Republic Act No. 11032 or the “Ease of Doing Business and Efficient Government Service Delivery Act of 2018” was enacted with the goal of improving the efficiency of Philippine government offices and reducing the processing time of transactions therewith. The law essentially mandates the streamlining of systems and procedures of government services in order build confidence from local and foreign investors to do business in the Philippines. But three years since the law came into existence, it makes one wonder how much government services have actually improved, especially now that everyone has been forced to adapt to a so-called ‘new normal’ because of COVID-19.
The pandemic upended normal office routines and caused many of the core notions of work and workplace to change. While the concepts of work-from-home arrangement and remote transactions are not new, the focus they have been receiving nowadays is unparalleled. As businesses emerge from the crisis and shift to a hybrid work arrangement, companies are now reconsidering the size, location, and design of their offices. For example, some companies opted not to renew their lease on offices spaces as more and more of their employees have been working in the comfort of their homes, rendering the upkeep of extra office spaces cost inefficient.
While the idea of transferring offices appears to just be a simple process of packing up and moving to a new location, there is more to that than meets the eye. Updating a company’s registered principal office address entails reporting such transfer to various government agencies such as the Securities and Exchange Commission (SEC), the Local Government Unit (LGU), the Bureau of Internal Revenue (BIR), the Social Security System (SSS), the Philippine Health Insurance (PhilHealth), and the Home Development Mutual Fund (HDMF), among others. Unfortunately, government offices and agencies in the Philippines do not share a single database of information on the thousands of businesses set up in the country. Hence, companies must prepare different sets of documentary requirements for each government office. This, of course, entails physically appearing before each of the offices – from SEC in Pasay City to the various Revenue District Offices (RDO) of the BIR throughout the country.
Our generation is inundated with information technology and advancement that allow us to communicate and transact beyond borders and remotely even. Now, more than ever, we are witnessing unprecedented development and emergence of various online tools and platforms that make communication and interaction possible regardless of physical distance. Despite the advancements in technology, the government sector still finds itself lagging behind the private sector when it comes to providing efficient digital services.
Although a number of government agencies, in compliance with the Ease of Doing Business Act, has implemented the use of these electronic tools and systems to ensure new and easy ways of doing business amidst the pandemic, such as the SEC which has finally implemented online registration and online submission of reportorial requirements via the Electronic Simplified Processing of Application for Registration of Company (SEC – ESPARC) and the Online Submission Tool (OST), it bears stressing that status quo remains – most government offices still conduct business manually.
Transferring from one BIR RDO to another, for example, still requires physical submission of the same set of documents required for initial registration (i.e., SEC documents); not to mention, the original BIR documents, including but not limited to the old Certificate of Registration and unused invoices and receipts, would have to be surrendered to the previous RDO unless the company will request permission from the BIR to retain the use of old booklets of invoices and/or receipts until a new Authority to Print (ATP) is issued by the new RDO. The company will also need to manually fill out BIR Form No. 1905 and to comply with open cases, which are more often than not, filed returns that did not show up in the BIR’s system. The company will then need to provide hard copies of those filed returns to show proof of compliance. From de-registration with the old RDO to registration with the new RDO, the whole transfer takes a month or so to complete. If only the BIR, within its organization, has a single database of all taxpayers’ registration information regardless of location, perhaps most processes would be less burdensome for taxpayers. But such is not the case. At least for now.
With the SEC recently implementing the use of electronic platforms, one cannot help but wonder – “When will other government offices and agencies follow suit?” The BIR issued Revenue Memorandum Order (RMO) No. 27-2020, otherwise known as the “BIR Digital Transformation (DX) Roadmap 2020-2030” in 2020. Under this RMO, business-related transactions with the BIR shall be automated through the development of accessible, web-based software and technology-neutral platforms in collaboration with the Department of Information and Communications Technology (DICT). While promising, we have yet to fully experience the BIR’s digital transformation.
While the 2020 Doing Business Report of the World Bank shows that the Philippines now ranks 95th out of 190 economies from 124th in 2019, we still have so much more to improve on to catch up with neighboring countries such as Singapore. It is about time for us to use technology to our advantage and to up our game. Otherwise, companies might pack up and switch addresses, not just from one Philippine city to another but out of the country. Companies put in money in the Philippine economy, the least we can do is to put in place a better, innovative, and revolutionary mechanism that ensures them of smooth and efficient registration, reportorial, and compliance measures to foster their confidence in doing business in the Philippines.
Zhyrr Andrei A. Barredo is a Tax Analyst from the tax group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.
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