Tax authorities and firms are now anticipating a more accessible and convenient mode of filing and payment of taxes in the new normal. This comes on the heels of an announcement made by the Bureau of Internal Revenue (BIR) that it is planning to offer 24/7 online tax services in a bid to ramp up its digital transformation initiatives.
When it comes to filing taxes, the government has long since strictly adhered to traditional “handbook processes.” It has become the norm that during the regulatory filing season in every government agency, particularly in the BIR, taxpayers will spend long hours in line to process tax compliance requirements. With the influx of taxpayers beating the deadlines for filing taxes, at times the manual filing system backs up; as a consequence, taxpayers incur additional costs.
Today, the need to harness the power of digital finance during the new normal ushered by the COVID-19 pandemic is increasingly being recognized. Various government agencies have embraced online payments, a development that has helped boost public confidence in digital financial services.
The digitalization of services has become more relevant following the pandemic. Video conferences, teleconsultations with doctors, remote workstations and online distance learning, to name a few, have become crucial for a large percentage of the population after the imposition of lockdowns and quarantine restrictions. Digital finance services are now more essential in facilitating transactions and processes. They enable people to pay for goods and services with more ease, to receive compensation for their work, to access social-assistance payments, and to secure financial support like bank loans for their distressed businesses, and now, to file and pay their taxes.
The digitalization of services is not a recent development. It has been in the BIR’s pipeline since 2019, as the agency recognized the need to adapt to and take advantage of the fast-evolving digital economy. It drafted a digital transformation road map (DX road map) that will streamline the tax filing and collection as part of initiatives to help boost public transactions by 2030. The DX road map details how the “reengineering” project referred to under BIR Strategy 2019-2023 can be effectively implemented. It likewise incorporates the tools necessary to maximize the BIR’s resources and extract maximum value from them.
In addition, the BIR has issued Revenue Memorandum Order (RMO) No. 27-2020 which enumerates the programs, outcomes, and corresponding timelines that the BIR will follow in carrying out its mission to improve its services in funding the national government’s programs and initiatives. The RMO is anchored on three principles: (i) adopting a people-first approach; (ii) instituting a process-driven perspective; and (iii) embracing digital technology. The BIR’s Digital Transformation scheme is in response to the directive of Carlos G. Dominguez III, secretary of Finance, for the BIR to sustain its efforts towards fully modernizing current tax administration processes. This is consistent with the objectives of the comprehensive tax reform program, particularly that of making tax compliance easier by aligning it with Republic Act (RA) No. 11032, otherwise known as “An Act Promoting Ease of Doing Business and Efficient Delivery of Government Services.”
During a recent presentation, BIR Deputy Commissioner Lanee S. Cui-David said that the aim of the BIR by 2030 is to help the agency become a “digitally transformed institution, providing convenient, reliable, and transparent services to taxpayers, resulting in more resources to provide comfortable and secure lives for Filipinos.”
To accelerate the digital transformation, Mr. Dominguez said during the signing ceremony for the United States Trade and Development Agency’s (USTDA) $809,450 grant to the BIR that 85% or P1.66 trillion of the total collections of the BIR in 2020 went through electronic channels. Meanwhile, almost 100% of the tax returns filed last year were done online. He added that online tax payments were “projected to dramatically increase in the coming years as the BIR accelerates its digital transformation.”
In 2022-2023, the BIR intends to implement an “Anytime, Anywhere Taxpayer Service” offering 24/7 online tax services through mobile applications. It will thus develop a BIR Mobile to process, streamline, and standardize taxpayer services, including registration, filing, and payment of taxes. As digitalization continues to be the priority of the BIR, taxpayers can expect to experience a more convenient, accessible, and faster registration and filing of returns, as well as a service-oriented BIR.
The proposed taxpayer service is expected to provide hassle-free and seamless tax administration through the adoption of a state-of-the-art system for data management. According to Mr. Dominguez, the BIR also seeks to be at the forefront of applying new technologies to achieve improved revenue performance.
The general principles of taxation tell us that “administrative feasibility” is one of the characteristics of a sound tax system. They provide that tax laws should be drafted with an intent to provide convenient, effective, and just administration of taxes. These laws must not be unduly burdensome and must help cultivate an improved climate for doing business. Administrative feasibility assures us that the tax system should be as simple as possible. It must be clear, concise, and capable of enforcement by an adequate and well-trained staff of public office. On top of these, this system must be convenient, both as to time spent and the manner of how taxes are assessed, collected, and complied with. The move towards digitalization will surely ease the tax administration and benefit, not only the government, but more importantly, taxpayers.
Leula Dianne G. Cantos is an Associate of the Tax Advisory and Compliance Division of P&A Grant Thornton.