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  • How the Ease of Paying Taxes Act Will Revolutionize Real Estate in the Philippines

    “Taxes are the price we pay for a civilized society.”

    – Oliver Wendell Holmes, Jr., Associate Justice of the US Supreme Court

    By Realttorney®

    Let’s face it: taxes have always been the ghost in the room during any property transaction in the Philippines. Whether you’re a developer breaking ground on a new residential enclave, a broker juggling multiple listings, or an heir trying to settle a family estate, tax compliance has often felt like navigating a maze – at times confusing, bureaucratic, and painfully slow.

    But all that may be about to change.

    Last January 2024, Pres. Marcos, Jr. signed into law Republic Act No. 11976, also known as the “Ease of Paying Taxes Act.” It aims to streamline tax administration, making it easier for real estate buyers, sellers, and owners to comply with their obligations. But Rep. Act No. 11976 does not directly address real estate taxation. Instead, it focuses on simplifying the administration of income and estate taxes, which can indirectly impact real estate transactions.

    This article dives into the key features of Rep. Act No. 11976, by highlighting how it benefits various taxpayers and stakeholders in the real estate industry, especially after the BIR released seven (7) Revenue Regulations in the last week of April 2024.

    Streamlined Tax Administration and Tax Compliance:

    One of the most significant benefits of Rep. Act No. 11976 is the emphasis on better and efficient tax administration. To operationalize this, Revenue Regulation No. 8-2024 was issued, which classified taxpayers into four categories:

    1. Micro Taxpayers – those with gross sales of less than P3 million for a taxable year;
    1. Small Taxpayers – those with gross sales of between P3 million to less than P20 million for a taxable year;
    1. Medium Taxpayers – those with gross sales of between P20 million to less than P1 billion for a taxable year; and
    1. Large Taxpayers – those with gross sales of P1 billion and above for a taxable year.

    To be clear, gross sales refer to total sales revenue, net of VAT, if applicable, during the taxable year, without any other deduction. Furthermore, gross sales shall only cover business income, excluding compensation income earned under an employer-employee relationship, passive income under Sections 24[1], 25[2], 27[3] and 28[4], and income excluded under Section 32 (B) of Rep. Act No. 8424, as amended.

    Hence, a mixed income earner (or a person with multiple income streams) will no longer agonize about being unwittingly categorized into a higher classification of taxpayer since the regulation clearly defines gross sales to include only business income.

    However, it should be noted that business income shall include income from the conduct of trade or business or the exercise of a profession. As such, RESPs must know these 4 categories listed above by heart.

    Kindly note that VAT-registered RESPs, business people, and juridical persons shall be automatically classified as Small Taxpayers. But, a taxpayer who will register to engage in business or practice a profession upon the effectivity of RR No. 8-2024 shall initially be classified based on the declaration in the Registration Forms beginning from the year they registered, and shall remain as such unless reclassified.

    Now the concerned taxpayer shall be reclassified in accordance with the threshold values indicated in the 4 items above. Taxpayers shall be duly notified by the BIR of their classification or reclassification, as may be applicable, in a manner or procedure to be prescribed in a revenue issuance to be issued separately.

    Finally, taxpayers registered in 2022 and prior years shall be classified based on their gross sales for the taxable year 2022. But, for taxpayers registered in 2022 and prior years without any submitted information on their gross sales for the taxable year 2022, including taxpayers registered in 2023 or in 2024 before the effectivity of RR No. 8-2024, shall initially be classified as Micro Taxpayer.

    These new classifications of taxpayers were made to encourage tax compliance on the part of all taxpayers in the Philippines.

    Streamlined Tax Filing and Payment

    The Act encourages the BIR to develop user-friendly online platforms for filing tax returns and paying taxes. This translates to:

    • Reduced Time and Cost: Imagine the convenience of filing tax returns electronically from the comfort of your office or home. This eliminates the need to travel to BIR offices and stand in queues, saving valuable time and resources. No more going to and queuing at Authorized Agent Banks (AABs) of different Revenue District Offices (RDOs) all over the country.
    • Fewer Errors: Online filing systems often come with built-in validation checks, minimizing the risk of errors in tax computations and filings.

    Improved Taxpayer Assistance by Modernizing the BIR Systems

    The Act emphasizes providing better taxpayer assistance. The BIR is mandated to perform the following:

    • Enhance taxpayer education: This could involve providing clear and accessible information on tax obligations specific to real estate transactions, such as capital gains tax for property sales or documentary stamp taxes, among others.
    • Establish a more responsive taxpayer hotline: A dedicated and accessible hotline can address taxpayer queries promptly, reducing confusion and frustration. It’s been more than one year since the law became effective. I am not so sure if the BIR has indeed established a more responsive hotline for taxpayers.

    Potential for Reduced Penalties and Interest

    The Act emphasizes fair treatment of taxpayers. While it doesn’t directly waive penalties and interest on late tax payments, it lays the groundwork for a more efficient system. With easier filing and clearer communication, the likelihood of unintentional tax delinquency might decrease. Additionally, the BIR may be more lenient with taxpayers who demonstrate a genuine effort to comply.

    All these reforms are not just superficial changes. It is a change in philosophy. The government is finally recognizing that one size does not fit all, especially in an industry as complex and as vital as real estate.

    Quid Nunc?

    So, what does this mean for you? Whether you own a condominium unit in BGC, manage real estate investments from overseas, or make your living closing deals and filing tax returns, here’s why Rep. Act No. 11976 matters – and how it might just be the best thing to happen to Philippine real estate in years.

    For Real Estate Developers: A Breath of Fresh Air

    If you’ve ever worked behind the scenes of a property development, you know that taxes can make or break project timelines. Filing monthly VAT returns, waiting endlessly for VAT refunds, if any are forthcoming, and managing the ever-changing interpretations of “business style” in official receipts have long been thorns in the side of real estate developers.

    Rep. Act No. 11976 changes the game by allowing developers (and real estate professionals) to:

    • File VAT returns quarterly instead of monthly—a huge administrative relief.
    • Get VAT refunds faster, thanks to a digitalized and standardized process.
    • Forget about “business style” descriptions on receipts, eliminating confusion and clerical inconsistencies.

    For Property Buyers and Property Owners: More Confidence, Less Complexity

    Buyers of real estate will benefit from the reduced transaction time under this relatively new law. The faster processing of the payment of the appropriate tax filing expedites the issuance of certificates authorizing registration and tax clearances, which is a very crucial document for real estate transactions. This can lead to quicker property transfers.

    Property owners – especially those selling land or receiving inherited properties – have traditionally relied on lawyers or licensed real estate brokers to help navigate the tax minefield. But this new law provides some much-needed breathing room.

    Here’s how:

    • Simplified Tax Compliance: The streamlined filing process can save property owners (sellers or heirs) valuable time and resources during property sales.
    • Reduced Compliance Burden: Clearer communication from the BIR can help sellers avoid unintentional tax errors and potential penalties.

    Imagine this: an 82-year-old widow in Quezon City, working to settle her late husband’s estate, no longer needs to deal with stacks of paper forms or wait in endless queues. With the help of a CPA or estate planner using accredited tax systems, her tax filings are secure and timely.

    Real Estate Owners (Landlords and Landladies): Stress-free Management

    • Easier Rental Income Reporting: Online filing systems can simplify the process of reporting rental income and paying income taxes.
    • Improved Access to Tax Information: Clearer and more accessible information from the BIR can help property owners understand their tax obligations related to rental income and property ownership.

    For OFWs and Foreign Investors: No More Flying Home Just to Pay Taxes

    If you’re a Filipino-American, an overseas worker, or a foreign investor who owns land or property in the Philippines, this law is music to your ears. Why? It should be emphasized that all taxes can now be filed and paid online. You have direct control over how you pay and when to pay your taxes.

    Better still, the BIR now recognizes tax service providers who can file the appropriate returns on your behalf, and these filings are considered official.

    That means you don’t need to fly back just to settle capital gains tax or sign estate tax documents. A well-trusted tax lawyer or CPA can now take care of this with full legal effect. With real-time access to filings and BIR receipts, managing a Philippine property portfolio abroad just became more viable.

    For Brokers and Real Estate Professionals: Clarity and Control

    Real estate brokers, listen up. This law could be one of the best tools you didn’t know you needed. Why?

    Historically, brokers have struggled with unclear tax obligations. Are you subject to VAT or percentage tax? Are you filing too much, too often? Worse, issuing a receipt with a mismatched “business style” could trigger an audit.

    What’s better now:

    • The law removes the need to state “business style”, which often caused mismatches between BIR records and what’s written on paper.
    • It clearly classifies taxpayers into micro, small, medium, and large, so brokers with modest earnings aren’t lumped into the same compliance group as corporations.
    • Online filing is now standard, making it easier to comply, even if you live or work in provinces where tax offices are limited.

    Let’s not forget the countless real estate brokers in the past who were penalized for minor infractions in receipts or due to confusion in VAT versus percentage tax requirements. Those days are long gone.

    What to Watch Out For: Implementation Hiccups

    While Rep. Act No. 11976 holds promise for a more taxpayer-friendly environment, its full impact will depend on the BIR’s implementation. Let’s not pretend this will be perfect after more than a year since the effectivity of this law. There are still challenges. And the success of the Act hinges on several factors.

    First, the BIR’s digital infrastructure must catch up quickly. User-friendly online platforms for filing and payment are crucial for achieving the intended benefits. Nationwide implementation requires investment and training for all BIR personnel.

    Second, many tax professionals and real estate service practitioners need retraining to adapt to new systems and classifications.

    Third, aside from professionals, educating taxpayers about their obligations and the new system is vital for ensuring smooth adoption.

    So, while the law is promising, vigilance is still the name of the game. So here are some practical advice for real estate stakeholders – whether you’re a developer, RESP, investor, or heir, here’s what you can do today to benefit from this landmark law:

    1. Review your tax filings and registration. Know what category you fall under.
    1. Update your invoice and receipt formats. Remove “business style” fields and comply with new standards.
    1. Go digital. Sign up for BIR’s eFPS and consult with accredited service providers.
    1. Ask for help. Engage a lawyer-CPA who understands both tax law and real estate. It’s worth it.

    In Closing: A Quiet Revolution for a Complex Industry

    The Ease of Paying Taxes Act isn’t just about cutting red tape. It’s about trust in a system that no longer sees taxpayers as adversaries, but as partners. And in the world of real estate, where fortunes rise and fall on timing, transparency, and compliance, this law may just be the quiet revolution we’ve been waiting for.

    So, the next time you close a sale, inherit a parcel of land, or get ready to invest in property, take comfort in knowing that the system behind the scenes is finally catching up with you, and for you.

    Rep. Act No. 11976 is not just a law. It’s a signal that things in Philippine real estate are about to get a lot easier – and a whole lot smarter. The law represents a positive step towards simplifying tax compliance in the Philippines.

    If you are a real estate service professional, you can play a vital role in disseminating information about the Act’s benefits to your clients. By understanding these changes, real estate buyers, sellers, and owners can navigate the tax landscape with greater ease and confidence. Remember, consulting with a tax advisor is always recommended for specific tax situations related to real estate transactions.

    Share your thoughts by leaving your comments in the comments section, and let’s start a conversation.

    ——-

    Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is committed to helping new and veteran real estate service practitioners be well-informed of the latest laws, rules, regulations, and information relevant to the real estate service sector.

    [1] On Interests, Royalties, Prizes, and Other Winnings, and Cash and/or Property Dividends of Individual Citizens.

    [2] On Prizes amounting to PhP 10,000.00 or less; and royalties on books as well as other literary works, and royalties on musical compositions of an Individual Resident Alien.

    [3] On Interest from Deposits and Yield or any other Monetary Benefit from Deposit Substitutes and from Trust Funds and Similar Arrangements, and Royalties; and Tax on Income Derived under the Expanded Foreign Currency Deposit System of Domestic Corporations.

    [4] Tax on Resident and Non-Resident Foreign Corporations.

  • Unlocking Success: Why Registering with the BIR is Non-Negotiable for New Real Estate Salespersons

    “The Practitioner shall secure all necessary licenses, permits and authority as may be required by law, ordinance or rules and regulations.”

    – Section 1 (b), Article III, PRBRES Resolution No. 39, Series of 2019

    By Realttorney®

    On the third week of January 2024, I will once again be part of a Real Estate Brokerage Seminar for Entry-Level Salespersons, sponsored by PREVAIL, Inc. We are always looking forward to such an event since it signifies that a lot of illegal practitioners (colorum) desire to become legitimate real estate service practitioners (RESPs).

    Photo by Sora Shimazaki on Pexels.com

    Now, if you are still not registered with the BIR then you must do so to be compliant with the National Internal Revenue Code of 1998, as amended. We also should follow the laws of the Philippines as mandated by the Code of Ethics and Responsibilities promulgated in PRBRES Resolution No. 39, Series of 2019. Hence, BIR registration is a must for all newly accredited real estate salespersons.

    I will quickly outline below, the steps to register with BIR as a self-employed individual (professional):

    STEP 1: Secure and fill up BIR Form 1901 – Application for Registration for Self-Employed and Mixed Income Individuals, Estates/Trusts.

    STEP 2: Submit the same with the following documentary requirements to the RDO having jurisdiction over the place where you hold office – it could be a home office or a commercial office space.

    Documentary Requirements:

    1. Birth certificate (Original and photocopy);
    2. Marriage certificate (Original and photocopy); and
    3. Birth certificate of children (Original and photocopy);

    Other documents for submission, if requested:

    1. Mayor’s Permit (Original and photocopy);
    2. Contract of Lease (if renting);
    3. Title/Tax Declaration & SPA/Affidavit of Consent if the location is not owned by the applicant (if not renting); and
    4. Sketch of location.

    STEP 3: Pay the Annual Registration Fee (P500.00) at the Authorized Agent Banks of the concerned RDO.

    STEP 4: Pay Documentary Stamp Tax (DST) [loose DST / BIR Form 2000 for DST on Contract of Lease, etc.). Present proofs of payment upon submission of the documentary requirements.

    STEP 5: Submit requirements for Authority to Print (ATP) and registration of books of accounts.

    Documentary Requirements:

    1. Accomplished BIR Form 1906;
    2. Job order from the printer;
    3. Final and clear sample of receipt and invoices (machine printed);
    4. Photocopy of Taxpayer Identification Number Card; and
    5. Photocopy of BIR Form 0605 (payment of registration fee).

    Book of Accounts:

    1. Cash Receipts;
    2. Cash Disbursement;
    3. Ledger;
    4. Journal;
    5. Subsidiary Sales Journal; and
    6. Subsidiary Purchase Journal [the last 2 are additional books for VAT Taxpayer].

    STEP 6: Attend the taxpayer’s initial briefing to be conducted by the RDO concerned for new registrants to apprise them of their rights and duties/responsibilities as taxpayers.

    STEP 7: Wait for the RDO to issue the Certificate of Registration (BIR Form 2303) together with the “Ask for Receipt” notice, Authority to Print, and Books of Accounts.

    A more comprehensive discussion of the steps enumerated above including the related revenue issuances promulgated by the BIR and codal references in the National Internal Revenue Code can be found on the BIR website (www.bir.gov.ph).

    A final reminder to all new salespersons and brokers reading this article. The tax code states that “all individuals engaged in trade or business shall accomplish and file the application on or before the commencement of business operation or from the day the first (1st) transaction occurred or within thirty (30) days from the application with the LGU for issuance of Mayor’s Permit/Professional Tax Receipt (PTR), whichever comes earlier.”

    I encourage newly accredited salespersons and newly licensed real estate brokers to register with the BIR as soon as possible. To reiterate, the Code of Ethics and Responsibility mandates all RESPs to register with the BIR. Finally, in 2005, Atty. Alexander L. Lacson published his book “12 Little Things Every Filipino Can Do To Help Our Country.”

    “PAY YOUR TAXES” is the 10th Little Thing he listed. I quote some portions of what he wrote in pages 75 – 80, which resonates the same message today as if it was written 19 years ago:

    “Of the many duties of a citizen under our Constitution, paying taxes is one of the most crucial. Because taxes are the lifeblood of our government, of our nation.

    “It is what we use to buy the basic textbooks for our millions of children in the country, or to build additional classrooms in public schools nationwide…

    “Taxes are what we use to buy the most basic of medicines, often generic and cheap, that our Department of Health officials distribute to 34 million Filipinos nationwide who live below the poverty line.

    “It is what we use to pay all our government employees nationwide – our soldiers, our policemen, our public school teachers, among many others.

    x     x     x

    “Viewed in this light, the taxes that you and I pay are actually not lost or wasted completely. A substantial portion of the taxes we pay is still put to good use. Because there are many public servants – not only a few or some – who still do their jobs properly. There are many of them, these honest and faithful ones, but maybe many of them are just in the rank and file, like you and me.

    “But they are there. Among the silent many who hold the center and keep our government from falling apart. They are the ones who keep our public institutions intact through storms and scandals, notwithstanding the misguided ambitions and corruption of some of their leaders.

    “It is for this reason that we should continue paying our taxes. The good ones in the government are still good reasons for us to continue paying our taxes properly. The challenge for us is just how to increase the number of these good ones in government.

    x     x     x

    “In 2003, P83 Billion was collected from individual income taxes. But 91% of this amount came from salaried workers from the government and private sector, people who have no choice since their income taxes are withheld mandatorily. Only P7 Billion of P83 Billion (or 9%) came from businessmen and professionals like doctors, lawyers, accountants, architects, and dentists, among others.

    x     x     x

    “Can you imagine if our businessmen and professionals pay more income taxes? Or if our government is able to collect 21% this year instead of the 14.1% last year because we all decided to pay 50% more taxes this year? This means that our government will have more funds to perform its duties and obligations to the public.

    x     x     x

    “But we have to pay our taxes properly. Because we all live in the same country. Because this government, whether we like it or not, is our government. Its cost is a burden we must all share. The task of building this nation is a task that we all must share. We all must contribute to building this kind of nation we dream of for ourselves. Each one of us has a role in it. Each one of us has a responsibility to it.”

    We sincerely hope that all newly accredited real estate salespersons will register themselves at the RDO nearest their place of residence. This is one of the keys to a successful career in the real estate service sector. There are no ifs or buts about this.

    ——-

    Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is committed to helping new and veteran real estate service practitioners be well-informed of the latest laws, rules, regulations, and information relevant to the real estate service sector.

  • Reminders as 2024 Rolls In

    “Our goal is to set the gold standard when it comes to compliance.”

    – Cathy Engelberg, Commissioner of the WNBA

    By Realttorney®

    Happy New Year. We wish you all the best for the Year of the Dragon. May you all work synergistically with your teams or other REPs to have the most prosperous 2024 possible.

    Photo by fauxels on Pexels.com

    We hope that you have your yearly goals written and these goals broken down into quarterly, monthly, and weekly goals.  Since this is the first working day of 2024, we would like to remind all real estate service professionals (RESPs) of some regulatory compliances according to Republic Act No 9646 and its Implementing Rules and Regulations (IRR).

    First, in Section 38, Rule IV of the IRR “Real estate service practitioners shall be required to indicate the certificate of registration, professional identification card, Privilege Tax Receipt (PTR) number, AIPO membership and/or receipt number.”

    Now, the IRR says ”privilege tax receipt” but in reality, this is called the Professional Tax Receipt or PTR. Yet, despite the “misspelling”, the mandate is clear. All licensed RESPs should get a PTR.

    Here are my previous year’s Professional Tax Receipts as an attorney and real estate broker

    It costs around PhP 300.00 and you can get this at the Office of the Treasurer of your LGU. Just say that you will get a PTR when you stand in front of the transaction window of the Treasurer’s Office. Some LGUs may not have a PTR, but instead have an OTR – the Occupational Tax Receipt – which is the same thing.

    What must you bring with you when you apply for a PTR? For veteran RESPs, a photocopy, digital copy, or the original copy of the PTR of the previous year will suffice. For the new salespersons and brokers, you need to bring a photocopy of your Certificate of Registration and the PRC ID Card with you.

    Second, if you are already registered with the Bureau of Internal Revenue (BIR) then you should pay your annual registration fee of PhP 500.00 using the BIR Form 0605. You can remit the payment at the BIR Revenue District Office (RDO) that you registered in or at the Authorized Agent Banks of the concerned RDO.

    Third, and final reminder, concerns accredited real estate salespersons and licensed real estate brokers who engage in project selling. If it is your cup of tea to sell subdivision and condominium projects then you are mandated by Presidential Decree No. 957 to register with the Department of Human Settlements and Urban Development (DHSUD), according to existing rules and regulations.

    Like securing a PTR, the Certificate of Registration must be renewed annually. You can apply at the Main office of DHSUD in Quezon City or at its Regional Offices nearest your place of residence.

    For licensed real estate brokers wanting to do project selling for the first time or those who are renewing their certificate of registration, kindly prepare for submission the following:

    (1) duly accomplished Application Form – which is specific per region. The application form you can download if you click here is only for Region IV-A [CALABARZON];

    (1) Photocopy of valid PRC-issued Certificate of Registration and PRC-issued Professional Identification Card (Originals thereof to be presented upon filing for comparison as faithful reproduction);

    (2) previous year’s Official Receipt;

    (3) Two recent 2 X 2 ID pictures; and

    (4) Surety/Cash Bond.

    If you are lucky to have been issued an ID Card issued by DHSUD then a copy of it can also be submitted. The registration fee is PhP 720.00 if renewed before expiration.

    Here is my DHSUD Identification Card for the year 2023

    Meanwhile, for newly accredited salespersons or those wanting to renew, you need to submit the following:

    (1) duly accomplished Application Form – which is specific per region. The application form you can download if you click here is only for Region IV-A [CALABARZON];

    (2) Two recent 2 X 2 ID pictures;

    (3) a copy of the PRC-issued accreditation card, or PRC-issued Official Receipt. or the PRC-issued claim stub;

    (4) Cash/Surety bond; and

    (5) the Letter of Engagement/Employment signed by a DHSUD registered Real Estate Broker with these attachments – copies of the PRC ID card of the broker, the DHSUD ID card, and the listing of accredited salespersons from PRC under the broker’s name. The registration fee is PhP 288.00 if renewed before expiration on December 31.

    Here is a sample of the Salesperson’s Letter of Engagement/Employment. Once again, notice that the Letter is region-specific. I secured this since I filed my requirements to the CALABARZON region in Brgy. Halang, Calamba City, Province of Laguna.

    Here is a final note. According to Section 4.7. of PRBRES Resolution No. 11, Series of 2021, “it is only after Mass Oath taking that the RES-Applicant can be considered Accredited and can already practice the real estate brokerage profession and may now register at DHSUD.”

    Let it be known that the Real Estate Salesperson-Applicant can only apply for registration at the DHSUD after attending the oathtaking ceremony – whether in person or online – NOT before. We hope this is clear.

    So kindly perform these regulatory compliances for you to work fully compliant with the requirements of the law that regulates our profession. Failure to comply is a violation of the law and the professional can be subjected to criminal and administrative sanctions.

    Start the year right. As professionals, these are the things we do. It is part of our identity as legal and fully compliant real estate service professionals.

    ——-

    Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is committed to helping new and veteran real estate service practitioners be well-informed of the latest laws, rules, regulations, and information relevant to the real estate service sector.

  • REMINDERS AS 2022 ROLLS IN

    “By the taxes he pays, a citizen has every right to demand for a good and honest government.”

    – Franklin D. Roosevelt

    By Realttorney

    Portions of the contents of this article were first published 4 days before its 10th year anniversary – January 12, 2012. It is updated to share the same message to all new and old real estate service practitioners (RESPs) – salespersons, brokers, appraisers, government assessors and consultants of their obligations as professionals.

    I wish all licensed RESPs a prosperous and abundant 2022. If we are to believe the “experts” and analysts the real estate industry looks brighter for this year due to the continued vaccination program of government, as the Philippine economy slowly rises up from the pandemic-induced negative growth in 2020.

    The boom in the demand for luxury and mid-income residential projects, both in the vertical and horizontal project, means more opportunities for RESPs earn more income in 2022. So, how do we prepare for a better and prosperous 2022?

    As the New Year is upon us already, I wish to outline some reminders that need to be performed by all old and new licensed RESPs pursuant to Republic Act No 9646 and its Implementing Rules and Regulations (IRR).

    First, in Section 38, Rule IV of the IRR “Real estate service practitioners shall be required to indicate the certificate of registration, professional identification card, Privilege Tax Receipt (PTR) number, AIPO membership and/or receipt number.”

    Therefore, all licensed RESPs should get a PTR. It cost around P300.00 and you can get this at your Office of the Treasurer of your LGU. Just say that you will get a PTR when you stand in front of the transaction window of the Treasurer’s Office of the.

    What must you bring with you when you apply for a PTR? For veteran RESPs, a photocopy or the original of the PTR of the previous year will suffice. For the new salespersons and brokers, you need bring a photocopy of your Certificate of Registration and the PRC ID Card with you.

    It should be noted that the Privilege Tax Receipt mentioned in the IRR is the same as the Professional Tax Receipt mentioned in the Local Government Code. For real estate salespersons, if the PTR is unavailable in your LGU please ask for the Occupational Tax Receipt (OTR).

    Second, if you are already registered with the Bureau of Internal Revenue (BIR) then you should pay your annual registration fee of P500.00 using the BIR Form 0605. You can remit the payment at the BIR Revenue District Office (RDO) that you registered in or at the Authorized Agent Banks of the concerned RDO.

    Now, if you are still not registered with the BIR then you must do so in order to be compliant with the National Internal Revenue Code of 1998, as amended. It is also our obligation to follow the laws of the Philippines as mandated by the Code of Ethics and Responsibilities promulgated in PRBRES Resolution No. 39, Series of 2019. Hence, BIR registration is a must for all licensed RESPs.

    I will quickly outline below, the steps to register with BIR as a self-employed individual (professional):

    STEP 1: Secure and fill up BIR Form 1901 – Application for Registration for Self-Employed and Mixed Income Individuals, Estates/Trusts.

    STEP 2: Submit the same with the following documentary requirements to the RDO having jurisdiction over the place where you hold office – it could be a home office or a commercial office space.

    Documentary Requirements:

    1. Birth certificate (Original and photocopy);
    2. Marriage certificate (Original and photocopy); and
    3. Birth certificate of children (Original and photocopy);

    Other documents for submission, if requested:

    1. Mayor’s Permit (Original and photocopy);
    2. Contract of Lease (if renting);
    3. Title/Tax Declaration & SPA/Affidavit of Consent if the location is not owned by applicant (if not renting); and
    4. Sketch of location.

    STEP 3: Pay the Annual Registration Fee (P500.00) at the Authorized Agent Banks of the concerned RDO.

    STEP 4: Pay Documentary Stamp Tax (DST) [loose DST / BIR Form 2000 for DST on Contract of Lease, etc.). Present proofs of payment upon submission of the documentary requirements.

    STEP 5: Submit requirements for Authority to Print (ATP) and registration of books of accounts.

    Documentary Requirements:

    1. Accomplished BIR Form 1906;
    2. Job order from the printer;
    3. Final and clear sample of receipt and invoices (machine printed);
    4. Photocopy of Taxpayer Identification Number Card; and
    5. Photocopy of BIR Form 0605 (payment of registration fee).

    Book of Accounts:

    1. Cash Receipts;
    2. Cash Disbursement;
    3. Ledger;
    4. Journal;
    5. Subsidiary Sales Journal; and
    6. Subsidiary Purchase Journal [last 2 are additional books for VAT Taxpayer].

    STEP 6: Attend the taxpayer’s initial briefing to be conducted by the RDO concerned for new registrants in order to apprise them of their rights and duties/responsibilities as taxpayers.

    STEP 7: Wait for the RDO to issue the Certificate of Registration (BIR Form 2303) together with the “Ask for Receipt” notice, Authority to Print and Books of Accounts.

    For a more comprehensive discussion on the steps enumerated above including the related revenue issuances promulgated by the BIR and codal references in the National Internal Revenue Code can be found in the BIR website (www.bir.gov.ph).

    A final reminder to all new salespersons and brokers reading this article. The tax code states that “all individuals engaged in trade or business shall accomplish and file the application on or before the commencement of business operation or from the day the first (1st) transaction occurred or within thirty (30) days from the application with the LGU for issuance of Mayor’s Permit/Professional Tax Receipt (PTR), which ever comes earlier.”

    I encourage newly accredited salespersons and newly licensed real estate brokers to register with the BIR. Furthermore, the Code of Ethics and Responsibility mandates all RESP to register with the BIR. In 2005, Atty. Alexander L. Lacson published his book “12 Little Things Every Filipino Can Do To Help Our Country.” You can buy a copy of his book at his website at www.alexlacson.net.

    “PAY YOUR TAXES” is the 10th Little Thing he listed. I quote some portions of what he wrote in pages 75 – 80, which resonates the same message today as if it was written 17 years ago:

    “Of the many duties of a citizen under our Constitution, paying taxes is one of the most crucial. Because taxes are the lifeblood of our government, of our nation.

    “It is what we use to buy the basic textbooks for our millions of children in the country, or to build additional classrooms in public schools nationwide…

    “Taxes are what we use to buy the most basic of medicines, often generic and cheap, that our Department of Health officials distribute to 34 million Filipinos nationwide who live below the poverty line.

    “It is what we use to pay all our government employees nationwide – our soldiers, our policemen, our public school teachers, among many others.

    x     x     x

    “Viewed in this light, the taxes that you and I pay are actually not lost or wasted completely. A substantial portion of the taxes we pay is still put to good use. Because there are many public servants – not only a few or some – who still do their jobs properly. There are many of them, these honest and faithful ones, but maybe many of them are just in the rank and file, like you and me.

    “But they are there. Among the silent many who hold the center and keep our government from falling apart. They are the ones who keep our public institutions intact through storms and scandals, notwithstanding the misguided ambitions and corruption of some of their leaders.

    “It is for this reason that we should continue paying our taxes. The good ones in the government are still good reason for us to continue paying our taxes properly. The challenge for us is just how to increase the number of these good ones in government.

    x     x     x

    “In 2003, P83 Billion was collected from individual income taxes. But 91% of this amount came from salaried workers from the government and private sector, people who have no choice since their income taxes are withheld mandatorily. Only P7 Billion of P83 Billion (or 9%) came from businessmen and professionals like doctors, lawyers, accountants, architects, and dentists, among others.

    x     x     x

    “Can you imagine if our businessmen and professionals pay more income taxes? Or if our government is able to collect 21% this year instead of the 14.1% last year, because we all decided to pay 50% more of taxes this year? This means that our government will have more funds to perform its duties and obligations to the public.

    x     x     x

    “But we have to pay our taxes properly. Because we all live in the same country. Because this government, whether we like it or not, is our government. Its cost is a burden we must all share. The task of building this nation is a task that we all must share. We all must contribute to build this kind of nation we dream for ourselves. Each one of us has a role in it. Each one of us has a responsibility to it.”

    Third, and final reminder, concerns real estate salespersons and brokers who engage in project selling. If it is your cup of tea to sell subdivision and condominium projects then you are mandated by Presidential Decree No. 957 to register with the Department of Human Settlements and Urban Development (DHSUD), pursuant to existing rules and regulations.

    Similar to securing a PTR, the Certificate of Registration must be renewed annually. You can apply at the Main office of DHSUD in Quezon City or at its Regional Offices nearest you place of residence. For licensed real estate brokers wanting to do project selling for the first time or those who are renewing their certificate of registration, kindly prepare for submission the following: (1) photocopy of your PRC ID Card, Certificate of Registration from PRC; (2) previous year’s Official Receipt; (3) recent 2 X 2 ID picture; and (4) surety/cash bond. If you are lucky to have been issued an ID Card by DHSUD then a copy of it can also be submitted. The registration fee is P720.00 if renewed prior to expiration.

    Meanwhile, for newly accredited salespersons or those wanting to renew, you need to submit the following: (1) duly accomplished application form – which can be downloaded from the DHSUD website; (2) recent 2 X 2 ID picture; (3) copy of the PRC-issued accreditation card, or PRC-issued O.R. or the claim stub; (4) cash/surety bond; and (5) the Letter of Engagement/Employer for the Broker with these attachments – copies of the PRC ID card of the broker, the DHSUD ID card and the listing of accredited salespersons from PRC under the broker’s name. The registration fee is P288.00 if renewed prior to expiration.

    I hope this is useful to you all as we welcome 2022. Happy New Year once again.

  • THE FINAL STEP: PREPARE A BUSINESS PLAN

    “Plan carefully and you will have plenty; if you act too quickly, you will never have enough.”

     – Proverbs 21:5, Good News Bible [Today’s English Version]

    By Ernesto C. Perez II

    You would think that having a creative and distinguished business name as well as an appropriate business vehicle chosen will bring us one step closer to registering our business with DTI and BIR.

    Unfortunately, we still have one more step to go. It is a long process but a necessary step to take. The next step is writing a business plan.

    You may think that preparing a business plan doesn’t apply to you because of the experience you have in the brokerage business. But for those who are still new and inexperienced or those who are engaged full-time because this is the only source of income they have then preparing and having a business plan is essential.

    I am not experienced in preparing business plans. In fact, I have several ventures that have failed mainly because of the lack of such a plan.

    There are numerous websites that guide you through the preparation of a business plan. You can hire a professional to assist you in preparing one. No matter what method you choose the important thing is to make a plan that is thoroughly researched.

    A final note if you will permit me. In the book of Donald Trump and Robert Kiyosaki entitled “Mida’s Touch: Why Some Entrepreneurs Get Rich And Why Most Don’t” they discussed their failures and how they learned from their numerous failures that made them succeed.

    In preparing your business plan, I would suggest that you plan to fail. This is not to say that you have to set small goals for yourself.

    By all means, think big! Plan for your outright success. But temper it with the knowledge that the best laid-out plan does not usually go according to what is written.

    There will be numerous bumps on the road. I am still on the bumpy part. Therefore, plan to make adjustments so that you will not be heavily frustrated when things do not happen as planned.

    Facing disappointments and experiencing failures when you thought you have covered all bases is the worst feeling of all. I am well acquainted with such failures and disappointments.

    You need a business plan that is flexible to give you room to adjust your goals accordingly and know what to do when faced with adversities. Once you have made your business plan you are now ready to register your business.

    I have outlined what requirements are needed when you are ready to register your business with the various agencies of the local and national government. You can read it in my previous post.

    Best of luck to everyone. Kung Hei Fat Choi!!