Marginal Income Earner - MIE

Self-employed business owners whose annual total gross sales or receipts do not exceed PHP100,000, may be tagged as Marginal Income Earner (MIE)

Marginal Income Earners are small businesses we see around and are usually few blocks away from each other, it may be, but not be limited to small sari-sari stores, small carinderias or turo-turos, drivers/operators of a single unit tricycle or jeepney, vulcanizing shops and others.

Like what I've said in my previous blog Marginal Income Earners are exempt from paying taxes, even the annual BIR registration are free for them, provided they stay small and no plan of expansion; because once they expand the business to generate more sales or revenues most likely they have to change their registrations and pay regular taxes to the government.

Though MIE's exist primarily for Subsistence or Livelihood, they still need to register with the Bureau of Internal Revenue (BIR) with minimal requirements provided for by BIR RMC - No. 7-2014 as follows;

1. Accomplish BIR Form 1901 with only a sworn statement of income and PSA authenticated birth certificate;
2. Registration of books of accounts (e.g., two-column journal or other simplified books for daily expenses and revenues);
   
3. Issuance of registered principal receipts/sales invoices as prescribed under Revenue Memorandum Order No. (RMO) 12-2013; and 
4. Filing annual income tax return (BIR Form 1701) is still required annually.

It must be noted that for Marginal Income Earners, the issuance of invoice or receipts is still required, simple bookkeeping still has to be maintained in the form Books of Accounts, that can be a two-column journal or other simplified record of daily expense and revenues; and filing of Annual Income Tax Returns is mandatory meaning a penalty may be incurred for non-compliance.

The above presentation are self-declaration based on searches applicable to the topic involving the latest issuance from tax regulating body of the Philippines, if there are other revenue regulations or revenue memorandum issued that over rule the above as discussed, such new tax related issuances shall prevail.

ELEDGER BOOKKEEPING AND ACCOUNTING SERVICES:
Our Services: Bookkeeping and Accounting , Tax Compliance
Business Registrations : DTI, SEC, BIR, Mayor's Permit, SSS,
PHI,, HMDF-Pagibig,  Send us Email elbas.main@gmail.com

Sari-Sari Store needs to pay tax... really?

The answer is Yes! Or may be NOT.  

Confused?

At the time the sari-sari store become operational after complying with all the required registrations and permit, what comes next is tax compliance.

What is a tax compliance means for a Pinoy business even in a small business like sari-sari store.

Tax compliance is the taxpayers' decision to comply with tax laws and regulations by paying tax timely and accurately.

In the Philippines and almost in every country around the world recognizes the importance of taxation and there always issues about compliance.

Small business like sari-sari store has to register with the Bureau of Internal Revenue (BIR).

Bureau of Internal Revenue (BIR) is the governments agency that regulates all kind of taxes every Filipino has to comply directly or indirectly. 

Later on in my future blog, I will tell you about direct and indirect tax.

A sari-sari store should register with the BIR and comply with certain taxes like;

1. Annual Registration - paid annually using the BIR form 0605
2. Quarterly Percentage - paid quarterly using the BIR form 2551Q
3. Annual Income Tax Return using the BIR Form 1701 for self employed or what we call sole proprietor. 
4. Withholding Tax 

In usual way the tax type for compliance is indicated in the BIR Registration Certificate or the BIR form 2303. Said tax type has to be complied with, accordingly per schedule otherwise it will incur penalty and interest commencing 

from the date the tax is due until the time such tax is paid.

So what about a small sari-sari store? 

It depends, if your sari-sari store fall under the category as Marginal Income Earner (MIE) with annual gross sales not exceeding P100,000 then it is totally exempt from paying taxes.

What if the sales exceeded the P100,000.00?

Annual gross sales exceeding P100,000.00 is a departure being MIE, as such the business or the taxpayer has to pay annual BIR registration and may be subjected to percentage and income tax.

Take note that according to new law or the TRAIN Law, Purely Self-Employed Individuals and/or Professionals Whose Gross Sales/Receipts and Other Non-Operating Income Do Not Exceed the VAT Threshold of P3,000,000, the tax shall be, at the taxpayer’s option;

1. 8% Income Tax on Gross Sales or Gross Receipts in Excess of P250,000 in Lieu of the Graduated Income Tax Rates and the Percentage Tax; Or

2. Income Tax Based on the Graduated Income Tax Rates

Therefore if the sales exceeded the P100,000,00 up to P250,000.00 the business owner should nominate the No. 1,  8% Income Tax on Gross Sales or Gross Receipts in Excess of P250,000 in Lieu of the Graduated Income Tax Rates and the Percentage Tax, from which still no taxes has to be paid, otherwise if the sales exceed P250,000,00 the 8% applies to the excess over 250,000.00

Example : Quarterly Compliance of a sari-sari store with accumulated sales of P260,000.00 in one year. Detailed as follows;

                                    

                 

         

I hope that I am clear with my simplified explanation of what a sari-sari has to comply when it comes to taxation.

ELEDGER BOOKKEEPING AND ACCOUNTING SERVICES:
Our Services: Bookkeeping and Accounting , Tax Compliance
Business Registrations : DTI, SEC, BIR, Mayor's Permit, SSS,
PHI,, HMDF-Pagibig,  Send us Email elbas.main@gmail.com