Tags: BIR Lessee Information Sheet, lease agreements, Philippine tax compliance, tenant registration, BIR Form 1902, real property lease
In the ever-evolving landscape of tax compliance in the Philippines, understanding the Bureau of Internal Revenue (BIR) requirements is crucial—especially for those involved in real estate transactions. One lesser-known yet important document is the Lessee Information Sheet. Whether you're a landlord leasing out property or a tenant entering into a new rental agreement, this guide will help you understand what the BIR Lessee Information Sheet is, why it matters, and how to fill it out correctly to avoid legal pitfalls.
What is the BIR Lessee Information Sheet?
The BIR Lessee Information Sheet is a document required by the BIR from property owners (lessors) who lease out real property. It must be filled out by the lessee (the tenant) and submitted by the lessor (the landlord) to the BIR office where the property is registered. This form helps the BIR monitor leasing transactions and ensure that taxes due from rental income are properly reported and paid.
This requirement is in line with the BIR’s broader effort to improve transparency, enhance tax collection, and reduce the risk of underreporting rental income—a common issue in real estate transactions in the country.
Legal Basis for Requiring Lessee Information
The obligation to file a Lessee Information Sheet is anchored in Revenue Memorandum Circular (RMC) No. 69-2009 and further emphasized in Revenue Regulations No. 12-2011. These issuances require lessors to submit the Lessee Information Sheet (LIS) on an annual basis or whenever a new lease agreement is executed or renewed.
The BIR’s intention is to match the rental income declared by the lessor against the expenses declared by the lessee, as both parties are required to report the transaction in their respective income tax returns.
Who Needs to File the Lessee Information Sheet?
- Lessor (Landlord): The person or entity who owns the real property and earns income from leasing it out.
- Lessee (Tenant): The individual or company renting the property. While the responsibility to submit lies with the lessor, the lessee must provide accurate and truthful information to complete the LIS.
Applicable to:
- Residential lease (if used for business)
- Commercial or office lease
- Warehouse or industrial space lease
- Government offices leasing private property
Note: Residential leases not used for business may be exempted, but lessors should still confirm with the RDO (Revenue District Office).
Information Required in the Lessee Information Sheet
The Lessee Information Sheet typically requires the following details from the tenant:
- Name of Lessee/Company Name
- TIN (Taxpayer Identification Number)
- Registered Address
- Contact Number and Email Address
- Nature of Business (if applicable)
- Details of the Leased Property
- Property address
- Monthly rental amount
- Start and end date of the lease contract
- Mode of payment (e.g., cash, post-dated checks)
- Copy of the Lease Contract
- Date of Submission
This form must be filled out for each tenant occupying a property, especially for commercial buildings with multiple tenants.
Why is the Lessee Information Sheet Important?
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For the Lessor:
- Ensures compliance with tax laws and avoids penalties from non-submission.
- Serves as proof of rental income declaration.
- Protects against discrepancies during BIR audits.
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For the Lessee:
- Ensures that their rental expense is properly recorded.
- Helps in securing official receipts from the landlord (which are mandatory).
- Serves as documentary evidence for tax deduction claims.
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For the BIR:
- Enables accurate cross-checking of income and expense declarations.
- Prevents tax evasion.
- Ensures both parties are fulfilling their tax obligations.
When and Where Should It Be Filed?
The Lessee Information Sheet must be submitted by the landlord to the Revenue District Office (RDO) where the property is located:
- Upon execution or renewal of a lease contract
- Annually for existing lease arrangements
While there's no specific deadline under the law for annual submission, it’s recommended to file it at the beginning of the year or within 30 days from the start of a lease contract to avoid penalties.
Consequences of Non-Compliance
Failure to submit the Lessee Information Sheet can result in:
- Fines and penalties under the Tax Code
- Disallowed rental expense deductions for lessees
- Compromise penalties during BIR audit of either party
- Possible inclusion in the BIR’s tax mapping or audit list
How Does This Affect Freelancers, SMEs, and Startups?
Many freelancers, small businesses, and startups rent office or co-working spaces. It’s essential to ensure your landlord submits your information to the BIR because:
- You might not be able to claim rent as a deductible expense if the lease is not reported.
- You could be flagged during a BIR audit.
- You need official receipts for your financial reports and tax return compliance.
Sample Scenario: John, a Startup Founder
Let’s say John, a freelance web developer, rents a small office unit in Davao City for P20,000/month. His landlord asks him to fill out the Lessee Information Sheet. John provides his name, TIN, business address, and a copy of his lease contract.
The landlord submits the LIS to RDO No. 113A in Davao. When John files his annual income tax return, he deducts his rental expense of P240,000 for the year. Since his information is properly recorded, the BIR accepts the deduction during their review.
If the landlord had failed to submit the LIS, John’s rental expense could be questioned during a BIR audit, possibly resulting in additional tax due.
Best Practices When Dealing with the Lessee Information Sheet
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Lessee:
- Always request a copy of the filed LIS from your landlord.
- Ensure your lease contract is notarized and has complete terms.
- Maintain copies of official receipts issued by your landlord.
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Lessor:
- Submit the LIS on time to the correct RDO.
- Keep a master list of all tenants with updated lease terms.
- Ensure all lease contracts are compliant with BIR regulations.
Final Thoughts
Understanding and complying with the requirements of the BIR Lessee Information Sheet is a shared responsibility between the landlord and the tenant. It might seem like just another form, but in the eyes of the BIR, it is a vital tool for tax compliance, transparency, and audit validation.
Whether you’re renting a small commercial stall, managing a condominium for lease, or occupying a shared office space, make sure your lease is reported properly. It's not just about avoiding penalties—it's about doing your part in building a culture of tax compliance in the Philippines.
Stay informed. Stay compliant. Be responsible.
If you found this guide helpful, share it with fellow tenants, landlords, or real estate practitioners to promote responsible tax practices in your community.
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