Revised Withholding Tax Table On Compensation Pursuant to the Amendments To The NIRC of 1997 as Introduced by Republic Act No. 10963

The bureau recently published the Revenue Memorandum Circular (RMC) No. 105-2017 with regards to Revised Withholding Tax on Compensation Pursuant to the Amendments to the National Internal Revenue Revenue Code (NIRC) of 1997 as Introduced by Republic Act No. 10963, Other Known as the "Tax Reform for Acceleration and Inclusion (TRAIN) Law".

Republic Act No. 10963, otherwise known as the "Tax Reform for Acceleration and Inclusion  (TRAIN) Law" is effective on January 1, 2018 to December 31, 2022. In this regard, beginning January 1, 2018, every employer making compensation payments in their respective employees shall deduct and withhold from such compensation a tax determined in accordance with the Revised Withholding Tax Table attached in ANNEX "A".

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20105-2017.pdf of the full text of RMC No. 105-2017.

Schedule Of Collection Of Taxes And Remittances To The BTr During The 31st ASEAN Summit And Proclamation No. 331, s. 2017

The bureau recently issued BANK BULLETIN NO. 2017-15 advising all Authorized Agent Banks (AABs) to observe the schedule of collection of taxes and remittances to the BTr during the 31st ASEAN Summit and Proclamation No. 331, s. 2017, Declaring November 13, 14 and 15, 2017 as Special Non-working Days in the National Capital Region (NCR), Provinces of Bulacan and Pampanga.

With this, all Authorized Agent Banks (AABs) in the NCR, including the provinces of Bulacan and Pampanga are hereby advised to observe the following schedule of Collection of Taxes and Remittances to the Bureau of the Treasury (BTr), without the corresponding penalties:

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_1/Advisory/bank%20bulletin%202017-15.pdf of the full text of Bank Bulletin No. 2017-15.

ePayment Channels of AABs

With the bureau's ePAY, taxpayers and practitioners who are avoiding hustles in paying their tax dues and liabilities could use the ePayment Channels of AABs.

The ePayment Channels accept tax payments through the use of either online, credit / debit / prepaid cards, and mobile payments.

Currently, the bureau has three (3) Available ePayment Gateways:

1. LandBank

2. Development Bank of the Philippines

3. Globe GCash

Please refer: https://www.bir.gov.ph/index.php/eservices/epay.html of the full text of the ePayment Channels of AABs.

BIR Privacy Policy

The bureau has implemented the Bureau of Internal Revenue Privacy Policy that applies to personal information in which they collect and process on all Bureau of Internal Revenue (BIR) forms, website and online services. 

Personal information refers to any information, whether recorded in material form or not, that will directly ascertain your identity. This includes your address and contact information.

Sensitive personal information is personal information that includes your age, date of birth, marital status, social security and other government identification numbers, financial information and tax returns.

WHAT PERSONAL INFORMATION WE COLLECT

We process and collect personal information for a lawful purpose connected with our functions and activities of administering the National Internal Revenue Code (NIRC) of 1997, as amended, and other existing tax laws. 

WHEN WE COLLECT PERSONAL INFORMATION

We collect personal information directly from you when you:

1. fill in a BIR form either online or in hard copy

2. register and use BIR online services

3. contact BIR by phone or other means 

We also collect personal information from third parties:

Take note that the NIRC of 1997, as amended, allows the Commissioner of Internal Revenue to collect personal information about a taxpayer from other people, entities and government offices subject to limitation provided for by existing laws. 

Third party information allows the BIR to ascertain the correctness of any returns, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance.

LIMITS ON USE AND DISCLOSURE OF YOUR PERSONAL INFORMATION

We only use and disclose personal information in connection with our lawful functions and activities of administering the NIRC of 1997, as amended, and other existing tax laws, and in accordance with existing legislations such as Republic Act (RA) No. 10173, or the Data Privacy Act of 2012, and RA No. 10021, or the Exchange of Information on Tax Matters Act of 2009.

The personal information we collect may be used to:

1. administer the NIRC of 1997, as amended, and other existing tax laws

2. update BIR database or records

3. provide to other government agencies which are entitled to the information under existing 

4. contact you, including sending you information electronically

HOW WE KEEP YOUR PERSONAL INFORMATION SECURE 

We respect your privacy and keep your information confidential unless we are lawfully required or allowed to disclose it or that you give your written consent to such disclosure. 

Under Section 270 of the NIRC of 1997, as amended, BIR personnel cannot divulge information collected from taxpayers concerning the latter’s business, income or estate, as well as the secrets, operation, style or work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer. There are, however, exceptions, namely:

1. disposition of income tax returns under Section 71 of the NIRC, as amended

2. disclosure of income tax returns under Section 26 of RA 6388 (Election Code) in case of an individual who files a certificate of candidacy and executes a waiver for the examination of his returns

3. information given by the BIR pursuant to a request by a foreign tax authority under an existing treaty pursuant to RA 10021 

The Data Privacy Act of 2012 clearly provides that personal data of an individual shall never be collected and processed without his or her consent, unless otherwise provided by law. 

We wish to emphasize that we have created and maintained a secure environment for the protection of your personal information and records. When we collect this information, it is kept safe and secure. We use reasonable security safeguards to protect information from loss, unauthorized access, use or disclosure.

Please refer: https://www.bir.gov.ph/index.php/privacy-policy.html of the full text Bureau of Internal Revenue Privacy Policy.

Promulgation and lmplementation of the People's Freedom of Information Manual of the BIR

The bureau has issued Revenue Memorandum Circular (RMC) No. 75-2017 for the promulgation and implementation of the People's Freedom of Information Manual of the Bureau of Internal Revenue (BIR) stated as follows: 

As a public service institution, the BIR is mandated to adopt and implement the constitutional policy of full public disclosure of its transactions involving public interest. subject to reasonable conditions prescribed by law. The BIR recognizes further the fundamental role of the right to a free and open exchange of information in democracy as a means to enhance transparency and accountability in government official acts, transactions, or decisions. 

In this regard, the BIR's Freedom of Information Manual ("Annex A') is hereby promulgated in order to promote said constitutional right and comply with the directive of Executive Order No 2 Series of 2016. Henceforth, to ensure the faithful compliance and observance of the BIR's Freedom of Information Manual everyone is directed to read and be familiar with its provisions. An electronic copy of this Manual shall be posted in the BIR website for reference. 

Click the following of the FOI Request Form.

Please refer https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2017/RMC%20No%2075-2007.pdf of the full text of RMC No. 752017.

When Payment Of Taxes Through Credit/Debit/Prepaid Card Is Deemed Made?

Revenue Regulations (RR) No. 2-2017 was issued by the bureau amending RR No. 3-2016 Section 4(a) and (b) to read as follows:

"SECTION 4. When Payment is Deemed Made. - The payment of taxes through credit/debit/prepaid card shall be deemed made on the date and time appearing in the system-generated payment confirmation receipt issued to the taxpayer-cardholder by the AAB-Acquirer.

However, in case of late remittance or non-remittance of taxes to the BIR, despite the timely issuance of a valid confirmation receipt by the AAB-Acquirer to the taxpayer-cardholder, the liability to pay the tax rests upon the AAB-Acquirer considering that from the time of issuance of a valid confirmation receipt to the taxpayer-cardholder, the AAB-Acquirer becomes the trustee of the government with obligation to remit the payment on time to the BIR.

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 https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/ANNEX%20A%20RMC%2042.pdf to download revised BIR Form No. 2305.

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No.%2042-2017.pdf of the full text of RMC No. 42-2017. 

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: https://www.bir.gov.ph/images/bir_files/downloadables/BIRF2305/BIRF2305_v2.accdb

2. 2305 Batch File Validation Module (ZIP): https://www.bir.gov.ph/images/bir_files/downloadables/BIRF2305/BIRF2305ValidationM_v2.zip

3. Job Aid - Batch Entry Module: https://www.bir.gov.ph/images/bir_files/downloadables/BIRF2305/job_aid_batch_entry_annex_b.pdf

4. Job Aid - Batch Data Entry Module: https://www.bir.gov.ph/images/bir_files/downloadables/BIRF2305/job_aid_data_entry_annex_a.pdf

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No.%2043-2017.pdf of the full text of RMC No. 43-2017. 

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 sparkup.ph, 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 http://sparkup.ph/signup/ 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 www.sparkup.ph and follow @SparkUpPH. 

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.

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.

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.

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.

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.

Taxpayers can download the updated GIS 2017 at http://www.sec.gov.ph/reportorial-requirements/corporations-with-primary-licenses-2/

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).

GUIDELINES FOR THE STUDENT-TRAINEES 

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. 

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202017/RMO%20No.%2011-2017.pdf of the full text of RMO No. 11-2017.

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. 

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202017/RMO%20No.%2012-2017.pdf of the full text of RMO No. 12-2017.

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 https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202017/RR%20No.%205-2017/RR%20No.%205-2017.pdf 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.

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

Please refer https://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202017/RMO%20No.%208-2017.pdf of the full text of RMO No. 8-2017.

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:

https://www.bir.gov.ph/images/bir_files/ebirforms/ebirforms_package_v6.3.zip

Alternative sites to obtain/download the Offline eBIRForms Package:

Websites: www.knowyourtaxes.ph; www.dof.gov.ph

Direct link: http://ftp.pregi.net/bir/ebirforms_package_v6.3.zip

SOURCE: www.bir.gov.ph

To download eBIRForms Package v6.4 (New)

https://philippinetaxtalk.blogspot.com/2018/03/ebirforms-package-v64-new.html

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 esubmission@bir.gov.ph, 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.

SOURCE: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2017/RMC%20No%2028-2017.pdf of the full text of RMC No. 28-2017.

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 tax. Final 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. 

Requirements:

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.

SOURCE: http://www.gov.ph/2014/04/01/who-are-required-to-file-income-tax-returns/; http://www.bir.gov.ph/images/bir_files/old_files/pdf/42126rr%20no.%2010-2008.pdf; http://www.bir.gov.ph/index.php/tax-information/withholding-tax.html

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.

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2027-2017.pdf of the full text of RMC No. 27-2017.

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

1. DI900 - DEFAULT INCOME

2. EI900 - EXCESS INCOME TAX

3. FP010 - FINES & PENALTIES - ON TAX ON INCOME

4. IC010 - INCOME TAX - ORDINARY DOMESTIC CORP.

5. IC011 - NON-STOCK NON-PROFIT ORGANIZATION

6. IC020 - PARTNERSHIP IN TRADE INCOME TAX

7. IC021 - PROFESSIONAL FEES PAID TO GENERAL PROFESSIONAL PARTNERSHIPS (EXCEPT TO PARTNERSHIP OF MEDICINE)

8. IC030 - PRIVATE EDUCATIONAL INSTITUTION, STOCK OR NONSTOCK

9. IC031 - NON STOCK, NON PROFIT HOSPITALS

10. IC040 - GOVERNMENT OWNED OR CONTROLLED CORPORATION

11. IC041 - NATIONAL & LOCAL GOVERNMENT UNIT (FOR PROPRIETARY ACTIVITIES) EXCEPT PUBS

12. IC050 - INCOME TAX - MUTUAL LIFE INSURANCE COMPANIES

13. IC055 - MINIMUM CORPORATE INCOME TAX

14. IC060 - INCOME TAX - FCDU

15. IC070 - ORDINARY RESIDENT FOREIGN CORP

16. IC080 - RFC - INTERNATIONAL CARRIERS

17. IC090 - FOREIGN MUTUAL LIFE INSURANCE CO.

18. IC100 - FOREIGN OBU/FCDU

19. IC101 - REGIONAL OPERATING HEADQUARTERS OF MULTINATIONALCOMP

20. IC120 - PRIZES REGARDLESS OF AMOUNT

21. IC130 - RENT - PERSONAL PROPERTY REGARDLESS OF AMOUNT (CORPORATE)

22. IC140 - PREMIUM AND ANNUITY - (CORPORATE PAYEES)

23. IC150 - OTHES (SPECIFY) - (CORPORATE PAYEES)

24. IC160 - TRANSPO CONTR (CORPORATE) CARRIAGE OF GOODS AND MECHANDISE BELOW P2000

25. IC170 - INTEREST - (CORPORATE PAYEES)

26. IC190 - OFFSHORE BANKING UNITS (OBUS)

27. IC191 - FOREIGN CURRENCY DEPOSIT UNITS (FCDUS)

28. IC370 - ON IMPROPERLY ACCUMULATED EARNINGS TAX

29. II010 - INCOME FROM COMP. ANDBUS/PROF.

30. II011 - PURE COMPENSATION INCOME - CITIZENS

31. II012 - RESIDENT ALIEN - PURE BUSINESS

32. II013 - ESTATES AND TRUST-MIXED INCOME

33. II020 - NRC INCOME

34. II050 - RENT FOR REAL PROPERTY BELOW P500 MONTH (USED IN BUSINESS)

35. II051 - RENT - PERSONAL PROPERTY REGARDLESS OF AMOUNT (INDIVIDUAL)

36. II060 - PREMIUM AND ANNUITY - (INDIVIDUAL PAYEES)

37. II070 - PENSIONS

38. II080 - OTHERS (SPECIFY) - (INDIVIDUAL PAYEES)

39. II090 - TRANSPO CONTR (INDIVIDUAL) CARRIAGE OF GOODS AND MERCHANDISE BELOW 2,000

40. II110 - INEREST - (INDIVIDUAL PAYEES)

41. II120 - PRIZES AMOUNTING TO: 10,000 OR LESS

42. II130 - PARTNERS DISTRIBUTION SHARE OF NET INCOME OF GENERAL PARTNERSHIP

43. II420 - CGT ON SALE OF REAL PROPERTY (CAPITAL ASSETS) FOR INDIVIDUAL

44. MC010 - TAX AMNESTY ON INCOME (INDIVIDUAL)

45. MC011 - INDIVIDUAL TAXPAYERS

46. MC020 - TAX AMNESTY ON INCOME (CORPORATE)

47. MC021 - CORPORATE TAXPAYERS

48. MC030 - COMPENSATION PAYMENTS ON DELINQUENT ACCOUNTS & DISP. ASSESSMENTS

49. MC040 INCOME FROM FORFEITED PROPERTIES

SOURCE: BIR ALPHALIST 5.1  and http://www.bir.gov.ph/index.php/bir-forms/certificates.html#c2304 

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.

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2024-2017.pdf

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

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202017/RMO%20No.%205-2017.pdf of the full text of RMO No. 5-2017.

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:

REGISTRATION AND FILINGS FEES:

PREPARATION OF STATISTICAL REPORTS, COMPANY LISTINGS AND RELATED INFORMATION ON SEC-REGISTERED ENTITIES:

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:  http://www.sec.gov.ph/wp-content/uploads/2017/03/2017MCno03.pdf of the full text of SEC Memrnadum Circular No. 3 Series of 2017.