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Tax Updates

Deadline extension for submission of “appointment book” until May 31

Issuance of Revenue Regulations 4-2014

Revenue Regulations (RR) No. 4-2014 was issued by the Bureau of Internal Revenue (BIR) sometime in March 2014 to monitor the fees charged by professionals, aid the BIR personnel in conducting tax audit and boost revenue collections.

This RR No. 4-2014 introduced the following new requirements in addition to the regular annual registration, registration of books of accounts and receipts/invoices:

1. Submission of affidavit of billing rates, manner of billing and factors considered in determining service fees upon registration and every year thereafter.

2. Registration of official appointment book (this will contain only names of clients and date/time of meeting.

3. When no fee is charge to client, a registered receipt shall be issue indicating 100% discount for substantiation.

Implication of the RR

Clearly, the BIR’s intention is really to gather additional evidence that will aid them in their audit. The intention is to promote transparency and to eradicate tax evasion.

If we are to take a look at this measure, there is but less consideration on how to monitor compliance. For example, a professional may have registered his books of accounts, receipts, appointment books and submitted affidavit before the BIR.

Firstly, how sure are we that the rates indicated in the affidavit are the actual rates? A professional may use approximations, which are comparable to market but way lower with what is actually charged.

Secondly, how sure are we that every meeting with the clients are documented in the appointment book? The additional task to be perform it self may already be a discouragement on its performance, much more that the professional thinks that his records will be used against him upon tax investigation.

Thirdly, how sure we are that a professional issues official receipts to its clients/patients every time  a service is rendered or a fee is received? If the customer/client didn’t ask for it, the professional may forget or intentionally not issue. Or, as a consideration for friendship or any existing customer-service provider relationship, issuance of OR is considered acceptable.

So how can we drive public to always ask for receipt? Their are various programs implemented by the BIR, such as “Premyo sa Resibo” which encourages customer to ask for receipts for a chance to win.  But, is that enough? There are also report a tax evader programs in exchange for rewards, but who will do it? Government cannot penalize people for not asking for receipts.  They can also not benefit from asking for it, unlike the corporate customers who may use them to so that their expenses maybe claimed as allowable deductions.

Therefore, we considered such effort as, somehow, futile, considering such loopholes. It will also create additional burden on the part of the tax payers, who are usually operating small scale.

Unless the BIR can prove later on that collections significantly increased due to the implementation of such regulations, then we see it ineffective and most of all, inefficient.

Extension of Submission of Appointment Book until May 5, 2014

In a news from DZMM, a division of ABS-CBN, an interview with the BIR Commissioner Kim Henares confirmed the extension of submission of appointment books for professionals.  Copy of the news is written below:

Pinalawig pa ng Bureau of Internal Revenue (BIR) ang deadline sa pagsusumite ng “appointment book” ng ilang self-employed professionals katulad ng mga doktor.

Sa panayam ng DZMM, sinabi ni BIR Commissioner Kim Henares na dapat sana’y ngayong Lunes, Mayo 5 ang itinakdang palugit para sa paghahain nito.

“In-extend ko po ‘yung deadline to May 31 kasi marami… ang may request po ‘yung mga different medical society,” ani Henares.

Bukod sa mga doktor, sinabi ni Henares na kailangan ding iprisinta ng mga dentista, abogado, accountant, engineer, architect at interior decorators ang kanilang “appointment book”.

Ipinaliwanag din ni Henares ang kahalagahan ng libro sa pag-audit ng BIR sa kita ng mga self-employed na propesyunal.

“Para makita namin kung ilan ‘yung kliyente nila. Bibilangin lang namin ‘yung resibo,” paliwanag ni Henares.

Sisilipin din anya ang affidavit of standard fee na siyang tutukoy kung magkano ang singil ng mga propesyunal kapalit ng kanilang serbisyo.

“Katulad po ng book of account, hindi ninyo naman sina-submit sa amin, itinatago ninyo. Kasi kapag in-audit namin kayo, titingnan namin ‘yung inyong book of account “

Babala ni Henares, mahaharap sa kaukulang parusa ang mga mabibigong sumunod sa kautusan.

“Usually, mga 1,000 to 50,000 [pesos] ho yan [ang multa]. Meron din ho ‘yang criminal provision, failure to keep book, meron din hong criminal liability pero hopefully hindi naman ho hahantong doon,” ani Henares.

We would love to hear it from you. Comment and share! :)

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About leecpa

Orlando Calundan is a Certified Public Accountant. He has exposures in audit of financial statements of entities in various industries such as real estate, food (quick service restaurants), manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements. http://calundan.co

Discussion

19 thoughts on “Deadline extension for submission of “appointment book” until May 31

  1. I bookkeep an I.T. individual.
    He has a 2 year exclusive contract with a local company (and its subsidiaries) to provide them with his IT services.
    His contract states that he can’t get employed elsewhere during the term of the contract. Meaning, he only has 1 client/employer. He receives his income once a month with 15% w/tax expanded deducted already and forwards to me his monthly 2307 for books recording.

    Question: Should I require him to comply with RR 4-2014 ?

    Posted by bong benitez | May 19, 2014, 2:51 am
  2. The RR 4-2014 states that all professionals are required to submit the affidavit and register “appointment book”. Who are covered with this so-called professionals? Di ba yung may licensed from PRC? Why is that even the ordinary bookkeepers -non professional (who has accounting firms) has to comply with this RR 4-2014? BIR Main Office informed us that we are also included in submitting affidavit and to register appointment book. May magagawa pa ba ako? Hay ang BIR nga naman

    Posted by Juvy | May 21, 2014, 6:28 am
  3. Are general professional partnerships considered self-employed professionals ? Do they need to do the affidavit and register the appointment book >

    Posted by bong benitez | May 22, 2014, 3:03 am
    • Sir, question answered below, please see nalang. Thanks.

      Posted by leecpa | May 27, 2014, 11:02 am
      • If you are a partner of a GPP and your GPP is already registered (has OR, appointment book, books of accounts, etc), do each individual partner have to register again as a self-employed professional and have another set of OR printed and register another set of books of accounts as an individual professional? What if the partner only practices under the GPP (hence the OR is issued only by the GPP) and has no clients as an individual practitioner?

        Posted by rts | June 2, 2014, 5:52 am
      • I think for partnerships, the appointment books shall be on the partnership. The registration and issuance of ORs is in the name of the partnership, not the partners.

        Posted by leecpa | June 2, 2014, 6:41 am
      • Thanks for the quick reply.

        Posted by rts | June 2, 2014, 6:49 am
  4. Hello Sir, ano po ilalagay sa appoinment books before ireceive ng BIR?

    Posted by liane | May 27, 2014, 3:20 am
    • I think wala naman, you just have to register it, just like your columnar books.

      Posted by leecpa | May 27, 2014, 3:51 am
      • Hello Sir,

        What about general professional partnership of accountants, doctors, engineers ?

        Does the partnership need to comply with RR 4-2014 ?

        Posted by bong benitez | May 27, 2014, 9:45 am
      • Hello Sir Bong! This is not specifically stated in the RR but if you refer to RMC No. 64-2012, you would notice that professionals, classified as self-employed, refers to an individual or a group.

        Here is the exact quote: Professionals, classified as self-employed, refers to an individual or a group, practicing his or their profession or calling, with or without license under a regulatory board or body.

        Here is the link to the said RMC: ftp://ftp.bir.gov.ph/webadmin1/pdf/66017RMC%20No%2064-2012.pdf

        Posted by leecpa | May 27, 2014, 11:01 am
      • Sir,

        Thank you sa reply regarding general professional partnerships.
        I will ask our client to comply with RR 4-2014

        Posted by bong benitez | May 29, 2014, 1:13 am
  5. Hi, is this applicable to freelancers in the radio/tv business? (i.e. djs, voice talents, events host)
    If yes, what will be put into the appointment book (?) and the affidavit??? We do not have meetings or appointments like lawyers and doctors do. 🙂
    Also, rates in said industry vary across various companies and to say write down a “standard fee” is almost impossible.

    Posted by leezadlf | May 28, 2014, 10:14 am
    • Hi, the term “professional” really has no specific boundary as used in the revenue regulation but as defined and stated above, “refers to an individual or a group, practicing his or their profession or calling, with or without license under a regulatory board or body”, which, I believe includes freelancers. As DJs, voice talents, events host, you are considered practicing your profession/calling.

      Meetings on the other hand, for the purpose intended by the BIR, may include those times you report to perform your contracted performances, etc.

      For the affidavit, accountants like us also have varying rates, depending on the nature and extent of the services performed. You can actually indicate a range for the rates for your services.

      Posted by leecpa | May 28, 2014, 10:41 am
      • Ok. Sobrang hassle nito … I pay the right taxes and then this pa. Sana lang talagang pati malalaking kumpanya mahabol nila kasi kawawa ang mga small-time self-employed taxpayers. Thanks for the info.

        Posted by leezadlf | May 28, 2014, 10:44 am
      • Yes, true… 🙂 BIR will use those information in case they will find some irregularities or obvious errors in taxpayer’s ITRs. They will drill down to the content of your appointment books, look at how many clients you had for a particular period, look at your rates and will perform analytical procedures (like total clients/meetings X rate) and from there, they will have an idea whether your reported income approximates the actual.

        Posted by leecpa | May 28, 2014, 10:48 am
  6. Hi, deadline is on May 31 di ba? May 31 is saturday so the deadline will be move on monday? Tama ba ko?

    Posted by Jlsn | May 30, 2014, 4:53 am

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