7 Jan 2022, 14:10 — 8 min read
2021 is officially over! However, that doesn’t mean that all tax and compliance requirements from 2021 have been completed.
In welcoming the new year, there are various tax and compliance obligations for January—annually, and all companies in the Philippines must be aware of these important requirements and deadlines.
That is why we have listed below some of the key tax and compliance activities that fall on an annual basis every January.
Most businesses in the Philippines register for Manual Books of Accounts when they initially register for their business—whether it’s a corporation, OPC or sole proprietorship. This is generally the default type of registration for the Books of Accounts in the Philippines.
But, by registering for Loose-Leaf Books, companies in the Philippines can avail of a much more efficient method or system for maintaining their accounting books throughout the financial year. In short, no more requirements to enter transactions by hand with the Manual Books.
Further, businesses must understand that after registering for Loose-Leaf Books with the BIR, there remains a January compliance requirement each year where you will be required to extract the accounting books and ledgers from your accounting system, format the information into a BIR approved format, print, bind and then file everything with the BIR (under the specific BIR filing format).
Finally, make sure to speak with your accountant or bookkeeper here in the Philippines to confirm and clarify the specific requirements when submitting your Loose-Leaf Books this month.
The deadline for filing the Loose-Leaf Books with the BIR is 15th of January, every year.
Unless exempt, all registered businesses in the Philippines are required to renew their business permit each year with their local municipality or city hall.
But in order to secure business permit renewal, there are a lot of documents and information that must first be collected, reviewed and submitted. It can be quite lengthy and challenging for some businesses, so start your preparations early.
Remember, a business without an up-to-date permit is technically not authorized to operate within its own municipality.
For the Business Permit Renewal application, it must be submitted on or before 20th of January 2022.
Did you know that companies in the Philippines need to renew their registration with the BIR every year? It’s not just the business permit that needs to be renewed every January.
All BIR registered businesses are required to pay a PHP 500.00 Annual Registration Fee to BIR each year. This 2022, the application must be filed and the fees must be paid by 31st of January 2022.
The Annual Registration Fee—or BIR Form 0605, is applicable to the current year, not the previous one. This means that the PHP 500.00 fee paid on January 2022 will be applicable for the current year, 2022.
For reference, you may find and download the BIR Form 0605 from BIR’s website.
The Certificate of Compensation Payment/Tax Withheld, commonly known as BIR Form 2316, is a BIR compliance requirement that must be prepared by any PH company that engaged employees during the prior calendar year.
There are two stages to the preparation and successful completion of the BIR Form 2316 submission process:
First, a separate BIR Form 2316 needs to be generated and sent to each covered employee of the company. The employee must then review, sign and return the form to the employer (assuming all of the details are accurate). The form should be prepared for any employee that received a salary, wage or any other form of remuneration from the employer over the prior calendar year.
The Form 2316 that has been delivered to the employee should identify the total amount of compensation paid to each individual employee and the total value of the compensation tax withheld from each employee during the previous calendar year.
The BIR Form 2316 should be sent to each individual employee before 31st of January 2022.
Second, the employer is required to submit a BIR Form 2316 to BIR in respect of each individual employee. Prior to submission, each form must be signed by both the employer and the employee.
The completed and signed BIR Form 2316 for each employee must be submitted to BIR before 28th of February 2022.
The Annual Information Return of Income Taxes Withheld on Compensation, commonly known as BIR Form No. 1604-C, is an employee/payroll-related BIR tax return that must be filed annually, every January.
This 2022, BIR Form 1604-C must be filed with BIR on or before 31st of January 2022.
When it comes to payroll taxes, employers in the Philippines must compute, deduct and withhold a certain value of an employee’s compensation before it is actually paid out to each employee. Employers must submit to BIR monthly tax returns reflecting the compensation withheld for each prior month. This is completed by preparing and submitting BIR Form 1601-C.
With BIR 1604-C, however, it is an annual filing. For January in every year, employers must prepare and submit a report to BIR which outlines the total amount of income tax withheld on compensation from all employees during the previous calendar year.
Employers in the Philippines are mandated to pay all covered employees an additional one month salary payment before the end of each calendar year.
This is the 13th Month Pay Benefit in the Philippines and it is famously known by employers and even more so, by employees.
P.D. No. 851 was the original legislation that initiated the coming into law of the requirement for PH employers to pay the 13th Month Pay Benefit.
As a mechanism to ensure that employers satisfy this requirement, on January each year, employers are required to submit a formal report to their nearest DOLE Regional Office which confirms that the company has fully complied with the 13th Month Pay obligation for all of its relevant employees.
So, this 2022, employers must submit the DOLE Compliance Report on or before 15th of January 2022.
Finally, it’s important to remember that the DOLE Compliance Report relates to the 13th Month Pay Benefit compliance requirement for the previous calendar year.
Make sure that you kick off 2022 with the right tax management and reporting services in place and ensure that your PH business can achieve 100% compliance from the start of the year and all year round.
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DISCLAIMER: This article is strictly for general information purposes only. Nothing in this article constitutes or intends to constitute financial, accounting, regulatory or legal advice and must not be used as a substitute for professional advice. It is still necessary to consult your relevant professional adviser regarding any specific matter referenced above.
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