Year-end Tax Compliance Reminders

As Featured on Philstar: Year-end tax compliance reminders

Now that the holidays have come to an end, the decorations have been cleaned up and the excitement from parties have begun to ease. It is time to get back on track on the compliance tasks needed to be accomplished. Businesses should be mindful of the various year-end tax compliance requirements with the Bureau of Internal Revenue (BIR) carried over to the new year, as non-compliance or late filing could lead to applicable penalties.

Taxpayers are well aware that prior to using any books of accounts, they are required to register their books with the BIR.  Under Revenue Memorandum Circular (RMC) No. 3-2023, all books of accounts shall be registered online with the BIR’s Online Registration and Update System (ORUS). With that, taxpayers are required to set up an ORUS account in order to use the said online registration facility. The ORUS will generate a QR Stamp that can be affixed to the first page of the manual books of accounts and permanently bound loose leaf books of account. In case of computerized books of accounts, the QR Stamp will be affixed to the transmittal letter to the BIR, detailing the contents of the USB flash drive where the books of accounts and other accounting records are stored.

Existing business taxpayers are required to register their new set of manual books of accounts prior to the full consumption or prior to using up the pages of their previously registered books. New sets of manual books of accounts are not required to be registered every year but the taxpayers may opt to register yearly, provided that the new sets of manual books are registered before its use. For taxpayers using loose leaf books of accounts, they should have already registered their books to the BIR last 15 January via the ORUS as the deadline is on or before 15 January of every year in case of taxpayers adopting a calendar year. Taxpayers with registered computerized books of accounts are required to yearly submit the soft copy of their books within 30 days after the end of each taxable year (i.e., on or before 30 January of every year in case of taxpayers adopting a calendar year).

Aside from books, another annual compliance matter is the submission of Annual Information Returns (i.e., BIR Form Nos. 1604-C, 1604-F, and 1604-E) and their related alphabetical lists (alphalist).

Employers who have deducted withholding tax on compensation (WTC) from their employees shall file the BIR Form No. 1604-C together with the alphalist of employees while withholding agents who have subjected their income payments to final withholding tax (FWT) or fringe benefits tax shall file BIR Form No. 1604-F together with the alphalist of payees/employees. Both BIR Form Nos. 1604-C and 1604-F shall be filed on or before 31 January 2024. On the other hand, withholding agents who have deducted expanded withholding tax (EWT) on its income payments shall file BIR Form No. 1604-E and submit the related alphalist of payees on or before 01 March 2024.

For taxpayers utilizing the electronic filing and payment system (eFPS), note that the BIR announced in RMC No. 62-2023 the availability of BIR Form Nos. 1604-C, 1604-E and 1604-F in the eFPS.  In case of unavailability of the new forms in the taxpayer’s eFPS account, RMC No. 18-2021 provides that eFPS filers shall use the new version of subject forms in the latest Offline eBIRForms package.  This RMC is aligned with RMC No. 4-2021 which provides for the use of eBIRForms in case the newly created forms are not yet available in the eFPS but already available in the eBIRForms.  Nonetheless, as RMC No. 18-2021 specifically covers annual information returns for the calendar year 2020, affected eFPS taxpayers should keep an eye out on advisories from the BIR as to any recent workaround guidelines on the filing of the said forms. 

Previously, all registered taxpayers doing business shall file and pay an annual registration fee (ARF) amounting to Php500.00 for every head office branch and separate or distinct establishment or place of business on or before 31 January of every year. With the passage of Republic Act (RA) No. 11976 or the Ease of Paying Taxes Act into law, taxpayers are no longer required to file and pay an ARF. The BIR issued an advisory that it will cease to collect the ARF effective on 22 January 2024. Taxpayers with existing BIR Certificate of Registration (COR) that includes Registration Fee shall remain valid. But taxpayers have the discretion to update or replace their COR at the Revenue District Office where they are registered on or before 31 December 2024.

Taxpayers should always keep abreast of the developments in compliance requirements and adjust to changes as they are implemented. Whether the change comes in the form of a law, rules or regulations, the burden falls on taxpayers to be informed of advisories and to monitor relevant issuances in order to be compliant and avoid the imposition of penalties.