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BIR’s road to digitalization

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The Bureau of Internal Revenue (BIR) has recognize the need to adapt to take advantage of fast-evolving technology to ensure it collects its rightful share of taxes from the digital economy. To do this, it has mapped out a 10-year digital roadmap. The roadmap incorporates the tools necessary to maximize resources at the BIR and ensure maximum value for the organization. It is anchored on three principles — (i) adopting a people-first approach; (ii) instituting a process perspective; and (iii) embracing digital technology, with the digital transformation mindset as its foundation. In addition, the roadmap consists of various digitalization projects that would modernize and digitalize tax administration, consistent with the objectives of Republic Act No. 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, to reduce red tape. As it applies to the BIR, the law means making tax compliance more convenient for taxpayers.

One of the notable projects under the BIR’s Digital Transformation initiative is the launch of the Online Registration and Update System (ORUS), a web-based system that provides an end-to-end process for registering taxpayers and updating their information. With the implementation of ORUS, taxpayers may skip the long queues and register and update their information with the BIR from the comfort of their homes.

Under Executive Order No. 98, series of 1999, all persons whether natural or juridical, dealing with all government agencies and instrumentalities, are required to provide their tax identification numbers (TIN) on all forms, permits, licenses, clearances, official papers and documents which they secure from and file with government agencies. This directive was issued as TINs are essential for our tax authorities to trace taxable transactions of persons and monitor their tax compliance.

In line with the Executive Order, BIR Revenue Regulations No. 7-2012 directs non-resident aliens not engaged in trade or business in the Philippines or non-resident foreign corporations to obtain TINs for the purpose of withholding taxes on their income from sources in the Philippines. The withholding agent is required to apply for the TIN on their behalf prior to or at the time of the filing of their withholding tax returns.

Moreover, Securities and Exchange Commission (SEC) Memorandum Circular No. 1, series of 2013, requires the inclusion of TINs of foreign investors (natural and juridical persons) in all forms, papers and documents filed with the SEC. In this regard, corporations filing their general information sheets (GIS) with the SEC are required to first secure TINs for their investors and stockholders, whether natural or juridical persons. If the TIN is missing, the SEC is to return the GIS.

With the launch of ORUS and the issuance of BIR Revenue Memorandum Circular (RMC) No. 120-2023, Filipino citizens and foreign nationals may now apply for TIN online without lining up at their respective Revenue District Offices (RDOs) and physically submitting hard copies of their application documents. Individuals and corporations may create an account in ORUS by filling out the necessary information and uploading the relevant documents in order to secure their TINs. Although the TIN application is now done online, the documentary requirements are still the same as in the previous practice (physical filing).

RMC 120-2023 is the BIR’s announcement of the availability of digital TINs through ORUS. With this new feature, individual taxpayers may secure their digital TIN identification document (ID) through the website starting Nov. 21, 2023, by creating an account and registering as a taxpayer. Those with previously issued TINs, whether or not they have been issued a physical TIN ID, may also still register with ORUS. It is worth noting that taxpayers who will be applying for a digital TIN ID are required to update their e-mail address at the RDO where they are registered by accomplishing and submitting BIR Form S1905 (Registration Update Sheet) via e-mail to their respective RDOs or through BIR’s eServices — Taxpayer Registration Related Application portal. Should there be any changes or updates that must be made after securing the digital TIN ID, taxpayers may re-generate their ID through the same website after 30 days from the first or last digital TIN ID generation, whichever is applicable.

Digital TIN IDs are to be honored and accepted as a valid government-issued ID for taxpayers to transact with government agencies and institutions, local government units, employers, banks, financial institutions and other relying parties. While digital TIN IDs do not have signatures, the authenticity of this ID may quickly be verified through ORUS as well by scanning the Quick Response (QR) code that may be found on the digital ID.

We have seen a number of the BIR’s Digital Transformation projects go live, making tax administration more efficient. Taxpayers remain hopeful that the BIR launches the remaining Digital Transformation projects to make tax compliance more convenient.

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.

Jerimae Celine N. Galope is a senior associate at the Tax Services department of Isla Lipana & Co., the Philippine member firm of PricewaterhouseCoopers global network.

jerimae.celine.n.galope@pwc.com

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