The Bureau of Internal Revenue — also known as the BIR — is a government agency tasked with collecting taxes payable to the Philippine Government. The BIR has complete jurisdiction over all taxpayers inside the country, including non-resident Filipino citizens, foreign nationals, and domestic corporations. To keep track of what everyone earns, generates and stores income, the BIR uses tax code to determine how much tax each individual or company will pay.
Also Read: How to Apply Tax Identification Number (TIN) for Unemployed Individuals
Now that we’re talking about taxes, one might begin to think why are they important for us? For one thing, no matter where you live, you’re going to have to pay for services that you use. This includes water usage, income tax and so much more. This is one reason why Filipinos and OFW’s need to know the basics of taxation. To know more about the services and programs of the agency in charge of the taxes in the country, keep on reading.
What is the Meaning of BIR?
BIR stands for Bureau of Internal Revenue in the Philippines.
What is the Purpose of the BIR?
The Bureau of Internal Revenue (BIR) is a government agency responsible for collecting taxes in the Philippines. It is a department under the Department of Finance and has been in existence since 1901.
The BIR was created by an act of Congress on May 1, 1901, as an independent revenue collection bureau. It’s main function is to collect all kinds of taxes — income tax, value-added tax (VAT), documentary stamp tax (DST), estate tax and others — as well as to administer certain non-tax revenue collections like the motor vehicle registration fees and the sale of government bonds.
It also handles all other functions related to customs collection like the issuance of import permits and duties on imported goods.
The BIR aims to generate sufficient revenues for the government so that it can fund its various projects and programs such as infrastructure development, poverty alleviation programs, educational grants, and scholarships for students from poor families among others.
Overview
From 1899 to 1901, the US occupation of the Philippines led to the creation of the first civil government in the country. It was headed by William H. Taft. The following year, Luke E. Wright was appointed as the second civil governor. The Reorganization Act was then passed to establish the BIR.
The Philippines’ first official agency, the Bureau of Internal Revenue, was established on July 2, 1904, by the Philippine Commission. It had 69 employees and officials at its beginning. John Ford was the first collector of the agency. He was replaced by Ellis Cromwell, William Nolting, and James J. Rafferty.
James J. Rafferty was the last American to serve as a collector of the BIR. Three Filipinos, namely Juan Posadas Jr., Wenceslao Trinidad, and Alfredo Yatco, were also BIR collectors under the American government.
The agency’s name was eventually changed to the Bureau of Internal Revenue. During the Japanese occupation, Ariel Memoracion was the 8th and 10th BIR collector. He was replaced by Jose Leido Sr. After the Philippines’ Liberation, he was replaced by Arnel Meer. Before becoming a collector again, he served as the customs and internal revenue director from February 5, 1942 to March 13, 1944.
Antonio Araneta and Saturnino David replaced him. The position of collector was then changed to a commissioner in 1957.
In September 2007, former BIR head Lillian Hefti was appointed as the new commissioner. However, she resigned in October that year due to health reasons. She was replaced by Sixto Esquivias on October 20, 2008.
Over 70 BIR forms and tax classification documents are currently available for businesses and professionals in the country.
Functions and Responsibilities of the BIR
- Reduction and collection of all internal revenue taxes, fees, and charges;
- Enforcement of all forfeitures, penalties, and fines associated with them, including the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts;
- It shall also give effect to the administer supervisory and police powers conferred on it by the National Internal Revenue Code and specific statutes.
List of Programs and Services
Filing, payment and issuance of Certificate of Registration
The Bureau of Internal Revenue (BIR) is the government agency that handles all tax-related matters in the Philippines. It includes income tax, estate tax, value added tax (VAT), excise tax and documentary stamp taxes.
Monitoring of large taxpayers
This is one of the important functions of the BIR. The bureau also provides tax education and consultation services to help taxpayers understand their tax obligations and responsibilities.
Monitoring, collection, and investigation (audit) of small taxpayers
The bureau also monitors, collects and investigates the tax compliance of small taxpayers. This includes the issuance of tax clearance certificates to individuals or businesses that have no outstanding liabilities with the BIR.
Monitoring and collection of excise and oil taxes
The bureau also collects excise and oil taxes, which are important sources of revenue for the government. The BIR is tasked with monitoring and collecting these taxes from manufacturers or importers of petroleum products and alcohol products.
Collection of documentary stamp taxes (DST)
The BIR is tasked with collecting documentary stamp taxes from businesses and individuals that transact through documents. These include real estate, transfers and other related transactions. The DST is used for the maintenance of public infrastructures such as roads, bridges, schools and hospitals. Collection of estate tax The bureau also collects estate tax from decedents’ heirs who receive their share of a deceased person’s assets upon death.
Issuance of tax credit certificate (TCC)
The BIR issues tax credit certificate to taxpayers who have overpaid their taxes. This is a document that entitles them to receive refunds from the government. Issuance of value-added tax (VAT) refund forms The BIR also issues VAT refund forms or official receipts to businesses and individuals who are entitled to get their share of the VAT they paid back from the government.
Payment and issuance of tax-free bond certificates (TFBC)
The BIR issues tax-free bond certificates to taxpayers who have overpaid their taxes. This is a document that entitles them to receive refunds from the government. Issuance of withholding tax (WHT) refund forms. The BIR also issues WHT refund forms or official receipts to businesses and individuals who are entitled to get their share of the WHT they paid back from the government.
Collection and issuance of clearance for the importation/exportation of animals or plants, articles made therefrom, or for the shipment of wildlife and other protected species/products which cannot be issued by local government units (LGUs) or the Department of Environment and Natural Resources (DENR).
Collection and issuance of clearance for the importation/exportation of animals or plants, articles made therefrom, or for the shipment of wildlife and other protected species/products which cannot be issued by local government units (LGUs) or the Department of Environment and Natural Resources (DENR).
Collection and issuance clearance for the importation/exportation or shipment of hazardous waste raw materials such as lead acid batteries scrap, waste paper for recycling. Also covers clearance for the importation/exportation or shipment of used machinery (used equipment grinding balls used in mineral processing industries, used generators, transformer oil); old vehicles subject to final inspection by the Land Transportation Office (LTO); vehicle chassis; donated vehicles; newspapers; computer parts; steel drums.
Clearance for the importation/exportation or shipment of used tires; scrap metals; second-hand tools and equipment (used machinery) subject to final inspection by the Bureau of Customs (BOC); used tires, waste paper, waste plastics, old vehicles and other materials imported for recycling purposes.
Collection and issuance of clearance for the importation/exportation or shipment of used rice hulls; used clothing; used shoes.
Clearance for the importation/exportation or shipment of used tires; scrap metals; second-hand tools and equipment (used machinery) subject to final inspection by the Bureau of Customs (BOC).
Collection and issuance of clearance for the importation/exportation or shipment of waste plastics (e.g. PET bottles); old computers, monitors, printers and other related equipment; tires; paper products such as cardboard boxes, papers, envelopes, etc.; metals such as steel bars and plates that are not subject to final inspection by the LTO.
The Bureau of Customs (BOC) is one of the government’s revenue collecting agency. It collects taxes on imported goods and ensures that all commercial transactions are done legally and above board.
List of Programs and Services of the BIR
Tax Deadlines
The Bureau of Internal Revenue (BIR) provides a list of programs and services that you can use to submit your tax returns, pay taxes or apply for exemptions. There are also online forms that you may download from the BIR website to help you with your tax filing.
Tax Identification Number (TIN)
This is a ten-digit number that you will use to file your tax returns. You can apply for one by visiting any of the BIR Service Centers located in malls and other public places. Your TIN is also used as proof of identity when you open bank accounts, apply for insurance policies and apply for government jobs. If you are self-employed, then you need to secure a license from the BIR first before applying for a TIN.
Business Registration
Before you can start your business, you need to register it with the BIR. This is a relatively simple process and can be done in any of their offices. You will need to provide proof of your identity (such as your birth certificate or passport), pay a registration fee and secure a TIN from the same office. Once your business has been registered, you can apply for an official Tax Identification Number (TIN) which will be used as proof of tax compliance.
Tax Returns
Self-employed individuals and freelancers have to file their own tax returns. This can be done online with the BIR’s E-Filing System or by visiting any of their offices. Your TIN will be required as proof of identification and tax compliance. If you are registering a business, then they will handle your tax returns for you.
BIR eServices
The BIR offers a range of services online, including the e-Filing System that allows you to submit your tax returns and view your payments. You can also apply for new business permits or renew existing ones using this service. Here are some of them:
The e-registration system is a web-based platform that allows individuals and businesses to manage their various tax registration activities. It includes the issuance of TIN Issuance, payment of registration fee, and the generation of certificate of registration.
The electronic filing and payment system of the BIR is an electronic method used to process and transmit tax return information. It can be accessed through the agency’s website.
The goal of the eBIR forms is to make filing and processing tax returns easier and more convenient for individuals and businesses.
The eAFS is an online application that allows individuals and businesses to submit their income tax returns and other required documents in PDF format.
BIR provides a link that allows taxpayers to pay their tax dues and liabilities through various ePayment Channels. These payment methods can be used by individuals and businesses using different types of cards.
BIR’s eONETT System is an online application that allows taxpayers to complete a One-Time Transaction related to the sale of real properties. This type of transaction can be performed through the use of various forms, such as the CGT-BIR Form 1706, CWT-BIR Form 1606, and the DTI-BIR Form 2000.OT.
NOTE: The eONETT System is only available for transactions involving the sale of real properties that are located in the various revenue regions of the BIR. These regions include the cities of San Fernando, Pampanga, Caloocan City, Manila, Quezon City, East NCR, CaBaMiRo, and South NCR.
The eTSPCert System is a web-based program that allows Tax Software Providers (TSPs) to carry out the certification of their software solutions for the electronic filing and payment of tax returns. This facility is designed to help ensure that the software used by these companies is compliant with the BIR’s data structure requirements.
The ORUS system is a web-based platform that allows individuals and businesses to manage their various tax registration activities. It includes the issuance of TIN Issuance, payment of registration fee, and the generation of certificate of registration.
NOTE: The initial implementation of the online registration of non-resident foreign corporations in South Quezon City is only available through RDO 39.
The eTCBP-TCVC is an online system that allows taxpayers to submit their applications for tax clearance and tax compliance verification certificates. They can do so by either using electronic mail or through the website of the BIR.
Access to BIR Forms
The BIR website contains the forms that taxpayers can use when filing their tax returns. These include the following:
- Form 1701 (Application for Registration of Foreign Taxpayers)
- Form 1702 (Report of Changes in Stockholders, Officers and Directors)
- Form 1703 (Registration of Foreign Taxpayer’s Agent or Representative)
- Form 1905-A (Issuance of Certificate of Registration as a Foreign Corporation)
- Form 1905-B (Appeal from Denial of Registration of Foreign Corporation)
- Form 1905-C (Application for Cancellation of Registration as a Foreign Corporation)
- Form 1905-D (Application for Certificate of Authority to Conduct Business in the Philippines)
- Form 1905-E (Registration and Annual Report Requirements for Domestic Corporations)
- Form 1906-I (Information Return on Gross Income Tax Withheld at Source by Certain Persons/ Entities Required to File an Income Tax Return Under Section 24(B)(1), NIRC)
Tax Information
The capital gains tax is imposed on the sale or exchange of capital assets in the Philippines. It can be imposed on the gains realized by the seller from the transactions, including the sale of certain types of capital assets.
The documentary stamp tax is a type of tax that applies to the documents, instruments, loans, and papers that are used to settle the obligations, rights, or property transactions.
The donor’s tax is a fee that is imposed on the transfer of property between multiple people. It can be used for the purchase or sale of real estate.
Estate tax is a type of tax that is imposed on the estate of a deceased person when the person’s will is executed. It can be carried out on the person’s right to transfer his or her estate to their lawful beneficiaries.
An income tax is a type of tax that applies to all kinds of earnings, including those from property, profession, trades, and offices. It is also a type of tax that affects people who earn a living from their jobs.
The percentage tax is a business tax that is imposed on individuals or entities that sell or lease goods or services in the course of their trade or business. These individuals or entities have gross annual sales or receipts that do not exceed P550,000.
This is a business tax imposed and collected from the seller in the course of trade or business on every sale of properties (real or personal) lease of goods or properties (real or personal) or vendors of services. It is an indirect tax, thus, it can be passed on to the buyer.
The value-added tax is a business tax that is imposed on the seller when the sale of a property or a business is completed. It can be passed on to the buyer. This type of tax is an indirect tax, so it can be passed on to the buyers.
Revenue Issuances
These are the official pronouncements of the Bureau of Internal Revenue that are published in the Official Gazette. They contain regulations, policies, procedural matters and other important information regarding taxes. Revenue Regulations and Revenue Procedures are two types of revenue issuances.
Zonal Values
Zonal values are the rates used to compute the value-added tax on the sale of property. They are based on a uniform rate imposed by the BIR that is applicable to all types of properties in each region.
How to Get Tax Clearance
Tax clearance is a document issued by the Bureau of Internal Revenue stating that a taxpayer is free from tax delinquency. It is also known as Taxpayer’s Certificate of Clearance or simply TCC. The process for getting one is simple and straightforward, but you must be aware of some important things before applying for it.
Requirements:
- You need to be a registered taxpayer in the BIR Electronic Filing and Payment System (eFPS), an online portal that allows taxpayers to file and pay income taxes online. If not, you need to go to your Revenue District Office (RDO) to enroll to eFPS and bring the following:
- Certificate of Registration (COR)
- Letter of Request for the enrollment in eFPS. Include 2 authorized users with the following details: name, email, contact numbers and position.
- You should not miss any tax payment before and bring the tax payment form and printed BIR acknowledgement email. Otherwise, you need to settle your taxes in the office and pay for penalty.
- Written request for tax clearance.
Steps:
- Bring a formal request for tax clearance as well as any additional documentation required to the RDO.
- If you have any tax arrears or missed payments, the RDO will investigate. If you have a payment arrear, you must pay it as well as a late fee.
- The RDO will issue a Certificate of No Tax Liability if all conditions are met.
- Using eFPS, pay the Tax Clearance Certification Fee of Php100. After that, attach the eFPS Bank Payment Confirmation Receipt.
- Please bring the following items to your local BIR office:
- Certificate of No Tax Liability
- Application Form for Tax Clearance – Application forms can be found on the BIR Website
- BIR Form 0605 (Payment Form) and eFPS Bank Payment Confirmation Receipt (from paying the Tax Clearance Certification Fee – see Step 4)
- Photocopy of Certificate of Registration (COR)
- Previous tax clearance issued
- 2 loose documentary stamps (do not affix)
- Letter of Request for Tax Clearance
- Latest Tax Returns filed and paid through eFPS from the payment for Registration Fee
- After submitting your documents, you must wait for further instructions. If all of the requirements are completed, you will be called to obtain your Tax Clearance.
- You may be required to bring your documents to the BIR’s headquarters in some places.
Video: Pinoy OFWs, Here’s How You Can Get Your TIN Number in the BIR
If you are an Overseas Filipino Worker (OFW), you may be wondering how you can get your Tax Identification Number (TIN) from the Bureau of Internal Revenue (BIR). Luckily, it is not difficult to obtain your TIN, and this video will briefly explain the process.
According to the Bureau of Internal Revenue (BIR), all Filipino citizens who are working abroad are required to have a Taxpayer Identification Number (TIN). This is to make sure that they are properly taxed on their income.
To apply for a TIN number, the OFW must go to the nearest BIR office in their area and fill out the necessary forms. They will also need to submit the required documents, which include their passport, work permit, employment contract, and bank statement or pay slip. Once the application has been processed, the OFW will be given their TIN.
To renew a TIN number, the OFW must go to the nearest BIR office and fill out the necessary forms. They will also need to submit the required documents, which include their passport, work permit, employment contract, and bank statement or pay slip. Once the application has been processed, the OFW will be given their TIN.
Frequently Asked Questions
1. What are the powers of the BIR?
The Bureau of Internal Revenue is under the control and supervision of the Department of Finance. It has the necessary powers and duties to collect and assess all national internal revenue taxes and fees, as well as enforce all penalties and fines connected therewith. It also has the authority to execute judgments in its favor in all cases involving the enforcement of these taxes and fines.
The Bureau of Internal Revenue is authorized to give effect to and administer the police powers and other regulations that are part of this Code.
2. What is the role of Bureau of Internal Revenue BIR in the Philippines?
The Bureau is tasked to collect close to 70 percent of revenues necessary to finance government’s expenditures. It is also responsible for administering the collection of taxes, duties, and fees. The Bureau also issues tax clearances and collects delinquent accounts from individuals, corporations, and businesses.
3. How can I verify my BIR TIN number?
If you’re applying for a Tax Identification Number (TIN) near the RDO where you live or work, then you should go to the nearest Taxpayers’ Service counter to ask for the verification of your identity. You can also present your valid birth certificate or ID.
4. Who are exempted from tax in the Philippines?
Starting January 1, 2018, compensation income earners, self-employed and professional taxpayers (SEPs) whose annual taxable incomes are P250,000 or less are exempt from the personal income tax (PIT). The 13th-month pay and other benefits amounting to P90,000 are likewise tax-exempt. The exemption is applicable for the whole year. This means that even if you earn P250,000 in the first quarter, you are still exempted from personal income tax for the entire year.
5. Can I check my TIN number online?
You can easily request or validate your TIN using the Bureau of Internal Revenue’s Mobile TIN Verifier app. This service allows taxpayers to send their inquiries and requests for TIN validation using their mobile phones. The app also has a live response from the agency’s headquarters.
6. How can I get my TIN ID number online?
If you are self-employed, you must first complete the necessary steps to get a TIN ID online. Doing so will allow you to receive your ID within three days. To apply online, visit the BIR’s eReg website or use your phone. After completing the form, you will receive a confirmation message from the agency. If you are employed by a company, you don’t have to go to the BIR office to get your SSS or PhilHealth numbers. Instead, your employer will simply submit a request for your details.
7. Is TIN ID a valid ID?
Although you don’t have to carry a TIN ID with you when making transactions, this card can still be used for various types of transactions. You can get one from the Bureau of Internal Revenue (BIR) office.
8. How long does it take to get TIN ID?
If the RDO is not able to process your transaction on the day of your application, then your TIN card may be issued the following day. If you wish to return to the same RDO within a couple of days, then you should do so.
Summary
The Bureau of Internal Revenue (BIR) is a government agency in the Philippines that is tasked with collecting taxes from individuals and corporations. In addition to this, it also handles other financial matters such as the issuance of licenses and permits, as well as the assessment and collection of internal revenue taxes.
The BIR plays an important role in the lives of Filipinos. It ensures that taxes are paid by all citizens so that government funds can be used for various programs and projects that will benefit everyone.
The BIR also ensures that businesses are paying correct taxes on their earnings so they can continue operating smoothly. If they don’t pay their taxes on time or at all, they’ll face sanctions from the government.
For example, if a business fails to pay its taxes within 30 days after receiving a notice from the BIR, its business permit will be suspended until payment has been made. And if it fails to comply with tax laws and regulations even after being warned several times by the BIR, then it will face penalties and fines from government authorities.
READ NEXT: How to Register for BIR Tax as an Online Freelancer in the Philippines
Contact Information
Address: BIR National Office Bldg., BIR Road, Diliman, Quezon City, Philippines
Telephone Number: 89817000; 89297676
Website: bir.gov.ph
Facebook Page: facebook.com/birgovph
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