TAX REQUIREMENTS

FOR
MARGINAL INCOME
EARNERS
By:

Abbago, Airish
Brillante, Eunice
Caronan, Mike
Collado, Princess
Orosco, Hari
Rabino, Feonah
Talens, Ted
4CAC

I. CLARIFICATION
OF
TAX
REQUIREMENTS FOR MIEs (Marginal
Income
Earners)
- The Bureau of Internal Revenue recently issued
Memorandum
Circular
No.
7-2014
- Issue of Memorandum is in line with BIRs
campaign to curb tax evasion and plug tax leaks
- Involves new requirements for MIEs to
register with the BIR and issue BIR-registered
receipts
and
sales
invoices
-Revenue Memorandum Circular (RMC)No. 7-2014
clarifies Revenue Regulations (RR) No. 7-2012

II. Tax Laws Applicable:

*Revenue Regulations (RR) No. 112000
*Revenue Regulations (RR) No. 072012
*Revenue Memorandum Circular (RMC)
No. 7-2014
*RA 8424 (NIRC)

Revenue Regulations (RR) No. 112000 (before 2012 regulations)

- MIEs will be given the opportunity to
register with the Bureau of Internal
Revenue, with no charge and without
complying with the usual documentary
requirements, such as maintenance of
books of accounts and issuance of
registered receipts/invoices.

Revenue Regulations (RR) No. 072012

MIEs:
*Do not realize gross sales or receipts exceeding
P100,000 in any 12-month period
*Not depriving compensation as employee
*Activities of principally for subsistence or livelihood
*Shall not include: licensed professionals, consultants,
artists, sales agents, brokers and others similarly
situated, including all others whose income have been
subjected to withholding tax

Revenue Regulations (RR) No. 7-2012

Requirements for Registration:
-BIR Form 1901 with the following minimal
documentary requirements:
1)Sworn Statement of Income for the year
(Annex A)
2)NSO Certified or Local Civil Registry Birth
Certificate;
3)Registration of Books of Accounts
4)Issuance of registered principal receipts/sales
invoices as prescribed under RMO 12-2013

Revenue Regulations (RR) No. 7-2012

- BIR Form 1901 with the following minimal
documentary requirements:
5)Filing and Payment of Annual Income Tax
Return using BIR Form 1701
6)Exemption from payment of business taxes
(VAT or any Percentage Tax).
7)Exemption from the payment of Annual
Registration Fee (ARF)

Revenue Memorandum Circular (RMC)

No.7-2014
MIEs:
1. Do not realize gross sales or receipts exceeding
P100,000 in any 12-month period
2. Not deriving compensation as employee
3. Should be principally for subsistence or livelihood
4. Shall not include licensed professionals,
consultants, artists, sales agents, brokers and
others similarly situated, including all others whose
income have been subjected to withholding tax

Revenue Memorandum Circular (RMC)

No.7-2014
The MIE, shall include but not limited to:
Agricultural
growers/producers
(farmers/fishermen) selling directly to ultimate
consumers, small sari-sari stores, small
carinderias or "turo-turos", drivers/operators of
a single unit tricycle, and such, but shall not
include licensed professionals, consultants,
artists, sales agents, brokers and others
similarly situated, including all others whose
income have been subjected to withholding tax.

Section 237 of RA 8424

All persons subject to an internal revenue tax shall,
for each sale or transfer of merchandise or for
services rendered valued at Twenty-five pesos
(P25.00) or more, issue duly registered receipts or
sales or commercial invoices, prepared at least in
duplicate, showing the date of transaction,
quantity, unit cost and description of merchandise
or nature of service . . . .
The Commissioner may, in meritorious cases,
exempt any person subject to internal
revenue tax from compliance with the
provisions of this Section.

III. RELEVANCE TO SOCIETY

*MIEs are composed of mainly class D
to E Filipinos who earn less than
minimum wage earners.
*These MIEs approximately just earn
less than 270 pesos per day
*There are added costs to MIEs with this
new regulation

III. RELEVANCE TO SOCIETY

*The businesses of MIEs mostly comprise of
Class D to Class E transactions, which means
that generating an audit trail based on
receipts is difficult.
*Having to track down the small businesses
situated at the outskirts of rural areas can
become burdensome. It is likely that costs of
collection will outweigh revenues.

III. RELEVANCE TO SOCIETY

*The high costs of compliance needed from
MIEs could force them out of business in
the long run.
*Charging taxes does not help them in any
way. Rather, it becomes a burden to a
sector that is situated below the poverty
line.

IV. RECOMMENDATIONS
1.Exempt all MIEs from business as
well as regular income taxes
2. Implement fixed amount applicable
to different MIEs
3. Simplify rules (yet expound on its
scope and implications)

RECOMMENDATION #1
Exemption from regular income
taxes:
-MIEs earn less than minimum
wage
-Minimum wage earners are
exempt from regular income tax

RECOMMENDATION #2
Implement a fixed amount
-Send a statement that everyone
must contribute
-MIEs will be monitored by BIR for
ease of transition into regular tax
payers
-Small amount of tax for low
income to prevent them from
being burdens to society

RECOMMENDATION #3
Simplify rules (yet expound on its
scope and implications)
-Rules understandable by MIEs

THANK YOU!
-end-