2023 has now started!
Which means so have the 2023 compliance requirements for businesses in the Philippines!
So, here are just some of the key annual compliance filings that businesses in the Philippines must be aware of in the coming weeks.
Remember! The regular ongoing monthly filings also need to be filed!
If you own a startup or SME business here in the Philippines and you want to get your finance and compliance requirements in order from the very start of the year, email the CloudCfo Team at firstname.lastname@example.org and let our experts explain how we can add real value for your finance function in 2023!
1. DOLE Report on Compliance With P.D. No. 851 – 15 January, 2023
Employers in the Philippines are mandated to pay all covered employees an additional one month salary payment at the end of each calendar year. This is commonly know as The 13th Month Pay Benefit.
P.D. No. 851 was the original legislation that initiated the coming into law of the requirement for PH employers to pay 13th Month Pay.
As a mechanism to ensure that employers satisfy this requirement, in January each year, employers are required to submit to their nearest DOLE Regional Office a Report which confirms that they complied fully with the 13th Month Pay obligation for all covered employees.
So, in 2023, employers must submit the DOLE Compliance Report on or before 15 January 2023. Remember – the DOLE Compliance Report will contain information relating to compliance during the 2020 calendar year!
2. Loose-Leaf Books Filing – 15 January, 2023
If your PH business manages its accounting books using the BIR approved Loose-Leaf Books of Accounts system, you will be required to collate, format, print, bind and file last year’s Loose-Leaf Books at the start of every year.
To find out more about the Loose-Leaf Books of Accounts system as well as the other forms of BIR approved Books of Accounts in the Philippines, check out our article – Books of Accounts in the Philippines – Which is Best for your Business?
So, for your 2020 Loose-Leaf Books filing, you need to submit these to the BIR by 15 January 2023!
Together with the various Loose-Leaf Books, a Treasurer’s Affidavit must also be submitted. This Affidavit confirms the number and category of books that are being submitted and how many pages each book contains. The Treasurer must also certify that the information relating to the Loose-Leaf Books submission is accurate and correct!
Finally, it may also be a requirement to have a Corporate Secretary Certificate signed to authorize a specific representative to file the Loose-Leaf Books on behalf of your business!
Make sure you confirm and clarify all of the requirements early and in advance – there is a lot of work and documentation required to submit your Loose-Leaf Books of Account by the deadline!
3. Business Permit Renewal – 20 January, 2023
Unless exempt, all registered businesses in the Philippines are required to renew their Business Permit each year with their local Municipality or City Hall. In order to secure the Business Permit Renewal, there are a number of documents required to be submitted. This generally includes, at a minimum:
- Previous year VAT or Percentage Tax Filings/Declarations;
- Previous year Audited Financial Statement;
- Previous year Business Permit Document Suite (which generally includes the Mayors Permit, Barangay Clearance, Sanitary Cert, Occupancy and Zoning Cert and Cedula (Community Tax Certificate);
- Certain Municipalities also require a Notarized Lease Agreement
- Certain Municipalities also require an up-to-date list of current employees employed by the business!
Companies are also required to pay a business permit fee (based on a % of gross sales/revenue in the previous year), local business taxes and any additional charges or fees that might be imposed by the particular Municipality.
In 2023, the Business Permit Renewal application must be submitted on or before 20 January 2023.
If you are planning on renewing the Business Permit yourself, remember to clarify all of the requirements well in advance with your local filing office so there are no surprises when you finally attend at City Hall offices for filing! Each Municipality may have their own variations on the specific requirements – so plan ahead!
Remember, a business without an up-to-date permit is technically not entitled to operate the business within the Municipality!
4. BIR Form 0605 – Annual Registration Fee – 31 January, 2023
All PH businesses must pay a PHP500 Annual Registration Fee to the BIR each year.
In 2023, this application must be filed and the fee must be paid by 31 January 2023.
In certain cases, this fee will often be paid earlier in January, for example, together with other BIR filings (e.g. Loose-Leaf Filings, Business Permit Renewal).
Remember – the Annual Registration Fee relates to the forthcoming year. So the fee paid this January will be paid in respect of the year 2023!
According to the BIR, BIR Form 0605 should also be completed and filed every time a company pays taxes and fees which do not have their own tax return form such as a second instalment payment for income tax, deficiency tax, delinquency tax, registration fees, penalties, advance payments, deposits, etc.
BIR Form 0605 can be found here.
5. BIR Form 2316 – 31 January 2023 and 28 February 2023
The Certificate of Compensation Payment/Tax Withheld, commonly known as BIR Form 2316, is a BIR compliance requirement that must be prepared by PH companies that have had employees during the previous calendar year.
There are two stages to the preparation and successful completion of the BIR Form 2316 submission process.
First, a separate BIR Form 2316 needs to be prepared for and sent to each covered employee of the company for the employee to sign and return. The form should be prepared for any employee that received a salary, wage or any other form of remuneration from the employer during the previous calendar year. The Form should identify the total amount of compensation paid to each employee and the total taxes withheld from each employee during the previous calendar year.
In 2023, the BIR Form 2316 must be sent to each individual employee before 31 January 2023.
Secondly, the employer is required to submit a BIR Form 2316 to the BIR in respect of each individual employee. Prior to submission, each Form must be signed by both the employer and the employee. In 2023, the completed and signed BIR Form 2316 for each employee must be submitted to the BIR prior to 28 February 2023.
For all you need to know about BIR Form 2316, check out our recent Explainer Article here – BIR Form 2316 – Payroll Compliance for PH Businesses.
6. BIR 1604C – 31 January, 2023
BIR Form No. 1604-C is also known as the Annual Information Return of Income Taxes Withheld on Compensation.
When it comes to payroll taxes, employers in the Philippines must compute, deduct and withhold a certain value of an employee’s compensation before it is actually paid out to each employee.
Employers must submit to the BIR monthly withholding tax on compensation returns. This is completed through preparation and submission of BIR Form 1601-C. The amount of tax computed within this Form must then be remitted to the BIR. In effect, BIR Form 1601-C should include the total amount of tax withheld from all employee salaries during the prior calendar month.
BIR 1604-C, however, is an annual filing! In January each year, employers must prepare and submit Report to the BIR which outlines the total amount of income tax withheld on compensation from all employees during the previous calendar year.
This annual report or return is called BIR Form 1604-C. In 2023, this Form must be filed with the BIR on or before 31 January 2023.
For further information on the Annual Information Return of Income Taxes Withheld on Compensation, check out our recent “explain all” article here!
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Contact Us today and make sure you kick off 2023 with the right finance management and reporting services in place for your business from the very start!