BIR Concerns

[muffin]

no bro, wala ka ng kinalaman sa mga umuupa ng machine mo, bale yung sa yo lang ang kukuhanan mo ng permit. and one more thing, what i mean sa contract of lease ay yung pwesto ng business mo or what you called your headquarters. Kung inuupahan mo yung place, kailangan ng BIR ng Contract of lease, pero kung sarili mo yung place, yung tax declaration lang ng real property ang ipapakita mo sa BIR. Kung yung place ay pagaari ng parents mo o ng ibang tao pero wala ka namang upa, mag-execute ka na lang ng affidavit of no rent. Lastly, dapat yung umuupa sa iyo ng machine ay kaltasan ka ng withholding tax sa mga ibinabayad sa iyo

 

sorry sir sobrang newbie ako sa taxation when it comes to business.

how does witholding tax work?

how much percent ang kaltas sa rent na binabayad nila sa akin? how do i remit the witholding tax?

is that the only tax i have to pay? what about income tax?

so if my headquarters is my home which my mom is renting (she's the one in the leasecontract) then i can execute affidavit of no rent?

 

sorry bro ang daming tanong. I just want to start out my business on the right foot and everything to be legal.

by the way, if i need someone to maintain my books do you offer such services? simple lang naman accounting ng business ko. rent income, transpo expense, salaries ng helper, repairs, acquisition of new machines. interest payments, loan acquisition, depreciation expense. Puro basic bro. I can do it in the long run pero i just need someone to teach me during the first few months or so until i can get the hang of it. Then come january, do you also certify books?

[wizard23]

Hi wizard23

 

It is more prudent if you file an application for cessation of or retirement from business using BIR Form 1905. If you have substantial input tax credits, you can then ask for a refund or tax credit certificate (TCC) from the BIR. Refunds or TCCs though take a long time. Most likely, you will have to go to the Court of Tax Appeals before you can get one.

 

Good luck.

 

 

got it. thanks for the advice azayco!

[in_style]

thanks for all the members who goes of their way to give advises.

bug help to the members!

[azayco]

sorry sir sobrang newbie ako sa taxation when it comes to business.

 

how does witholding tax work?

how much percent ang kaltas sa rent na binabayad nila sa akin? how do i remit the witholding tax?

is that the only tax i have to pay? what about income tax?

so if my headquarters is my home which my mom is renting (she's the one in the leasecontract) then i can execute affidavit of no rent?

 

sorry bro ang daming tanong. I just want to start out my business on the right foot and everything to be legal.

by the way, if i need someone to maintain my books do you offer such services? simple lang naman accounting ng business ko. rent income, transpo expense, salaries ng helper, repairs, acquisition of new machines. interest payments, loan acquisition, depreciation expense. Puro basic bro. I can do it in the long run pero i just need someone to teach me during the first few months or so until i can get the hang of it. Then come january, do you also certify books?

 

Withholding tax - in your case, you earn rental income. The lessee will pay you the rental fee of P1,000, for example. He will not give you the full P1,000. He will give you P1,000 less the withholding tax. For rental of video arcade machines, I think the withholding rate is 5% (if rentals exceed P10K annually) or in the example, P50. Thus, the lessee will pay you P950 and he (not you) will remit the P50 to the BIR. Make sure that you ask for a Certificate of Tax Withheld.

 

Yes, you are subject to income tax. If you will operate as a sole proprietor, you will include your income from this video arcade business in your personal income tax. (This will be a bit tricky administratively because you will have to coordinate with the HRD of your employer.) If you decide to set up a corporation, you will have to file the corporate income tax return (quarterly and one final on April 15 of each year).

 

For accounting services, better if you do it yourself or get a good referral from your friends.

[muffin]

Withholding tax - in your case, you earn rental income. The lessee will pay you the rental fee of P1,000, for example. He will not give you the full P1,000. He will give you P1,000 less the withholding tax. For rental of video arcade machines, I think the withholding rate is 5% (if rentals exceed P10K annually) or in the example, P50. Thus, the lessee will pay you P950 and he (not you) will remit the P50 to the BIR. Make sure that you ask for a Certificate of Tax Withheld.

 

Yes, you are subject to income tax. If you will operate as a sole proprietor, you will include your income from this video arcade business in your personal income tax. (This will be a bit tricky administratively because you will have to coordinate with the HRD of your employer.) If you decide to set up a corporation, you will have to file the corporate income tax return (quarterly and one final on April 15 of each year).

 

For accounting services, better if you do it yourself or get a good referral from your friends.

 

Naku, how do i work around is, now my problem is most of my lessees are just housewifeves trying to earn extra income and they no nothing about remitting WHTax, is there a work around for this? Let's put it this way, it's too much hassle for a housewife to remit WHtax.

[azayco]

Hi muffin

 

Check first if each of your lessee reaches the P10K threshold required for withholding.

 

If they do not reach the 10K threshold, they do not have to withhold.

 

If they do reach the 10K threshold, you can ask them that you can take on the responsibility of withholding the required amount. This will have some cost on your part (time, effort, admin work of your bookkeeper) but it will achieve your objective of making everything aboveboard and in order.

 

[muffin]

Hi muffin

 

Check first if each of your lessee reaches the P10K threshold required for withholding.

 

If they do not reach the 10K threshold, they do not have to withhold.

 

If they do reach the 10K threshold, you can ask them that you can take on the responsibility of withholding the required amount. This will have some cost on your part (time, effort, admin work of your bookkeeper) but it will achieve your objective of making everything aboveboard and in order.

 

 

ok, lets see if i get it right: Example, if one of my arcade machines is being leased for 4k a month by the lessee, then there's no need for witholding tax declaration anymore?

correct me if i'm wrong please. thanks.

what's the right procedure and how much percent is the WHT if only 4k a month is lease amount?

[jackbrng]

ok, lets see if i get it right: Example, if one of my arcade machines is being leased for 4k a month by the lessee, then there's no need for witholding tax declaration anymore?

correct me if i'm wrong please. thanks.

what's the right procedure and how much percent is the WHT if only 4k a month is lease amount?

 

correct ko lang previous post ko......

upon review of BIR Revenue Regulation 2-98, i don't see any provision that subject arcade machine to withholding tax. the rental stated on RR 2-98 was for rental of real property. so in my opinion, your rental income from arcade machine will not be subjected to withholding tax since it was not indicated on the said revenue regulation.

[azayco]

ok, lets see if i get it right: Example, if one of my arcade machines is being leased for 4k a month by the lessee, then there's no need for witholding tax declaration anymore?

correct me if i'm wrong please. thanks.

what's the right procedure and how much percent is the WHT if only 4k a month is lease amount?

 

If the lease is 4000 a month, you need to withhold 5% because the annual rental amounts to 48000, which is greater than the 10000 threshold set by BIR regulations. To facilitate the withholding process, you prepare the proper BIR form, have it signed by your lessee and then file it with the BIR together with the payment.

 

Hope that helps.

 

Sir jackbrng, I found a provision in RR 2-98 on rental of personal properties under an operating lease scheme. It's Section 2.57.2©(2). My opinion is this covers arcade machines. Please let me know if you agree.

[axlerose100]

You could also get the services of an accounting firm to take care of all your BIR requirements. My accountant takes care of filing all my ITRs, VAT reports, registration, etc. It will cost more but in my experience, the convenience is well worth it. This also saves you from seeing all those BIR SOBs taking away your hard earned money personally.

[jackbrng]

If the lease is 4000 a month, you need to withhold 5% because the annual rental amounts to 48000, which is greater than the 10000 threshold set by BIR regulations. To facilitate the withholding process, you prepare the proper BIR form, have it signed by your lessee and then file it with the BIR together with the payment.

 

Hope that helps.

 

Sir jackbrng, I found a provision in RR 2-98 on rental of personal properties under an operating lease scheme. It's Section 2.57.2©(2). My opinion is this covers arcade machines. Please let me know if you agree.

 

thanks sir azayco for clarification. but its not on BIR Revenue Regulation No. 2-98 anymore, its on BIR Revenue Regulation No. 14-2002, amending BIR RR No. 2-98. In my opinion, arcade machine will fall under "all other computer machines/equipment" and subject to 5% Creditable Withholding Tax.

[muffin]

You could also get the services of an accounting firm to take care of all your BIR requirements. My accountant takes care of filing all my ITRs, VAT reports, registration, etc. It will cost more but in my experience, the convenience is well worth it. This also saves you from seeing all those BIR SOBs taking away your hard earned money personally.

 

can you pm me your number sir? i'd like to ask how much and who do you get for your accounting? thanks

[muffin]

thanks sir azayco for clarification. but its not on BIR Revenue Regulation No. 2-98 anymore, its on BIR Revenue Regulation No. 14-2002, amending BIR RR No. 2-98. In my opinion, arcade machine will fall under "all other computer machines/equipment" and subject to 5% Creditable Withholding Tax.

 

Okay I see. so i have to file my income tax and withholding tax 5% as well....?

[azayco]

Sir Jackbrng - Thank you. I meant RR 2-98, as amended by RR 14-02. Just forgot to qualify. He he

 

Sir Muffin - Yes. you have to file income tax return and also pay withholding tax. Withholding tax is essentially paying your income tax in advance or a prepayment. At the end of the year, or more specifically on April 15 of the following year, you will compute your income tax and deduct all prepayments in the form of withholding tax. So on April 15, you only need to pay the balance (total income tax payable less withholding payments.) It is therefore very important that you keep the Certificates of Tax Withheld because these will constitute proof of withholding tax payments. Good luck bro.

[jackbrng]

Sir Jackbrng - Thank you. I meant RR 2-98, as amended by RR 14-02. Just forgot to qualify. He he

 

no problem sir, thank you din, medyo O.T. sino ba mas pogi sa avatar natin, hehehhe

 

anyway, at least naging active na naman itong thread na ito.

 

:thumbsupsmiley: :thumbsupsmiley: :thumbsupsmiley:

[azayco]

Jackbrng - Yours has a more winning smile. Haha!

 

Anyway, to remain on topic, I'll post RA 9178 or the Barangay MicroBusiness Enterprise Act which gives incentives to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities whose total assets (excluding the land on which the particular business entity's office, plant and equipment are situated) shall not be more than 3 million Pesos.

 

The incentives are:

 

1. income tax exemption

2. exemption from Minimum Wage Law

3. Credit lines from government financial institutions

4. technology training from the DTI

 

For SME entrepreneurs in the qualified industries, you may check the law here.

[jackbrng]

good news!

 

kakapirma lang ni pres. gma ng RA 9504 exempting minimum wage earner from income tax. so wala na ring withholding tax ang mga minimum wage earner. concern ko lang kung ano mangyayari sa withholding tax remitted prior to enactment of RA 9504. in my opinion kasi, magiging tax refund ito. basahin ko muna RA 9504 tapos update ako dito.

[tio_pot]

good news!

 

kakapirma lang ni pres. gma ng RA 9504 exempting minimum wage earner from income tax. so wala na ring withholding tax ang mga minimum wage earner. concern ko lang kung ano mangyayari sa withholding tax remitted prior to enactment of RA 9504. in my opinion kasi, magiging tax refund ito. basahin ko muna RA 9504 tapos update ako dito.

 

Kailan na kaya ang implementation nito? Kasi kung 2008, naku ang dami ng irerefund nyan. Sana sa January 2009 na lang para mapaghandaan at hindi masyado magulo. Kung irerefund man, katakot-takot na kayamanan ang ibabalik at paghihintay ng employers sa BIR sa pagrefund. Hay!

[jackbrng]

Kailan na kaya ang implementation nito? Kasi kung 2008, naku ang dami ng irerefund nyan. Sana sa January 2009 na lang para mapaghandaan at hindi masyado magulo. Kung irerefund man, katakot-takot na kayamanan ang ibabalik at paghihintay ng employers sa BIR sa pagrefund. Hay!

 

napirmahan na kahapon eh, so i-publish pa ito tapos gawan pa ng guidelines, siguro sa july or august na implementation nito.

 

malamang dami ng tax refund nito, kaya ako di na ako magwithheld sa katapusan, para maliit na lang atraso ng bir sa amin. hirap din kaya magpa-tax refund. hehehe

[tio_pot]

napirmahan na kahapon eh, so i-publish pa ito tapos gawan pa ng guidelines, siguro sa july or august na implementation nito.

 

malamang dami ng tax refund nito, kaya ako di na ako magwithheld sa katapusan, para maliit na lang atraso ng bir sa amin. hirap din kaya magpa-tax refund. hehehe

 

Question lang... Kung ang minimum wage ay 382.00 na, then we follow the computation sa table nila at ang exemption ay 50k lang, meron pa rin ikakaltas na around 8k/year. ang labo naman! Sana 2009 na lang ang implementation para wala masyado adjustment for 2008. Wrong timing kasi mid year na tsaka implement

 

Kainis pa yung ibang nagtatanong... Sasabihin pa na pinublish na sa dyaryo at papakita pa yung picture ni madam gloria na pumipirma. kaya dapat wala na kaltas. Minsan mahirap paliwanagan pero nakakatawa lang din naman sila. hehehe...

[jackbrng]

Question lang... Kung ang minimum wage ay 382.00 na, then we follow the computation sa table nila at ang exemption ay 50k lang, meron pa rin ikakaltas na around 8k/year. ang labo naman! Sana 2009 na lang ang implementation para wala masyado adjustment for 2008. Wrong timing kasi mid year na tsaka implement

 

Kainis pa yung ibang nagtatanong... Sasabihin pa na pinublish na sa dyaryo at papakita pa yung picture ni madam gloria na pumipirma. kaya dapat wala na kaltas. Minsan mahirap paliwanagan pero nakakatawa lang din naman sila. hehehe...

 

imho, this is not in a wrong timing. nagtataasan na po lahat ng bilihin, kawawa naman mga minimum wage earner. Asan naman po yung social responsilibility ng mga employer kung iisipin nila yung hirap ng adjustments vs. sa benefits ng mga employee.

 

i think, kahit na kamo may ikakaltas na around 8k/year, bale wala na ito dahil sa exemption sa income tax na ibinigay sa minimum wage earner ng bagong batas, or, better wait for the dof or bir guidelines sa implementation ng RA 9504 para mas malinaw. Siguro, may bagong lalabas din na Withholding Tax table at Income Tax table bungsod ng pagbago ng exemptions.

[in_style]

wow... nice to see this thread has been helpful to alot of people.

keep it coming, guys!

 

god bless those who share their knowledge and expertise!

rock on...

[tio_pot]

Kahapon yung public hearing ng BIR on the proposed revenue regulations implementing pertinent provisions of Republic Act No. 9504 relative to the withholding of income tax on compensation.

 

Meron bang may update dito?

[black cat]

^Draft pa din ang meron ako.. effective July 6, 2008.. though usually yun draft yun na rin ang naiimplement eh. If you need a copy, pm me your email and I'll send you. 50k na ang personal exemption regardless kung single, head of the family or married. 25k for each qualified dependent.

[black cat]

sorry sir sobrang newbie ako sa taxation when it comes to business.

1. how does witholding tax work?

2. how much percent ang kaltas sa rent na binabayad nila sa akin? how do i remit the witholding tax?

3. is that the only tax i have to pay? what about income tax?

4. so if my headquarters is my home which my mom is renting (she's the one in the leasecontract) then i can execute affidavit of no rent?

 

sorry bro ang daming tanong. I just want to start out my business on the right foot and everything to be legal.

by the way, if i need someone to maintain my books do you offer such services? simple lang naman accounting ng business ko. rent income, transpo expense, salaries ng helper, repairs, acquisition of new machines. interest payments, loan acquisition, depreciation expense. Puro basic bro. I can do it in the long run pero i just need someone to teach me during the first few months or so until i can get the hang of it. Then come january, do you also certify books?

 

1. withholding tax - problema to ng nagbabayad sa yo, hindi ikaw

2. 5% (on net of VAT amount) ..yun nagkaltas po ang magreremit nun, hindi ikaw :thumbsupsmiley:

3. hindi nga ikaw ang magbabayad neto.. income tax lang ang babayaran mo.. deadline April 15.. tska VAT if you're VAT Registered

4. di wala ka lang Rent Expense

 

Kung wala ka pang nakuhang accountant, I can refer someone.