After establishing your business with the DTI (sole proprietor) or SEC (partnership/corporation), then registering with the BIR and City Hall, many entrepreneurs believe their compliance obligations are complete. However, being tax compliant involves additional requirements beyond initial registration.
BIR Compliance Requirements
BIR compliance is one of the biggest sources of penalties hurting the pockets of many entrepreneurs, especially startups. Your obligations include:
- Posting of BIR Documents
- Submission and Payment of Tax Returns
- Submission of Required Attachments
- Issuing of BIR Accredited Receipts/Invoices
- Keeping of Books of Accounts
Posting of BIR Documents
Businesses must conspicuously display the following original documents:
Certificate of Registration (BIR Form 2303)
This is your proof of BIR registration, required by banks, clients, suppliers, and other business partners.
Payment Form BIR Form 0605
Documents the annual registration fee of PHP 500.00, payable by January 31 annually.
Notice to the Public to Issue Receipt/Invoice
Per Revenue Regulation 10-2019, sellers must issue BIR-accredited receipts for transactions of PHP 100 and above.
Compliance Verification
BIR officers conduct Tax Compliance Verification Drives (tax mapping) under Revenue Memorandum Order 9-2006 to verify business registration and document posting compliance. “Conspicuous” means obvious to the eye — not kept in drawers.
Penalties for Non-Compliance
Non-compliance penalties include PHP 3,000 per violation, which represents substantial costs for startups.
Filing and Payment of Tax Returns
Registered businesses must file and pay corresponding taxes. Consequences of failure include:
- 25%/50% surcharge on basic tax due
- Interest on late payments (currently 12% per annum)
- Compromise penalties per RMO 7-2015
Registration is just the beginning. Stay tuned for Part 2!