Compliance Requirements The registrant shall, whenever applicable, update his registration information with the Revenue District

The registrant shall, whenever applicable, update his registration information with the Revenue District Office where he is
registered, specifying therein any change in tax type and other taxpayer details.
KEEPING OF BOOKS OF ACCOUNTS
CANCELLATION OF REGISTRATION
All corporations, companies, partnerships, or persons required by law to pay internal revenue taxes shall keep a journal and The registration of any person who ceases to be liable to a tax type shall be cancelled, upon filing with the Revenue District
a ledger or their equivalents. Office where he is registered, an application for registration information update in a form prescribed therefore.
1. those whose gross quarterly sales earnings receipts or output do not exceed P50,000.00, shall keep and use a simplified set
of bookkeeping records duly authorized by the Secretary of Finance wherein all transaction and results of operations are WHERE T.I.N REQUIRED TO BE SUPPLIED
shown. Any person required under the tax code to make, render or file a return, statement or other document, shall be supplied with
2. Those whose gross quarterly sales, earnings, receipts, or output exceed 150,000 shall have their books of accounts audited or assigned a Taxpayer Identification Number (TIN), which he shall indicate in such return, statement or document filed
and examined yearly by independent Certified Public Accountants and their income tax returns accompanied with a duly with the BIR for his proper identification for tax purposes.
accomplished Account Information Form (AIF)
EXAMPLES OF DOCUMENTS WHICH REQUIRES INDICATION OF A TIN.
PRESERVATION OF BOOKS OF ACCOUNTS
All books of accounts, including the subsidiary books and other accounting records of corporations, partnerships or persons a. sugar quedans, refined sugar release order or similar instruments;
shall be preserved by them within 3 years (except in case of a false or fraudulent return) from the last entry in each book and b. domestic bills of lading
for which period the Commissioner is authorized to make an assessment. c. documents to be registered with the Register of Deeds or Assessor’s Office;
The said books and records shall be subject to examination and inspection by internal revenue officers made only d. registration certificate of transportation equipment by land, sea or air;
once in a taxable year, except in the following cases: e. documents to be registered with the SEC;
1. fraud, irregularity or mistakes as determined by the commissioner; f. building construction permits;
2. the taxpayer requests reinvestigation; g. application for loan with banks, financial institutions or other financial intermediaries;
3. verification or compliance with the withholding tax laws and regulations and h. application for mayor’s permit
4. in the exercise of the commissioner’s power to obtain information from other persons, in which case, another or separate i. application for business license with the DTI
examination and inspection may be made. j. such other documents which may thereafter be required under rules and regulations to be promulgated by the Secretary of
Finance, upon recommendation of the Commission of Internal Revenue.
REGISTRATION REQUIREMENTS
Every person subject to any internal revenue tax shall register once with the appropriate Revenue District Officer:
1. within 10 days from date of employment ISSUANCE OF RECEIPTS, SALES INVOICE OR COMMERCIAL INVOICE
2. on or before the commencement of business
3. before payment of any tax due All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued
4. upon filing of a return, statement or declaration as required in the tax code. at 25.00 or more, issue duly registered receipts, sales invoice or commercial invoice, prepared at least in duplicate, showing
the date of transaction, quantity under cost and description of merchandise or nature of service.
CONTENTS OF REGISTRATION
The taxpayer’s name, style, place of residence, business, and such other information as may be required by the In lieu of sale invoices or receipts, the BIR permits the use of cash register and point-of sale (POS) machines. In this regard,
commissioner of internal revenue in the form prescribed therefor. the BIR, has set rules, and the permit shall be issued only to proprietors, owners or operators of any of the following lines of
business and other similar establishments:
REGISTRATION FEE, AMOUNT AND WHEN PAID
An annual registration fee in the amount of P500.00 for every separate or distinct establishment or place of business, 1. supermarkets;
including facility types where sales transaction occur shall be paid, upon registration and every year thereafter on or before 2. department stores
the last day of January. 3. drugstores
4. bookstores
EXCEPTIONS: who are not required to pay: 5. groceries
a. cooperatives 6. bakeries
b. individuals earning purely compensation income, whether locally or abroad, amd 7. restaurants, bars, beer gardens, refreshment parlors and other eating places
c. overseas workers 8. record bars and music stores
TO WHOM PAYMENT MADE 9. video shops selling and leasing out cinematographic films
a. an authorized agent bank located within the revenue district office; 10. garages and other parking spaces
b. Revenue collection officer. Or 11. gasoline stations
c. duly authorized treasurer of the City or municipality where each place of business or branch is located. 12. hotels, motels, lodging houses and the like
13. token exchange stations
REGISTRANT SHOULD UPDATE REGISTRATION INFORMATION 14. recreational and amusement centers.
The Commissioner of Internal Revenue may, in meritorious cases, qualify other lines of business to use cash register and c. Interest income received by a resident individual taxpayer from a depository bank under the Foreign Currency Deposit
POS machines considering modern business practices. System- 7.5%
d. Interest income from long term deposit or investment in the form of savings, common or individual trust funds, deposit
WHERE NAME, BUSINESS STYLE, OR ADDRESS OF PURCHASER, CUSTOMER OR CLIENT IS REQUIRED substitutes, investment management accounts and other investments predetermined by the holder before the 5TH year at the
TO BE SHOWN ON THE RECEIPT OR INVOICE following rates

In case of sales receipts or transfers in the amount of P100.00 or more, regardless of amount where the sale or transfer is
made by persons subject to the value added tax to other persons also subject to value added tax, or where the receipt is Holding Period Rate
issued to cover payment made as rentals, commissions, compensations or fees. 4 years to less than 5 years 5%
3 years to less than 4 years 12%
PRINTING OF RECEIPTS, SALES INVOICE OR COMMERCIAL INVOICE IMPT!!!!! Less than 3 years 20%
All persons who are engaged in business shall secure from the BIR an authority to print receipts, sales invoice or
commercial invoice before a printer can print the same. e. On capital gains presumed to have been realized from the sale, exchange, or other disposition of real property located in
the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales based on the
No authority to print receipts, sales invoice or commercial invoice shall be granted unless the receipts or invoices to be gross selling price or fair market value, whichever is higher- 6%.
printed are serially numbered and shall show, among other things, the name, business style, taxpayer identification number
and business address of the person or entity to use the same and such other information that may be required by rules and PERSONS REQUIRED TO DEDUCT AND WITHHOLD CREDITABLE TAX ON INCOME PAYMENTS
regulations to be promulgated by the Secretary of Finance, upon recommendation of the commissioner. a. In general, any juridical person, whether or not engaged in trade or business;
b. An individual, with respect to payments made in connection with his trade or business; however,, insofar as taxable sale,
All persons who print receipts, sales invoice or commercial invoice shall maintain a logbook/ register of taxpayers who exchange or transfer of real property is concerned, individual buyers who are not engaged in trade or business are also
availed of their printing services. The logbook/ register shall contain the following information: constituted as withholding agents;
c. All government offices, including government-owned or controlled corporations, as well as provincial, city and municipal
a. names and TIN of the persons or entities for whom the receipts, sale invoice or commercial invoice were printed, and governments.
b. number of booklets, number of sets per booklet, number of copies per set and the serial numbers of the receipts or TIME OF WITHHOLDING
invoices in each booklet. The obligation of the payor to deduct and withhold the tax arises at the time an income is paid or payable, whichever comes
WITHHOLDING TAXES first. The term “payable” refers to the date the obligation became due, demandable or legally enforceable.
Tax credits refers to amounts allowed as deductions from the tax due. Withholding taxes just like foreign income tax paid or
accrued are tax credits. Thus, withholding taxes on income are being deducted from the income tax due and not from gross EXEMPTION FROM WITHHOLDING
income. The withholding of creditable withholding tax prescribed shall not apply to income payments made to the following:
WITHHOLDING OF TAX AT SOURCE a. National Government and its instrumentalities, including provincial, city or municipal governments;
1. Final Withholding Tax- Under the final withholding tax system the amount of income tax withheld by the withholding b. Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such
agent is constituted as a full and final payment of the income tax due from the payee on the said income. The liability for as but not limited to the following:
payment of the tax rest primarily on the payor as a withholding agent. 1. sales of real property by a corporation which is registered with and certified by the Housing and Land Use Regulatory
The liability for payment of the tax rest primarily on the payor as a withholding agent. Thus in case of his failure to withhold Board (HLURB) or HUDCC as engaged in socialized housing project where the selling price of the house and lot or only
the tax or in case of underwithholding, the deficiency tax shall be collected from the payor/withholding agent. The payee is the lot does not exceed P180,000 in Metro Manila or other highly urbanized areas and 150,000 in other areas or such
not required to file an income tax return for the particular income. adjusted amount of selling price for socialized housing….x x x.
The finality of the withholding tax is limited only to the payee’s income tax liability on the particular income. It does not 2. corporations registered with the Board of Investments x x x
extend to the payee’s other tax liability on income, such as when the said income is further subject to a percentage tax. For
example, if a bank receives income subject to final withholding tax, the same shall be subject to a percentage tax. 3. corporations which are exempt from the income tax under the NIRC, such as GSIS, SSS, PCSO, PHIC, PCSO and
2. Creditable Withholding Tax. Under the creditable withholding tax system, taxes withheld on certain income payments PAGCOR.
are intended to equal or at least approximate the tax due of the payee on said income. The income recipient is still required
to file an income tax return to report the income and or pay the difference between the tax withheld and the tax due on the
income. Taxes withheld on income payments covered by the expanded withholding tax and compensation income are PRE-ASSESSMENT NOTICE
creditable in nature.
A pre-assessment notice is served by the Government upon the taxpayer under any of the following circumstances:
INCOME PAYMENTS SUBJECT TO FINAL WITHHOLDING TAX AND CORRESPONDING RATES. 1. if the taxpayer fails to file a return where return is required;
1. Income Payment to a citizen or resident alien individual. 2. if he files a return but fails to pay the tax;
a. Interest from any peso bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds 3. if he files a return and pays the tax, but payment is insufficient because certain deductions claimed are disallowed by the
and similar arrangements, royalties, prizes (except prizes amounting to P10,000.00 or less which shall be subject to the BIR.
normal income tax for individuals), and other winnings (except PCSO winnings and lotto winnings) derived from sources
within the Philippines – 20%
b. Royalties on books, as well as other literary works and musical compositions- 10-%
After the taxpayer’s receipt of the pre-assessment notice, any of the following situations can take place: c. Enforcement of forfeiture of property
1. taxpayer accepts liability and pays the tax as appearing on the pre-assessment notice; d. Enforcement of tax lien
2. taxpayer disagrees with the pre-assessment notice and responds by explaining that he is not liable; e. Requiring the filing of bonds
3. taxpayer pays the tax and later on files a written claim for refund; f. Requiring proof of filing income tax returns
4. taxpayers enters into a compromise agreement with the BIR; g. Deportation of aliens
5. taxpayer ignores the pre-assessment notice. h. Inspection of books of accounts.
The tax code states that the period to respond shall be prescribed by implementing rules and regulations. If the taxpayer fails
to respond within such period (30 days), a final assessment shall issue. 2. JUDICIAL
a. ordinary civil action
ORDINARY PERIOD FOR ASSESSMENT b. criminal action

The right of the government to asses and later on to collect the tax is subject to prescription, upon the lapse of which it can
no longer exercise this right. Prescriptive period for collection.
Section 203, of the tax code provides that internal revenue taxes shall be assessed within 3 years after the last day prescribed
by law for the filing of the return. The same provision of law lays down the rules as to when the 3 year prescriptive period Where an assessment was made, the period for collection by judicial action or by distraint or levy is within 3 years after the
for assessment begins: date of assessment. Where no assessment was made and a return was filed, and the same is not false or fraudulent, the period
1. if the return is filed before the last day prescribed by law for the filing thereof, it shall be considered as filed on the last for collection by a proceeding in court is within 3 years after the return was due or filed whichever is later, except:
day;
2. if the return is filed on the last day prescribed by law, then it is considered as filed on such day; Where a return required to be filed was not filed, or even if filed the same is false or fraudulent, and made with the intent to
3. if the return is filed beyond the period prescribed by law, the 3 year period shall be counted from the day the return is evade the tax, the period is ten years after discovery of the omission to file the return or from the discovery of the falsity or
filed. fraud. The other exception relative to the prescriptive periods for assessment are also applicable.
So it is clear, that the reckoning point for the 3 year prescriptive period is flexible; if the return is filed on or before the
deadline, the reckoning point is the deadline; if filed beyond the deadline, the reckoning point is the date the return is Where the government makes another assessment on the basis of a reinvestigation requested by the taxpayer, or a revised
actually filed. The 3 year period for assessment begins to run from such a date. assessment because of an amended return or as a result of a reinvestigation asked for by the taxpayer, the period is counted
from the last assessment or the last revised assessment.
FINAL ASSESSMENT
A final assessment issues: Where the action is brought to enforce a compromise agreement into between the commissioner and the taxpayer, the
1. if the taxpayer, having received a pre-assessment notice fails to respond within the period provided for by the rules and prescriptive period is ten years from the time the cause of action accrues as fixed in the civil code.
regulations;
2. under the 5 circumstances enumerated under section 228 of the tax code where pre-assessment notice is not necessary
Section 228. enumerates the exceptional circumstances where a pre-assessment notice is not necessary: The running of the statute of limitation on the making of an assessment, the beginning of distraint or levy or any
proceeding in court for collection is suspended: IMPT!!!!!
1. when the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on
the face of the return; 1. for the period during which the Commissioner of Internal Revenue is prohibited from making tax assessment or beginning
2. when a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding the distraint or levy or any proceeding in court and for sixty days thereafter;
agent; or
3. when a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was 2. when the taxpayer requests for a reinvestigation which is granted by the commissioner;
determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for
the taxable quarter or quarters of the succeeding taxable year; 3. when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or
collected, unless the taxpayer informs the Commissioner of any change in address;
4. when the excise tax due on excisable articles has not been paid, or
5. when an article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital 4. when the warrant of distraint and levy is duly served upon the taxpayer, his authorized representative, or with a member
equipment, machineries and spare parts, has been sold, traded, or transferred to non-exempt persons. of his household with sufficient discretion and no property could be located; and

Under the foregoing circumstances, the taxpayer shall immediately receive a final assessment without the benefit of pre-
assessment notice. 5. When the taxpayer is out of the Philippines.
REMEDIES AVAILABLE TO THE GOVERNMENT IN THE COLLECTION OF THE INCOME TAX

1. ADMINISTRATIVE
a. Distraint of personal property;
b. Levy of personal property