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BIR, Bonifacio St.,Davao City
December 7, 2011
2:00 – 4:00 pm
Presented by:
SUSAN A. DAJAO-TUSOY, CPA, MPS
Asst. Chief, Assessment Division
Revenue Region 19-Davao City

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1. On registration w/ the BIR.
2. On issuance of authorized ORs/INVOICES
3. On keeping and maintaining of Books of Accounts.
4. 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.

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



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
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PRIMARY
REGISTRATION
SECONDARY
REGISTRATION
STAGE 1 STAGE 2
Application &
Issuance of TIN
Registration of
Business/Practice of
Profession/Employment
Registration of books,
Issuance of ATP, CAS and Loose-leaf

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•
Only one TIN for life
•
Multiple TIN is punishable by law.
•
Professionals may electronically secure
TIN through e-REG system

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•
•
•
–
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

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•
Withholding Taxes
- withholding tax on compensation income paid
- expanded withholding tax on income payments made

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•
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.

•
The OR shall be accomplished at least in duplicate
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•
The duplicate retained & preserved in place of business for 3 years from close of taxable year.

Sample of Commercial Invoice – A Non-VAT Official Receipt
SAMPLE ONLY

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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
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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
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Proper Invoicing and Receipting of Output Tax
SAMPLE ONLY
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Proper Invoicing and Receipting of Output Tax
SAMPLE ONLY
Service Fee
12% VAT
Total
Particulars
P1,124.10
134.90
P1,259.00
VAT should be billed separately
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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.
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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
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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
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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.

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PATIENTS’ LOG BOOK (A subsidiary book)
•
•
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

(Tax mapping)
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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

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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

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( as payor )

Required to Withhold Taxes

Expanded Withholding Tax
• Rentals – 5%
•
•
• Contractors – 2%
Professional fees -10% - 15% 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

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
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 10 th day of the following month except for the month of Dec., which shall be due on
Jan. 15
*net of VAT

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
Consequence if not remitted on time:
Computation:
Basic Tax (P30,000 x 5%) P 1,500.00
Add: 25% surcharge P 375.00
20% interest per annum* 24.65
comp. pen for late payment 700.00
1,099.65
Total Payable P 2,599.65
*assuming payment was delayed for 30 days (P1,500 x 20% x 30/365 days)

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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

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Doctors are Subject to Withholding Tax ( as payee ) on their Professional Fees
It shall be the duty and responsibility of the hospital, clinic, PHIC, HMO to remit taxes withheld from the ff:
1.
2.
3.
PF paid by PHIC/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

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Doctors are Subject to Withholding Tax ( as payee ) on their Professional Fees
•
• 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

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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)

RMC 38-2011 / RMC 49-2011
 On the obligation of PHIC to withhold taxes from medical practitioners
 10% or 15% Expanded Withholding Tax
 5% Withholding Tax on VAT or 3% for Non-VAT practitioner

Illustration 1 – for payment of fees not covered by the
CASE RATE PROGRAM
• Assume that PHIC paid P4,000 to a VAT registered doctor representing professional fees
• Income Tax Withholding (EWT)
• P4000* /112% = P3,571.43 x 15%** = P 535.71
• VAT Withholding
• P4000* /112% = P3,571.43 x 5% = P 178.57
assumptions
*Inclusive of VAT
** No sworn declaration of income was submitted

Illustration 2 – for payment of fees not covered by the
CASE RATE PROGRAM
• Assume that PHIC paid P4,000 to a NON-VAT registered doctor representing professional fees
• Income Tax Withholding (EWT)
• P4000 x 15%* = P 600.00`
• PercentageTax Withholding
• P4000 x 3% = P120.00
assumption
* No sworn declaration of income was submitted

Illustration 2: covered by the CASE RATE PROGRAM
• The entire case rate shall be paid to the concerned facility provider
• The hospital will pay the professional fee
•
•
•
Shall withhold 10% or 15% EWT
No 5% VAT withholding for non-government hospital
Government hospital is required to withhold 5% for VAT

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
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*should be supported with valid BIR Form 2307
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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.
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HOW TO COMPUTE Percentage Tax
Formula:
Gross Professional Fees Received
Multiply by tax rate
PercentageTax Due
P xxxx
3 %
P xxxx
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HOW TO COMPUTE VAT-regular transaction
Output Tax (Gross receipts x 12%)
Less: Input Tax
(VAT taxable purchases x 12%)
VAT Payable
P xxx xxx
P xxx
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HOW TO COMPUTE VAT-gov’t transaction
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
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The importance of Withholding Tax Certificates
(Form 2306/2307)
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•
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To support tax credit claims per return
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No certificate, no tax credit allowed
Serve as proof of transaction
Note: Be conscientious in gathering the withholding tax certificates on time
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Can be detected in our system
Such stop-filer case shall remain open until the corresponding return is duly filed and paid including penalties.

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VIOLATIONS CHECKLIST
On Registration Requirements
Failure to Register
Failure to Pay Annual Registration Fee
Failure to Display Annual Registration Fee
No Original Certificate of Registration Displayed
Failure to display the poster “Ask for Receipt”
If located in the
Cities
1 st Class
Municipality
2nd Class
Municipality
3rd Class
Municipality
P20,000
10,000
5,000
2,000
Penalties provided are inclusive of all other violations
P1,000
P1,000
P1,000
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VIOLATIONS CHECKLIST
Failure to issue receipts/invoices
Refusal to issue receipts/invoices
1 st Offense 2 nd Offense
P10,000 P20,000
25,000 50,000
Duplicate Copy of the receipts/invoices is blank but the accomplished original is detached
Use of unregistered receipts/invoices
Incomplete information in the receipts/invoices
If the information missing is the correct amount of the transaction
Possession or use of multiple or double receipts or invoices
20,000
20,000
5,000
20,000
50,000
50,000
10,000
50,000
Not qualified for compromise
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VIOLATIONS CHECKLIST
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
If the gross annual sales, earnings or receipts
Exceeds
But Does Not
Exceed Compromise
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
P 10,000 P 200
20,000
30,000
50,000
75,000
100,000
250,000
500,000
1,000,000
400
600
1,000
1,600
2,000
3,000
5,000
7,500
5,000,000
10,000,000
20,000,000
50,000,000
x x x
10,000
15,000
20,000
30,000
50,000
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