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The Bureau of Internal Revenue (BIR) recently celebrated its 115th Anniversary, and with it comes the time to recognize its performance. While the general perception of corruption remains, it is important not to forget the BIR’s active efforts. Praise what is right and criticize what is wrong.
In planning to start a business, deciding between a corporation and a sole proprietorship is one of the first considerations. The differences used to be clear-cut -- corporations for large businesses, sole proprietorships for smaller ones. For the most part, that remains true.
April 15 is the deadline for the most important type of tax payment -- the annual filing of income tax returns (ITRs). Almost all registered taxpayers are required to pay this tax, with only a few exceptions. For the government, the income tax is where the bulk of the Bureau of Internal Revenue’s (BIR) collections come from.
Low tax rates can mean high revenue collections if implemented and administrated correctly. But to do that, the taxes first need to actually be collected. Based on the BIR’s 2017 Annual Report, most of the tax collections for individuals came from withholding taxes on wages. Of the P390.85 billion collected from individuals, P317.74 billion came from the withholding tax on compensation income earners.
The Comprehensive Tax Reform Program seeks to implement a fairer, simpler, and more efficient tax system. Toward this end, it has implemented relatively lower tax rates under Tax Reform for Acceleration and Inclusion (TRAIN) Law and also targeting to lower tax on corporate income under Tax Reform for Attracting Better And High-quality Opportunities (TRABAHO). Unfortunately, this comes at the cost of increasing other tax rates.
PACKAGE 2 of the Tax Reform for Acceleration and Inclusion (TRAIN) has been met with protests, especially from the Philippine Economic Zone Authority (PEZA) and the Board of Investments (BoI). One of the notable features which remains to be the most controversial portion of the Comprehensive Tax Reform Program is the incentive reform.