BIR ‘ready’ to implement SONA tax-system overhaul

The Bureau of Internal Revenue (BIR) said it is ready for the enactment of the government’s tax relief proposals, aided by modernized systems and simplified compliance.

“In his fifth State of the Nation Address (SONA), President Ferdinand R. Marcos, Jr. outlined a clear tax reform agenda. The BIR supports this direction and stands ready to faithfully and efficiently implement the measures that Congress may enact,” BIR Commissioner Charlito Martin R. Mendoza said in a statement on Thursday.

Mr. Marcos on Monday urged Congress to raise the annual income tax-exempt threshold to PHP 350,000 from PHP 250,000 and remove the minimum corporate income tax (MCIT) imposed on micro and small enterprises.

Legislators have since filed bills seeking to implement or expand the proposed tax measures.

Sen. Joseph Victor G. Ejercito filed Senate Bill No. 2341 on Wednesday, going above and beyond the President’s proposal by setting the annual income exemption threshold at PHP 600,000.

“Our responsibility now is to ensure that the bureau is fully prepared once these measures are signed into law, while sustaining our ongoing initiatives to strengthen tax administration and enhance taxpayer experience,” Mr. Mendoza said.

While the proposals are being legislated, the BIR will continue pursuing reforms within its authority, he added.

“We will simplify compliance, improve our services, modernize our systems, and review processes and regulations that are no longer responsive to taxpayer needs,” he said.

The BIR will also consult stakeholders to ensure that its initiatives address their most pressing concerns, Mr. Mendoza said.

The Department of Finance (DoF) has estimated that the two SONA tax proposals would result in PHP 66 billion in foregone government revenue annually.

The higher exemption threshold would benefit at least 3.13 million workers, including an additional 1.2 million who would no longer pay income tax, while removing the MCIT would benefit about 78,000 micro and small enterprises, according to the DoF.

The higher threshold could increase the annual take-home pay of workers earning between PHP 250,000 and PHP 350,000 by as much as PHP 15,000. Those earning more than PHP 350,000 could receive up to PHP 17,500 in additional take-home pay each year. — Justine Irish D. Tabile