From the perspective of governance and tax compliance in the Philippines, the BIR Form 2303 or the Certificate of Registration, is one of the most important documents for businesses in the Philippines.
The BIR2303 is effectively the birth certificate of a business from the perspective of tax and compliance in PH!
For anyone that intends to set up and run any form of commercial business in the Philippines, the BIR Form 2303 must be applied for and acquired.
BIR2303 is effectively the first trigger point for the applicability of a company’s tax compliance obligations!
That’s why we have published our own Explainer below on everything you need to know about BIR Form 2303 or the Certificate of Registration!
The BIR Form 2303 and the Certificate of Registration (COR)
It is not uncommon for confusion to arise around the labelling of the BIR Form 2303 or the Certificate of Registration!
Simply put – the BIR Form 2303 is the Certificate of Registration!
The reference to BIR2303 is simply the BIR’s reference code or number for the formal BIR document. You will find this reference in the top left corner of BIR Form 2303.
The document, however, is formally named the “Certificate of Registration”. You will find this name reference included at the top and center of the BIR Form 2303 document. The “COR” is simply the abbreviated version of the formal name.
BIR Form 2303 is commonly referred to as the COR in practice. So throughout this article, we will use BIR Form 2303 and the COR interchangeably when referring to this important tax compliance document.
So, remember – when you hear people speaking about the BIR Form 2303 or the Certificate of Registration or the COR – they are actually referring to the same document/certificate!
What is a COR or BIR Form 2303?
In short, when an individual or company is running or intends to run a commercial business in the Philippines, they will first be required to register as a taxpayer with the tax authorities in the Philippines – the BIR.
Depending on the type of business being set up, the first step of the company registration process may be to register with the Department of Trade and Industry, or DTI, or the Securities and Exchange Commission, or SEC.
Once a business has performed the initial registration with the primary government agency (i.e. SEC, DTI), it will then be necessary to register with the BIR in order to register the business as an official taxpayer in the Philippines.
The COR is the document that a business receives at the end of this BIR registration process and effectively outlines and confirms the specific tax obligations of the relevant business. Tax obligations can vary depending on the type of business being registered and the information provided during the registration process!
When is a COR Required?
As mentioned above, for anyone that is running a business for a commercial purpose in the Philippines, the business must be registered with the tax authorities, the BIR. The result of a successful registration is the issuing of the BIR2303 or COR.
Whether you are intending to operate as a sole proprietorship, self-employed, partnership, freelancer, consultant or standard domestic corporation in the Philippines, a COR will need to be obtained at the outset.
Remember, the size of the business does not dictate whether or not a business needs to obtain a Certificate of Registration!
Whether your PH business is a small online business selling commercial goods to the Philippine market through online platforms such as Shopee or Lazada, or a large corporate entity with significant annual revenues, the obligation to register for and obtain a BIR2303 remains the same!
Remember also – just because a business does not obtain a Certificate of Registration, this does not mean that the business is free from any taxpayer obligations! It will simply mean that the business is non-compliant from the perspective of the BIR and will likely be subject to penalties and fines for non registration and non payment of taxes!
The “Certificate of Registration” is Different than the “Business Permit”
Firstly, it is important to understand that the COR is an entirely different document and involves a completely different process than the Business Permit.
As mentioned above, the COR is the key tax compliance document for a businesses which outlines the various tax categories, obligations and filing deadlines.
The Business Permit, however, is a form of business licence that companies in the Philippines must renew every year at the start of each year in accordance with their BIR compliance obligations. The COR does not need to be renewed each year.
The Business Permit is coming up again for renewal in January 2023! We will shortly be issuing a full Explainer on the Business Permit for PH companies – so make sure to check back on our Insights Blog in the coming weeks!
What Information is Included on the COR?
The COR contains a significant level of detail outlining the specific compliance obligations of the BIR registered business, including the following:
- The Tax Identification Number: This is commonly referred to as the “TIN” of the registered business. A TIN is required for all tax filings submitted or processed by any business. A TIN is issued by the BIR once the application for registration has been approved (BIR Form 1903 in the case of corporations and BIR Form 1901 for self-employed).
- Registered Name: This confirms the actual name of the business that has already been registered with the DTI or the SEC. If the business is a sole proprietorship or a freelancer/consultant, this would be the full personal name of the individual registering the business. Such businesses may also operate under a “trade name” – see below.
- Registration Date: This confirms the exact date on which the business was registered. The specific date of registration is extremely important as it identifies the date from which the company’s tax obligations arise.
- Registered Address: All businesses must have an official registered address. All official BIR correspondence will be issued to this address. If a business intends to change address, it is important that this change of address is notified to and registered with the BIR through a formal update process. This can be an important consideration for businesses that use a co-working space or virtual office as their registered address.
- Registered Tax Categories: The COR is the key document for a company to understand which tax categories the business is registered for and required to comply with. Below are a list of the more common tax categories that PH business can generally expect to see on their COR (this may vary depending on company’s registration preference:
- Taxpayer Types: The BIR Form 2303 will generally outline the type of taxpayer for which the business is registered. For example, depending on the individual business, this might include a Domestic Corporation, Representative Office, Branch Office – to name just a few.
- Line of Business: This section identifies the specific activities for which the business has been registered to pursue. A BIR designated code will be provided which will relate to the line or category of business. It is up the registerer to ensure they are registering the business under the correct activity. This is particularly important in the Philippines where different business activities/industries have different rules/limitations (e.g. ownership, foreign involvement, etc)
- Trade Name: If the business is trading under the same name as its Registered Name (see above), the Trade Name will be the same as the Registered Name. However, this will differ if the business wishes to trade under a separate name. For example, as mentioned above, a sole proprietorship, individuals may wish to trade under a different name and not their own personal name.
Updating the COR
While the BIR2303 or COR is a document that a company will obtain from the BIR at the point that the business is registered, there may still be a need to update the COR during the lifetime of a PH business.
One reason for updating a COR might be to update the various tax categories for which the business is registered. For example, a company may have initially registered the business for Percentage Tax. As the business progresses and sales/revenue increases, the business may exceed the monetary threshold for Percentage Tax registration (i.e. gross annual sales and/or receipts exceeding PHP3,000,000). At this point, the company will have an obligation to update their tax registration and transition from Percentage Tax to VAT.
The BIR Form 2303 will also need to be updated if the business changes any of its corporate details, including registered address, company name, company purpose, etc.
In short, if a PH company makes any changes to any of the details listed on its BIR Form 2303, it will need to ensure that the document is updated to reflect these changes!
The Importance of Having a COR
Below are some key reasons why obtaining a COR is a crucial requirement for PH businesses:
- First and foremost, if you run a business for a commercial purpose in the Philippines, you are statutorily obliged to apply for an obtain a COR for your business and register as a taxpayer. So, from a tax compliance perspective, it is essential for a business to obtain a COR immediately after the business is registered with the SEC/DTI and maintain the COR throughout the company’s lifetime.
- For various corporate activities being undertaken by a business, it will be necessary to provide a COR to evidence that the business is properly set up and registered in the Philippines. For example, SEC filings, lease agreements, supplier or partner engagements, tax filing systems (e.g. eFPS, etc).
- The COR is regularly requested by new clients as part of their Know Your Client (KYC) process.
- It is standard practice for financial institutions in the Philippines, such as banks and financing/lending companies, to request a company’s COR prior to letting a business open an account or profile with the particular institution.
- As your business grows, you may wish to raise funds or take on a strategic investor. Any party interested in becoming involved in your business is likely to request receipt of the COR, in addition to various other corporate documentation, as part of the due diligence process. If the business cannot produce a COR upon request, this will surely raise a due diligence red flag for an investor, bank or any other form of stakeholder.
- If your business has shareholders, you owe it to them to ensure the business is fully compliant and governed properly.
- Even if your business doesn’t have a COR, the BIR can still investigate the business. Just because the business is not properly registered as a taxpayer, that doesn’t mean that it is exempt from paying taxes in the Philippines! If the BIR becomes aware that your business is not properly registered with the BIR, there can be fines, penalties and significant tax audits for non-compliance.
Applying for a COR: The Process
For a corporation, BIR Form 1903 – Application for Registration for Corporations/Partnerships (Taxable/Non-Taxable) is the relevant BIR Form. This must be submitted to the BIR with all required documentation. Once approved, a COR will be issued by the BIR.
The various steps required with other agencies in the Philippines prior to applying for the COR are enough to form the subject of another article. While not exhaustive, outlined below are just some important documents that must be submitted with BIR Form 1903.
Feel free to check out the BIR website for the full list of BIR registration requirements.
- Copy of SEC Certificate of Incorporation. In the Philippines, when registering a corporation for tax, it is first necessary to register your business name and relevant corporate documentation (by-laws, Articles of Incorporation, etc) with the SEC.
- It is also necessary to have registered with the local Barangay Office and obtain a a Barangay Clearance Cert.
- It is also necessary to have registered with the local Mayor’s office and obtain a Mayor’s Permit
- Articles of Incorporation (this will have already been registered with the SEC)
- Proof of Payment of Annual Registration Fee (see below);
- BIR Form No. 1906 – Application for Authority to Print Receipts and sample of Principal Receipts/Invoices.
For a sole proprietorship/self-employed individual, the relevant form is BIR Form 1901. Individuals or self-employed must first register their business name with the Department of Trade and Industry or DTI. Individuals and self-employed also have to submit similar documents as the corporation above (i.e. Barangay Clearance, Mayor’s Permit, BIR Form 1906, etc).
Click here for the fill list of BIR Registration Requirements for sole proprietorships/self-employed individuals.
Displaying the COR in the Business
Once received, businesses have a mandatory obligation to display the COR clearly within their place of business.
At the bottom of each COR issued by the BIR, it will be quite standard for the following wording (or a variation of this wording) to appear:
“This Certificate must be exhibited conspicuously in the place of business”.
In corporate offices, many businesses display the COR in the proximity of the reception area or on the entrance or door of the business.
In restaurants or retail outlets, businesses will usually display the COR near the cash register, POS or entrance.
Obtaining the COR is just one step along the way on the registration process for a new business in the Philippines. However, there are a number of tasks that must be completed once the COR is obtained by a business.
After receiving the COR, a business is still required to apply for an Authority to Print Invoices/Receipts from the BIR. The application should be completed within 30 days from the date of the COR. Generally, this can be done at the same time as applying for the COR.
The business will also be required to register with the BIR for the Books of Accounts. Again, this should be completed within thirty (30) days from the date of the COR.
Remember also – from the moment your business is registered with the BIR, it’s required to make tax filings! From the date of the COR, the business is a registered taxpayer in the Philippines and must comply with its tax filing obligations. This is the case even if the business is not incurring revenue or expenses!
So, it is important to get your accounting team or outsourced accounting services provider on the case as early as possible!
Annual Registration Fee
Together with the application for a COR, PH businesses are required to file and pay a registration fee.
This registration then needs to be renewed and paid by the business each year.
On or before 31 January every year, a business must submit process payment to the BIR for the annual registration fee of PhP500. The filing and payment of annual registration fee is completed via BIR Form 0605.
We are now in Q4 of 2023! That means that the annual registration fee will be falling due again in the next few months!
Filing and payment of the annual registration fee is a key element of the compliance framework that arises every year in the Philippines. It is also a relatively straightforward compliance requirement.
For businesses that do not have their own accounting services provider or accounting team, it’s important to stay on top of this compliance obligation and ensure that it is complied with before the end of January each year! Put it in your diary on a recurring basis!
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