In life there are only two certainties — Death and Taxes. Keep this in mind as the tax filing season approaches. By some coincidence, filing season takes place at roughly the time of year when we celebrate Easter. And with most of us going into meditative mode in preparation for Holy Week, we cannot help but contemplate the significance as well that payment of taxes plays in any civilized society. In fact, Jesus himself recognized the significance of taxes when ordered his followers to “render unto Caesar that which is Caesar’s.”
As the April 17 deadline approaches, what we do in the following days could very well spell either penance or salvation as it relates to our tax obligations.
Here are seven last-minute reminders that taxpayers should consider this tax filing season.
1. Don’t wait until the very last day.
For taxpayers following the calendar-year accounting period, April 17, 2023, is the last day for filing of annual income tax return (AITR). In relation, taxpayers should likewise remember that April 6, 7, and 10 are regular holidays, which means that government offices, including the Bureau of Internal Revenue (BIR), and banking institutions, are expected to be closed. Thus, from the time this article is published, there will only be 16 working days left to prepare for the tax filing and payment requirements.
It would be prudent for taxpayers to remember that they need not wait for the very last day to meet their tax obligations. Doing so would help avoid any unforeseeable contingencies.
2. Be familiar with the various electronic filing systems.
Taxpayers, especially those that will be doing this for the first time, should be familiar with the various systems that the BIR has made available. It is worth noting that to keep up with the changing times, the BIR has been exerting significant effort to digitalize the process for filing and paying taxes, moving toward a paperless approach.
The eFPS (Electronic Filing and Payment System) applies to large taxpayers, those under the purview of the Taxpayer Account Management Program (TAMP), Importers and Customs Brokers, Taxpayers enjoying fiscal incentives, the top 5,000 individuals, corporations with paid-up capital stock of P10 million and above, and those with completely computerized accounting systems, among others.
Meanwhile, the use of e-BIRForms is applicable to taxpayers such as the top withholding agents, accredited tax agents/practitioners and all their client-taxpayers, accredited printers of principal and supplemental receipts/invoices, and those filing on a “No Payment Return” basis, among others.
For the rules on eFPS and eBIRForms, taxpayers may check on the BIR issuances such as RMO No. 1-2017, RMC No. 4-2021, and RMC No. 32-2023.
For those who do not qualify for use of electronic filing systems, manual filing will apply.
3. Know where to pay.
Recently, the BIR, via RMC 32-2023, has started to allow taxpayers filing manually and through the eBIRForms facility to pay to any authorized bank and RDO regardless of where they may be located. This means the taxpayers can now choose the most convenient authorized bank or RDOs to make their payments for the Annual ITR for the 2022 calendar year. The complete list of authorized banks and payment channels are posted on the BIR website.
4. Different ways of paying tax.
For eFPS filers, except for those who cannot do eFPS filing due to the unavailability of the BIR Forms in the eFPS, their options are limited to funding the bank account linked to their enrolled eFPS accounts. A common pitfall for eFPS filers is forgetting to fund the correct bank account linked to their eFPS. This surprisingly happens often as businesses tend to maintain multiple bank accounts. This should not be overlooked as even a day’s delay in funding is considered nonpayment of tax dues, subjecting the filer to surcharges.
For those that do not use the eFPS mode of payment, the BIR accepts GCash, credit card or debit card payments, and other payment facilities, in addition to payments to authorized agent banks.
Furthermore, Revenue Collections Officers (RCO) are allowed to receive cash payments, but only up to P20,000. If the taxpayers need to pay more than P20,000 through the RCO, they would need to do so by cheque.
5. Be aware of the applicable Income Tax Rates.
In preparing the AITR and in computing the related tax due, taxpayers are reminded to use the correct income tax rates. The corporate income tax rate could be 25% or 20% depending on net taxable income and total assets; for individual taxpayers, the applicable income tax rate is between 0% and 35%. For those subject to the Minimum Corporate Income Tax (MCIT), the CREATE Act has reduced the tax rate from 2% to 1%. Under the same Act, proprietary educational institutions and hospitals are now subject to the preferential rate of 1% from the original 10%. It should be noted, however, that the new MCIT and special corporate tax rates are applicable only until June 30, 2023; and the original tax rates will revert to their previous levels thereafter.
6. Do not forget the AITR attachments.
The obligations of the taxpayers include the filing of attachments to the AITR, such as the audited financial statements and statement of management responsibility, among others.
For manual filers, the attachments should be submitted at the time of filing of the AITR to the AAB or RCO under the jurisdiction of the Revenue District Office where the taxpayer is registered. For eBIRForms and eFPS filers, the submission should be made within 15 days from the date of the tax filing deadline.
7. Watch out for other contingencies.
There are other considerations that taxpayers should also take notice of, even though these are not specifically covered in the BIR-issued guidelines about the AITR. For one, those that use the e-BIRForm facility should be mindful of the system requirements for the use thereof. As of this writing, the eBIRForm software does not work on MacOS computers. In the same eBIRForm software, there are known system errors for which users have devised temporary work-around solutions.
Another example is that, when it comes to dealing with authorized banks and other payment facilities, taxpayers should take into consideration the relevant advisories as they relate to hours of operation and system downtime, among others.
Many other issues may arise that could impact the taxpayers’ ability to meet their tax obligations this filing season. Needless, to say, the taxpayers should remain vigilant and keep abreast of the tax issuances that could affect their AITR filing this season.
For the taxpayer, the tax season may seem like a cross to bear. However, there is no escaping it. It is an inevitable journey that a taxpayer must go through. Equipped with good intentions and proper guidance, this cross begins to become lighter and the road to salvation becomes more bearable.
Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
Yben R. Rogero is a manager from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.
