2. BUREAU OF INTERNAL REVENUE (BIR)
An agency under the Department of Finance, its duties and
mandate as follows: “assessment and collection of all national
internal revenue taxes, fees and charges, and the enforcement of all
forfeitures, penalties and fines connected therewith, including the
execution of judgments in all cases decided in its favor by the Court
of Tax Appeals and the ordinary courts.”
3. is an enforced proportional contribution upon
persons, properties and/or rights imposed by
the government for public purpose.
4. WHY YOU SHOULD REGISTER YOUR BUSINESS?
Under Sec. 236 of the Tax Code and RMC No. 60-
2020, all persons doing business and earning income
in any manner or form, including those who are into
digital transactions the use of any electronic
platforms and media, are required to register their
business.
5. BENEFITS OF A REGISTERED BUSINESS
1. YOUR BUSINESS IS LEGIT AND CREDIBLE, THUS, EARNS CUSTOMER’S TRUST
2. YOU HAVE THE OPPORTUNITY TO TRANSACT WITH BIG CLIENTS THAT REQUIRES REGISTERED BIR
RECEIPTS / INVOICES
3. YOU ARE FREE TO ADVERTISE YOUR BUSINESS
4. YOU WILL HAVE PROOF OF INCOME (INCOME TAX RETURN-BIR FORM 1701) THAT YOU CAN USE
TO APPLY FOR A LOAN, CREDIT CARD AND TRAVEL VISA
5. GIVES YOU PEACE OF MIND AND AVOID PENALTIES WHEN CHECKED BY TAX AUTHORITIES
6. B. Sales Invoice- Goods
WHAT ARE THE REQUIREMENTS?
1. BIR FORM 1901 version 2018 ( 2 copies)
2. Photocopy of any Government issued ID
3. Sample Receipt
A. Official Receipt – Services
7. WHAT ARE THE REQUIREMENTS?
4. Photocopy of DTI Certificate (if applicable)
5. Payment of Registration Fee Php 500.00 and Php 30.00 for Loose
Documentary Stamp Tax to be attached to the Certificate of Registration
6. Books of Accounts – 2 Columnar and 1 Ledger or Simplified Book Of Accounting (Blue Book)
columnar
OR
2 COLUMNAR – 1 Cash Receipt Book is a financial journal that contains cash inflows of the business operation.
1 Cash Disbursement Book is a financial journal that contains cash outflows of the business operation.
LEDGER – is a book which summarizes the total per account on a monthly basis.
SIMPLIED BOOK OF ACCOUNTING– is a book of accounts used by small businesses.
8. REQUIREMENTS DURING BUSINESS OPERATION
Display the original Certificate of Registration, Notice to Issue Receipt/Invoice and
Payment of Registration Fee (BIR Form 0605) in your store.
9. Issuance of Sales Invoices/Official Receipts
For every sale of goods or services to clients/customers/buyers, the taxpayer must issue
Sales Invoices/ Official Receipts (pursuant to Sec. 113 and 237 of the Tax Code)
Non-VAT – P100 and above
VAT – regardless of amount
Keeping of Books of Accounts
Record all business transactions within twenty four (24)hours following the close of the
daily transaction.
Preserve books of accounts and all supporting documents within ten (10) years from the
last day prescribed by law for the filing of return or actual date of filing of return, whichever
comes later pursuant to Section 235 of the Tax Code.
10. PARTICULARS
(SerialNo.ofReceipts/InvoicesIssued)
1 O.R #001-008 1 5 0 0
2 CLOSED
3 O.R.#009-012 3 0 0 0
4 O.R.#013-019 4 5 0 0
5 O.R.#020-031 6 0 0 0
6 NO TRANSACTION
7 NO TRANSACTION
Upto30 or 31 * TotalattheendoftheMonth 1 5 0 0 0
DATE AMOUNT
JANUARY2020
A. CASH RECEIPTS BOOK
12. C. GENERAL LEDGER
PARTICULARS
JAN. O.R.#001-031 1 5 0 0 0 7 0 0 0
FEB.
MAR.
APR.
Up TODecember
GRAND TOTAL X X X X X X X X X
TAXABLE YEAR 2020
2020
SALES
Amount
PURCHASES
PARTICULARS Amount
S.I.NO.0023
13. TAX RETURNS TO BE FILED (including the required attachments):
ANNUAL REGISTRATION FEE
INCOME TAX
BUSINESS TAX
A. PERCENTAGE TAX
B. VALUE ADDED TAX
EXPANDED WITHHOLDING TAX
WITHHOLDING TAX ON COMPENSATION
15. 15
INDIVIDUAL
Quarterly (BIR Form 1701Q)
Annual ITR (BIR Form 1701)
Every 15th day of the 4th moth following
the close of the taxable year (April 15).
INCOME TAX
NON-INDIVIDUAL
Quarterly (BIR Form 1702Q)
On or before the 60th day following the close
of the taxable quarter.
Annual ITR (BIR Form 1702)
on or before the 15th day of the fourth
month following the close of the taxable year.
1st Quarter May 15
2nd Quarter Aug. 15
3rd Quarter Nov. 15
16. 16
INDIVIDUAL
Quarterly (BIR Form 1701Q)
Annual ITR (BIR Form 1701)
INCOME TAX RATES
NON-INDIVIDUAL
Quarterly (BIR Form 1702Q)
Annual ITR (BIR Form 1702)
Regular rate – 30%
Minimum Corporate Income Tax – 2% of
the Gross Profit
17. TWO TYPES OF DEDUCTIONS
1. ITEMIZED DEDUCTIONS
Must be ordinary and necessary trade, business or professional
expenses attributable to the business or practice of profession.
Substantiated with sufficient evidence.
2. OPTIONAL STANDARD DEDUCTION (OSD)
Individual – 40% of Gross Sales/Receipts
Corporation – 40% of Gross Income
Once OSD is availed during the filing of 1st Quarter ITR, it is already irrevocable during the taxable year.
17
Salaries and Wages Transportation Cost
Rent Expense Supplies
Insurance Expense Interest Expense
Light and Water Depreciation
Fuel and Oil Others
EXAMPLES
18. Computation of Taxable Income
(Itemized Deductions)
GROSS RECEIPTS/ SALES 900,000.00
₱
LESS: COST SALES 490,000.00
₱
GROSS INCOME 410,000.00
₱
LESS: ITEMIZED DEDUCTIONS
Rent Expense 60,000.00
₱
Fuel and Oil 3,610.00
Salaries and Wages 100,000.00
Supplies Expense 560.00
Depreciation 3,600.00
Miscellaneous Expense 112.00 167,882.00
₱
Taxable Income 242,118.00
₱
19. Computation of Taxable Income
(40% Optional Standard Deductions)
Individual
GROSSRECEIPTS/SALES 900,000.00
₱
LESS: 40%OptionalStandardDeductions(P900,000x40%) 360,000.00
₱
TaxableIncome 540,000.00
₱
20. Computation of INCOME TAX
GROSSRECEIPTS/SALES 900,000.00
₱
LESS: COSTSALES 490,000.00
GROSSINCOME 410,000.00
LESS: ITEMIZEDDEDUCTIONS
RentExpense 60,000.00
₱
Fueland Oil 3,610.00
Salariesand Wages 100,000.00
SuppliesExpense 560.00
Depreciation 3,600.00
MiscellaneousExpense 112.00 167,882.00
TaxableIncome 242,118.00
INCOMETAXDUEUNDERTRAIN 0.00
Note:Ifthetaxdueiszero,thetaxpayerneedstofiletheIncometax
returnusingtheebirformsfacilityinBIRwebsite(www.bir.gov.ph).
GROSSRECEIPTS/SALES 900,000.00
₱
LESS:40%OptionalStandardDeductions(P900,000x40%) 360,000.00
TaxableIncome 540,000.00
INCOMETAXDUEUNDERTRAIN 65,000.00
Note: Use the income tax table for individual for computation of income tax due.
21. Documentary Requirement in Filing the ANNUAL INCOME
TAX (BIR FORM 1701/1701-A/1702)
1. Statement of Management Responsibility (SMR);
2. Financial Statements;
3. Certificate of Independent CPA duly accredited by BIR, if Gross
Sales/Receipts Exceed P 3,000,000.00;
4. Electronic Submission of Summary Alphalist of Withheld Taxes (SAWT) for
BIR Form 2307 together with confirmation receipt, if any;
5. BIR Form 2316 (for Mixed Income Earner, Individual);
6. BIR Form 1701Q / 1702Q filed with proof of payment, if to be claimed as tax
credit;
7. Income Tax Return previously filed and proof of payment, if filing an
amended return for the same taxable year.
22. SAMPLE OF FINANCIAL STATEMENT COMPOSITIONS
22
SALES 400,000.00
COST OF SALES
INVENTORY BEG 50,000.00
PURCHASES 175,000.00
TOTAL GOODS AVAILABLE FOR SALES 225,000.00
LESS: INVENTORY 65,000.00 160,000.00
GROSS PROFIT 240,000.00
ADD: OTHER INCOME 50,000.00
TOTAL 290,000.00
LESS ALLOWABLE DEDUCTION
RENTAL 36,000.00
SALARIES AND WAGES 24,000.00
ELECTRICITY 2,500.00
TAXES AND LICENSES 12,000.00
COMMUNICATION 6,000.00
TRANSPORTATION AND TRAVEL 2,000.00
FUEL AND OIL 5,000.00
REPAIRS AND MAINTENANCE 5,000.00
DEPRECIATION -
REPRESENTATION & ENTERTAINMENT -
BAD DEBTS -
CHARITABLE CONTRIBUTIONS - 92,500.00
NET INCOME 197,500.00
XYZ SARI SARI STORE
JUAN DELA CRUZ
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014
23. 23
LIABILITIES ANDCAPITAL
CURRENT ASSET LIABILITIES
CASH P XXXX ACCOUNTPAYABLE P XXXXXXXXX
ACCOUNTRECEIVABLE XXXX LOANS PAYABLE XXXXX
INVENTORY XXXX PERCENTAGE PAYABLE XXXXX
SUPPLIES XXXX XXXX OTHERPAYABLES XXXXX P XXXX
FIXEDASSET CAPITAL
FURNITURES ANDFIXTURES P XXXX JUANDELA CRUZCAPITAL beg. P XXXXXXXXX
STORE EQUIPMENT XXXX Add: Net Income XXXXX
DELIVEREQUIPMENT XXXX Total XXXXX
BUILDING XXXX Less Drawing XXXXX P XXXX
TOTAL XXXX
LESS: ACCUMULATEDDEPRECIATION XXXX XXXX
TOTAL ASSET P XXXX TOTAL LIABILITIES ANDCAPITAL P XXXXX
ASSET
JUANDELA CRUZ
BALANCESHEET
FORTHEYEARENDEDDECEMBER31, 2014
XYZSARI SARI STORE
SAMPLE OF FINANCIAL STATEMENT COMPOSITIONS
24. BUSINESS TAX
A. PERCENTAGE TAX
Any person whose Sales/Receipts are exempt from paying Value-Added Tax
under Sec 109 (B) of Tax Code shall be liable to 3% Percentage Tax on Gross
Sales/Receipts.
FORM TYPE: BIR FORM 2551Q
DUE DATES:
1st Quarter April 25
2nd Quarter July 25
3rd Quarter October 25
4th Quarter January 25
Documentary Requirement: Electronic Submission of Summary Alphalist of Withheld Taxes (SAWT) for
BIR Form 2307 together with confirmation receipt, if any.
25. The following are the recorded sales of Maria for the
1st Quarter of 2020.
January P 100,000.00
February 150,000.00
March 200,000.00
Total P 450,000.00
Business Tax Due (P 450,000.00 x 3%) P 13,500.00
Due Date April 25
26. What if Maria pays on April 30, how much is total tax
due?
Business Tax Due (P 450,000.00 x 3%) P 13,500.00
Add: 25% Surcharge (P 13,500.00 x 25%) 3,375.00
12% Interest per Annum (P 13,500.00 x 12% x 5 days/360 days) 22.50
Compromise Penalty 5,000.00
TOTAL P 21,897.50
27. All tax dues paid beyond the deadline are subject to the
following penalties:
1. 25% Surcharge ( Tax due x 25%)
2. 12% Interest( Tax due x 12% x (no. of days delay / 360 days))
3. Compromise Penalty based on RMO 7-2015 (see
next slide)
28. Revenue Memorandum Order 7-2015
If the amount of tax
unpaid exceeds
But does not exceed
Compromise
Penalty is
P xxx P 5,000 P 1,000
5,000 10,000 3,000
10,000 20,000 5,000
20,000 50,000 10,000
50,000 100,000 15,000
100,000 500,000 20,000
500,000 1,000,000 30,000
1,000,000 5,000,000 40,000
5,000,000 xxx 50,000
29. Optional Registration – may be opted upon initial registration or
may update during operations (Not cancellable for three (3)
years);
Mandatory Registration – Required if gross sales/receipts
exceeded or with the reason to believe that gross sales or
receipts will exceed P3,000,000 annually.
B. VALUE ADDED TAX
30. Taxable Period Due Date Form Type
January February 20 2550M
February March 20 2550M
1st Quarter April 25 2550Q
April May 20 2550M
May June 20 2550M
2nd Quarter July 25 2550Q
July August 20 2550M
August September 20 2550M
3rd Quarter October 25 2550Q
October November 20 2550M
November December 20 2550M
4th Quarter January 25 2550Q
31. VALUE ADDED TAX
OUTPUT TAX XXX
LESS: INPUT TAX XXX
VAT PAYABLE XXX
GROSS SALES/REVENUE XXX
MULTIPLY BY 12% XXX
OUTPUT VAT XXX
VATABLE PURCHASES XXX
MULTIPLY BY 12% XXX
INPUT VAT XXX
Documentary Requirement:
1. Monthly / Quarterly Electronic Submission of Summary
Alphalist of Withheld Taxes (SAWT) for BIR Form 2306
together with confirmation receipt, if any;
32. 8% OPTIONAL INCOME TAX
8% income tax on gross sales or gross receipts in excess of
P250,000 in lieu of the graduated income tax rates and the
percentage tax under Sec. 116;
Taxpayer should have expressed his/her intention of availing the 8%
Income Tax Rate
Who can avail:
Should be either a self-employed (single proprietor, professional, or
mixed income earner)
The taxpayer is a non-VAT filer (gross sales/receipt do not exceed P
3Million)
33. The total gross sales of Voily for taxable year 2018
was P 987,000.00.
Annual Gross Sales 987,000.00
Less: 40% Optional Standard Deductions 394,800.00
Taxable Income 592,200.00
Income Tax Due 78,050.00
Business Tax Due (P 987,000.00 x 3%) 29,610.00
Total P 107,660.00
34. The total gross sales of Voily for taxable year 2018
was P 987,000.00 and opted the 8% Option.
Annual Gross Sales 987,000.00
Less: 0.00
Taxable Income 987,000.00
Income Tax Due (P 987,000.00 – 250,000.00) * 8% 58,960.00
Business Tax Due 0.00
Total P 58,960.00
35. HOW TO AVAIL THE 8% OPTION
(for existing business)
1. Fill out BIR Form 1905;
2. Surrender Certificate of Registration;
3. Two (2) loose Documentary Stamp Tax;
4. Taxpayer must have expressed his/her intention of availing the
8% Income Tax Option in 1st Quarter 2551Q / 1st Quarter
1701Q which comes earlier.
36. EXPANDED WITHHOLDING TAX
A kind of withholding tax which is prescribed only for certain payors
and is creditable against the income tax due of the payee for the
taxable year.
Types of expenses payments that are subject to EWT.
Rentals Professional fees Advertising
Sugar Mineral products Quarry resources
Types of payor who are subject mandated to withhold.
Government offices
Political parties/candidates
Top Withholding Agents (TWA)
37. Examples of Income Payments subject to
Withholding Tax - Expanded
Income Payments to: RATE
Supplier of Goods 1%
Supplier of Services 2%
Rentals 5%
Professionals – Individual 5% /10%
Professionals - Corporation 10% / 15%
38. Taxable Period Due Date Form Type
January February 10 0619 E
February March 10 0619 E
1st Quarter April 30 1601EQ
April May 10 0619 E
May June 10 0619 E
2nd Quarter July 31 1601EQ
July August 10 0619 E
August September 10 0619 E
3rd Quarter October 31 1601EQ
October November 10 0619 E
November December 10 0619 E
4th Quarter January 31 1601EQ
Annualy March 1 1604 E
Required Attachments:
1. Electronic Submission of Quarterly Alphalist of Payees (QAP) together with confirmation receipt for BIR FORM 1601EQ;
2. Electronic Submission of Annual Alphalist of Payees together with confirmation receipt for BIR FORM 1604E.
39. WITHHOLDING TAX ON COMPENSATION
Persons subject to the withholding tax:
Monthly Remittance (BIR Form 1601C)
Every 10th day following the close of the month when the
withholding was made. (January to November)
Every 15th day following the close of the month when the
withholding was made. (December)
Annual Information Return (BIR Form 1604 C) on or before
January 31 following the close of taxable year, including
Alphabetical list of employees.
All employed individuals whether citizens or aliens, deriving income from compensation for
services rendered in the Philippines. The employer is constituted as the withholding agent
41. Inventory List is a report that outlines the details of all goods held by owner on the last
day of year.
Deadline: Every January 30 of the following year
42. REQUIREMENTS FOR CLOSURE OF BUSINESS
1. BIR Form No. 1905 (2 copies);
2. List of ending inventory of goods, supplies, including capital good; (1
original)
3. Inventory of unused sales invoices/ official receipts (SI/OR); (1 original)
4. Unused sales invoices/official receipts and all other unutilized accounting
forms (e.g. vouchers, debit/credit memos, delivery receipts, purchase
orders, etc. ) including business notices and permits as well as Certificate
of Registration (COR) shall be subject for destruction to be witnessed by
BIR personnel and officials. (1 original)
Note: If everything is in order and NO OPEN CASES are found, CERTIFICATE OF NO OUTSTANDING LIABILITY will be issued.
42
43. In what grounds can the Commissioner of Internal Revenue
suspend the business operations of a taxpayer?
a) In the case of a VAT-registered Person:
Failure to issue receipts or invoices;
Failure to file a value-added-tax return as required under Section 114;
or
Understatement of taxable sales or receipts by thirty percent (30%) or
more of his correct taxable sales or receipts for the taxable quarter.
b) Failure of any Person to Register as Required under
Section 236.
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