Every business whether a corporation or partnership registered with the SEC or a sole proprietorship registered with the DTI is under the obligation to immediately obtain business permits in the municipalities where they operate.
Corporations whether PEZA registered or not operating without the necessary business permits will incur fines, penalties or closure from the BIR or City Hall.
Registration is required for every separate or distinct establishment or place of business including facility types where sales transactions occur and warehouse where inventory of goods for sale are kept, and must be obtained before commencement of business and payment of any tax due.
BIR FINES
Failure to Register
– Fine of not less than P5,000 but not more than P20,000 and imprisonment of not less than 6 months but not more than 2 years.
Compromise Fees
a. Cities 20,000
b. 1st class municipalities 10,000
c. 2nd class municipalities 5,000
d. 3rd class municipalities 2,000
Official Receipts
Failure to issue receipts/invoices 1st violation 10,000 – 2nd violation 20,000
Refusal to issue receipts/invoices 1st violation 25,000 – 2nd violation 50,000
The above are just a few of the penalties that the BIR may impose.
Mayor’s Permit
None registration with City Hall has its own penalties;
Makati City Penalty example:
SEC. 3A.11. Penalty – Any violation of the provisions of this Article shall be punished by a fine of not less than One Thousands Pesos (P 1,000.00) nor more than Five Thousands Pesos (P 5,000.00), or imprisonment of not less than one (1) month not more than five (5) months, or both, at the discretion of the Court.
The above does not includes a surcharge of 25% for late payments and a 2% monthly interest on the unpaid taxes, fees or charges including surcharges.
The documentation required varies according to the municipality, below are listed :
– Barangay Clearance/Permit for the new year
– Previous Year’s Business Permit
– Financial Statement/ Income Tax Return for the preceding year
– Latest Community Tax Certificate
– Contract of Lease/ Lessor’s Permit
– Comprehensive General Liability Insurance
– List of Company Employees with Medical Certificates
Documentary requirements may vary from year to year, we recommend that you check for changes before filing your business permit renewal with City Hall.
Annual Mayor’s Permit Fees (business tax) vary according to the nature of the company’s business, the company’s preceding years gross sales are used to calculate the amount of tax due which can be less than 1% to 3% or more, regardless of when the business started to operate .
In the case of a newly-started business the initial tax for the year shall be calculated on the capital investment or paid up capital, contract of lease and size of office.
All business permits should be prominently displayed in every location where business is transacted.
About David Elefant
Philippines business consultant specializing in assisting companies setup their operations in the Philippines.
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