BIR urged to simplify tax system

Sen. Juan Edgardo “Sonny” Angara is calling on the Bureau of Internal Revenue (BIR) to simplify the current tax system to encourage more Filipinos, especially self-employed individuals, to pay their taxes.

Angara said the existing tax payment scheme is complicated making it difficult for small entrepreneurs to catch up with multi-billion corporations.

Sen. Juan Edgardo “Sonny” Angara

“It’s already proven that a complicated tax system does not work in our country,” said Angara, who chairs the Senate Committee on Ways and Means.

He said that BIR’s nationwide public information campaign on the basic steps to comply with the payment of correct taxes is not enough.

“It is commendable but this might not be enough. What we need to do is to incentivize our taxpayers, especially the informal sector. We should make it easy for them to comply for us to be able to widen our tax base,” Angara said.

He noted that currently the BIR operates on a “one-size-fits-all type” of tax system covering small companies and entrepreneurs and multi-billion corporations.

“Currently, we have a one-size-fits-all type of tax system. Meaning, those business tycoons who own multi-billion corporations have the same requirements as small owners of sari-sari stores or sidewalk vendors,” he said.

“But in reality, these small entrepreneurs really can’t afford to hire accountants and lawyers to do their financial statements,” he said.

He noted that taxpayers have to fill out many types of forms when they line up to pay their taxes. This can pose problems for ordinary individuals who may resort to tapping fixers to expedite their registration.

“That is where corruption, fixing and bribery start,” he said, reiterating the need to make the requirements simple particularly to the informal sector.

BIR registration and documentary requirements include birth certificate, mayor’s permit, Department of Trade and Industry (DTI) certificate of business name, Professional Regulation Commission (PRC) ID, and payment of professional tax receipt.

Taxpayers must also pay a registration fee of P500 annually, apply for invoices, and register their books of accounts.

A tax return should then be filed monthly for percentage tax, quarterly and annually for income tax, and monthly and quarterly for value added tax, even when there is no payment to be made.

Angara suggested that the BIR impose a one-time payment—a flat fee of P100 per year—to the national and local government for small entrepreneurs and informal economy workers in lieu of all taxes due in a year.

“We already requested from BIR their time and motion studies so we can look into how long it takes for a taxpayer to file, register and pay their taxes, and see how we can simplify and shorten the process,” Angara said.

source:  Manila Bulletin