TAX SEMINAR
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Year-End Adjustment/Substituted Filing
Registration Update
Updates on Registration of POS/CRM
Consolidated Revenue Regulation of
Special Economic Zones
ANNUALIZED
WITHHOLDING TAX
(Year-End
Adjustment)
Year-End Adjustment
OBJECTIVES:
• Compute for the correct Annualized Withholding
Tax (Year-End Adjustment) on Compensation
• Understand and explain the guidelines and
procedures for substituted filing of Income Tax
Return (BIR Form 1700) by employees receiving
purely compensation income
• Identify the different withholding tax returns to be
accomplished; and
• State the manner and time of filing of said
returns
Year-End Adjustment
PURPOSE:
Tax Due = Tax Withheld
WHEN:
– On or before the end of the calendar year,
prior to the payment of compensation for the
last payroll period
– If terminated, on the day on which the last
payment of compensation is made.
Year-End Adjustment - Formula
Gross compensation Income (present+previous employer)
Less: Non-taxable/Exempt Compensation Income
1.) 13th month pay & other benefits
xx
2.) Other non-taxable benefits
xx
3.) SSS, GSIS, PHIC and Union Dues(Employees share only) xx
Pxxx
xxx
xxx
Less: Exemptions
1.
Personal and Additional Exemptions
xx
2.
Health/Hospitalization premium payment (if applicable) xx
xxx
Taxable Compensation Income
xxx
Tax Due
xxx
Tax Withheld (Jan. – Dec.) or (Jan. – Termination)
xxx
Collectible: Tax Due > Tax Withheld -------Collect before payment of last wage
Refund:
Tax Due < Tax Withheld--------Refund on or before Jan. 15 of the ff. year/
last payment of wage
Break-even: Tax Due = Tax Withheld-------Do not withhold for December Salary
Annual Information Return (BIR Form 1604CF
/1604-E) Including the Alphabetical List of
Employees and Income Recipient
1.
2.
Manual Submission – 3 copies of 1604CF / 1604E +
alphalist of employees and income payees.
Diskette Submission – ten (10) or more number of
employees or payees who are recipient of income
payments subject to creditable and final withholding
tax, are required to submit 3.5 inch floppy disk using
any of the following options:
1. Excel Format Provided under Revenue Regulations No.
7-2000 with the technical specifications with validation
module prescribed by BIR.
2. Own extract program that shall meet the requirements
specified in RR 7-2000 with validation module
prescribed by the BIR.
3. Data Entry Module using Visual Fox Pro.
Annual Information Return (BIR Form 1604CF /
1604E) Including the Alphabetical List of
Employees and Income Recipient
• What to use
1604CF
• When to submit On or before Jan.
31 of the ff. year
• Where to submit RDO
• Retention
1604E+Alphalist
On or before March
1 of the ff. year
LTDO
LTAD
RDO
LTDO
LTAD
3 years in a diskette
3 years in a diskette
Substituted
Filing of
Income Tax
Returns (ITR)
BIR Form
1700
Individuals qualified for substituted filing
and must not file BIR Form No. 1700
1.
2.
3.
4.
5.
Receiving purely compensation income regardless of
amount;
Working for only one employer in the Philippines for the
calendar year year;
Income tax has been withheld correctly by the employer
(tax due equals tax withheld)
The employee’s spouse also complies with all the three
conditions stated above, and
Employer filed to BIR the Annual Information Returns on
Income Taxes Withheld (BIR Form 1604-CF)
Note:
All of the above requisites must be present. The Annual
Information Return of Income Taxes Withheld on Compensation and
Final Withholding Taxes (BIR Form 1604-CF) filed by their
respective employers duly stamped “Received”, shall be tantamount
to the substituted filing of Income Tax returns by said employees.
Individuals NOT qualified for substituted filing
and must file BIR Form No. 1700
1.
2.
3.
4.
5.
Individuals with two or more employees concurrently and
successively at anytime during the taxable year.
Employees whose income tax has not been withheld
correctly resulting to collectible or refundable return.
Employees whose monthly gross income does not exceed
P5,000 or the statutory minimum wage, whichever is
higher and opted for non-withholding of tax on said
income
Individuals deriving other non-business, non-professionrelated income in addition to compensation income not
otherwise subject to a final tax.
Individuals receiving purely compensation from a single
employer whose income tax has been correctly withheld
but whose spouse does not qualify for substituted filing.
Individuals NOT qualified for substituted filing
and must file BIR Form No. 1700
6. Non-resident aliens engaged in trade or
business in the Philippines deriving purely
compensation income or compensation income
and other non-business, non-professional
related income.
Note: In case of married individuals who are still required
to file returns, only ONE RETURN FOR THE
TAXABLE YEAR SHALL BE FILED by either of the
spouses to cover income of both. It shall be SIGNED
BY HUSBAND AND WIFE unless physically
impossible to do so, in which case, signature of one
of the spouse would suffice
Employees Withholding
Statements
• What to issue:
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Certificate of Compensation Payment/
Tax Withheld – Substituted Filing
Who to issue:
Employer
When to issue: a) On or before Jan. 31 of the ff. year
b) On the day of last payment of salary
if terminated
Number of copies:
Three copies
Signed by:
Both employer and employee
(under the penalty of perjury)
Note: An extra copy shall be furnished by the employer duly
certified by him to his NEW employer in cases of transfer of
employment within the taxable year.
Certificate of Compensation
Payment/Tax Withheld
Uses of Certificate of Compensation Payment/Tax
Withheld
1. Proof of financial capacity for the purpose of loan, credit
card or other applications
2. Proof of payment of tax or for availing tax credit in the
employee’s home country;
3. Securing travel tax exemption, when necessary; and
4. Other purposes with various government agencies
Application for
Registration
Information and
Exemption
Update (BIR
Form 1905 and
2305)
Registration Information Update
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Closure of Business/Cancellation of TIN
Change in Registered Address
Replacement of Certificate of Registration
Replacement/Cancellation of Authority to Print Receipts
and Invoices
Replacement of Tax Clearance Certificate for Tax Liabilities
Replacement of Lost/Damaged TIN Card
Change in Registered Activities
Change in Registered Name/Trade Name
Change in Tax Type Details
Change in Accounting Period
Exemption Update
• Change in Status
• Change in the Number of Qualified
Dependents
• Claim for Additional Exemptions and
Premium deduction
RR 2-2005:
Consolidated
RevenueRegulations
Implementing
• RA 7227 (BCDA Act of
1992)
• RA 7916 (SPEZ Act of
1995)
• RA 7903 (Zamboanga City
SEZ Act of 1995)
• RA 7922 (Cagayan SEZ
Act of 1995)
RR 2-2005: Consolidated Implementing
Rules on ECOZONEs
• National Tax Exemption and Incentives to Zone-Registered
Enterprises
a. Exempt from taxes on importations of raw materials
b. Exempt from Gross Receipts Tax, VAT, ad valorem, and excise taxes on
their sales of goods and services except local sales
c. Exempt from franchise, and common carrier or VAT and % on public and
service utilities within the Zone
d. Preferential tax treatment on income earned/derived from business
operations within the Zone
e. Purchases of raw materials from enterprises in the Customs Territory
shall be considered effectively zero-rated or exempt from VAT
f. May generate income from sources within the Customs Territory but up
to 30% of its total income from all sources only.
g. Carriers shall be bonded in an amount to be determined by the
Authorities which shall not be less than P50,000.
h. Articles which are manufactured in the Zone and exported to a foreign
country, upon subsequent importation into customs territory, be subject to
the laws on importation applicable to like articles manufactured in a
foreign country.
Tax and Fiscal Obligations
RA 7727
Subic-Ecozone
(1)
(2)
(3)
3% to the
(1)
National
Gov’t.
1% to the
(2)
LGU
1% to the
Special Dev’t.
Fundfor the
development
of
municipalities
outside
Olongapo
and Subic
RA 7916
Econzone
3% to the
National
Gov”t:
2% which
shall be
directly
remitted by
the business
to the
treausrer’s
office where
it is located
RA 7903
Zambo-Ecozone
(1)
(2)
(3)
2%to the
National Govt
2% to the
City of
Zamboanga
1%
development
fund of the
barangays
within the
City of
Zamboanga
RA 7922
Cagayan-Ecozone
(1)
(2)
(3)
(4)
2% to the NG
1% to the
Province of
Cagayan
½% to be
shared by the
affected
municipalities
1 ½% to the
CEZA
Tax and Fiscal Obligations
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The equivalent amount to tax paid/payable to the
National Government shall be considered for purposes
of any claim for credit against taxes paid to foreign
government.
Articles received by Zone registered enterprises which
cannot be accounted shall be presumed to have been
transferred to the Customs Territory w/o permit and
therefore subject to tax.
All zone registered enterprises operating within the
zone shall be constituted as withholding agents.
Interest from any Philippine currency bank deposits
and yield by a zone registered enterprise shall be
subject to internal revenue
RR 2-2005: Consolidated Implementing
Rules on ECOZONEs
• Removal or Withdrawal from Zone to
Customs Territory
– Shall be subject to the payment of customs
duties and internal revenue taxes as ordinary
importations. Articles removed shall be
presumed to be foreign unless there is
sufficient evidence that they are domestic
articles
RR 2-2005: Consolidated Implementing
Rules on ECOZONEs
• Service Establishments:
– All income derived by qualified ECOZONE
Service Enterprises, whether registered or
not, for services rendered within the
ECOZONES shall be subject to all internal
revenue taxes under the NIRC
– However, ECOZONE locators which export
their services or are rendering their services
abroad shall enjoy the 5% preferential tax
rate.
RR 2-2005: Consolidated Implementing
Rules on ECOZONEs
• Gross Income
– Shall refer to the gross sales or gross revenue
net of sales discount, sales returns and
allowances minus cost of sales and direct
costs but before any deductions for
administrative, marketing, selling, operating
expenses, or incidental losses during a given
taxable year
– It shall include interest income, gains from
sales and other income
For ECOZONES under RA 7916
Export Enterprises, Free trade
Developer/Operator, Facilities,
Enterprises and Domestic Market
Utilities and Tourism Enterprises
Enterprises
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Direct salaries, wages or labor
expenses
Production supervision salaries
Raw materials used in prod.
Decrease of Goods in Process Account
Decrease in Finish Goods Account
Supplies and Fuels used in prod.
Depreciation of machinery and
equipment used in production
Rent and utility charges associated with
building, equipment and warehouse
used in prod.
Financing Charges associated with
fixed assets used in production which
were not capitalized
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Direct salaries, wages or labor
expenses
Service supervision salaries
Direct materials, supplies used
Depreciation of machinery and
equipment used in registered activities
Financing Charges associated with
fixed assets used in registered activites
which were not capitalized
Rent and utility charges associated with
buildings and capital equipment used in
undertaking registered activities.
Registration Information Update
• APPLICATION FOR CLOSURE OF
BUSINESS/CANCELLATION OF TIN
• Documentary Requirements
1) Letter of request stating reason for termination of
business
2) Original Certificate of Registration
3) Books of Accounts
4) Inventory List of Unused Receipts and Invoices
5) Unused Receipts and Invoices for cancellation
6) Board Resolution / Notice of Dissolution (if Corporation /
Partnership)
• Additional Requirements in Case of Death of Individual
Taxpayer:
• 1) Death Certificate
• 2) Payment of Estate Tax, if any
Registration Information Update
• APPLICATION FOR CHANGE IN REGISTERED
ADDRESS
• Documentary Requirements
1) Original Certificate of Registration
2) Inventory List of Unused Receipts and
Invoices
3) Unused Receipts and Invoices for cancellation
4) Latest DTI Certificate (for individual) or SEC
Registration (for Corporation / Partnership)
5) Proof of Application for Mayor’s Permit under
new business address
6) Sketch of Place of Production (if excise
taxpayer)
Registration Information Update
• APPLICATION FOR REPLACEMENT OF
CERTIFICATE OF REGISTRATION
• Documentary Requirements
– a) Old Certificate of Registration, for
replacement;
– b) Affidavit of Loss, if lost; and
– c) Proof of Payment of Certification Fee and
Documentary stamp- to be submitted before
the issuance of the New Certificate of
Registration
Registration Information Update
• APPLICATION FOR
REPLACEMENT/CANCELLATION OF
AUTHORITY TO PRINT RECEIPTS AND
INVOICES
• Documentary Requirements
– a) Original Authority to Print Receipts and
Invoices; and
– b) New Application Form 1906, if applicable
Registration Information Update
• APPLICATION FOR REPLACEMENT OF
TAX CLEARANCE CERTIFICATE FOR
TAX LIABILITIES
• Documentary Requirements
– a) Affidavit of Loss, if applicable; and
– b) Proof of payment of Certification Fee and
Documentary Stamp Tax – to be submitted
before the issuance of the New Tax Clearance
Certificate
Registration Information Update
• APPLICATION FOR REPLACEMENT OF
LOST/DAMAGED TIN CARD
• Documentary Requirements
– a) Affidavit of Loss, if lost; and
– b) Old TIN Card (if replacement is due to
damaged card
Registration Information Update
• APPLICATION FOR CHANGE IN
REGISTERED ACTIVITIES
• Documentary Requirements
– Original Certificate of Registration
Registration Information Update
• APPLICATION FOR CHANGE IN
REGISTERED NAME/TRADE NAME
• Documentary Requirements
– a) Amended SEC Registration/DTI Certificate;
and
– b) Original Certificate of Registration
Registration Information Update
• APPLICATION FOR CHANGE IN TAX
TYPE DETAILS
• Documentary Requirements
– Original Certificate of Registration
Registration Information Update
• APPLICATION FOR CHANGE IN
ACCOUNTING PERIOD
• Documentary Requirements
– a) BIR written approval of the change
– b) Photocopy of short period return