Time flies fast. Counting down to 2022, with less than 60 days left, taxpayers and employers need to gear up for their year-end adjustments or tie up loose ends before the year closes. They should stay well-informed of the latest tax and inter-agency updates, a few of which are summarized below.
SUSPENDED HIKES ON MEMBER CONTRIBUTIONS
To manage the pandemic’s impact, PhilHealth suspended the proposed hike in members’ contributions early this year. In its official statement in January, the agency announced that premiums for 2021 will be collected using the contribution rate of 3% instead of 3.5%, with the ceiling of P60,000 on basic monthly salary remaining instead of the previously proposed P70,000 maximum.
The Home Development Mutual Fund or Pag-IBIG likewise postponed the increase in monthly contributions by its members. Consequently, the planned contribution increase of P150 from P100 for 2021 was deferred to January 2022.
While these postponements should alleviate the current financial apprehensions of members, the government may need to consider suspending the hikes further with the economic recovery still underway.
RELIEF FOR WORKING ALIENS AND NON-RESIDENT TAXPAYERS
With the lifting of travel restrictions, the Department of Labor and Employment issued Labor Advisory 16-2021 in August setting the guidelines for the issuance of Alien Employment Permits (AEP) or Certificates of Exemption/Exclusion (CoE) for foreign nationals intending to come to the Philippines for long-term employment. In annualizing income taxes, employers of 9(g) visa workers must note that foreign nationals remain taxable in the country even if they were unable to return to the Philippines during the lockdown, provided they remained on active secondment/employment in the Philippines. This is aligned with the special tax rules under RMC 83-2020.
Still, non-resident foreign income earners can avail of tax treaty benefits on all income derived from Philippine sources, provided they are entitled to relief from double taxation under relevant tax treaty provisions. The procedures for claiming treaty benefits have been updated by Revenue Memorandum Order 14-2021. To avoid the denial of treaty benefit claims, the Bureau of Internal Revenue (BIR) in Revenue Memorandum Circular (RMC) 77-2021 stressed the importance of submitting the required documents.
GUIDELINES FOR INDIVIDUAL TAXPAYERS
Generally, taxpayers must individually file an annual income tax return (ITR) unless exempted under existing rules (e.g., employees qualified under substituted filing).
Under RMC 4-2021, the filing of ITRs is either through electronic or manual mode. Since most taxpayers are required to file their ITRs electronically, they may use the eFPS or the eBIRForms software (latest version 7.9.2 under RMC 111-2021). Although the eFPS is a digital option for filing, certain taxpayers enumerated in the Circulars (e.g., those who are filing “No Payment Returns”) are explicitly required to use eBIRForms only.
Likewise, taxpayers may electronically pay for the corresponding taxes due through the following BIR accredited payment channels: (1) Development Bank of the Philippines (DBP) Tax Online; (2) Land Bank of the Philippines (LBP) Link.BizPortal; (3) Union Bank Online Web and Mobile Payment Facility; (4) Mobile Payment (GCash/PayMaya); or (5) I-Pay MYEG Philippines, Inc. (IPMP) Online Payment Facility.
As a word of caution, taxpayers who must file electronically but file and pay manually are liable for penalties for Wrong Venue filing; hence, strict adherence to regulations and issuances is critical to avoid penalties.
Furthermore, taxpayers covered by Section 116 of the Tax Code (e.g., persons whose sales or receipts are exempt from VAT) should take note of RMC 67-2021, which clarified the temporary reduction of percentage tax from 3% to 1% effective July 1, 2020 until June 30, 2023, consistent with the CREATE Act (RA No. 11534). As for filing, RMC 65-2021 prescribes the quarterly percentage tax returns filing deadline on or before Jan. 25, 2022 for the fourth quarter of the tax year 2021.
Finally, RMC 97-2021 reminds social media influencers of their tax obligations to avoid criminal liability for tax evasion and civil penalties.
DEVELOPMENTS IN TAXATION
With digitization, the Bureau is implementing convenient ways to address the needs of taxpayers, such as the following:
1. Online tax payments through various BIR-accredited electronic payment channels;
2. Submission of soft copies of BIR Form Nos. 2307 and 2316 in lieu of the hard copies through the selected modes or submission facilities of the BIR;
3. Permissible e-signature usage for certain BIR Forms;
4. Online TIN verification through the BIR Mobile TIN Verifier App;
5. Dissemination of tax awareness/educational videos;
6. Availability of Chatbot REVIE to assist taxpayers with their general inquiries; and
7. Online booking of Bureau appointments through the BIR’s eAppointment System.
Undeniably, the BIR’s digital platforms and electronic facilities still face technical difficulties. While taxpayers appreciate the advances, administrative feasibility remains a challenge. Thus, the government may need to assess the country’s overall infrastructure and endeavor to elevate its capabilities in managing the evolving market demand, especially now with limited movement and interactions. Consider, too, that an enhanced tax compliance process would boost tax revenue and ultimately revive economic growth.
A final bit of advice: taxpayers should strive to upgrade their tax knowledge and stay primed with tax updates to minimize mistakes. Considering the ever-changing tax rules, it is advisable to verify from time to time if there are newly released issuances, advisories, and regulations, which may supersede these updates. Moreover, to steer clear of potential issues with the BIR, taxpayers are urged to seek advice from the Bureau or tax consultants/specialists.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Rorie Miyshiel L. Bonus is a senior consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
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