A Tax Compliance Checklist for Filipino Corporations: What Do Businesses Need to Submit to the BIR?

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A Tax Compliance Checklist for Filipino Corporations: What Do Businesses Need to Submit to the BIR?

June 15, 2023

What do businesses in the Philippines need to submit to the BIR?

  1. Business registration documents
  2. Taxpayer Identification Number (TIN)
  3. Books of accounts and financial statements
  4. Tax Returns and Payment
  5. Other relevant documents

Tax compliance is one of the fundamental aspects of running a business in the Philippines. To meet their obligations, Filipino corporations must understand and fulfill the requirements set by the Bureau of Internal Revenue (BIR).

It can be tedious for many to compile all the forms needed, especially for start-ups and small and medium-sized enterprises. That’s why we provide a checklist for businesses on what businesses need to submit to BIR.

By adhering to this checklist, businesses can ensure they submit the necessary documents and forms to the BIR, effectively managing their tax responsibilities.

Business Registration Documents

To operate legally in the Philippines, a corporation must register with the BIR before starting operations. This process ensures compliance with the law.

Some documents and requirements need to be complied with. Let’s take a closer look at what these requirements entail:

  1. Articles of Incorporation and By-Laws: These legal documents outline the company’s structure, purpose, and governing principles. They provide crucial information about the corporation’s shareholders, directors, and authorized capital stock.
  2. Certificate of Incorporation from the Securities and Exchange Commission (SEC): This document confirms the company’s legal existence.
  3. Mayor’s Permit or Business License: Obtained from the local government unit where the business operates, this permit authorizes the corporation to conduct business activities.

Taxpayer Identification Number (TIN)

Taxpayer Identification Number (TIN)

All corporations are also required to obtain a Taxpayer Identification Number (TIN) from the BIR. The unique number serves as a distinctive identifier for tax purposes, playing a vital role in ensuring that the corporation meets its tax obligations.

Acquiring a TIN involves following a specific process and submitting relevant documents. Here are the steps and requirements to obtain a TIN:

  1. BIR Form 1903 (Application for Registration for Corporations, Partnerships, and Other Non-Individual Taxpayers): This form provides the necessary information about the corporation and its owners or shareholders.
  2. SEC Certificate of Registration: This document verifies the corporation’s legal existence.
  3. Proof of Payment of Annual Registration Fee: A receipt of the payment made to the BIR for the annual registration fee.

After gathering all the necessary documents, the next step is to visit the BIR’s office and submit the application for the TIN. The BIR will carefully review the documents and process the application to issue the TIN. Once the application is approved, the corporation will receive a unique TIN that will serve as its identification for all tax-related matters. This TIN will be essential for the corporation’s future tax transactions and compliance.

Books of Accounts and Financial Statements

Corporations in the Philippines must maintain organized books of accounts and prepare financial statements that adhere to the BIR’s guidelines. This practice ensures that all financial transactions are accurately recorded, enabling the proper calculation of taxable income.

Compliance with these requirements is of utmost importance to fulfill tax obligations. Here are the necessary documents for tax compliance:

  1. Books of Accounts: Corporations must maintain books, such as a general journal, general ledger, and subsidiary ledgers, to record their financial transactions accurately.
  2. Audited Financial Statements: Corporations with gross annual sales exceeding PHP 3,000,000 are required to have their financial statements audited by an independent certified public accountant.
  3. BIR Form 1701Q (Quarterly Income Tax Return): This form is used to report quarterly income tax liabilities, along with audited financial statements.

In the pursuit of operational excellence, it is beneficial for businesses to adopt an advanced Computerized Accounting System (CAS). By transitioning away from manual computations and traditional ledgers, organizations can streamline their accounting processes and unlock new levels of efficiency.

DynamIQ is proud to offer SAP Business One, a cutting-edge enterprise resource planning software integrated with a robust CAS. This powerful solution catalyzes business process automation, enabling companies to stay ahead in the digital era.

With our expertise, businesses can seamlessly incorporate the requisite forms mandated by the Philippine government into this digital solution, ensuring regulatory compliance and harnessing the full potential of SAP Business One.

Tax Returns and Payment

Tax Returns and Payment

It is the responsibility of Filipino corporations to fulfill their tax obligations by filing necessary tax returns and paying the corresponding taxes to the BIR. By doing so, corporations not only meet their financial responsibilities but also play a vital role in generating revenue for the government as lawful citizens of the country.

Here are the essential forms for tax compliance:

  1. BIR Form 1702Q (Quarterly Income Tax Return for Corporations, Partnerships, and Other Non-Individual Taxpayers): This form reports the corporation’s quarterly income tax liabilities.
  2. BIR Form 2550M (Monthly Value-Added Tax Declaration): Corporations registered for value-added tax (VAT) must file this form monthly.
  3. BIR Form 1604E (Annual Information Return of Creditable Income Taxes Withheld): This form is used to report and summarize the income taxes withheld from employees’ compensation.

Other Relevant Documents

In addition to the previously mentioned requirements, Filipino corporations have to submit various other documents to the BIR to ensure tax compliance. These additional documents provide important information and support the accuracy of tax reporting. Here are some of the key documents that corporations must submit:

  1. BIR Form 2307 (Certificate of Creditable Tax Withheld at Source): This form is issued by withholding agents to corporations as proof of taxes withheld on their behalf.
  2. BIR Form 2551Q (Quarterly Percentage Tax Return): Corporations subject to the percentage
  3. BIR Form 1702 (Annual Income Tax Return for Corporations, Partnerships, and Other Non-Individual Taxpayers): This form is used to report the corporation’s annual income tax liabilities.
  4. BIR Form 1601E (Monthly Remittance Return of Creditable Income Taxes Withheld): Corporations are required to submit this form monthly to report and remit the income taxes withheld from their employee’s compensation.
  5. BIR Form 2306 (Certificate of Final Income Tax Withheld): This form is issued by withholding agents to corporations as proof of final income taxes withheld on their behalf.
  6. BIR Form 2552 (Percentage Tax Return): Corporations engaged in specific businesses subject to percentage tax must file this form monthly.
  7. BIR Form 1604CF (Annual Information Return of Income Tax Withheld on Compensation and Final Withholding Taxes): This form is used to report and summarize the income taxes withheld on compensation and final withholding taxes.

It’s worth noting that the documents we’ve discussed so far are not an exhaustive list. Depending on the unique circumstances and nature of a corporation’s business activities, there may be additional forms and requirements to fulfill for tax compliance.

Certain industries or specific tax regulations might impose additional reporting obligations on corporations. Therefore, businesses must stay informed about any industry-specific or regulatory requirements that may apply to them. Being aware of these additional obligations and considering automating tax processes ensures that corporations maintain full compliance with the BIR and meet all their tax responsibilities.

Apply for SAP BIR CAS in the Philippines with DynamIQ

Large corporations in the Philippines may be tapped by the BIR to apply for a BIR CAS. When this happens, they seek the support of experts to make the switch to the digital solution if they haven’t.

If you’re a business based in the Philippines, striving to optimize your accounting system and meet the BIR requirements, DynamIQ is here to help you. As a reputable silver-accredited partner of SAP Business One, DynamIQ brings the necessary expertise and guidance to facilitate your BIR accreditation assistance.

Here at DynamIQ, our team has the expertise and experience to assist you through this process. We assure our clients a smooth transition from a manual to a computerized system that aligns with the BIR requirements of the Philippines.

Key Takeaway

This tax compliance checklist of what businesses need to submit to BIR serves as a guide for businesses all over the country. This ensures that they can submit the necessary documents and forms promptly. However, it is important to note that tax regulations may change over time, so it is advisable to consult with tax professionals or the BIR directly for the most up-to-date information.

By being tax compliant, Filipino corporations contribute to the growth and stability of the country’s economy while building trust and credibility within the business community.

You can seek our help here at DynamIQ for all your SAP Business One. Contact us to set up a consultation and take the first step towards optimized accounting and enhanced efficiency today!

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