A quick look at Revenue Regulations No. 6-2014

Presently, the common practice of the majority of taxpayers in accomplishing their respective tax returns is to manually fill out the blank spaces on printed Bureau of Internal Revenue (BIR) forms. The tax returns are usually available in “pigeonhole” shelves and cabinets located at your respective Revenue District Offices (RDOs)  and can also be downloaded from the BIR’s website.  The “downloadable” forms can be filled out electronically (entering the required information on the particular form while it is displayed on a computer) or printed and then manually filled out in capital letters using black ink (for the June 2013 version of Annual Income Tax Returns).  Focusing on the filling out of BIR forms and which forms are to be used, the BIR has issued Revenue Regulations (RR) No. 6-2014, which now makes it mandatory for non-electronic Filing and Payment System (eFPS) filers to use the electronic Bureau of Internal Revenue Forms (eBIRForms).

Firstly, what are these eBIRForms?  The eBIRForms was introduced to taxpayers under Revenue Memorandum Circular (RMC) No. 61-2012, and subsequently under Revenue Memorandum Order (RMO) No. 24-2013.  The eBIRForms Package was developed primarily to provide taxpayers with accessible and convenient service through easy preparation of certain returns, deviating from the conventional manual process of filling out of the returns on pre-printed forms.  The BIR believes that the manual process of filling out returns is highly susceptible to human error.

As reiterated in the regulations, the  term eBIRForms refers to two types of electronic services (e-Services) provided by the BIR relative to the preparation, generation and submission of tax returns. They are the Online e-BIRForms System and Offline eBIRForms Package.  The Online eBIRForms System, as from its name, is a filing infrastructure that accepts tax returns submitted online and automatically computes penalties for tax returns submitted beyond due date.  On the other hand, the Offline eBIRForms Package is the tax preparation software that allows the taxpayer and Accredited Tax Agent (ATA) to accomplish tax forms offline.   Taxpayers can directly encode data, validate, edit, save, delete, view and print the tax returns.  The software also has automatic computations with the capability to validate information inputted by the taxpayers.  The software may be downloaded from the BIR website (www.bir.gov.ph) or from your closest BIR e-lounge (for those without internet access). 

Secondly, who are now required to use the eBIRForms?  The regulations now make it mandatory for the following non-eFPS filers to use the eBIRForms:

1. The ATAs/practitioners (and all their respective client-taxpayers).  Per the latest BIR list dated Jan. 2, 2013), there are 2,937 ATAs/practitioners.  Since RMO No. 24-2013 defines an ATA as an accredited tax practitioner, then an ATA (acting as an agent to the point of signing a return which you prepared for your client) or a practitioner (limited to preparation of the return), AND all their respective clients are now subject to this mandatory requirement.

2. Accredited printers of principal and supplementary receipts/invoices.

3. One-time transaction (ONETT) taxpayers.  These are for taxpayers involved in the transfer of real properties and/or shares of stock, either by sale, exchange, donation, or succession, and donations in general.  So the taxes involved here are withholding taxes, capital gains taxes, documentary stamp taxes, donor’s taxes, and estate taxes.

4. Those who shall file a “no payment” return (i.e., a tax return that is not accompanied by any payment where the same is filed with any authorized BIR receiving office).  This means that if you are filing any of the 36 tax returns currently available in the eBIRForms package, and no payment is involved, it is mandatory to use the eBIRForms.

5. Government-owned or controlled corporations (GOCCs).

6. Local government units (LGUs) except barangays, and

7. Cooperatives registered with National Electrification Administration (NEA) and Local Water Utilities Administration (LWUA).   

Finally, how are these eBIRForms to be filed?  The regulations state that the taxpayers may opt to submit their tax returns manually using the Offline eBIRForms Package at their respective RDOs, or electronically through the use of the Online eBIRForms System.  Note that the eBIRForms System only deals with the filing of tax returns, and not payment.  The payment procedures to be followed are stated in RMO No. 24-2013.

Given the mandatory coverage of the specified non-eFPS filers, several concerns become apparent.  Under RMO No. 24-2013, the very first requirement to using the eBIRForms is that the taxpayers should have computers, or at the very least have computer access, not to mention computer skills.  Registration with the BIR is likewise a requirement for you to be able to use the eBIRForms System.

So, do all taxpayers covered by this regulation have a computer, or at least, have computer access?  Most, if not all ATAs/practitioners may have computers, but what about individual ONETT taxpayers, or taxpayers filing “no payment” returns?  This may not be a question the BIR can answer, but it is a situation that the BIR should take into consideration.

Another concern is the eBIRForms System itself.  Assuming that all taxpayers covered under this regulation actually can register and file through the eBIRForms System, is the infrastructure adequate to receive the sudden influx of electronic filing of all the returns?  Notwithstanding the convenience of electronic filing, just last April 15, 2014, the eFPS of the BIR experienced system downtime after reaching a peak of 5,000 plus online taxpayers who were filing income tax returns.

Lastly, Item No. 2, Section 3 of the regulations state that taxpayers may opt to submit their tax returns manually using the Offline eBIRForms Package at their respective RDOs, or electronically through the use of the Online eBIRForms System.  Under RMO No. 24-2013, manual submission of tax returns is defined as printing a hard copy of the tax returns and submitting the same to the RDO having jurisdiction over the particular taxpayer.  However, Section 6 of the same regulations states that any provisions of other issuances which are “inconsistent herewith, including the requirement for the filing of a paper-based return, are hereby repealed, modified or amended accordingly”.   So which is mandatory, just the use of the forms or both the use of the forms and the filing through the eBIRForms system?

Hopefully, the BIR will release issuances to clarify the above concerns.  Better yet, if the BIR intends to make certain requirements mandatory a short time after the release of the relevant issuances, the issuances should at least be clear and complete in its instructions.  After all, taxpayers do their best to comply with these requirements, and taxpayers can best comply when the instructions are clear.

Patricia C. Velarde is a supervisor from the tax group of R.G. Manabat & Co. (RGM&Co.), the Philippine member firm of KPMG International.

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 the views and opinions of KPMG International or RGM&Co. For comments or inquiries, please email [email protected] or [email protected].

For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.