Did you know that the bureau has issued new Revenue Regulations (RR) No. 6 - 2018 revoking RR No. 12-2013 thereby Reinstating the Provisions of Section 2.58.5 of RR No. 14-2002, as Amended by RR No. 17-2003?
These regulations refers to the requirements for deductibility of certain expenses and such deduction will also be allowed in the following cases where no withholding of tax was made.
In Section 2 of this Regulation, stated the Requirements For Deductibility Of Certain Expenses as follows:
"Sec. 2.58.5. Requirements for Deductibility. - Any income payment which is otherwise deductible under the Cod shall be allowed as a deduction from the payor's gross income only if it is shown that the income tax required to be withheld has been paid to the Bureau in accordance with secs. 57 and 58 of the Code.
A deduction will also be allowed in the following cases where no withholding of tax
was made:
(A) The payee reported the income and pays the tax due thereon and the withholding
agent pays the tax including the interest incident to the failure to withhold the tax, and
surcharges, if applicable, at the time of the audit/investigation or
reinvestigation/reconsideration.
(B) The recipient/payee failed to report the income on the due date thereof. but the
withholding agent/taxpayer pays the tax. including the interest incident to the failure to
withhold the tax and surcharges" if applicable, at the time cf audit/investigation or
reinvestigation/reconsideration.
(C) The withholding agent erroneously underwithheld the tax but pays the difference
between the correct amount and the amount of tax withheld including the interest. incident to
such error, and surcharges, if applicable, at the time of the audit investigation or
reinvestigation/reconsideration.
Items of deduction representing return of capital such as those pertaining to purchases
of raw materials forming part of finished product or purchases of goods for resale. shall be
allowed as deductions upon withholding agent's payment of the basic withholding tax and
penalties incident to non-withholding or underwithholding."
