Streamlining the Business Registration Process and Documentary Requirements

The bureau just recently issued Revenue Memorandum Circular (RMC) No. 93-2016 Streamlining the Business Registration Process and Documentary Requirements by Further Amending the List of Documentary Requirements for the Registration of Each Type of Application under "Annex A" of Revenue Regulations (RR) No. 7-2012, as Clarified Under Revenue Memorandum Circular (RMC) No. 70-2013 and RMC No. 37-2016.

1. Primary and secondary registration requirements amending the list of documentary requirements of each type of application published as "Annex A" of RR No. 7-2012 dated April 2, 2012, as clarified under RMC No. 70-2013 and RMC No. 37-2016.

The revised checklist of documentary requirements herein attached as Annexes "A1A11" included the acknowledgement of the applicant on the identified lacking documents for completion to facilitate the processing of application.

2. Steps for the registration of business in the Bureau of Internal Revenue (BIR) to be implemented as follows:

STEP 1. Apply for Registration [with complete documentary requirements (Annexes "A1-A11")]

STEP 2. Pay Annual Registration Fee [thru Mobile Revenue Collection Officers System (mRCOs), Authorized Agent Banks, Revenue Collection Officer or GCash]

STEP 3. Get Certificate of Registration with auto-approved Authority to Print (ATP) for initial principal receipts/invoices

The auto-approved ATP for initial principal receipts/invoices is only applicable to newly registered business taxpayer. But, subsequent application for receipts/invoices shall be processed in accordance with the procedures specified under existing issuances.

This Circular revokes all other circulars or issuances inconsistent herewith and shall take effect immediately. All internal revenue officers and employees are hereby enjoined to give this Circular a wide publicity as possible.

Reference: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2093-2016.pdf

eBIRForms Package v6.2 is Now Available (New)

Offline eBIRForms Package. The Offline eBIRForms Package is a tax preparation software that allows taxpayers and ATAs to accomplish or fill up tax forms offline. Instead of the conventional manual process of filling up tax returns on pre-printed forms that is highly susceptible to human error, taxpayers/ATAs can directly encode data, validate, edit, save, delete, view, print and submit their tax returns. The package can do automatic computations and has the capability to validate information encoded by taxpayers/ATAs. After filling out the forms in this package, taxpayers/ATAs can submit it to the Online eBIRForms System.

The bureau just recently updated the eBIRForms Package from v6.1 to v6.2

To download the Offline eBIRForms Package v6.2, just click the following link:

http://ftp.pregi.net/bir/ebirforms_package_v6.2.zip

Alternative sites to obtain/download the Offline eBIRForms Package:

Websites: www.knowyourtaxes.ph; www.dof.gov.ph

Direct link: http://ftp.pregi.net/bir/ebirforms_package_v6.2.zip

To download the new version of eBIRForms Package v6.3:

http://philippinetaxtalk.blogspot.com/2017/04/ebirforms-package-v63-new-version.html

Certificate Authorizing Registration (CAR) shall be issued within Five (5) Days from the Submission of Complete Documentary Requirements

The CIR of the bureau recently issued Revenue Memorandum Order (RMO) No. 41-2016 dated July 12, 2016 to restate about the Revenue Memorandum Circular (RMC) No. 039-15 "Updated BIR Citizens Charter as Consolidated" and the Provision on "Accessing Frontline Services", on Certificate Authorizing Registration (CAR) issuance.

CARs covering transactions on sale of real property, transfer or assignment of stocks not traded in the stock exchange(s), transfers subject to donor's tax and other taxes including documentary stamp tax related to the sale/transfer of properties shall be issued within five (5) days from the submission of complete documentary requirements.

BIR Officials and employees found to be in violation of this directive shall be subject to the administrative and criminal penalties enumerated under Republic Act (RA) No. 9485, otherwise known as the "Anti-red Tape Act of 2007" (ARTA).

This Order took effect immediately upon approval of the Commissioner of Internal Revenue, Caesar R. Dulay.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2041-2016.pdf of the full text of RMO No. 41-2016.

What is Internal Revenue Service (IRS)?

Learning about the Internal Revenue Service (IRS) for me is a continuous process to familiarize the system, payment of taxes and its procedures and other related tax matters.

Origin 

The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.

16th Amendment

In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.

A New Name

In the 50s, the agency was reorganized to replace a patronage system with career, professional employees. The Bureau of Internal Revenue name was changed to the Internal Revenue Service. Only the IRS commissioner and chief counsel are selected by the president and confirmed by the Senate.
SOURCE: https://www.irs.gov/uac/brief-history-of-irs

Streamlining Requirements and Process in Issuing Tax Clearances Required Under executive Order No. 398

The bureau issued recently the Revenue Memorandum Circular (RMC) No. 74-2016 dated July 13, 2016, in order to streamline the requirements and the process in issuing Tax Clearances required under executive Order No. 398 with details as follows:

1. The Tax Clearance shall be processed and released with two (2) working days from the submission of the complete documents.

2. The following are the documentary requirements necessary to support the application of the tax clearance:

2.1 Duly accomplished and notarized application form with two (2) pieces loose Documentary Stamp Tax;

2.2 Print-out of Certification fee paid thru the BIR's electronic Filing and Payment System (eFPS), with payment confirmation; and

2.3 Deliquiency Verification issued by concerned LTS or National/Regional Offices with a validity period of one (1) month from the date of issued.

The Deliquency Verification shall be issued by the concerned BIR Offices with twenty four (24) hours from filing of the application by the taxpayer.

3. The criteria for approving applications for Tax Clearance shall be governed by the provisions of existing issuances on the matter.

This order took effect immediately.

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2074-2016.pdf

What is a Certificate Authorizing Registration?

Certificate Authorizing Registration (CAR) is a certification issued by the Commissioner or his duly authorized representative attesting that the transfer and conveyance of land, buildings/improvements or shares of stock arising from sale, barter or exchange have been reported and the taxes due inclusive of the documentary stamp tax, have been fully paid.

With the implementation of the Electronic Certificate Authorizing Registration (eCAR) System, the CAR shall now be electronically generated.

SOURCE: http://www.bir.gov.ph/index.php/tax-information/capital-gains-tax.html#cgt3 

Requirements and Procedures of Capital Gains Tax for Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange

Capital Gains Tax for Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange.

TAX FORMBIR Form 1707 - Capital Gains Tax Return (For Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange)

DOCUMENTARY REQUIREMENTS

1) One original copy and one photocopy of the Notarized Deed of Sale/ Exchange of shares of stock

2) Photocopy of the Deed of Acquisition or proof of cost/ fair market value of the stocks at the time of acquisition

3) Photocopy of certificate of shares of stock

4) Photocopy of evidences of expenses related to sale

5) Photocopy of Audited Financial Statements duly certified by an independent certified public accountant with computation of fair market value per share at the time of sale.

6) Duly approved Tax Debit Memo, if applicable

Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.

PROCEDURES

File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the seller or transferor of stocks is registered. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the RDO where the seller or transferor of stocks is registered or electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)

TAX RATES

For Shares of Stocks Not Traded in the Stock Exchange

- Not over P100,000 - 5%

- Any amount in excess of P100,000 - 10%

BASIS IN THE VALUATION OF PROPERTY

 

For shares of stocks, it will be based on the net capital gains realized from the sale, barter, exchange or other disposition of shares of stocks in a domestic corporation, considered as capital assets not traded through the local stock exchange.

Definition of "fair market value" of the Shares of Stock

In the case of shares of stock not listed and traded in the local stock exchanges, the value of the shares of stock at the time of sale shall be the fair market value. In determining the value of the shares, the Adjusted Net Asset Method shall be used whereby all assets and liabilities are adjusted to fair market values. The net of adjusted asset minus the liability values is the indicated value of the equity.

 The appraised value of real property at the time of sale shall be the higher of –

(1) The fair market value as determined by the Commissioner, or

(2) The fair market value as shown in the schedule of valued fixed by the Provincial and City Assessors, or

(3) The fair market value as determined by Independent Appraiser

 

Determination of Gain or Loss from Sale or Disposition of Shares of Stock.

 

The gain from the sale or other disposition Stock. — The gain from the sale or other disposition of shares of stock shall be the excess of the amount realized therefrom over the basis or adjusted basis for determining gain, and the loss shall be the excess of the basis or adjusted basis for determining loss over the amount realized. The amount realized from the sale or other disposition of property shall be the sum of money received plus the fair market value of the property (other than money) received, if any.

 

DEADLINE

Within 30 days after each sale or disposition of shares of stocks or real property. In case of installment sale, the return shall be filed within 30 days following the receipt of the first down payment and within 30 days following the subsequent installment payments. Only one return shall be filed for multiple transactions within the day.

 

SOURCE: http://www.bir.gov.ph/index.php/tax-information/capital-gains-tax.html#cgt3

Requirements and Procedures of Final Capital Gains Tax for Onerous Transfer of Real Property Classified as Capital Assets (Taxable and Exempt)

Final Capital Gains Tax for Onerous Transfer of Real Property Classified as Capital Assets (Taxable and Exempt)

TAX FORM

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

DOCUMENTARY REQUIREMENTS

1) One original copy and one photocopy of the Notarized Deed of Sale or Exchange

2) Photocopy of the Original Certificate of Title; Transfer Certificate of Title; or Condominium Certificate of Title in case of a condo unit

3) Certified True Copy of the tax declaration on the lot and/or improvement during nearest time of sale

4) “Certificate of No Improvement” issued by the Assessor’s office where the property has no declared improvement, if applicable or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees

5) Copy of BIR Ruling for tax exemption confirmed by BIR, if applicable

6) Duly approved Tax Debit Memo, if applicable

7) “Sworn Declaration of Intent” as prescribed under Revenue Regulations 13-99, if the transaction is tax-exempt

8) Documents supporting the exemption

Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.

PROCEDURES

File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the property is located. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the RDO where the property is located or electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)

TAX RATES

For real property - 6%.

 

BASIS IN THE VALUATION OF PROPERTY

 

The value of the real property will be based on the selling price, fair market value as determined by the Commissioner (zonal value) or the fair market value as shown in the schedule of values of the Provincial or City Assessor, whichever is higher.

If there is no zonal value, the taxable base is whichever is higher of the gross selling price per sales documents or the fair market value that appears in the latest tax declaration.

If there is an improvement, the FMV per latest tax declaration at the time of the sale or disposition, duly certified by the City/Municipal Assessor shall be used. No adjustments shall be added on the said value, provided that the tax declaration bears the upgraded fair market value of the said property pursuant to Section 219 of R.A. No. 7160, otherwise known as the Local Government Code of 1991 and the last paragraph of the Local Assessment Regulations No. 1-92 dated October 6, 1992.

In case the tax declaration being presented was issued three (3) or more years prior to the date of sale or disposition of the real property, the seller/transferor shall be required to submit a certification from the City/Municipal Assessor whether or not the same is still the latest tax declaration covering the said real property. Otherwise, the taxpayer shall secure its latest tax declaration and shall submit a copy thereof duly certified by the said Assessor. (RAMO 1-2001).

DEADLINE

Within 30 days after each sale, exchange, transfer or other disposition of real property.

 

SOURCE: http://www.bir.gov.ph/index.php/tax-information/capital-gains-tax.html#cgt2 

How to Validate Monthly Alphalist of Payees (MAP) and Summary Alphalist of Withholding Taxes (SAWT) Using the BIR Alphalist Validation Module

FOR BIR 1601E

 

1.User can either validate 1600,1601E and 1601F diskette and data files. To validate 1601E files, click Validation and the Alphalist Validation Module screen will appear. 
Note: Validation is auto-checking of data conformity with prescribed data structure. Encode the TIN and the Branch Code (9 digit TIN without RDO Code) of the withholding agent at the <TIN of Withholding Agent> field. The <Year> field is defaulted to the current year. 

2.Click button on the <1601E> field to choose the transaction type to be validated, the 1601E Validation Menu screen appears. Click on <Browse> to search for that certain filename.

3. After clicking the <Browse> button, a directory screen will appear. From the directory screen choose and click the filename corresponding to the type of transaction to be validated. Filenames contain the following letters depending on the transaction to be validated: E=1601E and F=1601F. In this case, choose E then click <Ok> button to continue the process. 

4. After clicking the <Ok> button, it will go back to the 1601E Validation Menu. Click on <Validate File> to continue the validation. 

5. A Log Directory screen will appear. The default directory is “reports”. The user may  choose the folder where to save the report generated after validation, then click <Select> button to complete the validation process. 

6. After validation, the report generated will automatically appear. This report will indicate any errors found during validation. Otherwise, the report will specify that no errors were encountered. Click X at the upper right corner to close the Notepad window.

7. After closing the notepad window a validation window will appear informing the user where the validated file is stored. 


FOR SAWT FORM 2550Q

1.User can validate the SAWT forms diskette and data files. To validate 2550Q files, click Validation and the Alphalist Validation Module screen will appear. 

 Note: Validation is auto-checking of data conformity with prescribed data structure.

Encode the TIN and the Branch Code (9 digit TIN without RDO Code) of the withholding agent at the <TIN of Withholding Agent> field. The <Year> field is defaulted to the current year.

2.Click button on the <SAWT> field to choose the transaction type to be validated, the SAWT Validation Menu screen appears. Click on <Browse> to search for that certain filename.

3. After clicking the <Browse> button, a directory screen will appear. From the directory screen choose and click the filename corresponding to the type of transaction to be validated. Filenames contain the following letters depending on the transaction to be validated. Click <Ok> button to continue the process.

 

SOURCE: http://www.bir.gov.ph/images/bir_files/old_files/zip/jobaid.zip

How to Login, Add/Update MAP, Print/Inquire on a Taxpayer Screen, Add/Update SAWT and Generate File using the BIR Alphalist Data Entry

 A. LOGIN
 1. Click the icon on 1604 Attachments Data Entry and the User Login pop up will appear. Encode the <User Name> and <Password>, then click <OK> button or press E.

 2. The BIR Data Entry Main Menu will appear together with the BIR System Message pop-up. Then click <Yes> or press Enter key.

 Note: The BIR System Message pop-up will appear only on the initial installation of this program to capture information of the Withholding Agent.

3. The Withholding Agent Information screen will appear. Fill in all mandatory fields, then click Save button. The <Revert> button is used to undo encoding or when the user does not want to save the encoded data of the withholding agent. Once the Withholding Agent  Information screen is filled up, the next time you view the same screen to update information, Edit & Close buttons are activated.

Note: If field validation rule is violated, an Error Message pop up will appear. 

4. After saving the encoded information of the withholding agent, the Main Menu screen will appear. The selection buttons for attachments will be activated. Click MAP Forms button or press M.

5. The MAP Menu (Monthly Alphalist of Payees consisting of 1600, 1601E and 1601F) screen will appear. Click 1601E button or press E.

6. The 1601E Menu (Monthly Remittance Return of Creditable Income Taxes Withheld  (Expanded)) screen will appear.

Note: Details of the 1601E form is already available on the 1601E Menu screen.  <For the Month of> field is defaulted to current month and year but the user has the option to enter the same.

7. In the 1601E Schedule II screen, click <Add/Update> button, a pop-up message will appear. Click <Ok> button.

B. ADD / UPDATE 1601E SCHEDULE II

8. In the 1601E Schedule II Data Entry screen, click <Add> button to add or encode a record.  Take note that after clicking the Add button, the <Save>, <Revert > and <Exit> buttons are activated.

9. All mandatory fields must be properly filled up. After encoding data on the last field, click  <Save> button.

Note: An Error pop up screen will appear when there is still a mandatory field not yet filled  up.

10. A Question pop up message will appear. Click <Yes> to add another record and <No> if not. The cursor will go back to the original screen. Click the <Exit> button.

11. A pop up message will appear asking if you want to exit, click <Yes> button to return to 1601E Menu screen. 

12. All buttons are displayed and activated when you have encoded and saved multiple data. User  may use all activated buttons (i.e. <Top>, <Next>, <Prev>, <Bottom>,<Inquiry>) to go to other records. The <Edit> button is used if there are corrections on the saved data and  the <Delete> button is used to erase saved data. Click <Exit> to go back to the 1601E  Main Menu. Click <Back to MAP Sub Menu> to go back to the Main Menu.


C. PRINT / INQUIRE ON A TAXPAYER SCREEN (1600/1601/F)

13. To print or inquire a record, click <Print/Inquire> button and the Inquiry Screen will appear.

14. Click the <Search> button and the <Search Entry> pop-up will appear. Encode the TIN or Registered Name/Trade Name or Taxpayer’s Name (Individual) you want to inquire. Click the <Ok> button and the record you are inquiring will be highlighted.            

Note: All other forms (i.e. 1600 & 1601F) have the same inquiry screen. 

15. Click <View> button to view the report on line. The user can print said report by clicking print icon located on the toolbar at the upper left corner of the screen. Click arrows to navigate to other pages of the report. Click X on the upper right corner of the screen to close report and to go back to <Inquiry> screen.

16. To view report in excel format, click <eXcel Report> button. The user can edit entries and make corrections using this format; however, changes and/or corrections made in this report will not necessarily update information stored in the system. Click X on the upper right corner of the screen to close report and to go back to <Inquiry> screen.


D. GENERATE FILE

17. To generate file, click <Generate File> button on the 1601E Menu. A <Save As> pop up screen will appear. Specify the folder where to save the encoded data, then click <Save> button. A pop up message asking “Do you want to view the file created?’ will appear. Click <Yes> and the flat file of the data will appear. Click <No> and pop up message informing that the file was successfully created will appear. Click <Ok> to go back to 1601E Menu screen.

 

D. ADD / UPDATE SAWT

18. Click SAWT Forms button or press S.

19. The SAWT Menu (Summary Alphalist of Withholding Taxes) screen will appear.

 Note: Details of the SAWT form is already available on the SAWT Menu. <For the Month of> field is defaulted to current month and year but the user has the option to enter the same.

20. Choose a form from the pull down list. In this example we will choose form 2550Q. 

21. Click the <Add/Update> button, a pop-up message will appear. Click <Ok> button. 

22. In the 2550Q Schedule I Data Entry screen, click <Add> button to add or encode a record. Take note that after clicking the Add button, the <Save>, <Revert > and  <Exit> buttons are activated. 

23. All mandatory fields must be properly filled up. After encoding data on the last field, click  <Save> button.

 

Note: An Error pop up screen will appear when there is still a mandatory field not yet filled up.

24. A Question pop up message will appear. Click <Yes> to add another record and <No> if not. The cursor will go back to the original screen. Click the <Exit> button.

25. A pop up message will appear asking if you want to exit, click <Yes> button to return to SAWT Menu screen. 

26. All buttons are displayed and activated when you have encoded and saved multiple data. User may use all activated buttons (i.e. <Top>, <Next>, <Prev>, <Bottom>,<Inquiry>) to go to other records. The <Edit> button is used if there are corrections on the saved data and the <Delete> button is used to erase saved data. Click <Exit> to go back to the SAWT Menu. Click <Back to Main> to go back to the Main Menu.

 

 

E. PRINT / INQUIRE ON A TAXPAYER SCREEN (SAWT)

27. To print or inquire a record, click <Print/Inquire> button and the Inquiry Screen will appear. 

28. Click the <Search> button and the <Search Entry> pop-up will appear. Encode the TIN or Registered Name/Trade Name or Taxpayer’s Name (Individual) you want to inquire. Click the <Ok> button and the record you are inquiring will be highlighted.

Note: All other forms have the same inquiry screen. 

29. Click <View> button to view the report on line. The user can print said report by clicking print icon located on the toolbar at the upper left corner of the screen. Click arrows to navigate to other pages of the report. Click X on the upper right corner of the screen to close report and to go back to <Inquiry> screen.

30. To view report in excel format, click <eXcel Report> button. The user can edit entries and make corrections using this format; however, changes and/or corrections made in this report will not  necessarily update information stored in the system. Click X on the upper right corner of the screen   to close report and to go back to <Inquiry> screen.

 

F. GENERATE FILE

31. To generate file, click <Generate File> button on the 1601E Menu. A <Save As> pop up screen will appear. Specify the folder where to save the encoded data, then click <Save> button. A pop up message asking “Do you want to view the file created?’ will appear. Click <Yes> and the flat file of the data will appear. Click <No> and pop up message informing that the file was successfully created will appear. Click <Ok> to go back to 1601E Menu screen

 

SOURCE: http://www.bir.gov.ph/images/bir_files/old_files/zip/jobaid.zip