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.

Real Property Assessment and Valuation Reform Act

On 13 June 2024, the Republic Act No. 12001 or the Real Property Assessment and Valuation Reform Act (RPVARA) was signed into law and took effect on 3 July 2024. The RPVARA institutes reforms in real property valuations, reorganises the Bureau of Local Government Finance (BLGF), and grants tax amnesty (including special levies) on real property.

The law aims to achieve the following goals, among others:

• Support the development of an information database on valuation through continuing research and monitoring of new developments in the discipline to upgrade the country’s valuation system and be at par with the global standards contributing to the country’s inclusive and sustainable economic growth.
• Ensure transparency in real estate transactions to protect public interest and develop confidence in the valuation system.
• Separate the function of valuation of real properties from the functions of tax policy formulation and administration of the taxes due thereon.
• Provide a comprehensive and up-to-date electronic database of all real property transactions.
• Adopt market value as the single real property valuation base for assessment of real property-related tax in the country and for the valuation of real property for various transactions by all government agencies.

To achieve the above goals, the RPVARA will require the BLGF to update the Schedule of Market Values (SMVs) every three years by establishing the Real Property Valuation Service (RPVS) and Real Property Valuation Unit (RPVU) under the Office of the Local Assessors.

A Real Property Information System (RPIS) will be created by the BLGF to ensure that everyone will have access to accurate property valuations.

In order to transition to this new regime, taxpayers are given a chance to avail a real property tax amnesty (one-time or instalment payment).