Bureau of Internal Revenue – Advisory

Tax bureau orders all building owners to check on tenants !

OWNERS of commercial establishments will now be required to ensure that their tenants are registered taxpayers, according to the latest issuance of the Bureau of Internal Revenue (BIR).

The BIR has begun its drive to track the untaxed sector with Revenue Regulations No. 12-2011, issued on July 25, 2011

The latest tax regulation sets the reportorial requirements for establishments leasing commercial spaces.

“It shall be the primary responsibility of all owners or sub-lessors of commercial establishments/buildings/spaces to ensure that the person intending to lease their commercial space is a BIR-registered taxpayer,” the issuance stated.

Their tenants must have a tax identification number (TIN), a BIR Certificate of Registration and duly registered receipts, it added.

These requirements ensure that those engaged in retail remit value-added taxes and income taxes to the government.

“It is the duty of building owners to ensure that those they deal with are registered taxpayers,” BIR Commissioner Kim S. Jacinto-Henares said in a telephone interview yesterday.

“If not, they are aiding and abetting tax evasion,” she warned.

“I am only leveling the playing field. These commercial establishments pay taxes to the government, so their tenants must also do the same,” she explained.

Under the new issuance, building owners will now be required to submit, under oath, a tax registration profile of their lessees to the BIR twice a year.

They must provide the layout and unit addresses of their entire commercial space to the bureau, as well as the certified true copy of their lease contract per tenant.

Lessee Information Statements must also be passed to the BIR, indicating the registered names of the tenant, the TINs, the Authority to Print number for their official receipts and invoices, and the permit number for their cash register or other points of sale machines.

These will be submitted every Jan. 31 for all tenants as of Dec. 31 of the previous year, and every July 31 for the tenants as of June 30 of the current year.


However, for this year, the BIR has set a transition period, giving all building owners until Sept. 1 to submit their requirements for their tenants as of July 31.

Those who do not submit these requirements will be penalized by the BIR for willfully failing to pay taxes and supply correct information, subject to a fine of no less than P10,000 and imprisonment of up to 10 years.

Owners of commercial establishments who also falsify information will be charged with perjury, the issuance warned further.

A tax alert from Punongbayan & Araullo reminded lessors to start getting the required information from their tenants.

“Report accurate information because these may be used against you during tax examination,” the tax alert read.

“To ensure correctness of the information provided, you are advised to request for the source documents.”

Building owners must also ensure that the documentary stamp tax due on their lease contracts have already been paid, and that proof of payment will be made available at the BIR’s request.

Lastly, Punongbayan & Araullo urged lessors to require their unregistered lessees to begin the process already, to make it in time for the Sept. 1 due date of the report.

The BIR has identified the informal sector as one of the areas it will focus on to expand the tax base and increase revenues.

Ms. Jacinto-Henares had earlier estimated that the untaxed sector comprised 40% of the taxable population of the country.

The BIR, which accounts for some 70% of state revenues, is tasked to collect P940 billion this year. According to preliminary data, it had already collected P458 billion in the first half of the year, a 13.5% increase from the P403.5 billion netted in the same period in 2010. However, it missed the mid-year target of P460.3 billion.


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