Most of us welcome surprises for our birthdays, anniversaries, retirements, etc. However, as a taxpayer, would you still be delighted to receive a “surprise” from the Bureau of Internal Revenue (BIR), and if it’s in the form of a visit to check your tax compliance? This “surprise” visit is known as the BIR Tax Mapping/Tax Compliance Verification Drive (TCVD).
Pursuant to Revenue Memorandum Order (RMO) No. 09-2006, TCVD aims to expand the tax base, enhance compliance, and consequently boost collection efforts. This is merely a verification of the taxpayer’s compliance with basic administrative regulations and does not involve a thorough examination of books of account and other records.
As taxpayers, our usual question might be “What do the BIR’s representatives usually check during the conduct of TCVD?” This article summarizes the items that the BIR usually looks for during “surprise” visits and penalties imposed for any noncompliance.
Certificate of Registration (BIR Form No. 2303) and Payment of Annual Registration Fee (BIR Form No. 0605)
BIR Form No. 2303, also called Certificate of Registration (CoR), gives the holder the legal right to operate a business in the Philippines. It serves as proof that a business is registered as a taxpayer with the BIR. Hence, taxpayers should ensure that they are registered with the BIR on or before the commencement of their business, before payment of any tax due, or upon filing of a return, statement or declaration as required in the Tax Code.
Additionally, per Section 236 of the National Internal Revenue Code (NIRC) of 1997, an Annual Registration Fee (ARF) in the amount of P500 for every separate or distinct establishment or place of business, including facility types where sales transactions occur, must be paid upon registration and every year thereafter on or before the last day of January. Payment of the ARF must be made using BIR Form No. 0605 to an authorized agent bank located within the revenue district, or to the revenue collection officer, or duly authorized treasurer of the city or municipality where each place of business or branch is registered.
BIR Form Nos. 2303 and 0605 must be posted in the taxpayer’s place of business in areas conspicuous to the public.
“Ask for Receipt” signage or the new Notice to Issue Receipt/Invoice (NIRI)
The Notice to the Public/“Ask for Receipt” was first introduced by the BIR in Revenue Regulations (RR) No. 04-2000. Subsequently, this notice was replaced by the new Notice to Issue Receipt/Invoice (NIRI) pursuant to RR No. 10-2019. Taxpayers required to issue sales/commercial invoices and official receipts under existing rules are directed to post the notice in their places of business, including branches and mobile stores, in areas that are also conspicuous to the public.
As an update, in Revenue Memorandum Circular (RMC) No. 42-2022, as amended by RMC No. 75-2023, the old “Ask for Receipt” Notice issued by the RDO/LT Division to registered business taxpayers based on RR No. 07-2005 will be valid until Sept. 30, and must be replaced by the NIRI, which will be issued on a staggered basis to registered businesses on a timetable determined by the ending digit of their Taxpayer Identification Number (TIN).
Authority to Print (ATP) Invoices and Receipts (BIR Form No. 1906)
All persons, whether private or government, who are engaged in business must secure from the BIR an Authority to Print (ATP) principal and supplementary receipts/invoices. For newly registered taxpayers, the ATP must be secured simultaneously with the CoR. Fortunately, the previous five-year validity of the ATP receipts and invoices has been removed through the issuance of RR No. 06-2022 and will now have perpetual validity.
Registration of manual books of account/Approval of loose-leaf books of account
Taxpayers who use manual books of account, as provided in RMC 29-2019, must register their manual books before the deadline for filing of the first quarterly income tax return or the annual income tax return, whichever comes earlier. Meanwhile, loose-leaf books of account and other accounting records must be permanently bound and presented for registration together with a sworn statement attesting to the correctness of the entries made, and the number of all invoices, receipts, and books of account used for the period covered to the RDO/LTAD where the taxpayer is registered on or before 15 days after the end of each taxable year or within 15 days from the closure of business operations, whichever comes earlier.
Keep also in mind that books of account must always be kept at the place of business of the taxpayer. Such books and registers, together with records, vouchers, and other supporting papers and documents prescribed by the BIR, kept by taxpayers must be preserved intact, unaltered, and unmutilated.
Permit To Use (PTU) Cash Register Machines (CRM)/Point of Sale (PoS) Systems and Registration/PTU Computerized Accounting Systems (CAS)/Computerized Books of Account (CBA)
PTU CRM and PoS Systems must be secured first before the use of such systems. For new registrants, applications must be filed online using the Enhanced Electronic Accreditation and Registration (eAccReg) System for the Permit to Use and manually submitting the documentary requirements as provided in Annex B of RMO No. 24-2023. Once approved, the PTU can also be accessed on BIR’s eACCReg System.
On the other hand, pursuant to RMC No. 05-2021, for new registrants, PTUs for CBA and CAS are no longer applicable. Taxpayers only need to register the CAS or CBA by submitting the documentary requirements listed in the issuance. Upon submission of complete documentary requirements, an Acknowledgement Certificate (AC) is to be issued by the RDO. This document must be kept by the taxpayer as proof that the system has been duly registered.
Meanwhile, existing PTUs for CRM, PoS, CAS, and CBA are now perpetually valid pursuant to RR No. 06-2022, unless the PTU was revoked due to tampering of sales data to alter/avoid the recording of sale transactions or any major repair, upgrade, integration, and modification/alteration without prior notification and approval by the BIR.
PENALTIES
If BIR representatives find out during TCVD that any of the abovementioned administrative requirements have not been complied with, the following compromise penalties, as listed in RMO No. 07-2015, might be imposed on the taxpayer:
• Failure to register with the BIR — P5,000 to P20,000
• Failure to pay and display ARF (BIR Form No. 0605) — P1,000
• Failure to display CoR (BIR Form No. 2303) — P1,000
• Failure to display “Ask for Receipt”/NIRI — P1,000
• Failure to attach or paste authorized sticker authorizing the use of CRM/POS/CAS — P1,000/unit
• Failure to present application form (BIR Form Nos. 1900 and 1905) to use registered sales books/permit to use loose leaf sales books — P1,000
• Failure to issue receipts or invoices — P10,000 to P20,000
• Refusal to issue receipts or invoices — P25,000 to P50,000
• Use of unregistered receipts or invoices — P20,000 to P50,000
• Use of unregistered cash registered machines and or components without a permit — P25,000/unit up to P50,000/unit
• Printing of receipts or invoices without authority from the BIR — P25,000 to P50,000
Further, avoidance of tax mapping/TCVDs or failure to comply with the BIR tax regulations can lead to more serious repercussions.
Complying with the BIR’s numerous administrative requirements, along with the timely and proper remitting of taxes, can be quite overwhelming. Taxpayers may have a hard time memorizing these, and some might not even know that these requirements exist. But as the saying goes “ignorance of the law excuses no one.” Hence, as responsible taxpayers and citizens, it is our duty to take note of these requirements and ensure that they are complied with, so we aren’t too surprised when BIR representatives knock on our doors.
Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
Trisha Amor M. Gatdula is a senior in charge from the Tax Advisory & Compliance Practice Area of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing firms in the Philippines, with 29 Partners and more than 1000 staff members
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