Though we cannot altogether have good things to happen, as some are also affected by the passage of TRAIN e.g. minimum wage earners and small workers/businessowners not affected by decreased personal tax table, car/cosmetic purchasers/users, etc., I would like to highlight some of the things I celebrate in the passage of TRAIN.
Update of employee's tax status
Prior to TRAIN, employees need to submit BIR Form 2305 and attachments in order to claim personal and/or additional exemption. Though BIR made an online validation module for this, still, it require hard copy documents to be submitted to BIR. It appears very simple but not in reality.
Missing to do this simple process may incur higher taxes and lower net pay, wrong taxes that requires amendments of tax returns, employee clamor, tax preparers' nightmare in case an error is made, etc. A simple thing that affects a lot of stakeholders may be disappointing.
Good news is, TRAIN 1 abolished this requirement. Employees can now enjoy P250,000 nontaxable income which includes the personal and additional exemption up to a maximum of 4 dependents even without filing of forms and attachments, with some extra P100,000 from prior rules.
New deadlines and frequency of tax return filing
The monthly expanded and final withholding tax (EWT/FWT) due to be filed every 10th for non-eFPS taxpayers and every 11th-15th for eFPS taxpayers is moved to quarterly reporting due 30 days after the close of the quarter. This provided relief to preparers and taxpayers as they will have extra time to prepare the tax returns and to produce cash flows for payment.
Though it is still required to remit monthly EWT and FWT using BIR Form 0605, taxpayers are no longer required to submit monthly alphalist as it is converted to quarterly reporting.
Interest for penalties of late filing/payment
All returns have due dates for filing and payment. If the taxpayer filed/paid a day late without confirmed reason from BIR e.g. BIR system is down and they issue formal notice, taxpayer is charged of 25% surcharge, 20% interest per annum and compromise.
In TRAIN, the interest is lowered to 12% from 20% until a new interest rate shall be prescribed by the Bangko Sentral ng Pilipinas (BSP). The new rate is equal to double of the legal interest rate for loans set by the BSP. It is in the theory that, taxes are considered loans to the government and hence, timely payment is required.
With the passage of above items, it is a relief to know when cumbersome processes/rules are revisited and improved. This is a big help to ease the administrative side of tax compliance.
For questions or feedback, please comment below.
Disclaimer: The views or opinions in this article are mine. This is not a substitute for seeking professional advice.
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