AN ACT INTRODUCING ADMINISTRATIVE TAX REFORMS, AMENDING SECTIONS 21, 22, 51, 56, 57, 58, 76, 77, 81, 90, 91, 103, 106, 108, 109, 110, 112, 113, 114, 115, 116, 117, 118, 119, 120, 128, 200, 204, 229, 235, 236, 237, 238, 241, 243, 245, 248, AND 169; AND REPEALING SECTION 34(K) OF THE NATIONAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

Nineteenth Congress
Second Regular Session

[ REPUBLIC ACT NO. 11976, January 05, 2024 ]

AN ACT INTRODUCING ADMINISTRATIVE TAX REFORMS, AMENDING SECTIONS 21, 22, 51, 56, 57, 58, 76, 77, 81, 90, 91, 103, 106, 108, 109, 110, 112, 113, 114, 115, 116, 117, 118, 119, 120, 128, 200, 204, 229, 235, 236, 237, 238, 241, 243, 245, 248, AND 169; AND REPEALING SECTION 34(K) OF THE NATIONAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Title. - This Act shall be known as the "Ease of Paying Taxes Act".

Section 2. Declaration of Policy. - It is hereby declared the policy of the State:

Section 3. Section 21 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 4. Section 22 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 5. Section 34(K) of the National Internal Revenue Code of 1997, as amended, is repealed, and the succeeding paragraph is renumbered accordingly.

Section 6. Section 51 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 7. Section 56 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 8. Section 57 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 9. Section 58 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 10. Section 76 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 11. Section 77 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 12. Section 81 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 13. Section 90 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 14. Section 91 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 15. Section 103 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 16. Section 106 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 17. Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 18. Section 109 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 19. Section 110 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 20. Section 112 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 21. Section 113 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 22. Section 114 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 23. Section 115 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 24. Section 116 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"Section 16. Tax on Persons Exempt from Value-Added Tax (VAT). - Any person whose sales are exempt under Section 109(CC) of this Code from the payment of value-added tax and who is not a VAT-registered person shall pay, either electronically or manually, a tax equivalent to three percent (3%) of his gross quarterly sales: Provided, That cooperatives shall be exempt from the three percent (3%) tax herein imposed: Provided, further, That effective July 1, 2020 until June 30, 2023, the rates shall be one percent (1%)."

Section 25. Section 117 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"Section 117. Percentage Tax on Domestic Carriers and Keepers of Garages. - Cars for rent or hire driven by the lessee; transportation contractors, including persons who transport passengers for hire, and other domestic carriers by land for the transport of passengers (except owners of bancas and owners of animal-drawn two-wheeled vehicle), and keepers of garages shall pay a tax equivalent to three (3%) of their quarterly gross sales.

The gross sales of common carriers derived from their incoming and outgoing freight shall not be subjected to the local taxes imposed under Republic Act No. 7160, otherwise known as the Local Government Code of 1991."

Section 26. Section 118 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 27. Section 119 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 28. Section 120 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 29. Section 128 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 30. Section 200 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 31. Section 204 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 32. Section 229 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 33. Section 235 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 34. Section 236 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 35. Section 237 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 36. Section 238 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 37. Section 241 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

"Section 241. Exhibition of Certificate of Payment at Place of Business. - The certificate or receipts showing payment of taxes issued to a person engaged in business shall be kept conspicuously exhibited in plain view in or at the place where the business is conducted; and in case of a peddler or other persons not having a fixed place of business shall be kept in the possession of the holder thereof, subject to production upon demand of any internal revenue officer."

Section 38. Section 242 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

"Section 242. Continuation of Business of Deceased Person. - When any individual who has registered a business dies, and the same business is continued by the person or persons interested in his estate, no additional payment shall be required for the residue of the term which the tax was paid: Provided, however, That the person or persons interested in the estate should, within thirty (30) days from the death of the decedent, submit to the Bureau of Internal Revenue or the Regional or Revenue District Office inventories of goods or stocks had at the time of such death.

The requirement under this Section shall also be applicable in the case of transfer of ownership or change of name of the business establishment."

Section 39. Section 243 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

"Section 243. Removal of Business to Other Location. - Any registered business may, subject to the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be removed and continued in any other place without the payment of additional tax during the term for which the payment was made."

Section 40. Section 245 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 41. Section 248 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

Section 42. Section 269(j) of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

"Section 269. violations Committed by Government Enforcement Officers. - Every official, agent, or employee of the Bureau of Internal Revenue or any other agency of the Government charged with the enforcement of the provisions of this Code, who is guilty of any of the offenses herein below specified shall, upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000) and suffer imprisonment of not less than ten (10) years but not more than fifteen (15) years and shall likewise suffer an additional penalty of perpetual disqualification to hold public office, to vote, and to participate in any public election:

x x x

(j) Deliberate failure to act on the application for refunds within the prescribed period provided under Section 112 and Section 204 of this Act.

x x x."

Section 43. Digitalization of Bureau of Internal Revenue Services. - In order to improve the performance and efficiency in the delivery of its services, the BIR shall adopt an integrated digitalization strategy providing automated end-to-end solutions for the benefit of taxpayers. For this purpose, the BIR shall:

Section 44. Ease of Paying Taxes and Digitalization Roadmap. - The BIR shall develop and Ease of Paying Taxes (EOPT) and digitalization roadmap that will provide for the programs and projects to be implemented to ensure ease of compliance of tax laws, rules and regulations, including but not limited to the adoption of simplified tax returns, streamlining of tax processes, reduction of tax or documentary requirements, and digitalization of BIR services as provided under Section 40 of this Act: Provided, That in developing this roadmap, the BIR shall prioritize taxpayers who are considered as micro and small taxpayers for purposes of this Act, in terms of streamlining tax procedures and documentary requirements according to taxpayer size and capacity to comply: Provided, further, That the BIR shall ensure the accessibility of its various services to different taxpayers particularly micro and small taxpayers so as to improve tax compliance, and enhance taxpayer convenience.

The BIR shall submit an annual report on the EOPT and the digitalization roadmap to the Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP) as provided under Section 290 of the NIRC, as amended.

Section 45. Special Concessions for Certain Taxpayers. - The following concessions shall be made available to micro and small taxpayers for purposes of this Act:

Section 46. Applicability of Data Privacy Principles. - The processing, recording, transmission and storage of all personal data under this Act shall be in accordance with Republic Act No. 10173, otherwise known as the "Data Privacy Act of 2012:, and other laws on disclosure of information to the public in adherence to the principles of transparency, legitimate purpose and proportionality.

Section 47. Implementing Rules and Regulations. - Within ninety (90) calendar days from the effectivity of this Act, the Secretary of Finance, after due consultation with the Bureau of Internal Revenue, and the private sector, shall promulgate the necessary rules and regulations for its effective implementation.

Section 48. Transitory Clause. - Taxpayers are hereby given six (6) months from the effectivity of the implementing revenue regulations to comply with the amendments to Title IV on the Value-Added Tax and Title V on the Other Percentage Taxes of the NIRC, as amended.

Section 49. Separability Clause. - If any provisions of this Act is declared unconstitutional, the remaining parts or provisions not affected thereby shall remain in full force and effect.

Section 50. Repealing Clause. - All laws, decrees, executive orders, implementing rules and regulations, issuances, or any part thereof inconsistent with the provisions of this Acts are deemed repealed, amended or modified accordingly.

Section 51. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the Official Gazette or in a newspaper of general circulation.

Approved,

This Act, which is a consolidation of House Bill No. 4125 and Senate Bill No. 2224, was passed by the House of Representatives and the Senate of the Philippines on September 27, 2023.

Approved: JAN 05 2024

FERDINAND ROMUALDEZ MARCOS JR.
President of the Philippines

"Section 21. Sources of Revenue and Classification of Taxpayers. -

"Section 22. Definitions. - When used in this Title:

"Section 51. Individual Returns. -

"Section 56. Payment and Assessment of Income Tax for Individuals and Corporations. -

(A) Payment of Tax. -

"Section 57. Withholding of Tax at Source. -

The Department of Finance shall review, at least once every three (3) years, regulations and processes for the withholding of creditable tax under this Code, and direct the Bureau of Internal Revenue to amend rules and regulations for the same, should it be found during the review that the existing rules, regulations, and processes for the withholding of creditable tax under this Code adversely and materially impact the taxpayer: Provided, That micro taxpayers shall not be required to withhold taxes under Subsection (b) of this Section."

"Section 58. Returns and Payment of Taxes Withheld at Source. -

"Section 76. Final Adjustment Return. - x x x

x x x

In case the corporation is entitled to a tax credit or refund of the excess income taxes paid during the year, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry over and apply the said excess income tax paid against the income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor: Provided, That in case the taxpayer cannot carry over the excess income tax credit due to dissolution or cessation of business, the taxpayer shall file an application for refunds of any unutilized excess income tax credit, and the Bureau of Internal Revenue shall decide on the application and refund the excess taxes within two (2) years from the date of the dissolution or cessation of business."

"Section 77. Place and Time of Filing and Payment of Quarterly Corporate Income Tax. -

"Section 81. Filing of Return and Payment of Taxes Withheld. - Except as the Commissioner otherwise permits, taxes deducted and withheld by the employer on wages of employees shall be covered by a return and paid, either electronically or manually, to any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider.

The return shall be filed and the payment made, either electronically or manually, within twenty-five (25) days from the close of each calendar quarter: Provided, however, That the Commissioner may, with the approval of the Secretary of Finance, require the employee to pay or deposit the taxes deducted and withheld at more frequent is deemed necessary to protect the interest of the Government.

The taxes deducted and withheld by employers shall be held in a special fund in trust for the Government until the same are paid to the said collecting officers."

"Section 90. Estate Tax Returns. -

x x x

(D) Place of Filing. - Except in cases where the Commissioner otherwise permits, the return required under Subsection (A) shall be filed, either electronically or manually, with any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider."

"Section 91. Payment of Tax. -

x x x."

"Section 103. Filing of Return and Payment of Tax. -

"Section 106. Value-Added Tax on Sale of Goods or Properties. -

(A) Rate and Base of Tax. - There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, a value-added tax equivalent to twelve percent (12%) of the gross sales of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor.

(1) x x x

For the purposes of this Section, the term 'gross sales' means the total amount of money or its equivalent value in money which the purchaser pays is is obligated to pay to the seller in consideration of the sale, barter or exchange of the goods or properties, excluding the value-added tax. The excise tax, if any, on such goods or properties shall form part of the gross sales.

(D) Sales Returns, Allowances and Sales Discounts. - The value of foods or properties sold and subsequently returned or for which allowances were granted by a VAT-registered person may be deducted from the gross sales for the quarter in which a refund is made or a credit memorandum or refund is issued. Sales discount granted and indicated in the invoice at the time of sale and the grant of which does not depend upon the happening of a future event may be excluded from the gross sales within the same quarter it was given.

(E) Authority of the Commissioner to Determine the Appropriate Tax Base. - The Commissioner shall, by rules and regulations prescribed by the Secretary of Finance, determine the appropriate tax base in cases where a transaction is deemed a sale, barter or exchange of goods or properties under Subsection (B) hereof, or where the gross sales is unreasonably lower than the actual market value."

"Section 108. Value-Added Tax on Sale of Services and Use or Lease of Properties. -

"Section 109. Exempt Transactions. -

The following transactions shall be exempt from the value-added tax:

x x x

(CC) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales do not exceed the amount the Three million pesos (P3,000,000): Provided, That the amount herein stated shall be adjusted to its present values using the consumer price index, as published by the Philippine Statistics Authority (PSA) every three (3) years."

"Section 110. Tax Credits. -

"Section 112. Refunds of Input Tax. -

x x x

"Section 113. Invoicing and Accounting Requirements for VAT-Registered Persons. -

x x x."

"Section 144. return and Payment of Value-Added Tax. -

(A) In General. - Every person liable to pay the value-added tax imposed under this Title shall file, either electronically or manually, a quarterly return of the amount of his gross sales within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer: Provided, however, That VAT-registered persons shall pay, either electronically or manually, the value-added tax on a monthly basis: Provided, finally, That beginning January 1, 2023, the filing and payment required under this Subsection shall be done within twenty-five (25) days following the close of each taxable quarter.

x x x

(B) Where to File the Return and Pay the Tax. - Except as the Commissioner otherwise permits, the return shall be filed with and the tax paid, either electronically or manually, to any authorized agent bank, Revenue District Office through Revenue Collection Officer, or authorized tax software provider.

x x x."

"Section 115. Power of the Commissioner to Suspend the Business Operations of a Taxpayer. - The Commissioner or his authorized representative is hereby empowered to suspend the business operations and temporarily close the business establishment of any person for any of the following violations:

"Section 118. Percentage Tax on International Carriers. -

"Section 119. Tax on Franchises. - Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchises on radio and/or television broadcasting companies whose annual gross sales of the preceding year do not exceed Ten million pesos (P10,000,000), subject to Section 236 of this Code, a tax of three percent (3%) and on gas and water utilities, a tax of two percent (2%) on the gross sales derived from the business covered by the law granting the franchise: Provided, however, That radio and television broadcasting companies referred to in this Section shall have an option to be registered as a value-added taxpayer and pay the tax due thereon: Provided, further, That once the option is exercised, said option shall be irrevocable.

x x x."

"Section 120. Tax on Overseas Dispatch, Message or Conversation Originating from the Philippines. -

"Section 128. Returns and Payment of Percentage of Tax. -

x x x

(B) Where to File. - Except as the Commissioner otherwise permits, every person liable to the percentage tax under this Title shall file, either electronically or manually, a consolidated return for all branches or places of business with any authorized agent bank, Revenue District Officer through Revenue Collection Officer, or authorized tax software provider."

"Section 200. Payment of Documentary Stamp Tax. -

x x x."

"Section 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. -

The Commissioner may -

x x x

A Tax Credit Certificate validly issued under the provisions of this Code may be applied against any internal revenue tax, excluding withholding taxes, for which the taxpayer is directly liable. Any request for conversion into refund of unutilized tax credits may be allowed, subject to the provisions of Section 230 of this Code: Provided, That the original copy of the Tax Credit Certificate showing a creditable balance is surrendered to the appropriate revenue officer for verification and cancellation: Provided, further, That in no case shall a tax refund be given resulting from availment of incentives granted pursuant to special laws for which no actual payment was made.

"Section 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be filed unless there is a full or partial denial of the claim for refund or credit by the Commissioner or there is a failure on the part of the Commissioner to act on the claim within the one hundred eighty (180)-day period under Section 204 of this Code: Provided, however, That the Commissioner may, even without a written claim therefor, refund, or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.

In case of full or partial denial of the claim for tax refund, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer effected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred eighty (180)-day period, appeal the decision with the Court of Tax Appeals."

"Section 235. Preservation of Books of Accounts and Other Accounting Records. - 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 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: Provided, That for income tax purpose, such examination and inspection shall be made only once in a taxable year, except in the following cases:

x x x."

"Section 236. Registration, Requirements. -

"Section 237. Issuance of Sales or Commercial Invoices. -

(A) issuance. - 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 Five hundred pesos (P500) 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: Provided, That the amount herein stated shall be adjusted to its present values every three (3) years using the consumer price index, as published by the Philippine Statistics Authority: Provided, further, That the seller shall issue sale or commercial invoices when the buyer so requires regardless of the amount of transaction: Provided, however, That 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, further, That the aggregate sales amount at the end of the day is at least Five hundred pesos (P500): Provided, finally, 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.

x x x."

"Section 238. Printing of Sales or Commercial Invoices. - All persons who are engaged in business shall secure free of charge from the Bureau of Internal Revenue an authority to print sales or commercial invoices before a printer can print the same.

No authority to print sales or commercial invoices shall be granted unless the invoices to be printed are serially numbered and shall show, among other things, the name, Taxpayer Identification Number and business address of the person or entity to use the same, and such other information that may be required by the rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner.

All persons who print sales or commercial invoices shall maintain a logbook/register of taxpayers who availed of their printing services. The logbook/register shall contain the following information:

"Section 245. Specific Provisions to be Contained in Rules and Regulations. - The rules and regulations of the Bureau of Internal Revenue shall, among other things, contain provisions specifying, prescribing or defining:

x x x

"Section 248. Civil Penalties. -