Year-end Tax Compliance: Make a List and Check it Twice

As the year 2021 comes to a close, we have put together a checklist to help you with your year-end tax compliance requirements.

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At this time of the year, all sorts of lists are created – top 10 artists and songs for the year, Christmas wish list, new year’s resolutions, future dreams, among many others. They either get people to reflect on the past or plan things for the future. But there’s one type of list that one may find helpful as a taxpayer– a year-end tax compliance checklist:

  • First is the filing and payment of the December 2021 BIR Form 1601C (Monthly Remittance Return of Income Taxes Withheld on Compensation) where any year-end adjustments to the withholding tax on compensation of employees should be made. For manual and eBIRForms filers, filing and payment of December BIR Form 1601C should be made on or before January 15 of the following year (i.e., January 17, 2022, since January 15, 2022 will fall on a weekend). On the other hand, for eFPS taxpayers, filing deadlines are staggered (January 11 to 17, 2022) based on the taxpayer’s industry grouping, while the payment deadline shall be January 20, 2022. Any excess withholding taxes as a result of the year-end adjustments or annualization should be refunded by the employers to their employees not later than January 25 of the succeeding year (January 25, 2022).
  • Employers should issue BIR Form 2316 (Certificates of Compensation Payment/Tax Withheld) to their employees who were not terminated as of December 31, 2021 on or before January 31 of the succeeding calendar year (January 31, 2022). The employer and the employee should sign the certificates, either manually or by using their e-signature. Copies of BIR Form 2316, duly signed by the employer and the employee, should be submitted to the BIR not later than February 28 of the succeeding year (February 28, 2022) using the selected modes and submission facilities of the BIR. RMC No. 117- 2021 clarified that the scanned copy of the certificates may be submitted using a USB memory stick, a DVD-R or through the eAFS system. The Certified List of Employees Qualified for Substituted Filing of Income Tax Return should also be submitted to the BIR by February 28, 2022.
  • The 2021 Annual Information Returns, as well as the annual alphabetical lists, need to be filed with the BIR. In particular, BIR Form 1604C, including the alphalist of employees, and BIR Form 1604F, with the alphalist of employees other than rank and file who were given fringe benefits during the year and the annual alphalist of payees subjected to final withholding taxes, are due for submission on or before January 31 of the following year (January 31, 2022). On the other hand, BIR Form 1604E and the annual alphalist of payees subjected to expanded withholding taxes should be filed on or before March 1 of the following year in which payments were made (March 1, 2022).
  • Taxpayers with taxable year ending December 31, 2021 and with Permit to Use (PTU) loose-leaf books of accounts need to present their permanently bound loose-leaf books and other accounting records for taxable year 2021 to their respective BIR office where the Head Office or Branch is registered, on or before 15 days after the end of each taxable year (January 17, 2022 as January 15 falls on a Saturday). Meanwhile, taxpayers with existing PTU computerized books of accounts must submit and register their computerized books and other accounting records stored in a USB drive or other electronic storage device to the concerned BIR office within 30 days from the close of each taxable year (for taxpayers with December 31, 2021 year-end, the deadline is January 31, 2022, since January 30, 2022 will fall on a Sunday). Taxpayers maintaining manual books of accounts are only required to register a new set of books once the pages of the previously registered books have been used up.
  • The annual registration fee of ₱500 for every separate or distinct establishment or place of business, including facility types where sales transactions occur, should be paid on or before the last day of January (January 31, 2022) using BIR Form 0605 (Payment Form).
  • Taxpayers whose taxable year ends on December 31, 2021, must submit their annual inventory list of stocks-in-trade, raw materials, goods in process, supplies and other goods to the BIR not later than 30 days following the close of the taxable year (January 31, 2022, as January 30, 2022 will fall on a Sunday).
  • All owners or sub-lessors of commercial spaces are required to submit to the BIR, the layout of the entire area being leased, certified true copy of the lease contract and lessee information sheet for their tenants as of December 31, 2021 on or before 31 st of January (January 31, 2022).
  • Business owners are required to renew their 2022 Mayor’s/Business permits with the local government units (LGU) where they operate by January 20, 2022. The Local Business Tax (LBT) for 2022, which is based on the gross receipts or sales generated by their business for the calendar year 2021, should also be paid. The taxpayer can opt to pay the LBT in full within the first 20 days of January (January 20, 2022), or to pay on a quarterly basis, on or before the 20th day of the first month of the quarter.
  • Real Property Taxes (RPT) can be paid in four installments, on or before March 31, June 30, September 30, and December 31 of the year. However, real property owners can opt to pay early and in full to take advantage of the discounts usually granted by LGUs for advanced prompt payment.

While this list is not exhaustive, it should provide a good starting point for you to make your own year-end tax compliance to-do list, one that is specifically tailored to your business. With this, may we all close 2021 on a positive note and kick off the new year with renewed confidence and hope.

This article is for general information purposes only. It is not intended to provide tax advice or recommendation for any particular circumstance. While we have endeavored to ensure accuracy, we do not accept responsibility or liability for any actions taken based on the information indicated herein. Thus, any reliance placed upon such information is solely at your own risk.

Author

KAMILLE ALMIRA B. BARROGA
Senior Manager of Tax Compliance Group
[email protected]

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