As part of ease of doing business, the bureau has issued Revenue Memorandum Circular (RMC) No. 143-2019 dated December 16, 2019 for the clarifications on the inclusion of Taxpayers as Top Withholding Agents who are obliged to remit the 1% and 2% Creditable Withholding Taxes Pursuant to the Criteria of Revenue Regulations (RR) No. 7-2019.
It is clearly stated in the regulations that it should be observed in the revenue regulations (RR No. 12-94; RR No. 17-2003; RR No. 14-2008 and RR No. 6-2009) that the obligation to withhold and remit these CWTs to this Bureau is mandated only to those taxpayers whose business operations have a significant level of economic impact contributory to the collection of revenues. Under this perspective, more potential revenues can be detected and collected by this Bureau through the other stakeholders and business partners of these taxpayers. Based on this rationale that RR No. 7-2019 was issued in order to simplify the criteria for the selection of Top Withholding Agents (TWAs), which were introduced by RR No. 11-2018.
Further, in implementing the said Regulations and consistent to the policy of ease of doing business by ensuring that the list of TWAs only reflect taxpayers who are complaint to the prescribed criteria of RR No. 7-2019, Operations Memorandum (OM) Order No. 20-2019 was issued by the Deputy Commissioner for Operations Group to all Regional Director's and Revenue District Officers. The OM excludes the following taxpayers in the identification of TWAs although they have satisfied the prescribed criteria of the said RR:
a. National government agencies. government-owned controlled corporations. state
universities and colleges. and local government units:
b. Taxpayers who were included because of one-time transactions (i.e. estate and donor's tax);
c. Individual taxpayers deriving income on commission basis such as but not limited to insurance agent, and real estate broker, subjext to verification of their duly-filed 2018 Quarterly Income Tax Returns (BIR Form No. 1701Q) in order to determine the regularity of their transactions. Accordingly, if the P12M criteria has been satisfied only in one (1) taxable quarter, the taxpayer shall not be qualified as TWA; and
d. Taxpayers who are tax exempt from payment of income taxes with no proprietary activities (i.e. foundations. non-stock. non-profit and tax exempt educational
institutions, religious and charitable institutions. etc.).
On the basis of the above discussions and clarifications, in cases of publication of TWAs in the newspaper of general circulation wherein certain taxpayers are included or not deleted in existing list of TWAs but do not satisfy the criteria of RR No. 7-2019, or if they may have satisfied the same but qualify as taxpayers enumerated in OM No. 20-2019 who should be excluded from the list of TWAs, these taxpayers cannot be compelled to withhold the 1% and 2% CWTs.
Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20Full%20Text%202019/RMC%20No.%20143-2019.pdf of the full text of RMC No. 143-2019.
