BIR Tax Compliance of Privilege Stores in Philippines

By: Tax and Accounting Center Philippines

Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 16 – 2013 dated August 22, 2013 (RR No. 16-2013) revoking Revenue Regulations Nos. 16-2003 and 24-2003 relating to taxation of privilege stores in the Philippines.

Under RR No. 16-2013, privilege stores in the Philippines refer to a stall or outlet which is not permanently fixed to the ground and is normally set-up in places like shopping malls, hospitals, office buildings, hotels, villages or subdivisions, churches, parks, streets and other public places for the purpose of selling a variety of goods and/or services for short durations of time or during special events for not more than fifteen (15) days.

RR No. 16-2013 imposes upon the privilege store operators the following BIR tax compliance obligations:

Register and Secure Tax Identification Number

Privilege store operators are required to register with the BIR and secure tax identification number (TIN). Registration could be with the BIR Revenue District Office having jurisdiction over the privilege store activity or event. Accordingly, it shall post its BIR Certificate of Registration or BIR Form No. 2303 in a conspicuous place within its privilege stores.

Register and Keep Books of Accounts

As a seller of goods or service, privilege stores in the Philippines are required to register books of accounts depending on the nature of registration (VAT registered or non-Vat registered taxpayer) – a simplified set of bookkeeping records if quarterly sales, earnings or gross receipts does not except P50,000.

Issue BIR Official Receipts or Invoices provided by Exhibitor/Organizer

Under RR No. 16-2013, the relationship of privilege store operator in the Philippines and exhibitor or organizer is that of consignee-consignor relationship. Privilege store operator is merely a consignee or a pass through entity. The exhibitor is required to provide the privilege store operator any of the following for use in the sale of goods or services:

1. Cash Register Machines (CRM) or Point-of-Sale (POS) Machines, or
2. Centralized CRM or POS or payment centers, or
3. Manual BIR-registered official receipts or invoices

Accordingly, privilege store operators are required to issue official receipts or sales invoices provided by the exhibitor or organizer.

Submit Information Statement on Privilege Store Activities

Privilege store operators are likewise required to submit BIR an Information Statement on Privilege Store Activities in prescribed format on or before the first day of privilege store operations with the following:

• Inclusive dates of business operations
• Name of exhibitor or organizer
• TIN of exhibitor or organizer or lessor
• Name of event or exhibit
• Address or venue of event or exhibit
• Duration of operations in any given year

Failure to submit the Information Statement on Privilege Store Activities is subject to penalties.

Submit List of Sales on Privilege Store Activities

Privilege store operators are likewise required to submit List of Sales on Privilege Store Activities to exhibitor or operator within five (5) days after the privilege store operations. In turn, the exhibitor or organizer will reconcile the same with the CRM and POS for report submission to the BIR of exhibitor or organizer.

Withhold 5% taxes on lease

On the lease payments of privilege store operator to exhibitor or organizer or lessor or owner of property, it is required to withhold 5% creditable withholding tax upon payment or accrual on books of accounts, whichever comes earlier.  Withheld taxes on rental expense are required to be remitted using BIR Form No. 1601-E or Monthly Remittance Return of Creditable Income Taxes withheld every 10^th day of the month following the month of payment or accrual, except for December remittance to be remitted every 15^th day of January of the following year.

File income tax return

Privilege store operators are likewise required to file income tax returns for the taxable income generated from the sales of goods or services. It shall file BIR Form No. 1700 – Annual Income Tax Return not later than every April 15 of the following year.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances.