HOW TO PASS THE BIR HOW TO PASS THE BIR COMPLIANCE TESTCOMPLIANCE TEST

ROGER C. LEEROGER C. LEEGroup SupervisorGroup Supervisor

Revenue District No. 82Revenue District No. 82Cebu City Cebu City –– South South DistrctDistrct

ObjectivesObjectivesTaxpayers will be aware of the common violations

and adhere to the requirements of

OOKKEEPINGOOKKEEPING

NVOICING

EGISTRATION

Tax Mapping Operation MissionTax Mapping Operation Mission(Commissioner of Internal Revenue memo dated April 9, 2003)(Commissioner of Internal Revenue memo dated April 9, 2003)

1. To apprehend all business establishments notissuing proper receipts as well as for violationof all internal revenue laws, rules and regulations in the conduct of business;in the conduct of business;

2. To collect such penalties, fines and surcharges as are required under existing laws, regulations and memo orders;

3. To insure that all the violations discovered areimmediately corrected by business establishmentsconcerned; and

4. Seize all unauthorized invoices/receipts found inthe establishment including unregistered CRM or

Tax Mapping Operation MissionTax Mapping Operation Mission(Commissioner of Internal Revenue memo dated April 9, 2003)(Commissioner of Internal Revenue memo dated April 9, 2003)

the establishment including unregistered CRM orPOS machines.In the meantime that these seizedmachines have not yet been released, nor duly authorized receipts printed and for a period of notless than two weeks, to require the use of BIR Authorized Temporary Receipt/Invoice.

REGISTRATION VIOLATIONSREGISTRATION VIOLATIONS

� Failure to register the business with BIR

� No RF annual/renewal payment

� No Certificate Of Registration displayed � No Certificate Of Registration displayed

� No ”Ask for Receipt” poster displayed

Registration RequirementRegistration Requirement(Sec.236, NIRC)(Sec.236, NIRC)

1. Employees : Within 10 days from date of employment (BIR Form 1902- TRU)

2. Change of Status : Within 10 days from date of 2. Change of Status : Within 10 days from date of change (BIR Form 2305)

3. Business : Before commencement of business and payment of any tax due

Individual - BIR Form 1901Corporation - BIR Form 1903

3a. Sec. 248/249 – Failure to pay annual registrationfee is subject to penalties of 25% surcharge, interestand compromise penalty.

3b. Sec. 258 – Unlawful pursuit of business. For each act

Registration RequirementRegistration Requirement

3b. Sec. 258 – Unlawful pursuit of business. For each act or omission, be punished by a fine of not less than P5,000 but not more than P20,000 and imprisonmentof not less than six (6) months but not more than2 years.

Registration Fee for BusinessRegistration Fee for BusinessP500 to be paid upon registration for new registrants

and for old registrants, on or before Jan.31 of the year (BIRForm 0605) except:

1. Cooperatives1. Cooperatives2. Employees3. Individual Marginal Income Earners with

annual sales/services of not more thanP100,000

Registration ProcedureRegistration ProcedureRegistration is required for every separate or distinctestablishment or place of business including facilitytypeswhere sales transactions occur and warehousewhere inventory of goods for sale are kept beforecommencement of business and payment of any tax due.commencement of business and payment of any tax due.

The Certificate of Registration shall be issued to the applicant by the Revenue Office concerned uponcompliance with the requirements for registrationwhich shall be posted together with duly validated

Registration ProcedureRegistration Procedure

which shall be posted together with duly validatedRegistration Fee Return at a conspicuous place inthe principal place of business and at each branch.

Cancellation of RegistrationCancellation of RegistrationThe required documents for submission:

• Formal letter of termination/Notice of Dissolution• Duly accomplished BIR Form 1905• Unused Sales Invoice, ORs & other invoices• Unused Sales Invoice, ORs & other invoices• VAT returns and Withholding Tax remittances• Inventory of goods• Audited Financial Statements

Transfer of RegistrationTransfer of RegistrationWhenever a VAT-registered person changes hisprincipal place of business from one revenue districtto another, both revenue district offices should benotified by filing BIR Form 1905 within fifteen (15)days from the date of such change was made.days from the date of such change was made.

If the change of address is within the revenue district, the notification shall be filed with the same revenuedistrict office.

Penalties for Registration ViolationPenalties for Registration Violation

VIOLATION 1ST

OFFENSE

2ND

OFFENSE

FAILURE TO

REGISTER

FAILURE TO PAY ANNUAL REGISTRATION FEE

P 1,000.00

NO CERTIFICATE OF REGISTRATION DISPLAYED

P 1,000.00

NO ”ASK FOR RECEIPTS” POSTER DISPLAYED

P 1,000.00

Invoicing RequirementsInvoicing Requirements

All registered persons shall for every sale or lease of goods, properties or services, issue duly registeredreceipts or sales or commercial invoices which mustshow:• Name, TIN, address of seller• Date of transaction• Date of transaction• Quantity, unit cost and description of merchandise

or nature of service• The name,TIN, and address of the purchaser,

customer or client for VAT registered taxpayers• Invoice or receipt number• Authority to print number & other receipt details

INVOICING INVOICING VIOLATIONS & VIOLATIONS & PENALTIESPENALTIES

VIOLATION 1STOFFENSE 2NDOFFENSE

FAILURE TO ISSUE RECEIPTS/ INVOICES

P 10,000.00 P 20,000.00

REFUSAL TO ISSUE RECEIPTS/ INVOICES

P 25,000.00 P 50,000.00

DUPLICATE COPY OF RECEIPTS IS BLANK & USED ORIG COPY DETACHED

P 10,000.00 P 20,000.00

USE OF UNREGISTERED RECEIPTS/ INVOICES

P 10,000.00 P 20,000.00

INCOMPLETE INFORMATION IN THE RECEIPTS/INVOICES

P 1,000.00 P 2,500.00

INVOICING INVOICING VIOLATIONS & VIOLATIONS & PENALTIESPENALTIES

VIOLATION 1STOFFENSE 2NDOFFENSE

USE OF unregistered CRM,POS or SIMILAR DEVICES IN LIEU OF INVOICES/RECEIPTS

P 25,000.00 P 50,000.00

USE OF Computerized Accting System (CAS) &/or components w/o PERMIT

P 25,000.00 P 50,000.00(CAS) &/or components w/o PERMIT

FAILURE TO INFORM ANY ENHANCEMENTS/MODIFICATIONS/ CHANGES IN PREVIOUSLY ISSUED PERMIT to use CAS

P 25,000.00 P 50,000.00

Use of POS in TRAINING MODE IN THEIR SALES TRANSACTION

P 25,000.00 P50,000.00

VIOLATION 1STOFFENSE 2NDOFFENSE

FAILURE to register CRM as CASH DEPOSITORY ONLY

P 25,000.00 P 50,000.00

CASH depository CRM is USED FOR ISSUING SALES RECEIPTS/INVOICES

P 25,000.00 P 50,000.00

FAILURE to ATTACH/PASTE P 1,000.00

INVOICING INVOICING VIOLATIONS & VIOLATIONS & PENALTIESPENALTIES

FAILURE to ATTACH/PASTE ORIGINAL STICKER in the machine authorizing the USE of CRM/POS or similar device

P 1,000.00

FAILURE to ATTACH/PASTE ORIGINAL STICKER in the machine authorizing the USE of CRM for CASH DEPOSITORY ONLY

P 1,000.00

VIOLATION 1STOFFENSE 2NDOFFENSE

FAILURE to DISPLAY PERMIT issued by the RDO for CRM/POS/or similar device

P 1,000.00

FAILURE TO PROVIDE CRM with two (2) ROLLER TAPES

P 1,000.00

FAILURE TO NOTIFY THE REVENUE P 1,000.00

INVOICING INVOICING VIOLATIONS & VIOLATIONS & PENALTIESPENALTIES

FAILURE TO NOTIFY THE REVENUE DISTRICT OFFICE that the CRM/POS or similar device is DEFECTIVE and has been PULLED-OUT for REPAIR prior to the TRANSFER of CRM/POS to OTHER BUSINESS LOCATION

P 1,000.00

USE of CRM/POS or similar device in a PLACE OTHER THAN SPECIFIED IN THE PERMIT.

P 25,000.00 P 50,000.00

BOOKKEEPING VIOLATIONSBOOKKEEPING VIOLATIONS� Failure to register Books of Accounts

� Failure to keep Books of Accounts at the place of business

� Failure to record daily entries in the registered Books � Failure to record daily entries in the registered Books of Accounts

Books of AccountsBooks of Accounts(Sec. 232, NIRC)(Sec. 232, NIRC)

1. New Business – must be registered beforecommencement of the business or upon registration.

2. Existing Business – must be registered on or 2. Existing Business – must be registered on or before Dec. 31 of the current year.

3. Late registration – shall be subject to a minimum penalty of:Individual (Non-VAT P500; VAT P1,000)Corporation (Non-Vat P1,000; VAT P2,000)

BOOKKEEPING BOOKKEEPING VIOLATIONS & VIOLATIONS & PENALTIESPENALTIES

VIOLATION AMOUNT

FAILURE to register BOOKS OF ACCOUNTS/CASH REGISTER MACHINE´S SALES BOOKS

Subject to graduated rates (P200-P50,000) based on gross sales

FAILURE TO KEEP BOOKS OF ACCOUNTS AT THE PLACE OF BUSINESS

FAILURE TO MAKE ENTRIES IN THE REGISTERED BOOKS OF ACCOUNTS

OTHERS (refer to Section 275 of NIRC) P 1,000.00 for each act or ommission

File & Pay your taxes on timeFile & Pay your taxes on timeKIND OF TAX FREQUENCY BIR FORM DEADLINE

1. VAT Monthly 2550M 20th day of the following monthQuarterly 2550Q 25th day of the following month

2. Non-VAT Monthly 2551M 20th day of the following month(Percentage)

3. Withholding TaxCompensation Monthly 1601C 10th day of the following month except forCompensation Monthly 1601C 10th day of the following month except for

the month of DEC remittable not later thanJAN.15 of the following year

Expanded Monthly 1601E -do-

4. Income Tax Quarterly 1701Q 1ST Qtr – Apr 15(Individual 2nd Qtr - Aug 15

3rd Qtr - Nov 15Yearly 1701 Apr 15 of the following year

5. Income Tax Quarterly 1702Q 60 days after the end of the quarter(Corp/Part) Yearly 1702 15 days after the 4th month of every

calendar year or fiscal year

Schedule of Submission of Annual Schedule of Submission of Annual Information & ReportsInformation & Reports

Kind of Report Deadline• List of Inventories January 30• Annual Information return of taxes withheld from Income (Expanded and Final)

Form 1604C – Compensation January 31Form 1604C – Compensation January 31Form 1604E – Expanded March 1Form 1604F – Final January 31

BIR Compliance TestBIR Compliance TestQuestions Y N

1. Is your main business establishment or branch registered with the BIR?

2. Do you display the Certificate of Registration & ”Ask for Receipt” Poster?

3. Have you paid the annual Registration Fee or renewed your business?

4. Are your receipts/invoices registered with the BIR?

5. Do you issue receipts for every sale of goods or services?

6.Does your receipt contain the necessary & prescribed information?6.Does your receipt contain the necessary & prescribed information?

7.Are your Point Of Sale/Cash Register Machines registered with the BIR?

8.Do your POS/CR machines have the authority to use sticker?

9.Do you display the permit to use POS/CR Machines issued by the BIR?

10.Do you inform the BIR if your defective POS/CR Machines are replaced?

11.Do you have a Permit to use Computerized Accounting System?

12.Are your Books of Accounts/CRM sales books registered with the BIR?

13.Do you keep the Books of Accounts at the place of business?

14.Do you make entries in the registered Books of Accounts?

HOW YOU CAN HELP INCREASE HOW YOU CAN HELP INCREASE TAX COLLECTIONTAX COLLECTION

For Corporations and Enterprises:

1. Pay correct taxes regularly and on time2. Encourage officers and employees to pay correct 2. Encourage officers and employees to pay correct

taxes3. Organize tax forum/briefings for officers &

employees4. Produce & disseminate tax information,

education and communication materials to workforce and the public

5. Issue receipts for every business transaction

6. Include tax information in company newsletters and other publications

7. Sponsor broadcast infomercials or developmental plugs include tax duties and obligations in the

HOW YOU CAN HELP INCREASE HOW YOU CAN HELP INCREASE TAX COLLECTIONTAX COLLECTION

plugs include tax duties and obligations in the company code of conduct

8. Integrate tax-related topics in the company’s regular training programs