RR 2-98 - Amendments

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Implements Republic Act No. 8424, as amended, entitled "An Act Amending The National Internal Revenue Code, As Amended" (effective January 1, 1998), specifically, Sections 24, 25, 27, 28, 30, 31, 32, 33, 35, 51(A)(2)(b), 57, 58, 59, 78, 79, 80, 81, 82, 83, 114 and Title V of the NIRC of 1997. Amended by Revenue Regulations No. 3-98 (effective January 1, 1998) Re: Implementing Section 33 of the National Internal Revenue Code, as Amended by Republic Act No. 8424 Relative to the Special Treatment of Fringe Benefits; Revenue Regulations No. 8-98 (dated August 25, 1998) Re: Revenue Regulations Amending Pertinent Portions of Revenue Regulations Nos. 11-96 and 2-98 Relative to the Tax Treatment on the Sale, Transfer or Exchange of Real Property and for this Purpose Revising the Time and Place of Payment of the Capital Gains Tax Due Thereon; Revenue Regulations No. 12-98 (dated August 14, 1998) Re: Amending Section 2.57.2 of Revenue Regulations No. 2-98; Revenue Regulations No. 3-99 (dated January 22, 1999) Re: Further Amending Section 2 of Revenue Regulations No. 12-98; Revenue Regulations No. 7-2000 (dated June 16, 2000) Re: Amending Revenue Regulations No. 2-98; Revenue Regulations No. 8-2000 (dated August 21, 2000) Re: Amending Sections 2.78.1(A)(1), (A)(3), (A)(6), (A)(7), and (B)(11)(b) of Revenue Regulations No. 2-98, as Amended, and Section 2.33(C) of Revenue Regulations No. 3-98, with Respect to "De Minimis" Benefits, Additional Compensation Allowance (ACA), Representation and Transportation Allowance (RATA) and Personal Economic Relief Allowance (PERA); Revenue Regulations No. 10-2000 (dated December 14, 2000) Re: Further Amendments to Revenue Regulations No. 2-98 and 3-98, as Last Amended by Revenue Regulations No. 8-2000; Revenue Regulations No. 6-2001 (dated July 31, 2001) Re: Amending Pertinent Provisions of Revenue Regulations Nos. 1-98, 2-98, as Amended, and 7-95, as Amended, and Revenue Memorandum Circular No. 1-98 Relative to the Inclusion of Additional Taxpayers to be Subject to Final Withholding Tax, Revision of the Withholding Tax Rates on Certain Income Payments Subject to Creditable Withholding Tax, Time for the Filing of Various Tax Returns and Payment of the Taxes Due Thereon And Others; Revenue Regulations No. 12-2001 (dated September 7, 2001) Re: Amendment to the Pertinent Provisions of Revenue Regulations No. 1-98, as Amended, Revenue Regulations No. 2-98, as Amended, and Revenue Regulations No. 6-2001, Relative to the Revision of

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Withholding Tax Rates on Certain Income Payments Subject to Withholding Tax, the Deferment of the New Deadline Dates For Filing Selected Tax Returns, the Reporting Requirements for Recipients of Talent Fees, and for Other Purposes; Revenue Regulations No. 3-2002 (dated March 22, 2002) Re: Amending Section 2.58 and Further Amending Section 2.83 of Revenue Regulations No. 2-98 as Amended, Relative to the Submission of the Alphabetical Lists of Employees/Payees in Diskette Form and the Substituted Filing of Income Tax Returns of Payees/Employees Receiving Purely Compensation Income from Only One Employer for One Taxable Year Whose Tax Due is Equal to Tax Withheld and Individual-Payees Whose Compensation Income is Subject to Final Withholding Tax; Revenue Regulations No. 4-2002 (dated March 26, 2002) Re: Amending the Due Date for the Filing/Issuance of Certain BIR Tax Returns/Forms, Clarifying the Form/Type to be Used on certain Transactions and Prescribing Certain Attachments to Returns Filed; Revenue Regulations No. 14-2002 (dated September 9, 2002) Re: Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as amended; Revenue Regulations No. 19-2002 (dated October 11, 2002) Re: Amending Revenue Regulations No. 3-2002 and Further Amending Section 2.83 of Revenue Regulations No. 2-98 as Amended, Relative to Substituted Filing of Income Tax Return of Employees Receiving Purely Compensation Income from Only One Employer for One Taxable Year Whose Tax Due is Equal to Tax Withheld and Individual-Payees Whose Compensation Income is Subject to Final Withholding Tax; Revenue Regulations No. 14-2003 (dated March 26, 2003) Re: Amending Revenue Regulations No. 2-98, as amended, in order to simplify the collection of tax, through withholding at the source, on sales of goods or services subject to the 3% percentage tax under Section 116 of the Code, and/or to the value-added tax (VAT) under Sections 106 and 108 of the same Code; Revenue Regulations No. 17-2003 (dated March 31, 2003) Re: Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as Amended, Providing for Additional Transactions Subject to Creditable Withholding Tax; Re-Establishing the Policy that the Capital Gains Tax on the Sale, Exchange or Other Disposition of Real Property Classified as Capital Assets Shall be Collected as a Final Withholding Tax, Thereby Further Amending Revenue Regulations Nos. 8-98 and 13-99, as Amended by Revenue Regulations No. 14-2000; and for Other Purposes; Revenue Regulations No. 28-2003 (dated October 15, 2003) Re: Amending Further Pertinent Provisions of Revenue Regulations No. 2-98 as Amended, Relative to the Issuance of Certificate of Copyright 2015

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Value-Added Tax Withheld at Source, Thereby Amending Revenue Regulations No. 4-2002; and for Other Purpose; Revenue Regulations No. 30-2003 (dated November 12, 2003) Re: Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as Last Amended by Revenue Regulations No. 17-2003, and Revenue Regulations No. 8-98, as Amended, Providing for the Imposition of Final Withholding Tax on the Sale, Exchange or Other Disposition of Real Property Classified as Capital Assets by Non-resident Aliens, Increasing the Withholding Tax Rates on Certain Income Payments, Inclusion of Certain Income Payments, Sanctions to be Imposed on Payees Who Refuse the Withholding of Tax on Their Income/Receipts, and for Other Purposes; Revenue Regulations No. 1-2004 (dated January 14, 2004) Re: Amending Further Sec. 2.57.2(S) of Revenue Regulations No. 2-98, as Last Amended By Revenue Regulations No. 30-2003, Exempting Marginal Income Earners From Creditable Withholding Tax on Payments Made By Hotels, Restaurants, Resorts, Caterers, Food Processors, Canneries, Supermarkets, Livestock, Poultry, Fish and Marine Product Dealers, Hardwares, Factories, Furniture Shops, and All Other Establishments; Revenue Regulations No. 3-2004 (dated March 1, 2004) Re: Suspending the implementation of withholding tax on income payments made to suppliers of agricultural products under Section 2.57.2(S) of Revenue Regulations 2-98, as amended by RR 17-2003, further amended by RR 30-2003 and 1-2004; Revenue Regulations No. 8-2005 (dated February 23, 2005) Re: Amending further pertinent provisions of Revenue Regulations No. 2-98, as last amended by Revenue Regulations 3-2004, as Amended, providing for the inclusion of Income Payments subject to Creditable Withholding Tax under Section 2.57.2(U) on Manila Electric Company (MERALCO) Refund arising from Supreme Court Case G.R. No. 14814 of April 9, 2003 to Customers under Phase IV as approved by Energy Regulatory Commission (ERC); Revenue Regulations No. 1-2006 (effective January 1, 2006) Re: Amendments to Sections 2.78.1(B), Section 2.79(A) and (F), 2.83.4(C) and 2.83.5 of Revenue Regulations No. 2-98, as amended; Revenue Regulations No. 2-2006 (effective January 1, 2006) Re: Mandatory Attachments of the Summary Alphalist of Withholding Agents of Income Payments Subjected to Tax Withheld at Source (SAWT) to Tax Returns With Claimed Tax Credits due to Creditable Tax Withheld At Source and of the Monthly Alphalist of Payees (MAP) Whose Income Received Have Been Subjected to Withholding Tax to the Withholding Tax Remittance Return Filed by the Withholding Agent/Payor of Income Payments Withholding Tax At Source and of the Monthly Alphalist Copyright 2015

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of Payees (MAP) Whose Income Received Have Been Subjected to Withholding Tax in the Remittance Return Filed by the Withholding Agent/Payor of Income Payment; Revenue Regulations No. 4-2008 (dated February 19, 2008) Re: Amending the Venue for the Payment of Capital Gains Tax, Creditable Withholding Tax and Documentary Stamp Taxes Due on Onerous Transfers of Real Properties Owned by Taxpayers Classified as Large Taxpayers Pursuant to Revenue Regulations No. 1-98, as Amended, thereby Amending for this Purpose Pertinent Provisions of Revenue Regulations No. 8-98; Revenue Regulations No. 5-2008 (dated April 17, 2008) Re: Further Amendments to Revenue Regulations Nos. 2-98 and 3-98, as Last Amended by Revenue Regulations No. 10-2000, with Respect to "De Minimis Benefits"; Revenue Regulations No. 7-2008 (dated March 25, 2008) Re: Taxation on the Sale to the Bangko Sentral ng Pilipinas of Gold and Other Metallic Mineral Products Extracted or Produced by Small-Scale Miners, and Further Amending Section 2.57 2 (T) of Revenue Regulations No. 2-98, as Amended; Revenue Regulations No. 10-2008 (dated July 8, 2008) Re: Implementing Pertinent Provisions of Republic Act No. 9504, "An Act Amending Sections 22, 24, 34, 35, 51, and 79 of Republic Act No. 8424, as Amended, Otherwise Known as The National Internal Revenue Code" Relative to the Withholding of Income Tax on Compensation and Other Concerns; Revenue Regulations No. 14-2008 (dated November 26, 2008) Re: Amending Further Section 2.57.2 (M) of Revenue Regulations No. 2-98, as Amended, Increasing the Coverage of Withholding Tax Agents Required to Withhold 1% from Regular Suppliers of Goods and 2% from Regular Suppliers of Services from the Top 10,000 Private Corporations to Top 20,000 Private Corporations; Revenue Regulations No. 2-2009 (dated February 4, 2009) Re: Amending Further Secs. 2.57.2 and 2.58 of Revenue Regulations No. 2-98, as Amended, Subjecting to Creditable Withholding Tax the Interest Portion of the Refund of Meter Deposits by MERALCO and Other Distribution Utilities to Residential and Non-Residential Electricity Consumers/Customers; Revenue Regulations No. 5-2009 (dated May 13, 2009) Re: Reverting the venue for the filing of returns and payment of Capital Gains Tax, Creditable Withholding Tax and Documentary Stamp Tax due on the sale, transfer or exchange of real property of large taxpayers to the place where the property is located; Revenue Regulations No. 6-2009 (dated June 3, 2009) Re: Amending Further Pertinent Provisions of Revenue Regulations (RR) No. 2-98, as Amended, Providing for an Additional Criteria in the Determination of Top 20,000 Private Corporations, Including the Threshold on Their Purchases of Agricultural Copyright 2015

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Products, and Additional Transactions Subject to Creditable Withholding Tax on Income Payments Made by the Top Five Thousand (5,000) Individual Taxpayers Engaged in Trade/Business or Practice of Profession; Revenue Regulations No. 8-2009 (dated October 22, 2009) Re: Amending Further Secs. 2.57.2 and 2.57.3 of Revenue Regulations No. 2-98, as Amended, Subjecting to Creditable Withholding Tax the Income Payments Made by Political Parties and Candidates of Local and National Elections of All Their Campaign Expenditures and Income Payments Made by an Individual or Juridical Person Forming Part of Their Campaign Contributions to Candidates of Local and National Elections and to Political Parties; Revenue Regulations No. 10-2009 (No date supplied) Re: Amending Further Secs. 2.57.2 and 2.58 of Revenue Regulations No. 2-98, As Amended, Clarifying that Sub-Paragraph (W) as Recently Issued Under Revenue Regulations No. 8-2009 Should be Sub-Paragraph (X), and Other Concerns; Revenue Regulations No. 5-2011 (dated March 16, 2011) Re: Further Amendments to Revenue Regulations Nos. 2-98 and 3-98, as Last Amended by Revenue Regulations No. 5-2008, with Respect to "De Minimis Benefits"; Revenue Regulations No. 6-2012 (dated April 2, 2012) Re: Taxation on the Sale of Gold and Other Metallic Minerals to Bangko Sentral ng Pilipinas and Other Persons or Entities, Amending Revenue Regulations No. 7-2008, and Further Amending Section 2.57.2 (T) of Revenue Regulations No. 2-98, as Amended; Revenue Regulations No. 8-2012 (dated May 11, 2012) Re: Further Amendments to Revenue Regulations Nos. 2-98 and 3-98, as Last Amended by Revenue Regulations Nos. 5-2008 and 5-2011, with Respect to "De Minimis Benefits"; Revenue Regulations No. 14-2012 (dated November 7, 2012) Re: Proper Tax Treatment of Interest Income Earnings on Financial Instruments and Other Related Transactions; Revenue Regulations No. 10-2013 (dated May 2, 2013; effective June 1, 2013) Re: Amending Further Pertinent Provisions of Revenue Regulations (RR) No. 2-98, as Last Amended by Revenue Regulations No. 30-2003, Providing for the Inclusion of Real Estate Service Practitioners (i.e., Real Estate Consultant, Appraiser and Broker) Who Passed the Licensure Examination Given by the Real Estate Service Under the Professional Regulations Commission as Defined in Republic Act No. 9646, "The Real Estate Service Act of the Philippines" as Among Those Professionals Falling Under Section 2.57.2 (A) (1) of RR 2-98, as Amended, and RR 14-2002 as Regards Income Payments to Certain Brokers and Agents; Revenue Regulations No. 11-2013 (dated May 20, 2013) Re: Filing/Submission of Hard Copy of the Certificate of Compensation Payment/Tax Withheld (BIR Form 2316) Covering Employees Copyright 2015

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Who are Qualified for Substituted Filing, Thereby Amending Revenue Regulations (RR) No. 2-98, as Last Amended by RR No. 010-08; Revenue Regulations No. 12-2013 (dated July 12, 2013) Re: Amending Section 2.58.5 of Revenue Regulations No. 2-98, as Amended, Relative to the Requirements for Deductibility of Certain Income Payments; Revenue Regulations No. 14-2013 (dated September 20, 2013; effective October 1, 2013) Re: Amending Pertinent Provisions of Revenue Regulations No. 02-98, as Last Amended by Revenue Regulations No. 30-2003 and Revenue Regulations No. 17-2003; Revenue Regulations No. 1-2014 (dated December 17, 2013) Re: Amending the Provisions of Revenue Regulations (RR) No. 2-98, as Further Amended by RR No. 10-2008, Specifically on the Submission of Alphabetical List of Employees/Payees of Income Payments; Revenue Regulations No. 11-2014 (dated December 5, 2014) Re: Amending Further the Provisions of Section 2.57.2 of Revenue Regulations No. 2-98, as Amended, Particularly Subsection (M), (S), and (W), Creating a Separate Sub-Section for the Withholding of Creditable Income Tax on Real Estate Investment Trust (REIT) and Reclassifying the Treatment of Locally Produced Raw Sugar as a Separate Subsection for Purposes of the Creditable Withholding Tax; and Revenue Regulations No. 1-2015 (dated January 5, 2015) Re: Further Amendments to Revenue Regulations Nos. 2-98 and 3-98, as Last Amended by Revenue Regulations Nos. 5-2008, 5-2011 and 8-2012, with Respect to "De Minimis Benefits". Supersedes the following: 1. Issuances on income tax withheld on compensation — Revenue Regulations No. 6-82 (dated October 1, 1982) Re: Collection at Source of Income Tax on Compensation Income of Employed Resident Citizens and Aliens, Non-Resident Citizens and Non-Resident Aliens Engage in Trade or Business in the Philippines, and subsequent amendments made by Revenue Regulations No. 6-83 (effective August 1, 1983) Re: Revenue Regulations Implementing PD 1868 Granting Special Additional Personal Exemption, Revenue Regulations No. 9-83 (effective October 24, 1983) Re: Supplemental Regulations to Revenue Regulations No. 6-82, Revenue Regulations No. 2-85 (effective January 1, 1985) Re: Revised Withholding Tax Tables, Revenue Regulations No. 12-86 (effective January 1, 1986) Re: Amending pertinent provisions of the Revenue Regulations 6-82, as amended, otherwise known as the Withholding Tax Regulations on Compensation, Revenue Regulations No. 1-92 (effective January 1, 1992) Re: Amending Pertinent Provisions of Copyright 2015

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Revenue Regulations No. 6-82, As Amended by Revenue Regulations No. 12-86, Otherwise Known as the Withholding Tax Regulations On Compensation and prescribing a Revised Withholding Tax Table therefore, Revenue Regulations No. 3-92 (dated July 9, 1992) Re: Amending pertinent provisions of Revenue Regulations No. 6-82, as last amended, by Revenue Regulations No. 1-92 on the applicability/effectivity of the increased basic personal and additional exemptions, allowable to individual taxpayers for income tax purposes under Section 29 (1) of the National Internal Revenue Code, as amended by Republic Act No. 7167, and prescribing the guidelines for the credit/refund of excess withholding tax on compensation income for 1991, and Revenue Regulations No. 4-93 (dated November 27, 1992) Re: Implementing Republic Act No. 7497, "An Act Amending Pertinent Provisions of the National Internal Revenue Code, as amended, relative to the Final Withholding Tax on Purely Compensation Income". 2. Issuances on withholding on income subject to the expanded withholding tax — Revenue Regulations No. 6-85 (effective July 1, 1985) Re: Revised and consolidated expanded withholding tax regulations, and subsequent amendments made by Revenue Regulations No. 8-85 (dated September 12, 1985) Re: Amending Revenue Regulations No. 6-85, Revenue Regulations No. 13-86 (effective September 1, 1986) Re: Amending Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 8-85, Revenue Regulations No. 1-89 (effective January 1, 1989) Re: Regulations amending Revenue Regulations No. 6-85, otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations, Revenue Regulations No. 12-89 (effective January 1, 1990) Re: A Regulations Amending Revenue Regulations No. 6-85, as amended, otherwise known as the Revised and Consolidated Expanded Withholding Tax Regulations, Revenue Regulations No. 1-90 (effective February 1, 1990) Re: Creditable withholding tax on sale, exchange or transfer of real property, Revenue Regulations No. 8-90 (effective December 1, 1990) Re: Amendments to Sections 1, 2, and 9 of Revenue Regulations No. 6-85, Revenue Regulations No. 2-91 (effective March 11, 1991) Re: Amendments to Section 1(k) of Revenue Regulations No. 8-90, Revenue Regulations No. 4-91 (effective July 30, 1991) Re: Amending Revenue Regulations No. 6-85 by inserting a paragraph (L) to Section 1 of said Regulations, Revenue Regulations No. 6-94 (dated February 15, 1994) Re: Amendments to Revenue Regulations No. 6-85, otherwise known as the Expanded Withholding Tax Regulations, Revenue Regulations No. 7-94 (No Copyright 2015

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date supplied 1994) Re: Amending the Effectivity Clause of Revenue Regulations No. 6-94, Revenue Regulations No. 8-94 (effective July 1, 1994) Re: Amending the effectivity clause of Revenue Regulations No. 6-94, as amended by Revenue Regulations 7-94, Revenue Regulations No. 12-94 (dated June 27, 1994) Re: Amendments to Revenue Regulations No. 6-85, as amended, Otherwise Known as the Expanded Withholding Tax Regulations, and Revenue Regulations No. 16-94 (effective October 1, 1994) Re: Amending certain Sections of Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94, otherwise known as the Expanded Withholding Tax Regulations. See Issuances on Taxation of Certain Income Derived from Banking Activities — Revenue Regulations No. 12-80 (dated November 7, 1980) Re: Taxation of Certain Income Derived from Banking Activities, and subsequent amendments made by Revenue Regulations No. 8-81 (effective May 1, 1981) Re: Amending Revenue Regulations No. 12-80 Governing the Taxation of Certain Income Derived from Banking Activities, Revenue Regulations No. 1-84 (effective January 5, 1984) Re: Revised Quarterly and Annual Returns for Taxes Withheld on Interest Paid by Banks and Quasi Banks, Revenue Regulations No. 3-97 (effective January 2, 1997) Re: Amendment to Revenue Regulations No. 12-80; Revenue Regulations No. 16-81 (dated July 24, 1981) Re: Amending Revenue Regulations No. 13-78 otherwise known as the Expanded Withholding Tax Regulations; Revenue Regulations No. 16-84 (effective October 15, 1984) Re: Imposition of Additional One Per Cent (1%) Tax on the Gross Value Received by Banks, Non-Bank Financial Intermediaries and Authorized Foreign Exchange Dealers; Revenue Regulations No. 10-98 (dated August 25, 1998) Re: Implementing the Provisions of the National Internal Revenue Code, As Amended By Republic Act No. 8424, Relative to the Imposition of Income Taxes on Income Derived Under the Foreign Currency Deposit and Offshore Banking Systems; Revenue Regulations No. 13-2000 (dated November 20, 2000) Re: Implementing Section 34(B) of the Tax Code of 1997 on the Requirements for Deductibility of Interest Expense from the Gross Income of Taxpayer; Revenue Regulations No. 1-2008 (dated February 1, 2008) Re: Amending Certain Provisions of Revenue Regulations No. 10-2006 Prescribing the Guidelines and Conditions for the Tax Treatment of Securities Borrowing and Lending Transactions Involving Shares of Stock or Securities Listed in the Philippine Stock Exchange; Revenue Regulations No. 5-2007 (dated March 6, 2007) Re: Copyright 2015

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Prescribing the Guidelines and Conditions for the Tax Treatment of Securities Borrowing and Lending (SBL) or Securities Lending Transactions (SLTs) Involving the Fixed-Income Securities Lending Program of the Philippine Dealing & Exchange Corp. (PDEx); Revenue Regulations No. 10-2006 (dated June 23, 2006) Re: Prescribing the Guidelines and Conditions for the Tax Treatment of Securities Borrowing and Lending Transactions Involving Shares of Stock or Securities Listed in the Philippine Stock Exchange; Section 9 (c) of Republic Act No. 9243 entitled "An Act Rationalizing the Provisions on the Documentary Stamp Tax of the National Internal Revenue Code of 1997, as Amended, and for Other Purposes" (approved February 17, 2004) and Revenue Regulations No. 13-2004 (issued December 23, 2004) Re: Implementing the Provisions of Republic Act No. 9243, An Act Rationalizing the Provisions on the Documentary Stamp Tax of the National Internal Revenue Code of 1997, as Amended, and for Other Purposes; Revenue Memorandum Circular No. 35-81 (dated October 12, 1981) Re: Publishing Questions and Answers on Deposit Substitutes as Amended by Revenue Regulations Nos. 8-81 and 16-81; Revenue Memorandum Circular No. 5-83 (dated October 11, 1983) Re: Publishing Revenue Regulations No. 16-81 renumbering a pertinent subsection thereof; Revenue Memorandum Circular No. 12-93 (dated October 23, 1993) Re: Administrative settlement of "back to back" loans tax cases; Revenue Memorandum Circular No. 22-93 (No date supplied 1993) Re: Extension of deadline from 31 March 1993 to 28 May 1993; Revenue Memorandum Circular No. 77-2012 (dated November 22, 2012) Re: Clarifying Certain Provisions of Revenue Regulations No. 14-2012 on the Proper Tax Treatment of Interest Income Earnings on Financial Instruments and Other Related Transactions; Revenue Memorandum Circular No. 81-2012 (dated December 10, 2012) Re: Supplemental Clarifications on the Provisions of Revenue Regulations No. 14-2012 on the Proper Tax Treatment of Interest Income Earnings on Financial Instruments and Other Related Transactions; Revenue Memorandum Circular No. 84-2012 (dated Clarifying Tax Treatment of Interest Income Earnings on Loans That are Not Securitized, Assigned or Participated Out; and Revenue Audit Memorandum Order No. 1-84 (dated January 24, 1984) Re: Tax Treatment of Certain Items of Income Received by OBUs and FCDUs. See earlier issuances on Taxation of Interest Income Derived from Deposits and Yield from Deposit Substitutes — Revenue Regulations No. 17-84 (dated October 12, 1984) Re: Income Taxation of Interest Income Copyright 2015

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Derived from Deposits and Yield from Deposit Substitutes, and subsequent amendments made by Revenue Regulations No. 23-84 (effective January 1, 1985) Re: Amending Revenue Regulations No. 17-84, Revenue Regulations No. 3-85 (effective March 1, 1985) Re: Amending Revenue Regulations No. 23-84, and Revenue Regulations No. 10-86 (dated June 30, 1986) Re: Amendment of Section 3 of Revenue Regulations No. 17-84; Revenue Regulations No. 1-82 (date March 18, 1982) Re: Individual Income Tax as Restructured by Batas Pambansa Blg. 135; Revenue Memorandum Circular No. 35-81 (dated October 12, 1981) Re: Publishing Questions and Answers on Deposit Substitutes as Amended by Revenue Regulations Nos. 8-81 and 16-81; Revenue Memorandum Circular No. 31-84 (issued October 30, 1984) Re: Publishing Section 21 (d), 24 (cc) and 53 (d) (1) of the National Internal Revenue Code, as amended by Presidential Decree No. 1959; Revenue Memorandum Circular No. 39-85 (dated September 16, 1985) Re: Publishing Additional Questions and Answers On the Interpretation of the Provisions of the National Internal Revenue Code, as Implemented by Revenue Regulations Nos. 16-84 and 17-84 and, Revenue Memorandum Circular No. 27-84; Revenue Memorandum Circular No. 28-86 (dated August 11, 1986) Re: Clarifying the Provisions of Revenue Regulations No. 10-86, Amending Revenue Regulations No. 17-84 on Income Taxation of Interest Income from Deposits and Yield from Deposit Substitutes; Revenue Memorandum Circular No. 32-86 (dated October 15, 1986) Re: Publishing Questions Raised and Answers Given on The Interpretation of Certain Provisions of the Tax Code and Revenue Regulations Regarding the Final Withholding Tax on Interest Income from Deposits and Deposit Substitutes; and Revenue Audit Memorandum Order No. 1-84 (dated January 24, 1984) Re: Tax Treatment of Certain Items of Income Received by OBUs and FCDUs. See Issuances on Exemptions from Final Withholding Income Tax on Interest Income Derived from Deposits and Yield from Deposit Substitutes — Revenue Regulations No. 16-93 (dated April 22, 1993) Re: Republic Act No. 7353, otherwise known as the Rural Banks Act of 1992, providing for the Creation, Organization and Operation of Rural Banks and For Other Purposes; Revenue Regulations No. 1-95 (dated January 24, 1995) Re: Rules and Regulations to implement the tax incentives provisions under paragraphs (b) and (c) of Section 12, Republic Act No. 7227 otherwise known as the Bases Conversion and Development Act of 1992; Revenue Regulations No. 4-95 (dated June 15, 1995) Re: Republic Act No. 7906 otherwise known as the Copyright 2015

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Thrift Banks Act of 1995, providing for the Regulation of the Organization and Operations of Thrift Banks and For Other Purposes; Revenue Regulations No. 6-2010 (dated June 29, 2010) Re: Regulations Providing for the Policies, Guidelines and Procedures in the Implementation of the Tax Subsidy Granted Under Sections 17 (c) of Republic Act No. 3591 (Philippine Deposit Insurance Corporation [PDIC] Charter), as Amended by Republic Act No. 9576; Revenue Memorandum Circular No. 45-86 (dated December 5, 1986) Re: Tax exemption of the (i) Government Service Insurance System and (ii) Social Security System under Presidential Memorandum Order No. 42 dated September 25, 1986; Revenue Memorandum Circular No. 45-95 (dated December 11, 1995) Re: Tax Exemption of Interest Income and/or Yield from the Philippine currency bank deposits and deposit substitutes of Non-stock, Non-profit Private Educational Institutions; Revenue Memorandum Circular No. 7-2001 (dated February 20, 2001) Re: Taxability of Thrift Banks Effective January 1, 2000; and Revenue Memorandum Order No. 9-93 (effective October 15, 1993) Re: Prescribing the guidelines and procedures in the processing of claims for tax credit or refund of the then 15%, now 20% final income tax withheld from interest income/yield from deposit substitute instruments and interest income from Philippine currency bank deposits of employees' trust/trusteed private employees retirement plans. See issuances on Republic Act No. 7279, otherwise known as the "Urban Development and Housing Act of 1992" — Revenue Regulations No. 9-93 (dated March 4, 1993) Re: Republic Act No. 7279 otherwise known as the Urban Development and Housing Act of 1992, providing tax incentives to Government-owned and Controlled Corporations and Local Government Units as well as Private Sector Participating in Socialized Housing and Community Mortgage Program; Revenue Regulations No. 11-97 (dated July 4, 1997) Re: Revised Revenue Regulations implementing Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992, Providing Tax Incentives to Government-Owned or Controlled Corporations and Local Government Units, as well as Private Sector Participating in Socialized Housing and Community Mortgage Program, amending for the purpose pertinent provisions of Sections 2, 4 and 5 of Revenue Regulations No. 9-93; Revenue Regulations No. 17-2001 (dated October 5, 2001) Re: Revenue Regulations Implementing the Provisions on Community Mortgage Program (CMP) of Republic Act No. 7279, otherwise known as the "Urban Development and Housing Act of 1992"; Revenue Memorandum Circular Copyright 2015

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No. 3-2001 (effective January 13, 2001) Re: Delegation of Authority to Regional Directors to Issue Certain Rulings with Established Precedents; Revenue Memorandum Circular No. 42-2001 (dated October 5, 2001) Re: Circularizing the Tax Incentives of Sellers of Real Properties in Existing Areas for Priority Development (APDs) Sites, and in other Areas that may be Identified by the Local Government Units as Suitable for Socialized Housing Projects under R.A. No. 7279, Otherwise Known as the "Urban Development and Housing Act of 1992" and the Valuation of the Subject Real Properties for National Internal Revenue Tax Purposes; Revenue Memorandum Circular No. 43-2001 (dated October 8, 2001) Re: Circularizing the Memorandum of Agreement between the National Home Mortgage Finance Corporation and the Bureau of Internal revenue Streamlining the Procedures and Requirements for the Implementation of the Tax Incentives Granted to Legally Organized Associations Under the Community Mortgage Program Pursuant to Republic Act No. 7279; Revenue Memorandum Circular No. 30-2009 (dated May 14, 2009) Re: Circularizing Relevant Portions of HUDCC Resolution No. 1, Series of 2008, Approving the Adjustment of the Price Ceiling for Socialized Housing; Revenue Memorandum Circular No. 36-2011 (dated August 26, 2011) Re: BIR Rulings on Socialized Housing Under Republic Act No. 7279; Revenue Memorandum Circular No. 28-2013 (dated April 1, 2013) Re: Revocation of BIR Ruling No. SH (044) 261-2008 dated October 30, 2008 pursuant to BIR Ruling No. 433-2012 dated June 25, 2012; Revenue Memorandum Circular No. 35-2014 (dated May 8, 2014) Re: Circularizing Relevant Portions of Housing and Urban Development Coordinating Council (HUDCC) Resolution No. 1, Series of 2013, Approving the Adjustment of the Price Ceiling for Socialized Housing; and Revenue Memorandum Circular No. 36-2014 (dated May 8, 2014) Re: Clarifying the Price Ceiling of Socialized Lot Only Pursuant to Revenue Regulations (RR) No. 11-97, RR 17-01 and Housing and Urban Development Coordinating Council (HUDCC) Resolution No. 1, Series of 2013. See issuances on Tax Clearance Certificates (TCLs) and Certificate Authorizing Registration (CARs) for registration of transfers of real properties and/or payment of capital gains tax on such transfers — Revenue Regulations No. 11-96 (dated August 7, 1996) Re: Revenue Regulations prescribing the procedures in the preparation and issuance of Tax Clearance Certificate by the Revenue District Officer upon payment of capital gains tax, estate and donor's gift taxes, and expanded creditable withholding Copyright 2015

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tax, for purposes of registration of transfers of real properties; Revenue Regulations No. 8-98 (dated August 25, 1998) Re: Revenue Regulations Amending Pertinent Portions of Revenue Regulations Nos. 11-96 and 2-98 Relative to the Tax Treatment on the Sale, Transfer or Exchange of Real Property and for this Purpose Revising the Time and Place of Payment of the Capital Gains Tax Due Thereon; Revenue Regulations No. 4-99 (dated March 9, 1999) Re: Further Amending Revenue Memorandum Order No. 29-86 dated September 3, 1986, as Amended by Revenue Memorandum Order No. 16-88 dated April 18, 1988, as Further Amended by Revenue Memorandum Order No. 27-89 dated April 18, 1989, and as Last Amended by Revenue Memorandum Order No. 6-92 dated January 15, 1992 Relative to the Payment of Capital Gains Tax and Documentary Stamp Tax on Extra-Judicial Foreclosure Sale of Capital Assets Initiated by Banks, Finance and Insurance Companies; Revenue Regulations No. 18-2001 (dated November 13, 2001) Re: Guidelines on the Monitoring of the Basis of Property Transferred and Shares Received, Pursuant to a Tax-Free Exchange of Property for Shares under Section 40(C)(2) of the National Internal Revenue Code of 1997, Prescribing the Penalties for Failure to Comply with such Guidelines, and Authorizing the Imposition of Fees for the Monitoring Thereof; Revenue Regulations No. 7-2003 (dated December 27, 2002) Re: Providing the Guidelines in Determining Whether a Particular Real Property is a Capital Asset or an Ordinary Asset Pursuant to Section 39(A)(1) of the National Internal Revenue Code of 1997 for Purposes of Imposing the Capital Gains Tax under Sections 24(D), 25(A)(3), 25(B) and 27(D)(5), or the Ordinary Income Tax under Sections 24(A), 25(A) & (B), 27(A), 28(A)(1) and 28(B)(1), or the Minimum Corporate Income Tax (MCIT) under Sections 27(E) and 28(A)(2) of the same Code; Revenue Regulations No. 9-2012 (dated May 31, 2012) Re: Implementing Sections 24(D)(1), 27(D)(5), 57, 106 and 196 of the National Internal Revenue Code of 1997 on Non-Redemption of Properties Sold During Involuntary Sales; Revenue Memorandum Circular No. 50-2003 (dated August 22, 2003) Re: Clarifying the Venue for Payment of Capital Gains Tax/Creditable Expanded Withholding Tax and Corresponding Documentary Stamp Tax Relative to the Sale of Real Properties by Insurance Companies; Revenue Memorandum Circular No. 3-2007 (dated January 15, 2007) Re: Publishing the Full text of Memorandum Order No. 233 dated December 11, 2006 issued by the President Gloria Macapagal-Arroyo Directing the Land Registration Authority, through the concerned Register of Deeds, to Annotate in the Transfer Certificate of Title the Serial Number of the Copyright 2015

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Certificate Authorizing Registration issued by the Bureau of Internal Revenue, and Other Pertinent Details; Revenue Memorandum Circular No. 72-2007 (dated October 9, 2007) Re: Circularizing the Full Text of Administrative Order No. 186, Directing the City Assessor, Municipal Assessor and Provincial Assessor to An notate in all Tax Declarations the Serial Number of the Certificate Authorizing Registration Issued by the Bureau of Internal Revenue; Revenue Memorandum Order No. 22-96 (dated August 5, 1996) Re: Transitional Procedures for Processing Capital Gains Tax Returns; Revenue Memorandum Order No. 34-96 (dated November 15, 1996) Re: Clarification on the issuance of Tax Clearance Certificate under Revenue Regulations No. 11-96; Revenue Memorandum Order No. 17-97 (effective April 1, 1997) Re: Policies and guidelines to be observed in the issuance of Tax Clearance Certificates (TCLs) and Certificate Authorizing Registration (CARs) for transfers of real properties under Revenue Regulations No. 11-96, amending Revenue Memorandum Order No. 34-96 dated November 15, 1996; Revenue Memorandum Order No. 92-98 (dated November 25, 1998) Re: Implementing Policies, Guidelines and ITS Transition Procedures for the Implementation of Revenue Regulation No. 8-98; Revenue Memorandum Order No. 66-99 (dated August 9, 1999) Re: Revised Guidelines and Procedures on the Issuance of Certificates Authorizing Registration (CARs) and Reporting of Real and Personal Property Transactions; Revenue Memorandum Order No. 13-2001 (effective May 22, 2001) Re: Revised Guidelines and Procedures Regarding Issuance of Tax Verification Notices (TVNs), Tax Clearance Certificates (TCLs) and Certificates Authorizing Registration (CARs) in the Revenue District Offices; Revenue Memorandum Order No. 32-2001 (effective November 28, 2001) Re: Guidelines Implementing Revenue Regulations No. 18-2001 on the Monitoring of the Basis of the Property Transferred and Shares of Stock Received Pursuant to Section 40(C)(2) of the Tax Code of 1997, Revising and Updating the Requirements and Conditions Precedent to the Non-Recognition of Gain or Loss in Transactions Falling Thereunder, and Prescribing the Forms Therefor; Revenue Memorandum Order No. 15-2003 (dated May 8, 2003) Re: Policies, Guidelines and Procedures in the Processing and Monitoring of One-Time Transactions (ONETT) and the Issuance of Certificates Authorizing Registration (CARs) Covering Transactions Subject to Final Capital Gains Tax on Sale of Real Properties Considered as Capital Assets as well as Capital Gains Tax on the Net Capital Gain on Sale, Transfer or Assignment of Stocks Not Traded in the Stock Exchange(s), Expanded Withholding Tax on Sale of Copyright 2015

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Real Properties Considered as Ordinary Assets, Donor's Tax, Estate Tax and Other Taxes including Documentary Stamp Tax Related to the Sale/Transfer of Properties; and Revenue Memorandum Order No. 21-2003 (dated May 22, 2003) Re: Amending the Effectivity Clause of RMO No. 15-2003 dated May 8, 2003. See issuances designating personnel of government offices as withholding agents — Revenue Regulations No. 1-87 (dated April 2, 1987) Re: Regulations Implementing Executive Order No. 651 Requiring Government Offices, Agencies and Instrumentalities to Comply Strictly with the Laws and Regulations on Withholding of Taxes, Designating the Appropriate Withholding Agents For Such Purpose, and Fixing Official Responsibility Therefore; Revenue Regulations No. 6-96 (dated March 13, 1996) Re: Amendments to Revenue Regulations No. 1-87 Designating Personnel of Government Offices as Withholding Agents and Fixing Official Responsibilities, in Relation to Executive Order No. 651; Revenue Regulations No. 10-97 (dated July 1, 1997) Re: Amendments to Revenue Regulations No. 1-87, Designating Personnel of Government Offices as Withholding Agents and Fixing Official Responsibilities, in Relation to Executive Order No. 651; Revenue Memorandum Circular No. 40-2001 (issued September 25, 2001) Re: Publishing the Full Text of Department of Interior and Local Government (DILG) Circular No. 99-151 dated August 14, 1999 Re: Implementation of the Withholding Tax System; Revenue Memorandum Order No. 14-98 (effective December 10, 1997) Re: Prescribing the Policies and Procedures to Implement Revenue Regulations No. 10-97 Amending Revenue Regulations No. 1-87, in Relation to Executive Order No. 651, Re: Designation of Government Officials as Withholding Agents; and Revenue Memorandum Order No. 70-98 (effective July 27, 1998) Re: Amending Pertinent Provisions of Revenue Memorandum Order No. 14-98 Prescribing the Policies and Procedures to Implement Revenue Regulations No. 10-97 Amending Revenue Regulations No. 1-87, in Relation to Executive Order No. 651, Re: Designation of Government Officials as Withholding Agents. See issuances on withholding of taxes on certain money payments of government offices, agencies and instrumentalities — Revenue Regulations No. 4-83 (dated March 15, 1983) Re: Revised regulations implementing Republic Act No. 1051; Revenue Regulations No. 20-86 (effective October 13, 1986) Re: Revised Regulations amending Revenue Copyright 2015

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Regulations No. 4-83 implementing Republic Act No. 1051; Revenue Regulations No. 4-88 (effective January 21, 1988) Re: Regulations Amending Certain Provisions of Revenue Regulations No. 20-86; Revenue Regulations No. 10-93 (effective July 1, 1993) Re: Republic Act No. 7649, further amending Section 110 of the National Internal Revenue Code, as amended, requiring the withholding of creditable value-added tax; Revenue Regulations No. 7-95 (dated December 9, 1995) Re: Consolidated Value-Added Tax Regulations [and subsequent amendments thereto]; Revenue Memorandum Circular No. 2-87 (dated January 14, 1987) Re: Correction of Section 3-C of Revenue Regulations No. 20-86 or the Revised Regulations amending Republic Act No. 1051; Revenue Memorandum Circular No. 18-88 (dated March 24, 1988) Re: Effect of the implementation of E.O. No. 273 otherwise known as the Value-Added Tax Law on the requirements of withholding and remitting of taxes by government offices and agencies pursuant to R.A. No. 1051; Revenue Memorandum Circular No. 3-2000 (dated March 15, 2000) Re: Publishing the full text of DOF-DBM-COA Joint Circular 1-2000 dated January 3, 2000 Re: Guidelines in the remittance of all taxes withheld by National Government Agencies (NGAs) to the Bureau of Internal Revenue; II, A, 5; Revenue Memorandum Circular No. 60-2004 (dated August 20, 2004) Re: Clarification regarding the withholding of creditable value-added tax by government offices for purchases of P1,000.00 and below; Revenue Memorandum Circular No. 62-2004 (dated August 31, 2004) Re: Prescribing the use of the Government Expense Code Implementing Sections 2.57.2, 4.114 and 5.116 of Revenue Regulations No. 2-98 in relation to Sections 57(B), 114(c) and 116 to 123 of Republic Act No. 8424; Revenue Memorandum Circular No. 5-2006 (dated November 2, 2005) Re: Prescribing the use of the Government Money Payment Chart Implementing Sections 2.57.2, 4.114 and 5.116 of Revenue Regulations No. 2-98 as amended by Revenue Regulations No. 16-2005 in relation to Sections 57(B), 114(C) and 116 to 123 of Republic Act No. 8424 as amended by Republic Act No. 9337; Revenue Memorandum Circular No. 56-2009 (dated August 10, 2009) Re: Prescribing the Use of the Updated Government Money Payment Chart (Annex "A") to Implement Sections 2.57.2, 4.114 and 5.116 of Revenue Regulations (RR) No. 2-98, as Amended by RR No. 16-2005, in Relation to Sections 57 (B), 114 (C) and 116 to 123 of Republic Act (RA) No. 8424, as Amended by RA No. 9337, Amending for the Purpose Revenue Memorandum Circular No. 5-2006 (RMC 5-2006); Revenue Memorandum Circular No. 49-2011 (dated October 3, 2011) Re: Further Clarification on RMC No. 38-2011 on Expanded Copyright 2015

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Withholding Tax Obligation of Philippine Health Insurance Corporation (PHIC) Including the Income Tax Withholding Obligation of Hospitals/Clinics on Case Rates of PHIC and the Matter of 5% Final Withholding VAT for Government Money Payments; Revenue Memorandum Circular No. 23-2012 (dated February 14, 2012) Re: Reiteration of the Responsibilities of the Officials and Employees of Government Offices for the Withholding of Applicable Taxes on Certain Income Payments and the Imposition of Penalties for Non-Compliance Thereof; Revenue Memorandum Order No. 27-95 (dated August 8, 1995) Re: Requiring all Revenue District Officers to Conduct Spot Checking/Verification on Compliance by Government Agencies and Instrumentalities on the Withholding Tax Laws and Regulations; Revenue Memorandum Order No. 88-99 (dated October 13, 1999) Re: Strict Monitoring and Verification of Government Offices' Compliance to the Withholding Tax Requirements as part of the "Government Withholding Tax Program"; Revenue Memorandum Order No. 16-2000 (dated April 3, 2000) Re: Prescribing the Policies and Procedures for Processing and Monitoring of Withholding Tax Payments from National Government Agencies (NGAs); Revenue Memorandum Order No. 27-2001 (effective October 22, 2001) Re: Amending Specific Provisions of Revenue Memorandum Order No. 16-2000 re: Prescribing the Policies and Procedures for Processing and Monitoring of Withholding Tax Payments from National Government Agencies (NGAs); Revenue Memorandum Order No. 8-2003 (dated March 3, 2003) Re: Compliance of Local Government Units (LGUs), National Government Agencies (NGAs) and other government offices to withholding tax laws, rules and regulations and to clarify and identify the officials responsible for withholding of tax and its remittance; Revenue Memorandum Order No. 13-2006 (dated July 13, 2006) Re: Prescribing Policies and Procedures in Monitoring the Local Government Units' (LGUs) Compliance with Withholding Tax Rules and Regulations; and Revenue Audit Memorandum Order No. 5-86 (effective May 21, 1986) Re: Guidelines in the Verification of Withholding Taxes. See issuances on synchronization of withholding tax payments — Revenue Regulations No. 5-85 (dated March 19, 1985) Re: Synchronization of the time and manner of remitting taxes withheld under Sections 53, 54 and 93 of the National Internal Revenue Code; Revenue Regulations No. 3-93 (dated January 8, 1993) Re: Amending Revenue Regulations No. 5-85; Revenue Regulations No. 4-93 (dated November 27, 1992) Re: Implementing Copyright 2015

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Republic Act No. 7497, "An Act Amending Pertinent Provisions of the National Internal Revenue Code, as amended, relative to the Final Withholding Tax on Purely Compensation Income"; Revenue Regulations No. 18-93 (dated October 25, 1993) Re: Amending Further Revenue Regulations No. 5-85, as amended by Revenue Regulations No. 3-93; Revenue Regulations No. 1-98 (effective April 8, 1998) Re: Re-Defining the Term "Large Taxpayers", Modifying the Criteria for Determining Large Taxpayers, and Prescribing the Time, Place and Manner of Filing of Tax Returns and Payment of Taxes by Large Taxpayers Amending Further RR No. 12-93, as Amended by RR 3-94; Revenue Regulations No. 6-2001 (dated July 31, 2001) Re: Amending Pertinent Provisions of Revenue Regulations Nos. 1-98, 2-98, as Amended, and 7-95, as Amended, and Revenue Memorandum Circular No. 1-98 Relative to the Inclusion of Additional Taxpayers to be Subject to Final Withholding Tax, Revision of the Withholding Tax Rates on Certain Income Payments Subject to Creditable Withholding Tax, Time for the Filing of Various Tax Returns and Payment of the Taxes Due Thereon And Others; Revenue Regulations No. 9-2001 (dated August 3, 2001) Re: Electronic Filing of Tax Returns and Payment of Taxes; and subsequent amendments made by Revenue Regulations No. 2-2002 (dated March 5, 2002) Re: Amending the Coverage of the Electronic Filing and Payment System (EFPS) By Making It Mandatory for Large Taxpayers and Optional for Certain Identified Non-Large Taxpayers to Avail of the EFPS in the Filing of Their Tax Returns and the Payment of Taxes Due Thereon; Revenue Regulations No. 9-2002 (dated June 28, 2002) Re: Amending Further Revenue Regulations No. 9-2001, as Amended by Revenue Regulations No. 2-2002, Implementing Filing of Tax Returns and Payment of Taxes thru the Electronic Filing and Payment System (EFPS) and likewise amending partly RR No. 1-98; Revenue Regulations No. 26-2002 (dated December 5, 2002) Re: Amending Further Revenue Regulations No. 9-2001, as Amended by Revenue Regulations No. 2-2002 and Revenue Regulations No. 9-2002, Providing for the Staggered Filing of Returns of Taxpayers Enrolled in the Electronic Filing and Payment System (EFPS) Based on Industry Classification; Revenue Regulations No. 5-2004 (dated April 26, 2004) Re: Amending Further Revenue Regulations (RR) No. 9-2001, as Amended by RR No. 2-2002, RR No. 9-2002 and RR No. 26-2002, Providing for Additional Tax Returns/Forms Which Shall be Filed thru the Electronic Filing and Payment System (EFPS), Revising the Requirements for Enrollment of Taxpayers, and Expanding the Coverage Thereof to Include the Top 10,000 Private Corporations Duly Identified Under RR No. 17-2003; Revenue Copyright 2015

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Regulations No. 10-2007 (dated July 18, 2007) Re: Amends further Section 3 of RR No. 9-2001 expanding the coverage of taxpayers required to file returns and pay taxes through the Electronic Filing and Payment System; Revenue Regulations No. 3-2009 (dated February 9, 2009) Re: Amending Further Revenue Regulations (RR) No. 9-2001, As Amended by RR No. 2-2002, RR No. 9-2002, RR No. 26-2002, RR No. 5-2004, and RR No. 10-2007 Expanding the EFPS Coverage to Include the Top 20,000 Private Corporations Duly Identified Under RR No. 14-2008; and Revenue Regulations No. 1-2010 (dated January 21, 2010) Re: Amending Further Section 3 of Revenue Regulations (RR) No. 9-2001, as Last Amended by RR No. 10-2007, Expanding the Coverage of Taxpayers Required to File Returns and Pay Taxes Through the Electronic Filing and Payment System (EFPS) of the Bureau of Internal Revenue; Revenue Regulations No. 12-2001 (dated September 7, 2001) Re: Amendment to the Pertinent Provisions of Revenue Regulations No. 1-98, as Amended, Revenue Regulations No. 2-98, as Amended, and Revenue Regulations No. 6-2001, Relative to the Revision of Withholding Tax Rates on Certain Income Payments Subject to Withholding Tax, the Deferment of the New Deadline Dates For Filing Selected Tax Returns, the Reporting Requirements for Recipients of Talent Fees, and for Other Purposes; Revenue Regulations No. 17-2010 (dated November 26, 2010) Re: Consolidated Regulations Implementing Republic Act No. 7646, An Act Authorizing the Commissioner of Internal Revenue to Prescribe the Place for Payment of Internal Revenue Taxes by Large Taxpayers and Prescribing the Coverage and Criteria for Determining Large Taxpayers; Revenue Regulations No. 1-2013 (dated January 23, 2013) Re: Further Expands the Coverage of Taxpayers Required to File Tax Returns and Pay Taxes Through the Electronic Filing and Payment System (eFPS) to Include National Government Agencies (NGAs) Mandatorily Required to Use the Electronic Tax Remittance Advice (eTRA); Revenue Memorandum Circular No. 42-85 (dated October 16, 1985) Re: Publishing the New BIR Form No. 1743-w, Revising BIR Forms W-1A, W-1, 1743-A1, 1743-A and 1743-C; Revenue Memorandum Circular No. 28-92 (dated June 2, 1992) Re: Publishing the full text of Republic Act No. 7497, otherwise known as the "Finality of the Withholding Tax on Purely Compensation Income"; and Revenue Memorandum Circular No. 3-98 (dated January 14, 1998) Re: Clarification on the Schedule of Payment/Remittance of Taxes Withheld on Compensation, Creditable Expanded Withholding Tax and Final Tax.

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See issuances on filing of quarterly income tax returns and payment of estimated tax by an individual — Revenue Regulations No. 7-93 (effective January 4, 1993) Re: Filing of quarterly income tax returns and payment of quarterly income tax by individuals receiving self-employment income; Revenue Memorandum Circular No. 63-93 (dated November 8, 1993) Re: Deferment of the Implementation of the Effectivity of Revenue Regulations No. 7-93 from 1993 to 1994; Revenue Memorandum Circular No. 11-98 (dated April 1, 1998) Re: Clarification of the Conflict Between the Tax Code of 1997 and Revenue Regulations 7-93 with Respect to the Prescribed Dates of Filing of Quarterly Income Tax Return and Payment of Estimated Tax by an Individual; and Revenue Memorandum Circular No. 17-98 (dated May 15, 1998) Re: Waiver of Penalties for Self-Employed Individuals and Professionals Who Failed to Submit Their First Quarter Income Tax Returns for 1998 on April 15, 1998, but Nonetheless Filed Their Return on or Before May 15, 1998. See issuances on transmittal and processing of withholding tax returns — Revenue Memorandum Circular No. 3-2006 (dated January 9, 2006) Re: Required File Structure in the Submission of the Summary Alphalist of Withholding Agents of Income Payments Subjected to Tax Withheld at Source (SAWT) as Mandatory Attachments to Tax Returns With Claimed Tax Credits due to Creditable Withholding Tax At Source and of the Monthly Alphalist of Payees (MAP) Whose Income Received Have Been Subjected to Withholding Tax in the Remittance Return Filed by the Withholding Agent/Payor of Income Payment; Revenue Memorandum Order No. 72-98 (dated July 27, 1998) Re: Revising the Format and Procedures in the Preparation of the Monthly Report on Registration and Remittance of Withholding Taxes (BIR Form W-7) and Accomplishment Report on Pre-audited Withholding Tax Returns (BIR Form W-8), Pursuant to Revenue Memorandum Order 29-95; Revenue Memorandum Order No. 80-98 (effective November 4, 1998) Re: Prescribing the Procedures in the Transmittal and Processing of the Annual Information Return on Income Tax Withheld on Compensation, Expanded and Final Withholding Taxes (BIR Form No. 1743-IR or 1604) and the Monthly Remittance Return of Internal Revenue Taxes on Government Money Payments (BIR Form No. 750AV or 1600); Revenue Memorandum Order No. 5-2001 (dated February 5, 2001) Re: Prescribing the Policies and Procedures in the Receipt, Transmittal and Processing of the Alphabetical List of Employees/Income Payees as an Copyright 2015

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attachment to the Annual Information Return (BIR Form No. 1604-CF and 1604-E) filed in diskette form by Large Taxpayers, Excise Taxpayers and other Taxpayers/Withholding Agents (WAs) whose number of Employees or Income Payees are fifty (50) or more and other taxpayers WAs who opted to file in diskette; and Revenue Regulations No. 7-2000 (dated June 16, 2000) Re: Amending Revenue Regulations No. 2-98. See other issuances on compensation income — Revenue Regulations No. 3-2001 (dated April 3, 2001) Re: Granting Moratorium on the Withholding of Income Tax On the Compensation Income of Public Elementary and Secondary School Teachers Employed by the National Government; Revenue Memorandum Circular No. 28-82 (dated December 22, 1982) Re: Treatment of fixed or variable transportation, representation and other allowances, and extension of time to furnish BIR Form W-2; Revenue Memorandum Circular No. 1-83 (dated January 4, 1983) Re: Modification of Revenue Memorandum Circular No. 28-82 regarding Treatment of Fixed or Variable Transportation, representation and other allowances; Revenue Memorandum Circular No. 16-83 (dated May 31, 1983) Re: Treatment of Fixed or Variable Transportation, Representation/Entertainment and Other Allowances under Sec. 2(c) of Revenue Regulations No. 6-82; Revenue Memorandum Circular No. 15-87 (dated April 1, 1987) Re: Tax treatment of subsistence, clothing and quarters allowances paid to the personnel of the Armed Forces of the Philippines (AFP); Revenue Memorandum Circular No. 83-91 (dated November 12, 1991) Re: Publishing the Resolution of the Supreme Court in the case of "Commissioner of Internal Revenue vs. The Court of Appeals and Efren P. Castañeda", G.R. No. 96016 promulgated October 17, 1991, Re: non-taxability of terminal leave pay received by officials/employees retiring from the government service; Revenue Memorandum Circular No. 50-92 (dated November 25, 1992) Re: Tax Treatment of Loyalty Cash Award; Revenue Memorandum Circular No. 23-2001 (dated May 22, 2001) Re: An Act Exempting from Tax Certain Allowances and Benefits Granted to the Members of the Armed Forces of the Philippines; Revenue Memorandum Circular No. 21-2010 (dated March 8, 2010) Re: Reiteration of the Applicable Penalties for Employers Who Fail to Withhold, Remit, Do the Year-End Adjustment and Refund Employees of the Excess Withholding Taxes on Compensation; Revenue Memorandum Circular No. 27-2011 (dated July 1, 2011) Re: Revocation of BIR Ruling Nos. 002-99, DA-184-04, DA-569-04 and DA-087-06; Revenue Memorandum Circular No. 39-2012 (dated August 3, Copyright 2015

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2012) Re: Withholding of Income Tax on Backwages, Allowances, and Benefits Received by Employees through Garnishments of Debts or Credits Pursuant to a Labor Dispute Award; Revenue Memorandum Circular No. 46-2013 (dated May 26, 2013) Re: Clarification on the Taxability of Benefits under Collective Negotiations Agreement (CNA) Granted to Government Employees' Organizations Duly Approved/Accredited by the Civil Service Commission (CSC); Revenue Memorandum Order No. 36-84 (effective October 26, 1984) Re: Verification of Gross Compensation Income of Employees of Private Firms; Revenue Audit Memorandum Order No. 1-87 (dated April 23, 1987) Re: Guidelines in the Verification of Housing, Travel Representation Entertainment and Advertising Expenses, and other deductions from taxable income; Revenue Memorandum Order No. 63-98 (effective July 13, 1998) Re: Prescribing the Form to be Used in the Remittance of Taxes on Fringe Benefits; Revenue Memorandum Order No. 17-99 (effective February 22, 1999) Re: Prescribing Policies, Guidelines and Procedures on the Filing of Tax Returns of Purely Compensation Income Earners Without Cash or Check Payments (BIR Form No. 1700) and the Processing of Refundable Income Tax Returns of Employees with Excess Withholding Taxes on Compensation Income; Revenue Memorandum Order No. 26-2011 (dated June 13, 2011) Re: Guidelines in the Tax Treatment of Separation Benefits Received by Officials and Employees on Account of Their Separation from Employment Due to Death, Sickness or Other Physical Disability and the Issuance of Certificate of Tax Exemption from Income Tax and from the Withholding Tax; and Revenue Memorandum Order No. 36-2011 (dated September 28, 2011) Re: Amendment to Revenue Memorandum Order No. 26-2011 Providing for Guidelines in the Tax Treatment of Separation Benefits Received by Officials and Employees on Account of Their Separation from Employment Due to Death, Sickness or Other Physical Disability and the Issuance of Certificate of Tax Exemption from Income Tax and from the Withholding Tax. See issuances on RATA and PERA — Revenue Regulation No. 17-2011 (dated October 27, 2011) Re: Implementing the Tax Provisions of Republic Act No. 9505, Otherwise Known as the "Personal Equity and Retirement Account (PERA) Act of 2008"; Revenue Memorandum Circular No. 60-91 (dated July 9, 1991) Re: Tax Treatment of Representation and Transportation Allowances (RATA) granted to public officer or employee under the General Appropriations Act; Revenue Memorandum Circular No. Copyright 2015

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68-91 (dated July 26, 1991) Re: Grant of Personnel Economic Relief Allowance (PERA) To All Employees Of The Government; Revenue Memorandum Circular No. 15-92 (dated March 11, 1992) Re: Tax Treatment of Personnel Economic Relief Allowance (PERA); Revenue Memorandum Circular No. 46-92 (dated October 2, 1992) Re: Recomputation of Income Tax for 1991 for purposes of the credit/refund of excess withholding tax; and Revenue Memorandum Circular No. 1-95 (dated January 18, 1995) Re: Second Year Implementation Of The New Salary Schedule In The Government. See issuances on private retirement benefit plan — Revenue Regulations No. 1-68 (dated March 25, 1968) Re: Private Retirement Benefit Plan Regulations; Revenue Regulations No. 1-83 (dated October 28, 1982) Re: Amendments to Revenue Regulations No. 1-68 or the Private Retirement Benefit Plan Regulations; Revenue Regulations No. 11-2001 (dated September 3, 2001) Re: Amendments to Revenue Regulations No. 1-68, as amended by Revenue Regulations No. 1-83, otherwise known as the Private Retirement Benefit Plan Regulations; Revenue Memorandum Circular No. 10-83 (dated February 22, 1983) Re: Clarification on the amendments by Revenue Regulations No. 1-83 of Revenue Regulations No. 1-68 otherwise known as the Private Retirement Benefit Plan Regulations; Revenue Memorandum Order No. 9-93 (effective October 15, 1993) Re: Prescribing the guidelines and procedures in the processing of claims for tax credit or refund of the then 15%, now 20% final income tax withheld from interest income/yield from deposit substitute instruments and interest income from Philippine currency bank deposits of employees' trust/trusteed private employees retirement plans; and Revenue Memorandum Circular No. 39-2014 (dated May 12, 2014) Re: Clarifying the Tax Treatment of Payouts by Employee Pension Plans. See issuances on Special Purpose Vehicle — Revenue Regulations No. 6-2004 (dated March 31, 2004) Re: Implementing The Tax Exemptions and Privileges Granted Under Republic Act No. 9182, Otherwise Known As "The Special Purpose Vehicle (SPV) Act of 2002"; and Revenue Regulations No. 9-2005 (effective March 19, 2005) Re: Amending Pertinent Provisions of Revenue Regulations (RR) No. 06-04 Relative to the Tax Exemptions and Privileges Granted Under Republic Act No. 9182, Otherwise Known As "The Special Purpose Vehicle (SPV) Act of 2002 (the "Act")". Copyright 2015

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See new law and issuances on "Senior Citizens Act" — Republic Act No. 9257 entitled "An Act Granting Additional Benefits and Privileges to Senior Citizens Amending for the Purpose Republic Act No. 7432, Otherwise Known as "An Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant Benefits and Special Privileges and for Other Purposes" (approved February 26, 2004); Republic Act No. 9994 entitled "An Act Granting Additional Benefits And Privileges To Senior Citizens, Further Amending Republic Act No. 7432, As Amended, Otherwise Known As 'An Act To Maximize The Contribution Of Senior Citizens To Nation Building, Grant Benefits And Special Privileges And For Other Purposes'" (approved February 15, 2010); Revenue Regulations No. 4-2006 (dated December 2, 2005) Re: Implementing the Tax Privileges Provisions of Republic Act No. 9257, otherwise known as the "Expanded Senior Citizens Act of 2003", and Prescribing the Guidelines for the Availment Thereof; Revenue Regulations No. 1-2007 (dated December 4, 2006) Re: Amending Revenue Regulations No. 4-2006 Implementing the Tax Privileges Provisions of R.A. No. 9257, Otherwise Known as the expanded Senior Citizens Act of 2003; Revenue Regulations No. 7-2010 (dated July 20, 2010) Re: Implementing the Tax Privileges Provisions of Republic Act No. 9994, Otherwise Known as the "Expanded Senior Citizens Act of 2010", and Prescribing the Guidelines for the Availment Thereof; Revenue Regulations No. 8-2010 (dated September 3, 2010) Re: Amending Revenue Regulations No. 7-2010 Implementing the Tax Privileges Provisions of R.A. No. 9994, Otherwise Known as the "Expanded Senior Citizens Act of 2010"; Revenue Memorandum Circular No. 45-2010 (dated June 2, 2010) Re: Circularizing Section 4 of Republic Act No. 9994, An Act Granting Additional Benefits and Privileges to Senior Citizens, Further Amending Republic Act No. 7432, as Amended, Otherwise Known as "An Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant Benefits and Special Privileges and for Other Purposes"; and Revenue Memorandum Circular No. 38-2012 (dated August 3, 2012) Re: Questions and Answers Further Clarifying the Provisions of Revenue Regulations (RR) No. 7-2010, as amended by RR No. 8-2010, Implementing the Tax Privileges Provisions of Republic Act (RA) No. 9994, Otherwise Known as the "Expanded Senior Citizens Act of 2010". See issuances on Managerial and Technical Positions of Filipino personnel employed by Regional or Area Headquarters (RHQs) and Regional Operating Headquarters (ROHQs) of multinational companies Copyright 2015

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— Revenue Regulations No. 11-2010 (dated October 26, 2010) Re: Further Clarifying the Term "Managerial and Technical Positions" Under Section 2.57.1 (D) of Revenue Regulations (RR) No. 2-98, as Amended, by RR No. 12-2001, Implementing Section 25 (C) of the National Internal Revenue Code of 1997 (Tax Code), as Amended and Modifying for this Purpose Revenue Memorandum Circular (RMC) No. 41-09 Including Guidelines on Availment of the Fifteen Percent (15%) Preferential Income Tax Rate for Qualified Filipino Personnel Employed by Regional or Area Headquarters (RHQs) and Regional Operating Headquarters (ROHQs) of Multinational Companies; Revenue Memorandum Circular No. 41-2009 (dated July 23, 2009) Re: Clarifying the Meaning of the Term "Managerial and Technical Positions" under Section 25 (C) of the Tax Code of 1997, as Amended, and for Other Purposes; Revenue Memorandum Circular No. 82-2010 (dated November 5, 2010) Re: Clarification on the Filing of BIR Form No. 1947 Pursuant to the Provisions of Revenue Regulations No. 11-2010 Dated October 28, 2010 Clarification on the Filing of BIR Form No. 1947 Pursuant to the Provisions of Revenue Regulations No. 11-2010 Dated October 28, 2010; and Revenue Memorandum Circular No. 85-2010 (dated November 12, 2010) Re: Grace Period on Filing of BIR Form No. 1947 Pursuant to the Provisions of Revenue Regulations No. 11-2010 Dated October 28, 2010 and Revenue Memorandum Circular No. 82-2010 Dated November 5, 2010. See issuances related to General Professional Partnerships - Revenue Memorandum Circular No. 6-2003 (dated January 15, 2003) Re: Clarifying Certain Issues Relative to the Services Rendered by Individual Professional Practitioners, General Professional Partnerships, Entertainers, and Professional Athletes Who Are Subject to the Value-Added Tax or Percentage Tax, Whichever is Applicable, Beginning January 1, 2003; Revenue Memorandum Circular No. 3-2012 (dated January 11, 2012) Re: Tax Implications of General Professional Partnership; Revenue Memorandum Circular No. 89-2012 (dated December 27, 2012) Re: Clarifying the Tax Implications and Recording of Deposits/Advances Made by Clients of General Professional Partnerships for Expenses; Revenue Memorandum Circular No. 16-2013 (dated February 8, 2013) Re: Clarifying the Tax Implications and Recording of Deposits/Advances for Expenses Received by Taxpayers Not Covered by Revenue Memorandum Circular No. 89-2012; and Revenue Memorandum Circular No. 60-2014 (dated July 24, 2014) Re: Clarification on the Applicability of Revenue Memorandum Circular (RMC) No. 8-2014 to Copyright 2015

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General Professional Partnership (GPP) in Relation to RMC No. 003-12. See issuances on Privilege Stores - Revenue Regulations No. 16-2003 (dated March 31, 2003) Re: Implementing the Provisions of Sections 6, 244 and 245 in Relation to Sections 24, 25, 27, 28, 51, 52, 106, 108, 114, 116, and 128 of the National Internal Revenue Code of 1997 (Code), Imposing Advance Payment of Value-added Tax or Percentage Tax and of Income Tax on "Privilege-Store" and Prescribing and Reiterating the Obligations of Organizer or Exhibitor of Space for the Operation of "Privilege-Store," as Well as of the "Privilege-Store" Operators; Revenue Regulations No. 24-2003 Re: Amending Pertinent Provisions of Revenue Regulations No. 16-2003 Relating to the Taxation of Privilege Stores; Revenue Regulations No. 16-2013 (dated August 22, 2013) Re: Revoking Revenue Regulations Nos. 16-2003 and 24-2003 Relating to Taxation of Privilege Stores and Imposing New Rules; and Revenue Memorandum Circular No. 80-2007 (dated December 4, 2007) Re: Prescribing the Establishment of "BIR-On-Wheels " by the Revenue District Offices Where there are Taxpayers Engaged in the Business of Privilege Stores/"Tiangges", Bazaars and Like Establishments. See issuances on Shares of Stock Held as Capital Assets - Revenue Regulations No. 6-2008 (dated April 22, 2008) Re: Consolidated Regulations Prescribing The Rules on the Taxation of Sale, Barter, Exchange or Other Disposition of Shares of Stock Held as Capital Assets; and seusequent amendments made by Revenue Regulations No. 16-2012 (dated November 7, 2012) Re: Tax Treatment of Sales, Barters, Exchanges or Other Dispositions of Shares of Stock of Publicly-Listed Companies Whose Public Ownership Levels Fall Below the Mandatory Minimum Public Ownership (MPO) Level, Monitoring of These Companies and Their Stock Transactions, and Amending Revenue Regulations No. 06-08 for the Purpose; and Revenue Regulations No. 6-2013 (dated April 11, 2013) Re: Amending Certain Provision of Revenue Regulations No. 06-2008 Entitled Consolidated Regulations Prescribing the Rules on the Taxation of Sale, Barter, Exchange or Other Disposition of Shares of Stock Held as Capital Assets; Revenue Memorandum Circular No. 21-2008 (dated February 29, 2008) Re: Clarification on the Persons Liable to the Tax Imposed under Section 127 of the Tax Code and the Crediting of Tax Collection to the Appropriate Office of the Bureau of Internal Revenue; and Revenue Memorandum Circular No. 37-2012 (dated August 3, 2012) Re: Clarifying Section 11 of Revenue Copyright 2015

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Regulations No. 06-08. See issuances on Election Campaign Funds/Contribution - Revenue Regulations No. 7-2011 (dated February 16, 2011) Re: Policies in the Tax Treatment of Campaign Contributions and Expenditures; Revenue Memorandum Order No. 35-2009 (dated November 11, 2009) Re: Project "Iboto Mo"; Revenue Memorandum Circular No. 63-2009 (dated October 22, 2009) Re: Primer on Creditable Withholding Tax on Campaign Expenditures Prescribed in Revenue Regulations No. 8-2009; Revenue Memorandum Circular No. 40-2010 (dated May 25, 2010) Re: Guidelines in Registration, Update and Tagging of Registration Information of Political Parties, Candidates & Campaign Contributors Relative to Revenue Memorandum Order No. 35-2009 Re: Project "Iboto Mo"; Revenue Memorandum Circular No. 15-2013 (dated February 12, 2013) Re: Publishing and Implementing Pertinent Provisions of Resolution No. 9476 Issued by the Commission on Elections (COMELEC) on June 2012; and Revenue Memorandum Circular No. 48-2013 (dated June 28, 2013) Re: Tax Compliance Reminders under the May 13, 2013 Midterm Elections. See other issuances on withholding taxes under Revenue Regulations No. 2-98 — Revenue Memorandum Circular No. 5-98 (dated January 22, 1998) Re: Prescribing the Use of the Revised Withholding Tax Table Implementing Section 24(A)(1)(c) in Relation to Section 79 of Republic Act No. 8424; Revenue Memorandum Circular No. 21-98 (dated May 25, 1998) Re: Circularizing Department (DOF) Order 37-98 dated May 20, 1998 Extending the Grace Period for Compliance of Revenue Regulations 2-98; Revenue Memorandum Circular No. 4-99 (dated January 7, 1999) Re: Prescribing the Use of the Revised Withholding Tax Table Implementing Section 24(A)(1)(c) in Relation to Section 79 of Republic Act No. 8424; Revenue Memorandum Circular No. 16-2000 (dated October 16, 2000) Re: Monetization of Leave Credits of Government Officials and Employees; Revenue Memorandum Circular No. 35-2003 (dated June 16, 2003) Re: Guidelines Relating to the Filing and Remittance of Taxes Withheld on Income Payments Made to Suppliers of Agricultural Products, for the Month of June, Under Section 2.57.2(S) of Revenue Regulations No. 2-98 as amended by Revenue Regulations No. 17-2003; Revenue Memorandum Circular No. 48-2004 (dated July 19, 2004) Re: Revocation/Cancellation of BIR Ruling Nos. 076-88 (3/4/88), 004-89 (1/19/89) and 191-89 (9/4/89) Pursuant to CTA Case No. 5233; Revenue Memorandum Circular No. 72-2004 (dated Copyright 2015

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November 16, 2004) Re: Clarification of Issues on the Additional Transactions Subject to Creditable Withholding Tax under Revenue Regulations No. 17-2003 (RR 17-2003), as amended by RR 30-2003, RR 1-2004 and RR 3-2004; Revenue Memorandum Circular No. 9-2006 (dated January 25, 2006) Re: Clarifying the Amount Subject to VAT and Expanded Withholding Tax (Income Tax) of Brokers and Others Similarly Situated and the Other Parties with Whom They Transact Business; Revenue Memorandum Circular No. 35-2006 (dated June 21, 2006) Re: Clarifying the proper VAT and EWT treatment of freight and other incidental charges billed by Freight Forwarders; Revenue Memorandum Circular No. 39-2007 (dated January 22, 2007) Re: Clarifying the Income Tax and VAT Treatment of Agency Fees/Gross Receipts of Security Agencies Including the Withholding of Taxes Due thereon; Revenue Memorandum Circular No. 44-2007 (dated July 6, 2007) Re: Clarifying the Taxability of Agricultural Suppliers for Withholding Tax Purposes In Respect to Sales Made to Top 10,000 Corporations And to the Government In Relation to Revenue Regulations No. 3-2004 Which Suspended the Implementation of Withholding Tax on Income Payments Made to Suppliers of Agricultural Products under Section 2.57.2(S) of Revenue Regulations (RR) No. 2-98, as Amended; Revenue Memorandum Circular No. 45-2007 (dated July 6, 2007) Re: Reiteration of the Mandated Duty of the Top 10,000 Private Corporations and of the Government to Withhold Not Only on Their Purchase of Goods But Also on their Purchase of Services Pursuant to Revenue Regulations No. 2-98, as Amended; Revenue Memorandum Circular No. 34-2008 (dated April 15, 2008) Re: Tax Treatment of Director's Fees for Income Tax and Business Tax Purposes; Revenue Memorandum Circular No. 77-2008 (dated November 24, 2008) Re: Taxability of Director's Fees Received by Directors Who are Not Employees of the Corporation for VAT or Percentage Tax Purposes as Espoused under Revenue Memorandum Circular No. 34-2008; Revenue Memorandum Circular No. 85-2012 (dated December 26, 2012) Re: Withholding Tax Statement for Taxes Withheld at Source; Revenue Memorandum Circular No. 63-2013 (dated September 26, 2013) Re: Clarification on the Taxable Year Covered by Revenue Regulations No. 12-2013; Revenue Memorandum Circular No. 5-2014 (dated January 29, 2014) Re: Clarifying the Provisions of Revenue Regulations No. 1-2014 Pertaining to the Submission of Alphabetical List of Employees/Payees of Income Payments; Revenue Memorandum Circular No. 8-2014 (dated February 6, 2014) Re: Presentation of Tax Exemption Certificate or Ruling by Copyright 2015

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Exempt Individuals and Entities; Revenue Memorandum Circular No. 73-2014 (dated September 12, 2014) Re: Clarification of Withholding Tax Rates on Dividend Payments to Philippine Central Depository (PCD) Nominees; Revenue Memorandum Order No. 4-2004 (dated January 30, 2004) Re: Defining Guidelines Relating to Registration of Agricultural Supplier as Marginal Income Earners and their Exemption From the 1% Creditable Withholding Tax on Payments Made by Hotels, Restaurants, Resorts, Caterers, Food Processors, Canneries, Supermarkets, Livestock, Poultry, Fish and Marine Product Dealers, Hardwares, Factories, Furniture Shops and All Other Establishment; and Revenue Memorandum Order No. 47-2004 (dated July 15, 2004) Re: Prescribing Policies and Procedures in Monitoring, Identification for Inclusions or Deletions of Withholding Agents Classified as Top 10,000 Private Corporations (TTCs) under Section 2.57.2 (M) of Revenue Regulations No. 2-98, as amended by RR 17-2003, Standard Format in the Submission of the List of Regular Suppliers and Establishing Key Performance Indicator (KPI). See other issuances for additional information — Revenue Regulations No. 13-99 (dated July 26, 1999) Re: Exemption of Certain Individuals from the Capital Gains Tax on the Sale, Exchange or Disposition of a Principal Residence under Certain Conditions, and subsequent amendment made by Revenue Regulations No. 14-2000 (dated November 20, 2000) Re: Amending Sections 2(2), 3 and 6 of Revenue Regulations No. 13-99 vis-a-vis sale, exchange or disposition, by a natural person, of his "Principal Residence"; Revenue Regulations No. 19-2001 (dated November 6, 2001) Re: Amendment to the Agreement Between the Bureau of Internal Revenue and the Authorized Agent Bank (AAB) Relative to the Collection of Internal Revenue Tax Liabilities Through the Banking System Pursuant to Executive Order No. 937, as Implemented by Revenue Regulations No. 5-84, as Amended; Revenue Regulations No. 2-2005 (dated February 8, 2005) Re: Consolidated Revenue Regulations Implementing Relevant Provisions of Republic Act No. 7227 otherwise known as "Bases Conversion and Development Act of 1992", Republic Act 7916 as amended otherwise known as "Special Economic Zone Act of 1995", Republic Act No. 7903 otherwise known as "Zamboanga City Special Economic Zone Act of 1995" and Republic Act No. 7922 otherwise known as "Cagayan Special Economic Zone Act of 1995" Thereby Amending Revenue Regulations No. 1-95 as amended by Revenue Regulations No. 16-99; Revenue Regulations No. 11-2005 (effective March 5, 2005) Re: Regulations Copyright 2015

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Defining "Gross Income Earned" to Implement the Tax Incentive Provision in Section 24 of Republic Act No. 7916, otherwise known as "The Special Economic Zone Act of 1995" Revoking Section 7 of Revenue Regulations No. 2-2005, and Suspending the Effectivity of Certain Provisions of Revenue Regulations No. 2-2005; Revenue Regulations No. 12-2005 (effective March 5, 2005) Re: Regulations Defining "Gross Income" to Implement the Tax Incentive Provision under Paragraph (c) of Section 4 of Republic Act No. 7922, otherwise known as "Cagayan Special Economic Zone Act of 1995" and Paragraph (f) of Section 4 of Republic Act No. 7903, otherwise known as "Zamboanga City Special Economic Zone Act of 1995", Revoking Section 7 of Revenue Regulations No. 2-2005 and Suspending the Effectivity of Certain Provisions of Revenue Regulations No. 2-2005; Revenue Regulations No. 13-2005 (effective March 5, 2005) Re: Regulations Defining "Gross Income Earned" to Implement the Tax Incentive Provision under Paragraph (c) of Section 12 of Republic Act No. 7227, otherwise known as "The Bases Conversion Development Act of 1992" Revoking Section 7 of Revenue Regulations No. 2-2005, and Suspending the Effectivity of Certain Provisions of Revenue Regulations No. 2-2005; Revenue Regulations No. 12-2010 (issued October 18, 2010) Re: Regulations Providing for the Policies, Guidelines and Procedures in the Implementation of the Tax Subsidy to be Granted by the Fiscal Incentives Review Board to the Millennium Challenge Account-Philippines for the Philippine Compact Program; Revenue Regulations No. 16-2010 (issued November 25, 2010) Re: Guidelines, Rules & Procedures in the Filing of Confidential Information & the Investigation of Cases Arising Therefrom; Revenue Regulations No. 2-2011 (dated March 1, 2011) Re: Filing of Income Tax Return and/or Annual Information Return by Individuals, Including Estates and Trusts; Revenue Regulations No. 13-2011 (dated July 25, 2011) Re: Implementing the Tax Provisions of Republic Act No. 9856 Otherwise Known as "The Real Estate Investment Trust Act of 2009"; Revenue Regulations No. 5-2013 (dated March 21, 2013) Re: Tax Treatment of Sale of Jewelry, Gold and Other Metallic Minerals to a Nonresident Alien Individual Not Engaged in Trade or Business within the Philippines or to a Nonresident Foreign Corporation; Revenue Memorandum Circular No. 57-97 (dated December 3, 1997) Re: Publishing the Full Text of the Letter from the Bangko Sentral ng Pilipinas Regarding the Effect of the Liberalization of BSP Rules on Foreign Exchange and Foreign Trade Transactions on the Processing of Applications for VAT Refunds; Revenue Memorandum Circular No. 1-98 (dated January 2, 1998) Re: Salient Features Copyright 2015

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of Certain Amendments to the National Internal Revenue Code (NIRC) Made by R.A. No. 8424, Otherwise Known as the Comprehensive Tax Reform Act of 1997; Revenue Memorandum Circular No. 32-99 (dated May 3, 1999) Re: Japanese Contractors Undertaking Overseas Economic Cooperation Fund of Japan (OECF) Funded Project are Exempt From the Eight and One Half Percent (8.5%) Creditable VAT Imposed Under Section 114 (C) of the Tax Code of 1997 and to the One Percent (1%) Expanded Withholding Tax Imposed Under Section 2.57.2 (E) of Revenue Regulations No. 2-98 Implementing Section 57(B) of the Tax Code of 1997; Revenue Memorandum Circular No. 42-99 (dated June 2, 1999) Re: Amending Revenue Memorandum Circular No. 32-99; Revenue Memorandum Circular No. 14-2001 (dated March 12, 2001) Re: Lists of Requirements from Taxpayers for Issuance of Certain Rulings with Established Precedents Delegated to Regional Directors and to the Assistant Commissioner, Legal Service under RMC Nos. 2-2001, 3-2001 and 10-2001; Revenue Memorandum Circular No. 16-2001 (dated March 23, 2001) Re: Initial Launching of e-Filing Component of the Automated Data Capture System (ADCS), Otherwise Known as the e-Filing and e-Payment System for BIR National Office Personnel; Revenue Memorandum Circular No. 21-2001 (dated March 16, 2001) Re: Publishing the Memorandum of Agreement entered into by and among the Department of Finance, Bureau of Internal Revenue, Department of the Interior and Local Government, League of Provinces of the Philippines, League of Cities of the Philippines, League of Municipalities of the Philippines and the Liga ng mga Barangay sa Pilipinas re: commitment of all parties to help one another in the implementation of strategies to enhance their tax enforcement and collection efforts by utilizing all available resources necessary in the pursuit of these objectives; Revenue Memorandum Circular No. 24-2001 (dated May 28, 2001) Re: Enrollment Procedures Prior to Electronic Filing and Payment System (EFPS); Revenue Memorandum Circular No. 51-2002 (dated November 14, 2002) Re: Imposition of the Gross Receipts Tax under Sections 121 and 122 of the Tax Code on items of gross income subject to final withholding tax and clarifying the tax base thereof; Revenue Memorandum Circular No. 1-2003 (dated December 27, 2002) Re: Clarifying Certain Provisions of Revenue Regulations No. 3-2002 as amended by Revenue Regulations No. 19-2002 amending Section 2.83 of Revenue Regulations 2-98 in relation to the Substituted Filing of Income Tax Returns of Qualified Pure Compensation Income Earners; Revenue Memorandum Circular No. 72-2003 (dated October 20, 2003) Re: Copyright 2015

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Tax implications of Electric Cooperatives registered with the National Electrification Administration and Cooperative Development Authority; Revenue Memorandum Circular No. 76-2003 (dated November 14, 2003) Re: Tax Exemptions of Non-Stock, Non-Profit Corporations Section 30, Tax Code of 1997 and Non-stock, Non-Profit Educational Institutions under Paragraph 3, Section 4, Article XIV of the Constitution; Revenue Memorandum Circular No. 77-2003 (dated November 18, 2003) Re: Classification of Payments for Software for Income Tax Purposes; Revenue Memorandum Circular No. 72-2004 (dated November 16, 2004) Re: Clarification of Issues on the Additional Transactions Subject to Creditable Withholding Tax under Revenue Regulations No. 17-2003 (RR 17-2003), as amended by RR 30-2003, RR 1-2004 and RR 3-2004; Revenue Memorandum Circular No. 11-2005 (dated March 30, 2005) Re: Publishing the full text of DOF Memorandum CVP-0333-DOF/2005 dated March 18, 2005 on the Suspension of Revenue Regulations No. 2-2005; Revenue Memorandum Circular No. 32-2005 (dated June 17, 2005) Re: Publishing the full text of BIR Ruling No. 001-2005 dated June 16, 2005 subjecting the income realized by enterprises registered under the Bases Conversion and Development Act of 1992 and the Philippine Economic Zone Act of 1995 that is not related to its registered activity/ies to regular internal revenue taxes; Revenue Memorandum Circular No. 43-2005 (dated August 30, 2005) Re: Prescribing the Guidelines on the Proper Treatment of Shares of Stock Disposed of in the Stock Exchange; Revenue Memorandum Circular No. 44-2005 (effective September 1, 2005) Re: Taxation of Payments for Software; Revenue Memorandum Circular No. 46-2005 (dated September 12, 2005) Re: Prescribing the Guidelines on the Proper Treatment of Shares of Stock Dispos3ed of in the Stock Exchange; Revenue Memorandum Circular No. 56-2005 (effective October 12, 2005) Re: Revocation of Revenue Memorandum Circular No. 43-2005 Pertaining to Shares of Stock Disposed of in the Stock Exchange; Revenue Memorandum Circular No. 30-2008 (dated April 1, 2008) Re: Clarifying the Taxability of Insurance Companies for MCIT, Business Tax, and Documentary Stamp Tax Purposes, as subsequently amended by Revenue Memorandum Circular No. 59-2008 (dated August 23, 2008) Re: Amending Certain Portions of Revenue Memorandum Circular No. 30-2008 on the Subject of the Taxability of Insurance Companies for Minimum Corporate Income Tax (MCIT), Business Tax and Documentary Stamp Tax Purposes; Revenue Memorandum Circular No. 22-2009 (dated April 22, 2009) Re: Clarifying the Allowable Claims for Personal and Additional Copyright 2015

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Exemptions and Optional Standard Deduction (OSD) Pursuant to Revenue Regulations Nos. 10-2008 and 16-2008, Respectively; Revenue Memorandum Circular No. 69-2009 (dated December 7, 2009) Re: Mandatory Enrollment to and Availment of the Electronic Filing and Payment System (eFPS) Facility for Selected Taxpayers; Revenue Memorandum Circular No. 18-2010 (dated March 1, 2010) Re: Clarification on the Coverage and Taxability of Amusement Places under Section 125 (b) of the National Internal Revenue Code (Tax Code) of 1997, as Amended; Revenue Memorandum Circular No. 18-2011 (dated April 12, 2011) Re: Income Tax Exemption of Interest Income Earnings from Long Term Deposits or Investment Certificates Under Secs. 24 (B) (1) & 25 (A) (2) of the National Internal Revenue Code of 1997, as Amended; Revenue Memorandum Circular No. 63-2012 (dated October 29, 2012) Re: Clarifying the Issues Affecting Invoicing and Recording of Income Payments for Media Advertising Placements; Revenue Memorandum Circular No. 91-2012 (dated December 28, 2012) Re: Supplement to Revenue Memorandum Circular No. 63-2012 on Invoicing and Recording of Income Payments for Media Advertising Placements; Revenue Memorandum Order No. 52-99 (dated May 17, 1999) Re: Amendment to Certain Provisions of Revenue Memorandum Order No. 17-99 dated February 22, 1999 and Clarifications on the Processing of Income Tax Returns with Second Installment and Refundable Returns; Revenue Memorandum Order No. 75-99 (effective September 9, 1999) Re: Delegation of Authority to Regional Directors to Issue Certain Rulings with Established Precedents; Revenue Memorandum Order No. 32-2004 (dated July 2, 2004) Re: Special Operations on Motels; Revenue Memorandum Order No. 22-2005 (dated August 2, 2005) Re: Prescribing the Guidelines and Procedures in the Implementation of Revenue Regulation (RR) No. 8-2005 on the Inclusion as Income Payments Subject to Creditable Withholding Tax the Manila Electric Company (MERALCO) Refund to Phase IV Customers as Approved by the Energy Regulatory Board (ERB) and Arising from the Supreme Court Case G.R. 141314 of April 9, 2003; Revenue Memorandum Order No. 23-2005 (effective August 17, 2005) Re: Audit/Investigation of Withholding Tax Liabilities for Taxable Years 2003 and 2004 Including Withholding Tax on Fringe Benefits; Revenue Memorandum Order No. 24-2005 (dated October 5, 2005) Re: Processing of Claims for Tax Refund of Japanese Contractors and Nationals Undertaking Projects Funded by the Overseas Economic Cooperation Fund of Japan (OECF); Revenue Audit Memorandum Order No. 1-2000 (dated March 17, 2000) Re: Updated Copyright 2015

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Handbook on Audit Procedures and Techniques Volume I (Revision —Year 2000); and Revenue Audit Memorandum Order No. 2-2000 (dated February 28, 2000) Re: Bank Audit Manual. See also later VAT issuance — Revenue Regulations No. 16-2005 (dated September 1, 2005) Re: Consolidated Value-Added Tax Regulations of 2005. 1

Effective January 1, 1998.

2

Authority of Secretary of Finance to promulgate rules and regulations.

3

Withholding of tax at source, Returns and payment of taxes withheld at source, and Tax on profits collectible from owner or other persons, respectively.

4

Title II, Chapter XIII, Withholding on Wages.

5

Return and payment of value-added tax (Withholding of creditable value-added tax).

6

Title V, Other Percentage Taxes.

Section 2.57 (B) - Creditable Withholding Tax 7

Individual returns, and Corporation returns, respectively.

Section 2.57.1 - Income Payments Subject to Final Witholding Tax 8

See issuances on taxation of certain income derived from banking activities — Revenue Regulations No. 12-80, and subsequent amendments made by Revenue Regulations No. 8-81, Revenue Regulations No. 1-84, and Revenue Regulations No. 3-97; and Revenue Regulations No. 10-98. See earlier issuances on taxation of interest income derived from deposits and yield from deposit substitutes — Revenue Regulations No. 17-84, and subsequent amendments made by Revenue Regulations No. 23-84, Revenue Regulations No. 3-85, and Revenue Regulations No. 10-86; and Revenue Audit Memorandum Order No. 1-84. See issuance on taxation of securities borrowing and lending transactions- Revenue Regulations No. 5-2007.

Section 2.57.1 (A) - Income Payments to a Citizen or to a Resident Alien Individual Copyright 2015

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9

See amendments made by Section 2, Revenue Regulations No. 6-2001; and Section 3, Revenue Regulations No. 17-2003.

10

Income tax rates (Rates of income tax on individual citizen and individual resident alien of the Philippines).

11

See Revenue Regulations No. 10-98.

12

As amended by Section 2, Revenue Regulations No. 17-2003. Original text: SECTION 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at the rates herein specified; (A) Income payments to a citizen or to a resident alien individual; xxx

xxx

xxx

(6) On capital gains presumed to have been realized from the sale, exchange or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value as determined in accordance with Sec. 6(E) of the Code (i.e. the authority of the Commissioner to prescribe the real property values), whichever is higher — Six percent (6%). In case of dispositions of real property made by individuals to the government or any of its political subdivisions or agencies or to government-owned or controlled corporations, the tax to be imposed shall be determined either under Section 24(A) of the Code for normal income tax for individual citizens and residents or under Section 24(D)(1) of the Code for the final tax on capital gains from sale of property at six percent (6%), at the option of the taxpayer. xxx

xxx

xxx

As amended by Revenue Regulations No. 8-98. SECTION 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at Copyright 2015

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the rates herein specified; (A) Income payments to a citizen or to a resident alien individual; xxx

xxx

xxx

(6) The rate of six percent (6%) shall be imposed on capital gains presumed to have been realized by the seller from the sale, exchange or other disposition of real properties located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value as determined in accordance with Section 6(E) of the Code (i.e., the authority of the Commissioner to prescribe the real property values), whichever is higher. In case of disposition of real property made by individuals to the government or to any of its political subdivisions or agencies or to government-owned or -controlled corporations, the tax to be imposed shall be determined either under the normal income tax rate imposed in Section 24(A) or under a final capital gains tax of six percent (6%) imposed under Section 24(D)(1), both of the Tax Code of 1997, at the option of the taxpayer.

13

Power of the Commissioner to make assessments and prescribe additional requirements for tax administration and enforcement.

14

Income tax rates (Capital gains from sale of real property).

15

See Section 2, Revenue Regulations No. 8-98 and Revenue Memorandum Order No. 92-98. See also Revenue Memorandum Order No. 66-99, Revenue Memorandum Order No. 13-2001, and Revenue Regulations No. 4-99.

16

Section 2.57.7 as added by Revenue Regulations No. 6-2001.

Section 2.57.1 (B) - Income Payment to Non-resident Aliens Engaged in Trade or Business in the Philippines 17

As amended by Revenue Regulations No. 30-2003 and Revenue Regulations No. 6-2001.

18

Tax on nonresident alien individual (Nonresident alien engaged in trade or business within the Philippines).

19

Amended by Section 2, Revenue Regulations No. 30-2003.

Copyright 2015

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Original text of Section 2.57.1 (B)(3): "Sec. 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at the rates herein specified. xxx

xxx

xxx

(B) Income Payment to Non-resident Aliens Engaged in Trade or Business in the Philippines. — The following forms of income derived from sources within the Philippines shall be subject to final withholding tax in the hands of a non-resident alien individual engaged in trade or business within the Philippines, based on the gross amount thereof and at the rates prescribed therefor: xxx

xxx

xxx

(3) On capital gains presumed to have been realized from the sale exchange or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value as determined in accordance with Sec. 6(E) of the Code (i.e. the authority of the Commissioner to prescribe zonal values), whichever is higher — Six percent (6%). In case of dispositions of real property made by individuals to government or any of its political subdivisions or agencies or to government-owned or controlled corporations, the tax to be imposed shall be determined either under Section 24(A) of the code for the normal rate of income tax for individual citizens and residents or under Section 24(D)(1) of the Code for the final tax on capital gains from sale of property at six percent (6%), at the option of the taxpayer.

20

See Section 2, Revenue Regulations No. 8-98 and Revenue Memorandum Order No. 92-98. See also Revenue Memorandum Order No. 66-99, Revenue Memorandum Order No. 13-2001, and Revenue Regulations No. 4-99.

21

Section 2.57.1 (B)(4) added by Revenue Regulations No. 6-2001.

22

Section 2.57.1 (B)(5) added by Revenue Regulations No. 6-2001.

Section 2.57.1 (C) - Income Derived from All Sources Within the Philippines by a Copyright 2015

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Non-resident Alien Individual Not Engaged in Trade or Business Within the Philippines 23

As amended by Section 2, Revenue Regulations No. 30-2003. Original text of Section 2.57.1 (C) (2): "Sec. 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at the rates herein specified. xxx

xxx

xxx

(C) Income Derived from All Sources Within the Philippines by a Non-resident Alien Individual Not Engaged in Trade or Business Within the Philippines. — The following forms of income derived from all sources within the Philippines shall be subject to a final withholding tax in the hands of a non-resident alien individual not engaged in trade or business within the Philippines based on the following amounts and at the rates prescribed therefor: xxx

xxx

xxx

(2) On capital gains presumed to have been realized from the sale, exchange or other disposition of real property located in the Philippines, classified as capital assets, including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value as determined in accordance with Sec. 6(E) of the Code (i.e. the authority of the Commissioner to prescribe the real property values), whichever is higher — Six percent (6%). In case of dispositions of real property made by individuals to government or any of its political subdivisions or agencies or to government-owned or controlled corporations, the tax to be imposed shall be determined either under Sec. 24(a) of the Code for the rates of income tax for individual citizens and residents or under Sec. 24(D)(1) of the Code for the final tax on capital gains from sale of property at six percent (6%), at the option of the taxpayer.

See Section 2, Revenue Regulations No. 8-98 and Revenue Memorandum Order No. 92-98. See also Revenue Memorandum Order No. 66-99, Revenue Memorandum Order No. 13-2001, and Revenue Regulations No. 4-99. Section 2.57.1 (D) - Income Derived by Alien Individuals Employed by a Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies Copyright 2015

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24

As amended by Section 2, Revenue Regulations No. 12-2001. Original text of Section 2.57.1 (D): "Sec. 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at the rates herein specified. xxx

xxx

xxx

(D) Income Derived by Alien Individuals Employed by Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies. — A final withholding tax equivalent to fifteen percent (15%) shall be withheld by the withholding agent from the gross income received by every alien individual occupying managerial and technical positions in regional or area headquarters and regional operating headquarters and representative offices established in the Philippines by multinational companies as salaries, wages, annuities, compensation, remuneration, and other emoluments, such as honoraria and allowances, except income which is subject to the fringe benefits tax, from such regional or area headquarters and regional operating headquarters. The same tax treatment shall apply to Filipinos employed and occupying the same as those of alien employed by these multinational companies. The term "multinational company" means a foreign firm or entity engaged in international trade with its affiliates or subsidiaries or branch offices in the Asia Pacific Region and other foreign markets.

As amended by Section 2, Revenue Regulations No. 6-2001: "Sec. 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at the rates herein specified. xxx

xxx

xxx

(D) Income Derived by Alien Individuals Employed by Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies and Those Employed by Offshore Banking Units and Petroleum Service Contractors and Subcontractors. — A final-withholding tax equivalent to fifteen percent (15%) shall be withheld by the withholding agent from the gross income received by every alien individual occupying managerial and Copyright 2015

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technical positions in regional or area headquarters and regional operating headquarters established in the Philippines by multinational companies as salaries, wages, annuities, compensation, remuneration, and other emoluments, such as honoraria and allowances, except income which is subject to the fringe benefits tax, from such regional or area headquarters and regional operating headquarters. The same tax treatment is applicable to Filipinos employed and occupying the same positions as those aliens employed by multinational companies, regardless of whether or not there is an alien executive occupying the same position, provided, that such Filipinos shall have the option to be taxed at either 15% of gross income or at the regular tax rate on their taxable income in accordance with the Tax Code of 1997. In case of the latter, the withholding tax rates under Sections 2.78 and 2.79 of Revenue Regulations No. 2-98 shall apply.

See also Republic Act No. 8756 entitled "An Act Providing For The Terms, Conditions And Licensing Requirements Of Regional Or Area Headquarters, Regional Operating Headquarters, And Regional Warehouses Of Multinational Companies, Amending For The Purpose Certain Provisions Of Executive Order No. 226, Otherwise Known As The Omnibus Investments Code Of 1987" (dated November 23, 1999). See futher clarificatory Regulations No. 11-2010. 25

regulations

onthis

provision,

Revenue

See Revenue Regulations No. 3-98 and subsequent amendments thereto.

Section 2.57.1 (E) - Income Derived by Alien Individuals Employed by Offshore Banking Units 26

As amended by Section 2, Revenue Regulations No. 6-2001. Original text: "Sec. 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at the rates herein specified. xxx

xxx

xxx

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withheld by the withholding agent from the gross income of alien individuals occupying managerial or technical positions in offshore banking units established in the Philippines, as salaries, wages, annuities, compensations, remuneration and other emoluments such as honoraria and allowances, received from such offshore banking units. The same tax treatment shall apply to Filipinos employed and occupying the same positions as those of aliens who are employed by these offshore banking units.

Section 2.57.1 (F) - Income of Aliens Employed by Foreign Petroleum Service Contactors and Subcontractors 27

As amended by Section 2, Revenue Regulations No. 6-2001. Original text: "Sec. 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at the rates herein specified. xxx

xxx

xxx

(F) Income of Aliens Employed by Foreign Petroleum Service Contractors and Subcontractors. — A final withholding tax equivalent to fifteen percent (15%) shall be withheld from the gross income of an alien individual who is a permanent resident of a foreign country but who is employed and assigned in the Philippines by a foreign service contractor or by a foreign service subcontractor who is engaged in petroleum operations in the Philippines. His gross income includes salaries, wages, annuities, compensation, remuneration and other emoluments, such as honoraria and allowances, received from such contractor or subcontractor. The same tax treatment shall apply to Filipinos who are employed and occupying the same positions as those of aliens employed by a foreign petroleum service contractor or subcontractor.

Section 2.57.1 (G) - Income Payment to a Domestic Corporation 28

As amended by Section 2, Revenue Regulations No. 6-2001 and Section 2, Revenue Regulations No. 17-2003.

29

See Revenue Regulations No. 10-98.

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30

As amended by Section 2, Revenue Regulations No. 17-2003. Original text of Section 2.57.1 (G) (5): "Sec. 2.57.1. Income Payments Subject to Final Withholding Tax. — The following forms of income shall be subject to final withholding tax at the rates herein specified. xxx

xxx

xxx

G) Income Payment to a Domestic Corporation. — The following items of income shall be subject to a final withholding tax in the hands of a domestic corporation, based on the gross amount thereof and at the rate of tax prescribed therefor: (5) On capital gains presumed to have been realized from the sale, exchange or other disposition of real property located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value as determined in accordance with Sec. 6(E) of the Code, whichever is higher — Six percent (6%).

31

See Revenue Regulations No. 8-98 and Revenue Memorandum Order No. 92-98. See also Revenue Memorandum Order No. 66-99, Revenue Memorandum Order No. 13-2001; and Revenue Regulations No. 4-99.

32

Added by Section 2, Revenue Regulations No. 6-2001.

Section 2.57.1 (H) - Income Payment to a Resident Foreign Corporation 33

See amendment made by Section 2, Revenue Regulations No. 6-2001.

34

See Revenue Regulations No. 10-98.

35

See Section 28(A)(5), NIRC of 1997.

36

See Revenue Regulations No. 10-98.

37

See Revenue Regulations No. 10-98.

38

Added by Section 2, Revenue Regulations No. 6-2001.

Section 2.57.1 (J) - Fringe Benefits Granted to the Employee (Except Rank and File Employee) Copyright 2015

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39

See Revenue Regulations No. 3-98 and subsequent amendments made by Revenue Regulations Nos. 8-2000; 10-2000; 5-2008; and 5-2011.

Section 2.57.2 - Income Payment Subject to Creditable Withholding Tax and Rates Prescribed Thereon 40

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See amendments made by Revenue Regulations No. 8-98 (dated August 25, 1998) Re: Revenue Regulations Amending Pertinent Portions of Revenue Regulations Nos. 11-96 and 2-98 Relative to the Tax Treatment on the Sale, Transfer or Exchange of Real Property and for this Purpose Revising the Time and Place of Payment of the Capital Gains Tax Due Thereon; Revenue Regulations No. 12-98 (dated August 14, 1998) Re: Amending Section 2.57.2 of Revenue Regulations No. 2-98; Revenue Regulations No. 3-99 (dated January 22, 1999) Re: Further Amending Section 2 of Revenue Regulations No. 12-98; Revenue Regulations No. 6-2001 (dated July 31, 2001) Re: Amending Pertinent Provisions of Revenue Regulations Nos. 1-98, 2-98, as Amended, and 7-95, as Amended, and Revenue Memorandum Circular No. 1-98 Relative to the Inclusion of Additional Taxpayers to be Subject to Final Withholding Tax, Revision of the Withholding Tax Rates on Certain Income Payments Subject to Creditable Withholding Tax, Time for the Filing of Various Tax Returns and Payment of the Taxes Due Thereon And Others; Revenue Regulations No. 12-2001 (issued September 7, 2001) Re: Amendment to the Pertinent Provisions of Revenue Regulations No. 1-98, as Amended, Revenue Regulations No. 2-98, as Amended, and Revenue Regulations No. 6-2001, Relative to the Revision of Withholding Tax Rates on Certain Income Payments Subject to Withholding Tax, the Deferment of the New Deadline Dates For Filing Selected Tax Returns, the Reporting Requirements for Recipients of Talent Fees, and for Other Purposes; Revenue Regulations No. 14-2002 (dated September 9, 2002) Re: Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as amended; Revenue Regulations No. 19-2002 (dated October 11, 2002) Re: Amending Revenue Regulations No. 3-2002 and Further Amending Section 2.83 of Revenue Regulations No. 2-98 as Amended, Relative to Substituted Filing of Income Tax Return of Employees Receiving Purely Compensation Income from Only One Employer for One Taxable Year Whose Tax Due is Equal to Tax Withheld and Individual-Payees Whose Compensation Income is Subject to Final Withholding Tax; Revenue Regulations No. 17-2003 (dated March 31, 2003) Re: Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as Amended, Providing for Additional Transactions Subject to Creditable CD Technologies Asia, Inc. and Accesslaw, Inc.

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Withholding Tax; Re-Establishing the Policy that the Capital Gains Tax on the Sale, Exchange or Other Disposition of Real Property Classified as Capital Assets Shall be Collected as a Final Withholding Tax, Thereby Further Amending Revenue Regulations Nos. 8-98 and 13-99, as Amended by Revenue Regulations No. 14-2000; and for Other Purposes; Revenue Regulations No. 30-2003 (dated November 12, 2003) Re: Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as Last Amended by Revenue Regulations No. 17-2003, and Revenue Regulations No. 8-98, as Amended, Providing for the Imposition of Final Withholding Tax on the Sale, Exchange or Other Disposition of Real Property Classified as Capital Assets by Non-resident Aliens, Increasing the Withholding Tax Rates on Certain Income Payments, Inclusion of Certain Income Payments, Sanctions to be Imposed on Payees Who Refuse the Withholding of Tax on Their Income/Receipts, and for Other Purposes; Revenue Regulations No. 1-2004 (dated January 14, 2004) Re: Amending Further Sec. 2.57.2(S) of Revenue Regulations No. 2-98, as Last Amended By Revenue Regulations No. 30-2003, Exempting Marginal Income Earners From Creditable Withholding Tax on Payments Made By Hotels, Restaurants, Resorts, Caterers, Food Processors, Canneries, Supermarkets, Livestock, Poultry, Fish and Marine Product Dealers, Hardwares, Factories, Furniture Shops, and All Other Establishments; Revenue Regulations No. 3-2004 (dated March 1, 2004) Re: Suspending the implementation of withholding tax on income payments made to suppliers of agricultural products under Section 2.57.2(S) of Revenue Regulations 2-98, as amended by RR 17-2003, further amended by RR 30-2003 and 1-2004; Revenue Regulations No. 8-2005 (dated February 23, 2005) Re: Amending further pertinent provisions of Revenue Regulations No. 2-98, as last amended by Revenue Regulations 3-2004, as Amended, providing for the inclusion of Income Payments subject to Creditable Withholding Tax under Section 2.57.2(U) on Manila Electric Company (MERALCO) Refund arising from Supreme Court Case G.R. No. 14814 of April 9, 2003 to Customers under Phase IV as approved by Energy Regulatory Commission (ERC); Revenue Regulations No. 2-2009 (dated February 4, 2009) Re: Amending Further Secs. 2.57.2 and 2.58 of Revenue Regulations No. 2-98, as Amended, Subjecting to Creditable Withholding Tax the Interest Portion of the Refund of Meter Deposits by MERALCO and Other Distribution Utilities to Residential and Non-Residential Electricity Consumers/Customers; Revenue Regulations No. 8-2009 (dated October 22, 2009) Re: Amending Further Secs. 2.57.2 and 2.57.3 of Revenue Regulations No. 2-98, as Amended, Subjecting to Creditable Copyright 2015

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Withholding Tax the Income Payments Made by Political Parties and Candidates of Local and National Elections of All Their Campaign Expenditures and Income Payments Made by an Individual or Juridical Person Forming Part of Their Campaign Contributions to Candidates of Local and National Elections and to Political Parties; and Revenue Regulations No. 13-2011 (dated July 25, 2011) Re: Implementing the Tax Provisions of Republic Act No. 9856 Otherwise Known as "The Real Estate Investment Trust Act of 2009". See prior issuances on expanded withholding tax — Revenue Regulations No. 6-85 and subsequent amendments made by Revenue Regulations Nos. 8-85, 13-86, 1-89, 12-89, 1-90, 8-90, 2-91, 4-91, 6-94, 7-94, 8-94, 12-94, and 16-94. Section 2.57.2 (A) - Professional Fees, Talent Fees, etc. for Services Rendered by Individuals 41

As amended by Section 3, Revenue Regulations No. 6-2001; Section 3, Revenue Regulations No. 12-2001; Section 3, Revenue Regulations No. 30-2003; and Section 2, Revenue Regulations No. 10-2013. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: (A) Professional fees, talent fees, etc., for services rendered by individuals — On the gross professional, promotional and talent fees or any other form of remuneration for the services of the following individuals — Ten percent (10%); (1)

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Those individually engaged in the practice of professions or callings: lawyers; certified public accountants; doctors of medicine; architects; civil, electrical, chemical, mechanical, structural, industrial, mining, sanitary, metallurgical and geodetic engineers; marine surveyors; doctors of veterinary science; dentist; professional appraisers; connoisseurs of tobacco; actuaries; and interior decorators;

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(2)

Professional entertainers such as but not limited to actors and actresses, singers and emcees;

(3)

Professional athletes including basketball players, pelotaris and jockeys;

(4)

All directors involved in movies, stage, radio, television and musical productions;

(5)

Insurance agents and insurance adjusters;

(6)

Management and technical consultants;

(7)

Bookkeeping agents and agencies;

(8)

Other recipients of talent fees;

(9)

Fees of directors who are not employees of the company paying such fees, whose duties are confined to attendance at and participation in the meetings of the board of directors.

The amounts subject to withholding under this paragraph shall include not only fees, but also per diems, allowances and any other form of income payments. In the case of professional entertainers, athletes, and all recipient of talent fees, the amount subject to withholding tax shall also include amounts paid to them in consideration for the use of their names or pictures in print, broadcast, or other media or for public appearances, for purposes of advertisements or sales promotion. xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 10-2013: Section 2.57.2. Income payments subject to creditable withholding tax and rates prescribed thereon. — . . . (A) Professional fees, talent fees, etc., for services rendered by individuals. — On the gross professional, promotional and talent fees or any other form of remuneration for the services of the following individuals — Fifteen percent (15%), if the gross income for the current year exceeds P720,000; and Ten percent (10%), if otherwise: (1) Those individually engaged in the practice of profession or callings: . . . designers, real estate service practitioners (RESPs), (i.e., real Copyright 2015

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estate consultants, real estate appraisers and real estate brokers) requiring government licensure examination given by the Real Estate Service pursuant to Republic Act No. 9646 and all other profession requiring government licensure examination regulated by the Professional Regulations Commission, Supreme Court, etc. . . . xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 30-2003: Sec. 2.57.2. Income payments subject to creditable withholding tax and rates prescribed thereon. — . . . (A) Professional fees, talent fees, etc., for services rendered by individuals. — On the gross professional, promotional and talent fees or any other form of remuneration for the services of the following individuals — Fifteen percent (15%), if the gross income for the current year exceeds P720,000; and Ten percent (10%), if otherwise;

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(1)

Those individually engaged in the practice of professions or callings; lawyers; certified public accountants; doctors of medicine; architects; civil, electrical, chemical, mechanical, structural, industrial, mining, sanitary, metallurgical and geodetic engineers; marine surveyors; doctors of veterinary science; dentist; professional appraisers; connoisseurs of tobacco; actuaries; interior decorators, designers and all other profession requiring government licensure examinations and/or regulated by the Professional Regulations Commission, Supreme Court, etc.

(2)

Professional entertainers, such as, but not limited to, actors and actresses, singers, lyricist, composers and emcees;

(3)

Professional athletes, including basketball players, pelotaris and jockeys;

(4)

All directors and producers involved in movies, stage, radio, television and musical productions;

(5)

Insurance agents and insurance adjusters;

(6)

Management and technical consultants;

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(7)

Bookkeeping agents and agencies;

(8)

Other recipient of talent fees;

(9)

Fees of directors who are not employees of the company paying such fees, whose duties are confined to attendance at and participation in the meetings of the board of directors. xxx

xxx

xxx

Furthermore, in order to determine the applicable tax rate (10% or 15%) to be applied/withheld by the withholding agent, every individual professional/talent/corporate directors herein enumerated, shall periodically disclose his gross income for the current year to the Bureau of Internal Revenue (BIR) by submitting a notarized sworn declaration attached as Annex "A" hereof in three (3) copies (two (2) copies for the BIR and one (1) copy for the taxpayer), copy furnished all the current payors of the declaration duly stamped received by the BIR (Collection Division of the Regional Office having jurisdiction over the place where the income earner is registered/Large Taxpayers Collection Division for large taxpayers in Metro Manila/LTDO for large taxpayers outside Metro-Manila). Sworn declaration may likewise be filed by the income payor on behalf of the professionals/talents/directors whose services were being rendered exclusively to the aforesaid payor. The disclosure should be filed on June 30 of each year or within fifteen (15) days after the end of the month the professional/talent/director's income reaches P720,000, whichever comes earlier. In case his total gross income is less than P720,000 as of June 30, he/she shall submit a second disclosure within fifteen (15) days after the end of the month that his/her gross income for the current year to date reaches P720,000. The payee — professional/talent/director shall furnish each payor a copy of the BIR duly stamped received sworn declaration not later than five (5) days from the date of receipt by the BIR. In case of failure to submit the June 30 annual declaration/disclosure to the BIR, and to furnish the payor/s a copy thereof, the payor shall withhold the tax at the rate of 15%. The Collection Division/Large Taxpayers Collection Division/LTDO shall transmit one (1) copy of the duly submitted notarized sworn declaration, to the Withholding Tax Division within five (5) days from receipt thereof. The remaining copy shall be the file copy of the concerned Regional Office/Large Taxpayer Service/LTDO for monitoring purposes. These requirements shall likewise apply to taxable juridical persons Copyright 2015

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(sworn declaration shall be executed by the president/managing partner of the corporation/company), partners of general professional partnerships and medical practitioners stated under sub-sections (B), (H) and (I) hereof. Notwithstanding the foregoing, if an individual recipient receives professional fees/talent fees/directors fees in addition to salaries from the same payor, the said fees shall be considered as supplemental compensation and, thus be subject to the withholding tax on compensation. xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 12-2001: Section 2.57.2. Income payment subject to creditable withholding tax and rates prescribed thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines. (A) Professional fees, talent fees, etc. for services rendered by individuals. — On the gross professional, promotional and talent fees or any other form of remuneration for the services of the following individuals — xxx

xxx

(2)

Professional entertainers, such as, but not limited to, actors and actresses, singers and emcees — Twenty percent (20%), if the professional entertainer's gross income for the current year exceeds P720,000; and Ten percent (10%), if otherwise;

(3)

Professional athletes, including basketball players, pelotaris and jockeys — Twenty percent (20%), if the professional athlete's gross income for the current year exceeds P720,000; and Ten percent (10%), if otherwise;

(4)

All directors involved in movies, stage, radio, television and musical productions — Twenty percent (20%), if the director's gross income for the current year exceeds P720,000; and Ten Percent (10%); if otherwise; xxx

(8) Copyright 2015

xxx

xxx

xxx

Other recipients of talent fees — Twenty percent (20%), if the recipient's gross income for the current year exceeds

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P720,000; and Ten percent (10%), if otherwise. xxx

xxx

xxx

The amounts 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. In the case of professional entertainers, professional athletes, directors involved in movies, stage, radio, television and musical productions and other recipients of talent fees, the amounts subject to withholding tax shall also include amounts paid to them in consideration for the use of their names or pictures in print, broadcast, or other media or for public appearances, for purposes of advertisements or sales proportion. Furthermore, in order to determine the applicable tax rate (10% or 20%) to be applied/withheld by the withholding agent, every professional entertainer, professional athlete, director involved in movies, stage radio, television and musical productions and other recipients of talent fees shall annually disclose his gross incomes for the current year to the Bureau of Internal Revenue (BIR), by submitting a notarized sworn declaration thereof, copy furnished all the current payors of the declaration duly stamped received by the BIR (Withholding Tax Division of the National Office). The disclosure should be filed on June 30 of each year or within fifteen (15) days after the end of the month the talent's income reaches P720,000, whichever comes earlier. In case his total gross income is less than P72,000 as June 30, he/she shall submit a second disclosure within fifteen (15) days after the end of the month that his/her gross income for the current year to date reaches P720,000. The initial disclosure after the effectivity or these Regulations shall be filed on or before September 30, 2001 or within fifteen (15) days after the effectivity of these Regulations, whichever comes later. In case of failure to submit the annual declaration/disclosure to the BIR, the payor shall withhold the tax at the rate of 20%. Notwithstanding the foregoing, if an individual recipient receives talent fees in addition to salaries from the same payor, the said talent fees shall be considered as supplemental compensation and, thus, be subject to the withholding tax on compensation. xxx

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xxx

xxx

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As amended by Section 3, Revenue Regulations No. 6-2001: SEC. 2.57.2. Income payment subject to creditable withholding tax and rates prescribed thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: (A) Professional fees, talent fees, etc. for services rendered by individuals — On the gross professional, promotional and talent fees or any other form of remuneration for the services of the following individuals — (1)

Those individually engaged in the practice of professions or callings; lawyers; certified public accountants; doctors of medicine; architects; civil, electrical, chemical, mechanical, structural, industrial, mining, sanitary, metallurgical and geodetic engineers; marine surveyors; doctors of veterinary science; dentists; professional appraisers; connoisseurs of tobacco; actuaries; and interior decorators — Ten percent (10%)

(2)

Professional entertainers, such as, but not limited to, actors and actresses, singers and emcees — Twenty percent (20%)

(3)

Professional athletes, including basketball players, pelotaris and jockeys — Twenty percent (20%)

(4)

All directors involved in movies, stage, radio, television and musical productions — Twenty percent (20%)

(5)

Insurance agents and insurance adjusters — Ten percent (10%)

(6)

Management and technical consultants — Ten percent (10%)

(7)

Bookkeeping agents and agencies — Ten percent (10%)

(8)

Other recipients of talent fees — Twenty percent (20%)

(9)

Fees of directors, who are not employees of the company paying such fees, whose duties are confined to attendance at and participation in the meetings of the board of directors — Twenty percent (20%)

The amounts subject to withholding under this paragraph shall include Copyright 2015

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not only fees, but also per diems, allowances and any other form of income payments. In the case of professional entertainers, athletes, and all recipients of talent fees, the amounts subject to withholding tax shall also include amounts paid to them in consideration for the use of their names or pictures in print, broadcast, or other media or for public appearances, for purposes of advertisements or sales promotion; xxx

xxx

xxx

Section 2.57.2 (B) - Professional Fees, Talent Fees, etc. for Services of Taxable Juridical Persons 42

As amended by Section 3, Revenue Regulations No. 30-2003. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(B) Professional fees, talent fees, etc. for services of taxable juridical persons — On the gross professional, promotional and talents fees, or any other form of remuneration enumerated in the preceding subparagraph for the services of taxable juridical persons — Five percent (5%). xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 6-2001. Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(B) Professional fees, talent fees, etc. for services of taxable juridical persons — On the gross professional, promotional and talents fees, or any other form of remuneration enumerated in the preceding subparagraph for the services Copyright 2015

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of taxable juridical persons — Ten percent (10%)

Section 2.57.2 (C) - Rentals 43

As amended by Section 3, Revenue Regulations No. 17-2003. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(C) Rentals — On gross rental for the continued use or possession of real property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity — Five percent (5%). xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 14-2002. Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(C) Rentals (1) Real properties. — On gross rental for the continued use or possession of real property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity — Five percent (5%); (2) Personal properties. — On gross rental or lease in excess of Ten Thousand Pesos (P10,000.00) per payment for the continued use or possession of personal property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity which Copyright 2015

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include, but not limited to the following: land transport equipment, water transport equipment, air transport equipment, industrial equipment, commercial equipment, scientific equipment, agricultural machinery and equipment, construction/civil engineering machinery and equipment, telecommunication equipment, office furniture/machines/equipment, main frame computer and all other computer machines/equipment, materials handling equipment and auxiliary equipment — Five percent (5%); However, the Ten Thousand Pesos (P10,000.00) threshold shall not apply when the accumulated gross rental or lease paid by the lessee to the same lessor exceeds or is reasonably expected to exceed P10,000.00 within the year. In which case, the lessee shall withhold the five percent (5%) withholding tax on the entire amount. (3) Poles, satellites and transmission facilities. — On gross rentals or lease for the use of poles, satellites and/or transponder and transmission facilities which include but not limited to the following: switchboards, land lines/aerial cables, underground cables and submarine cables — Five percent (5%); (4) Billboards. — On gross rentals or lease of spaces used in posting advertisements in the form of billboards and/or structures similar thereto, posted in public places such as, but not limited to, buildings, vehicles, amusement places, malls, street posts, etc. — Five percent (5%) xxx

xxx

xxx

See earlier provisions on rentals under Section 1(c), Revenue Regulations No. 6-85, and subsequent amendment made by Revenue Regulations No. 8-90. Section 2.57.2 (E) - Income Payments to Certain Contractors 44

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As amended by Section 3, Revenue Regulations No. 6-2001, Section 2, Revenue Regulations No. 14-2002 and Section 3, Revenue Regulations No. 17-2003. CD Technologies Asia, Inc. and Accesslaw, Inc.

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Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(E) Income payments to certain contractors — On gross payments to the following contractors, whether individual or corporate — One percent (1%). (1) General engineering contractors — Those whose principal contracting business in connection with fixed works requiring specialized engineering knowledge and skill including the following divisions or subjects:

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(a)

Reclamation works;

(b)

Railroads;

(c)

Highways, streets and roads;

(d)

Tunnels;

(e)

Airports and airways;

(f)

Waste reduction plants;

(g)

Bridges, overpasses, underpasses and other similar works;

(h)

Pipelines and other systems for the transmission of petroleum and other liquid or gaseous substances;

(i)

Land leveling;

(j)

Excavating;

(k)

Trenching;

(l)

Paving; and

(m)

Surfacing work.

General

Building

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—

Those

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principal 55

contracting business is in connection with any structure built, for the support, shelter and enclosure of persons, animals, chattels, or movable property of any kind, requiring in its construction the use of more than two unrelated building trades or crafts, or to do or superintend the whole or any part thereto. Such structure includes sewers and sewerage disposal plants and systems, parks, playgrounds, and other recreational works, refineries, chemical plants and similar industrial plants requiring specialized engineering knowledge and skills, powerhouse, power plants and other utility plants and installation, mines and metallurgical plants, cement and concrete works in connection with the above-mentioned fixed works. (3) Specialty Contractors — Those whose operations pertain to the performance of construction work requiring special skill and whose principal contracting business involves the use of specialized building trades or crafts. cdasia

(4)

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Other contractors — (a)

Filling, demolition and salvage work contractors and operators of mine drilling apparatus;

(b)

Operators of dockyards;

(c)

Persons engaged in the installation of water system, and gas or electric light, heat or power;

(d)

Operators of stevedoring, warehousing or forwarding establishments;

(e)

Transportation contractors which include common carriers for the carriage of goods and merchandise of whatever kind by land, air or water, where the gross payments by the payor to the same payee amounts to at least two thousand pesos (P2,000) per month, regardless of the number of shipments during the month;

(f)

Printers, bookbinders, lithographers and publishers except those principally engaged in the publication or printing of any newspaper, magazine, review or bulletin which appears at regular intervals, with fixed prices for subscription and sale;

(g)

Messengerial, janitorial, private detective and/or security agencies, credit and/or collection agencies and other

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business agencies; (h)

Advertising agencies, exclusive of gross payments to media;

(i)

Independent producers of television, radio and stage performances or shows;

(j)

Independent producers of "jingles";

(k)

Labor recruiting agencies;

(l)

Persons engaged in the installation of elevators, central air conditioning units, computer machines and other equipment and machineries and the maintenance services thereon;

(m)

Persons engaged in the sale of computer services;

(n)

Persons engaged in landscaping services;

(o)

Persons engaged in the collection and disposal of garbage;

(p)

TV and radio station operators on sale of TV and radio airtime; and

(q)

TV and radio blocktimers on sale of TV and radio commercial spots. xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 17-2003: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(E) Income payments to certain contractors — On gross payments to the following contractors, whether individual or corporate — Two percent Copyright 2015

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(2%) xxx (3)

Other contractors xxx

xxx

xxx

(1) xxx

xxx

(k) Labor recruiting agencies and/or "labor-only" contractors. For this purpose, any person who undertakes to supply workers to an employer shall be deemed to be engaged in "labor-only" contracting where such person does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials and the workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer which the workers are habitually employed; STcHDC

xxx

xxx

xxx

As amended by Revenue Regulations No. 14-2002: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(E) Income payments to certain contractors. — On gross payments to the following contractors, whether individual or corporate — Two percent (2%) xxx (4)

xxx

xxx

Other contractors — xxx

xxx

xxx

(m) Persons engaged in the sale of computer services, computer programmers, software/program developer/designer, internet service providers, web page designing, computer data processing, conversion or base Copyright 2015

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services and other computer related activities; xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 6-2001: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(E) Income payments to certain contractors — On gross payments to the following contractors, whether individual or corporate — Two percent (2%) (1) General engineering contractors — Those whose principal contracting business in connection with fixed works requiring specialized engineering knowledge and skill, including the following divisions or subjects:

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(a)

Reclamation works;

(b)

Railroads;

(c)

Highways, streets and roads;

(d)

Tunnels;

(e)

Airports and airways;

(f)

Waste reduction plants;

(g)

Bridges, overpasses, underpasses and other similar works;

(h)

Pipelines and other systems for the transmission of petroleum and other liquid or gaseous substances;

(i)

Land leveling;

(j)

Excavating;

(k)

Trenching;

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(l)

Paving; and

(m)

Surfacing work.

(2) General building contractors — Those whose principal contracting business is in connection with any structure built, for the support, shelter and enclosure of persons, animals, chattels, or movable property of any kind, requiring in its construction the use of more than two unrelated building trades or crafts, or to do or superintend the whole or any part thereto. Such structure includes sewers and sewerage disposal plants and systems, parks, playgrounds, and other recreational works, refineries, chemical plants and similar industrial plants requiring specialized engineering knowledge and skills, powerhouse, power plants and other utility plants and installation, mines and metallurgical plants, cement and concrete works in connection with the above-mentioned fixed works. (3) Specialty Contractors — Those whose operations pertain to the performance of construction work requiring special skill and whose principal contracting business involves the use of specialized building trades or crafts. (4)

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Other contractors —

(a)

Filling, demolition and salvage work contractors and operators of mine drilling apparatus;

(b)

Operators of dockyards;

(c)

Persons engaged in the installation of water system, and gas or electric light, heat or power;

(d)

Operators of stevedoring, establishments;

(e)

Transportation contractors which include common carriers for the carriage of goods and merchandise of whatever kind by land, air or water, where the gross payments by the payor to the same payee amounts to at least two thousand pesos (P2,000) per month, regardless of the number of shipments during the month;

(f)

Printers, bookbinders, lithographers and publishers except those principally engaged in the publication or printing of any newspaper, magazine, review or bulletin which appears at

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forwarding

60

regular intervals, with fixed prices for subscription and sale; (g)

Messengerial, janitorial, private detective and/or security agencies, credit and/or collection agencies and other business agencies;

(h)

Advertising agencies, exclusive of gross payments to media;

(i)

Independent producers performances or shows;

(j)

Independent producers of "jingles";

(k)

Labor recruiting agencies;

(l)

Persons engaged in the installation of elevators, central air conditioning units, computer machines and other equipment and machineries and the maintenance services thereon;

(m)

Persons engaged in the sale of computer services;

(n)

Persons engaged in landscaping services;

(o)

Persons engaged in the collection and disposal of garbage;

(p)

TV and radio station operators on sale of TV and radio airtime; and

(q)

TV and radio blocktimers on sale of TV and radio commercial spots.

of

television,

radio

and

stage

45

See earlier provisions under Section 1(e)2(e), Revenue Regulations No. 6-85, and subsequent amendments made by Revenue Regulations Nos. 8-85 and 13-86.

46

See amendment made by Section 3, Revenue Regulations No. 17-2003.

47

See amendment made by Section 2, Revenue Regulations No. 14-2002.

Section 2.57.2 (F) - Income Distribution to the Beneficiaries 48

Estates and trusts (Imposition of tax).

Section 2.57.2 (G) - Income Payments to Certain Brokers and Agents

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49

As amended by Section 3, Revenue Regulations No. 10-2013 Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(G) Income payments to certain brokers and agents. — On gross commissions of customs, insurance, real estate and commercial brokers and fees of agents of professional entertainers — Five percent (5%); xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 17-2003: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(G) Income payments to certain brokers and agents. — On gross commissions or service fees of customs, insurance, stock, real estate, immigration and commercial brokers and fees of agents of professional entertainers. — Ten percent (10%); xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 14-2002: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines:

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xxx

xxx

xxx

(G) Income payments to certain brokers and agents. — On gross commissions of customs, insurance, stock, real estate, immigration and commercial brokers, and fees of agents of professional entertainers. — Ten percent (10%) xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 6-2001: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(G) Income payments to certain brokers and agents — On gross commissions of customs, insurance, real estate and commercial brokers and fees of agents of professional entertainers — Ten percent (10%) xxx

xxx

xxx

Section 2.57.2 (H) - Income Payments to Partners of General Professional Partnerships 50

As amended by Section 3, Revenue Regulations No. 30-2003. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(H) Income payments to partners of general professional partnerships. — Income payments made periodically or at the end of the taxable year by a general professional partnership to the partners, such as drawings, advances, sharings, allowances, stipends, etc. — Ten percent (10%);

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xxx

xxx

xxx

See earlier provisions under Section 1(h), Revenue Regulations No. 6-85, and subsequent amendment made by Revenue Regulations No. 1-89. Section 2.57.2 (I) - Professional Fees Paid to Medical Practitioners 51

As last amended by Section 2, Revenue Regulations No. 14-2013. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(I) Professional fees paid to medical practitioners. — Any amount collected for and paid to medical practitioners by hospitals and clinics or paid by patients to the medical practitioners through the hospital or clinic — Ten percent (10%); xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 30-2003: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(I) Professional fees paid to medical practitioners. — Any amount collected for and paid to medical practitioners (includes doctors of medicine, doctors of veterinary science and dentists) by hospitals and clinics, or paid directly to the medical practitioners by patients who were ‘admitted and confined' to such Hospitals or Clinics, or paid directly to such medical practitioners by health maintenance organizations (HMOs) and/or similar establishments which is likewise covered by Section 2.57.2(A)(1) — Fifteen percent (15%), if the income payments to the medical practitioner for the Copyright 2015

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current year exceeds P720,000; and Ten percent (10%), if otherwise. a) It shall be the duty and responsibility of the hospital, clinic or HMO to remit taxes withheld from the following: 1. Professional fees paid by HMOs to medical practitioners. 2. Professional fees paid by patients to medical practitioners thru the hospitals or clinics. 3. Professional fees paid by patients directly to medical practitioners where the 10% or 15% expanded withholding tax, whichever is applicable, shall in turn be given by medical practitioners directly to the Accounting Office of the hospitals or clinics

c)

xxx

xxx

xxx

xxx

xxx

xxx

...

(ii) Medical practitioners whose professional fee was paid to them directly by the patients and the 10% or 15% withholding tax, whichever is applicable, was given by such practitioners to the Accounting Office of the hospital or clinic (iii) Medical practitioners whose professional fee was paid to them directly by the patients but the 10% or 15% withholding tax, whichever is applicable, was not given by such practitioners to the Accounting Office of the hospital or clinic. xxx

xxx

xxx

(e) Hospitals and clinics shall be responsible for the accurate computation of taxes to be withheld on professional fees paid by patients thru the hospitals and clinics, in the same way that HMOs shall be responsible for the computation of taxes to be withheld from the professional fees paid by them to the medical practitioners, and timely remittance of the 10% or 15% expanded withholding tax, whichever is applicable. The list of all income recipients-payees in this Subsection shall be included in the Alphalist of Payees Subject to Expanded Withholding Tax Copyright 2015

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attached to BIR Form No. 1604-E (Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax). Likewise, the hospitals, clinics or HMOs shall issue a Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) to medical practitioners who are subjected to withholding, every 20th day following the close of the taxable quarter or upon request of the payee. xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 17-2003: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(I) Professional fees paid to medical practitioners. — Any amount collected for and paid to medical practitioners (includes doctors of medicine, doctors of veterinary science and dentists) by hospitals and clinics, or paid directly to the medical practitioners by patients who were 'admitted and confined' to such Hospitals or Clinics, or paid directly to such medical practitioners by health maintenance organizations (HMOs) and/or similar establishments which is likewise covered by Section 2.57.2 (A)(1). — Ten percent (10%); xxx

xxx

xxx

d) For this purpose, the term 'medical practitioners' shall likewise include medical technologists, allied health workers (e.g., occupational therapists, physical therapists, speech therapists, nurses, etc.) and other medical practitioners who are not under an employer-employee relationship with the hospital, clinic or HMO and other similar establishments. xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 14-2002: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there Copyright 2015

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shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(I) Professional fees paid to medical practitioners. — Any amount collected for and paid to medical practitioners (includes doctors of medicine, doctors of veterinary science and dentists) by hospitals and clinics or paid directly to the medical practitioners by patients who were 'admitted and confined' to such Hospitals or Clinics. — Ten percent (10%) a) It shall be the duty and responsibility of the Hospital or Clinic to remit taxes withheld from the following: IaCHTS

xxx

xxx

xxx

b) Exception — The withholding tax herein prescribed shall not apply whenever there is proof that no professional fee has in fact been charged by the medical practitioner and paid by his patient. Provided, however, that this fact is shown in a sworn declaration jointly executed by the medical practitioner, and the patient or his duly authorized representative, in case the patient is a minor or otherwise incapacitated. This sworn declaration, to be executed in the form presented in Annex "A" of these Regulations, shall form part of the records of the hospital or clinic and shall constitute as part of its records and shall be made readily available to any duly authorized Revenue Officer for tax audit purpose. Provided, further, that the said administrator of the hospital or clinic shall inform the Revenue District Office having jurisdiction over such hospital or clinic about any medical practitioner who fails or refuses to execute the sworn statement herein prescribed, within ten (10) days from the occurrence of such event. c) Hospitals and Clinics shall submit the names and addresses of medical practitioners in the following classifications, every 15th day after the end of each calendar quarter, to the Collection Division of the Revenue Region for non-large taxpayers and at the Large Taxpayers Document Processing and Quality Assurance Division (LTDP&QAD) Copyright 2015

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in the National Office or Large Taxpayers District Office (LTDO) in the Region for large taxpayers, where such hospital or clinic is registered, using the prescribed format. xxx

xxx

xxx

d) For this purpose, the term 'medical practitioners' includes, medical technologists, allied health workers (e.g., occupational therapists, physical therapists, speech therapists, nurses etc.) and other medical practitioners who are not under an employer-employee relationship with the hospital or clinic. e) Hospitals and clinics shall be responsible for the accurate computation of professional fees paid directly to hospitals and clinics and timely remittance of 10% expanded withholding tax. The list of all income recipients-payees in this Subsection shall be included in the Alphalist of Payees Subject to Expanded Withholding Tax attached to BIR Form No. 1604-E (Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax). xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 6-2001: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(I) Professional fees paid to medical practitioners — Any amount collected for and paid to medical practitioners (includes doctors of medicine, doctors of veterinary science and dentists) by hospitals and clinics or paid directly to the medical practitioners by patients who were admitted and confined to such hospitals or clinics — Ten percent (10%) a)

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It shall be the duty and responsibility of the hospital or clinic to remit taxes withheld from the following:

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1.

Professional fees paid directly to hospitals or clinics by patients.

2.

Professional fees paid by patients directly to medical practitioners where the 10% expanded withholding tax shall in turn be given by medical practitioners directly to the Accounting Office of the hospitals or clinics.

b)

Exception — The withholding tax herein prescribed shall not apply whenever no professional fee has been charged by the medical practitioner and paid by his patient.

c)

Hospitals and clinics shall submit the names and addresses of medical practitioners in the following classifications, every 15th day after the end of each calendar quarter, to the Collection Division of the Revenue Region where such hospital or clinic is located, using "Annex A" [i.e., as indicated in Revenue Regulations No. 3-99]: (i)

Medical practitioners whose professional fee was paid by patients directly to the hospital or clinic.

(ii)

Medical practitioners whose professional fee was paid to them directly by the patients and the 10% withholding tax was given by such practitioners to the Accounting Office of the hospital or clinic. ITScAE

(iii)

Medical practitioners whose professional fee was paid to them directly by the patients but the 10% withholding tax was not given by such practitioners to the Accounting Office of the hospital or clinic.

(iv)

Medical practitioners who did not charge any professional fee from their patients.

d)

The rules herein prescribed shall likewise apply to rendering of medical services by medical practitioners through a duly registered professional partnership for the practice of the medical profession.

e)

Hospitals or clinics shall be responsible for the accurate computation of professional fees paid directly to hospitals and clinics and timely remittances of the 10% expanded withholding taxes. Likewise, the hospitals or clinics shall issue a Certificate of Creditable

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Tax Withheld at Source (BIR Form No. 2307) to medical practitioners who were subjected to withholding, every 20th day following the close of the taxable quarter. The names of medical practitioners shall be included in the Alphabetical List of Income Recipients attached to the Annual Information Return (BIR Form No. 1604).

As amended by Section 2, Revenue Regulations No. 3-99: "SEC. 2. Amendment. — Income payments subject to creditable withholding tax and rates prescribed thereon. — Except as otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: "xxx "I.

xxx

xxx

Professional fees paid to medical practitioners. — Any amount collected for and paid to medical practitioners by hospitals and clinics or paid directly to the medical practitioners by patients who were admitted and confined to such Hospitals or Clinics. "a)

"b)

It shall be the duty and responsibility of the hospital or clinic to remit taxes withheld from the following: "1.

Professional fees paid directly to Hospitals or Clinics by patients.

"2.

Professional fees paid by patients directly to medical practitioners where the 10% expanded withholding tax shall in turn be given by medical practitioners directly to the Accounting Office of the Hospitals or Clinics.

Exception — The withholding tax herein prescribed shall not apply whenever no professional fee has been charged by the medical practitioner and paid by his patient. cdll

"c)

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Hospitals and Clinics shall submit the names and addresses of medical practitioners in the following classifications, every 15th day after the end of each calendar quarter, to the Collection Division of the Revenue Region where such Hospital or Clinic is

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located, using "Annex A":

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"i.

Medical Practitioners whose professional fee was paid by patients directly to the hospital or clinic.

"ii.

Medical Practitioners whose professional fee was paid to them directly by the patients and the 10% withholding tax was given by such practitioner to the Accounting Office of the Hospital or Clinic.

"iii.

Medical Practitioners whose professional fee was paid to them directly by the patients but the 10% withholding tax was not given by such practitioners to the Accounting Office of the Hospital or Clinic.

"iv.

Medical Practitioners who did not charge any professional fee from their patients.

"d)

The rules herein prescribed shall likewise apply to rendering of medical services by medical practitioners through a duly registered professional partnership for the practice of the medical profession, provided, however, that the rate of the withholding tax to be imposed shall be at five percent (5%) pursuant to the provisions of this Section."

"e)

Hospitals or clinics shall be responsible for the accurate computation of professional fees paid directly to hospitals and clinic and timely remittance of the 10% expanded withholding taxes. The deadline of the remittance of the withholding tax collected whether paid directly to hospitals or clinic or directly to medical practitioners is on or before the 10th day of the following month from January to November and January 25th for the month of December, to the accredited agent Bank (AAB) of the Bureau of Internal Revenue. Failure to remit the same at the prescribed dates shall be subjected to penalties prescribed by the NIRC.

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Likewise, the hospitals or clinics shall issue a Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307), to medical practitioners who were subjected to withholding, every 20th day following the close of the taxable quarter. The names of medical practitioners shall be included in the Alphabetical List of Income Recipients attached to the Annual Information Return (BIR Form No. 1604).

As amended by Section 2, Revenue Regulations No. 12-98: "Sec. 2.57.2. Income payments subject to creditable withholding tax and rates prescribed thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: "xxx

xxx

xxx

"(I) Professional fees paid to medical practitioners — Any amount collected for and paid to medical practitioners by hospitals and clinics or paid by patients to the medical practitioners through the hospital or clinic — Ten Percent (10%). "(a) It shall be the duty and responsibility of the hospital or clinic to collect from any patient admitted by such hospital or clinic, the professional fee of the attending medical practitioner and to withhold the tax herein prescribed. It is the intent of these Regulations that the hospital or clinic shall, at all times, collect the professional fee for and in behalf of the medical practitioner and to withhold therefrom the tax herein prescribed. "(i) In general. — It shall be presumed that the hospital or clinic has collected the professional fee of the said medical practitioner and shall, accordingly, be liable for the withholding of the tax vis-a-vis each and every patient admitted into the hospital or clinic under the care of the said medical practitioner. "(ii) Exception. — The withholding tax herein prescribed shall not apply whenever there is proof that no professional fee has in fact been charged by the medical practitioner and paid by his patient, Provided, however, Copyright 2015

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that this fact is shown in a sworn declaration (ANNEX A hereof) jointly executed by the medical practitioner, the patient or his duly authorized representative, and the administrator of the hospital or clinic. This sworn declaration shall form part of the records of the hospital or clinic and shall constitute as part of its records and shall be made readily available to any duly authorized Revenue Officer for tax audit purpose, Provided, further, that the said administrator of the hospital or clinic shall inform the Revenue District Office having jurisdiction over such hospital or clinic about any medical practitioner who fails or refuses to execute the sworn statement herein prescribed, within ten (10) days from the occurrence of such event. cda

"(b) The rules herein prescribed shall likewise apply to rendering of medical services by medical practitioners through a duly registered professional partnership for the practice of the medical profession provided, however, that the rate of the withholding tax to be imposed shall be at five percent (5%), pursuant to the provisions of Sub-section (B) of this Section."

See earlier provision under Section 1(i), Revenue Regulations No 6-85, and subsequent amendment made by Revenue Regulations No. 1-89. Section 2.57.2 (J) - Gross selling price or total amount of consideration or its equivalent paid to the seller/owner for the sale, exchange or transfer of real property classified as ordinary asset 52

As last amended by Section 3, Revenue Regulations No. 17-2003. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(J) Gross selling price or total amount of consideration or its equivalent paid to the seller/owner for the sale, exchange or transfer of. — Real Copyright 2015

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property, other than capital assets, sold by an individual, corporation, estate, trust, trust fund or pension fund and the seller/transferor is habitually engaged in the real estate business in accordance with the following schedule — Those which are exempt from a withholding tax at source as prescribed in Sec. 2.57.5 of these regulations

Exempt

With a selling price of five hundred thousand pesos (P500,000.00) or less

1.5%

With a selling price of more than five hundred thousand pesos (P500,000.00) but not more than two million pesos (P2,000,000.00)

3.0%

With selling price of more than two million pesos (P2,000,000.00)

5.0%

A seller/transferor must show proof of registration with HLURB or HUDCC to be considered as habitually engaged in the real estate business. Real property, other than capital asset, by an individual, estate, trust, trust fund or pension fund or by a corporation who is not habitually engaged in the real estate business — Seven and one-half percent (7.5%). LLphil

Gross selling price shall mean the consideration stated in the sales document or the fair market value determined in accordance with Section 6 (E) of the Code, as amended, whichever is higher. In an exchange, the fair market value of the property received in exchange, as determined in the Income Tax Regulations shall be used. Where the consideration or part thereof is payable on installment, no withholding of tax is required to be made on the periodic installment payments where the buyer is an individual not engaged in trade or business. In such a case, the applicable rate of tax based on the entire consideration shall be withheld on the last installment or installments to be paid to the seller. However, if the buyer is engaged in trade or business, whether a corporation or otherwise, the tax shall be deducted and withheld by the buyer on every installment. xxx

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xxx

xxx

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As amended by Section 3, Revenue Regulations No. 6-2001: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(J) Gross selling price or total amount of consideration or its equivalent paid to the seller/owner for the sale, exchange or transfer of real property classified as ordinary asset — A creditable withholding tax based on the gross selling price/total amount of consideration or the fair market value determined in accordance with Section 6(E) of the Code, whichever is higher, paid to the seller/owner for the sale, transfer or exchange of real property, other than capital asset, shall be imposed upon the withholding agent/buyer, in accordance with the following schedule: A.

Where the seller/transferor is exempt from creditable withholding tax in accordance with Sec 2.57.5 of these regulations Exempt B.

Upon the following values of real property, where the seller/transferor is habitually engaged in the real estate business: With a selling price of Five Hundred Thousand Pesos (P500,000.00) or less

1.5% With a selling price of more than Five Hundred Thousand Pesos (P500,000.00) but not more than Two Million Pesos (P2,000,000.00) 3.0% With a selling price of more than Two Million Pesos (P2,000,000.00) 5.0% C.

Where the seller/transferor is not habitually engaged in the real estate business

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Registration with the HLURB or HUDCC shall be sufficient for a seller/transferor to be considered as habitually engaged in the real estate business. If the seller/transferor is not registered with HLURB or HUDCC, he/it may prove that he/it is engaged in the real estate business by offering other satisfactory evidence (for example, he/it consummated during the preceding year at least six taxable real estate transactions, regardless of amount). Notwithstanding the foregoing, for purposes of these Regulations, banks shall not be considered as habitually engaged in the real estate business. Gross selling price shall mean the consideration stated in the sales document or the fair market value determined in accordance with Section 6 (E) of the Code, whichever is higher. In an exchange, the fair market value of the property received in exchange shall be considered as the consideration. If the buyer is an individual not engaged in trade or business, the following rules shall apply: (i) If the sale is a sale of property on the installment plan (that is, payments in the year of sale do not exceed 25% of the selling price), no withholding of tax is required to be made on the periodic installment payments. In such a case, the applicable rate of tax based on the gross selling price or fair market value of the property, whichever is higher, shall be withheld on the last installment or installments to be paid to the seller until the tax is fully paid. (ii) If, on the other hand, the sale is on a "cash basis" or is a "deferred-payment sale not on the installment plan" (that is, payments in the year of sale exceed 25% of the selling price), the buyer shall withhold the tax based on the gross selling price or fair market value of the property, whichever is higher, on the first installment. However, if the buyer is engaged in trade or business, whether a corporation or otherwise, these rules shall apply: (i) If the sale is a sale of property on the installment plan (that is, payments in the year of sale do not exceed 25% of the selling price), the tax shall be deducted and withheld by the buyer on every installment. (ii) If, on the other hand, the sale is on a "cash basis" or is a "deferred-payment sale not on the installment plan" (that is, payments in the year of sale exceed 25% of the selling price), the buyer shall withhold the tax based on the gross selling price or fair market value of the property, Copyright 2015

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whichever is higher, on the first installment. In any case, no Certificate Authorizing Registration (CAR) shall be issued to the buyer unless the creditable withholding tax due on the sale, transfer or exchange of real property other than capital asset has been fully paid.

See also Section 4, Revenue Regulations No. 8-98. See earlier provision under Section 1(j), Revenue Regulations No. 6-85, and subsequent amendments made by Revenue Regulations No. 12-89, 1-90, 6-94, 7-94, 8-94, and 12-94. See also issuances on Republic Act No. 7279, otherwise known as the "Urban Development and Housing Act of 1992" — Revenue Regulations No. 9-93; Revenue Regulations No. 11-97; Revenue Regulations No. 17-2001; Revenue Memorandum Circular No. 3-2001; Revenue Memorandum Circular No. 42-2001; and Revenue Memorandum Circular No. 43-2001. See further Revenue Memorandum Order No. 66-99, Revenue Memorandum Order No. 13-2001 and Revenue Regulations No. 4-99. Section 2.57.2 (K) - Additional income payments to government personnel from importers, shipping and airline companies, or their agents 53

See earlier provision under Section 1(l), Revenue Regulations No. 6-85, and subsequent amendments made by Revenue Regulations Nos. 4-91, 6-94, 7-94, 8-94, and 12-94.

Section 2.57.2 (L) - Certain Income Payments Made by Credit Card Companies 54

As amended by Section 3, Revenue Regulations No. 6-2001. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(L) Certain income payments made by credit card companies. — On Copyright 2015

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the gross amounts paid by any credit card company in the Philippines to any business entity, whether a natural or juridical person, representing the sales of goods/services made by the aforesaid business entity to cardholders — One half percent (1/2%); xxx

xxx

xxx

See earlier provision under Section 1(m), Revenue Regulations No. 6-85, and subsequent amendments made by Revenue Regulations Nos. 6-94, 7-94, 8-94, 12-94, and 16-94. Section 2.57.2 (M) - Income Payments Made by the Top Twenty Thousand (20,000) Corporations 55

Now as amended by Section 2, Revenue Regulations No. 11-2014 and as last amended by Section 2, Revenue Regulations No. 6-2009. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(M) Income payments made by the top five thousand (5,000) corporations. — Income payments made by any of the top five thousand (5,000) corporations, as determined by the Commissioner, to their local supplier of goods — One percent (1%);

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(1)

The term "goods" pertains to tangible personal property. It does not include intangible personal property as well as real property.

(2)

The term "local suppliers of goods" pertains to a supplier from whom any of the top five thousand (5,000) corporations, as determined by the Commissioner, regularly makes its purchases of goods. As a general rule, this term does not include a casual purchase of goods, that is, purchases made from non-regular suppliers and oftentimes involving single purchases. However, a single purchase which involves one hundred thousand pesos (P100,000.00) or more shall be subject to a withholding tax.

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(3)

A corporation shall not be considered a withholding agent for purposes of this Section, unless such corporation has been determined and duly notified in writing by the Commissioner that it has been selected as one of the top five thousand (5,000) corporations.

(4)

The withholding agent shall submit on a semestral basis a list of its regular suppliers of goods to the Revenue District Office (RDO) having jurisdiction over the withholding agent's principal place of business on or before July 31 and January 31 of each year. xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 6-2009. Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(M) Income payments made by the top twenty thousand (20,000) private corporations to their local/resident supplier of goods and local/resident supplier of services other than those covered by other rates of withholding tax. — Income payments made by any of the top 20,000 private corporations, as determined by the Commissioner, to their local/resident supplier of goods and local/resident supplier of services, including non-resident aliens engaged in trade or business in the Philippines. Provided, however, that for purchases involving agricultural products in their original state, the tax required to be withheld under, this sub-section shall only apply to purchases in excess of the cumulative amount of Three Hundred Thousand Pesos (P300,000) within the same taxable year. For this purpose, agricultural products in their original state as used in these regulations, shall only include corn, coconut, copra, palay, rice, cassava, sugar cane, coffee, fruits, vegetables, marine food products, poultry and livestocks. Supplier of goods

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—

One percent (1%)

Supplier of services —

Two percent (2%)

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Top 20,000 private corporations shall include a corporate taxpayer who has been determined and notified by the Bureau of Internal Revenue (BIR) as having satisfied any of the following criteria: a. Classified and duly notified by the Commissioner as a large taxpayer under Revenue Regulations No. 1-98, as amended, or belonging to the top five thousand (5,000) private corporations under RR 12-94, or to the top ten thousand (10,000) private corporations under RR 17-2003, unless previously de-classified as such or had already ceased business operations (automatic inclusion); b. VAT payment or payable, whichever is higher, of at least P100,000 for the preceding year; c.

Annual income tax due of at least P200,000 for the preceding

d.

Total percentage tax paid of at least P100,000 for the preceding

e.

Gross sales of P10,000,000 and above for the preceding year;

f.

Gross purchases of P5,000,000 and above for the preceding

g.

Total excise tax payment of at least P100,000 for the preceding

year;

year;

year;

year. Illustrative example for agricultural products: Question: How do we compute the 1% expanded withholding tax (EWT) on purchases of palay, an agricultural product, made by ABC Corporation, included in the BIR's list of Top 20,000 Private Corporations, from Mr. Ben Soriano, a small supplier/planter based on the following information: Number of Transactions Year

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Purchase Amount

One

2009

P 90,000.00

Two

2010

320,000.00

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One

2011

400,000.00

One

2012

90,000.00

Answer: 1. In 2009, the transaction is exempt from the 1% EWT since the amount is less than P300,000.00. 2. In 2010, only the amount in excess of P300,000.00 or P20,000.00 shall be subject to the 1% EWT. Thus, the 1% EWT shall be P200.00 (P20,000.00 x 1%). 3. In 2011, the amount of P100,000.00 shall be subject to the 1% EWT since the amount is in excess of the P300,000.00 threshold. Therefore, the amount of P1,000.00 shall be withheld (P100,000.00 x 1%). 4. In 2012, the transaction is exempt from the 1% EWT since the amount involved is only P90,000.00 which is below the P300,000.00 threshold. xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 14-2008: "Sec. 2.57. Withholding of Tax at Source. — "Sec. 2.57.2. Income payment subject to creditable withholding tax and rates prescribed thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines. "xxx

xxx

xxx

"(M) Income payments made by the top twenty thousand (20,000) private corporations to their local/resident supplier of goods and local/resident supplier of services other than those covered by other rates of withholding tax. — Income payments made by any of the top twenty thousand (20,000) private corporations, as determined by the Commissioner, to their local/resident supplier of goods and local/resident supplier of services, including non-resident alien engaged in trade or business in the Philippines

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Supplier of goods — One percent (1%) Supplier of services — Two percent (2%) "Top twenty thousand (20,000) private corporations shall include a corporate taxpayer who has been determined and notified by the Bureau of Internal Revenue (BIR) as having satisfied any of the following criteria: CHaDIT

(a) Classified and duly notified by the Commissioner as a large taxpayer under Revenue Regulations No. 1-98, as amended, or belonging to the top five thousand (5,000) private corporations under RR 12-94, or to the top ten thousand (10,000) private corporations under RR 17-2003, unless previously de-classified as such or had already ceased business operations (automatic inclusion); (b) Any taxpayer with net VAT paid or payable for the preceding year of at least P100,000; (c) Any taxpayer with annual income tax paid or payable for the preceding year of at least P200,000; (d) Any taxpayer with percentage taxes for the preceding year of at least P100,000; (e) Any taxpayer whose gross sales for the preceding year is over P10,000,000; HScaCT

(f) Any taxpayer whose gross purchases for the preceding year is over P5,000,000. "The term "goods" pertains to tangible personal property. It does not include intangible personal property, as well as real property. "The term "local/resident suppliers of goods" pertains to a supplier from whom any of the top twenty thousand (20,000) private corporations, as determined by the Commissioner, regularly makes its purchases of goods. As a general rule, this term does not include a casual purchase of goods, that is, purchase made from a non-regular supplier and oftentimes involving a single purchase. However, a single purchase which involves Ten thousand pesos (P10,000.00) or more shall be subject to a withholding tax. The term "regular suppliers" refers to suppliers who are engaged in business or exercise of profession/calling with whom the taxpayer-buyer has transacted at least six (6) Copyright 2015

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transactions, regardless of amount per transaction, either in the previous year or current year. The same rules apply to local/resident supplier of services other than those covered by separate rates of withholding tax. "A corporation shall not be considered a withholding agent for purposes of this Section, unless such corporation has been determined and duly notified in writing by the Commissioner that it has been selected as one of the top twenty thousand (20,000) private corporations. "Any corporation which has been duly classified and notified as large taxpayer by the Commissioner pursuant to RR 1-98, as amended, shall be automatically considered one of the top twenty thousand (20,000) private corporations, provided, however, that its authority as a withholding agent shall be effective only upon receipt of written notice from the Commissioner that it has been classified as a large taxpayer, as well as one of the top twenty thousand (20,000) private corporations, for purposes of these regulations. "Any corporation shall remain a withholding agent for purposes of these regulations, unless the Commissioner notifies it in writing that it shall cease to be one. The following, however, are some of the reasons that a taxpayer shall automatically cease to be a withholding agent, and therefore no prior written notice, for purposes of these regulations, is required, to wit: IcTCHD

(a) closure/cessation of business/dissolution taxpayer with notice of dissolution given to the BIR);

(for

(b) merger/consolidation (for dissolved or absorbed corporation); (c) any other form of business combination wherein by operation of law a corporate taxpayer loses its juridical personality. "The withholding agent shall submit on a semestral basis a list of its regular suppliers of goods and/or services to the Large Taxpayers Assistance Division/Large Taxpayers District Office in the case of large taxpayers duly notified as such pursuant to RR 1-98, as amended, or Revenue District Office (RDO) having jurisdiction over the withholding agent's principal place of business on or before July 31 and January 31 of each year. "A government-owned or -controlled corporation previously classified as one of the top five thousand (5,000) corporations under RR 12-94, as amended, shall cease to be a withholding agent or included in the top twenty thousand Copyright 2015

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(20,000) private corporations for purposes of these regulations but rather shall be treated as one under the succeeding sub-section (N) since it is already withholding 1% or 2% of the amount paid for the purchase of goods/services from local/resident suppliers. TAIESD

"The Commissioner of Internal Revenue may recommend to the Secretary of Finance the amendment/modification to any or all of the criteria in the determination and selection of taxpayers forming part of the top twenty thousand (20,000) private corporations after considering such factors as inflation, volume of business, and similar factors. Provided, however, that the Commissioner is empowered to conduct periodic review as to the number of taxpayers who ceased to qualify under the category of top twenty thousand (20,000) private corporations for purposes of delisting them or excluding them from the list and to identify taxpayers to be added to the list of top twenty (20,000) private corporations. "All taxpayers previously included in the list of top 5,000 private corporations under RR 12-94, as amended, and those who qualified as top ten thousand (10,000) private corporations under RR 17-2003 shall continue to withhold one percent (1%) for supplier of goods and 2% for supplier of services upon the effectivity of these Regulations, unless any of the following situations occur: (a) the Commissioner communicates in writing that they have ceased to qualify as taxpayers includible in the list of top twenty thousand (20,000) private corporations, or (b) those officially identified to have ceased business operations, or undergone any of the business combinations wherein by operation of law the juridical personality of said taxpayers ceased."

As amended by Section 3, Revenue Regulations No. 17-2003: "Sec. 2.57.2. Income payments subject to creditable withholding tax and rates prescribed thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(M) Income payments made by the top ten thousand (10,000) private corporations to their local/resident supplier of goods and local/resident supplier of services other than those covered by other rates of withholding tax. — Income payments made by any of the top ten thousand (10,000) private corporations, as determined by the Commissioner, to their local/resident supplier of goods and local/resident supplier of services, Copyright 2015

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including non-resident alien engaged in trade or business in the Philippines Supplier of goods — One percent (1%) Supplier of services — Two percent (2%) Top ten thousand (10,000) private corporations shall include a corporate taxpayer who has been determined and notified by the Bureau of Internal Revenue (BIR) as having satisfied any of the following criteria: a) Classified and duly notified by the Commissioner as a large taxpayer under Revenue Regulations No. 1-98, as amended (automatic inclusion); b) Any taxpayer with net VAT paid or payable for the preceding year of at least P100,000.00; c) Any taxpayer with annual income tax paid or payable for the preceding year of at least P200,000.00; d) Any taxpayer with percentage taxes for the preceding year of at least P100,000.00; e) Any taxpayer whose gross sales for the preceding year is over P10,000,000.00; or f) Any taxpayer whose gross purchases for the preceding year is over 5,000,000.00. The term "goods" pertains to tangible personal property. It does not include intangible personal property as well as real property. The term "local/resident supplier of goods" pertains to a supplier from whom any of the top ten thousand (10,000) private corporations, as determined by the Commissioner, regularly makes its purchases of goods. As a general rule, this term does not include a casual purchase of goods, that is, purchases made from non-regular suppliers and oftentimes involving single purchases. However, a single purchase which involves ten thousand pesos (P10,000.00) or more shall be subject to a withholding tax. The term "regular suppliers" refers to suppliers who are engaged in business or exercise of profession/calling with whom the taxpayer-buyer has transacted at least six (6) transactions, regardless of amount per transaction, either in the previous year or current year. The same rules apply to local/resident supplier of services other than those covered by separate rates of Copyright 2015

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withholding tax. A corporation shall not be considered a withholding agent for purposes of this Section, unless such corporation has been determined and duly notified, in writing, by the Commissioner that it has been selected as one of the top ten thousand (10,000) private corporations. Any corporation which has been duly classified and notified as large taxpayer by the Commissioner pursuant to RR 1-98, as amended, shall be automatically considered one of the top ten thousand (10,000) private corporations, provided, however, that its authority as a withholding agent shall be effective only upon receipt of written notice from the Commissioner that it has been classified as a large taxpayer, as well as one of the top ten thousand (10,000) private corporations, for purposes of these regulations. Any corporation shall remain a withholding agent for purposes of these regulations, unless the Commissioner notifies it in writing that it shall cease to be one. The following, however, are some of the reasons that a taxpayer shall automatically cease to be a withholding agent, and therefore no prior written notice, for purposes of these Regulations, is required, to wit: a) closure/cessation of business/dissolution (for taxpayer with notice of dissolution given to the BIR), b) merger/consolidation (for dissolved or absorbed corporation); c) any other form of business combination wherein by operation of law a corporate taxpayer loses its juridical personality. The withholding agent shall submit on a semestral basis a list of regular suppliers of goods and/or services to the Large Taxpayers Assistance Division/Large Taxpayers District Office in the case of large taxpayers duly notified as such pursuant to RR 1-98, as amended, or Revenue District Office having jurisdiction over the withholding agent's principal place of business on or before July 31 or January 31 of each year. A government-owned or controlled corporation previously classified as one of the top five thousand (5,000) corporations under RR 14-94, as amended, shall cease to be a withholding agent or included in the top ten thousand (10,000) private corporations for purposes of these regulations but Copyright 2015

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rather shall be treated as one under the succeeding sub-section (N) since it is already withholding two percent (2%) of the amount paid for the purchase of goods/services from local/resident suppliers. The Commissioner of Internal Revenue may recommend to the Secretary of Finance the amendment/modification to any or all of the criteria in the determination and selection of taxpayers forming part of the top ten thousand (10,000) private corporations after considering such factors as inflation, volume of business, and similar factors. Provided, however, That the Commissioner is empowered to conduct periodic review as to the number of taxpayers who ceased to qualify under the category of top ten thousand private corporations for purposes of delisting them or excluding them from the list and to identify taxpayers to be added to the list of top 10,000 private corporations. The top ten thousand (10,000) private corporations will be announced through the issuance of a Revenue Memorandum Circular to be issued for this purpose. All taxpayers previously included in the list of Top 5,000 Corporations under RR 12-94, as amended, shall continue to withhold the one percent (1%) withholding tax (which shall become 1% for supplier of goods and 2% for supplier of services upon the effectivity of these Regulations) unless any of the following situations occur: (a) the Commissioner communicates in writing that they have ceased to qualify as taxpayers includible in the list of top ten thousand private corporations, or (b) those officially identified to have ceased business operations, or undergone any of the business combinations wherein by operation of law the juridical personality of said taxpayers ceased. xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 6-2001: "SEC. 2.57.2. Income payment subject to creditable withholding tax and rates prescribed thereon — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(M) Income payments made by the top five thousand (5,000) corporations. — Income payments made by any of the top five thousand (5,000) corporations, as determined by the Commissioner, to their local supplier of Copyright 2015

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goods — One percent (1%) (1) The term "goods" pertains to tangible personal property. It does not include intangible personal property as well as real property. (2) The term "local suppliers of goods" pertains to a supplier from whom any of the top five thousand (5,000) corporations, as determined by the Commissioner, makes its purchases of goods. (3) A corporation shall not be considered a withholding agent for purposes of this Section, unless such corporation has been determined and duly notified in writing by the Commissioner that it has been selected as one of the top five thousand (5,000) corporations. (4) The withholding agent shall submit on a semestral basis of its regular suppliers of goods to the Revenue District Office (RDO) having jurisdiction over the withholding agent's principal place of business on or before July 31 and January 31 of each year."

See earlier provision under Section 1(n), Revenue Regulations No. 6-85, and subsequent amendments made by Revenue Regulations Nos. 6-94, 7-94, 8-94, and 12-94. See also Revenue Memorandum Circular No. 28-94 (dated January 29, 1994) Re: Creditable Withholding Tax on Income Payments by Top 5,000 Corporations. Section 2.57.2 (N) - Income Payments Made by the Government to Its Local/Resident Supplier of Goods and Local/Resident Supplier of Services Other than those Covered by Other Rates of Withholding Tax 56

As last amended by Section 3, Revenue Regulations No. 30-2003. Original text: Section 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates Prescribed Thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

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single purchase which is P10,000 and below, which are made by a government office, national or local, including government-owned or controlled corporations, on their purchases of goods from local suppliers — One percent (1%); A government-owned or controlled corporation which is listed as one of the top five thousand (5,000) corporations shall withhold the tax in its capacity as a government-owned or controlled corporation rather than as one of the top five thousand (5,000) corporations. cdasia

xxx

xxx

xxx

As amended by Section 3, Revenue Regulations No. 17-2003: "Sec. 2.57.2. Income payments subject to creditable withholding tax and rates prescribed thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(N) Income payments made by the government to its local/resident supplier of goods and local/resident supplier of services other than those covered by other rates of withholding tax. — Income payments, except any casual or single purchase of P10,000.00 and below, which are made by a government office, national or local, including barangays, or their attached agencies or bodies, and government-owned or controlled corporations, on their purchases of goods and purchases of services from local/resident suppliers — Two per cent (2%). A government-owned and controlled corporation shall withhold the tax in its capacity as a government-owned and controlled corporation rather than as a corporation stated in Subsection (M) hereof. xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 14-2002: "Sec. 2.57.2. Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: Copyright 2015

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xxx

xxx

xxx

(N) Income payments by government. — Income payments, except any casual or single purchase of P10,000.00 and below, which are made by a government office, national or local including barangays, or their attached agencies or bodies, and government-owned or controlled corporations, on their purchases of goods from local suppliers — Two percent (2%); A government-owned or controlled corporation shall withhold the tax in its capacity as a government-owned or controlled corporation rather than as a corporation stated in Subsection (M) hereof. xxx

xxx

xxx

See earlier provision under Section 1(n), Revenue Regulations No. 6-85, and subsequent amendments made by Revenue Regulations Nos. 6-94, 7-94, 8-94, and 12-94. Section 2.57.2 (O) - Commissions of Independent and/or Exclusive Sales Representatives, and Marketing Agents of Companies 57

As amended by Section 3, Revenue Regulations No. 17-2003. As added by Section 2, Revenue Regulations No. 14-2002: "Sec. 2.57.2. Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(O) Commissions of independent and exclusive distributors, medical/technical and sales representatives, and marketing agents of multi-level marketing companies. — On gross commissions paid by multi-level marketing companies to independent and exclusive distributors, medical/technical and sales representatives, and marketing agents and sub-agents on their sale of goods or services by way of direct selling or similar arrangements. — Ten percent (10%); 'Multi-level marketing' is a system of direct selling in which consumer products are sold by individuals where consumer products and services are supplied by an established multi-level marketing company who Copyright 2015

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encourages the distributor to build and manage his own sales force by recruiting, motivating, and training others to sell the product or service. A percentage on the sales of the distributor's sales force would be his compensation in addition to his personal sales. 'Multi-level marketing companies' means any entity that is engaged in the sale of its products or services through individual that directly sell such products or services to the consumers." xxx

xxx

xxx

Section 2.57.2 (P) - Tolling Fees Paid to Refineries 58

Added by Section 2, Revenue Regulations No. 14-2002.

Section 2.57.2 (Q) - Payments Made by Pre-need Companies to Funeral Parlors 59

Added by Section 2, Revenue Regulations No. 14-2002.

Section 2.57.2 (R) - Payments Made to Embalmers 60

Added by Section 2, Revenue Regulations No. 14-2002.

Section 2.57.2 (S) - Income Payments Made to Suppliers of Agricultural Products 61

Now as amended by Section 2, Revenue Regulations No. 11-2014 and as last amended by Section 1, Revenue Regulations No. 1-2004. See, however, Revenue Regulations No. 3-2004 suspending the implementation of withholding tax on income payments made to suppliers of agricultural products under Section 2.57.2(S) of Revenue Regulations 2-98, as amended by RR 17-2003, further amended by RR 30-2003 and 1-2004. As added by Section 3, Revenue Regulations No. 17-2003: (S) Income payments made to suppliers of agricultural products. — Income payments made to regular agricultural suppliers such as those, but not limited to, payments made by hotels, restaurants, resorts, caterers, food processors, canneries, supermarkets, livestock, poultry, fish and marine food products dealers and all other establishments, except for income payments to casual agricultural suppliers where the annual gross purchases therefrom do not exceed P20,000 — One Percent (1%) The term "regular agricultural suppliers" refers to suppliers with whom the taxpayer has transacted at least six (6) transactions, regardless of amount per transaction, either in the previous or current year. The term

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"casual agricultural supplier" refers to suppliers who did not qualify as regular agricultural supplier as defined in the preceding statement. The term "agricultural suppliers" refers to suppliers/sellers of agricultural and marine food products, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials therefor. "Livestock" shall include cows, bulls and calves, pigs, sheep, goats and other animals similar thereto. "Poultry" shall include fowls, ducks, geese, turkey and others similar thereto. "Marine food products" shall include fish and crustaceans, such as but not limited to, eels, trout, lobsters, shrimps, prawns, oysters, mussels and clams. Meat, fruits, fish, vegetables and other agricultural and marine food products, even if they have undergone the simple processes of preparation or preservation for the market, such as freezing, drying salting, smoking or stripping, including those using advanced technological means of packaging, such as shrink wrapping in plastics, vacuum packing, tetra-pak and other similar packaging method, shall still be covered by this subsection. Polished and/or husked rice, corn grits, locally produced raw cane sugar and ordinary salt shall be considered as agricultural food products.

As amended by Section 3, Revenue Regulations No. 30-2003: (S) Income payments made to suppliers of agricultural products. — Income payments made to regular agricultural suppliers such as those, but not limited to, payments made by hotels, restaurants, resorts, caterers, food processors, canneries, supermarkets, livestock, poultry, fish and marine products dealers, hardwares, factories, furniture shops and all other establishments, except for income payments to casual agricultural suppliers where the annual gross purchases therefrom do not exceed P20,000 — One percent (1%) xxx

xxx

xxx

The term "agricultural suppliers" refers to suppliers/sellers of agricultural, forest and marine food and non food products, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials therefor. "Livestock" shall include cows, bulls and calves, pigs, sheep, goats and other animals similar thereto. "Poultry" shall include fowls, ducks, geese, turkey and others similar thereto. "Marine products" shall include fish and crustaceans, such as but not Copyright 2015

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limited to, eels, trout, lobsters, shrimps, prawns, oysters, mussels and clams, shells and other aquatic products. xxx

xxx

xxx"

As amended by Section 2, Revenue Regulations No. 1-2004: (S) Income payments made to suppliers of agricultural products. — Income payments made to agricultural suppliers such as those, but not limited to, payments made by hotels, restaurants, resorts, caterers, food processors, canneries, supermarkets, livestock, poultry, fish and marine products dealers, hardwares, factories, furniture shops and all other establishments, except for income payments to marginal income earners which, as defined in Revenue Regulations 11-2000 dated December 12, 2000, refer to individuals not otherwise deriving compensation as an employee under an employee-employer relationship, but who are self-employed and deriving gross sales/receipts not exceeding P100,000.00 during any 12-month period. — One percent (1%) The term "agricultural suppliers" refers to suppliers/sellers of agricultural, forest and marine food and non food products, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials therefor. "Livestock" shall include cows, bulls and calves, pigs, sheep, goats and other animals similar thereto. "Poultry" shall include fowls, ducks, geese, turkey and others similar thereto. "Marine products" shall include fish and crustaceans such as but not limited to, eels, trout, lobsters, shrimps, prawns, oysters, mussels and clams, shells and other aquatic products. Meat, fruits, fish, vegetables and other agricultural and marine food products, even if they have undergone the simple processes of preparation or preservation for the market, such as freezing, drying salting, smoking or stripping, including those using advanced technological means of packaging, such as shrink wrapping in plastics, vacuum packing, tetra-pak and other similar packaging method, shall still be covered by this subsection. Polished and/or husked rice, corn grits, locally produced raw cane sugar and ordinary salt shall be considered as agricultural food products.

Section 2.57.2 (T) - Income Payments on Purchases of Minerals, Mineral Products and Quarry Resources as Defined and Discussed in Section 151 of the Code

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62

As amended by Section 3, Revenue Regulations No. 6-2012. As added by Section 3, Revenue Regulations No. 17-2003: (T) Income payments on purchases of minerals, mineral products and quarry resources as defined and discussed in Section 151 of the Code. — Income payments on purchases of minerals, mineral products, and quarry resources such as but not limited to silver, gold, marble, granite, gravel, sand, boulders and other materials/products — One percent (1%)

As amended by Section 4, Revenue Regulations No. 7-2008: xxx

xxx

xxx.

Section 2.57.2 (T) of Rev. Regs. No. 2-98, as amended by Rev. Regs. No. 17-2003, is hereby further amended to read as follows: "(T) Income payments on purchases of minerals, mineral products and quarry resources as defined and discussed in Section 151 of the Code. — Income payments on purchases of minerals, mineral products and quarry resources such as but not limited to silver, gold, marble, granite, gravel, sand, boulders and other materials/products — Ten percent (10%)"

Section 2.57.2 (U) - Meralco Payments 63

As amended by Section 2, Revenue Regulations No. 2-2009. As added by Section 2, Revenue Regulations No. 8-2005: "Sec. 2.57.2. Income payments subject to creditable tax and rates prescribed thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

(U) MERALCO Refund arising from Supreme Court Case G.R. No. 14814 of April 9, 2003 to customers under Phase IV as approved by ERC — On gross amount of refund given by MERALCO to Customers with active contracts as classified by MERALCO — Twenty Five Percent (25%); To Copyright 2015

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Customers with terminated contracts — Thirty Two Percent (32%);

Section 2.57.2 (V) - Interest Income on the Refund Paid either through Direct Payment or Application Against Customers' Billings by Other Electric Distribution Utilities (DUs) 64

Added by Section 2, Revenue Regulations No. 2-2009.

Section 2.57.2 (W) - Income Payments Made by the Top Five Thousand (5,000) Individual Taxpayers to Their Local/Resident Suppliers of Goods and Local/Resident Suppliers of Services Other than those Covered by Other Rates of Withholding Tax 65

As amended by Section 2, Revenue Regulations No. 11-2014. Original text as added by Section 2, Revenue Regulations No. 6-2009: (W) Income payments made by the top five thousand (5,000) Individual Taxpayers to their local/resident suppliers of goods and local/resident suppliers of services other than those covered by other rates of withholding tax. — Income payments made by the Top 5,000 Individual Taxpayers engaged in trade or business in the Philippines, as determined by the Commissioner of Internal Revenue, to their local/resident suppliers of goods and local/resident suppliers of services other than those covered by other rates of withholding tax, including non-resident aliens engaged in trade or business in the Philippines. Provided, however, that for purchases involving agricultural products in their original state, the tax required to be withheld under this sub-section shall only apply to purchases in excess of the cumulative amount of Three Hundred Thousand Pesos (P300,000) within the same year. For this purpose, agricultural products in their original state as used in these regulations, shall only include corn, coconut, copra, palay, rice, cassava, sugar cane, coffee, fruits, vegetables, marine food products, poultry and livestocks. xxx

xxx

xxx

See Section 2, Revenue Regulations No. 10-2009, clarifying that that sub-paragraph (W) as issued under Section 2 of Revenue Regulations No. 8-2009 should be sub-paragraph (X). Section 2.57.2 (X) - Income Payments Made by Political Parties and Candidates of Local and National Elections of All Their purchase of Goods and Services 66

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As amended by Section 2, Revenue Regulations No. 10-2009, which also clarified that sub-paragraph (W) as issued under Revenue Regulations No. 8-2009 should be sub-paragraph (X). CD Technologies Asia, Inc. and Accesslaw, Inc.

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As added by Section 2, Revenue Regulations No. 08-2009: "Sec. 2.57.2. Income payments subject to creditable tax and rates prescribed thereon. — Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines: xxx

xxx

xxx

"(W) (2) Income payments made by political parties and candidates of local and national elections of all their campaign expenditures, and income payments made by individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates — Five percent (5%).

Section 2.57.2 (Y) - Interest Income Derived from Any Other Debt Instruments 67

Added by Section 7, Revenue Regulations No. 14-2012.

Section 2.57.2 (Z) - Income payments to Real Estate Investment Trust (REIT) 67-a Added by Section 2, Revenue Regulations No. 11-2014. Section 2.57.2 (AA) - Income payments on locally produced raw sugar 67-b Added by Section 2, Revenue Regulations No. 11-2014. Section 2.57.3 - Persons Required to Deduct and Withhold 68

As last amended by Section 3, Revenue Regulations No. 8-2009. Original text: SECTION 2.57.3. Persons Required to Deduct and Withhold. — The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.57.2:

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(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. However, insofar as taxable sale, exchange or transfer of real property is concerned, individual buyers who

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are not engaged in trade or business are also constituted as withholding agents; (C)

All government offices including government-owned or controlled corporations, as well as provincial, city and municipal governments.

As amended by Section 3, Revenue Regulations No. 8-2009: "Sec. 2.57.3. Persons required to deduct and withhold. — The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.57.2: xxx

xxx

xxx

"(D) All individuals, juridical persons and political parties, with respect to their income payments made as campaign expenditures and/or purchase of goods and services intended as campaign contributions.

As amended by Section 5, Revenue Regulations No. 30-2003: "Sec. 2.57.3. Persons required to deduct and withhold. — . . . xxx

xxx

xxx

Agents, employees or any person purchasing goods or services/paying for and in behalf of the aforesaid withholding agents shall likewise withhold in their behalf, provided that the official receipts of payment/sales invoice shall be issued in the name of the person whom the former represents and the corresponding certificate of taxes withheld (BIR Form No. 2307) shall immediately be issued upon withholding of the tax. All income payments which are required to be subjected to withholding tax shall be subject to the corresponding withholding tax rate to be withheld by the person having control over the payment and who, at the same time, claims the expenses, [e.g. payments to utility companies which are required to be subjected to withholding tax shall likewise be subjected to withholding tax even if the meter or billing statement (e.g. electric or water meter or the telephone bill) is not in the name of the payor, as long as valid proof that payment of a particular expense is being shouldered by the aforementioned payor (i. e. contract between the registered user of the meter and the payor); payments made by persons who are sharing portion of the bill Copyright 2015

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which is in the name of another person as long as he is a duly constituted withholding agent and shall only withhold on the portion of the expense being shouldered by him]. DaAETS

Income payments made thru brokers or agents or other person authorized to collect/receive payments for and on behalf of the payee, whether for consideration or otherwise, shall likewise be subject to the corresponding withholding tax rates to be withheld by the payor/person having control over the payment with the corresponding issuance of certificate of taxes withheld in the name of the payee whom the agent represents. The obligation to withhold is imposed upon the buyer-payor of income although the burden of tax is really upon the seller-income earner hence, unjustifiable refusal of the latter to be subjected to withholding shall be a ground for the mandatory audit of his income tax liabilities (including withholding tax) upon verified complaint of the buyer-payor."

As amended by Section 4, Revenue Regulations No. 17-2003: "Sec. 2.57.3. Persons required to deduct and withhold. — The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.57.2: (A) . . . (B) An individual, with respect to payments made in connection with his trade or business. However, insofar as taxable sales, exchanges or transfers of real property are concerned, the buyers, whether or not engaged in trade or business, are constituted as withholding agents. In any case, no Certificate Authorizing Registration (CAR)/Tax Clearance Certificate (TCL) shall be issued to the buyer unless the withholding tax due on the sale, transfer or exchange of real property has been duly paid." Since the tax herein involved and being withheld is income tax, the burden of the tax is really upon the seller although the mode of payment of the tax is through withholding by the buyer. As such, the tax withheld is considered a part of the consideration agreed between the seller and buyer resulting, therefore, to a net take to the seller of only the difference between the agreed consideration/selling price and the tax withheld.

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(C) . . ."

As amended by Section 3, Revenue Regulations No. 14-2002: "Sec. 2.57.3. Persons required to deduct and withhold. — The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.57.2: (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. However, insofar as taxable sale, exchange or transfer of real property is concerned, individual buyers who are not engaged in trade or business are also constituted as withholding agents; (C) All government offices including government-owned or controlled corporations, as well as provincial, city and municipal governments and barangays."

See earlier provision under Section 2, Revenue Regulations No. 6-85, and subsequent amendments made by Revenue Regulations Nos. 1-90, 8-90, 6-94, 7-94, 8-94, and 12-94. 69

See Executive Order No. 651 entitled "Requiring Government Offices, Agencies and Instrumentalities to Comply Strictly with the Laws and Regulations on Withholding Taxes" (dated February 16, 1981). See issuances designating personnel of government offices as withholding agents — Revenue Regulations No. 1-87, and subsequent amendments made by Revenue Regulations No. 6-96, and Revenue Regulations No. 10-97; Revenue Memorandum Circular No. 40-2001; Revenue Memorandum Order No. 14-98; and Revenue Memorandum Order No. 70-98. See also Revenue Regulations No. 8-98, Revenue Regulations No. 4-99, Revenue Memorandum Order No. 66-99, and Revenue Memorandum Order No. 13-2001.

Section 2.57.4 - Time of Withholding 70 Copyright 2015

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Original text: SECTION 2.57.4. Time of Withholding. — The obligation of the payor to deduct and withhold the tax under Section 2.57 of these regulations arises at the time an income is paid or payable, whichever comes first, the term "payable" refers to the date the obligation become due, demandable or legally enforceable.

See earlier provision under Section 3, Revenue Regulations No. 6-85 and subsequent amendments thereto. Section 2.57.5 - Exemption from Withholding 71

As amended by Section 4, Revenue Regulations No. 14-2002. Original text: SECTION 2.57.5. Exemption from Withholding. — The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to the following: (A) National government and provincial, city or municipal governments;

its

instrumentalities,

including

(B) 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:

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(1)

Sales of real property by a corporation which is registered with and certified by the Housing and Land Use Regulatory Board (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 one hundred eighty thousand pesos (P180,000) in Metro Manila and other highly urbanized areas and one hundred fifty thousand pesos (P150,000) in other areas or such adjusted amount of selling price for socialized housing as may later be determined and adopted by the HLURB, as provided under Republic Act No. 7279 and its implementing regulations;

(2)

Corporations registered with the Board of Investments and enjoying exemption from the income tax provided by Republic Act No. 7916 and the Omnibus Investment Code of 1987;

(3)

Corporations which are exempt from the income tax under Sec. 30 of the NIRC, to wit: the Government Service Insurance System

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(GSIS), the Social Security System (SSS), the Philippine Health Insurance Corporation (PHIC), the Philippine Charity Sweepstakes Office (PCSO) and the Philippine Amusement and Gaming Corporation (PAGCOR); However, the income payments arising from any activity which is conducted for profit or income derived from real or personal property shall be subject to a withholding tax as prescribed in these regulations.

See earlier provision under Section 4, Revenue Regulations No. 6-85, and subsequent amendment made by Revenue Regulations No. 12-94; and Revenue Memorandum Circular No. 30-85 (dated July 25, 1985) Re: Nullification of Section 4(a) of Revenue Regulations No. 6-85 or the Revised and Consolidated Expanded Withholding Tax Regulations. 72

Entitled "An Act to Provide for a Comprehensive and Continuing Urban Development and Housing Program, Establish the Mechanism for its Implementation, and for Other Purposes" (dated March 24, 1992). See issuances on RA 7279, otherwise known as the "Urban Development and Housing Act of 1992" — Revenue Regulations No. 9-93; Revenue Regulations No. 11-97; Revenue Regulations No. 17-2001; Revenue Memorandum Circular No. 3-2001; Revenue Memorandum Circular No. 42-2001; and Revenue Memorandum Circular No. 43-2001.

73

Entitled "An Act Providing for the Legal Framework and Mechanisms for the Creation, Operation, Administration, and Coordination of Special Economic Zones in the Philippines, Creating for this Purpose, the Philippine Economic Zone Authority (PEZA), and for Other Purposes" (effective February 24, 1995).

74

EO 226 entitled "The Omnibus Investments Code Of 1987" (effective July 16, 1987).

75

Exemptions from tax on corporations.

Section 2.58 - Returns and Payment of Taxes Withheld at Source 76

See earlier provision under Section 2, Revenue Regulations No. 5-85, and subsequent amendments made by Revenue Regulations Nos. 3-93 and 18-93; and Revenue Memorandum Circular No. 42 -85. See also Section 5, Revenue Regulations No. 8-98, Revenue

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Regulations No. 1-98 and Revenue Regulations No. 9-2001. Section 2.58 (A) - Returns and Payment of Taxes Withheld at Source; Monthly Return and Payment of Taxes Withheld at Source 77

As last amended by Section 3, Revenue Regulations No. 10-2009. Original text: SECTION 2.58. Returns and Payment of Taxes Withheld at Source. (A) Monthly return and payment of taxes withheld at source — (1) WHERE TO FILE — Creditable and final withholding taxes deducted and withheld by the withholding agent shall be paid upon filing a return in duplicate with the authorized agent banks located within the Revenue District Office (RDO) having jurisdiction over the residence or principal place of business of the withholding agent. In places where there is no authorized agent banks, the return shall be filed directly with the Revenue District Officer, Collection Officer or the duly authorized Treasurer of the city or municipality where the withholding agent's residence or principal place of business is located, or where the withholding agent is a corporation, where the principal office is located except in cases where the Commissioner otherwise permits. (2)

WHEN TO FILE —

(a)

The withholding tax return, whether creditable or final, shall be filed and payments should be made within ten (10) days after the end of each month except for taxes withheld for December which shall be filed on or before January 25 of the following year.

(b)

For large taxpayers , the filing of the return and the payment of tax shall be made within twenty five (25) days after the end of each month.

(c)

The return for final withholding taxes on interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements shall be filed and the payment made within twenty five (25) days from the close of each calendar quarter.

(B) Withholding tax statement for taxes withheld — Every payor required to deduct and withhold taxes under these regulations shall furnish each payee, whether individual or corporate, with a withholding tax statement, using Copyright 2015

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the prescribed form (BIR Form 2307) showing the income payments made and the amount of taxes withheld therefrom, for every month of the quarter within twenty (20) days following the close of the taxable quarter employed by the payee in filing his/its quarterly income tax return. Upon request of the payee, however, the payor must furnish such statement to the payee simultaneously with the income payment. For final withholding taxes, the statement should be given to the payee on or before January 31 of the succeeding year. (C) Annual information return for income tax withheld at source. — The payor is required to file with the Commissioner, Revenue Regional Director, Revenue District Officer, Collection Agent in the city or municipality where the payor has his legal residence or principal place of business, where the government office is located in the case of a government agency, on or before January 31 of the following year in which payments were made, an Annual Information Return of Income Tax Withheld at Source (Form No. 1604), showing among others the following information: (1)

Name, address and taxpayer's, identification number (TIN); and

(2)

Nature of income payments, gross amount and amount of tax withheld from each payee and such other information as may be required by the Commissioner.

If the payor is the Government of the Philippines or any political subdivision or agency thereof, or any government-owned or controlled corporation, the return shall be made by the officer or employee having control of the payments or by any designated officer or employee.

As amended by Section 3, Revenue Regulations No. 2-2009: "Sec. 2.58. Returns and Payment of Taxes Withheld at Source. — "(A) Monthly return and payment of taxes withheld at source — "(1) WHERE TO FILE — xxx

xxx

xxx

xxx

xxx

"(2) WHEN TO FILE — xxx

"MERALCO and other Distribution Utilities (DUs) required to withhold taxes pursuant to Sec. 2.57.2 (U) and (V) above shall submit a Copyright 2015

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Monthly Alphalist of Payees (MAP) (Annex "A") for each calendar quarter, which shall be electronically attached to the monthly remittance return of the calendar quarter (e.g., BIR Form 1601-E for the quarter ending March with attached MAP for January, February, March). It shall contain an alphalist of customers from whom taxes have been withheld for the return period and in whose behalf, the taxes were remitted under BIR Form No. 1601-E showing the total amount of income and taxes withheld and remitted. "xxx

xxx

xxx"

As amended by Section 3, Revenue Regulations No. 2-2006: "Section 2.58. RETURNS WITHHELD AT SOURCE. A.

AND PAYMENT OF TAXES

Monthly return and payment of taxes withheld at source. —

(1) WHERE TO FILE — Creditable withholding taxes (Expanded Withholding Tax) deducted and withheld by the withholding agent shall be remitted by accomplishing the Monthly Remittance Return of Creditable Income Taxes Withheld (BIR Form No. 1601-E) and for final taxes Monthly Remittance Return of Final Taxes Withheld (BIR Form No. 1601-F) in triplicate copies with Monthly Alphalist of Payees (MAP), the tax base and the amount withheld paid upon filing the return with the authorized agent banks under the jurisdiction of the Revenue District Office (RDO)/Large Taxpayers District Office (LTDO) where the withholding agent is required to register and file the return. In places where there is no authorized agent bank, the return shall be filed directly with the Revenue Collection Officer or the duly authorized Municipal/City treasurer of the Revenue District Office where the withholding agent is required to register or file the return, except in cases where the Commissioner otherwise permits. xxx

xxx

xxx"

As amended by Section 3, Revenue Regulations No. 8-2005: "Sec. 2.58. RETURNS AND PAYMENT OF TAXES WITHHELD AT SOURCE. (A.) Monthly return and payment of taxes withheld at source — (1) Copyright 2015

WHERE TO FILE —

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xxx (2)

xxx

xxx

xxx

xxx

WHEN TO FILE — xxx

MERALCO shall submit a Monthly Alphalist of Payees (MAP) Annex "A" for each calendar quarter, which shall be electronically attached to the monthly remittance return of the calendar quarter (e.g. BIR Form 1601-E for the quarter ending March with attached MAP for January, February, March). It shall contain an alphalist of customers from whom taxes have been withheld for the return period and in whose behalf, the taxes were remitted under BIR Form No. 1601-E showing the total amount of income and taxes withheld and remitted. SECHIA

xxx

xxx

xxx

As amended by Section 5, Revenue Regulations No. 17-2003: "Sec. 2.58. RETURNS AND PAYMENT OF TAXES WITHHELD AT SOURCE. (A) Monthly return and payment of taxes withheld at source. — (1)

...

(2)

WHEN TO FILE —

(a) For both large and non-large taxpayers, the withholding tax return, whether creditable or final (including final withholding taxes on interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements) shall be filed and payments should be made, within ten (10) days after the end of each month, except for taxes withheld for the month of December of each year, which shall be filed on or before January 15 of the following year; and except for the final capital gains tax on the sale or other onerous disposition of real property considered as capital asset which must be taken/withheld from the seller by the buyer and remitted within thirty (30) days from the date of notarization of the transfer document to the collecting agent of the RDO having jurisdiction over the place where the property is located. TCaEIc

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Nonetheless, in case of disposition of real property classified as capital asset by an individual to the government, the tax to be imposed shall be determined either under the normal income tax rate imposed in Sec. 24(A) or under a final capital gains tax of six percent (6%) imposed under Sec. 24(D)(1) of the Code, at the option of the taxpayer-seller. Thus, if the seller chooses the first option, the buyer does not have to withhold the six percent (6%) final capital gains tax but no Certificate Authorizing Registration shall be issued for the transaction until the seller or the buyer shows the seller's filed income tax return reflecting the result of the subject real estate transaction. (b) With respect, however, to taxpayers, whether large or non-large, who availed of the electronic filing and payment system (EFPS), the deadline for electronically filing the applicable withholding tax returns and paying the taxes due thereon via the EFPS shall be five (5) days later than the deadlines set above, unless the EFPS regulations provide for different deadline dates and except for the final capital gains tax on the sale, barter or exchange of real property where the law fixes a definite deadline for the payment thereof."

As amended by Section 4(1), Revenue Regulations No. 6-2001: "SEC. 2.58. RETURNS AND PAYMENT OF TAXES WITHHELD AT SOURCE. (A) Monthly return and payment of taxes

xxx (2)

xxx

xxx

WHEN TO FILE —

(a) For both large and non-large taxpayers, the withholding tax return, whether creditable or final (including final withholding taxes on interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements) shall be filed and payments should be made, within ten (10) days after the end of each month, except for taxes withheld for the month of December of each year, which shall be filed on or before January 15 of the following year. (b) With respect, however, to taxpayers, whether large or non-large, who availed of the electronic filing and payment (EFPS), the deadline for electronically filing the applicable withholding tax returns and paying the Copyright 2015

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taxes due thereon via the EFPS shall be five (5) days later than the deadlines set above."

78

See Revenue Memorandum Order No. 48-2000 (dated October 23, 2000) Re: Re-classification of Status of Taxpayers Previously Classified as Large Taxpayers Under Revenue Regulations No. 12-93, as Amended by Revenue Regulations No. 3-94; Revenue Regulations No. 1-98; Revenue Regulations No. 6-2001; Revenue Regulations No. 9-2001; and Revenue Regulations No. 12-2001.

Section 2.58 (B) - Returns and Payment of Taxes Withheld at Source; Withholding Tax Statements for Taxes Withheld 79

As amended by Section 1, Revenue Regulations No. 3-2002. Original text: SECTION 2.58. Returns and Payment of Taxes Withheld at Source. xxx

xxx

xxx

(B) Withholding tax statement for taxes withheld — Every payor required to deduct and withhold taxes under these regulations shall furnish each payee, whether individual or corporate, with a withholding tax statement, using the prescribed form (BIR Form 2307) showing the income payments made and the amount of taxes withheld therefrom, for every month of the quarter within twenty (20) days following the close of the taxable quarter employed by the payee in filing his/its quarterly income tax return. Upon request of the payee, however, the payor must furnish such statement to the payee simultaneously with the income payment. For final withholding taxes, the statement should be given to the payee on or before January 31 of the succeeding year. xxx

xxx

xxx

See earlier provision under Section 6, Revenue Regulations No. 6-85 and subsequent amendment made by Revenue Regulations No. 12-94. Section 2.58 (C) - Returns and Payment of Taxes Withheld at Source; Annual Information Return for Income Tax Withheld at Source 80

As last amended by Section 3, Revenue Regulations No. 10-2009. Original text:

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SECTION 2.58. Returns and Payment of Taxes Withheld at Source. xxx

xxx

xxx

(C) Annual information return for income tax withheld at source. — The payor is required to file with the Commissioner, Revenue Regional Director, Revenue District Officer, Collection Agent in the city or municipality where the payor has his legal residence or principal place of business, where the government office is located in the case of a government agency, on or before January 31 of the following year in which payments were made, an Annual Information Return of Income Tax Withheld at Source (Form No. 1604), showing among others the following information: (1)

Name, address and taxpayer's, identification number (TIN); and

(2)

Nature of income payments, gross amount and amount of tax withheld from each payee and such other information as may be required by the Commissioner.

If the payor is the Government of the Philippines or any political subdivision or agency thereof, or any government-owned or controlled corporation, the return shall be made by the officer or employee having control of the payments or by any designated officer or employee. xxx

xxx

xxx

As amended by Section 1, Revenue Regulations No. 3-2002. "Section 2.58. RETURNS AND PAYMENT OF TAXES WITHHELD AT SOURCE.

xxx

xxx

xxx

(C) Annual information return for income tax withheld at source. — The payor is required to file with the BIR-Large Taxpayers Assistance Division, Large Taxpayers District Office or the Excise Taxpayers Assistance Division, or the Revenue District Office where the payor/employer is registered as Withholding Agent, on or before March 1 of the following year in which payments were made, an Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax (BIR Form No. 1604-E) and on or before January 31 of the said year an Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form No. 1604-CF), Copyright 2015

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showing among others, the following information: xxx

xxx

xxx

An individual whose sole income has been subjected to final withholding tax provided under Section 57(A) shall not be required to file an income tax return pursuant to Section 51(A)(2)(c) of the Tax Code. For purposes of documentation, as may be required by other agencies in the government (including, but not limited to, the Bureau of Immigration as well as for purposes of establishing financial capacity for bank loans or credit card application in private and public entities and other purposes, BIR Form No. 2306 duly signed by the employer and the employee shall suffice. The term "an individual whose compensation income has been subjected to final withholding tax" shall include aliens or Filipino citizens occupying the same positions as the alien employees, as the case may be, who are employed by regional operating headquarters, regional or area headquarters, offshore banking units, petroleum service contractors and sub-contractors, pursuant to pertinent provisions of Sections 25(C), (D), (E) and 57(A) of the Tax Code of 1997, Republic Act No. 8756, Presidential Decree No. 1354, and other pertinent laws."

See also Revenue Regulations No. 7-2000. See earlier provision under Section 3, Revenue Regulations No. 5-85 and subsequent amendments thereto; and Section 5(b), Revenue Regulations No. 6-85 and subsequent amendments thereto. Section 2.58.1 - Income of Recipient 81

Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes.

82

Payment and assessment of income tax for individual and corporations.

Section 2.58.2 - Registration with the Register of Deeds 83

As amended by Section 5, Revenue Regulations No. 14-2002. Original text: SECTION 2.58.2. Registration with the Register of Deeds. — Deeds of conveyances of land or land and building/improvement thereon arising from sales, barters, or exchanges subject to the creditable expanded withholding tax shall not be recorded by the Register of Deeds unless the Commissioner or his duly authorized representative has certified that such transfers and conveyances

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have been reported and the expanded withholding tax, inclusive of the documentary stamp tax, due thereon have been fully paid, pursuant to the provisions of Sections 57 and 196 of the Code , respectively.

See Revenue Regulations No. 11-96; Revenue Regulations No. 8-98; Revenue Memorandum Order No. 66-99; and Revenue Memorandum Order No. 13-2001. 84

Withholding of Tax at Source, and Stamp Tax on Deeds of Sale and Conveyance of Real Property, respectively.

85

Returns and payment of taxes withheld at source (Registration with Register of Deeds).

86

Violations Committed by Government Enforcement Officers

Section 2.58.3 - Claim for Tax Credit or Refund 87

See earlier provision under Section 10, Revenue Regulations No. 6-85, and subsequent amendment made by Revenue Regulations No. 12-94.

Section 2.58.3 (C) - Income of Recipient 88

Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes, and Recovery of Tax Erroneously or Illegally Collected, respectively.

Section 2.58.4 - Verification of Returns and Statement 89

See earlier provision under Section 7, Revenue Regulations No. 6-85, and subsequent amendments thereto.

Section 2.58.5 - Requirement for Deductibility 90

As last amended by Section 6, Revenue Regulations No. 17-2003. Original text: SECTION 2.58.5. Requirement 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. A deduction will also be allowed in the following cases where no withholding of tax was made:

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(A) The payee reported the income and the withholding agent/taxpayer pays the tax, including the interest incident to the failure to withhold the tax, and surcharges, if applicable, at the time of the original audit and investigation; (B) The recipient/payee failed to report the income on the due date thereof, but the withholding agent/taxpayer pays the tax, including the interest incident to the failure to withhold the tax and surcharges, if applicable, at the time of the original audit and investigation; (C) The withholding agent erroneously underwithheld the tax but pays the difference between the correct amount and the amount of tax withheld, including the interest, incident to such error, and surcharges, if applicable, at the time of the original audit and investigation.

As amended by Section 6, Revenue Regulations No. 14-2002: "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. A deduction will also be allowed in the following cases where no withholding of tax was made: (A) The payee reported the income and pays the tax due thereon and the withholding agent pays the tax including the interest incident to the failure to withhold the tax, and surcharges, if applicable, at the time of the audit investigation or reinvestigation/reconsideration. (B) The recipient/payee failed to report the income on the due date thereof, but the withholding agent/taxpayer pays the tax, including the interest incident to the failure to withhold the tax, and surcharges, if applicable, at the time of the audit/investigation or reinvestigation/reconsideration. (C) The withholding agent erroneously underwithheld the tax but pays the difference between the correct amount and the amount of tax withheld, including the interest, incident to such error, and surcharges, if applicable, at the time of the audit/investigation or reinvestigation/reconsideration."

See earlier provision under Section 9, Revenue Regulations No. 6-85, and subsequent amendment made by Revenue Regulations No. 8-90. Copyright 2015

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91

Withholding Tax at Source, and Returns and Payment of Taxes Withheld at Source, respectively.

Section 2.78.1 (A) - Withholding of Income Tax on Compensation Income; Compensation Income 92

As last amended by Section 1, Revenue Regulations No. 8-2012. Original text: SECTION 2.78.1. Income. —

Withholding of Income Tax on Compensation

(A) Compensation Income Defined. — In general, the term "compensation" means all remuneration for services performed by an employee for his employer under an employer-employee relationship, unless specifically excluded by the Code. The name by which the remuneration for services is designated is immaterial. Thus, salaries, wages, emoluments and honoraria, allowances, commissions (e.g. transportation, representation, entertainment and the like); fees including director's fees, if the director is, at the same time, an employee of the employer/corporation; taxable bonuses and fringe benefits except those which are subject to the fringe benefits tax under Sec. 33 of the Code; taxable pensions and retirement pay; and other income of a similar nature constitute compensation income. The basis upon which the remuneration is paid is immaterial in determining whether the remuneration constitutes compensation. Thus, it may be paid on the basis of piece-work, or a percentage of profits; and may be paid hourly, daily, weekly, monthly or annually. Remuneration for services constitutes compensation even if the relationship of employer and employee does not exist any longer at the time when payment is made between the person in whose employ the services had been performed and the individual who performed them. (1) Compensation paid in kind. — Compensation may be paid in money or in some medium other than money, as for example, stocks, bonds or other forms of property. If services are paid for in a medium other than money, the fair market value of the thing taken in payment is the amount to be included as compensation subject to withholding. If the services are rendered at a stipulated price, in the absence of evidence to the contrary, such price will be Copyright 2015

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presumed to be the fair market value of the remuneration received. If a corporation transfers to its employees its own stock as remuneration for services rendered by the employee, the amount of such remuneration is the fair market value of the stock at the time the services were rendered. (2) Living quarters or meals. — If a person receives a salary as remuneration for services rendered, and in addition thereto, living quarters or meals are provided, the value to such person of the quarters and meals so furnished shall be added to the remuneration paid for the purpose of determining the amount of compensation subject to withholding. However, if living quarters or meals are furnished to an employee for the convenience of the employer, the value thereof need not be included as part of compensation income. (3) Facilities and privileges of a relatively small value. — Ordinarily, facilities and privileges (such as entertainment, medical services, or so called "courtesy" discounts on purchases), furnished or offered by an employer to his employees generally, are not considered as compensation subject to withholding if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees. Where compensation is paid in property other than money, the employer shall make necessary arrangements to ensure that the amount of the tax required to be withheld is available for payment to the Commissioner. (4) Tips and gratuities. — Tips or gratuities paid directly to an employee by a customer of the employer which are not accounted for by the employee to the employer are considered as taxable income but not subject to withholding. (5) Pensions, retirement and separation pay. — Pensions, retirement and separation pay constitute compensation subject to withholding, except those provided under Subsection B of this section. (6) Fixed or variable transportation, representation and other allowances — (a)

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IN GENERAL, fixed or variable transportation, representation and other allowances which are received by a public officer or employee or officer or employee of a private entity, in addition to the regular compensation fixed for his position or office, is compensation subject to withholding.

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(b)

Any amount paid specifically, either as advances or reimbursements for travelling, representation and other bonafide ordinary and necessary expenses incurred or reasonably expected to be incurred by the employee in the performance of his duties are not compensation subject to withholding, if the following conditions are satisfied: (i)

It is for ordinary and necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade, business or profession; and

(ii)

The employee is required to account/liquidate for the foregoing expenses in accordance with the specific requirements of substantiation for each category of expenses pursuant to Sec. 34 of the Code. The excess of actual expenses over advances made shall constitute taxable income if such amount is not returned to the employer. Reasonable amounts of reimbursements/advances for travelling and entertainment expenses which are pre-computed on a daily basis and are paid to an employee while he is on an assignment or duty need not be subject to the requirement of substantiation and to withholding.

(7) Vacation and sick leave allowances. — Amounts of "vacation allowances or sick leave credits" which are paid to an employee constitute compensation. Thus, the salary of an employee on vacation or on sick leave, which are paid notwithstanding his absence from work, constitutes compensation. However, the monetized value of unutilized vacation leave credits of ten (10) days or less which were paid to the employee during the year are not subject to income tax and to the withholding tax . (8) Deductions made by employer from compensation of employee. — Any amount which is required by law to be deducted by the employer from the compensation of an employee including the withheld tax is considered as part of the employee's compensation and is deemed to be paid to the employee as compensation at the time the deduction is made. (9) Remuneration for services as employee of a nonresident alien individual or foreign entity. — The term "compensation" includes remuneration for services performed by an employee of a nonresident alien individual, foreign Copyright 2015

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partnership or foreign corporation, whether or not such alien individual or foreign entity is engaged in trade or business within the Philippines. Any person paying compensation on behalf of a non-resident alien individual, foreign partnership, or foreign corporation which is not engaged in trade or business within the Philippines is subject to all provisions of law and regulations applicable to an employer. (10) Compensation for services performed outside the Philippines. — Remuneration for services performed outside the Philippines by a resident citizen for a domestic or a resident foreign corporation or partnership, or for a non-resident corporation or partnership, or for a non-resident individual not engaged in trade or business in the Philippines shall be treated as compensation which is subject to tax. A non-resident citizen as defined in these regulations is taxable only on income derived from sources within the Philippines. In general, the situs of the income whether within or without the Philippines, is determined by the place where the service is rendered. xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 5-2011: "Sec. 2.78.1. Withholding of Income Tax on Compensation Income. — (A) . . . (1)

... xxx

(3)

xxx

xxx

Facilities and privileges of relatively small value. — . . . xxx

xxx

xxx

The following shall be considered as "de minimis" benefits not subject to income tax as well as withholding tax on compensation income of both managerial and rank and file employees:

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(a)

Monetized unused vacation leave credits of private employees not exceeding ten (10) days during the year;

(b)

Monetized value of vacation and sick leave credits paid to government officials and employees;

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(c)

Medical cash allowance to dependents of employees, not exceeding P750 per employee per semester or P125 per month; DIAcTE

(d)

Rice subsidy of P1,500 or one (1) sack of 50 kg. rice per month amounting to not more than P1,500;

(e)

Uniform and Clothing allowance not exceeding P4,000 per annum;

(f)

Actual medical assistance, e.g., medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000.00 per annum;

(g)

Laundry allowance not exceeding P300 per month;

(h)

Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;

(i)

Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum;

(j)

Daily meal allowance for overtime work and night/graveyard shift not exceeding twenty-five percent (25%) of the basic minimum wage on a per region basis;

All other benefits given by employers which are not included in the above enumeration shall not be considered as "de minimis" benefits, and hence, shall be subject to income tax as well as withholding tax on compensation income. xxx

xxx

xxx"

As amended by Section 2, Revenue Regulations No. 10-2008: "Sec. 2.78.1. Withholding of Income Tax on Compensation Income. — (A) Compensation Income Defined. — . . . Copyright 2015

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xxx

xxx

xxx

(3) Facilities and privileges of relatively small value. — Ordinarily, facilities, and privileges (such as entertainment, medical services, or so-called "courtesy" discounts on purchases), otherwise known as "de minimis benefits," furnished or offered by an employer to his employees, are not considered as compensation subject to income tax and consequently to withholding tax, if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as means of promoting the health, goodwill, contentment, or efficiency of his employees. ADSIaT

The following shall be considered as "de minimis" benefits not subject to income tax, hence, not subject to withholding tax on compensation income of both managerial and rank and file employees: (a)

Monetized unused vacation leave credits of employees not exceeding ten (10) days during the year and the monetized value of leave credits paid to government officials and employees; CAaSED

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(b)

Medical cash allowance to dependents of employees not exceeding P750.00 per employee per semester or P125 per month;

(c)

Rice subsidy of P1,500.00 or one (1) sack of 50-kg. rice per month amounting to not more than P1,500.00;

(d)

Uniforms and clothing allowance not exceeding P4,000.00 per annum;

(e)

Actual yearly medical benefits not exceeding P10,000.00 per annum;

(f)

Laundry allowance not exceeding P300.00 per month;

(g)

Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000.00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;

(h)

Gifts given during Christmas and major anniversary celebrations not exceeding P5,000.00 per employee per annum;

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(i)

Flowers, fruits, books, or similar items given to employees under special circumstances, e.g., on account of illness, marriage, birth of a baby, etc.; and

(j)

Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic minimum wage.

The amount of 'de minimis' benefits conforming to the ceiling herein prescribed shall not be considered in determining the P30,000.00 ceiling of 'other benefits' excluded from gross income under Section 32 (b) (7) (e) of the Code. Provided that, the excess of the 'de minimis' benefits over their respective ceilings prescribed by these regulations shall be considered as part of 'other benefits' and the employee receiving it will be subject to tax only on the excess over the P30,000.00 ceiling. Provided, further, that MWEs receiving 'other benefits' exceeding the P30,000.00 limit shall be taxable on the excess benefits, as well as on his salaries, wages and allowances, just like an employee receiving compensation income beyond the SMW. DcAEIS

Any amount given by the employer as benefits to its employees, whether classified as "de minimis" benefits or fringe benefits, shall constitute as deductible expense upon such employer. Where compensation is paid in property other than money, the employer shall make necessary arrangements to ensure that the amount of the tax required to be withheld is available for payment to the Bureau of Internal Revenue. ScaHDT

xxx

xxx

xxx

As amended by Section 1, Revenue Regulations No. 5-2008: "Sec. 2.78.1. Withholding of Income Tax on Compensation Income. — (A) . . . (1)

... xxx

(3)

xxx

xxx

Facilities and privileges of relatively small value. — . . . xxx

xxx

xxx

The following shall be considered as "de minimis" benefits not subject to Copyright 2015

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income tax as well as withholding tax on compensation income of both managerial and rank and file employees: (a)

... xxx

xxx

xxx

(c) Rice subsidy of P1,500.00 or one (1) sack of 50 kg. rice per month amounting to not more than P1,500.00; (d)

Uniform and Clothing allowance not exceeding P4,000.00 per

annum; xxx

xxx

xxx

As amended by Section 1, Revenue Regulations No. 10-2000: "Sec. 2.78.1. Withholding of Income Tax on Compensation Income. — "(A) . . . "(1) Compensation paid in kind. — . . . "xxx

xxx

xxx

"(3) Facilities and privileges of relatively small value. — "xxx

xxx

xxx

"The following shall be considered as "de minimis" benefits not subject to INCOME TAX AS WELL AS withholding tax on compensation income of both managerial and rank and file employees: (a) Monetized unused vacation leave credits of PRIVATE employees not exceeding ten (10) days during the year AND THE MONETIZED VALUE OF LEAVE CREDITS PAID TO GOVERNMENT OFFICIALS AND EMPLOYEES; (b) Medical cash allowance to dependents of employees not exceeding P750.00 per employee per semester or P125 per month; (c) Rice subsidy of P1,000.00 or one (1) sack of 50-kg. rice per month amounting to not more than P1,000.00;

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(d)

Uniform and clothing allowance not exceeding P3,000 per annum;

(e)

Actual yearly medical benefits not exceeding P10,000 per annum;

(f)

Laundry allowance not exceeding P300 per month;

(g) Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000 received by the employee under an established written plan which does not discriminate in favor of highly paid employees; (h) Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum; (i) Flowers, fruits, books, or similar items given to employees under special circumstances, e.g., on account of illness, marriage, birth of a baby, etc., and (j) Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic minimum wage." "xxx

xxx

xxx

"(6) Fixed or variable transportation, representation and other allowances — "xxx

xxx

xxx

"(b) . . . "(i) . . . "(ii) The employee is required to account/liquidate for the expenses in accordance with the specific requirements of substantiation for each category of expenses pursuant to Sec. 34 of the Code. The excess of ADVANCES MADE over ACTUAL EXPENSES shall constitute taxable income if such amount is not returned to the employer. Reasonable amounts of reimbursements/advances for travelling and entertainment expenses which are pre-computed on a daily basis and are paid to an employee while he is on an assignment or duty need not be subject to the requirements of substantiation and to withholding." "(iii) . . . Copyright 2015

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"(7) Vacation and sick leave allowances. Amounts of "vacation allowances or sick leave credits" which are paid to an employee constitute compensation. Thus, the salary of an employee on vacation or on sick leave, which IS paid notwithstanding his absence from work constitutes compensation. However, the monetized value of unutilized vacation leave credits of ten (10) days or less which ARE paid to PRIVATE employees during the year AND THE MONETIZED VALUE OF LEAVE CREDITS PAID TO GOVERNMENT OFFICIALS AND EMPLOYEES SHALL NOT BE SUBJECT TO INCOME TAX AND CONSEQUENTLY TO WITHHOLDING TAX." aTEScI

"xxx

xxx

xxx

As amended by Section 1, Revenue Regulations No. 8-2000: "Sec. 2.78.1. Withholding of Income Tax on Compensation Income. — "(A) . . . "(1) Compensation paid in kind. — . . . ''Where compensation is paid in property other than money, the employer shall make necessary arrangements to ensure that the amount of the tax required to be withheld is available for payment to the Commissioner. "(3) Facilities and privileges of relatively small value. — Ordinarily, facilities and privileges (such as entertainment, medical services, or so-called "courtesy discounts" on purchases), otherwise known as "de minimis benefits," furnished or offered by an employer to his employees, are not considered as compensation subject to INCOME TAX AND CONSEQUENTLY TO withholding tax, if such facilities are offered or furnished by the employer merely as means of promoting the health, goodwill, contentment, or efficiency of his employees. "THE FOLLOWING SHALL BE CONSIDERED AS "DE MINIMIS" BENEFITS NOT SUBJECT TO WITHHOLDING TAX ON COMPENSATION INCOME OF BOTH MANAGERIAL AND RANK AND FILE EMPLOYEES: (a)

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MONETIZED UNUSED VACATION LEAVE CREDITS OF EMPLOYEES NOT EXCEEDING TEN (10) DAYS DURING THE YEAR;

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(b)

MEDICAL CASH ALLOWANCE TO DEPENDENTS OF EMPLOYEES NOT EXCEEDING P750.00 PER EMPLOYEE PER SEMESTER OR P125 PER MONTH;

(c)

RICE SUBSIDY OF P1,000.00 OR ONE (1) SACK OF 50-KG. RICE PER MONTH AMOUNTING TO NOT MORE THAN P1,000.00.

(d)

UNIFORMS AND CLOTHING ALLOWANCE EXCEEDING P3,000 PER ANNUM;

NOT

(e)

ACTUAL YEARLY MEDICAL EXCEEDING P10,000 PER ANNUM;

NOT

(f)

LAUNDRY ALLOWANCE NOT EXCEEDING P300 PER MONTH;

(g)

EMPLOYEES ACHIEVEMENT AWARDS, E.G., FOR LENGTH OF SERVICE OR SAFETY ACHIEVEMENT, WHICH MUST BE IN THE FORM OF A TANGIBLE PERSONAL PROPERTY OTHER THAN CASH OR GIFT CERTIFICATE, WITH AN ANNUAL MONETARY VALUE NOT EXCEEDING P10,000.00 RECEIVED BY THE EMPLOYEE UNDER AN ESTABLISHED WRITTEN PLAN WHICH DOES NOT DISCRIMINATE IN FAVOR OF HIGHLY PAID EMPLOYEES;

(h)

GIFTS GIVEN DURING CHRISTMAS AND MAJOR ANNIVERSARY CELEBRATIONS NOT EXCEEDING P5,000 PER EMPLOYEE PER ANNUM;

(i)

FLOWERS, FRUITS, BOOKS, OR SIMILAR ITEMS GIVEN TO EMPLOYEES UNDER SPECIAL CIRCUMSTANCES, E.G., ON ACCOUNT OF ILLNESS, MARRIAGE, BIRTH OF A BABY, ETC.; AND

(j)

DAILY MEAL ALLOWANCE FOR OVERTIME WORK NOT EXCEEDING TWENTY FIVE PERCENT (25%) OF THE BASIC MINIMUM WAGE.

BENEFITS

THE AMOUNT OF "DE MINIMIS' BENEFITS CONFORMING TO THE CEILING HEREIN PRESCRIBED SHALL NOT BE CONSIDERED IN DETERMINING THE P30,000 CEILING OF Copyright 2015

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"OTHER BENEFITS" PROVIDED UNDER SECTION 32(B)(7)(e) OF THE CODE. HOWEVER, IF THE EMPLOYER PAYS MORE THAN THE CEILING PRESCRIBED BY THESE REGULATIONS, THE EXCESS SHALL BE TAXABLE TO THE EMPLOYEE RECEIVING THE BENEFITS ONLY IF SUCH EXCESS IS BEYOND THE P30,000.00 CEILING. PROVIDED, FURTHER, THAT ANY AMOUNT GIVEN BY THE EMPLOYER AS BENEFITS TO ITS EMPLOYEES, WHETHER CLASSIFIED AS DE MINIMIS BENEFITS OR FRINGE BENEFITS, SHALL CONSTITUTE AS DEDUCTIBLE EXPENSE UPON SUCH EMPLOYER. "(4) . . . (5)

..

"(6) Fixed or variable transportation, representation and other allowances. — "(a)

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IN GENERAL, fixed or variable transportation, representation and other allowances which are received by a public officer or employee of a private entity, in addition to the regular compensation fixed for his position or office, is compensation subject to withholding. PROVIDED, HOWEVER, THAT REPRESENTATION AND TRANSPORTATION ALLOWANCE (RATA) GRANTED TO PUBLIC OFFICERS AND EMPLOYEES UNDER THE GENERAL APPROPRIATIONS ACT AND THE PERSONNEL ECONOMIC RELIEF ALLOWANCE (PERA) WHICH ESSENTIALLY CONSTITUTE REIMBURSEMENT FOR EXPENSES INCURRED IN THE PERFORMANCE OF GOVERNMENT PERSONNEL'S OFFICIAL DUTIES SHALL NOT BE SUBJECT TO INCOME TAX AND CONSEQUENTLY TO WITHHOLDING TAX. PROVIDED FURTHER, THAT PURSUANT TO E.O. 219 WHICH TOOK EFFECT ON JANUARY 1, 2000, ADDITIONAL COMPENSATION ALLOWANCE (ACA) GIVEN TO GOVERNMENT PERSONNEL SHALL NOT BE SUBJECT TO WITHHOLDING TAX PENDING ITS FORMAL INTEGRATION INTO THE BASIC PAY. CONSEQUENTLY, AND EFFECTIVE FOR THE TAXABLE YEAR 2000, ACA SHALL BE CLASSIFIED AS PART OF THE "OTHER BENEFITS" UNDER SECTION

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32(B)(7)(e) OF THE CODE WHICH ARE EXCLUDED FROM GROSS COMPENSATION INCOME PROVIDED THE TOTAL AMOUNT OF SUCH BENEFITS DOES NOT EXCEED P30,000.00. ADETca

"(b)

Any amount paid specifically, either as advances or reimbursements for traveling, representation and other bona fide ordinary and necessary expenses incurred or reasonably expected to be incurred by the employee in the performance of his duties are not compensation subject to withholding, if the following conditions are satisfied: "(i)

It is for ordinary and necessary traveling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade, business or profession; and

"(ii)

The employee is required to account/liquidate for the foregoing expenses in accordance with the specific requirements of substantiation for each category of expenses pursuant to Sec. 34 of the Code. The excess of actual expenses over advances made shall constitute taxable income if such amount is not returned to the employer. Reasonable amounts of reimbursements/advances for traveling and entertainment expenses which are pre-computed on a daily basis and are paid to an employee while he is on an assignment or duty need not be subject to the requirements of substantiation and to withholding." "xxx

xxx

xxx

See earlier provision under Section 2, Revenue Regulations No. 6-82, and subsequent amendments made by Revenue Regulations Nos. 9-83 and 12-86. See earlier issuances on compensation income — Revenue Memorandum Circular No. 28-82; Revenue Memorandum Circular No. 1-83; Revenue Memorandum Circular No. 16-83; Revenue Memorandum Circular No. 15-87; Revenue Memorandum Circular No. 23-2001; Revenue Memorandum Order No. 36-84; and Revenue Audit Copyright 2015

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Memorandum Order No. 1-87. 93

Special Treatment of Fringe Benefit. See Revenue Regulations No. 3-98 and subsequent amendments thereto.

94

See amendment made by Section 2, Revenue Regulations No. 8-2000.

95

See also Executive Order No. 291 entitled "Monetization of Leave Credits of Government Officials and Employees" (effective September 27, 2000); and Revenue Memorandum Circular No. 16-2000.

95-a As added by Section 1, Revenue Regulations No. 1-2015. 96

See Executive Order No. 291 and Revenue Memorandum Circular No. 16-2000.

97

See issuances on RATA and PERA — Revenue Memorandum Circular No. 60-91; Revenue Memorandum Circular No. 68-91; Revenue Memorandum Circular No. 15-92; Revenue Memorandum Circular No. 46-92; and Revenue Memorandum Circular No. 1-95.

97-a Entitled "Grant Of Salary Adjustment To All Government Personnel" (effective January 1, 2000). 98

Deductions from gross income.

99

See amendment made by Section 1, Revenue Regulations No. 10-2000.

100

See amendment made by Section 1, Revenue Regulations No. 10-2000. See also EO 291; and Revenue Memorandum Circular No. 16-2000. See further X,B,4,4.3.2,d,d.1, Revenue Audit Memorandum Order No. 1-2000 (dated March 17, 2000) Re: Updated Handbook on Audit Procedures and Techniques Volume I (Revision - Year 2000); Revenue Memorandum Circular No. 76-89 (dated December 8, 1989) Re: Publishing the Resolution of the Supreme Court in the case of Commissioner of Internal Revenue vs. Oscar R. Victoriano and the Court of Tax Appeals re: taxability of terminal leave pay of retiring official/employee in the government service; Revenue Memorandum Circular No. 83-91 (dated November 12, 1991) Re: Publishing the Resolution of the Supreme Court in the case of "Commissioner of Internal

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Revenue vs. The Court of Appeals and Efren P. Castañeda", G.R. No. 96016 promulgated October 17, 1991, re: non-taxability of terminal leave pay received by officials/employees retiring from the government service; Revenue Memorandum Circular No. 3-2001 (dated January 13, 2001) Re: Delegation of Authority to Regional Directors to Issue Certain Rulings with Established Precedents; Revenue Memorandum Circular No. 14-2001 (dated March 12, 2001) Re: Lists of Requirements from Taxpayers for Issuance of Certain Rulings with Established Precedents Delegated to Regional Directors and to the Assistant Commissioner, Legal Service under RMC Nos. 2-2001, 3-2001 and 10-2001; Revenue Memorandum Circular No. 17-2001 (dated March 20, 2001) Re: Adoption of Fiscal Discipline Measures in the Public Sector for FY 2001; and Revenue Memorandum Order No. 75-99 (dated September 9, 1999) Re: Delegation of Authority to Regional Directors to Issue Certain Rulings with Established Precedents. Section 2.78.1 (B) - Withholding of Income Tax on Compensation Income 101

As last amended by Section 2, Revenue Regulations No. 10-2008. Original text: SECTION 2.78.1. Income. — xxx

Withholding of Income Tax on Compensation

xxx

xxx

(B) Exemptions from withholding tax on compensation. — The following income payments are exempted from the requirement of withholding tax on compensation: (1) (a)

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Remunerations received as an incident of employment, as follows: Retirement benefits received under Republic Act under 7641 and those received by officials and employees of private firms, whether individual or corporate, under a reasonable private benefit plan maintained by the employer which meet the following requirements: (i)

The plan must be reasonable;

(ii)

The benefit plan must be approved by the Bureau;

(iii)

The retiring official or employee must have been in the

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service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of retirement; and (iv)

(b)

The retiring official or employee should not have previously availed of the privilege under the retirement benefit plan of the same or another employer.

Any amount received by an official or employee or by his heirs from the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee, such as retrenchment, redundancy, or cessation of business. The phrase "for any cause beyond the control of the said official or employee" connotes involuntariness on the part of the official or employee. The separation from the service of the official or employee must not be asked for or initiated by him. The separation was not of his own making. Whether or not the separation is beyond the control of the official or employee, being essentially a question of fact, shall be determined on the basis of prevailing facts and circumstances. It shall be duly established by the employer by competent evidence which should be attached to the monthly return for the period in which the amount paid due to the involuntary separation was made. Amounts received by reason of involuntary separation remain exempt from income tax even if the official or the employee, at the time of separation, had rendered less than ten (10) years of service and/or is below fifty (50) years of age. Any payment made by an employer to an employee on account of dismissal, constitutes compensation regardless of whether the employer is legally bound by contract, statute, or otherwise, to make such payment.

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(c)

Social security benefits, retirement gratuities, pensions and other similar benefits received by residents or non-resident citizens of the Philippines or aliens who come to reside permanently in the Philippines from foreign government agencies and other institutions private or public;

(d)

Payments of benefits due or to become due to any person residing

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in the Philippines under the law of the United States administered by the United States Veterans Administration; (e)

Payments of benefits made under the Social Security System Act of 1954 as amended; and

(f)

Benefits received from the GSIS Act of 1937, as amended , and the retirement gratuity received by government officials and employees.

(2)

Remuneration paid for agricultural labor —

(a)

Remuneration for services which constitute agricultural labor and paid entirely in products of the farm where the labor is performed is not subject to withholding. In general, however, the term, "agricultural labor" does not include services performed in connection with forestry, lumbering or landscaping.

(b)

Remuneration paid entirely in products of the farm where the labor is performed by an employee of any person in connection with any of the following activities is excepted as remuneration for agricultural labor:

(c)

(i)

The cultivation of soil;

(ii)

The raising, shearing, feeding, caring for, training, or management of livestock, bees, poultry, or wildlife; or

(iii)

The raising or harvesting of any other agricultural or horticultural commodity. The term "farm" as used in this subsection includes, but is not limited to stock, dairy, poultry, fruits and truck farms, plantations, ranches, nurseries ranges, orchards, and such greenhouse and other similar structures as are used primarily for the raising of agricultural or horticultural commodities.

The remuneration paid entirely in products of the farm where labor is performed for the following services in the employ of the owner or tenant or other operator of one or more farms is not considered as remuneration for agricultural labor, provided the major part of such services is performed on a farm: (i)

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Services performed in connection with the operation, management, conservation, improvement, or maintenance

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of any such farms or its tools or equipments; or (ii)

Services performed in salvaging timber, or clearing land brush and other debris left by a hurricane or typhoon.

The services described in (i) above may include for example, services performed by carpenters, painters, mechanics, farm supervisors, irrigation engineers, bookkeepers, and other skilled or semi-skilled workers, which contribute in any way to the conduct of the farm or farms, as such, operated by the person employing them, as distinguished from any other enterprise in which such person may be engaged. Since the services described in this paragraph must be performed in the employ of the owner or tenant or other operator of the farm, the exception does not extend to remuneration paid for services performed by employees of a commercial painting concern, for example, which contracts with a farmer to renovate his farm properties. (d)

(e)

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Remuneration paid entirely in products of the farm where labor is performed by an employee in the employ of any person in connection with any of the following operations is not considered as remuneration for agricultural labor without regard to the place where such services are performed: (i)

The making of copra, stripping of abaca, etc.;

(ii)

The hatching of poultry;

(ii)

The raising of fish;

(iv)

The operation or maintenance of ditches, canals, reservoirs, or waterways used exclusively for supplying or storing water for farming purposes; and

(v)

The production or harvesting of crude gum from a living tree or the processing of such crude gum into gum spirits or turpentine and gum resin, provided such processing is carried on by the original producer of such crude gum.

Remuneration paid entirely in products of the farm where labor is performed by an employee in the employ of a farmer or a farmer's cooperative, organization or group in the handling, planting, drying, packing, packaging, processing, freezing,

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grading, storing or delivering to storage or to market or to carrier for transportation to market, of any agricultural or horticultural commodity, produced by such farmer or farmer-members of such organization or group, is excepted as remuneration for agricultural labor. Services performed by employees of such farmer or farmer's organization or group in handling, planting, drying, packaging, processing, freezing, grading, storing, or delivering to storage or to market or to carrier for transportation to market of commodities produced by persons other than such farmer or members of such farmer's organization or group are not performed "as an incident to ordinary farming operation". All payments made in cash or other forms other than products of the farm where labor is performed, for services constituting agricultural labor as explained above, are not within the exception. (3) Remuneration for domestic services. — Remuneration paid for services of a household nature performed by an employee in or about the private home of the person by whom he is employed is not subject to withholding. However, the services of household personnel furnished to an employee (except rank and file employees) by an employer shall be subject to the fringe benefits tax pursuant to Sec. 33 of the Code, as amended. A private home is the fixed place of abode of an individual or family. If the home is utilized primarily for the purpose of supplying board or lodging to the public as a business enterprise, it ceases to be a private home and remuneration paid for services performed therein is not exempted. In general, services of a household nature in or about a private home include services rendered by cooks, maids, butlers, valets, laundresses, gardeners, chauffeurs of automobiles for family use. The remuneration paid for the services above enumerated which are performed in or about rooming or lodging houses, boarding houses, clubs, hotels, hospitals or commercial offices or establishments is considered as compensation; Remuneration paid for services performed as a private secretary, even if they are performed in the employer's home is considered as compensation; (4) Remuneration for casual labor not in the course of an employer's trade or business. — The term "casual labor" includes labor which is occasional, Copyright 2015

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incidental or regular. The expression "not in the course of the employer's trade or business" includes labor that does not promote or advance the trade or business of the employer. Thus, any remuneration paid for labor which is occasional, incidental or irregular, and does not promote or advance the employer's trade or business, is not considered as compensation. EXAMPLE: A's business is that of operating a sawmill. He employs B, a carpenter, at an hourly wage to repair his home. B's work is irregular and he spends, the greater part of two days in completing the work. Since B's labor is casual and is not in the course of A's business, the remuneration paid for such services is exempted. Any remuneration paid for casual labor, that is, labor which is occasional, incidental or irregular, but which is rendered in the course of the employer's trade or business, is considered as compensation. EXAMPLE: E is engaged in the business of operating a department store. He employs additional clerks for a short period. While the services of the clerks may be casual, they are rendered in the course of the employer's trade or business and therefore the remuneration paid for such services is considered as compensation. Any remuneration paid for casual labor performed for a corporation is considered as compensation; (5) Compensation for services by a citizen or resident of the Philippines for a foreign government or an international organization. — Remuneration paid for services performed as an employee of a foreign government or an international organization is exempted. The exemption includes not only remuneration paid for services performed by ambassadors, ministers and other diplomatic officers and employees but also remuneration paid for services performed as consular or other officer or employee of a foreign government or as a non-diplomatic representative of such government. (6) Damages. — Actual, moral, exemplary and nominal damages received by an employee or his heirs pursuant to a final judgment or compromise agreement arising out of or related to an employer-employee relationship. (7) Life Insurance. — The proceeds of life insurance policies paid to the heirs or beneficiaries upon the death of the insured, whether in a single sum Copyright 2015

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or otherwise, provided however, that interest payments agreed under the policy for the amounts which are held by the insured under such an agreement shall be included in the gross income. (8) Amount received by the insured as a return of premium. — The amount received by the insured, as a return of premium or premiums paid by him under life insurance, endowment, or annuity contracts either during the term or at the maturity of the term mentioned in the contract or upon surrender of the contract. (9) Compensation for injuries or sickness. — Amounts received through Accident or Health Insurance or under Workmen's Compensation Acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness. (10) Income exempt under treaty. — Income of any kind to the extent required by any treaty obligation binding upon the Government of the Philippines. (11) Thirteenth (13th ) month pay and other benefits. — (a) Thirteenth (13th) month pay equivalent to the mandatory one (1) month basic salary of officials and employees of the government, (whether national or local), including government-owned or controlled corporations, and or private offices received after the twelfth (12th) month pay; and (b) Other benefits such as Christmas bonus, productivity incentive bonus, loyalty award, gifts in cash or in kind and other benefits of similar nature actually received by officials and employees of both government and private offices. The above stated exclusions (a) and (b) shall cover benefits paid or accrued during the year provided that the total amount shall not exceed thirty thousand pesos (P30,000.00) which may be increased through rules and regulations issued by the Secretary of Finance, upon recommendation of the Commissioner, after considering, among others, the effect on the same of the inflation rate at the end of the taxable year. (12) GSIS, SSS, Medicare and other contributions. — GSIS, SSS, Medicare and Pag-Ibig contributions, and union dues of individual employees.

As amended by Section 1, Revenue Regulations No. 1-2006: Copyright 2015

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"SECTION 2.78.1. Income. — xxx

Withholding of Income Tax on Compensation

xxx

xxx

"(B) Exemptions from withholding tax on compensation. — The following income payments are exempted from the requirement of withholding tax on compensation: xxx

xxx

xxx

"(13) COMPENSATION INCOME OF INDIVIDUALS THAT DO NOT EXCEED THE STATUTORY MINIMUM WAGE OR FIVE THOUSAND PESOS (PHP5,000.00) PER MONTH (SIXTY THOUSAND PESOS [PHP60,000.00] A YEAR), WHICHEVER IS HIGHER." "(14) COMPENSATION INCOME OF EMPLOYEES OF THE GOVERNMENT OF THE PHILIPPINES, OR ANY OF ITS POLITICAL SUBDIVISIONS, AGENCIES OR INSTRUMENTALITIES, WITH SALARY GRADES 1 TO 3."

As amended by Section 1, Revenue Regulations No. 8-2000: "Sec. 2.78.1. Withholding of Income Tax on Compensation Income. — "xxx

xxx

xxx

"(B) Exemptions from withholding tax on compensation. The following income payments are exempted from the requirement of withholding tax on compensation: "xxx "(11)

xxx

xxx

Thirteenth (13th) month pay and other benefits. —

"(a) . . . "(b) Other benefits such as Christmas bonus, productivity incentives, loyalty award, gift in cash or in kind and other benefits of similar nature actually received by officials and employees of both government and private offices, INCLUDING THE ADDITIONAL COMPENSATION ALLOWANCE ("ACA") GRANTED AND PAID TO ALL OFFICIALS AND EMPLOYEES OF THE NATIONAL GOVERNMENT AGENCIES Copyright 2015

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(NGAs) INCLUDING STATE UNIVERSITIES AND COLLEGES (SUCs), GOVERNMENT-OWNED AND/OR CONTROLLED CORPORATIONS (GOCCs), GOVERNMENT FINANCIAL INSTITUTIONS (GFIs) AND LOCAL GOVERNMENT UNITS (LGUs) "The above stated exclusions (a) and (b) shall cover benefits paid or accrued during the year provided that total amount shall not exceed thirty thousand pesos (P30,000.00) which may be increased through rules and regulations issued by the Secretary of Finance, upon recommendation of the Commissioner, after considering, among others, the effect on the same of the inflation rate at the end of the taxable year." "(12)

...

"(13) FACILITIES AND PRIVILEGES OF RELATIVELY SMALL VALUE OR 'DE MINIMIS' BENEFITS AS DEFINED UNDER THESE REGULATIONS."

See Section 32(B), NIRC of 1997. See also earlier provision under Section 3, Revenue Regulations No. 6-82 and subsequent amendment made by Revenue Regulations No. 12-86. 102

Entitled "An Act Amending Article 287 of Presidential Decree No. 442, as amended, Otherwise Known as the Labor Code of the Philippines, by Providing for Retirement Pay to Qualified Private Sector Employees in the Absence of Any Retirement Plan in the Establishment" (effective December 9, 1992). See issuances on private retirement benefit plan — Revenue Regulations No. 1-83; Revenue Regulations No. 11-2001; Revenue Memorandum Circular No. 10-83; and Revenue Memorandum Order No. 9-93.

103

Republic Act No. 1161, as amended, entitled "An Act to Create a Social Security System Providing Sickness, Unemployment, Retirement, Disability and Death Benefits for Employees" (effective June 18, 1954). See now Republic Act No. 8282 entitled "An Act Further Strengthening The Social Security System Thereby Amending For This Purpose Republic Act No. 1161, As Amended, Otherwise Known As The Social Security Law" (approved May 1, 1997).

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104

CA 186, as amended, entitled "An Act to Create and Establish a 'Government Service Insurance System' to Provide for its Administration, and to Appropriate the Necessary Funds Therefor" (dated November 14, 1936). See now Republic Act No. 8291 entitled "An Act Amending Presidential Decree No. 1146, As Amended, Expanding And Increasing The Coverage And Benefits Of The Government Service Insurance System, Instituting Reforms Therein And For Other Purposes" (approved May 30, 1997).

105

Special Treatment of Fringe Benefit. See Section 2.33(B)(4), Revenue Regulations No. 3-98 and subsequent amendments made by Revenue Regulations Nos. 8-2000 and 10-2000.

106

Amends Revenue Regulations No. 2-95 (dated January 3, 1995) Re: Implementing Republic Act No. 7833, An Act to Exclude the Benefits Mandated Pursuant to Republic Act No. 6686 and Presidential Decree No. 851, as Amended, and other Benefits from the Computation of Gross Compensation Income for the Purposes of Determining Taxable Compensation Income, Amending for the Purpose Section 28 (b) (8) of the National Internal Revenue Code, as Amended. See Revenue Memorandum Circular No. 36-94 (dated December 14, 1994) Re: Publishing the full text of Republic Act No. 7833 — an Act excluding the benefits mandated pursuant to Republic Act No. 6686 and Presidential Decree No. 851, as amended, and other benefits from the computation of gross compensation income for purposes of determining taxable compensation income, amending for the purpose Section 28 (b) (8) of the National Internal Revenue Code, as amended.

107

See amendment made by Section 2, Revenue Regulations No. 8-2000.

108

Revenue Regulations No. 8-2000 inserted the provision "(13) facilities and privileges of relatively small value or 'de minimis' benefits as defined under these regulations" which was amended by Section 1, Revenue Regulations No. 10-2008. Revenue Regulations No. 10-2008 also inserted provision "(14) Compensation income of employees in the public sector with compensation income of not more than the SMW in the non-agricultural sector, as fixed by

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RTWPB/NWPC, applicable to the place where he/she is assigned." 109

As amended by Section 2, Revenue Regulations No. 10-2008.

Section 2.78.2 - Payroll Period 110

See earlier provision under Section 4, Revenue Regulations No. 6-82 and subsequent amendments thereto.

Section 2.78.3 - Employee 111

See earlier provision under Section 5, Revenue Regulations No. 6-82 and subsequent amendments thereto.

Section 2.78.4 - Employer 112

See earlier provision under Section 6, Revenue Regulations No. 6-82 and subsequent amendments thereto.

Section 2.78.4 (B) - Employer; Person Paying Compensation on behalf of a Non-resident 113

See EO 651; and issuances designating personnel of government offices as withholding agents — Revenue Regulations No. 1-87, and subsequent amendments made by Revenue Regulations No. 6-96 and Revenue Regulations No. 10-97; Revenue Memorandum Circular No. 40-2001; Revenue Memorandum Order No. 14-98, and subsequent amendment made by Revenue Memorandum Order No. 70-98.

Section 2.78.4 (C) - Employer; Compensation Paid on behalf of Two or More Employers 114

See earlier provision under Section 11, Revenue Regulations No. 6-82 and subsequent amendments thereto.

Section 2.78.5 - Computation of Wages 115

Inserted by Section 2, Revenue Regulations No. 10-2008.

Section 2.79 (A) - Income Tax Collected at Source on Compensation Income; Requirement of Withholding 116

As amended by Section 3, Revenue Regulations No. 10-2008. Original text: Section 2.79. Income.

Income Tax Collected at Source on Compensation

(A) Requirement of Withholding. — Every employer must withhold Copyright 2015

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from compensations paid, an amount computed in accordance with these regulations. Provided, that no withholding of tax shall be required where the total compensation income of an individual does not exceed the statutory minimum wage or five thousand pesos (P5,000.00) monthly (sixty thousand pesos (P60,000.00) a year), whichever is higher. Employees whose total annual compensation, as determined in the preceding paragraph, does not exceed P60,000.00 shall be given two options with which to pay his income tax due to wit: (1)

His compensation income shall be subjected to withholding tax, but he shall not be required to file the income tax return prescribed in Sec. 51 of the Code (filing of an individual return) except when covered by any of the situations enumerated in Sec. 2.83.4 of these Regulations.

(2)

His compensation income shall not be subject to a withholding tax but he shall file his annual income tax return and pay the tax due thereon, annually.

Where the employee has opted to have his compensation income subjected to withholding so as to be relieved of the obligation of filing an annual income tax return and paying his tax due on a lump sum basis, he shall execute a waiver in a prescribed BIR form of his exemption from withholding which shall constitute the authority for the employer to apply the withholding tax table provided under these Regulations. The employee who opts to file the Income Tax Return shall file the same not later than April 15 of the year immediately following the taxable year. xxx

xxx

xxx

As amended by Section 2, Revenue Regulations No. 1-2006: "SEC. 2.79. Income.

Income Tax Collected at Source on Compensation

"(A) Requirement of Withholding. — Every employer must withhold from compensations paid, an amount computed in accordance with these regulations. PROVIDED, THAT COMPENSATION INCOME OF (1) INDIVIDUALS THAT DO NOT EXCEED THE STATUTORY MINIMUM WAGE OR FIVE THOUSAND PESOS (PHP5,000.00) PER MONTH (SIXTY THOUSAND PESOS [PHP60,000.00] A YEAR), Copyright 2015

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WHICHEVER IS HIGHER, AND (2) EMPLOYEES OF THE GOVERNMENT OF THE PHILIPPINES, OR ANY OF ITS POLITICAL SUBDIVISIONS, AGENCIES OR INSTRUMENTALITIES, WITH SALARY GRADES 1 TO 3, SHALL NOT BE SUBJECT TO WITHHOLDING TAX. "THE AFOREMENTIONED INDIVIDUALS WHOSE COMPENSATION INCOME IS NOT SUBJECT TO WITHHOLDING TAX SHALL REMAIN LIABLE FOR INCOME TAXES AND SHALL CONTINUE TO FILE THEIR ANNUAL INCOME TAX RETURNS AND PAY THE INCOME TAXES DUE THEREON, IF ANY, NOT LATER THAN APRIL 15 OF THE YEAR IMMEDIATELY FOLLOWING THE TAXABLE YEAR. xxx

xxx

xxx

Section 2.79 (B) - Income Tax Collected at Source on Compensation Income; Computation of Withholding Tax on Compensation Income in General 117

As amended by Section 3, Revenue Regulations No. 10-2008. Original text: Section 2.79. Income.

Income Tax Collected at Source on Compensation

xxx

xxx

xxx

(B) Computation of Withholding Tax on Compensation Income in General. — The procedures provided herein below shall govern the computation of withholding tax on the taxable compensation income of the employees. Provided, however, that taxable fringe benefits received by employees other than the rank and file, as defined in the Labor Code of the Philippines, as amended, shall be subject to a Fringe Benefits Tax, instead of the rates prescribed in the Withholding Tax Tables pursuant to Sec. 24(A) of the Code, as amended (refer to Sec. 2.79.D of these Regulations). (1) Use of Withholding Tax Tables. — In general, every employer making payment of compensation shall deduct and withhold from such compensation a tax determined in accordance with the prescribed new withholding tax tables effective January 1, 1998 (Annex A) of these Regulations. There are four (4) withholding tables prescribed in these regulations, as Copyright 2015

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follows: (a)

Monthly Tax Table — to be used by employers using the monthly payroll period;

(b)

Semi-Monthly Tax Table — to be used by employers using the semi-monthly payroll period;

(c)

Weekly Tax Table — to be used by employers using the weekly payroll period;

(d)

Daily Tax Table — to be used by employers using the daily payroll period.

If the compensation is paid other than daily, weekly, semi-monthly or monthly, the tax to be withheld shall be computed as follows: (a)

Annually — use the annualized computation referred to in Sec. 2.79 (B)(5)(b) of these Regulations;

(b)

Quarterly and semi-annually — divide the compensation by three (3) or six (6), respectively, to determine the average monthly compensation. Use the monthly withholding tax table to compute the tax, and the tax so computed shall be multiplied by three (3) or six (6) accordingly.

(2) (a)

Components of the Withholding Tax Table. — Each tax table is grouped into Tables A, B and C.

A — Table for employees without dependent children B — Table for heads of family with dependent children C — Table for married employees with qualified dependent children b)

The columns in the Tables reflect the following:

1st column — reflects the exemption status of employee represented by letter symbols. (refer to the explanation of the legend of symbols in letter (d) below) 2nd column — reflects the total amount of personal and additional exemption, in pesos, to which an employee is entitled. (c) Copyright 2015

Column numbers 1 to 10 reflect the portion of the amount of

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taxes to be withheld on the amount of compensation of the employees. Every amount in all the columns within Tables A, B and C represent the compensation level. (d)

Legend of symbols — The symbols used in the new withholding tax table represent the following:

Z — Zero exemption for (a) employee with multiple employers simultaneously, with respect to second, third, etc., employer and (b) for employee who fails to file an application for registration (BIR Form 1902) or an exemption certificate; (BIR Form 2305) S — Single, legally separated spouses/widow/widower without any qualified dependent; Cdpr

ME — Married employee who is not legally separated; [HF — Head of the family who is either single/legally separated spouse/widow or widower with a qualified dependent parent; sister or brother; legitimate, recognized natural or legally adopted child; or a qualified senior citizen as defined by these regulations pursuant to Sec. 2 of R.A. No. 7432(3). [In view however, of the promulgation of the Family Code which makes no distinction between the spurious and natural child, an illegitimate child can now be considered as a qualified dependent and qualifies the claimant to the status of head of the family.] The numerals (1-4) affixed to the status symbols "ME" and HF" represent the number of qualified legitimate, illegitimate, or legally adopted children; Exemption — means the amount of exemption in thousand pesos an employee is entitled to claim as a deduction from gross compensation income in accordance with the status and number of qualified dependent children. (3)

Steps to determine the amount of tax to be withheld:

Step 1. Use the appropriate tables for the payroll period; monthly semi-monthly weekly or daily as the case may be. Step 2. Determine the total monetary and non-monetary compensation paid to an employee for the payroll period, segregating gross Copyright 2015

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benefits which includes thirteenth (13th) month pay, productivity incentives, Christmas bonus, and other benefits received by the employee per payroll period. Gross benefits which are received by officials and employees of public and private entities in the amount of thirty thousand pesos (P30,000) or less shall be exempted from income tax and from withholding tax. Step 3. Segregate the taxable compensation from the non-taxable income paid to the employee for the payroll period. The taxable income refers to all remuneration paid to an employee not otherwise exempted by law from income tax and consequently from withholding tax. The non-taxable income are those which are specifically exempted from income tax by the Code or by other special laws as listed in Sec. 2.78.1 (B) of these Regulations (e.g. benefits not exceeding P30,000, non-taxable retirement benefits and separation pay). Step 4. Segregate the taxable compensation income as determined in Step 3 into regular taxable compensation income and supplementary compensation income. Regular compensation includes basic salary, fixed allowances for representation, transportation and other allowances paid to an employee per payroll period. Supplementary compensation includes payments to an employee in addition to the regular compensation such as commission, overtime pay, taxable retirement pay, taxable bonus and other taxable benefits, with or without regard to a payroll period. Step 5.

Fix the compensation level as follows:

(i)

Determine the line (horizontal) corresponding to the status and number of qualified dependent children using the appropriate symbol for the taxpayer status.

(ii)

Determine the column to be used by taking into account only the total amount of taxable regular compensation income. The compensation level is the amount indicated in the line and column to which the regular compensation income is equal to or in excess, but not to exceed the amount in the next column of the same line.

Step 6. Compute the withholding tax due by adding the tax predetermined in the compensation level indicated at the top of the column, to the tax on the excess of the total regular and supplementary compensation over the compensation level, which is computed by multiplying the excess by the rate also indicated at the top of the same column. cdrep

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Sample Computations on the use of the Withholding Tax Table:

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EXAMPLE I: Mr. A, single, with no qualified dependent receives P6,000 as regular monthly compensation. COMPUTATION: Using the monthly withholding tax table, the monthly withholding tax is computed by referring to Table A line 2 of column 4 which shows a tax of P208.33 on P4,167.00 plus 15% of the excess (P6,000.00 4,167.00 = P1,833.00) Total taxable compensation Less: compensation level (line A-2 Column 4)

P 6,000.00

Tax on P4,167.00 Tax on excess (P1,833.00 x 15%) Monthly withholding tax

4,167.00 ––––––––– P 1,833.00 ––––––––– P 208.33 274.95 ––––––––– P 483.28 –––––––––

EXAMPLE II: Mr. B, head of the family (with a qualified dependent parent) receives P6,200.00 as monthly regular compensation and P800.00 as supplementary compensation for January or a total of P7,000.00. COMPUTATION: Using the monthly withholding tax table, the withholding tax for January is computed by referring to Table A line 3 HF of column 4 (fix compensation level taking into account only the regular compensation income of P6,200.000) which shows a tax of P208.33 on P4,583.00 plus 15% of the excess (P7,000.00 - 4,583.00 = P2,417.00). Total taxable compensation Less: compensation level (line A-3 Column 4)

P 7,000.00

Excess Tax on (P4,583.00) Tax on excess (P2,417.00 x 1 5%) Withholding tax for January

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4,583.00 ––––––––– P 2,417.00 ––––––––– P 208.33 362.55 ––––––––– P 570.88 –––––––––

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EXAMPLE III: Mrs. C, married with two (2) qualified dependent children receives P5,500.00 as regular monthly compensation. Mr. C, her husband is also employed and claims for the additional exemptions. COMPUTATION: Using the monthly withholding tax table, the withholding tax due is computed by referring to table A line 4 ME of column 4 which shows a tax of P208.33 on P5,167.00 plus 15% of the excess (P5,500.00 P5,167.00 = P333.00). Total taxable compensation Less: compensation level (Line A- 4 Column 4)

P 5,500.00 5,167.00 –––––––— P 333.00 –––––––—

Excess Tax on P5,167,00 Tax on excess (P333.00 x 15%) Monthly withholding tax

P 208.33 49.95 –––––––— P 258.28 –––––––—

EXAMPLE IV: Mr. D, married with two (2) qualified dependent children receives P3,550.00 as regular semi-monthly compensation. Mrs. D, his wife is also employed. Mr. D did not waive his right in favor of the wife to claim for the additional exemptions. COMPUTATION: Using the semi-monthly withholding tax tables, the withholding tax due is computed by referring to Table C line 2 ME 2 of column 4 which shows a tax of P104.17 on P3,250.00 plus 15% of the excess (P3,550.00 - 3,250.00 = P300.00) Total taxable compensation Less: compensation level (line C-2 Column 4) Excess Tax on P3,250.00 Tax on excess (P300.00 x 15%) Semi-monthly withholding tax Copyright 2015

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P3,550.00 3,250.00 –––––––– P 300.00 –––––––– P 104.17 45.00 –––––––– P 149.17

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––––––––

EXAMPLE V: Mr. E, married with two (2) qualified dependent children receives P3,300.00 as regular semi-monthly compensation. Mrs. E, his wife is not employed. COMPUTATION: Using the semi-monthly withholding tax tables, the withholding tax due is computed by referring to Table C line 2 ME2 of Column 4 which shows a tax of P104.17 on P3,250 plus 15% of the excess (3,300 3,250 = P50.00) Total taxable compensation P3,300.00 Less: compensation level (Line C-2 Column 4) 3,250.00 –––––––– Excess P 50.00 –––––––– Tax on P3,250.00 P 104.17 Tax on excess (P50.00 x 15%) 7.50 –––––––– Semi-monthly withholding P 111.67 ––––––––

EXAMPLE VI: On June, 1998, Mr. F, single receives P30,000.00 as regular monthly salary and half of his 13th month pay amounting to P15,000.00 plus other benefits such as productivity pay of P10,000.00 and loyalty pay of P6,000.00. Compute the withholding tax of Mr. F for the month of June, 1998.

COMPUTATION: Regular Wage Gross Benefits: 13th month pay Productivity Loyalty pay

P30,000.00

P15,000 10,000 P6,000 ––––––––— Total Gross Benefits P 31,000.00 –––––––––– Add Taxable Gross Benefits (P31,000 - 30,000 = P1,000)* Total Taxable Compensation Income Less Compensation level Copyright 2015

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1,000.00 ––––––––– P31,000.00 22 500.00 –––––––––

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Excess Tax on P22,500 (line A2, col. 7) Tax on excess (P8,500.00 x 30%) Withholding tax for the month of June

P 8,500.00 ––––––––– P 4,166.67 2,550.00 ––––––––– P 6,716.67 –––––––––

* gross benefit of P31,000 less the maximum total exemptions of the gross benefit of P30,000 (5)

Use of Exceptional Computations

(a) Cumulative average method. — If in respect of a particular employee, the regular compensation is exempt from withholding because the amount thereof is below the compensation level, but supplementary compensation is paid during the calendar year; or the supplementary compensation is equal to or more than the regular compensation to be paid; or the employee was newly hired and had a previous employer/s within the calendar year, other than the present employer doing this cumulative computation, the present employer shall determine the tax to be deducted and withheld in accordance with the cumulative average method provided hereunder: Step 1. Add the amount of taxable regular and supplementary compensation to be paid to an employee for the payroll period subject of computation to the sum of the taxable regular and supplementary compensation since the beginning of the current calendar year including the compensation paid by the previous employers within the same calendar year, if any; Step 2. Divide the aggregate amount of compensation computed in step 1 by the number of payroll period to which the amount relates; Step 3. Compute the tax to be deducted and withheld on the cumulative average compensation determined in Step No. (2) in accordance with the withholding tax table; cdphil

Step 4. Multiply the tax computed in Step No. (3) by the number of payroll period to which it relates; Step 5. Determine the excess, if any, of the amount of tax computed in Step No. (4) over the total amount of tax already deducted and withheld from the beginning payroll period to the last payroll period, including Copyright 2015

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that withheld by the previous employer/s within the calendar year, if any. The excess, as computed, shall be deducted and withheld from the compensation to be paid for the last payroll period of the current calendar year. The cumulative average method, once applicable to a particular employee at any time during the calendar year, shall be the same method to be consistently used for the remaining payroll period/s of the same calendar year. EXAMPLE VII: (Regular monthly compensation is exempt from withholding but supplementary compensation is paid during the calendar year) — Mr. G, married with three (3) qualified dependent children whose spouse is not employed received the following compensation: Month

Regular Compensation

Supplementary Compensation

Total Compensation

Jan. Feb. Mar.

P4,500.00 4,500.00 4,400.00

P1,750.00 1,750.00 1,500.00

P6,250.00 6,250.00 5,500.00

COMPUTATION: 1.

For Jan. - P6,250.00 + 0 For Feb. - P6,250.00 + 6,250.00 For Mar. - P6,250 + 6,250 + 5,500

= = =

P 6,250.00 P12,500.00 P18,000.00

2.

For Jan. - P6,250/1 For Feb. - P12,500/2 For Mar. - P18,000/3

= = =

P 6,250.00 P 6,250.00 P 6,000.00

3.

For January Tax on P5,500.00 (Line C.3, Col. 3) Tax on excess (P750.00 x 10%) Tax on P6,250.00

For February Tax on P5,500 (line C.3, col. 3) Tax on excess (P750.00 x 10%) Tax on P6,250 Copyright 2015

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P

41.67 75.00 —––––––– P 116.67 —–––––––

P

41.67 75.00 ––—––––– P 116.67

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–—–––––– For March Tax on P5,500 (line C.3, col. 3) Tax on excess (P500.00 x 15%)

P

41.67 50.00 –—–––––– P 91.67 –—––––––

Tax on P6,000.00

4.

For Jan. - P116.67 x 1 For Feb. - P116.67 x 2 For Mar. - P91.67 x 3

= = =

P 116.67 P 233.34 P 275.01

5.

For Jan. - P116.67 - 0 For Feb. - P233.34 - 116.67 For Mar. - P275.01 - 233.34

= = =

P 116.67 P 116.67 P 41.67

EXAMPLE VIII: (Supplemental compensation is equal to or more than the regular compensation) — Mr. H, married with one (1) qualified dependent and whose spouse is also employed received the following compensation. Mr. H waived his right to claim for the additional exemptions in favor of his wife. Month

Regular Compensation

Supplementary Compensation

Total Compensation

Jan. Feb. Mar.

P3,000.00 3,000.00 3,000.00

P3,000.00 3,500.00 5,000.00

P6,000.00 6,500.00 8,000.00

COMPUTATION:

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1.

For Jan. - P6,000.00 + 0 For Feb. - P6,000.00 + 6,500.00 For Mar. - P8,000.00 + 6,000.00 + 6,500.00

= = =

P 6,000.00 P12,500.00 P20,500.00

2.

For Jan. - P6,000/1 For Feb. - P12,500/2 For Mar. - P20,500/3

= = =

P 6,000.00 P 6,250.00 P 6,833.33

3.

For January Tax on P5,167.00 (line A4, col. 4) Tax on excess (P833.00 x 15%)

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P 208.33 P 124.95 147

–––––––— P 333.28 –––––––—

Tax on P6,000.00

For February Tax on P5,167.00 (line A4, col. 4) Tax on excess (P1,083.00 x 15%)

P 208.33 P 162.45 –––––––— P 370.78 –––––––—

Tax on P6,250.00

For March Tax on P5,167.00 (line A 4 col. 4) Tax on excess (P1,666.33 x 15%)

P 208.33 P 249.95 –––––––— P 458.28 –––––––—

Tax on P6,833.33

4.

For Jan. - P333.28 x 1 For Feb. - P370.78 x 2 For Mar. - P458.28 x 3

= = =

P 333.28 P 741.56 P 1,374.84

5.

For Jan. - P333.28 - 0 For Feb. - P741.56 - 333.28 For Mar. - P1,374.84 - 741.56

= = =

P 333.28 P 408.28 P 633.28

EXAMPLE IX: (Computation of monthly withholding tax for a new employee with previous employer during the year) — Ms. I, single was hired by X Co. on July, 1998. Her total taxable income per month is P10,000.00. She was previously employed by W Co. from January to June with a monthly taxable income of P6,000.00. Per Form No. 2316 (Certificate of Income Tax Withheld on Compensation) issued by the previous employer, which was presented by Ms. I to her present employer, the total tax withheld is P2,899.68. In computing for the tax withheld on the compensation of Ms. I starting the month of July, X Co. shall use the cumulative average method, as follows: llcd

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Month

Present Compensation Income

Total Previous Income

Total Taxable Income

JULY

10,000.00

36,000.00

46,000.00

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AUG

10,000.00

10,000.00

SEPT

10,000.00

10,000.00

OCT

10,000.00

10,000.00

NOV

10,000.00

10,000.00

DEC

10,000.00 ––––––––– 60,000.00 –––––––––

10,000.00 ––––––––– 96,000.00 –––––––––

––––––––– 36,000.00 –––––––––

COMPUTATION: Step 1 — For July 36,000 +10,000

=

46,000.00

For August 46,000 + 10,000

=

56,000.00

For September 46,000 + 10,000 + 10,000

=

66,000.00

For October 46,000 + 10,000 + 10,000 + 10,000

=

76,000.00

For November 46,000 + 10,000 + 10,000 + 10,000 + 10,000 =

86,000.00

Step 2 — For July 46,000/7

=

6,571.43

For August 56,000/8

=

7,000.00

For September 66,000/9

=

7,333.33

For October 76,000/10

=

7,600.00

For November 86,000/11

=

7,818.18

= =

P 208.33 360.66

Step 3 — For July P6,571.43 Tax on P4,167 Tax on excess (2,404.43 x 15%) Copyright 2015

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Copyright 2015

Tax on P6,571.43

=

For August P7,000.00 Tax on P4,167 Tax on excess (P2,833.00 x 15%)

= =

Tax on P7,000

=

For September P7,333.33 Tax on P4,167 Tax on excess (P3,166.33 x 15%)

= =

Tax on P7,333.33

=

For October P7,600.00 Tax on P7,500 Tax on excess (P100 x 20%)

= =

Tax on P7,600

=

For November P7,818.18 Tax on P7,500 Tax on excess (P318.18 x 20%)

= =

Tax on P7,818.18

=

––––––– P568.99 –––––––

P208.33 424.95 ––––––– P633.28 –––––––

P208.33 474.95 ––––––– P683.28 –––––––

P708.33 20.00 ––––––– P728.33 –––––––

P708.33 63.64 ––––––– P771.97 –––––––

Step 4 — For July For August For September For October For November

P568.99 X 7 P633.28 X 8 P683.28 X 9 P728.33 X 10 P771.97 X 11

= = = = =

P3,982.93 P5,066.24 P6,149.52 P7,283.30 P8,491.67

Step 5 — For July For August

P3,982.93 - 2,899.68 P5,066.24 - 3,982.93

= =

P1,083.26 P1,083.31

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For Sept. For October For Nov.

P6,149.52 - 5,066.24 P7,283.30 - 6,149.52 P8,491.67 - 7,283.30

= = =

P1,083.28 P1,133.78 P1,208.37

(b) Annualized withholding tax method. — (i) When the employer-employee relationship is terminated before the end of the calendar year; and (ii) when computing for the year-end adjustment, the employer shall determine the amount to be withheld from the compensation on the last month of employment or in December of the current calendar year in accordance with the following procedures: Step 1. Determine the taxable regular and supplementary compensation paid to the employee for the entire calendar year. Refer to Steps 2 to 5 of Sec. 2.79 (B)(1)(b) of these Regulations, using as basis the compensation received for the calendar year. cdphil

Step 2. If the employee has previous employment/s within the year, add the amount of taxable regular and supplementary compensation paid to the employee by the previous employer doing the annualized computation to the taxable compensation income received from previous employer/s during the calendar year: (i)

When the employer-employee relationship is terminated before December — The taxable regular and supplementary compensation income shall be the amount paid since the beginning of the current calendar year to the termination of employment.

(ii)

Year-end adjustment — The taxable regular and supplementary compensation income shall be the amount paid since the beginning of the current calendar year to December.

(iii)

Taxable fringe benefits received by employees holding managerial or supervisory positions shall be subject to a final fringe benefit tax as prescribed in Section 2.79 (D) of these Regulations. Hence, the same shall not form part of the taxable supplementary compensation, of managers and supervisors, subject to the withholding tax tables.

Step 3. Deduct from the aggregate amount of compensation computed in Step No. (2) the amount of the total personal and additional exemptions of the employee. Copyright 2015

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Step 4. Deduct the amount of premium payments on Health and/or Hospitalization Insurance of employees who have presented evidence that they have paid during the taxable year premium payments (the deductible amount shall not exceed P2,400 or P200 per month whichever is lower) and that their family's total gross income does not exceed P250,000 for the calendar year. For purposes of substantiating the claim of insurance expense, the policy contract shall be presented to the employer together with the original official receipt of the premium payment, in addition to the documents which will be prescribed by the BIR in a separate regulation to determine the aggregate of his family income. Total family income includes primary income and other income from sources received by all members of the nuclear family, i.e. father, mother, unmarried children living together as one household, or a single parent with children. A single person living alone is considered as a nuclear family. The spouse claiming the additional exemptions for the qualified dependent children shall be the same spouse to claim the deductions for premium payments. Step 5. Compute the amount of tax on the difference arrived at in Step 4, in accordance with the schedule provided in Sec. 24 (A) of the Code, as follows: Over

not over 10,000 30,000 70,000 140,000 250,000 500,000

But Not Over 10,000 30,000 70,000 140,000 250,000 500,000 over

Amount Rate

Of Excess Over

5% 500+10% 10,000 2,500+15% 30,000 8,500+20% 70,000 22,500+25% 140,000 50,000+30% 250,000 125,000+34% 500,000 (33% in 1999) (32% in 2000 and thereafter)

Step 6. Determine the deficiency or excess, if any, of the tax computed in Step 5 over the cumulative tax already deducted and withheld since the beginning of the current calendar year. The deficiency tax (when the amount of tax computed in Step 5 is greater than the amount of cumulative tax already deducted and withheld or when no tax has been withheld from the beginning of the calendar year) shall be deducted from the last payment of compensation for Copyright 2015

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the calendar year. If the deficiency tax is more than the amount of last compensation to be paid to an employee, the employer shall be liable to pay the amount of tax which cannot be collected from the employee. The obligation of the employee to the employer arising from the payment by the latter of the amount of tax which cannot be collected from the compensation of the employee is a matter of settlement between the employee and employer. The excess tax (when the amount of cumulative tax already deducted and withheld is greater than the tax computed in Step 5) shall be credited or refunded to the employee not later than January 25 of the following year. However, in case of termination of employment before December, the refund shall be given to the employee at the payment of the last compensation during the year. In return, the employer is entitled to deduct the amount refunded from the remittable amount of taxes withheld from compensation income in the current month in which the refund was made, and in the succeeding months thereafter until the amount refunded by the employer is fully repaid. EXAMPLE X: (Use of annualized computation when employer-employee relationship was terminated before December) — Mr. X, head of the family with a qualified dependent brother receives P8,000 as monthly regular compensation starting January 1, 1998. On June 1, 1998, he filed his resignation effective June 30, 1998. The tax withheld from January to May was P3,624.65. COMPUTATION: (To be done before payment of the compensation for June 1998): Total compensation received from January 1 to May 31, 1998 Add: Compensation to be received on June Gross compensation Jan-June Less: Personal Exemption Net Taxable Compensation

Tax Due* Less: Tax Withheld from Jan to May To be refunded to Employee Mr. X

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P40,000.00 8,000.00 ––––––––– P48,000.00 25,000.00 ––––––––– P23,000.00 ––––––––– P1,800.00 3,624.00 ––––––––– (P1,824.65) –––––––––

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* Tax on P10,000.00 Tax on excess (P13,000 x 10%) Tax on P36,000

P 500.00 1,300.00 ––––––––– P 1,800.00 –––––––––

EXAMPLE XI. (Year-end adjustments computation) — For taxable year 1998, Asian Mfg. has the following employees: 1. Mr. K, married with 2 qualified dependent children who received the following compensation for the year: Basic Monthly Salary Overtime Pay for November Thirteenth Month pay Other Benefits

P45,000 P 5,000 P45,000 P12,000

2. Mr. L, married, whose wife is also employed, with two dependent children. The second child was born in December. He received for the year, the following: Basic Monthly Salary Thirteenth Month Pay Other Benefits

3.

P6,500 P6,500 P6,000

Ms. M, single, who was hired in July received the following:

Basic Monthly Salary P20,000 Thirteenth Month Pay P20,000 Monthly Salary from Previous Employer (January-June) P 6,000

She paid for the year an annual premium on health and hospitalization insurance amounting to P2,400.00. 4. following:

Mrs. N, married, whose husband is also working received the

Basic Monthly Salary Thirteenth Month Pay (50%)

P35,000 P17,500

She resigned effective, July 30, 1998

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COMPUTATION OF WITHHOLDING TAX FOR DECEMBER: 1.

Mr. K

Compensation Basic Salary Overtime (Nov.) 13th month pay Other benefits Totals

Received for the year P540,000 5,000 45,000 12,000 ––––––––– P602,000

Non-Taxable

30,000 ––––––––– P30,000

Less: Personal and additional exemptions Net taxable compensation

Tax due* Less: Tax w/held from previous months (Jan-Nov.) Tax to be withheld for December

Taxable P540,000 5,000 15,000 12,000 ––––––––– P572,000 48,000 ––––––––– P 524,000 ––––––––– P133,160.00 130,788.79 ––––––––– P 2,371.21 –––––––––

* Tax Due is computed by using the rates prescribed in Sec. 24 (A), NIRC — (refer to schedule on page 43 of these regulations)

2.

Mr. L

Compensation Basic Salary 13th month pay Other benefits Totals

Received for the year P 78,000 6,500 6,000 ————— P90,500

Non-Taxable

P78,000.00 P6,500 6,000 ————— P12,500

Less: Personal and additional exemptions Net taxable compensation Copyright 2015

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Taxable

————— P 78,000.00 48,000.00 ————— P 30,000.00

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————— Tax due Less: Tax withheld from previous month (Jan-Nov.)

P 2,500.00 2,291.63 ————— P 208.37 —————

Amount to be withheld for December

3.

Ms. M. Single — Computation of withholding tax for December

Compensation from previous employer (Jan. to June) Compensation from present employer (July to Dec) Total Taxable Compensation (Jan. to Dec.) Less: Personal and additional exemptions P20,000.00 Premium payments on health & hospitalization insurance 2,400.00 ––––––––– Net Taxable Compensation Tax Due Less: Taxes withheld — *Previous employer **Present employer

P2,899.68 15,591.98 –––––––– Amount of taxes withheld for the month of December

P 36,000.00 120,000.00 –––––––––– P156,000.00

22,400.00 –––––––––– P133,600.00 –––––––––– P 21,220.00

18,491.66 –––––––––– P 2,728.34 ––––––––––

* Refer to Certificate of Income Tax Withheld on Compensation issued by previous employer. ** Taxes withheld from July to December computed by the present employer using the cumulative computation.

4.

Mrs. N married (computation of tax upon resignation): Total compensation Received for the year

Basic Salary 13th month pay Other benefits Copyright 2015

P245,000 17,500 6,000

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Non-Taxable

Taxable P245,000

P17,500 6,000 Philippine Taxation Encyclopedia 2014

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–––––––– P268,500 ––––––––

––––––– P23,000 –––––––

–––––––– P245,000 ————

Less: Personal and additional exemptions

32,000 –––––––– P213,000 ––––––––

Net taxable compensation income

Tax due (Jan. to July 30) Less Tax withheld (Jan. to June)

P40,750.00 45,700.02 ––––––––— P(4,950.02) ––––––––—

Over withheld Tax to be Refunded in the month of July

The annualized computation done for each employee shall be reflected by the employer at the alphabetical list attached to the Form No. 1604. (3) If the compensation is paid other than daily, weekly, semi-monthly or monthly, compute the tax to be deducted and withheld as follows: a)

Annually — refers to computation on annualized income;

b)

Quarterly and semi-annually — divide the compensation by three (3) or six (6), respectively, to determine the average monthly compensation. Use the monthly withholding tax table to compute the tax, and the tax so computed shall be multiplied by three (3) or six (6), accordingly; LLjur

c)

Bi-weekly — divide the compensation by two (2) to determine the average weekly compensation. Use the weekly withholding tax table to compute the tax, and the tax so computed shall be multiplied by two (2);

d)

Miscellaneous — if compensation is paid irregularly, or for a period other than those mentioned above, divide the compensation by the number of days from last payment to date of payment (excluding Sundays and holidays). Use the daily tax table, the tax so computed shall be multiplied by the number of days. xxx

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xxx

xxx

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See earlier provision under Section 7, Revenue Regulations No. 6-82 and subsequent amendments made by Revenue Regulations Nos. 6-83, 9-83, 2-85, 12-86, 1-92, 3-92 and 4-93. 118

See Section 33, NIRC of 1997; and Revenue Regulations No. 3-98 and subsequent amendments made by Revenue Regulations Nos. 8-2000 and 10-2000.

119

See Revenue Memorandum Circular No. 5-98 and Revenue Memorandum Circular No. 4-99.

120

See Revenue Regulations No. 3-98 and subsequent amendments made by Revenue Regulations Nos. 8-2000 and 10-2000.

Section 2.79 (C) - Income Tax Collected at Source on Compensation Income; Computation of Withholding Tax on Salaries and Benefits Received by Employees other than Rank and File 121

See amendments made by Revenue Regulations Nos. 8-2000 and 10-2000 to Section 2.78.1 of Revenue Regulations No. 2-98.

122

See Revenue Regulations No. 3-98 and subsequent amendments made by Revenue Regulations Nos. 8-2000; 10-2000; Revenue Regulations No. 5-2008; Revenue Regulations No. 5-2011; and Revenue Regulations No. 8-2012.

Section 2.79 (D) - Income Tax Collected at Source on Compensation Income; Computation of Withholding Tax on Fringe Benefit 123

See Revenue Regulations No. 3-98 and subsequent amendments made by Revenue Regulations Nos. 8-2000 and 10-2000. See also Revenue Memorandum Circular No. 5-98.

124

Special treatment of fringe benefit.

125

See Revenue Regulations No. 3-98 and subsequent amendments made by Revenue Regulations Nos. 8-2000 and 10-2000.

126

See Revenue Memorandum Circular No. 5-98.

127

Tax on nonresident alien individual.

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128

See amendments made by Revenue Regulations Nos. 8-2000, 10-2000, and 5-2008.

Section 2.79 (F) - Requirement for Deductibility 129

As amended by Section 3, Revenue Regulations No. 10-2008: Original text: (F) Requirement for Deductibility. — The provisions of Sec. 2.58.5 of these Regulations shall apply.

Section 2.79 (H) - Income Tax Collected at Source on Compensation Income; Nondeductibility of Tax and Credit for Tax Withheld 130

See Revenue Memorandum Order No. 17-99 and Revenue Memorandum Order No. 52-99.

131

SECTION 49. Countersigning of Warrants or Checks by Auditors. — No warrant or check shall be paid by the Treasury of the Philippines, local treasurer, or any government depository unless it is countersigned by a duly authorized official of the Commission. When, in the opinion of the Commission, the interest of the service so requires, the warrant or check may be paid without the countersignature under such rules and regulations as it may be prescribed from time to time.

132

Dated July 25, 1987.

Section 2.79 (I) - Income Tax Collected at Source on Compensation Income; Right to Claim Withholding Exemptions 133

As amended by Section 3, Revenue Regulations No. 10-2008: Original text: (I) Right to Claim Withholding Exemptions. — An employee receiving compensation shall be entitled to withholding exemptions as provided in the Code, as amended. In order to receive the benefit of such exemptions, the employee must file the Application for Registration (BIR Form No. 1902), upon employment and a Withholding Compensation and Exemption Certificate (Form No. 2305), in case of updates on changes in his exemptions. The withholding exemptions to which an employee is entitled depends upon his status as single, married, head of the family and the number of dependents qualified for additional exemptions. Each employee shall be allowed to claim the following

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amount of exemptions, with respect to compensation paid on or after January 1, 1998. (1)

Personal and additional exemptions. —

(a)

Basic personal exemptions. —

(i)

For single individual or married individual judicially decreed as legally separated with no qualified dependents, the amount of personal exemption allowed is twenty thousand pesos (P20,000.00);

(ii)

For each legally married employee, the amount of personal exemption allowed is thirty two thousand pesos (P32,000.00). A married individual deriving income within the Philippines whose spouse is unemployed or is a non-resident citizen deriving income from foreign sources, shall be entitled to a personal exemption of thirty two thousand pesos (P32,000.00) only;

(iii)

For head of a family, the amount of personal exemption allowed is twenty five thousand pesos (P25,000.00). Head of the family means an unmarried or legally separated man or woman with one or both parents or one or more brothers or sisters whether of the whole or half blood or with one or more legitimate or illegitimate, recognized natural or legally adopted children living with and dependent upon him for their chief support, where such brothers or sisters or children are not more than twenty one (21) years of age, unmarried and not gainfully employed or where such children, brothers, or sisters, regardless of age are incapable of self-support because of mental or physical defect. The term also includes an unmarried or legally separated man or woman who is the benefactor of a qualified senior citizen.

A senior citizen is any resident citizen of the Philippines of at least sixty (60) years old, including those who have retired from both government offices and private enterprises, and has an income of not more than Sixty thousand pesos (P60,000) per annum subject to the review of the National Economic Development Authority (NEDA) every three years (definition taken from Republic Act No. 7432). (b) Additional exemptions for taxpayer with dependents. — A married individual or a head of family shall be allowed an additional exemption of eight thousand pesos (P8,000) for each qualified dependent child, provided that the Copyright 2015

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total number of dependents for which additional exemptions may be claimed shall not exceed four (4) dependents. The additional exemptions for qualified dependent children shall be claimed by only one of the spouses in the case of married individuals. A dependent means a legitimate, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect. The husband shall be the proper claimant of the additional exemption for qualified dependent children unless he explicitly waives his right in favor of his wife in the application for registration (BIR Form 1902) or in the withholding exemption certificate (BIR Form 2305). Provided, however, that where the spouse of the employee is unemployed or is a non-resident citizen deriving income from foreign sources, the employed spouse within the Philippines shall be automatically entitled to claim the additional exemptions for children.

See earlier provision under Section 8, Revenue Regulations No. 6-82 and subsequent amendments made by Revenue Regulations Nos. 6-83, 2-85, 12-86, 1-92, 3-92 and 4-93. Section 2.79.1 - Application for Registration for Individuals Earning Compensation Income (BIR Form No. 1902) 134

As amended by Section 4, Revenue Regulations No. 10-2008: Original text: SECTION 2.79.1. Application for Registration for Individuals Earning Compensation Income (BIR Form No. 1902). — The application for registration of employees shall be accomplished by both employer and employee relating to the following information and other requirements: (A) Employee. —

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(1)

Name/Taxpayer's Identification Number (TIN)/Address of employee/other information required by the form;

(2)

Status of employee whether SINGLE/legally separated/widow or widower with no dependent child, married, or head of the family;

(3)

Status of spouse of the employee. — If the employee is legally

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married, the Name/TIN, if any, of the spouse and whether said spouse is employed, unemployed, employed abroad, or is engaged in trade or business should be indicated on the application; (4)

Qualified dependents. — Name and date of birth of qualified dependent/s (children, parent/s, brother/s, sister/s or senior citizens);

(5)

Claimant of exemption for children. — The husband is the proper claimant of additional exemptions for qualified children. However, the wife shall claim full additional exemption for children in the following cases: (a)

(6)

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Husband is unemployed;

(b)

Husband is a non-resident citizen deriving income from foreign sources;

(c)

The husband waives his right to claim the exemptions of children (waiver should be for all children) in a sworn statement to be attached to his application form for registration (1902) and that of his wife's, in accordance with the procedures prescribed in this Section;

Required forms and attachments. — Upon filing the Application for registration (BIR Form No. 1902), the taxpayer is required to attach any of the following documents to establish the status of the taxpayer, if applicable, to the application:

(a)

Marriage contract;

(b)

Court decision of legal separation;

(c)

Birth Certificate of each qualified dependent brother, sister or child;

(d)

Certificate of employment of the husband if he is working abroad;

(e)

Waiver of exemptions of children by the husband in case wife is claiming the additional exemptions of the children;

(f)

Waiver from exemption on withholding tax of taxpayers

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whose total compensation income in a year does not exceed P60,000.00. (g)

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Medical Certificate of dependent brother, sister or child, if physically or mentally incapacitated;

(h)

Court decision of legal adoption of children;

(i)

Death certificate;

(j)

Current certificate of income tax exemption of qualified senior citizen;

(k)

Other documentary evidence, where the above documents are not available.

(7)

Concurrent multiple employments. — An employee who is employed concurrently by two or more employers within the same period of time during the taxable year shall file the Application (BIR Form No. 1902) with his main employer (employer paying the higher/est wage) and shall furnish a copy of the duly received Application with his secondary employers (2nd, 3rd, etc. employers). The employed husband and wife shall each file a separate application with their respective employers;

(8)

Successive multiple employment. — An employee who transferred to another employer during the taxable year, shall furnish his new Employer with an Exemption Certificate (Form No. 2305) indicating therein his previous employments during the taxable year (name of employer/s, address/s, TIN/s and the date/s of his separation) and attach to the said certificate, a copy of the Certificate of Income Tax Withheld on Compensation (BIR Form No. 2316) for the calendar year issued by previous employer/s;

(9)

Mixed income. — An individual receiving a combination of compensation and business/professional income shall first deduct the allowable personal and additional exemptions from compensation income only the excess therefrom can be deducted, from business or professional income. In the case of husband and wife, the husband shall be the proper claimant of the exemptions unless he waives it in favor of his wife.

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(B) Employer. — The employer with whom the employee's Application for Registration (Form No. 1902) is filed, must indicate the date of receipt thereon and accomplish Part V of the said Application pertaining to Employer's Information such as TIN, Employer's Registered Name, and other relevant information. (C) Procedures for the filing of the Application (Form No. 1902) — (1)

(2)

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All employers shall require their employees to accomplish in duplicate the Application for Registration described above as follows: (a)

All employees who have not filed the Application for Registration (BIR Form 1902), as of December 31, 1997, shall accomplish and file the application with their employers not later than April 30, 1998;

(b)

New employees shall accomplish and file the Application within ten (10) days from the date of commencement of employment;

(c)

In case of changes in the information data in the Application (BIR Form 1902) previously submitted by the employee, consisting of changes in personal and additional exemptions, employment/working status of the spouse of the employee, multiple employment status and amount of compensation income, an Exemption Certificate (BIR Form 2305) reflecting the changes, together with the required documents/evidence of changes must be submitted to the employer within ten (10) days after such change. The employer shall then make the necessary adjustments on the withholding tax of the employee based on the new information;

The employer shall transmit both the original and duplicate copies of the Application or Certificate (after accomplishing the portion for Employer's information of either forms) to the Revenue District Officer of the City or Municipality where the employer has his legal residence or place of business within thirty (30) days following its receipt from the employee. The duplicate copy duly stamped received by the BIR shall be given to the employee.

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(3)

The employer shall review the exemptions of the employees and shall, in the computation of taxes required to be withheld on the compensation of employees, apply the correct and applicable exemptions as provided in these regulations.

(4)

In case the husband waives his right to claim the additional exemptions of children in favor of his wife, he shall accomplish a waiver form (BIR Form No. ____) in accordance with the following procedures: (a)

Fill up three (3) copies of the prescribed waiver form (BIR Form No. ____)

(b)

Submit to his employer within ten (10) days from employment, together with the BIR Form 1902 said waiver form for acknowledgment in the space provided for that purpose. The employer of the husband shall: (i)

After filling up the acknowledgment portion of the waiver form, retain the duplicate copy of the form and furnish the employee the original and triplicate copies for submission to the employer of the wife and for file of the employee, respectively.

(ii)

Stop deductions of exemptions of children from the husband's compensation income starting the following month. The employer of the wife shall: Upon receipt of copy of the waiver form duly acknowledged by the employer of the husband, start deducting exemptions of children from the wife's income on the month when the employer of the husband stopped deducting the exemptions of children from the husband's income.

(c)

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The employed husband and wife shall apply the waiver in the computation of their respective taxable income in the income tax return required to be filed by them following the procedure for filing the waiver under Section 2.79.1

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(C)(4) of these regulations, that is, the husband shall not deduct exemptions of children from his compensation income because he has waived the same (exemptions of children) in favor of his wife who will now deduct said exemptions from her income in computing her tax due. Waiver exercised during the calendar year shall be made only once in a calendar year and shall take effect for the present calendar year and succeeding year/s until revoked by the husband. Any waiver/revocation of such waiver shall take effect only starting the succeeding calendar year. In no case should an employer of the wife deduct exemptions of children from the wife's income unless the waiver by the husband has been duly acknowledged by the employer of the husband.

See earlier provision under Section 9, Revenue Regulations No. 6-82 and subsequent amendment made by Revenue Regulations No. 4-93. See also Section 4, Revenue Regulations No. 7-96 (dated June 6, 1996) Re: Prescribing the Use of the Redesigned/New Forms in the Filing of Tax and Information Returns/Declarations and Applications for Registration and Permit. Section 2.79.2 - Failure to file Application for Registration (BIR Form No. 1902) or Certificate of Update of Exemption and of Employer's and Employee's Information (BIR Form No. 2305) 135

As amended by Section 4, Revenue Regulations No. 10-2008: Original text: SECTION 2.79.2. Failure to File Application for Registration (Form No. 1902 or Exemption Certificate). — Where an employee, in violation of these regulations either fails or refuses to file an Application for Registration (1902) together with the required attachments, the employer shall withhold the taxes prescribed under the Schedule for Zero Exemption of the Revised Withholding Tax Table effective January 1, 1998. In case of failure to file the Exemption Certificate (2305) together with the attachments, the employer shall withhold the taxes based on the reported personal exemptions existing prior to the change of status and without reflecting any change. Any refund or underwithholding that shall arise due to the violations shall be covered by the penalties prescribed in Section 80 of the NIRC, as amended (Liability for Tax).

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Section 2.79.3 - Withholding on the Basis of Average Compensation 136

See earlier provision under Section 12, Revenue Regulations No. 6-82 and subsequent amendments thereto.

Section 2.79.4 - Husband and Wife 137

See earlier provision under Section 13, Revenue Regulations No. 6-82 and subsequent amendments thereto.

Section 2.79.6 - Year-End Adjustment 138

See earlier provision under Section 22(b), Revenue Regulations No. 6-82 and subsequent amendments made by Revenue Regulations Nos. 6-83 and 12-86. See also Revenue Memorandum Order No. 80-98, Revenue Memorandum Order No. 5-2001, and Revenue Regulations No. 7-2000.

139

See Revenue Regulations No. 3-98 and subsequent amendments made by Revenue Regulations Nos. 8-2000 and 10-2000.

Section 2.80 (A) - Liability for Tax; Employer 140

As amended by Section 5, Revenue Regulations No. 10-2008. Original text: SECTION 2.80. Liability for Tax. — (A) Employer. — (1) In general, the employer shall be responsible for the withholding and remittance of the correct amount of tax required to be deducted and withheld from the compensation income of his employees. If the employer fails to withhold and remit the correct amount of tax, such tax shall be collected from the employer together with the penalties or additions to the tax otherwise applicable. (2) The employer who required to collect, account for and remit any tax imposed by the NIRC, as amended, who willfully fails to collect such tax, or account for and remit such tax or willfully assist in any manner to evade any payment thereof, shall in addition to other penalties, provided for in the Code, as amended, be liable, upon conviction, to a penalty equal to the amount of the tax not collected nor accounted for or remitted. (3)

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Any employer/withholding agent who fails, or refuses to refund

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excess withholding tax not later than January 25 of the succeeding year shall, in addition to any penalties provided in Title X of the Code , as amended, be liable to a penalty equal to the total amount of refund which was not refunded to the employee resulting from any excess of the amount withheld over the tax actually due on their return. xxx

xxx

xxx

See earlier provision under Section 14, Revenue Regulations No. 6-82 and subsequent amendment made by Revenue Regulations No. 4-93. 141

Statutory Offenses and Penalties

Section 2.80 (B) - Liability for Tax; Employee 142

As amended by Section 5, Revenue Regulations No. 10-2008. Original text: SECTION 2.80. Liability for Tax. — xxx

xxx

xxx

(B) Employee. — Where an employee fails or refuses to file the withholding exemption certificate or willfully supplies false or inaccurate information thereunder after due written notice by the employer, the tax otherwise to be withheld by the employer shall be collected from him including penalties or additions to the tax from the due date of remittance until the date of payment. On the other hand, where the employee, after due written notice from the employer, willfully fails or refuses to file the application for registration OR the withholding exemption certificate or willfully supplies false and inaccurate information, the excess taxes withheld by the employer shall not be refunded to the employee but shall be forfeited in favor of the government. xxx

xxx

xxx

Section 2.80 (C) - Liability for Tax; Additions to Tax; Deficiency Interest 143

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See Section 272 (Violation of Withholding Tax Provision), NIRC of 1997; EO 651; Revenue Memorandum Order No. 29-97 (effective May 27, 1997) Re: Procedures in the Implementation of the DOF-DBM. Joint Circular No. 3-97; Revenue Memorandum Order No. 41-97 (effective July 17, 1997) Re: Prescribing the Policies and Procedures in the Implementation of Operation "Even Returns"; and Revenue Memorandum Order No. 88-99 (dated CD Technologies Asia, Inc. and Accesslaw, Inc.

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October 13, 1999) Re: Strict Monitoring and Verification of Government Offices' Compliance to the Withholding Tax Requirements as part of the "GOVERNMENT WITHHOLDING TAX PROGRAM". See also issuances designating personnel of government offices as withholding agents — Revenue Regulations No. 1-87, and subsequent amendments made by Revenue Regulations No. 6-96, and Revenue Regulations No. 10-97; Revenue Memorandum Order No. 14-98, and subsequent amendment made by Revenue Memorandum Order No. 70-98. Section 2.80 (E) - Liability for Tax; Specific Penalties 144

Authority of the Commissioner to compromise, abate, and refund or credit taxes.

145

See issuances designating personnel of government offices as withholding agents — Revenue Regulations No. 1-87, and subsequent amendments made by Revenue Regulations No. 6-96, and Revenue Regulations No. 10-97; Revenue Memorandum Circular No. 40-2001; Revenue Memorandum Order No. 14-98, and subsequent amendment made by Revenue Memorandum Order No. 70-98.

Section 2.81 - Filing of Return and Payment of Income Tax Withheld on Compensation (Form No. 1601) 146

As amended by Section 4(1), Revenue Regulations No. 6-2001. Original text: SECTION 2.81. Filing of Return and Payment of Income Tax Withheld on Compensation (Form No. 1601). — Every person required to deduct and withhold the tax on compensation shall make a return and pay such tax on or before the 10th day of the month following the month in which withholding was made to any authorized agent bank within the Revenue District Office (RDO) or in places where there are no agent banks, to the Revenue District Officer of the City or Municipality where the withholding agent/employers legal residence or place of business or office is located; provided, however, that taxes withheld from the last compensation (December) for the calendar year shall be paid not later than January 25 of the succeeding year; Provided, further, that large taxpayers as determined by the Commissioner shall remit taxes withheld on or before the 25th day of the following month. LibLex

If the person required to withhold and pay the tax is a corporation, the Copyright 2015

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return shall be made in the name of the corporation and shall be signed and verified by the president, vice-president, or authorized officers. With respect to any tax required to be withheld by a fiduciary, the returns shall be made in the name of the individual, estate, or trust for which such fiduciary acts, and shall be signed and verified by such fiduciary. In the case of two or more joint fiduciaries the return shall be signed and verified by one of such fiduciaries.

See earlier provision under Section 16, Revenue Regulations No. 6-82 and subsequent amendment made by Revenue Regulations No. 4-93; and Section 2, Revenue Regulations No. 5-85 and subsequent amendments thereto. See also Revenue Regulations No. 9-2001. Section 2.82 - Return and Payment in case Where the Government is the Employer 147

See Section 82 (Return and Payment in Case of Government Employees), NIRC of 1997. See also issuances designating personnel of government offices as withholding agents — Revenue Regulations No. 1-87, and subsequent amendments made by Revenue Regulations No. 6-96, and Revenue Regulations No. 10-97; Revenue Memorandum Circular No. 40-2001; Revenue Memorandum Order No. 14-98, and subsequent amendment made by Revenue Memorandum Order No. 70-98.

Section 2.83.1 - Employees Withholding Statement (BIR Form No. 2316) 148

As last amended by Section 6, Revenue Regulations No. 10-2008. Original text: SECTION 2.83.1. Employees Withholding Statements (BIR Form No. 2316). — In general, every employer or other person who is required to deduct and withhold the tax on compensation and fringe benefits shall furnish every employee from whose compensation taxes have been withheld the Certificate of Income Tax Withheld on Compensation (Form No. 2316, formerly Form No. W-2) on or before January 31 of the succeeding calendar year, or if his employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made. The employer shall furnish each employee with the original and

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duplicate copies of Form No. 2316 showing the name and address of the employer; employer's TIN; name and address of the employee; employee's TIN; amount of exemptions claimed; amount of premium payments on medical insurance not exceeding P2,400.00, if any; the sum of compensation paid including the non-taxable benefits; the amount of tax due; the amount of tax withheld during the calendar year and such other information as may be required. The statement must be signed by both the employer or other authorized officer and the employee, and shall contain a written declaration that it is made under the penalties of perjury. If the employer is the Government of the Philippines, its political subdivision, agency or instrumentality or government-owned or controlled corporation, the statement shall be signed by the duly designated officer or employee. An extra copy of Form 2316 shall be furnished by the employee, duly certified by him, to his new employer.

As amended by Section 2, Revenue Regulations No. 19-2002: "Section 2.83.1. Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316). — In general, every employer or other person who is required to deduct and withhold the tax on compensation including fringe benefits given to rank and file employees, shall furnish every employee from whose compensation taxes have been withheld the Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316), on or before January 31 of the succeeding calendar year, or if the employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made. Failure to furnish the same shall be a ground for the mandatory audit of payor’s income tax liabilities (including withholding tax) upon verified complaint of the payee. xxx

xxx

xxx

The Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) shall contain a certification to the effect that the employer's filing of BIR Form No. 1604-CF shall be considered as a substituted filing of the employee's income tax return to the extent that the amount of compensation and tax withheld appearing in BIR Form No. 1604-CF as filed with BIR is consistent with the corresponding amounts indicated in BIR Form No. 2316. It shall be signed by both the employee and employer attesting to the fact that the information stated therein has been verified and is true and correct to the best of their knowledge. However, the withholding agents/employers are required to retain copies of the duly signed BIR Form No. 2316 for a period Copyright 2015

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of three (3) years as required under the National Internal Revenue Code. The employee who is qualified for substituted filing of income tax return under these regulations, shall no longer be required to file income tax return (BIR Form No. 1700) since BIR Form No. 1604-CF shall be considered a substituted return filed by the employer. BIR Form No. 2316, duly certified by both employee and employer, shall serve the same purpose as if a BIR Form No. 1700 had been filed, such as proof of financial capacity for purposes of loan, credit card, or other applications, or for the purpose of availing tax credit in the employee's home country and for other purposes with various government agencies. This may also be used for purposes of securing travel tax exemption, when necessary. However, information referring to the certification, appearing at the bottom of BIR Form No. 2316, shall not be signed by both the employer and the employee if the latter is not qualified for substituted filing. In which case, BIR Form No. 2316 furnished by the employer to the employee shall be attached to the employee’s Income Tax Return (BIR Form No. 1700) to be filed on or before April 15 of the following year. For the implementation of these Regulations, BIR Form No. 2316 herein referred to shall be BIR Form No. 2316 version October 2002 or any later version. Thus, the old version cannot be used for this purpose although may be used for those taxpayers still required to file BIR Form No. 1700."

As amended by Section 2, Revenue Regulations No. 3-2002: "Section 2.83.1. Employees Withholding Statements (BIR Form No. 2316). — In general, every employer or other person who is required to deduct and withhold the tax on compensation including fringe benefits given to rank and file employees, shall furnish every employee from whose compensation taxes have been withheld the Certificate of Income Tax Withheld on Compensation (BIR Form No. 2316) on or before January 31 of the succeeding calendar year, or if employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made. Failure to furnish the same shall be a ground for the mandatory audit of payor's income tax liabilities (including withholding tax) upon verified complaint of the payee.

xxx

xxx

xxx

The employee who is qualified for substituted filing of income tax return under these regulations, and the employer, shall issue a joint Copyright 2015

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certification (Annex "A") to the effect that the employer's filing of BIR Form No. 1604-CF shall be considered a substituted filing of the employee's income tax return to the extent that the amount of compensation and tax withheld appearing in BIR Form No. 1604-CF, as filed with the BIR, is consistent with the corresponding amounts indicated in BIR Form No. 2316 and the certification. The parties shall likewise certify, under oath, that the information stated in such certification is true and correct to the best of their knowledge. Such employee shall no longer be required to file income tax return (BIR Form No. 1700) since BIR Form No. 1604-CF shall be considered a substituted return filed by the employer with the consent of such employee. The joint certification shall serve the same purpose as if a BIR Form No. 1700 had been filed, such as proof of financial capacity for purposes of loan, credit card, or other applications, or for the purpose of availing tax credit in the employee's home country and for other purposes with various government agencies. This may also be used for purposes of securing travel tax exemption, when necessary."

See earlier provision under Section 20(a), Revenue Regulations No. 6-82 and subsequent amendment made by Revenue Regulations No. 4-93; and Section 7, Revenue Regulations No. 2-95 (dated January 3, 1995) Re: Implementing Republic Act No. 7833 An Act to Exclude the Benefits Mandated Pursuant to Republic Act No. 6686 and Presidential Decree No. 851, as Amended, and other Benefits from the Computation of Gross Compensation Income for the Purposes of Determining Taxable Compensation Income, Amending for the Purpose Section 28 (b) (8) of the National Internal Revenue Code, as Amended. Section 2.83.2 - Annual Information Return of Income Tax Withheld on Compensation (Form No. 1604, Formerly Form No. 1743IR) 149

As amended by Section 6, Revenue Regulations No. 10-2008. Original text: SECTION 2.83.2. Annual Information Return of Income Tax Withheld on Compensation (Form No. 1604, Formerly Form No. 1743IR). — Every employer or other person required to deduct and withhold the tax shall, on or before January thirty-first of the succeeding year, file with either the Collection Agent or Authorized Municipal Treasurer or Revenue District Officer or Commissioner the Annual Information Return of Income Tax Withheld on Compensation (BIR Form No. 1604), to be submitted with an alphabetical list

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of employees, both in duplicate copies. (A) The Annual Information Return of Income Tax Withheld on Compensation must show among others, the following: (1)

Withholding Agent's registered name, address and Taxpayer's Identification Number (TIN);

(B) The alphabetical list of employees must show the following: (1)

Name and TIN of employees;

(2)

Gross compensation paid by present and previous employers for the calendar year;

(3)

(a) Taxable 13th month pay/Other benefits for the rank and file employees (b) Taxable fringe benefits for managerial employees

(4)

Non-taxable 13th month pay/Other benefits (Present employer)

(5)

Amount of exemptions;

(6)

Amount of premium payments on medical insurance not exceeding P2,400.00, if any;

(7)

Tax required to be withheld computed in accordance with Sec. 24(A) of the Code;

(8)

Tax withheld by all present employers for calendar year; and

(9)

Adjustment, if any.

(C) The alphabetical list of employees shall be prepared indicating among others, separate listings of the following:

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(1)

Employees as of December 31 of the taxable year without previous employment during the year;

(2)

Employees as of December 31 of the taxable year with previous employment within the year;

(3)

Employees who were terminated prior to the year-end adjustment computation showing the month of termination/month of last

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payment of compensation during the year of termination; and (4)

Alien employees subject to final withholding tax.

In cases where no information was provided by a previous employer, such fact should be annotated in Form 1604 and the present employer shall not be liable to any penalties.

See earlier provision under Section 8, Revenue Regulations No. 2-95; Sections 3 and 4, Revenue Regulations No. 5-85 and subsequent amendments thereto; and Section 20, Revenue Regulations No. 6-82 and subsequent amendment made by Revenue Regulations No. 4-93. See also Revenue Regulations No. 8-98 and Revenue Memorandum Order No. 5-2001. Section 2.83.3 - Requirement for List of Payees 150

Now as amended by Revenue Regulations No. 1-2014 and as last amended by Section 6, Revenue Regulations No. 10-2008. Original text: SECTION 2.83.3. Requirement for Income Payees List. — In lieu of the manually prepared alphabetical list of employees and list of payees and income payments subject to creditable and final withholding taxes which are required to be attached as integral part of the Annual Return (Form No. 1604), the Withholding Agent may, at its option, submit computer-processed tapes or cassettes or diskettes, provided that the said list has been encoded in accordance with the formats prescribed by Form 1604. (4)

As amended by Section 1, Revenue Regulations Nos. 7-2000: "SEC. 2.83.3. Requirement for list of Income Payees. — In lieu of the manually prepared alphabetical list of employees and list of payees and income payments subject to creditable and final withholding taxes which are required to be attached as integral part of the Annual Information Returns (Form No. 1604CF/1604E), the Withholding Agent may, at his option, submit 3.5 inch floppy diskettes, containing the said lists. However, for large taxpayers, excise taxpayers and other taxpayers whose number of employees or income payees are fifty (50) or more, the said list of employees and income payees shall be submitted in magnetic Copyright 2015

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form using 3.5-inch floppy diskettes to the Large Taxpayers Assistance Division, Large Taxpayers District Offices, Excise Taxpayers Assistance Division or to the respective Revenue District Office having jurisdiction over the taxpayer on or before January 31 of the succeeding year, for income payments subject to compensation and final withholding taxes and on or before March 1 of the following year for those subject to creditable expanded withholding taxes. The list shall conform to the technical specifications prescribed under Annex A hereof."

As amended by Section 3, Revenue Regulations No. 3-2002: "Section 2.83.3. Requirement for list of payees. — In addition to the manually prepared alphabetical list of employees and list of payees who are recipients of income payments subjected to creditable and final withholding taxes which form part of the Annual Information Returns (BIR Form Nos. 1604-CF/1604-E), the withholding agent may, at his option, submit 3.5 inch floppy diskettes, containing the said list. However, taxpayers whose number of employees or income payees are ten (10) or more, are mandatorily required to submit the said lists in a 3.5 inch floppy diskettes, using the existing CSV data file format, together with the manually prepared alphabetical list. In order to comply with this format, the withholding agents shall have the option to use any of the following: 1. the Excel format provided under Revenue Regulations No. 7-2000 with technical specifications to be prescribed in a Revenue Memorandum Circular (RMC) to be issued by the BIR; 2. their own extract program that shall meet the requirements specified in the above-mentioned RMC; or 3. the Data Entry Module using Visual Foxpro that will be available upon request or by downloading from the BIR's web site at http://www.bir.gov.ph, with the corresponding job aid to be provided in the above-mentioned RMC. For those who would choose either option 1 or 2, such taxpayers shall use a validation module developed by the BIR, which can be downloaded from the BIR website. In any case, the withholding agents are required to save the same to a secondary storage as back up for a period of three (3) years from Copyright 2015

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submission of the diskette, as aforementioned, for future reference. For withholding agents classified as large taxpayers and excise taxpayers falling within the jurisdiction of the Large Taxpayers Service and/or Large Taxpayers District Office, the Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form No. 1604-CF) and the Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax (BIR Form No. 1604-E) shall be submitted to the Large Taxpayers Assistance Division, Large Taxpayers District Offices or Excise Taxpayers Assistance Division, as the case may be. For other withholding agents, the aforesaid annual returns shall be submitted to their respective Revenue District Offices. BIR Form No. 1604-CF shall be submitted on or before January 31 of the succeeding year while BIR Form No. 1604-E shall be filed on or before March 1 of the following year. Only diskettes readable upon submission shall be considered as duly filed "Alphabetical List of Employees/Payees" by the employer. Violation hereof, shall be a ground for the mandatory audit of violator's income tax liabilities (including withholding tax). The manually prepared (hard copy) alphabetical list of employee shall be filed in triplicate copies (two copies for the BIR) to be stamped "received" by the BIR-Large Taxpayers Assistance Division, Large Taxpayers District Office or the Excise Taxpayers Assistance Division, or the Revenue District Office where the payor/employer is registered as Withholding Agent. Except for the submission of the manually prepared alphabetical list of employees, all other requirements aforestated above shall apply to taxable year 2002."

As amended by Section 6, Revenue Regulations No. 10-2008: SECTION 2.83.3. Requirement for List of Payees. — In addition to the manually prepared alphabetical list of employees and list of payees and income payments subject to creditable and final withholding taxes which are required to be attached as integral part of the Annual Information Returns (BIR Form No. 1604CF/1604E), Monthly Remittance Returns (BIR Form No. 1601C etc.), the withholding agent may submit soft copy in 3.5-inch floppy diskettes/CD or email: [email protected], containing the said alphalists. However, taxpayers, whose number of employees or income payees are Copyright 2015

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ten (10) or more, are mandatorily required to submit the said lists in 3.5-inch floppy diskettes/CD or email: [email protected] using the existing CSV data file format, together with the manually prepared alphabetical list. In order to comply with this format, the withholding agents shall have the option to use any of the following: 1. Excel format provided under Revenue Regulations No. 7-2000, as amended, following the technical specifications required by the BIR; 2. Their own extract program that shall meet the technical specifications required by the BIR; or 3. Data Entry Module using Visual FoxPro that will be available upon request or by downloading from the BIR's web site at http://www.bir.gov.ph with the corresponding job aid. For those who would choose either option 1 or 2, such taxpayers shall use a validation module developed by the BIR, which can be downloaded from the BIR website. In any case, the withholding agents are required to save the same to a secondary storage as back up for a period of three (3) years from submission of the diskette, as aforementioned, for future reference. For withholding agents classified as large taxpayers and excise taxpayers falling within the jurisdiction of the Large Taxpayers Service and/or Large Taxpayers District Office, the Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form No. 1604-CF) and the Annual Information Return of Creditable Income Taxes Withheld (Expanded)/ Income Payments Exempt from Withholding Tax (BIR Form No. 1604-E) shall be submitted to the Large Taxpayers Assistance Division, Large Taxpayers District Offices or Excise Taxpayers Assistance Division, as the case may be. For other withholding agents, the aforesaid annual returns shall be submitted to their respective Revenue District Offices. BIR Form No. 1604-CF shall be submitted on or before January 31 of the succeeding year while BIR Form No. 1604-E shall be filed on or before March 1 of the following year. Only diskettes/CD/email: [email protected] readable and virus free files upon submission shall be considered as duly filed "Alphabetical List of Employees/Payees" by the employer. Violation hereof, shall be a ground for the mandatory audit of violator's income tax liabilities (including withholding tax). Diskettes/CDs must be uploaded by the above-mentioned offices within fifteen (15) days from receipt. Copyright 2015

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The manually prepared (hard copy for below 10 employees/payees) alphabetical list of employee shall be filed in triplicate copies (two copies for the BIR) to be stamped "received" by the BIR-Large Taxpayers Assistance Division, Large Taxpayers District Office or the Excise Taxpayers Assistance Division, or the Revenue District Office where the payor/employer is registered as Withholding Agent. Manually filed alphalists must be encoded and uploaded by the abovementioned offices within thirty (30) days from receipt.

See Revenue Memorandum Order No. 5-2001 and Revenue Regulations No. 3-84 (effective January 23, 1984) Re: Computer processed alphabetical list of employees and payees of income payments in lieu of manually prepared lists. Section 2.83.4 - Filing of Income Tax Returns by Employees Receiving Purely Compensation Income 151

As last amended by Section 6, Revenue Regulations No. 10-2008. Original text: SECTION 2.83.4. Filing of Income Tax Returns by Employees Receiving Purely Compensation Income. — Individual taxpayers receiving purely compensation income from Philippine sources which does not exceed an aggregate amount of P60,000 for the calendar year and the income tax on which has been withheld correctly by the employer (tax withheld equals tax due) shall no longer file an income tax return (1700) required under Sec. 51 of the Code. The following individuals, however, are still required to file their income tax returns: (A)

Individuals deriving compensation concurrently from two or more employers at anytime during the taxable year.

(B)

Individuals whose purely compensation income for the taxable year exceeds P60,000.

(C)

Individuals receiving a combination of compensation and business income (mixed income). This includes a married individual receiving purely compensation income whose spouse derives income from business. In case of married individuals who are still required to file returns, only one return for the taxable year shall be filed by

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either spouse to cover the income of both spouses. (D)

Employees whose total compensation income, regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly, that is, that the total withholding tax does not equal the total tax due on total compensation income for the taxable year.

(E)

In case of married individuals where one of the spouses received compensation income exceeding P60,000, a return shall be filed to include the income of the other spouse whose compensation is P60,000 or less.

As amended by Section 3, Revenue Regulations No. 1-2006: "SEC. 2.83.4. Substituted Filing of Income Tax Returns by Employees Receiving Purely Compensation Income. — . . . . xxx

xxx

xxx

The following individuals, however, are not qualified for substituted filing and therefore, still required to file BIR Form No. 1700 in accordance with existing regulations: xxx

xxx

xxx

"(C) EMPLOYEES WHOSE GROSS COMPENSATION INCOME DO NOT EXCEED THE STATUTORY MINIMUM WAGE OR FIVE THOUSAND PESOS (PHP5,000.00) PER MONTH (SIXTY THOUSAND PESOS [PHP60,000.00] A YEAR), WHICHEVER IS HIGHER, INCLUDING EMPLOYEES OF THE GOVERNMENT OF THE PHILIPPINES, OR ANY OF ITS POLITICAL SUBDIVISIONS, AGENCIES OR INSTRUMENTALITIES, WITH SALARY GRADES 1 TO 3." xxx

xxx

xxx"

As amended by Section 4, Revenue Regulations No. 3-2002: "Section 2.83.4. Substituted Filing of Income Tax Returns by Employees Receiving Purely Compensation Income. — Individual taxpayers receiving purely compensation income, regardless of amount, from only one employer in the Philippines for the calendar year, the income tax of which has been withheld correctly by the said employer (tax due equals tax withheld), shall Copyright 2015

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not be required to file BIR Form No. 1700. In lieu of BIR Form No. 1700, the Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form No. 1604-CF) (hard copy) filed by their respective employers, duly stamped "received" by the BIR, shall be tantamount to the substituted filing of income tax returns by said employees. The following individuals, however, are not qualified for substituted filing and therefore, still required to file BIR Form No. 1700 in accordance with existing regulations: (A) Individuals deriving compensation from two or more employers concurrently or successively at anytime during the taxable year. (B) Employees deriving compensation income, regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return. (C) Employees whose monthly gross compensation income does not exceed Five Thousand Pesos (P5,000.00) or the statutory minimum wage, whichever is higher, and opted for non-withholding of tax on said income. (D) Individuals deriving other non-business, non-profession-related income in addition to compensation income not otherwise subject to a final tax. (E) Individuals receiving purely compensation income from a single employer, although the income tax of which has been correctly withheld, but whose spouse falls under Section 2.83A(A), (B), (C) and (D) of these Regulations. (F) Non-resident aliens engaged in trade or business in the Philippines deriving purely compensation income, or compensation income and other non-business, non-profession-related income. In case of married individuals who are still required to file returns under existing provisions of the law, i.e., in those instances not covered by the substituted filing of returns, only one return for the taxable year shall be filed by either spouse to cover the income of the spouses, which return shall be signed by the husband and wife unless it is physically impossible to do so, in which case signature of one of the spouses would suffice."

See earlier provision under Section 19, Revenue Regulations No. 6-82 Copyright 2015

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and subsequent amendment made by Revenue Regulations No. 4-93. Section 2.83.5 - Registration as Withholding Agent 152

As last amended by Section 6, Revenue Regulations No. 10-2008. Original text: SECTION 2.83.5. Registration as Withholding Agent. — Every person who makes payment or expects to make payment of compensation in the amount of sixty thousand pesos (P60,000.00) or more a year or five thousand pesos (P5,000.00) monthly, to any single employee shall register by filing in duplicate, with the Revenue District Office (RDO) of the City or Municipality where his legal residence or place of business is located, an Application for Registration as a withholding agent using the form prescribed by the Bureau not later than ten (10) days after becoming an employer.

As amended by Section 4, Revenue Regulations No. 1-2006: "SEC. 2.83.5. Registration as Withholding Agent. — Every person who makes payment or expects to make payment of compensation in AN AMOUNT EXCEEDING THE STATUTORY MINIMUM WAGE OR SIXTY THOUSAND PESOS (P60,000.00) A YEAR (FIVE THOUSAND PESOS [PHP5,000.00] MONTHLY), WHICHEVER IS HIGHER, to any single employee shall register by filing in duplicate, with the Revenue District Office (RDO) of the City or Municipality where his legal residence or place of business is located, an Application for Registration as a withholding agent using the form prescribed by the Bureau not later than ten (10) days after becoming an employer."

See earlier provision under Section 23, Revenue Regulations No. 6-82 and subsequent amendments thereto. Section 2.83.6 - Applicability of Constructive Receipt of Compensation 153

See earlier provision under Section 25, Revenue Regulations No. 6-82 and subsequent amendments thereto.

Section 2.83.7 - Extension of Time for Furnishing Statements to Employee 154

See earlier provision under Section 20(b), Revenue Regulations No. 6-82 and subsequent amendment made by Revenue Regulations No. 4-93.

Section 4.114 (A) - Withholding of Creditable Value-Added Tax

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155

As amended by Section 7, Revenue Regulations No. 14-2002. Original text: SECTION 4.114. Withholding of Creditable Value-Added Tax. In general, value-added tax due on sales of goods and services are not subject to withholding since the tax is not determinable at the time of sale. However, sale of goods and services to the government subject to VAT shall be subject to withholding pursuant to Sec. 114 (C) of RA 8424. (A) Rates and basis of creditable value-added tax to be withheld. — The gross payments made by the government to sellers of goods and services shall be subject to withholding tax at the rates herein prescribed: (1)

In general, payments by the government or any of its political subdivisions, instrumentalities or agencies including government-owned or controlled corporations (GOCCs) on account of its purchase of goods from sellers and services rendered by contractors who are subject to the value-added tax — On gross payment for the purchase of goods -

3%

On gross payment for services rendered

6%

-

(2)

Payments made to government public works contractors — 8.5%

(3)

Payments for lease or use of property or property rights to non-resident owners — 10% xxx

xxx

xxx

See issuances on withholding of taxes on certain money payments of government offices, agencies and instrumentalities — Revenue Regulations No. 4-83; Revenue Regulations No. 20-86; Revenue Regulations No. 4-88; Revenue Regulations No. 10-93; Revenue Regulations No. 7-95 and subsequent amendments thereto; Revenue Memorandum Circular No. 2-87; Revenue Memorandum Circular No. 18-88; Revenue Memorandum Circular No. 3-2000; II, A, 5, Revenue Memorandum Order No. 27-95; Revenue Memorandum Order No. 88-99; Revenue Memorandum Order No. 16-200; Revenue Memorandum Order No. 27-2001; and Revenue Audit Memorandum Order No. 5-86. Copyright 2015

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Section 4.114 (B) - Persons Required to Deduct and Withhold 156

As amended by Section 7, Revenue Regulations No. 14-2002. Original text: SECTION 4.114. Withholding of Creditable Value-Added Tax. xxx

xxx

xxx

(B) Persons required to deduct and withhold. — All local government units, represented by the Provincial Treasurer in provinces, the City Treasurer in cities, the Municipal Treasurer in municipalities, and Barangay Treasurer in barangays, Treasurers of GOCCs and the Chief Accountant or any person holding similar position and performing similar function in national government offices, as withholding agents, shall deduct and withhold the prescribed creditable value-added tax before making any payment to seller of goods and services. Where the government as herein defined has regional offices, branches or units, the withholding and remittance of the creditable VAT may be done on a decentralized basis as such, the treasurer or the chief accountant or any person holding similar function in said regional office, branch or unit shall deduct and withhold the creditable VAT before making any payment to the seller of goods and services. xxx

xxx

xxx

See Executive Order No. 651; and issuances designating personnel of government offices as withholding agents — Revenue Regulations No. 1-87 and subsequent amendments made by Revenue Regulations No. 6-96, and Revenue Regulations No. 10-97; Revenue Memorandum Circular No. 40-2001; Revenue Memorandum Order No. 14-98, and subsequent amendment made by Revenue Memorandum Order No. 70-98. Section 4.114 (C) - Returns and Payment of Taxes Withheld 157

As last amended by Section 3, B, Revenue Regulations No. 2-2006. Original text: SECTION 4.114. Withholding of Creditable Value-Added Tax. xxx

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(C) Returns and payment of taxes withheld. — The withholding agents shall accomplish the Monthly Value-Added Tax Declaration (BIR Form 2550M) in duplicate and the amount withheld paid upon filing the return with the authorized agent banks located within the Revenue District Office (RDO) having jurisdiction over the place where the government office is located. In places where there are no authorized agent bank, the return shall be filed directly with the Revenue District Offices, Collection Offices or the duly authorized Treasurer of the city or municipality where the government office is located except in cases where the Commissioner otherwise permits. The required return shall be filed and payments made within ten (10) days following the end of the month the withholding was made except taxes withheld for the 3rd month of the quarter which shall be remitted through a Quarterly Value-Added Tax Return (BIR Form 2550Q) to be filed not later than the 25th day after the end of the calendar quarter. cda

xxx

xxx

xxx

As amended by Section 7, Revenue Regulations No. 14-2002: "SECTION 4.114. Withholding of Creditable Value-Added Tax. xxx

xxx

xxx

(C) Returns and payment of taxes withheld. — The withholding agents shall accomplish the Monthly Remittance Returns of Value-Added Tax and Other Percentage Taxes Withheld (BIR Form No. 1600) in triplicate and the amount withheld paid upon filing the return with the authorized agent banks under the jurisdiction of the Revenue District Office (RDO)/Large Taxpayers District Office (LTDO) where the withholding agent is required to register and file the return. In places where there is no authorized agent bank, the return shall be filed directly with the Revenue Collection Officer or the duly authorized Municipal/City Treasurer of the Revenue District Office where the withholding agent is required to register or file the return, except in cases where the Commissioner otherwise permits. xxx

xxx

xxx"

See also amendment made by Revenue Regulations No. 4-2002. Section 4.114 (D) - Certificate of Value-Added Tax Withheld 158 Copyright 2015

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Original text: SECTION 4.114. Withholding of Creditable Value-Added Tax xxx

xxx

xxx

(D) Certificate of Value Added Tax Withheld. — Every withholding agent shall furnish each seller of goods and services from whom taxes has been deducted and withheld, the Certificate of Creditable Tax Withheld at Source (BIR Form 2307) to be accomplished in quadruplicate, the first three copies of which shall be given to the seller/payee not later than the fifteenth day of the following month. The fourth copy shall be the file copy of the withholding agent. xxx

xxx

xxx

As amended by Section 5, Revenue Regulations No. 12-2001: SECTION 4.114. Withholding of Creditable Value-Added Tax xxx

xxx

xxx

"(D) Certificate of value added tax withheld at source. — Every withholding agent shall furnish each seller of goods and services from whom taxes has been deducted and withheld, the Certificate of Creditable Tax Withheld at Source (BIR Form 2307) to be accomplished in quadruplicate, the first three copies of which shall be given to the seller/payee not later than the fifth (5th) day of the following month. The fourth copy shall be the file copy of the withholding agent."

Section 4.114 (E) - Liability of Designated Officers 159

Additions to the Tax.

160

See Section 272 (Violation of Withholding Tax Provision), NIRC of 1997; and EO 651 entitled "Requiring Government Offices, Agencies and Instrumentalities to Comply Strictly with the Laws and Regulations on Withholding Taxes" (dated February 16, 1981).

160-a Sec. 4.114 was impliedly repealed by the enactment of RA 9337 amending, among others, Section 114 of the NIRC of 1997. See now Section 4.114-2, RR 16-2005. Section 5.116 (A) - Withholding of Percentage Tax; Internal Revenue Taxes Required to Copyright 2015

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be Withheld 161

As amended by Section 8, Revenue Regulations No. 14-2002. Original text SECTION 5.116. Withholding of Percentage Tax. — Bureaus, offices and instrumentalities of the government, including government-owned or controlled corporations as well as their subsidiaries, provinces, cities and municipalities making any money payment to private individuals, corporations, partnerships and/or associations are required to deduct and withhold the taxes due from the payees on account of such money payments. (A) Internal revenue taxes required to be withheld. — Percentage taxes on gross money payments, to the following shall be subjected to withholding at the rates herein prescribed: (1)

Persons exempt from value-added tax (VAT). — On gross payments to persons who are exempt under Sec. 109 (z) of the Code from payment of value-added tax and who is not a VAT registered person except payment to cooperatives — Three percent (3%)

(2)

Domestic carriers and keepers of garages. — On gross payments to operators of cars for rent or hire driven by the lessee, transportation contractors, including those who transports passengers for hire, and other domestic carriers by land, air or water, for transport of passengers, except owner of bancas and owners of animal-drawn two wheeled vehicle, and keepers of garages — Three percent (3%)

(3)

International carriers —

(4)

(a)

On gross payments to international air carriers doing business in the Philippines — Three percent (3%)

(b)

On gross payments to international shipping carriers doing business in the Philippines — Three percent (3%)

Franchises — (a)

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On gross payments to all franchises on radio and/or

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television broadcasting companies whose annual gross receipts of the preceding year does not exceed P10,000.00 — Three percent (3%) (b)

(5)

On gross payments to franchises on electric, gas and water utilities — Two percent (2%)

Banks and non-bank financial intermediaries — (a)

On interest, commissions and discounts paid or given to banks and non-bank financial intermediaries arising out of lending activities as well as financial leasing, on the basis of the remaining maturities of the instrument — Short-term maturity (not exceeding 2 years) 5% Medium-term maturity (over 2 year but not exceeding 4 years) 3% Long-term maturity

(6)

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(i) 1%

over 4 years but not exceeding 7 years

(ii) 0%

over 7 years

(b)

On dividends 0%

(c)

On royalties, rentals of property, real or personal, profits from exchange and all other gross income — Five percent (5%)

Finance companies — (a)

On interest, discounts and other items of gross income paid to finance companies and other financial intermediaries not performing quasi-banking functions — Five percent (5%)

(b)

On interests, commissions and discounts paid from their

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loan transactions from finance companies as well as financial leasing based on the remaining maturities of the instruments: Short-term maturity (not exceeding 2 years) 5% Medium-term maturity (over 2 years but not exceeding 4 years) 3% Long-term maturity (i) over 4 years but not exceeding 7 years 1% (ii) over 7 years 0% (7)

Life insurance premiums — On the total premiums paid to persons doing life insurance business of any sort in the Philippines — Five percent (5%) However the following shall not be included in the taxable receipts and consequently not subject to withholding tax:

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(a)

Premiums refunded within six (6) months after payment on account of rejection of risk or returned for other reasons to the insured;

(b)

reinsurance premiums where the tax has previously been paid;

(c)

premiums collected or received by any branch of a domestic corporation, firm or association doing business outside the Philippines on account of any life insurance of a non-resident insured, if any tax on such premium is imposed by a foreign country where the branch is established;

(d)

premiums collected or received on account of any reinsurance, if the insured, in case of personal insurance

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resides outside the Philippines, if any tax on such premiums is imposed by a foreign country where the original insurance has been issued or perfected; (e)

(8)

(9)

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portion of the premiums collected or received by the insurance companies on variable contracts in excess of the amounts necessary to insure the lives of the variable contract workers.

Agents of foreign insurance companies — (a)

On premiums paid to every fire, marine, or miscellaneous insurance agent legally authorized under the Insurance Code to procure policies of insurance on risk located in the Philippines for companies not authorized to transact business in the Philippines except on reinsurance premium — Ten percent (10%)

(b)

On premium payments obtained directly with foreign companies where the owner of the property does not make use of the services of any agent, company or corporation residing or doing business in the Philippines, in which case, it shall be the duty of said owners to report to the Insurance Commissioner and to the BIR Commissioner each case where insurance has been so effected — Five percent (5%)

Amusements — On gross payments to the proprietor, lessee, or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, jai-alai and racetracks at the rates herein prescribed: (a)

cockpits — Eighteen percent (18%)

(b)

Cabarets, night and day clubs — Eighteen percent (18%)

(c)

Boxing exhibitions except those wherein World or Oriental Championship in any division is at stake and at least one of the contenders is a citizen of the Philippines and promoted by a citizen/s of the Philippines or by a corporation or association at least 60% of the capital of which is owned by such citizens — Ten percent (10%)

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(d)

Professional basketball games as envisioned in Presidential Decree No. 871 — Fifteen percent (15%)

(e)

Jai-alai and racetracks irrespective of whether or not any amount is charged for admission — Thirty percent (30%)

(10) Sale, barter or exchange of shares of stock listed and traded through the local stock exchange. — On the gross selling price or gross value in money derived on every sale, barter or other disposition of shares of stock listed and traded through the local stock exchange other than the sale by a dealer in securities — One-half of one percent (1/2 of 1%) (11) Shares of stock sold or exchanged through initial public offering. — On the gross selling price or gross value in money derived on every sale, barter, exchange or other disposition through initial public offering of shares of stock in closely held corporations in accordance with the proportion of such shares to the total outstanding shares of stock after the listing in the local stock exchange at the rates herein prescribed: Not over 25% 4% Over 25% but not exceeding 33 1/3% 2% Over 33 1/3% 1%

See Section 7, Revenue Regulations No. 17-2003, excluding paragraph 12 from the enumeration of income payments subject to withholding of percentage tax which shall no longer apply due to the lapse of Republic Act No. 9010. Paragraph 12, as added by Section 8, Revenue Regulations No. 14-2002, reads as follows: "xxx Copyright 2015

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(12) On gross payments to stock, real estate, commercial, customs, insurance and immigration brokers based on gross receipts for services rendered pursuant to R.A. 9010. — Seven percent (7%)."

See issuances on withholding of taxes on certain money payments of government offices, agencies and instrumentalities — Revenue Regulations No. 4-83; Revenue Regulations No. 20-86; Revenue Regulations No. 4-88; Revenue Regulations No. 10-93; Revenue Regulations No. 7-95 and subsequent amendments thereto; Revenue Memorandum Circular No. 2-87; Revenue Memorandum Circular No. 18-88; Revenue Memorandum Circular No. 3-2000; II, A, 5, Revenue Memorandum Order No. 27-95; Revenue Memorandum Order No. 88-99; Revenue Memorandum Order No. 16-2000; Revenue Memorandum Order No. 27-2001; and Revenue Audit Memorandum Order No. 5-86. 162

(z) 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 Five hundred fifty thousand pesos (P550,000): Provided, That not later than January 31st of the calendar year subsequent to the effectivity of RA 8241 and each calendar year thereafter, the amount of Five hundred fifty thousand pesos (P550,000) shall be adjusted to its present value using the Consumer Price Index, as published by the National Statistics Office (NSO).

163

Entitled "Placing Professional Basketball Games and Other Professional Games Under the Supervision and Regulation of the Games and Amusements Board" (effective January 6, 1976).

164

See Section 127(A) — Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded Through the Local Stock Exchange, NIRC of 1997.

165

See Section 127(B) — Tax on Shares of Stock Sold or Exchanged Through Initial Public Offering, NIRC of 1997.

Section 5.116 (B) - Returns and Payments of Taxes Withheld 166

As last amended by Section 3, C, Revenue Regulations No. 2-2006. Original text: SECTION 5.116. Withholding of Percentage Tax. — Bureaus, offices

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and instrumentalities of the government, including government-owned or controlled corporations as well as their subsidiaries, provinces, cities and municipalities making any money payment to private individuals, corporations, partnerships and/or associations are required to deduct and withhold the taxes due from the payees on account of such money payments. xxx

xxx

xxx

(B) Returns and payments of taxes withheld. — No money payments shall be made by any government office or agency unless the taxes due thereon shall have been deducted and withheld. Taxes deducted and withheld shall be covered by the Monthly Return of Internal Revenue Taxes withheld on Government Money Payments (BIR Form 1600) in duplicate to be filed and the tax to be paid to the Authorized Agent Bank located within the Revenue District Office (RDO) having jurisdiction over the place where the government office is located. In places where there are no authorized agent bank, the return shall be filed directly with the Revenue District Officer, Collection Officer or the duly authorized Treasurer of the City or Municipality where the government office is located except in cases where the Commissioner otherwise permits. The required return shall be filed and payments made within ten (10) days following the end of the month the withholding was made. xxx

xxx

xxx

As amended by Section 8, Revenue Regulations No. 14-2002: SECTION 5.116. Withholding of Percentage Tax. — Bureaus, offices and instrumentalities of the government, including government-owned or controlled corporations as well as their subsidiaries, provinces, cities and municipalities making any money payment to private individuals, corporations, partnerships and/or associations are required to deduct and withhold the taxes due from the payees on account of such money payments. "xxx

xxx

xxx

(B) Returns and payments of taxes withheld. — No money payments shall be made by any government office or agency, unless the taxes due thereon shall have been deducted and withheld. Taxes deducted and withheld shall be covered by the Monthly Remittance Return of VAT and Other Percentage Taxes Withheld (BIR Form Copyright 2015

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No. 1600) in triplicate to be filed and the tax to be paid to the Authorized Agent Bank under the jurisdiction of the Large Taxpayers Service including the Large Taxpayer's District Office, in case of large taxpayer, or the Authorized Agent Bank under the jurisdiction of the Revenue District Office where the withholding agent is located, for non-large taxpayer. In places where there are no authorized agent bank, the return shall be filed directly with the Revenue Collection Officer or the duly authorized Treasurer of the City or Municipality where the withholding agent is required to register except in cases where the Commissioner otherwise permits. The required return shall be filed and payments made within ten (10) days following the end of the month the withholding was made or the withholding tax has accrued. xxx

xxx

xxx"

See Revenue Regulations No. 1-98; Revenue Regulations No. 6-2001; Revenue Regulations No. 9-2001; and Revenue Regulations No. 12-2001. Section 5.116 (C) - Certificate of Internal Revenue Taxes Withheld 167

As amended by Section 5, Revenue Regulations No. 12-2001. Original text: Original text: SECTION 5.116. Withholding of Percentage Tax. — Bureaus, offices and instrumentalities of the government, including government-owned or controlled corporations as well as their subsidiaries, provinces, cities and municipalities making any money payment to private individuals, corporations, partnerships and/or associations are required to deduct and withhold the taxes due from the payees on account of such money payments. xxx

xxx

xxx

(C) Certificate of internal revenue taxes withheld. — Every withholding government office, agency or entity shall furnish each proprietor, operator, common carrier, franchise holder, bank and non-bank financial intermediaries, finance company, insurance company or agent from whom taxes under these regulations had been deducted and withheld the Certificate of Creditable Tax Withheld at Source (BIR Form 2307) to be accomplished in triplicate, two copies to be given to the payee simultaneously with the money payments not later than the fifteenth (15th) day of the month following the close of the calendar quarter. The third copy of the certificate shall be the file copy of Copyright 2015

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the withholding government office, agency or entity. xxx

xxx

xxx

See also Revenue Regulations No. 1-98 and Revenue Regulations No. 6-2001. Section 5.116 (D) - Liability of Designated Officers 168

General Provisions, Title X, Chapter I.

169

See Section 272, NIRC of 1997. See EO 651 entitled "Requiring Government Offices, Agencies and Instrumentalities to Comply Strictly with the Laws and Regulations on Withholding Taxes" (dated February 16, 1981); and issuances designating personnel of government offices as withholding agents — Revenue Regulations No. 1-87, and subsequent amendments made by Revenue Regulations No. 6-96, and Revenue Regulations No. 10-97; Revenue Memorandum Circular No. 40-2001; Revenue Memorandum Order No. 14-98, and subsequent amendment made by Revenue Memorandum Order No. 70-98.

Section 5.128 - Withholding of Percentage Tax on Purchases of Goods and/or Payments for Services Acquired in the Course of Trade or Business and Rendered by Persons Subject to the 3% Percentage Tax Pursuant to Section 116 of the Code 170

New provisions added by Section 2, Revenue Regulations No. 14-2003.

Section 9.245 - Withholding of VAT on Purchase of Goods and/or on Payments for Services Acquired in the Course of Trade or Business and Rendered by Persons Subject to VAT Pursuant to Sections 106 and 108 of the Code 171

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New provisions added by Section 3, Revenue Regulations No. 14-2003.

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Endnotes 1 (Popup - Popup) *

Typographical error in numbering corrected by Section 4, Revenue Regulations No. 30-2003.

2 (Popup - Popup) *

Corrected as subparagraph (x) by Revenue Regulations No. 10-2009.

3 (Popup - Popup) RA 7392 entitled "An Act to Maximize the Contribution of Senior Citizens to Nation Building, Grant Benefits and Special Privileges and for Other Purposes" (dated April 23, 1992), provides: "Section 2. Definition of Terms. — As used in this Act, the term "senior citizen" shall mean any resident citizen of the Philippines at least sixty (60) years old, including those who have retired from both government offices and private enterprises, and has an income of not more than Sixty thousand pesos (P60,000.00) per annum subject to review by the National Economic and Development Authority (NEDA) every three (3) years." 4 (Popup - Popup) *

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See issuances on transmittal and processing of withholding tax returns — Revenue Memorandum Order No. 72-98; Revenue Memorandum Order No. 80-98; Revenue Memorandum Order 5-2001; and Revenue Regulations No. 7-2000.

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Philippine Taxation Encyclopedia 2014

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