The start of the calendar year can be both an exciting and challenging time for companies in the Philippines. Around this time, companies tend to start thinking about new projects such as marketing campaigns, greater product and service offerings or more effective strategic partnerships. It can also be a time when businesses need to make important decisions about their financial future, capital requirements or resource planning. There always remains, however, one constant for companies each time January rolls around – annual mandatory tax and compliance deadlines.
Outlined below are just some of the key filings and payments that companies in the Philippines must be conscious of as we enter the second half of January. Businesses must comply with these requirements and deadlines to avoid what could be quite substantial financial penalties. If you need any further information on the below, feel free to contact us at firstname.lastname@example.org.
- 1 Loose-Leaf Books of Accounts15 January 2019
- 2 DOLE Compliance Report15 January 2019
- 3 Business Permits and Local Taxes20 January 2019
- 4 Income Tax Refund for Employees25 January 2019
- 5 Submission of Inventory Lists 30 January 2019
- 6 Computerized Books of Accounts30 January 2019
- 7 BIR Annual Registration Fee31 January 2019
- 8 Certification of Compensation Payment 31 January 2019
- 9 Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes31 January 2019
Loose-Leaf Books of Accounts15 January 2019
All businesses who have opted to maintain their accounting books via the loose-leaf books of accounts system must submit BIR format approved accounting books and records for the year ending 31 December 2018. These books must be submitted by 15 January 2019. An affidavit must also be submitted confirming the type of books, the number of pages and the volume number of the books submitted. Remember also, that to be entitled to file loose-leaf books of accounts, a company must first have been granted the relevant permit by the BIR.
DOLE Compliance Report
15 January 2019
Employees in the Philippines who have worked for more than one month with their employer are entitled to a 13th Month Pay. Employers must pay this to employees by 24 December each year. Employers must also submit a report to their nearest Department of Labour and Employment (DOLE) Regional Office confirming their compliance with the 13th Month Pay requirement. The report must include various details such as the name of the employer, number of workers and amount paid per employee. The compliance report, for the 2018 year, must be submitted by 15 January 2019.
Business Permits and Local Taxes20 January 2019
All registered businesses or professionals in the Philippines (who are not subject to an exemption) must renew their Business Permit every year with their Local Government Units (LGUs). Permit applications are required at both the Barangay and Municipal levels. Alongside these permit registrations, companies must also pay the permit fee, local business taxes as well as any additional charges that the LGUs may impose. The permit renewal application and payment of taxes and charges must be submitted by 20 January 2019 – just six days away! A business without an up-to-date permit is not entitled to operate within the LGU area. Remember, businesses can also opt to pay on a half or quarterly year basis where payments must be paid within 20 days of each half or quarter year. Start preparing your applications and submissions now – the queues grow longer as the date draws nearer.
Income Tax Refund for Employees25 January 2019
Employers in the Philippines are required to withhold part of their employees’ salaries (compensation) during the working year. The payments withheld are then remitted by employers to the BIR as income tax. It is the job of the employer to compute and remit the correct amount of income tax payable each year. Sometimes, deductions made to an employee’s salary may exceed the amount that should actually have been deducted. Where this occurs, the excess income tax must be refunded by the employer to the employee. For the 2018 working year, employers must pay any tax refunds due to affected employees by 25 January 2019.
Submission of Inventory Lists 30 January 2019
All businesses that hold or sell inventory are required to submit inventory lists to the BIR for the year ending 31 December 2018. Inventory lists must be submitted by 30 January 2019. The list must include all relevant schedules (in both hard & soft copy) of finished goods, works in process, raw materials, supplies and stocks-in trade.
Computerized Books of Accounts30 January 2019
Those businesses that have opted to submit their accounting books to the BIR via the computerized books of accounts system must submit their books (and other accounting records and relevant media) in soft copy (CD-R, DVD–R) for the year ending 31 December 2018. It is mandatory for larger companies who have been notified by the BIR to use the computerized accounting books system. An affidavit must also be submitted which confirms the completeness and accuracy of the computerized books. Make sure to submit computerized books by 30 January 2019 or risk facing financial penalties!
BIR Annual Registration Fee31 January 2019
All businesses in the Philippines, including self-employed professionals, must pay an Annual Registration Fee of P500 to the BIR each year. This fee must be paid by 31 January 2019. The fee is payable for and relates to 2019 – not 2018. It is important to be aware that if you have multiple businesses registered in the Philippines, a separate Annual Registration Fee must be paid for each one of those businesses.
Certification of Compensation Payment 31 January 2019
Employers are required to issue each employee with a certificate (BIR Form 2316) which outlines the total amount paid to the employee and the total amount of taxes withheld during the relevant year. For the 2018 year, employers are required to issue this certificate to each employee by 31 January 2019.
Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes31 January 2019
Businesses must complete and file Form 1604CF which summarises the amount of withholding tax on compensations paid and submitted to the BIR during 2018. The form also requires a list (in alphabetical order) of all employees or payees of the company for whom taxes were withheld during that same year. Form 1604CF must be filed with the BIR by 31 January 2019. This is a lot of information to collect so you should commence preparations as soon as possible (if preparations haven’t already started!).
For a comprehensive list of all tax and compliance filings and payments due in January 2019, see our Tax Calendar for January 2019.
Remember also that tax and compliance requirements and deadlines continue all year round – January is only the beginning. Make sure to check www.cloudcfo.ph on a regular basis for updates on the tax and compliance requirements throughout 2019.