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CHAPTER 5
LEGAL ASPECT
Legal Requirements
A business must be registered and recognized to ensure its authenticity. It is
necessary to comply with all license and permits required by the different government
agencies concerned.
Estimated Estimated
Procedure
Time Cost
1. Verify and reserve the company name with the
1 day 40.00
Securities and Exchange Commission (SEC)
2. Notarize articles of partnership at the notary 1 day 500.00
3. Register the company with the SEC and receive
pre-registered Taxpayer Identification Number
(TIN). The following documents are required for
SEC registration: 3 days 5645.00
Company name verification slip;
Articles of Partnership; and
Statement of assets and liabilities
4. After issuance of the SEC certificate of
incorporation, pay the annual community tax and
1 day 500.00
obtain the community tax certificate (CTC) from
the City Treasurer's Office (CTO).
5. Obtain barangay clearance 1 day 700.00
6. Proceed to the Muntinlupa Business Center (MBC)
to submit application form and requirements; and
obtain endorsement from the Business Permits and
Licensing Office (BPLO) together with the
following requirements:
Barangay clearance; 1 day No Cost
SEC registration;
Authorization letter of owner with ID;
Lease contract/tax declaration;
SSS certification/clearance; and
Community tax certificate.
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7. Obtain the business permit to operate from the
MBC. The company must go back to the MBC-
BPLO Computer Billing Section to get assessment
of the business permit fees and taxes. Then the
company pays for and obtains the official receipt at
the MBC-Treasury Window. Included are the
annual fees for the following:
mayor’s permit fee P 3,875
sanitary inspection fee 1,200
zoning fee 1,300 3 days 14,605.00
building fee 1,000
mechanical fee 1,000
electrical fee 480
plumbing fee 240
signboard fee 200
environmental protection 2,400
miscellaneous fee 1,100
processing fee 10
RRDM fee 1,8001
8. Buy special books of account at bookstore 1 day 400.00
9. Apply for Certificate of Registration (COR) and
Taxpayer Identification Number (TIN) at the
Bureau of Internal Revenue (BIR). To obtain the
TIN, the company has to file:
Barangay clearance; 2 days 615.00
Business permit; and
Copy of its SEC registration.
Registration as a VAT registered business is also
needed.
10. Pay the annual registration fee at the Authorized
500.00
Agency Bank.
1 day
11. Pay the documentary stamp taxes (DST) at the
6,750
Authorized Agency Bank.
12. Obtain the authority to print receipts and invoices
from the BIR. To obtain the ATP from the BIR, the
company must submit the following documents to
the BIR Revenue District Office (RDO): 1 day No Cost
Duly completed application for authority to
print receipts and invoices (BIR Form No.
1906);
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Final and clear sample of receipts and invoices
(machine-printed);
Application for registration (BIR Form No.
1903); and
Proof of payment of annual registration fee
(BIR Form No. 0605).
13. Print receipts and invoices at the print shops 7 days 3,800.00
14. Have books of accounts and Printer’s Certificate of
Delivery of Receipts and Invoices (PCD) stamped
by the BIR. After the printing of receipts and
invoices, the printer issues a Printer’s Certificate of
Delivery of Receipts and Invoices (PCD) to the
company, which must submit this to the appropriate
BIR RDO (i.e., the RDO which has jurisdiction
over the company’s principal place of business) for
registration and stamping within thirty (30) days
1 day No Cost
from issuance. The company must also submit the
following documents:
All required books of accounts;
SEC registration;
BIR Form W-5;
Certified photocopy of the ATP; and
Notarized taxpayer-user’s sworn statement
enumerating the responsibilities and
commitments of the taxpayer-user.
15. Initial registration with the Social Security System
7 days No Cost
(SSS)
16. Complete registration with SSS and Philippine
Health Insurance Company (PhilHealth). Within
thirty (30) days from the issuance of the SSS and
PhilHealth employer number, the company submits
the following:
To SSS:
Employment report (Form R-1A); 1 day No Cost
Specimen signature card (Form L-501);
Sketch of business address; and
Validated miscellaneous payment return form
(Form R-6) or special bank receipt showing
payment of the employer registration plate, if
not paid upon initial registration.
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To PhilHealth:
Member registration forms for each employee
with the required supporting documents.
Total 32 days 32,855.00
Income tax
Under the National Internal Revenue Code (NIRC), the business is considered as
a partnership, or in NIRC terms, as a corporation. From Section 27 of the NIRC, except
as otherwise provided in this Code, an income tax of thirty percent (30%), effective
January 1, 2009, is hereby imposed upon the taxable income derived during each taxable
year from all sources within and without the Philippines by every corporation. The
business will use a calendar year for tax purposes.
Annual Income Tax Return for Corporations and Partnerships Provisions:
Tax Form:
BIR Form 1702 - Annual Income Tax Return (For Corporations and Partnerships)
Documentary Requirements:
1. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form
2304), if applicable
2. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Proof of Foreign Tax Credits, if applicable
5. Income tax return previously filed and proof of payment, if amended return is
filed for the same taxable year
6. Account Information Form (AIF) and/or the Certificate of the independent CPA
with Audited Financial Statements, if the gross quarterly sales, earnings, receipts
or output exceed P150,000.00
7. Proof of prior year’s excess tax credits, if applicable
Procedures:
1. Fill-up BIR Form 1702 in triplicate.
2. If there is payment:
Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District
Office where you are registered and present the duly accomplished BIR Form
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1702, together with the required attachments and your payment. In places where
there are no AABs, proceed to the Revenue Collection Officer or duly Authorized
City or Municipal Treasurer located within the Revenue District Office where you
are registered and present the duly accomplished BIR Form 1702 with the
required attachments and your payments. Receive your copy of the duly stamped
and validated form from the teller of the AABs/Revenue Collection Officer/duly
Authorized City or Municipal Treasurer.
3. For "No Payment" Returns including refundable/ creditable returns and returns
with excess tax credit carry over:
Proceed to the Revenue District Office where you are registered or to any Tax
Filing Center established by BIR and present the duly accomplished BIR Form
1702, together with the required attachments. Receive your copy of the duly
stamped and validated form from the RDO/Tax Filing Center representative
Deadline:
Final Adjustment Return or Annual Income Tax Return - On or before the 15th
day of the fourth month following the close of the taxpayer’s taxable year
Value-added Tax
Any person or entity who, in the course of his trade or business, sells, barters,
exchanges, leases goods or properties and renders services subject to VAT, if the
aggregate amount of actual gross sales or receipts exceed One Million Nine Hundred
Nineteen Thousand Five Hundred Pesos (P1,919,500.00). Since the proponents are
expecting of an annual sales exceeding P1,919,500.00 the business will be VAT
registered.
Monthly VAT Declaration
Tax Form
BIR Form 2550M - Monthly Value-Added Tax Declaration (February 2007 ENCS)
Documentary Requirements
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1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307),
if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to
Withholding Tax At Source (SAWT), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Authorization letter, if return is filed by authorized representative.
Procedures
1. Fill-up BIR Form No. 2550M in triplicate copies (two copies for the BIR and one copy
for the taxpayer)
2. If there is payment:
File the Monthly VAT declaration, together with the required attachments, and
pay the VAT due thereon with any Authorized Agent Bank (AAB) under the
jurisdiction of theRevenue District Office (RDO)/Large Taxpayers District Office
(LTDO) where the taxpayer (head office of the business establishment) is
registered or required to be registered.
The taxpayer must accomplish and submit BIR-prescribed deposit slip, which the
bank teller shall machine validate as evidence that payment was received by the
AAB. The AAB receiving the tax return shall stamp mark the word "Received" on
the return and machine validate the return as proof of filing the return and
payment of the tax.
In places where there are no duly accredited agent banks, file the Monthly VAT
declaration, together with the required attachments and pay the VAT due with the
Revenue Collection Officer (RCO) or duly authorized Treasurer of the
Municipality where such taxpayer (head office of the business establishment) is
registered or required to be registered.
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The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue
Official Receipt upon payment of the tax.
3. If there is no payment:
File the Monthly VAT Declaration, together with the required attachments with
the RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly
authorized Municipal/ City Treasurer of Municipality/City where the taxpayer
(head office of the business establishment) is registered or required to be
registered.
Deadline
Not later than the 20th day following the end of each month
Quarterly VAT Return
Tax Form
BIR Form No. 2550Q - Quarterly Value-Added Tax Return (February 2007 ENCS)
Attachments to the Return
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if
applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to
Withholding Tax At Source (SAWT), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Previously filed return and proof of payment, for amended return
6. Authorization letter, if return is filed by authorized representative
Procedures
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1. Fill-up BIR Form 2550Q in triplicate copies (two copies for the BIR and one copy for
the taxpayer)
2. If there is payment:
File the Quarterly VAT Return, together with the required attachments, and pay
the VAT due thereon with any AAB under the jurisdiction of the RDO/LTDO
where the taxpayer (head office of the business establishment) is registered or
required to be registered.
The taxpayer must accomplish and submit BIR- prescribed deposit slip, which the
bank teller shall machine validate as evidence that payment was received by the
AAB. The AAB receiving the tax return shall stamp mark the word "Received" on
the return and machine validate that return as proof of filing the return and
payment of the tax.
In places where there are no duly accredited agent banks, file the Quarterly VAT
Return, together with the required attachments and pay the VAT due with the
Revenue Collection Officer (RCO) or duly authorized Treasurer of the
Municipality where such taxpayer (head office of the business establishment) is
registered or required to be registered.
The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official
Receipt upon payment of the tax.
3. If there is no payment:
File the Quarterly VAT Return, together with the required attachments with the
RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly
authorized Municipal/City Treasurer of Municipality/City where the taxpayer
(head office of the business establishment) is registered or required to be
registered.
Deadline
Within twenty five (25) days following the close of taxable quarter.
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Monthly Remittance of Taxes Withheld on Compensation
Tax Form
BIR Form 1601-C : Monthly Remittance Return of Income Taxes Withheld on
Compensation
Who Are Required To File
Every registered withholding agent on compensation, which includes, but not limited to
the following:
1) Individuals engaged in business or practice of profession with employees subject to
income tax
2) All Juridical persons (e.g., Corporations, general partnerships, associations, etc.)
whether or not engaged in business.
3) Government Agencies and Instrumentalities (e.g.,NGAs, GOCCs, etc.), including local
government units (LGUs)
Documentary Requirements/Attachments to the tax return:
1) For amended return, proof of remittance and the return previously filed.
2) For those with advance payments, BIR Form No. 0605
3) For Private Sector, copy of the list of MWEs who received hazard pay submitted to the
DOLE Regional/Provincial Offices-Operations Division/Unit, for the return period
March, June, September and December, if applicable.
4) For Public Sector, copy of Department of Budget and Management (DBM) circular/s
or equivalent on MWEs allowed to receive hazard pay, for the return period March, June,
September and December, if applicable.
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5) Electronic Tax Remittance Advice (eTRA) previously Tax Remittance Advice (TRA)
for National Government Agencies (NGAs) as required under DOF-DBM Joint Circular
No. 1-2000A and RR 1-2013.
Procedures for Filing and Payment
1. Read instructions indicated in the tax return.
2. Accomplish correctly BIR Form No. 1601-C in triplicate copies.
3. If there is tax required to be remitted:
- Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office
(RDO) where you are registered or withholding agent is registered and present the duly
accomplished BIR Form No. 1601-C, together with the required attachments (if
applicable) and your payment.
- In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where
you are registered or withholding agent is registered and present the duly accomplished
BIR Form No. 1601- C, together with the required attachments (if applicable) and your
payment.
- Receive your copy of the duly stamped and validated form from the teller of the
AAB's/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
4. If there is no tax required to be remitted:
- Proceed to the Revenue District Office where you are registered or where the
withholding agent is registered and present the duly accomplished BIR Form No. 1601-C,
together with the required attachments.
- Receive your copy of the duly stamped and validated BIR Form from the RDO.
Deadline
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On or before the tenth (10th) day of the month following the month the withholding was
made, except for taxes withheld for the month of December which shall be filed and paid
on or before January 15 of the succeeding year
Monthly Remittance Of Income Taxes Withheld (Expanded) [Except for Transactions
Involving Onerous Transfer of Real Property Classified as Ordinary Asset]
Tax Form
BIR Form No. 1601-E: Monthly Remittance Return of Income Taxes Withheld
(Expanded) [Except for Transactions Involving Onerous Transfer of Real Property
Classified as Ordinary Asset]
Who Are Required To File
Every registered withholding agent on Expanded Withholding Tax, which may include,
but not limited to the following:
1) In general, any juridical person, whether or not engaged in trade or business
2) An individual, with respect to payments made in connection with his trade or business.
However, insofar as taxable sale, exchange or transfer of real property is concerned,
individual buyers who are not engaged in trade or business are also constituted as
withholding agents.
3) Government agencies and instrumentalities (e.g., National Government Agencies,
Government-Owned or Controlled Corporations, Local Government Units, etc.)
4) All individuals, juridical persons and political parties, with respect to their income
payments made as campaign expenditures and/or purchase of goods and services
intended as campaign contributions.
Documentary Requirements
1. Return previously filed and proof of remittance, if amended return
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2. Monthly Alphalist of Payees (MAP), except income payments made by political
parties, candidates and income payments made by individual or juridical person on the
purchase of goods and services as campaign contributions to political parties and
candidates
3. For advance payment, BIR Form No. 0605
4. Electronic Tax Remittance Advice (eTRA) previously Tax Remittance Advice (TRA)
for National Government Agencies (NGAs) as required under DOF- DBM Joint Circular
No. 1-2000A and RR 1-2013
Procedures for Filing and Payment
1. Read instructions indicated in the tax return.
2. Accomplish BIR Form No. 1601-E in triplicate copies.
3. If there is tax required to be remitted:
- Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office
where you are registered or taxpayer concerned is registered and present the duly
accomplished BIR Form No. 1601- E, together with the required attachments and your
payment.
- In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where
you are registered or taxpayer concerned is registered and present the duly accomplished
BIR Form 1601-E, together with the required attachments and your payment
- Receive your copy of the duly stamped and validated form from the teller of the
AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
4. If there is no tax required to be remitted:
- Proceed to the Revenue District Office where you are registered and present the duly
accomplished BIR Form 1601-E, together with the required attachments.
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- Receive your copy of the duly stamped and validated form from the RDO
representative.
Deadline
On or before the tenth (10th) day of the month following the month the withholding was
made, except for taxes withheld for the month of December which shall be filed and paid
on or before January 15 of the succeeding year
Loan Application
A small business loan can help the proponents in funding their venture. Not all
businesses can get a small business loan, so the proponents need to take special care in
applying for one.
Qualifications for SME loans:
If an individual, must be a Filipino, of legal age, not more than 65 years old upon
loan maturity
If a corporation, must be at 60% owned by Filipinos
If a partnership, at least one of the general partners is a Filipino
With financing need of at least PhP500,000.00
Documentary Requirements:
Properly filled-out and signed Business Loan Application Form and Statement of
Assets & Liabilities (available here for downloading)
Two (2) Valid IDs
Business registration papers – DTI Certificate of Registration or SEC Articles of
Incorporation and By-Laws, General Information Sheet
Waiver of Confidentiality of Client’s information and/or Authority of the Bank to
Conduct Random Verification with the BIR (as indicated in the application form)
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Interim financial statements, if available
Photocopy of bank statements or passbook within the past 6 full months
Photocopy of TCT, tax declaration and vicinity map of the offered collateral
Trade References / List of at least five major suppliers and clients with contact
names and contact details
Company profile and ownership structure
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