Orientation Seminar for Tax Agents and Practitioners Susan D. Tusoy, cpa, mps Asst. Chief, Assessment Division

It is impossible to begin to learn that which one thinks one already knows.

- Epictetus

REGISTRATION OF BOOKS OF ACCOUNTS

Registration of Manual Books of Accounts (RMC 82-2008)

Registration Procedures:

1. Manual books of accounts previously registered – whose pages are not yet fully exhausted can still be used in the succeeding years without the need of re-registering or re stamping – the portions pertaining to a particular year should be properly labelled or marked by the taxpayer.

Registration of Manual Books of Accounts (RMC 82-2008) cont...

2. The registration of a new set of manual books of accounts shall only be at the time when the pages of the previously registered books have all been already exhausted.

• Not necessary to register new set of manual books of accounts each and every year.

Registration of Manual Books of Accounts (RMC 82-2008) cont...

3. other deadlines • Jan. 30 of the ff year (RMO 29-2002) applies only to computerized books of accounts and not to manual books of accounts • The “15 days after the end of the calendar year” (RMC 13-82) refers to loose-leaf books of accounts and not to manual books of accounts

Registration of Manual Books of Accounts (RMC 82-2008) cont...

4. Newly registered taxpayers shall present the Manual Books of Accounts before use to the RDOs where the place of business is located or concerned office under the Large Taxpayer Service for approval and registration.

Registration of Manual Books of Accounts (RMC 82-2008) cont...

5. Subsidiary manual books of accounts to be used by taxpayers, in addition to the manual books of accounts, shall be registered before use, following the same rules.

6. TSS personnel has no authority to examine whether the previously registered books are complete and/or updated prior to its approval.

On CAS – (RMO 29-2002) • The requirement of binding and stamping of computerized books of accounts and/or receipts and invoices are no longer necessary, provided that: 1. Soft copy of the CAS in text file format shall be made available in the ff mode: – In CD-ROM (read only) properly labelled – Electronically archived information In case the TP has no capability to submit in CD ROM form, procedures under the manual system shall prevail

On CAS – (RMO 29-2002) con’t...

2. A duly notarized certification in the form of an affidavait ascertaining/attesting the accuracy of the ff shall be submitted to the RDO within 30 days from the close of the taxable year: – – The number of receipts and invoice used during the year; and Soft copy in CD ROM duly stamped “registered” and signed by authorized official or the archived books of accounts

On Loose Leaf (RMC 13-82) • TP should be required to bind the loose leaf forms within 15 days after the end of the taxable year

Taxpayers’ Responsibility for Representations Made in their Behalf by Their Tax Agents (RMC 82-2007)

Taxpayers’ Responsibility for Representations Made in their Behalf by Their Tax Agents (RMC 82-2007) • The contents and representations of the tax returns and information statements remain the responsibility of the taxpayers in their capacity as the principals; • The taxpayers are under strict obligation to check, verify, and validate the – Authenticity – Correctness and – Validity of the returns/information filed with the BIR

Taxpayers’ Responsibility for Representations Made in their Behalf by Their Tax Agents (RMC 82-2007) • Any findings, errors, violations or infractions noted therein as a result of such verification and authentication procedures shall render both the taxpayer and his/its tax agent civilly, administratively and criminally liable, pursuant to existing rules and regulations.

Submission of the Statement of Management Responsibility (RR 3-2010) • Since the Annual ITR is primarily the responsibility of the management of the taxpayer, this shall be accompanied by a Statement of Management’s Responsibility; • All taxpayers required to file annual income tax return shall required to submit a Statement of Management’s Responsibility.

SHOW CAUSE LETTER TO ERRING CPAs

Memo No. OPM No. 10-08-001

Show Cause Letter to “Erring CPAs” Memo No. OPM No. 10-08-001 -In its bid to improve tax compliance, the BIR has started writing “show cause letters” to CPAs who issued unqualified opinions in the audit reports of their clients’ F/S where there were validated and verified misstatements in said statements.

Show Cause Letter to “Erring CPAs” • While their responsibility is limited to that of expressing an opinion on the financial statements, the BIR believes that had they undertook the generally required audit procedures they could have easily uncovered probable big understatements.

Show Cause Letter to “Erring CPAs” • The CPAs concerned were given ten (10) days from receipt of the show cause letter to explain in writing the findings of the BIR.

• Erring CPAs may face suspension or revocation of their accreditation and possibly their license to practice.

ANNUAL INVENTORY LIST

Revenue Memorandum Circular No. 2-84

Annual Inventory List (RMC 2-84) • Please be reminded on the submission of Annual Inventory List of stocks-in-trade, raw materials, goods in process, supplies and other goods – Quantity – Description – Unit cost – Total cost – Method of costing or valuing their inventory

Annual Inventory List (RMC 2-84) • Deadline – Beg. Inventory shall be submitted within 10 days after starting the business – Subsequent inventory list shall be submitted not later than 30 days after the close of the calendar year or accounting period

ADDITIONAL REQUIREMENTS IN THE PREPARATION AND SUBMISSION OF FINANCIAL STATEMENTS Revenue Regulations No. 15-2010

Additional Requirements in the Preparation and Submission of F/S • RR 15-2010 (amending RR 21-02) • The notes of f/s shall include info on taxes, duties and license fees paid or accrued during the taxable year 1. The amount of VAT Output tax and the account title and amount/s upon which the same was based,

Additional Requirements in the Preparation and Submission of F/S 2. The amount of VAT Input taxes claimed broken down into: a. Beginning of the year b. Current year’s domestic purchases/ – – – – – – payments Goods for resale/manufacture or further processing Goods other than for resale or manufacture Capital goods subject to amortization Capital goods not subject to amortization Services lodged under cost of goods sold Services lodged under other accounts

Additional Requirements in the Preparation and Submission of F/S c. Claims for tax credit/refund and other adjustments; and d. Balance at the end of the year.

3. The landed cost of imports/customs duties/ tariff fees 4. The amount of excise tax 5. DST on loan instruments, shares of stock, etc.

6. All taxes (local or nat’l) including real estate taxes, licence and permit fees accounts both under Cost of Sales and Opex accounts

Additional Requirements in the Preparation and Submission of F/S 7. The amount of withholding taxes categorized into: - Tax on compensation and benefits - Creditable withholding taxes - Final withholding taxes 8. Periods covered and amount/s of deficiency tax assessments, whether protested or not 9. Tax cases, and amounts involved, under preliminary investigation, litigation and/or prosecution in courts or bodies outside the BIR

TAXABILITY OF AGRICULTURAL CONTRACT GROWERS

Revenue Memorandum Circular No. 97-2010

Taxability of Agricultural Contract Growers (RMC 97-2010) • Toll processing services confirmed as VAT exempt pertain only services to clients from which growing of animals were contracted.

• Preparing and packaging hogs/chicken ready for delivery after producing or growing them can be said to be within the purview of agricultural contract growing.

Taxability of Agricultural Contract Growers (RMC 97-2010) • If such an activity is done independently of growing poultry, livestock, or other agricultural and marine food products, the same can be considered as VAT taxable services not covered by agricultural contract growing.

GUIDELINES AND PROCEDURES IN THE TREATMENT OF UNSERVED LNs, LAs and TVNs Revenue Memorandum Circular No. 98-2010

Unserved LNs, LAs, and TVNs (RMC 98-2010) • Every effort shall be made to serve LNs, LAs, and TVNs • ROs must obtain appropriate certifications from any two of the ff org./offices: – Barangay Office – Municipal/City Gov’t. Business Permit/Licensing Office – DTI – SEC – MERALCO – PLDT

Unserved LNs, LAs, and TVNs (RMC 98-2010) • In the event that any two of the above offices certify that concerned TP does not appear in their records, the TP shall be given “Cannot be Located” (CBL) status in the records of the Bureau • Names of TP shall be submitted to AITEID for publication – TP is given 15 days to communicate with the Bureau

Unserved LNs, LAs, and TVNs (RMC 98-2010) • The concerned BIR office shall recommend the cancellation of registration and invoicing privileges • The assessment for the tax due shall be made as follows: – In case of LNs, assess def. taxes based on discrepancies per LN - In case of LAs/TVNs – assess def. tax based on best evidence obtainable *shall be posted in the BIR website

Unserved LNs, LAs, and TVNs (RMC 98-2010) • A list of TPs with CBL status whose registration and invoicing privileges have been recommended for cancellation shall be published in the BIR website and in 2 newspapers of general circulation – Purchases made from them shall not be allowed as deduction for IT purposes – Input taxes from such TP shall be disallowed for VAT purposes *it shall not deter the BIR from pursuing legal remedies

Electronic Filing and Payment System (eFPS)

What is eFPS?

• eFPS stands for Electronic Filing and Payment System, and it refers to the system developed and maintained by the BIR for electronically filing tax returns, including attachments, if any, and paying taxes due thereon, specifically through the internet.

What is e-Filing?

• e-Filing is the process of electronically filing returns including attachments, if any, specifically through the internet.

What is e-Payment?

• e-Payment is the process of electronically paying a tax liability through the internet banking facilities of Authorized Agent Banks (AABs).

What are its objectives?

• paperless tax filing • can pay their taxes online through the convenience of an internet-banking • taxpayers can file and pay for their taxes anytime, anywhere as long as he or she is using a computer with an internet connection.

What are the benefits of the system?

• Convenient to use - it is quick and simple to use, as well as secure • Interactive - information exchange is immediate and online • Self-validating - errors are minimized • Fast - response or acknowledgment time is quicker than manual filing

What are the benefits of the system?

• Readily available – it is available 24 / 7 including holidays • Secure - return and payment transactions are more secure, as all data transmission is encrypted • Cost effective - processing cost of returns and payments is minimized (e.g. receiving, pre-processing, encoding, error-handling and storage)

Coverage • Large Taxpayers • Volunteering Taxpayer • Top Twenty Thousand Companies • Top 5,000 Individual Taxpayers • Local Government Units • Bidder/s • Bank Borrower/s

Coverage • Stock Broker/s • 10 Million Paid Up Capital • CAS(Computerized Accounting System • Volunteering Large & Non-Large Taxpayers registered with the Integrated Tax System and with e-mail account and internet access; and • Volunteering BIR National Office employees

REVENUE OFFICERS’ ACTIVITY REPORT

RMO 25-94

RO’s Activity Report (RMO 25-94) • Log Sheet must be properly accomplished and attached to docket

Name of Taxpayer : Period Covered of Audit: Letter of Authority No.: Date Issued REVENUE OFFICER'S ACTIVITY REPORT DATE ACTIVITY NO. OF HOURS NAME AND DESIGNATION OF PERSON/S CONTACTED/TAP ACCREDITATION NO.

Prepared by: Noted by:

For more information Visit our website at www.bir.gov.ph

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It's what you learn after you know it all that counts.

- John Wooden