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WELCOME PARTICIPANTS TO THE

WELCOME PARTICIPANTS TO THE. SEMINAR ON THE BASICS OF TAXATION For TV/Radio Talents/Media Practitioners/Other TPs BIR MULTI-PURPOSE HALL MAY 22, 2014. BUREAU OF INTERNAL REVENUE. Tax Update Seminar with Media Practitioners Revenue Region 19-Davao City May 21, 2014. Presented by:

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WELCOME PARTICIPANTS TO THE

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  1. WELCOMEPARTICIPANTS TO THE SEMINAR ON THE BASICS OF TAXATION For TV/Radio Talents/Media Practitioners/Other TPs BIR MULTI-PURPOSE HALL MAY 22, 2014

  2. BUREAU OF INTERNAL REVENUE Tax Update Seminar with Media Practitioners Revenue Region 19-Davao City May 21, 2014 Presented by: SUSAN D. TUSOY, CPA, MPS Asst. Chief, Assessment Division

  3. Topic Outline • Registration, Invoicing and Bookkeeping Regulations • Applicable Tax Type • Registration Fee • Income Tax • Business Tax (VAT and Percentage) • Withholding Tax

  4. REGISTRATION FEES

  5. When to register • On or before the commencement of business • Before payment of any tax due • Upon filing of a return, statement or declaration as required by the NIRC. • Employee: within 10 days from date of employment

  6. BIR Registration Procedures PRIMARY REGISTRATION SECONDARY REGISTRATION STAGE 1 STAGE 2 Application & Issuance of TIN Registration of Business/Practice of Profession/Employment Registration of books, Issuance of ATP, CAS and Loose-leaf

  7. On Registration • Pay Annual Registration Fee of P500.00 upon registration and every year thereafter on or before Jan. 31 • for every separate or distinct establishment or place of business, including facility types where sales transactions occur

  8. On Registration (RR 4-2014) • Submit an affidavit indicating the rates, manner of billings and the factors considered in determining their service fees on or before Jan. 31 every year • Transition deadline: May 31, 2014 (RMC 32-2014)

  9. INVOICING REQUIREMENTS

  10. Invoicing Requirements • Issue sequentially Official Receipt (OR) for fees received • Each OR issued shall indicate the name and address of the client, date of transaction, nature of service rendered and the amount.

  11. Invoicing Requirements • The OR shall be accomplished at least in duplicate • The duplicate retained & preserved in place of business for 10 years from close of taxable year (RR 17-2013).

  12. Invoicing Requirements (RR 4-2014) In cases no professional fees are charged by the professional and paid by client, a BIR registered receipt, duly acknowledged by the later, shall be issued showing a discount of 100% as substantiation of the “pro-bono” service. 13

  13. Sample of Commercial Invoice – A Non-VAT Official Receipt

  14. Proper Invoicing and Receipting of Output Tax • Revenue Regulations 18-2011 • Reiterates Sec. 237 of the Tax Code that VAT-registered taxpayers should separately bill the VAT. • The amount shall be shown as a separate item in the invoice or receipt 15

  15. Proper Invoicing and Receipting of Output Tax Ex: If the amount charged is P560.00, it shall be presented in the following manner: Professional Fee (P560.00/112%) P 500.00 Add12% VAT (12% of P500.00) 60.00 Total Amount charged P 560.00 16

  16. Proper Invoicing and Receipting of Output Tax 17

  17. A written account evidencing the sale of goods and/or services issued to customers in an ordinary course of business Principal Receipts/Invoices (RR 18-2012)

  18. A written account evidencing the sale of goods and/or properties • issued whether cash sales or on account • Basis of the output tax liability of the seller and the input tax claim of the buyer • Includes Cash Sales Invoices & Charge Sales Invoices VAT Sales Invoice

  19. A proof of sale of service and/or leasing of properties • Basis of the output tax liability of the seller and the input tax claim of the buyer VAT Official Receipt

  20. Non-Vat Sales Invoices • A written account evidencing the sale of goods and/or properties, whether cash sales or on account • Basis of the Percentage Tax liability of the seller • Non-Vat Official Receipts • A proof of sale of service and/or leasing of properties • Basis of the Percentage Tax liability of the seller Non-VAT Receipts/Invoices

  21. Also known as Commercial Invoices • Documents evidencing delivery, agreement to sell or transfer of goods and services • Example • Delivery Receipt • Collection Receipt Supplementary Receipts/Invoices

  22. The approved ATP shall be valid only upon full usage of the inclusive serial numbers of principal and supplementary receipts/invoices reflected in such ATP or five (5) years from issuance of the same, whichever comes first. Salient Features

  23. ONLY BIR ACCREDITED PRINTERS shall have the exclusive authority to print principal and supplementary receipts/invoices. Salient Features

  24. Expiring Authority to Print (ATP) for invoices/receipts (principal and supplementary) shall apply for a new ATP not later than 60 days prior to actual expiry date Transitory Provision

  25. Expired Receipts/Invoices • Those with ATP prior to Jan. 1, 2011 were valid only until Aug. 30, 2013 while those with ATP dated Jan. 1, 2011 to Jan. 17, 2013 were valid only until Oct. 31, 2013. • Issuance of receipts/invoices after its validity constitute a violation of Sec. 264 of the NIRC of 1997 • It is considered as if no receipt/invoice was issued

  26. Expired Receipts/Invoices • No deduction from gross income shall be allowed using these invoices/receipts as there are not valid proof of substantiation • In case of VAT-registered persons, no input tax may be claimed using these receipts/invoices

  27. On issuance of tax clearance (RMC 52-2013) • To fully implement the requirements under RR 18-2012, a certified true copy of the ATP shall be included as attachment • No ATP shall be a ground for non-issuance of tax clearance for whatever purposes

  28. The importance of Asking for Receipts • To support input tax claims • Will facilitate audit trail • To ascertain that sales transactions are properly recorded • Corresponding taxes are paid • To support business purchases/expenses 29

  29. BOOKKEEPING REQUIREMENTS

  30. BOOKKEEPING REQUIREMENTS • Required to register books of accounts • Journal • Ledger • Subsidiary Ledger • Preserved within the prescriptive period of 10 yrs • Gross receipts exceeding P150,000 in any given quarter must be audited by a CPA

  31. BOOKKEEPING REQUIREMENTS • Transactions for the day must be entered in books on or before 12nn the following day. Balances transferred to Ledger day following end of month • It’s not required to register new set of books every year; only before the pages of current book is almost used up.

  32. For Medical/Dental PractitionersPATIENTS’ LOG BOOK (A subsidiary book) • Daily list of clients w/ the corresponding fees including those free of charge, per branch • Name and address • Date • Official receipt no. • Amount charge • Must be registered with the BIR

  33. For Restaurants/Drugstores and the like • Maintain subsidiary book • For Senior Citizens Discount • For Persons with Disability

  34. For all professionalsOfficial Appointment Books (RR 4-2014) • Shall be registered with the BIR • Transition: not later than May 31, 2014 (RR 32-2014) • Shall contain • Names of the client • Date/time of the meeting

  35. Original Certificate of Registration, Registration Fee and the Ask for Receipt Notice must be conspicuously displayed in the physician’s place of business and/or clinic Tax Compliance Verification Drive (Tax mapping)

  36. Income Tax

  37. Sample Computation – Itemized Deduction Gross Receipts P2,000,000 Less: Allowable Deductions (itemized) Rent P 500,000 Fuel and Oil 50,000 Communication 20,000 Supplies 280,000 Professional Fees 100,000 950,000 Net Income P1,050,000 Less: Personal Exemption 50,000 Additional Exemption (2 dep.) 50,000 100,000 Net Taxable Income P 950,000 Tax Due P 269,000 Tax Withheld (1st to 4thQtr) Form 2307 212,500 Quarterly Income Tax Payment 50,000 262,500 Payable P 6,500

  38. INCOME TAX TABLE OVER BUT NOT OVER AMOUNT RATE OF EXCESS OVER Not over 10,0000 5% 10,000 30,000 500 + 10% 10,000 30,000 70,000 2,500 + 15% 30,000 70,000 140,000 8,500 + 20% 70,000 140,000 250,000 22,500 + 25% 140,000 250,000 500,000 50,000 + 30% 250,000 500,000 over 125,000 + 32% 500,000

  39. Business Expenses: • To be deductible, business expense must: • constitute ordinary and necessary expense; • to be paid or incurred during the taxable year in carrying on or directly attributable to operation and/or conduct of trade, business, or profession; • be reasonable in amount; • be sustained by adequate proof; • not be against law or public policy

  40. RR 12-2013 – Requirements for Deductibility • Any income payment allowable as deduction shall only be allowed to be deducted if: • The income tax required to be withheld has been paid to the BIR • No deduction shall be allowed notwithstanding payments of WTAX at the time of investigation

  41. Sample Computation –Optional Standard Deduction Gross Receipts P2,000,000 Less: Optional Standard Deduction (40%) 800,000 Net Income P 1,200,000 Less: Personal Exemption 50,000 Additional Exemption (2 dep.) 50,000 100,000 Net Taxable Income P 1,100,000 Tax Due P 317,000 Tax Withheld (1st to 4thQtr) 212,500 Quarterly Income Tax Payment 50,000 262,500 Payable P 54,500

  42. Advantages of using optional standard deduction (for individual taxpayers) • shall not be required to submit with his tax return such financial statements otherwise required under the Code • shall keep such records pertaining to his gross sales or gross receipts,

  43. Income Tax Due Dates

  44. Value Added Tax/ Percentage Tax

  45. VAT vs. NON-VAT Value Added Tax (12%) • Medical/dental services rendered by professionals whose gross receipts exceed the threshold of P1,919,500 Non-VAT • If gross receipts do not exceed the threshold • Subject to 3% percentage tax

  46. VAT defined • It is a tax on the value added to the purchase price or cost in the sale or lease of goods, properties, or services in the course of trade or business. • Due Date

  47. VATPayable Output Tax ( P100,000 x 12%) - P12,000.00 Less Input Tax (60,000 x 12%) - 7,200.00 VAT payable - P 4,800.00

  48. HOW TO COMPUTE VAT-gov’t transaction Formula: Output Tax (12% of Gross receipts ) P xxx Less Standard Input Tax (7% of gross receipts) xxx VAT Payable P xxx Less 5% withholding tax xxx VAT Payable P xxx 49 49

  49. Sources of Input Tax • Purchase of goods/services for which the VAT was actually paid, like: • Rentals on office • Purchase of medical supplies • Communication expenses • Fuel • Professional services • etc

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