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Lessors to monitor BIR registration of their lessees

Lessors to monitor BIR registration of their lessees (Revenue Regulations No. 12-2011, July 25, 2011)

BIR will now require lessors to monitor and report to the BIR the registration profile of  their lessees who are engaged in business.  This is to ensure that owners or sub-lessors of commercial buildings or spaces deal only with BIR-registered taxpayers.

The required reports , which shall be under oath, shall indicate the following information:
    1.    Building/space lay-out of the entire area being leased with proper  unit/space address or reference;
    2.    Certified true copy of contract of lease per tenant; and
    3.    Lessee Information Statement (indicating the registered name of tenant, TIN, ATP for official receipts  and invoices, and POS/CRM permit number, leased area, monthly rental payment, and period of lease)

The reports shall be submitted every 31st of January (for tenants as of December 31st of the previous year) and 31st of July (for tenants as of June 30th of the current year). 

The reports shall be submitted in hard and soft copies (excel format sored in a CD-R)) to the Revenue District Office (RDO) where the commercial establishment, building or space is located.

Effectivity. The order takes effect immediately and  deadline for the initial submission is on September 01, 2011 covering tenants as of July 31, 2011.

BIR monitoring activities.  BIR will use the information submitted by lessors to validate the registration profile of the lessees.  The information will also be used for future audit and investigation activities to validate the revenues reported by the lessors.

Penalty provisions.   Lessors who fail to submit the reportorial requirements, or who willfully provide false information  shall be subject to penalties under Sections 255 and 267 of the Tax Code. The regulations also mention that lessors who knowingly transact with taxpayers who are not registered with BIR will also be penalized.

Action points for lessors.
    1.     Lessors should therefore start getting the required information from their lessees.
    2.    Report accurate information because these may be used against you during tax examination.  
    3.    To ensure correctness of the information provided, you are advised to request for the source documents (copy of BIR  registration, etc.)
    4.    Ensure the DST on the lease contract has been paid and proof is available.
    5.    Advise lessees who are unregistered to process their registration before the September 1 due date for submission of the report.

Action points for lessees.

    1.    Ensure that the information to be reported by the lessor on your company is accurate.  These may be used during your tax examination.
    2.    Process your BIR registration if not yet registered.

For sample format of the Lessee Information Statement and for further details, please see attached copy of RR 12-2011.