Tax notes: Compliance requirements of marginal income earners

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Monday, March 31, 2014


THE Bureau of Internal Revenue (BIR) has issued the following clarifications on the registration and compliance of marginal income earners.

Definition and coverage of “marginal income earners”

A marginal income earner (MIE) is an individual not deriving compensation as an employee under an employer-employee relationship but who is self-employed and deriving gross sales or receipts not exceeding P100,000 in any 12-month period. To be considered a MIE, the activity of the individual should be for subsistence or livelihood.

The term “marginal income earner” shall include, but shall not be limited to, agricultural growers/ producers (farmers/fishermen) selling directly to consumers, small sari-sari stores, small carinderias or turo-turos, drivers/operators of a single unit tricycle, and others. It should not, however, include licensed professionals, consultants, artists, sales agents, brokers and other similar individuals, and all others whose revenue is subject to withholding tax pursuant to Revenue Memorandum
Circular (RMC) No. 7-2014.

Registration and compliance requirements

A marginal income earner is required to register with the BIR but with minimum registration and compliance requirements, as follows:

1) Registration with the BIR using BIR Form 1901 with the following minimal documentary requirements: (a) sworn statement of income for the year; and (b) National Statistics Office (NSO) certified or Local Civil Registry Birth Certificate;

2) Exemption from payment of Annual Registration Fee (ARF);

3) Registration of books of accounts (e.g., two-column journal or other simplified books for daily expenses and revenues);

4) Issuance of registered principal receipts/sales invoices as prescribed under Revenue Memorandum Order No. (RMO) 12-2013;

5) Filing and payment of annual income tax return (BIR Form 1701); and

6) Exemption from payment of business taxes (value-added tax and percentage tax).

(Source: Punongbayan & Araullo)

Published in the Sun.Star Cebu newspaper on April 01, 2014.

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