Philippines Tax Compliance Map

Email: mnl4ww@evershinecpa.com
or
Contact by Viber or Skype during working hours of the Philippines time zone.
For Philippines going-out cases, the coordinator window will be:
Manila Branch of Evershine BPO Service Corp. in Taiwan
Project Manager Meiling Wu, who speaks both English and Tagalog.
Viber: +886966173105
Skype: wumeiling25

GLA – Philippines Corporate Income Tax

GLA-PH-01 GLA Tax Entity

Question from a client:
Is the Philippines corporate income tax a national income tax? A local income tax?
Or is there a national and local income tax?
What if the national income tax and the local income tax are levied separately or levied together?
What is the standard tax rate? What is the special tax rate?

Answer from Evershine RD:
Corporate income taxes are imposed at the national level.
However, depending on business activity, LGUs levy LBT on gross receipts of corporations and individuals engaged in trade or business or practicing a profession in their place of business.
The Philippines ‘ tax system consists of local and national taxes.
National taxes include income tax, value-added tax (VAT), percentage tax, excise tax, and documentary stamp taxes, among others.
Local taxes include local business tax (LBT), real property tax, and community tax.
Corporate tax rates at 25%.
The reduced corporate income tax rate at 20% applies to domestic corporations with net taxable income not exceeding 5 million pesos and total assets (exclude land) not exceeding 100 million pesos.

GLA-PH-02 Registration

Question from client:
Which government unit is responsible for the collection of Philippines corporate income tax?
The registration of the country’s corporate income tax status, that is, the tax certificate number application procedure, paper certificate number application? Or online account application? URL?
What is the advance certificate number for applying for this certificate number?
Do I need to use the industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
Corporate taxes are levied and collected by the Bureau of Internal Revenue (BIR).
Accomplish BIR Form 1903 version 2018 (Application for Registration for Corporations) and submit the same together with the documentary requirements with the New Business Registrant Counter of the RDO having jurisdiction over the place where the head office and branch, respectively.
Documentary Requirements:

1. Photocopy of SEC Certificate of Incorporation
2. Articles of Incorporation

Pay the following at the New Business Registrant Counter in the BIR Office.
(i) Annual Registration Fee (P500.00)
(ii) Documentary Stamp Tax (P30.00) (if applicable)
(iii) BIR Printed Receipt/Invoice (if opted to buy for use)
The RDO shall then issue the Certificate of Registration (Form 2303) together with the “Notice to Issue Receipt/Invoice”, Authority to Print, BIR Printed Receipts/Invoices (if applicable) and e-Receipt as proof of payment.
A business taxpayer may also submit application via electronic mail through BIR New Business Registration (NewBizReg) Portal at https://www.bir.gov.ph/newbizreg/.

GLA-PH-03 GLA Order (OD)

Question from client:
What are the order of the Philippines corporate income tax return (information flow determines tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pay?
At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit first (DF). Pay by installment first and declare later.

GLA-PH-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for the Philippines corporate income tax return (information flow determines the tax base)?
Filing cycle: monthly? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: website URL?

Answer from Evershine RD:
Companies must file a quarterly income tax declaration (BIR Form 1702-Q) within 60 days of the end of each of the first three quarters in the tax year.
A final annual tax return (BIR Form 1701 or 1702) must be filed on or before the 15^th day of the fourth month following the close of the tax year.
Electronic filing of quarterly declarations and final adjustment returns (among other direct and indirect tax declarations) is mandatory under the Electronic Filing and Payment System (eFPS) at https://efps.bir.gov.ph/home.html.
Taxpayers who are otherwise not required to file electronically (either through the eBIRForms or the eFPS), shall use the electronic or computer-generated returns or photocopied returns in its original format. Fill up and sign on the returns and submit to esubmission@bir.gov.ph.

GLA-PH-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for the Philippines corporate income tax payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize the deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
Companies must make quarterly estimated tax payments when they submit their quarterly income tax declarations; the final balance due for the tax year must be paid when filing the final adjusted return.
In the event the aggregate quarterly estimated income tax paid exceeds the amount declared in the final adjusted return, the excess amount can be carried forward and credited against the estimated quarterly estimated income tax liabilities in succeeding tax years.
Alternatively, the excess amount can be credited or refunded to the taxpayer.
Taxpayers required to file their income tax returns electronically through the eFPS platform must also pay their tax due through that platform.
For taxpayers who are required to file using the eBIRForms platform, payment can be made either online or manually through an authorized agent bank (AAB), or through the Revenue Collection Officer where there is no AAB within the territorial jurisdiction of the Revenue District Office where the taxpayer is registered.

VAT – Philippines VAT

VAT-PH-01 VAT Tax Entity

Question from client:
Is Philippines VAT National VAT? Local VAT? Or is there a national plus Local VAT?
What if the National VAT and Local VAT are levied separately or levied together?
What is the standard VAT rate? What is the special VAT rate?

Answer from Evershine RD:
VAT are imposed at the national level.In Philippines, VAT standard rate of 12% applies.
The Philippines Tax Code does not provide for reduced or supplementary rates of VAT.
There are also zero rate and VAT exemptions.

VAT-PH-02 Registration

Question from client:
Which government unit is responsible for the levying of VAT in the Philippines?
The registration of the Philippines’s VAT levy status, that is, the application procedure for VAT certificate number, paper certificate number application?
Or online account application? URL?
What is the advance certificate number for applying for a VAT certificate number?
Do I need to use an industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
The Bureau of Internal Revenue (BIR) is responsible for the administration of VAT.
Philippines Tax Code provides that persons are required to register for VAT if they have or expected to have gross sales or receipts exceeding threshold of 3 million pesos for the past 12 months.
The VAT registration is required to be renewed annually.
For new entities, registration for VAT is already signified upon registration of the business using “Bureau of Internal Revenue Form No. 1903.” This form, together with the registration fee of 500 Philippine pesos (which is renewed annually) must be lodged for every separate or distinct establishment or place of business before the taxpayer starts doing business.
On registration, a taxpayer is assigned a unique 9-digit Taxpayer Identification Number (TIN) in the format “123456789”.
Branches are issued a separate TIN which includes an additional 5 digits representing the number of branches.

VAT-PH-03 WWT Order (OD)

Question from client:
What is the order of Philippines’s VAT declaration (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? First declare and then pay?
At the same time as the declaration and payment?

Answer from Evershine RD:
Same period (SP): Filing of VAT return and pay the taxes due by the same time.

VAT-PH-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for the Philippines VAT declaration (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Website URL?

Answer from Evershine RD:
Quarterly VAT returns (BIR Form No. 2550-Q) must be filed within 25days after the close of the tax quarter, showing the taxpayer’s cumulative quarterly gross sales or receipts.
In addition, taxpayers must file monthly declarations returns (BIR Form No. 2550-M) due by 20^th day following the end of the month for manual filers.
Electronic filing is due between 21 and 25^th days from the end of the month.
Electronic filing is required for certain taxpayers, such as those notified as large taxpayers or those belonging to the top 20,000 corporations and Philippine Economic Zone Authority (PEZA) registered entities.
Certain filers or taxpayers who do not file electronically (referred to as “Non-eFPS filers or taxpayers”) are required to use eBIR Forms to prepare and file VAT returns.
The forms may be submitted manually, using the Offline eBIR Forms Package or electronically, using the Online eBIR Forms System.

VAT-PH-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for Philippines VAT payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
OCT payment at the bank counter?
Or the above methods coexist?

Answer from Evershine RD:
VAT is due monthly at the time when the monthly declaration is due.
Payments in the monthly VAT declarations are credited in the quarterly VAT return to determine the net VAT payable, excess input tax, or overpayment at the end of a quarter.
The electronic filing system includes a facility for electronic payment.
Those who file manually can make payments through any of the following methods:

1. Over-the-counter cash transaction
2. Bank debit system
3. Credit facility with a bank, credit company
4. Personal or company cheque

Please be aware of below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Manila Evershine BPO Service Limited Corp.
E-mail: mnl4ww@evershinecpa.com
or
Contact by Viber or Skype during working hours of the Philippines time zone.
For Philippines going-out cases, the coordinator window will be:
Manila Branch of Evershine BPO Service Corp. in Taiwan
Project Manager Meiling Wu, speaks both English and Tagalog.
Viber: +886966173105
Skype: wumeiling25

or
For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System,
please send an email to HQ4mnl@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
Email address:dalechen@evershinecpa.com
LinkedIn address:Dale Chen

Additional Information

Evershine CPAs Firm Headquarters
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Tel No.: +886-2-27170515 ext. 105
Mobile: +886-939357000
Email: kerrychen@evershinecpa.com
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