Road to perfection

TOP OF MIND - Leonides Crispino De Castro - The Philippine Star

Winston Churchill once said that “to improve is to change; to be perfect is to change often.” Considering how dynamic Philippine taxation is, the amendments in the Tax Code these past few years are but means to achieve an ideal tax system.

Philippine tax rules have been continuously evolving to adapt to the ever-changing needs of the taxpayers. It comes as no surprise that with the enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) Law which took effect on Jan. 1, 2018, VAT-registered taxpayers have found solace in simplified VAT filings and payment. However, not all taxpayers are content with the changes in the procedures.

On Jan. 13, 2023, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) 5-2023 advising that VAT-registered taxpayers are no longer required to file the Monthly Value-Added Tax Declaration (BIR Form No. 2550M) for transactions starting Jan. 1, 2023 but will instead file the corresponding Quarterly Value-Added Tax Return (BIR Form No. 2550Q) within 25 days following the close of each taxable quarter when the transaction transpired.

In line with this change, the BIR issued RMC 59-2023 on May 19, 2023 to announce the availability of the revised BIR Form No. 2550Q (Quarterly Value-Added Tax (VAT) Return). The revised BIR Form 2550Q is already available on the BIR website under the BIR Forms VAT/Percentage Tax Returns Section.

However, the form is not yet available in the Electronic Filing and Payment System (eFPS) and Electronic Bureau of Internal Revenue Forms (eBIRForms).

The BIR added that once the return becomes available in the eFPS and the offline eBIRForms Package, a separate revenue issuance shall be released to announce its availability.

Recently, the BIR has recognized that despite the above amendments to the Tax Code and its implementing revenue issuances, there are VAT-registered taxpayers who are requesting that they be allowed to file their VAT returns and pay the corresponding VAT on a monthly basis through the use of BIR Form 2550M.

In line with Republic Act (RA) 11032 or the “Ease of Doing Business and Efficient Government Service Delivery Act of 2018,” the BIR strives towards continuously improving its policies and processes to streamline and reduce the financial burden for the convenience of the taxpayers. Considering that the Tax Code follows the pay-as-you-file system of taxation under which taxpayers compute their own tax liability, prepare the return and pay the tax as they file the return, the BIR has allowed VAT-registered persons to file and pay their VAT returns monthly if they deem it to be more convenient.

In response to this concern, the BIR issued RMC 52-2023 on May 10, 2023 clarifying that VAT-registered taxpayers may continue to file and pay their VAT liabilities on a monthly basis through the continued use of BIR Form 2550M provided that they continue to file the quarterly VAT return and pay the corresponding VAT liabilities as mandated under the Tax Code.

The BIR further clarified that if the VAT-registered person opts to switch from filing their VAT return and paying tax on a monthly basis using BIR Form 2550M to quarterly filing using BIR Form 2550Q, or vice versa, no penalties shall arise.

However, the BIR emphasized that while BIR Form 2550Q and the payment of such must be made within twenty-five (25) days following the close of each taxable quarter, the monthly filing of BIR Form No. 2550M has no prescribed deadline.

Lastly, the BIR stated that the procedures and guidelines set forth in Revenue Regulations (RR) Nos. 16-2005, 6-2014, RMC No. 68-2005 and other related revenue issuances regarding the use of BIR Form 2550M shall continue to apply.

While there may be pushbacks, these should not stop us from supporting the BIR in making our tax system simpler and fairer for everyone. We should also recognize and commend the BIR for its efforts in accommodating the concerns of all stakeholders.

* * *

Leonides Crispino de Castro is an Associate from the Tax Group of KPMG in the Philippines (R.G. Manabat & Co.), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

The firm has been recognized as a Tier 1 in Transfer Pricing Practice and in General Corporate Tax Practice by the International Tax Review. For more information, you may reach out to Tax Associate Leonides Crispino D. De Castro or Tax Partner Manuel P. Salvador III through [email protected], social media or visit www.home.kpmg/ph.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.

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