before April 15 of each year covering all stock transactions of the preceding taxable year; and
2. From the sale or disposition of real property under Section 24 (D) shall file a return, within 30 days following each sale or other disposition. (Sec.
51 [C][2], NIRC)
Q: What is the confidentiality rule with respect to tax returns filed with the BIR?
A: This means that although Sec. 71 of the NIRC provides that the tax returns shall constitute public records, it is necessary to know that these are confidential in nature and may not be inquired into in unauthorized cases under the pain of penalty provided for in Sec. 270 of the NIRC.
Note: For conviction of each act or omission, the penalty of fine of not less than P50,000 but not more than P100,000 or imprisonment of not less than 2 years but not more than 5 years.
Q: What are the instances wherein inquiry into the income tax returns of taxpayers may be
authorized?
A: Inquiry into the ITR of taxpayers may be had when:
1. the inspection of the return is authorized upon the written order of the President of the Philippines;
2. the inspection is authorized under Finance Regulation No. 33 of the Secretary of Finance;
3. the production of the tax return is a material evidence in a criminal case where the Government is interested in the result;
4. the production or inspection thereof is authorized by the taxpayer himself.
Q: What is substituted filing?
A: It is when the employer‘s annual return may be considered as the ―substitute Income Tax Return (ITR) of an employee inasmuch as the information provided in his income tax return would exactly be the same information contained in the employer‘s annual return.
Q: What are the conditions for the substitute filing of ITR?
A:
1. Employee receives purely compensation income, regardless of amount, during the taxable year;
2. He receives the income only from one employer;
3. Income tax withheld is equal to income tax due;
4. Employer filed information return showing the income tax withheld on employees compensation income. (RR No.
3-2002)
Corporate Returns
Q: Who are required to file a Corporate Tax Return?
A:
GR: Every corporation subject to tax under the NIRC shall file a corporate tax return.
XPN: Foreign corporations not engaged in trade or business in the Philippines (Sec. 52, NIRC)
Q: What are the requirements for corporations in filing their returns?
A: Every corporation subject to the tax under the code, except foreign corporation not engaged in trade or business, shall render, induplicate, a true and accurate quarterly income tax return and final or adjustment return. The returns shall be filed by the president, vice-president or other principal officer, and shall be sworn to by such officer and by the treasurer or assistant treasurer. (Sec. 52, NIRC) Q: What shall be the accounting period that a corporation may employ as its basis for filing its annual income tax return?
A: A corporation may employ either a calendar year or fiscal year, provided, that the corporation may not change the accounting period employed without prior approval from the Commissioner in accordance with the provisions os Section 47 of the NIRC. (Sec. 52 [B])
Q: What is the rule on the declaration of quarterly corporate income tax?
A: Every corporation shall file in duplicate a quarterly summary declaration of its gross income and deductions on a cumulative basis for the preceding quarter or quarters upon which the income tax shall be levied, collected and paid. The tax so computed shall be decreased by the amount
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of tax previously paid or assessed during the preceding quarters and shall be paid not later than 60 days from the close of each of the 3 quarters of the taxable year, whether calendar or fiscal year.
(Sec. 75, NIRC)
Q: What is the Final Adjustment Return?
A: It is a return that covers the total taxable income of a corporation for the preceding calendar or fiscal year. The quarterly tax payments are in the nature of advances or portions of the annual income tax due. They have to be adjusted at the end of the calendar or fiscal year through the Final Adjustment return.
Q: What is the rule as regards the declaration by a corporation of its income adopting a final adjustment return?
A: Every corporation liable to tax under Section 27 shall file a final adjustment return covering the taxable income for the preceding calendar or fiscal year.
Q: What are the options of the corporation if the sum of the quarterly tax payments made during the taxable year is not equal to the total tax due on the entire taxable year?
A:
1. Pay the balance of tax still due; or 2. Carry-over the excess credit;
3. Be credited or refunded with the excess amount paid, as the case may be. (Sec. 76, NIRC)
Note: In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. (Sec. 76, NIRC)
Q: Is the option of carry- over exclusive?
A: Yes. Once the option to carry-over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable quarters has been made, such option shall be considered irrevocable for the taxable period and no application for cash refund or issuance of tax credit certificate shall be allowed. (Sec. 76, NIRC)
Q: What is the importance of the Final Adjustment Return to the refund of erroneously paid taxes?
A: The two year period shall be computed from the time of filing the adjustment return or annual income tax return and final payment of income tax.
(Atlas Consolidated v. CIR, June 8, 2007)
Q: When does a corporation file the income tax return?
A: The corporate quarterly declaration shall be filed within sixty days (60) following the close of each of the first three quarters of the taxable year. (Sec.
77[B], NIRC)
The final adjustment return shall be filed on or before the 15th day of April, or on or before the 15th day of the fourth month following the close of the fiscal year, as the case may be. (Sec. 77[B], NIRC)
For return on capital gains realized from sale of shares of stocks not traded in the local stock exchange, the corporation shall file a return 30 days after each transaction and a final consolidated return of all transactions during the taxable year on or before the 15th day of the 4th month following the close of the taxable year. (Sec. 52[D], NIRC) Q: Where does a corporation file the tax returns?
A: The quarterly income tax return and final adjustment return shall be filed with the authorized agent banks or Revenue District Officer or Collection agent or duly authorized treasurer of the city or municipality having jurisdiction over the location of the principal office of the corporation filing the return or place where its main books of accounts and other data from which the return is prepared are kept. (Sec. 77[A], NIRC)
Q: Is an extension of time allowed in the filing of return?
A: Yes. The Commissioner, may, in meritorious cases, grant a reasonable extension of time for filing returns of income (or final and adjustment returns in case of corporations), subject to the provisions of Section 56 of the NIRC. (Sec.53, NIRC)
Q: What is required from a Corporation Contemplating Dissolution or Reorganization as regards the filing of return?
A: Every corporation shall, within 30 days after the adoption by the corporation of a resolution or plan for its dissolution; or for the liquidation of the whole or any part of its capital stock, including a corporation which has been notified of possible involuntary dissolution by the SEC; or for its reorganization, shall render a correct return to the
Commissioner, verified under oath, setting forth the terms of such resolution or plan and such other information as the Secretary of Finance, upon recommendation of the Commissioner, shall by rules and regulations, prescribe. (Sec. 52[C], NIRC)
Note: The dissolving or reorganizing corporation, shall prior to the issuance by the SEC of the certificate of dissolution or Reorganization, secure a certificate of tax clearance from the BIR which shall be submitted to the SEC. (Sec. 52[C], NIRC)
Q: What is the rule on returns of receivers, trustees in bankruptcy or assignees?
A: In cases wherein receivers, trustees or assignees are operating the property or business of a corporation, they shall make returns of net income as and for such corporation, in the same manner and form as such organization is hereinbefore required to make returns. Any tax due on the income as returned by receivers, trustees or assignees shall be assessed and collected in the same manner as if assessed directly against the organizations of whose businesses or properties they have custody or control. (Sec. 54, NIRC)
Q: What is the rule on the returns of General Professional Partnership?
A: Every general professional partnership shall file, in duplicate, a return of its income, except income exempt under Section 32 B, setting forth the items of gross income and of deductions allowed by this title, and the names, TIN, addresses and shares of each of the partners. (Sec. 55, NIRC)
Note: A GPP is not subject to income tax, but it is required to file a return of its income for the purpose of furnishing information as to the share in the gains or profits which each partner shall include in his individual return. The individual partner is taxable on his distributive share of the net income of the partnership, whether distributed or not, and are required to include such distributive shares in their individual returns (Sec. 22, Regs. No. 2 as amended).
Q: What are the rules governing Fiduciary Returns?
A: Guardians, trustees, executors, administrators, receivers, conservators and all persons or corporations, acting in any fiduciary capacity, shall render, in duplicate, a return of the income of the person, trust or estate for whom or which they act, in case such person, trust, estate has a gross income of 20,000 pesos or over during the taxable year.
Such fiduciary or person filing the return for him or it, shall take oath that he has sufficient knowledge of the affairs of such person, trust or estate to enable him to make such return and that the same is, to the best of his knowledge and belief, true and correct, and subject to the provisions applicable to individual taxpayers under Title II of the NIRC.
Note: The return made by or for one or two or more joint fiduciaries filed in the province where such fiduciaries reside, shall be a sufficient compliance with the requirements of Sec. 65, NIRC.
Furthermore, trustees, executors, administrators and other fiduciaries are indemnified against the claims or demands of every beneficiary for all payments of taxes which they shall be required to pay, and they shall have credit for the amount of such payments against the beneficiary or principal in any accounting which they make as such trustees or other fiduciaries. (Sec.
66, NIRC)
Estate Tax Return
Q: When is a notice of death required to be filed?
A: A notice of death is required to be filed:
1. In all cases of transfers subject to tax; or 2. Even if exempt from tax, if gross value of
estate exceeds P20,000. (Sec. 89, NIRC) Q: Who shall file the notice of death?
A: Notice of death must be filed by the executor, administrator or any of the legal heirs, as the case may be. (Sec. 89, NIRC)
Q: When must the notice of death be filed?
A: It shall be filed within two (2) months after decedent’s death or within the same period after qualifying as such executor or administrator. (Sec.
89, NIRC)
Q: To whom shall the notice be filed?
A: The notice shall be filed with the Commissioner.
(Sec. 89, NIRC)
Q: When is an Estate Tax Return required?
A: An estate tax return is required:
1. In all cases of transfers subject to tax;
2. Even though exempt, where gross value of estate exceeds P200,000;
3. When the gross estate consists of registered or registrable property, regardless of amount.(Sec.90, NIRC)
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Note: Real property, motor vehicle, shares of stocks and other similar properties are considered registered or registrable property.
Q: Who shall file the Estate Tax Return?
A: The return shall be filed by:
1. The executor, or administrator, or any of the legal heirs of the decedent, whether resident or non-resident of the Philippines
2. any person in actual or constructive possession of any property of the decedent.
Q: When must this return be filed?
A: The return must be filed within six (6) months from the decedent's death. (Sec. 90 [B]), NIRC)
Note: Extension of time for the filing of the return, on meritorious cases, may be allowed by the Commissioner. The period of extension is limited to a period not exceeding thirty (30) days. (Sec. 90 [C]), NIRC)
Q: Where must the return be filed?
A:
If it is a Resident Decedent –
i. Authorized Agent Bank (AAB) or ii. Revenue District Officer (RDO),
Collection Officer, or
iii. Duly authorized Treasurer of the city or municipality in which the decedent was domiciled at the time of his death, or
iv. Any other place where the CIR permits the estate tax return to be filed (Sec. 90 [D], NIRC)
If it is a Non-Resident Decedent – i. Office of the CIR
ii. Revenue District Officer or
iii. Philippine Embassy or Consulate in the country where decedent is residing at the time of his/her death iv. Any other place where the CIR
permits the estate tax return to be filed
Donor’s Tax Return Q: Is a notice of donation required?
A:
GR: Notice of donation is not required.
XPN:
1. Donation to NGO worth at least P50, 000 Provided, not more than 30% of which will be used for administration purposes.
2. Donation to any candidate, political party, or coalition of parties
Q: Who shall file the notice of donation?
A: Any person making a donation shall file such notice, unless the donation is specifically exempted under NIRC or other special laws. (Sec.103 [A], NIRC)
Q: When must this return be filed?
A: Any person making a donation shall file a return within 30 days after the date the gift is made.
(Sec.103 [B], NIRC)
Q: Where to file the return?
A: The return must be filed with:
1. AAB, RDO, RCO, or duly authorized treasurer of the City or municipality where the donor was domiciled at the time of the transfer;
2. If there is no legal residence in the Philippines, with the office of the Commissioner;
3. For gifts made by non-residents, with the Phil embassy or Consulate in the country where he is domiciled at the time of the transfer or directly with the office of the Commissioner. (Sec.103 [B], NIRC)
VAT Return
Q: What is the rule governing the filing of a VAT return?
A: Every person liable to pay VAT shall file a quarterly return of the amount of his gross sales or receipts within 25 days following the close of each taxable quarter. However, a VAT-registered person shall pay the VAT on a monthly basis.
Any person, whose registration has been cancelled, shall file a return and pay the tax due within 25 days from the date of cancellation of registration;
Provided, that only one consolidated return shall be filed by the taxpayer for his principal place of business or head and all his branches. (Sec. 114[A], NIRC)
Q: Where must the return be filed?
A: Except as the Commissioner otherwise permits, the return shall be filed with the authorized agent bank, revenue collection officer or duly authorized city or municipal treasurer in the Philippines located within the revenue district where the taxpayer is registered or required to register. (Sec. 114 [B], NIRC)
Withholding Tax Return
Q: What is the rule as regards the filing of Withholding Tax Return?
A: Taxes deducted and withheld under Sec.57 by withholding agents shall be covered by a return and paid to, except in cases where the Commissioner otherwise permits, an authorized agent bank, revenue district officer, collection agent or duly authorized treasurer of the city or municipality where the withholding agent has his legal residence or place of business, or where the withholding agent is a corporation, where the principal office is located. (Sec.58, NIRC)
Note: The taxes deducted and withheld by the withholding agent shall be held as special fund in trust for the government until paid to the collecting officers.
The return for final withholding tax shall be filed and the payment made within 25 days from the close of each calendar quarter, while the return for creditable withholding taxes shall be filed and payment made not later than the last day of the month following the close of the quarter during which the withholding was made; Provided, that the Commissioner, with the approval of the Secretary of Finance, may require these withholding agents to pay or deposit the taxes deducted or withheld at more frequent intervals when necessary to protect the interest of the government.
(Sec.58[B], NIRC)
PAYMENT OF TAXES