Recently, the Bureau of Internal Revenue (BIR) released its tax campaign jingle “Para sa Pilipino” with the following lyrics:
Sino pa ba ang tutugon
Para sabay-sabay ang pagbangon
Progreso ating ambisyon
Sama-sama sa hamon ng panahon
(Who else will answer the call/to bring everyone up together/Progress is our ambition/Hand in hand we meet the challenge of the times)
As the words suggest, everyone has to pay their share to fund economic recovery, given the country’s current state. Thus, the tax filing deadline for 2020 was not extended.
While the BIR released a number of pronouncements to address concerns about tax filing during a pandemic, I cannot help but mull over the benefits and disadvantages of these issuances.
APRIL 15 FILING OF AITR WITH OPTION TO AMEND
A few days before April 15, the BIR issued Revenue Memorandum Circular (RMC) No. 46-2021, which stated that the deadline for the filing of the 2020 Annual Income Tax Return (AITR) and payment of the corresponding tax was to remain April 15. However, in consideration of those unable to meet the deadline due to the lockdown restrictions which would impair travel to and from the National Capital Region (NCR) Plus quarantine zone, taxpayers may file a provisional AITR on or before the deadline. The return may be amended on or before May 15 without penalty for taxpayers whose amendments would result in additional tax liabilities. In cases where such an amendment will result in an overpayment, the taxpayer may opt to carry it over as a credit against the tax due in the succeeding period or to file a claim for a refund.
Though the RMC reduced taxpayers’ hardships in filing during a pandemic, businesses owners faced a further challenge in the deadline for the filing of first quarter tax returns for 2021, which also falls on May 15. This means that individuals with businesses will need to prepare two returns (AITR and first quarter tax return) and travel to the RDO where they are registered. This poses a health risk to manual filers, especially if they reside outside of their RDO’s jurisdiction, unless the out-of-district filing and payment allowed under RMC 41-2021 and Bank Bulletin 2021-06 is extended. However, they may maximize this opportunity by filing it in one day with the Bureau, which would only require them to travel once to their respective RDOs.
It remains to be seen but perhaps the Bureau could extend out-of-venue filing to May 15 to tip the scales even further to the benefit side.
RECOGNITION OF ELECTRONIC SIGNATURES
It was also reiterated in RMC No. 46-2021 that all tax returns, including attachments, can be signed electronically by the taxpayer. Such e-signatures are deemed equivalent to an actual or “wet” signature.
This is in conjunction with the Circular issued by the BIR (RMC 29-2021) early this year which gave withholding agents the option to use e-signatures in the Certificate of Withholding (e.g., BIR Form 2316, 2304, 2306, 2307). The BIR’s approval is no longer required for e-signatures; however, the Certificates shall be the replica or the copy of the latest version (or revised copy in case it will be made available) provided by the Bureau.
Further, RMC No. 29-2021 highlighted that the use of the e-signatures gives rise to the following presumptions:
1. It is that of the person to whom it correlates;
2. It was affixed by that person with the intention of authenticating or approving the electronic document to which it is related or to indicate such person’s consent to the transaction embodied therein; and
3. The methods or processes utilized to affix or verify the e-signature operated without error or fault.
The acceptance of digitally-signed documents is a welcome change as our country tries to embrace digitization. It certainly simplifies and encourages compliance from taxpayers.
SUBMISSION OF ATTACHMENTS VIA EAFS
The Bureau also issued revised guidelines through RMC 43-2021 on the use of the Electronic Audited Financial Statement (eAFS) System in submitting an electronically filed ITR and the required attachments, including BIR Form No. 1709.
While taxpayers may submit the required attachments through this system, they must observe the procedures specified in the guidelines, such as using the corresponding naming conventions.
This Circular pushed for online submission to address the restrictions in movement and health concerns.
SUBMISSION OF ATTACHMENTS FOR THE AMENDED AITR
Just before April 30, the Bureau also issued an advisory extending the deadline for attachments to the electronically filed AITR in case of amendments. Based on initial pronouncements, taxpayers had to submit attachments to the AITR on April 30, even if an amended AITR was to be filed on May 15. This would result in double filing of possibly voluminous attachments. With this advisory, the deadline for the submission of attachments is now May 30.
No penalty will be imposed for non-submission of the attachments to the AITR but later amended on or before May 15. Taxpayers are given 15 days from the date of the filing of their provisional AITRs to submit the attachments if they were not able to do so. However, in case no revisions or changes are made to the documents submitted previously, attachments to the amended AITR need not be submitted.
Considering that the rise of COVID 19 cases remains unabated, less physical interaction or social distancing remains the norm. The availability of online platforms, such as the eAFS and eBIRForms/eFPS, helps ensure taxpayer compliance and safety. Thus, taxpayers are highly encouraged to utilize the online portals to minimize exposure.
However, for taxpayers who still choose to file manually, it would be of great help if the government could also continue to allow the filing of the amended AITRs and their attachments at any RDO assuming that the lockdown is extended. As of this writing, out-of-district filing has only been allowed until April 30. In addition, the BIR may also consider adding accredited banks or online payment options to encourage more taxpayers to file electronically.
Certainly, the Bureau heeded taxpayers’ calls for consideration in the filing of the AITR this year. The response may not be up to everyone’s expectations, especially in terms of timeliness, but it is nevertheless appreciated. Regardless of the times, planning ahead and making timely decisions that benefit taxpayers will certainly help to make future pronouncements more boon than bane.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Giselle Juliane is a consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.