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We have seen efforts of the Bureau of Internal Revenue (BIR) adapt to the sudden changes brought about by COVID-19 pandemic. One of which is the issuance of Revenue Memorandum Circular (RMC) No. 29-2021 which now allows the use of electronic signature (e-Signature) on certain BIR forms/certificates. 

On 14 June 2000, former President Joseph Estrada signed into law Republic Act (RA) No. 8792, otherwise known as the “E-commerce Act of 2000” which aims to facilitate domestic and international dealings, transactions, arrangements, agreements, contracts and exchanges and storage of information through the utilization of electronic, optical and similar medium, mode, instrumentality and technology to recognize the authenticity and reliability of electronic data messages or electronic documents related to such activities and to promote the universal use of electronic transactions in the government and by the general public. This law was enacted to put rest on the contention of acceptability of electronic contracts as evidence. This law grants the legal recognition to electronic signatures whereby it provides that the e-signature on an electronic document shall be equivalent to the signature of a person on a written document if the said signature is proved by showing that a prescribed procedure, not alterable by the parties interested in the electronic document, existed under which - 

a)    A method is used to identify the party sought to be bound and to indicate said party’s access to the electronic document necessary for his consent or approval through the electronic signature;

b)    Said method is reliable and appropriate for the purpose for which the electronic document was generated or communicated, in the light of all circumstances, including any relevant agreement;

c)    It is necessary for the party sought to be bound, in order to proceed further with the transaction, to have executed or provided the electronic signature; and,

d)    The other party is authorized and enabled to verify the electronic signature and to make the decision to proceed with the transaction authenticated by the same.

Apparently, this RA has been more appreciated especially due to the continuing effect of COVID-19 pandemic whereby transactions are mostly done online or virtually, as most of us ensure that businesses still run, and everyday lives continue without and/or with less contact to people.

Aside from considering the effects of the COVID-19 pandemic, the said RMC takes into account RA No. 11032 or the “Ease of Doing Business and Efficient Government Service Delivery Act of 2018” which mandates all government offices and agencies to provide services covering business and non-business related transactions, and which adopts simplified procedures that will reduce red tape and expedite transactions in government. Some taxpayers have numerous transactions and as such, preparation and signing of certificates/forms may take time and effort especially nowadays when work-from-home arrangements are being implemented by several companies. This RMC improves the process of completion of forms/certificates of the BIR as it lessens not only the interaction among the taxpayers, but also the delay when completing forms manually.

For BIR purposes, the RMC allows the use of electronic signature on the following forms:

a)    BIR Form No. 2304 – Certificate of Income Payment Not Subject to Withholding Tax (Excluding Compensation Income);

b)    BIR Form No. 2306 – Certificate of Final Tax Withheld at Source;

c)    BIR Form No. 2307 – Certificate of Creditable Tax Withheld at Source; and,

d)    BIR Form No. 2316 – Certificate of Compensation Payment/Tax Withheld.

The RMC further provides the policies and guidelines for the use of e-Signature on the abovementioned BIR forms/certificates, to wit:

1.    The withholding agents for duly authorized representatives of the withholding agents who issue the abovementioned BIR Form/Certificates have the option to use e-Signature, aside from manual signature, on such BIR Forms/Certificates. The e-signature serves as the functional equivalent of the withholding agent’s manual signature on said Form/Certificate.

2.    In case the withholding agent opts to use e-Signature, approval of the BIR is no longer necessary.

3.    The Form/Certificate to be issued or affixed with e-Signature, should be the exact replica or copy of the latest version officially printed by the BIR. In case the BIR makes revision or changes in the Form/Certificate (e.g. change in version date, size, etc.), such revised Form/Certificate shall be used.

4.    The Form/Certificate shall also contain the manual signature/e-Signature of the payee in order to be valid and binding. The e-Signature serves as a functional equivalent of the payee’s manual signature on said Form/Certificate.

5.    The e-Signature is presumed to be the following:

a.    The e-Signature is that of the person to whom it correlates;

b.    The e-Signature was affixed by that person with the intention of authenticating or approving the electronic document to which it is related or to indicate such person’s consent to the transaction embodied therein; and.

c.     The methods or processes utilized to affix or verify the e-Signature operated without error or fault.

6.  In case of falsity or any misrepresentations contained in the issued Form/Certificate, those responsible therefor shall be held criminally, civilly and administratively liable pursuant to the provisions of the Tax Code 1997, as amended by the Revised Penal Code and other applicable laws. Under Section 253 of the Tax Code of 1997, as amended, in the case of associations, partnerships or corporations, the penalty shall be imposed on the partner, president, general manager, treasurer, officer-in-charge and employees responsible for violation.

7.  The withholding agent shall make sure that the Form/Certificate with e-Signature shall only be issued once. In case of reissuance or the payee requested for another copy of the Form/Certificate after giving the original copy, the reissued Form/Certificate should contain a “RE-PRINT” watermark in Cambria font and size of 144. This is to avoid double take up of tax credits, especially with BIR Form 2307.

As of date, the latest version for BIR Forms Nos. 2306, 2307 and 2316 officially printed by the BIR are the January 2018 (ENCS) versions which are pursuant to RMC No. 74-2019 and RMC No. 100-2019. While for BIR Form No. 2304, no new update has been issued yet as the BIR still allows the use of the old July 1999 (ENCS) version.  

The efforts of the BIR to aim for progress in our tax system and to adapt to the sudden change of circumstance as everyone goes online can be seen in the recent several issuances including this circular. Is this the sign to a shift in a fully digitized and paperless tax compliance?  

Mary Armi G. Milanes is a Supervisor  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.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email ph-inquiry@kpmg.com or rgmanabat@kpmg.com.