Tax Implications of Real Estate Service Practitioners (RESPs) Who Passed the Licensure Examinations and Who Did Not Pass or Did Not Take Up Licensure Examinations Given by the Real Estate Service

The Revenue Regulations No. 10-2013 was issued by the Department of Finance and promulgated to further amend portions of Revenue Regulations No. 2-98 as last amended by Revenue Regulations No. 30-2003, providing  for the inclusion of Real Estate Service pursuant to RA 9646, "The Real Estate Service Act of the Philippines" as among those professionals falling under Section 2.57.2(A)(1) of Revenue Regulations No. 2-98, as amended, subject to the 10% or 15%  creditable (expanded) withholding tax and to amend Section 2.57.2(G) of RR 14-2002 to include real estate practitioners who did not pass or did not take up licensure examinations given by the Real Estate Service.

Section 2 of these regulation stated that, Section 2.57.2(A)(1) of RR 2-98, as last amended by RR 30-2003, is hereby further amended to read as follows:

"Section 2.57.2. Income payment subject to creditable withholding tax and rates prescribed thereon. - xxx      xxx

(A) Professional fees, talent fees, etc., for services rendered by individuals. - On the gross professional, promotional and talent fees or any other form of remuneration for the services of the following individuals - Fifteen percent (15%), if the gross income for the current year exceeds P720,000; and Ten percent (10%), if otherwise: 

(1) Those individually engaged in the practice of profession or callings; xxx designers, real estate service practitioners (RESPs), (i. e. real estate consultants, real estate appraisers and real estate brokers) requiring government licensure examination given by the Real Estate Service pursuant to Republic Act No. 9646 and all other profession requiring government licensure examination regulated by the Professional Regulations Commission, Supreme Court, etc. xxx"

Moreover, Section 3 of these regulations stated also that Section 2.57.2(G) of RR 2-98, as last amended by RR 14-2002, is hereby further amended to read as follows:

"Section 2.57.2. - Income payment subject to creditable withholding tax and rates prescribed thereon. -          xxx               xxx

           xxx               xxx

(G) Income payment to certain brokers and agents. - On gross commissions of customs, insurance, stock, immigration and commercial brokers, fees of agents of professional entertainers and real estate service practitioners (RESPs), (i. e. real estate consultants, real appraisers and real estate brokers) who failed or did not take up the licensure examination given by and not registered with the Real Estate Service under the Professional Regulations Commission. - Ten percent (10%).

   xxx          xxx         xxx"

These regulations was took effect last June 1, 2013 and shall cover income payment to be paid or payable starting June 1, 2013 which are required to be remitted within the month of July, 2013.

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/71818RR%2010-2013%20revised.pdf of the full text of the regulations.