BIR had made a system to sort taxpayers according to their size, sales, purchases, assets amount of tax payments, etc. This system helped BIR in monitoring the level of compliance, trends and analysis and revenues to be generated by the government from these large buckets.
How are these taxpayers identified?
BIR identifies large taxpayers by monitoring the amount of their tax payments for VAT, PT, WHT, Excise Tax, CIT and DST. It may also be according to their gross sales and purchases, financial condition and results of operations.
For further reading, please refer to these regulations for specific criteria:
Large taxpayers - RR 1-1998
Top 20,000 corporations - RR 14-2008, RR 6-2009
How will the taxpayer know that it is classified as such?
A formal notice from the BIR will be issued to the taxpayer once it is identified by the BIR. The start date to comply is usually stated in the notice. It is very important that the notice is forwarded to the correct address and person so necessary action will be done. For this purpose, taxpayers should notify the BIR of any change in address.
How is compliance different from non-large taxpayers?
As expected, large taxpayers have more compliance requirements than non-large taxpayers. The following are additional requirements:
1. Monthly withholding tax to suppliers of goods and services
2. Additional 2307 preparation due to broader scope of withholding
3. Filing of Semestrial List of Regular Suppliers
4. Filing and payment of returns in eFPS
5. Filing of hard copy documents such as annual CIT and attachments in National Office
6. Use of Computerized Accounting System for those considered as large taxpayers as required in RR 9-2009
A special team is assigned to monitor the compliance of these taxpayers to ensure that proper taxes are remitted on time. Therefore, it is very important to know and understand the requirements. This will prepare the taxpayer in case of tax inquiry/audit in the future.
For questions or feedback, please comment below.
Disclaimer: The views or opinions in this article are mine. This is not a substitute for seeking professional advice.
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