Since Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law took effect on Jan. 1, the implementation of certain provisions of the law has become an endless topic in various fora especially amongst taxpayers who are greatly affected. To ensure that the TRAIN will smoothly reach its destination, the Bureau of Internal Revenue (BIR) has been very proactive in addressing the concerns of bewildered taxpayers through public consultations, seminars, and various issuances. In fact, five revenue regulations (RRs) and a number of revenue memorandum circulars (RMCs) have been issued since January to implement certain provisions of this new law. This notwithstanding, taxpayers still find themselves in the dark in the absence of formal implementing rules and regulations, especially on income tax and value-added tax (VAT).
One of the recent and most common concerns raised by most taxpayers is the manner of carrying out the changes in filing of tax returns considering the new tax rates and modifications on the frequency of filing certain tax returns introduced under the TRAIN law. Although there were already issuances on the workaround procedures issued by the BIR, taxpayers still can’t help but feel anxious as the other provisions of the law remain unclear and lack sufficient guidance.
In response to this growing anticipation for additional and more detailed guidelines, the BIR began releasing tax advisories before the deadlines for filing and payment of the January tax returns. Surprisingly though, the contents of certain advisories are notably not consistent to some extent with those of the provisions under the TRAIN law. An example is the advisory issued on Jan. 31, which provides that the remittance of creditable and final taxes withheld shall be made on or before the 10th day following the month of withholding through BIR Form No. 0605 or payment form for the first two months of the quarter. The said advisory was further clarified in a subsequent issuance dated Feb. 6, stating that the remittance of taxes withheld on the 10th day following the month of withholding shall apply for manual or over-the-counter tax filers while, for those filing and paying via the electronic filing and payment system (EFPS), the due date for remittance is extended until the 15th day following the close of the taxable month. It can be noted, however, that one of the major changes introduced by the TRAIN law is the quarterly filing and remittance of creditable withholding taxes, which used to be filed and paid on a monthly basis. With the issuance of the said tax advisories, many taxpayers were confused since, in effect, the tax advisories only somewhat restored the old manner of remittance of creditable and final withholding taxes. The only difference is the use of a different form, i.e., payment form.
There are also concerns on whether those who do not have any withholding tax due payable for the month are still required to file a NIL monthly withholding tax return or the payment form. I believe they are not required, but since the advisories did not tackle the issue, then, taxpayers are at a loss on what should they do. In fact, a number of taxpayers are asking if it would be safe to assume that filing a NIL return is optional, since there were no explicit guidelines provided by the BIR regarding the matter. Further, since there are no penalty clauses included in the tax advisories, can the taxpayers remain placid that no open cases would result in case of non-filing of a NIL monthly withholding tax remittance return?
The BIR issued another tax advisory on Feb. 8 that tackles the guidelines on the quarterly filing and payment of percentage taxes pursuant to the TRAIN law. Previously, percentage tax returns are filed and paid on a monthly basis by certain taxpayers’ subject to percentage tax. However, it is worth noting that the advisory specifically mentioned only those taxpayers subject to percentage tax pursuant to Section 116 of the Tax Code (VAT-exempt taxpayers with annual revenues not exceeding P3,000,000) and those who will be subject thereto due to change of registration from VAT to Non-VAT. How about other percentage taxpayers, such as banks, who were also filing their percentage tax returns on a monthly basis prior to the TRAIN law? Should they also follow the guidelines set forth in the tax advisory, or should they stick to the old manner of filing their percentage tax returns?
Undoubtedly, the transition period to fully implement the changes under the TRAIN law have a long way to go. Hopefully, the present administration’s promise of a less complicated and more taxpayer-friendly administration of taxes will soon be felt by the taxpayers. I sincerely hope that the BIR will soon be able to release the appropriate revenue issuances that would comprehensively address all concerns and clarifications sought by the taxpayers.
Marvin K. Villarama is a senior of the Tax Advisory and Compliance of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.