Tax Filing Reminders: Outline

PHILIPPINE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
sponsored by
OUTLINE
Committee on Legislation and Taxation
SEMINAR on
I. Time, Place and Manner of Filing of
“Tax Updates and Court Decisions”
Holiday Inn & Suites Makati
Annual ITR and Audited FS
March 4, 2016
II. Payment of Income Tax
III. Attachments to Annual ITR
IV. Financial Statements
Tax Filing Reminders V. Computation of Income Tax
ATTY. LUIS JOSE P. FERRER, CPA
Partner, Business Tax Services VI. Others
Page 2 Year-end Tips and Reminders
T i m e Of F i l i n g
 The Annual Income Tax Return (“ITR”) shall be filed on

or before April 15, or on or before the 15th day of
the 4th month following the close of the fiscal year,
as the case may be.
 No extension on ITR filing is allowed.

I. Time, Place and Manner of Filing of  Late filing of ITR will be subject to a 25% surcharge,
Annual ITR and Audited FS 20% interest per annum and compromise penalty.
Page 3 Year-end Tips and Reminders Page 4 Year-end Tips and Reminders
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Signatory of the ITR Where to File the ITR and Pay the Tax
GENERAL RULES:
For Individuals:
 The taxpayer himself No Payment:
 File the ITR with the Revenue District Office (RDO) / BIR
For Corporations: office where registered as taxpayer.
President
Vice-President or With Payment:
Other principal officer  File the ITR with the BIR authorized agent bank (“AAB”)
The ITR shall be sworn by such officer and by the having jurisdiction over the location of the principal office of
treasurer or assistant treasurer the corporation.
[Section 52(A), Tax Code].  If there are no AABs, file the ITR with the Collection Agent
Accredited tax agent or duly authorized Treasurer of the city or municipality
having jurisdiction over the principal office of the
Corporation.
Electronic Filing and Payment System (eFPS) Electronic Filing & Payment System (eFPS)
 eFPS is a system which allows taxpayers to directly Taxpayers required to file ITR and pay the tax through eFPS:
encode, submit their tax returns and pay their taxes due
• Large taxpayers
online over the internet through the BIR website. • All government bidders
• Corporations with paid-up capital stock of P10 million
• Corporations with complete computerized system
• Top 20,000 private corporations
• Top 5,000 individual taxpayers
• Enterprises enjoying fiscal incentives granted by government
agencies under special laws (RA 7916, EO 226, RA 9400
other zone authorities)
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Electronic Filing and Payment System (eFPS) Time of Payment in case of eFPS Filing
 E-payments shall be made within the day the return

 eFPS is also mandatory for taxpayers included in the is electronically filed following the “pay-as-you-file”
Taxpayer Account Management Program, including principle. [RR No. 09-02]
prospective importers required to secure the Importer
Clearance Certificates and Customs Broker  The filing of the return ahead of the payment of the tax
Clearance Certificates (Revenue Regulations No. 10- due is in accordance with the “pay-as-you-file”
2014 dated December 10, 2014). principle as long as the payment of the tax is made
on or before the due date of the applicable tax.
[RR No. 09-02]
Electronic BIR Forms for Non-Large Taxpayers Electronic BIR Forms

Mandatory Use of Electronic BIR Forms (eBIRForms)
Revenue Memorandum Circular No. 61-2012 dated
October 12, 2012 Revenue Regulations (RR) No. 6-2014 (September 5, 2014),
► Authorize the use of Electronic Bureau of Internal Revenue Forms as amended by RR No. 5-2015 (March 17, 2015)
(eBIR Forms) Packages on a pilot basis in Metro Manila starting
October 16, 2012. Mandatory Coverage:
Non-eFPS filers enumerated below are required to use eBIRForms on
all 36 enumerated returns (including the ITR) to be filed on September
Revenue Memorandum Order No. 24-2013 dated
1, 2014 or after:
September 11, 2013 • Accredited tax agents/practitioners and all its client-taxpayers
► Prescribing the Guidelines, Policies, and Procedures on • Accredited printers of principal and supplementary receipts/invoices
• One-Time Transaction taxpayers
the Use of eBIRForms in Relation to RMC No. 61-2012 • Those who shall file a “No-Payment” return
• Government-owned or controlled corporations
• Local government units (LGUs), except barangays
• Cooperative registered with National Electrification Administration and Local
Water Utilities Administration
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Electronic BIR Forms Electronic BIR Forms
RR No. 6-2014, as amended by RR No. 5-2015 RR No. 6-2014, as amended by RR No. 5-2015
► Two (2) types of electronic services (e-Services) provided by the ► The eBIRForms are available to all filers with or without Internet
Bureau relative to the preparation, generation, and submission of tax access. Taxpayers with Internet can download the eBIRForms
returns: Package from the BIR website, while taxpayers without internet can
download the eBIRForms Package from the BIR e-lounges.
a. Offline eBIRForms Package: software that allows the taxpayer and
Accredited Tax Agent (ATA) to accomplish or fill up tax forms offline; ► Those covered by these regulations are required to electronically
and submit and file their tax returns.
a. Online eBIRForms System: is a filing infrastructure that accepts tax ► Upon successful validation of the accomplished tax return, taxpayer
returns submitted online and automatically computes penalties for shall receive a system-generated notification email
tax returns submitted beyond due date. acknowledging successful filing of the return. Taxpayer should
print the Filing Reference (FRN) page and submit this to AABs for
the payment of the tax.
Electronic BIR Forms Electronic BIR Forms

RR No. 6-2014, as amended by RR No. 5-2015 RMC No. 58-2015: Availability of Electronic eBIRForms
Package Version 5.1
► Penalties for failure to comply with the regulations:
► Penalty of P1,000 per return pursuant to Section 250 of the Tax ► The eBIRForms Package Version 5.1 is now available and
Code downloadable from any of the following sites:
► Civil penalty of 25% of the tax due, for filing a return in a manner 1. www.knowyourtaxes.ph;
not in compliance with existing regulations, thus, tantamount to 2. www.dof.gov.ph;
wrong venue filing; and 3. Dropbox link: http://goo.gl/UCr8XS;
► Inclusion in priority audit program of Revenue District Offices 4. Direct link: http://ftp.pregi.net/bir/ebirforms_package_v5.1.zip;
5. www.bir.gov.ph
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Electronic BIR Forms eFPS Filing
RMC No. 58-2015: Availability of Electronic eBIRForms General Rule:
Package Version 5.1
 Taxpayers who shall avail of eFPS shall submit their Audited
► The new eBIRForms package has the following modifications:
FS, Certificates of Withholding Tax (CWT) (in DVD-R), Tax
A. BIR Form No. 1707-A (Annual Capital Gains Tax Return for Onerous
Debit Memo (TDM) utilized in the payment of taxes, if any, to
Transfer of Shares of Stock Not Traded Through the Local Stock
Exchange) is included in the package and thirty seven (37) returns are the RDO or LTS (LTAD) or LTDO where they are
now available in eBIRForms; registered within 15 days from date of filing of the ITR
B. BIR Form Nos. 1601E, 1702-MX and 2000 were enhanced; and (RMO No. 05-02; RR No. 02-2015).
C. Annual Income Tax Returns (BIR Form Nos. 1700, 1701, 1702-EX,
1702-MX & 1702-RT) can now be submitted online thru the eBIR Forms
System.
► All the thirty seven (37) tax returns can be filed by clicking the “SUBMIT” or
“FINAL COPY” button and the taxpayer will receive the corresponding
confirmation thru email notification.
eFPS Filing Where to File the ITR and Pay the Tax
 RR No. 02-2015 dated December 17, 2014: In lieu of the
Large Taxpayer/ eFPS Taxpayer
submission of hard copies of Certificate of Creditable tax
Withheld at Source (BIR Form No. 2307) as attachment to the  The Annual ITR shall be e-filed and the tax e-paid using the
Summary Alphalist of Withholding Agents of Income eFPS facilities thru www.bir.gov.ph.
Payments Subjected to Creditable Withholding Taxes (SAWT)
(which is an ITR attachment), the taxpayer shall submit: Non-Large Taxpayer/ eBIRForms taxpayer
 The Annual ITR shall be filed with the authorized agent
 scanned copies of the certificates, stored using “PDF” file format bank (“AAB”) having jurisdiction over the location of the
in a Digital Versatile Disk-Recordable (DVD-R), principal office of the corporation.
 DVD-R is labeled properly  If there are no AABs, the Annual ITR shall be filed with the
 DVD-R is submitted to the BIR office where the taxpayer is Revenue Collection Officer of the city or municipality
registered, and having jurisdiction over the principal office of the
 taxpayer submits a notarized Certification of a duly authorized
Corporation.
representative certifying that the soft copies of the BIR form
contained in the DVD-R are complete and exact copies of the  The eBIR Forms taxpayer may also file the ITR
originals. electronically using the eBIR Forms system.
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Revised Forms Revised Forms
Revenue Regulation No. 02-14 issued January 24, 2014 Revenue Memorandum Circular (RMC) No. 13-2015
dated March 31, 2015
► Superseding Revenue Regulation (RR) No. 19-2011 and prescribes the new
BIR Forms to be used for Income Tax filing covering and starting the taxable
year ended December 31, 2013:
► Amends BIR Forms No. 1700, 1701 and 1702
1. BIR Form No. 1700 Version June 2013 (Annual Income Tax Return for ► Amendment consists mainly in making the disclosure of Supplemental
Individuals Earning Purely Compensation Income) Information under BIR Forms No. 1700 and 1701 optional on the part
2. BIR Form No. 1701 Version June 2013 (Annual Income Tax Return for Self- of the taxpayer on the part for income tax filing covering and starting
Employed Individuals, Estate and Trusts) with calendar year 2014, due for filing on or before April 15, 2015
3. BIR Form No. 1702-RT Version June 2013 (Annual Income Tax Return for ► Individual income tax filers using BIR Forms No. 1700 and 1701 are
Corporation, Partnership and Other Non-individual Taxpayers subject only to advised that for the income tax filing covering and starting with
the Regular Income Tax Rate) calendar year 2015, the disclosures required under Supplemental
4. BIR Form No. 1702-EX Version June 2013 (Annual Income Tax Return for Information portion of the said forms will be mandatory
Corporation, Partnership and Other Non-individual Taxpayers exempt under
the Tax Code)
5. BIR Form No. 1702-MX Version June 2013 (Annual Income Tax Return for
Corporation, Partnership and Other Non-individual Taxpayers subject to
Multiple Income Tax Rate or Special/ Preferential Rate)
Manner of Filing Manner of Filing

Revenue Memorandum Order (RMO) No. 06-10, as amended by RMO Nos. 13-10 and 13-11
- not applicable to eFPS taxpayers The attachments to the ITRs shall also be received in the same
manner as above, but the attached FS shall be stamped
received only on the page of the Audit Certificate, the
BALANCE SHEET and the INCOME STATEMENT.
Number of Copies
The other pages of the FS and its attachments need not be
 Taxpayer shall only accomplish and file three (3) copies of tax stamped received.
returns with the AAB and/or the BIR.
Any excess shall not be received by the AAB and/or the BIR.
In the case of corporations and other juridical persons, there
should be a stamp "RECEIVED" in at least two (2) extra copies
Stamping of the Official receiving Seal of the AFS for filing with the SEC.
 All concerned Offices, including AABs, shall receive the ITRs by

stamping the official receiving seal or stamp of receipt of an
internal revenue office where the said returns are filed on the
space provided for in the three (3) copies of the returns.
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Certified True Copies of ITR and Audited
Financial Statement (“AFS”) Certified True Copies of ITR and AFS
Revenue Memorandum Circular No. 33-2010
The taxpayer has the option of filing with the SEC either :
RMO No. 6-2010, as amended by RMO Mo. 13-2010, prescribes
the policies and guidelines in the a. one (1) original copy of the complete AFS with External
Auditor’s Certification, Balance Sheet and Income Statement duly
1. stamping of ITRs and the accompanying AFS, and stamped by the BIR or AABs and two (2) sets of photocopies of
2. limiting the number of copies of ITRs and AFS to be said documents; or,
received by AABs and the BIR to three. b. one (1) certified true copy of the complete AFS, with the
 The three copies of the ITRs shall be distributed as follows:
BIR certification appearing on each and every page of the AFS
and two (2) sets of photocopies of said documents.
► Two (2) copies to the BIR (and attached to the ITRs)
► One (1) copy to the taxpayer
Note: The stamping of only three (3) copies of the ITR shall also be applied to
all other tax returns and payment forms, unless a lesser number of copies is Note: The underlined text is amended by RMC No. 36-2010, stating that the AFS shall be duly stamped by the BIR
prescribed, pursuant to RMO No. 54-2010. or AABS ONLY on the first page.
Certified True Copies of ITR and AFS 2016 Schedule of Filing of AFS with SEC
► If the second option is selected, the taxpayer shall request for a SEC Memorandum Circular No. 1 dated January 11, 2016
certified true copy of the AFS from the BIR office where the taxpayer is
registered. A certification fee of One Hundred Pesos (PhP100.00) per Audited FS of companies whose fiscal year ends on December 31,
set of AFS and DST of Fifteen Pesos (PhP15.00) shall be paid for 2015 shall be filed depending on the last numerical digit of their
each set of AFS certified as true copy by the BIR. SEC registration or license number in accordance with the
► In case that the taxpayer shall desire to request for a certified true copy schedule provided by the Circular.
of the ITR, the certification fee of One Hundred Pesos (PhP100.00)
and DST of Fifteen Pesos (PhP15.00) shall be paid for each ITR Last numerical digit of SEC registration
Date of Filing
certified as true copy by the BIR.
► It is NOT MANDATORY that certified true copies of the ITR and AFS April 18, 19, 20, 21, 22 1 and 2
be secured. It is the option of the taxpayer to secure these or not. April 25, 26, 27, 28, 29 3 and 4
May 2, 3, 4, 5, 6 5 and 6
May 10, 11, 12, 13 7 and 8
May 16, 17, 18, 19, 20 9 and 0
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Establishment of eLounge Facilities in Revenue
2016 Schedule of Filing of AFS with SEC District Offices or RDOs (RMO 18-2012)
SEC Memorandum Circular No. 1 dated January 11, 1. The eLounge facility in the RDO shall be created to provide taxpayers with free electronic
2016 or online medium to access the BIR's web services.
2. The eLounge facility shall be established in the following Bureau Offices:
However, all corporations may file their AFS regardless of the • The Tax Information and Education Division (TIED), at the National Office;
last numerical digit of their registration or license number on or • The Metro Manila RDOs; and
before the first day stated in the abovementioned schedule. • Selected RDOs outside Metro Manila, in accordance with a set of basic criteria
regarding the number of taxpayers mandated to perform on-line transactions with
Late filings of filing after respective due dates shall be accepted the BIR, taking into consideration the ICT readiness/availability of the locality of the
starting May 23, 2016 and shall be subject to the prescribed Bureau office where an eLounge facility will be established.
penalties which shall be computed from the date of the last day
of filing schedule mentioned.
Establishment of eLounge Facilities in Revenue Individuals Earning Purely Compensation

District Offices or RDOs (RMO 18-2012) Income (BIR Form No. 1700)
3. Mandatory requirements for the creation of an eLounge facility: Who are required to file?
• The eLounge shall be set up at or near the Taxpayer Service Area at the Taxpayer  The return shall be filed, in triplicate copies, by every resident citizen
Service Section (TSS). deriving compensation income from all sources, or resident alien and
4. The eLounge shall be manned by personnel under TSS. non-resident citizen with respect to compensation income from within
5. A queuing system shall be installed in the eLounge, to support the mandate of the RDO to the Philippines, except the following:
provide fast and accurate frontline service to BIR clients.
1. An individual whose gross compensation income does not
6. An electronic logbook (e-logbook) shall be maintained to monitor the number of taxpayers
exceed his total personal and additional exemptions;
who avail of the eLounge facility.
7. The eLounge shall be open from 8am to 5pm or beyond office hours depending on the 2. An individual with respect to pure compensation income derived
from sources within the Philippines, the income tax on which has
needs of taxpayers.
been correctly withheld (tax due equals tax withheld);
3. An individual whose income has been subjected to FWT; and
4. A minimum wage earner or an individual who is exempt from
income tax.
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Individuals Earning Purely Compensation
Income (BIR Form No. 1700)
Who are required to file?

 An individual deriving compensation concurrently from two
or more employers at any time during the taxable year shall
file an income tax return.
 In the case of married individuals who are still required to

file returns or in those instances not covered by the
substituted filing of returns, only one return for the taxable
year shall be filed by either spouse to cover the income
of the spouses, which return shall be signed by the
husband and wife, unless it is physically impossible to do so, II. Payment of Income Tax
in which case signature of one of the spouses would suffice.
Payment of Tax Through AABs Payment of Tax Through AABs

Revenue Regulations No. 16-02 b) "Bank debit system" refers to the system whereby a
taxpayer, through a bank debit memo/advice, authorizes
 General Rule: “Pay as you file” withdrawals from its existing bank accounts for payment of
tax liabilities.
 The payment of tax can be made either by cash, check or through the bank debit system.
The bank debit system mode is allowed only if the
a) "Over–the–counter cash payment" refers to payment of tax liabilities to the AAB in the
taxpayer has a bank account with the AAB branch where
currencies (paper bills or coins) that are legal tender in the Philippines. The maximum
it intends to file and pay its tax return / form / declaration,
amount allowed per tax payment shall not exceed P10,000.00.
provided said AAB branch is within the jurisdiction of
the BIR RDO where the tax payment is due and payable.
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Payment of Tax Through AABs Sample Check
3. TIN
c) "Checks" refers to a bill of exchange or Order Instrument
drawn on a bank payable on demand.
1. Collecting Bank
In the issuance and accomplishment of checks for the payment
of internal revenue taxes, the Branch shall indicate in the space
provided for "PAY TO THE ORDER OF" the following data: 2. “For the Account
1) presenting/collecting bank or the bank where the payment is Of”
to be coursed and
2) FAO (For the Account Of) Bureau of Internal Revenue as
payee;
XYZ Bank
And under the "ACCOUNT NAME" the:
3) taxpayer identification number (TIN).
Authority of Revenue Collection Officer (“RCO”) to

Accept Payment Other Mode of Payment - Tax Credit Certificate (“TCC”)
RMO No. 4-2007, as amended by RMO 32-2008 and  The taxpayer must file a prior application with the BIR for the
further amended in RMO No. 8-2009 dated March 9, 2009 use of its own TCC in the payment of income tax. The BIR
will issue a Tax Debit Memo (“TDM”) to be applied against
 “The issuance of Revenue Official Receipts shall be limited the taxpayer’s income tax due.
to tax payments, in cash not exceeding the amount of
Twenty Thousand Pesos (Php20,000.00) per return. A TCC is no longer transferrable.
However, there shall be no limit on the amount if payment
is made thru checks".
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Other Mode of Payment - Tax Credit Certificate (“TCC”) Other Mode of Payment - Use of Tax Credit Certificate (TCC)
 TCCs can be applied against any internal revenue tax (except withholding tax) through  TDMs should be processed every time the TCC is used for
the issuance of a TDM. payment of taxes
 A TDM is a letter from the DOF addressed either to the BIR or the BOC, authorizing the  Although the taxpayer can legally use the TCC in paying its
debit of tax credit amount as indicated in the letter. full tax liability, the BIR and the BOC, in practice, allow only
 The TDM contains: 25% of the tax liability to be paid with TCC and the rest with
cash
1. The TDM number,
2. TCC number,
3. its date of issue,
4. original TCC value; and
5. outstanding TCC value
Penalties Penalties
A. Surcharge of 25% for each of the following B. Interest at 20% per annum on any unpaid amount
violations: of tax, from the date prescribed for the payment until
1. Late Filing: Failure to file the return and pay the amount it is fully paid.
of tax or installment due on or before the due dates;
2. Wrong Venue: Unless otherwise authorized by the C. Compromise penalty
Commissioner, filing the return with a person or office
other than those with whom it is required to be filed; RMO No. 07-2015: prescribes and implements the
revised consolidated Schedule of Compromise Penalties
3. Non-Payment of Full Amount of Income Tax Due:
Failure to pay the full or part of the amount of tax shown for Violations of the National Internal Revenue Code
on the return on or before the due date
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Attachments to Annual ITR
1. Certificate of the independent CPA (if gross quarterly
sales, earnings, receipts or output exceed P150,000)
2. Statement of Management Responsibility
3. Summary Alphalist of Withholding Agents of Income
Payments subjected to Creditable Withholding Taxes
(SAWT)
4. Audited Financial Statements and/or Account
Information Form (AIF)
5. Certificate of Income payments not subjected to
III. Attachments to Annual ITR withholding tax (BIR Form 2304)
6. Certificates of Creditable Tax Withheld at Source (BIR
Form 2307) – or in DVD-R for eFPS filers (RR No. 2-
2015)
Attachments to Annual ITR Attachments to Annual ITR
7. Duly approved Tax Debit Memo, if applicable RMC 21-2016 dated February 11, 2016
8. Proof of prior years’ excess credits, if applicable
9. Proof of foreign tax credits, if applicable Circularizing the Professional Regulatory Board of Accountancy
Resolution No. 03, Series of 2016 entitled “Requiring the
10. For amended returns, proof of tax payment and the Submission of Certificate by the Responsible Certified Public
return previously filed Accountants on the Compilation Services for the Preparation of
11. Certificate of tax treaty relief, if applicable Financial Statements and Notes Thereto”
The Board of Accountancy (BoA) has signed the rules on

Financial Statements (FS) preparation and the requirement for
the Certificate of Compilation Services for the preparation of
Financial Statements (FS) and notes thereto (“the Certificate”).
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Attachments to Annual ITR Attachments to Annual ITR
RMC 21-2016 dated February 11, 2016 RMC 21-2016 dated February 11, 2016
The rules provide, among others, the following: • The CPAs rendering the compilation services for the preparation of the FS and signing the Certificate shall
• Requirement of the attachment to the annual FS of a Certificate on the compilation services rendered in the first be accredited with the Professional Regulatory Board of Accountancy after submitting the necessary
preparation of FS and notes to the FS. application and complying with the Continuing Professional Development (CPD) requirements.
• The Certificate shall be prepared only for issuers which/who have gross sales or revenues exceeding ten million • The Board of Accountancy approved the extension of the deadline of February 29, 2015 for the filing of the
pesos (P10,000,000) for a particular accounting year. application for accreditation by CPAs in Commerce and Industry (C&I) in its meeting last February 11, 2016.
• The preparation of the FS and disclosure notes is a practice of accountancy in commerce and industry and shall be The deadline for filing the accreditation application is extended to April 30, 2016.
done only by Certified Public Accountants (“CPAs”). • Completion of the Continuing Professional Development (CPD) requirements can be done not later
• The reiteration of the rule that CPAs in public practice are prohibited from preparing or assisting in the than June 30, 2016 after signing an affidavit of undertaking to that effect.
preparation of FS and disclosure note of their clients which engaged them to render attest services for the same • Accreditation applications can be done through authorized representatives.
documents.
• The CPAs in public practice who violate this prohibition rule shall be subject to stern sanctions by the Board of
Accountancy.
Summary Alphalist of Withholding Agents of Income Payments

Attachments to Annual ITR subjected to Creditable Withholding Taxes (SAWT)
RMC 21-2016 dated February 11, 2016 RR No. 2-06 prescribed the mandatory filing of the SAWT with the BIR as an attachment
upon filing the quarterly and annual ITRs.
The applicability of the rules with respect to reporting periods is as follows:
• for reporting period ending June 30, 2016 and subsequent periods -- MANDATORY Consolidated alphalist of withholding agents from whom income was earned or received
• for reporting period ended December 31, 2015 and subsequent periods ending May and subjected to withholding tax to be submitted by the payee-recipient of income as
30, 2016 -- OPTIONAL attachment to its duly filed return for a given period.
• for reporting periods which end prior to December 31, 2015 -- NOT COVERED BY  Contains summary of information, showing among others:
THE RESOLUTION
1. total amounts of income/gross sales/gross receipts, and
2. claimed tax credits taken from all Certificates of Creditable Withholding Tax at Source issued
by the payors of income payment.
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Summary Alphalist of Withholding Agents of Income Payments Summary Alphalist of Withholding Agents of Income Payments
subjected to Creditable Withholding Taxes (SAWT) subjected to Creditable Withholding Taxes (SAWT)
RR No. 2-2015 dated December 17, 2014: RR No. 2-2015 dated December 17, 2014:
Procedure in submitting BIR Forms 2307 and 2316 as attachments to SAWT 1. Scan the original BIR Form 2307 (Certificate of
Creditable tax Withheld at Source);
• Mandatory for taxpayer registered under the Large Tax

2. Store/save the soft copy of the BIR Form (PDF file) in a
DVD-R with filename:
Services (LTS).
a. Registered BIR name of taxpayer
• Optional for non-LTS taxpayer.
b. TIN with head/branch office code
c. Taxable period
Ex. Rizal Corporation_131042445_03192015
Summary Alphalist of Withholding Agents of Income Payments Summary Alphalist of Withholding Agents of Income Payments
subjected to Creditable Withholding Taxes (SAWT) subjected to Creditable Withholding Taxes (SAWT)
RR No. 2-2015 dated December 17, 2014: RR No. 2-2015 dated December 17, 2014:
3. Label
4. Submit DVD-R to BIR where the taxpayer is registered,
with Notarized Certification
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Summary Alphalist of Withholding Agents of Income Payments
subjected to Creditable Withholding Taxes (SAWT) Certification of Independent CPA
 Retention of the Hard Copy of the Certificates of Tax  Corporations, companies, partnerships, or persons, whose
Withheld (BIR Form No. 2306, BIR Form No. 2307, & BIR gross quarterly sales, earnings, receipts or output exceed
Form No. 2316) P150,000 shall have their books of accounts audited and
► The hard copy of the Certificates of Tax Withheld at examined yearly by independent CPAs and their ITRs
Source including withholding tax on compensation issued accompanied with a duly accomplished Account Information
by the payors of income payments to the payees shall Form (AIF).
always be retained within the period prescribed in the
law for the preservation of books of accounts and  The AIF shall contain, among others, information lifted from
accounting records (10 years from date of last entry, certified balance sheets, profit and loss statements,
per RR 7-2013) and presentation of said hard copy may schedules listing income-producing properties and the
be requested during audit to prove the tax credits arising corresponding income therefrom and other relevant
from withholding taxes which are being claimed in the tax statements [Sec. 232(A), Tax Code].
returns filed (RR No. 2-2006).
Statement of Management Responsibility Statement of Management Responsibility

“STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR ANNUAL INCOME TAX RETURN”
Revenue Regulation No. 3-10
The Management of (name of taxpayer) is responsible for all information and representations contained in the Annual Income Tax
Contents and Format of Statement of Management Return for the year ended (date). Management is likewise responsible for all information and representations contained in the
financial statements accompanying the (Annual Income Tax Return or Annual Information Return) covering the same reporting period.
Responsibility Furthermore, the Management is responsible for all information and representations contained in all the other tax returns filed for the
reporting period, including, but not limited, to the value added tax and/or percentage tax returns, withholding tax returns,
 Since the annual ITR is primarily the responsibility of the documentary stamp tax returns, and any and all other tax returns.
taxpayer, this shall be accompanied by a statement of In this regard, the Management affirms that the attached audited financial statements for the year ended (date) and the accompanying
Annual Income Tax Return are in accordance with the books and records of (name of taxpayer), complete and correct in all material
management’s responsibility. respects. Management likewise affirms that:
 All taxpayers required to file annual ITR under the 1997 (a) the Annual Income Tax Return has been prepared in accordance with the provisions of the National Internal Revenue Code, as
amended, and pertinent tax regulations and other issuances of the Department of Finance and the Bureau of Internal Revenue;
Tax Code, as amended, shall be required to submit a
statement of management’s responsibility,:
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Statement of Management Responsibility Statement of Management Responsibility
(b) any disparity of figures in the submitted reports arising from the preparation of financial statements pursuant to financial
accounting standards and the preparation of the income tax return pursuant to tax accounting rules has been reported as ► Aside from the Individual Taxpayer, President and Managing
reconciling items and maintained in the company’s books and records in accordance with the requirements of Revenue
Regulations No. 8-2007 and other relevant issuances; Partner, the Chief Executive Officer and the Chief Financial
(c) the (name of taxpayer) has filed all applicable tax returns, reports and statements required to be filed under Philippine tax Officer or any officer performing similar functions regardless
laws for the reporting period, and all taxes and other impositions shown thereon to be due and payable have been paid for the
reporting period, except those contested in good faith. of their designation are also required to affix their signatures in
the Statement.
Signature: ____________________
(Name of the Individual Taxpayer/President/Managing Partner)
Signature: ____________________ ► In the case of a foreign corporation with branch office in the
(Name of the Chief Executive Officer or its equivalent) Take note of the Philippines, the above Statement shall be signed by its who is in
Signature: ____________________ signatories charge of its operations, local manager.
(Name of the Chief Financial Officer or its equivalent)
Attachments to the Annual ITR
Revenue Memorandum Circular No. 21-2007

For taxpayers registered with the BOI, BOI-ARMM
and PEZA:
►Photocopy of the Certificate of Entitlement (CE) for ITH issued
by the BOI, BOI-ARMM stating therein that the concerned entity
is a bona fide BOI/BOI-ARMM-registered enterprise entitled to
ITH incentives; and
►Photocopy of the Certification issued by the PEZA stating therein

that the entity is a bona fide PEZA-registered enterprise entitled IV. Audited Financial Statements
to ITH and / or the 5% Gross Income Tax incentive.
16
Audited Financial Statements (“AFS”) Audited Financial Statements
Revenue Regulation No. 07-2007, amending RR No. 21-2002 Revenue Regulation No. 21-02
 The AFS shall be composed of the following:
1. Balance sheet;
 The FS shall present the accounts in a descriptive manner
such that the nature of the specific transactions entered in the
2. Income statement or Profit and Loss Statement;
accounts are known to the reader.
3. Statement of Changes in Equity, showing either:
a. All changes in equity  The account titles to be used must be specific and not control
b. Changes in equity; other than those arising from transactions with accounts which must be completely enumerated in the FS.
equity holders acting in their capacity as equity holders;
4. Statement of Cash Flows;  The accounts must conform to the rules and requirements
5. Notes, comprising a summary of significant accounting policies and of regulatory agencies that have supervision over the
other explanatory notes; and taxpayer such as the Securities and Exchange Commission,
6. Schedules attached to the afore-cited statements. Bangko Sentral ng Pilipinas, Insurance Commission, etc.
 The submission of the above statements is mandatory even if there
is no income, retained earnings, and so on.
Audited Financial Statements (AFS) Time and Place of filing AFS

Revenue Regulation No. 21-02
 The Income Statement shall show separately by segment
 The paper copy of the AFS shall be filed with the BIR within
15 days from the date of filing of BIR Form No. 1702.
(there should be proper labeling), with breakdown of the
specific accounts, the following:  RMC 2-2003 clarified that attachments to a return is due 15
days after e-filing deadline and not from date of e-payment.
i. Cost of Goods Sold (for seller of goods)/Cost of
Services (for seller of services);  The taxpayer is required to file four copies of the AFS.
ii. Selling and Administrative Expenses;
iii. Financial Expenses, if any;
iv. Special Deductions (e.g., NOLCO, if any;)
v. Deductions under Special Laws, if any.
Note: Deductions III, IV and V should be fully explained in the Notes to the
Financial Statements.
17
AFS Reportorial Requirements Preservation of Books
Revenue Regulation No. 21-02 Revenue Regulations (RR) No. 17-13, as amended by
RR No. 05-14 and 10-2015
 All the FS filed with accompanying auditor’s certificate shall
show the comparative figures of the current year and the  All taxpayers are required to preserve their books of
previous year. Thus, FS with no required Auditor’s accounts, including subsidiary books and other accounting
Certificate need not be presented in comparative format. records, for a 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, for the
taxable year when the last entry was made in the books of
accounts.
 Within the first 5 years, the taxpayer shall retain hardcopies of
the books;
 Thereafter, the taxpayer may retain only an electronic copy of
the hardcopy (paper) of the books in an electronic storage
system compliant with BIR rules.
Additional Compliance Requirements for Taxpayers Adopting

Preservation of Books Philippine Financial Reporting Standards (“PFRS”)
Revenue Regulations (RR) No. 17-13, as amended by Revenue Regulation No. 08-07
RR No. 05-14 and 10-2015
• Disparity between financial accounting and tax accounting
 Unless a longer period of retention is required under the 1997 Tax results from the application of PFRS. Hence, there is a need to
Code or other relevant laws, the independent CPA who audited the reconcile the disparity to avoid issues during BIR
records and certified the financial statements of the taxpayer, investigations.
equally as the taxpayer, has the responsibility to maintain and
preserve electronic copies of the audited and certified financial
• Taxpayers are mandated to maintain books and records that
would reflect the reconciling items between Financial
statements including the audit working papers for a period of ten
(10) years from the due date of filing the annual ITR or the actual Statements figures and/or data with those reflected / presented
date of filing thereof, whichever comes later. in the filed ITR.
• In case of a BIR investigation, the records must provide in
sufficient detail the computation of the differences and the
reasons therefor aimed at bringing into agreement the PFRS
and ITR figures.
18
Revenues / Receipts
► All income for the year shall be declared in the Annual ITR
except those specifically excluded in the Tax Code.
► The amount of P30,000.00, specifically referring to the amount
of 13th month pay and other benefits as one of the exclusions
from gross compensation income received by an employee is
increased to P82,000.00, effective January 1, 2015. (RR No. 3-
2015 dated March 9, 2015)
V. Computation of Income Tax
Revenues / Receipts Allowable Expenses / Deductions

► Match Gross Receipts per VAT / percentage tax returns with ► Allowable deductions from gross income are all ordinary and
Revenues per Quarterly ITR and FS and evaluate reason for necessary expenses paid or incurred during the taxable
any discrepancy. year in carrying on or which are directly attributable to, the
► A substantial underdeclaration of taxable sales, receipts or development, management, operation and/or conduct of
income shall constitute prima facie evidence of a false or the trade, business or exercise of a profession.
fraudulent return. Failure to report sales, receipts or income in ► The taxpayer must substantiate with sufficient evidence,
an amount exceeding 30% of that declared per return shall such as official receipts or other adequate records:
render the taxpayer liable for substantial underdeclaration of (i) the amount of the expense being deducted, and
sales, receipts or income. (ii) the direct connection or relation of the expense being
deducted to the development, management, operation
and/or conduct of the trade, business or profession of the
taxpayer.
19
Allowable Expenses / Deductions Expenses with Limitations:
► A substantial overstatement of deductions shall constitute 1. Interest Expense

prima facie evidence of a false or fraudulent return. A claim
of deductions in an amount exceeding thirty percent (30%)  The taxpayer's otherwise allowable deduction for interest expense shall
be reduced by 33% (effective January 1, 2009) of the interest income
of actual deductions shall render the taxpayer liable for
subjected to final tax.
overstatement of deductions. Example:
► Interest Expense of PhP150,000 from Loan;
► RR No. 12-2013 dated July 22, 2013 ► Interest Income of PhP100,000 from Deposit
No deduction from gross income will also be allowed notwithstanding Computation

payment of withholding tax at the time of the investigation or Interest Expense from Loan PhP 150,000
reinvestigation/reconsideration, in cases where no withholding of tax Less: 33% of interest income from Deposit (33% x
was made in accordance with Sections 57 and 58 of the Code. P100,000) 33,000
► RMC 63-2013 dated September 63-2013 clarifies that RR 12-2013 shall
apply to audit/investigations for taxable year 2013 and onwards. Deductible interest expense 117,000
► Please take note of the Transfer Pricing Guidelines pursuant to RR 2-2013 dated
January 2, 2013.
Expenses with Limitations: Expenses with Limitations:
2. Entertainment, Amusement, Recreation Expenses 2. EAR Expenses

Ceiling (RR No. 10-02)  Representation Expenses are expenses incurred by a taxpayer
in connection with the conduct of his trade, business or exercise
 0.50% of net sales (i.e., gross sales less sales of profession, in entertaining, providing amusement and
returns/allowances and sales discounts) for taxpayers recreation to, or meeting with, a guest or guests at a dining place,
engaged in sale of goods or properties; and place of amusement, country club, theater, concert, play, sporting
 1% of net revenue (i.e., gross revenue less discounts) for event, and similar events or places.
taxpayers engaged in sale of services, including exercise  The term “guests" shall mean persons or entities with which the
of profession and use or lease of properties. taxpayer has direct business relations, such as but not limited to,
 Any expense incurred for EAR that is contrary to law, clients/customers or prospective clients/customers. The term shall
morals, public policy or public order shall in no case be not include employees, officers, partners, directors, stockholders,
allowed as a deduction. (Section 4 (c) of RR No. 10-02) or trustees of the taxpayer. (Sections 2 and 3 of RR No. 10-02)
20
Expenses with Limitations: Expenses with Limitations:
The following are NOT considered EAR expenses:  If a taxpayer is deriving income from both sale of goods/properties and services, the
1. Expenses treated as compensation or fringe benefits for services allowable EAR expense shall be determined based on the apportionment formula below,
rendered under an employer-employee relationship, pursuant to but in no case to exceed the maximum percentage ceilings provided earlier.
RR No. 2-98, RR No. 3-98 and amendments thereto;
2. Expenses for charitable or fund raising events;  Apportionment Formula:
3. Expenses for bonafide business meeting of stockholders,
partners or directors;
4. Expenses for attending or sponsoring an employee to a business
league or professional organization meeting;
Net sales / net revenue
5. Expenses for events organized for promotion, marketing and X Actual Expenses
advertising including concerts, conferences, seminars, Total Net sales & net revenue
workshops, conventions, and other similar events; or
6. Other expenses of a similar nature.
Expenses with Limitations Expenses with Limitations
3. Donations iii. Donation to Accredited NGOs, provided that:
Donations entitled to Full Deductibility: a. The accredited NGO must be organized and operated
exclusively for the purposes mentioned, and no part of its net
i. Donation to the Government or any of its agencies, income must inure to the benefit of any private individual;
provided that the donation must be used in undertaking
priority activities in education, health, youth and sports b. The donee must utilize the donation for the active conduct of
development, human settlements, science and culture and its purpose, not later than the 15th day of the third month after
in economic development according to a National Priority the close of its taxable year in which the contribution is
Plan determined by the National Economic and received;
Development Authority (“NEDA”).
c. The donee’s level of administrative expense shall not exceed
ii. Donations to Certain Foreign Institutions or International
30% of its total expenses; and the donee’s assets, in case of
Organizations. its dissolution, would be distributed to the entities enumerated
in the provision.
21
RR No. 13-98 Donations to any candidate or political party or coalition of

Submit evidences or proofs to the BIR by showing the Certificate/s of parties for campaign purposes shall not be subject to the
Donation and indicating therein the following: payment of any gift tax.
- Actual receipt by the accredited non-stock, non-profit ► Section 13 of the R.A. No. 7166 (Election Code) specifically states
corporation/NGO of the donation or contribution and the date of that any provision of law to the contrary notwithstanding any
receipt thereof; and contribution in cash or kind to any candidate or political party or
- The amount of the charitable donation or contribution, if in cash; if coalition of parties for campaign purposes, duly reported to the
property, whether real or personal, the acquisition cost of the said Commission shall not be subject to the payment of any gift tax
property. (donor’s tax).
RR No. 02-03
For donation worth over PhP 50,000, Notice to the RDO is required and
Certificate of Donation must be attached.

Donations to any candidate or political party or coalition of Donations entitled to Limited Deductibility:
parties for campaign purposes shall not be subject to the
payment of any gift tax. 1. Donations which do not meet the conditions for full deductibility
2. Donations to accredited domestic corporations or associations
► It is necessary, however, that, for every contribution received, an organized and operated exclusively for religious, charitable,
official receipt (OR) shall be issued by the candidate or political party. scientific, youth and sports development, cultural or educational
Otherwise, the contribution may be subject to tax. The Bureau of purposes or for the rehabilitation of veterans, or to social welfare
Internal Revenue (BIR) may construe the same as donation subject to institutions
donor’s tax or unaccounted source of income subject to regular 3. Donations to non-accredited NGOs.
income tax. If contributions are in kind, those shall be valued at their
cash equivalent or fair market value
Type of Taxpayer Limit
Individual Donor 10% of Taxable Income
Corporate Donor 5% of Taxable Income
22
Expenses with Limitations Net Operating Loss Carry Over (NOLCO)
4. Depreciation of Vehicle and Related Expense (RR No.  The NOLCO shall be separately shown in the ITR. It must
12-2012) likewise be shown in the Reconciliation Section of the Tax
Return.
 Only one vehicle for land transport is allowed for use of an official  The unused NOLCO shall be presented in the Notes to FS
or employee, the value of which should not exceed showing in detail:
PhP2,4000,000.00. 1. The taxable year in which the net operating loss was
 No depreciation is allowed for yacht, helicopters, airplanes, and/or sustained or incurred
aircrafts, and land vehicles which exceed the threshold UNLESS 2. Any amount thereof claimed as NOLCO deduction
the taxpayer’s main line of business is transport operations or within 3 consecutive years immediately following the
lease of transport equipment and the vehicles purchased are year of such loss.
used in operations.  Failure to comply with this disclosure requirement will
 All maintenance expense on account of the non-depreciable disqualify the taxpayer from claiming the NOLCO.
Vehicle for tax purposes are disallowed in its entirety.
Minimum Corporate Income Tax (MCIT) Optional Standard Deduction (OSD)

 Any amount paid as excess MCIT shall be recorded in the RR No. 16-08
books as an asset "deferred charges-MCIT".
The items of gross income under Section 32 (A) of the 1997 Tax
 It shall be carried forward and may be credited against the Code which are required to be declared in the ITR of the taxpayer
normal income tax due for a period not exceeding 3 taxable for the taxable year are part of the gross income against which the
years immediately following the taxable year/s in which the OSD may be deducted in arriving at the taxable income.
same has been paid. Passive incomes which have been subjected to a final tax at source
shall not form part of the gross income for purposes of computing
 Any amount of excess MCIT which has not or cannot be so the 40% OSD.
credited against the normal income taxes due for the 3-year For other taxpayers allowed by law to report their income and
period shall lose its creditability; and shall be removed from deductions under a different method of accounting (e.g. percentage
"deferred charges-MCIT" account by a debit to "retained of completion basis, etc.) other than cash and accrual method of
earnings" and a credit to "deferred charges-MCIT" since this accounting, the “gross income” shall be determined in accordance
tax is not allowable as deduction from gross income, it being an with said acceptable method of accounting.
income tax.
23
Optional Standard Deduction (OSD) Optional Standard Deduction (OSD)
RR No. 2-10 RR No. 2-10

Manner of Electing OSD or Itemized Deduction: Making the Election:
The election to claim either the OSD or the itemized Once the election is made, the same type of deduction must be
deduction for the taxable year must be signified by consistently applied for all the succeeding quarterly returns
checking the appropriate box on the ITR filed for the first and in the final ITR for the taxable year.
quarter of the taxable year. Any taxpayer who is required but fails to file the quarterly ITR
Once the election to avail of the OSD or itemized for the first quarter shall be considered as having availed of
deduction is signified in the return, it shall be irrevocable the itemized deductions for the taxable year.
for the taxable year for which the return is made.
ITR Reconciling Items Pre-Audit of Annual Income Tax Returns

Examples of Non-Taxable Income: Revenue Memorandum Order No. 25-2012 dated October
3, 2012
►Interest income already subjected to final Coverage: All ITRs filed by individual taxpayers engaged in business
withholding tax
or in the practice of their profession and corporate taxpayers.
►Dividend income of a domestic corporation from  Pre-audit is conducted without field investigation or Electronic
another domestic corporation Letter of Authority (“eLA”) or Tax Verification Notice (“TVN”).
Examples of Non-Deductible Expense: The Revenue Officer shall verify the following during audit:
► Allowance for doubtful accounts 1. Mathematical computation of income tax due and payments;
► Allowance for inventory obsolescence 2. Correctness and applicability of personal and additional
exemptions claimed by individuals against the registration
records per Integrated Tax System (“ITS”)
24
Pre-Audit of Annual Income Tax Returns Pre-Audit of Annual Income Tax Returns
3. Correctness and validity of the following deductions/ 6. Claimed creditable withholding taxes against tax due and
expenses subject to the ceiling/limitations prescribed under substantiation of claims through the certificates of withholding
existing law and regulations: taxes attached to the tax returns or submitted electronically to
a) Interest expense the BIR;
b) Charitable and other contributions 7. Correct utilization of Tax Credit Certificates which should be
c) Representation expense duly supported by an approved Tax Debit Memo issued by
the authorized Revenue Official;
d) Miscellaneous expense
8. Correctness of deductions claimed by taxpayers who opted
4. Validity of claims for income tax holiday, tax exemption and for Optional Standard Deduction (“OSD”)
other claimed tax incentives which resulted to non-payment or
reduced payment of tax due. 9. Accuracy and applicability of the computation of the Net
Operating Loss Carry-Over (“NOLCO”); and
5. Correctness of the application of the minimum corporate
income tax (MCIT); 10. Completeness of the required attachments to annual ITRs as
prescribed under existing revenue issuances.
Advances
Commissioner Of Internal Revenue vs. Filinvest Development Corporation, G.R. No. 163653.
July 19, 2011.
 “(I)nstructional letters as well as the journal and cash vouchers evidencing the advances xxx qualified as loan agreements
upon which documentary stamp taxes may be imposed.”
Revenue Memorandum Circular No. 048-11 dated October 6, 2011

 Circularizes the relevant portion of Supreme Court Decision in the case Commissioner of Internal Revenue vs. Filinvest
Development Corporation, G.R. Nos. 163653 and 167689 dated July 19, 2011, concerning Documentary Stamp Tax on
Inter-corporate Loans.
 SEC. 180. Stamp Tax on All Bonds, Loan Agreements, Promissory Notes, Bills of Exchange, Drafts, Instruments and
Securities Issued by the Government or Any of its Instrumentalities, Deposit Substitute Debt Instruments,
Certificates of Deposits Bearing Interest and Others Not Payable on Sight or Demand. xxx documentary stamp tax
of Thirty centavos (P0.30) [now P1.00] on each Two hundred pesos (P200), or fractional part thereof, of the face value of
V. Others any such agreement, bill of exchange, draft, certificate of deposit, or note xxx
25
Deposit for Future Subscription Related Party Disclosure
Financial Reporting Bulletin No. 6 Financial Reporting Bulletin No. 13

The following requirements under Philippine Accounting Standard 24 must be observed
A company should not consider a deposit for future subscription as an by corporations:
1. The required disclosures on transactions and outstanding balances shall be made
equity instrument unless all of the following elements are present: separately for each of the following categories: (a) the parent; (b) entities with joint
1. There is a lack or insufficiency of authorized unissued shares control or significant influence over the entity; (c) subsidiaries; (d) associates; (e) joint
of stock to cover the deposit; ventures in which the entity is a venture; (f) key management personnel of the entity
2. The company’s Board of Directors and stockholders have or its parent; and (g) other related parties.
2. For each of said category, the following information shall be provided:
approved an increase in capital stock to cover the shares a. the amount of the transactions;
corresponding to the amount of the deposit; and b. the amount of outstanding balances and their terms and conditions, including
3. An application for the approval of the increase in capital stock whether they are secured, and the nature of the consideration to be provided in
has been presented for filing or filed with the Commission. settlement, and details of any guarantees given or received;
c. provisions for doubtful debts related to the amount of outstanding balances;
d. the expense recognized during the period in respect of bad or doubtful debts
If any or all of the foregoing elements are not present, the transaction due from related parties.
should be recognized as a liability. 3. The presentation shall be made in columnar format according to the above categories
and disclosure items.
Improperly Accumulated Earnings Tax Improperly Accumulated Earnings Tax
Revenue Memorandum Order 35-2011 Revenue Regulation No. 02-01

By way of illustration, Improperly Accumulated Taxable Income (IATI) is computed as follows:
Taxable Income for the year (e.g., 2010) Pxxxx SECTION 6. Period for Payment of Dividend/Payment of IAET. —The
Add:
(a) Income subjected to Final Tax Pxxx
dividends must be declared and paid or issued not later than one year
(b) NOLCO xxx following the close of the taxable year, otherwise, the IAET, if any, should
(c) Income exempt from tax xxx
(d) Income excluded from gross income xxx xxxx
be paid within fifteen (15) days thereafter.
–––––--- ----–––––
Pxxxx
Less:
SECTION 7. Determination of Purpose to Avoid Income Tax. —xxx
Income Tax paid Pxxx Xxx xxx xxx
Dividends declared/paid xxx xxxx
–––––--- ––----–––
In order to determine whether profits are accumulated for the reasonable
Total Pxxxx needs of the business as to avoid the imposition of the improperly
Add: Retained Earnings from prior years
Accumulated Earnings as of December 31, 2010
accumulated earnings tax, the controlling intention of the taxpayer is that
Less: Amount that may be Retained which is manifested at the time of accumulation, not subsequently declared
(100% of Paid-Up Capital as of December 31, 2010) xxxx
–––––
intentions which are merely the product of afterthought. A speculative and
IATI Pxxxx indefinite purpose will not suffice. The mere recognition of a future problem
=====
The resulting "Improperly Accumulated Taxable Income" is thereby multiplied by 10% to arrive at the Improperly Accumulated Earnings Tax
or the discussion of possible and alternative solutions is not sufficient.
(IAET). Definiteness of plan/s coupled with action/s taken towards its
consummation are essential.
26
Appropriation of RE for Business Expansion RE Available for Dividend Declaration
SEC Memorandum Circular No. 11, Series of 2008
Financial Reporting Bulletin No. 15
Pursuant to PAS 1, the following disclosures are relevant to provide

an understanding on the impact of the retention of earnings on the
financial statements and thus, must be provided therein:
1. Details of the expansion (e.g., description of the project,

timeline) to render the project definite;
2. The date of the approval by the Board of Directors of the
project.
Reconciliation of Retained Earnings Reconciliation of Retained Earnings

Financial Reporting Bulletin No. 14
Financial Reporting Bulletin No. 14 Items Amount
Unappropriated Retained Earnings, beginning P xxx
 Under paragraph 4(C) of SRC Rule 68, as amended, issuers of Adjustments:
(see adjustments in previous year’s Reconciliation) xxx
securities to the public, and stock corporations with unrestricted Unappropriated Retained Earnings, as adjusted, beginning P xxx
retained earnings in excess of 100% of paid-in capital stock, are Net Income based on the face of AFS
mandated to submit with their audited financial statements a Less: Non-actual/unrealized income net of tax
• Equity in net income of associate/joint venture
Reconciliation of Retained Earnings Available for Dividend • Unrealized foreign exchange gain - net (except those attributable to Cash and Cash Equivalents) Unrealized actuarial gain
Declaration which should present the prescribed adjustments. • Fair value adjustment (M2M gains)
• Fair value adjustment of Investment Property resulting to gain Adjustment due to deviation from PFRS/GAAP-gain
• Other unrealized gains or adjustments to the retained earnings as a result of certain transactions accounted for under the PFRS
Add: Non-actual losses
• Depreciation on revaluation increment (after tax)
• Adjustment due to deviation from PFRS/GAAP – loss
Loss on fair value adjustment of investment property (after tax)
Net Income Actual/Realized
P xxx
Unappropriated Retained Earnings, as adjusted, ending Pxx x
27
Creditable Withholding Taxes (CWTs) The ITR filed by an accredited tax agent on behalf of a
► CWTs should be substantiated by Certificates of taxpayer shall bear the following information:
Creditable Taxes Withheld at Source (BIR Form 2307)
► CWTs should pertain to the year subject of the ITR A. For CPAs and others (individual practitioners and
members of GPPs):
► TIN
Option to Carry-over or Refund Excess Taxes ► Certificate of Accreditation Number, Date of Issuance,
► Option to carry-over: The taxpayer shall exercise his and Date of Expiry
option by marking with an “x” the appropriate box,
B. For Members of the Philippine Bar (individual
which option shall be considered irrevocable for that
practitioners, members of GPPs):
taxable period.
► TIN
► Attorney’s Roll number or Accreditation Number, if any
Submission of Inventory List and Other Submission of Inventory List and Other
Reportorial Requirements Reportorial Requirements
RMC 57-2015 dated September 16, 2015 Amended by RMC 61-2015 RMC 57-2015 dated September 16, 2015 Amended by RMC 61-2015
on September 29, 2015 on September 29, 2015
► Provide guidance on how financial accounting information, in addition ► All taxpayers with tangible asset-rich balance sheets, often with at
to the annual inventory list required to be filed under Section 13 of RR least half of their total assets in working capital assets, e.g., accounts
No. V-I, should be reported to the Bureau. receivable and inventory, shall submit, in addition to the annual
inventory list, schedules/lists prescribed in the Circular, in hard and
► The additional reports or schedules to be submitted and filed with the soft copies.
annual inventory list shall cover companies maintaining inventory of
stock-in-trade, raw materials, goods in process, supplies and other
goods such as manufacturing, wholesaling, distributing/retailing
sectors including real estate dealers/developers, service companies,
e.g., construction companies, building contractors, etc.
28
Submission of Inventory List and Other
Reportorial Requirements BIR Audit Program
RMC 57-2015 dated September 16, 2015 Amended by RMC 61-2015 RMO 19-2015 dated September 15, 2015
on September 29, 2015
This Order prescribes the policies, guidelines and
► The schedules and inventory list shall be submitted every 30th day procedures to be observed in the audit/investigation of
following the close of the taxable year (depending on the accounting tax returns to enhance taxpayers’ voluntary compliance
period adopted by the taxpayer) as enunciated under Section 13 of
Revenue Regulations No. V-I, otherwise known as the Bookkeeping by encouraging the correct payment of internal revenue
Regulations, which provides for the filing of an annual inventory of taxes through the exercise of the enforcement function
stocks-in-trade, raw materials, goods in process, supplies and other of the Bureau.
goods not later than 30 days following the close of the taxable year, to
wit: In general, all taxpayers are considered as possible
candidates for audit. To cover the audit/investigation of
taxpayers, electronic Letters of Authority (eLAs) shall be
issued.
BIR Audit Program BIR Audit Program

RMO 19-2015 dated September 15, 2015 RMO 19-2015 dated September 15, 2015
The said audit/investigation shall include, but not be limited to the Priority Taxpayers/Industries:
mandatory cases and priority taxpayers/industries specified in this
Order including other priority audit that may be identified by the
Regional Director (RD)/Assistant Commissioner, Large Taxpayers
Service (ACIR-LTS).
Mandatory Cases:
29
BIR Audit Program
RMO 19-2015 dated September 15, 2015
Priority Taxpayers/Industries:
Questions?
30

Tax Filing Reminders: Outline

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PHILIPPINE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

Page 2 Year-end Tips and Reminders

 The Annual Income Tax Return (“ITR”) shall be filed on

 No extension on ITR filing is allowed.

 E-payments shall be made within the day the return

Electronic BIR Forms for Non-Large Taxpayers Electronic BIR Forms

Electronic BIR Forms Electronic BIR Forms

Manner of Filing Manner of Filing

 All concerned Offices, including AABs, shall receive the ITRs by

Establishment of eLounge Facilities in Revenue Individuals Earning Purely Compensation

Who are required to file?

 In the case of married individuals who are still required to

Payment of Tax Through AABs Payment of Tax Through AABs

Authority of Revenue Collection Officer (“RCO”) to

Attachments to Annual ITR Attachments to Annual ITR

The Board of Accountancy (BoA) has signed the rules on

Summary Alphalist of Withholding Agents of Income Payments

• Mandatory for taxpayer registered under the Large Tax

Statement of Management Responsibility Statement of Management Responsibility

Attachments to the Annual ITR

Revenue Memorandum Circular No. 21-2007

►Photocopy of the Certification issued by the PEZA stating therein

Audited Financial Statements (AFS) Time and Place of filing AFS

Additional Compliance Requirements for Taxpayers Adopting

V. Computation of Income Tax

Revenues / Receipts Allowable Expenses / Deductions

► A substantial overstatement of deductions shall constitute 1. Interest Expense

No deduction from gross income will also be allowed notwithstanding Computation

Expenses with Limitations: Expenses with Limitations:

2. Entertainment, Amusement, Recreation Expenses 2. EAR Expenses

Expenses with Limitations Expenses with Limitations

3. Donations iii. Donation to Accredited NGOs, provided that:

RR No. 13-98 Donations to any candidate or political party or coalition of

Expenses with Limitations Expenses with Limitations

Minimum Corporate Income Tax (MCIT) Optional Standard Deduction (OSD)

RR No. 2-10 RR No. 2-10

ITR Reconciling Items Pre-Audit of Annual Income Tax Returns

Revenue Memorandum Circular No. 048-11 dated October 6, 2011

Financial Reporting Bulletin No. 6 Financial Reporting Bulletin No. 13

Improperly Accumulated Earnings Tax Improperly Accumulated Earnings Tax

Revenue Memorandum Order 35-2011 Revenue Regulation No. 02-01

Pursuant to PAS 1, the following disclosures are relevant to provide

1. Details of the expansion (e.g., description of the project,

Reconciliation of Retained Earnings Reconciliation of Retained Earnings

BIR Audit Program BIR Audit Program

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