From a compliance and governance perspective, BIR Form 2303 or the Certificate of Registration, is one of the most important documents for businesses in the Philippines.
Think of it as the birth certificate of a business!
If you’re intending to set up and run pretty much any type of business in the Philippines, BIR Form 2303 is required. It’s the legal basis under which a business can operate and pay taxes in the Philippines.
Given its importance, we have provided an explainer below on everything you need to know about BIR Form 2303!
First off, what’s the difference between BIR Form 2303 and the Certificate of Registration or COR?
BIR Form 2303 is the Certificate of Registration (COR)
BIR Form 2303 and the Certificate of Registration are one and the same!
BIR Form 2303 is just the BIR reference number of the document issued by the BIR in the form of the Certificate of Registration. The document itself is headed Certificate of Registration, but also contains a reference to BIR Form No. 2303.
The document is most commonly known as the COR (Certificate of Registration). So throughout this article, we will refer to BIR Form 2303 as the COR.
What kind of businesses need a COR?
Pretty much every type of business set up or registered in the Philippines.
Whether you are intending to operate as a sole proprietorship, self-employed, partnership, freelancer, consultant or corporation in the Philippines, the business should obtain a COR at the outset.
What kind of information does the COR contain?
The COR contains a lot of important details specific to the registered business, including the following:
- TIN – This is the Tax Identification Number 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).
- Registration Name – This confirms the precise name of the registered business. If the business is a sole proprietorship or a freelancer/consultant, this would be the full personal name of the individual registering the business.
- Registration Date – This confirms the exact date on which the business was registered. The date of registration is important as it signals the date on which the business first became subject to tax in the Philippines. It also signals the birth date of the business.
- Registered Address – All businesses must have an official 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 process. This can be an important consideration for businesses that use a co-working space as the registered address.
- Tax Type – Helpfully, the COR outlines all the relevant taxes that a business is required to pay. For example, a standard corporation will generally have to pay Income Tax (IT), Value Added Tax (VAT), Withholding Tax – Expanded or Other, Withholding Tax on Compensation. For a sole proprietorship or freelance/consultant business just starting out, the COR will also usually reference Percentage Tax in the list of taxes. For specific tax filing dates each month, check out our Tax Calendar, released every month!
- Line of Business – This section outlines the activities in which the business is engaged. 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, in a sole proprietorship, individuals may wish to trade under a different name and not their own personal name.
Does a business really need a COR?
Yes! To ensure proper tax compliance and governance from the outset, you should apply for and obtain a COR for your business.
These are just some of the reasons why obtaining a COR is so important:
- For various corporate activities undertaken by a business, it will be necessary to provide a COR to evidence that the business is properly set up. For example, opening a bank account, SEC filings, lease agreements, etc.
- The COR is regularly requested by new clients as part of their Know Your Client (KYC) process.
- 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 of your business, there can be fines, penalties and significant tax audits for non-compliance.
We could list out many more reasons why obtaining a COR is such a necessity – but, hopefully you get the picture from above!
Ok, got it! So how do I obtain a COR?
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. Click here 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. A Barangay Clearance is required.
- It is also necessary to have registered with the local Mayor’s office, obtain and submit 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 have to first register their business name with the Department of Trade and Industry or DTI. Individuals 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.
What do I do once I get the COR?
The COR must be displayed clearly within the place of business. At the bottom of each COR issued, you will find the wording “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. In restaurants or retail outlets, businesses will usually display the COR near the cash register, POS or entrance.
So, once I have the COR, that’s it?
The business needs to apply for an Authority to Print Invoices/Receipts from the BIR. This 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. Our two recent articles on issuing receipts and sales invoices in the Philippines provide more information on these elements of compliance.
Further, the business also has to ensure it has registered its Books of Accounts with the BIR. Again, this has to be completed within 30 days of 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 operating or incurring revenue or expenses!
So, it is important to get your accounting team or outsourced accounting and bookkeeping services provider on the case as early as possible!
Annual Registration Fee
Along with your BIR application for a COR, you have to pay a registration fee. This registration then needs to be renewed and paid for every year.
So, on or before 31 January each year, your business needs to file and pay the annual registration fee of PhP500 to the BIR. The filing is submitted through BIR Form 0605.
Even though January is nearly over, it might be worthwhile reviewing your annual tax and compliance filings for January 2020!
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