Senator Win Gatchalian said that the administrative burden currently being experienced by micro-enterprises in paying taxes will be reduced by the enactment of the proposed Ease of Paying Taxes measure.
Under the proposed measure, micro-taxpayers shall not be required to withhold taxes ranging from 1% to 15% for purchase of goods and services subject to expanded withholding tax (EWT), a process they need to comply with each month for every transaction subject to EWT that they enter into, Gatchalian explained.
Aside from eliminating the requirement to withhold taxes, the proposed measure also provides for a reduction of penalties on micro and small enterprises. These include a reduced rate of 10% for civil penalties as opposed to 25% civil penalties for failure or neglect to file the correct tax returns and/or failure to pay the correct taxes or deficiencies; a 50% reduction on the interest rate in cases when there are deficiencies or delinquencies in the tax due; a reduced fine of P500 as penalty for failure to file certain information returns which originally amounts to Php1,000 for each failure; and a reduced compromise penalty rate of at least 50% for violations on invoicing requirements for VAT-registered persons, issuance of sales or commercial invoice, and printing of sales or commercial invoice.
“As it would eliminate the complexities associated with tax payments, we are confident that this measure will enhance tax compliance, leading to better tax collection and will encourage micro-businesses to register their respective businesses,” Gatchalian said.
Consequently, enlisting their businesses with the appropriate government agencies such as the Bureau of Internal Revenue (BIR) would enable these micro-enterprises to avail of loans from financial institutions and grow their businesses, he added.
“Sa oras na maisabatas na ito, inaasahang magiging mas madali para sa mga maliliit na negosyante na makapagbayad ng buwis. Tiwala rin tayong makakatulong ito para magkaroon ng mas maraming trabaho ang ating mga kababayan at mapalakas nang husto ang ekonomiya,” said Gatchalian, principal author of the measure and chairperson of the Senate Committee on Ways and Means. A reconciled version of the proposed Ease of Paying Taxes Act was recently ratified by the Senate, putting the measure an inch away from getting enacted into law.