When is the Issuance of Certificate of Taxes Withheld (BIR Form No. 2307)?

Revenue Regulations No. 30-2003, Section 5 as amended, refers to the persons required to deduct and withhold as follows:

Agents, employees or any person purchasing goods or services/paying for and in behalf of the aforesaid withholding agents shall likewise withhold in their behalf, provided that the official receipts of payment/sales invoice shall be issued in the name of the person whom the former represents and the corresponding certificate of taxes withheld (BIR Form No. 2307) shall immediately be issued upon withholding of the tax.

All income payments which are required to be subjected to withholding tax shall be subject to the corresponding withholding tax rate to be withheld by the person having control over the payment and who, at the same time, claims the expenses, (e. g. payments to utility companies which are required to be subjected to withholding tax shall likewise be subjected to withhold tax even if the meter or billing statements (e. g. electric or water meter or the telephone bill) is not in the name of the payor, as long as valid proof that payment of a particular expense is being shouldered by the aforementioned payor (i.e. contract between the registered user of the meter and the payor); payments made by persons who are sharing portion of the bill which is in the name of another person as long as he is a duly constituted withholding agent and shall only withhold on the portion of the expense being shouldered by him).

Income payments made thru brokers or agents or other person authorized to collect/receive payments for and on behalf of the payee, whether for consideration or otherwise, shall likewise be subjected to the corresponding withhoding tax rates to be withheld by the payor/person having control over the payment with the corresponding issuance of certificate of taxes withheld in the name of the payee whom the agent represents.

The obligation to withhold is imposed upon the buyer-payor of income although the burden of tax is really upon the seller-income earner hence, unjustifiable refusal of the latter to be subjected to withholding shall hence, unjustifiable refusal of the latter to be subjected to withholding shall be a ground for the mandatory audit of his income tax liabilities (including withholding tax) upon verified complaint of the buyer-payor."

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/601rr03_30.pdf of the full text of the Revenue Regulations Nos. 30-2003.

Deadline for the Disclosure of Gross Income for the Current Year to the BIR by Submitting a Notarized Sworn Declaration for every Individual Professional/Talent/Corporate Director to Determine the Applicable Tax Rate (10% or 15%) to be Applied/Withheld by the Withholding Agent

Under Revenue Regulations No. 30-2003, Section 3 (A), in order to determine the applicable tax rate (10% or 15%) to be applied/withheld by the withholding agent, every individual professional/talent/corporate director herein enumerate, shall periodically  disclose his gross income for the current year to the Bureau of Internal Revenue (BIR), by submitting a notarized sworn declaration  attached as Annex "A" hereof in three (3) copies (two (2) copies for the BIR and one (1) copy for the taxpayer), copy furnished all the current payors of the declaration duly stamped received by the BIR (Collection Division of the Regional Office having jurisdiction over the place where the income earner is registered/ Large Taxpayers Collection Division for large taxpayers in Metro Manila/ LTDO for large taxpayers outside Metro-Manila). Sworn declaration may likewise be filed by the income payor on behalf of the professionals/talents/directors whose services were being rendered exclusively to the aforesaid payor. The disclosure should be filed on June 30 of each year or within fifteen (15) days after the end of the month the professionals/talents/director's income reaches P720,000, whichever comes earlier. In case his total gross income is less than P720,000 as of June 30, he/she shall submit a second disclosure within fifteen days after the end of the month that his/her gross income for the current year to date reaches P720,000. The payee - professional/talent/director shall furnish each payor a copy of the BIR duly stamped received sworn declaration not later than (5) days from the date of receipt by the BIR. In case of failure to submit the annual declaration/disclosure to the BIR, the payor shall withhold the tax at the rate of 15%.

The Collection Division/Large Taxpayers Collection Division/LTDO shall transmit one (1) copy of the duly submitted notarized sworn declaration, to the Withholding Tax Division within five (5) days from receipt thereof. The remaining copy shall be the file copy of the concerned Regional Office/Large Taxpayer Services/LTDO for monitoring purposes. 

These requirements shall likewise apply to taxable juridical persons (sworn declaration shall be executed by the president/managing partner of the corporation/company), partners of general professional partnerships and medical practitioners stated under sub-sections (B), (H) and (I) hereof.

Notwithstanding the foregoing, if an individual recipient received professional fees/talent fees/directors fees in addition to salaries from the same payor, the said fees shall be considered as supplemental compensation and, thus be subject to the withholding tax on compensation.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/601rr03_30.pdf of the full text of the Revenue Regulations No. 30-2003.

http://philippinetaxtalk.blogspot.com/2014/03/guidelines-and-policies-for-monitoring.html

SEC Issues a Reminder for Strict Compliance of Financial Reporting Obligations

The Securities and Exchange Commission (SEC) issued last April 14, 2014 a reminder for Strict Compliance of Financial Reporting Obligations to all the Boards of Directors and management of registered corporations over the preparation and submission of their annual financial statements.

It is stated,  that the Securities Regulation Code (SRC) Rule 68, as amended, provides that the corporations' financial statements are primarily the responsibility of their respective management and accordingly, the fairness of the representations made therein is an implicit and integral part of the management's responsibility. The Board of Directors, in discharging its responsibilities, reviews and approves the financial statements before these are submitted to the stockholders. These responsibilities are reflected in the Statement of Management's Responsibility that must be signed by the corporation's Chairman of the Board, Chief Executive Officer and Chief Finance Officer, and that must be attached to the annual financial statements.

Besides, during the independent examination of the corporation's financial statements, the management should provide the external auditor with the complete set of financial statements as prescribed under the financial reporting framework, and if applicable, the schedules and reconciliation forming part of the financial statements that are required under the existing rules of the Commission. In order to have an independent review of the financial statements prepared by the management, the external auditor must not create a template format of financial statements for mere accomplishment by the management. The management should provide the external auditor his review all information, such as records and documentation, and other matter that are relevant to the financial statements prepared by the management. These include schedules, computations, projections, reconciliations, reports, analyses and such additional information that the auditor may request from management and when appropriate, from those tasked to perform governance.

The management shall provide unrestricted access to records and personnel of the entity from whom the auditor deems it necessary to obtain audit evidence. The corporation shall neither allow nor require its independent auditor to prepare its financial statements and/or any of its supporting documents. There should be a clear understanding on the part of the management that the external auditor's duty is to conduct an independent examination of the company's financial statements and supporting documents. There should be a clear understanding on the part of the management that the external auditor's duty is to conduct an independent examination of the company's financial statements and supporting documents pursuant to the prescribed auditing standards and practices. Philippine Standard on Auditing (PSA) 210 (revised) and PSA 580 (revised and redrafted) particularly require that the auditor and the management should agree with the audit engagement terms and conditions before proceeding with the actual audit which include the responsibility of the management to prepare the corporation's financial statements. Thus, the management is expected to have sufficient knowledge of the process followed by the corporation in preparing and presenting the financial statements and the assertions therein on which to base its written representations.

Please refer http://www.sec.gov.ph/notices/notices/strict%20compliance%20of%20financial%20reporting%20obligations.pdf of the full text of the notice issued the SEC.

Waiver of Penalties for Electronic Filing and Payment System (eFPS) Taxpayers

Did you know that the BIR has experienced a system downtime last April 15, 2014 due to the volume of taxpayers filing/paying thrue eFPS?

With this, the bureau has issued the Revenue Memorandum Circular No. 28-2014 on April 16, 2014 to hereby informed all concerned that the penalties attendant to late filing of returns and payment of income tax/es for the taxable year ended December 31, 2013 and quarter ended March 31, 2014, are hereby waived. This waived strictly covers eFPS-registered taxpayers and tax returns filed last April 16, 2014.

Moreover, all those eFPS-enrolled taxpayers who have already manually filed and paid their income tax due for above taxable periods will not be imposed of penalties, and are hereby advised to refile using eFPS until April 25, 2014.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/85582RMC%2028-2014.pdf of the full text of the RMC No. 28-2014.

Contents and Format of Statement of Management's Responsibility for Annual Income Tax Return

Last year 2010, the Revenue Regulation No. 3-2010 was issued by the bureau pursuant to Section 244, in relation to Section 6(H), and Section 275 of the National Internal Revenue Code of 1997, to provide the rationale and guidelines for the submission of the Statement of Management Responsibility that shall accompany the financial statements that shall be submitted with the annual income tax return.

Under Section 2 of these regulations, the Contents and Format of Statement of Management Responsibility is stated as follows:

(a) Since the Annual Income Tax Return is primarily the responsibility of the management of the taxpayer, this shall accompanied by a statement of management's responsibility.

(b) All taxpayers required to file annual income tax return under the National Internal Revenue Code, as amended, shall be required to submit a statement of management's responsibility, as follows:

STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR ANNUAL INCOME TAX RETURN

The Management of (name of taxpayer) is responsible for all information and representations contained in the Annual Income Tax Return for the year ended (date). Management is likewise responsible for all information and representations contained in the financial statements accompanying the (Annual Income Tax Return or Annual Information Return) covering the same reporting period, Furthermore, the Management is responsible for all information and representations contained in all the other tax returns filed for the reporting, including, but not limited, to the value added tax and/or percentage tax returns, withholding tax returns, documentary stamp tax returns, and any and all other tax returns.

In this regard, the Management affirms that the attached audited financial statements for the year ended (date) and the accompanying Annual Income Tax Return are in accordance with the books and records of (name of taxpayer), complete and correct in all material respects. Management likewise affirms that:

     (a) the Annual Income Tax Return has been prepared in accordance with the provisions of the National   Internal Revenue Code, as amended, and pertinent tax regulations and other issuances of the Department of Finance and the Bureau of Internal Revenue;
     (b) any disparity of figures in the submitted reports arising from the preparation of financial statements pursuant to financial accounting standards and the preparation of the income tax return pursuant to tax accounting rules has been reported as reconciling items and maintained in the company's books and records in accordance with the requirements of Revenue Regulations No. 8-2007 and other relevant issuances;
     (c) the (name of taxpayer) has filed all applicable tax returns, reports and statements required
 to be filed under Philippine tax laws for the reporting period, and all taxes and other impositions shown thereon to be due and payable have been paid for the reporting period, except those contested in good faith.


Signature:
(Name of the Individual Taxpayer/President/Managing Partner)

Signature:
(Name of the Chief Executive Office or its equivalent)

Signature:
(Name of the Chief Financial Officer or its equivalent)

(c) Aside from Individual Taxpayer, President and Managing Partner, the chief Executive Officer and the Chief Financial Officer or any officer performing similar functions regardless of their designation are also required to affix their signatures in the afore-mentioned Statement.

(d) In the case of a foreign corporation with branch office in the Philippines, the above Statement shall be signed by its local manager who is in charge of its operations.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/49436RR%203-2010.pdf of the full context of Revenue Regulations No. 3-2010

Taxpayers Who Filed ITRs through BIR eFPS May Still be Filed the Financial Statements, Statement of Management Responsibility (SMR), BIR Form 2307 and Others) with the Concerned LT office/RDO within Fifteen (15) Days After the Electronic Filing of the Return

The bureau has issued the Revenue Memorandum Circular No. 20-2014 related to the guidelines in the Filing, Receiving of Taxable Year 2013 Income Tax Returns (ITRs) BIR Form Nos. 1700, 1701, 1702-RT, 1702-EX and 1702-MX, All June 2013 ENCS version under Revenue Regulations No. 2-2014.

It is stated in the memorandum that for eFPS Taxpayers who have used the offline eBIRForms Package may choose the following:

a. Those who manually filed the return/paid the tax, electronically re-file (efile) the contents of the previously filed ITRs by accomplishing the applicable ITR in the eFPS facility.

b. Those who electronically filed and paid using version 2011, follow the procedures in Annex B within ten (10) days from the availability of the online submission.

With this, for the purpose of determining the date when the returns are filed, it shall be the date the initial eFiling was duly accomplished.

The accompanying schedules and attachments (i.e. Financial Statements, Statement of Management Responsibility (SMR), BIR Form 2307, etc.) may still be filed with the concerned LT office/RDO where they are registered within fifteen (15) days after the electronic filing of the return. Together with the said attachments, the taxpayers shall also submit the duly accomplish signed hard copy of the ITR with Filing Reference Number.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/84889RMC%20No%2020-2014.pdf of the full text of the Revenue Memorandum Circular No. 20-2014.

Guidelines and Policies for the Monitoring of Service Fees of Professionals

The bureau just issued Revenue Regulations No. 4-2014 in connection with its campaign to promote transparency and to eradicate tax evasion among self-employed professionals which the bureau encouraged them to comply with the BIR's requirements on registration pursuant to section 236 of the National Internal Revenue Code (NIRC) of 1997 as amended and issuance of official receipts and invoices under Sections 113 and 237 of the same code.

Under RR No. 4-2014, the polices and guidelines for the monitoring of service fees of professionals is stated in Section 2 with details as follows:

1. Self-employed professionals shall register and pay the annual registration fee (ARF) with the RDO/LTO having jurisdiction over them. In addition to the requirements for annual registration all self-employed professionals shall submit an affidavit indicating the rates manner of billings and the factors they consider in determining their service fees upon registration and every year thereafter on or before January 31.

2. Self-employed professionals are obligated to register the books of accounts and official appointment books of their practice of profession/occupation/calling before using the same. The official appointment books shall contain only the names of the client and the date/time of the meeting. They are likewise obligated to register their sales invoices and official receipts (VAT or non-VAT) before using them in any transactions.

3. In cases when no professional fees are charged by the professional and paid by client, a BIR registered receipt, duly acknowledged by the latter shall be issued showing a discount of 100% as substantiation of the  "pro-bono' service.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/84365RR%204-2014.pdf of the full text of Revenue Regulations No. 4-2014.

The eBIRFORMS Offline Package v4.0 (w/ Annual Income Tax Returns v2013 ENCS) is Now Available for Downloading

This day, the BIR just announced that the eBIRFORMS Offline Package v4.0 (w/ Annual Income Tax Returns v2013 ENCS) is now available for downloading in the eBIRForms page for use in the preparation, encoding and filing of the BIR Form Nos. 1700, 1702-RT, 1702-EX, 1702-MX.

Job Aids are also included for  easy navigation and use of the application tool.  BIR Form No. 1701 and online submission of Annual Income Tax Returns to eFPS will be available soon.

BIR Interactive Forms may be accessed in the “BIR Forms” portion. BIR Form No. 1700 / BIR Form 1701 / BIR Form No. 1702

Hope that this blog would help you in preparing your Annual Income Tax Returns.

Here's the update for the eBIRForms Offline Package v.7.08  http://ftp.pregi.net/bir/ebirforms_package_v4.7.08_ITRv2013.zip

The Acceptance of Out-Of-District Filing of Income Tax Returns of Certain Government Officials and Employees Shall No Longer be Allowed

The new Revenue Memorandum Circular No. 15-2014 issued by the bureau is a reminder on the acceptance of out-of district filing of Annual Income Tax Returns (BIR Form Nos. 1700 and 1701) of certain government officials and employees pursuant to the provisions of Revenue Memorandum Circular No. 29-2013. 

The filing of the Annual Income Tax Returns as well as the payment of taxes due thereon anywhere of the following government officials and employees shall no longer be allowed:

1. Members of the Armed Forces of the Philippines (AFP);

2. Members of the Philippine National Police (PNP); and 

3. Public School Teachers/Professors/Instructors

It is also stated that any concerned revenue personnel who is found to be violating this Circular shall be subjected to the appropriate sanctions prescribed under Section 7 of Revenue Regulations No. 13-2010 dated November 25, 2010.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/83702RMC%20No%2015-2014.pdf of the full text of the Revenue Memorandum Circular No. 15-2014.

Selected SSS Branches Extend Saturday Services to Serve Members

The SSS President & CEO has issued the Circular Order No. 2014-003 to extend the Saturday services of the branches to serve members from 8:00 a.m. to 5:00 p.m. on Saturdays effective February 8, 2014 until June 28, 2014 as follows:

NCR - 1. Diliman Branch 2. Cubao Branch, 3. San Francisco de Monte Branch 4. Mandaluyong Branch, 5. Pasig Shaw Branch, 6. Binondo Branch, 7. Manila Branch, 8. Makati G. Puyat Branch, 9. Alabang Branch, 10. Makati Ayala Branch

LUZON - 1. Baguio Branch, 2. Dagupan Branch, 3. Bacoor Branch, 4. Binan Branch

VISAYAS & MINDANAO - 1. Cebu Branch, 2. Lapu-Lapu Branch, 3. Bacolod Branch, 4. Iloilo Branch, 5. Cagayan de Oro Branch, 6. Davao Branch, 7. Zamboanga Branch

Please refer http://www.sss.gov.ph/sss/uploaded_images/circular/Cir-2014-003.pdf of the full text of circular.