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Two trillion pesos. This is the revenue collection target of the Bureau of Internal Revenue (BIR) for 2016 and much of this represents income tax collected via withholding tax. In 2014 alone, withholding taxes accounted for more or less 40% of total income tax collected by the government. Considering the significance of withholding tax to the government, each and every taxpayer engaged in trade or business in the Philippines is required to withhold on their income payments, unless specifically exempted.

We often hear the phrase: “Taxes are the lifeblood of the Government,” as the main reason why collecting them is essential. However, there are instances when this should give way to the taxpayer’s right to claim a tax refund or credit. One such instance is a claim for tax refund or tax credit on input Value-Added Tax (VAT) arising from VAT zero-rated export sales. A taxpayer claiming this type of tax credit or refund must present at least three types of documents.

In every relationship, the parties involved need to agree to achieve a harmonious relationship. The Bureau of Internal Revenue (BIR) and the taxpayer are no exception. An assessment has to be formally issued within three years from the due date or date filing of the tax return, whichever is later. In case the three-year period is not sufficient, the taxpayer and the BIR may agree in writing to extend the three-year period for assessment pursuant to Section 222 of the Tax Code. The taxpayer executes a Waiver of the Statute of Limitation which is accepted by the BIR.

It is barely two weeks to the May 9 elections. For months, we have been hearing many promises from the presidential candidates, and it cannot be denied that one of the things that might win over a voter is a candidate’s take on tax reform. To be sure, tax reform is one of many aspects of governance that a president needs to consider, apart from fighting crime and corruption, defending sovereign territory, and growing the economy, to name a few. But what makes many of these initiatives possible is a well-managed treasury, funded by the taxes we pay. Therefore presidential candidates really ought to speak more about what they plan to do with the tax system.

Taxpayers may have finally been given two rays of hope by the Court of Tax Appeals when it comes to the applicability of deficiency and delinquency interest in tax assessments. Taxpayers under assessment are often faced with two types of interest under the Tax Code. The first, deficiency interest, is imposed on any deficiency tax due from the date prescribed for its payment until the full payment thereof. The second, delinquency interest, is imposed on the deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the BIR. Interest rates for both are at 20%.

The countdown has started and taxpayers have barely 4 days before the last day for filing the final adjustment return otherwise known as the Annual Income Tax Return for the taxable year ended December 31, 2015. Specifically, corporate taxpayers are required to file a final adjustment return covering the taxable income for the preceding calendar year on or before the 15th day of April and, likewise, to pay the income tax due thereon at the time the declaration or return is filed in accordance with the provisions of Section 76 and 77 of the National Internal Revenue Code of 1997 (Tax Code), as amended.

As the April 15 deadline for the filing of annual income tax return (ITR) is drawing near, taxpayers shall once again start flocking towards various revenue district offices (RDO) of the Bureau of Internal Revenue (BIR). It is at this point that taxpayers should be reminded of the rules on those required to file electronically rather than manually. For those required to file electronically, the available electronic platforms of the BIR are: (a) Electronic Filing and Payment System (eFPS); and (2) Electronic BIR Forms Systems (eBIRForms).

For 2016, the Philippines’ national budget is around P3 trillion and the Bureau of Internal Revenue (BIR) is tasked to collect around P2 trillion. Out of the BIR’s total collection target, about P1.243 trillion is expected to come from income taxes. That is how important income taxes are for the country, accounting for around 41% of the national budget. It is interesting to note, however, that a lot of countries are now shifting their focus to indirect tax. The primary reasons behind the global shift to indirect tax are discussed in an article released by Grant Thornton International (Grant Thornton) entitled “Rethinking Tax: The shift to indirect tax,” and I would like to share this article with you.