Taxpayers Who Are Not Mandated To Use eBIRForms and Electronically Filing "No Payment Returns"

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

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 taxpayer input. However, they are encouraged as much as possible to file their returns electronically to avoid the crowd and long lines.

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.

Filing/Submission of Hard Copy of the Certificate of Compensation Payment/Tax Withheld (BIR Form 2316) Covering Employees Who are Qualified for Substituted Filing

Revenue Regulations (RR) No. 11-2013 was issued by amending RR No. No. 2-98, last amended by RR No. 010-08.

In cases covered by substituted filing, the employer shall furnish each employee with the original copy of BIR Form No. 2316 and file/submit to the BIR the duplicate copy not later than February 28 following the close of the calendar year.

Under Section 250 of the Tax Code: "In the case of each failure to file an information return, statement or list, or keep any record, or supply any information required by this Code or y the Commissioner on the date prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall, upon notice and demand by the Commissioner, be paid by the person failing to file keep or supply the same, one thousand pesos (P1,000) for each failure: Provided, however, That the aggregate amount to be imposed for all such failures during a calendar year shall not exceed twenty-five thousand pesos (P25,000).

Any employer/withholding agent, including the government or any of its political subdivisions and government owned and controlled corporations, who/which fails to comply with the above filing/submission of BIR Form 2316 within the time required by this Regulations for two consecutive years my be dealt with in accordance with Section 255 which provides in part that "Any person required under this code or by rules promulgate thereunder to pay any tax, make any return, keep any record, or supply correct and accurate information, who willfully fails to pay such tax, make such return, keep such record, or supply such correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties provided by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than Ten Thousand Pesos (P10,000.00) and suffer imprisonment of not less than one (1) year but not more than ten (10) years."

The compromise fee shall be P1,000 for each BIR Form No. 2316 not filed without any maximum threshold.

Under RR No. 2-2015, Section of these Regulations shall strictly complied with by all taxpayers registered with the Large Taxpayers Service (LTS); Provided, however, That any non-LTS taxpayer duly registered under the Revenue District Office may, at its his/her option, comply with the said requirements as follows; Provided, further, That the non-LTS registered taxpayer shall no longer be allowed to submit in hard copies thereafter once said taxpayer opted to adopt the requirements by these Regulations.

RR No. 2-2015, Sec. 2.83. Statement and Returns. - In cases covered by substituted filing, the employer shall furnish each employee with the origial copy of BIR Form No. 2316 and, in lieu of the submission of hard copies of the duplicate original thereof, the following procedures shall be strictly observed:

1. Scan the duplicate original copies of BIR Form No. 2316 through a scanning machine or device;

2. Store the soft copies of BIR Form No. 2316 using the "PDF" file format with the filenames alphabetically arranged in a Digital Versatile Disk-Recordable (DVD-R). The filename shall contain the following information:

a. Surname of the employee;

b.Taxpayer Identification Number (TIN) of the employee; and

c. Taxable Period

Example: Dela Cruz_131885220000_12312014

3. Label the DVD-R containing the soft copies of the said BIR forms in accordance with the format prescribed in Annex "B" of these Regulations; and 

4. Submit the duly accomplished DVR-R to the BIR Office where the taxpayer is duly registered not later than February 28 following the close of the calendar year, together with a notarized Certification prepared according to the format in Annex "C" of these Regulations and duly signed by the authorized representative of the taxpayer certifying that the soft copies of the said BIR form contained in the DVD-R are the complete and exact copies of the original thereof.

Please refer the following links to read the full text of RR No. 11-2013, RR No. 2-2015 and RMC No. 24-2015

http://www.bir.gov.ph/images/bir_files/old_files/pdf/71821RR%2011-2013.pdf

http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%202-2015/RR%20No%202-2015.pdf

http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2024-2015.pdf

Alphalist Data Entry and Validation Module Version 5.1 (New) is Now Available

The bureau just recently issued Alphalist Data Entry and Validation Module Version 5.1 (New).

To download the Alphalist Data Entry & Validation Module Version 5.1 just click on the following:

HTML: http://www.bir.gov.ph/images/bir_files/downloadables/alphalist/alphalist_full_setup_v5.1.exe

The Alphalist was updated in relation to the issuance of Revenue Regulations (RR) No. 3-2015 and other existing Revenue Regulations.

Sale, Importation or Lease of Passenger or Cargo Vessels and Aircraft, including Engine, Equipment and Spare Parts thereof for Domestic or International Transport Operations are Not Subject to VAT

Revenue Regulations No. 15-2015 has recently issued by the BIR amending Sections 4.109-1 (B)(1)(s), (t) and (u) of Revenue Regulations (RR) No. 16-2005, as amended with details as follows:

SECTION 4.109-1. VAT-Exempt Transactions. - 

(B) Exempt transactions. - 

(1) Subject to the provisions of Sebsection (2) hereof, the following transactions shall be exempt from VAT:

(s) The transport of passengers by international carriers doing business in the Philippines shall be exempt from value-added tax (VAT) pursuant to Sections 109(1)(s) of the NIRC, as amended by RA No. 10378. The transport of cargo by international carriers doing business in the Philippines shall be exempt from VAT pursuant to Sections 109(1)(E) of the NIRC, as amended by RA No. 10378, as the same is subject to Common Carrier's Tax (Percentage Tax on International Carriers) under Section 118 of the NIRC, as amended. International carriers exempt under Sections 109(1)(S) and 109(1)(E) of the NIRC, as amended, shall not be allowed to register for VAT purposes.

(t) Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations; Provided, however, that the exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shall be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA.

(u) Importation of fuel, goods and supplies by persons engaged in international shipping or air transport operations; Provided, that the said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a foreign port, or vice versa, without docking or stopping at any other port in the Philippines unless the docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other than that mentioned in this paragraph, such portion of fuel, goods and supplies shall be subject to twelve percent (12%) VAT starting February 1, 2006;

(v) Services of banks, non-bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries, such as money changers and pawnshops, subject to percentage tax under Secs. 121 and 122, respectively, of the Tax Code; and

(w) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the amount of One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00); Provided, every three (3) years thereafter, the amount shall be adjusted to its present value using the Consumer Price Index, as published by the NSO; Provided, further, that such adjustment shall be published through revenue regulations to be issued not later than March 31 of each year;

For purposes of the threshold of P1,919,500.00, the husband and the wife shall be considered separate taxpayers. However, the aggregation rule for each taxpayer shall apply. For instance, if a professional, aside from the practice of his profession, also derives revenue from other lines of business which are otherwise subject to VAT, the same shall be combined for purposes of determining whether the threshold has been exceeded. Thus, the VAT-exempt sales shall not be included in determining the threshold.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%2015-2015.pdf of the full text of RR No. 15-2015.

Alphalist Data Entry and Validation Module Version 5.0 (New) is Now Available

The Bureau of Internal Revenue (BIR) just updated their downloadables particularly the Alphalist data Entry and Validation Module Version 5.0 (New)

To download the Alphalist data Entry and Validation Module Version 5.0 (New) just click the following:

HTML: http://www.bir.gov.ph/images/bir_files/downloadables/alphalist/alphalist_full_setup_v5.exe

ATC PATCH: http://www.bir.gov.ph/images/bir_files/old_files/zip/atc_patch.zip

To download the Alphalist data Entry and Validation Module Version 5.1 (New) just click the following:

HTML: http://www.bir.gov.ph/images/bir_files/downloadables/alphalist/alphalist_full_setup_v5.1.exe

 

The Alphalist is updated in relation to the issuance of Revenue Regulations (RR) No. 3-2015 and other existing Revenue Regulations.

Income Payment or Expense/Cost not Subject to Withholding of Tax and Income Tax

In Section 2 of Revenue Regulations No. 12-2013 - Amendment. - Section 2.58.5 of RR 2-98, is hereby further amended to read as follows:

"Sec. 2.58.5. Requirements for Deductibility. - Any income payment which is otherwise deductible under the Code shall be allowed as a deduction from the payor's gross income only if it is shown that the income tax required to be withheld has been paid to the Bureau in accordance with Secs. 57 and 58 of the Code.

No deduction will also be allowed notwithstanding payments of withholding tax at the time of the audit of investigation or reinvestigation/reconsideration in cases where no withholding of tax was made in accordance with Secs. 57 and 58 of the Code."

However, Revenue Memorandum Circular no. 63-2013 was issued to clarify RR No. 12-2013 (dated 11 July 2013), which amends the requirements of deductibility of certain income payments under Section 2.58.5 of RR 2-98 as amended. As stated in RR No. 12-2013, no deduction will be allowed notwithstanding payments of withholding tax at the time of the audit investigation or reinvestigation/consideration in cases where no withholding of tax was made in accordance with Secs. 57 and 58 of the Code. In this regard, it is hereby clarified that the provisions of RR No. 12-2013 shall apply to audit investigation for taxable year 2013.

REIMBURSEMENT OF EXPENSES OR COST

Payments made by the Company to their Officer and Employees as reimbursement of expenses/cost or liquidation of advances are not considered as income payment. The ordinary, necessary, business transactions related to the operations of the Corporation are considered as REIMBURSEMENT OF COST AND NOT INCOME but just a RETURN OF CAPITAL, and thus, is not subject to Withholding Tax and Income Tax in the Philippines. 

CASUAL PURCHASE INVOLVING A SINGLE TRANSACTION OF LESS THAN TEN THOUSAND PESOS (PHP10,000.00); NON-REGULAR SUPPLIER OF GOODS & SERVICES AND OTHER EXPENSES

In general, income payment made by Top twenty thousand (20,000) private corporations, as determined by the Commissioner under Revenue Regulations No. 14-2008 to their regular purchases to its local/resident suppliers of goods and services are subject to Expanded Withholding Tax [Services-2% & Goods-1%]. But, casual purchase of goods and services, that are, purchased made from a non-regular supplier and oftentimes involving a single purchase of less than Ten thousand pesos (P10,000.00) and has not transacted at least six (6) transactions, either in the previous year or current year, are not subject to withholding tax.

In general, the following payments made by Top 20,000 corporations are exempt from withholding tax in the Philippines: Payments that does not constitute income on the part of the payee (ex. Reimbursable expenses), Payments to government agencies, payments to income tax exempt entities.

PROFESSIONAL FEES

Under existing Revenue Regulations, stated that Professional fees of services rendered by Individuals and Corporations on the Gross Professional Fees are subject to Creditable Withholding Tax of Fifteen percent (15%), if the gross income for the current year exceeds P720,000; and Ten percent (10%), if the gross income for the current year is P720,000 and below. However, Income payments made to General Professional Partnerships (GPP) are not subject to Withholding Tax. [Revenue Memorandum Circular No. 3-2012 – “SECTION 2.57.5 (4)]; Section 26 of the National Internal Revenue Code (NIRC) of 1997, as amended.

Those taxpayers who are not among of the top 20,000 corporations or mentioned in RR No. 14-2008 are not required to comply as stated in the regulations. However, taxpayers are required to comply with the requirements of deductibility of income payment mentioned in the National Internal Revenue Code as amended and other existing revenue regulations.

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

Revenue Regulations (RR) No. 5-2015 was issued by the bureau for the amendment of RR No. 6-2014 and Imposition of Penalties for Failure to File Returns Under the Electronic Systems of the BIR by Taxpayers Mandatorily Covered by eFPS or eBIRForms.

 

In Section of the said RR, it mentioned the amendment to RR 6-2014 - The use of the e-BIRForms facility is mandatory for those covered by RR No. 6-2014, in order to clarify this, Section 3 paragraph 2 of RR No. 6-2014 is hereby amended to read as follows:

 

"X X X

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.

 

Upon successful validation of the accomplished tax return, taxpayers shall receive a system-generated notification e-mail which acknowledges that the tax return has been successfully filed. Taxpayer should print the Filing Reference (FRN) page generated by the system and the same shall be submitted to the Authorized Agent Banks (AABs) for the payment of the taxes due thereon. Sample printed FRN page is herein attached as Annex "A".

 

XXX"

 

Moreover, all taxpayers, under existing issuances, 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 the following links of the Revenue Relations No. 5-2015: http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%205-2015/RR%205-2015.pdf and Annex "A" http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%205-2015/Annex%20A.pdf.

 

Philippines Makes Doing Business Easier In Starting A Business

Did you know that you can now start your business easier in the Philippines with the simplified 6 steps of about 8 days? Paying Taxes (Social Service Contributions / Payments) reduce to 13 payments from 36.

Starting a business is now simple due to reforms that organized steps and the cooperation of the government agencies.

Please check the diagram below: (http://www.bir.gov.ph/images/bir_files/internal_communications_1/Posters/00.%20MOA%20Signing%20poster%20Edit8.jpg)

This project was made possible by different government agencies above stated. In fact, the implementation of this project will be successful with the cooperation of both the taxpayers, investors and government agencies.

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

Revenue Memorandum Circular (RMC) No. 8-2014 was issued by the bureau with regards to the presentation of Tax Exemption Certificate or Ruling by Exempt Individuals and Entities.

 

The BIR cited that 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.

 

With this, the concerned withholding agents, the RMC require all individuals and entities claiming such exemption to provide a copy of a valid, current and subsisting tax exemption certificate or ruling, as  per existing administrative issuances and any issuance that may be issued from 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 lack of tax exemption certificate or ruling shall cause the imposition of penalties under Section 251 and other pertinent Sections of the Tax Code.

 

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.

 

It was also mentioned that the Circular revokes all other circulars or issuances inconsistent with it

 

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/82437RMC%20No%208-2014.pdf of the full text RMC No. 8-2014.

Who Else Wants To Avoid Tax Penalties?

Most taxpayers wants to avoid in paying tax penalties with the bureau. In fact, this burden can be avoided by any type or classification of taxpayers by paying the right taxes on time and doing or following the tax obligations with diligence as required by revenue regulations, national internal revenue code and other tax laws.

As a taxpayer, to avoid this tax burdens, I usually keep myself updated with the revenue regulations, national internal revenue code and other tax laws. Tax planning and compliance are one of the measures in avoiding tax penalties. Mastery of these revenue regulations and national internal revenue code can truly help us taxpayers in avoiding tax penalties. 

Businessmen and entrepreneurs usually hires good tax consultants with regards to tax planning, compliance reporting and other services. 

For me, quality service begins with wisdom, perseverance, actions and compliance.