Professional Documents
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Department of Finance (DOF) main responsible for the fiscal policies and general
management of the Philippine Governments financial resources.
It has executive supervision and control over the following government agencies:
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TAX ADMINISTRATION
Handout No. 1-02 A.G. DULAY
~> The BIR is principally tasked with the enforcement of the National Internal Revenue Code
(NIRC).
A. BIR OFFICERS
1. The Commissioner
2. Deputy Commissioners - a total of six who are tasked to head the following groups:
a. Operations Group
b. Legal and Enforcement
c. Information Systems Group
d. Resource Management Group
e. Tax Reform and Administration Group
f. Special Concerns Group
3. Revenue Regional Director
4. Revenue District Officer
5. Revenue Examiners and Officers
6. Division Chiefs
7. BIR Collection Agents
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Handout No. 1-02 A.G. DULAY
The following are the requirements for compliance by a taxpayer engaged in a business, as
the case may be, as laid down in the Tax Code or NIRC:
A. REGISTRATION
Important Points:
1. A person subject to ANY internal revenue tax shall register once with the appropriate
revenue office [could be the revenue office (a) where the taxpayer resides or (b) work
or (3) where the business of the taxpayer is located].
2. Any person (natural or juridical) who is required to file a tax return, statement or
document with the BIR shall be registered and assigned with a Taxpayer Identification
Number (TIN).
3. Only ONE (1) TIN shall be assigned to a taxpayer. Otherwise, having more than one TIN
will result to a criminal liability under the Tax Code.
Exceptions:
a. Foreign Currency Deposit Unit (FCDU) of a local or foreign bank in the Philippines
b. Estate of a deceased person
Registration Period:
1. Within ten (10) days from the date of employment;
2. On or before the commencement of the business;
3. Before payment of any tax due; or
4. Upon filing of a return, statement or declaration as required under the Tax Code.
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Annual Registration Fee = P 500.00
(for every separate or distinct establishment or place of business where sales transactions occur)
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1. This fee shall be paid:
a. upon registration; and
b. every year thereafter on or before January 31 (amount may vary depending on the
gross receipts of the taxpayer for the last taxable year)
BIR Forms:
1. BIR Form No. 1901 for self-employed, mixed income individuals, estates and trusts
2. BIR Form No. 1902 for individuals earning purely compensation income
3. BIR Form No. 1903 for corporation and partnerships
4. BIR Form No. 1904 for one-time taxpayer and persons registering under Executive
Order (E.O.) No. 98 (securing TIN to be able to transact with any government agencies)
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Handout No. 1-02 A.G. DULAY
5. BIR Form No. 1905 for updating or cancellation of registration, cancellation of TIN
and new copy of certificate of registration
Rules:
1. No additional tax payment shall be required for the remaining period within which the
tax was paid.
2. The person who will continue the business should submit inventories of goods or stocks
to the BIR within 30 days from the death of the decedent.
3. The same requirements in no. 1 and 2 above will apply in case of transfer of ownership
or change of name of the business establishment.
Rules:
1. It shall be the taxpayers duty to update his registration status by filling an application
for registration information update.
2. The transfer of registration requires no additional registration fee to be paid by the
taxpayer.
3. Before the transfer, the taxpayer must secure the necessary tax clearance from the
Revenue District Office (RDO) where the head office or branch is presently registered.
Rules:
1. Official Receipt for sales of services
2. Invoice for sales of goods
Requirements:
1. Authority to Print (ATP) (BIR Form No. 1906) shall be secured from the BIR.
2. The printed receipts or invoice should:
a. Be serially numbered;
b. Contain the name, business style, TIN and business address of the person or entity
who will use such receipts or invoices; and
c. Contain information that may be required by rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of the BIR
Commissioner.
Rules:
1. Time for issuance of receipts or invoices = time when transaction is effected
2. Value of merchandise sold or service rendered = P25.00 or more
receipt or invoice is required
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Handout No. 1-02 A.G. DULAY
(in the two cases above, the receipt or invoice should indicate the name, business (if
any), and address of the purchaser/customer/client)
5. The original receipt or invoice shall be issued to the customer and the seller shall keep
the duplicate in his place of business for ten years.
6. Both the seller and customer should keep his copy of receipts or invoices for a period
of ten years in his place of business from the close of the taxable year in which such
document was made.
F. CERTIFICATE OF PAYMENT
Rules:
1. The certificate of payment including the receipts supporting the payment of taxes
made (e.g. annual registration fee) shall be kept in plain view where the business is
conducted.
2. In case of a peddler or other persons not having a fixed place of business, the same
shall be kept in the possession of the holder thereof, and shall be presented upon
demand of any internal revenue officer.
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Handout No. 1-02 A.G. DULAY
4. BIR Form No. 1702-RT version June 2013 Annual ITR for Corporations, Partnerships
and Other Non-Individual Taxpayers Subject Only to the REGULAR Income Tax Rate
5. BIR Form No. 1702-EX version June 2013 - Annual ITR for use only by Corporations,
Partnerships and Other Non-lndividual Taxpayers EXEMPT Under the Tax Code, as
amended, [Sec. 30 and those exempted in Sec. 27(C)] and Other Special Laws, with NO
Other Taxable Income
6. BIR Form No. 1702-MX version June 2013 - Annual ITR for Corporations, Partnerships
and Other Non-individuals with Mixed Income Subject to MULTIPLE Income Tax Rates
or with Income Subject to Special/Preferential Rate
7. BIR Form No. 1702Q version July 2008 Quarterly ITR for Corporations, Partnerships
and Other Non-Individual Taxpayers
Quarterly Annual
Compensation (Individual Taxpayer)
Filing Deadline on or before April 15 of the
Payment Deadline succeeding year
Corporate Taxpayers
Within 60 days from the close of the On or before the 15th day of April, or
Filing Deadline
taxable quarter, whether calendar or on or before the 15th day of the 4th
fiscal year month following the close of the fiscal
Payment Deadline
year, as the case may be
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b. Taxpayer to avoid abuses in the payment of taxes (as provided by the due
process of law)
Examples:
1. Dispute to a tax assessment
2. Compromise
3. Tax refund
4. Amendment of tax returns
1. DEFINITION
Tax assessment is a formal letter made by the BIR demanding the taxpayer to settle
his tax liabilities within the specified period.
NOTE: Tax assessments are presumed to be correct and made in good faith.
The following may authorize the examination of ANY taxpayer and the assessment of
the correct amount of taxes:
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NOTE: Failure on the part of the taxpayer to file a return shall not prevent the
Commissioner from authorizing the examination of any taxpayer.
5. WHEN TO ASSESS
6. PERIOD OF ASSESSMENT
This refers to the span of time allowed by law to the BIR to investigate a taxpayers
tax discrepancy to enforce collection of taxes.
NOTE: If the BIR has not assessed or collected within the assessment period, its right to
act has expired and therefore, the taxpayer is deemed to have paid the correct
amount of tax.
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Willful Neglect within 10 years after the discovery of within 3 years from assessment
(filed return was false or the falsity, fraud or omission
fraudulent)
Taxpayer needs to respond within 15 days from the date of receipt of the PAN
If taxpayer responded
If taxpayer failed to respond -->
considered in default
Agree Does not agree
*Types of Protest:
a. Reconsideration
refers to a plea of re-evaluation of an assessment on the basis of existing
records without need of additional evidence. It may involve a question of fact or
of law or both.
~ For motion for reconsideration, the decision of the BIR will be based only on
documents already submitted to the BIR prior to the issuance of FAN and no new
evidence will be accepted.
b. Reinvestigation
refers to a plea of re-evaluation of an assessment on the basis of newly
discovered evidence that a taxpayer intends to present in the reinvestigation. It
may also involve a question of fact or of law or both.
~ For motion for reinvestigation, the taxpayer is required to submit all relevant and
additional supporting documents within 60 days from filing of protest.
In the above-cited cases, a FLD/FAN shall be issued outright. (RR No. 18-2013)
NOTE: The Notice of Informal Conference was already removed in the tax assessment
process as per Revenue Regulations (RR) No. 18-2013, as clarified by Revenue
Memorandum Circular (RMC) No. 11-2014.
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A. TYPES OF REMEDIES
1. Summary Proceedings or Administrative Remedies
a. Distraint of personal property
b. Levy on real property
c. Other administrative collection remedies
Important Notes:
a. Either of the summary or judicial or both simultaneously may be pursued in the
discretion of the authorities charged with the collection of such taxes.
b. The remedies of distraint and levy shall not be availed of where the amount of tax
involved is not more than P100.00.
c. The judgment in the criminal case shall not only impose the penalty but shall also order
payment of such taxes which are the subject of the criminal cases as finally decided by
the BIR Commissioner.
ACTUAL CONSTRUCTIVE
Personal property is physically taken Personal property is NOT physically taken
The taxpayer is already delinquent in payment of his There is no finding yet of a discrepancy, only that
taxes the taxpayer is leaving the country or disposing of
hi property on fraud of creditors or is in the
process of liquidation
Personal property taken is sold in order to satisfy Personal property is merely held as security to
the delinquent taxes answer for any future tax delinquency
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5. FURTHER DISTRAINT
~ The remedy by distraint of personal property maybe repeated if necessary until the
full amount due, including all expenses, is collected.
1. WHEN TO LEVY
~ After the expiration of the time required to pay the delinquent tax or revenue, real
property may be levied upon BEFORE, SIMULTANEOUSLY or AFTER the distraint of
personal property belonging to the delinquent taxpayer.
~ The owner shall not be deprived of the possession of the property sold and shall be
entitled to the rents and other income thereof until the expiration of the time allowed
for redemption.
5. FURTHER LEVY
(same rule with distraint of personal property applies)
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Important Notes:
a. The Tax Laws provides that injunctions are not available to restrain collection of
national internal revenue taxes, fee or charge imposed by the Tax Code.
b. The imposition of injunction is only applicable within the discretion of the Tax
Court.
Important Notes:
a. Tax lien is directed to the property subject to tax regardless of the owner of the
property, irrespective of who is the possessor thereof.
b. It is enforced by:
b1. Seizure proceeds are applied to satisfy the tax liability and the excess thereof
will be returned to the taxpayer.
b2. Forfeiture no part of the proceeds will go to the taxpayer since the property
was confiscated in favor of the government.
c. Tax lien is not valid against any mortgage, purchases or judgment creditor until
notice of such lien shall be filed by the Commissioner in the Office of the Register of
Deeds of the province or city where the property of the taxpayer is located.
3. Enforcement of forfeiture
Important Notes:
a. If the sale of confiscated articles would be harmful to the public health, the
Commissioner may order that these be destroyed.
b. Enforcement:
b1. Chattel and removable fixtures by seizure and sale or destruction
b2. Real property by a judgment of condemnation and sale in legal action or
proceeding, civil or criminal, as the case require
c. Forfeited property shall not immediately be destroyed for at least 20 days after
seizure for evidence purposes.
4. Requiring the filing of bonds (mostly applicable to customs duties and excise taxes)
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8. Deportation of aliens
Important Notes:
a. A compromise of the tax liability is possible at ANY stage of the litigation.
b. All criminal violations may be compromised EXCEPT:
b1. Those already filed in court; or
b2. Those involving fraud
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40% Taxpayer is suffering from surplus or earnings deficit resulting to impairment in the
original capacity by at least 50%
Important Notes:
a. The Revenue Officers (RO) may be authorized by the Commissioner to inspect the
taxpayers books of accounts and other records.
b. Inspection and examination shall be made only once in a taxable year, EXCEPT on
the following cases:
b1. Fraud, irregularity and mistakes as determined by the Commissioner
b2. Request for reinvestigation
b3. Verification of compliance with withholding tax laws and regulations
b4. Verification of capital gains tax liabilities
c. Taxpayers are required to preserve their books of accounts within 10 years but
only in the form of hardcopies for the first five years thereof. Thereafter, the
taxpayer may retain only an electronic copy of the hardcopy of the books of
accounts, subsidiaries and other accounting records. (RR No. 5-2014)
e. A Letter of Authority (LOA) signed by either the BIR Commissioner, his deputy,
officials of the investigating division, Regional Director, Assistant Director or the
Revenue District Officer will be served to the taxpayer as a request to permit the
bearer thereof to conduct the necessary examination of the taxpayers books of
accounts and records.
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a. Civil action
One that is brought to enforce, redress or protect private rights
In general, all types of legal proceedings other than criminal proceedings are
civil actions.
For tax purposes, this refers to actions instituted by the government to collect
national internal revenue taxes in the ordinary courts
b. Criminal action
A penal prosecution; it is an action, suit or cause instituted to punish an
infraction of the criminal laws.
Important Notes:
b1. The judgment in the criminal case shall not only impose the penalty but also
order payment of the taxes as decided by the CTA.
b2. As a rule, assessment is not necessary before filing criminal complaint to tax
evasion.
b3. Tax fraud or evasion is a criminal case. However, the burden of proof for the
establishment of fraud lies with the BIR.
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A. TYPES OF REMEDIES
1. Summary Proceedings or Administrative Remedies
a. Tax Avoidance or Tax Minimization (please see Part II of Handout No. 1-01)
b. Amendment of Tax Returns
Considerations:
must be made within 3 years from the date of filing of such return
no notice for audit or investigation of such return has been served to the
taxpayer
Qualifications:
Income tax payment for the current taxable year must exceed the income tax
payment for the base year by at least 20%; and
Ratio of income tax payment to gross sales/receipts for the current taxable
year must be at least equal to that of the base year.
Important Notes:
1. A filed return showing an overpayment shall be considered as a written claim
for the credit or refund.
2. A Tax Credit Certificate (TCC) validly issued under the provisions of the Tax
Code may be applied against any internal revenue tax, excluding withholding
taxes, for which the taxpayer is directly liable.
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Prescriptive Period:
a. Civil action
a1. Appeal to the CTA
a2. Secure Injunction from CTA
a3. Appeal from CTA to the SC
b. Criminal action
c. Others
c1. Action for Damages against Revenue Officers
c2. Action to Contest Forfeiture of Chattel
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A. DEFINITION OF TERMS
Delinquency
the failure of the taxpayer to pay the tax due on the date fixed by law or indicated in
the assessment notice or letter of demand
Deficiency
the amount still due and collectible from a taxpayer upon audit or investigation
Surcharge
a civil penalty imposed by law as addition to the main tax required to be paid
Willful neglect
the taxpayer knowingly delays the filing of the tax return
B. ADDITIONS TO TAX
1. Interest
Formula:
General Rule:
There shall be assessed and collected on any unpaid amount of tax, interest at the rate
of 20% per annum, or such higher rate as may be prescribed by rules and regulations,
from the date prescribed for payment until the amount is fully paid.
a. Interest on deficiency
Applied in case there is any deficiency in the tax due
b. Interest on delinquency
Applied in case of failure to pay:
The amount of the tax due on any return required to be filed;
The amount of the tax for which no return is required; or
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2. Surcharge
50% 1. In case of willful neglect to file the return within the period prescribed by the Tax
Code; or
2. In case a false or fraudulent return is willfully made;*** or
3. In case a person who is not VAT-registered issues an invoice or receipts showing
his TIN, followed by the word "VAT".
*** In case the taxpayer, without notice from the Commissioner or his duly authorized
representative,voluntarily files a return, only 25% surcharge shall be imposed for late filing and late
payment of the tax in lieu of the 50% surcharge.
3. Compromise Penalty
consensual in nature
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C. FORMATOF COMPUTATION
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Sources:
1. The 1997 National Internal Revenue Code
2. Various BIR Regulations
3. Income Taxation by Valencia and Roxas 6th edition
4. Review Notes from various Review Centers
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