THE ELECTRONIC FILING AND PAYMENT SYSTEM (EFPS) OF THE BUREAU OF INTERNAL REVENUE

The Bureau of Internal Revenue has further expanded the coverage of corporations required to file and pay taxes through the Electronic Filing and Payment System (EFPS) as per Revenue Regulations 10-2007. Revenue Regulations 10-2007 enumerates the following criteria for a corporation to be covered in EFPS:

1. Corporations with paid-up capital stock of Ten Million Pesos (Php.10,000,000) and above;
2. Corporations with complete computerized system;
3. All government bidders pursuant to EO no. 398 as implemented by RR 3-2005.
   

However, non-stock, non-profit corporations are excluded from the coverage of RR 10-2007.

The BIR's Electronic Filing and Payment System (EFPS) is a filing and payment gateway of the BIR which started online on July 1, 2001. It is a system developed and maintained by the BIR where the taxpayer can file through the internet, tax returns including attachments (if any) and accordingly pay the taxes due through Authorized Agent Banks' (AAB) internet banking facility. In this process, the taxpayer's representative will not have to go to the bank or the BIR office to file and pay it's monthly dues as this can be done online. The taxpayer will only have to log-on to the agency's link https://efps.bir.gov.ph/index.html.

Generally, any corporation though not covered by the RR 10-2007 - specifically those non-large taxpayers, may still opt to avail of the Electronic Filing and Payment System. The taxpayer's representative will only have to have their company be enrolled in the BIR's system. The taxpayer will only need to have an Internet connection, Internet Explorer Version 5 or higher, an email account, an a nominated bank account of an Authorized Agent Bank of the BIR.

The introduction of EFPS have lessened the load of compliance on BIR requirements. Through the EFPS, taxpayers will not have to wait on long lines just to have its payments be received as this can be done by simply a click of a mouse. Mispostings on the BIR forms are likewise brought to a minimum since the forms on the EFPS system are electronic and will compute for itself the tax due on the filed return. Having the option of validation, the forms will be counter-checked by the system itself. Taxpayers will not be stressed with on beating the clearing time of banks as transactions done before 10PM can still be considered as payment for such day.

However, we have just recently experienced the downside of an online system. Last April 15, 2008, the deadline for filing Annual Income taxes, the EFPS system of the BIR bogged down causing confusion and chaos to its users. This, I think, should be primarily be considered by the government. Since it now uses the advantages of the internet to aide in its regulatory and licensing functions, it should also invest whatever is needed for an internet system to work flawlessly.

IS INCOME FROM BLOGGING TAXABLE?

Is income from blogging taxable? My answer is Yes. Though there have been no concrete BIR regulation to address this question or at least I may have not found one, the basis of my opinion is Chapter 3, Section 23 of the National Internal Revenue Code which states that "A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines". Therefore, it means that all revenue sources of income by a Filipino currently residing in the Philippines shall be subject to tax.

Though income from such endeavor is not subjected to withholding taxes, this shall still be within the bounds of Philippine taxation. This will then be the responsibility of the income earner or of the blogger in this case, to report to the government his earnings from abroad. And since there exists no employee-employer relationship between the publisher (blogger) and the advertising middlemen, this may be reckoned to as income from business and therefore, as just like the thousands of blogging enthusiasts in the country who also has a full-time job, will now be treated as mixed income earner.

As a mixed income earner, first and foremost, the taxpayer will now be required to register at their respective BIR District Offices as such. With it goes the responsibility to pay for the registration fee of Php.500 and may further be subjected to VAT if the annual income from blogging goes beyond Php.1,500,000 annually. It will however be a zero-rated VAT since the business is a sale to customers outside of the country. Further, the taxpayer will now be required to keep books of accounts or accounting records. There will also be additional reportorial requirement as a mixed income earner, which is the quarterly income tax and even monthly VAT reports if income is reaches the VATABLE SALE threshold.

BUSINESS PERMIT SYSTEM GUIDEBOOK FOR CENTRAL VISAYAS

I have discussed about the project in its pilot roll-out in my post "Business will soon be as easy as ABC". After barely a year of pilot run, it is now going to be implemented region wide in Central Visayas. The goal being, to limit the number of bureaucracy and red-tape in acquiring and processing business permits.

A Business Permit and Licensing System (BPLS) guidebook will be launched on July 9th which will soon be in place in 40 Local Government Units (LGU's) in Central Visayas. The book's title "Towards One Business Permit and Licensing System", is expected to assist LGUs shift to a more investor-friendly Business Permit and Licensing System. This will create a one-stop shop for new businesses acquiring the necessary permits and licenses.

As I have expressed on my earlier post on "Business will soon be as easy as ABC", I applaud the stakeholders of this project in seeing through that this be implemented to as many LGU as possible. This will definitely ease the stresses of starting-up a business venture and financially lessen the cost of business start-up. This will give entrepreneurs more time in developing better products and services than on non-value adding activities to consumers.

My Opinion on RA 9504 (The Republic Act ammending the National Internal Revenue Code Relative to the Withholding of Income Tax on Compensation)

I am quite interested on the forthcoming BIR's approved Revenue Regulation on RA 9504 , otherwise known as The Republic Act amending the National Internal Revenue Code Relative to the Withholding of Income Tax on Compensation. On July 1, the Bureau of Internal Revenue conducted a public hearing relative to the published revenue regulations draft in its national office. As I have previously highlighted on my post "Increased Tax Exemptions for Individual Taxpayers", the personal exemptions increased to Php.50,000 and Php.25,000 per dependent on the additional personal exemption. Further, this law exempts the minimum wage earners the requirement of withholding tax and increases the threshold of exemption as minimum wage at Php.10,000 per month (Php.120,000 per year) if the said amount is higher than the minimum wage of the locality. Exemption on withholding tax applies further to holiday pays, hazard pays, overtime pay and differential pay received by minimum waged earner. RA 9504 further increases also the Optional Standard Deduction (OSD) for those individuals who are earning business income from 10% to 40%.

But reading through the draft revenue regulation, these aren't as simple as it seems. Though this law clearly expresses it's intent to alleviate the low income earners of the working class Filipinos, this creates so much confusion on the part of the employers, more specifically - the cubicled Corporate Finance Warriors that will be tasked perform the requirement of the BIR. Here are my points:

1. Though the law provides for an increase in personal and additional exemptions to cover dependents, this will be effected on a pro-rated basis. The old personal and additional exemptions will still be effected on the individual's income covering January to June while the new exemptions will be for July to December. Even though this can simply be remedied with the aide of a spreadsheet, imagine the tediousness of the activity of dividing the personal and additional exemption by two and applying it to the individual's income and then accordingly adjust the taxes withheld to date. This in effect entails a preparation of an Alphalist of Employees as of June 2008.
   
2. Though clearly now identifies that all income received by minimum waged earners will be exempted from withholding taxes, the fact still remains that such exemption does not exclude the person from paying income tax. It is thus of this reason perhaps that the BIR now requires employers to compute for the taxes due of minimum waged earners for the period January to June and these shall then be deducted to the minimum-wage employee's payroll for July. Again, an Alphalist preparation on the part of the employer - Annual Alphalist preparation procedure by the company for a period covering 6 months. Further, this will require also an HR undertaking to explain such deduction to minimum-wage employees' payroll.
   
3. The law on exempting minimum-waged employees from withholding taxes is merely a temporary remedy and may even give burden to these minimum income level employees when the time to pay for income taxes arrives come April 15th. This temporary solution is clearly seen as such because of the provision on the draft regulation where minimum-wage employees are given the option to be subjected to withholding tax by requesting from employers "in writing" that the minimum-wage employee be deducted with withholding tax.

In my conclusion, the law simply fortifies that Taxes are the bloodlines of the Government. Though one may be exempted from withholding taxes, this does not exclude the same from income tax payment. The law, in effect, could only be highlighted with this features: Increase in Personal and Additional Exemptions (but then again, this is still on a pro-rated basis for 2008). Stating the exemption of minimum-waged earners from income taxes and increasing the 40% OSD on individual business-income earners are but moth and academic.

New Schedule of Submission of Philhealth Remittance Reports (RF-1)

Beginning 3rd Quarter of 2008, the submission of the revised remittance reports (RF-1) of the Philippine Health Insurance Corporation shall be on on or before the 15th after the applicable month. The old schedule of submission of remittance reports will be followed only until the 2nd Quarter of 2008 which covers the remittance months of April - June 2008. Based on the old schedule, the deadline of submission of Remittance Reports (RF-1) will still be on the 15th of July, 2008.

The new schedule which will effect for the month covering July 2008 requires the submission of remittance reports (RF-1) on August 15th, 2008. From then on, succeeding months' premium contributions remittance report will be due every 15th day after the applicable month. Employers who are "diskette-reporting" shall also follow the same schedule. However, the deadline of payment of remittance remains on every 10th day after the applicable month.

INCREASED TAX EXEMPTIONS FOR INDIVIDUAL TAXPAYERS

Both houses for Philippine Congress are now about to hold it's joint committee deliberations to put into law an increased personal and allowable deductions for individual taxpayers. Currently, a single taxpayer enjoys Php.20,000.00 deduction as a allowable deduction from his/her taxable income, for a head of the family individual is Php.25,000 and for a married individual Php.32,000. An additional Php.8,000 allowable deduction from a head of the family or married individual for every dependent to a maximum of 4 dependents.

The Philippines' House of Representatives and House of Senate are proposing an increased personal exemption to Php.50,000 for a single, head of the family or married individual and an additional Php.25,000 per dependent for the two latter types of individual taxpayer. This will be the government's answer to help ease the effect of rises prices and escalating cost of living. I believe it is just appropos that this bills be passed into law as this will very much directly benefit individual taxpayers. Hopefully, the Filipino people will already be hearing this good news in effect by the end of this end of June.