Ending the year on a compliant note

By: Candy Bravo

AS we approach the end of the year, it's normal to look back on small and big wins and make plans and resolutions for the upcoming one. For accountants, taxpayers and entrepreneurs, however, the transition to a new year marks the beginning of yearly compliance requirements as laid down by several Philippine government authorities.

It is essential that taxpayers and registered businesses are aware of these compliance regulations. Below is an overview to help taxpayers avoid fines and penalties at the end of the year.

Books of accounts
All registered businesses and taxpayers should maintain a set of books to track the results of their operations. Under Revenue Memorandum Circular 3-2023, it is only when all pages in previously registered books have been exhausted can a new set of manual books be registered. However, a taxpayer may opt to use and register a new set on a yearly basis.

The bound (manual) books of account for the taxable year must be submitted to the Bureau of Internal Revenue (BIR) on January 15 or within 15 days from the closure of business operations. The soft copy of computerized books, meanwhile, must be submitted in CD-R, DVD-R, or other optical media on January 30 or within 30 days from the closure of business operations.

Renewal registrations
Unless exempt, all taxpayers and registered businesses must renew their registrations with local government units annually on January 20 or quarterly within 20 days after the close of each quarter. With the BIR, this is due for filing and payment on January 31.

Should The Ease of Paying Taxes Act — which aims to ease the burden of tax compliance, particularly for micro and small enterprises — be signed into law, one of its salient features is the removal of the P500 annual registration fee.

Information returns/alphalist
The annual information return of income taxes withheld on compensation (BIR Form 1604C) and that for income payments subjected to final withholding taxes (BIR Form 1604F) are due by January 31. The annual information return of creditable income taxes withheld (expanded)/ income payments exempt from withholding tax (BIR Form 1604E), meanwhile, should be submitted by March 1.

Certificate of compensation payment/tax withheld
The certificate of compensation payment/tax withheld (BIR Form 2316) shows the details of the employee's salaries or remuneration received along with the corresponding taxes withheld and remitted to the BIR for a taxable year. Employers are required to distribute BIR Form 2316 to employees no later than January 31 and submit to the tax office the duly signed copies on February 28 of the succeeding year.

Annual income tax return/other requirements
The annual income tax return (AITR) should be filed with the BIR by April 15 or the 15th day of the fourth month following the taxable year.

Required attachments such as audited financial statements (AFS), statement of management responsibility and related party transactions (BIR Form 1709), etc., meanwhile, should be submitted immediately upon manual filing of the AITR with the authorized bank or revenue collection officer. For the eBIR form and eFPS filers, these should be submitted within 15 days after the tax filing deadline.

As for the duly received AFS, filing with the Securities and Exchange Commission (SEC) should be within 120 calendar days from the end of the fiscal year for corporations whose fiscal years end on a date other than December 31. For those whose taxable year ends on December 31, the deadline depends on the last digit of their SEC registration or license number.

The duly filed AITR and duly received AFS should be submitted to the Philippine Economic Zone Authority (PEZA) on May 15 or within 30 days after filing with the BIR. The annual tax incentives and benefits reports, meanwhile, should be with the PEZA by May 15 or within 30 days from the AITR's statutory filing deadline. Lastly, annual employment and compensation data should be submitted to the ecozone regulator by May 15 of the following year.

General information sheet
The SEC requires that the GIS be filed within 30 days depending on the corporation's meeting and license issuance. For domestic stock and non-stock corporations, this should be done within 30 calendar days from the date of the actual annual stockholders' or members' meeting.

For branches and representative offices of foreign corporations and regional operating/regional headquarters of multinationals, the deadline is within 30 days from the anniversary date of the SEC license's issuance.

Inventory list
Under RMC 57-2015, all taxpayers with inventory lists and other tangible asset-rich balance sheets, often with at least half of their total assets in working capital assets (e.g., accounts receivable and inventory), are required to submit this document to the BIR, in DVD-R and properly labeled and with a notarized certification signed by an authorized representative, on January 30 or within 30 days from the close of each fiscal year.

Considering these are just some of the yearend compliance requirements, it's safe to say that being compliant with Philippine tax regulations takes a significant effort. Having a checklist can help avoid missed requirements and deadlines. Moving forward, we hope the government will continue to work on improving tax regulations in the Philippines until such a time when yearend compliance is a simple and easy exercise for taxpayers.

As published in The Manila Times on 4 December 2023. The author is an Assistant Manager with the Tax & Corporate Services group of Deloitte Philippines.