Republic Act No. 11976, also known as "Ease of Paying Taxes Act"

President Ferdinand R. Marcos Jr. signed into law last January 5, 2024 Republic Act No. 11976, also known as “Ease of Paying Taxes Act”.

The law amends certain provisions of the Tax Code and aims to increase the efficiency and effectiveness of tax administration, and strengthen taxpayer rights.

Among the salient Sections are as follows:

SECTIONS

GUIDELINES

SECTION 3.
Sources of Revenue and Classification of Taxpayers

For the purposes of responsive tax administration, taxpayers shall be classified as follows:

Micro — Gross Sales of less than 3 million
Small — Gross Sales of 3 million to less than 20 million
Medium — Gross Sales of 20 million to less than 1 billion
Large — Gross Sales of 1 billion and above

SECTION 9.
Returns and Payment of Taxes Withheld at Source

The obligation to deduct and withhold the tax arises at the time the income becomes payable.

SECTION 19.
Tax Credits

VAT refund claims shall be classified into low, medium, and high-risk claims, with the risk classification based on the amount of refund claim, tax compliance history, frequency of filing VAT refund claims, among others.

SECTION 20.
Refunds of Input Tax

Any input tax evidenced by a VAT invoice issued in accordance with Section 113 shall be creditable against output.

A seller of goods or services may deduct the output VAT pertaining to uncollected receivables from its output VAT on the next quarter, after the lapse of the agreed upon period to pay.

In case of recovery of uncollected receivables, the output VAT pertaining thereto shall be added to the output VA of the taxpayer during the period of recovery.

SECTION 31.
Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes

The Commissioner shall decide on a claim for refund of erroneously received taxes within 180 days from the date of submission of complete documents. If denied, the legal basis should be stated.

SECTION 33.
Preservation of Books of Accounts

All the books of accounts, including the subsidiary books and other accounting records of corporations, partnerships, or persons, shall be preserved by them for a period of five (5) years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year when the last entry was made in the books of accounts.

The said books and records shall be subject to examination and inspection by internal revenue officers.

SECTION 34.
Registration Requirements

The annual registration fee of P500 is removed.

SECTION 35.
Issuance of Sales or Commercial Invoices

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 500 or more, issue duly registered sale or commercial invoices, showing the name, Taxpayer Identification Number, date of transaction, quantity, unit cost and description of merchandise or nature of service.

The amount stated shall be adjusted to its present values every three (3) years using the consumer price index, as published by the Philippine Statistics Authority;
The seller shall issue sale or commercial invoices when the buyer so requires regardless of the amount of transaction;
If the sales amount per transaction is below the threshold, the seller will issue one (1) invoice for the aggregate sales amount for such sales at the end of the day, Provided, that the aggregate sales amount at the end of the day is at least P500;
That VAT-registered persons shall issue duly registered sale or commercial invoices regardless of the amount of the sale and transfer of merchandise or for services rendered.

SECTION 36.
Printing of Sales or Commercial Invoices

All persons who are engaged in business shall secure free of charge from the BIR an authority to print sales or commercial invoices before a printer can print the same.

Business style is not required on invoices.

SECTION 40.
Specific Provisions to be Contained in Rules and Regulations

Taxes shall be paid either electronically or manually, through the collection officers of the BIR or through duly authorized agent banks (AAB).

The Commissioner, may, by rules and regulations, require that the tax returns, papers, statements and taxes of large taxpayers be filed and paid respectively, through any AAB or with any RDO through RCO or authorized tax software providers.

SECTION 45.
Special Concessions for Certain Taxpayers

The following concessions shall be made available to micro and small taxpayers:

The ITR shall consist of a maximum of two (2) pages in paper form or electronic form;
A reduced rate of 10% for civil penalties;
A 50% reduction on the interest rate;
A reduced P500 penalty for failure to file certain information return; and
A reduced compromise penalty rate of at least 50% for violations of Section 113, 237, and 238 of the NIRC, as amended.