Republic of the Philippines

City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION

ADDITIONS TO TAX (Train Law) and BIR Registration- FREQUENTLY ASKED QUESTIONS

1. Definition of Terms

Delinquency is the failure of the taxpayer to pay the tax due on the date fixed by law or indicated in the assessment notice
or letter of demand.

Deficiency is the amount still due and collectible from a taxpayer upon audit or investigation.

Surcharge is a civil penalty imposed by law as addition to the main tax required to be paid.

There is willful neglect if the taxpayer knowingly delays the filing of the tax return.

There shall constitute prima facie evidence of a false or fraudulent return

1. Substantial under declaration of taxable sales, receipts or income (eg failure to report sales, receipts or income in an amount
exceeding 30% of that declared per return).
2. Substantial overstatement of deductions (eg a claim of deduction in an amount exceeding 30% of actual deductions).
3. Recurrence of understatement of income or overstatement of deductions for more than one taxable year.

2. Additions to Tax

a. Civil Penalties or surcharges

1. Twenty five percent (25%) surcharge - There shall be imposed, in addition to the basic tax required to be paid, a penalty
equivalent to twenty-five percent (25%) thereof, in any of the following cases:
a. Failure to file any return and pay the tax due thereon as required under the provisions of the Tax Code or rules and
regulations on the date prescribed or
b. Unless otherwise authorized by the Commissioner, filing a return with an internal revenue officer oth other
er than those with
whom the return is required to be filed
c. Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment
d. Failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of the
Tax Code or rules and regulations, or the full amount of tax due for which no return is required to be filed, on or before the
date prescribed for its payment

2. Fifty percent (50%) surcharge

a. In case of willful neglect to file the return within the period prescribed by the code or
b. In case a false or fraudulent return is willfully made

Note: In case the taxpayer, without notice from the Commissioner or his duly authorized representative, voluntarily files a return, only 25%
surcharge shall be imposed for late filing and late payment of the tax in lieu of the 50% surcharge

c. In case a person who is not VAT registered issues an invoice or receipt showing his TIN, followed by the word “VAT”
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION
b. Interest

1. General – There shall be assessed and collected on any unpaid amount of tax, interest at the rate of double the legal
interest rate per annum, or such higher rate as may be prescribed by rules and regulations, from the date prescribed for
payment until the amount is fully paid.

2. Deficiency interest – Any deficiency in the tax due, as the term is defined in the Tax Code, shall be subject to the double
the legal interest rate per annum,
annum or such higher rate as may be prescribed by rules and regulations, which interest shall be
assessed and collected from the date prescribed for its payment until the full payment thereof.

3. Delinquency interest – In case of failure to pay:

a. The amount of the tax due on any return required to be filed or
b. The amount of the tax for which no return is required or
c. A deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the
Commissioner, there shall be assessed and collected on the unpaid amount, interest at double the legal interest rate per
annum, or such higher rate as may be prescribed by rules and regulations until the amount is fully paid.

4. Interest on extended payment – if any person required to pay the tax is qualified and elects to pay the tax in installments
under the provisions of the tax code, but fails to pay the tax or any installment hereof, or any part of such amount or
installment on or before the date prescribed for its payments or where the Commissioner has authorized an
extension of time within which to pay a tax or deficiency tax or any part thereof, there shall be assessed and collected
interest at double the legal interest rate per annum, or such higher rate as may be prescribed by rules and regulations on
the tax or deficiency tax or any part thereof unpaid from the date of notice and demand until it is paid

C. Compromise Penalty

1. The extrajudicial settlement of the taxpayer’s criminal liability and the amount of the suggested compromise penalty shall
conform with the schedule of compromise penalties provided under Revenue Memorandum Order No. 1-90 or has hereafter
been revised
2. In general, the taxpayer’s criminal liability arising from his violation of the pertinent provision of the Code may be settled
extra-judicially instead of BIR instituting against the taxpayer a criminal action in court
3. A compromise in extrajudicial settlement of the taxpayer’s criminal liability for his violation is consensual in character,
hence, may not be imposed on the taxpayer without his consent
4. The BIR may only suggest settlement of the taxpayer’s liability through a compromise

D. Format of Computation (With Additions to Tax)

Tax payable Pxxx
Add: Surcharge xxx
Interest xxx
Compromise penalty xxx xxx
Total amount payable Pxxx
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION
Part 2. Due Dates – Last day for filing return and payment of tax
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION

In Summary:
Tax Type Covered period Form to Use Alphalist of Due date for filing and payment
Payees
Non-EFPS EFPS Filers
Filers
Expanded/creditable 1st month of the BIR Form 0605 None 10th day of the 15th day of the
Withholding Tax quarter ATC –MC 200 following month following month
(1601E/1606) Tax Type WE
2nd month of the BIR Form 0605 None 10th days of the 15th day of the
quarter ATC –MC 200 following month following month
Tax Type WE
Calendar Quarter BIR Form Yes (to include all Last day of the Last day of the
1601EQ income month following the month following the
payments for the close of the close of the
quarter) quarter quarter
Final Withholding Tax 1st month of the BIR Form 0605 None 10th day of the 15th day of the
(1601 F/1602) quarter ATC –MC 200 following month following month
Tax Type WF
2nd month of the BIR Form 0605 None 10th days of the 15th day of the
quarter ATC –MC 200 following month following month
Tax Type WF
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION
Calendar Quarter BIR Form Yes for 1601F (to Last day of the Last day of the
1601FQ/1602Q include all month following the month following the
income close of the quarter close of the quarter
payments for the
quarter)
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION
BIR Registration- FREQUENTLY ASKED QUESTIONS

1) Who are required to register with the BIR?

Every person subject to any internal revenue tax shall register once with the appropriate Revenue District Officer:

1. Within ten (10) days from the 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 the NIRC.
5. Death of individual;
6. Full settlement of the tax liabilities of the estate;
7. Discovery of a taxpayer having multiple TINs; and
8. Dissolution, merger or consolidation of juridical person.

2) Are non-resident
resident aliens and non-resident
non resident foreign corporations receiving income from sources within the
Philippines required to register with the BIR?

Yes, Non-Resident Aliens Not Engaged in Trade or Business (NRANETB) or Non-Resident Foreign Corporations (NRFC)
shall be issued TINs for purposes of withholding taxes on their income from sources within the Philippines. The withholding
agent shall apply for the TIN in behalf of the NRANETB or NRFC prior to or at the time of the filing of their monthly
withholding tax return as applicant under EO 98, series of 1998 (Sec.4.1v of RR 7-2012).

3) If the taxpayer is engaged in VATable

VATable activity, but the gross sales or receipts from business or practice of
profession is P 3,000,000.00 or below, is he required to register?

Yes, he is required to register as a Non-VAT taxpayer. However, if his gross sales or receipts is more than P 100,000.00 but
does not exceed P 3,000,000.00, he has the option to register as VAT taxpayer. In the case of marginal income earners with
gross sales or receipts of P 100,000 and below, they have no other option but to register as non-VAT taxpayer.

4) Are taxpayers required to register their business annually?

No, taxpayers are required to register only once before commencing their business. However, they are required to pay the
registration fee of P 500.00 annually.

5) When is the taxpayer required to apply for registration and pay the registration fee?

New taxpayers shall apply for registration and pay the registration fee before commencing their business. Thereafter, taxpayers
should pay the annual registration fee not later than January 31 every year.

6) Where should a taxpayer register?

All taxpayers are required to register with the RDO having jurisdiction over the head office, branch office, place of production
or storage place where inventory of goods for sale or use in business are kept.

7) Are branches, storage places and places of production also required to pay the Annual Registration Fee (ARF) of
P 500.00?

Each branch is required to pay the ARF of P 500.00. However, storage and production places are liable to the ARF only when
sales operations are conducted thereat.

8) Who are required to register without paying the ARF?

a) Cooperatives duly registered with the CDA;

b) Individual residents earning purely compensation income

 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION

c) OCWs/OFWs;

d) Marginal Income Earners;

 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION
e) GAIs, in the discharge of their governmental functions;

f) LGUs, in the discharge of their governmental functions;

g) Tax exempt corporations such as those enumerated under Section 30 of the Code, as amended, in pursuance of tax-
exempt activities;

h) Non-stock/non-profit organizations
g not engaged in business;

i) Persons subject to tax under one-time

one transactions;

j) Persons registered under EO 98, series of 1998; and

k) Facility/ies where no saless transactions occur.

9) Are taxpayers transferring business address within the year either within the same district or to another district
required to pay another registration fee of P 500.00?

No, since the ARF is payable annually, they are no longer required to pay the registra
registration
tion fee to the new district office,
provided the P 500.00 was already paid.

10) After complying with all the requirements for registration, what document will be issued to the taxpayer as proof
of registration?

Certificate of Registration (BIR Form 2303) for newly registered taxpayer and validated Payment Form (BIR Form 0605) for
every renewal.

However, Employees, ONETT taxpayers, and/or persons who have secured a TIN under EO 98, series of 1998 with the BIR
shall not be issued a COR.

11) When will the Certificate of Registration (COR) be issued to the taxpayer?

The COR (BIR Form 2303) shalll be issued within the period/time presccribed under the existing “BIR Citizens Cha
C rter”
together with the approved Authority to Print and Registered books of accounts.

12) Who will issue the COR?

The RDO having jurisdiction of the head office or branch shall issue the COR.

13) How many COR (BIR Form 2303) shall be issued by the Revenue District Office?

For every Application for Registration, there shall be a corresponding COR to be issued to the head office and each branch
being registered.

14) What will the taxpayer do with the COR and the Proof of Payment of ARF?

The original copy of COR and the duly validated BIR Form 0605 as proof of payment of ARF are required to be displayed in
any conspicuous place in the head office and branch office.

15) What are the instances when a taxpayer can apply for cancellation of his registration?

The TIN/Registration cancellation

on shall take place upon:

All taxpayers who filed for cance cellation of registration due to closure/ce
cessation or termination of business, excecept for
branches, shall be subjected to immediate investigation by the BIR office concerned to determine the taxpayer’s tax liabilities.
 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION

16) Is there a particular form prescribed for Application for Cancellation of Registration?

Yes, BIR Form 1905 (Application for Registration Information Update).

 Republic of the Philippines
City of Olongapo
GORDON COLLEGE
Olongapo City Sports Complex, East Tapinac, Olongapo City
Tel. No. (047) 224-2089
2089 loc. 314

TAXATION
17) Where shall the Application for Registration Information Update be filed?

It shall be filed with the RDO who issued the COR. For VAT taxpayer, he shall further notify the RDO where the Home
Office is registered.

18) If a taxpayer is in doubt of his status as VAT taxpayer, what is he supposed to do?

Go to the RDO who has jurisdiction over his place of business and seek assistance.