Tax Updates: Ease of Paying Taxes (EOPT) Act

Author: Atty. Angeli Alyssa S. Andan

ABOUT

Republic Act No. 11967, also known as the Ease of Paying Taxes (EOPT) Act, was signed into law on January 5, 2024. One of the aims of the law is to modernize tax administration and improve its efficiency and effectiveness by providing mechanisms that encourage proper and easy compliance at least cost and resources possible.

SALIENT LEGAL UPDATES

1. The law now provides a classification of taxpayers for purposes of responsive tax administration. 
   1. Micro Taxpayers – those with gross sales of less than Php 3,000,000. Note that this micro taxpayers are not required to withhold taxes. 
   2. Small Taxpayers – those with gross sales of Php 3,000,000 to less than Php 21,000,000
   3. Medium Taxpayers – those with gross sales of Php 3,000,000 to less than Php 20,000,000
   4. Medium Taxpayers – those with gross sales of Php 20,000,000 to less than Php 1,000,000,000
   5. Large Taxpayers – those with gross sales of Php 1,000,000,000 and above (Sec. 21, as amended) 
2. An Overseas Contract Worker or Overseas Filipino Worker is not required to file an income tax return. (Sec. 51(a)(2), as amended)
3. The Department of Finance is now obliged to review the regulations and processes for the withholding of creditable tax at least once every 3 years. The DOF is also obliged to direct the BIR to amend the rules in case these rules materially impact the taxpayer. (Sec. 57, as amended)
4. The obligation to deduct and withhold the tax arises at the time the income has become payable. (Sec. 58(C), as amended)
5. In case the taxpayer cannot carry over the excess income tax credit due to dissolution or cessation of business, the taxpayer shall file an application for refunds of any unutilized excess income tax credit, The BIR shall decide on the application and refund the excess taxes within two (2) years from the date of the dissolution or cessation of business. (Sec. 76, as amended)
6. The following can now be filed either electronically or manually, with any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider:
   1. income tax returns (Sec. 51(b), as amended)
   2. income returns of married individuals, whether citizens, resident or nonresident aliens, who do not derive income purely from compensation (Sec. 51(d), as amended)
   3. quarterly income tax declaration and the final adjustment return  (Sec. 77(A), as amended)
   4. the corporate quarterly declaration (Sec. 77(B), as amended). 
   5. returns on taxes deducted and withheld by the employer on wages of employees (Sec. 81, as amended)
   6. estate tax returns (Sec. 90, as amended)
   7. value-added tax returns (Sec. 114(a), as amended)
   8. percentage tax return (Sec. 128, as amended)
   9. documentary stamp tax return (Sec. 200, as amended)
7. The following can now be paid either electronically or manually:
   1. income tax of individuals and corporations (Sec. 56(A)(1), as amended)
   2. taxes deducted and withheld (Sec. 58(A), as amended)
   3. income tax due on the corporate quarterly returns and the final adjustments income tax returns (Sec. 77(C), as amended)
   4. taxes deducted and withheld by the employer on wages of employees (Sec. 81, as amended)
   5. estate tax (Sec. 90, as amended)
   6. value-added tax (Sec. 114(a), as amended)
   7. tax on persons exempt from VAT (Sec. 116, as amended)
   8. percentage tax (Sec. 128, as amended)
   9. documentary stamp tax (Sec. 200, as amended)
8. The tax base of VAT is 12% of the gross sales of the goods and services. (Sec. 106 and 108, as amended)
9. Sale of goods and sale of services, the gross annual sales not exceeding Php3M is now exempt from VAT, provided the amount stated shall be adjusted to its present values using the consumer price index, as published by the PSA every three (3) years. (Sec. 109(CC), as amended)
10. A seller of goods or services may deduct the output VAT pertaining to uncollected receivables from its output VAT on the next quarter, after the lapse of the agreed upon period to pay (Sec. 110 (D), as amended)
11. A person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status may apply for the issuance of a tax credit certificate or cash fund for any unused input tax. (Sec. 112(B), as amended)
12. There is also a classification of taxpayers in case of VAT refund claims, the basis of which is the amount of VAT refund claim, tax compliance history, frequency of filing VAT refund claims, among others. (Sec. 112(C), as amended)
13. Appeal to the CTA is a remedy available in case of full or partial denial of the claim for tax refund, or the failure on the part of the Commissioner to act on the application for refund for creditable input tax.  (Sec. 112(C), as amended)
14. A VAT invoice is issued for both sale of goods and sale of services. A VAT Official receipt has been removed in the law. (Sec. 113(A), as amended)
15. In case of authority of the CIR to refund or credit taxes, CIR shall decide the refund within 180 days from date of submission of complete documents in support of the application filed. In case of denial of the claim for refund, the CIR must state the legal and/or factual basis for such. Failure to decide on the application for refund within the 180-day period is punishable. (Sec. 204(c), as amended)
16. All persons who are engaged in business shall secure an authority to print sales or commercial invoices before a printer can print the same. (Sec. 238, as amended)
17. Filing a return with an internal revenue officer other than those with whom the return is required to be filed is no longer penalized with 25% of the amount due, in addition to the tax required to be paid (Sec. 248, as amended)

Of all these changes introduced by the EOPT, the most significant one is the mandating of a single document for both sales of goods and services – which is the Sales Invoice. (RR No. 3-2024)

For a more detailed discussion on the salient legal updates concerning the EOPT, watch out for Bais Andan Law Offices’ legal lifelines on the revenue regulations. Reach out to us today via email at info@baisandanlaw.com or by phone at +63915 968 2503 or (045) 281 0164.