Compliance Requirements PDF

22/04/2024 PRE28 321 | LESSON 6 Compliance Requirements REAB, CPA BOOKS OF ACCOUNTS ANS SUBSIDIARIES All corporations, companies, partnerships or persons required by law to pay internal revenue taxes shall keep a journal and...

22/04/2024 PRE28 321 | LESSON 6 Compliance Requirements REAB, CPA BOOKS OF ACCOUNTS ANS SUBSIDIARIES All corporations, companies, partnerships or persons required by law to pay internal revenue taxes shall keep a journal and a ledger or their equivalents: Provided, however, That those whose quarterly sales, earnings, receipts, or output do not exceed Fifty thousand pesos (P50,000) shall keep and use simplified set of bookkeeping records duly authorized by the Secretary of Finance where in all transactions and results of operations are shown and from which all taxes due the Government may readily and accurately be ascertained and determined any time of the year: 2 1  22/04/2024 BOOKS OF ACCOUNTS ANS SUBSIDIARIES Provided, further, That corporations, companies, partnerships or persons whose gross quarterly sales, earnings, receipts or output exceed One hundred fifty thousand pesos (P150,000) shall have their books of accounts audited and examined yearly by independent Certified Public Accountants and their income tax returns accompanied with a duly accomplished Account Information Form (AIF) which shall contain, among others, information lifted from certified balance sheets, profit and loss statements, schedules listing income-producing properties and the corresponding income therefrom and other relevant statements. 3 BOOKS OF ACCOUNTS ANS SUBSIDIARIES All corporations, companies, partnerships or persons keeping the books of accounts mentioned in the preceding Section may, at their option, keep subsidiary books as the needs of their business may require: Provided, That were such subsidiaries are kept, they shall form part of the accounting system of the taxpayer and shall be subject to the same rules and regulations as to their keeping, translation, production and inspection as are applicable to the journal and the ledger. 4 2  22/04/2024 PRESERVATION OF BOOKS OF ACCOUNTS AND OTHER ACCOUNTING RECORDS All the books of accounts, including the subsidiary books and other accounting records of corporations, partnerships, or persons, shall be preserved by them for a period beginning from the last entry in each book until the last day prescribed by Section 203 within which the Commissioner is authorized to make an assessment. The said books and records shall be subject to examination and inspection by internal revenue officers: Provided, That for income tax purposes, such examination and inspection shall be made only once in a taxable year, except in the following cases: 5 PRESERVATION OF BOOKS OF ACCOUNTS AND OTHER ACCOUNTING RECORDS (a) Fraud, irregularity or mistakes, as determined by the Commissioner; (b) The taxpayer requests reinvestigation; (c) Verification of compliance with withholding tax laws and regulations; (d) Verification of capital gains tax liabilities; and 6 3  22/04/2024 PRESERVATION OF BOOKS OF ACCOUNTS AND OTHER ACCOUNTING RECORDS (e) In the exercise of the Commissioner’s power under Section 5(B) to obtain information from other persons in which case, another or separate examination and inspection may be made. Examination and inspection of books of accounts and other accounting records shall be done in the taxpayer’s office or place of business or in the office of the Bureau of Internal Revenue. 7 PRESERVATION OF BOOKS OF ACCOUNTS AND OTHER ACCOUNTING RECORDS All corporations, partnerships or persons that retire from business shall, within ten (10) days from the date of retirement or within such period of time as may be allowed by the Commissioner in special cases, submit their books of accounts, including the subsidiary books and other accounting records to the Commissioner or any of his deputies for examination, after which they shall be returned. Corporations and partnerships contemplating dissolution must notify the Commissioner and shall not be dissolved until cleared of any tax liability. 8 4  22/04/2024 PRESERVATION OF BOOKS OF ACCOUNTS AND OTHER ACCOUNTING RECORDS Any provision of existing general or special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax- exempt organizations or grantees of tax incentives shall be subject to examination by the Bureau of Internal Revenue for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liability, if any. 9 REGISTRATION REQUIREMENTS (A) Requirements. – Every person subject to any internal revenue tax shall register once with the appropriate Revenue District Officer: (1) Within ten (10) days from date of employment, or (2) On or before the commencement of business, or (3) Before payment of any tax due, or (4) Upon filing of a return, statement or declaration as required in this Code. 10 5  22/04/2024 REGISTRATION REQUIREMENTS The registration shall contain the taxpayer’s name, style, place of residence, business and such other information as may be required by the Commissioner in the form prescribed therefor. A person maintaining a head office, branch or facility shall register with the Revenue District Officer having jurisdiction over the head office, brand or facility. For purposes of this Section, the term ‘facility’ may include but not be limited to sales outlets, places of production, warehouses or storage places. 11 REGISTRATION REQUIREMENTS (B) Annual Registration Fee. – An annual registration fee in the amount of Five hundred pesos (P500) for every separate or distinct establishment or place of business, including facility types where sales transactions occur, shall be paid upon registration and every year thereafter on or before the last day of January: Provided, however, That cooperatives, individuals earning purely compensation income, whether locally or abroad, and overseas workers are not liable to the registration fee herein imposed. The registration fee shall be paid to an authorized agent bank located within the revenue district, or to the Revenue Collection Officer, or duly authorized Treasurer of the city of municipality where each place of business or branch is registered. 12 6  22/04/2024 REGISTRATION REQUIREMENTS (C) Registration of Each Type of Internal Revenue Tax. – Every person who is required to register with the Bureau of Internal Revenue under Subsection (A) hereof, shall register each type of internal revenue tax for which he is obligated, shall file a return and shall pay such taxes, and shall updates such registration of any changes in accordance with Subsection (E) hereof. 13 REGISTRATION REQUIREMENTS (D) Transfer of Registration. – In case a registered person decides to transfer his place of business or his head office or branches, it shall be his duty to update his registration status by filing an application for registration information update in the form prescribed therefor. (E) Other Updates. – Any person registered in accordance with this Section shall, whenever applicable, update his registration information with the Revenue District Office where he is registered, specifying therein any change in type and other taxpayer details. 14 7  22/04/2024 REGISTRATION REQUIREMENTS (F) Cancellation of Registration. – The registration of any person who ceases to be liable to a tax type shall be cancelled upon filing with the Revenue District Office where he is registered an application for registration information update in a form prescribed therefor. (G) Persons Commencing Business. – Any person, who expects to realize gross sales or receipts subject to value-added tax in excess of the amount prescribed under Section 109(z) of this Code for the next 12-month period from the commencement of the business, shall register with the Revenue District Office which has jurisdiction over the head office or branch and shall pay the annual registration fee prescribed in Subsection (B) hereof. 15 REGISTRATION REQUIREMENTS (H) Persons Becoming Liable to the Value-added Tax. – Any person, whose gross sales or receipts in any 12-month period exceeds the amount prescribed under Subsection 109(z) of this Code for exemption from the value-added tax shall register in accordance with Subsection (A) hereof, and shall pay the annual registration fee prescribed within ten (10) days after the end of the last month of that period, and shall be liable to the value-added tax commencing from the first day of the month following his registration. 16 8  22/04/2024 REGISTRATION REQUIREMENTS (I) Optional Registration of Exempt Person. – Any person whose transactions are exempt from value-added tax under Section 109(z) of this Code; or any person whose transactions are exempt from the value-added tax under Section 109(a), (b), (c), and (d) of this Code, who opts to register as a VAT taxpayer with respect to his export sales only, may update his registration information in accordance with Subsection (E) hereof, not later than ten (10) days before the beginning of the taxable quarter and shall pay the annual registration fee prescribed in Subsection (B) hereof. In any case, the Commissioner may, for administrative reasons, deny any application for registration including updates prescribed under Subsection (E) hereof. 17. REGISTRATION REQUIREMENTS For purposes of Title IV of this Code, any person who has registered value- added tax as a tax type in accordance with the provisions of Subsection (C) hereof shall be referred to as VAT-registered person who shall be assigned only one Taxpayer Identification Number. 18 9  22/04/2024 REGISTRATION REQUIREMENTS (J) Supplying of Taxpayer Identification Number (TIN). – Any person required under the authority of this Code to make, render or file a return, statement or other document shall be supplied with or assigned a Taxpayer Identification Number (TIN) which he shall indicate in such return, statement or document filed with the Bureau of Internal Revenue for his proper identification for tax purposes, and which he shall indicate in certain documents, such as, but not limited to the following: (1) Sugar quedans, refined sugar release order or similar instruments; (2) Domestic bills of lading; 19 REGISTRATION REQUIREMENTS 3) Documents to be registered with the Register of Deeds of Assessor’s Office; (4) Registration certificate of transportation equipment by land, sea or air; (5) Documents to be registered with the Securities and Exchange Commission; (6) Building construction permits; 20 10  22/04/2024 REGISTRATION REQUIREMENTS (7) Application for loan with banks, financial institutions, or other financial intermediaries; (8) Application for mayor’s permit; (9) Application for business license with the Department of Trade & Industry; and (10) Such other documents which may hereafter be required under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. 21 REGISTRATION REQUIREMENTS In cases where a registered taxpayer dies, the administrator or executor shall register the estate of the decedent in accordance with Subsection (A) hereof and a new Taxpayer Identification Number (TIN) shall be supplied in accordance with the provisions of this Section. 22 11  22/04/2024 REGISTRATION REQUIREMENTS In the case of a nonresident decedent, the executor or administrator of the estate shall register the estate with the Revenue District Office where he is registered: Provided, however, That in case such executor or administrator is not registered, registration of the estate shall be made with the Taxpayer Identification Number (TIN) supplied by the Revenue District Office having jurisdiction over his legal residence. 23 REGISTRATION REQUIREMENTS Only one Taxpayer identification Number (TIN) shall be assigned to a taxpayer. Any person who shall secure more than one Taxpayer Identification Number shall be criminally liable under the provision of Section 275 on ‘Violation of Other Provisions of this Code or Regulations in General’. 24 12  22/04/2024 ISSUANCE OF RECEIPTS OR SALES INVOICES All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: 25 ISSUANCE OF RECEIPTS OR SALES INVOICES Provided, however, That in the case of sales, receipts or transfers in the amount of One hundred pesos (P100.00) or more, or regardless of the amount, where the sale or transfer is made by a person liable to value- added tax to another person also liable to value-added tax; or where the receipt is issued to cover payment made as rentals, commissions, compensations or fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer or client: 26 13  22/04/2024 ISSUANCE OF RECEIPTS OR SALES INVOICES Provided, further, That where the purchaser is a VAT-registered person, in addition to the information herein required, the invoice or receipt shall further show the Taxpayer Identification Number (TIN) of the purchaser. 27 ISSUANCE OF RECEIPTS OR SALES INVOICES The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the same in his place of business for a period of three (3) years from the close of the taxable year in which such invoice or receipt was issued, while the duplicate shall be kept and preserved by the issuer, also in his place of business, for a like period. The Commissioner may, in meritorious cases, exempt any person subject to internal revenue tax from compliance with the provisions of this Section. 28 14  22/04/2024 PRINTING OF RECEIPTS OR SALES INVOICES All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same. No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. 29 PRINTING OF RECEIPTS OR SALES INVOICES All persons who print receipt or sales or commercial invoices shall maintain a logbook/register of taxpayers who availed of their printing services. The logbook/register shall contain the following information: (1) Names, Taxpayer Identification Numbers of the persons or entities for whom the receipts or sales or commercial invoices were printed; and (2) Number of booklets, number of sets per booklet, number of copies per set and the serial numbers of the receipts or invoices in each booklet. 30 15  22/04/2024 SIGN TO BE EXHIBITED BY DISTILLER, RECTIFIER, COMPOUNDER, REPACKER, AND WHOLESALE DEALER Every person engaged in distilling or rectifying spirits, compounding liquors, repacking wines or distilled spirits, and every wholesale liquor dealer shall keep conspicuously on the outside of his place of business a sign exhibiting, in letters not less than six centimeters (6 cms.) high, his name or firm style, with the words ‘Registered Distiller,’ ‘Rectifier of Spirits,’ ‘Compounder of Liquors,’ ‘Repacker of Wines or Distilled Spirits,’ or ‘Wholesale Liquor Dealer,’ as the case may be, and his assessment number. 31 SIGN TO BE EXHIBITED BY MANUFACTURER OR PRODUCTS OF TOBACCO Every manufacturer of cigars, cigarettes or tobacco, and every wholesale dealer in leaf tobacco or manufactured products of tobacco shall place and keep on outside of the building wherein his business is carried on, so that it can be distinctly seen, a sign stating his full name and business in letters not less than six centimeters (6 cms.) high and also giving his assessment number. 32 16  22/04/2024 EXHIBITION OF CERTIFICATE OF PAYMENT AT PLACE OF BUSINESS The certificate or receipts showing payment of taxes issued to a person engaged in a business subject to an annual registration fee shall be kept conspicuously exhibited in plain view in or at the place where the business is conducted; and in case of a peddler or other persons not having a fixed place of business, shall be kept in the possession of the holder thereof, subject to production upon demand of any internal revenue officer. 33 CONTINUATION OF BUSINESS OF DECEASED PERSON AND REMOVAL OF BUSINESS TO OTHER LOCATION When any individual who has paid the annual registration fee dies, and the same business is continued by the person or persons interested in his estate, no additional payment shall be required for the residue of the term which the tax was paid: Provided, however, That the person or persons interested in the estate should, within thirty (30) days from the death of the decedent, submit to the Bureau of Internal Revenue or the regional or revenue District Office inventories of goods or stocks had at the time of such death. The requirement under this Section shall also be applicable in the case of transfer of ownership or change of name of the business establishment. 34 17  22/04/2024 CONTINUATION OF BUSINESS OF DECEASED PERSON AND REMOVAL OF BUSINESS TO OTHER LOCATION Any business for which the annual registration fee has been paid may, subject to the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be removed and continued in any other place without the payment of additional tax during the term for which the payment was made. 35 “ Thank you. 36 18  22/04/2024 “ Assignment: Look for one case relating to tax evasion. 1. What is the title of the case? 2. Write down the facts and the highlights of the case. 3. Cite also the final decision of the Court. 4. What is your reflection on the selected case? 37 19