Presented by Atty. Elenita B. Quimosing, Chief of Staff, Office of the Deputy Commissioner-Operations Group - Bureau of Internal Revenue last February 23, 2016 during the BIR Consultation on E-Commerce Taxation forum.

1.
ONLINE
BUSINESS
Tax
Updates
February
23,
2016
A>y.
Elenita
B.
Quimosing
Chief
of
Staff
Office
of
the
Deputy
Commissioner-­‐Opera8ons
Group
1

2. 1st Canon of Taxation
1st: The subject of every state ought to
contribute towards the support of government
nearly as possible in proportion to their
respective abilities, that is in proportion to
the revenue which they respectively enjoy
under the protection of the state.
Adam Smith (Wealth of Nations)
2

3. BASIS OF TAXATION
— found on the reciprocal duties of
protection and support between the
state and its inhabitants. The state
collects taxes from the subjects so
that it may be able to perform the
functions of government. The citizen,
on the other hand, pays taxes so that he
may be secured in the enjoyment of the
benefits of an organized society.
3

4. What are taxes for?
The prevalent idea is, taxes serve mainly to
finance the govt. Taxes can be viewed along
other objectives:
• Social justice attribute of taxation –
re-distribution of income or wealth
• Regulatory purposes – like taxes on sin
products; non-essential items like luxury
cars, jewelries, perfume.
4

5. “TAXES
ARE
THE
PRICE
WE
PAY
FOR
CIVILIZATION”
.
.
.JusHce
OLIVER
WENDELL
HOLMES
5

6. Tax compliance
and your finances
AVOID PENALTIES,
NOT “AVOID TAXES”
6

7.
RMC 55-2013 - Online
Business Transactions
Policies & Guidelines
• Primary Registration – COR
• Secondary Registration – ATP, books of accounts
• Issuance of Invoices, ORs
• Withholding from payees & employees, Remittances
• Filing of returns and payment of taxes; submission of
required information returns, lists, etc.
• Keeping of books of accounts and other business/
acctg. records 7

8.
RMC 55-2013 - Online
Business Transactions
Obligations of Parties to Online Transactions
• Merchant/Retailer
• Buyer/Customer
• Payment Gateways
• Freight Forwarders
• Online Website Administrators
8

9.
RR 10-2015 – Use of non-
thermal paper
• Non-thermal paper shall be used for all CRM/POS &
other invoice/receipt-generating machine/software
• Staggered implementation dates on use of non-
thermal paper for machines already registered
• Information required to appear at the OR/SI/other
commercial invoices to include “This Invoice/Receipt
shall be valid for five (5) years from the date of the
permit to use.”; other info for senior citizens/pwd
• Covered also are those machines generating
electronic receipts which are connected to a network
or linked to CAS or components thereof
• Penalty provisions under NIRC
• Adjustments: Oct. 1, 2015/Oct. 31/Dec. 31, 2015
9

10.
RMC 68-2015 – Accreditation
of CRM/POS/Other Sales
Machines/Receipting Software
• Accreditation at the BIR National Office Level only
through the National Accreditation Board (NAB)
• Only BIR-accredited sales machines/receipting
software shall be used by business taxpayers
• Accreditation shall be valid for 5 years from the
date of issuance of the Certificate of Accreditation.
Application for renewal shall be within 60 days prior
to expiration of the validity period
• Tp-users of sales receipting system software or any similar
software acquired/subscribed via Cloud application service
provider shall likewise secure an accreditation, provided
provision for storage and backup of all required data including
authorized access for BIR Rev. Officers shall be locally
available for audit purposes. 10

11. 2/25/16
11
REVENUE MEMORANDUM
Circular No. 56-2015
Monthly eSales Report via eSales Reporting System
Ø eSales is a real time reporting online of actual sales
transactions recorded by:
• CRM
• POS
• Other sales machines and/or software
Ø The above are required to be tamper-proof thus should
contain the original data that should serve as basis for
tax assessments by Rev. Officers
Ø Sales records are not allowed to be altered or
amended, except on meritorious cases, where it will
require justification addressed to the concerned to the
Revenue Office with corresponding adjusting entries
properly recorded in the Books of Accounts.

12. 2/25/16
12
REVENUE MEMORANDUM
ORDER No. 20-2015
Registration of Employees
Ø eREG System is required to be used in generating TIN
for employees by:
• LT Employers
• Corporations under TAMP
• TPs enrolled in eFPS
Ø Employees shall be registered at the RDO where the
employer is registered or at the local RDO of the bus.
address where the LT-Employer is physically located
Ø Penalty – imposed to employers who are required to use
eReg but instruct their new employees to visit RDOs
(P1,000 per employee); also penalty for those who
supplied erroneous/invalid information in eReg/Update
module

13. 2/25/16
13
REVENUE MEMORANDUM
CIRCULAR No. 85-2012
Withholding Tax Statement for Taxes Withheld at
Source
Ø Every payor required to deduct and withhold taxes - furnish in
triplicate, each payee, whether individual or corporate, with a
withholding tax statement, BIR Form No. 2307, showing the
income payments made and the amount of taxes withheld therefrom,
for every month of the quarter, within twenty (20) days following
the close of taxable quarter
• Failure- ground for the mandatory audit of payor’s income tax
liabilities (including withholding tax)
• For final withholding taxes-the statement given to the payee
on or before January 31 of the succeeding year
• Upon request of the payee, however, payor must furnish such
certificate simultaneously with the income payment

14. 14
REVENUE REGULATIONS
No. 11-2013
Filing / Submission of Hard Copy of the Certificate of
Compensation Payment / Tax Withheld (BIR Form
2316) Covering Employees Who are Qualified for
Substituted Filing...
Ø Employers of MWEs are still required to issue BIR
Form No. 2316 (June 2008 ENCS version) to the MWEs
on or before January 31 of the following year.
Ø Employees covered by substituted filing: the employer
shall furnish each employee with the original copy of
BIR Form No. 2316 and file / submit to the BIR the
duplicate copy not later than February 28 following
the close of the calendar year.
Ø Failure – subject to applicable penalties

15. 15
REVENUE REGULATIONS
No. 2-2015 amending
RR 11-2013 & RR 2-2006
Submission of Copies of BIR Form 2307 & 2316
Ø For CWT: in lieu of the hard copies of 2307, as
attachment to SAWT, scanned copies stored in a
DVD-R using pdf file format may be submitted
together with a notarized Certification
Ø For Employees covered by substituted filing: the
employer shall furnish each employee with the
original copy of 2316, and file / submit the scanned
copies stored in a DVD-R, using pdf file format, may
be submitted together with a notarized Certification
Ø RMC 24-2015 – retention of the hard copies of the
said forms shall remain in force & effect, &
presentation may be requested during audit

16. 16
REVENUE REGULATIONS
NO. 1-2014
Amending the provisions of RR 2-98, as further
amended by RR 10-2008, specifically on the
submission of alphabetical list of employees / payees
of income payments
Requirement to submit an alphabetical list of
employees and list of payees on income payments
subject to creditable and final withholding taxes as
attachments to the Annual Information Returns (BIR
Form No. 1601CF / 1604E) and Monthly Remittance
Returns (BIR Form No 1601C, etc.).
Covered are ALL withholding agents
• regardless of the number of employees and payees
• whether the employees / payees are exempt or not

17. 17
RR NO. 1-2014 (clarified by
RMC 5-2014)
submission of alphabetical list of employees / payees…
Modes of submission:
• As attachment in the Electronic Filing and Payment
System (eFPS);
• Through Electronic Submission - BIR’s website
address at esubmission@bir.gov.ph; and
• Through Electronic Mail (email) at dedicated BIR
addresses.
Alphalist that does not conform with the prescribed
format thereby resulting to the unsuccessful uploading
• deemed not received, and
• not qualify as a deductible expense for income tax
purposes

18. The SAWT and MAP
— Summary Alphalist of Withholding Tax at Source (SAWT)
!List of the contents of Certificates of Taxes W/held at
Source ( Form 2307) like income received; period when
income earned, amount of tax w/held. All 2307 shall be
attached to SAWT.
!SAWT attached by recipient of income to 1701, 1701Q
(individuals) and 1702, 1702Q (GPPs)
— Monthly Alphalist of Payees (MAP)
!List of the contents of all 2307 issued by you
!MAP attached by payor of income to remittance
returns like 1601-E, 1601-C
18

19.
VAT under the Tax Code
SEC. 105. Persons Liable. - Any person who, in the
course of trade or business, sells, barters, exchanges,
leases goods or properties, renders services, and any
person who imports goods …
Ø VAT is an indirect tax and the amount of tax may be
shifted or passed on to the buyer, transferee or
lessee of the goods, properties or services.
Ø "in the course of trade or business" means the regular conduct
or pursuit of a commercial or an economic activity, including
transactions incidental thereto, by any person regardless of
whether or not the person engaged therein is a non-stock,
nonprofit private organization (irrespective of the disposition of
its net income and whether or not it sells exclusively to
members or their guests), or government entity. 19

20.
VAT under the Tax Code
SEC. 106. Value-Added Tax on Sale of Goods or
Properties. -
(A) Rate and Base of Tax. - There shall be levied,
assessed and collected … 12% VAT
• Threshold : P1,919,500
• Below threshold : subject to 3% tax on gross
pursuant to Sec. 109 (W)
20

21.
VAT under the Tax Code
SEC. 106.
(2) The following sales by VAT-registered persons shall
be subject to zero percent (0%) rate:
(a) Export Sales. - The term "export sales" means:
(1) The sale and actual shipment of goods from the Philippines
to a foreign country, irrespective of any shipping arrangement
that may be agreed upon which may influence or determine the
transfer of ownership of the goods so exported and paid for in
acceptable foreign currency or its equivalent in goods or
services, and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP);
21

22.
VAT under the Tax Code
Continuation >>>SEC. 106. (Export Sales)
(2) Sale of raw materials or packaging materials to a nonresident
buyer for delivery to a resident local export-oriented enterprise
to be used in manufacturing, processing, packing or repacking in
the Philippines of the said buyer's goods and paid for in
acceptable foreign currency and accounted for in accordance with
the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
(3) Sale of raw materials or packaging materials to export-oriented
enterprise whose export sales exceed seventy percent (70%) of
total annual production;
(4) Sale of gold to the Bangko Sentral ng Pilipinas (BSP); and
(5) Those considered export sales under Executive Order NO. 226,
otherwise known as the "Omnibus Investment Code of 1987", and
other special laws; and
(6) The sale of goods, supplies, equipment and fuel to persons
engaged in international shipping or international air transport
operations
22

23.
VAT under the Tax Code
Continuation >>>SEC. 106. (0%)
(b) Foreign Currency Denominated Sale- means sale to a
nonresident of goods, except those mentioned in
Sections 149 and 150, assembled or manufactured in
the Philippines for delivery to a resident in the
Philippines, paid for in acceptable foreign currency and
accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP).
(c) Sales to persons or entities whose exemption under
special laws or international agreements to which the
Philippines is a signatory effectively subjects such
sales to zero rate.
23

24.
RR 1-2012 SLSP
Mandatory Submission of Quarterly Summary List
of Sales and Purchases (SLSP) by All VAT
Registered :
• Persons Required to Submit Summary Lists of
Sales (SLS): All persons liable for VAT such as
manufacturers, wholesalers, service-providers,
among others are required
• Persons Required to Submit Summary Lists of
Purchases and/or Importations (SLP/I): All persons
liable for VAT such as manufacturers, service-
providers, among others are required
24

25. 25
Preservation of Books of Accounts and Other Accounting
Records
Ø RETENTION PERIODS - 10 years reckoned from the
day following the deadline in filing a return, or if filed
after the deadline, from the date of the filing of the
return, for the taxable year when the last entry was
made in the books of accounts
Ø EXAMINATION AND INSPECTION. - All books,
registers, records, vouchers and other supporting papers:
• kept at all times at the place of business
• subject to inspection by any internal revenue officer,
and upon demand, the same must be immediately be
produced and submitted for inspection
REVENUE REGULATIONS
No. 17-2013

26. 26
EXAMINATION AND INSPECTION - may be examined
and inspected for purposes of
• regular audit or extraordinary audit
• requests for exchange of information by a foreign tax
authority, and
• in the exercise of the Commissioner’s power to obtain
information under Section 5 of the NIRC, among others.
Ø Examination and inspection of books of accounts and
other accounting records shall be done
• in the taxpayer’s office or
• place of business or
• in the office of the BIR.
RR No. 17-2013 (cont.)

27. 27
Amending RR No 17-2013 on the “Preservation of
Books of Accounts and Other Accounting Records”
RETENTION PERIODS
• 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 the filing of the return
• within the first five (5) years, shall retain
hardcopies of the books of accounts, including
subsidiary books and other accounting records;
thereafter, may retain only an electronic copy of the
hardcopy in an electronic storage system which
complies with prescribed conditions, otherwise must
preserve the original copy of all records
REVENUE REGULATIONS
No. 5-2014

28. 28
Preservation of Books of Accounts and Other Accounting Records…
RETENTION PERIODS
• the independent CPA has the responsibility to preserve
electronic copies of the audited and certified FS
including the audited working papers for 10 years
ELECTRONIC STORAGE SYSTEM to be used by the
taxpayer or independent CPA:
• An accurate and complete transfer of the images of the
hardcopy of the books of accts, subsidiary books and
other acctg records to an electronic storage media; and
• Index, store, preserve, retrieve, and reproduce the
electronically stored images of the hardcopy of records
RR No. 5-2014

29. 29
Preservation …
Ø The stored data in the electronic storage system must
be highly legible and readable when displayed in a
video display terminal and when reproduced in
hardcopy.
Ø For each electronic storage system used, the taxpayer
must maintain, and make available to the BIR upon
request, complete descriptions of:
• the electronic storage system, including all procedures relating to
its use; and
• the indexing system.
Ø BIR may periodically initiate tests of a taxpayer’s electronic
storage system (tests not qualified as “examination”/“inspection”
as these do not involve determination of tax liability)
RR No. 5-2014

30. 2/25/16
30
REVENUE MEMORANDUM
CIRCULAR No. 6-2013
Clarifies taxpayers’ concerns on the
audit program and their responsibility in
selecting tax agents / practitioners to
make representation in the BIR in their
behalf
• Per RR No. 11-2006, as amended - BIR can
refuse to transact official business with tax
agents/practitioners who are not accredited
before it; all taxpayers shall ensure that the
tax agents/practitioners whom they will
engage are accredited with the BIR.

31. 2/25/16
31
REVENUE MEMORANDUM CIRCULAR No. 6-2013
(con’t.)
• Further, taxpayers should be aware of their
responsibilities, which are as follows:
a. Before engaging the service of a tax agent/
practitioner- secure a copy of his/its BIR
certificate of accreditation; take note of the
TIN, Accreditation Number, date of issuance
and date of expiry
b. Constantly visit the BIR website for the
publication of the updated master list of the
accredited tax agents/practitioners.

32.
Enforcement Activities
• Modified Tax Compliance Verification Drive (MTCVD)
under Rmo 31-2003 - campaign to expand the tax
base and enhance taxpayer compliance in the areas
of business registration, invoicing & bookkeeping.
• Letter Notices – issued based on result of data
matching from RELIEF and BOC
• Reconciliation of Listing for Enforcement
(RELIEF) supports the third party information
program of the Bureau through the cross
referencing of third party information from the
taxpayers' Summary Lists of Sales and Purchases
prescribed to be submitted on a quarterly basis.
32

33.
RMO 5-2012 Benchmarking
Conduct of Performance Benchmarking Method
• Objective: to address tax leakages, or the
schemes being applied by some taxpayers and tax
practitioners in reducing tax payments to the
government.
• Benchmarking of taxpayers -the process of
setting a standard to determine the performance
level of taxpayers in a given line of industry or
sector.
• In this case, the ratios of Net VAT Due and Income Tax
Due in relation to gross sales/receipt, vis-à-vis profit
margin rate is to be used for the purpose of setting
the industry standard for taxpayers’ compliance.
33

34. Tax Forms & Filing
Deadlines
NOTE: TP needs to file a return even when
there’s no tax due to pay.
Tax Type Form
Type
Tax Base/Remarks Deadlines
1. Annual Reg’n Fee 0605 Fixed P500.00 January 31st
2. % Tax 2551M 3% on gross if 1.9M &
below
20th ff taxable month
3. VAT (monthly)
VAT(quarterly)
2550M
2550Q
12% gross sales if above
1.9M
Same
20th ff taxable month
25th ff end of qtr.
4. W/holding Taxes 1601E See back of tax form 10th ff taxable month
5. Annual Information
Return on WHT
1604-E w/ alpha list of payees March 1, the ff year.
5. Income Tax (Q) 1701Q 45 days ff end of qtr, except Q1 due on April 15
34

35. BIR : Top “GO IT”
— Call Center : 981-8888
— Website: www.bir.gov.ph
35

36. 36