Senator Sherwin Gatchalian said it would be much easier for small businesses to pay taxes once Senate Bill 2224 or the Ease of Paying Taxes measure is passed into law.
Under the proposed measure, micro-taxpayers will not be required to withhold taxes ranging from 1 percent to 15 percent for purchase of goods and services subject to expanded withholding tax (EWT), a process businesses need to comply with each month for every transaction subject to EWT that they enter into, Gatchalian explained.
Gatchalian, principal author of the measure and chairperson of the Senate Ways and Means Committee, also said he is confident this would help create more jobs and boost the country’s economy.”
“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,” he said.
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 percent for civil penalties as opposed to 25 percent civil penalties for failure or neglect to file the correct tax returns and/or failure to pay the correct taxes or deficiencies.
This also includes a 50 percent reduction on the interest rate in cases when there are deficiencies or delinquencies in the tax due; a reduced fine of P500 as a penalty for failure to file certain information returns which originally amounts to P1,000 for each failure; and a reduced compromise penalty rate of at least 50 percent 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.