Your BIR Certificate Of Registration (BIR Form 2303)

Wondering what must be indicated in your Certificate Of Registration (COR) or the BIR Form 2303?


It must show your TIN, Registered Name, Business Name, the Tax Type, the Line of Business.

What are the important things you must consider when applying for COR?

The Tax Type and the Line of Business.

The Tax Type are those types of taxes that you must file and pay to the BIR.

These are the following:

1. Business Tax
2. Withholding Tax
3. Income Tax

The Business Tax is either VAT or Percentage Tax.

Withholding Tax are WHT on Compensation, WHT Expanded and WHT others

Income Tax are those Quarterly (1701Q and 1702Q) and Annually filed (1701 and 1702).

All of these taxes must be enumerated in your COR. Make it sure that they are there otherwise you will have some consequences to face at a later time if they are not complete.

Another important thing is the Line of Business.

The Line of Business is your basis in preparing your Financial Statements.  Make it sure you know your business nature whether you are engage in trading or manufacturing or servicing. And ensure that the right business nature is what reflected in that section otherwise your financial reporting will be prepared in mistake or error.

Also, your Tax Types and Line of Business are the point of reference of what Books Of Accounts you must register, and what are those you must indicate in your ATP application for Invoicing and Receipting.

So, I would suggest early on consult a professional when applying for your Business Registration to the BIR.

Exemptions on Taxable Income of Individual Tax Payer

The following exemptions are allowed by law (R.A. 9504 effective July 6, 2008) to be deducted from net income:

Basic Personal Exemption - per taxpayer :  P50,000.00

Additional Exemption for each qualified dependent child (maximum of 4) :  P25,000.00

When is Business Tax Payable

The Business Tax either the Percentage Tax or Value Added Tax is payable on or before the 20th of the following month.

Income Tax

Definition:

An Income Tax is imposed based on the net income of the business.

A Net Income is determined by deducting the Cost of Sales or Services and Allowable Operating Expenses from Gross Sales or Gross Receipts of the business during a taxable period.


Illustrative Formula:

Gross Sales / Gross Receipts
Less: Cost of Sales / Cost of Services
Equals: Gross Margin or Gross Income
Less: Operating Expenses (Allowable)
Equals: Net Income

Net Income
Multiply by: tax rate
Equals: Income Tax
Less: Quarterly Income Tax Paid
Equals: Income Tax still due and payable

Percentage Tax

Definition:

Percentage Tax is the tax imposed on the gross receipts of non-vat registered business owner and is usually subject to 3% tax rate. 

VAT or Value Added Tax

Definition:

A VAT business transaction is subject to 12% tax rate.

Output VAT vs Input VAT

Output VAT is the 12% tax from the VATable sales or gross receipts of the VAT Registered business owner.

Input VAT  is the 12% tax from the VATable purchases, disbursements or expenses made by the business owner.

The Input VAT is deducted from the Output VAT to get the net VAT payable.

Illustrative Formula:

Output VAT
Less: Input VAT
Equals Net VAT Payable 

Business Taxes

Definition:

It is the tax that are imposed on the gross receipts or sales in the ordinary course of business transactions during a taxable period.


Classification:

1. VAT or Value Added Tax
2. Percentage Tax