Wednesday, June 21, 2017

Revised BIR Form No. 2305 (Certificate of Update of Exemption, and of Employer and Employee's Information

Revenue Memorandum Circular (RMC) No. 42-2017 has issued by the bureau recently circularizing the Revised BIR Form No. 2305 (Certificate of Update of Exemption, and of Employer and Employee's Information) April 2017 ENCS to reflect the provision of Revenue Regulations (RR) No. 5-2017 implementing Republic Act No. 10754, entitled "An Act Expanding the Benefits and Privileges of Person with Disability (PWD)" relative to the tax privileges of person with disability.

The revised BIR Form No. 2305 will be used by individuals to update their civil status, additional exemption which now includes PWD as an additional exemption/dependent of a benefactor, if applicable, and employer's information.

Click to download revised BIR Form No. 2305.

Please refer: of the full text of RMC No. 42-2017. 

Friday, June 16, 2017

New Versions Of The Update Of Exemption Of Employee (UEE) Data Entry Module In Filing Of The BIR Form No. 2305 (Certificate of Update Of Exemption And Of Employers And Employee's Information) And 2305 Batch File Validation Module

The bureau has issued Revenue Memorandum Circular (RMC) No. 43-2017 recently with regard to the availability of the updated versions of the UEE Data Entry Module and Batch File Validation Module in the filing of BIR Form no. 2305 in relation to RMC No. 59-2015.

Updates in the new versions include the acceptance of Persons with Disability (PWD) pursuant to Republic Act (RA) No. 10754. The following work around procedures shall be followed to allow the data entry of a qualified PWD dependent as an additional exemption:

1. In the Part III - Additional Exemptions of BIR Form No. 2305, encode the name and birthdate of the qualified PWD dependent;
2. Tick the "Mark if PWD/Mentally/Physically Incapacitated" box; and
3. Click the save button after encoding all the required information.

To download click the following:

1. Update of Exemption of Employees Data Entry Module:

2. 2305 Batch File Validation Module (ZIP):

3. Job Aid - Batch Entry Module:

4. Job Aid - Batch Data Entry Module:

Please refer: of the full text of RMC No. 43-2017. 

Sunday, June 11, 2017

Do You Consider Tax Planning As Part Of The SparkUp or Growth For The Next Generation Of Business People?

Financial, Marketing, Sales and Human Resources Planning are one of the important factors to consider for the growth of business entity. However, I also consider Tax Planning as part of the growth for the Next Generation of Start-Up and Business People.

For three decades of award-winning economic reportage, BusinessWorld, the country's leading business newspaper, introduces its newest successor in the age of disruptive innovation: SparkUp.

Right: Lucien C. Dy Tioco, Executive Vice-President of Philippine Star Media Group
The digital-first multimedia platform SparkUp is a space for the community of young, passionate, and wildly aspiring go-getters. It assets include the website, social media pages including Facebook, Instagram, and Twitter @SparkUpPH, and a quarterly published magazine.

Readers will expect original content for the next generation of business people. A daily content hashtag categorizes the stories:

#MoneyMonday - Tips on money management with the latest news on saving, investing, and spending;

#TrendingTuesday - Insights on the latest trends and their impact on entrepreneurs and consumers;

#WorkingWednesday - Workplace stories and tips for the Gen Y and Gen Z's work ethics and career outlooks;

#TakeoverThursday - An insider tour of a day in the life of the members of the Sparkommunity;

#FreshFriday - Stories on the lighter side of business.

Besides, SparkUp will also deliver insights from industry icons called Sparkfluencers who are young and trending business influencers who made it to the top. SparkUp also introduces Sparktionary to boost awareness of business terms. This built-in dictionary provides digestive definitions through interactive executions readily available for every reader.

Signing up to SparkUp via will give users additional capacities, such as contributing their own content, highlighting passages of interest, taking down notes, bookmarking stories, and participating in a gamified platform.

SparkUp will also regularly hold a series of events aimed at empowering the Sparkommunity. Among these events are entrepreneurial summits, pocket forums, campus activations, start-up competitions, and case-study activities. These will enable members of the Sparkommunity to learn, meet up, network and find potential partners.

To know more about SparkUp, visit and follow @SparkUpPH. 

Thursday, June 1, 2017

Types of Withholding Taxes, Duties & Obligations of a Withholding Agent and Time of Withholding

In my previous blogs, I mentioned about the importance of withholding tax system, persons exempt from withholding tax and persons required to deduct and withhold. This day, the  topics are Types of Withholding Taxes, Time of Withholding and Duties & Obligations of a Withholding Agent.

Types of Withholding Taxes

1. Withholding Tax on Gross Compensation
2. Expanded or Creditable Withholding Tax Service Income. Service Income and Purchases of goods)
3. Final Withholding Tax (Passive Investment Income) - Interest, Dividends, Royalties, Prizes, Winnings and Capital Gain
4. Withholding Tax on Government Money Payment (Income Tax, VAT and Percentage Tax)
5. Quarterly Withholding Tax (Individual Engage in Business or Profession and Corporation)

Duties & Obligations of a Withholding Agent

1. To register
2. To deduct and withhold
3. To remit the tax withheld 
4. To file withholding tax returns
5. To issue withholding tax certificate

Time of Withholding

Ordinarily, the obligation of the payor to deduct and withhold arises:

1. At the an income payment is paid or payable
2. Income payment is accrued or recorded as an expense or asset, whichever is applicable in the payor's books, whichever is come first.

The topic was discussed by Dr. Ruperto P. Somera, Ph. D. DBA, DBE, CPA, a resource speaker of Philippine Institute of Certified Public Accountants (CPAs) of a Seminar on Issues, Problems and Solutions in Tax Audit and Investigation; Comprehensive Discussion of Withholding Tax last May 25, 2017.

Wednesday, May 31, 2017

Persons Required To Deduct & Withhold Tax

Not all persons are exempt from withholding tax. There're also persons required by law to deduct and withhold tax.

The persons required to deduct & withhold tax are as follows:

a. In general, any juridical person, whether or not engaged in trade or business;

b. An individual, with respect to payments made in connection with his trade or business.

c. All government offices including government owned or controlled corporation, as well as provincial, city, municipal governments and barangays.

If you have read the National Internal Revenue Code (NIRC), regulations and circulars, it is stated that there're requirements for deductibility of income payments to income tax. 

The topic was discussed by Dr. Ruperto P. Somera, Ph. D. DBA, DBE, CPA, a resource speaker of Philippine Institute of Certified Public Accountants (CPAs) of a Seminar on Issues, Problems and Solutions in Tax Audit and Investigation; Comprehensive Discussion of Withholding Tax last May 25, 2017.

Tuesday, May 30, 2017

Persons Exempt From Withholding Tax: Seminar On Comprehensive Discussion Of Withholding Tax At PICPA

Does you company exempt from withholding tax? In general, taxpayers demand to be exempted from withholding tax but the government determines the persons (juridical or non-juridical) exempt from withholding related to business activities.

Persons Exempt From Withholding Tax As Follows:

1. National government and its instrumentalities, including provincial, city or municipal governments and barangays, except government-owned controlled operations. 

2. Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special. Such as but not limited to the following:

a) Sales of real property by a corporation which is registered with and certified by HLURB or HUDCC as engaged in socialized housing project where the selling price of the house and lot or only the lot does not exceed P180,000.00 in Metro Manila and other highly urbanized areas  and P150,000.00 in other areas.

b) Corporations registered with the BOI, PEZA, and SBMA, enjoying exemption from income tax under E. O. 226, R. A. 7916, and R. A. 7227;

c) Corporations, which are exempt from income tax under Section 30 of the Tax Code, such as Government Service Insurance System (GSIS), Social Security System (SSS), and Philippine Health Insurance Corporation (PHIC);

d) General professional partnerships; and

e) Joint ventures or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating or consortium agreement under a service contract with the government.

The lawmakers and policy makers may issue regulations and circulars to update the requirements for the exemption of withholding tax.

The topic was discussed by Dr. Ruperto P. Somera, Ph. D. DBA, DBE, CPA, a resource speaker of Philippine Institute of Certified Public Accountants (CPAs) of a Seminar on Issues, Problems and Solutions in Tax Audit and Investigation; Comprehensive Discussion of Withholding Tax last May 25, 2017.

Monday, May 29, 2017

Importance Of Withholding Tax System: Seminar On Comprehensive Discussion Of Withholding Tax At PICPA

Is it necessary to know the Importance of Withholding Tax System in the business community? 

Withholding tax is a method of collecting income tax in advance from taxable income of the recipient of income. Therefore, if the income of the recipient is exempt from income tax, no withholding tax is required to be made by the payor of such income, which is constituted as a withholding agent.

The Importance of Withholding Tax System is an effective tool in the collection of taxes for the following reasons considered:

1. It encourages voluntary compliance;
2. It reduced cost of collection effort;
3. It prevents delinquencies and revenue loss; and
4. It prevents dry spells in the fiscal condition of the government by providing revenues throughout the taxable year.

The topic was discussed by Dr. Ruperto P. Somera, Ph. D. DBA, DBE, CPA, a resource speaker of Philippine Institute of Certified Public Accountants (CPAs) of a Seminar on Issues, Problems and Solutions in Tax Audit and Investigation; Comprehensive Discussion of Withholding Tax last May 25, 2017.

Sunday, May 28, 2017

SEC General Information Sheet (GIS) 2017

I was requested to prepare a General Information Sheet (GIS) recently for a Domestic Stock Corporation located here in Metro Manila. For me, the requirements in preparation of the GIS includes Articles of Incorporation of the Company, Updated Certificate of Shares of Stock, List of Shareholders (Including Tax Identifcation No. (TIN), Address, No. of Shares and Classification of Shares), List of Officers and Employees and updated GIS Form.

Thursday, May 18, 2017

On-the-Job Training (OJT) in the National and Regional Offices in the BIR

Revenue Memorandum Order (RMO) No. 11-2017 has issued by the bureau recently to prescribe the policies, guidelines and procedures in accepting students for On-the-Job Training (OJT) in the Bureau of Internal Revenue to be adopted by the Personnel Division (PD) including all other units/offices in the National Office and the Administrative & Human Resource Management Divisions (AHRMDs) in the Revenue Regions (RRS) including its Revenue District Offices (RDOs).


1. The Student-Applicants for OJT shall submit the following documents to the Personnel Division if in the National Office/the Administrative and Human Resource Management Division (AHRMD) if in the RR or its Revenue District Offices (RDOs) not co-located in the RR: 

a. Two (2) copies of Resume together with recent two 2x2 ID pictures. 

b. Two (2) photocopies of Official Registration Form/Enrollment Form of the Student concerned. 

c. Original Indorsement Letter signed by the College Dean/School Official or Practicum Coordinator requiring them to undergo OJT for a prescribed number of hours as part of their academic requirements. 

d. Job Proficiency Rating Sheet.

2. In order to maintain modesty and proper decorum in the office and for security purposes, the Student-Trainees must register and sign in the Student-Trainees’ OJT Logbook found in the entrance lobby counter of the BIR building. The wearing of StudentTrainees’ prescribed school uniform and ID must be strictly observed when entering and while inside the BIR premises. 

3. For those colleges/universities without prescribed school uniforms, the StudentTraineesshall wear black pants paired with white collared polo (for male) and black pants or black skirt with white collared blouse (for female) from Monday to Friday. This policy must be strictly followed. 

4. They shall render eight (8) hours of duty/service per day when reporting for OJT. If duty/service is for a half-day only, they shall render at least four (4) hours of duty/service per day, either from 8am to12pm or from 1pm to 5pm. 

5. The Student-Trainees in the National and RRs including its RDOs shall personally punch in their respective Bundy Cards and shall register in a separate Logbook/Attendance Sheet where they are assigned every time they report for duty. 

6. At the end of each month, the Bundy Card shall be signed by the Student-Trainees and their Immediate Supervisor for submission to the college/university upon completion of OJT. 

7. The photocopy of Student-Trainees’ Bundy Card shall be certified by the Head of Office as proof of their attendance before filing with other office records. 

8. The Student-Trainees shall not be allowed to transfer from one office to another once they have officially reported for duty at their office assignment. Otherwise, they will be denied continuation of OJT including the disapproval of the number of duty hours/service rendered in the Bureau. 

9. Any unethical behavior committed by revenue officials/employees against the Student-Trainees must be reported to the Head of Office where they are assigned. 4 10. The Certificate of Completion (Annex C) shall be issued to the Student-Trainees by the Office where they are assigned after they have completed the required number of duty hours/service. 

Wednesday, May 17, 2017

Guidelines and Procedure to Streamline the Process and Issuance of Certificate of Tax Exemption (CTE) and Electronic Certificate Authorizing Registration (eCAR) for Transfers of Raw Lands to Community/Homeowners Associations for Socialized Housing Projects

To improve the level of taxpayer service especially to the underprivileged and homeless sectors of the society is one of the objectives of Revenue Memorandum Order (RMO) No. 12-2017 issued by the bureau recently entitled: "Guidelines and Procedure to Streamline the Process and Issuance of Certificate Authorizing Registration (eCAR) for Transfers of Raw Lands to Community/Homeowners Associations for Socialized Housing Projects Under Article VIII, Section 32, of Republic Act (RA) No. 7279, Otherwise Known as the "Urban Development and Housing Act of 1992"."

Processing and Issuance of the CTE:

The application for the issuance of CTE shall be filed directly with the Office of the Commissioner. No application shalI be processed unless the following documentary requirements are fully complied with by the requesting party: 

a. Original Certification signed by the President of the SHFC that the subject property qualifies and is actually a CMP Project. Such Certification shall be sufficient guarantee of the validity, authenticity and due diligence in the review of CMP Project loan application of the Homeowners Association; 

b. Certified true copy of the Deed of Sale executed by the landowner in favor of the Community/Homeowners Association; 

c. Certified true copy of the Master List of Beneficiaries; 

d. Certified true copy of the Transfer Certificate of Title /Original Certificate of Title and latest Tax Declaration of the property; and e. Extrajudicial Settlement of Estate, in case the title of the property is still in the name of a deceased landowner, and evidence of payment of appropriate taxes.

Processing and Issuance of eCAR: 

The RDO concerned shall undertake to process, approve and issue the necessary eCAR within five working (5) days from the date of submission of the CTE. The CTE shall be a sufficient basis for the Revenue District Officer concerned to issue the eCAR and no other documents shall be required from the taxpayer/landowner requesting for the eCAR. The eCAR that will be issued shall particularly state that the raw land is intended for a Community Mortgage Program pursuant to RA No. 7279, with a lien on the title of the land annotated by the Register of Deeds having jurisdiction over the properties, to the effect that the same is to be applied or is being applied to socialized housing project pursuant to RA 7279. 

Monday, May 15, 2017

An Act Expanding the Benefits and Privileges of Persons with Disability (PWD)

The bureau has issued Revenue Regulations (RR) No. 5-2017 recently about the Rules and Regulations Implementing Republic Act. No. 10754, entitled "An Act Expanding the Benefits and Privileges of Persons with Disability (PWD)" Relative to the Tax Privileges of Persons with Disability and Tax Incentives for Establishments Granting Sales Discount, and Prescribing the Guidelines for the Availment Thereof, Amending RR No. 1-2009.

These regulations prescribe the guidelines for the implementation of the tax privileges of persons with disability and their benefactor; and tax incentives for establishments granting twenty percent (20%) sales discount and exemption from Value-added Tax (VAT) under Sections 32 and 33 of R. A. 7277, as amended by R. A. No. 9442, otherwise known as the "Magna Carta for Persons with Disability" and R. A. No. 10754; and amend certain provisions of RR No. 1-2009.

Computation of the Discount and VAT Exemption Granted to Qualified Persons with Disability

VAT on sale of goods or services with sales discounts granted by business establishments enumerated under Section 3 hereof shall be computed in accordance with the following formula:

Amount of sale (with VAT)     P 1,120.00
Less: 12% VAT                            120.00
Total Amount                            1,000.00
Less: 20% Sales Discount            200.00
Total Amount Due                  P   800.00

The Two Hundred Pesos (P200.00) cost of the discount in the above illustration, shall be allowed as a deduction from gross income for the same taxable year that the discount is granted; Provided that, the total amount of the claimed tax deduction net of VAT; if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper documentation in accordance with the provisions of the Tax Code. This means that for the establishment to be allowed to claim the discount as a deduction, the amount of sales that must be reported for income tax purposes is the VAT - exclusive selling price of P1,000.00 and not the amount of sales net of the discount - P800.00

Computation of Discount on Non-VAT Taxpayer:

Sales/Receipts                                              P 1,120.00
Less: 20% Discount                                            224.00
Amt. Payable by PWD/Received by Seller          896.00
Multiply by tax rate                                       x         3%
Percentage Tax Due                                     P      26.88

Please refer of the Definition of Terms, Sales Discounts which may be Claimed by Qualified Persons with Disability (PWD) and the full text of RR No. 5-2017.

Saturday, April 22, 2017

Precedure for Claiming Tax Treaty Benefits for Dividend, Interest and Royalty Income of Nonresident Income Earners

In the previous month, the bureau has issued Revenue Memorandum Order (RMO) No. 8-2017 with regards to the Procedure for Claiming Tax Treaty Benefits for Dividend, Interest and Royalty Income of Nonresident Income Earners. 

Procedure for the Availment of Tax Treaty Relief

1. Nonresidents claiming tax treaty relief shall submit a duly accomplished CORTT Form (Part I and II) or the prescribed certificate of residency with Part I (A, B and C) and II of the CORTT Form to their withholding agents/income payors before income is paid or credited. 

2. The withholding agent/income payor shall file BIR Form 1601-F and BIR Form 1604-CF and shall pay the withholding taxes due in accordance with the Tax Code and existing Revenue Issuances. 

3. The withholding agent/income payor shall submit an original of the duly accomplished CORTT (Part I and II) or the prescribed certificate of residency with Part I (A, B and C) and II of the CORTT Form to ITAD and RDO No. 39 within 30 days after payment of withholding taxes due on dividend, interest and royalty income of nonresident based on applicable tax treaty. 

4. The withholding agent shall submit an updated Part II of the CORTT Form within 30 days after payment of withholding taxes due in the following cases: 

a) If the CORTT Form filed with ITAD and RDO No. 39 is used for another dividend payment within its prescribed period of validity; and 

b) In case of staggered payment of interest and royalty income

Friday, April 7, 2017

eBIRForms Package v6.3 (New Version)

The bureau has issued a new version of eBIRForms Package v6.3 to update the BIRForms Package v6.2 for taxpayers who will be filing their income tax returns and other tax declarations and returns for the Year 2016 and Year 2017. 

I have read in the Job Aid for the use of Offline eBIR Forms Package about the page setup to print the forms and the page setup to print the forms Annual Income Tax Return Forms 1700, 1701, 1702-RT, 1702-EX and 1702-MX  version 2013 ENCS. 

To download, click the following:

Alternative sites to obtain/download the Offline eBIRForms Package:


Friday, March 31, 2017

Guidelines in the Filing and Processing of 2016 Income Tax Returns Including Its Attachments

The bureau has issued Revenue Memorandum Circular (RMC) No. 28-2017 recently in line with the guidelines in the filing, receiving and processing of 2016 Income Tax Returns including its attachments, due on or before April 17, 2017 (since April 15, 2017 falls on a Saturday which is a holiday/non-working day) or on before the 15th day of the fourth month following the close of the taxpayer's taxable year (taxpayers covered by fiscal year).

Manner of Filing of Returns. Taxpayers who are mandated to use eBIRForms/eFPS (Annex "A") under existing issuances, and those who opted to file manually, shall file and pay with the following guidelines:

Optional Manual filing of "No Payment Returns". The following individuals may file manually "No Payment Returns" with the RDO where they are registered using officially printed forms/photocopied or electronic/computer-generated returns:

(1) Senior Citizen (SC) or Persons with Disabilities (PWDs) filing for their own return;
(2) Employees deriving purely compensation income from two or more employers, concurrently or successively at any time during the taxable year, or from a single employer, although the income of which has been correctly subjected to withholding tax, but whose spouse is not entitled to substituted filing;
(3) Employees qualified for substituted filing under RR 2-98 Sec. 2.83.4, as amended, but opted to file for an ITR and are filing for purpose of promotion, loans, scholarship, foreign travel requirements, etc.

Printed Copy of e-Filed Tax Returns. Electronically filed and/or paid ITRs using eBIRForms or eFPS without any attachments required, need not to submit printed copy of e-Filed tax returns to the LTD/RDO.

Required Attachments. The required attachments (Annexes "B1 to B5") and accompanying schedules shall be submitted to the LTD/RDO or AABs located within the territorial jurisdiction of the LTD/RDO where the taxpayer is registered.

Taxpayers who are electronically filed shall also submit a signed copy of electronically filed ITR with Filing Reference Number (FRN) thru eFPS facility or an email Tax Return Receipt Confirmation and a signed copy of electronically filed ITR thru eBIRForms facility, together with the required attachments within fifteen (15) days after the electronic filing of the return.

The Summary Alphalist of Withholding Tax (SAWT) using the Data Entry Module of the BIR shall be emailed to, if applicable.

Receiving and Stamping. RDOs, LTDs and all AABs shall receive the income tax returns by stamping the official receiving seal on the space provided for in the three (3) copies of the returns, whether or not the taxpayer is under the jurisdiction of a regional office with Document Processing Division (DPD). Any copies of the return in excess of 3 copies shall not be stamped "RECEIVED" by the RDO, LTD and AAB. However, in the case of corporations and other juridical persons, there shall be stamped "RECEIVED" in at least two (2) extra copies of the Audited Financial Statements (AFS) for filing with the Securities and Exchange Commission (SEC).

The attached AFS to the ITR shall be stamped received only on the page of the Audit Certificate, the Statement of Financial Position, the Statement of Comprehensive Income and/or its equivalent and Statement of Management's Responsibility. The other pages of the financial statements and its attachments need not anymore be stamped received.

Supplemental Information. the disclosure of Supplemental Information under BIR Form Nos. 1700 and 1701 is OPTIONAL on the part of the individual taxpayer filing ITR covering and starting with calendar year 2016 due for filing on or before April 17, 2017.

Thursday, March 30, 2017

Who Are Not Required and Exempt To File An Income Tax Return?

Did you know that there are individuals who are not required and exempt to file an Income Tax Return

You may consider the standard that you are not required to file an income tax return as follows: 

1. Compensations income of Minimum Wage Earners (MWEs) who work in the private sector and being paid the Statutory Minimum Wage (SMW), as fixed by Regional Tripartite Wage and Productivity Board (RTWPB)/National Wages and Productivity Commission (NWPC), applicable to the place where he/she is assigned. (Revenue Regulations (RR) No. 10-2008 (B) (13) / Revenue Memorandum Circular (RMC) No. 91-2010)

2. Your gross income (total earned for the past year) does not exceed your total personal and additional exemptions. (In General)

3. Your income derived from a single employer does not exceed P60,000 and the income tax on which has been correctly withheld.

4. Your income has been subjected to final withholding taxFinal Withholding Tax is a kind of withholding tax which is prescribed on certain income payments and is not creditable against the income tax due of the payee on other income subject to regular rates of tax for the taxable year. Income Tax withheld constitutes the full and final payment of the Income Tax due from the payee on the particular income subjected to final withholding tax.

5. You are qualified for substituted filing. 


5.1 You are employed by a single employer during the taxable year.

5.2 You earn purely compensation income from that single employer.

5.3 Your tax due at the year’s end equals the tax withheld by the employer.

5.4 If you are married, your spouse also complies with the above conditions.

5.5 Your employer files the annual information return (BIR Form No.1604-CF).

5.6 Your employer issues BIR Form No.2316 to every employee.

You are exempt from filing income tax returns if:

You are a non-resident citizen who is:

1. A Filipino citizen not residing in the Philippines, but who has established with the BIR that you wish to remain living outside the country.

2. A Filipino citizen who leaves the Philippines during the taxable year to reside abroad, either as an immigrant of for permanent employment.

3. A Filipino citizen who works and earns income abroad.

4. A Filipino citizen previously considered a non-resident citizen.

5. You are an overseas Filipino worker whose income is derived solely from sources outside the Philippines.

6. If you are Filipino citizen working as an overseas seaman, your vessel must be engaged exclusively in international trade.

Wednesday, March 29, 2017

Basis for the Imposition of Tax on the Sale, Exchange or Other Disposition of Real Property

Recently, the bureau has issued Revenue Memorandum Circular (RMC) No. 27-2017 to clarify the basis for the imposition of tax on the sale, exchange or other disposition of real property whether classified as capital asset or ordinary asset.

It is stated in Section 6(E) of Republic Act (RA) 8424, Tax Reform Act of 1997, also known as the National Internal Revenue Code of 1997, has provided the following:

"SEC. 6. Power of the Commissioner to Make Assessment and Prescribe Additional Requirements for Tax Administration and Enforcement. - 

XXX         XXX         XXX

(E) Authority of the Commissioner to Prescribe Real Property Values. - The Commissioner is hereby authorized to divide the Philippines into different zones or areas and shall, upon consultation with competent appraisers both from the private and public sectors, determine the fair market value of real properties located in each zone area. For purposes of computing any internal revenue tax, the value of the property shall be, whichever is the higher of:

(1) The fair market value as determined by the Commissioner; or
(2) The fair market value as shown in the schedule of values of the Provincial and City Assessors."

For purposes of imposing the tax Sec. 24(D)(1) and 27(D)(5) of the same Act, as implemented by Revenue Regulations Nos. 2-98 and 7-2003, provide that it shall be based on the gross selling price or current fair market value as determined in accordance with Sec. 6(E) of the Code, whichever is higher.

Wednesday, March 22, 2017

Income Payments Exempt From Withholding Tax But Subject To Income Tax

Have you explored the Alphalist Data Entry and Validation Module Version 5.1 (New) with regards to the Income Payments Exempt From Withholding Tax But Subject To Income Tax Reported Under BIR Form No. 2304 - Certificate of Income Payment Not Subject to Withholding Tax (Excluding Compensation Income)? 

BIR Form No. 2304 is a Certificate to be accomplished and issued by a Payor to recipients of income not subject to withholding tax. This Certificate should be attached to the Annual Income Tax Return - BIR Form 1701 for individuals, or BIR Form 1702 for non-individuals.

Filing Date

Payor must furnish the payee on or before January 31 of the year following the year in which the income payment was made.

Below is the list of Income Payments Exempt From Withholding Tax But Not Subject To Income Tax Reported Under BIR Form No. 2304: 

Alphanumeric Tax Code (ATC) / Income Payment

33. II020 - NRC INCOME
37. II070 - PENSIONS


Wednesday, March 15, 2017

Addition to RMC 14-2017 on the Temporary Suspension of Enrollment to Electronic Filing and Payment System (eFPS)

Revenue Memorandum Circular (RMC) No. 24-2017 has issued by the bureau recently with regards to the addendum to RMC 14-2017 on the Temporary Suspension of Enrollment to Electronic Filing and Payment System (eFPS).

The Circular supplements RMC No. 14-2017, as follows:

1. Taxpayers required to secure the BIR Importer's Clearance Certificate (ICC) and Broker's Clearance Certificate (BCC) and Government Bidder's Tax Clearance are exempted from the provisions of Revenue Memorandum Circular No. 14-2017 suspending eFPS enrollment during the period of March 1 to April 30 of every year.

2. The Revenue District Office (RDO) concerned shall continue to process eFPS application/s of the aforementioned taxpayer/s and shall activate their eFPS account/s immediately, upon verification of the completeness of documents submitted. Thereafter, taxpayer/s shall receive an auto-email notification/confirmation of successful eFPS enrollment.

3. Aforementioned taxpayer/s successfully enrolled/activated to eFPS shall file their returns through te eFPS facility. If said taxpayers do not receive an auto-email notification/confirmation of successful eFPS enrollment/activation within twenty-four (24) hours upon enrollment, they shall their tax return/s thru the eBIRForms facility, until such time that the aforesaid auto-email notification/confirmation is received from BIR.

These conditions shall apply only for the duration of the suspension of eFPS enrollment from March 1 to April 30 of every year.

Sunday, March 12, 2017

Objectives for the Implementation of Taxpayer Registration System (TRS) Under the Electronic Tax Information Systems-1 (eTIS-1)

In the past few days, the bureau has issued Revenue Memorandum Order (RMO) No. 5-2017 about the Functional Guidelines Relative to the Implementation of the Taxpayer Registration System (TRS) Under the Electronic Tax Information Systems-1 (eTIS-1). The eTIS-1 is a web-based application which shall consist of eight (8) modules, namely: Taxpayer Registration System (TRS), Returns Filing and Processing (RFP), Collection, Remittance and Reconciliation (CRR), Audit, Case Management System (CMS), Taxpayer Accounting System (TAS), Batch Architecture Module (BAM) and System Administration Management (SAM).

The Objectives of the Implementation of TRS in eTIS-1 is as follows:

Section 2. OBJECTIVES. The implementation of TRS in eTIS-1 is aimed to increase the Bureau’s efficiency in terms of capturing and monitoring taxpayer’s registration information, as well as the Bureau's reporting requirements in order to support the core functions of collecting revenues. Thus, this Order is issued for TRS under eTIS-1 to: 

1. Prescribe the functional guidelines and procedures in its implementation; 

2. Redefine procedures in the Registration Processes to harmonize with subject functionality; 

3. Adapt the following enhancements on the Registration System: 

a. Five (5) digit Philippine Standard Industrial Classification (PSIC) / Philippine Standard Occupational Classification (PSOC) Codes, upon update of the list of Alphanumeric Tax Code (ATC); 

b. Five (5) digit branch code and facility code;  

c. Tagging and un-tagging of Inactive/Black-listed taxpayers; 

d. Tagging of taxpayers under the Taxpayer Account Management Program (TAMP) and Very Important Person (VIP), whether natural or juridical person; 

e. Uploading of required attachments; 

f. Generation of reports and correspondences such as but not limited to direct printing of TIN Cards; 

g. Prescribe the revised system-generated Authority to Print (Annex A), Certificate of Registration (BIR Form No. 2303, Revised November 2014) (Annex B) and use of Certificate of Registration for Facility (BIR Form No. 2303-F) (Annex C) for registered facility types in eTIS-1 pilot sites; 

h. Capture additional registration information such as incentives type, list of stockholders/members/partners, contact details, relationships (i.e. agent or authorized representative, employer, subsidiary companies), and exemptions details; and 

4. Adopt and implement the enhanced version of the following application for registration forms pursuant to Revenue Memorandum Circular (RMC) No. 09-2015: 

BIR Form No. 1901 - Application for Registration for Self-Employed (Single Proprietor/ Professional/Mixed Income Earner) Marginal Income Earner, Nonresident Alien Engaged in Trade / Business, Estate and Trust 

BIR Form No. 1902 - Application for Registration for Individuals Earning Purely Compensation Income and Resident Alien Employee 

BIR Form No. 1903 - Application for Registration for Corporations/Partnerships (Taxable/Non- Taxable) including Government Agencies and Instrumentalities (GAIs), Local Government Units (LGUs), Cooperatives and Associations 

BIR Form No. 1904 - Application for Taxpayer Identification Number (TIN) under Executive Order (E.O.) 98 

BIR Form No. 1905 - Application for Registration Information Update/Correction/ Cancellation 

BIR Form No. 2305 - Certificate of Update of Exemption of Employer’s and Employee’s Information

Friday, March 10, 2017

Consolidated Schedule of Fees and Charges Per SEC Memorandum Circular No. 3 Series of 2017

Have you read the Securities and Exchange Commission (SEC) PH Memorandum Circular No. 3 Series of 2017

The circular is related to the Consolidated Schedule of Fees and Charges as approved by the Department of Finance (DOF) to be imposed and collected by the Securities and Exchange Commission as follows:



It is also stated that all other circulars, rules, orders and issuances, or part thereof inconsistent with the Memorandum Circular are hereby repealed or modified accordingly.

A Legal Research Fee (LRF) equivalent to 1% of the Filing Fee but not less than Ten Pesos (P10.00) shall be paid at the time of filing of application for Registration, Licensing, Accreditation, and Other Related Transactions.

Please refer: of the full text of SEC Memrnadum Circular No. 3 Series of 2017.

Wednesday, March 8, 2017

Issuance of Authority to Release Imported Goods for Imported Automobiles Already Released from Customs Custody

The bureau has issued Revenue Regulations (RR) No. 2-2016 amending certain provisions of RR No. 2-2016 particularly in the issuance of Authority to Release Imported Goods for imported automobiles already released from customs custody. 

Section 2. AMENDMENTS. - Items III and IV of Revenue Regulations No. 2-2016 shall be amended as follows:

III. Legal Basis

Finally, under the provisions of effective international Agreements and the principle of reciprocity, Recognized International Organizations and Foreign Emphasis in the Philippines are exempted from all taxes, hence, the exemption from requirement of securing an ATRIG.

IV. When and under circumstances ATRIG issued

However, Foreign Embassies and Recognized International Organizations are exempted from securing ATRIG pursuant to the principle of reciprocity and international agreements to which the Philippine is a signatory, respectively.

Please refer of the full text of RR No. 2-2016 and additional requirements.

Tuesday, March 7, 2017

New VAT Exemption Identification Card (VEIC) Issued to Qualified Diplomats, Officials and Dependents of the US Embassy

The New Value-Added Tax (VAT) Exemption Identification Card (VEIC) issued to Qualified Diplomats, Officials and Dependents of the Embassy of the United States of America (US Embassy) under Revenue Memorandum Circular (RMC) No. 23-2017 pursuant to Revenue Memorandum Order (RMO) No. 22-2004 of May 24, 2016, entitles, "Value-Added Tax (VAT) Exemption Certificate/Identification Card Issued to Qualified Foreign Embassies and Their Qualified Personnel Amending/Modifying RMC 81-99".

Currently, only the US Embassy's qualified personnel and the latter's qualified dependents are being issued VEICs by the Bureau of Internal Revenue (BIR). It is use on personal purchase of goods and services to the business establishments.

Attached, as Annex "A" is a template of the VEiC which shall be issued by the BIR to US Embassy qualified personnel and their qualified dependents, as approved by its duly authorized signatory. Nonetheless, all VEICs duly issued before the issuance of this RMC shall rernain valid until their expiry dates. For comparison purposes, attached, as Annex "8", is a sarnple copy of the earlier version of the VEIC. 

Sunday, March 5, 2017

Measures To Consider For Every Establishment With Regards To Tax Compliance Verification Drive

Tax Compliance Verification Drive is one of the programs of the Bureau of Internal Revenue inspecting business establishments across the country, to verify compliance with registration, invoicing and bookkeeping requirements provided for under existing internal revenue laws, rules and regulations. 

However, the issuance of Reminder Letter to all business establishments during tax mapping operations is a requirement to be able to have an ample time for all businesses to prepare the important requirements at the time of tax mapping.

Needs to Do for Every Establishment of the Tax Compliance Verification Drive as follows:

1. Register your business with the BIR.

2. Display the BIR Certificate of Registration, the Registration Fee for the Current Year and "Notice to the Public/Ask for Receipt" signage in the place of business.

3. Issue registered invoices/receipts for sales of goods or services. Register the Cash Register Machines, Point-Of Sale machines, or other similar devices (if any).

4. Register and maintain Books of Accounts in the business premises.

5. Withhold taxes on compensation of employees, and on payments subject to final and expanded withholding tax and remit the correct tax as withheld.

6. File the necessary returns and pay the corresponding correct taxes at time/s required by law. 

Please refer and of the full text of Tax Compliance Verification Drive and detailed BIR Requirements, respectively. 

Saturday, March 4, 2017

Policies and Procedures in the Issuance of eLA for VAT Credit/Refund Claims Filed with the VCAD

To answer the question regarding the policies and procedures in the issuance of (Electronic Letters (eLA) for Value-Added Tax (VAT) Credit/Refund claims filed by Direct Exporters filed with the VAT Credit Audit Division (VCAD), the bureau has issued Revenue Memorandum Circular (RMC) No. 19-2017 recently amending question and answer to Number 12 of RMC No. 80-2010 to read as follows:

Q12: What are the policies and procedures in the issuance of eLA for VAT credit/refund claims with the VCAD?

A12: The following policies and procedures shall be observed:

1. The Chief of the VCAD shall use the Electronic Letter of Authority Monitoring System (eLAMS) in requesting for the issuance of eLAs, as well as in updating of the status of the same, until the Case Management System (CMS) of the Electronic Tax Information System (eTIS) is rolled-out in the National Office.

2. The Assistant Commissioner, Assessment Service shall be authorized approving official/signatory for eLAs issued covering VAT credit/refund claims filed with the VCAD.

Friday, March 3, 2017

Issuance of Certificate of Tax Exemption (CTE) to Service Cooperatives

Have you read the new circular issued by the bureau recently related to the Issuance of Certificate of Tax Exemption (CTE) to Service Cooperatives?

Revenue Memorandum Circular (RMC) No. 18-2017 has issued by the CIR circularizing Memorandum No. 008-2017 dated February 24, 2017 Regarding Issuance of Certificate of Tax Exemption (CTE) to Service Cooperatives.

Attached as Annex "A" of the RMC stated the affected cooperatives of Article 23 of Republic Act (RA) No. 9520 as follows:

The affected cooperatives, however, posit that Article 23 of Republic Act (RA) No. 9520, specifically includes a definition of service cooperative as follows: 

Art. 23. Type and Categories of Cooperatives. – Types of Cooperatives - Cooperatives may fall under any of the following types: 

(a) xxx xxx xxx 

xxx xxx xxx 

(e) Service Cooperative is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services;

 xxx xxx xxx 

(u) Other types of cooperatives as may be determined by the Cooperative Development Authority.” Aside from the service cooperatives, other cooperatives not specifically defined under the afore-quoted provision may also be registered as determined by the CDA. Moreover, RA 9520 expressly provides that any doubt in the interpretation and construction of said law should be resolved liberally in favor of the cooperatives, thus:

ART. 142. Interpretation and Construction. – In case of doubt as to the meaning of any provision of his Code or the regulations issued in pursuance thereof, the same shall be resolved liberally in favor of the cooperatives and their members.

It is also stated in the memorandum that service cooperatives must not be totally prohibited from availing of the tax incentives provided under RA 9520 provided that they are duly registered with the CDA and have been issued Certificates of Good Standing to show that they are bona fide cooperatives falling under RA 9520. Provided, however, that these cooperatives will be subject to post audit verification to check on whether they are just being used as a tax shield to avoid or evade payment of taxes.

Please refer: of the full text of RMC No. 18-2017 and of the full text of Annex "A" Memorandum with regards to Issuance of Certificate of Tax Exemption (CTE) to Service Cooperatives and the guidelines for the registration of the Service Cooperatives.