Reminder on Year-End Compliance

The new year always bring positive perspective. May it be because the close of the year is coming or the idea of a fresh start keeps us motivated. At this time, we are either writing the memories of the past year or creating resolutions and plans for the new coming year.

For accountants, taxpayers and businesses, new year will also means start of the annual compliance we have to submit to various government agencies in the Philippines especially the BIR (Bureau of Internal Revenue), SEC (Securities and Exchange Commission) and LGUs (Local Government Units) such as Municipal and Barangay. This annual compliance starts in January and ends not until more or less May.

This article aims to provide you with a list of some of the annual year-end compliance required to be submitted by registered businesses. We hope it can guide you in your annual compliance to avoid payment of penalties for non-compliance.

1. RENEWAL OF REGISTRATIONS

Annually, all registered businesses and taxpayers engaged in business, except those exempt, are required to renew registrations to the following government agencies:

Local Government Unit (LGU)

• Barangay
• Municipal

Deadline of Annual Payment of Business Registrations Renewal is January 20. However, there’s an option to pay the renewal registrations quarterly which is due 20 days after the close of the quarter (April 20, July 20 and October 20).

Bureau of Internal Revenue (BIR)
Annual registration fee amounting to P500.00, on the other hand, is required to be filed and paid to the BIR on or before January 31.

For efficient filing of BIR Form 0605, you may use MPM Accounting Software.

2. REGISTRATIONS AND SUBMISSION OF BOOKS OF ACCOUNTS

There are different types of books of accounts that can be registered with the BIR. For more details about the different types of books of accounts, click here.

Annual compliance depends on the type of books of accounts registered, as follows:

Manual Books of Accounts
Per RMC 82-2008, manual books of accounts will only be renewed or re-stamped if already fully exhausted or used. In addition, manual books of accounts are not required to be submitted to the BIR annually. However, it may be required to be presented upon audit and/or tax mapping.

Loose-leaf Books of Accounts
For BIR approved loose-leaf books, taxpayer must submit to the BIR bounded books of account for the taxable year on or before January 15.

Computerized Books of Accounts
For BIR approved computerized books, taxpayer must submit to the BIR in CD-R, DVD-R or other optical media for the taxable year on or before January 30.

Update: Submission may also now be done via ORUS.

For ease of compliance on books of accounts, you may use MPM Accounting Software.

3. SUBMISSION OF SUMMARY LIST (ALPHALIST)

The following annual information, in a form of alphabetical list, must be submitted to the BIR.

BIR Form 1604C – Annual Information Return of Income Taxes Withheld on Compensation
This form consist of the summary of withholding tax on compensations (BIR Form 1601C) paid and filed to the BIR during the taxable year, and the summary list (alphalist) of employees, existing and resigned, during the taxable year. This is due for submission to BIR on or before January 31.

For efficient preparation, filing and submission of BIR Form 1604C and Alphalist of Employees, you may use MPM Payroll Software.

BIR Form 1604E – Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax
This form consist of the summary of withholding tax – expanded (BIR Form 1601E) paid and filed to the BIR during the taxable year, and the summary list (alphalist) of income payees during the year. This is due for submission to BIR on or before March 1.

For efficient preparation, filing and submission of BIR Form 1604E and Alphalist of Payees, you may use MPM Accounting Software.

4. DISTRIBUTION AND SUBMISSION OF BIR FORM 2316 – CERTIFICATES OF COMPENSATION PAYMENT/TAX WITHHELD

This form is a return that details an employee’s income earned, with the corresponding tax withheld and remitted to the BIR, by the employer, during the taxable year. This is due for distribution and signing of the current and existing employee on or before January 31.

In addition, BIR also requires the employer to submit to the BIR a signed copies of the said BIR Form 2316 on or before February 28.

For efficient preparation and distribution of BIR Form 2316 to Employees, you may use MPM Payroll Software.

5. FILING OF ANNUAL INCOME TAX RETURNS AND AUDITED FINANCIAL STATEMENTS

In general, except those exempted, companies or taxpayers engaged in business are required to submit to BIR, and Securities and Exchange Commission (SEC) (for corporations only), a copy of their Annual Income Tax Return (BIR Form 1701, 1701A or 1702RT, 1702MX, 1702EX) and Audited Financial Statements on or before April 15.

6. FILING OF GENERAL FORM FINANCIAL STATEMENTS (GFFS)

This is a requirement of the SEC for corporations only with gross sales or revenue of more than P5,000,000.00 during the year. It’s an excel form that needs to be filled out and submitted to SEC in electronic format 30 days from the last day of submission of Audited Financial Statement, which is May 15.

7. FILING OF GENERAL INFORMATION SHEET (GIS)

This is again a requirement of the SEC for stock corporations only. It must be signed by the corporation secretary and must be submitted thirty (30) days after the actual annual stockholder’s meeting (For Domestic Corporation) or anniversary date of the issuance of the SEC license (For Foreign Corporation).

8. SUBMISSION OF INVENTORY LIST AND OTHER REPORTORIAL REQUIREMENTS

Per Revenue Memorandum Circular 57-2015, inventory list and other tangible asset-rich balance sheets, often with at least half of their total assets in working capital assets, such as accounts receivable, are required to be submitted to the BIR, in DVD-R properly labeled and with notarized certification signed by authorized representative, on or before January 30.

9. SUBMISSION OF SUMMARY LIST OF TENANTS AND OTHER REQUIREMENTS

Per Revenue Regulation 12-2011, this applies to taxpayers engaged in leasing or renting of property for commercial activities, which are required by the BIR to submit the following a) layout of the leased property b) certified true copy of lease agreement per tenant c) lessee information sheet as of December 31. This is due for submission to BIR on or before January 31 (for the 2nd semester: July to December) and July 31 (for the 1st semester: Jan to June).

10. SUMMARY LIST OF REGULAR SUPPLIERS

Per Revenue Regulations No 14-2008, large taxpayers (Top 5,000 individual/Top 20,000 Private Corporations) as determined by the Commissioner of the Internal Revenue , shall submit on semestral basis a summary list of its regular suppliers of goods and/or services to the Large Taxpayers Assistance Division/Large Taxpayer District Office on or before January 31 (for the 2nd semester: July to December) and July 31 (for the 1st semester: Jan to June).

In general, this article has summarises the annual compliance requirements of companies or taxpayer engaged in business. There may be other annual reportorial requirements needed by your company depending on the industry, formation and size such as for reports to be submitted to BOI (Bureau of Investments), PEZA (Philippine Economic Zone Authority), etc., which you may need further information and research to comply with.

Below is a summary of all the information i mentioned in this article. I hope it will guide you in your compliance requirements this coming new year.

Summary of Annual Compliances