BIR TAX ADMINISTRATION

ASSESSMENT

COLLECTION
CERTIFICATE OF REGISTRATION
The Certificate of Registration (BIR Form 2303)
will be issued not later than five (5) working days from the filing of the
application and submission of all documentary requirements

1901 Application for Registration for Self-Employed and Mixed Income Individuals,
business of Estates/Trusts

1903 Application for Registration for Corporations/ Partnerships (Taxable/Non-

Taxable)

1902 Individuals who are registering with the Bureau of Internal Revenue for the first time
because of employment, is required to register within ten (10) days from the date of
employment.

1904 , Application for Registration For One-Time Taxpayer and Persons Registering under E.O. 98
(Securing a TIN to be able to transact with any Government Office)
Example, application for TIN of the Estate for the filing of the Estate Tax Return.
Secondary Registration

• 1905, Registration of Book of Accounts/Application for Registration

Information Update/Correction/Cancellation

• 1906, Application for Authority to Print Invoices

• 1900, Application for Authority to Use Computerized Accounting Systems

and/or Components thereof/Loose-leaf Book of Accounts

• 1907, Application for Permit to Use Cash Register Machine (CRM) and/or
Point of Sales Machine (POS)
(FCMS) BIR CASE MONITORING SYSTEM
STOP FILERS are taxpayers who were identified to have failed to file their returns as indicated in
the Revenue Data Center’s Returns Compliance System.

Open cases are BIR returns or tax forms that a COR holder failed or forgot to file through the
online eBIR app. They could be monthly, quarterly, or annually, depending on the taxes indicated
on the COR (Certificate of Registration) issued by BIR during application for registration.

RESOLVING OPEN CASES

1. If the taxpayer has proof that those returns tagged as “not filed”, he must present those filed
returns, if any, to the Revenue District office to clear and close his “open case”.

2. If the returns were not filed, the taxpayer will be required to pay the corresponding penalty to
close the “open case”.
 RA 11976 EOPT

RA 11976 EOPT, Business Classification:

 Micro - with gross sales of less than ₱3,000,000
 Small - with gross sales of ₱3,000,000 to less than ₱20,000,000
 Medium - with gross sales of ₱20,000,000 to less than ₱1,000,000,000
 Large - with gross sales of ₱1,000,000,000 and above

Special Concession Micro and Small Taxpayers –

 Reduced civil penalties (10% surcharge);
 6% interest; P500 penalty for failure to file certain information returns;
 50% of the compromise penalty on violations of invoicing/printing of invoices)
DEREGISTERING OF BUSINESS
Initial clearance is to be secured from local treasurer’s office from where the mayor’s permit to operate
your business was issued.

Deregistering a business with the BIR requires the filing of a notice of closure or cessation of business
to the RDO where it is registered, by completing the prescribed registration updates form and
submitting the required documents. Under Revenue Memorandum Circular No. 57-2020, the
streamlined documentary requirements are as follows:
1. BIR Form 1905 (2 originals);
2. Death certificate, in case of death of an individual (1 photocopy);
3. List of ending inventory of goods, supplies, including capital goods (1 original);
4. Inventory of unused sales invoices/official receipts (1 original); and
5. Unused sales invoices/official receipts and all other unutilized accounting forms (e.g., vouchers,
debit/credit memos, delivery receipts, purchases orders, etc.) including business notices and
permits as well as the Certificate of Registration (BIR Form 2303) subject for destruction to be
witnessed by BIR personnel and officials (1 original).
Tax assessment is a systematic process used by the Philippine government to determine the
correct amount of tax liability of a taxpayer. The Bureau of Internal Revenue (BIR) is the primary
agency responsible for this function.

Requisite of Valid Assessment

Assessment must be made within the prescriptive period
Pre-assessment notice must be sent to the taxpayer
The taxpayer must be informed in writing of the law and the facts upon which the assessment
was made.
The Government Assessment Process:
 Letter of Authority
 Audit/investigation of the taxpayer’s records
 Notice of Tax Discrepancy w/i 5 days response
 Preliminary Assessment Notice (PAN), EXCEPT: Mathematica error
w/i 15 days written protest Withholding taxes
Excise tax
Tax exempt on hands of not exempt

 Final Assessment Notice (FAN) w/i 30 days , Reconsideration /Reinvestigation`

 Final Decision on Disputed Assessment (FDDA)
w/i 30 days appeal to CTA
The composition of the CTA consists of:

One Presiding Justice and eight Associate Justices.

It may sit en banc (8 Justices + Presiding Justice)
or in three divisions, each composed of three Justices.

Decisions made by a division can be appealed to the CTA en banc, and

further appeals may be made to the Supreme Court
TAX ESCAPES : Avoidance or/ Evasion
Tax avoidance
refers to legal methods of reducing tax liability through careful planning and
utilizing provisions within the tax code. In Philippine taxation, taxpayers can legally
employ three primary tax avoidance methods:
• exemption,
• shifting, and
• transformation.
 INTERNAL REVENUE TAXES RETURNS

PAYOR PAYEE
 Final Tax on Income Payments for:
 Fringe Benefit
 Passive Income  Ask/keep the Quarterly Certification of Tax
 Capital Gains W/held:`
 Form 2306
 Creditable Withholding tax on Income Payments
for: FILE
Income Tax Returns:
 Taxable Compensation Income, 2316 Quarterly Annual
1700
 Business Income, 2307 1701Q 1701
1702Q 1702
TAX
DESCRIPTION TAX RATE ATC
TYPE
IND CORP
Professional fees (Lawyers, CPA's, Engineers,
WE
etc.)
- if the gross income for the current year
5% WI010
did not exceed ₱ 3M
- if gross income is more than ₱ 3M or VAT
10% WI011
registered regardlessof amount
Professional fees (Lawyers, CPA's, Engineers,
WE
etc.)
- if gross income for the current year did
10% WC010
not exceed ₱ 720,000.00
- if gross income exceeds ₱ 720,000.00 15% WC011
 Rentals Oon gross rental or lease for the
continued use or possession of personal property
in excess of ₱ 10,000.00 annually and real
WE property used in business which the payor or 5% WI100 WC100
obligor has not taken title or is not taking title, or
in which has no equity; poles, satellites,
transmission facilities and billboards
Cinemathographic film rentals and other
payments to resident indivduals and corporate
WE 5% WI110 WC110
cinematographic film owners, lessors and
distributors
WE Income payments to certain contractors 2% WI120 WC120
Income distribution to the beneficiaries of estate
WE 15% WI130
and trusts
 Payment by the General Professional
WE
Partnership (GPPs) to its partners
- if gross income for the current year did not
10% WI152
exceed ₱ 720,000.00
- if gross income exceeds ₱ 720,000.00 15% WI153
1% OF 1/2
Income payments made by credit card
WE of gross WI158 WC158
companies
amount
Additional Income Payments to govt personnel
WE from importers, shipping and airline companies 15% WI159
or their agents for overtime services
Income Payment made by NGAs, LGU, & etc to
WE its local/resident suppliers of goods other than 1% WI640 WC640
those covered by other rates of withholding tax
Income Payment made by NGAs, LGU, & etc to
WE its local/resident suppliers of services other than 2% WI157 WC157
those covered by other rates of withholding tax
 Income Payment made by top withholding agents
to their local/resident suppliers of goods other
WE 1% WI158 WC158
than those covered by other rates of withholding
tax
Payments made by pre-need companies to
WE 1% WI535 WC535
funeral parlors
WE Tolling fees paid to refineries 5% WI540 WC540
 PASSIVE INCOME Preferential Taxation:

• Cash/Property Dividends received by a domestic corporation from another domestic

corporation

• Stock dividends: Generally not subject to tax upon issuance. The subsequent
cancellation
or redemption of such stocks, however, shall be taxable to the extent that it represents
a distribution of earnings.

• Dividends received by non-resident foreign corporations from domestic corporations,

15% if covered by existing DTA agreement, otherwise, 25%
EXEMPTIONS (Interest Income)
 Interest from long-term deposits (5 years or more): Tax-exempt

 Pursuant to Article 61(3) of RA 9520, Cooperatives be entitled to an exemption on taxes on

transactions with insurance companies and banks, including but not limited to 20% final tax on
interest deposits and 15% (7.5%) final income tax on interest income derived from a depository
bank under the expanded foreign currency deposit system.

Pre-terminated Long-Term Deposits/Investment ATC

 Less than three (3) years 20% WI 440
 Three (3) years to less than four (4) years 12% WI 441
 Four (4) years to less than five (5) years 5% WI 442

BIR's ATC (Alphanumeric Tax Code) An ATC (Alphanumeric Tax Code) is a code used by the Bureau of
Internal Revenue (BIR) to classify businesses based on their activities.
ATC WI for individual and ATC WC for Corporation.
Royalties on books, literary works, and musical compositions: Copyright Preferential rate of 10%

Prizes amounting to ten thousand pesos (P10,000.00) or less exempt from 20% final tax, which
shall be subject to regular tax

Under Section 32 of the Tax code, Prizes and Awards made primarily in recognition of
religious, charitable, scientific, educational, artistic, literary, or civic achievements are not subject to
tax under the following conditions: 1) The recipient was selected without any action on his part to
enter the contest or proceeding; and 2) The recipient is not required to render substantial future
services as a condition to receiving the prize or award.

all Prizes and Awards in sports competitions are likewise not subject to tax provided
that these are granted to athletes in local and international sports competitions and tournaments
whether held in the Philippines or abroad and sanctioned by their national sports associations.

Winnings amounting to ten thousand pesos (P10,000.00) or less from the Philippine Charity
Sweepstakes and Lotto, which shall be exempt from tax.
Section 107(NIRC) Value-Added Tax on Importation of Goods. -
(A) In General. - There shall be levied, assessed and collected on every importation of goods a
value-added tax, Exemptions; Section 109 and other special Laws.

VAT EXEMPT IMPORTATION (Chapter 4, Business and Transfer Taxation2019 edition by Rex B Banggawan)

Sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind
generally imported seed, as, or yielding or producing foods for human consumption; and breeding stock and genetic
materials therefore (lechon manok if dined in is VATable VAT RULING 009-007)
Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds, including
ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds
for race horses, fighting cocks, aquarium fish, zoo animals and other animals considered as pets)
Importation of personal and household effects belonging to residents of the Philippines returning from abroad and
non-resident citizens coming to resettle in the Philippines; Provided, that such goods are exempt from custom duties
under the Tariff and Customs Code of the Philippines;
Importation of professional instruments and implements, tools of trade, occupation or employment, wearing apparel,
domestic animals, and personal and household effects
Sale, importation, printing or publication of books and any newspaper, magazine
Importation of fuel, goods and supplies by persons engaged in international shipping or air transport operations
Sale, importation or lease of passenger or cargo vessels and aircraft for domestic or international transport operations
VAT EXEMPT, if not in OPT, exempt from 3%:

Services by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar
cane into raw sugar

Medical, dental, hospital and veterinary services except those rendered by professionals

Educational services rendered by private educational institutions duly accredited by the Department of
Education (DepED), the Commission on Higher Education (CHED) and the Technical Education and Skills
Development Authority (TESDA) and those rendered by the government educational institutions;

Sales of cooperatives with Certificate of Tax Exemption

Marginal income earners (MIEs) refer to individuals not otherwise deriving compensation as an employee under an
employer-employee relationship but who are self-employed and deriving gross sales/receipts not exceeding P100,000.00
during any 12-month period. Their activities are considered principally for subsistence or livelihood
VAT EXEMPT, if not in OPT, exempt from 3%:

Lease of residential units with a monthly rental per unit not exceeding Fifteen Thousand Pesos (P15,000.00),
regardless of the amount of aggregate rentals received by the lessor during the year

Sale printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular
intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid
advertisements

Transport of passengers by international carriers(FOREIGN CORP.)

Association dues, membership fees, and other assessments and charges collected on a purely reimbursement basis
by homeowners’ associations and condominium established under Republic Act No. 9904 (Magna Carta for
Homeowners and Homeowner’s Association) and Republic Act No. 4726 (The Condominium Act), respectively

Sale of gold to the Banko Sentral ng Pilipinas (BSP) (previously zero-rated transaction)
Transactions which are exempt under international agreements to which the Philippines is a signatory or under
special laws
 Related INPUT VAT is not creditable

VAT EXEMPT SALES OF VAT REGISTERED PERSON:

AVAILABLE Discounts and VAT exemption:

GOODS and SERVICES SENIOR CITIZEN PWD SOLO PARENT
Food/lodging/health care/fare/amusement 20% 20%
Basic and Prime commodities 5% 5%
Baby’s food/medicines/supplements until age 6 10%

Prime commodities/necessities include rice, corn, bread, meat, eggs, milk, vegetables, fruits, sugar,
salt, soap, candles, liquified petroleum gas, and kerosene. Prime commodities include flour, onions,
vinegar, soy sauce, fertilizers, pesticides, poultry feeds, school supplies, construction materials,
batteries, and light bulbs.

If the solo parent earns less than ₱250,000 a year, they will be entitled to a 10% discount and exemption from
the value-added tax.
Their purchases, such as diapers, infant milk and food, prescription medicines and vaccines, and micronutrient
and medical supplements from birth until six years old, will be VAT-exempt.
RMC 99-2023
Real properties are considered ordinary assets
include the following:
(a) Stock in trade of a taxpayer or other real property of a kind which would
properly be included in the inventory of the taxpayer if on hand at the
close of the taxable year; or

(b) Real property held by the taxpayer primarily for sale to customers in the
ordinary course of his trade or business; or

(c) Real property used in trade or business (i.e., buildings and/or

improvements) of a character which is subject to the allowance for
depreciation provided under Sec. 34 (F) of the National Internal Revenue
Code (NIRC) of 1997, as amended; or (d) Real properties used in trade or
business by the taxpayer.
12% VAT on Sale of Real Property (Ordinary Asset)
RR No. 99-2023, in relation to RR No. 16-2005, provides that the 12%
VAT on the sale of real property shall be based on the gross selling price
of the property which is the consideration stated in the sales document
or the fair market value (FMV), whichever is higher. The FMV is the
higher of the zonal value and assessed value.
RA 12001 RPVARA, This Act aims to establish and maintain standards based on the Philippine Valuation
Standards (PVS) to govern the valuation of real property in the country through the Bureau of Local
Government Finance.
With the enactment of the RPVARA, the BIR is no longer in the position to determine the zonal value of real
properties for internal revenue tax purposes. This is now transferred to local assessors who are required to
adopt the Philippine Valuation Standard (PVS) to ensure uniform valuation of real properties

The Commissioner of Internal Revenue shall use the Schedule of Market Value (SMV) or the actual gross
selling price, as stated in the real property transaction documents, whichever is higher, in computing any
internal revenue tax.
RMC 99-2023 Donation of Real Property
Donation by a VAT-registered person of a real property used in the
course of business of the donor-taxpayer and donation by a VAT-
registered person of a real property originally intended for use in
business are classified as deemed sales of real properties classified as
ordinary assets and hence shall also be subject to VAT
CAPITAL GAIN TAXES:

Tax Form BIR Form 1706 – Final Capital Gains Tax Return (For Onerous Transfer of
Real Property Classified as Capital Assets -Taxable and Exempt)

Tax Form BIR Form 1707 - Capital Gains Tax Return (For Onerous Transfer of
Shares of Stocks Not Traded Through the Local Stock Exchange)
EXEMPTIONS
Certain capital asset transactions in Philippine taxation are exempt from capital gains tax (CGT).

Key Exempt Real Property Transactions

Sale of Principal Residence

Must be owned and used as a principal residence for at least 3 years
Proceeds must be used to purchase/construct a new principal residence within 18 months
 Inherited Properties: Properties transferred through inheritance are not subject to CGT but are
subject to estate tax. The subsequent sale of an inherited property by the heirs, however, is
subject to CGT.

 Donations: Properties transferred as donations are subject to the donor's tax instead of CGT.

 Government Expropriation: Properties acquired by the government through expropriation are

exempt from CGT.
 TAXES as to COLLECTING UNITS

National Taxes:
Internal Revenue Taxes, (BIR); CUSTOM DUTIES, BoC
Business Taxes
VAT 2550Q TRAVEL TAX, DOT /PTA
OPT 2551Q
Excise Tax 2200
ENERGY TAX, BIR COMMISSIONER
Income Tax The purpose of the law is to conserve energy and promote
Final Taxes, 1601FQ, 1602, 1603 efficient utilization.
Income Tax Returns, 1700, 1701, 1702 The owner, proprietor, operator, or any person in charge of the
electric utility must file a true and correct return with the
Transfer Taxes Commissioner of Internal Revenue within twenty (20) calendar
Donor’s Tax 1800 days after the end of each calendar month in which the tax is
Estate Tax 1801 collected.

Documentary Stamp Tax

In general 2000 ROAD USER TAX, RA 8794, LTO
One Time filing 2000 OT to provide additional revenue to the national government for the
maintenance of national and provincial roads.
 CONGRESS

LOCAL GOVERNMENT CODE

SANGGUNIAN
Sangguniang Panlalawigan Sangguniang Panlungsod Sangguniang Bayan
 Transfer of Real Property Can collect the same Tax  Manufacturers, brewers, distillers
Ownership that the Province and the
 Tax on printing and publication municipality is collecting.  Wholesalers, distributors, dealers
 Franchise tax  Retailers
Can be more than, but not
 Tax on Quarry  Exporter, Wholesalers, Retailers of
to exceed 50% more than
Essential Commodities
 Professional tax the maximum amount that
the Province and  Contractors
 Amusement tax municipality can collect.  Banks/Financial intermediaries
 Delivery truck tax
 Peddlers
 Businesses subject to Internal
Revenue Taxes
Barangays may levy taxes, fees, and charges, as provided in this Article, which shall exclusively accrue to them:
(a) Taxes - On stores or retailers with fixed business establishments with gross sales or receipts of the preceding calendar year ofFifty
Thousand pesos (P50,000.00) or less in the case of cities and
(b) Thirty thousand pesos (P30,000.00) or less, in the case of municipalities, at a rate not exceeding one percent (1%) on such gross
sales or receipts.
COMMON TAXING AUTHORITY:
Common Revenue Raising Powers
Service Fees and Charges. - Local government units may impose and collect such reasonable fees and
charges for services rendered.

COMMUNITY TAX imposed and collected by the municipality or by the city.

REAL PROPERTY TAX, Taxes on immovable property, or land and buildings, collected by
the province, city or municipality w/i Metro Manila.