Presentation of Tax Exemption Certificate or Ruling by Exempt Individuals and Entities

The bureau has issued the Revenue Memorandum Circular No. 8-2014 with regards to the presentation of Tax Exemption Certificate or Ruling by exempt Individuals and Entities.

This Revenue Circular stated that pursuant to Sections 57 to 59 and Sections 78 to 83 of the Tax Code, in relation to Revenue Regulations (RR) No. 02-1998, as amended, certain items of income are made subject to the payment of withholding taxes (final tax, creditable/expanded withholding tax, withholding tax on compensation) at the rates prescribed therein.

Besides, under the provisions of existing tax laws and administrative issuances, however, some individuals, entities and transactions are considered exempt from imposition of taxes on income and, consequently, from withholding taxes.

In this regard, the concerned withholding agents shall require all individuals and entities claiming such exemption to provide a copy of a valid, current and subsisting tax exmeption certificate or ruling, as per existing administrative issuances and any issuance that may be issued time to time, before payment of the related income. The tax exemption certificate or ruling must explicitly recognize the grant of tax exemption, as well as the corresponding exemption from imposition of withholding tax. Failure on the part of the taxpayer to present the said tax exemption certificate or ruling herein required shall subject him to the payment of appropriate withholding taxes due on the transaction. On the other hand, the withholding agent's failure to withhold notwithstanding the lac of tax exemption certificate or ruling shall cause the imposition or penalties under Section 251 and other pertinent Sections of the Tax Code.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/82437RMC%20No%208-2014.pdf  of the full text RMC No. 8-2014.

Further Amendment of the Revised Forms No. 1700, 1701, and 1702

The Bureau recently issued the Revenue Memorandum Circular No. 9, 2014 to further amend Revenue Memorandum Circular (RMC) No. 57-2011, entitled "Revised Forms No. 1700, 1701, and 1702 under the first and second paragraphs read as follows:

"This circular further amends BIR Forms No. 1700, 1701, and 1702, previously amended under Revenue Memorandum Circular No. 40-2011. The amendment consists mainly in making disclosure of Supplemental Information under BIR Form Nos. 1700 and 1701 optional on the part of the taxpayer for income tax filing covering and starting with calendar year 2013, due for filing on or before April 15, 2014, and remaining of BIR Form No. 1702 as of a November 2011 version (now, renamed 1702-RT, 1702-EX and 1702-MX, version 2013).

Individual Income tax filers using forms No. 1700 and 1701 are however advised that for income tax filing covering and starting with calendar year 2014, the disclosures required under the Supplemental Information portion of the said forms will be mandatory. Thus, the taxpayers are advised to demand from their payors, and properly document their BIR Form No. 2307 and other pieces of evidence for final taxes withheld. Likewise, said taxpayers should properly receipt and book their tax-exempt income."

Under the RMC, it is stated that in any returns filed with the BIR, indivudual taxpayers are given the option to use either (a) their community tax certificate, (b) passport, or (c) driver's license.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/82594RMC%20No%209-2014.pdf of the full text of RMC No. 9-2014.

Related blog: http://philippinetaxtalk.blogspot.com/2014/02/new-income-tax-forms-covering-and.html

Clarifications on the Registration and Compliance Requirements of Marginal Income Earners

The CIR just recently issued the Revenue Memorandum Circular No. 7-2014 to clarify the issues with regards to the registration and compliance requirements of marginal income earners pursuant to Revenue Regulations No 7-2012.

Under the RR, Marginal Income Earner (MIE) defined in Section 3 as follows:

"Marginal Income Earner - shall refer to those individual whose business do not realize gross sales or receipts exceeding P100,000 in any 12-month period."

The individual referred to in that section is an individual not deriving compensation as an employee under employer-employee relationship but who is self-employed and deriving gross sales or receipts not exceeding P100,000 in any 12-month period. Moreover, the activities of such MIE should be principally for subsistence or livelihood. The MIE, as herein defined, shall include but not limited to agricultural growers/produces (farmers/fishermen) selling directly to ultimate consumers, small sari-sari stores, small carinderias or "turo-turos", drivers/operators of a single unit tricycle, and such, but shall not include licensed professionals, consultants, artists, sales agents, brokers and others similarly situated, including all others whose income have been subjected to withholding tax.

Under the RMC, the incidence of being a MIE as required under RR 7-2012 covers the following privileges and minimum registration and tax compliance requirements:

1. Registration with the Bureau using BIR Form 1901 with the following minimal documentary requirements:

i. Sworn Statement of Income for the year (Annex "A"); and

ii. NSO Certified or Local Civil Registry Birth Certificate;

2. Exemption from the payment of Annual Registration Fee (ARF);

3. Registration of Books of Accounts (e. g. two-column journal or other simplified books for daily expenses and revenues);

4. Issuance of registered principal receipts/sales invoices as prescribed under RMO 12-2013;

5. Filing and Payment of Annual Income Tax Return using BIR Form 1701 similar to any other self-employed individuals; and

6. Exemption from payment of business taxes (i.e. VAT or any Percentage Tax).

Besides, it also stated that upon evaluation of application for registration, the BIR District Office shall issue the Certificate of Registration and shall likewise ensure compliance with the registration of books of accounts, and issuance of Authority To Print for their Principal Receipts/Sales Invoices.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/82435RMC%20No%207-2014.pdf of the full text of RMC 7-2014.

Amending Certain Provisions of Section 10 of RR No. 10-2010 "Exchange of Information Regulations"

The bureau has amended the Section 2 of RR No. 10-2010 under the new Revenue Regulations No. 3-2014 as follows:

"A taxpayer shall be duly notified in writing by the Commissioner that a foreign tax authority is requesting for exchange of information held by financial institutions pursuant to an international convention or agreement on tax matter within sixty (60) days from receipt of the said request.

However, if notification within this period will undermine the chances of success of the investigation conducted by the requesting foreign tax authority, the taxpayer shall notified by the requesting foreign tax authority, the taxpayer shall notified within six (6) calendar months from receipt of the request."

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/82785RR%20No%20%203-2014.pdf of the full tex of the revenue regulations.

Extending the Provisional Accreditation of Printers of Manually Printed Receipts and Invoices Up to February 28, 2014

The Bureau issued the Revenue Memorandum Circular No. 6-2014 to extend the Provisional Accreditation of Printers of Manually Printed Receipts and Invoices Up to February 28, 2014 related to Revenue Regulations (RR) No. 15-2012 and Revenue Memorandum Order (RMO) No. 13-2013.

According to the Circular, it is issued to extend the provisional accreditation of printers up to February 28, 2014, RDOs thru the N/RAB shall be given ample time to cover all deemed accredited printers for the conduct of evaluation/onsite inspection.

If not complied either by the taxpayer or concerned BIR personnel, shall be subject to sanctions/penalties in accordance with the Tax Code, as amended.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/82092RMC%20No%206-2014.pdf of the full text of Revenue Memorandum Circular No. 6-2014.

New Income Tax Forms Covering and Starting the Taxable Year ended December 31, 2013

The Bureau of Internal Revenue (BIR) just recently issued to authorized the use new BIR forms for income tax returns (ITRs) filing covering and starting the Taxable Year ended December 31, 2013.

Under Section 3 of this revenue regulations, all taxpayers required to file their ITRs under Section 51 (A)(1) of the Tax Code and those not required to file under Section 51 (A)(2) but who opted to do so, covering and starting taxable year ended December 31, 2013 shall use the applicable forms as follows:

1. BIR Form No. 1700 version June 2013 (Annual Income Tax Return for Individuals Earning Purely Comensation Income);

2. BIR Form No. 1701 version June 2013 (Annual Income Tax Return for Self-Employed Individuals, Estates and Trusts);

3. BIR Form No. 1702-RT version June 2013 (Annual Income Tax Return for Corporations, Partnerships and Other Non-Individual Taxpayers Subject Only of the REGULAR Income Tax Rate);

4. BIR Form No. 1702-EX version June 2013 (Annual Income Tax Return for Use Only by Corporations, Partnerships and Other Non-Individual Taxpayers EXEMPT under the Tax Code, as amended, (Sec. 30 and those exempted in Sec. 27 (C) and Other Special Laws, with NO Other Taxable Income); and

5. BIR Form No. 1702-MX versions June 2013 (Annual Income Tax Return for Corporations, Partnerships and Other Non-Individuals with Mixed Income Subject to Multiple Income Tax Rate or with Income Subject to Special/Preferential Rate).

It also stated in Section 4 of this regulations the rounding to the nearest peso in the ITR. If the amount of centavos is 49 or less, drop down the centavos (e.g., P100.49 = P100). If the amount is 50 centavos or more, round up to the next peso (e.g., P100.50 = P101.00).

In addition, under Section 5 of this regulations requires the mandatory itemized deductions as follows:

A. Corporations, partnerships and other non-individuals are mandated to use the itemized deductions in the following cases:

1. Those exempt under the Tax Code, as amended (Section 30 and those exempted under Section 27(C)) and other special laws, with no other taxable income;

2. Those with income subject to special/preferential tax rates; and

3. Those with income subject to income tax rate under Section 27(A) and 28(A)(1) of the Tax Code, as amended, and also with income subject to special/preferential tax rates.

Juridical entities whose taxable base is the gross revenue or receipts (e.g., non-resident foreign international carriers) are not entitled to the itemized deductions nor to the optional standard deduction (OSD) under Section 34(L) of the Tax Code, as amended.

B. Individual taxpayers who are not entitled to avail of the OSD and thus use only the itemized deduction method are as follows:

1. Those exempt under the Tax Code, as amended, and other special laws with no other taxable income (e.g Barangay Micro Business Enterprise (BMBE));

2. Those with income subject to special/preferential tax rates; and

3. Those with income subject to income tax rate under Section 24 of the Tax Code, as amended, and also with income subject to special/preferential tax rates.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/82199RR%20No%20%202-2014.pdf of the full text of Revenue Regulations No. 2-2014 and BIR Form 1700; BIR Form 1701;BIR Form 1702-RT;BIR Form 1702-EX &BIR Form 1702-MX of the New Income Tax Forms covering and starting the Taxable Year ended December 31, 2013.

New General Information Sheet (GIS) Form Issued by SEC

The Security and Exchange Commission (SEC) has updated the General Information Sheet (GIS) Form dated September 25, 2013.

The GIS consist of General Instructions as follows:

1. For user corporation: this GIS should be submitted within thirty (30) calendar days from the date of the annual stockholders' meeting. Do not leave any item blank. Write "n.a." if the information required is not applicable to the corporation or "none" if the information is non-existent.

2. If no meeting is held, the corporation shall submit  the GIS together with an affidavit of non-holding of meeting within thirty (30) claendar days from the date of the scheduled annual meeting (as provided in the by-laws). However, should an annual stockholders' meeting be held thereafter, a new GIS shall be submitted/filed.

3. This GIS shall be accomplished in English and certified and sworn to by the corporate secretary of the corporation.

4. The SEC should be timely apprised of relevant changes in the submitted information as they arise. For changes resulting from actions that arose between the annual meetings, the corporation shall submit only the affected page of the GIS that relates to the new information together with a cover letter signed by the corporate secretary of the corporation. The page of the GIS and cover letter shall be submitted within seven (7) days after such change occurred or became effective.

5. Submit five (5) copies of the GIS to the Central Receiving Section, Ground Floor, SEC bldg., EDSA, Mandaluyong City. All copies shall uniformly be on A4 or letter-sized paper with a standard cover page. The pages of all copies shall use only one side. Corporations submitting a copy of their GIS online or via internet shall submit one (1) hard copy of the GIS, together with a certification under oath by its corporate secretary that the copy submitted online contains the exact data in the hard copy.

6. Only the GIS accomplished in accordance with these instructions shall be considered as having been filed.

7. This GIS may be used as evidenced against the corporation and its responsible directors/officers for any violation of existing laws, rules and regulations.

Please refer http://www.sec.gov.ph/download/gis_form.html of the full text and to download the new GIS form.

Clarifications on the Provisions of Revenue Regulations No. 1-2014 with Regards to the Submission of Alphabetical List of Employees/Payees of Income Payments

The Commissioner of Internal Revenue just recently issued the Revenue Memorandum Circular No. 5-2014 to make it clear of the provisions of Revenue Regulations (RR) No. 1-2014 amending the provisions of RR No. 2-98, as further amended by RR No. 10-2008 more particularly the submission of alphabetical list of employees/payees on income payments as follows:

Question 1. What are the modes of submission of the alphabetical list of employees and the list of payees on income payments subject to creditable and final withholding taxes (alphalist) prescribed under RR No. 1-2014?

Answer. There are only three modes of submission of the alphalist according to RR No. 1-2014, which can be used by the taxpayer, at its option, in so far as applicable, namely:

a. As attachment in the Electronic Filing and Payment System (eFPS);

NOTE: The attachment of alphalist through the eFPS is temporarily disabled and a tax advisory shall be immediately issued through the BIR website as soon as the technical thereon are resolved.

b. Through Electronic Submission (eSubmission) using the BIR's website address at esubmission@bir.gov.ph; and

c. Through Electronic Mail (email) submission at dedicated BIR email addresses using the data entry module of the BIR.

However, for all taxpayers who are mandated to use the eFPS and the Inter-Active Forms (IAFs) System under existing revenue regulations, including those who voluntarily enrolled with the said systems, they are only allowed to use the mode of eSubmission in submitting their alphalists. Once the attachment facility of eFPS is already available the eFPS-users may opt to use either the eSubmission or the attachment facility of the eFPS in the submission of their alphalists.

For taxpayers who are neither eFPS-users nor IAF-enrolled users, they may avail the eSubmission facility or the email submission of alphalists. It is preferred, however, that the eSubmission facility for the filing of alphalists be availed of by the concerned taxpayers considering that the said submission facility is more convenient for both the taxpayers and the BIR because it requires no manual intervention by the concerned revenue district offices (RDOs).

Question 8. Are the Annual Information Returns (BIR Form No. 1604-CF and No. 1604-E) included in the submission of the alphalist through the different modes enumerated under RR No. 1-2014?

Answer. Except for taxpayers who are using the eFPS facility in the filing the Annual Information Returns, all other taxpayers are still required to prepare and submit the hard or physical copies thereof, together with the printed copy of the computer screen display of the acknowledgement/confirmation of the BIR's receipt of the alphalist, to the RDO where the concerned taxpayers are duly registered, considering that only the submission of alphalist through the three different modes (e.g., eFPS, eSubmission and email submission) is prescribed by the said regulations.

Question 9. What is the presumption on the maintenance by the taxpayer of an email account for purposes of submission of the alphalist?

Answer. Yes. Except for the Monthly Remittance Return for Compensation (BIR Form No. 1601-C) where the monthly list of recipients of compensation is not required to be attached to the said monthly remittance return, the submission of the alphalist of income payees, e.g., Monthly Alpahalist of Payees (MAP) and the Summary Alphalist of Withholding Taxes (SAWT) are likewise required to be filed/submitted to the concerned RDO through the applicable modes of submission prescribed under the said revenue regulations.

However, except for taxpayers who are using the eFPS facility in filing the Monthly Remittance Returns (BIR Form No. 1601-C, etc), as well as, the Income Tax Returns (quarterly and annual returns), Value-Added Tax Declarations/Returns (BIR Form No. 2551Q), all other taxpayers are still required to prepare and submit the hard or physical copies thereof and pay the corresponding withholding taxes due thereon, if any, together with the printed copy of the computer screen display of the acknowledgement/confirmation of the BIR's receipt of the monthly alphalist, to the Authorized Agent Bank (AAB) or RDO where the concerned taxpayers are duly registered, as the case may be.

Question 10. Are the Monthly Alphalist of Payees (MAP) and the Summary Alphalist of Withholding Taxes (SAWT) also covered by the different modes of submission prescribed under RR No. 1-2014?

Answer. Yes. Except for the Monthly Remittance Return for Compensation (BIR Form No. 1601-C) where the monthly list of recipients of compensation is not required to be attached to the said monthly remittance return, the submission of the alphalist of income payees, e.g., Monthly Alphalist of Payees (MAP) and the Summary Alphalist of Withholding Taxes (SAWT) are likewise required to be filed/submitted to the concerned RDO through the applicable modes of submission prescribed under the said revenue regulations.

However, except for taxpayers who are using the eFPS facility in filing the MOnthly Remittance Returns (BIR Form No. 1601-C, etc.), as well as, the Income Tax Returns (quarterly and annual returns), Value-Added Tax Declarations/Returns (BIR Form No. 2550M and No. 2550Q, Percentage Tax Returns (BIR Form Nos. 2551M and No. 2551Q), all other taxpayers are still required to prepare and submit the hard or physical copies thereof and pay the corresponding withholding taxes due thereon, if any, together with the printed copy of the computer screen display of the acknowledgement/confirmation of the BIR's receipt of the monthly alphalist, to the Authoized Agent Bank (AAB) or RDO where the concerned taxpayers are fuly registered, as the case may be.

Question 13. In cases where an alphalist is not successfully uploaded and considered not received by the BIR pursuant the provisions of RR No. 1-2014, what shall be the penalty to be imposed to the taxpayer who submitted an unsuccessfully uploaded alphalist?

Answer: Inasmuch as the said violation is considered as a failure to make/file/submit any return or supply correct information at the time or times required by law or regulations under Section 255 of the National Internal Revenue Code of 1997, as amended, the taxpayer is liable than one (1) year but not more than ten (10) years, or in lieu thereof, to pay the compromise penalty in the amount that corresponds to the taxpayer's gross annual sales, earnings or receipts, pursuant to the existing Revenue Memorandum Order on Schedule of Compromise Penalties.

However, in cases where the concerned BIR Office, after conducting the required validation processes, shall duly inform the taxpayer for non-compliance with any of the requirements prescribed in Question 12 of this Circular and require the re-submission of a correct alphalist, a separate penalty shall be imposed against the taxpayer for each incorrectly accomplished and submitted alphalist.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/81938RMC%20No%205-2014.pdf of the other questions and answers of the full text of RMC 5-2014.

Related post: http://philippinetaxtalk.blogspot.com/2014/01/submission-of-alphabetical-list-of.html

Pag-IBIG (Pagtutulungan sa kinabukasan: Ikaw, Bangko, Industriya at Gobyerno) Fund Tax Exemptions

The Bureau of Internal Revenue has issued the Revenue Memorandum Circular No. 43-2011 dated September 28, 2011 to make widely known to the public about the Section 19 of Republic Act. No. 9679 known as the "Human Development Mutual Fund Law of 2009," with details as follows:

"SEC. 19. Exemption from Tax, Legal Process and Lien. - All laws to the contrary notwithstanding, the Fund and all its assets and properties, all contributions collected and all accruals thereto and income or investment earnings therefrom, as well as all supplies, equipment, papers or documents shall exempt from any tax, assessment, fee, charge, or customs or import duty; and all benefit payments made by the Pag-IBIG Fund shall likewise be exempt from all kinds of taxes, fees or charges, and shall not be liable to attachments, garnishments, levy or seizure by or under any legal or equitable process whatsoever, either before or after receipt by the person or persons entitled thereto, except to pay any debt of the member to the Fund. No tax measure of whatever nature enacted shall apply to the Fund, unless it expressly revokes the declared policy of the State in Section 2 hereof granting tax exemption to the Fund. Any tax assessment against the Fund shall be null and void."

RA No. 9679 was signed into law on July 21, 2009. The Implementing Rules and Regulations was made effective on January 1, 2010 after its publication.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/60284RMC%20No%2043-2011.pdf of the full text of RMC No. 43-2011.

Department of Trade and Industry (DTI) Launches Electronic Payment (E-Payment) for Business Name Registration for Sole Proprietorship

The Department of Industry (DTI) just recently announced the electronic payment (e-payment) facility for business name registration last January 20, 2014 to make it faster and easier for entrepreneurs to start a business in the Philippines.

According to DTI Secretary Gregory L Domingo, the e-payment facility for business name registration is one of the projects that the DTI is implementing to simplify the process of dealing with the government as entrepreneurs start and run their businesses. Besides, he also added that the DTI's goal is to make the Philippines a favorable environment for both foreign and local business to flourish.

The entrepreneurs can apply and renew their business name without going to the DTI offices, and enjoy the convenience of paying the applicable fees online through their computer or mobile phones. Sole proprietors can now apply online through the BNRS website at bnrs.dti.gov.ph completing the registration of about 15 minutes and they can opt to download and print their business name certificates.

In addition, the registration of a business name can also be done online through the PBRS website at business.gov.ph where entrepreneurs can also avail of other government-related services such as Taxpayer Identification Number (TIN) validation and/or creation with the Bureau of Internal Revenue and application of Employer's Registration Number (ERN) with Pag-IBIG Fund, PhilHealth and Social Security System (SSS) in less than 40 minutes.

Please refer http://www.dti.gov.ph/dti/index.php?p=154&type=2&sec=2&aid=1264 of the article published by DTI with regards to e-payment for business name registration.