Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Nineteenth Congress
First Regular Session

HOUSE BILL NO.

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
INTRODUCING ADMINISTRATIVE TAX REFORMS, AMENDING
SECTIONS 21, 22, 51, 56, 58, 77, 81, 90, 91, 103, 106, 108, 109, 110, 112, 113, 114, 115,
116, 128, 200, 236, 237, 245, and 248, AND ADDING SECTIONS 291 AND 292 OF
REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS “THE NATIONAL
INTERNAL REVENUE CODE OF 1997", AS AMENDED

EXPLANATORY NOTE

THE EASE OF PAYING TAXES AC

Red tape experienced by taxpayers undermines the social contract between the citizen and the
state. When citizens perform their patriotic duty to pay correct taxes and ensure the flow of the
lifeblood of the government. the least the state can do is to ease the process of doing so.

The benefits of high taxpayer mor: -annot be understated. When people are invested in their
government, a “sense of nation” is embedded, and faith in the government is secured.
Unfortunately. the Philippine tax administration system is convoluted and demoralizing to the
taxpayers

This bill seeks to modernize tax administration and improve tax compliance. There are three
main reasons for reforming our tax administration system.

First, tedious tax administration results in lower ease of doing business. Tax compliance
constraints on businesses were magnified during the pandemic, Since the Bureau of Intemal
Revenue (BIR) is still in the process of transitioning into a fully electronic tax filing and
payment system. taxpayers were still required to physically file hard copies of documents and
pay their tax dues to comply with set deadlines in the face of health concerns.

The 2015 World Bank Enterprise survey revealed that businesses. especially the small and
medium enterprises. find the country’s tax administration a major constraint. This is in large
part because of the one-size-fits-all approach given to the currently limited classification of

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taxpayers despite differences in capacity to comply with tax requirements. Understandably,
strict verification processes are necessary for large taxpayers, but simple taxpayer transactions
for small taxpayers need not be as tedious.

Second, complicated tax administration policies result in higher uncollected revenues, or tax
gap. Tax gap is the difference between what the policy theoretically allows to collect, and what
the collecting agencies actually generate.

In 2018, the estimated total tax gap was Php909 billion which was the combination of the
estimated tax gaps on personal income tax, corporate income tax, VA'T and excise taxes on
cigarettes, alcohol. and petroleum products. The bulk of this came from VAT and CIT, each
amounting to Php350 billion. This significant tax gap gives us a picture of inefficiency due to
outdated or complicated tax administration policies as well as the extent of taxpayers’ non-
compliance.

Finally, complex tax administration results in low tax morale and higher tax uncertainty.
During my stint with investment banking, I had to deal with tax uncertainty as a major hurdle
to investment. Tax uncertainty makes the company valuation ambiguous and more high-risk
It increases the hurdle rate for investment, making destinations with low tax morale less
attractive to investment. And it increases tax compliance costs, with a very real impact on the
bottomline and earnings-per-share.

Our estimate is that tax uncertainty contributes up to 3.43 percentage points more to the hurdle
rate for investing in the Philippines. This means that a potential business has to have a profit
margin of 3.43% more than usual for an investor to consider investing in the Philippines. Our
estimates suggest that we could capture a broad range of industries, from telecommunications
to semiconductors, from pharmaceuticals to information services, if we reduce our tax
uncertainty.

Low tax morale and high tax uncertainty has a real impact on the economy. We estimate 0.68
10 1.02 percentage points in foregone real GDP growth annually (depending on share of capital
formation) due to foregone investments because of low tax morale.

The Ease of Paying Taxes bill seeks to address these concerns. among others, through the
following:

1. Simplification of the process of filing tax returns for small taxpayers to help facilitate
their compliance with tax rules and regulation

. Removal of the required Php500.00 annual taxpayer registration fee;

3. Introduction of a medium taxpayer classification and a corresponding BIR special unit
to capture and safeguard at least 90% of the country’s tax collections that this segment
contributes, along with large taxpayers:

4. Relaxation of rules on filing and payment by separating the acts of filing from payment
thereby giving taxpayers the flexibility to choose to pay as they file or file and pay in
their respective districts;

Enhanced portability of tax transactions by removing venue restrictions in the filing of
returns and payment of taxes:

Creation of registration facilities for non-resident taxpayers;

Removal of the distinction between sales invoice and official receipts for purposes of
recognizing VAT transactions and making sales invoices the document to be used by
taxpayers to substantiate VAT transactions whether for sale of goods or services; and

6.
7.

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8, Institutionalization of a Taxpayer's Bill of Rights to serve as the guiding principle in
formulating and implementing tax policies and to increase taxpayers’ awareness of their
rights to enable them to exercise and protect the same.

The tax administration efficiency resulting from the passage of this measure shall yield an
estimated Php73.1 billion additional revenues over a period of five (5) years. We also expect
to reduce opportunities for corruption and improve taxpayer experience through the
modernization of tax administration procedures.

Ultimately, we aim to boost taxpayer morale by building trust and legitimacy between the
government and taxpayers as it holds the potential to increase revenues which translates to
additional infrastructure and better social and health services for our fellow Filipinos.

Il is earnestly sought and urgently needed.

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Nineteenth Congress
First Regular Session

5
HOUSE BILL NO. 53

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
INTRODUCING ADMINISTRATIVE TAX REFORMS, AMENDING
SECTIONS 21, 22, 51, 56, 58, 77, 81, 90, 91, 103, 106, 108, 109, 110, 112, 113, 114, 115,
116, 128, 200, 236, 237, 245, and 248, AND ADDING SECTIONS 291 AND 292 OF
REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS “THE NATIONAL.
INTERNAL REVENUE CODE OF 1997”, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Title. ~ This Act shall be known as the “Ease of Paying Taxes Act.”

SEC. 2. Declaration of Policy. ~ It is hereby declared the policy of the State:

(1) To provide a healthy environment for the tax paying public that protects and
safeguards taxpayer rights and welfare, as well as assures the fair treatment of all taxpayers;

(2) To modemize tax administration and improve its efficiency and effectiveness by
providing mechanisms that encourage proper and easy compliance at the least cost and
resources possible:

(3) To update the taxation system, adopt best practices, and replace antiquated
procedures such as requiring the filing of a return or declaration for the payment of taxes or the
“pay as you file” system and restriction of venue for filing and payment; and

(4) To enact policies and procedures which are appropriate to different types of
taxpayers.

SEC. 3. Section 21 of the National Internal Revenue Code of 1997, as amended. is

hereby amended to read as follows:
“SEC. 21. Sources of Revenue|. -| AND CLASSIFICATION OF
TAXPAYERS. -

Page | 1


(A) The following taxes, fees and charges are deemed to be national
internal revenue taxes:
"(a) Income tax;
"(b) Estate and donor's taxes;
"(c) Value-added tax;
"(d) Other percentage taxes:
"(©) Excise taxes;
"(f) Documentary stamp taxes; and
"(g) Such other taxes as are or hereafter may be imposed and
collected by the Bureau of Internal Revenue.

“(B) CLASSIFICATION OF TAXPAYERS ~ FOR PURPOSES OF
RESPONSIVE TAX ADMINISTRATION, THE SECRETARY OF
FINANCE, UPON RECOMMENDATION OF THE COMMISSIONER,
SHALL ESTABLISH REASONABLE CRITERIA FOR CLASSIFYING
TAXPAYERS, TAKING INTO CONSIDERATION THEIR CAPACITY
TO COMPLY WITH TAX RULES AND REGULATIONS, THE
AMOUNT AND TYPE OF TAX PAID, THE GROSS SALES AND/OR
RECEIPTS OF THE TAXPAYER, AS WELL AS INFLATION,
VOLUME OF BUSINESS, WAGE AND EMPLOYMENT LEVELS, AND
SIMILAR ECONOMIC AND FINANCIAL FACTORS: PROVIDED,
THAT THE SECRETARY OF FINANCE SHALL PROVIDE
CLASSIFICATIONS FOR LARGE AND MEDIUM TAXPAYERS AND
INTRODUCE ADDITIONAL CLASSIFICATION OF TAXPAYERS AS
MAY BE DEEMED NECESSARY AND REASONABLE TO ACHIEVE
BETTER SERVICE AND TAX ADMINISTRATION: PROVIDED,
FURTHER, THAT FOR EVERY CLASS OF TAXPAYERS, THE
BUREAU OF INTERNAL REVENUE MAY PROVIDE FOR A SPECIAL
UNIT TO CATER TO THE NEEDS OF TAXPAYERS UNDER SUCH
CLASSIFICATION: PROVIDED, FINALLY, THAT, FOR EASE OF
COMPLIANCE TO TAX RULES AND REGULATIONS, SIMPLIFIED
TAX RETURNS AND PROCESSES SHALL BE IMPLEMENTED FOR
TAXPAYERS NOT CLASSIFIED AS MEDIUM OR LARGE.”

SEC. 4. Section 22 of the National Internal Revenue Code of 1997, as amended, is

hereby further amended to read as follows:
Page |2


“SEC. 22. Definitions. — When used in this Title:

XXX

(i) THE TERM “FILING OF RETURN” SHALL REFER TO
THE ACT OF ACCOMPLISHING AND SUBMITTING THE
PRESCRIBED TAX RETURN TO THE BUREAU OF INTERNAL
REVENUE AS REQUIRED UNDER THIS CODE OR AS PRESCRIBED
UNDER EXISTING RULES AND REGULATIONS.

(JJ) THE TERM “PAYMENT OF TAX” OR “REMITTANCE OF
TAX” SHALL REFER TO THE ACT OF DELIVERING THE AMOUNT
OF TAX DUE OR WITHHELD TO THE BUREAU OF INTERNAL
REVENUE AS REQUIRED UNDER THIS CODE OR AS PRESCRIBED
UNDER EXISTING RULES AND REGULATIONS.”
SEC. 5. Section 51 of the National Internal Revenue Code of 1997, as amended, is

hereby further amended to read as follows:
“SEC. 51. Individual Returns. —
XxX
(B) Where to File. - Except in cases where the Commissioner otherwise
permits, the return shall be filed with an] ANY authorized agent bank, Revenue
District Officer, Collection Agent for duly authorized Treasurer of the city or
municipality in which such person has his legal residence or principal place of
business in the Philippines). or if there be no legal residence or place of business
in the Philippines. with the Office of the Commissioner.”
SEC. 6. Section 56 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:
“SEC.
and Corporations. ~
(A) Payment of Tax. —
(1) Jn General. — The total amount of tax imposed by this Title shall be
paid by the person subject thereto [at the time] DURING the FILING OF THE
retum [is filed], OR BEFORE IT IS DUE. In the case of tramp vessels. the

shipping agents and/or the husbanding agents. and in their absence. the captains

. Payment and Assessment of Income Tax for Individuals

thereof are required to file the return herein provided and pay the tax due

thereon before their departure. Upon failure of the said agents or captains to file
Page |3


the return and pay the tax, the Bureau of Customs is hereby authorized to hold
the vessel and prevent its departure until proof of payment of the tax is
presented or a sufficient bond is filed to answer for the tax due.”
XxX
SEC. 7. Section 58 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:
“SEC. 58, Return and Payment of Taxes Withheld at Source. —
(A) Quarterly Returns and Payments of Taxes Withheld. - Taxes

deducted and withheld under Section 57 by withholding agents shall be covered
by a retum and paid to, except in cases where the Commissioner otherwise

permits, an authorized agent bank, Revenue District Officer, OR Collection

y where the

Agent [, or duly authorized Treasurer of the city or municipal
withholding agent has his legal residence or principal place of business, or
where the withholding agent is a corporation, where the principal office is
located}.”
XXX
SEC. 8, Section 77 of the National Internal Revenue Code of 1997, as amended, is
hereby amended to read as follows
“SEC. 77. Place and Time of Filing and Payment of Quarterly
Corporate Income Tax. —
(A) Place of Filing.— Except as the Commissioner otherwise
permits, the quarterly income tax declaration required in Section 75 and the
final adjustment return required in Section 76 shall be filed with the authorized
agent banks or Revenue District Officer or Collection Agent [or duly authorized
Treasurer of the city or municipality having jurisdiction over the location of the
principal off
of accounts and other data from which the return is prepared are kept].
(B)xxx
(C) Time of Payment of the Income Tax. ~ The income tax due on the

of the corporation filing the return or place where its main books

corporate quarterly retums and the final adjustment income tax returns
computed in accordance with Sections 75 and 76 shall be paid [at the time]
DURING THE FILING OF the declaration or return [is filed], OR BEFORE

IT IS DUE, in a manner prescribed by the Commissioner.”

Page | 4


SEC. 9. Section 81 of the National Intemal Revenue Code of 1997, as amended, is
hereby amended to read as follows:
“SEC. 81. Filing of Return and Payment of Taxes Withheld. — Except
as the Commissioner otherwise permits, taxes deducted and withheld by the
employer on wages of employees shall be covered by a return and paid to an
authorized agent bank, REVENUE DISTRICT OFFICER, OR Collection
Agent [. or the duly authorized Treasurer of the city or municipality where the
employer has his legal residence or principal place of business, or in case the
employer is a corporation, where the principal office is located].””
XXX
SEC. 10, Section 90 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:
“SEC. 90. Estate Tax Returns. —
Xxx
(D) Place of Filing.— Except in cases where the Commissioner
otherwise permits, the return required under Subsection (A) shall be filed with
an authorized agent bank, or Revenue District Officer, Collection Officer |, or

duly authorized Treasurer of the city or municipality in which the decedent was
domiciled at the time of his death] or if there be no legal residence in the
Philippines, with the Office of the Commissioner.”
SEC. 11. Section 91 of the National Intemal Revenue Code of 1997, as amended, is

hereby further amended to read as follows:

SEC. 91. Payment of Tax. —

(A) Time of Payment, ~ The estate tax imposed by Section 84 shall be

paid [at the time] ON OR BEFORE the return is filed by the executor,

administrator or the heirs.”
Xxx
SEC. 12. Section 103 of the National Internal Revenue Code of 1997, as amended, is
hereby amended to read as follows:
“SEC. 103. Filing of Return and Payment of Tax. ~
(A)xxx
(B) Time and Place of Filing and Payment. — The return of the donor
required in this Section shall be filed within thirty (30) days after the date the

gift is made and the tax due thereon shall be paid [at the time of filing]
Page | 5


DURING THE FILING OF THE DECLARATION OR RETURN, OR
BEFORE IT IS DUE, IN A MANNER PRESCRIBED BY THE
COMMISSIONER. Except in cases where the Commissioner otherwise
permits, the return shall be filed and the tax paid to an authorized agent bank,
[the] Revenue District Officer, OR Revenue Collection Officer for duly

authorized Treasurer of the city or municipality where the donor was domiciled
at the time of the transfer, or if there be no legal residence in the Philippines,
with the Office of the Commissioner]. In the case of gifts made by a
nonresident, the return may be filed with the Philippine Embassy or Consulate
in the country where he is domiciled at the time of the transfer, or directly with
the Office of the Commissioner.”
SEC. 13, Section 106 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:
“SEC. 106. Value-Added Tax on Sale of Goods or Properties. —
(A) Rate and Base of Tax.

() xxx

XX

(a) Xxx
(b) xxx
(©) xxx
(@) xxx
(@) xxx
FOR PURPOSES OF THIS SECTION, [The] THE term ‘gross
selling price’ means the total amount of money or its equivalent which the
purchaser pays or is obligated to pay to the seller in consideration of the sale,
barter or exchange of the goods or properties, excluding the value-added tax.
The excise tax, if any, on such goods or properties shall form part of the gross
selling price.
(2) xxx
(B) xxx
(xxx
(D) Sales Returns, Allowances and Sales Discounts. — The value of
goods or properties sold and subsequently returned or for which allowances
were granted by a VAT-registered person may be deducted from the gross

sales or [receipts] GROSS SELLING PRICE for the quarter in which a
Page | 6


refund is made or a credit memorandum or refund is issued. Sales discount
granted and indicated in the invoice at the time of sale and the grant of which
does not depend upon the happening of a future event may be excluded from
the gross sales within the same quarter it was given.”

(FE) xxx
SEC. 14. Section 108 of the National internal Revenue Code of 1997, as amended, is

hereby further amended to read as follows

“SEC. 108. Value-added Tax on Sale of Services and Use or Lease of
Properties. —

(A) Rate and Base of Tax. — There shall be levied, assessed and
collected, a value-added tax equivalent to twelve percent (12%) of THE gross
[receipts] SELLING PRICE derived from the sale or exchange of services,
including the use or lease of properties.”

Xxx

FOR PURPOSES OF THIS SECTION, [The] THE term ‘gross
[receipts] SELLING PRICE” means the total amount of money or its
equivalent [representing the contract price, compensation, service fee, rental or
royalty. including the amount charged for materials supplied with the services
and deposits and advanced payments actually or constructively received during
the taxable quarter for the services performed or to be performed for another
person] WHICH THE PURCHASER PAYS OR IS OBLIGATED TO
PAY TO THE SELLER IN CONSIDERATION OF THE SALE,
BARTER, OR EXCHANGE OF SERVICES AND THE USE OR LEASE
OF PROPERTIES, excluding value-added tax.

Xxx
SEC. 15. Section 109 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:
“SEC, 109. Exempt Transactions. ~
(1) Subject to the provisions of Subsection (2) hereof, the following transactions
shall be exempt from the value-added tax:

XXX

(CC) Sale or lease of goods or properties or the performance of serv
other than the transactions mentioned in the preceding paragraphs, the gross

annual sales [and/or receipts] do not exceed the amount of Three million pesos
Page |7


(P3,000,000)|.]: PROVIDED, THAT THE AMOUNT HEREIN STATED
SHALL BE ADJUSTED TO ITS PRESENT VALUE NOT LATER THAN
JANUARY 31, 2021, AND EVERY THREE (3) YEARS THEREAFTER,
BASED ON THE CONSUMER PRICE INDEX THAT IS PUBLISHED

BY THE PHILIPPINE STATISTICS AUTHORITY (PSA).

hereby further amended to read as follows:
EC. 110. Tax Credits. ~
(A) Creditable Input Tax. —

(1) Any input tax evidenced by a VAT invoice [or official receipt]

issued in accordance with Section 113 hereof on the following transactions shall

be creditable against the output tax:
(a) Purchase or importation of goods:

(i For sale; or
(ii) For conversion into or intended to form part of a finished
product for sale including packaging materials; or
(ili) For use as supplies in the course of business: or
(iv) For use as materials supplied in the sale of service; or
(¥) For use in trade or business for which deduction for
depreciation or amortization is allowed under this Code.

(b) Purchase of services on which a value-added tax has been

actually paid.”

XXX

SEC. 16. Section 110 of the National Internal Revenue Code of 1997, as amended, is

SEC. 17. Section 112 of the National Internal Revenue Code of 1997, as amended. is

hereby further amended to read as follows:
“SEC. 112. Refunds or Tax Credits of Input Tax. —
XXX
(C) Period within which THE Refund of Input Taxes shall be Made.
— In proper cases, the Commissioner shall grant a refund for creditable input
taxes within ninety (90) days from the date of submission of the [official receipt
or] invoices and other documents in support of the application filed in
accordance with Subsections (A) and (B) hereof: Provided, That should the
Commissioner find that the grant of refund is not proper, the Commissioner

must state in writing the legal and factual basis for the denial.

Page |8


XXX
SEC. 18. Section 113 of the National Intemal Revenue Code of 1997, as amended. is
hereby amended to read as follows:
“SEC. 113. Invoicing and Accounting Requirements for VAT-
Registered Persons. —
(A) Invoicing Requirement|s]. — A VAT-registered person shall
issue[:
(1) AL A VAT invoice for every sale, barter or exchange OR LEASE
of goods or properties [; and
(2) A VAT official receipt for every lease of goods or properties,] and

for every sale, barter or exchange of service:

(B) Information Contained in the VAT Invoice \or VAT Official
Receipt). — The following information shall be indicated in the VAT invoice
or VAT official receipt}:

(1) A statement that the seller is a VAT-registered person, followed by
his Taxpayer's Identification Number (TIN);

(2) The total amount which the purchaser pays or is obligated to pay to
the seller with the indication that such amount includes the value-added tax:
Provided, That:

(a) The amount of the tax shall be shown as a separate item in the invoice
[or receipt]:

(b) If the sale is exempt from value-added tax, the term 'VAT-exempt
sale' shall be written or printed prominently on the invoice [or receipt]:

(c) If the sale is subject to zero percent (0%) value-added tax, the term
‘zero-rated sale’ shall be written or printed prominently on the invoice [or
receipt}:

(d) If the sale involves goods, properties or services some of which are
subject to and some of which are VAT zero-rated or VAT-exempt, the invoice
[or receipt] shall clearly indicate the break-down of the sale price between its
taxable, exempt and zero-rated components, and the calculation of the value~
added tax on each portion of the sale shall be shown on the invoice Jor receipt]:
Provided, That the seller may issue separate invoices Jor receipts] for the
taxable, exempt, and zero-rated components of the sale,

(xxx
Page {9


xxx

(C)xxx

(D) Consequence of Issuing AN Erroneous VAT Invoice \or VAT
Official Receipt|. —

(1) Ifa person who is not a VAT-registered person issues an invoice [or
receipt] showing his Taxpayer Identification Number (TIN), followed by the
word "VAT:

(a) The issuer shall. in addition to any liability to other percentage taxes,
be liable to:

(i) The tax imposed in Section 106 or 108 without the benefit of any
input tax credit: and

Gi) A fifty percent (50%) surcharge under Section 248 (B) of this Code:

(b) The VAT shall, if the other requisite information required under
Subsection (B) hereof is shown on the invoice [or receipt], be recognized as an
input tax credit to the purchaser under Section 110 of this Code.

(2) If a VAT-registered person issues a VAT invoice [or VAT official
receipt] for a VAT-exempt transaction, but fails to display prominently on the
invoice [or receipt] the term 'VAT-exempt sale’, the issuer shall be liable to
account for the tax imposed in Section 106 or 108 as if Section 109 did not
apply.

XxX

SEC. 19. Section 114 of the National Internal Revenue Code of 1997, as amended, is

hereby further amended to read as follows:
“SEC. 114, Return and Payment of Value-Added Tax. —

{A) In General. — Every person liable to pay the value-added tax
imposed under this Title shall file a quarterly return of the amount of his gross
sales [or receipts] within twenty-five (25) days following the close of each
taxable quarter prescribed for each taxpayer: Provided, however, That VAT-
registered persons shall pay the value-added tax on a monthly basis: Provided,
finally, That beginning January 1, 2023, the filing and payment required under
this Subsection shall be done within twenty-five (25) days following the close
of each taxable quarter.

XXX

Page | 10


(B) Where to File the Return and Pay the Tax. — Except as the
Commissioner otherwise permits, the return shall be filed with and the tax paid
to an authorized agent bank, OR Revenue Collection Officer for duly
authorized city or municipal Treasurer in the Philippines located within the
revenue district where the taxpayer is registered or required to register].”

XXX
SEC. 20. Section 115 of the National Internal Revenue Code of 1997, as amended, is

hereby amended to read as follows:

“SEC. 115. Power of the Commissioner to Suspend the Business
Operations of a Taxpayer. — The Commissioner or his authorized
representative is hereby empowered to suspend the business operations and
temporarily close the business establishment of any person for any of the
following violations:

(a) In the case of a VAT-registered Person. —

(1) Failure to issue [receipts or] invoices;

(2) Failure to file a value-added tax return as required under Section
114; or

(3) Understatement of taxable sales [or receipts] by thirty percent (30%)
or more of his correct taxable sales for receipts] for the taxable quarter.

XXX
SEC. 21. Section 116 of the National Internal Revenue Code of 1997, as amended, is

hereby further amended to read as follows:

“SEC. 116. Tax on Persons Exempt from Value-Added Tax (VAT). —
Any person whose sales [or receipts] are exempt under Section 109 (BB) of this
Code from the payment of value-added tax and who is not a VAT-registered
person shall pay a tax equivalent to three percent (3%) of his gross quarterly

shall be exempt from the three

sales [or receipts]: Provided, That cooperatives,

percent (3%) gross receipts tax herein imposed.

amended, is

SEC. 22. Section 128 of the National Internal Revenue Code of 1997,

hereby amended to read as follows:

EC. 128. Returns and Payment of Percentage Taxes. ~
XXX
(B) Where to File. - Except as the Commissioner otherwise permits.

every person liable to the percentage tax under this Title [may, at his option,]
Page | 11


SHALL file a [separate return for each branch or place of business, or]
consolidated retum for all branches or places of business with [the] AN
authorized agent bank, Revenue District Officer. OR Collection Agent for duly
authorized Treasurer of the city or municipality where said business or principal

place of business is located, as the case may be].”

SEC. 23. Section 200 of the National Internal Revenue Code of 1997, as amended, is

hereby amended to read as follows:
“SEC. 200. Payment of Documentary Stamp Tax. =
XXX
(C) Where to File. — Except in cases where the Commissioner otherwise
permits, the aforesaid tax return shall be filed with and the tax due shall be paid
through the authorized agent bank [within the territorial jurisdiction of the
Revenue District Office which has jurisdiction over the residence or principal
place of business of the taxpayer]. In places where there is no authorized agent
bank, the return shall be filed with [the] A Revenue District Officer[.| OR
collection agent |. or duly authorized Treasurer of the city or municipality in
which the taxpayer has his legal residence or principal place of business].
XXX
SEC. 24. Section 236 of the National Internal Revenue Code of 1997. as amended. is
hereby further amended to read as follows:
“SEC. 236. Registration Requirements. —
(A) Requirements. — Every person subject to any internal revenue tax
shall register once with the appropriate Revenue District Officer
(1) Within ten (10) days from date of employment. or
(2) On or before the commencement of business, or
(3) Before payment of any tax due, or
(4) Upon filing of a return, statement or declaration as required in this
Code.
The registration shall contain the taxpayer's name. [style.] place of residence.
business. and such other information as may be required by the Commissioner
in the form prescribed therefor: Provided, THAT THE COMMISSIONER
SHALL ENSURE THE AVAILABILITY OF REGISTRATION
FACILITIES TO TAXPAYERS WHO ARE NOT RESIDING IN THE

COUNTRY: PROVIDED, FURTHER, That the Commissioner shall simplify
Page | 12



the business registration and tax compliance requirements of self-employed
individuals and/or professionals.

XXX

{(B) Annual Registration Fee. — An anoual registration fee in the

amount of Five hundred pesos (PhPS00) for every separate or distinct

including facility types where sales

establishment or place of business.
transactions occur, shall be paid upon registration and every year thereafter on
or before the last day of January: Provided, however, That cooperatives,
individuals caring purely compensation income, whether locally or abroad,
and overseas workers are not liable to the registration fee herein imposed.

The registration fee shall be paid to an authorized agent bank located
within the revenue district, or to the Revenue Collection Officer, or duly
authorized ‘Treasurer of the city or municipality where each place of business
or branch is registered.

[©)] (B) Registration of Each Type of Internal Revenue Tax.—x x x

[D)] (© Transfer of Registration. — x xx

[)] (D) Other Updates. -x x x

[)] ©) Cancellation of Registration. — x x x

(J) General Rule, ~ The registration of any person who ceases
to be liable to a tax type shall be cancelled upon MERE filing with the
Revenue District Office where he is registered, an application for
registration information update in a form prescribed therefor(3).
HOWEVER, THIS SHALL NOT PRECLUDE THE REVENUE
DISTRICT OFFICER FROM CONDUCTING AN AUDIT IN
ORDER TO DETERMINE ANY TAX LIABILITY: PROVIDED,
THAT THE DECISION TO CONDUCT THE AUDIT IS BASED
ON RISK ASSESSMENT EVALUATION.

(2) Cancellation of Value-Added Tax Registration. —x xx

[G)| (F) Persons Required to Register for Value-Added Tax, —x x x
[GH] (G) Optional Registration for Value-Added Tax of Exempt
Person. -%X%
[()] (A) Supplying of Taxpayer Identification Number (TIN). —X x x"
SEC. 25. Section 237 of the National Internal Revenue Code of 1997, as amended, is

hereby further amended to read as follows:
Page | 13


“SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. ~

(A) Issuance. — All persons subject to an internal revenue tax shall, at
the point of each sale and transfer of merchandise or for services rendered
valued at One hundred pesos (PhP100.00) or more, issue duly registered
receipts or sale or commercial invoices, showing the date of transaction,
guantity, unit cost and description of merchandise or nature of service:
Provided, however, That where the receipt is issued to cover payment made as
rentals, commissions, compensation or fees, receipts or invoices shall be issued
which shall show the name, [business style, if any,] and address of the
purchaser, customer or client: Provided, further, That where the purchaser is a
VAT-registered person, in addition to the information herein required, the
invoice or receipt shall further show the Taxpayer Identification Number (TIN)
of the purchaser.”

XXX
SEC. 26. Section 245 of the National Internal Revenue Code of 1997, as amended, is

hereby amended to read as follows:

“SEC. 248. Specific Provisions to be Contained in Rules and
Regulations, — The rules and regulations of the Bureau of Internal Revenue
shall, among other things, contain provisions specifying, prescribing ot
defining:

XXX
“@) The manner in which intemal revenue taxes, such as income tax,

including withholding tax, estate and donor's taxes, value-added tax, other

percentage taxes, excise taxes and documentary stamp taxes shall be paid

through the collection officers of the Bureau of Internal Revenue or through
duly authorized agent banks which are hereby deputized to receive payments of
such taxes and the returns, papers and statements that may be filed by the
taxpayers in connection with the payment of the tax: Provided, however, That

notwithstanding the other provisions of this Code prescribing the place of filing

of returns and payment of taxes, the Commissioner may, by rules and
regulations, require that the tax returns, papers and statements and taxes of
MEDIUM AND large taxpayers be filed and paid, respectively, through
collection officers or through duly authorized agent banks[. Provided, further,

That the Commissioner can exercise this power within six (6) years from the
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approval of Republic Act No. 7646 or the completion of its comprehensive
computerization program, whichever comes earlier]: Provided, [finally]
FURTHER, That separate venues for the Luzon, Visayas and Mindanao areas
may be designated for the filing of tax reuumns and payment of taxes by said
MEDIUM AND large taxpayers
[For purposes of this Section, ‘large taxpayer’ means a taxpayer who
satisfies any of the following criteria:
"(1) Value-Added Tax (VAT) — Business establishment with
VAT paid or payable of at least One hundred thousand pesos
(PhP100,000) for any quarter of the preceding taxable year:
"(2)_ Excise Tax — Business establishment with excise tax paid or
payable of at least One million pesos (PhP1,000,000) for the
preceding taxable year;
"(3) Corporate Income Tax — Business establishment with annual
income tax paid or payable of at least One million pesos
(PhPI,000,000) for the preceding taxable year; and
“a

Withholding Tax — Business establishment with withholding
tax payment or remittance of at least One million pesos
(PhP1,000,000) for the preceding taxable year.

Provided, however, That the Secretary of Finance, upon recommendation of the
Commissioner, may modify or add to the above criteria for determining a large
taxpayer after considering such factors as inflation, volume of business, wage
and employment levels, and similar economic factors.]

“The penalties prescribed under Section 248 of this Code shall be imposed on

any violation of the rules and regulations issued by the Secretary of Finance.

upon recommendation of the Commissioner, prescribing the place of filing of
retums and payments of taxes by MEDIUM AND large taxpayers.”
SEC. 27. Section 248 of the National Internal Revenue Code of 1997, as amended, is
hereby amended to read as follows:
“SEC. 248. Civil Penalties. —
(A) There shall be imposed, in addition to the tax required to be paid.
a penalty equivalent to twenty-five percent (25%) of the amount due, in the

following cases:

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(1) Failure to file any return and pay the tax due thereon as required
under the provisions of this Code or rules and regulations on the date
prescribed: or

[(2) Unless otherwise authorized by the Commissioner. filing a return
with an internal revenue officer other than those with whom the return
is required to be fileds]

[(3)] @) Failure to pay the deficieney tax within the time prescribed for
its payment in the notice of assessment; or

[(4)] (3) Failure to pay the full or part of the amount of tax shown on

any return required to be filed under the provisions of this Code or rules
and regulations. or the full amount of tax due for which no retum is
required to be filed, on or before the date prescribed for its payment.
XXX
SEC. 28. A new Title XIV shall be added in the National Intemal Revenue Code of
1997. as amended, to read as follows:
“TITLE XIV
“RIGHTS OF TAXPAYERS
“SEC. 291. TAXPAYER'S BILL OF RIGHTS. —1N ADDITION TO
THE RIGHTS AND REMEDIES OF THE TAXPAYER PROVIDED IN
THE NATIONAL INTERNAL REVE CODE OF 1997, AS
AMENDED, THE TAXPAYER SHALL HAVE THE FOLLOWING SET
OF FUNDAMENTAL RIGHTS:
1, TO PAY NO MORE THAN THE CORRECT AMOUNT
OF TAX;
. TO A FAIR AND JUST TAX SYSTEM;
3. TO BE INFORMED WITH TIMELY AND EASY TO
UNDERSTAND INFORMATION;
4. TO QUALITY SERVICE AND TAX EDUCATION;
. TO THE CONSISTENT AND TRANSPARENT
APPLICATION OF THE LAW;
6. TO HAVE THE CLASSIFICATION OF TAXPAYER
CONSIDERED WHENEVER TAX RULES ARE

PREPARED AND ENFORCED;

w

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7. TO PRIVACY AND CONFIDENTIALITY OF
INFORMATION, UNLESS AUTHORIZED BY THE
TAXPAYER OR BY LAW;

8. TO SPEEDY DISPOSITION OF CASES, ASSESSMENTS,
AUDI ER SIMILAR
ACTIONS;

9. TO FINALITY OF TAX CASES; AND

10.TO BE PROTECTED AGAINST MALICIOUS,
EXCESSIVE, AND WRONGFUL ASSESSMENTS AND
TO SEEK REDRESS FOR THE SAME.”

“SEC. 292. TAXPAYER'S ADVOCATE OFFICE. ~ THE OFFICE

OF THE TAX ADVOCATE IS HEREBY CREATED UNDER THE
SUPERVISION AND CONTROL OF THE DEPARTMENT OF
FINANCE AND INDEPENDENT FROM THE BUREAU OF INTERNAL
REVENUE. ITS POWERS AND DUTIES SHALL INCLUDE:

1, ENSURE THAT THE RIGHTS OF THE TAXPAYERS ARE
PROTECTED AND PROVIDE ASSISTANCE TO THE
TAXPAYERS IN RELATION THERETO;

2. IDENTIFY SYSTEMIC PROBLEMS WITHIN THE BUREAU
OF INTERNAL REVENUE WHICH HAMPERS EFFICIENT
AND FAIR TAX ADMINISTRATION AND PROPOSE
CHANGES THEREIN TO MITIGATE IDENTIFIED
PROBLEMS, WHETHER ADMINISTRATIVE OR
LEGISLATIVE IN NATURE;

3. REPORT DIRECTLY TO THE COMMISSIONER OF
INTERNAL REVENUE OUTPUTS AND OUTCOMES THAT
RESULT FROM THE EXECUTION OF ITS DUTIES, AND
COORDINATE ITS OTHER FUNCTIONS SUCH AS, BUT
NOT LIMITED TO, THE DEVELOPMENT AND
IMPLEMENTATION OF PROGRAMS THAT WILL HELP
EDUCATE TAXPAYERS AND EFFECTIVELY
DISSEMINATE THE TAXPAYER'S BILL OF RIGHTS; AND

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4. PERFORM SUCH OTHER FUNCTIONS AS MAY BY
PROVIDED BY LAW OR REQUIRED BY THE SECRETARY
OF FINANCE.”

SEC. 29. Title XIV and Title XV of the National Internal Revenue Code of 1997. as
amended, are hereby renumbered as Title XV and Title XVI respectively. and the succeeding
sections shall be renumbered accordingly.

SEC. 30. Separability Clause. ~ \fany provision of this Act is declared unconstitutional.
the remaining parts or provision not affected thereby shall remain in full force and effect.

SEC. 31. Repealing Clause. ~ All laws, decrees, executive orders, implementing rules
and regulations, issuances. or any part thereof inconsistent with the provisions of this Act are
deemed repealed, amended or modified accordingly.

SEC. 32. Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation

Approved,

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