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.