BASIC TAXATION

Presented by:Susan D. Tusoy, CPA, MPS

Asst. Chief, Assessment Division

Topic Outline

Registration

Invoicing Requirements

Bookkeeping Requirements

Overview

Income Tax

Percentage Tax

VAT

Withholding Tax

others

REGISTRATION REQUIREMENT

S

On Registration

Register your businessOn or before the commencement of

businessBefore payment of any tax dueUpon filing of a return, statement or

declaration as required by the NIRC.

On Registration

Register your employee/s

within 10 days from date of employment

On Registration

Secure Taxpayer Identification Number

Multiple TIN is punishable by law.

Registration Procedures8

PRIMARY REGISTRATION

SECONDARY REGISTRATION

Application &Issuance of TIN

Registration of Business/Practice of Profession/Employment

Registration of books, Issuance of ATP, CAS and Loose-leaf

STAGE 1 STAGE 2

INVOICING REGULATIONS

On Invoicing Requirements

Apply for Authority to Print (ATP)

After printing, register ORs/Invoices thru Printer’s Certificate of Delivery (PCD)

Invoicing Requirements

Issue sequentially an OR for fees received or Sales Invoice for sale of goods.

Each SI shall show the name, address of client, date of transaction, qty, selling price per unit, description of merchandise sold and total amount.

Invoicing Requirements

The OR/SI shall be accomplished in duplicate, the duplicate retained & preserved in place of business for 10 years from close of taxable year.

Proper Invoicing and Receipting of Output Tax

Revenue Regulations 18-2011

• Reiterates Sec. 237 of the Tax Code that VAT-registered taxpayers should separately bill the VAT.

• The amount shall be shown as a separate item in the invoice or receipt

All persons subject to internal revenue tax shall:

For each sale of P25 or more; Issue duly registered receipts or sales

or commercial invoices; Prepared at least in duplicate.

Disposition of the receipts/invoices

Original -> purchaser Duplicate -> retained by issuer

Copies of receipts/invoices should be preserved in the place of business for a period of 10 years, if engaged in business.

Centralized issuance of ATPs – At the RDO of the HO Separate application and permit for

each establishment to be filed at RDO of the HO

Signed by official of the HO

Register the receipts with RDO of the user (HO or branch).

Principal Receipt/Invoice(RR 18-2012)

A written account evidencing the sale of goods and/or services issued to customers in an ordinary course of business

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Sales Invoice

Sales Invoice A written account evidencing

the sale of goods and/or properties

Includes Cash Sales Invoices & Charge Sales Invoices

Sales Invoice

VAT SALES INVOICEoBasis of the output tax liability of

the seller and the input tax claim of the buyer

Non-VAT Sales InvoicesoBasis of the Percentage Tax liability

of the seller

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Official Receipt

A proof of sale of service and/or leasing of properties

oVAT Official Receipt• Basis of the output tax liability of the

seller and the input tax claim of the buyer

oNon-VAT Official Receipt• Basis of the Percentage Tax

liability of the seller 21

Supplementary Receipts/Invoices

Also known as Commercial Invoices

Documents evidencing delivery, agreement to sell or transfer of goods and services

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Supplementary Receipts/Invoices

Delivery Receipts Order Slips Debit and/or Credit Memo Purchase Order Job Order Provisional/Temporary Receipt Acknowledgement Receipt 23

Supplementary Receipts/Invoices

Collection Receipt Cash Receipt Bill of Lading Billing Statement Statement of Account

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Supplementary Receipts/Invoices

Includes any other documents, by whatever name it is known or called

whether prepared manually or pre-printed/pre-numbered loose-leaf or computerized, issued to customers

25

Supplementary Receipts/Invoices

Not valid to support the claim of Input Taxes by buyers of goods and/or services

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Salient Features

One application shall be filed for ATP per establishment (HO or branch)

Filed with RDO/LT Office where the HO is registered

Each application shall be issued a separate ATP

Independent series of serial number for all receipts/invoices (principal & supplementary)

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Salient Features

The approved ATP shall be valid only upon o full usage of the inclusive serial

numbers or o five (5) years from issuance of the

ATP, whichever comes first.

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Salient Features

ONLY BIR ACCREDITED PRINTERS shall have the exclusive authority to print principal and supplementary receipts/invoices.

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Transitory Provision

Expiring ATP for invoices/receipts (principal and supplementary) shall apply for a new ATP not later than 60 days prior to actual expiry date

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Validity of Unused/ Unissued Principal & Supplementary Receipts/ Invoices

VALIDITY(RMC 52-

2013)

Receipts with ATP prior to Jan. 1, 2011 shall no longer be valid as of

Aug. 30, 2013

Receipts with ATP dated Jan. 1, 2011 to Jan. 17, 2013 shall be valid until . . . . . . . .(provided that new ATP was issued on or before Aug. 30, 2013)

Oct. 31, 2013

Invoicing Requirements

Issuance of receipts/invoices after its validity constitute a violation of Sec. 264 of the NIRC of 1997

It is considered as if no receipt/invoice was issued

Invoicing Requirements

No deduction from gross income shall be allowed using these invoices/receipts as they are not valid proof of substantiation

In case of VAT-registered persons, no input tax may be claimed using these receipts/invoices

On issuance of tax clearance (RMC 52-2013)

To fully implement the requirements under RR 18-2012, a certified true copy of the ATP shall be included as attachment

No ATP shall be a ground for non-issuance of tax clearance for whatever purposes

BOOKKEEPING REQUIREMENT

S

ON BOOKKEEPING REQUIREMENTS

Apply for registration of books of accounts, basically a Journal, Ledger, and applicable subsidiary books

The BIR records your latest volume in our registration database.

All of the above to be done within 30 days from date of registration

ON BOOKKEEPING REQUIREMENTS

Preserved within the prescriptive period of 10 yrs (RR 17-2013).

Gross receipts exceeding P150k in any given quarter must be audited by a CPA

If using Computerized Accounting System Must be approved by the BIR before its use

ON BOOKKEEPING REQUIREMENTS

Transactions for the day must be entered in books on or before 12nn the following day. Balances transferred to the Ledger on day following the end of month

It’s not required to register new set of books every year; only before the pages of current book is almost used up.

Display “Ask For Receipt Poster” which shall be issued upon release of COR

Display Certificate of Registration (COR) at the establishment (BIR Form 1556)

At the place of business in an area

conspicuous to the public at all times.

Penalty: P1,000 and/or imprisonment

of not more than 6 months.

REGISTRATION FEES

On Registration

• Pay Annual Registration Fee of P500.00 upon registration and every year thereafter on or before Jan. 31• for every separate or distinct establishment

or place of business, including facility types where sales transactions occur

INCOME TAX

Income Tax Rates

Individual (5% - 32%) Corporation

Normal Income Tax – 30%Minimum Corporate Income Tax – 2%Improperly Accumulated Earnings Tax – 10%

Income Tax Due Dates

Income Tax Period

Due Date Individual

Due DateCorporation

1st Quarter April 15 60 days after the end of the

quarter2nd Quarter Aug. 15

3rd Quarter Nov. 15

Annual Return April 15 15th day of the 4th month after the end of the accounting period

Minimum Corporate Income Tax of 2% of Gross Income

Same as Annual ITR (imposed beginning on the 4th taxable year after the start of business operation.

Improperly Accumulated Earnings Tax 15th day after the end of the year following the close of the taxable year

New Income Tax Forms

Under Revenue Regulations No. 2-2014

Percentage Tax

Percentage Tax

Rate - 3% of gross revenue

if gross revenue do not exceed P1.5M (now P1,919,500 pursuant to RR 16-2011) otherwise subject to VAT

Due Date

Return Period Due Date

Monthly Percentage Tax 2oth day ff taxable month

Value-Added Tax

VAT defined It is a tax on the value added to the purchase

price or cost in the sale or lease of goods, properties, or services in the course of trade or business.

Due Date

51

VAT Payable

Output Tax ( Sales x 12%) - P x x x

Less Input Tax (Purchases x 12%) - x x x

VAT payable - P x x x

52

Output Tax

Means the value-added tax due on the sale or lease of taxable good or property or services by a VAT-registered person.

VAT Rates 12% 0%

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Gross Receipts

• Contract price, compensation, service fee, rental or royalty

• Including the amount charged for materials supplied with the services

• Deposits applied as payments for services rendered

• Advance payment actually or constructively received

• Excluding the VAT

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INPUT TAX

Is the value added tax due from or paid by a VAT-registered person in the course of his trade or business. Any input tax evidenced by a VAT

invoice or official receipt shall be creditable against the output tax.

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Sources Input Tax

Purchase or importation of goods For sale

For conversion into or intended to form part of a finished product for sale including packaging materials

For use as supplies in the course of business

For use as materials supplied in the sale of service

For use in trade or business for which deduction for depreciation / amortization is allowed under the Tax Code

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Sources of Input Tax (cont…)

Purchase of real properties for which the VAT was actually paid

Purchase of services for which the VAT was actually paid

Transitional input tax Presumptive Input tax Standard Input Tax (gov’t. transaction)

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Standard Input

Rate of 7% effectively accounts for the standard Input VAT for sales of goods or services to government;

In lieu of the actual input VAT directly attributable or ratably apportioned to such sale;

Standard Input

If the actual input tax exceeds the standard input, the excess may form part of the seller’s expense or cost;

If less than the standard, the difference must be closed to expense or cost.

VAT on Gov’t. Transactions

Output Tax (12%) - P 12,000

Less: Standard Input (7%) - 7,000

VAT Payable - P 5,000

Less: Withholding Tax (5%) - 5,000

VAT Payable P -0-

Submission of Summary List of Sales and Purchases

RR 1-2012– Mandatory submission of Quarterly

Summary List of Sales and Purchases by all VAT registered taxpayers effective Jan. 1, 2012

Due Date:

On or before the 25th day of the month

following the close of the taxable

quarter.

Submission of SLS / SLP

SLS/SLP shall be submitted in softcopy to the RDO having jurisdiction of the taxpayer on or before the 25th day of the month following the close of the taxable quarter

Submission of SLS / SLP

For TPs under LTS and those enrolled in eFPS shall submit thru electronic filing facility on or before the 30th day of the following month following the close of the taxable quarter.

Update on Withholding Tax on Wages

Revenue Regulations No. 11-2013

Filing/Submission of Hard Copy of the Certificate of Compensation Payment/Tax Withheld (BIR Form 2316)

•Covering Employees Who are Qualified for Substituted Filing•Deadline Feb. 28 of the ff year

Expanded Withholding Taxes

Persons Required to Deduct & withhold

Juridical persons, whether or not engaged in trade or business;

Individuals in connection with his trade or business, however, individual buyers of real properties are also constituted as withholding agents;

All government offices.

INCOME PAYMENTS SUBJECT TO EWT

DESCRIPTION

A. Professional fees, talent fees, etc., for services rendered by individuals

15% if gross income exceeds P720T 10% if otherwise DISCLOSURE REQUIREMENT

shall periodically disclose his gross income for the current year to the BIR by submitting a Notarized Sworn Declaration to the Collection Division

Should be filed on June 30 of each year or w/in 15 days after the end of the month the professional/talent/directors income reaches P720T, w/ever comes first.

INCOME PAYMENTS SUBJECT TO EWT

DESCRIPTION

B. x x x

C. Rentals

On real properties – 5%

On personal properties - on gross rental or lease in excess of p10,000 annually

Poles, satellites and transmission facilities – 5%

Billboards – 5%

INCOME PAYMENTS SUBJECT TO EWT

DESCRIPTION

D. x x x

E.Income Payments to certain contractors

F.x x x

G.x x x

H.x x x

I. x x x

2% on gross payments of the ff:

- General engineering contractors - General building contractors - Specialty contractors - other contractors

INCOME PAYMENTS SUBJECT TO EWT

DESCRIPTION

J. x x x

K.x x x

L.x x x

M.Income payments made by the top 20K private corp to their local/resident supplier of goods/services other than those covered by other wtax rates

Supplier of goods – 1%Supplier of services – 2%

INCOME PAYMENTS SUBJECT TO EWT

DESCRIPTION

N. Income payments made by the gov’t. to its local/resident supplier of goods/services other than those covered by other wtax rates

O. x x x

Supplier of goods – 1%Supplier of services – 2%

INCOME PAYMENTS SUBJECT TO EWT

DESCRIPTION

P. x x x

Q. x x x

R. x x x

S. x x x

T. Income payments on purchases of minerals, mineral products and quarry resources

5%

Answer: Non-VAT Contractor

Requirements for deductibility:

• Income payment shall only be allowed as deduction from the payor’s gross income only if it is shown that the income tax required to be withheld has been paid to the BIR

• No payment shall be allowed not withstanding payments of withholding tax at the time of audit/investigation

Withholding Tax on Government Money

Payments

On Gov’t. Money Payments

Rate

Contractors having contracts with the government or any of its political subdivisions, instrumentalities or agencies, including government-owned and controlled corporations (GOCCs)

5% Final – for VAT

Taxpayers

3% for Non-VAT Taxpayers

Illustration

The Office of the Provincial Capitol of Davao del Sur availed your services for the construction of a waiting shed with a contract price of P224,000.00.

Compute for the withholding taxes assuming the contractor is: a) Non-VAT registered taxpayer

b) VAT registered taxpayer

Answer: Non-VAT Contractor

Expanded Withholding Tax

W/tax on Gov’t. Money Payment

(creditable against Income Tax)

(creditable against Percentage Tax)

P224,000.00 x 2% = P4,480.00

P224,000 x 3% = P6,720.00

Answer: VAT Contractor

Expanded Withholding Tax

W/tax on Gov’t. Money Payment

(creditable against Income Tax)

(creditable against Value-Added Tax)

(P224,000.00/112%) x 2% =

P4,000.00

(P224,000/112%) x 5% =

P10,000.00

Important! TP needs to file a return even

when there’s no tax due to pay for every tax type he registered.

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Electronic Filing and Payment System (eFPS)

Mandatory Enrollment to and availment of eFPS facility (RR 69-2009)

Large Taxpayers

All government Bidders

Corporation with complete computerized system

Taxpayers belonging to the list of Top 20,000 Private Corporations

Taxpayers belonging to the Top 5,000 individual taxpayers

The end....