Amendment for the Coverage of Taxpayers Required to File Returns through Electronic Bureau of Internal Revenue Forms (eBIRForms)

The BIR recently issued Revenue Regulations No. 9-2016 amending Section 4 of Revenue Regulations (RR) No. 6-2014, Coverage of Taxpayers Required to File Returns through Electronic Bureau of Internal Revenue Forms (eBIRForms).

Only those non-eFPS filers are covered by these Regulations:

1. Accredited Tax Agents/Practitioners and all its client-taxpayers;
2. Accredited Printers of Principal and Supplementary Receipts/Invoices;
3. One-Time Transaction (ONETT) taxpayers who are classified as real estate dealers/developers; those who are considered as habitually engaged in the sale of real property and regular taxpayers already covered by eBIRForms. Thus, taxpayers who are filing BIR Form No. 1706, 1707, 1800 and 2000-OT (for BIR Form Form No. 1706 only) are excluded in the mandatory coverage from using the eBIRForms;
4. Those who shall file a "No Payment Return".
5. Government-Owned-or-Controlled Corporations (GOCCs);
6. Local Government Units (LGUs), except barangays, and
7. Cooperatives registered with National Electrification Administration (NEA) and Local Water Utilities Administration (LWUA).

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202016/RR%20No.%209-2016.pdf

Tax Treatment and Appropriate Withholding Taxes on Income Payments by Departments and Agencies of the Government to Individuals Engaged under a Job Order or Contract of Service Arrangement

The bureau has issued Revenue Memorandum Circular (RMC) No. 130-2016 recently, to clarify the withholding taxes imposed on income payments made by departments and agencies of the government, including government owned and/or -controlled corporations and government financial institutions (GFIs) to individuals whose services are engaged under a contract of service or job order arrangement. 

In the circular, it clarifies the terms "Contract of Service" and "Job Order" that there's  no employer-employee relationship created under either a job order or contract of service, and that services rendered pursuant thereto shall not be considered as government service.

The clarifications are important for the tax treatment of remuneration/fees received by personnel under a job order or contract of for service:

l) Professionals Hired Under Contract For Services Or Job Order

 A. Creditable Withholding T'ax under Section 2.57.2(A) of Revenue Regulations (RR) No. 2-98, as amended. 

In general, individuals who follow an independent. trade, business, or profession, in which they offer their services to the public, are not employees. 

For professionals who are paid for the services they render, they are subject to a withholding tax rate of 10% or 150%, whichever is applicable, on their gross professional fee per Section 2.57.2(A) of RR. No. 2-98, as amended. 

The amount subject to withholding tax under this paragraph shall include not only fees. but also per diems. allowances and any other form of income payments not subject to withholding tax on compensation. 

2. Non-Professionals Hired Under Contract For Services Or Job Order

A. Income Tax: No creditable withholding tax

Income payments to individuals who are not professionals under a contract for service or job order basis shall be not subject to creditable withholding tax rates provided by Section 2.57.2 of RR No. 2-98, as amended. However, such income payments shall be reported as income subject to income tax under Section 24 of the Tax Code of 1997, as amended, in relation to Section 51 of the same Tax Code.

With regards to the Tax Treatment Common to Professionals and Non-Professionals Hired Under Contract for Services or Job Order Basis and full text of the RMC please refer: 

http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20130-2016.pdf 

Why Sin Tax Reform Law Should Be Fully Implemented?

Republic Act 10351, or the Sin Tax Reform Law, is primarily a health measure with revenue implications, but more fundamentally, it is a good governance measure. The Sin Tax Law helps finance the Universal Health Care program of the government, simplified the current excise tax system on alcohol and tobacco products and fixed long standing structural weaknesses, and addresses public health issues relating to alcohol and tobacco consumption.

Recently, the Department of Finance (DOF) urges Congress to let sin tax law 'run its course'. Finance Secretary Carlos Dominguez III has encourage the congressional oversight committee on the Sin Tax Reform Act to start reviewing the revenue and health impact of the tax rates mandated under this law to determine what measures should be undertaken by the Legislature once the statute matures in 2017. He said that the the Sin Tax Reform Act is a very good law and it should be fully implemented and allowed to run its course.

Besides, RA 10351 mandates that the current two-tiered tax rate merge into a unitary tax rate of P30 per cigarette pack for all brands starting Jan. 1, 2017, and the rate indexed to inflation by increasing it to 4 percent annually.

Dominguez also added that DOF expects “this review to occur” as mandated by law and for it to “be done well to inform [us] what we should be doing in the future.”

SOURCE: http://www.dof.gov.ph/index.php/dof-urges-congress-to-let-sin-tax-law-run-its-course/ and http://www.dof.gov.ph/index.php/advocacies/sin-tax-reform/

Formula and Computation of 13th Month Pay

"Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year. The minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.

"Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances, profit-sharing payments, cash equivalent of unused vacation and sick leave credits, overtime pay, premium pay, night shift differential, holiday pay, and all allowances and monetary benefits which are not considered, or integrated as part of the regular or basic salary of the employee.

FORMULA AND COMPUTATION OF 13TH MONTH PAY

The 13th  month pay shall be paid not later than December 24 of every year. An employer, however, may give to his or her employees one-half (1/2) of the 13th month pay before the opening of the regular school year and the remaining half on or before December 24 of every year.

The BIR has issued Revenue Regulations No. 3-2015 implementing the Provisions of Republic Act No. 10653. "An act Adjusting the 13th Month Pay and Other Benefits Ceiling Excluded from the Computation of Gross Income for Purposes of Income Taxation.

Amending the provision on Revenue Regulations No. 2-98 - The amount of Thirty Thousand Pesos (P30,000.00), specifically referring to the total amount of 13th month pay and other benefits as one of the exclusions from gross compensation income received by an employee prescribed under the pertinent provisions, including the example computations of revenue Regulations (RR) No. 2-98, as amended, is hereby increased to "Eighty Two Thousand Pesos (P82,000.00)", pursuant to the provisions of RA No. 10653.

SOURCE: http://www.dole.gov.ph/files/LA%20012-13.pdf;  http://www.gov.ph/2015/02/12/republic-act-no-10653/ and http://www.gov.ph/1975/12/16/presidential-decree-no-851-s-1975/ and http://philippinetaxtalk.blogspot.com/2015/03/republic-act-no-10653-increase-of-total.html 

Lifting of Suspension of Effectivity of Certain Revenue Issuances under RMC No. 127-2016

The bureau just issued Revenue Memorandum Circular (RMC) No. 127-2016 for the suspension of effectivity of all  revenue issuances promulgated under RMC No. 69-2016 dated July 1, 2016 within the period covering June 1 to 30, 2016.

 

The suspension of the following revenue issuances is hereby lifted:

 

RMC / Title/Description of RMC

 

RMC No. 61-2016 - Prescribing Policies and Guidelines for Accounting and Recording Transactions Involving "Netting" or "Offsetting".

 

RMC No. 62-2016 - Clarification on Property Tax Treatment of Passed-on Gross Receipts Tax

 

The RMC is dated November 15, 2016 and the lifting of suspension of the effectivity of the foregoing revenue issuances the same shall be effective immediately.

 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20127-2016.pdf of the full text of RMC No. 127-2016.

Implement Rules and Regulations of Republic Act No. 10693 otherwise known as the "Microfinance NGOs ACT"

The bureau has issued Revenue Memorandum Circular (RMC) No. 124-2016 for the information and guidance of all internal revenue officials, employees and others concerned with regards to the Implementing Rules and Regulations of Republic Act No. 10693 otherwise known as the "Microfinance NGOs Act."

 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20124-2016.pdf of the full text of RMC No. 124-2016.

BIR Registration Forms for the Implementation of Taxpayer Registration System (TRS) under Electronic Tax Information System (eTIS-1)

Revenue Memorandum Circular (RMC) No. 9-2015 was issued by the bureau to inform taxpayers and others concerned on the availability of the  enhanced version (November 2014 ENCS) of the registration forms applicable only to the District Offices covered by the Systems Roll-out of Taxpayer Registration System (TRS) under the Electronic Tax Information System (eTIS-1), as follows:

 

BIR Form No. / Description

 

1901 - Application for Registration for Self-Employed (Single Proprietor/ Professional), Mixed Income Individuals, Marginal Income Earner, Non-resident Alien Engaged in trade/ Business, Estate and Trust

 

1902 - Application for Registration for Individuals Earning Purely Compensation Income (Local Employee and Resident Alien Employee)

 

1903 - Application for Registration for Corporations, Partnerships (Taxable/Non-taxable), including Government Agencies and Instrumentalities (GAIs), Local Government Units (LGUs), Cooperatives and Associations

 

1904 - Application for Registration for One-time Taxpayer/Person Registering under E. O. 98 and Foreign National

 

1905 - Application for Registration Information Update/Correction/Cancellation

 

2305 - Certificate of Update of Exemption and of Employer's and Employee's Information

 

Please refer:  http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%209-2015.pdf of the full text of RMC No. 9-2015.

 

 

Gov't Debt Ratio and BIR's Tax Effort Improves

Did you know that the Gov't debt ratio improves in September?

According to the news released by the Department of Finance, the Gov’t debt ratio improves in September. The share of debt to the country’s economy slid further as of September this year as the gross domestic product (GDP) continued to grow faster than government liabilities, latest data from the Department of Finance (DOF) showed.

Following a series of liability management measures of the DOF, Finance Undersecretary Gil Beltran reported that the government debt-to-GDP ratio further improved to 44.2 percent by end-September from 44.7 percent in the same month last year.

“Debt management measures led to the continuing drop in the debt-GDP ratio to 44.2 percent as of September 2016, an improvement from end-2015 ratio of 44.7 percent,” Beltran, who is the DOF’s chief economist, said in a report to Finance Secretary Carlos Dominguez III.

The debt-to-GDP ratio is projected to sustain the yearly decline until falling to about 35 percent by the end of the Duterte administration.

The national government debt as a proportion of GDP had continually dropped from 52.4 percent in 2010 to 44.7 percent in 2015.

“Strong fiscal fundamentals will continue to underpin robust economic growth during the rest of the year,” said Beltran.

The Bureau of Internal Revenue’s tax effort improved to 11.31 percent from 11.27 percent, while the Bureau of Customs’ figure slightly fell to 2.78 percent from 2.81 percent.

Source: http://www.dof.gov.ph/index.php/govt-debt-ratio-improves-in-september/

BIR signs Memorandum of Agreement (MOA) with DTI for faster Tax Identification Number (TIN) issuance

As part of the bureau's campaign of "ease of doing business in the Philippines", the Bureau of Internal Revenue (BIR) and the Department of Trade and Industry (DTI) agreed to collaborate together to facilitate the issuance of Taxpayer Identification Number (TIN) to registering small and medium domestic businesses.

The Memorandum of Agreement (MOA) was signed by Commissioner Caesar R. Dulay (for the BIR) and Secretary Ramon M. Lopez (for the DTI) on October 10, 2016 at the Executive Conference Room in the BIR National Office.

The Commissioner mentioned during the open forum about the BIR's issuance of a Revenue Memorandum Circular (RMC) No. 93-2016, which streamlined the business registration process and documentary requirements.

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_5/2016%20BIR%20Monitor/v18n10%20high%20res.pdf of the full text of BIR News.

Enjoining All Government Officials and Employees to Strictly Observe and Comply with the Prohibition Against Going to Gambling Casinos

The bureau has issued Revenue Memorandum Circular (RMC) No. 106-2016 publishing the Full Tex of Memorandum Circular No. 06, Entitled "Enjoining All Government Officials and Employees to Strictly Observe and Comply with the Prohibition Against Going to Gambling Casinos".

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20106-2016.pdf of the full text of  Memorandum Circular No. 06 dated September 20, 2016.