Revised Withholding Tax Table On Compensation Pursuant to the Amendments To The NIRC of 1997 as Introduced by Republic Act No. 10963

The bureau recently published the Revenue Memorandum Circular (RMC) No. 105-2017 with regards to Revised Withholding Tax on Compensation Pursuant to the Amendments to the National Internal Revenue Revenue Code (NIRC) of 1997 as Introduced by Republic Act No. 10963, Other Known as the "Tax Reform for Acceleration and Inclusion (TRAIN) Law".

Republic Act No. 10963, otherwise known as the "Tax Reform for Acceleration and Inclusion  (TRAIN) Law" is effective on January 1, 2018 to December 31, 2022. In this regard, beginning January 1, 2018, every employer making compensation payments in their respective employees shall deduct and withhold from such compensation a tax determined in accordance with the Revised Withholding Tax Table attached in ANNEX "A".

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20105-2017.pdf of the full text of RMC No. 105-2017.

Schedule Of Collection Of Taxes And Remittances To The BTr During The 31st ASEAN Summit And Proclamation No. 331, s. 2017

The bureau recently issued BANK BULLETIN NO. 2017-15 advising all Authorized Agent Banks (AABs) to observe the schedule of collection of taxes and remittances to the BTr during the 31st ASEAN Summit and Proclamation No. 331, s. 2017, Declaring November 13, 14 and 15, 2017 as Special Non-working Days in the National Capital Region (NCR), Provinces of Bulacan and Pampanga.

With this, all Authorized Agent Banks (AABs) in the NCR, including the provinces of Bulacan and Pampanga are hereby advised to observe the following schedule of Collection of Taxes and Remittances to the Bureau of the Treasury (BTr), without the corresponding penalties:

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_1/Advisory/bank%20bulletin%202017-15.pdf of the full text of Bank Bulletin No. 2017-15.

ePayment Channels of AABs

With the bureau's ePAY, taxpayers and practitioners who are avoiding hustles in paying their tax dues and liabilities could use the ePayment Channels of AABs.

The ePayment Channels accept tax payments through the use of either online, credit / debit / prepaid cards, and mobile payments.

Currently, the bureau has three (3) Available ePayment Gateways:

1. LandBank

2. Development Bank of the Philippines

3. Globe GCash

Please refer: https://www.bir.gov.ph/index.php/eservices/epay.html of the full text of the ePayment Channels of AABs.

BIR Privacy Policy

The bureau has implemented the Bureau of Internal Revenue Privacy Policy that applies to personal information in which they collect and process on all Bureau of Internal Revenue (BIR) forms, website and online services. 

Personal information refers to any information, whether recorded in material form or not, that will directly ascertain your identity. This includes your address and contact information.

Sensitive personal information is personal information that includes your age, date of birth, marital status, social security and other government identification numbers, financial information and tax returns.

WHAT PERSONAL INFORMATION WE COLLECT

We process and collect personal information for a lawful purpose connected with our functions and activities of administering the National Internal Revenue Code (NIRC) of 1997, as amended, and other existing tax laws. 

WHEN WE COLLECT PERSONAL INFORMATION

We collect personal information directly from you when you:

1. fill in a BIR form either online or in hard copy

2. register and use BIR online services

3. contact BIR by phone or other means 

We also collect personal information from third parties:

Take note that the NIRC of 1997, as amended, allows the Commissioner of Internal Revenue to collect personal information about a taxpayer from other people, entities and government offices subject to limitation provided for by existing laws. 

Third party information allows the BIR to ascertain the correctness of any returns, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance.

LIMITS ON USE AND DISCLOSURE OF YOUR PERSONAL INFORMATION

We only use and disclose personal information in connection with our lawful functions and activities of administering the NIRC of 1997, as amended, and other existing tax laws, and in accordance with existing legislations such as Republic Act (RA) No. 10173, or the Data Privacy Act of 2012, and RA No. 10021, or the Exchange of Information on Tax Matters Act of 2009.

The personal information we collect may be used to:

1. administer the NIRC of 1997, as amended, and other existing tax laws

2. update BIR database or records

3. provide to other government agencies which are entitled to the information under existing 

4. contact you, including sending you information electronically

HOW WE KEEP YOUR PERSONAL INFORMATION SECURE 

We respect your privacy and keep your information confidential unless we are lawfully required or allowed to disclose it or that you give your written consent to such disclosure. 

Under Section 270 of the NIRC of 1997, as amended, BIR personnel cannot divulge information collected from taxpayers concerning the latter’s business, income or estate, as well as the secrets, operation, style or work, or apparatus of any manufacturer or producer, or confidential information regarding the business of any taxpayer. There are, however, exceptions, namely:

1. disposition of income tax returns under Section 71 of the NIRC, as amended

2. disclosure of income tax returns under Section 26 of RA 6388 (Election Code) in case of an individual who files a certificate of candidacy and executes a waiver for the examination of his returns

3. information given by the BIR pursuant to a request by a foreign tax authority under an existing treaty pursuant to RA 10021 

The Data Privacy Act of 2012 clearly provides that personal data of an individual shall never be collected and processed without his or her consent, unless otherwise provided by law. 

We wish to emphasize that we have created and maintained a secure environment for the protection of your personal information and records. When we collect this information, it is kept safe and secure. We use reasonable security safeguards to protect information from loss, unauthorized access, use or disclosure.

Please refer: https://www.bir.gov.ph/index.php/privacy-policy.html of the full text Bureau of Internal Revenue Privacy Policy.

Promulgation and lmplementation of the People's Freedom of Information Manual of the BIR

The bureau has issued Revenue Memorandum Circular (RMC) No. 75-2017 for the promulgation and implementation of the People's Freedom of Information Manual of the Bureau of Internal Revenue (BIR) stated as follows: 

As a public service institution, the BIR is mandated to adopt and implement the constitutional policy of full public disclosure of its transactions involving public interest. subject to reasonable conditions prescribed by law. The BIR recognizes further the fundamental role of the right to a free and open exchange of information in democracy as a means to enhance transparency and accountability in government official acts, transactions, or decisions. 

In this regard, the BIR's Freedom of Information Manual ("Annex A') is hereby promulgated in order to promote said constitutional right and comply with the directive of Executive Order No 2 Series of 2016. Henceforth, to ensure the faithful compliance and observance of the BIR's Freedom of Information Manual everyone is directed to read and be familiar with its provisions. An electronic copy of this Manual shall be posted in the BIR website for reference. 

Click the following of the FOI Request Form.

Please refer https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2017/RMC%20No%2075-2007.pdf of the full text of RMC No. 752017.

When Payment Of Taxes Through Credit/Debit/Prepaid Card Is Deemed Made?

Revenue Regulations (RR) No. 2-2017 was issued by the bureau amending RR No. 3-2016 Section 4(a) and (b) to read as follows:

"SECTION 4. When Payment is Deemed Made. - The payment of taxes through credit/debit/prepaid card shall be deemed made on the date and time appearing in the system-generated payment confirmation receipt issued to the taxpayer-cardholder by the AAB-Acquirer.

However, in case of late remittance or non-remittance of taxes to the BIR, despite the timely issuance of a valid confirmation receipt by the AAB-Acquirer to the taxpayer-cardholder, the liability to pay the tax rests upon the AAB-Acquirer considering that from the time of issuance of a valid confirmation receipt to the taxpayer-cardholder, the AAB-Acquirer becomes the trustee of the government with obligation to remit the payment on time to the BIR.

Revised BIR Form No. 2305 (Certificate of Update of Exemption, and of Employer and Employee's Information

Revenue Memorandum Circular (RMC) No. 42-2017 has issued by the bureau recently circularizing the Revised BIR Form No. 2305 (Certificate of Update of Exemption, and of Employer and Employee's Information) April 2017 ENCS to reflect the provision of Revenue Regulations (RR) No. 5-2017 implementing Republic Act No. 10754, entitled "An Act Expanding the Benefits and Privileges of Person with Disability (PWD)" relative to the tax privileges of person with disability.

The revised BIR Form No. 2305 will be used by individuals to update their civil status, additional exemption which now includes PWD as an additional exemption/dependent of a benefactor, if applicable, and employer's information.

Click https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/ANNEX%20A%20RMC%2042.pdf to download revised BIR Form No. 2305.

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No.%2042-2017.pdf of the full text of RMC No. 42-2017. 

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.