Philippines

Ease of Paying Taxes (EOPT) Act

On 5 January 2024, the Republic Act No. 11976 or the EOPT Act was signed into law. The EOPT Act introduced significant amendments to the National Internal Revenue Code of 1997 (‘Philippine Tax Code‘) that are intended to protect and safeguard taxpayer rights and welfare, to modernise tax administration by providing mechanisms that encourage easy compliance at the least cost and resources, and to update the Philippine tax system and adopt best practices. The EOPT Act became effective on 22 January 2024.

The salient amendments include the following, among others:

• File-and-pay anywhere mechanism. Taxes shall be paid either electronically or manually at the time the return is filed.
• Classification of taxpayers into micro, small, medium, and large taxpayers.
• Withholding of tax on income payments only when payable.
• Imposition of value-added tax (VAT) on services based on gross sales, no longer on gross receipts.
• VAT invoices are sufficient to substantiate input VAT arising from the purchase of both goods and services.
• Removal of ‘business style’ as a VAT invoicing requirement.
• Removal of annual registration fee.
• Removal of withholding tax (WHT) as a requirement for deductibility of expenses.