Tax Administration

Tax Administration
It is the system involving enforcement of taxes

through the assessment and collection of taxes.

It includes the execution of judgement and capacity
to act in all tax cases decided by the court in favor of
BIR

It refers to the manner and procedure of

collecting taxes in accordance with the tax

policy.

Stages of Taxation

Levy
Passage of tax laws/ordinances through the

legislature
Imposition of taxes
Tax laws shall determine
Kind (nature of taxes)
Subject of taxation (those to be taxed)
Objective (purpose of tax)
Tax Rate and Base (how much tax to be collected)
Manner of imposing and collecting tax (implementation)

Assessment
Implementation of tax laws by the executive branch
Done by its administrative agencies

Dept. of Finance
Bureau of Internal Revenue
Bureau of Customs

Taxes are self-assessing

Taxpayer can compute his own taxes

This step determines the specific sum of tax charged

on a person or property in accordance to tax law

Payment of Tax
Act of compliance by the taxpayer in contributing his

share to defray the government expenses

Also called Tax Collection

Process of obtaining payment of tax

Includes options schemes or remedies legally

available to the taxpayer

Aspects of Taxation
Legislative
Function
(Congress)

Executive
Function (thru
BIR)

Passage of Tax Laws

Define object of tax
Fix tax rates
Prescribe payment date
Penalty for violations
Tax exemptions
Tax Assessment
Computation
Tax base x rate = TAX

Collection of Taxes

Tax Policy

Tax
Administration

Principles of a Sound Tax System

Tax Administrative Agencies

Bureau of Customs (BC) and Tariff Commission (TC)

Tasked to enforce the Tariff and Customs Code (TCC)

BC also collects the taxes on imports embodied in the NIRC

Land Transportation Office

Responsible for collecting registration fees and motor vehicle

tax

Duly and lawfully authorized collectors

Persons, agencies or duly accredited banks authorized by BIR,

BC, TC and LTO to collect taxes

Local offices in charge to enforce local

taxation, such as:

Provincial,

City, Municipal and Barangay

Treasurers
Provincial and City Assessors
Provincial and City Board of Assessment Appeals
Central Board of Assessment Appeals

The Bureau of Internal Revenue

The BIR is

principally
tasked with the
enforcement of
the NIRC
List of BIR

Officers:

Powers and Duties of the BIR

To assess and collect all national internal revenue
taxes, fees and charges
2. To enforce all forfeitures, penalties and fines connected
with the above
3. To execute judgements in all cases decided in its favor
by the Court of Tax Appeals and the ordinary court
4. To administer, supervise and effect police powers
authorized by the NIRC and other laws
1.

Assign Internal Revenue Officers to establishments

Providing and distributing BIR forms, receipts and
certificates
Submitting annual report and pertinent information to
Congress

Powers of the Internal Revenue Commissioner

Interpret tax laws

1.

The BIR Commissioner has the exclusive and original

power to interpret provisions of the NIRC and the other
laws, subject to review by the Secretary of Finance

2. Power to decide tax cases

Decide disputed assessments, refunds of internal taxes,

fees or other charges, penalties imposed arsing under
the Tax Code or other tax laws, subject to the exclusive
appellate jurisdiction of the Court of Appeals

3. Power to summon

Ascertain the correctness of tax return, and to

determine the taxpayers liability and
compliance. In the exercise of this power, he is
authorized to:
a) Examine tax payers records
b) Obtain taxpayers financial information
c) Summon the person liable for tax
d) Take testimony of the person concerned
under oath
e) Conduct regular canvas concerning all
persons liable to pay any internal revenue tax

3. Power to make assessment

To make assessment and prescribe additional

requirements for tax administration and
enforcement are as follows
1. Examinations of
a. Returns and determination of tax due
b. Statements, reports and other documents
submitted
o

2. Authority to:
a. Conduct inventory surveillance, and

b.
c.
d.
e.
f.

prescribe presumptive gross sales

and receipts
Terminate taxable period
Prescribe real property values
Inquire into bank deposit accounts
Accredit and register tax agents
Prescribe additional procedural or
documentary requirements

PH Primary Tax Incentives

A. Tax holiday The Omnibus Investment Code grants to

entities that registered w/ the Board of Investments and that
qualify under the annual Investment Priority Plan, entitlements
to tax holidays of either 4 to 6 years. They are also granted tax
credits for purchase of Philippine-made capital equipment and
raw materials.
B. Special Economic Zones There are over 30 special economic zones where export manufacturing firms are given
a tax holiday for the first 4 years or 6 years of its operations,
followed by a 5% tax thereafter. This covers exemption from all
internal revenue taxes, including VAT.

Treaty with the U.S.A.

The Philippines has tax treaties with many

countries including the U.S. in order to minimize the
effects of double taxation. The business profits of a
resident of another country with whom our country
has a tax treaty are taxable in the Philippines only
if the resident has a permanent establishment in the
PH to which the profits are fully gained from.

Primary types of PH taxation

A. Individual Income Tax for both resident citizens and
resident aliens with corresponding allowable personal
exemptions: P50K for S, M and HF; additional exemption
of P25K for each of the four dependents.
B. Passive income tax on interests, dividends, capital gains,
fringe benefits.
C. Corporation Tax (including partnerships) of 30% of NI
D. Value Added Tax (VAT) of 12% of gross selling price/value
of goods
E. Percentage tax (for nonVAT entities)

Administrative Provision

Administrative Provisions
For purposes of effective and efficient collection, the Tax

Code provides the following requirements for compliance

by the taxpayer
1. Registration
2. Issuance of receipts or sales or commercial invoices
3. Printing of receipts or sales or commercial invoices
4. Exhibition of certificate of payment at place of business
5. Requirements for continuance of business of deceased
person
6. Requirements for transfer of business to another location

Registration Requirements
Primary Registration 2 stages

1. Secure your TIN

2. Registration of business, profession and/or undertaking which the
person, natural or juridical, intends to pursue on account of which she/it
is expected to regularly file tax returns, pay taxes and fees prescribed by
The Code.
1. Within 10 days from date of employment
2. On or before the commencement of business or within
thirty (30) working days upon receipt of Mayors
Permit/PTR.

BIR Forms
The following forms are needed for registration
1.

2.

3.

4.

5.

BIR Form 1901- for registration of self-employed, mixed

income individuals, estates and trusts
BIR Form 1902- for individuals earning purely
compensation income
BIR Form 1903- For registration of corporations and
partnerships
BIR Form 1904- For registration of one-time taxpayer and
persons registration under E.O. No. 98
BIR Form 1904- For updating/cancellation of registration,
cancellation of TIN, new copy of certificate of registration

Contents of Registration Forms

The business registration (COR) shall contain the

following:
1.
2.
3.

Taxpayers name and style of business

Place of residence and business
Other information as required by the Commissioner in
the form
Any person maintaining a head office branch or facility
shall register with the RDO having jurisdiction over the
head office, branch or facility.

BIR Form 605

Shall be accomplished in the following instances:
1. Upon payment of annual registration fee for new

business and other renewals on or before January 31,

every year.
2. Note: separate payment of P500 for the HO and
each and every branch or outlet.
3. Upon receipt of a demand letter/assessment notice
and/or collection letter from BIR
4. Every time a tax payer or penalty is due or an
advance payment is made.

Example
Ms V is engaged in various lines of business with the

following trade names with DTI, all of which are located at

Rm. 501 C.M. Recto, Quiapo, Manila:
TIN
1)
2)
3)
4)

Bilis Internet Caf

VV Computer Supplies
VG Bookkeeping Services
HWV Janitorial Services

135-536-536-0000
135-536-536-0001
135-536-536-0002
135-536-536-0003

(1) is the HO, (2-4) are considered branches. Each of the businesses owned by
Ms. V is required to pay P500 RF.
However, a person pursuing several undertaking of such a type that will not require
the registration with DTI-approved business trade name, and the same are
Conducted in the same place of business, only one RF may be required to cover
all pursuits; otherwise each undertaking shall be treated as a separate or distinct
establishment.

Filing, Payment and Updates

Every person who is required to register with the

BIR shall file a tax return and pay such taxes for each
type of internal revenue tax for which he is obligated.
Any person registered in accordance with Sec. 236 of

NIRC shall, whenever applicable, update his

registration information with the Revenue District
Officer where he is registered. These changes may
be:

Tax type
Other taxpayer details

Transfer Registration
In case a registered

person decides to
transfer his place of
business, head office or
branches
It is the duty of the
taxpayer to file an update
No additional
registration fee

Cancellation of Registration
The registration of any

person who ceases to be

liable to a tax type shall
be cancelled upon filing
with the RDO where he is
registered.

Printing of Receipts, Sales or Commercial Invoice

Sales or Commercial Invoice

A document issued by the seller of goods to the buyer

Receipt

A document issued for sales of services

Requirements before printing of receipts of

invoices:
BIRs authority to print
o

Accomplish BIR Form 1906 with RDO with jurisdiction of

head office or branch

 Other requirements

No authority shall be granted unless the receipts or invoices

are:

Serially numbered

Contain the name, business style, TIN and business

address of the person or entity

Contain information that may be required by the rules

and regulations to be promulgated by the Secretary of
Finance, upon recommendation of the Commissioner.

Issuance of Receipts, Sales or Commercial

Invoice
Rules for Issuance:
1. Time for issuance of receipts or invoices should be
the time when transaction is effected
2. All persons subject to any internal revenue tax are

required to issue receipts or sales invoices when

the value of goods sold and services rendered is
P25 and more
3. Receipt/invoice is not required when:
a.
b.

Value of goods sold or service rendered is less than P25

Exempted by the BIR Commissioner in meritorious
cases

4. Regardless of amount, a receipt must be issued

when:
a.

b.

It covers payment made as rentals, commissions,

compensations or fees
A VAT-registered person makes the sale to another VATregistered person

5. The receipt shall indicate the name, business,

address of purchaser, customer or client when:

a.

b.

c.

It covers payment made as rentals, commissions,

compensations or fees
The sale is made by a person liable to VAT to another
person also liable to VAT
The sale, receipts or transfer is P100 or more

6. The original receipt shall be issued to the purchaser

and the issuer shall keep the duplicate in his place

of business for three years
7. The purchaser or the issuer should keep his copy of

receipts for a period of three years in his place of

business from the close of the taxable year in which
such invoice or receipt was made.

Certificate of Payment
The taxpayer is required to observe the following

with regard to the certificate of payment:

1.

2.

The certificate or receipts showing payment of taxes

issued to a person engaged in business subject to annual
registration fee shall be kept in plain view at the place
where the business is conducted
In case of a peddler or other persons not having a fixed
place of business, it shall be kept in the possession of the
holder thereof, and shall be presented upon demand of
internal revenue officer

Business of a Deceased Person

When any individual who has paid the annual

registration fee dies, and the same business is

continued by the person or persons interested in his
estate, the following rules shall apply:
1. No additional payment for the payment within
which the tax was paid
2. Inventories of goods or stocks should be
submitted to the BIR within 30 days of death of
the descendent
3. The same requirements shall be applied in case
of transfer of ownership or change of name of
the business establishment

Payment of annual income tax

returns
RMC No. 57-2011: Revised BIR forms
a. Form No. 1700 for individuals earning purely compensation
income (including Non-Business / Non-Professional income)
b.Form No. 1701 for self-employed individuals, estates and trusts,
(including those with both business and corporate income)
c.Form No. 1702 for Corporation, Partnership and other
non-individual taxpayers.

Taxation for thought (TFT)

Instructions:

Tell me which principle of sound taxation system am I

In your opinion, which among the principle do you think is
often/rampantly violated and why?
How do you think can the government address/solve your
stated violated principle?