Surprises are often something most of us want for our birthdays, anniversaries, retirements, etc. However, as taxpayers, would you still be delighted to receive a “surprise” if it’s from the BIR, and if it’s in the form of a visit to check your tax compliances? This “surprise” visit is called BIR Tax Mapping/Tax Compliance Verification Drive (TCVD).
Pursuant to Revenue Memorandum Order (RMO) No. 09-2006, Tax Mapping/TCVD aims to expand the Bureau’s tax base, enhance tax compliance, and consequently boost its tax collection efforts. This is merely a verification of the taxpayer’s compliance with basic administrative regulations and does not involve a thorough examination of books of accounts and other accounting records.
As taxpayers, our usual question might be “What does the BIR representatives usually check during the conduct of TCVD?” This article summarizes the items that the BIR usually looks for during their “surprise” visit and penalties imposed for any noncompliance.
Certificate of Registration (BIR Form No. 2303) and Payment of Annual Registration Fee (ARF) thru BIR Form No. 0605
The BIR Form No. 2303, also called Certificate of Registration (COR), is an official document that gives the holder the legal right to operate a business in the Philippines. It serves as proof that a business is registered as a taxpayer with the Bureau of Internal Revenue (BIR). Hence, taxpayers should ensure that they are registered with the BIR on or before the commencement of their business, before payment of any tax due, or upon filing of a return, statement or declaration as required in the Tax Code.
Additionally, per Section 236 of the National Internal Revenue Code (NIRC) of 1997, an Annual Registration Fee (ARF) in the amount of five hundred pesos (P500) for every separate or distinct establishment or place of business, including facility types where sales transactions occur, shall be paid upon registration and every year thereafter on or before the last day of January. Payment of ARF shall be made using BIR Form No. 0605 to an authorized agent bank located within the revenue district, or to the revenue collection officer, or duly authorized treasurer of the city or municipality where each place of business or branch is registered.
Both BIR Form Nos. 2303 and 0605 shall be posted in the taxpayer’s place of business in areas conspicuous to the public.
Notice to Public/”Ask for Receipt” signage or the new Notice to Issue Receipt/Invoice (NIRI)
The Notice to the Public/”Ask for Receipt” was first introduced by the BIR in Revenue Regulations (RR) No. 04-2000. Subsequently, said Notice to the Public/”Ask for Receipt” was replaced by the new Notice to Issue Receipt/Invoice (NIRI) pursuant to RR No. 10-2019. Taxpayers who are required to issue sales/commercial invoices and official receipts under existing rules are directed to post the notice in their places of business, including branches and mobile stores, in areas that are also conspicuous to the public.
As an update, in Revenue Memorandum Circular (RMC) No. 42-2022, as amended by RMC No. 75-2023, the old “Ask for Receipt” Notice issued by the RDO/LT Division to registered business taxpayers based on RR No. 07-2005 shall only be valid until September 30, 2023, and shall be replaced through staggered issuance of the new NIRI to the existing business registrants based on the ending digit of their Taxpayer Identification Number (TIN).
Authority to Print (ATP) Invoices and Receipts (BIR Form No. 1906)
All persons, whether private or government, who are engaged in business shall secure from the BIR an Authority to Print (ATP) principal and supplementary receipts/invoices. For newly registered taxpayers, the ATP must be secured simultaneously with the COR. Fortunately, the previous 5-year validity of the ATP receipts and invoices has been removed through the issuance of RR No. 06-2022 and shall now have perpetual validity.
Registration of manual books of accounts/Approval of loose-leaf books of accounts
Taxpayers who use manual books of accounts, as provided in RMC 29-2019, shall register their manual books of accounts before the deadline for filing of the first quarterly income tax return or the annual income tax return, whichever comes earlier. Meanwhile, loose-leaf books of accounts and other accounting records shall be permanently bound and presented for registration together with a sworn statement attesting to the correctness of the entries made, and the number of all invoices, receipts, and books of accounts used for the period covered to the RDO/LTAD where the taxpayer is registered on or before 15 days after the end of each taxable year or within 15 days from the closure of business operations, whichever comes earlier.
Keep also in mind that books of accounts shall always be kept at the place of business of the taxpayer. Such books and registers, together with records, vouchers, and other supporting papers and documents prescribed by the BIR, kept by taxpayers shall be preserved intact, unaltered, and unmutilated.
Permit To Use (PTU) Cash Register Machines (CRM)/Point of Sale (POS) Systems and Registration/PTU Computerized Accounting Systems (CAS)/Computerized Books of Accounts (CBA)
PTU CRM and POS Systems shall be secured first before using the said systems. For new registrants, applications shall be done online using the Enhanced Electronic Accreditation and Registration (eAccReg) System for Permit to Use and manually submitting the documentary requirements as provided in Annex B of RMO No. 24-2023. Once approved, the PTU can also be accessed on BIR’s eACCReg System.
On the other hand, pursuant to RMC No. 05-2021, for new registrants, PTU CBA and CAS are no longer applicable. Taxpayers shall only need to register the said CAS or CBA by submitting the required documentary requirements mentioned in the said issuance. Upon submission of complete documentary requirements, an Acknowledgement Certificate (AC) shall be issued by the RDO. Said document shall be kept by the taxpayer as proof that the system has been duly registered.
Meanwhile, existing PTU CRM, POS, CAS, and CBA shall be perpetually valid pursuant to RR No. 06-2022, unless said PTU has been revoked due to tampering of sales data to alter/avoid the recording of sale transactions or any major repair, upgrade, integration, and modification/alteration without prior notification and approval by the BIR.
Penalties
If BIR representatives find out during TCVD that any of the abovementioned administrative requirements have not been complied with, the following compromise penalties, as mentioned in RMO No. 07-2015, might be imposed on the taxpayer:
Further, avoidance of tax mapping/TCVDs or failure to comply with the BIR tax regulations can lead to more serious repercussions.
Complying with BIR’s numerous administrative requirements, along with the timely and proper remitting of taxes, can be quite overwhelming. Taxpayers may have a hard time memorizing these, and some might not even know that these requirements exist. But as the saying goes “ignorance of the law excuses no one”, hence, as responsible taxpayers and citizens of this country, it is our duty to take note of these requirements and ensure that they are complied with, so we won’t be so surprised when BIR representatives knock on our doors.
Let's Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
As published in BusinessWorld, dated 01 August 2023
