House panel lists rights of taxpayers, freelancers

HE House Committee on Ways and Means on Monday approved a measure providing for a bill of rights for taxpayers while easing the payment of taxes in the Philippines.

TAlbay Rep. Joey Sarte Salceda said his committee approved House Bill 7881, or the Ease of Paying Taxes Act, which will establish an office of the taxpayer advocate and codify a bill of rights for taxpayers to encourage tax compliance and protect taxpayer welfare.

Salceda said the bill includes taxpayer classification/segmentation to ease the experience of small and medium taxpayers and focus on education and taxpayer services for their segments, while focusing collection efforts on large enterprises.

He said it also relaxed rules on returns filing and the payment of taxes (i.e., “venue-filing” and “payas-you-file”) so that taxpayers can comply with tax requirements anywhere in the country.

The measure also provides for a uniform documentation for substantiating VAT transactions to facilitate electronic invoicing and close VAT loopholes; and easing compliance requirements so that tax filings for small enterprises need not be as burdensome as large enterprises.

“This is part of a bigger picture: the simplification and modernization of government processes. This is one of four pillars. The other three are ease of registering and operating a business, ease of public service delivery, and ease of government procurement,” he said.

Under the bill, taxpayers, including ofws, will be able to apply for tax identification numbers, file and pay taxes, without the need for physical appearance. Forms are also expected to be significantly reduced for small and medium taxpayers.

It also unifies the requirement for VAT documentation, requiring only an invoice instead of both an invoice and a receipt. This will help expedite the VAT refund system in the Bureau of Internal Revenue (BIR).

According to Salceda, the proposal aims to improve “tax morale” or the enthusiasm of taxpayers to meet their tax obligations.

“one of the roots of our lack of competitiveness is low tax morale. People aren’t excited to pay taxes because the process is tedious, and open to abuse and rent-seeking,” Salceda said.

Citing an industry analysis which he conducted, Salceda estimated the economic impact of low tax morale to be as much as 0.68 to 10.02 percentage points of lost GDP growth.

Taxpayer rights

MEANWHILE, the taxpayer rights include:

1. Right to pay no more than the correct amount of tax

2. Right to a fair and impartial appeal

3. Right to timely and easy to understand information

4. Right to quality tax education and service

5. Right to the consistent and transparent application of the law

6. Right to have the cost of compliance respected whenever tax rules are prepared and enforced

7. Right to privacy and confidentiality of information, unless authorized by the taxpayer or by law

8. Right to speedy disposition of cases, assessments, audits, investigation and other similar actions

9. Right to finality of tax cases, including, but not limited to, agreement on the amount of tax due

10. Right to be protected and seek redress against malicious, excessive and wrongful assessments.

Freelancers

Also, the House Committee on Ways and Means approved the unnumbered substitute bill providing legal and contractual protections to freelancers, or self-employed individuals who take seasonal or short-term jobs, such as wedding planners, content writers, artists, and others who take “gigs.”

The protections will also entitle freelancers to benefits such as nightshift differentials and hazard pay, the bill said.

The labor Code currently does not define “freelancers.” There is also no formal contractual framework for freelancers in the law.

Salceda said that some 1.5 million Filipinos were employed in the “gig” economy or freelancing prior to the pandemic, and he expects the number to have risen at the height of Covid-19.

Among the protections that the proposed substitute bill will include are: a framework for contracts between employers and freelancers; eligibility for nightshift differential for freelancers who are required to be physically present in the workplace or those on field assignments; and hazard pay for freelancers deployed in dangerous areas.

The proposal also makes it unlawful to pay the compensation due the freelancer later than 15 days after the date of payment of compensation stated in the written contract, or after the rendition of services in cases where there is no written contract.