What is a business?

• A habitual engagement in a commercial activity involving the

sale of goods or services to clients
Business Tax
• Tax imposed on the right or privilege to engage in an onerous
transfer of goods or services in the normal conduct of
business.
Regularity Rule
Following are not subject to business tax:

1. Sale by non-dealers, and dealers who sell properties which

they are not engaged in dealing with
2. Privilege stores
Regularity Rule
Following are not subject to business tax:

1. Sale by non-dealers, and dealers who sell properties which

they are not engaged in dealing with
2. Privilege stores- should engage in business activity for a
cumulative period of not more than 15 days.
Exceptions to the Regularity Rule
1. Business principally for subsistence or livelihood
2. Sales of nonresidents are presumed made in the course of
business
Commercial Activity
• Engagement in sale of goods or service for profit

Except:
1. Gov’t agencies and instrumentalities
2. Non-profit organizations or association
3. Employment
4. Directorship in a corporation
Other persons considered engaged in
business:
1. Consultants
2. Sales agents or brokers
3. Television or movie talents
4. Cooking instructors
5. Martial art instructors
Nature of business tax:
1. Consumption tax
2. Indirect Tax
3. Privilege Tax
Types of Business Taxes
• Value-Added tax
• Other percentage taxes
• Excise Tax
Business Taxpayers
What is a taxable person in business taxation?
“Person” refers to any individual, trust, estate, partnership, corporation,
joint venture, cooperative, or association.

Taxable unit is called “person”.

Income tax exemption does not necessarily mean exemption from

business taxes and vice versa.
Registration of business
a. Register with the appropriate RDO using the appropriate BIR Form
b. Pay annual registration fee of P500.00 using BIR Form No. 0605 for
every separate or distinct establishment where sales transactions occur
Any person who maintains a head or main offices and offices in different
places (i.e. branch) shall register with the RDO which has jurisdiction over
the place where the head office is located.

Registration fee- paid before the start of the business and every year
thereafter on or before the 31st day of January to any accredited bank/
collection agent in the RD where the head office or branch is registered.
Registration of business
1. TIN Application form
2. Sketch of business site of taxpayer if necessary, or if not, provide
exemption certificate
3. Photocopy:
1. Mayor’s permit and license
2. DTI cert / SEC
3. Articles of Partnership or Incorporation
4. Marriage contracts for individuals
5. Unit and agency charter for gov’t agencies and local gov’t units
Registration certificate
• To be issued by BIR
• Every taxpayer shall post or exhibit this (original copy) and duly
validated Registration Fee Return at a conspicuous place in his
principal place of business and at each branch is such a way that is
clearly and easily visible to the public
Types of business as to registration:
a. VAT Registered taxpayers- pay 12% VAT
b. Non-VAT Registered taxpayers- pay 3% percentage tax
Cancellation of registration
• Letter Request stating the reason for termination.
• Original BIR Certificate of Registration.
• Books of Account / Ask for Receipts Poster.
• Inventory List of Unused Receipts / Invoices.
• Unused Receipts / Invoices for Cancellation.
• Board Resolution / Notice of Dissolution.
• Latest ITR with Financial Status (for 3 years).
• Interim ITR with Financial Statement.
• Verification Slip (CMS).
• Form 1905.
• Latest form 0605 for annual registration.
• Certification from the City Hall that the business has “Retired”.
• Authority to Print (ATP) issued.
• Delinquency Verification
Cancellation of registration
• Process:
• Go to your RDO and get a BIR Form 1905. Fill that out and submit it to your RDO together with
all the requirements above.
• Go to TIN Issuance counter to have your 1905 stamped. Make sure to get your copy of stamped
1905. It is your proof that your TIN is already canceled, and you don’t need to file any tax
returns.
• Submit all the requirements to the examiner for assessment. If all the documents are complete,
they will tell you to follow up again usually after 1 week.
• Just in case BIR tells you that you forgot or missed filing one tax but you did file it, just submit
the form you filed before together with the confirmation email then wait.
• In the event that you really missed filing, just file the form online, and pay the necessary fees
and penalty at the Authorized Agents Banks (AABs). Then submit it to your RDO and wait again.
• Once you’re cleared, they will release your Certificate of No Liability.
Penalties
1. Failure to register the business with BIR
COMPROMISE PENALTY: If the subject establishment is (located) in the following:
Cities - P20,000
1st class municipalities - P10,000
2nd class municipalities - P5,000
3rd class municipalities - P2,000
2. Failure to pay and display Annual Registration Fee (BIR Form 0605)
COMPROMISE PENALTY: P1,000 every year and/or during tax mapping
3. No Certificate of Registration and Notice to the Public displayed
COMPROMISE PENALTY: P1,000 during tax mapping
4. Failure to display the poster "Ask for BIR Receipt" or "Notice to the Public" to demand receipts/invoice
COMPROMISE PENALTY: P1,000 during tax mapping
1. Mrs. Ellerton, a medical practitioner, sold his principal residence for P10M.
2. Mang Merto is a real property dealer. During period of excess cash liquidity, he
usually purchases shares of stocks of other corporations as investment. He sells
them when cash needs arise.
3. Mang Andro makes key chains and wood arts for sale to tourists during the
annual Kadayawan Festival. He rented a booth during the festival and recorded a
sales of P150,000 over the one-week festivities.
4. Julies bakeshop, an established business enterprise, also rented a booth in the
festival to sell its bread and pastries.
5. The PRC, collected P12,000,000 from professional license fees during the month.
6. The PRC earned additional P1,000,000 from rental income on its vacant
premises.
7. Zeus, a CPA, practices his profession in the industry as the CFO of a Non-profit
organization. During the month, he received a P50,000 compensation plus
P10,000 fringe benefits.