On 5 January 2024, Republic Act No. 11976, also known as the Ease of Paying Taxes Act, was signed into law by President Ferdinand R. Marcos Jr.

RA 11976 introduced significant amendments to the National Internal Revenue Code of 1997, which are intended: (a) to modernize and improve tax administration and collection by providing mechanisms that encourage easy compliance at the least cost and expense; (b) to protect and safeguard taxpayer rights and welfare; and (c) to update the tax system and adopt best practices.

The law takes effect 15 days after its publication in the Official Gazette or a newspaper of general circulation.

But before we discuss the amendments that were made to encourage and render it easier for people to comply with their obligation to pay taxes while reiterating the responsibility of the Bureau of Internal Revenue (BIR) officials to be faithful to their work, it is worth early noting that the law has considered the interest of the government as well.

RA 11976 has introduced the file-and-pay-anywhere mechanism. Taxes may now be paid electronically or manually when the return is filed. This is true not only for income taxes but other taxes, such as estate taxes, donor’s taxes, value-added taxes, and percentage taxes.

The new law has also made the electronic payment avenue available to first-time registered taxpayers and amendments to their registration. These amendments may be conveniently done by simply filling out and filing a registration information update form.

There are also upgrades regarding the withholding of taxes. The withholding of applicable income taxes shall no longer be a requirement for the deductibility of expenses for computing income taxes. Instead, the obligation to deduct and withhold tax shall arise when the income has become payable.

This addresses the timing issue of withholding taxes and amends the former rule prescribed by BIR regulations that taxes should be withheld when they are paid, payable, or accrued, whichever comes first.

And let us not forget the administration’s disposition, which supports our modern-day heroes, our Overseas Filipino Workers. The law explicitly states that overseas Filipino workers or OFWs, defined under the Department of Migrant Workers Act, are no longer required to file an income tax return.

Individuals who are business-minded or wish to engage in business were also taken into account by the law. All persons engaged in business can now secure, free of charge from the BIR, the authority to print sales or commercial invoices before a printer can print the same.

Claims for credits or refunds were also considered. BIR officials are given 180 days to act on claims for refund of erroneous or illegal tax collections. The officials’ failure to rule on the claims within the 180-day period shall be punishable under the law. 

The government’s interests were still considered for all the amendments introduced to simplify and encourage tax compliance by the general public. Books shall be preserved for five years reckoned from the day following the deadline for filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year. This used to be three years, but the new law now mandates a longer period.

It is clear the new law was designed to benefit us taxpayers, especially the small ones. However, what needs to be apparent is that this streamlining of tax payments will also encourage big foreign businesses to invest in the Philippines. Let us all then do our part to disseminate information about this law to ensure every taxpayer can benefit from it.