As part of the digital transformation in tax administration that Philippine President Duterte wants to embark on, the Department of Finance aims to complete the full shift to an electronic invoicing system by December 2022.
This initiative would allow the government to provide better and faster services to taxpayers.
According to a recent press release, this digital transformation initiative will prioritise the welfare of taxpayers and overall ease of efficiency of compliance.
Efficient tax service
Finance Assistant Secretary Antonio Lambino II explained that this will address the tendency of the current tax system to overemphasise controls and monitoring.
For instance, there are redundant data fields currently required in tax returns that already form party of other mandatory attachments in paying taxes.
The Tax Reform for Acceleration and Inclusion Act (TRAIN) provides the government the corrective measure to do away with some of the redundancies and inefficiencies in the tax system by mandating the establishment of an e-invoicing system.
He added that progress has been made in modernising information technology services for taxpayers. However, further reforms are needed.
The digital transformation will not only improve services to taxpayers but would also result in administrative savings.
Partnering with South Korea
The Bureau of Internal Revenue (BIR), in partnership with the Government of South Korea, is set to complete the development of the e-invoicing system by end of 2022.
Moreover, it will make the tax bureau more resilient and easily adaptable to changes in policy and technology.
The digital transformation agenda of the BIR includes optimising business processes, implementing an enabling infrastructure, maximising the use of information for effective business operations, and improving the digital literacy of the Bureau’s workforce.
This agenda requires a high level of commitment, and the tax bureau has initiated foundational activities, such as business process mapping, starting this year.
It was reported that guided by best practices in e-invoicing, the BIR started studying South Korea’s electronic invoicing system as early as January 2018.
Finance Secretary Carlos G. Dominguez III cited South Korea’s electronic invoicing program as the best model on which to base the government’s own program.
Since 2011, South Korea has been implementing its mandatory electronic tax invoice system for all corporate and certain individual taxpayers.
Implementation schedule
As reported, the Korea International Cooperation Agency (KOICA), which is the South Korean government’s aid arm, is expected to provide a US$ 7.3 million grant to implement the first phase of the e-invoicing project.
This funding will allow for e-receipts to be piloted in 2020, with full implementation thereafter.
Issuance of e-receipts would be pilot tested next year. The BIR will select 100 taxpayers to test it ahead of its mandatory implementation.
The Export-Import Bank of Korea, which is also known as Korea Eximbank, is also expected to provide a loan to fully implement the system
