STRATEGIC TAX MANAGEMENT B.
DOUBLE TAXATION
Module 1:
TAXPAYERS AND TAX COMPLIANCE REQUIREMENTS
I. REVIEW OF GENERAL PRINCIPLES OF TAXATION
TAXATION is the inherent power by which the sovereign,
through its law-making body, raises revenue to defray the
necessary expenses of the government. It is a manner of
apportioning the costs of the government among those who, in
some measure, are privileged to enjoy its benefits and must bear
its burdens.
INHERENT TO THE STATE: It is inherent in character because its
exercise is guaranteed by the mere existence of the state. It could
be exercised even in the absence of a constitutional grant. The
power to tax proceeds upon the theory that the existence of a
government is a necessity and this power is an essential and
inherent attribute of sovereignty, belonging as a matter of right
to every independent state or government. (Pepsi-Cola Bottling
Co. of the Philippines vs. Municipality of Tanauan, Leyte, G.R. No.
L-31156, February 27, 1976)
A. PRINCIPLES OF A SOUND TAX SYSTEM (FAT)
1. Fiscal Adequacy – revenue raised must be sufficient to meet
government/public expenditures and other public needs.
(Chavez vs. Ongpin; GR No. 76778; June 6, 1990)
2. Administrative Feasibility – tax laws must be clear and
concise; capable of effective and efficient enforcement;
convenient as to time and manner of payment, must not
obstruct business growth and economic development.
The VAT law cannot be considered as violative of the
Administrative Feasibility principle because it is principally
aimed to rationalize the system on taxes of goods and
services. Thus, simplifying tax administration and making the
system more equitable to enable the country to attain
economic recovery. (Kapatiran ng Mga Naglilingkod sa
Pamahalaan v. Tan; June 30, 1988)
3. Theoretical Justice – must take into consideration the
taxpayer’s ability to pay (Ability to Pay Theory). Art. VI, Sec.
28(1) of the 1987 Constitution mandates that the rule on
taxation must be uniform and equitable and that the State
evolve a progressive system of taxation.
NOTE: Non-observance of Fiscal Adequacy and Administrative
Feasibility will render the tax measure unsound but not
unconstitutional. However, non-observance of the Principle of
Theoretical Justice is invalid because the Constitution itself
requires that taxation must be equitable.
MA5125: Strategic Tax Management
Module 1: Taxpayers and Tax Compliance Requirements
This study source was downloaded by 100000751298229 from CourseHero.com on 01-18-2022 20:38:25 GMT -06:00
Page 1 of 8
https://www.coursehero.com/file/90133335/Taxpayers-and-Tax-Compliance-Requirementspdf/
Double taxation means taxing the same person for the same tax
period and the same activity twice, by the same jurisdiction.
Double taxation in strict sense is when:
1. Both taxes are imposed on the same property or subject
matter;
2. For the same purpose;
3. Imposed by the same taxing authority;
4. Within the same jurisdiction;
5. During the same taxing period;
6. Covering the same kind or character of tax.
Double Taxation in broad sense is the opposite of direct double
taxation and is not legally objectionable. The absence of one or
more of the foregoing requisites of obnoxious direct tax makes it
indirect.
Constitutionality of double taxation: Double taxation in its
stricter sense is unconstitutional but that in the broader sense is
not necessarily so.
Our Constitution does not prohibit double taxation. However,
double taxation will not be allowed if it results in a violation of
the equal protection clause.
Modes of eliminating double taxation
1. Tax Deduction – an amount subtracted from the gross
income to arrive at taxable income.
2. Tax Credit – an amount subtracted from a taxpayer’s tax
liability (tax due) to arrive at the tax still due.
A deduction differs from a tax credit, in that a deduction
reduces taxable income while a credit reduces tax liability.
3. Treaties with other states: a tax treaty sets out the
respective rights to tax of the state of source (situs) and the
state of residence with regard to certain cases, an exclusive
right to tax is conferred on one of the contracting states;
however, for other items of income or capital, both states
are given the right to tax, although the amount of tax that
may be imposed by the state of source is limited.
It applies whenever the state of source is given full or limited
right to tax. The treaty makes it incumbent upon the state of
residence to allow relief in order to avoid double taxation.
Note: The BIR issued RMO No. 1-2000, as amended by RMO
No. 72-2010, requiring taxpayers to file for a Tax Treaty
Relief Application on or before the transaction date before
availing of the provisions of a tax treaty. However, as held by
the Supreme Court, this administrative requirement cannot
defeat the right of any taxpayer entitled to the preferential
rates in the tax treaty.
 C. FORMS OF ESCAPE FROM TAXATION
1. Shifting – the burden of payment is transferred from the
statutory taxpayer to another without violating the law (e.g.,
VAT);
2. Capitalization – the reduction in the price of the taxed
object equal to the capitalized value of future taxes the
purchaser is expected to be called upon to pay.
3. Transformation – for manufacturers or producers, upon
whom tax are imposed, fearing the loss of his market if he
should add to the price, pays the tax and endeavor to recoup
himself by improving his process of production, thereby
producing his units at a lower cost.
4. Tax Avoidance – exploitation by the taxpayer of legally
permissible alternative tax rates or methods of assessing
taxable property or income, in order to avoid or reduce tax
liability. Also known as “tax minimization.” (e.g. utilizing all
permissible allowable deductions)
5. Tax Exemption – grant of immunity to particular persons or
corporations of a particular class from a tax which persons
or corporations generally within the same rate or taxing
district are obliged to pay.
Basic Principles Regarding Tax Exemption
a. Exemptions are highly disfavored by law and he who
claims an exemption must be able to justify his claim by
the clearest grant of law. An exemption from the
common burden cannot be permitted to exist upon
vague implication. (Asiatic Petroleum Co. v. Llanes, 49
Phil. 466; see also House v. Posadas, 53 Phil. 338 and
Collector of Int. Revenue v. Manila Jockey Club, Inc., G.R.
No. L-8755, March 24, 1956)
b. He who claims exemption should prove his factual and
legal basis for exemption. (Commissioner of Internal
Revenue v. Acesite (Philippines) Hotel Corporation, G.R.
No. 147295, February 16, 2007)
c. Tax exemptions are strictly construed against the
person claiming it. (Esso Standard Eastern, Inc. v. Acting
Commissioner of Customs, GR No. L-21841, October 28,
1966)
d. Constitutional grant of exemptions are self-executing.
e. In the same way that taxes are personal, tax exemptions
are also personal.
f. Deductions from income tax purposes partake of the
nature of tax exemptions, therefore should also be
construed strictly against the taxpayer. (Commissioner
of Internal Revenue v. General Foods (Phils), Inc., GR No.
143672, April 24, 2003)
g. Same treatments are given to tax refunds.
(Commissioner of Internal Revenue v. Eastern
Telecommunications Phils., Inc., G.R. No. 163835, July 7,
2010)
Kinds of Tax Exemption
As to Form:
a. Express – Expressly granted by the Constitution,
statutes, treaties, franchises or similar legislative acts.
MA5125: Strategic Tax Management
Module 1: Taxpayers and Tax Compliance Requirements
This study source was downloaded by 100000751298229 from CourseHero.com on 01-18-2022 20:38:25 GMT -06:00
Page 2 of 8
https://www.coursehero.com/file/90133335/Taxpayers-and-Tax-Compliance-Requirementspdf/
b. Implied – When particular persons, properties, or
exercise are deemed exempt as they fall outside the
scope of the taxing provision itself.
c. Contractual – Are those agreed to by the taxing
authority in contract lawfully entered into by them
under enabling laws (e.g., fiscal incentives granted to
qualified and registered PEZA enterprises, which will be
discussed further in Module 5).
As to Basis:
a. Constitutional Exemptions – Immunities from taxation
which originate from the Constitution.
b. Statutory Exemptions – those which emanate from
legislation.
As to Extent:
a. Total Exemption – connotes absolute immunity.
b. Partial Exemption – one where a collection of a part of
the tax is dispensed with.
Grounds for Tax Exemption
a. Contract – the grant of tax exemption is usually
contained in the charter of the corporation to which the
exemption is granted.
b. Public policy – to encourage new and necessary
industries, or to foster charitable institutions.
c. Reciprocity – to reduce the rigors of international
double or multiple taxation, tax exemptions maybe
granted in treaties. A tax exemption is a personal
privilege of the grantee and therefore not assignable; it
is generally revocable by the government, unless
founded on contract and must not be discriminatory.
6. Tax Evasion – use of a taxpayer of illegal or fraudulent
means to defeat or lessen the payment of tax. Also known
as “tax dodging,” it presupposes malice, fraud, bad faith, or
willful intent on the part of the taxpayer either to under-
declare income or over-declare deductions to defeat tax
liability.
Connotes the integration of 3 Factors:
a. The end to be achieved, i.e. the payment of less than
that known by the taxpayer to be legally due;
b. An accompanying state of mind which is described as
being “evil”, in “bad faith”, “willful”, or “deliberate and
not merely accidental”, and
c. A course of action or failure of action which is unlawful.
7. Compensation or Set-off: as a general rule, taxes cannot be
the subject of a set-off or compensation because of the
lifeblood doctrine; they are not contractual obligations but
arise out of duty to the government; and the government
and the taxpayer are not mutually debtors and creditors of
each other. (Francia v. IAC, G.R. No. L-67649, June 28, 1988)
Taxes are of a distinct kind, essence and nature, and these
 impositions cannot be classed in merely the same category E.
as ordinary obligations; the applicable laws and principles 1.
governing each are peculiar, not necessarily common, to
each; and public policy is better subserved if the integrity
and independence of taxes are maintained. (Republic v.
Mambulao Lumber Co.)
A person cannot refuse to pay tax on the basis that the
government owes him an amount equal to or greater than
the tax being collected. The collection of a tax cannot await
the results of a lawsuit against the government. (Philex 2.
Mining Corp. v. Commissioner)
8. Compromise and Abatement – these are powers granted to
the Commissioner of Internal Revenue to reduce tax
liabilities and/or penalties. (This will be discussed further in
Module 6)
9. Tax Amnesty – refers to the articulation of the absolute
waiver by a sovereign of its right to collect taxes and power
to impose penalties on persons or entities guilty of violating
a tax law. Tax amnesty aims to grant a general reprieve to
tax evaders who wish to come clean by giving them an
opportunity to straighten out their records. (Metropolitan
Bank and Trust Co. v. Commissioner of Internal Revenue, G.R.
No. 178797, 4 August 2009) (This will be discussed further in 3.
Module 6)
D. CONSTRUCTION AND INTERPRETATION OF TAX LAWS
Tax laws must be construed reasonably to carry out the purpose,
intent and the objective of the law. 4.
As a rule, if the tax law is clear and free of ambiguity, it will be
applied in its literal import. If there is doubt as to its validity or if
it is ambiguous, the law will be construed strictly against the F.
Government and liberally in favor of the taxpayer. 1.
2.
Tax Exemptions; deductions and refund: in case of ambiguity, 3.
the law will be construed strictly against the taxpayer and 4.
liberally in favor of the government, except: 5.
1. Where the statute granting exemption expressly provides 6.
for a liberal interpretation; 7.
2. Special taxes relating to special cases and affecting only 8.
special classes of persons; 9.
3. Property held in private ownership;
4. Traditional exemptees, such as those in favor of religious
and charitable institutions;
5. In favor of the government, its political subdivisions or 1.
instruments; and
6. By clear legislative intent.
Tax exemptions are never presumed. It must be established and
proved by the taxpayer; must be limited to what the law says; 2.
and personal to the person entitled to the same.
MA5125: Strategic Tax Management
Module 1: Taxpayers and Tax Compliance Requirements
This study source was downloaded by 100000751298229 from CourseHero.com on 01-18-2022 20:38:25 GMT -06:00
Page 3 of 8
https://www.coursehero.com/file/90133335/Taxpayers-and-Tax-Compliance-Requirementspdf/
STAGES OF TAXATION
Levy
The determination by Congress of the subject and object of
taxation as well as the rate (Domondon, 9th ed, p. 29). It
refers to the enactment of tax laws or statutes (Dimaampao,
2011 ed, p. 14).
Note: This is NOT the “Levy” under Sec. 207 of NIRC, which
refers to the remedy of the Government to collect taxes.
Assessment and Collection
Assessment is a notice to the effect that the amount therein
stated is due as tax and a demand for payment thereof.
Rules governing assessment and collection of taxes to
prevent its abuse
a. The tax law must designate which agency will collect the
taxes
b. The circulars or regulations issued by the Secretary of
Finance or the Commissioner of the Internal Revenue
must be in accordance with the tax measures imposed
by Congress
Collection is the final stage and goal of tax administration.
Payment
The act of compliance by the taxpayer, including such
options, schemes or remedies as may be legally open or
available to him.
Refund
The taxpayer asks for restitution of the money paid as tax
which is either excessive or erroneous.
SOURCES OF TAX LAWS
Constitution;
National Internal Revenue Code (Tax Code);
Tarff and Customs Code;
Local Government Code (Book II);
Local Tax Ordinances;
Tax Treaties;
Special Laws;
Jurisprudence;
Revenue Rules and Regulations, and Administrative Rulings
II. TYPES OF TAXES
Annual Registration Fee (ARF) in the amount of ₱500.00 is
paid by business taxpayers for every head office and/or
branch upon registration and every year thereafter on or
before January 31.
Capital Gains Tax (CGT) is a tax imposed on the gains
presumed to have been realized by the seller from the sale,
exchange, or other disposition of capital assets (i.e., real
property and shares of stocks of a domestic corporation)
 located in the Philippines, including pacto de retro sales and
other forms of conditional sale.
3. Documentary Stamp Tax (DST) is a tax on documents,
instruments, loan agreements and papers evidencing the
acceptance, assignment, sale or transfer of an obligation,
rights, or property incident thereto.
4. Donor's Tax is a tax on a donation or gift, and is imposed on
the gratuitous transfer of property between two or more
persons who are living at the time of the transfer.
5. Estate Tax is a tax on the right of the deceased person to
transmit his/her estate to his/her lawful heirs and
beneficiaries at the time of death and on certain transfers
which are made by law as equivalent to testamentary
disposition.
6. Excise Tax is a tax on the production, sale or consumption of
a commodity in a country. It applies to goods manufactured
or produced in the Philippines for domestic sale or
consumption or for any other disposition; and to imported
goods.
7. Income Tax (IT) is a tax on all yearly profits arising from
property, profession, trades or offices or as a tax on a
person’s income, emoluments, profits and the like.
8. Percentage Tax is a business tax imposed on persons or
entities who sell or lease goods, properties or services in the
course of trade or business whose gross annual sales or
receipts do not exceed ₱3,000,000.00 and are not VAT-
registered.
9. Value-Added Tax (VAT) is a business tax imposed and
collected from the seller in the course of trade or business
on every sale of properties (real or personal) lease of goods
or properties (real or personal) or vendors of services. It is
an indirect tax, thus, it can be passed on to the buyer.
10. Withholding Tax is the amount withheld by a withholding
agent representing the tax on the income payment.
Withholding tax may either be creditable or final.
a. Creditable Withholding Tax
i. Withholding Tax on Compensation (WTC) is the tax
withheld from individuals receiving compensation
income.
ii. Expanded Withholding Tax (EWT) is a kind of
withholding tax which is prescribed only for certain
payors and is creditable against the income tax due
of the payee for the taxable quarter/year in which
the particular income was earned.
b. Final Withholding Tax (FWT) is a kind of withholding tax
which is prescribed only for certain payors and types of
MA5125: Strategic Tax Management
Module 1: Taxpayers and Tax Compliance Requirements
This study source was downloaded by 100000751298229 from CourseHero.com on 01-18-2022 20:38:26 GMT -06:00
Page 4 of 8
https://www.coursehero.com/file/90133335/Taxpayers-and-Tax-Compliance-Requirementspdf/
income and is not creditable against the income tax due
of the payee on other income subject to regular tax
rates for the taxable year. The tax withheld constitutes
the full and final payment of the Income Tax due from
the payee on the particular income subjected to final
withholding tax.
III. TAXPAYER REGISTRATION
Who are required to register with the Bureau of Internal
Revenue (BIR)?
Every person subject to any national internal revenue tax such
as: IT, estate and donor’s taxes, VAT, percentage tax, withholding
tax, excise tax, and DST, including its branches (for purposes of
securing branch code); also includes persons subject to taxes
under One Time Transactions (ONETT) such as but not limited to
CGT, Donor’s Tax and Estate Tax is required to register with the
BIR and secure a Taxpayer Identification Number.
A. Taxpayer Identification Number (TIN)
TIN pertain to the system-generated reference index number
issued and assigned by the BIR to each and every person
registered in its database.
The TIN comprises of a 9 to 13 digit numeric code where the first
9 digits is the TIN proper and the last 4 digits is the branch code.
Sample TIN:
0 1 2 - 3 4 5 - 6 7 8 - 0 0 0 9
TIN proper Branch Code
General Rules in the Application and Issuance of TIN
1. The TIN, once assigned to a particular taxpayer, is non-
transferable and there shall be no instance where two or
several taxpayers are holders of the same TIN;
2. Only one TIN shall be assigned to the taxpayer, regardless of
variety of transactions e.g. employee who is at the same
time engaged in business. Once assigned with a TIN, a
taxpayer is precluded from applying for another TIN. Any
person who shall secure more than one TIN shall be subject
to the criminal liability and a penalty of ₱1,000.00 for every
TIN acquired in excess of one;
3. The Estate of a deceased person or a Trust under an
irrevocable trust agreement shall be issued a TIN separate
and distinct from the TIN of the deceased person and/or
trustee;
4. Minors who are earning and/or who are under the
circumstances prescribed under Executive Order (EO) No.
98, series of 1998 shall be supplied with TIN;
Pursuant to EO 98, series of 1998, persons whether natural
or juridical, dealing with all government agencies and
instrumentalities, including Government- Owned and/or
Controlled Corporations (GOCCs), and all Local Government
Units (LGUs), are required to incorporate their TIN in all
forms, permits, licenses, clearances, official papers and
 documents which they secure from these government Agencies and Instrumentalities, LGUs, Cooperatives and
agencies, instrumentalities, including GOCCs and LGUs. Associations
When to On or before the commencement of
5. Non-Resident Aliens Not Engaged in Trade or Business Register business which shall be reckoned from
(NRANETB) or Non- Resident Foreign Corporations (NRFC) the day when the first sale transaction
shall be issued TINs for purposes of withholding taxes on occurred or within thirty (30) calendar
their income from sources within the Philippines. The days from the issuance of Mayor’s
withholding agent shall apply for the TIN in behalf of the Permit by LGU, or Securities and
NRANETB or NRFC prior to or at the time of the filing of their Exchange Commission’s Certificate of
monthly withholding tax return as applicant under EO 98, Registration, or the date of its first sales
series of 1998; transaction prior to its registration.
6. Branches of identified Large Taxpayer shall be registered at
the Large Taxpayers Service (LTS) where the Head Office is Where to RDO having jurisdiction over the place
registered; Register where the Head Office is located.
7. All incorporators of corporations/associations (stock and
non-stock), partners of partnerships and members of Fee ₱500 Annual Registration Fee and ₱30
cooperatives must have TINs. loose stamp/DST
BIR Form and 1903*
B. Registration Requirements Requirements
1. Self-Employed (Single Proprietor/Professional), Mixed
Income Individuals, Non-Resident Alien Engaged in Trade 4. One-Time Taxpayer and Persons Registering under E.O. 98
or Business, Estate and Trust (Securing a TIN to be able to transact with any Government
When to On or before the commencement of Office)
Register business which shall be reckoned from When to Before payment of any tax due/before
the day when the first sale transaction Register filing of return or before the issuance of
occurred or within thirty (30) calendar TIN under E.O.98.
days from the issuance of Mayor’s
Permit/Professional Tax Receipt by the Parties to ONETT transactions who, at
local government unit (LGU), OR before the time of their transaction, have not
payment of any tax due or before filing yet been issued a TIN shall apply for
a return. issuance thereof at the time of payment
of the tax due.
Where to Revenue District Office (RDO) having
Register jurisdiction over the place of business Where to Under E.O. 98 – Any RDO provided the
(or residence, as applicable). Register RDO shall use eREG System to generate
the TIN; or at the RDO having
Fee ₱500 Annual Registration Fee and ₱30 jurisdiction over the residence address
loose stamp/DST of the applicant.
BIR Form and 1901*
Requirements Non-resident applicants – Office of the
Commissioner of Internal Revenue
2. Individuals Earning Purely Compensation Income (Local through RDO No. 39, South Quezon City
and Alien Employee)
When to Within ten (10) days from the date of Donation – RDO having jurisdiction over
Register employment. the residence of the donor;

Where to Online through the Employer using the Sale of Real Property – RDO where the
Register BIR eRegistration (eREG) System or RDO real property is located ;
having jurisdiction over the place of
office of the principal employer. Sale of Shares of Stocks – RDO having
jurisdiction over the address of the
Fee None seller for shares of stock not traded in
BIR Form and 1902 the Stock Exchange.
Requirements Fee None
BIR Form and 1904
3. Corporations, Partnerships, including Government Requirements

MA5125: Strategic Tax Management

Module 1: Taxpayers and Tax Compliance Requirements
This study source was downloaded by 100000751298229 from CourseHero.com on 01-18-2022 20:38:26 GMT -06:00
Page 5 of 8

https://www.coursehero.com/file/90133335/Taxpayers-and-Tax-Compliance-Requirementspdf/
 *Prior to 09 June 2020, the submission of a Mayor’s Permit (or
duly received Application for Mayor’s Business Permit, if the
former is still in process with the LGU) prior to registration for
business taxpayers is mandatory. As part of the efforts to
streamline the requirements pursuant to the Ease of Doing
Business and Efficient Government Delivery Act of 2018, the BIR
dispensed with the Mayor’s Permit as one of the mandatory
requirements for BIR registration. (RMC No. 57-2020)
Issuance of Certificate of Registration (COR) (BIR Form 2303)
The COR shall only be issued to individuals engaged in
business or practice of profession and to juridical persons
(whether taxable or exempt) (Business taxpayers).
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.
Business taxpayers shall register each type of internal revenue
tax for which he/it is obligated to file a return or pay taxes due
thereon. Generally, registration of tax types by a business entity
consists of but not limited to the following internal revenue
taxes/fees:
IT;
VAT and/or percentage tax;
WTC, EWT, FWT;
DST;
Excise tax; and
ARF.
Business taxpayers and those required to issue receipts, shall
submit the following requirements to complete their
registration:
1. Application for Authority to Print Receipts / Invoices;
2. Registration of Manual Books of Accounts; or
3. Application for Permit to use Computerized Accounting
System (CAS) or components thereof, if applicable;
4. Application for Permit to use Loose Leaf Accounting Records,
if applicable;
5. Application for Permit to Use CRM/POS Machines, and the
like, if applicable;
6. Permit to Operate for taxpayers engaged in activities/
transactions involving products subject to excise taxes.
As a general rule, it shall be mandatory for the BIR district office
to process and issue simultaneously the Certificate of
Registration (COR), ATP and register the books of accounts of
business taxpayers immediately after registration and upon
complete submission of the requirements.
IV. OTHER COMPLIANCE REQUIREMENTS
A. Books of Accounts
All corporations, companies, partnerships or persons required by
law to pay internal revenue taxes shall keep and use relevant and
appropriate set of bookkeeping records. Taxpayers may maintain
its books of accounts in any of the following manner:
MA5125: Strategic Tax Management
Module 1: Taxpayers and Tax Compliance Requirements
This study source was downloaded by 100000751298229 from CourseHero.com on 01-18-2022 20:38:26 GMT -06:00
Page 6 of 8
https://www.coursehero.com/file/90133335/Taxpayers-and-Tax-Compliance-Requirementspdf/
1. Manual Books of Accounts
New Business – books must be registered before the
deadline for filing of the first quarterly income tax
return or the annual income tax return, whichever is
earlier.
Existing Business – shall only be at the time when the
pages of the previously registered books have been
already exhausted.
2. Loose leaf Books of Accounts
Shall be permanently bound and presented for
registration to the RDO on or before the 15th day of each
taxable year.
3. Computerized Books of Accounts
The taxpayer must apply for authority to use
Computerized Accounting System (CAS) before the
system is used.
Computerized books of accounts and other accounting
records in electronic format shall be submitted to the
RDO within 30 days from the close of each taxable year.
Examination of Books of Accounts: Corporations, companies,
partnerships, or persons whose gross annual sales, earnings,
receipts, or output exceed Three Million Pesos (₱3,000,000.00)
shall have their books of accounts audited and examined yearly
by independent Certified Public Accountants.
Retention Period: All taxpayers are required to preserve their
books of accounts, including subsidiary books and other
accounting records, for a period of ten (10) years reckoned from
the day following the deadline in filing a return, or if filed after
the deadline, from the date of filing if the return for the taxable
year when the least entry was made in the books of accounts.
(RMC 29-2019)
B. Official Receipts, Sales Invoices and Commercial Invoices
1. All persons, whether private or government who are
engaged in business shall secure from the BIR an Authority
to Print (ATP) principal and supplementary invoices. All
persons subject to an internal revenue tax shall, at the point
of each sale and transfer of merchandise or for services
rendered valued at One hundred pesos (₱100.00) or more,
issue duly registered receipts or sales or commercial
invoices, showing the date of transaction, quantity, unit cost
and description of merchandise or nature of service:
Provided, however, That where the receipt is issued to cover
payment made as rentals, commissions, compensations,
fees, receipts or invoices shall be issued which shall show the
name, business style, if any, and address of the purchaser,
customer or client: Provided, further, That where the
purchaser is a VAT-registered person, in addition to the
information herein required, the invoice or receipt shall
further show the TIN of the purchaser.
2. The approved ATP shall be valid only upon full usage of the
 inclusive serial numbers of principal and supplementary
receipts/invoices reflected in such ATP OR five (5) years from
issuance of the same, whichever comes first. (RMO 13-2013)
3. Use of cash register or point of sale machines (CRM/POS),
whether for issuance of receipts or safekeeping, must be
authorized by the RDO where the business is located.
Original copy of the Permit to Use must be posted on the
machine. (RR No. 11-2004)
4. Notice to Issue Receipts/Invoices (NIRI) (previously, Ask for
Receipts) shall be posted at a conspicuous places at the
taxpayer’s place of business.
C. Registration Updates
Any person registered as a taxpayer shall, whenever applicable,
update his registration information with the BIR district office
where he is registered using BIR Form 1905. The instances when
a taxpayer must update his registration information include (but
are not limited to) the following:
1. A change in the nature of the business from sale of taxable
goods and/or services to being VAT-exempt in accordance
with Section 109 (1) of the Tax Code, as amended;
2. A person whose transactions are exempt from VAT but
voluntarily registered under the VAT system, and after the
lapse of three (3) years after his registration applies for
cancellation of his VAT registration. However, the optional
registration as a VAT taxpayer of a franchise grantee of radio
and/or television broadcasting whose gross receipts for the
preceding year did not exceed ₱10,000,000.00 shall be
irrevocable;
3. A VAT-registered person whose gross sales or receipts for
three (3) consecutive years did not exceed the amount of
Three Million Pesos (₱3,000,000.00). Upon updating his
registration, the taxpayer shall become liable to the
percentage tax imposed in Section 116 of the Code, as
amended. A short period return for the remaining period
that he was VAT-registered shall be filed within twenty five
(25) days from the date of cancellation of his VAT
registration as a tax type and at the same time register for
percentage tax as his new tax type; and
4. Any other changes/updates in registration information
MA5125: Strategic Tax Management
Module 1: Taxpayers and Tax Compliance Requirements
This study source was downloaded by 100000751298229 from CourseHero.com on 01-18-2022 20:38:26 GMT -06:00
Page 7 of 8
https://www.coursehero.com/file/90133335/Taxpayers-and-Tax-Compliance-Requirementspdf/
previously supplied, including cancellation or change in any
tax types.
V. VAT AND NON-VAT REGISTRATION
For purposes of determining the proper tax type (i.e., whether
VAT or other percentage taxes) based on the nature of the
business activity of the taxpayer, the following rules shall apply:
1. VAT Registration, in General
Any person who, in the course of trade or business, sells,
barters, exchanges goods or properties, or engages in the
sale of services subject to VAT imposed in Sections 106 and
108 of the Tax Code, as amended, shall register the VAT tax
type with the BIR district office having jurisdiction over the
head office.
2. Mandatory VAT Registration
Any person who, in the course of trade or business, sells,
barters or exchanges goods or properties or engages in the
sale or exchange of services shall be liable to register the VAT
tax type if:
i. His gross sales or receipts for the past twelve (12)
months, other than those that are exempt under
Section 109 (1) (A) to (U) of the Code, as amended, have
exceeded Three Million Pesos (₱3,000,000.00); or
ii. There are reasonable grounds to believe that his gross
sales or receipts for the next twelve (12) months, other
than those that are exempt under Section 109 (1) (A) to
(U) of the Code, as amended, will exceed Three Million
Pesos (₱3,000,000.00).
Every person who becomes liable to VAT shall register with
the BIR district office which has jurisdiction over his HO. If he
fails to register, he shall be liable to pay the output tax under
Sections 106 and/or 108 of the Tax Code, as amended, as if
he were a VAT-registered person, but without the benefit of
input tax credits for the period in which he was not properly
registered.
Moreover, franchise grantees of radio and television
broadcasting, whose gross annual receipt for the preceding
calendar year exceeded ₱10,000,000.00, shall register as
VAT taxpayer within thirty (30) days from the end of the
taxable year.
3. Non-VAT Registration
The following are not required to register VAT as a tax type:
i. Those persons subject to other percentage taxes under
Title V of the Tax Code, as amended;
ii. Those whose transactions are VAT-exempt as
enumerated under Section 109 of the Tax Code, as
amended.
iii. Marginal Income earners or those individual whose
business do not realize gross sales or receipts exceeding
₱100,000 in any 12-month period.
 4. Optional Registration of Value-Added Tax for VAT- Exempt
Persons
i. Any person who is VAT-exempt under Section 109 (1)
(V) of the Tax Code, as amended, i.e., sale or lease of
goods or properties or the performance of services
other than the transactions mentioned in Section 109
(1) (A) to (U) of the Code, as amended, the gross annual
sales and/or receipts do not exceed the amount of
Three Million Pesos (₱3,000,000.00) not otherwise
required to register for VAT may elect to be VAT-
registered by registering with the BIR district office that
has jurisdiction over the HO of that person.
ii. Any person who is VAT-registered but enters into
transactions which are exempt from VAT (mixed
transactions) may opt that the VAT apply to his
transactions which would have been exempt under
Section 109 (1) of the Tax Code, as amended.
iii. Franchise grantees of radio and/or television
broadcasting whose annual gross receipts of the
preceding year do not exceed Ten Million Pesos
(₱10,000,000.00) derived from the business covered by
the law granting the franchise may opt for VAT
registration. This option, once exercised, shall be
irrevocable.

Any person who elects to register under (i) and (ii) above
above shall not be allowed to cancel his VAT registration for
the next three (3) years.

VI. PENALTIES FOR VIOLATIONS

Refer to Annex “A” of RMO No. 7-2015 for the Revised

Consolidated Schedule of Compromise Penalties for Violations of
the Tax Code.

MA5125: Strategic Tax Management

Module 1: Taxpayers and Tax Compliance Requirements
This study source was downloaded by 100000751298229 from CourseHero.com on 01-18-2022 20:38:26 GMT -06:00
Page 8 of 8

https://www.coursehero.com/file/90133335/Taxpayers-and-Tax-Compliance-Requirementspdf/
Powered by TCPDF (www.tcpdf.org)