INTRODUCTORY QUESTIONS AND ANSWERS

Q1: Who are professionals?

A: Professionals are those who practice their profession or calling, with or without license under
a regulatory board or body.

Professionals with license under a regulatory board include Certified Public Accountants (CPAs),
practicing lawyers, doctors of medicines, dentists, architects, engineers and teachers. Bloggers,
internet marketers, web designers, writers and other persons who provide specialized services
can also be considered professionals, though they may not have professional licenses under a
regulatory body. 1 Online Business English Trainers are classified under professionals who
provide specialized service.

Q2: What is the nature of the 10% withholding tax? What is the purpose of BIR Form 2307
attached to our email on payroll computation at the end of each month?

A: The 10% withholding tax is not the tax itself. It is the government's (BIR) method of collecting
income tax in advance from the income of the taxpayers (trainers) through their withholding
agent (Bizmates).2

The document, BIR Form 2307 (Certificate of Creditable Tax Withheld) serves as proof that the
company remits 10% of your gross income to the government. The amount of withholding tax on
compensation as shown in BIR Form 2307 shall be claimed by the taxpayer (trainer) as tax credit
against his income tax liability for the quarter (BIR Form 1701Q) or year (BIR 1701). 3 Hence, as
a result of computing for the ITR, the trainer doesn't have to pay for anything because of the
allowable deductions and claiming the 10% withholding tax (as per BIR 2307) as his tax credit.

Q3: Now that I have a BIR TIN and BIR 2307s issued by the company, can I automatically
file my Annual ITR for the year 2015 before April 15, 2016?

A: No. If you inquire at BIR on how to file Annual ITR, they would tell you the same thing that
you cannot file your ITR unless you are registered as self-employed professional. Some of
you might think that you are already registered because you already obtained your BIR TIN. Of
course, you do not stop there. For clarification, application for BIR TIN should not be confused
with registration as taxpayer.

Q4: What are the benefits and advantages of professionals who register with the BIR?

If you are a professional, whos required to register as a self-employed individual, but still not
registered with the BIR and not filing income tax returns, the following are the things you must
consider.

1. Your annual income tax return (BIR form 1701) will serve as your proof of earnings,
which you can use for obtaining loans with different institutions, such as banks, credit
cooperatives, lending companies, SSS and PAG-IBIG. You can also use it to apply for
credit cards.
2. Filing your Income Tax Return and paying the right tax are contributing to the progress
of the country. As a citizen you should be helping in the development and progress of
your nation. Your tax money helps build roads and bridges, provide basic medical care
to, compensates our police and armed forces to protect and defend our country, and so
much more.
3. Moreover, youll be able to claim your tax credit, if overpaid.
4. By being registered with the BIR and having official receipts (OR) under your name, your
clients will have more confidence of getting your services.

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 5. You can save money in the future by paying your taxes on time and avoiding penalties,
such as interests, surcharges and compromise.
6. You will not be charged with tax evasion, which is punishable by the law.
7. and other ethical and moral benefits, such as having a clear conscience and having
good night sleeps. 4

Note: Our FAQs Q8-6 provided a link where the BIR provides stiff penalties for tax evasion:
http://www.gov.ph/2014/04/01/who-are-required-to-file-income-tax-returns/

According to the site from the Official Gazette:

When you dont pay your taxes or when you dont file an income tax return (or do it the wrong way, or whatever),
you are charged with:
Tax evasion When an individual or a corporation willfully uses illegal means to avoid paying taxes or the right amount
of taxes. Tax evaders will be fined no less than P30,000 pesos but no more than P100,000, and suffer imprisonment of no
less than two years but no more than four years.5

Q5: What is an income tax return?

A: An income tax return is a document in which the taxpayer formally makes a report on his
gross income and deductions to the Bureau of Internal Revenue (BIR). 6

If you are employed with only one employer with a certain number of employees, your employer
files your ITR in your behalf which is called Substituted Filing (BIR 2316 Certificate of
Compensation Payment or Income Tax Withheld). Being self-employed professionals, we file our
own income tax return.

Q6: When should the income tax return be filed?

A: In the case of an individual with income from business or practice of profession, quarterly and
annual income tax returns should be filed as follows:

First Quarter (January to March) On or before April 15

Second Quarter (April to June) On or before August 15
Third Quarter (July to September) On or before November 15
Annual (January to December) On or before April 15 of the succeeding year7

Q7: Considering that my job is not visible because I work at home, am I safe by getting
away with paying my taxes?

A: No. The BIR would still find out. Bizmates is require to submit an alphabetical list of employees
and list of payees (Alphalist) on income payments subject to creditable and final withholding
taxes which are required to be attached as integral part of their Annual Information Returns and
Monthly Remittance Returns.8 Our names are included in their Alphalist. The BIRs Integrated
Tax System (ITS) detects non-filing or non-payment of tax returns by a taxpayer.

BIR REGISTRATION

Q8: As an Online Business English Trainer, what requirements do I need to comply to

register with the BIR?

A: Your Revenue District Office (RDO) may require you to secure the following:

1. Annual Registration Fee of P500 (to be paid at Authorized Agent Banks)

2. Completely filled BIR 0605 (Payment Form) please see Annex A
3. Completely filled BIR 1901 (Application for Registration) please see Annex B

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 4. Photocopy of occupational permit please see Annex C
Note: For steps in acquiring Occupational Permit, kindly refer to page 6 of this hand-out
5. Photocopy of NSO certified birth certificate of taxpayer and dependent
6. Php15 for the documentary stamp tax (DST) to be attached to your Certificate of
Registration (COR) or BIR 2303 please see Annex D
7. Attend the required taxpayers briefing at the RDO before the release of your COR.

After securing these documents, your RDO will issue you the following:

1. Certificate of Registration (BIR 2303) Annex D

2. Ask for Receipt Poster

Note: The following requirements are listed in Tax Guide for Professionals
1. Birth Certificate or any documents showing name, address, and birth date;
2. Mayors Permit, if applicable;
3. DTI Certificate of Business Name to be submitted prior to issuance of the Certificate of Registration or BIR
Form No. 2303, if applicable;
4. Professional Regulation Commission ID, if applicable; and
5. Payment of Professional Tax Receipt (PTR) from the local government, if applicable.

COMMON PROBLEM with BIR REGISTRATION

Q9: When I visited my RDO to register as self-employed professional, BIR asked me to
secure DTI Permit and Mayor's Business Permit. Do I really need to secure these
documents?

A: No. Please let them understand that you are doing business in the exercise of
profession and what you need is Occupational Permit hence, the Mayor's Business Permit and
DTI Permit can be dispensed with.

Q10: After obtaining my COR, what else do I need to comply?

A: After getting your Certificate of Registration, your RDO will also require you to comply the
following:
1. Register your book of accounts using BIR 1905 please see Annex E, and have them
stamped at your RDO.
a. Journal
b. Ledger
2. Apply for Receipts using BIR Form No. 1906 (Authority to Print) 9 please see Annex F
Usually, the BIR accredited printing press who will print your receipts can assist you on the
registration of your official receipts. Your receipts should be serially numbered. It also indicates your name,
business style (profession), TIN and your registered business /office address (residence where you teach).

Note: Some RDOs may be bent with this rule on requiring freelance professionals to issue receipts. If your RDO
would not require you to issue receipts, you are lucky. For clarification, kindly visit your respective RDO.

Q11: Are we really required to issue receipts?

A: Yes, we are. You may wonder how come we are required to issue receipts and to whom do we
issue receipts. It could be confusing, considering that we teach Japanese students who pay to
Bizmates, hence, we presume that Bizmates would already issue them receipts.

Under the Tax Code, all persons subject to internal revenue tax are required to issue an invoice
for each sale of goods and an official receipt (OR) for services rendered valued at Php 25.00 or
more.10 Even though we earn peanuts, we are required to issue receipts to Bizmates for
professional services rendered. Given that we earn more than Php 25.00 for teaching, we are
required to issue the company receipts for our professional fees, not to our students.

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Q12: What are the taxes I need to pay?

A: Being self-employed NON-VAT taxpayers, we are subject to the following:

1. 3% monthly percentage tax (BIR Form 2551M)11 please see Annex G

2. quarterly income tax (1701Q) please see Annex H
3. annual income tax (1701)

In our case, the only burden we trainers have to pay is the percentage tax.* Being exempted from
VAT, As discussed earlier in Q2, we dont have to pay anything for filing our income tax returns (BIR
1701Q and BIR 1701) because of claiming the 10% withholding tax as our tax credit.

How to Compute the Percentage Tax? Sample Computation October 2015 Compensation
Gross Pay: Php 13,750

Net amount received Php XXX Net amount received Php 12,375
Add: 10% Add: +
Expanded Withholding Tax Php XXX 10% Expanded Withholding Tax 1,375
________ ________
Total Professional Fee Php XXX Total Professional Fee Php 13,750
Multiply by Multiply by x
3% percentage tax Php XXX 3% percentage tax .03
________ ________
Percentage Tax Due Php XXX12 Percentage Tax Due Php 412.50

*Business tax rates may either be:

1. Value Added Tax (VAT)- 12% if gross professional fees exceed Php 1,919,500 for a 12- month period; or
2. Percentage Tax (PT) or NON-VAT-3% if gross professional fees total Php 1,919,500 and below for a 12-month period.13

ELECTRONIC FILING AND PAYMENT SYSTEM

Q13: Im a very busy person. Is there a convenient way for me to file and pay my taxes without hiring
a bookkeeper?

A: Yes, there is. You can conveniently file and pay your taxes through eFPS which stands for Electronic
Filing and Payment System. It refers to the system developed and maintained by the Bureau of Internal
Revenue (BIR) for electronically filing tax returns, including attachments, if any, and paying taxes due
thereon, specifically through the internet.

Q14: Why do we need to use eFPS? What are its objectives?

A: With eFPS, taxpayers can avail of a paperless tax filing experience and can also pay their taxes online
through the convenience of an internet-banking service via debit from their enrolled bank account. In
addition, since eFPS is available on the Internet, taxpayers can file and pay for their taxes anytime,
anywhere as long as he or she is using a computer with an internet connection.

Q15: What are the expected benefits of the system?

A: The eFPS is:

1. Convenient to use - it is quick and simple to use, as well as secure.

2. Interactive - information exchange is immediate and online, users get immediate feedback from the
system when enrolling, e-filing or performing e-payments.
3. Self-validating - errors are minimized because all of the information supplied by the taxpayer is
validated before final submission.

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4. Fast - response or acknowledgment time is quicker than manual filing.
5. Readily available - eFPS is available 24 hours a day, 7 days a week including holidays.
6. Secure - return and payment transactions are more secure, as all data transmission is encrypted.
7. Cost effective - processing cost of returns and payments is minimized (e.g. receiving, pre-processing,
encoding, error-handling and storage).

Q16: Who is eligible to use the system?

A: Qualified taxpayers who need to file and pay their taxes to the Philippine government are encouraged to
use the system.

Q17: Is there any additional cost that the taxpayer will incur upon availment of this system?

A: None whatsoever, enrollment and usage of eFPS is FREE of charge. However, check with your bank
(where you have enrolled for e-payment) if they charge fees and/or if your need to maintain a minimum
ADB (Average Daily Balance). 14

Q18: Who are those mandated to use eFPS?

A: Those mandated are the following:

Taxpayer Account Management Program (TAMP) Taxpayers (RR No. 10-2014)
Accredited Importer and Prospective Importer required to secure the BIR-ICC & BIR-BCC (RR No. 10-2014)
National Government Agencies (NGAs) (RR No. 1-2013)
All Licensed Local Contractors (RR No. 10-2012)
Enterprises Enjoying Fiscal Incentives (PEZA, BOI, Various Zone Authorities, Etc.) (RR No. 1-2010)
Top 5,000 Individual Taxpayers (RR No. 6-2009)
Corporations with Paid-Up Capital Stock of P10 Million and above (RR No. 10-2007)
Corporations with Complete Computerized Accounting System (CAS) (RR No. 10-2007)
Procuring Government Agencies with respect to Withholding of VAT and Percentage Taxes (RR No. 3-2005)
Government Bidders (RR No. 3-2005)
Insurance companies and Stock brokers (RMC No. 71-2004)
Large Taxpayers (RR No. 2-2002, as amended)
Top 20,000 Private Corporation (RR No. 2-98, as amended) 15

Q20: What are the steps in enrolling?

A: They are the following:

Step 1: Access BIR website at www.bir.gov.ph using your internet browser.
Step 2: Click eServices.
Step 3: Click either eFPS or eBIRForms
Step 4: From the Login page, click on 'Enroll to eFPS or eBIRForms
Step 5: The eFPS or eBIRForms online enrollment form appears. Complete the required fields on the
Enrollment Form page. Then, click on the "Submit" button.
Step 6: Submit to BIR a certificate authorizing any three (3) officers designated to file the return. (Under
Section 52 (A) of the Tax Code (President or representative and Treasurer or Asst. Treasurer of the
Corporation). Individuals enrolling online for themselves shall be automatically activated without
submitting any documents to BIR.16

Note: Detailed process is enumerated in RMO 24-2013.

Q19: Are all taxpayers required to electronically file returns?

A: NO, NOT ALL TAXPAYERS ARE REQUIRED TO FILE ELECTRONICALLY. Only taxpayers enumerated in
items no. 5 and 6 of REVENUE MEMORANDUM CIRCULAR NO. 19-2015 are required/mandated to file
electronically. However, nothing prevents those who are not enumerated in this RMC to voluntarily enroll
and file using either the eFPS/eBIRForms electronic platform of the BIR. 17

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 HOW I ACQUIRED MY OCCUPATIONAL PERMIT AT QUEZON CITY HALL

Most companies would require their employees to secure occupational permit as requirement to practice their
occupation. As a freelance professional, I secured an occupational permit not only to practice my profession but
also to secure a new Certificate of Registration at Bureau of Internal Revenue RDO 40 Cubao.

Getting an occupational permit at Quezon City Hall is not easy, compared to Tacloban City Hall, Makati City Hall
and other jurisdiction. The queue and red tape may be discouraging. Waiting in line may be laborious but your
efforts will pay off once you get your occupational permit. Now, I am writing this blog entry to help the prospect
applicants secure the documents that they need and save time from asking people from the City Hall who do not
even give clear directions (some are friendly actually).

STEP 1: SECURE CEDULA, POLICE CLEARANCE or NBI CLEARANCE, and LABORATORY TEST RESULT
AT CITY HEALTH or OTHER ACCREDITED LABORATORIES

These are the following documents I obtained. I included the fees and waiting time, for your guidance.

DOCUMENT FEE WAITING TIME

Free of Charge
Barangay Clearance Note: Some barangays charge Php30.00 for seconds
issuance and Php15.00 for the documentary stamp.

Php 55
Cedula Note: I acquired my cedula at our Barangay Hall. seconds
The fee will vary depending on the amount of income
you declared for the preceding year.
Php 250
Police Clearance Breakdown: I paid Php 150 for the issuance of police 1 to 2 hours
(or NBI Clearance) clearance and P100 for the ID, which is valid for one
year. You may actually opt for NBI Clearance which
cost P115.

In order to secure NBI clearance, you will need at least 2 valid IDs with address in Quezon City. On the other
hand, getting a police clearance only requires 1 valid ID with address in Quezon City. If you don't have one, a
barangay clearance will do. My driver's license is still addressed in Tacloban City, so I had to secure a barangay
clearance from the barangay hall. They asked me for proof of billing with my name on it. I presented original
copies of my bank statement and internet bill that is why they issued me the document. I acquired cedula at the
barangay hall, too so there's no need to acquire cedula at the city hall anymore.

While waiting for your police clearance you may go to any nearby accredited laboratory to have your stool and
sputum examined. I chose Gilcare Diagnostics because of its short waiting time. I did not choose City Health
because I've read in some blogs that getting the applicants' specimens examined and waiting for the result there
takes forever.

STEP 2: SECURE ORDER OF PAYMENT FOR MAYOR'S PERMIT and HEALTH CERTIFICATE

After obtaining the documents, you are ready to get your order of payment at the tent in front of Land Bank. There
are separate lines for getting order of payments for Mayor's Permit and Health Certificate, respectively. It took me
almost an hour to wait in each line.

STEP 3: PAY AT THE CITY TREASURER'S CASHIER

The City Treasurer's cashier is located near Landbank. It took me more than an hour to wait in line just to pay. I
paid Php170 for Mayor's Permit and Php94 for the Health Certificate.

STEP 4: SECURE APPLICATION FORM FOR OCCUPATIONAL PERMIT

Oh, yes. After paying at the City Treasurer's Cashier, I had to go back to the same tent in front of Landbank just
to fall in line for the application form. I waited for less than an hour to fall in line for a piece of paper. It would be
too late to complain because I am a step away to get my occupational permit.

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Oh, and by the way, the Quezon City Hall website says you can actually download the form to avoid the long
queue. I did not notice any applicants filling up a downloaded form so I just followed what they did by falling in
line.

STEP 5: HAVE YOUR PICTURE TAKEN AT THE BUSINESS PERMIT LICENSING OFFICE

I actually fell in line for less than 30 minutes, so it was okay. I met a beauty consultant from Revlon who happened
to be processing her occupational permit, too. Her name is Adele and she works in Ortigas. Having our picture
taken was quick.

STEP 6: WAIT FOR THE RELEASE OF YOUR OCCUPATIONAL PERMIT AT THE BASEMENT

Well, we waited for more than 2 hours for the release of our occupational permit which I did not mind at all
because we were given the chance to sit down. So, while waiting for the document, Adele and I had a long
conversation. The security guard in charge of the release was actually very nice.

Notice the discrepancies with the amount I paid at the City Treasurer's cashier and the amount indicated in my
occupational permit.

ACTUAL AMOUNT PAID AT AMOUNT INDICATED IN THE

DOCUMENT THE CITY TREASURERS OCCUPATIONAL PERMIT
CASHIER

Mayors Permit Php 170 Php 150

Health Certificate Php 94 Php 50

A total discrepancy of Php 64.00! Actually, the small amount is no big deal to me that is why I did not contest
that small discrepancy. However, it crossed my mind that if we would consider the number of taxpayers getting
an occupational permit every year, then Quezon City would raise a lot of revenue.

Anyway, to those who came across my blog entry, please do not be discouraged with the process I went through
because by the time you apply for occupational permit, you might not experience the hours of waiting I went
through. One reason why it took two days to process my occupational permit is because I applied on January
2015. January is the month when employees would also renew their permits and they are required to renew before
January 31. Meaning to say, there was plenty of people. The process would also depend on your City Hall. I've
heard that the processes in Makati and Bulacan are faster, compared to Quezon City.

To our Business Processing and Licensing Division, I have suggestions which I highly recommend as a taxpayer
of Quezon City. If you come across my blog, I hope you consider my constructive criticism. The problem is the
difficulty in processing our occupational permit. I see the root cause in the unnecessary queues. The taxpayers
need to fall in line five times, to wit:

1) Get order of payment for mayor's permit.

2) Get order of payment for health certificate.
3) Pay at the City Treasurer's cashier.
4) Get application form for occupational permit.
5) Have our picture taken at BPLO building and wait for the release of the occupational permit.

So, here are my suggestions: The queues in numbers 1 and 2 can be consolidated in one queue and there's no
need for a queue in number 4 anymore. I suggest that application forms should be readily available with the
security guard just like SSS, BIR and other government agencies. Your website provided a link to download the
application form for printing and that's good. In cases of long queues, a personnel should check the requirements
of applicants waiting in line to see whether they are complete or not. I noticed some applicants who fell in line for
nothing because they lack requirements. Remember, these people are taxpayers too. We contribute a lot in raising
revenue for Quezon City. So, I suggest for your division to assist us by restructuring the process in getting permits
especially during peak times. If Quezon City is promoting Anti-Red Tape, you can start by eliminating the
unnecessary queues. 18

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_________________
References

1 Blog by Victorino Abrugar, CPA - http://businesstips.ph/how-to-register-with-the-bir-for-professionals/

2 Reviewer on Taxation by Atty. Victorino C. Mamalateo 2014 Edition pg. 337
3 Ibid pg. 344
4 Blog by Louis Delos Angeles, CPA - http://investinginphilippines.com/benefits-of-filing-your-income-tax-return/
5 Sec. 254 National Internal Revenue Code
6 Income Tax Law and Accounting by Virgilio T. Reyes 2012 Edition
7 Tax Guide for Professionals pg. 8 - ftp://ftp.bir.gov.ph/webadmin1/pdf/taxguide.pdf
8 Revenue Regulations No. 10-2008 Section 2.83.3, as amended
9 National Internal Revenue Code (NIRC) Sec. 238
10 NIRC Sec. 237
11 NIRC Sec. 116
12 Tax Guide for Professionals pg. 6
13 NIRC Sec. 109 (v), as amended
14 https://efps.bir.gov.ph/eFPSFAQ.html
15 Revenue Memorandum Circular (RMC) 19-2015 No. 5
16 RMC 19-2015 No. 8
17 RMC 19-2015 No. 9
18 http://joahnacheska.blogspot.com/2015/02/how-i-acquired-my-occupational-permit.html

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