Who Are Those Taxpayers Not Mandated To Use eBIRForms and eFile?

Revenue Memorandum Circular (RMC) No. 12-2015 was issued by the bureau to clarify Section 4(3) of Revenue Regulations Nos. 6-2014 and RR 5-2015, mandating the use of eBIRForms and electronically filling "no payment returns". 

The following taxpayers may file manually "no payment returns" to the Revenue District Office (RDO) where registered using officially printed forms/photocopied or electronic/computer-generated returns:

1. Senior Citizen (SC) or Persons with Disabilities (PWD) filing for their own return;

2. Employees deriving purely compensation income and the income tax of which has been withheld correctly showing tax due is equal to the tax withheld whether single or multiple employers (with two or more employers concurrently and successively at anytime during the taxable year);

3. Employees qualified for substituted filing under RR 2-98 Sec. 2.83.4, as amended, but opted to file for an Income Tax Return (ITR) and are filing for purposes of promotion (PNP/AFP), loans, scholarship, foreign travel requirements, etc.

But the above-taxpayers are encourage to use offline eBIRforms for ease and convenience in the preparation, validation, computation rules and efficiently check for completeness and correctness of taxpayers input.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2012-2015.pdf of the full text of RMC No. 12-2015.

Who Are Those Mandated To Use eFPS, eBIRForms and eFile under RMC No. 19-2015

Revenue Memorandum Circular (RMC) No. 19-2015 has issued by the bureau for the clarifications/resolutions on issues and concerns to the Frequently Asked Questions (FAQs) in connection with the implementation of the Electronic Platform in Filing Tax returns under eFPS or eBIRForms for filing Income Tax Returns for Calendar Year 2014 Due on or before April 15, 2015, and others.

Those mandated to use eFPS are the following:

1. Taxpayer Account Management Program (TAMP) Taxpayers (RR No. 10-2014)

2. Accredited Imported and Prospective Imported required to secure the BIR-ICC & BIR-BCC (RR No. 10-12014)

3. National Government Agencies (NGAs) (RR No. 1-2013)

4. All Licensed Local Contractors (RR No. 10-2012)

5. Enterprised Enjoying Fiscal Incentives (PEZA, boi, Various Zone Authorities, Etc.) (RR No. 1-2010)

6. Top 5,000 Individual Taxpayers (RR No. 6-2009)

7. Corporations with Paid-Up Capital Stock of P10 Million and above (R No. 10-2007)

8. Corporations with Complete Computerized Accounting System (CAS) (RR No. 10-2007)

9. Procuring Government Agencies with respect to Withholding of VAT and Percentage Taxes (RR No. 3-2005)

10. Government Bidders (RR No. 3-2005)

11. Insurance companies and Stock brokers (RMC No. 71-2004)

12. Large Taxpayers (RR No. 2-2002, as amended)

13. Top 20,000 Private Corporation (RR No. 2-98, as amended)

Those mandated to use eBIRForms and eFile (RR 6-2014) are the folowing:

1. ACCREDITED TAX AGENTS/PRACTITIONERS & all its client-taxpayers who authorized them to file in their behalf

2. ACCREDITED PRINTERS of Principal and Supplementary Receipts/Invoices

3. One-Time Transaction (ONETT) taxpayers

4. Those engaged in business, or those with mix (both compensation and business income) who shall file a "NO PAYMENT" Return (exception under RMC No. 12-2015)

5. Government-Owned or Controlled Corporations (GOCCs)

6. Local Government Units (LGUs), except barangays

7. Cooperatives, registered with National Electrification Administration (NEA) and Local Water Utilities Admnistrations (LWUA)

For the systems requirements, browser requirements, those exempted and may file manually, steps in enrolling and other concerns please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/rmc_no_19-2015.pdf of the full text of RMC No. 19-2015.

"No Payment" Annual Income Tax Returns (ITRs) 2014 and Quarterly ITRs may be Filed Manually On or Before April 15, 2015 Thru The Use Of The Official Printed Forms or the Offline eBIRForms Package But Shall Be Re-filed Electronically On or Before June 15, 2015

With the help of PICPA, ACPAPP, SENATORS, CONGRESSMEN and Other Personalities to the taxpayers and practitioners with regards to the issues for the implementation of Revenue Regulation (RR) No. 6-2014 as amended by RR No. 5-2015, the Commissioner of Internal Revenue has issued Revenue Memorandum Circular (RMC) No. 18-2015 for the Deferment of Implementation on eFiling of "No Payment" Income Tax Returns (ITRs) and Other Concerns.

"No Payment" Returns may be filed manually on or before April 15, 2015 with the Revenue District Office where they are registered, thru the use of the official printed forms or the offline eBIRForms Package listed below:

1. BIR Form No. 1700 - Annual Income Tax Return for Individuals Earning Purely compensation Income (Including Non-business/Non-Profession Income)

2. BIR Form No. 1701 - Annual Income Tax Return for Self-Employed Individuals, estates and Trusts

3. BIR Form No. 1701Q - Quarterly Income Tax Return for Self-employed Individuals, Estates, and Trust (Including Those with both Business and Compensation Income)

4. BIR Form No. 1702-RT - Annual Income Tax Return for Corporation, Partnership and Other Non-Individual Taxpayers Subject Only to REGULAR Income Tax Rate Description

5. BIR Form No. 1702-MX - Annual Income Tax Return for Corporation, Partnership and Other Non-Individual with MIXED Income Subject to Multiple Income Tax Rates or with Income Subject to SPECIAL/PREFERENTIAL RATE

6. BIR Form No. 1702-EX - Annual Income Tax Return for Use ONLY by Corporation, Partnership and Other Non-Individual Taxpayer 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

7. BIR Form No. 1702Q - Quarterly Income Tax Return for Corporations, Partnerships and Other Non-Individual Taxpayers

"No Payment" Returns filed manually shall be re-filed electronically on or before June 15, 2015. 

Penalties imposed under RR No 5-2015 on filing using a mode/venue different from that prescribed shall be waived provided the subject ITRs have been re-submitted electronically in the BIR's systems on or before June 15, 2015.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/rmc_no_18-2015.pdf

of the full text of RMC No. 18-2015.

Email Submission of 2014 ITR is Allowed Whether Enrolled or Not To eBIRForms System But Those Who Are Not Yet Enrolled Will Subsequently Enroll After eFiling

The BIR just recently issued Revenue Memorandum Circular No. 16-2015 to provide alternative modes of obtaining Offline eBIRForms Package of which the taxpayers have the following options:

1. Download from any of the following:

1.1 www.knowyourtaxtes.ph;

1.2 http://www.dof.gov.ph/?page_id=11827

1.3 Dropbox using this link: http://bit.ly/1ImuMLj

1.4 Direct link using:http://ftp.pregi.net/bir/ebirforms_package_v4.07.07_ITRv2013.zip

2. Copy through taxpayer's USB flash drive from the RDO e-Lounge

Moreover, taxpayers using the Offline eBIRForms Version 4.7.07 can easily submit the 2014 ITR via email, and subsequently enroll (https://ebirforms.bir.gov.ph/)  after eFiling. Thus, email submission of 2014 ITR is allowed whether enrolled or not to eBIRForms System.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/rmc_no_14-2015.pdf . Taxpayers can resend the generated ITR2014 to BIR through your email. The following is the sample eMail Subject:

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2016-2015.pdf of the full text of RMC No. 16-2015

Deferment of Implementation on eFiling of Withholding Tax BIR Form No. 1600, 1601-C, 1601-E, 1601-F, 1602, 1603 and 1606 to Prioritize the Electronic filing of the Annual Income Tax Return

Revenue Memorandum Circular No. 15-2015 was issued by the BIR to informed the public for the Deferment of Implementation on eFiling of Identified Withholding Tax Forms to prioritize the electronic filing of the annual Income Tax Return due on April 15, 2015.

The electronic filing of the forms listed below shall be temporarily deferred in so far as those due on or before April 15, 2015:

1. BIR Form No. 1600 - Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld

2. BIR form No. 1601-C - Monthly Remittance Return of Income Taxes Withheld on Compensation

3. BIR Form No. 1601-E - Monthly Remittance Return of Creditable Income Taxes Withheld (Expanded)

4. BIR Form No. 1601-F - Monthly Remittance Return of Final Income Taxes Withheld

5. BIR Form No. 1602 - Monthly Remittance Return of Final Income Taxes Withheld on Interest Paid on Deposits and Yield on Deposits Substitutes?Trusts/Etc.

6. BIR Form No. 1603 - Quarterly Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other than Rank and file

7. BIR Form No. 1606 - Withholding Tax Remittance Return for Onerous Transfer of Real Property Other than Capital Asset (Including Taxable and Exempt)

The mentioned returns may be filed manually, on or before its due date as previously specified, thru the use of the regular printed forms or the offline eBIRForms, and tax payments made to the concerned Authorized Agent banks (AABs). But, for no payment returns the same may be filed in the concerned RDOs provided the receipt of the returns shall be acknowledged thru the Mobile Revenue Collection Officers System (MRCOS).

The returns filed manually shall be re-filed electronically after April 15, 2015 but not beyond April 30, 2015.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2015-2015.pdf of the full text of RMC No. 15-2015

Steps In Filing Income Tax Return For TY 2014 Using the Online eBIRForms System With No Payment or With Payment

The Bureau of Internal Revenue just issued Revenue Memorandum Circular No. 14-2015 to provide guidelines in the filing, receiving and processing, using the ELECTRONIC PLATFORM OF BIR for 2014 ITRs (BIR Form Nos. 1700, 1701, 1702-RT, 1702-EX and 1702-MX) version under Revenue Regulations No. 2-2014, as well as define policies for the filing of ITRs which are due on or before April 15, 2015. 

This circular does not cover taxpayers who are not mandated to use eFPS/eBIRForms as stated in RMC 12-2015 such as the Senior Citizen (SC) or Persons with Disabilities (PWD) filing for their own return; employees deriving purely compensation income and the income tax of which has been withheld correctly showing tax due is equal to the tax withheld whether single or multiple employers (with two or more employers concurrently and successively at anytime during the taxable year and employees qualified for substituted filing under RR 2-98 Sec. 2.83.4, as amended, but opted to file for an Income Tax Return (ITR) and are filing for purposes of promotion (PNP/AFP), loans, scholarship, foreign travel requirements, etc. but they are encouraged to use offline eBIRforms for ease and conveniece in the preparation, validation computation rules and efficiently check for completeness and correctness of taxpayer input. 

This circular does not also cover those who have not opted to file electronically, and thus, the existing procedures on manual filing shall apply.

The following are the steps in filing Income Tax Return for Taxable Year 2014 using the Online eBIRForm System (Annex C)  with No Payment or with Payment: (RMC No. 14-2015)

1. Download and install the Offline eBIRForms Package v4.7.07 http://ftp.pregi.net/bir/ebirforms_package_v4.7.07_ITRv2013.zip (Go to www.bir.gov.ph, then click eServices and click eBIRForms under Offline eBIRForm Package).

2. Accomplish ITR

3. Validate ITR

4. Select "Final Copy"

5. Select "Submit" (Click No if not submit to eFPS)

6. System automatically sends email to *.bir.gov.ph and taxpayer receives email notification. (make sure that have you an email account)

7. Print email notification

8. Print ITR, Attach email notification and Pay manually

9. Submit to RDO where registered the following: 1. Printed ITR 2. Email Notofication 3. Required attachments (within 15 days after e-Filing)

10. END

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/rmc_no_14-2015.pdf and http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2012-2015.pdf of the full text of RMC No. 14-2015 and RMC No. 12-2015.

Secrets of Tax Minimization: How To Reduce Tax Legally and Ethically

Tax Avoidance or Tax Minimization is the available to cover escaped accomplished by legal procedure which may be contrary to the intent of the tax law's sponsors but nevertheless do not violate the law.

The following are suggestions on how to reduce tax legally and ethically:

1. Effective Tax Management - To maximize Tax Benefits we have to do the following:

a. To optimize Tax Deductions, 

b. To minimize Taxable Income

c. To avail all Tax Incentives

d. To avail Tax Remedies under code

e. To comply all the requirements of the Bureau of Internal Revenue

2. Master the National Internal Revenue Code (NIRC) and be updated with regards to Revenue Regulations, Circulars and Orders.

a. Know the tax rules

b. Know how the rules

c. Maintain a high level of tax compliance

d. Know you rights and remedies

e. Know the rules and process the assessment

f. Know best practices of handling assessment

g. Study and define your strategy

h. Consider favorable settlement such as amnesty, abatement and compromise settlement

3. Make A Tax Planning and Strategies in Your Business

4. Make an Investment On Passive Income (Interest Income From Banks, Inter-Corporate Dividends Other Income Subject To Final Tax and Others)

5. Attend Seminars for Continuing Professional Education (CPE)

6. Ask help to Tax Consultant.

Manny Pacquiao Ranks No. 1 of the Top Individual Taxpayers for Taxable Year 2013 Based on Regular Income Taxes Paid to the Government of the Philippines

Did you know that Emmanuel "Manny" D. Pacquiao Ranks No. 1 among of the Top 500 Individual Taxpayers for Taxable Year 2013 with Regular Income Taxes paid to the Government of the Philippines.?

The Bureau of Internal Revenue just announced the Top Individual Taxpayers for Taxable Year 2013 based on Regular Income Taxes paid to the Government of the Philippines as of November 24 2014.

Emmanuel "Manny" D. Pacquiao paid Regular Income Taxes of  Php168,841,863 to the Government of the Philippines.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Advisory/TOP_500_Individual_arranged%20by%20rank_copy.pdf of the complete list of the Top Individual Taxpayers for Taxable Year 2013.

Interest Income from Long-Term Deposit or Investment Is Exempted From Income Tax With Certain Conditions

Revenue Memorandum Circular No. 7-2015 was issued by the Bureau of Internal Revenue to state again the Tax Treatment of Interest Income Derived from Long-Term Deposits or Investments Certificates as Described in Revenue Regulations No. 14-2012 and Clarified in Revenue Memorandum Circular Nos. 77-2012 and 81-2012.

In order for the interest income from long-term deposit or investment in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments evidenced by certificates in such form prescribed by the Bangko Sentral ng Pilipinas (BSP) to be exempted from income tax, the following characteristics/conditions must be present:

1. The depositor or investor is an individual citizen (resident or non-resident) or resident alien or non-resident alien engaged in trade or business in the Philippines;

2. The long-term deposits or investment must be in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments evidences by certificates in such form prescribed by the Bangko Sentral ng Pilipinas (BSP);

3. The long-term deposits or investments must be in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments evidenced by certificates in such form prescribed by the Bangko Sentral ng Pilipinas (BSP);

4.The long-term deposits or investments must be issued by banks only and not by other entities or individuals;

5. The long-term deposits or investments must have a maturity period of not less than five (5) years;

6. The long-term deposits or investment must be in denominations of Ten Thousand Pesos (P10,000) and other denominations as may be prescribed by the BSP;

7. The long-term deposit or investment should not be terminated by the original investor before the fifth (5th) year, otherwise they shall be subjected to the graduated rates of 5%, 12% or 20% on interest income earnings; and

8. Except those specifically exempted by law or regulations, any other income such as gains from trading, foreign exchange gain shall not be covered by income tax exemption.

Provided, that for interest income derived by individuals investing in common or individuals trust finds or investment management accounts to be exempted from income tax, the following additional characteristics/conditions must ALL be present:

1. The investment of the individual investor in the common or individual trust fund or investment management account must be actually held/management by the bank for the named individual at leat five (5) years without interruption. The term "bank" referred to herein are banks duly licensed as such by the Bangko Sentral ng Pilipinas;

2. The underlying investments of the common or individual trust account or investment management accounts must comply with the requirements of Section 22(FF) of the NIRC of 1997, as amended, as well as the requirements mentioned above;

3. The common or individual trust account or investment management account must hold on to such underlying investment in continuous and uninterrupted period for at least five (5) years.

In case of pre-termination, transfer or negotiation of said long-term deposit or investment by the depositor or investor before the fifth (5th) year, the interest income shall be subjected to the following graduated rates of Final Withholding Tax(FWT) on the entire income and shall be deducted and withheld by the depository bank from the proceeds of the long-term deposit or investment certificate based on the remaining maturity thereof as follows:

Four (4) years to less than five (5) years - 5%;

Three (3) years to less than for (4) years - 12%; and

Less than three (3) years - 20%.

For nonresident alien not engaged in trade or business in the Philippines, interest income received from long-term deposit or investment shall be subject to a Final Withholding Tax (FWT) at the rate of twenty five percent (25%) pursuant to Section 25 (B) of the NIRC of 1997, as amended.

For nonresident foreign corporation, interest income received from long-term deposit or investment shall be subject to a Final Withholding Tax (FWT) at the rate of thirty percent (30%) pursuant to Section 28 (B) (1) of the NIRC of 1997, as amended. However, interest income from long-term deposit or investment shall be subject to regular income at the rate of thirty percent (30%) if received by a domestic corporation and resident foreign corporation pursuant to Sections 27 (A) and 28 (A) (1) of the NIRC of 1997, as amended.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%207-2015.pdf to see the illustrations and the full text of RMC No. 7-2015.

Imposition of Penalties for Failure to File Returns Under the Electronic Systems of the BIR by Taxpayers Mandatorily Covered by eFPS or eBIRForms

The BIR has issued Revenue Regulations No. 5-2015 to amend Section 3 paragraph 2 of RR No. 6-2014 as follows:

2. Non-eFPS filers, covered by Section 4 herein, shall mandatorily use the eBIR Forms facility in electronically submitting and filing all their tax returns.

All taxpayers, under existing , who are mandatorily covered to file their returns using eFPS or eBIRForms, who fail to do so, shall be imposed a penalty of One Thousand Pesos (P1,000) per return to Section 250 of the NIRC of 1997, as amended.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%205-2015/RR%205-2015.pdf of the full text of Revenue Regulations No. 5-2015.