QuestionsQuestions (BIR REGULATIONS NO. 4-2005)
BIR Regulations No. 4-2005 implemented BSP Circular No. 472 (Series of 2005). It required all bank borrowers and co-makers (and, if applicable, endorser, surety, and/or guarantor) to submit their latest Income Tax Return (ITR) stamped as received by the BIR, and financial statements (for borrowers engaged in business), together with a waiver/authority for the bank to conduct random verification with the BIR.
The requirement covers the credit applicant/borrower and co-maker, and also endorser, surety and/or guarantor if applicable.
(a) For taxpayers already with an Annual ITR, “latest” refers to the ITR for the preceding tax year (calendar or fiscal). (b) For new establishments without annual ITRs yet, it refers to the ITR for the most recent quarter.
FS include the balance sheet, statement of income, statement of changes in equity, and statement of cash flows, together with all notes to the statements.
Starting 2005, for taxpayers with total assets of more than PHP 15 million, only financial statements audited by external auditors accredited by the SEC shall be acceptable.
EFPS is an internet-based BIR system for paperless filing of tax returns, payment of taxes due, and submission of information such as financial statements, balance sheets, and summary lists of sales and purchases, accessible through the BIR Portal (www.my.bir.gov.ph).
The applicant may download a copy of the EFPS-filed ITR from the BIR Portal while the bank verifies authenticity using the procedures under the regulations.
Returns filed with Accredited Agent Banks (AABs) or through EFPS with corresponding reference number are deemed duly stamped and received by the BIR.
The bank must check authenticity either by telephone to the BIR Contact Center (981-8888) or through the BIR Portal.
The bank must fax a copy of the tax return to the BIR Contact Center with a covering letter-request stating the bank name, contact person, bank telephone and/or fax number, applicant/co-maker name and TIN, and the applicant’s telephone/fax numbers. The Center coordinates verification with the concerned BIR region/district.
Supporting FS are required to be presented to a Revenue District Office after filing and paying either through EFPS or manually through the AABs for stamping.
Banks must fax an Authenticity Verification Request to the BIR Contact Center (981-8888) attaching the FS to be verified.
The fax request must include: bank name, contact person, fax number, telephone number, name and TIN of credit applicant, and total revenues in the FS.
The consistency of data/figures in the ITR and FS is checked and considered in evaluating the financial capacity and creditworthiness of the credit applicants and co-makers.
The applicant must provide a waiver of confidentiality of client information and/or an authority allowing the bank to conduct random verification with the BIR to establish the authenticity of the ITR and accompanying financial statements submitted.
EFPS is not stated as strictly mandatory; applicants are “strongly advised” to file electronically using EFPS to facilitate the bank’s ITR and FS verification.
They take effect fifteen (15) days after publication in any newspaper of general circulation.
They aim to (1) provide a system for banks to discharge responsibilities under BSP Circular 472-2005, ensuring only tax-compliant applicants are allowed to apply for credit as well as to become co-maker/endorser/surety/guarantor; (2) provide a simple, systematic way for tax-compliant applicants to obtain required documents and comply; and (3) ensure authenticity of the ITR and accompanying financial statements.