RA 11976 - Ease of Paying Taxes Law

Question 1

When did EOPT Law take effect?

Answer 1

SEC. 51. Effectivity.– This Act shall take effect fifteen (15) days after its publication in the Official Gazette or
in a newspaper of general circulation.

Since the law has been published in the Official Gazette on January 7, 2024, the date of the effectivity of the EOPT will be on January 22, 2024.

Question 2

What are the key objectives of EOPT Law?

Answer 2

*SEC. 2. Declaration of Policy. *
(1)To provide healthy environment for the tax paying public that protects and safeguards taxpayer rights and welfare, as well as assures the fair treatment of all taxpayers;

(2)To modernize tax administration and improve its efficiency and effectiveness by providing mechanisms that encourage proper and easy compliance at the least cost and resources possible;

(3)To update the taxation system, adopt best practices, and replace antiquated procedures; and

(4)To enact policies and procedures, which are appropriate to different types of taxpayers.

Question 3

What are the salient features of the EOPT Law?

Answer 3

1. Classification of Taxpayers (RR 8-2024)
2. Amendments on Tax Base
3. Amendments in Relation to VAT
4. Amendments on Exempt Transactions
5. Amendments on Filing of Returns and Payment of Taxes
6. Amendments on Compliance Requirements
7. Amendments on Remedies
8. Amendments on Statutory Offenses and Penalties
9. Others
   
   • Digitalization of BIR Services
   • Special Concessions for Certain Taxpayers (RR 6-2024)

Question 4

What are the classifications of taxpayers under the EOPT Law?

Answer 4

RR 8-2024 implements Sec 21(B) of the NIRC as amended by RA 11976, on the Classification of Taxpayers:

1. Micro Taxpayers - Gross Sales is less than PHP 3,000,000
2. Small Taxpayers - Gross Sales is PHP 3,000,000 to less than PHP 20,000,000
3. Medium Taxpayers - Gross Sales is PHP 20,000,000 to less than PHP 1,000,000,000.
4. Large Taxpayers - Gross Sales is PHP 1,000,000,000 and above

Gross Sales shall refer to total sales revenue net of VAT, without any deductions. It shall also refer to business income EXCLUDING compensation income and passive income.

Question 5

How is the taxpayer classification under EOPT implemented?

Answer 5

1. Taxpayers registered in 2022 and prior years: Classified based on their Gross sales for TY 2022.
2. Taxpayers registered in 2022 and prior years but without any submitted information regarding TY 2022 and taxpayers registered in 2023 and 2024: Inititally classified as MICRO, except for those VAT-registered, which shall be classified as SMALL.

Question 6

What are the changes in penalty rates under EOPT?

Answer 6

RR No. 6-2024 implements Sec 45 of RA No. 11976 on imposition of REDUCED INTEREST AND PENALTY RATES FOR MICRO AND SMALL TAXPAYERS

1. Reduced Civil Penalty Rate of 10%
2. Reduced Interest Rate of 50% (effectively 6%)
3. Reduced penalty rate (50%, effectively PHP 500) in the following cases:
   
   • Failure to file an information return/statement/list
     
     • Failure to keep any record
     • Failure to supply any information
     • Aggregate amount shall not exceed PHP 12,500 during a calendar year
4. Reduced compromise penalty rates (50%, provided not fraudulent)
   
   • SEC 113 (INVOICING REQUIREMENTS)
   • SEC 137 (ISSUANCE OF INVOICE)
   • SEC 238 (PRINTING OF INVOICE)