BIR AND OTHER REGULATORY REQUIREMENTS

Transcription

1 BIR AND OTHER REGULATORY REQUIREMENTS

2 PRINCIPLES FOR GOOD GOVERNANCE AND ETHICAL PRACTICE Principles for Good Governance and Ethical Practice Source: Panel on the Nonprofit Sector, October 2007 M. Cass Wheeler Chief Executive Officer American Heart Association Listed as one of the two Co-Conveners

3 PRINCIPLE 1: LAWS AND REGULATIONS Principle Statement [An] organization must comply with all applicable laws and regulations organizations are subject to a range of laws. An organization s governing board is ultimately responsible for overseeing and ensuring that the organization complies with all its legal obligations and for detecting and remedying wrongdoing by management. While board members are not required to have specialized legal knowledge, they should be familiar with the basic rules and requirements with which their organization must comply and secure the necessary legal advice and assistance to structure appropriate monitoring and oversight mechanisms.

4 COMPLIANCE WITH LAWS AND REGULATIONS Applicable to PCP as an organization Applicable also to members meaning PCP officers and members must comply with existing Laws and regulations be these: National Local (Province, City or Municipality) General Special

5 GOVERNMENT AGENCIES TO DEAL WITH Professional Regulation Commission (PRC) Local Government Units (LGUs) Barangay, City or Municipality Bureau of Internal Revenue (BIR) -Revenue District Office -National Office, Diliman, Quezon City Department of Trade and Industry (DTI) As sole proprietor, Name / Brand [e.g., Reyes Clinic] Securities and Exchange Commission (SEC) Partner(s), stockholders LGU and BIR List of LGU and BIR requirements may be comprehensive but not all-inclusive

6 LOCAL GOVERNMENT UNIT (LGU) What Basis / Amount Due Date Where Barangay P500 clearance Community tax certificate Basic of P1.00 P5.00 for inhabitants who own real property with an aggregate assessed value of One thousand pesos (P1,000.00) or more, or who is required by law to file an income tax return shall pay an annual Additional tax of One peso (P1.00) for every One thousand pesos (P1,000.00) of income but not to exceed P5, Last day of February of each year Place of residence or principal place of business Lease contract, certificate of title, deed of sale, occupancy permit Privilege tax P300 January 31 City/Municipality of principal office

7 LOCAL GOVERNMENT UNIT (LGU) What Basis / Amount Due Date Where Local business tax 2% of receipts of the preceding calendar year Sec 143(h) Commensurate with the cost of regulation, inspection and licensing before any person may engage in business or occupation, or practice profession or calling. Sec 147 January 20 City or municipality Mayor s permit and fees (sanitary, health, garbage fees, etc.) Real property tax January 20 City or Municipality Note: LBT and RPT are major taxes to be paid in the local level. Province not exceeding one percent (1%) of the assessed value of real property City or a municipality within the Metropolitan Manila Area not exceeding two percent (2%) of the assessed value of real property Special Education Fund of one percent (1%) on the assessed value of real property 1st installment March 31 2 nd installment June 30 3 rd installment September 30 Last installment -- December 31 Advance payment with 20% discount City or Municipality

8 BIR REGISTRATION REQUIREMENTS BEFORE COMMENCEMENT OF THE PRACTICE OF PROFESSION: Obtain Tax Identification Number Obtain Certificate of Registration Register Books of Accounts Obtain Authority to Print Invoice

9 COMPLIANCE WITH THE BIR FILING REQUIREMENTS: BIR Filing Requirements Due Date / Frequency 1. Issue receipts on income Daily 2. Keep receipts or support of expenses Daily 3. Summarize and prepare financial statements Monthly 4. CPA Certificate Annual 5. Prepare tax returns and pay tax due Monthly, Quarterly, Annual 6. Quarterly Income Tax Return (BIR Form 1701 Q) 1 st Qtr April 15 2 nd Qtr in August 15 3 rd Qtr -- November Annual Income Tax Return (BIR Form 1701) April 15 of the following year 8. Monthly VAT Declaration 20 days after the end of each month 9. Quarterly VAT Return (BIR Form 2550Q) 25 days after the close of the taxable quarter 10. Percentage Tax Return (BIR Form 2551M) 20 days after the end of the month 11. Monthly Remittance Return of Income taxes Withheld (Expanded) 10 days after the end of the month [BIR Form 1601 E] 12. Annual Information Return of Creditable Income Taxes Withheld March 31 of the following year (Expanded) [BIR Form No E] 13. Monthly Remittance Return of Income Taxes Withheld on 10 days after the end of the month Compensation (BIR Form No C) 14. Annual Information Return of Income Tax Withheld on January 31 of the following year Compensation and Final Withholding Taxes (BIR Form No. 1604CF)

10 ALLOWABLE EXPENSES/DEDUCTIONS FROM INCOME For income received/earned: Issue Official Receipt Second: Claim expenses Personal exemption Single individual or married individual judicially decreed as legally separated P20,000 Head of family -- P25,000 For each married individual -- P32,000 Additional -- P8,000 for each dependent not exceeding four (4) Optional standard deduction 40% of receipts No need to keep receipts or support of expenses Itemized Deductions (Sec. 34)

11 HEAD OF THE FAMILY AND DEDUCTIONS Head of the family means an unmarried or legally separated man or woman with one or both parents, or with one or more brothers or sisters, or with one or more legitimate, recognized natural or legally adopted children living with and dependent upon him for their chief support, where such brothers or sisters or children are not more than twenty-one (21) years of age, unmarried and not gainfully employed or where such children, brothers or sisters, regardless of age are incapable of self-support because of mental or physical defect. Provision of the National Internal RevenueCode (NIRC or Tax Code) "SECTION 34.Deductions from Gross Income. there shall be allowed the following deductions from gross income:

12 "(A)EXPENSES. "(1) Ordinary and Necessary Trade, Business or Professional Expenses. "(a) In General. There shall be allowed as deduction from gross income all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on or which are directly attributable to, the development, management, operation and/or conduct of the trade, business or exercise of a profession, including: "(i) "(ii) "(iii) "(iv) A reasonable allowance for salaries, wages.. A reasonable allowance for travel expenses, here and abroad, while away from home in the pursuit of trade, business or profession; A reasonable allowance for rentals A reasonable allowance for entertainment, amusement and recreation expenses

13 (B) SUBSTANTIATION REQUIREMENTS. No deduction from gross income shall be allowed under Subsection (A) hereof unless the taxpayer shall substantiate with sufficient evidence, such as official receipts or other adequate records: (i) the amount of the expense being deducted, and (ii) the direct connection or relation of the expense being deducted to the development, management, operation and/or conduct of the trade, business or profession of the taxpayer.

14 REQUIREMENTS FOR DEDUCTIBILITY -- THE EXPENSES BEING CLAIMED AS DEDUCTION MUST BE: Ordinary and necessary business or professional expenses Reasonable in amount Substantiated with sufficient evidence Bribes, kickbacks and other similar payments are not allowed

15 ITEMIZED DEDUCTIONS OR ALLOWABLE DEDUCTIONS LISTED UNDER THE MANDATORY ATTACHMENT TO BIR FORM NO Advertising and promotions Amortization Bad debts Charitable contributions Commission Communication, light and water Depletion Depreciation Fringe benefits Fuel and oil Insurance Interest Janitorial and messengerial services

16 ITEMIZED OR ALLOWABLE DEDUCTIONS Miscellaneous Office supplies Other services Professional fees Rental Repairs and maintenance-labor Repairs and maintenance-materials/supplies Representation and entertainment Research and development Royalties Salaries and allowances Security services SSS, GSIS, Medicare, HDMF and other contributions Taxes and licenses Tolling fees Trainings and seminars Transportation and travel Others (specify)

17 REVIEW AND TAX MAPPING Review: LGU Barangay clearance, CTC, PTR, LBT, Mayor s permit and fees, RPT BIR Registration requirements before commencing practice TIN, Apply for registration, COR, Register books, ATAP BIR Filing Requirements including reporting of income and expenses Tax Mapping Operations (RMO dated Dec. 11, 2005) Books of accounts Invoices Registration Requirements

18 Dealing with BIR examiners Be nice and cooperative Involve your accountant/bookkeeper Know what they need and verify with LOA TAX MAPPING AND BIR EXAMINATION Costs of Non-cooperation Bigger deficiency assessments Income Expenses Higher professional fees Negative impression by the BIR examiner

19 COMPLIANCE OF PCP MAIN OFFICE BIR COMPLIANCE REQUIREMENTS Certificate of Registration [Note: Sometimes not complete or need to be updated.] BIR Filing Requirements Due Date / Frequency 1. Quarterly Income Tax Return Q1 Oct 30 Q2 Jan 29 Q3 Apr days after the end of the quarter 2. Annual Income Tax Return Sep th of the 4th month after FY 3. Monthly Percentage Tax Return 20 days after end of each month 4. Quarterly Percentage Tax Return 20 days after the end of each month 5. Monthly VAT Declaration 20 days after the close of the month 6. Quarterly VAT Return 25 days after the close of the quarter 7. Monthly Remittance Return Expanded 10 days after the end of the month Withholding tax 8. Annual Information Return Expanded March 1 after the end of the calendar year Withholding Tax 9. Monthly Remittance Return Withholding Tax 10 days after the end of the month on Compensation 10. Annual Information Return Withholding Tax Jan 31 after the end of the calendar year on Compensation 11. Annual Registration Fee Jan 31

20 OTHER REGULATORY REQUIREMENTS SEC Audited Financial Statements Sep 28 [120 days after FY] Mayor s Permit and Fees January 20 SSS, Philhealth, HDMF/Pag-IBIG 10 days after the end of the month

21 COMPLIANCE OF CHAPTERS SEC Registration, TIN Chapters SEC Registered TIN 1 ILOCOS-ABRA yes Lower North Eastern Luzon not yet 3 Northern Luzon yes North Western Luzon 5 Upper North Eastern Luzon 6 BICOL yes Central Luzon yes 8 RIZAL yes 9 Southern Luzon yes BOHOL yes CAPIZ-AKLAN yes Central Visayas yes 13 Eastern Visayas yes

22 14 Negros Oriental yes 15 West Visayas-Negros Occidental yes West Visayas-PANAY yes CARAGA 18 Northern Mindanao 19 North Western Mindanao 20 SOCSKSARGEN not yet 21 Southern Mindanao not yet 22 Western Mindanao not yet 23 CAMANAVA not yet 24 MANILA yes 25 MARIKINA yes 26 MATAPAT yes 27 PAMUNLAS yes 28 PASAY 29 (PASJMAN yes Quezon City yes

23 30 CHAPTERS 19 Registered with the SEC 10 with TIN 9 without TIN 11 No SEC registration and no TIN Services Needed Bookkeeper / Accountant Independent CPA to certify the financial statements Rate

24 Q & A