SUBJECT: Implementing Section 204(B), in Relation to Section 290 of the Tax Code of 1997, Regarding Abatement or Cancellation of Internal Revenue Tax Liabilities.
TO : All Internal Revenue Officers and Others Concerned.
SECTION 1. SCOPE. – Pursuant to Section 244 of the National Internal Revenue Code of 1997 (Code), these Regulations are hereby promulgated for the purpose of implementing Section 204(B), in relation to Sections 7(c) and 290 of the same Code, regarding the authority of the Commissioner of Internal Revenue (Commissioner) to abate or cancel internal revenue tax liabilities of certain taxpayers based on any of the following grounds, viz:
“(1) The tax or any portion thereof appears to be unjustly or excessively assessed; or
“(2) The administration and collection costs involved do not justify the collection of the amount due.”
Disputed assessments pursuant to the provisions of Section 228 of the Code and its implementing rules and regulations, and assessments which are void from the beginning are not covered by these Regulations.
SEC. 2. INSTANCES WHEN THE PENALTIES AND/OR INTEREST IMPOSED ON THE TAXPAYER MAY BE ABATED OR CANCELLED ON THE GROUND THAT THE IMPOSITION THEREOF IS UNJUST OR EXCESSIVE.–
2.1 When the filing of the return/payment of the tax is made at the wrong venue;
2.2 When taxpayer’s mistake in payment of his tax is due to erroneous written official advice of a revenue officer;
2.3 When taxpayer fails to file the return and pay the tax on time due to substantial losses from prolonged labor dispute, force majeure, legitimate business reverses such as in the following instances, provided, however, that the abatement shall only cover the surcharge and the compromise penalty and not the interest imposed under Section 249 of the Code:
2.3.1 Labor strike for more than six (6) months which has caused the temporary shutdown of business;
2.3.2 Public turmoil;
2.3.3 Natural calamity such as lightning, earthquake, storm, flood and the like;
2.3.4 Armed conflicts such as war or insurgency;
2.3.5 Substantial losses sustained due to fire, robbery, theft, embezzlement;
2.3.6 Continuous heavy losses incurred by the taxpayer for the last two (2) years;
2.3.7 Liquidity problem of the taxpayer for the last three (3) years; or
2.3.8 Such other instances which the Commissioner may deem analogous to the enumeration above.
2.4 When the assessment is brought about or the result of taxpayer’s non-compliance with the law due to a difficult interpretation of said law;
2.5 When taxpayer fails to file the return and pay the correct tax on time due to circumstances beyond his control, provided, however, that abatement shall cover only the surcharge and the compromise penalty and not the interest;
2.6 Late payment of the tax under meritorious circumstances such as those provided hereunder:
2.6.1 One day late filing and remittance due to failure to beat bank cut-off time;
2.6.2 Use of wrong tax form but correct amount of tax was remitted;
2.6.3 Filing an amended return under meritorious circumstances, provided, however, that abatement shall cover only the penalties and not the interest;
2.6.4 Surcharge erroneously imposed;
2.6.5 Late filing of return due to unresolved issue on classification/valuation of real property (for capital gains tax cases, etc.);
2.6.6 Offsetting of taxes of the same kind, i.e., overpayment in one quarter/month is offset against underpayment in another quarter/month;
2.6.7 Automatic offsetting of overpayment of one kind of withholding tax against the underpayment of another kind;
2.6.8 Late remittance of withholding tax on compensation of expatriates for services rendered in the Philippines pending the issuance by the Securities and Exchange Commission of the license to the Philippine branch office or subsidiary, provided, however, that the abatement shall only cover the surcharge and the compromise penalty and not the interest;
2.6.9 Wrong use of Tax Credit Certificate (TCC) where Tax Debit Memo (TDM) was not properly applied for; and
2.6.10 Such other instances which the Commissioner may deem analogous to the enumeration above.
2.7 Other cases similar or synonymous thereto.
SEC. 3. INSTANCES WHEN THE TAX LIABILITIES, PENALTIES AND/OR INTEREST IMPOSED ON TAXPAYER MAY BE ABATED OR CANCELLED ON THE GROUND THAT THE ADMINISTRATION AND COLLECTION COSTS ARE MORE THAN THE AMOUNT SOUGHT TO BE COLLECTED. – When the administrative and collection costs, including cost of litigation, are much more than the amount that may be collected from the taxpayer, the assessment maybe reduced through abatement, or entirely cancelled pursuant to Section 204(B) of the Code. The instances that may fall under this category are the following:
3.1 Abatement of penalties on assessment confirmed by lower court but appealed by the taxpayer to a higher court;
3.2 Abatement of penalties on withholding tax assessment under meritorious circumstances; 3.3 Abatement of penalties on delayed installment payment under meritorious circumstances;
3.4 Abatement of penalties on assessment reduced after reinvestigation but taxpayer is still contesting reduced assessment; and
3.5 Such other instances which the Commissioner may deem analogous to the enumeration above.
For items 3.1 to 3.4 above, the abatement of the surcharge and compromise penalty shall be allowed only upon written application by the taxpayer signifying his willingness to pay the basic tax and interest or basic tax only, whichever is applicable under the prevailing circumstance.
SEC. 4. THE COMMISSIONER HAS THE SOLE AUTHORITY TO ABATE OR CANCEL TAX, PENALTIES AND/OR INTEREST. – The Commissioner has the sole authority to abate or cancel internal revenue taxes, penalties and/or interest pursuant to Section 204(B), in relation to Section 7(c), both of the Code. This authority is generally applicable to surcharge and compromise penalties only, however, in meritorious instances, the Commissioner may likewise abate the interest as well as basic tax assessed, provided, however, that cases for abatement or cancellation of tax, penalties and/or interest by the Commissioner shall be coursed through the following officials:
4.1 The Deputy Commissioner (Operations Group), who shall constitute a Technical Working Committee (TWC) for the evaluation and review of any application for abatement or cancellation of tax, penalties and/or interest processed by the Revenue District Office (RDO) as reviewed by the Regional Office (RO), or by the Large Taxpayers’ Service’s Collection or Audit Division and Large Taxpayers District Office (LTDO) as reviewed by the Large Taxpayers Service (LTS), or by Collection Enforcement Division/ Withholding Agent and Monitoring Division as reviewed by the Collection Service, or by the Legal Service, or any other office that has jurisdiction over the case; and
4.2 The Deputy Commissioner (Legal and Inspection Group), who shall evaluate the legal issue involved in the case.
The application for abatement or cancellation of tax, penalties and/or interest should state the reasons and causes for such request. Documentary proofs for the underlying reasons and causes aforestated should be appended to the “Application for Abatement or Cancellation of Tax, Penalties and/or Interest” (Annex “A”). On the other hand, denial of the application for abatement or cancellation of tax, penalties and/or interest should state the reasons therefor.
SEC. 5. PROCESSING TIME. – The application for abatement or cancellation of tax, penalties and/or interest should be acted upon by the processing office and reviewing office within five (5) days from receipt by said office. The BIR National Office has thirty (30) days within which to act on the case.
SEC. 6. REPORT OF THE COMMISSIONER TO THE CONGRESSIONAL OVERSIGHT COMMITTEE (COC). – The Commissioner shall submit to the Congressional Oversight Committee (COC), through the Chairmen of the Committee on Ways and Means of both the Senate and House of Representatives, every six (6) months of each calendar year, a report on the exercise of his power to abate or cancel tax liabilities, penalties and/or interest imposed on taxpayers. In this regard, all the originating offices which processed the application for abatement or cancellation of tax, penalties and/or interest shall likewise prepare for this activity/process (abatement) all the reports being prepared in the collection of taxes under the compromise power of the Commissioner, unless the Commissioner provides otherwise.
SEC. 7. TRANSITORY PROVISIONS. - Dockets that are already in the National Office as of the effectivity of these Regulations shall no longer be returned to the Region but shall be processed taking into consideration the recommendation of the originating office, although subject to review and modification by the National Office.
SEC. 8. REPEALING CLAUSE. – All existing rules and regulations or rulings or parts thereof, which are contrary to or inconsistent with the provisions of these Regulations are hereby amended, modified or repealed accordingly.
SEC. 9. EFFECTIVITY. – The provisions of these Regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
RENÉ G. BAÑEZ
Commissioner of Internal Revenue
REVENUE REGULATIONS NO. 12-2001
SUBJECT : 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.
TO : All Internal Revenue Officers and Others Concerned.
SECTION 1. Scope. – Pursuant to Section 244 of the Tax Code of 1997, in relation to Sections 57 and 128(A)(3) of the same Code, these Regulations are hereby promulgated in order to amend pertinent provisions of Revenue Regulations No. 6-2001 (RR 6-2001) relative to the rates of creditable withholding tax, effectivity of the adjustment in the creditable withholding tax rates as well as the new deadline dates for the filing of selected tax returns, compliance or reporting requirements prescribed from recipients of talent fees, and for other purposes.
SECTION 2. Final Withholding Tax on Income Derived by Alien Individuals Employed by Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies. – Sec. 2.57.1(D) of Revenue Regulations No. 2-98 (RR 2-98), as amended, is hereby further amended to read as follows:
“(D) Income Derived by Alien Individuals Employed by Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies. -
xxx xxx xxx
The same tax treatment is applicable to Filipinos employed and occupying the same positions as those aliens employed by regional or area headquarters and regional operating headquarters of 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 if the employer (Regional Operating Headquarters/Regional or Area Headquarters) is governed by Book III of E. O. 226 as amended by R. A. 8756. In case the Filipino opted to be taxed at the regular tax rate under Section 24 of the Tax Code of 1997, the provisions of Section 2.79 (A) to (D) of Revenue Regulations No. 2-98 shall apply.
xxx xxx xxx”
SECTION 3. Creditable Withholding Tax on Talent Fees for Services Rendered by Individuals. - Pertinent portions of Section 2.57.2(A) of RR 2-98, as amended by RR 6-2001, are hereby further amended to read as follows:
“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 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 xxx xxx
(8) Other recipients of talent fees – Twenty percent (20%), if the recipient’s gross income for the current year exceeds 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 promotion.
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 income 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 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 initial disclosure after the effectivity of 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.” SECTION 4. Time of Withholding. – Section 2.57.4 of RR 2-98, is hereby amended to read as follows:
“Sec. 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 payment is paid or payable, or the income payment is accrued or recorded as an expense or asset, whichever is applicable, in the payor’s books, whichever comes first. The term “payable” refers to the date the obligation becomes due, demandable or legally enforceable.
Provided, however, that where income is not yet paid or payable but the same has been recorded as an expense or asset, whichever is applicable, in the payor’s books, the obligation to withhold shall arise in the last month of the return period in which the same is claimed as an expense or amortized for tax purposes.
“Example – X Corporation, a domestic corporation which reports income and expenses on a calendar year basis, issues 2-year bonds with face value of P100,000,000 at a discount amounting to P6,000,000 on January 1, 2002 to twenty five (25) investors. It records in its books the amortized portion of the discount as expense in the amount of P250,000/month (P6,000,000 divided by 24 months).
“Since the discount is not yet paid or payable but the aliquot portion of which has already been recorded as expense for tax purposes, the withholding of the 20% final tax shall be done on the last month of the quarter when the same has been claimed as an expense in the quarterly income tax returns/final adjustments returns filed by X Corporation.
“Thus, in the above illustration, the amortized discount to be recorded by X Corporation for the months of January, February and March 2002 amounting to P750,000 shall be subject to 20% final tax of P150,000 come March 2002, which tax shall be remitted within 10 days after the quarter ending March 2002 (that is, on or before April 10, 2002). The said withholding tax shall be reported in its Monthly Remittance Return of Final Income Taxes Withheld required to be filed in April 2002. On the other hand, for the calendar quarter ending December 2002, the withholding of the final tax for the amortized discount pertaining to the months of October, November and December shall be done in December 2002 and the remittance thereof shall be on or before January 15, 2003. The said withholding tax shall be reported in its Monthly Remittance Return of Final Income Taxes Withheld required to be filed in January 2003.”
SECTION 5. Issuance of Certificate of Value-Added Tax Withheld and Percentage Tax Withheld. - (a) Section 4.114(D) of Revenue Regulations 2-98 is hereby amended to read as follows:
“(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.”
(b) Section 5.116(C) of Revenue Regulations 2-98 is hereby amended to read as follows: “(C) Certificate of percentage tax withheld at source. - Every withholding agent 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 fifth (5th) day of the following month. The third copy of the certificate shall be the file copy of the withholding agent.”
SECTION 6. Time of Filing of Percentage Tax Returns and Payment of Taxes Due Thereon. –
a) Section 6(a) of Revenue Regulations No. 6-2001 is hereby amended to read as follows:
“SECTION 6. Time for Filing of Percentage Tax Returns and the Payment of Taxes Due Thereon. – The time for filing of the percentage tax returns and the payment of the taxes due thereon shall be revised in accordance with the rules and appropriate amendments to existing regulations, as presented below.
a. For non-large taxpayers, percentage tax returns shall be filed within ten (10) days after the end of each month and the tax thereon shall be paid at the same time the aforesaid return is filed, provided, however, that with respect to non-large taxpayers who availed of the electronic filing and payment system (EFPS), the deadline for electronically filing the percentage tax return and paying the tax due thereon via the EFPS shall be five (5) days later than the deadline set above, provided, further, that for percentage tax returns required to be filed under Sections 120, 125, 126 and 127 of the Tax Code of 1997, they shall be filed within the periods stated in those sections.”
b) Section 4(3.4) of Revenue Regulations No. 1-98 (RR 1-98), as amended by RR 6-2001, is further amended to read as follows: “Section 4. Filing of Returns and Payment of Taxes. – xxx xxx xxx
3. When to File and Pay
3.4 Other Percentage Taxes
Large taxpayers who are presently preparing separate percentage tax returns shall file a consolidated return, and pay the aggregate taxes due, within ten (10) days after the end of each month, provided, however, that with respect to Large Taxpayers who availed of the EFPS, the deadline for electronically filing the percentage tax returns and paying the taxes due thereon shall be five (5) days later than the deadline set above, provided, further, that for percentage tax returns required to be filed under Sections 120, 125, 126 and 127 of the Tax Code of 1997, they shall be filed within the periods stated in those sections. The Head Office shall prepare a schedule (Annex C) of all percentage tax returns of the branches/units with the following information:
a. Period covered;
b. Head office and branch/unit names and addresses; and
c. Kind and amount of percentage tax payable.”
SECTION 7. Effectivity of the New Deadline Dates in the Filing of Selected Returns and Payment of Taxes Due Thereon as well as the Adjustment of Creditable Withholding Tax Rates as Prescribed in Revenue Regulations No. 6-2001. - Section 8 of RR 6-2001 is hereby amended to read as follows:
“SECTION 8. Effectivity Clause. These Regulations shall take effect with respect to money/income payments that are paid or payable or accrued/recorded as expense/asset in the books of accounts in October 2001 the withholding taxes of which are required to be paid/remitted to the Bureau of Internal Revenue within the month of November 2001. The new filing deadline dates shall apply to October 2001 returns which are due for filing in November 2001.”
SECTION 8. Penalty Clause. - Any violation of the provisions of these Regulations shall be punishable under the pertinent provisions of the Tax Code of 1997.
SECTION 9. Transitory Provision. - Considering that employees are being taxed on a calendar year basis, the 15% final withholding tax on the gross income of alien individuals occupying managerial and technical positions in representative offices, as well as of Filipinos occupying the same position as such aliens, shall continue to be imposed until December 31, 2001. Thereafter, the pertinent provisions of the Tax Code of 1997 shall apply to these taxpayers depending upon their classification as taxpayers (Secs. 24, 25(A), 25(B) and 33).
SECTION 10. Repealing Clause. - The provisions of RR 6-2001 and any other revenue regulations, revenue memorandum order, revenue memorandum circular or other issuance of the Bureau of Internal Revenue inconsistent with these Regulations are hereby repealed, amended, or modified accordingly.
SECTION 11. Effectivity Clause. – These Regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
RENÉ G. BAÑEZ
Commissioner of Internal Revenue
Annex “A”
Adjustment of the Creditable Withholding Tax Rates
| Income Subject to CWT | From | To |
| A. Professional fees, talent fees, etc. for services rendered by individuals | ||
| 1. Professional entertainers, such as,
| 10%
| 20% - if the current year’s gross income exceeds P720,000; 10% - if the current year’s gross income does not exceed P720,000 |
| 2. Professional athletes, including
| 10%
| 20% - if the current year’s gross income exceeds P720,000; 10% - if the current year’s gross income does not exceed P720,000 |
| 3. All directors involved in movies, | 10%
| 20% - if the current year’s gross income exceeds P720,000; 10% - if the current year’s gross income does not exceed P720,000 |
| 4. Other recipients of talent fees
| 10%
| 20% - if the current year’s gross income exceeds P720,000; 10% - if the current year’s gross income does not exceed P720,000 |
| 5. 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 | 10%
| 20%
|
| B. Professional fees, talent fees, etc. for
| 5%
| 10%
|
| C. Income payments to certain contractors: 1. General engineering contractors 2. General building contractors 3. Specialty contractors 4. Other contractors | 1%
| 2%
|
| D. Income payments to customs, insurance, real estate and commercial brokers and agents of professional entertainers | 5%
| 10%
|
| E. Gross selling price or fair market value paid to the seller/owner for the sale, exchange or transfer of real property classified as ordinary asset, where the seller is not habitually engaged in the real estate business | 7.5%
| 6%
|
| F. Certain income payments made by | 1/2% on the gross | 1% on one-half of the |
Annex “B”
Taxes Affected By The Acceleration of Filing of Returns and Payment of Taxes Due Thereon
| Tax | From | To (Manual) | To (EFPS) |
| 1. Creditable and final withholding tax (excluding the month of December and excluding the final withholding tax on interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements): | |||
| a. Non-Large Taxpayer | Within 10 days after the end of each month | Within 10 days after the end of each month | Within 15 days after the end of each month |
| b. Large Taxpayer | Within 25 days after the end of each month | Within 10 days after the end of each month | Within 15 days after the end of each month |
| 2. Creditable and final withholding tax for the month of December (excluding the final withholding tax on interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements): | |||
| a. Non-Large Taxpayer | On or before January 25 of the following year | On or before January 15 of the following year | On or before January 20 of the following year |
| b. Large Taxpayer
| On or before January 25 of the following year | On or before January 15 of the following year | On or before January 20 of the following year |
| 3. Final withholding tax on interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements: | |||
| a. Non-Large
| Within 25 days from
| For January to November – within 10 days after the end of each month For December – on or before January 15 of the following year | For January to |
| b. Large Taxpayer
| Within 25 days from
| For January to November – within 10 days after the end of each month For December – on or before January 15 of the following year | For January to November – within 15 days after the end of each month For December – on or before January 20 of the following year |
| 4. Withholding tax on compensation (excluding the month of December): | |||
| a. Non-Large Taxpayer | On or before the 10th day of the month following the month in which withholding was made | On or before the 10th day of the month following the month in which withholding was made | On or before the 15th day of the month following the month in which withholding was made |
| b. Large Taxpayer
| On or before the 25th | On or before the 10th day of the month following the month in which withholding was made | On or before the 15th day of the month following the month in which withholding was made |
| 5. Withholding tax on compensation for the month of December: | |||
| a. Non-Large | Not later than January 25 of the following year | Not later than January 15 of the following year | Not later than January 20 of the following year |
| b. Large Taxpayer | On or before the 25th day of the following month | Not later than January 15 of the following year | Not later than January 20 of the following year |
| 6. Value-added tax – monthly VAT declaration: | |||
| a. Non-Large Taxpayer | Within 25 days after the end of each month | Within 10 days after the end of each month | Within 15 days after the end of each month |
| b. Large Taxpayer
| Not later than the 25th day following the end of each month | Not later than the 10th day following the end of each month | Not later than the 15th day following the end of each month |
| 7. Documentary stamp tax: | |||
| a. Non-Large
| Within 10 days after the close of the month when the taxable document was made, signed, accepted, or transferred | Within 5 days after the close of the month when the taxable document was made, signed, accepted, or transferred | |
| b. Large Taxpayer
| Within 10 days after the close of the month when the taxable document was made, signed, accepted, or transferred | Within 5 days after the close of the month when the taxable document was made, signed, accepted, or transferred | |
| 8. Percentage tax: | |||
| a. Non-Large
| Within 25 days after
| Within 10 days after the end of each month, except those under Sections 120, 125, 126 and 127 of the Tax Code of 1997 | Within 15 days after the end of each month, except those under Sections 120, 125, 126 and 127 of the Tax Code of 1997 |
| b. Large Taxpayer
| Within 25 days after
| Within 10 days after the end of each month, except those under Sections 120, 125, 126 and 127 of the Tax Code of 1997 | Within 15 days after the end of each month, except those under Sections 120, 125, 126 and 127 of the Tax Code of 1997 |
Notes:
1. Section 120 – Overseas communication tax
2. Section 125 – Amusement tax
3. Section 126 – Tax on winnings
4. Section 127 - Stock transaction tax and IPO tax
ANNEX “C”
AFFIDAVIT-DECLARATION
OF CURRENT YEAR’S GROSS INCOME
Republic of the Philippines )
Province of _____________________) SS
City/Municipality of _____________ )
I, __________________________________, of legal age, single/married, residing at
___________________________________________________, after being sworn in accordance with law,
depose and say that:
1. I am a/an [state nature of work] for which I receive talent fees;
2. As such, I have received a gross income of _____________ for the current year as of
________________, 20_____;
3. I am executing this Affidavit-Declaration as a requirement of Revenue Regulations No.
_______ of the Bureau of Internal Revenue in the determination of the applicable creditable
withholding tax rate (10% or 20%) to be imposed by withholding agent/s.
IN WITNESS WHEREOF, I have hereunto set my hand this _______day of
_____________________, 20_____, in the City/Municipality of ___________________, Province of
_________________, Philippines.
Affiant-Declarant
SUBSCRIBED and sworn to before me, in the City/Municipality of ___________________, this
_________ day of _________________, 20____ by ___________________ with Community Tax
Certificate No. _____________ issued at ____________________________ on _______________,
20____.
Notary Public
My commission expires on_____________
Doc. No. : ______
Page No. : ______
Book No. : ______
Series of 20______.
12
GUIDELINES AND INSTRUCTIONS
WHO WILL EXECUTE
Every professional entertainer, professional athlete, director involved in movies, stage, radio, television and musical production and other recipients of talent fees shall annually disclose his/her gross income for the current year.
WHEN TO EXECUTE
The Affidavit-Declaration of Current Year’s Gross Income shall be filed on June 30 of each year or within fifteen (15) days after the end of the month the talent’s income reaches P720,000.00, whichever comes earlier. In case his/her total gross income is less than P720,000.00 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 P720,000.00.
In case of failure to submit the annual declaration/disclosure to the BIR, the payor shall withhold the tax at the rate of 20%.
WHERE TO FILE
The duly notarized Affidavit-Declaration of Current Year’s Gross Income shall be filed with the Withholding Agents Monitoring Division, Room 207, Bureau of Internal Revenue (BIR), National Office, Diliman, Quezon City.
REVENUE REGULATIONS NO. 9-2001
NOTE: Amended in RR 2-2002, RR 9-2002, RR 26-2002, RR 5-2004, and RR 10-2007
SUBJECT : Electronic Filing of Tax Returns and Payment of Taxes
TO : All Internal Revenue Officers and Others Concerned
______________________________________________________________________
Section 1. SCOPE. Pursuant to the provisions of Section 244 of the National Internal Revenue Code of 1997 (Tax Code), in relation to Section 27 of Republic Act No. 8792, otherwise known as the "Electronic Commerce Act," these Regulations are hereby promulgated to regulate the electronic filing of tax returns and payment of taxes.
Section 2. DEFINITION OF TERMS. For purposes of these Regulations, the terms herein provided are defined as follows:
2.1 Electronic Filing and Payment System (EFPS or System) – refers to the system developed and maintained by the Bureau of Internal Revenue (BIR) for electronically filing tax returns, including attachments, if any, and paying taxes due thereon, specifically through the internet.
2.2 Authorized Agent Bank (AAB) – refers to any bank as certified by the Bangko Sentral ng Pilipinas (BSP) which has satisfied the criteria on accreditation and is actually accredited to collect internal revenue taxes.
2.3 e-Filing – means the process of electronically filing returns including attachments, if any, specifically through the internet.
2.4 e-Payment – means the process of electronically paying a tax liability through the internet banking facilities of AABs.
2.5 Large Taxpayer – refers to a taxpayer who has been classified and duly notified by the Commissioner of Internal Revenue (CIR) for having satisfied any or a combination of set criteria as prescribed in Revenue Regulations No. 1-98 or any amendatory regulations.
This includes all large taxpayers under the jurisdiction of the Large Taxpayers Service (LTS) and Large Taxpayers District Office/s (LTDO).
2.6 Non-Large Taxpayer – refers to a taxpayer whose tax payments and financial conditions do not satisfy the set criteria as per Revenue Regulations No. 1-98 or any amendatory regulations and/or have not been classified and notified as a Large Taxpayer by the CIR.
2.7 Due Date – the date prescribed by law or regulations within which to file a particular return and pay the tax due thereon.
2.8 Electronic Signature – refers to the methodology or procedures prescribed by the BIR through the EFPS, employed by an individual taxpayer, or by an officer/s of a corporate taxpayer who is required by the Tax Code or appropriate regulations to affix his/their signature to such return, who files a return and pays taxes through the EFPS, with the intention of authenticating, approving, and attesting to the truth and correctness of such return. In the case of a corporate taxpayer, the electronic signature shall be deemed to be the signature singly, and collectively, of both the authorized corporate officer/s that are required by the Tax Code or appropriate regulations to file and swear to the truth and correctness of such return and who are named in the Board Resolution or equivalent document submitted by the taxpayer to the BIR pursuant to Section 1(d) of Revenue Memorandum Circular (RMC) No. 24-2001 dated May 28, 2001. The CIR is authorized to modify, change or revoke such method or procedure with prior notice to the taxpayers.
2.9 Filing Reference Number – refers to the control number issued by the EFPS to acknowledge that a tax return, including attachments, has been successfully filed electronically. This shall serve as evidence of the fact of filing and the date of filing of the return.
2.10 Confirmation Number - refers to the control number issued by the AAB to the taxpayer and BIR to acknowledge that the taxpayer’s account has been successfully debited electronically in payment of his tax liability. Such Confirmation Number shall be considered the equivalent of a bank validation and official receipt issued by the AAB and shall further serve as evidence of the fact of payment of the taxpayer’s liability to the extent of the amount reflected in the Confirmation Number, and the date of payment by the taxpayer.
2.11Acknowledgment Number – refers to the control number issued by the BIR to the taxpayer to confirm that tax payment has been credited to the account of the government.
2.12 Return – refers initially to any of the following electronic returns produced by the EFPS:
a. 1601C – Monthly Remittance Return of Income Taxes Withheld on Compensation
b. 1601E – Monthly Remittance Return of Creditable Income Taxes Withheld (Expanded)
c. 1602 – Remittance Return of Final Income Taxes Withheld
d. 1603 – Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees other than Rank and File
e. 1700 – Annual Income Tax Return
f. 1702 – Annual Income Tax Return for Corporations and Partnerships
g. 1702Q – Quarterly Income Tax Return for Corporations and Partnerships
h. 2200A – Excise Tax Return for Alcohol Products
i. 2200P – Excise Tax Return for Petroleum Products
j. 2200T – Excise Tax Return for Tobacco Products
k. 2550M – Monthly Value-Added Tax Declaration
l. 2550Q – Quarterly Value-Added Tax Return
m. 2551 – Percentage Tax Return.
In determining a taxpayer’s compliance with a particular tax liability, it is the information in the return, and not the form of such return, that governs.
The Commissioner is authorized, from time to time, and as the system and operational requirements may so need, to expand or reduce the list of returns that can be filed electronically through the EFPS.
Section 3. VOLUNTARY COVERAGE. Large Taxpayers and Non-Large Taxpayers shall have the option to avail of the EFPS in filing their returns and paying the taxes due thereon.
Section 4. ENROLLMENT FOR SYSTEM USAGE. Taxpayers who would like to avail of the EFPS shall enroll in the EFPS in accordance with the provisions of RMC No. 24-2001. Taxpayers registered with the Integrated Tax System (ITS) with e-mail account and internet access may enroll in the EFPS.
In addition, a taxpayer who will e-pay shall enroll with any AAB where he intends to pay through the bank debit system. However, Large Taxpayers’ enrollment shall be limited only to the AABs authorized to serve them and who are capable to accept epayments, until such time that private banks are allowed by the Monetary Board of the BSP to open accounts with the Bureau of Treasury and, provided, that such private banks are e-banking capable.
Section 5. RETURNS COVERED BY ENROLLMENT. A taxpayer enrolled with the EFPS shall file the applicable returns enumerated in Section 2.12 hereof via the EFPS.
Section 6. SECURITY OF INFORMATION. The identity, authority and capability of the taxpayer transacting with the BIR using the EFPS is handled by the enrollment and logon facilities of the EFPS. The transmission of data is secured through encryption and the use of technology provided by Verisign and Secure Socket Layer (SSL).
Section 7. TIME OF FILING OF RETURN. To erase any doubt and to ensure receipt by the BIR before midnight of the due date set by applicable laws and regulations for the filing of a return and the payment of the corresponding tax, the electronic return shall be filed on or before 10:00 p.m. of the due date provided under applicable laws, regulations and other issuances of the BIR, including these Regulations.
Section 8. TIME AND PLACE OF PAYMENT.
8.1 Large Taxpayers. (a) Large Taxpayers who will e-pay shall enroll with any AAB authorized to serve them and who are capable to accept e-payments, until such time that private banks are allowed by the Monetary Board of the BSP to open accounts with the Bureau of Treasury and, provided, that such private banks are e-banking capable.
E-payments (when available as provided in Section 4 of these Regulations) shall be made within the day the return was electronically filed following the “pay-as-you-file” principle.
(b) For Large Taxpayers who intend to pay their taxes manually, the same shall be made at the AABs servicing the aforesaid taxpayers located at the Ground Floor of the BIR National Office Building with respect to Large Taxpayers registered with the LTS or at the premises of the AABs servicing the said taxpayers located within the respective territorial jurisdiction of the LTDOs with respect to Large Taxpayers registered with the LTDOs. Manual payments shall be made within banking hours of the day when the return was electronically filed following the “pay-as-you-file” principle.
8.2 Non-Large Taxpayers. (a) For Non-Large Taxpayers who intend to e-pay, electronic payment shall be made through the internet banking facilities of any AAB. This shall constitute an exception to the general rule that the return shall be filed with, and the tax paid, to the AAB within the territorial jurisdiction of the Revenue District Office where the taxpayer is required to register. Epayments shall be made within the day the return was electronically filed, subject to the provisions on installment payment in the Tax Code of 1997, following the “pay-as-you-file” principle.
(b) For Non-Large Taxpayers who intend to make manual payment, the same may be made only with the AABs within the territorial jurisdiction of the Revenue District Office where the taxpayer is required to register. In places where there is no AAB, the payment shall be made with the Revenue District Officer, Collection Agent, or duly authorized Treasurer of the city or municipality under the jurisdiction of the Revenue District Office in which the Non-Large Taxpayer is required to register. Manual payments shall be made within banking hours of the day when the return was electronically filed, subject to the provisions on installment payment in the Tax Code of 1997, following the “pay-as-you-file” principle.
Section 9. CONFIRMATION OF RECEIPT OF RETURN/S/DOCUMENTS AND PAYMENT/S OF TAXES.
9.1 e-Filing and e-Payment - The return is deemed filed, on the date appearing in, and after a Filing Reference Number is generated and issued to the taxpayer via the EFPS. The tax due thereon is deemed paid after a Confirmation Number is issued to the taxpayer and to the BIR by the AAB. In addition, an Acknowledgement Number shall be issued by the BIR to the taxpayer to confirm that the tax payment has been credited to the account of the government.
9.2 e-Filing and Manual Payment – The return is deemed filed, on the date appearing in, and after a Filing Reference Number is issued to the taxpayer via the EFPS. The print-out of the Filing Reference Number shall be presented to the AABs for manual payment of the tax due thereon. The payment thereof is received upon validation of the document containing the Filing Reference Number generated by the EFPS and the issuance of an Official Receipt by the AAB.
9.3 Date of Receipt of Return – The receipt of the return occurs at the time it enters the EFPS and shall be evidenced by the date indicated in the Filing Reference Number.
Section 10. PRESUMPTIONS RELATING TO ELECTRONIC SIGNATURE. An electronic signature, as defined in these Regulations, gives rise to the following presumptions:
10.1 That the electronic signature is the signature of the individual taxpayer, or in the case of a corporate taxpayer, the signature singly and collectively, of both the authorized corporate officer/s that are required by the Tax Code or appropriate regulations to file and swear to the truth and correctness of such return and who are named in the Board Resolution or equivalent document submitted by the taxpayer to the BIR pursuant to Section 1(d) of RMC No. 24-2001 dated May 28, 2001; and
10.2 That the electronic signature was affixed by the above-mentioned taxpayer/person/s with the intention of signing, approving, and swearing to the truth and correctness of such return.
Section 11. AVAILABILITY OF RETURNS. The electronic copies of the returns in their original format e-filed by a taxpayer can be accessed by him/it via the EFPS for a period of two (2) months from filing thereof. After this period, a taxpayer may secure a certification from the BIR containing the information supplied by him in the return which he/it e-filed via the EFPS.
Section 12. EVIDENCE OF CONTENTS OF RETURN. In cases of disputes regarding the contents of returns filed via the EFPS, the contents shown/stored in the ITS Server of the BIR shall govern.
Section 13. TIME AND PLACE OF FILING AUDITED FINANCIAL STATEMENTS.
The paper copy of the audited financial statements shall be filed within fifteen (15) days from the date of filing of BIR Form No. 1702. The taxpayer is required to file four copies of the audited financial statements (FS).
The audited FS shall be filed with the LTS or the LTDO as the case may be, in the case of Large Taxpayers, and with their respective Revenue District Offices, in the case of Non-Large Taxpayers.
Section 14. TIME AND PLACE OF FILING CERTIFICATE OF WITHHOLDING TAX.
The certificate of withholding tax shall be filed within fifteen (15) days from the date of filing of any of the following BIR Form Nos.: a) 1702; b) 1702Q; c) 2550M; d) 2550Q; and e) 2551. The taxpayer is required to file three (3) copies of the certificate of withholding tax (CWT).
With respect to BIR Form No. 1700, in cases where such form is required to be filed, the certificate of withholding tax shall be filed in triplicate by the taxpayer when required by the BIR.
The certificate of withholding tax of income payments made to a Large Taxpayer shall be filed with the LTS or the LTDO as the case may be, in the case of Large Taxpayers, and with their respective Revenue District Offices, in the case of Non-Large Taxpayers.
Section 15. TRANSITORY PROVISION. Taxpayers enrolled in the EFPS shall, with respect to their filing of every applicable return for the first time via the EFPS, be subject to parallel filing, that is, the taxpayer who e-files shall still manually file the return; provided, that, this transitory provision shall be effective only until December 31, 2001.
Section 16. PENALTY CLAUSE. Any violation of the provisions of these Regulations shall be punishable under the pertinent provision/s of the Tax Code of 1997.
Section 17. REPEALING CLAUSE. With respect to a taxpayer availing of the EFPS, any revenue issuance inconsistent herewith, including any requirement for the filing of a paper-based return, is hereby amended accordingly.
Section 18. EFFECTIVITY CLAUSE. These regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending approval:
(Original Signed)
RENÉ G. BAÑEZ
Commissioner of Internal Revenue
SUBJECT : Electronic Filing of Tax Returns and Payment of Taxes
TO : All Internal Revenue Officers and Others Concerned
______________________________________________________________________
Section 1. SCOPE. Pursuant to the provisions of Section 244 of the National Internal Revenue Code of 1997 (Tax Code), in relation to Section 27 of Republic Act No. 8792, otherwise known as the "Electronic Commerce Act," these Regulations are hereby promulgated to regulate the electronic filing of tax returns and payment of taxes.
Section 2. DEFINITION OF TERMS. For purposes of these Regulations, the terms herein provided are defined as follows:
2.1 Electronic Filing and Payment System (EFPS or System) – refers to the system developed and maintained by the Bureau of Internal Revenue (BIR) for electronically filing tax returns, including attachments, if any, and paying taxes due thereon, specifically through the internet.
2.2 Authorized Agent Bank (AAB) – refers to any bank as certified by the Bangko Sentral ng Pilipinas (BSP) which has satisfied the criteria on accreditation and is actually accredited to collect internal revenue taxes.
2.3 e-Filing – means the process of electronically filing returns including attachments, if any, specifically through the internet.
2.4 e-Payment – means the process of electronically paying a tax liability through the internet banking facilities of AABs.
2.5 Large Taxpayer – refers to a taxpayer who has been classified and duly notified by the Commissioner of Internal Revenue (CIR) for having satisfied any or a combination of set criteria as prescribed in Revenue Regulations No. 1-98 or any amendatory regulations.
This includes all large taxpayers under the jurisdiction of the Large Taxpayers Service (LTS) and Large Taxpayers District Office/s (LTDO).
2.6 Non-Large Taxpayer – refers to a taxpayer whose tax payments and financial conditions do not satisfy the set criteria as per Revenue Regulations No. 1-98 or any amendatory regulations and/or have not been classified and notified as a Large Taxpayer by the CIR.
2.7 Due Date – the date prescribed by law or regulations within which to file a particular return and pay the tax due thereon.
2.8 Electronic Signature – refers to the methodology or procedures prescribed by the BIR through the EFPS, employed by an individual taxpayer, or by an officer/s of a corporate taxpayer who is required by the Tax Code or appropriate regulations to affix his/their signature to such return, who files a return and pays taxes through the EFPS, with the intention of authenticating, approving, and attesting to the truth and correctness of such return. In the case of a corporate taxpayer, the electronic signature shall be deemed to be the signature singly, and collectively, of both the authorized corporate officer/s that are required by the Tax Code or appropriate regulations to file and swear to the truth and correctness of such return and who are named in the Board Resolution or equivalent document submitted by the taxpayer to the BIR pursuant to Section 1(d) of Revenue Memorandum Circular (RMC) No. 24-2001 dated May 28, 2001. The CIR is authorized to modify, change or revoke such method or procedure with prior notice to the taxpayers.
2.9 Filing Reference Number – refers to the control number issued by the EFPS to acknowledge that a tax return, including attachments, has been successfully filed electronically. This shall serve as evidence of the fact of filing and the date of filing of the return.
2.10 Confirmation Number - refers to the control number issued by the AAB to the taxpayer and BIR to acknowledge that the taxpayer’s account has been successfully debited electronically in payment of his tax liability. Such Confirmation Number shall be considered the equivalent of a bank validation and official receipt issued by the AAB and shall further serve as evidence of the fact of payment of the taxpayer’s liability to the extent of the amount reflected in the Confirmation Number, and the date of payment by the taxpayer.
2.11Acknowledgment Number – refers to the control number issued by the BIR to the taxpayer to confirm that tax payment has been credited to the account of the government.
2.12 Return – refers initially to any of the following electronic returns produced by the EFPS:
a. 1601C – Monthly Remittance Return of Income Taxes Withheld on Compensation
b. 1601E – Monthly Remittance Return of Creditable Income Taxes Withheld (Expanded)
c. 1602 – Remittance Return of Final Income Taxes Withheld
d. 1603 – Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees other than Rank and File
e. 1700 – Annual Income Tax Return
f. 1702 – Annual Income Tax Return for Corporations and Partnerships
g. 1702Q – Quarterly Income Tax Return for Corporations and Partnerships
h. 2200A – Excise Tax Return for Alcohol Products
i. 2200P – Excise Tax Return for Petroleum Products
j. 2200T – Excise Tax Return for Tobacco Products
k. 2550M – Monthly Value-Added Tax Declaration
l. 2550Q – Quarterly Value-Added Tax Return
m. 2551 – Percentage Tax Return.
In determining a taxpayer’s compliance with a particular tax liability, it is the information in the return, and not the form of such return, that governs.
The Commissioner is authorized, from time to time, and as the system and operational requirements may so need, to expand or reduce the list of returns that can be filed electronically through the EFPS.
Section 3. VOLUNTARY COVERAGE. Large Taxpayers and Non-Large Taxpayers shall have the option to avail of the EFPS in filing their returns and paying the taxes due thereon.
Section 4. ENROLLMENT FOR SYSTEM USAGE. Taxpayers who would like to avail of the EFPS shall enroll in the EFPS in accordance with the provisions of RMC No. 24-2001. Taxpayers registered with the Integrated Tax System (ITS) with e-mail account and internet access may enroll in the EFPS.
In addition, a taxpayer who will e-pay shall enroll with any AAB where he intends to pay through the bank debit system. However, Large Taxpayers’ enrollment shall be limited only to the AABs authorized to serve them and who are capable to accept epayments, until such time that private banks are allowed by the Monetary Board of the BSP to open accounts with the Bureau of Treasury and, provided, that such private banks are e-banking capable.
Section 5. RETURNS COVERED BY ENROLLMENT. A taxpayer enrolled with the EFPS shall file the applicable returns enumerated in Section 2.12 hereof via the EFPS.
Section 6. SECURITY OF INFORMATION. The identity, authority and capability of the taxpayer transacting with the BIR using the EFPS is handled by the enrollment and logon facilities of the EFPS. The transmission of data is secured through encryption and the use of technology provided by Verisign and Secure Socket Layer (SSL).
Section 7. TIME OF FILING OF RETURN. To erase any doubt and to ensure receipt by the BIR before midnight of the due date set by applicable laws and regulations for the filing of a return and the payment of the corresponding tax, the electronic return shall be filed on or before 10:00 p.m. of the due date provided under applicable laws, regulations and other issuances of the BIR, including these Regulations.
Section 8. TIME AND PLACE OF PAYMENT.
8.1 Large Taxpayers. (a) Large Taxpayers who will e-pay shall enroll with any AAB authorized to serve them and who are capable to accept e-payments, until such time that private banks are allowed by the Monetary Board of the BSP to open accounts with the Bureau of Treasury and, provided, that such private banks are e-banking capable.
E-payments (when available as provided in Section 4 of these Regulations) shall be made within the day the return was electronically filed following the “pay-as-you-file” principle.
(b) For Large Taxpayers who intend to pay their taxes manually, the same shall be made at the AABs servicing the aforesaid taxpayers located at the Ground Floor of the BIR National Office Building with respect to Large Taxpayers registered with the LTS or at the premises of the AABs servicing the said taxpayers located within the respective territorial jurisdiction of the LTDOs with respect to Large Taxpayers registered with the LTDOs. Manual payments shall be made within banking hours of the day when the return was electronically filed following the “pay-as-you-file” principle.
8.2 Non-Large Taxpayers. (a) For Non-Large Taxpayers who intend to e-pay, electronic payment shall be made through the internet banking facilities of any AAB. This shall constitute an exception to the general rule that the return shall be filed with, and the tax paid, to the AAB within the territorial jurisdiction of the Revenue District Office where the taxpayer is required to register. Epayments shall be made within the day the return was electronically filed, subject to the provisions on installment payment in the Tax Code of 1997, following the “pay-as-you-file” principle.
(b) For Non-Large Taxpayers who intend to make manual payment, the same may be made only with the AABs within the territorial jurisdiction of the Revenue District Office where the taxpayer is required to register. In places where there is no AAB, the payment shall be made with the Revenue District Officer, Collection Agent, or duly authorized Treasurer of the city or municipality under the jurisdiction of the Revenue District Office in which the Non-Large Taxpayer is required to register. Manual payments shall be made within banking hours of the day when the return was electronically filed, subject to the provisions on installment payment in the Tax Code of 1997, following the “pay-as-you-file” principle.
Section 9. CONFIRMATION OF RECEIPT OF RETURN/S/DOCUMENTS AND PAYMENT/S OF TAXES.
9.1 e-Filing and e-Payment - The return is deemed filed, on the date appearing in, and after a Filing Reference Number is generated and issued to the taxpayer via the EFPS. The tax due thereon is deemed paid after a Confirmation Number is issued to the taxpayer and to the BIR by the AAB. In addition, an Acknowledgement Number shall be issued by the BIR to the taxpayer to confirm that the tax payment has been credited to the account of the government.
9.2 e-Filing and Manual Payment – The return is deemed filed, on the date appearing in, and after a Filing Reference Number is issued to the taxpayer via the EFPS. The print-out of the Filing Reference Number shall be presented to the AABs for manual payment of the tax due thereon. The payment thereof is received upon validation of the document containing the Filing Reference Number generated by the EFPS and the issuance of an Official Receipt by the AAB.
9.3 Date of Receipt of Return – The receipt of the return occurs at the time it enters the EFPS and shall be evidenced by the date indicated in the Filing Reference Number.
Section 10. PRESUMPTIONS RELATING TO ELECTRONIC SIGNATURE. An electronic signature, as defined in these Regulations, gives rise to the following presumptions:
10.1 That the electronic signature is the signature of the individual taxpayer, or in the case of a corporate taxpayer, the signature singly and collectively, of both the authorized corporate officer/s that are required by the Tax Code or appropriate regulations to file and swear to the truth and correctness of such return and who are named in the Board Resolution or equivalent document submitted by the taxpayer to the BIR pursuant to Section 1(d) of RMC No. 24-2001 dated May 28, 2001; and
10.2 That the electronic signature was affixed by the above-mentioned taxpayer/person/s with the intention of signing, approving, and swearing to the truth and correctness of such return.
Section 11. AVAILABILITY OF RETURNS. The electronic copies of the returns in their original format e-filed by a taxpayer can be accessed by him/it via the EFPS for a period of two (2) months from filing thereof. After this period, a taxpayer may secure a certification from the BIR containing the information supplied by him in the return which he/it e-filed via the EFPS.
Section 12. EVIDENCE OF CONTENTS OF RETURN. In cases of disputes regarding the contents of returns filed via the EFPS, the contents shown/stored in the ITS Server of the BIR shall govern.
Section 13. TIME AND PLACE OF FILING AUDITED FINANCIAL STATEMENTS.
The paper copy of the audited financial statements shall be filed within fifteen (15) days from the date of filing of BIR Form No. 1702. The taxpayer is required to file four copies of the audited financial statements (FS).
The audited FS shall be filed with the LTS or the LTDO as the case may be, in the case of Large Taxpayers, and with their respective Revenue District Offices, in the case of Non-Large Taxpayers.
Section 14. TIME AND PLACE OF FILING CERTIFICATE OF WITHHOLDING TAX.
The certificate of withholding tax shall be filed within fifteen (15) days from the date of filing of any of the following BIR Form Nos.: a) 1702; b) 1702Q; c) 2550M; d) 2550Q; and e) 2551. The taxpayer is required to file three (3) copies of the certificate of withholding tax (CWT).
With respect to BIR Form No. 1700, in cases where such form is required to be filed, the certificate of withholding tax shall be filed in triplicate by the taxpayer when required by the BIR.
The certificate of withholding tax of income payments made to a Large Taxpayer shall be filed with the LTS or the LTDO as the case may be, in the case of Large Taxpayers, and with their respective Revenue District Offices, in the case of Non-Large Taxpayers.
Section 15. TRANSITORY PROVISION. Taxpayers enrolled in the EFPS shall, with respect to their filing of every applicable return for the first time via the EFPS, be subject to parallel filing, that is, the taxpayer who e-files shall still manually file the return; provided, that, this transitory provision shall be effective only until December 31, 2001.
Section 16. PENALTY CLAUSE. Any violation of the provisions of these Regulations shall be punishable under the pertinent provision/s of the Tax Code of 1997.
Section 17. REPEALING CLAUSE. With respect to a taxpayer availing of the EFPS, any revenue issuance inconsistent herewith, including any requirement for the filing of a paper-based return, is hereby amended accordingly.
Section 18. EFFECTIVITY CLAUSE. These regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending approval:
(Original Signed)
RENÉ G. BAÑEZ
Commissioner of Internal Revenue
REVENUE REGULATIONS NO. 7 - 2001
NOTE: Superseded by RR 8-2004
SUBJECT : Further Implementing Sections 7(c), 204(A) and 290 of the Tax Code of 1997 on ompromise Settlement of Internal Revenue Tax Liabilities and Thereby Amending Revenue Regulations No. 6-2000.
TO : All Internal Revenue Officers and Others Concerned.
SECTION 1. SCOPE AND OBJECTIVES. – Pursuant to Section 244 of the Tax Code of 1997, these Regulations are hereby promulgated for the purpose of further implementing Sections 7(c), 204(A) and 290 of the same Code, thereby amending Revenue Regulations (RR) No. 6-2000 and giving an authority to the Commissioner of Internal Revenue to compromise the payment of internal revenue tax liabilities of certain taxpayers with outstanding receivable accounts and disputed assessments with the Bureau.
SEC. 2. CASES WHICH MAY BE COMPROMISED. - The following cases may, upon taxpayer’s compliance with the basis set forth under Section 3 of these Regulations, be the subject matter of compromise settlement, viz:
1. Delinquent accounts;
2. Cases under administrative protest pending in the Regional Offices, Revenue District Offices, Legal Service, Large Taxpayer Service LTS), Collection Service, Enforcement Service and other offices in the National Office;
3. Civil tax cases being disputed before the courts, e.g., MTC, RTC, CTA, CA, SC;
4. Collection cases filed in courts;
5. Criminal violations, other than those already filed in court or those involving criminal tax fraud; and
6. Cases covered by pre-assessment notices but taxpayer is not agreeable to the findings of the audit office as confirmed by the review office.
EXCEPTIONS:
1. Withholding tax cases;
2. Criminal tax fraud cases;
3. Criminal violations already filed in court;
4. Delinquent accounts with duly approved schedule of installment payments;
5. Cases where final reports of reinvestigation or reconsideration have been issued resulting to reduction in the original assessment and the taxpayer is agreeable to such decision. On the other hand, other protested cases shall be handled by the Regional Evaluation Board (REB) or the National Evaluation Board (NEB) on a case to case basis; and
6. Cases which become final and executory after final judgment of a court.
SEC. 3. BASIS FOR ACCEPTANCE OF COMPROMISE SETTLEMENT. - The Commissioner may compromise the payment of any internal revenue tax on the following grounds:
1. Doubtful validity of the assessment. - The offer to compromise a delinquent account or disputed assessment under these Regulations on the ground of reasonable doubt as to the validity of the assessment may be accepted when it is shown that:
(a) The delinquent account or disputed assessment is one resulting from a jeopardy assessment (For this purpose, “jeopardy assessment” shall refer to a tax assessment which was assessed without the benefit of complete or partial audit by an authorized revenue officer, who has reason to believe that the assessment and collection of a deficiency tax will be jeopardized by delay because of the taxpayer’s failure to comply with the audit and investigation requirements to present his books of accounts and/or pertinent records, or to substantiate all or any of the deductions, exemptions, or credits claimed in his return); or
(b) The assessment seems to be arbitrary in nature, appearing to be based on presumptions and there is reason to believe that it is lacking in legal and/or factual basis; or
(c) The taxpayer failed to file an administrative protest on account of the alleged failure to receive notice of assessment or preliminary assessment and there is reason to believe that the assessment is lacking in legal and/or factual basis; or
(d) The taxpayer failed to file a request for reinvestigation/reconsideration within 30 days from receipt of final assessment notice and there is reason to believe that the assessment is lacking in legal and/or factual basis; or
(e) The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse decision of the Commissioner, or his authorized representative, in some cases, within 30 days from receipt thereof and there is reason to believe that the assessment is lacking in legal and/or factual basis; or
(f) The assessments were issued on or after January 1, 1998, where the demand notice allegedly failed to comply with the formalities prescribed under Sec. 228 of the Tax Code of 1997; or
(g) Assessments made based on the “Best Evidence Obtainable Rule” and there is reason to believe that the same can be disputed by sufficient and competent evidence.
2. Financial incapacity. - The offer to compromise based on financial incapacity may be accepted upon showing that:
(a) The corporation ceased operation or is already dissolved; or
(b) The taxpayer is suffering from surplus or earnings deficit resulting to impairment in the original capital by at least 50%; or
(c) The taxpayer is suffering from a networth deficit computed by deducting total liabilities (net of deferred credits) from total assets (net of prepaid expenses, deferred charges, pre-operating expenses, as well as appraisal increases in fixed assets), taken from the latest audited financial statements; or
(d) The taxpayer is a compensation income earner with no other source of income and the family’s gross monthly compensation income does not exceed the levels of compensation income provided for under Sec. 4.1.1 of these Regulations, and it appears that the taxpayer possesses no other leviable/distrainable assets, other than his family home; or
(e) The taxpayer has been granted by the Securities and Exchange Commission (SEC) or by any competent tribunal a moratorium or suspension of payments to creditors, or otherwise declared bankrupt or insolvent.
The Commissioner shall not consider any offer for compromise settlement by reason of financial incapacity unless and until the taxpayer waives in writing his privilege of the secrecy of bank deposits under Republic Act No. 1405 or under other general or special laws, and such waiver shall constitute as the authority of the Commissioner to inquire into the bank deposits of the taxpayer.
For purposes of these Regulations, the term “assessment” includes the preliminary assessment notice (PAN) issued as of June 30, 2001 by the appropriate “Review Office”. In fine, it does not include the post reporting notice issued by the head of the investigating unit.
SEC. 4. PRESCRIBED MINIMUM PERCENTAGES OF COMPROMISE SETTLEMENT. – The compromise settlement of the internal revenue tax liabilities of taxpayers, reckoned on a per tax type assessment basis, shall be subject to the following minimum rates based on the basic assessed tax:
1. For cases of “financial incapacity” –
1.1. If taxpayer is an individual whose only source of income is from employment and whose monthly salary, if single, is P10,500 or less, or if married, whose salary together with his spouse is P21,000 per month, or less - 10%
1.2. If taxpayer is an individual without any source of income - 10%
1.3. Where the taxpayer is under any of the following conditions:
1.3.1. Zero networth computed in accordance with Sec. 3.2(c) hereof - 10%
1.3.2. Negative networth computed in accordance with Sec. 3.2(c) hereof - 10%
1.3.3. Dissolved corporations - 20%
1.3.4. Already non-operating companies for a period of:
(a) three (3) years or more as of the date of application for compromise settlement - 10%
(b) Less than 3 years - 20%
1.3.5. Surplus or earnings deficit resulting to impairment in the original capital by at least 50% - 20%
1.3.6. With moratorium/suspension of payments; declared insolvent or bankrupt - 10%
2. For cases of “doubtful validity” – A minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax.
The taxpayer may, nevertheless, request for a compromise rate lower than forty percent (40%): Provided, however, that he shall be required to submit his request in writing stating therein the reasons, legal and/or factual, why he should be entitled to such lower rate: Provided, further, that for applications of compromise settlement based on doubtful validity of the assessment involving an offer lower than the minimum forty percent (40%) compromise rate, the same shall be subject to the prior approval by the NEB.
The herein prescribed minimum percentages shall likewise apply in compromise settlement of assessments consisting solely of increments, i.e., surcharge, interest, etc., based on the total amount assessed.
SEC. 5. DOCUMENTARY REQUIREMENTS. –
1. If the application for compromise is premised under Sec. 4.1.1 hereof, the taxpayer-applicant shall submit with his application (a) a certification from his employer on his prevailing monthly salary, including allowances; and (b) a sworn statement that he has no other source of income other than from employment.
2. If the application is premised under Sec. 4.1.2 hereof, the taxpayerapplicant shall submit with his application a sworn statement that he derives no income from any source whatever.
3. If the application is premised under Sec. 4.1.3 hereof, a copy of the applicant's latest audited financial statements or audited Account Information Form filed with the BIR shall be submitted with the application. Nonetheless, for situation under Sec. 4.1.3.3 hereof, the “Notice of Dissolution” submitted to SEC or other similar or equivalent document should likewise be submitted. For situation under Sec. 4.1.3.6, a copy of the order granting the moratorium or suspension of payments or of bankruptcy or insolvency shall be submitted.
SEC. 6. APPROVAL OF OFFER OF COMPROMISE. - Except for offers of compromise where the approval is delegated to the REB pursuant to the succeeding paragraph, all compromise settlements within the jurisdiction of the National Office (NO) shall be approved by the NEB composed of the Commissioner and the four (4) Deputy Commissioners. All decisions of the NEB, whether favorable or otherwise, shall have the concurrence of the Commissioner.
Offers of compromise of assessments issued by the Regional Offices involving basic deficiency taxes of Five Hundred Thousand Pesos (P500,000) or less and for minor criminal violations discovered by the Regional and District Offices, shall be subject to the approval by the Regional Evaluation Board (REB), comprised of the following Officers of the Region:
Regional Director – Chairman
Members:
• Assistant Regional Director
• Chief, Legal Division
• Chief, Assessment Division
• Chief, Collection Division
• Revenue District Officer having jurisdiction over the taxpayer-applicant
Provided, however, that if the offer of compromise is less than the prescribed rates set forth in Sec. 4 hereof, the same shall always be subject to the approval of the NEB.
If the compromise offer meets the conditions for availment set forth in Sections 3, 4, and 5 of these Regulations, the case is considered provisionally closed on the day compromise amount is fully paid and the approval of the compromise offer becomes a matter of course on the part of the approving authority referred to in this Section.
SEC. 7. REPORT OF THE COMMISSIONER ON THE EXERCISE OF HIS AUTHORITY TO COMPROMISE TO THE CONGRESSIONAL OVERSIGHT COMMITTEE. – The Commissioner shall submit to the Congressional Oversight Committee through the Chairmen of the Committee on Ways and Means of both the Senate and House of Representatives, every six (6) months of each calendar year, a report on the exercise of his powers to compromise the tax liabilities of taxpayers. In this regard, the REB should submit to the Commissioner all the necessary reports and data in due time for the latter to be able to submit the required reports to the Congressional Oversight Committee.
SEC. 8. REPEALING CLAUSE. – RR No. 6-2000 and all other issuances implementing Section 204 of the Tax Code of 1997 or parts thereof which are contrary to or inconsistent with the provisions of these Regulations are hereby amended, modified or repealed accordingly.
SEC. 9. EFFECTIVITY. – The provisions of these Regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
RENÉ G. BAÑEZ
Commissioner of Internal Revenue
SUBJECT : Further Implementing Sections 7(c), 204(A) and 290 of the Tax Code of 1997 on ompromise Settlement of Internal Revenue Tax Liabilities and Thereby Amending Revenue Regulations No. 6-2000.
TO : All Internal Revenue Officers and Others Concerned.
SECTION 1. SCOPE AND OBJECTIVES. – Pursuant to Section 244 of the Tax Code of 1997, these Regulations are hereby promulgated for the purpose of further implementing Sections 7(c), 204(A) and 290 of the same Code, thereby amending Revenue Regulations (RR) No. 6-2000 and giving an authority to the Commissioner of Internal Revenue to compromise the payment of internal revenue tax liabilities of certain taxpayers with outstanding receivable accounts and disputed assessments with the Bureau.
SEC. 2. CASES WHICH MAY BE COMPROMISED. - The following cases may, upon taxpayer’s compliance with the basis set forth under Section 3 of these Regulations, be the subject matter of compromise settlement, viz:
1. Delinquent accounts;
2. Cases under administrative protest pending in the Regional Offices, Revenue District Offices, Legal Service, Large Taxpayer Service LTS), Collection Service, Enforcement Service and other offices in the National Office;
3. Civil tax cases being disputed before the courts, e.g., MTC, RTC, CTA, CA, SC;
4. Collection cases filed in courts;
5. Criminal violations, other than those already filed in court or those involving criminal tax fraud; and
6. Cases covered by pre-assessment notices but taxpayer is not agreeable to the findings of the audit office as confirmed by the review office.
EXCEPTIONS:
1. Withholding tax cases;
2. Criminal tax fraud cases;
3. Criminal violations already filed in court;
4. Delinquent accounts with duly approved schedule of installment payments;
5. Cases where final reports of reinvestigation or reconsideration have been issued resulting to reduction in the original assessment and the taxpayer is agreeable to such decision. On the other hand, other protested cases shall be handled by the Regional Evaluation Board (REB) or the National Evaluation Board (NEB) on a case to case basis; and
6. Cases which become final and executory after final judgment of a court.
SEC. 3. BASIS FOR ACCEPTANCE OF COMPROMISE SETTLEMENT. - The Commissioner may compromise the payment of any internal revenue tax on the following grounds:
1. Doubtful validity of the assessment. - The offer to compromise a delinquent account or disputed assessment under these Regulations on the ground of reasonable doubt as to the validity of the assessment may be accepted when it is shown that:
(a) The delinquent account or disputed assessment is one resulting from a jeopardy assessment (For this purpose, “jeopardy assessment” shall refer to a tax assessment which was assessed without the benefit of complete or partial audit by an authorized revenue officer, who has reason to believe that the assessment and collection of a deficiency tax will be jeopardized by delay because of the taxpayer’s failure to comply with the audit and investigation requirements to present his books of accounts and/or pertinent records, or to substantiate all or any of the deductions, exemptions, or credits claimed in his return); or
(b) The assessment seems to be arbitrary in nature, appearing to be based on presumptions and there is reason to believe that it is lacking in legal and/or factual basis; or
(c) The taxpayer failed to file an administrative protest on account of the alleged failure to receive notice of assessment or preliminary assessment and there is reason to believe that the assessment is lacking in legal and/or factual basis; or
(d) The taxpayer failed to file a request for reinvestigation/reconsideration within 30 days from receipt of final assessment notice and there is reason to believe that the assessment is lacking in legal and/or factual basis; or
(e) The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse decision of the Commissioner, or his authorized representative, in some cases, within 30 days from receipt thereof and there is reason to believe that the assessment is lacking in legal and/or factual basis; or
(f) The assessments were issued on or after January 1, 1998, where the demand notice allegedly failed to comply with the formalities prescribed under Sec. 228 of the Tax Code of 1997; or
(g) Assessments made based on the “Best Evidence Obtainable Rule” and there is reason to believe that the same can be disputed by sufficient and competent evidence.
2. Financial incapacity. - The offer to compromise based on financial incapacity may be accepted upon showing that:
(a) The corporation ceased operation or is already dissolved; or
(b) The taxpayer is suffering from surplus or earnings deficit resulting to impairment in the original capital by at least 50%; or
(c) The taxpayer is suffering from a networth deficit computed by deducting total liabilities (net of deferred credits) from total assets (net of prepaid expenses, deferred charges, pre-operating expenses, as well as appraisal increases in fixed assets), taken from the latest audited financial statements; or
(d) The taxpayer is a compensation income earner with no other source of income and the family’s gross monthly compensation income does not exceed the levels of compensation income provided for under Sec. 4.1.1 of these Regulations, and it appears that the taxpayer possesses no other leviable/distrainable assets, other than his family home; or
(e) The taxpayer has been granted by the Securities and Exchange Commission (SEC) or by any competent tribunal a moratorium or suspension of payments to creditors, or otherwise declared bankrupt or insolvent.
The Commissioner shall not consider any offer for compromise settlement by reason of financial incapacity unless and until the taxpayer waives in writing his privilege of the secrecy of bank deposits under Republic Act No. 1405 or under other general or special laws, and such waiver shall constitute as the authority of the Commissioner to inquire into the bank deposits of the taxpayer.
For purposes of these Regulations, the term “assessment” includes the preliminary assessment notice (PAN) issued as of June 30, 2001 by the appropriate “Review Office”. In fine, it does not include the post reporting notice issued by the head of the investigating unit.
SEC. 4. PRESCRIBED MINIMUM PERCENTAGES OF COMPROMISE SETTLEMENT. – The compromise settlement of the internal revenue tax liabilities of taxpayers, reckoned on a per tax type assessment basis, shall be subject to the following minimum rates based on the basic assessed tax:
1. For cases of “financial incapacity” –
1.1. If taxpayer is an individual whose only source of income is from employment and whose monthly salary, if single, is P10,500 or less, or if married, whose salary together with his spouse is P21,000 per month, or less - 10%
1.2. If taxpayer is an individual without any source of income - 10%
1.3. Where the taxpayer is under any of the following conditions:
1.3.1. Zero networth computed in accordance with Sec. 3.2(c) hereof - 10%
1.3.2. Negative networth computed in accordance with Sec. 3.2(c) hereof - 10%
1.3.3. Dissolved corporations - 20%
1.3.4. Already non-operating companies for a period of:
(a) three (3) years or more as of the date of application for compromise settlement - 10%
(b) Less than 3 years - 20%
1.3.5. Surplus or earnings deficit resulting to impairment in the original capital by at least 50% - 20%
1.3.6. With moratorium/suspension of payments; declared insolvent or bankrupt - 10%
2. For cases of “doubtful validity” – A minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax.
The taxpayer may, nevertheless, request for a compromise rate lower than forty percent (40%): Provided, however, that he shall be required to submit his request in writing stating therein the reasons, legal and/or factual, why he should be entitled to such lower rate: Provided, further, that for applications of compromise settlement based on doubtful validity of the assessment involving an offer lower than the minimum forty percent (40%) compromise rate, the same shall be subject to the prior approval by the NEB.
The herein prescribed minimum percentages shall likewise apply in compromise settlement of assessments consisting solely of increments, i.e., surcharge, interest, etc., based on the total amount assessed.
SEC. 5. DOCUMENTARY REQUIREMENTS. –
1. If the application for compromise is premised under Sec. 4.1.1 hereof, the taxpayer-applicant shall submit with his application (a) a certification from his employer on his prevailing monthly salary, including allowances; and (b) a sworn statement that he has no other source of income other than from employment.
2. If the application is premised under Sec. 4.1.2 hereof, the taxpayerapplicant shall submit with his application a sworn statement that he derives no income from any source whatever.
3. If the application is premised under Sec. 4.1.3 hereof, a copy of the applicant's latest audited financial statements or audited Account Information Form filed with the BIR shall be submitted with the application. Nonetheless, for situation under Sec. 4.1.3.3 hereof, the “Notice of Dissolution” submitted to SEC or other similar or equivalent document should likewise be submitted. For situation under Sec. 4.1.3.6, a copy of the order granting the moratorium or suspension of payments or of bankruptcy or insolvency shall be submitted.
SEC. 6. APPROVAL OF OFFER OF COMPROMISE. - Except for offers of compromise where the approval is delegated to the REB pursuant to the succeeding paragraph, all compromise settlements within the jurisdiction of the National Office (NO) shall be approved by the NEB composed of the Commissioner and the four (4) Deputy Commissioners. All decisions of the NEB, whether favorable or otherwise, shall have the concurrence of the Commissioner.
Offers of compromise of assessments issued by the Regional Offices involving basic deficiency taxes of Five Hundred Thousand Pesos (P500,000) or less and for minor criminal violations discovered by the Regional and District Offices, shall be subject to the approval by the Regional Evaluation Board (REB), comprised of the following Officers of the Region:
Regional Director – Chairman
Members:
• Assistant Regional Director
• Chief, Legal Division
• Chief, Assessment Division
• Chief, Collection Division
• Revenue District Officer having jurisdiction over the taxpayer-applicant
Provided, however, that if the offer of compromise is less than the prescribed rates set forth in Sec. 4 hereof, the same shall always be subject to the approval of the NEB.
If the compromise offer meets the conditions for availment set forth in Sections 3, 4, and 5 of these Regulations, the case is considered provisionally closed on the day compromise amount is fully paid and the approval of the compromise offer becomes a matter of course on the part of the approving authority referred to in this Section.
SEC. 7. REPORT OF THE COMMISSIONER ON THE EXERCISE OF HIS AUTHORITY TO COMPROMISE TO THE CONGRESSIONAL OVERSIGHT COMMITTEE. – The Commissioner shall submit to the Congressional Oversight Committee through the Chairmen of the Committee on Ways and Means of both the Senate and House of Representatives, every six (6) months of each calendar year, a report on the exercise of his powers to compromise the tax liabilities of taxpayers. In this regard, the REB should submit to the Commissioner all the necessary reports and data in due time for the latter to be able to submit the required reports to the Congressional Oversight Committee.
SEC. 8. REPEALING CLAUSE. – RR No. 6-2000 and all other issuances implementing Section 204 of the Tax Code of 1997 or parts thereof which are contrary to or inconsistent with the provisions of these Regulations are hereby amended, modified or repealed accordingly.
SEC. 9. EFFECTIVITY. – The provisions of these Regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
RENÉ G. BAÑEZ
Commissioner of Internal Revenue
REVENUE REGULATIONS NO. 6 - 2001
SUBJECT : 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
TO : All Internal Revenue Officers and Others Concerned
SECTION 1. Scope. – Pursuant to Section 244 of the Tax Code of 1997, in relation to Sections 25(C), 25(D), 25(E), 57, 58, 59, 81, 114(A), 128(A)(3) and 200(B) of the same Code and Presidential Decree (P.D.) No. 1354, these Regulations are hereby promulgated, in order to, among others, revise the rates of withholding tax on certain income payments subject to creditable withholding tax, and provide for the time for the filing of the various tax returns, and the payment of the taxes due thereon.
SECTION 2. Income Payments Subject to Final Withholding Tax.
Section 2.57.1 of Revenue Regulations No. 2-98, as amended, is hereby further amended to read as follows:
“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:
(A) Income payments to a citizen or to a resident alien individual
xxx xxx xxx
(7) Gross income derived from contracts by subcontractors from service contractors engaged in 'petroleum operations' as defined under P.D. 87 (also known as the 'Oil Exploration and Development Act') in the Philippines – Eight percent (8%) of its gross income derived from such contracts in lieu of any and all taxes, national and local, as imposed under P.D. 1354
(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
(4) Gross income from all sources within the Philippines derived by non-resident cinematographic film owners, lessors or distributors - Twenty Five percent (25%)
For purposes of these regulations, the term ‘cinematographic film’ includes motion picture films, films, tapes, discs and other such similar or related products.
(5) Gross income derived from contracts by subcontractors from service contractors engaged in 'petroleum operations' as defined under P.D. 87 (also known as the 'Oil Exploration and Development Act') in the Philippines – Eight percent (8%) of its gross income derived from such contracts in lieu of any and all taxes, national and local, as imposed under P.D. 1354
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 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.
The term “multinational company” means a foreign firm or entity engaged in international trade with affiliates or subsidiaries or branch offices in the Asia Pacific Region and other foreign markets.
(E) Income Derived by Alien Individuals Employed by Offshore Banking Units. – A final withholding tax equivalent to fifteen percent (15%) shall be withheld by the withholding agent from the gross income of alien individuals occupying managerial and technical positions in offshore banking units established in the Philippines, as salaries, wages, annuities, compensation, remuneration, and other emoluments, such as honoraria and allowances received from such offshore banking units.
The same tax treatment is applicable to Filipinos employed and occupying the same positions as those aliens employed by offshore banking units, regardless of whether or not there is an alien executive occupying the same position.
(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 Phiippines. 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 is applicable to Filipinos employed and occupying the same positions as those aliens employed by foreign petroleum service contractors and subcontractors, regardless of whether or not there is an alien executive occupying the same position.
(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:
xxx xxx xxx
(6) Gross income derived from contracts by subcontractors from service contractors engaged in 'petroleum operations' as defined under P.D. 87 (also known as the 'Oil Exploration and Development Act') in the Philippines – Eight percent (8%) of its gross income derived from such contracts in lieu of any and all taxes, national and local, as imposed under P.D. 1354
(H) Income Payment to a Resident Foreign Corporation. – The following forms of income shall be subject to a final withholding tax in the hands of a resident foreign corporation, based on the gross amount thereof and at the rate of tax prescribed therefor:
xxx xxx xxx
(6) Gross income derived from contracts by subcontractors from service contractors engaged in 'petroleum operations' as defined under P.D. 87 (also known as the 'Oil Exploration and Development Act') in the Philippines – Eight percent (8%) of its gross income derived from such contracts in lieu of any and all taxes, national and local, as imposed under P.D. 1354
xxx xxx xxx”
SECTION 3. Revised Rates of Creditable Withholding Tax. - Section 2.57.2 of Revenue Regulations No. 2-98, as amended, is hereby further amended to read as follows:
“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 -
(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 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;
(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 – Ten percent (10%)
(C) Rentals - On the 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%)
(D) Cinematographic film rentals and other payments - On gross payments to resident individuals and corporate cinematographic film owners, lessors or distributors – Five percent (5%)
(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:
(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.
(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) 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 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.
(F) Income distribution to the beneficiaries - On income distributed to the beneficiaries of estates and trust as determined under Sec. 60 of the Code, except such income subject to final withholding tax and tax exempt income – Fifteen percent (15%)
(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%)
(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%)
(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:
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.
(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 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).
(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 - 6.0%
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 “deferredpayment 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 “deferredpayment 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.
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.
(K) Additional income payments to government personnel from importers, shipping and airline companies, or their agents - On gross additional payments by importers, shipping and airline companies, or their agents to government personnel for overtime services as authorized by law – Fifteen percent (15%)
For this purpose, the importers, shipping and airline companies or their agents, shall be the withholding agents of the Government.
(L) Certain income payments made by credit card companies - On one-half (1/2) of the gross amounts paid by any credit card company in the Philippines to any business entity, whether natural or juridical person, representing the sales of goods/services made by the aforesaid business entity to cardholders – One percent (1%)
(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%)
(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.
(N) Income payments by government. - Income payments, except any 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.”
SECTION 4. Time for Filing of Withholding Tax and Value-Added Tax Returns and the Payment of Taxes Due Thereon. - The time for filing of the various tax returns as indicated below and the payment of the taxes due thereon shall be revised in accordance with the appropriate amendments to the existing regulations, as presented below.
(1) Sections 2.58(A)(2) and 2.81 of Revenue Regulations No. 2-98, as amended, are hereby further amended to read as follows:
“Sec. 2.58 - RETURNS AND PAYMENT OF TAXES WITHHELD AT SOURCE.
(A) Monthly return and payment of taxes
xxx xxx xxx
(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.
(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 taxes due thereon via the EFPS shall be five (5) days later than the deadlines set above.”
“Sec. 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, including large taxpayers as determined by the Commissioner, 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/employer’s 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 15 of the succeeding year;
Provided, however, that with respect to taxpayers, whether large or non-large, who availed of the EFPS, the deadline for electronically filing the aforesaid withholding tax return and paying the tax due thereon via the EFPS shall be five (5) days later than the deadlines set above.
xxx xxx xxx”
(2) Section 4.110-1(A), (B) and (C) of Revenue Regulations No. 7-95, as amended, is further amended to read as follows:
“SEC. 4.110-1. Filing of return and payment of VAT. –
A) Filing of Return. – Every person liable to pay VAT shall file a quarterly return of the amount of his gross sales or receipts within twenty five (25) days following the close of the calendar quarter.
B) Payment of VAT. – All persons liable to VAT shall pay the tax monthly based on the taxable sales/receipts for the month, using the monthly VAT declaration form within ten (10) days after the end of each month; provided, however, that with respect to taxpayers who availed of the electronic filing and payment system (EFPS), the deadline for electronically filing the monthly VAT declaration and paying the tax due thereon via the EFPS shall be five (5) days later than the deadline set above. The declaration shall be accomplished only for the first two (2) months of each calendar quarter.
xxx xxx xxx
C) Short Period Return. – Any person who retires from business or whose registration has been cancelled shall file a quarterly return and pay the tax due thereon within twenty five (25) days from the cessation of business operations or from the date of cancellation of registration, as the case may be.
All persons first registered under Section 4.107-1(b)(3) and 4.107-1(c) of these Regulations shall be liable to VAT on the effective date of registration stated in their Certificates of Registration; i.e., the first day of the month following their registration. If the effective date of registration falls on the first or second month of a calendar quarter, the initial VAT monthly declaration shall be filed within ten (10) days after the end of the month, and the initial quarterly return shall be filed on or before the 25th day after the end of the calendar quarter. On the other hand, if the effective date of registration falls on the third month of the calendar quarter, the quarterly return shall be filed on or before the 25th day of the month following the end of the calendar quarter, and no VAT monthly declaration need be filed.”
(3) Section 4(3.3) of Revenue Regulations No. 1-98 is hereby amended to read as follows:
“Section 4. Filing of Returns and Payment of Taxes. –
xxx xxx xxx
3. When to File and Pay
3.3 Value-Added Tax (VAT)
Monthly VAT declarations of Large Taxpayers shall be filed, and taxes paid, not later than the 10th day following the end of each month; provided, however, that with respect to Large Taxpayers who availed of the electronic filing and payment system (EFPS), the deadline for electronically filing the monthly VAT declaration and paying the tax due thereon via the EFPS shall be five (5) days later than the deadline set above. The quarterly VAT returns of Large Taxpayers shall be filed, and the taxes paid, not later than the 25th day following the end of each quarter.”
SECTION 5. Time for Filing of Documentary Stamp Tax Returns and the Payment of Taxes Due Thereon. - The time for filing of the documentary stamp tax returns and the payment of the taxes due thereon shall be revised in accordance with the appropriate amendments to existing regulations, as presented below.
(1) Paragraph 19 of Revenue Memorandum Circular No. 1-98 is hereby amended to read as follows:
“(19) The documentary stamp tax return shall be filed within five (5) days after the close of the month when the taxable document was made, signed, accepted, or transferred, and the tax thereon shall be paid at the same time the aforesaid return is filed.”
(2) For large taxpayers, Section 4(3.6) of Revenue Regulations No. 1-98 is hereby amended to read as follows:
“Section 4. Filing of Returns and Payment of Taxes. –
xxx xxx xxx
3. When to File and Pay
3.6 Documentary Stamp Taxes
Large taxpayers shall pay their documentary stamp taxes within five (5) days after the close of the month when the taxable document was made, signed, issued, accepted or transferred by the filing of the documentary stamp tax returns, through purchase or actual affixture or by imprinting the documentary stamps through a documentary stamp tax metering machine.”
SECTION 6. Time for Filing of Percentage Tax Returns and the Payment of Taxes Due Thereon. – The time for filing of the percentage tax returns and the payment of the taxes due thereon shall be revised in accordance with the rules and appropriate amendments to existing regulations, as presented below.
a. For non-large taxpayers, percentage tax returns shall be filed within ten (10) days after the end of each month and the tax thereon shall be paid at the same time the aforesaid return is filed, provided, however, that with respect to non-large taxpayers who availed of the electronic filing and payment system (EFPS), the deadline for electronically filing the percentage tax return and paying the tax due thereon via the EFPS shall be five (5) days later than the deadline set above, provided, further, that for percentage tax returns required to be filed under Sections 120, 126 and 127 of the Tax Code of 1997, they shall be filed within the periods stated in those sections.
b. For large taxpayers, Section 4(3.4) of Revenue Regulations No. 1-98 is hereby amended to read as follows:
“Section 4. Filing of Returns and Payment of Taxes. –
xxx xxx xxx
3. When to File and Pay
3.4 Other Percentage Taxes
Large taxpayers who are presently preparing separate percentage tax returns shall file a consolidated return, and pay the aggregate taxes due, within ten (10) days after the end of each month, provided, however, that with respect to Large Taxpayers who availed of the EFPS, the deadline for electronically filing the percentage tax returns and paying the taxes due thereon shall be five (5) days later than the deadline set above, provided, further, that for percentage tax returns required to be filed under Sections 120, 126 and 127 of the Tax Code of 1997, they shall be filed within the periods stated in those sections. The Head Office shall prepare a schedule (Annex C) of all percentage tax returns of the branches/units with the following information:
a. Period covered;
b. Head office and branch/unit names and addresses; and
c. Kind and amount of percentage tax payable.”
SECTION 7. Repealing Clause. - The provisions of any revenue regulations, revenue memorandum order, revenue memorandum circular or any other issuance of the Bureau of Internal Revenue inconsistent with these Regulations are hereby repealed, amended, or modified accordingly.
SECTION 8. Effectivity Clause. – These Regulations shall take effect with respect to income payments that are paid or payable in September 2001 and which are required to be remitted to the Bureau of Internal Revenue within the month of October 2001.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
RENÉ G. BAÑEZ
Commissioner of Internal Revenue
Annex “A”
Changes in the Creditable Withholding Tax Rates
| Income Subject to CWT | From | To |
| A. Professional fees, talent fees, etc. for services rendered by individuals | ||
| 1. Professional entertainers, such as, but not limited to, actors and actresses, singers and emcees | 10%
| 20%
|
| 2. Professional athletes, including basketball players, pelotaris and jockeys | 10% | 20% |
| 3. All directors involved in movies, stage, radio, television and musical productions | 10%
| 20%
|
| 4. Other recipients of talent fees | 10% | 20% |
| 5. 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 | 10%
| 20%
|
| B. Professional fees, talent fees, etc. for services of taxable juridical persons | 5% | 10% |
| C. Income payments to certain contractors: 1. General engineering contractors 2. General building contractors 3. Specialty contractors 4. Other contractors | 1%
| 2%
|
| D. Income payments to customs, insurance, real estate and commercial brokers and agents of professional entertainers | 5%
| 10%
|
| E. Gross selling price or fair market value paid to the seller/owner for the sale, exchange or transfer of real property classified as ordinary asset, where the seller is not habitually engaged in the real estate business | 7.5%
| 6%
|
| F. Certain income payments made by credit card companies | 1/2% on the gross amounts paid | 1% on one-half of the gross amounts paid |
Annex “B”
Taxes Affected By The Acceleration of Filing of Returns and Payment of Taxes Due Thereon
| Tax | From | To (Manual) | To (EFPS) |
| 1. Creditable and final withholding tax (excluding final withholding tax on interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements): | |||
| a. Non-Large Taxpayer | Within 10 days after the end of each month | Within 10 days after the end of each month | Within 15 days after the end of each month |
| b. Large Taxpayer | Within 25 days after the end of each month | Within 10 days after the end of each month | Within 15 days after the end of each month |
| 2. Final withholding tax on interest from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements: | |||
| a. Non-Large | Within 25 days from the close of each calendar quarter | Within 10 days after the end of each month | Within 15 days after the end of each month |
| b. Large Taxpayer
| Within 25 days from the close of each calendar quarter | Within 10 days after | Within 15 days after |
| 3. Creditable and final withholding tax withheld for December: | |||
| a. Non-Large Taxpayer | On or before January 25 of the following year | On or before January 15 of the following year | On or before January 20 of the following year |
| b. Large Taxpayer | On or before January 25 of the following year | On or before January 15 of the following year | On or before January 20 of the following year |
| 4. Withholding tax on compensation (excluding the month of December): | |||
| a. Non-Large | On or before the 10th day of the month following the month in which withholding was made | On or before the 10th day of the month following the month in which withholding was made | On or before the 15th day of the month following the month in which withholding was made |
| b. Large Taxpayer
| On or before the 25th
| On or before the 10th day of the month following the month in which withholding was made | On or before the 15th day of the month following the month in which withholding was made |
| 5. Withholding tax on compensation for the month of December: | |||
| a. Non-Large Taxpayer | Not later than January 25 of the following year | Not later than January 15 of the following year | Not later than January 20 of the following year |
| b. Large Taxpayer
| On or before the 25th day of the following month | Not later than January 15 of the following year | Not later than January 20 of the following year |
| 6. Value-added tax – monthly VAT declaration: | |||
| a. Non-Large Taxpayer | Within 25 days after the end of each month | Within 10 days after the end of each month | Within 15 days after the end of each month |
| b. Large Taxpayer | Not later than the 25th day following the end of each month | Not later than the 10th day following the end of each month | Not later than the 15th day following the end of each month |
| 7. Documentary stamp tax: | |||
| a. Non-Large
| Within 10 days after the close of the month when the taxable document was made, signed, accepted, or transferred | Within 5 days after the close of the month when the taxable document was made, signed, accepted, or transferred | |
| b. Large Taxpayer | Within 10 days after the close of the month when the taxable document was made, signed, accepted, or transferred | Within 5 days after the close of the month when the taxable document was made, signed, accepted, or transferred | |
| 8. Percentage tax | |||
| a. Non-Large
| Within 25 days after
| Within 10 days after the end of each month, except those under Sections 120, 126 and 127 of the Tax Code of 1997 | Within 15 days after the end of each month, except those under Sections 120, 126 and 127 of the Tax Code of 1997 |
| b. Large Taxpayer
| Within 25 days after
| Within 10 days after the end of each month, except those under Sections 120, 126 and 127 of the Tax Code of 1997 | Within 15 days after the end of each month, except those under Sections 120, 126 and 127 of the Tax Code of 1997 |
Notes:
1. Section 120 – Overseas communication tax
2. Section 126 – Tax on winnings
3. Section 127 - Stock transaction tax and IPO tax
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