2009 year-end tax reminders

by: Arnold P. Supilanas

(Published in BusinessWorld on December 22, 2009)

The year 2009 is about to end. Aside from Christmas-related activities, companies also start planning for year-end activities related to various compliance requirements of the Bureau of Internal Revenue (BIR).  Some of these compliance requirements are the filing of annual returns, lists and schedules.

Here are some tax reminders for the year ending 2009 and the coming year 2010.

Registration of Manual Books of Accounts.  Taxpayers using manual books of accounts are required to register their books before using it. Manual books of accounts that are intended for use in 2010 should be registered with the BIR on or before December 31, 2009. 

However, the BIR simplified its rules when they issued Revenue Memorandum Circular (RMC) No. 82-2008. Under the said regulations, manual books that have been registered by a taxpayer but have not yet been fully utilized can still be used in the succeeding years without the need for re-stamping. 

The only requirement is to label the pages applicable to a particular period for proper monitoring.  In other words, a new set of books shall be registered only when the previously registered books have been fully utilized.  Therefore, taxpayers are not required to register a new set of books every year.

Annualization of Withholding Taxes of Employees.  This process involves the preparation of the:
           - monthly withholding tax return (BIR Form 1601-C) for December which is due on January 15, 2010 for manual filers or on January 12 to 15 for those under the Electronic Filing and Payment System (EFPS), depending on their industry grouping; (
          - Annual Information Return of Income Taxes Withheld on Compensation (BIR Form 1604-CF) including the alphabetical listing of employees which is due on February 1, 2010;
          - Certificates of Compensation Payment/Tax Withheld (BIR Form 2316) which is also due for distribution to employees on or before February 1, 2010.

Those preparing these returns have to remember the increased amount of basic personal and additional exemptions of individual taxpayers amounting to P50,000 and P25,000, respectively, regardless of status (i.e., single, head of family or married) and the tax exemption of minimum wage earners.

Preparation of Inventory List.  Under existing tax regulations, taxpayers are required to file an inventory list of stocks-in-trade, raw materials, goods in process, supplies, and other goods not later than 30 days after the close of the taxable year. 

Hence, taxpayers whose accounting period ends on December 31, 2009 should file their annual inventory list on or before January 30, 2010. In preparing the inventory list, taxpayers should ensure that the amount of ending inventory declared in the list will be the same amount reported in the audited financial statements as well as in the annual income tax return.

Since the inventory balances in the list are unaudited, it is advisable to submit an amended list in case there will be material audit adjustments.  It is important that the inventory balances in the inventory listing should tally with the inventory balances in audited financial statements and annual income tax return.

Compliance with eDST System.  Taxpayers who are mandated to use the web-based electronic documentary stamp tax (eDST) system in the payment/remittance of their documentary stamp tax (DST) liabilities and the affixture of the prescribed documentary stamp on taxable documents have until December 31, 2009 to comply with the transitory provisions of Revenue Regulations (RR) No. 07-2009. Under the said regulations, eDST system will be fully implemented by the BIR beginning January 1, 2010. 

It is never early to prepare for your taxes. If your company wa nts to have a smooth year-end and begin 2010 stress-free, it is best to start preparing for all the BIR requirements before the year ends to get a head start on your tax preparation next year.