Saturday, December 31, 2016

Creation and Revision of Alphanumeric Tax Code (ATC) for Pure Business

The CIR of the bureau has issued Revenue Memorandum Order (RMO) No. 67-2016 recently for the creation and modification of the Description of Alphanumeric Tax Code (ATC) for Pure Business. The main objective is to facilitate the proper identification of tax collection from Pure Business agreeable to the Sec. 32 (A) (2) of the National Internal Revenue Code (NIRC), and in connection with the Bureau's Tax Forms Enhancement Program.

The following ATC is hereby created:
This RMO shall take effect  immediately upon issuance dated  December 23, 2016.

Friday, December 30, 2016

BIR Amends the Early Withdrawal Penalty of RA No. 9505

The Revenue Regulations (RR) No. 10-2016 dated December 27, 2016 has issued by the bureau recently amending Section 10.C. of RR No. 17-2001 Implementing the Early Withdrawal Penalty of Republic Act No. 9505, Otherwise Known as the Personal Equity and Retirement Account (PERA) Act of 2008.

The amendment shall read as follows:

SECTION 2. Amendment. - Section 10.C. of RR No. 17-2011 is hereby amended to read as follows:

"SECTION 10. PERA Distributions and Early Withdrawals. - 


C. Imposition of Penalty. -- In case of Early Withdrawals not failing under any of the circumstances under Section 10 (B) above, the Contributor shall pay the following Early Withdrawal Penalties: 

(1) The five percent (5%) tax credit availed by the Contributors for the entire period of the PERA;

(2) A flat rate of twenty percent (20%) based on the total income earned by said account from the time of its opening/creation up to the time of withdrawal.

For full transparency, the Administrator shall fully disclose the above penalty arising from withdrawals to the contributor prior to account opening and shall likewise submit a quarterly report of such termination or withdrawal to the PERA Processing Office, within sixty (60) days following the end of the quarter of the date of termination or withdrawal.

Monday, December 26, 2016

Availability of Stamp Verifier App to Authenticate Internal Revenue Stamps on Cigarettes

Revenue Memorandum Circular (RMC) No. 51-2016 was issued by the bureau to inform the public of the availability of a mobile application know as Stamp Verifier app, that will enable the user to determine the authenticity of the internal revenue stamps affixed to locally manufactured cigarettes intended for domestic consumption as well as imported cigarettes required under Revenue Regulations (RR) No. 7-2014 as amended by RR Nos. 8 and 9-2015.

The mobile application is a tool in identifying smuggled and counterfeit cigarettes proliferating in the country.

Stamp Verifier app is an Android and iOS application for BIR and public use to verify validity of QR coded of the stamp affixed on a cigarette pack. QR Code, one of the security features of the stamp, refers to a two-dimensional bar code that holds information relative to the the product to which the stamp is affixed, including a Unique Identifier Code (UIC) which is a code or serial number that represents an internal revenue stamp.

It is also stated the device requirements for the application and the procedures on how to download and install the Stamp Verifier app for Android and iOS. 

Moreover, it is also mentioned in the circular on how to use the Stamp Verifier app for Android and iOS.

Limitation on the Availability of Mobile Application on Non-Android Phones to Authenticate Internal Revenue Stamps

The bureau has issued Revenue Memorandum Circular (RMC) No. 132-2016 recently to inform all taxpayers and others concerned on the limitation of the availability of Mobile Application (particularly on non-android phones) affecting the authentication of internal revenue stamps on cigarettes as circularized under RMC No. 51-2016.

It is stated in the circular the limitation is not on the Stamp Verifier Application but rather on non-android phones. 

The new or updated version of the said application can now be downloaded in the Google Play Store.

Saturday, December 24, 2016

Foreign Account Tax Compliance Act

Securities and Exchange Commission (SEC ) Memorandum Circular No. 8 was approved by the Commission En Banc in its meeting held on April 3, 2014. The objective of the circular is to guide non-bank financial institutions (NBFIs) that are covered by Foreign Account Tax Compliance Act (FATCA) regulations.

FATCA was enacted in 2010 by the United States (U. S.) Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act. It was enacted to prevent off-shore tax abuses by U. S. taxpayers. FATCA requires, among others, the on-line registration of foreign financial institutions (FFIs) with the U. S. Internal Revenue Service (IRS) and their reporting to the IRS of information about financial accounts by FFIs in which U. S. taxpayers hold a substantial ownership interest. Under the Act, non-compliance therewith will result to the imposition of a 30 percent withholding tax on payments of U. S.-sourced income to FFIs.

The FFIs referred to in the FATCA pertain to financial institutions which are organized under the laws of a jurisdiction other than the United States of America.

The IRS has included the following FFIs in its non-exclusive list:

* Depository institutions
* Custodial institutions
* Investment entities
* Certain types of insurance companies that have cash value products or annuities

NBFIs that are licensed by the Commission are instructed to conduct the procedures stated in the circular.

Please refer of the full text of SEC Circular No. 8 of the Foreign Account Tax Compliance Act.

Monday, December 19, 2016

List of Personal Equity Retirement Account (PERA) Unit Investment Trust Funds (UITFs) Duly Approved by the BSP

The BIR has issued Revenue Memorandum Circular (RMC) No. 131-2016 to inform the public of the List of Personal Equity Retirement Account (PERA) Unit Investment Trust Funds (UITFs) Duly Approved by the Bangko Sentral ng Pilipinas (BSP).

Further stated in the circular that under Rule 11 of the Rules and Regulations Implementing Republic Act No. 9505, otherwise known as the Personal Equity Retirement Account (PERA) Act of 2008, and Section 9 of Revenue Regulations (RR) No. 17-2011, all income earned from the investments and re-investments of PERA assets in PERA investment products shall be exempt from income taxes provided that said PERA investment products have been duly accredited by the concerned Regulatory Authority.

Below is the list of PERA Unit Investment Trust Funds (UITFs)/investment products duly approved/accredited by the Bangko Sentral ng Pilipinas (BSP):

The only income earned from the investments and re-investments of PERA assets in the above-enumerated PERA investment products shall be exempt from income taxes under Rule 11 of the Rule and Regulations Implementing investments and re-investing of PERA assets in government securities is likewise exempt from income taxes under the said provisions.

Monday, December 12, 2016

Amendment for the Coverage of Taxpayers Required to File Returns through Electronic Bureau of Internal Revenue Forms (eBIRForms)

The BIR recently issued Revenue Regulations No. 9-2016 amending Section 4 of Revenue Regulations (RR) No. 6-2014, Coverage of Taxpayers Required to File Returns through Electronic Bureau of Internal Revenue Forms (eBIRForms).

Only those non-eFPS filers are covered by these Regulations:

1. Accredited Tax Agents/Practitioners and all its client-taxpayers;
2. Accredited Printers of Principal and Supplementary Receipts/Invoices;
3. One-Time Transaction (ONETT) taxpayers who are classified as real estate dealers/developers; those who are considered as habitually engaged in the sale of real property and regular taxpayers already covered by eBIRForms. Thus, taxpayers who are filing BIR Form No. 1706, 1707, 1800 and 2000-OT (for BIR Form Form No. 1706 only) are excluded in the mandatory coverage from using the eBIRForms;
4. Those who shall file a "No Payment Return".
5. Government-Owned-or-Controlled Corporations (GOCCs);
6. Local Government Units (LGUs), except barangays, and
7. Cooperatives registered with National Electrification Administration (NEA) and Local Water Utilities Administration (LWUA).

Please refer

Sunday, December 11, 2016

Tax Treatment and Appropriate Withholding Taxes on Income Payments by Departments and Agencies of the Government to Individuals Engaged under a Job Order or Contract of Service Arrangement

The bureau has issued Revenue Memorandum Circular (RMC) No. 130-2016 recently, to clarify the withholding taxes imposed on income payments made by departments and agencies of the government, including government owned and/or -controlled corporations and government financial institutions (GFIs) to individuals whose services are engaged under a contract of service or job order arrangement. 

In the circular, it clarifies the terms "Contract of Service" and "Job Order" that there's  no employer-employee relationship created under either a job order or contract of service, and that services rendered pursuant thereto shall not be considered as government service.

The clarifications are important for the tax treatment of remuneration/fees received by personnel under a job order or contract of for service:

l) Professionals Hired Under Contract For Services Or Job Order

 A. Creditable Withholding T'ax under Section 2.57.2(A) of Revenue Regulations (RR) No. 2-98, as amended. 

In general, individuals who follow an independent. trade, business, or profession, in which they offer their services to the public, are not employees. 

For professionals who are paid for the services they render, they are subject to a withholding tax rate of 10% or 150%, whichever is applicable, on their gross professional fee per Section 2.57.2(A) of RR. No. 2-98, as amended. 

The amount subject to withholding tax under this paragraph shall include not only fees. but also per diems. allowances and any other form of income payments not subject to withholding tax on compensation. 

2. Non-Professionals Hired Under Contract For Services Or Job Order

A. Income Tax: No creditable withholding tax

Income payments to individuals who are not professionals under a contract for service or job order basis shall be not subject to creditable withholding tax rates provided by Section 2.57.2 of RR No. 2-98, as amended. However, such income payments shall be reported as income subject to income tax under Section 24 of the Tax Code of 1997, as amended, in relation to Section 51 of the same Tax Code.

With regards to the Tax Treatment Common to Professionals and Non-Professionals Hired Under Contract for Services or Job Order Basis and full text of the RMC please refer: 

Saturday, December 10, 2016

Why Sin Tax Reform Law Should Be Fully Implemented?

Republic Act 10351, or the Sin Tax Reform Law, is primarily a health measure with revenue implications, but more fundamentally, it is a good governance measure. The Sin Tax Law helps finance the Universal Health Care program of the government, simplified the current excise tax system on alcohol and tobacco products and fixed long standing structural weaknesses, and addresses public health issues relating to alcohol and tobacco consumption.

Recently, the Department of Finance (DOF) urges Congress to let sin tax law 'run its course'. Finance Secretary Carlos Dominguez III has encourage the congressional oversight committee on the Sin Tax Reform Act to start reviewing the revenue and health impact of the tax rates mandated under this law to determine what measures should be undertaken by the Legislature once the statute matures in 2017. He said that the the Sin Tax Reform Act is a very good law and it should be fully implemented and allowed to run its course.

Besides, RA 10351 mandates that the current two-tiered tax rate merge into a unitary tax rate of P30 per cigarette pack for all brands starting Jan. 1, 2017, and the rate indexed to inflation by increasing it to 4 percent annually.

Dominguez also added that DOF expects “this review to occur” as mandated by law and for it to “be done well to inform [us] what we should be doing in the future.”

Friday, December 9, 2016

Formula and Computation of 13th Month Pay

"Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year. The minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.

"Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances, profit-sharing payments, cash equivalent of unused vacation and sick leave credits, overtime pay, premium pay, night shift differential, holiday pay, and all allowances and monetary benefits which are not considered, or integrated as part of the regular or basic salary of the employee.


The 13th  month pay shall be paid not later than December 24 of every year. An employer, however, may give to his or her employees one-half (1/2) of the 13th month pay before the opening of the regular school year and the remaining half on or before December 24 of every year.

The BIR has issued Revenue Regulations No. 3-2015 implementing the Provisions of Republic Act No. 10653. "An act Adjusting the 13th Month Pay and Other Benefits Ceiling Excluded from the Computation of Gross Income for Purposes of Income Taxation.

Amending the provision on Revenue Regulations No. 2-98 - The amount of Thirty Thousand Pesos (P30,000.00), specifically referring to the total amount of 13th month pay and other benefits as one of the exclusions from gross compensation income received by an employee prescribed under the pertinent provisions, including the example computations of revenue Regulations (RR) No. 2-98, as amended, is hereby increased to "Eighty Two Thousand Pesos (P82,000.00)", pursuant to the provisions of RA No. 10653.

Wednesday, December 7, 2016

Lifting of Suspension of Effectivity of Certain Revenue Issuances under RMC No. 127-2016

The bureau just issued Revenue Memorandum Circular (RMC) No. 127-2016 for the suspension of effectivity of all  revenue issuances promulgated under RMC No. 69-2016 dated July 1, 2016 within the period covering June 1 to 30, 2016.
The suspension of the following revenue issuances is hereby lifted:
RMC / Title/Description of RMC
RMC No. 61-2016 - Prescribing Policies and Guidelines for Accounting and Recording Transactions Involving "Netting" or "Offsetting".
RMC No. 62-2016 - Clarification on Property Tax Treatment of Passed-on Gross Receipts Tax
The RMC is dated November 15, 2016 and the lifting of suspension of the effectivity of the foregoing revenue issuances the same shall be effective immediately.

Implement Rules and Regulations of Republic Act No. 10693 otherwise known as the "Microfinance NGOs ACT"

The bureau has issued Revenue Memorandum Circular (RMC) No. 124-2016 for the information and guidance of all internal revenue officials, employees and others concerned with regards to the Implementing Rules and Regulations of Republic Act No. 10693 otherwise known as the "Microfinance NGOs Act."

BIR Registration Forms for the Implementation of Taxpayer Registration System (TRS) under Electronic Tax Information System (eTIS-1)

Revenue Memorandum Circular (RMC) No. 9-2015 was issued by the bureau to inform taxpayers and others concerned on the availability of the  enhanced version (November 2014 ENCS) of the registration forms applicable only to the District Offices covered by the Systems Roll-out of Taxpayer Registration System (TRS) under the Electronic Tax Information System (eTIS-1), as follows:
BIR Form No. / Description
1901 - Application for Registration for Self-Employed (Single Proprietor/ Professional), Mixed Income Individuals, Marginal Income Earner, Non-resident Alien Engaged in trade/ Business, Estate and Trust
1902 - Application for Registration for Individuals Earning Purely Compensation Income (Local Employee and Resident Alien Employee)
1903 - Application for Registration for Corporations, Partnerships (Taxable/Non-taxable), including Government Agencies and Instrumentalities (GAIs), Local Government Units (LGUs), Cooperatives and Associations
1904 - Application for Registration for One-time Taxpayer/Person Registering under E. O. 98 and Foreign National
1905 - Application for Registration Information Update/Correction/Cancellation
2305 - Certificate of Update of Exemption and of Employer's and Employee's Information

Sunday, December 4, 2016

Gov't Debt Ratio and BIR's Tax Effort Improves

Did you know that the Gov't debt ratio improves in September?

According to the news released by the Department of Finance, the Gov’t debt ratio improves in September. The share of debt to the country’s economy slid further as of September this year as the gross domestic product (GDP) continued to grow faster than government liabilities, latest data from the Department of Finance (DOF) showed.

Following a series of liability management measures of the DOF, Finance Undersecretary Gil Beltran reported that the government debt-to-GDP ratio further improved to 44.2 percent by end-September from 44.7 percent in the same month last year.

“Debt management measures led to the continuing drop in the debt-GDP ratio to 44.2 percent as of September 2016, an improvement from end-2015 ratio of 44.7 percent,” Beltran, who is the DOF’s chief economist, said in a report to Finance Secretary Carlos Dominguez III.

The debt-to-GDP ratio is projected to sustain the yearly decline until falling to about 35 percent by the end of the Duterte administration.

The national government debt as a proportion of GDP had continually dropped from 52.4 percent in 2010 to 44.7 percent in 2015.

“Strong fiscal fundamentals will continue to underpin robust economic growth during the rest of the year,” said Beltran.

The Bureau of Internal Revenue’s tax effort improved to 11.31 percent from 11.27 percent, while the Bureau of Customs’ figure slightly fell to 2.78 percent from 2.81 percent.

Thursday, December 1, 2016

BIR signs Memorandum of Agreement (MOA) with DTI for faster Tax Identification Number (TIN) issuance

As part of the bureau's campaign of "ease of doing business in the Philippines", the Bureau of Internal Revenue (BIR) and the Department of Trade and Industry (DTI) agreed to collaborate together to facilitate the issuance of Taxpayer Identification Number (TIN) to registering small and medium domestic businesses.

The Memorandum of Agreement (MOA) was signed by Commissioner Caesar R. Dulay (for the BIR) and Secretary Ramon M. Lopez (for the DTI) on October 10, 2016 at the Executive Conference Room in the BIR National Office.

The Commissioner mentioned during the open forum about the BIR's issuance of a Revenue Memorandum Circular (RMC) No. 93-2016, which streamlined the business registration process and documentary requirements.