HOW TO BE A BIR TAX AGENT?

HOW TO BE A BIR TAX AGENT?

By: Ione Mejia

IS THE ONE DOING YOUR TAXES AN ACCREDITED BIR TAX AGENT?

DO YOU WANT TO BE AN ACCREDITED BIR TAX AGENT?

Read on, this is for you.

So, what exactly is  a tax agent?

Tax agents/practitioners as per BIR Revenue Regulation 11-2006 are the ff:

     1. those engaged in the regular preparation, certification, audit, and filing of tax returns, information returns or other statement or reports required by the Code or regulations

     2. those who are engaged in the regular preparation of request for ruling, petitions for re investigation, protests, requests for refund or tax credits certificates compromise settlement and/or abatement of tax liabilities and other official papers and correspondence with the Bureau of International Revenue and other similar or related activities

         3. those who regularly appears on meetings, conferences, and hearing before any office of the Bureau of Internal Revenue officially on behalf of the taxpayer or client in all matters relating to a client's right and privileges, or liabilities under laws or regulations administered by the BIR

Those engage in the tax practice above are required to apply for accreditation.
(Section 2(e) RR 11-2006)

WHO ARE REQUIRED TO REGISTER?

1. Individual tax practitioner engaged in private practice who are Certified Public Accountant (CPA's); CPA-Lawyers who issue/sign auditors certificate or otherwise perform functions exclusively pertaining to a CPA; and individual other than CPA's who meet the qualifications prescribed in these Regulations;

2. Partners of a General Professional Partnership (GPP) engaged in the practice of taxation, accountancy, and/or auditing; their duly authorized officers or representative who regularly appear or otherwise engage in tax practice before the BIR.

3. General Professional Partnership engaged in the practice of taxation, accountancy and auditing who regularly appears or otherwise engaged in tax practice before the BIR.

4. Officers or duly authorized representatives of incorporated business entities engaged in accounting, auditing or tax consultancy services.

WHAT ARE THE QUALIFICATION OF APPLICANTS?

SECTION 4 ( RR 11-2006)  - Minimum qualification of Applicants - In general, the grant of accreditation shall be based on the applicant's professional competence, integrity and moral fitness. Along these lines, the following are hereby prescribed:

A. FOR THE INDIVIDUAL TAX AGENTS  ( other than member of the Philippine bar)
 
       1. He must be  Certified Public Accountant ( CPA) with current professional license from the Professional Regulations Commission (PRC).

       2. If he is not a CPA, he must have obtained at least a degree in law, Juris Doctor (JD) or it's equivalent, or a Bachelor's degree in Arts, Commerce or Business Administration with at least (18) units in accounting and/or taxation in a college or university recognized by the Department of Education, Culture and Sports (DECS)/ Department of Education (DepEd), Commission on Higher Education (CHED) or in a foreign school of known repute or one duly recognized by it's government. In addition , he must be able to demonstrate or present convincing proof of special competence in tax matter or tax practice, ex. previously acquired experience; at least (18) credit hours of special training, seminars, short ern course, etc. in taxation obtained not more than one (1) year prior to the application of the accreditation , subject to evaluation and approval of the Board;

     3. He must be of good moral character as certified under oath by at least two (2) disinterested persons who are either members of the Philippine Bar or A Certified Public Accountants in good standing.

     4. He must not have been charged with and convicted with final judgement of a crime involving moral turpitude, or found guilty of any act or omission penalized under the Tax Code, or found guilty of aiding or abetting or causing the commission of any such offense by another, and.

      5. He must be a citizen of the Philippines.

    6.  He must have completed at least six (6) hours per year or total of eighteen (18) hours for the three years of continuing professional education (CPE) in taxation from training/seminars conducted by the BIR ( Ex. Revenue Regions, Revenue District Offices, etc.) or from private institutions ( ex. tax/auditing firms, educational or training institutions, professional organization, etc. ) where the number of training hours earned are printed on the certificates and obtained not more than a year prior to the application/renewal for accreditation.


B. FOR GENERAL PROFESSIONAL PARTNERSHIP - In case of GPP's engaged in the exercise of professional accountancy, auditing or tax consultancy services (other than general professional partnerships engaged in the practice of law), the application for accreditation files by the partners and/or the duly authorized officers and representatives therefore shall conform with the ff:

   1. The partners and duly authorized officers or representatives thereof must meet all the qualifications of an individual tax agent as prescribed in the Section 4(A) hereof. In lieu of the submission of documents or proof thereof, said qualifications may be certified to under oath by managing partner of the firm; and

      2. The partnership is one registered with Securities and Exchange Commission.

C. IN THE CASE OF INCORPORATED ENTITIES engaged in accounting and tax consultancy other than general professional partnerships:

     1. the firm must be registered with the Securities and Exchange Commission (SEC);and

    2. The applicant-officers or duly authorized representatives thereof must meet all the qualfications of an individual as prescribed under Section 4(a) hereof.

WHAT ARE THE ACCREDITATION PROCEDURES?

SECTION-5  (RR 11-2006)
I-  WHERE TO FILE?

All applicant shall accomplished their application for accreditation in the form to be prescribed by the Commissioner of Internal Revenue. The duly-accomplished application form shall be submitted together with all documentary requirements prescribed in the (B) (1) or (2) of this Section, whichever is applicable with the Regional Revenue Accreditation Board (RRAB) of the place where the individual applicant or general professional partnership has his/it's residence or principal place of business.

Individual applicants and GPP's who are duly accredited by the BOA and SEC, however, shall submit their sduly accomplished application form together with the documentary requirements prescribed in the items (B)(3) of this Section with the Revenue National Accreditation Board (RNAB).

II - WHAT ARE THE DOCUMENTARY REQUIREMENTS?
SECTION 5. ACCREDITATION ( RR 11-2006)
Applicants shall submit togehter with their duly accomplished forms, the following documents:

1. FOR INDIVIDUAL APPLICANTS:

      A. Certificate of registration with the Board of Accountancy (BOA) and current license with the Professional Regulations Commission, if a CPA, or Attorney's Roll Number and Mandatory Continuing Legal Education (MCLE) Compliance Number, if a Lawyer.

     B. Certificate of membership in Good Standing with his/her/its PICPA Chapter or ACCPA (for  CPAs) or Integrated Bar of the Philippines (for lawyers)

    C. Certificate of Good Moral Character issued by two (2) disinterested person, who are either member of the Bar or Certified Public Accountant of good standing; and

       D. If non Certified Public Accountant (CPA):
              1. Certified copy of transcript of records from the university or college showing compliance with at least eighteen (18) units in accounting or taxation as prescribed in Section 4 (A) (2).

           2. Written certification of continuing professional education (CPE) units of at least six (6) hours per year or total of eighteen (18) hours for the three years in taxation conducted by BIR ( ex. Revenue Regions, Revenue District Offices, etc.) or from private institutions ( ex.tax/auditing firms, educational or training institutions, professional organization, etc.) where the number of training hours earned are printed on the certificates and obtained not more than a year prior to the application/renewal for accreditation.


2.  FOR THE PARTNERS, DIRECTORS, OFFICERS, OR DULY AUTHORIZED REPRESENTATIVES OF GENERAL PROFESSIONAL PARTNERSHIP AND INCORPORATED ENTITIES ENGAGED IN ACCOUNTING AND TAX CONSULTANCY.

             A. Certificate of Good Moral Character issued by two (2) disinterested person, who are either member of the Bar or Certified Public Accountant of good standing; and

           B. Other applicable requirements for an individual applicant, or in lieu thereof . certification under oath by the managing partner(s) that the applicant acting for the firm possesses all the qualifications prescribed under Section 4(A) of these regulations.

      C. For those partners, Directors, Officers or duly authorized representatives of General Professional Partnership duly registered with the SEC, in addition to the above documentary requirements, a certification from the BOA of the said Partner, Director, Officers or duly authorized representative is a CPA. Provided, however, that the requirements under letters a,b and c of Section 5(B)(1) hereoof need not be submitted if the Professional Partnership can submit a certified true copy of it's SEC Certificate of Accreditation as well as BOA Certificates of Registration of all the partners, officers, and representatives of the Professional Partnership of CPA's.

             D. List of all current partners, directors, officers, associates or representatives duly authorized by the GPP to act on it's behalf in representing it's client before the BIR.


3. FOR THE INDIVIDUAL AND GPP'S ACCREDITED BY BOA AND SEC.

           A. Certified true copy of BOA Certificate of Registration

          B. Certified true copy of SEC Certificate of Accreditation.


III- PROCESSING FEE

Each applicant shall pay a non refundable processing fee of Five hundred pesos ( P 500.00) upon filing of his application for accreditation. If the applicant is a general professional partnership (GPP), the fee shall be paid by each partner and authorized representative thereof. In the case of incorporated entities engaged in accounting and tax consultancy services, the fee shall be paid by each of the applicant  officers or designated representative thereof.

EFFECTS OF ACCREDITATION
(Section 9 of RR 11-2006 is hereby amended to read as follows, RR 14-2010)

Only those Tax Agents/Practitioners. Partners or officers of General Professional Partnership, or officers or Directors of corporate entities engaged in tax practice who have been issued Certificate of Accreditation or ID card shall be allowed to represent a taxpayer or transact business with the Bureau of Internal Revenue in representation of a taxpayer for the purpose defined in this regulations. THE COMMISSIONER OR HIS AUTHORIZED REPRESENTATIVE SHALL ONLY CONSIDER AS VALID DOCUMENT /ATTACHMENTS TO TAX RETURNS, INFORMATION RETURNS, OR OTHER STATEMENTS OR REPORTS REQUIRED BY THE CODE OR REGULATIONS, THE FINANCIAL STATEMENTS PREPARED, SIGNED AND CERTIFIED BY DULY ACCREDITED TAX PRACTITIONERS. The BIR can refuse to transact official business with tax practitioners who are not accredited before it and shall require that certain official statements such as returns, financial statements, reports, protests, request for ruling, official correspondence and other statements, paper, documents filed on behalf of a taxpayer be signed  or certified persons which shall bear the following information below the signature of the latter.

A. For individual's (CPA's, member of GPP's and others)
           1. Tax Identification Number (TIN) and
           2. BIR Accreditation Number, Date of Issue, and Date of Expiry

B. For members of the Philippine Bar (lawyers)
         1. Tax Identification Number (TIN)
         2. Attorney's Roll Number 
        3. Mandatory Continuing Legal Education (MCLE) Compliance Number; and
        4. BIR Accreditation Number, Date of Issue, and Date of Expiry

If you need assistance, tax advice and tax help, contact us TAXINSIDER



Source: BIR Revenue Regulation Number 11-2006
             BIR  Revenue Regulation Number 14-2010

Freelancer's guide to paying tax - Part 1

FREELANCER'S GUIDE TO PAYING TAX 
by: Ione Baron-Mejia

Image from rabidbi.com

"Freelance ain't free therefore you're income's taxable."

"Tulungan mo naman ako sa tax ko." "Ano bang gagawin ko? " "Pano ba mag online" "Pwede bang ikaw na lang gumawa ng tax ko? " These are the things i usually here from my friends who are also freelancers. I figured, i better write about this,  so the next time i hear  another soul lost on what to do with their tax, i'm just going to send them link,  to this blog, makes life a little easier. This is also to help other freelancers in dilemma as to what and how to pay their taxes. 

First things first.

Anong klaseng taxpayer ka muna?

There are two major kind of taxpayers:

I. Individual

II. Corporation

Ang mga freelancer ay Individual taxpayer.

May dalawang klase ang Individual Taxpayer

Individual taxpayer can be classified as:

I-A. Citizen

I-B, Alien

 Ang mga freelancer ay classified na Citizen na Individual Taxpayer.

IA - CITIZENS are classified as:

IA-1.Resident citizen - Pilipino na nakatira at nagtratrabaho sa Pilipinas

IA-2. Non resident citizen - Pilipino na hindi nakatira at nagtratrabago sa ibang bansa. 

    IA2-a. Immigrants

    IA2-b Employees of foriegn entities on apermanent basis

    IA2-c. Overseas Contract workers or (CW)

Freelancers are classified as Resident Citizen

 Aliens are either resident of nonresident. Nonresident aliens are further divided into engaged or not engaged in trade or business in the Philippines. If an alien has an aggregate period of stay here in the Philippines for more than 180 days he shall be considered as a “nonresident alien doing business in the Philippines.”

What are the sources of income of resident citizens taxable under the Philippine law?

Ans. All income derived from sources within and without the Philippines.

In short lahat ng kita mo sa Pilipinas o sa ibang bansa man yan taxable yan.

Ngayon alam na natin kung ano ang taxable income mo,  kung ano ang kailangan mong ireport na kita.

Tanong: Freelancer artist ka, may raket ka sa Pilipinas, meron ka ring raket sa ibang bansa.  Kita lang ba sa Pilipinas ang taxable? Mali. Lahat ng kita mo kahit saan man yan sa mundo kinita,  taxable yan under Philippine law. 

What are the sources of income of  nonresident citizens taxable under Philippine law?

A nonresident citizen is taxable only one income derived from sources within the Philippines. Thus an immigrant, employee of a foreign entity on permanent basis and OCW will be taxed only on income derived from the Philippines. His income from the country where he is working will not be taxed in our country. 

In short, kung nonresident citizen: Kita lang sa Pilipinas ang taxable same with aliens. 

What sources of income of  aliens taxable under Philippine law?

An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources within the Philippines.

Self employed taxpayers are those individual who receive income from business ( sole proprietorship)  or/and  from practice of profession ( registered or not registered with the PRC (Professional Regulation Commission) such as CPA's, lawyers, doctors, engineers, architects, dentist,artists, bloggers, media practitioners). Freelancers are self employed taxpayers.  

SELF EMPLOYED KA OR FREELANCER, WHAT'S NEXT?


First thing to do is to register in BIR. 


First: Go to BIR's office. I assume you already have your TIN. If not, you have to register here first.

https://ereg.bir.gov.ph/ereg/welcome.do


Your Revenue District Office ( RDO) depends on your business address that you will be using. If you are a freelancer and working at home, you can use your residential address as your business address. ( Isa yan sa laging tinatanong wala naman akong business address, kung wala kang business address yong home/ residential address mo ang gamitin mo, pwede yon. Check your RDO below. 

http://www.bir.gov.ph/index.php/contact-us/directory/revenue-district-offices.html


2nd:  the BIR will ask you for your license if you tell them your are applying as self employed or a professional. You can show them your PRC ID, if your  industry doesn't require one, just inform them about it, they will understand.


3rd: Fill up a registration form, you will have to use BIR form 1901 and BIR form 605, which is payment form. You need to pay (P500.00 ) five hundred pesos for your registration fee. 
Where do you pay? You need to go to the authorized bank of your RDO, these are the banks usually within your area, check the link below. 

http://www.bir.gov.ph/index.php/list-of-authorized-agent-banks.html



4th:  You need to submit the following documents together with the BIR for 1901.
1. Prepare your registered TIN Number
2. Xerox copy of your birth certificate
3.  If your are married, xerox copy of your marriage certificate and birth certificate/s of your dependents/children
4. Xerox copy of your ID with name, address and signature.
5. Xerox copy of your proof of address.
( The BIR may ask if your are renting your office. They will require you to submit  lease contract if you are renting your office if you have an office,  then you have to pay docs stamps for that.)

5th: Register your books.
Journal, Ledger, Cash receipt Journal and Cash Disbursement Journal
( Buy these from bookstore then bring it to BIR para tatakan nila)


6th: Look for an accredited printer who can assist you with printing your invoices. Or you can ask BIR personnel for recommendation, usually may kakilala sila para mas mabilis.



You can allocate at least one whole day for these.  Go to the BIR office with the BIR form 1901, BIR form 605 for registration fee together with the required docs and the books. Then go to the bank for the registration fee, go back to BIR and submit the payment form. They will then inform you when to go back for the Certificate of Registration. 


Congratulations! You are now regisitered in BIR. You can now start paying your taxes. :-)



If you need assistance or tax help, contact us @ TAXINSIDER.

HOW TO COMPUTE WITHHOLDING TAX ON COMPENSATION

HOW TO COMPUTE WITHHOLDING TAX ON COMPENSATION
by: Ione Baron Mejia

Tanong ni empleyado, "Tama kaya ang computation ng withholding tax ko?"

Una, bago tayo mag compute. Ano ba yong withholding tax? Withholding tax,  eto yong tax sa kinikita mo ng gobeyerno na binabawas sayo ng employer mo kada buwan. Yong employer mo ang nangungulekta sayo para sa gobeyerno. 

Now, this is how to compute withholding tax on compensation.

Step 1: Determine kung talagang dapat ka bang withholdan o hindi.

Please be informed that if you are a minimum wage earner (MWE) who is purely earning compensation income you are not subject to income tax, therefore you are not subject to withholding tax. Kaya dapat hindi ka binabawasan  o hindi ka nabawasan ng withholding tax. In short, ang mga minimum wage earner (MWE) ay walang withholding tax.

Then, who are subject to withholding tax?

Those who are earning above minimum, (except those that are expressly enumerated by the National Internal Revenue Code), their income are taxable and are therefore subject to withholding tax.



Step 2: Presenting the Withholding Tax Table. Eto ang gagamitin natin para sa pag compute ng withholding tax nyo. (Please dont be intimidated with it, madali lang intindihin yan.)

Legend:
Z - Zero exemption
S - Single
ME - Married Employee 1;2;3;4- Number of qualified dependent children
S/ME  =  P50,000 
Each Working employeeQualified Dependent Child = P25,000 each but not exceeding four (4) children

( Yan po ang ibig sabihin ng Z,S at ME madali lang di ba)

1. DAILY TAX TABLE - SHOULD BE USED BY EMPLOYERS USING DAILY PAYROLL PERIOD
2. WEEKLY TAX TABLE - SHOULD BE USED BY EMPLOYERS USING WEEKLY PAYROLL PERIOD
3.SEMI-MONTHLY TAX TABLE - SHOULD BE USED BY EMPLOYERS USING SEMI MONTHLY PAYROLL PERIOD
4. MONTHLY TAX TABLE - SHOULD BE USED BY EMPLOYERS USING MONTHLY PAYROLL PERIOD

( Para naman yan sa nakahighlight ng blue )

Ngayon alam mo na, above minimum ka, so may income tax ka therefore may withholding tax ka. Second, kailan ba kayo nagswesweldo? daily, weekly, semi monthly, monthly. Third, determine/compute total compensation you receive, from there determine your regular taxable compensation and your supplementary taxable compensation.


STEP 3:

Determine the total monetary and non monetary compensation you have received for the payroll period. Excluding the ff below: 
1. 13th month pay, 
2. productivity incentives, 
3. Christmas bonus, 
4. other benefits, 
5. your contribution to SSS or GSIS, HDMF, Philhealth.

( Gross benefit which are received by officials and employees of both public and private entities in the amount of thirty thousand pesos (P 30,000) or less is exempted from income and withholding tax.)


Step 4: Determine your taxable and non taxable compensation income.

What is taxable ? 
The taxable income refers to all remuneration paid to an employee not otherwise exempted by law from income tax and consequently from withholding tax.

What is non taxable?
The non-taxable income are those which are specifically exempted from income tax by the Code or by other special laws as listed in Sec.2.78.1(B) hereof 
example: 1. benefits not exceeding P30,000, 
               2. non-taxable retirement benefits 
               3. separation pay

After you determine your taxable compensation income, you segregate it into:
1. Regular taxable compensation income
    A. basic salary
    B. fixed allowances for representation
    C. transportation and other allowance you receive per payroll period
2. Supplementary compensation income
    A. Commission
    B. Overtime pay
    C. Taxable bonus
    D. Other taxable benefit

Yong regular mong narereceive kada payroll ang regular compensensation income mo, ang supplementary eh yong narereceive mo o dagdag na binibigay sayo pwera sa regular na narereceive mo. Importante ma determine nyo to kasi ang regular taxable compensation income ang gagamitin mong amount sa withholding tax table.


Example:

1. Juan Dela Cruz, married with two dependent. 
    (Check the legend in the taxable table = ME2 kasi married at 2 dependent)

2.  He is receiving eighteen thousand basic salary ( P 18,000), received semi monthly. = 9,000   ( Regular taxable compensation income)  
    ( For example purpose amount of SSS, Philhealth, and others is 1,000)

3.  Overtime pay two thousand pesos.( P 2,000)
      ( Supplementary taxable compensation income)

4. Commission of five thousand pesos ( P 5,000)
       (Supplementary taxable compensation income)
     

Basic pay            9,000 - 1,000 = 8,000
 (semi monthly basic pay less non taxable SSS and others)


Overtime pay       2, 000
Commission         5,000
Total                    15,000


 1. Go to the table in semi monthly section
 2. See number 2 ME2
 3. Check compensation level line 7,083  (base sa 8,000 na regular taxable compensation)
 4. Compensation level 7,083   
     Excess = 7,917   (Total 15,000 - 7,083 compensation level line)   
     % on excess tax = 20%     ( base on tax table)
 5. Tax on compensation level = 354.17
     Tax on the excess = 1,583.40  (7,917 x .20)
     Total withholding tax = 1,937.57  (354.17 + 1,583.40)


Eto ang ginawa ko para makuha ang total withholding tax:

Total withholding tax is P 1,937.57. Pano nakuha, pakicheck yong table, punta ka sa semi monthly tapos hanapin mo yong ME2. Bakit ME2 kasi married employee si Juan Dela Cruz at 2 ang dependent. Tapos tingan mo yong linya from ME2, hindi ka pwede sa 5,417 kasi masyadong mababa hindi ka rin pwede sa 10.000 at sobra ka naman sa 8,000 ang compensation level mo ay sa 7,089, syempre may sobra ang excess eh 7,917. Pano nakuha yong 7,917 eto yong total compensation mo na 15,000 minus 7,083 na compensation level line. Ngayon tingnan mo sa taas ng 7,083 naka lagay don yon tax sa compensation level mo na 7,803 ang tax nyan eh 354.17 tapos ang tax naman sa excess na 7,917 eh 1,583.40. Paano nakuha yong 1,583.40, imultiply mo yong 7,917 x 20%  excess tax ang sagot dyan eh 1,583.40. Ngayon i add mo yong 354.17 na tax sa compensation level at yong 1,583.40 na tax sa excess yan yong total withholding tax mo 354.17 plus 1,583.40 equals 1,937.54.

1,937.57 dapat ang ibabawas ng employer ni Juan Dela Cruz sa sweldo nya. Yon ang tax nya na ibabayad sa government. In totally unrelated issue, yong MRT/LRT daw magtataas ang pamasahi, saan kaya napupunta yong tax na winiwithhold sa mga empleyado? Syempre sa mga government projects.hehehehe.



For comments, questions or  tax help please email me at yourtaxaid@gmail.com or ione.mejia@gmail.com

TAXABLE BA ANG CHRISTMAS BONUS MO?

TAXABLE BA AND CHRISTMAS BONUS MO?

by: Ione Baron-Mejia

Ho! Ho! Ho! Merry Christmas!!

This is to answer  your burning question this Christmas Season...Taxable ba ang Christmas bonus ko? 

1. Una, linawin natin. Ano ba yong Christmas bonus?

Answer:

Bonus - an extra amount of money that is given to you as a present or reward for good work as well as the money you were expecting:

a productivity bonusa Christmas bonusThe company used to give discretionary bonus payments.

( Dictionary.org)

Christmas bonus  is a form of present or gift, or renumeration given by employers to it's employees every December during Christmas time.

Remuneration means?

Remuneration is the compensation that one receives in exchange for the work or services performed. Typically, this consists of monetary rewards, also referred to as wage orsalary.^[1] A number of complementary benefits, however, are increasingly popular remuneration mechanisms. Remuneration is one component of reward management. ( Wikipedia.org)

2. We were given gift in kind, is it still considered christmas bonus?

Answer: Yes. Christmas bonus can be given on cash or in kind.

3. Is Christmas bonus taxable or  is it tax exempt?

Answer: It depends how much you received. BIR Revenue Regulation 5-2011 ( further amending BIR RR 2-98 and 3-98 as last amended by RR 5-2008 with respect to "De Minimis " benefit ),   states that : Gifts given during christmas and major anniversary celebrations not exceeding five thousand pesos (P 5,000) per employee per annum is EXEMPT from tax. Hence, any excess in the Five thousand pesos (P 5,000) threshold shall be lodged under the Thirty Thousand ( P30,000) statutory exemption and if it exceeds the statutory allowance it shall be taxed accordingly.

BIR Chief Henares explains it clearly:

http://www.gmanetwork.com/news/story/339490/economy/companies/13th-month-pay-bonuses-below-p30k-are-tax-exempt-bir-chief-henares

Internal Revenue chief Kim Henares on Thursday reminded government agencies and private firms that 13th month salaries, bonuses and benefits not exceeding P30,000 are exempted from tax.

On the other hand, any amount exceeding P30,000 would be subjected to tax.

Henares' reminder came at a time when companies are starting to hand out 13th month pay as well as holiday and year-end bonuses to their employees.

"For example kung sinuma mo lahat bonuses mo whatever you call it... kunwari total bonuses for the year is P40,000, P30,000 is exempted and P10k lang binubuwisan," Henares told reporters at the Department of Justice in Manila.

"Iyon lang ang nasa batas kaya iyon lang i-implement ng BIR," she added, saying that the tax rule should be implemented "across the board."

Henares emphasized that the rule on tax exemptions applies to all workers whether in the private or public sectors.

"So if you are in government, whether executive or legislative or judiciary branches... the rules are the same," Henares said.

The Revenue chief said companies and their accountants should be "conscious and mindful" of this tax exemption rules or risk being held criminally liable "for not withholding properly."

She also reminded income earners to indicate in their annual income tax returns details on their 13 month pay, bonuses, and benefits as well as the corresponding deductions if any.

Henares was earlier quoted as thumbing down a proposal made by Senate president pro-tempore Ralph Recto to raise the tax exemption for bonuses to P75,000 from the current P30,000.

Henares said Recto's proposal cannot be implemented unless there is a law that would determine an alternative source for the billions of pesos that the government stands to lose from implementing a higher tax exemption ceiling. —KG, GMA News

If you need assistance or tax help, contact us @TAXINSIDER

NEW BIR INCOME TAX FORM

Hear ye! Hear ye!

There is a new BIR income tax form! Below is the copy of the new revenue regulation.

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE


REVENUE REGULATIONS No. 2-2014

 January 24, 2014

SUBJECT : New Income Tax Forms

 TO : All Revenue Officials, Employees, and Others Concerned


SECTION 1 - Objective.

 These Revenue Regulations are issued to prescribe the new BIR forms that
will be used for income tax returns (ITRs) filing covering and starting the taxable year
ended December 31, 2013.

 SECTION 2 - Scope.

 Pursuant to Section 244, in relation to Sections 6(H), 51(A)(1) and 51(A)(2)
of the National Internal Revenue Code of 1997 (Tax Code), as amended, these
Regulations are issued to prescribe the use of revised income tax forms with bar codes,
and to reflect the changes in information required from said forms. This will also
enable the said forms to be read by an optical character reader (OCR) for ease in
scanning.


SECTION 3 - Filing of New ITR Forms.

 All taxpayers required to file their ITRs under Section 51(A)(1) of the Tax
Code and those not required to file under Section 51(A)(2) but who opted to do so,
covering and starting taxable year ended December 31, 2013 shall use the applicable
forms as follows:

 1. BIR Form No. 1700 version June 2013 (Annual Income Tax
Return for Individuals Earning Purely Compensation Income);


2. BIR Form No. 1701 version June 2013 (Annual Income Tax
Return for Self-Employed Individuals, Estates and Trusts);


3. BIR Form No. 1702-RT version June 2013 (Annual Income Tax
Return for Corporations, Partnerships and Other Non-Individual
Taxpayers Subject Only to the REGULAR Income Tax Rate);


4. BIR Form No. 1702-EX version June 2013 (Annual Income Tax
Return for Use Only by Corporations, Partnerships and Other
Non-Individual 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); and


5. BIR Form No. 1702-MX version June 2013 (Annual Income Tax
Return for Corporations, Partnerships and Other Non-Individuals
with Mixed Income Subject to Multiple Income Tax Rates or with
Income Subject to Special/Preferential Rate)
 

SECTION 4 - Rounding Off to the Nearest Peso in the ITR.


The requirement for entering centavos in the ITR has been eliminated. If the
amount of centavos is 49 or less, drop down the centavos (e.g., P 100.49 = P 100.00).
If the amount is 50 centavos or more, round up to the next peso (e.g., P 100.50 =
P101.00).


SECTION 5 - Mandatory Itemized Deductions.

A. Corporations, partnerships and other non-individuals are mandated to use
the itemized deductions in the following cases:


1. Those exempt under the Tax Code, as amended [Section 30 and those
exempted under Section 27(C)] and other special laws, with no other
taxable income;

2. Those with income subject to special/preferential tax rates; and
3. Those with income subject to income tax rate under Section 27(A) and
28(A)(1) of the Tax Code, as amended, and also with income subject
to special/preferential tax rates.
Juridical entities whose taxable base is the gross revenue or receipts (e.g.,
non-resident foreign international carriers) are not entitled to the itemized
deductions nor to the optional standard deduction (OSD) under Section
34(L) of the Tax Code, as amended.


B. Individual taxpayers who are not entitled to avail of the OSD and thus use
only the itemized deduction method are as follows:

1. Those exempt under the Tax Code, as amended, and other special laws
with no other taxable income [e.g. Barangay Micro Business Enterprise
(BMBE)];
2. Those with income subject to special/preferential tax rates; and
3. Those with income subject to income tax rate under Section 24 of the
Tax Code, as amended, and also with income subject to
special/preferential tax rates.


SECTION 6 - Transitory Provisions.

Taxpayers who filed using old forms for their 2013 ITRs (manual and/or
electronic) must re-file using the new income tax forms upon their availability.


SECTION 7 - Repealing Clause.


All existing regulations and other issuances or portions thereof which are
inconsistent with the provisions of these Regulations are hereby repealed, amended,
or modified accordingly.


SECTION 8 - Effectivity.

These Regulations shall take effect starting the taxable year ended December
31, 2013 and after fifteen (15) days following publication in two (2) newspapers of
general circulation.

 (Original Signed)

CESAR V. PURISIMA
Secretary of Finance


Recommending approval


 (Original Signed)
 KIM S. JACINTO-HENARES

 Commissioner of Internal Revenue

If you need assistance or tax help, contact us @  TAXINSIDER

Revenue Regulation 1-2014 Amendment of RR 2-98 Alphalist Reporting

Happy New Year!

This is my renewed/renamed blog, so we cannot to be accused of being sexist ( just kidding) from yourtaxmama.blogspot.com  to yourtaxaid.blogspot.com hence all the posts are from the previous blog except this one.

On to my first post of the year, just when we are busy preparing our annual alphalist reporting to BIR, here is the revenue regulation with regards to it.  It is now required to report/submit to BIR list of your employees whether they are exempted or not from withholding tax and list of payees on income payments subject to creditable and final withholding taxes. It simply means report/submit the names of all your employees and payees together with its income and its the corresponding withholding taxes.

Revenue Regulation 1-2014

What is it?

It is amending the Provisions of Revenue Regulations (RR) No. 2-98, as Further

Amended by RR No. 10-2008, Specifically on the Submission of

Alphabetical List of Employees/Payees of Income Payments.

  

What does it mean?

Again,  BIR now requires all withholding agents, regardless of number of employees and payees, whether the employees/payees are exempt or not, submit an alphabetical list of employees and list of payees on income payments subject to creditable and final withholding taxes which are required to be attached as integral part of Annual Information Returns ( BIR Form No. 1604CF/1604E) and Monthly Remittance Returns, etc., under the following  modes.

1. As attachment in the Electronic Filing and Payment System ( eFPS)
2  Through Electronic Submission using the BIR's website address at esubmission@bir.gov.ph and
3. Through electronic mail ( email) at dedicated BIR address using the prescribed CSV data file format, the details of wich shall be issued in separate revenue issuance.

"In cases where any withholding agent does not have its own internet facility or unavailability of commercial establishments with internet connection within the location of the withholding agent, the alphalist prescribed herein maybe electronically mailed (e-mail) thru the e-lounge facility of the nearest revenue district office or revenue region of the BIR."

“The submission of the herein prescribed alphalist where the income payments and taxes withheld are lumped into one single amount (e.g. “Various employees”, “Various payees”, “PCD nominees”, “Others”, etc.) shall not be allowed. The submission thereof, including any alphalist that does not conform with the prescribed format thereby resulting to the unsuccessful uploading into the BIR system shall be deemed not as received and shall not qualify as a deductible expense for income tax purposes.”

"Accordingly, the manual submission of the alphabetical lists containing less than ten (10) employees/payees by withholding agents under Annual Information Returns BIR Form No. 1604CF and BIR No. 1604E shall be immediately discontinued beginning January 31, 2014 and March 1, 2014, respectively, and every year thereafter.”

( manual submission of Alphalist for companies with less than 10 employees is not allowed anymore, all alphalist are to be submitted electronically/ via email)

Deadline for manual submission:

1604CF & Annual Employees Alphalist - January 31, 2014

1604E & Annual Payees List subject to creditable and final withholding tax  - March 31, 2014

Here are the email addresses, where you can send digitally submit your alphalist of employees:

If you need assistance or tax help, contact us @ TAXINSIDER