Year-end tax compliance reminders

With the holidays over, the decorations cleaned up, and the excitement from parties fading. It is time to get back on track on the compliance tasks needed to be accomplished. Businesses should be mindful of the various year-end tax compliance requirements with the Bureau of Internal Revenue (BIR) carried over to the new year, as non-compliance or late filing could lead to applicable penalties.

Taxpayers are well aware that prior to using any books of accounts, they are required to register their books with the BIR. Under Revenue Memorandum Circular (RMC) 3-2023, all books of accounts shall be registered online with the BIR’s Online Registration and Update System (ORUS). With that, taxpayers are required to set up an ORUS account in order to use the said online registration facility. The ORUS will generate a QR stamp that can be affixed to the first page of the manual books of accounts and permanently bound loose leaf books of account. In case of computerized books of accounts, the QR stamp will be affixed to the transmittal letter to the BIR, detailing the contents of the USB flash drive where the books of accounts and other accounting records are stored.

Existing business taxpayers are required to register their new set of manual books of accounts prior to the full consumption or prior to using up the pages of their previously registered books. New sets of manual books of accounts are not required to be registered every year, but taxpayers may opt to register yearly, provided that the new sets of manual books are registered before its use. For taxpayers using loose leaf books of accounts, they should have already registered their books with the BIR last Jan. 15 via the ORUS, as the deadline is on or before Jan. 15 of every year in case of taxpayers adopting a calendar year. Taxpayers with registered computerized books of accounts are required to annually submit the soft copy of their books within 30 days after the end of each taxable year (i.e., on or before Jan. 30 of every year in case of taxpayers adopting a calendar year).

Aside from books, another annual compliance matter is the submission of Annual Information Returns (i.e., BIR form nos. 1604-C, 1604-F, and 1604-E) and their related alphabetical lists (alphalist).

Employers who have deducted withholding tax on compensation (WTC) from their employees shall file the BIR form no. 1604-C, together with the alphalist of employees while withholding agents who have subjected their income payments to final withholding tax (FWT) or fringe benefits tax shall file BIR form no. 1604-F, together with the alphalist of payees/employees. Both BIR form nos. 1604-C and 1604-F shall be filed on or before Jan. 31. On the other hand, withholding agents who have deducted expanded withholding tax (EWT) on its income payments shall file BIR form no. 1604-E and submit the related alphalist of payees on or before March 1.

For taxpayers utilizing the electronic filing and payment system (eFPS), note that the BIR announced in RMC 62-2023 the availability of BIR form nos. 1604-C, 1604-E and 1604-F in the eFPS. In case of unavailability of the new forms in the taxpayer’s eFPS account, RMC 18-2021 provides that eFPS filers shall use the new version of subject forms in the latest Offline eBIRForms package. This RMC is aligned with RMC 4-2021 which provides for the use of eBIRForms in case the newly created forms are not yet available in the eFPS, but already available in the eBIRForms. Nonetheless, as RMC 18-2021 specifically covers annual information returns for the calendar year 2020, affected eFPS taxpayers should keep an eye out on advisories from the BIR as to any recent workaround guidelines on the filing of the said forms.

Previously, all registered taxpayers doing business shall file and pay an annual registration fee (ARF) amounting to P500 for every head office branch and separate or distinct establishment or place of business on or before Jan. 31 of every year. With the passage of Republic Act (RA) 11976 or the Ease of Paying Taxes Act into law, taxpayers are no longer required to file and pay an ARF. The BIR issued an advisory that it will cease to collect the ARF effective on Jan. 22. Taxpayers with existing BIR Certificate of Registration (COR) that includes registration fee shall remain valid. But taxpayers have the discretion to update or replace their COR at the Revenue District Office where they are registered on or before Dec. 31, 2024.

Taxpayers should always keep abreast of the developments in compliance requirements and adjust to changes as they are implemented. Whether the change comes in the form of a law, rules or regulations, the burden falls on taxpayers to be informed of advisories and to monitor relevant issuances in order to be compliant and avoid the imposition of penalties.

Mikaella Pauline M. Hidalgo is a tax associate under the tax group of KPMG in the Philippines (R.G. Manabat & Co.), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The firm has been recognized as a Tier 1 in transfer pricing practice and in general corporate tax practice by the International Tax Review. For more information, you may reach out to Mikaella Pauline M. Hidalgo or Mary Karen E. Quizon-Sakkam through [email protected], social media or visit www.home.kpmg/ph.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.