Tax Filing for VAT Registered Businesses in the Philippines

Tax filing for VAT Registered Businesses in the Philippines1

I have some friends who are VAT registered and they ask me how they can file and pay for all of their tax forms. So today (as a fellow VAT registered business), I will be sharing with you what I do. For full disclosure to all the other VAT registered businesses in the Philippines, I am not a CPA. I am one of the Co-Founders of Taxumo, an accredited TSP or Tax Software Provider in the Philippines. If you want to consult more with a CPA, feel free to book an appointment here: Taxumo Consult

Personally, I do all of my taxes by myself. I don’t have an accounting background nor am I good in Math. LOL! I just want to show you that you can comply still and have an easy time preparing, filing and paying your taxes even with just basic knowledge and by just being diligent in tracking revenue and expenses.

So let’s start…

How do I know if I am a VAT Registered Business?

VAT registered businesses in the Philippines are those that earn more than Php 3 Million Gross Sales or Revenue in one year. And how do you know if you are a Non-VAT versus VAT registered business in the Philippines? Well, our businesses and professions have one-page (or sometimes even more pages) profiles with the BIR called Certificate of Registration or COR (sample shown in the picture below). It contains all our business/professional information and the type of taxes we need to pay. VAT Entities will see “VALUE – ADDED TAX” in their Certificate of Registration or COR (Form 2303) when they register their business or profession at the BIR Revenue District office (branch of the BIR).

For the sake of this blog post, I will teach you how to use Taxumo if you have a VAT entity/business. We’ll go through 1) account set up, 2) encoding revenue that you receive and expenses that you incur, 3) discuss a little bit about withholding tax certificates and creating these and 4) filing and payment of your taxes.

VAT Forms and other Forms for VAT Registered Businesses in the Philippines

VAT Forms in the Philippines are 2550M and 2550Q. Each 2550Q or Quarterly VAT Form submission also should come with an SLSP or Summary of List of Sales and Purchases attachments that need to be submitted to the BIR. The proof that you have submitted your VAT forms is when you receive a BIR confirmation for both the filing and another email confirmation from the BIR for the SLSP attachment. Check out this image for the frequency of the forms and what forms to file. I included some basic computation, too.

Tax filing for VAT Registered Businesses in the Philippines 2
Here is the frequency of VAT filings and a simple overview of the computation

Again, if you are using Taxumo, you don’t have to memorize how these are computed. Placing this here so that you just have a basic idea.

Now, some businesses are also assigned this tax type, “Withholding Tax – Expanded / OTH”. When you see this in your Certificate of Registration or COR, you are a Withholding Tax Agent. This means that for all of your payments and expenses, you will need to withhold and issue a 2307 or Certificate of Creditable Tax Withheld to the person that you paid and withheld from. I will also show you how to easily generate a form in Taxumo. And also, in another post, I’ll probably discuss this more.

Setting up my Account in Taxumo as a VAT registered business in the Philippines?

First off, you just need to go to https://www.taxumo.com and sign up for FREE. You don’t need to pay yet… you only pay when you are ready to file your tax forms.

Once in the site, go to your SETTINGS tab and check if you have filled it up correctly. Most of the Taxpayer Details can be seen in your Certificate of Registration (so don’t panic). Please copy what’s shown in your COR and please don’t forget to check out the TOOL TIP or that aqua check mark to give you further instructions.

Then for your BUSINESS PROFILE, know that you can make a new profile for each year. Let me go through each field…

Line of Business: Copy the Industry code stated in your COR

I want to file my taxes from: If you just recently got your COR, indicate the date when they released your COR. It’s usually stamped, written or typed at the bottom of your COR. If you are switching from manually filing, just indicate the date today.

Business Type: Please indicate if you are selling goods or product, providing services or both.

VAT Registered businesses in the Philippines use Taxumo 11

Income Source: If you are a corporation, partnership or sole proprietor and you are not employed by a local employer, choose solely from business. If you have a profession and business AND employed (employee with a local employer), choose mixed from business and employment. If you are a licensed professional (ex. Doctor, lawyer, etc.; people with PRC licenses), Financial Advisor with IC license, or a Non-Licensed Professional (ex. Sales agents, Freelance Consultant, Writer, Digital worker, etc.), choose income from profession.

VAT Registered businesses in the Philippines use Taxumo 10

Income Tax Rate Type: For VAT registered businesses in the Philippines, your only option is Graduated Income Tax. You cannot opt for the 8% Gross Receipt Tax.

VAT Registered businesses in the Philippines use Taxumo 9

Taxpayers Type: Choose which applies to you from the choices.

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Deduction Method: You can choose between Optional Standard deduction (declare that 40% of your Gross Revenue are your expenses) or Itemized Deduction (include all expenses in the computation of taxes and consider all the line items).

My Business is under BMBE Law: If you have a Barangay Micro business Enterprise (BMBE) certificate then click on Yes. Otherwise, click on No.

VAT Registered businesses in the Philippines use Taxumo 7

Now make sure that the Tax forms that you highlight in Aqua are those that are in your Certificate of Registration or COR.

VAT Registered businesses in the Philippines use Taxumo 6

Don’t forget to click on SAVE. So that’s it for setting up your account in Taxumo. Now let’s go to filing and paying your taxes.

So in the TAX DUES tab, you will see the taxes that you need to pay and those that you might have missed (this is based on the date that you have inputed in the “file my taxes from” date in the settings page and NOT from BIR, so don’t panic). If you have already paid these manually, you can just click on “hide card”.

Each card or box is a tax form that you need to file. These taxes are grouped as to the kind of tax it is. The black box is the tax type (ex. Income tax, Value Added Tax, etc.).

VAT Registered businesses in the Philippines use Taxumo 5

Now, for the system to prepare and compute your taxes, you need to feed it information. It needs to know the revenue that you received, the expenses that you incurred, the withholding tax forms that you either received or passed on to your supplier.

In the CASHFLOW tab, this is where you add your Income and Expense entries.

VAT Registered businesses in the Philippines use Taxumo 4

For the Revenue that you received, click on ADD in the box for “Your income”. This box will pop up and you can just fill in these fields.

VAT Registered businesses in the Philippines use Taxumo 3
Important to get the TIN and the address of your Client / Customer

For adding expenses, just click on the ADD button in the “Your expenses” box and fill in the details in this pop up. If you are required to withhold, meaning you have “Withholding Tax – Expanded / OTH” in your COR, please don’t forget to check the tick box in the lower part of the screen if you withheld for this particular transaction.

VAT Registered businesses in the Philippines use Taxumo 2
Look at the bottom — there is a tick box for the Expanded Withholding Tax generator of Taxumo

By the way, for VAT entries (both income and expenses), be sure that you have the TIN and the address of your suppliers and even clients.

To continue, after clicking on the submit button, it will lead you to this pop up that will ask for information about the withheld amount, the Tax Code, etc.

For the Tax Code, it’s a drop down of all the tax codes that you can use. If your supplier is a corporation, the Code will probably start with a WC. If your supplier is an individual, the code will start with a WI and if your supplier is a bank, the code will probably start with a WB.

What I have I personally encountered as a supplier (since I am not a withholding agent or not required to withhold), my clients normally ask me what code do I use. I would check on the other 2307 forms that I receive and give them that code. If you are required to withhold, get a copy of the 2303 and if your supplier is non-VAT, get a copy of the Notarized Sworn Statement, too. This will help you identify what code to use.

Once you have completed that in Taxumo, Taxumo will automatically generate a 2307 form like this for you.

Again, this Withholding Tax Generator feature is only applicable and used by those with “Withholding Tax – Expanded / OTH” in their COR. If you don’t have this, you can just untick the box or make sure that the box is unticked when you add an expense in Taxumo.

Once you have encoded all the details, you can now go back to the TAX DUES tab and click on FILE NOW. This is when you will need a subscription to continue.

VAT Registered businesses in the Philippines use Taxumo 1

The beauty of Taxumo is that you know exactly how much you need to pay on the due date of a tax form. When you encode the data that they system needs, taxes are AUTOMATICALLY CALCULATED and dues or the amount that you have to pay are shown.

If you have tax dues to pay, you can pay via GRABPAY, PAYMAYA for Debit and Credit Card, GCASH, Online / Mobile Banking, Over the counter – Banks and Over the counter – Non banks (like Robinsons, Cebuana Lhuillier, etc.)

Just wait for a few days then visit your PAST FILINGS Tab under TAX DUES (left menu bar). For 2550Q, you will see all these attached: BIR Confirmation, Summary list of Sales, Summary List of Purchases and Tax Payment Record. For 2550M, you will see the BIR Confirmations and the Tax Payment Record.

Completed filing!

So that’s it! That’s how I prepare, file and pay for my VAT Filings. I hope that other VAT registered businesses in the Philippines found this blog article useful. This is how I do my taxes by myself!

If you are thinking of subscribing, the Taxumo subscription plan that you will need for this is the Small & Medium Business Plan.

Taxumo subscription plan for VAT Registered businesses in the Philippines -Monthly
If you pay on a monthly basis
Taxumo subscription plan for VAT Registered businesses in the Philippines - 2 year plan
If you get a 2 year plan

If you have any questions, feel free to message customercare@taxumo.com or chat with them using the chat box in the Taxumo Website.

Happy filing!

P.S. Here is another article that might be of interest to you: https://mommyginger.com/how-to-write-an-official-receipt-for-vat-individuals.html

Wonder Woman 1984 on HBO GO

Let’s join Wonder Woman in the 80s!

Wonder Woman 1984

I’m actually a Marvel Cinematic Universe Fan but there are some DC Comics based movies that I enjoy, too. One of the characters that I love is Wonder Woman. I loved Wonder Woman – Rise of the Warrior. This is why I’m excited to watch Wonder Woman 1984 on HBO Go. This movie that’s directed by Patty Jenkins and starring that gorgeous Gal Gadot will premiere exclusively in the Philippines from 21 April on HBO GO. I’m excited that the setting is in the 80s, the era of my childhood.

So to prepare for this premiere, Zeeka and I built the Wonder Woman™ vs Cheetah Lego set while I wore my Wonder Woman 1984 shirt!

Wonder Woman 1984

Speaking of mood and ambiance, the filmmakers turned to their trusted superpowered creative teams led by director of photography Matthew Jensen, production designer Aline Bonetto, costume designer Lindy Hemming, and composer Hans Zimmer. From colors, costumes, to creating a mall straight out of the 80’s, discover the monumental efforts it took to bring the 80’s back to life.

The setting of America 1984 in all glitz and glamour and with people having that “have it all” mentality that inevitably leads to wanting even more. For Jenkins, the setting was a personal as well as professional choice. “The initial idea of setting the story in 1984 came from my desire to see Wonder Woman in my era, an era that to me is synonymous with her, in terms of the character’s cultural popularity.”

Something to watch out for aside from the movie’s physical setting, the music is superb. It really goes with and further enhances and captures the spirit of the 80s. Considered as one of the more memorable music-centric decades in history, Jenkins had a very specific approach to the film’s music. To evoke a score that touched on the sounds from that decade, she turned to legendary film composer Hans Zimmer.

Zimmer, known for pushing the boundaries when it comes to being experimental, says his one great innovation for this film is truth. “Real musicians playing real instruments and embracing the music, adding that sense of humanity. Like Wonder Woman: honest, truthful and honorable.”

Throughout the film, Diana remains resolved in her faith in mankind, and in her unrelenting pursuit of justice. But it is that underlying theme of the film, truth—her truth—that will define whether she can become the warrior the world needs, and a hero for everyone.

Stream or download Wonder Woman 1984 on HBO GO. Download the app at the App Store or Play Store on your device. You can also access HBO GO via Cignal, Globe and Skycable or at https://www.hbogoasia.com/. HBO GO can be accessed via Android TV, Apple TV, LG TV and Samsung Smart TV – and comes with AirPlay and Google Cast functionality.

CREATE Law Percentage Tax Changes

People have been talking about it and now, new businesses want to register because of the lowered tax rate. Want to know the CREATE Law Percentage Tax Changes? If you are filing your Percentage Taxes using Taxumo, you’ll have a convenient time filing with the changes that were brought up with CREATE Act or RA No. 11534 (Corporate Recovery and Tax Incentives for Enterprises Act). For those who want to read the law, here is the link to the CREATE law.

The Comprehensive Recovery and Tax Incentives for Enterprises (CREATE) Act (Republic Act 11354) is a bill that seeks to assist businesses as a response to the pandemic situation, with retroactive provisions and lower tax rates. This was enacted to law last April 11, 2021.

CREATE Law Percentage Tax Changes

Hooray for those who are paying Percentage Taxes, the Bureau of Internal Revenue will now accept just 1% of your gross earnings for Percentage Tax (submitted via the 2551Q). From the usual 3% tax rate, taxpayers can now use the new 1% rate for their taxes. What’s tricky is that this new 1% rate is a retroactive tax rate that can be applied for all due taxes starting from July (Q3) 2020 (last year).

Taxumo is CREATE-ready for Percentage Tax Changes

The great thing about this is that for Taxumo users, this 1% tax code change has been applied to our 2551Q forms and your due taxes will be computed using this new tax code. The system also fixed this to be the default now so even new Taxumo subscribers can utilize the 1% rate with our 2551Q forms. There’s no need to worry about re-calculating stuff to take advantage of this.

This is the advantage really of being a Taxumo user. For changes like this in any computation, Taxumo makes necessary adjustments and helps you through the transition.

For example, if you filed your Quarterly Percentage Tax forms for 2020 Q3 and Q4 in Taxumo, Taxumo will compute the excess you paid and then use those as credits starting 2021 Q1. To do that, simply file your Quarterly Percentage Tax form (2551Q) for 2021 Q1, due this coming April 23 (Taxumo’s Deadline is earlier), and Taxumo will automatically compute it for you.

If you’ve already filed your 2551Q form for 2021 Q1 thru Taxumo, simply file an amendment filing by clicking either of the links below:

  1. For 8% business profile
  2. For non-8% business profile

Super easy! So if you are still not yet using Taxumo for computing, filing and paying taxes, you may want to sign up now and try it out! This is the perfect time to start using Taxumo.

Sign up here: https://www.taxumo.com

PS. Here is an article that I create before that might help you get started: https://mommyginger.com/a-freelancers-and-consultants-guide-to-using-taxumo.html

First Trimester Journey: Pregnant during COVID

Last week, we announced that I’m pregnant and Team Arbo is expecting our little one this 2021. The baby is due anytime end of September to early October. Today, I’ll share with you my first trimester journey!

My first trimester journey

We have really been planning to have another baby. Zeeka turned 8 this year and I think since two years ago, we’ve really been thinking about it. But every time, I would feel that we weren’t ready (or maybe it was just me). Then 2020 came, Zeeka turned 7 just right about before lockdown in Metro Manila happened. Then, again, we thought or I thought, I wasn’t ready, especially given the situation. Until one day, I realized that we won’t always be ready. We will never be ready.

Finding out I was Pregnant

Since we were “planning”, I started taking folic acid since middle of 2020. February 2021, I noticed some changes in the way I was feeling. I missed my period this month so as soon as I missed it, I took a home pregnancy test. Lo and behold, it came out positive! I remember placing it in and envelope and after EJ’s meeting, I handed it over to him right before our lunch break. He opened it and his eyes sparkled! haha! I knew that EJ was waiting for this moment, too. We both wanted to have around 2-3 kids.

My First Trimester Journey

Oh my gosh! I remembered my pregnancy with Zeeka to be a walk in the park. I didn’t have any morning sickness during my first pregnancy. I was glowing and radiant! But for this pregnancy, I felt horrible! I felt nauseous every single minute of the day. I would listen during meetings, but oftentimes, I would feel like vomiting so I’d stop mid-sentence sometimes while talking. What helped me a lot were Ginger candy. I didn’t have much appetite for anything really. These Ginger candies would sustain me all throughout the day.

I never forgot to drink lots of water though and coconut juice as advised by my doctor. During the early months of my first trimester, I knew that I was dehydrated so I really made sure to drink 2 liters of water a day (even if I felt a little bit bloated because of the amount of water).

Obviously, exercising with gusto was out of the question. I would walk back and forth here at home. I think I need to do more walking though now that I’m in the early days of my second quarter.

Check – ups and Blood Tests

I had online check-ups with my obstetrician. She said that that will suffice for now, and I would have a teleconsult with her after having any tests done like my transvaginal ultrasounds or blood tests. So during these times (of COVID-19), it may be best to have tele-consults first with your doctor unless you’re experiencing bleeding, or if you feel that something’s wrong.

For blood tests and urinalysis, I would call Hi- Precision Diagnostics to do home service. The first tests that my doctor had me take are FBS, CBC, urinalysis, HbsAg, VDRL, HIV 1 and 2. The tests cost me around close to Php 3000 for all of these.

As for the Transvaginal Ultrasound, I had it in In My Womb. My doctor said it was better to go to these specialized clinics first rather than take it in hospital at this point in time when cases of COVID in our country is still high. A TVS in In my Womb costs around Php 2700. In In My Womb, they make sure that you follow protocols. I have a history of having Gestational Trophoblastic Disease (GTD) so I had to mention that to them.

In the first trimester, I got a transvaginal ultrasound on eh 6th and 8th (or was it 9th week?). The reason why was the heartbeat is best detected during the 8th or 9th week. Although, the doctor saw the heartbeat during both transvaginal ultrasounds. I’m telling you this so that you don’t worry also when they mention that it’s too early to see any heartbeat. I was actually due for another ultrasound during the 12th week, but I’m scared to go out of the house.

My doctor said it’s fine and to start practicing using a doppler. We bought a doppler a long time ago during my pregnancy with Zeeka. I also bought my neighbors’ doppler recently because ours was broken. You can also buy one from Lazada. This is the link to the doppler that we use now.

Reminders for your First Trimester Journey

For the first trimester, the priority is really taking care of yourself. If you have good health, your baby will have good health, too. When you plan to leave the house for any check ups, put on a mask and face shield at home and just only remove these again when you return. Try not to touch your mask or face shield anywhere or anytime outside of the house. This was an advise that I really take to heart. Even in the car, I don’t touch or take off my mask and face shield (even if we use our own car).

I also use those Ionizers that I hang around my neck. I use an ionizer that my parents gave. You can get it also from Lazada and here is the link to the ionizer that I use.

Inside the house, we have an air purifier, too, that we place near the entrance hallway of our condo. We have the one from Xiaomi and I think it works pretty well. Here is the link to the Xiaomi Air Purifier we have at home. I really wanted to have those heavy duty ones so I’m still saving up for those. This air purifier approximately worth Php 7000 will do.

During the first trimester, aside from folic acid, I haven’t been taking other vitamins since my doctor said that vitamins and even maternal milk can make you more nauseous. True enough! I felt queasy after trying to take one cup of milk and drinking vitamin C (on separate occasions). Now that I feel better, I started taking maternal milk.

So there, that’s it for my first trimester journey. If you have something to share about your experience during your own first trimester journey or if you have any questions, feel free to message me! I’ll be glad to answer and chat with you. If you are pregnant and reading this, congratulations! 🙂 This will be an exciting journey!

P.S. Here are some of the other posts in this blog that you might be interested in

Go Invest with GInvest!

With GInvest, Invest Anytime Anywhere!

Update on this post for 2021! GInvest has new funds that you can invest in, both local and foreign funds! If you look below, I wished for them to have foreign funds, too, and they did! Maybe the GInvest people are reading.

Check out my video to learn how I create and investment plan and how to start investing in GInvest. Also, If you have wishlists, comment in the comment section below!

—————————————————–

I’ve been setting aside money for different investments. I’ve been investing since I was 27 years old. I’m using around 4 kinds on investment channels. The reason for the various channels is that I have different investment objectives for each channel. I have one that I will use for my retirement. The two other policies that we have are for the education of Zeeka (and other children, if we do have others). The last one that I have is really for emergency funds.

I personally love investing. Why? I just think that it’s like a game. Funny as this may sound, I love that investing feels like a personal game that I’m playing, and I’m competing against myself. I love that I actually have control over what happens, and the forces around me and the temptation to go shopping are my opponents! haha!

Recently, I found this cool new way of investing and it’s super easy! It’s called GInvest. So it’s hidden in our GCash App, in the “Show More” portion. Currently though, it’s on BETA and only available to a few individuals. Super blessed to be given the chance to test this.

 

So I clicked on GInvest and it asked me these questions first. You have to answer these questions as truthfully as possible since the main reason for this quiz is not to spy on you. It’s actually to get your risk profile and to get a sense of your risk appetite.

 

After you answer all of the questions, you will be shown your risk profile. In my case, I am a moderately aggressive investor.

You will then have access to the GInvest dashboard once your registration has been approved. Note that you will receive emails every step of the way. I like this, because it informs me of what’s happening with my registration / account event is I don’t open the application.

With GInvest, they will match your investment with what your risk profile is. Their partner for the investment products that they offer is ATRAM.

The ATR Asset Management​ (ATRAM or ATRAM Group) operates through ATR Asset Management, Inc. (ATRAM MF) and the ATRAM Trust Corporation. In 2009, the ATRAM Group decided to expand its presence in the fast growing domestic asset management industry by forming a dedicated business group called ATR Asset Management (ATRAM or ATRAM Group). Under this group is ATRAM Trust and ATRAM MF.

For those that don’t know, ATRAM Trust Corporation (ATRAM Trust) is the first stand-alone trust corporation in the Philippines. It received its license to operate last October 2016.

ATR Asset Management (ATRAM MF), on the other hand, was established in July 1995 as the Mutual Fund Management Co. of the Phils. (MFMCP) by the Clemente Fund Management Asia Ltd. to serve as investment adviser, principal distributor and administrator of the Mutual Fund Company of the Philippines also known as the “Kabuhayan Fund”. In 2003, Maybank ATR Kim Eng Capital Partners, Inc. purchased an 83% stake in MFMCP from some of the original shareholders thereby gaining control of the company.

Personally, I did my research first before I invested. I think they’re a pretty legit company. You can read more about them here: https://www.atram.com.ph/ATRAM/AboutUs/default.aspx

So the type of investment presented to me was ATRAM Peso Money Market Fund. This fund is a UITF or a Unit Investment Trust Fund. UITFs are types of funds that pools funds from different investors with the same objectives.

I wanted to try GInvest, so I clicked on the subscribed button, and transferred around Php 1000 for investment. Get this! The minimum investment amount is Php 50! If you want to invest extra funds every day, you actually can! So after hitting the subscribe button, I got a message that GInvest will message me back once I have the subscribed units.

It just took a couple of days (or less) before I got to see it on my dashboard as “subscribed”. For those who want more information about the ATRAM PESO MONEY MARKET FUND, don’t worry! You will receive an email that contains information about the fund like this.

 

What I like about GInvest

I like that I can easily invest. Investing before was (in my opinion) more tedious than just setting aside money for savings. I think it’s tedious because of the documentation that you need to fill out. You also need to coordinate with a financial or wealth advisor, even during the initial stages of the discussion. And lastly, to top up, you pay using bills payment channels, but to know if you have “subscribed”, you will still receive their manual “letters and official receipts” weeks after. If you want to know if your subscription was received, you will still need to check with you advisor oftentimes.

I also appreciate the amount of control that’s given by GInvest. I can invest or redeem whenever I want. I can also get updates and see my subscribed shares when I open the app.

I also like that the minimum investment amount is Php 50. When I first saw this, I couldn’t believe it!

Lastly, the “set reminder” functionality that sends an SMS to you with the amount that you set is something that is very useful. You can set it to remind you every middle and end of the month or every end of the month or every end of the quarter. It just makes everything more consistent.

What I wish GInvest would have

I wished they would have more investment products like stock both local and foreign stocks, etc. Also, if there’s a way to lock that certain portion of the GCASH app. This is just for extra data privacy. Also, if you could possibly add analytics (or a way to tell us how much we should invest to POSSIBLY reach a goal for our personal investments, that would be awesome!

So that’s about it, guys! Will I continue investing GInvest? Yes, I will.

I think I trust GInvest enough and most importantly, it’s so easy and convenient! haha!

Love Lots,

P.S. You may want to check out:

GSave – https://mommyginger.com/save-money-with-gcash.html

GCredit – https://mommyginger.com/how-gcredit-works.html

Financial Tools – https://mommyginger.com/how-financial-tools-can-keep-you-out-of-trouble.html