De Minimis Benefits Values


deminimis 2De Minimis Benefits are tax exempt.  These benefits were outlined and defined by the Bureau of Internal Revenue (BIR) in the issuance of Revenue Regulation No. 3-98 and several amendments since its adoption such as RR No 8-2000, RR No. 15-2011, RR No. 8-2012, RR No. 1-2015 and the latest issuance as of this writing is RR No. 3-2015.

There are several sites discussing the topic and even the BIR per se. But how much really is the maximum amount of the benefits if we convert these into peso amount  on a monthly or yearly basis?

The table below will give you a guide on the peso amount assuming a Minimum Wage Earner located in NCR or a daily wage of P454.00.deminimis

But then gain in the application of de minimis benefits, its important to note the stated limits.  Further, it is also important to consider policies created by the company such as (1) Sick & Vacation Leave (SLVL) and  (2) Health policy covered by an HMO.  Lastly, it is important as well to finally consider if a company is under a CBA agreement.

Bottom line, De Minimis Benefits were created as employees privileges and these are relatively small in value and non-taxable.

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TAXATION FOR PROFESSIONALS


True Wellness WarriorsTaxation, in general, is not that popular with most small & medium business owners. The same scenario exists for those professionals who wanted to practice their chosen profession such as doctor. Perhaps because most of the time, taxation is synonymous with a reduction to the overall profitability of a certain business. However, Taxation is a MUST particularly if you wanted to start a business.

Last May 30, 2015, I conducted a seminar entitled “Taxation for Professionals” at the Bayview Park Hotel in Manila organized by True Wellness Warriors. True WellnessThe seminar was specifically intended for doctors who wanted to practice profession and of course doctors who wanted to venture into business such as clinic and the like. The topics I prepared are basically about BIR registration, invoicing compliance, bookkeeping requirements, tax computation, penalties, interest & surcharges, and important dates. Yep, it’s practically an ultimate guide for professionals who wanted to become self-employed and yes starting a business too.  Whew! the question and answer portion is the most exciting portion of the seminar.

WarriorsAnyhow, since I already caught your attention and you are now browsing through and reading this article, I would like to share you the requirements first before we go to the step-by-step procedures, okay?

Okay, if you are a professional, a doctor, lawyer or an accountant, here are the requirements that you need to accomplish.

1. A registered TIN number
2. One original and two photocopies of BIR Form 0605
3. Photocopy of your birth certificate (NSO)
4. Photocopy of your marriage certificate (if married) and the birth certificate/s of your dependents, if you have any
5. Two copies of completed BIR 1901 form
6. Photocopy of proof of address
7. Payment of Professional Tax Receipt (PTR)
8. PRC License
9. Affidavit indicating the rates, manner of billings, and the factors considered in determining service fees (as specified in BIR Revenue Regulation 4-2014). You can download a sample affidavit here.

After securing all those requirements mentioned, here is what you need to do next.

Step 1 – is to know you Revenue District Office (RDO)

Step 2 – go to the RDO and register by filling up BIR Form 0605 (payment form) and pay Php500.00

Step 3 -Fill up BIR FORM 1901 (application for registration) and submit the needed requirements

Step 4 – Apply for Invoices/Receipts using BIR FORM no. 1906 – Authority to Print (ATP). Release of ATP is usually 3-5 working days.

Step 5 – Register books of accounts and have them stamped by RDO where you are registered. These are:(1) Journal (2) Ledger (3) Subsidiary Professional Income Books (4) Subsidiary Purchases (5) Expenses Books

There. Simple, yes?  Congratulations, you can now start becoming a self-employed professional.  Good luck!

BIR related, How is a particular taxpayer selected for audit?


Officers of the BIR, like for example the Revenue District Officers, the Chief of Large Taxpayer Assessment Division, or the Chief of Excise Taxpayer Operations Division, or even the Chief of Policy Cases and Tax Fraud Division, are responsible for the conduct of audit and/or investigation.  The same offices are the one responsible for the preparation of a list of all taxpayer who fall, again, again, who fall within the selection criteria prescribed in a Revenue Memorandum Order issued by CIR to establish guidelines for the audit program of a particular year.

The list of taxpayers shall then be submitted to their respective Assistant Commissioner for pre-approval and to the Commissioner of Internal Revenue for final approval. The list submitted by RDO shall be pre-approved by the Regional Director and finally approved by Assistant Commissioner, Assessment Service.

The following statements were lifted from RMO 19-2000 for your reference

Selection of said returns for audit shall be based on the following order of priority:

(1) tax cases for audit based on policy direction of the Commissioner;

(2) taxpayers with third party information which resulted to substantial reduction in tax payments; and

(3) taxpayers with low tax compliance.

Taxpayers under the jurisdiction of the Large Taxpayers Service and Excise Taxpayers Service are not covered by the Order. Only the Revenue District Offices are authorized to conduct a short-term audit. In no case shall the Assessment Division and Special Investigation Division in the Regional Offices be allowed to perform a short-term audit of tax returns. All Letters of Authority (Las)/Audit Notices (ANs) shall be issued and approved by the Regional Director. However, no Las/ANs shall be issued by the Regional Director without prior written approval of the ACIR, Assessment Service. Only Revenue Officers-Assessment Group shall be authorized to conduct audit and investigation of tax cases, whether in a principal or assisting capacity. The same Revenue Officer and/or Group Supervisor shall not be assigned to audit/investigate the same taxpayer during the year except when this is not possible due to limited number of Group Supervisor/Revenue Officer in the RDO.

HOWEVER, pleaser refer RMOs 64-99, 67-99, 18-2000 for further information.