Taxation in the digital age
In today’s era of volatility, there is no other way but to re-invent. The growth of services like Netflix, the use of food delivery apps, and long lines outside malls waiting for the release of the latest iPhone are affirmations of our new reality. Given such levels of technological development, taxpayers also expect their tax transactions with the government to be fast and convenient.
The pandemic has amplified the need to re-invent and adapt to the changing times. To ensure business continuity, we were forced to abandon our old ways and adopt new processes tailored fit to the situation. Fast forward to 2022, true enough, we have already seen major technological improvements, particularly in our tax compliance processes.
With Republic Act No. 8792 (the E-Commerce Act) and Republic Act No. 11032 (Ease of Doing Business and Efficient Government Service Delivery Act of 2018) in mind, the Bureau of Internal Revenue (BIR) has released certain issuances to help taxpayers transition into the digital age.
ON USE OF ELECTRONIC SIGNATURES
Revenue Memorandum Circular (RMC) No. 29-2021 authorized the use of e-signatures on the following BIR Forms/certificates:
• Certificate of Income Payment not subject to Withholding Tax (Excluding Compensation Income) (BIR Form No. 2304);
• Certificate of Final Tax Withheld at Source (BIR Form No. 2306);
• Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307); and
• Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316).
The BIR also allowed the use of e-signatures on the income tax return and its attachments through RMC No. 42-2022. As per RA No. 8792, an electronic signature is deemed equivalent to an actual signature or “wet signature” for filing purposes.
The use of e-signatures removes the additional physical arrangements to be coordinated with the authorized signatory, and taxpayers hope that the recognition of e-signatures will be extended further to letters to the BIR in assessment procedures, among others.
IMPLEMENTATION OF THE ELECTRONIC INVOICING SYSTEM (EIS)
Through Revenue Regulations (RR) No. 08-2022, the BIR required the following taxpayers to issue electronic receipts or sales/commercial invoices:
• Taxpayers engaged in the export of goods and services;
• Taxpayers engaged in electronic commerce (e-commerce); and
• Taxpayers under the Large Taxpayers Service (LTS).
Except for those engaged in e-commerce, the taxpayers mentioned above are required to electronically report or transmit their sales data to the BIR through the use of their Sales Data Transmission System.
Taxpayers not belonging to these categories may still issue manual receipts/invoices. Alternatively, they may opt to use the electronic invoicing system, comply with the provisions of the regulation, and issue the e-Invoices/e-Receipts in lieu of manual receipts/invoices.
As an added benefit, taxpayers registered under the EIS are also not required to submit their Summary List of Sales (SLS) since the transmission of sales data to the Bureau is done real time or near real time. However, the Summary List of Purchases (SLP) and Summary List of Importation (SLI) is still required for submission.
Perhaps, in the near future, even the SLP and SLI will no longer be required for submission, as these might already be captured by a system in the future, for the convenience of the taxpayers.
ONLINE REGISTRATION AND UPDATE SYSTEM (ORUS)
Pursuant to RMC No. 122-2022, the BIR launched ORUS to help taxpayers to register, update, and conduct registration-related transactions online, eventually removing the taxpayers’ need to be physically present in their respective Revenue District Offices (RDOs) for such transactions.
Through the issuance, the BIR also reminded taxpayers that the indicated designated e-mail address will serve as the taxpayer’s official e-mail address for use in serving BIR orders, notices, letters, and other processes/communications to the taxpayers. Hence, it is recommended that taxpayers keep a keen eye on the e-mails received through the e-mail address registered with the BIR.
CENTRAL BUSINESS PORTAL (CBP)
The CBP serves as a central system for applications for various business-related transactions with various government agencies. The portal, launched through RMC 15-2021, features registration transactions with the SEC, BIR, SSS, PhilHealth, and Pag-IBIG. Additionally, RMC 61-2022 expanded CBP to cover DTI and selected LGUs for business registration. As to BIR registration, the portal can accommodate online registration of:
• Single Proprietors;
• Corporations; and
The CBP helps aspiring entrepreneurs create an “online one-stop shop” for business registration-related transactions, reducing their need to go to and from various government agencies and offices simply for registering their business.
SOMETHING TO LOOK FORWARD TO
With its approval on third and final reading in Congress, House Bill (HB) 4125, otherwise known as the Ease of Paying Taxes (EoPT) Act, seeks to amend certain provisions of the Tax Code. These amendments aim to lighten the taxpayer’s burden by simplifying various tax rules for taxpayers to meet their obligations in a more convenient fashion. Should the bill be signed into law, the amendments on simplified VAT rules, easier filing and payment of taxes, and lowering of administrative penalties, among others, would be a big help for taxpayers, especially those who are still struggling because of the pandemic or those looking forward to starting anew.
As changes in technology accelerate, we have two choices — to catch up or to be left behind. We hope that with digitalization, government agencies continuously develop and improve their processes, resulting in a better quality of life for all of us. As the saying goes, “To improve is to change; to be perfect is to change often.”
Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
John Alexis S. B. Sumulong is a senior-in charge from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.