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.
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.
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.
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.
Taxpayers Type: Choose which applies to you from the choices.
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.
Now make sure that the Tax forms that you highlight in Aqua are those that are in your Certificate of Registration or COR.
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.).
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.
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.
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.
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.
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.
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.
If you have any questions, feel free to message firstname.lastname@example.org or chat with them using the chat box in the Taxumo Website.
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