Despite the legislative milestones achieved through the passage of the Ease of Doing Business Act, TRAIN, CREATE, and the Ease of Paying Taxes Act, the Philippines must continue its efforts to enhance its tax regime.
During the 2024 International Tax and Investment Conference organized by the Asian Consulting Group (ACG) at the Sheraton Manila on February 27, speakers unanimously emphasized the need for the Philippines to broaden its tax base.
Mon Abrea, founder and chair of ACG, advocated for a series of reforms aimed at increasing accessibility and fairness within the tax system. These include the adoption of prepopulated tax returns, a transition to risk-based audits, simplification of taxation for micro, small, and medium enterprises (MSMEs), and the establishment of a dedicated office for VAT refunds.
Abrea noted that these measures would enhance operational efficiency within the Bureau of Internal Revenue, easing tax compliance for MSMEs and fostering fairness across the board.
His proposal for prepopulated tax returns aims to streamline the filing process by utilizing existing data to automatically populate tax forms, reducing taxpayer workload and enhancing accuracy in reporting. This approach, reminiscent of receiving a credit card statement, is expected to significantly reduce administrative costs and boost compliance rates, particularly among self-employed individuals and professionals.
The introduction of a risk-based audit system would enable the BIR to prioritize audits based on the likelihood of non-compliance, thereby optimizing resource allocation and enhancing audit effectiveness.
Abrea critiqued the current random audit approach for its inefficiency and susceptibility to potential abuse.
To further support MSMEs, Abrea suggested simplifying their tax compliance process by offering a flat tax rate on gross sales or revenues, thus reducing complexity and compliance costs. Additionally, the proposal to establish a dedicated office for VAT refunds aims to address existing delays and complexities faced by taxpayers seeking refunds.
Abrea emphasized that these reforms are crucial to bolster government revenues, promote fairness, and facilitate taxpayer compliance.
Originally published on Bilyonaryo.
