Tax Services and Tax Compliance for PH Businesses | CloudCfo

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Here’s why you need expert tax consulting
and tax compliance services for your
business in the Philippines

Compliance with BIR Requirements

A company or person carrying on a commercial business in the Philippines is obliged to register as a taxpayer, and file and pay taxes in the Philippines.

The Bureau of Internal Revenue, or the BIR, is the regulator of tax compliance for any form of commercial business in the Philippines. Therefore, all commercial enterprises are obliged to register with the BIR at which point the enterprise will become an official taxpayer in the Philippines. Remember – these tax compliance obligations will arise immediately from the point the business first registers with the BIR – even if the business has not yet started to operate.

In order to secure full compliance, a business in the Philippines should consider engaging with a tax services provider. Doing so will ensure that the business complies with all of its mandatory and statutory obligations. As a taxpayer in the Philippines, it is your obligation to pay taxes and submit all necessary filings to the BIR. Philippine businesses registered with the BIR are subject to various tax compliance requirements throughout the year for all their business-related activities. This includes financial transaction taxes, income taxes, payroll taxes, document taxes, dividend and royalty taxes, and more. There are also administrative compliance requirements relating to the business permit, submission of books and inventory, and employee lists!

Tax Compliance All Year Around in the Philippines

Tax compliance in the Philippines does not happen once— it happens all throughout the financial year. Under the Philippine tax compliance framework, businesses cannot wait until the end of the financial year to compute and file their taxes.

Why? Tax filings and tax payments in the Philippines are due every month, every quarter, and every year. In some industries, taxes must also be filed bi-annually. In certain cases, the same categories of taxes must be filed on a monthly and quarterly basis – meaning the monthly and quarterly filings must add up and align.

For many businesses, dealing with tax compliance and tax computations on an ongoing basis can be a significant burden – from both an operational and administrative perspective. As such, many PH businesses will opt to outsource their tax compliance requirements to a tax services provider and focus more on growing all other aspects of their business.

Remember – a tax compliance services provider can do more than just file taxes on behalf of a business in the Philippines. They can also help build your tax compliance processes, controls, and systems. So make sure that your PH tax services provider includes process review and assessment as part of their scope of work.

Various Tax Categories for PH Businesses

Upon registration with the BIR, Philippine businesses will receive their BIR Form 2303, commonly known as the Certificate of Registration or the COR.

The COR will outline the specific taxes that each corporation is required to file and pay – as well as the frequency of such filings. So, make sure to review the COR for your own business to fully understand the specific tax compliance requirements. Alternatively, if you engage a tax compliance provider, the provider will review your COR and identify what the tax filing requirements are each month.

There are many taxes that need to be filed and paid on an ongoing basis in the Philippines and this can vary depending on the type and size of the business, type of industry, and objectives of the business – financially and operationally. There are transactional taxes, sales taxes, expense-related taxes, employee taxes, profit-related taxes, and many others. For this reason, there is no generic tax registration status for a business in the Philippines.

Here are just some of the tax categories that businesses need to consider when running a business in the Philippines: Corporate Income Tax (ITR), Capital Gains Tax (CGT), Documentary Stamp Tax (DST), Interest Tax, Percentage Tax (depending on the revenue of business), Withholding Tax on Compensation (employee-related), Expanded Withholding Tax (EWT – on payments), Value Added Tax (VAT – sales/purchases tax) and many more!

An expert tax services provider will know all of the corporate taxes that your business is required to pay here in the Philippines, identify when they have to be paid, and ensure that your business remains aware and compliant across all of the various tax categories.

Many Sources for Philippine Tax Laws

For business owners, founders, and managers in the Philippines, it can be a real challenge to constantly monitor the various tax obligations that might apply to your business and your industry, as well as the potential tax implications for individual financial transactions. Tax requirements can also change quite regularly, which means that the specific compliance obligations for a business may not be the same all year round.

Companies in the Philippines are mandated to comply with a significant range of legislation, guidelines, advisories, regulations, tax codes, and various other forms of tax instruments that might impact a business’ tax filing, computation, or payment obligations.

The following are just some of the sources of tax law that can apply to and impact corporations and businesses in the Philippines: The National Internal Revenue Code of 1997 (often referred to as the Tax Code of the Philippines), Revenue Memorandum Orders or RMOs, Revenue Memorandum Circulars or RMCs, Revenue Regulations, BIR Rulings Tax Treaties, industry-specific legislation, and many more.

An expert provider of tax compliance services and tax consultancy services in the Philippines will be able to guide you and your PH business through the complex framework of tax laws, regulations, and legislation that can impact business across the country.

Businesses should take note that tax laws in the Philippines can be amended at any time. Such amendments can relate to tax treatment, tax deadlines, as well as to the requirements for the submission of taxes. An online accounting professional or a tax expert in the Philippines will be handy because they can advise your business on any changes to tax compliance obligations.

Different Tax Filing Systems

A tax services provider will help your business with several things such as the value of taxes that must be filed, the type of taxes, and how they should be filed. They will also arrange the tax filing according to their schedule— monthly, quarterly, bi-annual (industry specific), and annually.

For taxpayers in the Philippines, taxes can be filed with the BIR by using one of three different systems. These three systems are Manual Filing, filing via eFiling and Payment System (eFPS), and filing via eBIRForms.

Manual filing involves the preparation and filing personally of tax forms in the local Revenue District Office, or RDO, where a business or company is registered. This manual system can be for taxpayers who are exempted from the electronic filing of tax returns. This might include senior citizens, persons with disabilities (PWDs), or taxpayers who are unable to use the eFPS and eBIRForms systems as they may not have the technical capabilities or necessary systems in place.

The eBIRForms system is a method of tax filing in the Philippines where users obtain tax forms online and complete the tax forms offline. It is, effectively, a hybrid online and manual system for tax filing in the Philippines. Users then only need to go back online at the time of submitting the tax forms. eBIRForms is generally used by smaller businesses that do not have permanent access to the internet, one-time or once-off taxpayers or indeed, taxpayers that have not yet registered for eFPS.

The eFPS filing system is the online electronic filing system for filing taxes with the BIR in the Philippines. The eFPS was implemented by the BIR to simplify and support efficiencies for taxpayers, tax filing, and tax payments. All taxpayers are entitled to use this online system for filing taxes based on their preference or technical capabilities.

When you work with an online tax compliance services provider, you can have access to tax experts for tax consultancy and tax advice on the type of filing system that is right for your business. The tax service provider can also register the business to eFPS on your behalf so you can have an optimized and efficient system for filing taxes.

Statutory Audit in the Philippines

Each year, all non-exempt businesses in the Philippines are required to file a Financial Statement (FS), with the BIR and the Securities and Exchange Commission (SEC).

However, before a company submits its year FS to the BIR, and then to the SEC, it must first be audited by an independent auditor or audit firm. It must also be certified and signed off by the auditor as being a true and accurate reflection of the company’s finances and accounts for the particular financial year.

Before the audit, companies must ensure that their financial documentation, information, and compliance requirements are in order. To complete the audit, the independent auditor or firm will need to collate all of the various financial and tax documentation that the business generated throughout the financial year.

This can be extremely time-consuming and will take a lot of resources if the company’s tax and financial compliance was not managed properly throughout the year. It will be very difficult for the auditor to certify financial statements if the company does not have the requirements for tax compliance throughout the year.

Employing the services of an online tax services provider will make the audit process much more efficient and easier to manage for your management team. How so?

A tax compliance provider will ensure that tax compliance was managed in accordance with BIR requirements throughout the year. The tax compliance services provider can also assist the auditor with any queries or requests for documents or information needed during the audit. This way, you, as a business owner, no longer have to worry about tax compliance— you can focus more on running the business.

Once the FS has been audited, it is then referred to as an Audited Financial Statement (AFS) and must be submitted to the BIR and SEC. After submission, it is then marked off as a completed compliance requirement by the business.

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