1 A TAX BRIEFING FOR Cashiers/Secretaries of Medical Practitioners Social Hall, BIR Building Bolton Ext., Davao City Nov. 29, 2011 8:00 – 10:30am and 1:00 – 3:30pm Presented by: SUSAN A. DAJAO-TUSOY, CPA, MPS Asst. Chief, Assessment Division Revenue Region 19-Davao City 2 Objectives of this briefing To orient the cashiers/secretaries of medical practitioners on the following: • Registration • Invoicing and • Bookkeeping Requirements To review the participants of the reportorial requirements as required by existing rules and regulations; 3 Objectives of this briefing To apprise the participants of the common violations committed by taxpayers and the corresponding penalties; and At the end of the session, the participants should realize the importance of their role as cashiers/secretaries of medical practitioners in the latter’s compliance to tax laws and regulations. 4 Check your compliance 1. 2. 3. 4. On registration w/ the BIR. On issuance of authorized ORs/INVOICES On keeping and maintaining of Books of Accounts. On withholding & remittance of w/holding taxes, if applicable. 5. On filing of required tax returns and payment of taxes due thereon. 6. On submission of required information & returns to the BIR. 5 REGISTRATION REQUIREMENTS 6 When to register On or before the commencement of business Before payment of any tax due Upon filing of a return, statement or declaration as required by the NIRC. Employee: within 10 days from date of employment 7 REGISTRATION REQUIREMENTS INDIVIDUALS: 1. BC or any ID showing applicant’s complete name, address, birthday & signature, such as but not limited to driver’s license, PRC ID and/or passport. If applicant is a married woman, marriage contract shall be required; 2. PTR for the current year, if applicable; and 3) Lease contract, if applicable. 8 REGISTRATION REQUIREMENTS GENERAL PROFESSIONAL PARTNERSHIPs (GPPs) 1) Articles of Partnership, or Partnership Agreement; 2) Mayor’s permit or application for the permit duly received by the concerned LGU; 3) Lease contract, if applicable 9 BIR Registration Procedures PRIMARY REGISTRATION STAGE 1 Application & Issuance of TIN SECONDARY REGISTRATION STAGE 2 Registration of Business/Practice of Profession/Employment Registration of books, Issuance of ATP, CAS and Loose-leaf 10 PRIMARY REGISTRATION 1. ACCOMPLISH APPLICATION FORM: • 1901 for individuals and 1903 for GPPs • Applicable tax types are selected for registration • Submit application together with the applicable attachments to the Revenue District Office (RDO) having jurisdiction over your principal place of business or practice of profession. TIN WILL BE VERIFIED OR ISSUED AT THIS STAGE 11 Your Unique Identifier: TIN • Only one TIN for life • Multiple TIN is punishable by law. • Professionals may electronically secure TIN through e-REG system 12 A. PRIMARY REGISTRATION 2. PAY REGISTRATION FEE of P500 upon registration using Payment Form 0605 and/or DOCUMENTARY STAMP TAX on Lease Contract, if applicable, using Form 2000, to any AAB or Revenue Collection Officer located w/in the RDO; 3. Attend taxpayer briefing as scheduled or secure briefing materials at the RDO before release of COR and “Ask for Receipt” Notice. 13 REGISTRATION OF BRANCH Medical practitioners are also required to register and pay the corresponding Registration Fee for each separate or distinct establishment. 14 Practitioner’s Usual Tax Types • Registration Fee (RF) • Income Tax • Business Tax – VAT – 12% if gross annual fees exceed 1.5M or if opted to register as VAT Taxpayer – Percentage tax – 3% on the gross, if gross annual income is below 1.5M 15 Practitioner’s Usual Tax Types • Withholding Taxes - withholding tax on compensation income paid - expanded withholding tax on income payments made 16 B. SECONDARY REGISTRATION Apply for Authority to Print (ATP) official receipts/invoices using Form 1906 together with required attachments: NEW TPs: Job order; final clear sample of receipt/OR; photo copy of the ff: application for registration; RF payment; COR 17 B. SECONDARY REGISTRATION OLD TPs: Job order; final clear sample; last booklet printed for verification; photo copy of the ff: Registration Fee Payment Previous Authority to Print and Certificate of Registration After printing, register ORs/Invoices thru Printer’s Certificate of Delivery (PCD) – ask your printer 18 B.SECONDARY REGISTRATION – CON’T. • Apply for registration of books of accounts, basically a Journal, Ledger, and applicable subsidiary books The BIR records your latest volume in your registration database. All of the above to be done within 30 days from date of registration 19 INVOICING REQUIREMENTS 20 Invoicing Requirements • Issue sequentially Official Receipt (OR) for fees received • Sales Invoice for sale of goods (medicines). • Each OR issued shall indicate the name and address of the client, date of transaction, nature of service rendered and the amount. 21 Invoicing Requirements • The OR shall be accomplished at least in duplicate • The duplicate retained & preserved in place of business for 3 years from close of taxable year. Sample of Commercial Invoices Sample only Sample of Commercial Invoice – A Non-VAT Official Receipt SAMPLE ONLY Sample of Commercial Invoice – A VAT Sales Invoice VAT is correctly shown VAT is correctly shown 25 Proper Invoicing and Receipting of Output Tax Revenue Regulations 18-2011 • Reiterates Sec. 237 of the Tax Code that VAT-registered taxpayers should separately bill the VAT. • The amount shall be shown as a separate item in the invoice or receipt 25 26 Proper Invoicing and Receipting of Output Tax Ex: If the amount charged is P560.00, it shall be presented in the following manner: Professional Fee (P560.00/112%) Add12% VAT (12% of P500.00 Total Amount charged P 500.00 60.00 P 560.00 26 27 Proper Invoicing and Receipting of Output Tax SAMPLE ONLY Particulars Service Fee 12% VAT Total P1,124.10 134.90 P1,259.00 VAT should be billed separately 27 28 Proper Invoicing and Receipting of Output Tax Penalty • for each act or omission, be punished by a fine of not less than P1,000.00 but not more than P50,000.00 and • suffer imprisonment of not less than two (2) years but not more than four (4) years. 28 29 The importance of Asking for Receipts • To support input tax claims • Will facilitate audit trail • To ascertain that sales transactions are properly recorded • Corresponding taxes are paid • To support business purchases/expenses 29 BOOKKEEPING REQUIREMENTS 30 31 BOOKKEEPING REQUIREMENTS • Cash or accrual • Preserved within the prescriptive period of 3yrs • Gross receipts exceeding P150,000 in any given quarter must be audited by a CPA 32 BOOKKEEPING REQUIREMENTS • Transactions for the day must be entered in books on or before 12nn the following day. Balances transferred to Ledger day following end of month • It’s not required to register new set of books every year; only before the pages of current book is almost used up. 33 A PRACTITIONER’S SUBSIDIARY BOOK’s CONTENTS • Daily list of clients w/ the corresponding fees including those free of charge, per branch • Name and address • Date • Official receipt no. • Amount charge • Must be registered with the BIR 34 Tax Compliance Verification Drive (Tax mapping) Original Certificate of Registration, Registration Fee and the Ask for Receipt Notice must be conspicuously displayed in the physician’s place of business and/or clinic 35 C. UPDATE REGISTRATION DATA Accomplish Form 1905 and submit to your home RDO for: • Change of registered address • Change of registered activity • Change of tax types (cancellation or addition) • Additional personal exemption 36 Compliance Requirements 37 Doctors as Withholding Agent (as payor) Required to Withhold Taxes Expanded Withholding Tax • Rentals – 5% • Contractors – 2% • etc. (see BIR Form 1601E) Salary of employees, if paying more than the Minimum Wage (Region XI – Non-agri. sector is 286.00 minimum wage per day) (RMC 11-2011) 38 Doctors as Withholding Agent (as payor) Example: Dr. A is renting a clinic space at P30,000/mo. Expanded Withholding Tax is P 30,000 x 5% = P1,500.00 Due date: Every 10th day of the following month except for the month of Dec., which shall be due on Jan. 15 39 Doctors as Withholding Agent (as payor) Consequence if not remitted on time: Computation: Basic Tax (P30,000 x 5%) Add: 25% surcharge 20% interest per annum* comp. pen for late payment Total Payable P 375.00 24.65 700.00 P 1,500.00 1,099.65 P 2,599.65 *assuming payment was delayed for 30 days (P1,500 x 20% x 30/365 days) 40 Doctors are Subject to Withholding Tax (as payee) on their Professional Fees Expanded Withholding Tax(EWT) creditable against Income Tax 15% if exceeding P720T, 10% for less than Disclosure Requirement (RR 12-01) • Using the Notarized Sworn Declaration (Annex A of RR 12-01) • Submit to the Collection Division • Due on June 30 each year or within 15 days when the income reaches P720,000 whichever comes first 41 Doctors are Subject to Withholding Tax (as payee) on their Professional Fees It shall be the duty and responsibility of the hospital, clinic or HMO to remit taxes withheld from the ff: 1. 2. 3. PF paid by HMOs to medical practitioners PF paid by patients to medical practitioners thru hospitals or clinics PF paid by patients directly to medical practitioners • The applicable 10% of 15% EWT, shall in turn be given by the medical practitioners directly to the acctg. Office of the hospitals or clinics • The hospital shall issue BIR Form 2307 42 Doctors are Subject to Withholding Tax (as payee) on their Professional Fees Except: • When there is proof that no PF has in fact been charged and paid by his patient • The patient/representative to execute Sworn Declaration (Annex A of RR 12-98) • Shall form part of the records of the hospital/clinic • Must be readily available for tax audit purposes 43 Doctors are Subject to Withholding Tax (as payee) on their Professional Fees On Government Money Payments (Ex: Payments of PHIC to medical doctors) 5% of Gross Income if VAT Registered Taxpayer (creditable against VAT liability) 3% of Gross Receipts for Non-VAT Taxpayer (creditable against Percentage Tax liability) 44 HOW TO COMPUTE Income Tax Formula: Aggregate professional income Less: Allowable deductions or 40% OSD (of Gross Fees) Personal & Add’l Exemptions Taxable income Tax due (see tax table on Form 1701) Less Creditable withholding tax (Form 2307) * Tax Payable (Overpayment) xxx (xxx) (xxx) xxx xxx xxx xxx *should be supported with valid BIR Form 2307 44 45 HOW TO COMPUTE Income Tax • Exemptions are comprised of Personal Exemption of P50,000 & Additional Exemption of P25,000 for each qualified dependent child not exceeding 4. • Valid claimant for additional exemption is the husband but wife can claim if the husband executes waiver. 45 46 HOW TO COMPUTE Income Tax • Health/hospitalization premium is allowed to the extent of P2,400 if aggregate family income does not exceed P250,000. For married individuals, the spouse who claims additional personal exemption shall claim the premium deduction. 46 47 HOW TO COMPUTE Percentage Tax Formula: Gross Professional Fees Received Multiply by tax rate PercentageTax Due P xxxx 3% P xxxx 47 48 HOW TO COMPUTE VAT-regular transaction Formula: Output Tax (Gross receipts x 12%) Less: Input Tax (VAT taxable purchases x 12%) VAT Payable P xxx xxx P xxx 48 49 HOW TO COMPUTE VAT-gov’t transaction Formula: Output Tax (12% of Gross receipts ) Less Standard Input Tax (7% of gross receipts) VAT Payable Less 5% withholding tax VAT Payable P xxx xxx P xxx xxx P xxx 49 50 The importance of Withholding Tax Certificates (Form 2306/2307) • To support tax credit claims per return • No certificate, no tax credit allowed • Serve as proof of transaction • Be conscientious in gathering the withholding tax certificates on time 50 51 Stop filer Cases • Can be detected in our system • Such stop-filer case shall remain open until the corresponding return is duly filed and paid including penalties. 52 Tax Forms & Filing Deadlines Tax Type Form Type 1. Annual Reg’n Fee 0605 2. Percentage Tax Tax Base/Remarks Deadlines Fixed P500.00 January 31st 2551M 3% on gross if 1.5M & below 20th ff taxable month 3. VAT (monthly) 2550M 20th ff taxable month VAT(quarterly) 2550Q 12% gross sales if above 1.5M Same 4. W/holding Taxes 1601E/ 1601C See back of tax form 10th ff taxable month 25th ff end of qtr. except for Dec which is due on Jan 15 53 Tax Forms & Filing Deadlines Tax Type 5. Annual Information Return on WHT 6. Individual Income Tax Form Type 1604-E 1604-CF 1701Q Tax Base/ Remarks Deadlines w/ alpha list of payees March 1, the ff year. Net Income 1st Qtr – April 15 current year 2nd Qtr – Aug. 15 current year 3rd Qtr – Nov. 15 current year Annual - April 15 following year Jan. 31 the ff year NOTE: TP needs to file a return even when there’s no tax due to pay. 54 VIOLATIONS CHECKLIST On Registration Requirements If located in the Failure to Register Cities P20,000 1st Class Municipality 10,000 2nd Class Municipality 5,000 3rd Class Municipality 2,000 Penalties provided are inclusive of all other violations Failure to Pay Annual Registration Fee P1,000 Failure to Display Annual Registration Fee No Original Certificate of Registration Displayed P1,000 Failure to display the poster “Ask for Receipt” P1,000 54 55 VIOLATIONS CHECKLIST On Invoicing Requirements 1st Offense 2nd Offense Failure to issue receipts/invoices P10,000 P20,000 Refusal to issue receipts/invoices 25,000 50,000 Duplicate Copy of the receipts/invoices is blank but the accomplished original is detached 20,000 50,000 Use of unregistered receipts/invoices 20,000 50,000 Incomplete information in the receipts/invoices 5,000 10,000 If the information missing is the correct amount of the transaction 20,000 50,000 Possession or use of multiple or double receipts or invoices Not qualified for compromise 55 56 VIOLATIONS CHECKLIST If the gross annual sales, earnings or receipts But Does Not Exceeds Exceed Compromise On Bookkeeping Requirements P Failure to register Books of Accounts/Cash Register Machine's Sales books Failure to keep Books of Accounts at the place of business Failure to make entries in the registered Books of Accounts P 10,000 20,000 30,000 50,000 75,000 100,000 250,000 500,000 1,000,000 5,000,000 10,000,000 20,000,000 50,000,000 10,000 P 20,000 30,000 50,000 75,000 100,000 250,000 500,000 1,000,000 5,000,000 10,000,000 20,000,000 50,000,000 xxx 200 400 600 1,000 1,600 2,000 3,000 5,000 7,500 10,000 15,000 20,000 30,000 50,000 56 www.them egallery.c om The rise and fall of a nation rests with every one of its citizens. - Chinese Proverbs