November 23rd, 2022
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) told members of the American Chamber of Commerce in the Philippines (AmCham) that the Ease of Paying Taxes Bill (House Bill No. 4125) will reduce room for arbitrary visits and audits by officials of the Bureau of Internal Revenue among small businesses and foreign investors.
Salceda was the keynote speaker for the meeting of the chamber’s Legislative Committee meeting.
“The Ease of Paying Taxes act institutionalizes the risk-based audit system. That means audit will focus on taxpayers who are likeliest to evade tax in large quantities.”
Salceda cited the World Bank Enterprise Survey which shows that foreign investors and small businesses get visited by tax officials more often than large domestic businesses.
This, Salceda says, increases the risk of corruption and arbitrary enforcement of tax laws.
“More face time with tax officials makes the country riskier as an investment destination.”
“90% of tax revenues come from medium to large businesses. So proportional attention should be given to tax collection in their segments.”
“We should focus on what matters. Most of the time, auditing small businesses isn’t worth it.”
Salceda explained that under current BIR rules, tax authorities operate under the assumption that all taxpayers are subject to audit.
Salceda adds that the risk-based system is especially more relevant now that the DOF has lifted the suspension of field audit operations.
“We also have just around 13,000 employees in the BIR. Even assuming everyone can audit, that’s 2000 taxpayers per BIR employee. No way is trying to catch the small at the expense of time for big audits worth it.”
Under the Ease of Paying Taxes Act, smaller taxpayers will also have fewer forms to file and their own separate taxpayer service.
The bill also institutionalizes the taxpayer bill of rights and the taxpayer advocate office, among other provisions.
The AmCham identified the bill as its highest priority near the end of the Duterte administration and has since reiterated support for its passage during the Marcos administration.