BUSINESS AND

INCOME TAXATION
JAVEL MATERIALS AND SERVICES INC.

FRANCIS G. CATAMIO, MBA

GENERAL ACCOUNTANT 05.18.2019
KNOWLEDGE OF THE BUSINESS (KOB)

• Registered with BIR last Feb. 11,2019

• Corporation
• Line of Business: Other Wholesaling, Other Non-store retail sale and Other Service
Activities
• Compliances: Income Tax,VAT and Registration Fee
OBJECTIVES:

• Definition and purpose of Tax

• Types of Business Taxes in the Philippines
• Withholding Tax on Compensation
• Withholding Tax Expanded
• Final Tax
• Value-Added Tax
• Income Tax for Corporation
• Annual Registration Fee
• BIR Forms and Deadlines
• Book of Accounts
• Printing of Receipts and/or Invoices
• Filing in electronic BIR (eBIR) Forms or electronic filing payment systems
(EFPS)
DEFINITION AND PURPOSE OF TAX

• A means by which governments finance their expenditure by imposing charges on

citizens and corporate entities.
• Taxes are funds used by the government to finance basic social services that are vital to
the lives of citizens and economic growth. Every year, individuals and corporations pay
government taxes, which are used to fund expenditures.
• When government spending exceeds revenue collected, a budget deficit occurs. The
government borrows money to cover this gap.
• The loans are later on added as additional expenses for the country.
VALUE ADDED TAX (VAT)

• VAT is a consumption tax that is added in a product or service you sell.

• It is an indirect tax that is passed on to buyers, consumers and end users.
WHAT ARE THE TAX RATES INVOLVING
VALUE ADDED TAX OR VAT?
• VAT 12%
• VAT Zero Rated (0%)
• VAT Exempt
WHAT IS THE BASIS OF VALUE ADDED TAX
OR VAT?
• VAT on Sale of Goods, Properties, Services, or Lease of Properties is based on the
monthly gross sales and receipts.
• VAT on Importation is based on the total value used by the Bureau of Customs in
determining tariff and customs duties, plus custom duties, excise taxes, and other charges
to be paid by the importer prior to the release of such goods from customs custody.
WHEN AND WHERE TO FILE AND PAY VALUE
ADDED TAX OR VAT?
• Monthly Value Added Tax Declaration (BIR Form 2550M) shall be filed not later than the
20th day of the following month.
• Quarterly Value Added Tax Return (BIR Form 2550Q) shall be filed not later than the
25th day of the following quarter.
•
• 1st Month of the Quarter – Use BIR Form 2550M
• 2nd Month of the Quarter – Use BIR Form 2550M
• 3rd Month of the Quarter – Use BIR Form 2550Q
• The return shall file through Electronic Bureau of Internal Revenue Forms (eBIRForms)
or Electronic Filing and Payment System (eFPS).
• And shall be paid through eFPS or Authorized Agent Bank (AAB) of the Revenue District
Office (RDO) where the taxpayer is registered and conducting business.
• Taxpayers with branches shall file only one consolidated return/declaration for his
principal place of business or head office and all branches.
WHAT IS INPUT VAT, OUTPUT VAT, AND VAT
PAYABLE?
• VAT Payable is the tax you need to pay after deducting Input Tax from Output Tax.
• The Formula for computing VAT Payable is:
Output Tax
– Input Tax
VAT Payable / (Overpayment)
• Output Tax is the 12% Value Added Tax (VAT) due on the sale or lease of taxable
goods, properties, services.
• Input Tax is the 12% Value Added Tax due on the purchase, lease, or importation of
taxable goods, properties and services from a VAT Registered Taxpayer or Foreign
companies.
• Input tax also include Input Tax on Importation and Deferred Input Tax.
WHAT IS THE SUMMARY LIST OF SALES AND
PURCHASES (SLSP)?
• All persons liable for VAT are required to submit Summary List of Sales and Purchases (SLSP) every
twenty-fifth (25th) of the month following the close of the taxable quarter through BIR Software
called Reconciliation of Listing for Enforcement System (RELIEF).
• BIR’s RELIEF Data Entry is where you input information like TIN number, Registered Name, Business
Address, Gross Sales or Purchases, Input Tax or Output Tax,VAT Zero Rated,VAT Exempt, etc.
• After RELIEF Data Entry, you must check if there is no error using BIR’s RELIEF Validation.
• After BIR RELIEF Validation, you can now Email it to esubmission@bir.gov.ph.
• After few days, you will receive an email confirmation from BIR. Print a hardcopy as proof that you
submit Summary List of Sales and Purchases (SLSP).
WHAT ARE THE INVOICING REQUIREMENTS
WHEN IT COMES TO VAT?
• The amount of Input tax shall be shown as a separate item in the invoice or receipt.
• If the Sale is exempt from VAT, the amount of VAT-exempt sale shall be written or printed
prominently on the invoice or receipt.
• If the sale is subject to zero percent (0%) VAT, the amount of zero-rated sale” shall be
written or printed prominently on the invoice or receipt.
WHAT WILL HAPPEN IF YOU FAIL TO DISPLAY
PROMINENTLY ON THE INVOICE OR RECEIPT THE WORDS
“VAT-EXEMPT SALE” ON EXEMPT TRANSACTION?
• The transaction shall become taxable and the issuer shall be liable to pay VAT thereon.
• The purchase shall be entitled to claim an input tax credit on his purchase.
WHAT WILL HAPPEN TO FILING AND PAYMENT
OF VAT RETURN STARTING JANUARY 1, 2023?

• According to Sec. 37 of TRAIN Law

• Filing and payment of Value Added Tax will be done on a quarterly basis instead on a
monthly basis.
• This shall be done within twenty five (25) days following the close of each taxable
quarter.
INCOME TAX

• A corporate tax, also called corporation tax or company tax, is a direct tax imposed
by a jurisdiction on the income or capital of corporations or analogous legal entities.
Many countries impose such taxes at the national level, and a similar tax may be
imposed at state or local levels
WHEN AND WHERE TO FILE AND PAY
CORPORATE INCOME TAX?
• Quarterly Corporate Income Tax (BIR Form 1702Q) shall be filed not later than 60 days
after the quarter.

• Annual Corporate Income Tax (BIR Form 1702) shall be filed not later than April 15 of
the following year.
• The return shall file through Electronic Bureau of Internal Revenue Forms (eBIRForms)
or Electronic Filing and Payment System (eFPS).
• And shall be paid through eFPS or Authorized Agent Bank (AAB) of the Revenue District
Office (RDO) where the taxpayer is registered and conducting business.
• Taxpayers with branches shall file only one consolidated return/declaration for his
principal place of business or head office and all branches.
• This is an alphabetical list of all taxpayers where your customers withheld from you.
(2307)
• You file this as an attachment to BIR Form No.1702Q using BIR Alphalist Data Entry
and Validation Module which you can download in the website of BIR.
• After Data Entry and Validation of QAP, you need to email it to
esubmission@bir.gov.ph.
• After that, you will received email confirmation from the BIR that the report you submit
is correct.
• Print the email confirmation as proof that you filed on time.
ANNUAL REGISTRATION FEE

• With the BIR, you need to pay your Annual Registration Fee in the amount of P500.
As the name implies, you will have to pay this amount every year. The Annual
Registration Fee is due on January 31 and failure to pay this amount will incur a
compromise penalty of P1,000
WITHHOLDING TAX ON COMPENSATION

• It is an approximate of income tax liability on compensation required to be withheld by

the employer upon every payment or accrual or recording of salaries and wages in its
books of accounts.
WHAT WILL HAPPEN IF THE EMPLOYER FAILS TO
WITHHOLD TAXES FROM HIS/HER EMPLOYEES?

• 25%-50% surcharge based on tax unpaid

• 12% annual interest based on tax unpaid
• Compromise Penalty P1,000 – 25,000 every time you fail to withhold
WHAT ARE THE BIR FORMS EVERY EMPLOYER WHO
HAVE AT LEAST ONE (1) EMPLOYEE NEEDS TO FILE?

• The 1st BIR Form to be used is Monthly Remittance Return of Income Taxes Withheld on
Compensation (BIR Form No. 1601C).
• The 2nd BIR Form is the Annual Information Return of Income Taxes Withheld on
Compensation and Final Withholding Taxes (BIR Form No. 1604CF)
• The 3rd BIR Form is the Certificate of Compensation Payment and Tax Withheld (BIR
Form No. 2316)
All return shall be filed in triplicate by every employer required to deduct and withhold
taxes on compensation paid to employees.
WHEN TO FILE AND PAY INCOME TAX
WITHHELD ON COMPENSATION?
• The BIR Form No. 1601C shall be filed and the tax paid/remitted on or before the
tenth (10th) day of the month following the month in which withholding was made.
• The BIR Form No. 1604CF shall be filed on or before January 31 of the year
following the calendar year in which the compensation payment and other income
payments subjected to final withholding taxes were paid or accrued.
• The BIR Form No. 2316 shall be distributed to the employees for signing on or
before January 31 of the following year and submit to the BIR on or before
February 28 of the following year.
WHERE TO FILE AND PAY INCOME TAX
WITHHELD ON COMPENSATION?
• The return shall be filed and the tax paid/remitted with the Authorized Agent Bank
(AAB) of the Revenue District Office (RDO) having jurisdiction over the withholding
agent’s place of business/office.
• A taxpayer may file a separate return for the head office and for each branch or place of
business/office or a consolidated return for the head office and all the branches/offices.
• In the case of large taxpayers only one consolidated return is required.
WHAT ARE THE ATTACHMENTS REQUIRED
IN FILING BIR FORM NO. 1604CF?
• Alphalist of Employees as of December 31 with No Previous Employer within the Year.
(Schedule 7.3)
• Alphalist of Employees as of December 31 with Previous Employer/s within the Year.
(Schedule 7.4)
• Alphalist of Employees Terminated before December 31. (Schedule 7.1)
• Alphalist of Employees other than Rank & File Who Were Given Fringe Benefits During
the year. (Schedule 6)
• Alphalist of Payees Subjected to Final Withholding Tax. (Schedule 5)
• Alphalist of Minimum Wage Earners. (Schedule 7.5)
• The employer inputs his/her employees in the Alphalist Data Entry and validated
using Alphalist Validation.You can download this to the BIR website, www.bir.gov.ph.
• After Validation, the employer need to email it to esubmission@bir.gov.ph
• After that, you will received email confirmation from the BIR that the report you submit
is correct.
• Print the email confirmation as proof that you filed on time.
WHO ARE THE EMPLOYEES NOT QUALIFIED
FOR SUBSTITUTED FILING INCOME TAX?
• If the individual taxpayer is qualified for substituted filing of Income Tax, this means that
the employer is the one who will file income tax in behalf of his/her employees using
Certificate of Compensation Payment and Tax Withheld (BIR Form No.
2316).
The following individuals are NOT qualified for substituted filing of income tax and
therefore, still required to file Income Tax Return:
• Individuals deriving compensation from two or more employers concurrently or
successively at any time during the taxable year.
Concurrent Multiple Employment means an employee is employed by two or more
employers within the same period of time during the taxable year.
Successive Multiple Employment means an employee who transferred to another
employer during the taxable year.
• Employees whose income tax has not been withheld correctly.
• Individuals deriving other non-business and/or non-professional related income in
addition to compensation income not otherwise subject to a final tax.
• Individuals who spouse has 2 or more employers, income tax and final tax has not been
withheld correctly.
• Non-resident aliens engaged in trade or business in the Philippines deriving
compensation income and/or other non-business, non-professional related income.
WHAT ARE THE ATTACHMENTS REQUIRED
IN FILING BIR FORM NO. 2316?
• After the employees sign the BIR Form No. 2316, this shall be return to the employer so that
the employer can submit this to the BIR together with Certified List of Employees
Qualified for Substituted Filing of ITR (Annex “F”) on or before February 28 of the
following year.
• The list shall be stamped “Received” by the concerned BIR office.
• In the event the employee will need his/her BIR Form No. 2316 stamped “Received”,
• He/She shall request the concerned BIR office to have the certificate stamped “Received”
• Accompanied with the submission of the employer’s certification that he/she was included in
the list submitted by such employer to the BIR.
WITHHOLDING TAX EXPANDED

• Expanded Withholding Tax (EWT) is a kind of tax that is taken in advance by the buyer
(withholding agent) from the seller’s income, on behalf of the government.
• If you’re a withholding agent, you’re required to collect withholding tax on behalf of the
government, in order to avoid unnecessary penalties.
• The tax withheld is used as a deduction to the Income tax of the seller.
WHAT WILL HAPPEN IF THE WITHHOLDING
AGENT FAILS TO WITHHOLD TAXES?
• If the withholding agent fails to withhold expanded withholding tax, he/she will need to
pay penalties amounting to:
• 25%-50% surcharge based on tax unpaid
• 12% annual interest based on tax unpaid
• Compromise Penalty P1,000 – 25,000 every time you fail to withhold
WHO ARE REQUIRED TO FILE AND PAY
EXPANDED WITHHOLDING TAX?
• Not everyone is a withholding agent. You will be a Withholding Agent only if your
payment is included in the list of Income Payments subject to Expanded Withholding Tax.
WHEN, WHERE TO FILE AND PAY EXPANDED
WITHHOLDING TAX?
• Before the Implementation of Train Law on January 2018, taxpayers file Expanded
Withholding Tax (EWT) on or before the 10th of the following month and on or before
Mar. 1 using BIR Form No. 1601E and BIR Form No. 1604E, respectively.
• Monthly Remittance Form of Creditable Income Taxes Withheld – Expanded (BIR
Form No. 0619E)
• This shall be filed and remitted on or before the 10th of the following month in which
withholding was made. This shall be filed for the first 2 months of each quarter.
• Quarterly Remittance Form of Creditable Income Taxes Withheld – Expanded
(BIR Form No. 1601EQ)
• This quarterly withholding tax remittance return shall be filed and remitted along with
Quarterly Alphalist of Payees (QAP) not later than the last day of the month following
the close of the quarter during which withholding was made.
• Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307)
• This return is the proof that you withhold expanded tax from the seller. You give this to your seller
either every 20th day following the close of the taxable quarter or upon request of the payee.
• The Seller will attached this form when they file their Income Tax Return (ITR) to minimize the tax they
need to pay.
• Annual Information Return of Creditable Income Taxes Withheld (BIR Form No. 1604E)
• This return shall be filed on or before March 1 of the year following the calendar year in which the
income payments subjected to expanded withholding taxes.
• Here is the summary of what you might need to file every Quarter:
• 1st Month of the Quarter – File BIR Form No. 0619E
• 2nd Month of the Quarter – File BIR Form No. 0619E
• 3rd Month of the Quarter – File BIR Form No. 1601EQ and QAP
• On or Before Mar. 1 after the taxable year – File BIR Form No. 1604E
• These returns shall be filed through Electronic Bureau of Internal Revenue Forms
(eBIRForms) or Electronic Filing and Payment System (eFPS).
• And shall be paid through eFPS or Authorized Agent Bank (AAB) of the Revenue District
Office (RDO) where the taxpayer is registered and conducting business.
• A taxpayer may file a separate form for the head office and for each branch or place of
business/office or a consolidated form for head office and all the branches/offices.
• In the case of large taxpayers, only one consolidated form is required.
WHAT IS QUARTERLY ALPHALIST OF PAYEES
(QAP)?
• This is an alphabetical list of all taxpayers where you withhold expanded withholding taxes
(EWT) with.
• You file this as an attachment to BIR Form No.1601EQ using BIR Alphalist Data Entry
and Validation Module which you can download in the website of BIR.
• After Data Entry and Validation of QAP, you need to email it to esubmission@bir.gov.ph.
• After that, you will received email confirmation from the BIR that the report you submit is
correct.
• Print the email confirmation as proof that you filed on time.
FINAL TAX

• Final Tax is a kind of withholding tax which is prescribed on certain income payments.
• It is not creditable against the Income Tax due of the Payee or Receiver of the Income.
• Once an income is subjected to Final Tax, it will not be furthered taxed under the Income
Tax and/or capital gains tax.
WHO ARE REQUIRED TO FILE AND PAY
FINAL WITHHOLDING TAX?
• Not everyone is a withholding agent.
• You will be a Withholding Agent only if your payment is included in the list of Income
Payments subject to Final Withholding Tax.
• This includes but not limited to Dividends, Distributive Share in Taxable
Partnership, Royalties, and Prizes.
WHAT WILL HAPPEN IF THE WITHHOLDING
AGENT FAILS TO WITHHOLD TAXES?
• If the withholding agent fails to withhold Final Withholding Tax, he/she will need to pay
penalties amounting to:
• a. 25%-50% surcharge based on tax unpaid
• b. 12% annual interest based on tax unpaid
• c. Compromise Penalty P1,000 – 25,000 every time you fail to withhold
WHAT AND WHEN TO FILE AND PAY FINAL
WITHHOLDING TAX?
• Commonly use BIR Form here are the 0619F, 1601FQ, and 1604CF.
• BIR Form No. 1600 is usually use by the Government to Withhold Final Withholding
VAT to their supplier.
• BIR Form No. 1602Q is usually use by the Banks.
• BIR Form 1603Q is use by Companies who give Fringe Benefits to its Employees other
than Rank and File.
WHERE TO FILE AND PAY FINAL
WITHHOLDING TAX?
• The return shall be filed and the tax paid/remitted with the Authorized Agent Bank
(AAB) of the Revenue District Office (RDO) having jurisdiction over the withholding
agent’s place of business/office.
• A taxpayer may file a separate return for the head office and for each branch or place of
business/office or a consolidated return for the head office and all the branches/offices.
• In the case of large taxpayers only one consolidated return is required.
WHAT ARE THE ATTACHMENTS REQUIRED
IN FILING BIR FORM NO. 1604CF?
• Alphalist of Employees as of December 31 with No Previous Employer within the Year.
(Schedule 7.3)
• Alphalist of Employees as of December 31 with Previous Employer/s within the Year. (Schedule
7.4)
• Alphalist of Employees Terminated before December 31. (Schedule 7.1)
• Alphalist of Employees other than Rank & File Who Were Given Fringe Benefits During the
year. (Schedule 6)
• Alphalist of Payees Subjected to Final Withholding Tax. (Schedule 5)
• Alphalist of Minimum Wage Earners. (Schedule 7.5)
• The attachment above are alphabetical list of all taxpayers where you withhold taxes
from.
• You file this together with BIR Form No. 1604CF on or before Jan. 31 after the end of
the taxable year.
• The employer inputs his/her employees in the BIR Alphalist Data Entry and validated
using BIR Alphalist Validation.
• You can download this to the BIR website, www.bir.gov.ph.
• After Validation, the employer need to email it to esubmission@bir.gov.ph.
• After that, you will received email confirmation from the BIR that the report you submit
is correct.
• Print the email confirmation and attached it to BIR Form 1604CF
• And Submit 2-3 Copies to the BIR.
WHAT IS THE QUARTERLY ALPHALIST OF
PAYEES (QAP)?
• You file this together with BIR Form No. 1601FQ on or before the last day of the month
after the end of quarter.
• You file this using BIR Alphalist Data Entry and BIR Validation Module which you can
download in the website of BIR, www.bir.gov.ph.
• After Data Entry and Validation of QAP, you need to email it to esubmission@bir.gov.ph.
• After that, you will received email confirmation from the BIR that the report you submit is
correct.
• Print the email confirmation and attached it to the BIR Quarterly Remittance Return of
Final Income Tax Withheld as proof that you filed on time.
WHAT IS THE CERTIFICATE OF FINAL TAX
WITHHELD AT SOURCE (BIR FORM NO. 2306)
• This return is a proof that the Payor Withhold Final Tax from the Payee.
• The Payor give this to the Payee either every 20th day following the close of the
taxable quarter or upon request of the payee.
• Once an income is subjected to Final Tax, it will not be furthered taxed under the Income
Tax and/or capital gains tax.
• If the government is the one who withholds tax from you. You can use the BIR Form No.
2306 as a tax deduction in filing your Percentage or VAT return.
BOOK OF ACCOUNTS

• Manual Book of Accounts

These are the traditional journal, ledger and columnar books you can buy in the book and
office supplies store. Recording in the manual books of account is handwritten. This is the
most popular type of books of account for small enterprises since it is less costly and easy
to register with the BIR.
GENERAL JOURNAL

• It is referred to as the book of original entry. It records business transaction in order of

date using the principle of “debit and credit”
GENERAL LEDGER

• It is referred to as the book of final entry. It summarized all the journal entries of an
account to get the ending balances.
CASH RECEIPTS JOURNAL

• It is a special journal used to record cash sales and/or collection of receivables.

CASH DISBURSEMENT JOURNAL

• It is a special journal used to record cash payments of expenses and/or payables

SALES JOURNAL

• It is a special journal used to record sales on credit (receivable from customer)

PURCHASE JOURNAL

• It is a special journal used to record purchases on credit (payable to supplier)