There is an enduring yet relevant saying that echoes across generations, that in life there are but only two certainties – Death and Taxes. This saying becomes even more emphasized for Filipino taxpayers as the tax filing season for many usually coincides with the time most Filipinos commemorate the death of Jesus Christ. And as most of us begin to zone into meditative mode in preparation for Holy Week, we cannot help but contemplate the significance as well that payment of taxes plays in any civilized society. In fact, Jesus himself recognized the significance of taxes when he poignantly said, “render unto Caesar that which is Caesar’s”.
As we are nearing the April 17 income tax return filing deadline, what we do in the following days could very well spell either penance or salvation as it relates to our tax obligations.
Just as there are seven last words on the cross, perhaps we could have seven last-minute reminders that taxpayers should consider this tax filing season.
1. Don’t wait for the very last day.
For taxpayers following the calendar-year accounting period, April 17, 2023, is the last day for filing of annual income tax return (AITR). In relation, taxpayers should likewise remember that April 6, 7, and 10 are declared regular holidays, which means that government offices, including the Bureau of Internal Revenue (BIR), and banking institutions are expected to be closed. Thereabouts, from the time this article is published, there would only be 16 working days left to prepare for the tax filing and payment requirements.
Mindful of the above dates, it would be prudent for taxpayers to remember that they need not wait for the very last day to meet their tax obligations. Doing so would help avoid any unforeseeable contingencies.
2. Be familiar with the different electronic filing systems.
Taxpayers, especially those that will be doing this for the first time, should be familiar with the different systems that the BIR has made available to utilize. It is worthy to note that to keep up with the changing times, the BIR has been making significant efforts to digitalize the processes for the filing and payment of taxes, moving toward a paperless approach.
The eFPS (Electronic Filing and Payment System) applies to taxpayers such as large taxpayers, Taxpayer Account Management Program (TAMP), Importers/Custom Brokers, Taxpayers with fiscal incentives, top 5,000 individuals, corporations with paid-up capital stock of 10 million and above, and those with a complete computerized system, among others.
Meanwhile, the use of e-BIRForms is applicable to taxpayers such as the top withholding agents, accredited tax agents/practitioners and all their client-taxpayers, accredited printers of principal and supplemental receipts/invoices, those who shall file a “No Payment Return”, among others.
For the relevant rules on eFPS and eBIRForms, taxpayers may check on the BIR issuances such as RMO No. 1-2017, RMC No. 4-2021, and RMC No. 32-2023.
For those who do not qualify under the electronic filing system, the old-fashioned manual filing will apply.
3. Know where to pay.
It is noteworthy that just quite recently, the BIR, (RMC 32-2023) has begun to allow taxpayers filing manually and through the eBIRForms facility to pay to any authorized banks and RDOs regardless of where they may be located. This means the taxpayers can now choose the most convenient authorized banks or RDOs to make their payments for the Annual ITR for calendar year 2022. The complete list of authorized banks and payment channels are posted on the BIR website.
4. Different manner of paying tax
For eFPS filers, except for those who would not be able to do the eFPS filing due to the unavailability of the BIR Forms in the eFPS, their option is limited to funding the bank account linked to their enrolled eFPS accounts. A common pitfall for eFPS filers is forgetting to fund the correct bank account linked to their eFPS. This surprisingly happens quite commonly as businesses tend to maintain multiple bank accounts. This should not be overlooked as even a day late funding is considered a nonpayment of tax dues, which would subject the filer to surcharges.
For those that do not use the eFPS mode of payment, the BIR has made available payments via online payment gateways such as Gcash, credit card or debit card payment, and other payment facilities, in addition to the payment to authorized agent banks.
Furthermore, Revenue Collections Officers (RCO) are allowed to receive cash payments, but only up to 20,000 pesos. If the taxpayers need to pay more than 20,000 pesos through the RCO, they would need to do so by cheque.
5. Be aware of the applicable Income Tax Rates.
In preparing the AITR and in computing the related tax dues, taxpayers are reminded to use the correct income tax rates. The corporate income tax rates could be 25% or 20% depending on net taxable income and total assets; while for individual taxpayers, the applicable income tax rate is from 0% to 35%. For those subject to the Minimum Corporate Income Tax (MCIT), the CREATE Act has reduced the tax rate from 2% to 1%. Under the same Act, proprietary educational institutions and hospitals are now subject to preferential rate of 1% from its original 10%. It should be noted, however, that the new MCIT and special corporate tax rates are made applicable only until June 30, 2023; and the original tax rates will revert to their previous rates thereafter.
6. Do not forget the AITR attachments.
The obligations of the taxpayers include the filing of attachments to the AITR, such as the audited financial statements and statement of management responsibility, among others.
For the manual filers, the attachments should be submitted at the time of filing of the AITR to the AAB or RCO under the jurisdiction of the Revenue District Office where the taxpayer is registered. For eBIRForms and eFPS filers, the submission should be made within fifteen days from the date of the tax filing deadline.
7. Watch out for other contingencies.
There are other considerations that taxpayers should also take notice of, even though these are not specifically covered in the BIR-issued guidelines about the AITR. For one, those that use the e-BIRForm facility should be mindful of the system requirements for the use thereof. It would interest the taxpayers to learn that, as of this writing, the eBIRForm software does not work in MacOS computers. In the same eBIRForm software, there are known system errors for which users have devised temporary walk-around solutions.
Another example is that, when it comes to dealing with the authorized banks and other payment facilities, taxpayers should take into consideration the relevant advisories as they relate to hours of operations and system downtimes, among others.
There are many other issues that may arise that could impact the taxpayers’ ability to meet their tax obligations this tax filing season. Needless, to say, the taxpayers should remain vigilant of these issues and should keep themselves abreast of the tax issuances that would affect their AITR filing this season.
For the taxpayer, the tax season may seem a cross to bear. However, there is no escaping it. It is an inevitable journey that a taxpayer must go through. Equipped with good intentions and proper guidance, this cross begins to become lighter and the road to salvation becomes more bearable.
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.
As published in BusinessWorld, dated 21 March 2023