NOTE: Superseded by RR 8-2004
SUBJECT : Revenue Regulations Implementing Sections 7(c), 204(A) and 290 of the National Internal Revenue Code of 1997 on Compromise Settlement of Internal Revenue Tax Liabilities Superseding Revenue Regulations Nos. 6-2000 and 7-2001.
TO : All Internal Revenue Officers and Others Concerned.
SECTION 1. SCOPE AND OBJECTIVES. – Pursuant to Section 244 of the National Internal Revenue Code of 1997 (Code), these Regulations are hereby promulgated for the purpose of implementing Sections 7(c), 204(A) and 290 of the same Code, superseding Revenue Regulations (RR) Nos. 6-2000 and 7-2001 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 of Internal Revenue and the Courts.
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 after issuance of the Final Assessment Notice to the taxpayer which are still 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;
4. Collection cases filed in courts;
5. Criminal violations, other than those already filed in court or those involving criminal tax fraud.
EXCEPTIONS:
1. Withholding tax cases, unless the applicant-taxpayer invokes provisions of law that cast doubt on the taxpayer’s obligation to withhold;
2. Criminal tax fraud cases confirmed as such by the Commissioner of Internal Revenue or his duly authorized representative;
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 by signing the required agreement form for the purpose. 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;
6. Cases which become final and executory after final judgment of a court, where compromise is requested on the ground of doubtful validity of the assessment; and
7. Estate tax cases where compromise is requested on the ground of financial incapacity of the taxpayer.
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 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 National Internal Revenue 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; or
(h) The assessment was issued within the prescriptive period for assessment as extended by the taxpayer’s execution of Waiver of the Statute of Limitations the validity or authenticity of which is being questioned or at issue and there is strong reason to believe and evidence to prove that it is not authentic .
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.
Provided, that tax liabilities corresponding to the Subscription Receivable or Assets distributed/distributable to the stockholders representing return of capital at the time of cessation of operation or dissolution of business shall not be considered for compromise; or
(b) The taxpayer, as reflected in its latest Balance Sheet supposed to be filed with the Bureau of Internal Revenue, is suffering from surplus or earnings deficit resulting to impairment in the original capital by at least 50%, provided that amounts payable or due to stockholders other than business-related transactions which are properly includible in the regular “accounts payable” are by fiction of law considered as part of capital and not liability, and provided further that the taxpayer has no sufficient liquid asset to satisfy the tax liability; or
(c) The taxpayer is suffering from a networth deficit (total liabilities exceed total assets) computed by deducting total liabilities (net of deferred credits and amounts payable to stockholders/owners reflected as liabilities, except businessrelated transactions) 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, provided that in the case of an individual taxpayer, he has no other leviable properties under the law other than his family home; 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 or distrainable assets, other than his family home; or (e) The taxpayer has been declared by any competent tribunal/authority/body/government agency as bankrupt or insolvent.
The Commissioner shall not consider any offer for compromise settlement on the ground of financial incapacity of a taxpayer with Tax Credit Certificate(TCC), issued under the National Internal Revenue Code of 1997 or Executive Order No. 226, on hand or in transit, or with pending claim for tax refund or tax credit with the Bureau of Internal Revenue, Department of Finance One-Stop-Shop Tax Credit and Duty Drawback Center (Tax Revenue Group or Investment Incentive Group) and/or the courts, or with existing finalized agreement or prospect of future agreement with any party that resulted or could result to an increase in the equity of the taxpayer at the time of the offer for compromise or at a definite future time. Moreover, no offer of compromise shall be entertained 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.
Presence of circumstances that would place the taxpayer-applicant’s inability to pay in serious doubt can be a ground to deny the application for compromise based on financial incapacity of the taxpayer to pay the tax.
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, and it appears that the taxpayer possesses no other leviable/distrainable assets, other than his family home - 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% - 40%
1.3.6. Declared insolvent or bankrupt, - 20% unless taxpayer falls squarely under any situation as discussed above, thus resulting to the application of the appropriate rate.
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 taxpayer-applicant 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 declaring bankruptcy or insolvency shall be submitted.
In all cases of offer based on financial incapacity, Waiver of the Secrecy of Bank Deposit under R.A. 1405 and Sworn Statement saying that he has no Tax Credit Certificate(TCC) on hand or in transit or claim for tax refund or TCC under the National Internal Revenue Code of 1997 and Executive Order No. 226 pending in any office shall be submitted.
Moreover, additional requirements prescribed under the existing Revenue Memorandum Order (RMO) shall still be complied with unless amended and/or expanded by an amendatory RMO. 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 a majority of all the members of the NEB composed of the Commissioner and the four (4) Deputy Commissioners. All decisions of the NEB, granting the request of the taxpayer or favorable to the taxpayer, 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. The compromise offer may be paid before or after the approval of the offer of compromise by the Board (NEB or REB), at the option of the taxpayer.
In case of disapproval of compromise offer previously paid, the same shall be dealt with in accordance with the prevailing procedures embodied in the Revenue Memorandum Order issued for this purpose, including amendments thereto.
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. – These Regulations supersede Revenue Regulations No. 6-2000, and Revenue Regulations No. 7-2001. All other issuances 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 after fifteen (15) days following publication in any newspaper of general circulation except for cases the compromise of which have been confirmed by the Secretary of Finance in which case these Regulations shall take effect immediately upon publication.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
REVENUE REGULATIONS NO. 26-2002
NOTE: Amended in RR 5-2004, and RR 10-2007
SUBJECT : Amending Further Revenue Regulations (RR) No. 9-2001, as Amended by Revenue Regulations No. 2-2002 and Revenue Regulations No. 9-2002, Providing for the Staggered Filing of Returns of Taxpayers Enrolled in the Electronic Filing and Payment System (EFPS) Based on Industry Classification.
TO : All Internal Revenue Officers and Othe rs Concerned.
SECTION 1. SCOPE. – Pursuant to the provisions of Section 244 of the National Internal Revenue Code of 1997 (Code) in relation to Sections 57, 58, 81, 114(A) and 128(A)(3) of the same Code, and to Section 27 of Republic Act No. 8792, otherwise known as the “Electronic Commerce Act” , these Regulations are hereby promulgated to amend Section 7 of Revenue Regulations (RR) No. 9-2001, as amended by RR 2-2002 and RR 9-2002 providing for the staggered filing of returns of taxpayers enrolled in the EFPS based on industry classification.
SECTION 2. STAGGERED FILING OF RETURNS. - Section 7 of RR 9-2001 as amended by RR 2-2002 and RR 9-2002, is hereby amended to read as follows:
“Section 7. TIME OF FILING OF RETURN.-For purposes of filing returns under the EFPS, the taxpayers classified under the following business industries shall be required to file the Monthly Withholding Tax Returns, except withholding of Value-Added Tax; Monthly VAT Declarations; and Monthly Percentage Tax Returns, on or before the dates prescribed and presented herein-below:
| BUSINESS INDUSTRY | MONTHLY WITHHOLDING TAX RETURNS EXCEPT WITHHOLDING OF VALUE ADDED TAX | MONTHLY VAT DECLARATIONS AND MONTHLY PERCENTAGE TAX RETURNS |
| Group A Banking Institutions Insurance and Pension Funding Non-Bank Financial Intermediation Activities Auxiliary to Financial Intermediation Construction Water transport Hotels and Restaurants Land Transport | · Fifteen (15) days following end of the month. | · Twenty five (25) days following end of the month. |
| Group B Manufacture & Repair of Furniture Manufacture of Basic Metals Manufacture of Chemicals and Chemical Products Manufacture of Coke, Refined Petroleum & Fuel Products Manufacture of Electrical Machinery & Apparatus N.E.C. Manufacture of Fabricated Metal Products Manufacture of Food, Products & Beverages Manufacture of Machinery & Equipment NEC Manufacture of Medical, Precision, Optical Instruments Manufacture of Motor Vehicles, Trailers & Semi-Trailers Manufacture of Office, Accounting & Computing Machinery Manufacture of Other Non-Metallic Mineral Products Manufacture of Other Transport Equipment Manufacture of Other Wearing Apparel Manufacture of Paper and Paper Products Manufacture of Radio, TV & Communication Equipment/Apparatus Manufacture of Rubber & Plastic Products Manufacture of Textiles Manufacture of Tobacco Products Manufacture of Wood & Wood Products Manufacturing N.E.C. Metallic Ore Mining Non-Metallic Mining & Quarrying | · Fourteen (14) days following end of the month. | · Twenty four (24) days following end of the month. |
| Group C Retail Sale Wholesale Trade and Commission Trade Sale, Maintenance, Repair of Motor Vehicle, Sale of Automotive Fuel Collection, Purification and Distribution of Water Computer and Related Activities Real Estate Activities | · Thirteen (13) days following end of the month. | · Twenty three (23) days following end of the month. |
| Group D Air Transport Electricity, Gas, Steam, & Hot Water Supply Postal & Telecommunications Publishing, Printing & Reproduction of Recorded Media Recreational, Cultural & Sporting Activities Recycling Renting of Goods & Equipment Supporting & Aux Transport Activities | · Twelve (12) days following end of the month. | · Twenty two (22) days following end of the month. |
| Group E | · Eleven (11) days following end of the month. | · Twenty one (21) days following end of the month. |
It is reiterated and clarified, however, that the return for withholding of Value-added Tax shall be filed on or before the tenth (10th) day of the following month, which is likewise the due date for the payment of this type of withholding tax.
To erase any doubt and to ensure receipt by the BIR before midnight of the due dates prescribed above for the filing of a return, the electronic return shall be filed on or before 10:00 p.m. of the above prescribed due dates.
For the electronic payment of tax for the returns required to be filed earlier under the staggered filing system, the taxpayer upon e-filing shall, still using the facilities of Electronic Filing and Payment System (EFPS), likewise give instruction to the Authorized Agent Bank to debit its account for the amount of tax on or before the due date for payment thereof as prescribed under the prevailing/applicable laws/regulations.
For purposes of these regulations, the industry of the taxpayer is its primary line of business or the primary purpose of its existence as stated in the Articles of Incorporation, for corporate taxpayers.
SEC. 3. REPEALING CLAUSE. - The provisions of internal revenue issuances inconsistent herewith are hereby repealed, modified or amended accordingly.
SEC. 4. EFFECTIVITY CLAUSE. - These Regulations shall take effect after fifteen (15) days following publication in a newspaper of general circulation.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval :
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
REVENUE REGULATIONS NO. 21-2002
NOTE: Amended in RR 7-2007
SUBJECT : Implementing the Provisions of Section 6(H) of the Tax Code of 1997, Authorizing the Commissioner of Internal Revenue to Prescribe Additional Procedural and/or Documentary Requirements in Connection with the Preparation and Submission of Financial Statements Accompanying the Tax Returns.
TO : All Internal Revenue Officers and Others Concerned.
Pursuant to Section 244 of the Tax Code of 1997, in relation to Section 6(H) of the Same Code, these Regulations are hereby promulgated to prescribe the manner of compliance with any documentary and/or procedural requirements in connection with the preparation and submission of financial statements accompanying the tax returns.
SECTION 1. CONTENTS AND FORMAT OF FINANCIAL STATEMENTS TO BE ATTACHED TO THE ANNUAL INCOME TAX RETURN OR INFORMATION RETURN. – The Financial Statements with accompanying Auditor’s Certificate attached to the Annual Income Tax Return, or Annual Information Return for the Tax exempt persons, as the case may be, to be filed with the Bureau of Internal Revenue, thru its collection agents including Accredited Agent Banks, shall present/state the accounts therein in a very descriptive fashion such that the nature of the specific transactions entered in the accounts are known to the reader.
The account titles to be used must be specific and not control accounts which must completely be enumerated in the financial statements and these accounts must conform to the rules and requirements of regulatory agencies that have supervision over them such as the Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas (BSP), Insurance Commission (IC), etc.
The accounts prescribed in the reports required by the SEC, BSP, IC and other regulatory bodies shall likewise be the accounts to be used by individual taxpayers who are engaged in business or in the exercise of profession, except for accounts that are peculiar to corporations and other juridical persons.
The Profit and Loss Statement/Income Statement shall show separately by segment (there should be proper labeling), with breakdown of the specific accounts, the following:
1. Cost of Goods Sold (for seller of goods)/Cost of Services (for seller of services);
II. Selling and Administrative Expenses;
III. Financial Expenses, if any;
IV. Special Deductions (e.g., Net Operating Loss Carry-Over (NOLCO)), if any;
V. Deductions under Special Laws, if any.
(Note: Deductions III, IV and V should be fully explained in the Notes to the Financial Statements)
SEC. 2. COVERAGE. – The Financial Statements shall be composed of the following :
a) Balance Sheet;
b) Income Statement/Profit and Loss Statement;
c) Statement of Retained Earnings;
d) Statement of Changes in Financial Position; and
e) Schedules attached to the afore-cited statements.
The submission of the above statements is mandatory even if there is no income, retained earnings, etc.
All the financial statements filed with accompanying auditor’s certificate as cited above shall show the comparative figures of the current year and the previous year. Thus, Financial Statements with no required Auditors Certificate as enunciated in Sec. 232 of the Tax Code of 1997 need not be presented in comparative format.
SEC. 3. RESPONSIBILITY OF EXTERNAL AUDITORS. – Unless a longer period of retention is required under the Tax Code or other relevant laws (e.g. the Accountancy Law, etc.), the independent CPA who audited the records and certified the financial statements of the taxpayer, equally as the taxpayer, has the responsibility to maintain and preserve copies of the audited and certified financial statements for a period of three (3) years from the due date of filing the annual income tax return or the actual date of filing thereof, whichever comes later. This is in addition to all other responsibilities of the independent CPA under other pertinent provisions of the Tax Code and implementing regulations, including generally accepted auditing standards, and applicable jurisprudence.
SEC. 4. PENAL PROVISIONS – Any independent Certified Public Accountant who, in his capacity as external auditor, willfully falsifies any report or statement bearing on any examination or audit, or renders a report, including exhibits, statements, schedules or other forms of accountancy work which has not been verified by him personally or under his supervision or by a member of his firm or by a member of his staff in accordance with sound auditing practices, or, certifies financial statements of a business enterprise containing an essential misstatement of facts or omission in respect of the transactions, taxable income, deduction and/or exemption of his client, shall be dealt with in accordance with Section 257 of the Tax Code.
SEC. 5. APPLICABILITY OF THESE REGULATIONS.- These Regulations shall apply to all Income Tax and Information Returns to be filed hereafter.
SEC. 6. REPEALING CLAUSE. – All existing rules, regulations and other issuances or portions thereof inconsistent with the provisions of these Regulations are hereby modified, repealed or revoked accordingly.
SEC. 7. EFFECTIVITY CLAUSE. – These Regulations shall take effect after fifteen (15) days following complete publication in a newspaper of general circulation in the Philippines.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
RECOMMENDING APPROVAL:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
SUBJECT : Implementing the Provisions of Section 6(H) of the Tax Code of 1997, Authorizing the Commissioner of Internal Revenue to Prescribe Additional Procedural and/or Documentary Requirements in Connection with the Preparation and Submission of Financial Statements Accompanying the Tax Returns.
TO : All Internal Revenue Officers and Others Concerned.
Pursuant to Section 244 of the Tax Code of 1997, in relation to Section 6(H) of the Same Code, these Regulations are hereby promulgated to prescribe the manner of compliance with any documentary and/or procedural requirements in connection with the preparation and submission of financial statements accompanying the tax returns.
SECTION 1. CONTENTS AND FORMAT OF FINANCIAL STATEMENTS TO BE ATTACHED TO THE ANNUAL INCOME TAX RETURN OR INFORMATION RETURN. – The Financial Statements with accompanying Auditor’s Certificate attached to the Annual Income Tax Return, or Annual Information Return for the Tax exempt persons, as the case may be, to be filed with the Bureau of Internal Revenue, thru its collection agents including Accredited Agent Banks, shall present/state the accounts therein in a very descriptive fashion such that the nature of the specific transactions entered in the accounts are known to the reader.
The account titles to be used must be specific and not control accounts which must completely be enumerated in the financial statements and these accounts must conform to the rules and requirements of regulatory agencies that have supervision over them such as the Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas (BSP), Insurance Commission (IC), etc.
The accounts prescribed in the reports required by the SEC, BSP, IC and other regulatory bodies shall likewise be the accounts to be used by individual taxpayers who are engaged in business or in the exercise of profession, except for accounts that are peculiar to corporations and other juridical persons.
The Profit and Loss Statement/Income Statement shall show separately by segment (there should be proper labeling), with breakdown of the specific accounts, the following:
1. Cost of Goods Sold (for seller of goods)/Cost of Services (for seller of services);
II. Selling and Administrative Expenses;
III. Financial Expenses, if any;
IV. Special Deductions (e.g., Net Operating Loss Carry-Over (NOLCO)), if any;
V. Deductions under Special Laws, if any.
(Note: Deductions III, IV and V should be fully explained in the Notes to the Financial Statements)
SEC. 2. COVERAGE. – The Financial Statements shall be composed of the following :
a) Balance Sheet;
b) Income Statement/Profit and Loss Statement;
c) Statement of Retained Earnings;
d) Statement of Changes in Financial Position; and
e) Schedules attached to the afore-cited statements.
The submission of the above statements is mandatory even if there is no income, retained earnings, etc.
All the financial statements filed with accompanying auditor’s certificate as cited above shall show the comparative figures of the current year and the previous year. Thus, Financial Statements with no required Auditors Certificate as enunciated in Sec. 232 of the Tax Code of 1997 need not be presented in comparative format.
SEC. 3. RESPONSIBILITY OF EXTERNAL AUDITORS. – Unless a longer period of retention is required under the Tax Code or other relevant laws (e.g. the Accountancy Law, etc.), the independent CPA who audited the records and certified the financial statements of the taxpayer, equally as the taxpayer, has the responsibility to maintain and preserve copies of the audited and certified financial statements for a period of three (3) years from the due date of filing the annual income tax return or the actual date of filing thereof, whichever comes later. This is in addition to all other responsibilities of the independent CPA under other pertinent provisions of the Tax Code and implementing regulations, including generally accepted auditing standards, and applicable jurisprudence.
SEC. 4. PENAL PROVISIONS – Any independent Certified Public Accountant who, in his capacity as external auditor, willfully falsifies any report or statement bearing on any examination or audit, or renders a report, including exhibits, statements, schedules or other forms of accountancy work which has not been verified by him personally or under his supervision or by a member of his firm or by a member of his staff in accordance with sound auditing practices, or, certifies financial statements of a business enterprise containing an essential misstatement of facts or omission in respect of the transactions, taxable income, deduction and/or exemption of his client, shall be dealt with in accordance with Section 257 of the Tax Code.
SEC. 5. APPLICABILITY OF THESE REGULATIONS.- These Regulations shall apply to all Income Tax and Information Returns to be filed hereafter.
SEC. 6. REPEALING CLAUSE. – All existing rules, regulations and other issuances or portions thereof inconsistent with the provisions of these Regulations are hereby modified, repealed or revoked accordingly.
SEC. 7. EFFECTIVITY CLAUSE. – These Regulations shall take effect after fifteen (15) days following complete publication in a newspaper of general circulation in the Philippines.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
RECOMMENDING APPROVAL:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
REVENUE REGULATIONS NOS. 19-2002
SUBJECT: Amending Revenue Regulations No. 3-2002 and Further Amending Section 2.83 of Revenue Regulations No. 2-98 as Amended, Relative to Substituted Filing of Income Tax Return of Employees Receiving Purely Compensation Income from Only One Employer for One Taxable Year Whose Tax Due is Equal to Tax Withheld and Individual-Payees Whose Compensation Income is Subject to Final Withholding Tax.
TO: All Internal Revenue Officers, Employees and Others Concerned.
SECTION 1. Scope. - Pursuant to the provisions of Section 244 in relation to Section 51(A)(2)(b) of the National Internal Revenue Code of 1997, these Regulations are hereby promulgated to further amend pertinent provisions of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 3-2002.
SECTION 2. Amendment. - Section 2.83.1 of Revenue Regulations No. 2-98, as amended by Section 2 of Revenue Regulations No. 3-2002, is hereby further amended to read as follows:
“Section 2.83.1. Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316). In general, every employer or other person who is required to deduct and withhold the tax on compensation including fringe benefits given to rank and file employees, shall furnish every employee from whose compensation taxes have been withheld the Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316), on or before January 31 of the succeeding calendar year, or if the employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made. Failure to furnish the same shall be a ground for the mandatory audit of payor’s income tax liabilities (including withholding tax) upon verified complaint of the payee.
xxx xxx xxx
The Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) shall contain a certification to the effect that the employer’s filing of BIR Form No. 1604-CF shall be considered as a substituted filing of the employee’s income tax return to the extent that the amount of compensation and tax withheld appearing in BIR Form No. 1604-CF as filed with BIR is consistent with the corresponding amounts indicated in BIR Form No. 2316. It shall be signed by both the employee and employer attesting to the fact that the information stated therein has been verified and is true and correct to the best of their knowledge. However, the withholding agents/employers are required to retain copies of the duly signed BIR Form No. 2316 for a period of three (3) years as required under the National Internal Revenue Code.
The employee who is qualified for substituted filing of income tax return under these regulations, shall no longer be required to file income tax return (BIR Form No. 1700) since BIR Form No. 1604-CF shall be considered a substituted return filed by the employer. BIR Form No. 2316, duly certified by both employee and employer, shall serve the same purpose as if a BIR Form No. 1700 had been filed, such as proof of financial capacity for purposes of loan, credit card, or other applications, or for the purpose of availing tax credit in the employee’s home country and for other purposes with various government agencies. This may also be used for purposes of securing travel tax exemption, when necessary.
However, information referring to the certification, appearing at the bottom of BIR Form No. 2316, shall not be signed by both the employer and the employee if the latter is not qualified for substituted filing. In which case, BIR Form No. 2316 furnished by the employer to the employee shall be attached to the employee’s Income Tax Return (BIR Form No. 1700) to be filed on or before April 15 of the following year.
For the implementation of these Regulations, BIR Form No. 2316 herein referred to shall be BIR Form No. 2316 version October 2002 or any later version. Thus, the old version cannot be used for this purpose although may be used for those taxpayers still required to file BIR Form No. 1700.”
Section 3. Repealing Clause. The provisions of existing regulations and issuances inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.
Section 4. Effectivity Clause. These Regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation in the Philippines.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
TO: All Internal Revenue Officers, Employees and Others Concerned.
SECTION 1. Scope. - Pursuant to the provisions of Section 244 in relation to Section 51(A)(2)(b) of the National Internal Revenue Code of 1997, these Regulations are hereby promulgated to further amend pertinent provisions of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 3-2002.
SECTION 2. Amendment. - Section 2.83.1 of Revenue Regulations No. 2-98, as amended by Section 2 of Revenue Regulations No. 3-2002, is hereby further amended to read as follows:
“Section 2.83.1. Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316). In general, every employer or other person who is required to deduct and withhold the tax on compensation including fringe benefits given to rank and file employees, shall furnish every employee from whose compensation taxes have been withheld the Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316), on or before January 31 of the succeeding calendar year, or if the employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made. Failure to furnish the same shall be a ground for the mandatory audit of payor’s income tax liabilities (including withholding tax) upon verified complaint of the payee.
xxx xxx xxx
The Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) shall contain a certification to the effect that the employer’s filing of BIR Form No. 1604-CF shall be considered as a substituted filing of the employee’s income tax return to the extent that the amount of compensation and tax withheld appearing in BIR Form No. 1604-CF as filed with BIR is consistent with the corresponding amounts indicated in BIR Form No. 2316. It shall be signed by both the employee and employer attesting to the fact that the information stated therein has been verified and is true and correct to the best of their knowledge. However, the withholding agents/employers are required to retain copies of the duly signed BIR Form No. 2316 for a period of three (3) years as required under the National Internal Revenue Code.
The employee who is qualified for substituted filing of income tax return under these regulations, shall no longer be required to file income tax return (BIR Form No. 1700) since BIR Form No. 1604-CF shall be considered a substituted return filed by the employer. BIR Form No. 2316, duly certified by both employee and employer, shall serve the same purpose as if a BIR Form No. 1700 had been filed, such as proof of financial capacity for purposes of loan, credit card, or other applications, or for the purpose of availing tax credit in the employee’s home country and for other purposes with various government agencies. This may also be used for purposes of securing travel tax exemption, when necessary.
However, information referring to the certification, appearing at the bottom of BIR Form No. 2316, shall not be signed by both the employer and the employee if the latter is not qualified for substituted filing. In which case, BIR Form No. 2316 furnished by the employer to the employee shall be attached to the employee’s Income Tax Return (BIR Form No. 1700) to be filed on or before April 15 of the following year.
For the implementation of these Regulations, BIR Form No. 2316 herein referred to shall be BIR Form No. 2316 version October 2002 or any later version. Thus, the old version cannot be used for this purpose although may be used for those taxpayers still required to file BIR Form No. 1700.”
Section 3. Repealing Clause. The provisions of existing regulations and issuances inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.
Section 4. Effectivity Clause. These Regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation in the Philippines.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
REVENUE MEMORANDUM ORDER NO. 29-2002
SUBJECT: Revised Procedures in the Processing and Approval of Applications for Permit to Adopt Computerized Accounting System (CAS) or Components Thereof Amending RMO 21-2000
TO : All Internal Revenue Officials and Employees and Others Concerned
I. OBJECTIVE
This Order is issued to further prescribe policies, guidelines and procedures as well as define duties and responsibilities relative to the processing and approval of applications for Permit to Adopt Computerized Accounting System or Components Thereof.
II. DEFINITION OF TERMS
For purposes of this Order, the following definitions are provided:
A. Affiliated Corporations. This means that two or more organizations are allied with or closely connected with one another, or with a central body but each organization continues to exist. It does not bear the construction that one of the “affiliated” organizations is in all particulars identical with or covered by the parent or main organization with which it is affiliated.
B. Branch. A fixed establishment in a locality which conducts operation of the business as an extension of the principal office with at least one tax type.
C. Computerized Accounting System [CAS]. The integration of different component systems to produce computerized books of accounts and computer-generated accounting records and documents. For purposes of this issuance, it shall also refer to applications for the use of any or all of the CAS components.
D. Component of CAS. Any system application adopted to generate accounting records, reports and/or documents.
E. Computerized Books of Accounts. These refer to books of accounts such as General Ledger, General Journal, Sales Book, Purchase Book, Disbursement Book, etc., which are systems generated.
F. Computer Generated Accounting Records. This refers to official receipts, sales and cash invoices, cash vouchers, journal vouchers, billing statements, sales tickets and other underlying accounting records.
G. Computer Generated Receipts and Invoices. These are part of accounting records which are generated by the system with a capacity to produce sequential range of numbers.
H. Computer Generated Subsidiary Accounting Records. These refer to Cash Receipt Book, Cash Disbursement Book, Accounts Payable Book, Accounts Receivable Book, Debit/Credit Memo Book and other underlying subsidiary accounting records being generated under a computerized system.
I. CRM/POS Machines Linked to CAS. This refers to Cash Register Machines (CRM)/Point of Sale (POS) Machines that are electronically connected to a CAS or to a central server via network.
J. Database. A collection of information organized in such a way that a computer program can quickly select desired pieces of data.
K. Development Software. Programs used to compile, interpret and assemble many sort of programming languages.
L. Disaster Recovery Procedure (DRP), Backup and Recovery Strategy. A routine of procedures to restore from backup losses due to natural disasters, loss of power, internal sabotage or any form that can damage components of a computerized system.
This describes how an organization is to deal with potential and/or actual disasters; i.e., plan consisting of precautionary and remedial actions to be undertaken to minimize, maintain and /or immediately resume mission-critical functions in case of potential and/or actual disasters.
M. Electronic Archive. A copy of files in a long-term storage medium for back-up/retention purposes.
N. Functional Description. This refers to documents showing a high level description of the functions and features of a computerized accounting system under evaluation.
O. Global System. Refers to a system which is simultaneously used by a taxpayer for its Head Office and Branches worldwide.
P. Head Office. This refers to the principal place of business as appearing in the Articles of Incorporation. In the case of individual, the head office shall be the principal place of business where the main books of accounts and other related accounting records are kept and maintained.
Q. In-House/Customized CAS. This refers to the accounting system developed internally in accordance with prescribed user requirements.
R. Large Taxpayer. This refers to a taxpayer who has been classified and duly notified by the Commissioner of Internal Revenue as a Large Taxpayer (regular and excise) for having satisfied any or a combination of the set criteria as to tax payments, financial condition, and results of operations as prescribed in Revenue Regulations No. 1-98 and Section 245 of the NIRC of 1997, including amendatory provisions of law and regulations. S. National System. Refers to a system, which is simultaneously used by a taxpayer for its head office and branches nationwide.
T. Off-the-Shelf. This refers to a ready-made software or solution that is readily available in the market to support the business requirements of an establishment/company. It is also called packaged software.
U. Pre-printed Invoices/Receipts. Sequentially pre-numbered receipts/invoices with approved Authority to Print (ATP) reserved for systems downtime.
V. Process Flow. This refers to the flow of procedures presented in diagram form.
W. Regular Taxpayer. This refers to a taxpayer that has not been classified and notified as a large taxpayer pursuant to Sec. 245 of the Tax Code of 1997 and Revenue Regulations No. 1-98, including amendatory law and regulations.
X. Sales or Commercial Invoice. This is a written account of goods sold or services rendered and the prices charged therefor used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer of goods and services. For this purpose, Sales or Commercial Invoices shall be limited to the following:
X.1. Cash Sales Invoice. This is an invoice issued for every transaction involving sale or transfer of goods or rendition of services whether the same is paid in cash, check, or any other similar mode of payment.
X.2. Charge sales invoice. This is an invoice issued for every transaction involving sale or transfer of goods/rendition of services but the payment or consideration of which is on deferred or account basis.
X.3 Official Receipt. A receipt issued for the payment of services rendered or of goods sold on account.
Y. Stand alone CRM/POS Machines – are those that can run independently from CAS.
Z. System Demonstration. This refers to the presentation of the actual use of an accounting system or any of its components either on a test or production environment.
AA. System Enhancement. Any change or modification in the system software or architecture components of a computerized application system that will add value or further improve the system.
BB. System Flow. This represents the inputs, outputs and processes of a system.
CC. System Generated Number. Number generated automatically by a computerized system used in reference to a particular accounting document.
III. SCOPE OF IMPLEMENTATION
A. All taxpayers engaged in business, whether classified as regular or large taxpayers, who have Computerized Accounting System or components thereof shall apply for permit prior to its use.
B. Components of Computerized Accounting System shall be the following:
1. General Journal and other subsidiary records except General Ledger.
(Note: It shall be mandatory to apply for permit to adopt a complete CAS instead of applying a permit for General Ledger only);
2. Sales, Purchases, Accounts Receivable, Accounts Payable, Inventory, Payroll ledgers, subsidiary ledgers and other accounting records;
3. Any application system which generates subsidiary ledger which is part of official accounting documents such as official receipts [OR], sales and cash invoices, cash vouchers, journal vouchers, billing statements, sales tickets, etc.;
4. Any application system which generates report as required by the BIR (e.g., a separate report for void and suspended transactions to explain the deduction from sale, compilation of their Integrated/consolidated sales report produced every end of the day); and
5. Point of Sale (POS) machine/Cash Register Machine (CRM) connected thru a network or linked to CAS.
C. Taxpayer applying for e-invoicing system shall apply for a complete CAS provided the system is capable of generating hard copy of the invoice anytime.
IV. COMPUTERIZED SYSTEMS EVALUATION TEAM (CSET)
A. For purposes of this Order, a Computerized System Evaluation Team [CSET] shall be created in the National Office and Regional Offices. The CSET shall convene at least twice a month to conduct the appropriate evaluation and recommend the approval of applications to adopt Computerized Accounting System [CAS] or components thereof. The CSET shall be composed of the following members:
1. National Office
Group I
Head : Chief, Large Taxpayers Assistance Division (LTAD) I
Asst. Head : Chief, Computer Operations, Network and Engineering Division (CONED) - Information Systems Operations Service Data Center (ISOSDC)
Members :
Representative of Information Systems
Operations Service – Data Center (ISOS-DC)
Representative of LTAD I
Representative of Large Taxpayers Audit and
Investigation Division I
Group II
Head : Chief, Large Taxpayers Assistance Division (LTAD) II
Asst. Head : Chief, CONED - ISOS-DC
Members :
Representative of ISOS-DC
Representative of LTAD II
Representative of Large Taxpayers Audit and Investigation Division II
2. Large Taxpayers District Office (LTDO)
Head : Concerned Large Taxpayer District Officer
Asst. Head : Chief, CONED of the nearest RDC (As determined by DCIR, ISG)
Members :
Representative of concerned RDC Representative of Assessment Section of the LTDO
Representative of Taxpayer Service Section of the LTDO
3. Regional Office/Revenue District Office (RDO)
Head : Concerned Revenue District Officer
Asst. Head : Chief, CONED of the Revenue Data Center (RDC) concerned
Members :
Representative of concerned RDC
Representative of Assessment Section of the RDO
Representative of Taxpayer Service Section of the RDO
B. CSET shall refer for resolution legal issues that may arise in the course of their evaluation of the application for CAS to Law Division in the National Office or Legal Division in the Regional Offices.
C. Travel allowance or provision of service vehicle in shuttling CSET members to and from the taxpayer’s site, per diem and other related expenses for training, briefing, system demonstration, and ocular inspection shall be allocated and made available for the use of CSET.
CSET member shall secure a Certificate of Appearance from the taxpayer for any task undertaken at the taxpayer’s site.
D. A workshop shall be undertaken by the Human Resource Development Service (HRDS) in coordination with the Operation and Information Systems Groups to orient both the technical and the functional groups on the scope, substance and evaluation of CAS.
A group of Revenue Officers (ROs) from the Large Taxpayers Assistance Divisions I & II and Taxpayer Service Section and Assessment Section of the LTDOs and Revenue District Offices shall be trained in this workshop.
Furthermore, these ROs shall undergo on-the-job training in the evaluation of CAS on a rotation basis.
E. ROs who shall observe the taxpayer’s system demo, shall act as trainers/coaches of other ROs relative to the evaluation of applications for the use of CAS and/or components thereof and other functions relative to the use of CAS.
V. POLICIES
A. All applications for CAS, whether by Head Office or branches, shall be filed by the Head Office at LTAD I or II, LTDO and RDO having jurisdiction over the Head Office except in the following cases:
1. In case the branch adopts CAS ahead of the Head Office, the application shall be filed by the Branch with the RDO having jurisdiction over the branch with a certification that the Head Office does not use a CAS. In the event that the Head Office later adopts the same CAS and the branch with a previously issued permit shall be linked to it, the permit to be issued to the Head Office shall include a new permit for the said branch, which shall supersede the previously issued permit.
2. In case the branch adopts a different CAS from that of its Head Office, it shall apply for permit to adopt CAS at the BIR office having jurisdiction over the branch.
B. Affiliated companies, sister companies, franchisees and closely held corporations shall secure separate permits for the use of CAS at LTAD I or II, LTDO or RDO. This requirement is without regard whether they are sharing a server and using exactly the same system previously approved for use by its mother company or other sister companies.
C. Actual systems demo shall be dispensed with in cases of application for CAS of the following taxpayers provided a photocopy of the permit previously issued and a certification of the approved system from the concerned CSET Technical Team shall be submitted:
1. Head Office applying for CAS of additional branch/es.
2. Branch adopting the same system being used by another branch with previously issued permit.
3. Affiliated companies, sister companies, franchisees and closely held corporations using exactly the same system previously approved for use by its mother company or other sister companies.
D. Taxpayers whose CAS are provided by their consultants (i.e. accounting firms) shall apply for a separate permit for the use thereof. Taxpayers whose CAS is being outsourced to an accounting firm shall be required to keep and maintain copies of its book of accounts (whether in soft or hard copies) and other related accounting records and documents in its place of business.
E. Taxpayer applying for CAS or components thereof without computer generated receipts and invoices shall apply for Authority to Print (ATP) for his official receipts, invoices and the like following prevailing rules and procedures on the issuance of ATP.
F. Application for use of Point of Sale (POS) Machine/Cash Register Machine (CRM) linked to CAS shall be processed following the provisions of this RMO.
Application for use of stand-alone (not linked to CAS) POS Machine/CRM shall be processed under the provisions of RR 10-99 or any later regulations that may be issued amending RR 10-99.
G. Taxpayers who opt to maintain a pool of CRM/POS Machines in their business operations during peak season (stand-by/roving machines) shall identify such in their applications.
These machines shall be treated as Head Office machines and shall be issued permits by LTAD I or II, LTDO or RDO having jurisdiction over the Head Office. Only CRM/POS Machines belonging to the pool shall be allowed to be transported for use in the branches or to any place of business of the taxpayer.
Transfer to the taxpayer’s branch/es of CRM/POS machines belonging to the pool shall be subject to the approval of LTAD I or II, LTDO or RDO having jurisdiction over the Head Office which shall then inform the Branch/es RDOs where the machines shall be used.
H. In evaluating application for CAS by Head Office involving branches located outside the jurisdiction of the BIR concerned office having jurisdiction over the Head Office,
the concerned CSET shall coordinate and refer to the other CSET having jurisdiction over the branch/es the evaluation of the CAS of the branch/es concerned. The results of the cross RDO evaluation of the branch/es’ CAS shall be submitted to the CSET having jurisdiction over the Head Office which shall recommend approval/disapproval for issuance of permit to use CAS. The RDO having jurisdiction over the head office of the taxpayer shall issue to the said taxpayer-head office the applied permit for the branch.
I. Permit to adopt CAS and/or components thereof shall be issued to the taxpayer within the following period:
Application not requiring systems demo and no cross RDO evaluation - 10 days
Application not requiring systems demo with cross RDO evaluation - 20 days
Application requiring systems demo with no cross RDO evaluation - 30 days
Application requiring systems demo with cross RDO evaluation - 40 days
J. Stickers for CRM/POS Machine linked to CAS to be used by the branch/es shall be issued by the BIR office having jurisdiction over the branch/es upon presentation by the taxpayer and submission of a copy of the Branch Permit issued by the BIR office having jurisdiction over the Head Office.
K. No temporary permit to adopt CAS shall be issued except upon approval of the Deputy Commissioner for Operations Group. Temporary permit shall be issued only based on valid and meritorious cases (e. g., systems enhancement that need to be done abroad).
The validity of temporary permit approved by the Deputy Commissioner of Operations may either be shortened or renewed depending on the compliance on the reason(s) for issuance of the temporary permit by the taxpayer.
L. Taxpayers with approved CAS capable of generating reports such as but not limited to daily sales, accumulated sales, etc. need not be required to maintain manual Cash Register Machine Sales Book provided that all information required in the manual CRM Sales Book are reflected in the computerized reports. However, these computerized reports shall be made available during post system evaluation of CAS, or duly authorized tax audit of taxpayer’s records.
M. In case of systems downtime, taxpayers using computer generated receipts and invoices but whose system has no redundancy/automatic switchover shall be allowed to issue manual receipts using any of the following:
1. Remaining receipts/invoices out of the inventory of previously approved unused manually printed receipts and invoices; or
2. Manually pre-printed and pre-numbered receipts and invoices with approved authority to print (ATP) reserved or set aside for use during systems downtime which shall not exceed one thousand (1,000) sets.
N. Taxpayers with approved CAS capable of generating receipts and invoices, whether global or national system, shall be required to:
1. Secure advanced approval of the next set of Pre-Approved Range of Serial Number from BIR concerned offices within 30 days before full consumption or utilization of the previously approved range of serial numbers. The first number of the series of number to be issued or used by the taxpayer shall be the continuation in the next set of range of serial number for approval. (e.g. 1st Pre-Approved Range of Serial Number of Invoice: 1000-5000; next set of Pre-Approved Range of Serial Number of Invoice should be 5001-10000)
2. Submit a report on the range of serial numbers of receipts and invoices which have been consumed and/or cancelled during the immediately preceding taxable year to the concerned office within 30 days from the close of the taxable year.
However, taxpayers with global system and using invoices and receipts printed abroad (set as a precedent in BIR Ruling No. DA-295-98) shall not be required to seek advance approval of the next set of Pre-approved Range of Serial Number for use in the Philippines but shall present these pre-numbered invoices and receipts to BIR concerned office for registration prior to their use. The invoices/receipts herein referred to shall be tracked using office automation tools of the BIR office.
For global system under which invoices and receipts are system-generated, the serial number of invoices/receipts issued or used during the year shall be stated/presented in chronological sequence of issuance by date of issue in the CD-ROM that will be registered, together with other accounting records, with the BIR office having jurisdiction over the taxpayer within 30 days following the end of the accounting period.
O. With the implementation of the E-Commerce Law, the requirement of binding and stamping of computerized books of accounts and/or receipts and invoices generated by a duly approved Computerized Accounting System shall no longer be necessary, provided that:
1. Soft copy of the computerized books of accounts and other accounting records/documents in text file format shall be made available in any of the following mode:
a. In CD-ROM (read only) properly labeled with the name of taxpayer, taxable year and the Serial No. and Volume No. of the books of accounts and other accounting records/documents, duly stamped registered and signed by LTAD I or II, LTDO or RDO.
Adjustments to books of accounts and other accounting records/documents may still be submitted in a separate CD-ROM (read only) before the deadline for annual income tax return duly certified by the independent auditor indicating therein the adjustments made.
The separate CD-ROM (read only) containing the adjustments to books of accounts and other accounting records/documents shall be properly labeled with the name of taxpayer, taxable year and the Serial No. and Volume No. of the books of accounts and other accounting records/documents duly stamped registered and signed by LTAD I or II, LTDO or RDO; or
b. Electronically archived information in the books of accounts and other accounting records/documents. Archive of the books of accounts and other accounting records/documents shall be retained for three (3) years from due date of filing or actual filing of annual income tax return, whichever comes late.
In case taxpayer has no capability to submit in CD-ROM form, procedures under the manual system shall prevail.
2. A duly notarized certification in the form of an affidavit ascertaining/attesting the accuracy of the following shall be submitted to LTAD I or II, LTDO or RDO within 30 days from the close of taxable year:
a. The number of receipts and invoices used during the year; and
b. The soft copy of the books of accounts and other accounting records/document in text file format for the taxable year in CDROM duly stamped “Registered” and signed in the label by authorized official of LTAD I or II, LTDO or RDO or the archived books of accounts and other accounting records/documents for the taxable year, if applicable.
P. The taxpayer shall apply for a new permit to use CAS in case of any system enhancement that shall result in change in systems release and/or version number. In case a taxpayer is found using an enhanced system without the approval of the BIR, the permit originally issued shall be deemed automatically revoked from the time the enhanced system is adopted.
VI. PROCEDURES
A. Large Taxpayers Assistance Divisions I & II, Large Taxpayers District Office and Revenue District Office [Taxpayer Service Section (TSS)]:
1. Require the taxpayer to submit the following requirements:
a. Accomplished BIR Form 1900 Application for Authority to Use Computerized Accounting System and/or Components Thereof/Loose-leaf Books of Accounts, 2002 Enhanced version (Annex “A”) and/or BIR Form 1907 Application for Permit to Use Cash Register Machine/Point of Sale Machine, 2002 Enhanced version (Annex “B”)
b. Company Profile
b.1 Photocopy of BIR Certificate of Registration
b.2 Photocopy of Previously Issued Permit, if applicable
b.3 Photocopy of Current Registration Fee Payment
c. Location map of the place of business;
d. Inventory of previously approved unused Invoices and receipts, if applicable;
e. List of Branches that will use CAS, if any;
f. Technical Requirements
f.1 Application Name and Software Used (Development & Database)
f.2 Functions and Features of the Application.
f.3 System Flow/s
f.4 Process Flow
f.5 Back-up Procedure, Disaster and Recovery Plan
f.6 Sworn Statement (Annex “C” ) and Proof of System Ownership
f.7 List of Reports and Correspondences that can be generated from the system with their description, purpose and sample layout
f.8 Facsimile of System generated Loose-Leaf Books of Accounts and list thereof/ Receipts/ Invoices
g. Additional requirements in case of affiliated companies/sister companies, franchisees and branches:
g.1 Photocopy of Previously Issued Permit for mother/sister company or another branch using the same system, if applicable.
g.2 Certification from the CSET which previously evaluated the approved system.
2. Receive the requirements submitted by the taxpayer-applicant.
3. Evaluate validity of the application and review completeness of requirements submitted by checking the appropriate boxes in BIR Form 1900.
4. If requirements are complete, stamp “Received” BIR Form 1900 and/or BIR Form 1907, otherwise, return the documents submitted to the taxpayer-applicant with instruction to complete the requirements.
5. Distribute copies of submitted applications and requirements to CSET for evaluation.
6. Coordinate with CSET and taxpayer-applicant the date and the venue for the actual system demonstration of the proposed Computerized Accounting System applied, if deemed necessary.
7. Coordinate with the taxpayer and members of CSET for the timely resolution of issues and concerns raised during actual system demonstration.
8. Receive CSET’s recommendation for approval/disapproval of application together with the accomplished Functional and Technical Evaluation/Appraisal Checklist (Annex “D”) or for issuance of temporary permit upon approval of DCIR-Operations
8.1. If recommended for approval:
a. Prepare Permit to Adopt Computerized Accounting System or Components Thereof (Annex “E”) with the Schedule of Attachments in the Permit (Annex “E-1”) and if applicable, Branch Permit to Adopt Computerized Accounting System or Components Thereof, (Annex “F”) with the corresponding Schedule of Attachments in the Branch Permit (Annex “F-1”); Assign/indicate Permit Number using the following format:
For Permit per Annex “E”: Month and Year, RDO No. and Sequence Number (MMYY-RDO# -XXXXX). E.g. 0102-039-00001
For Branch Permit per Annex “F”: Month and Year, RDO No., Sequence Number and Branch Code (MMYY-RDO# -XXXXX–XXX). E.g. 0102-039-00001-001)
b. If applicable, prepare stickers for CRM/POS Machines (Annex “G”) linked to CAS to be used by the taxpayerapplicant himself.
(Note: LTAD I and II, LTDOs and computerized RDOs shall create a case for the CRM/POS Machines in the CMS and assign the same to a case officer prior to the preparation and issuance of the corresponding stickers. The corresponding template for CRM shall likewise be filled out by the case officer assigned.)
c. Forward permit or CRM/POS stickers, if applicable, for approval of the concerned officials:
c.1 For large taxpayers under LTS – ACIR, LTS
c.2 For large taxpayers under LTDO – Concerned LTDO officer
c.3 For regular taxpayers – RDO concerned
8.2. If recommended for disapproval; prepare Letter of Denial for Permit to Adopt CAS or Components Thereof (Annex “H”) and forward to the concerned officials mentioned in Item 1.8.1.c above for signature.
8.3. If recommended for issuance of temporary permit:
a. Prepare the Temporary Permit (Annex “I”) and transmittal/endorsement memo.
b. Forward Temporary Permit together with the transmittal/endorsement memo to Taxpayer Assistance Service for evaluation.
9. Receive from the concerned officials approved/signed permit/temporary permit and/or CRM/POS stickers or Letter of Denial.
10. Release the approved permit/Temporary Permit and/or CRM/POS stickers, if applicable or Letter of Denial to taxpayer-applicant.
11. Explain the contents of the permit to the taxpayer and instruct him/it to adhere and comply with the provisions stated in the issued permit.
12. Maintain and regularly update the MS Excel – based Register of Permit to Adopt Computerized Accounting System (Annex “J”).
13. Furnish the RDOs concerned of the List of Permits Issued to Branches (Annex “K”) within their respective area of jurisdiction on or before the 5th day after the end of each month.
14. Maintain files of the List of Permits Issued to Branches within its area of jurisdiction furnished by other RDOs/LTDO, LTAD, for reference purposes.
15. If a taxpayer requests for stickers for CRM/POS Machines linked to CAS for use by branch/es within its area of jurisdiction:
5.1 Require taxpayer to present the Branch Permit which includes CRM/POS Machines linked to CAS.
15.2 Verify authenticity of the presented Branch Permit by checking from its file of List of Permits Issued to Branch/es within its area of jurisdiction furnished by other RDOs/LTDO/LTAD or from the office which issued the permit.
15.3 Prepare CRM/POS stickers for signature of authorized officials.
(Note: LTAD I and II, LTDOs and computerized RDOs shall create a case for the CRM/POS Machines in the CMS and assign the same to a case officer prior to the preparation and issuance of the corresponding stickers. The corresponding template for CRM shall likewise be filled out by the case officer assigned.)
15.4 Issue CRM/POS stickers to taxpayer.
16. Prepare and submit Quarterly Inventory of Issued Permits to Use CAS and Taxpayers with Pending Applications (Annex “L”) to Taxpayer Service Programs and Monitoring Division (TSPMD) on or before the 15th day after the end of each quarter.
17. Receive from taxpayers with approved CAS capable of generating receipts and invoices the Report of the Range of Serial Numbers of Receipts and Invoices Consumed/Cancelled (Annex “M”) during the immediately preceding year within 30 days from the close of taxable year; File the said reports for reference purposes during audit of taxpayers.
18. In lieu of stamping of hardbound computer generated books of accounts and receipts and invoices and other accounting records:
18.1 Receive from the taxpayer an Affidavit on the Post Reporting Requirements for CAS in lieu of Hardbound Computer Generated Books of Accounts, Receipts and Invoices and other accounting records (Annex “N”), and soft copy in text file format of the books of accounts and other accounting records in CDROM properly labeled with the name of taxpayer, taxable year and serial no. and volume no. of the books of accounts and other accounting records, within 30 days from the close of the taxable year.
18.2 Stamp “Registered” and sign on the label of the CD-ROM.
18.3 Return CD-ROM to taxpayer.
B. Computerized System Evaluation Team (CSET):
1. Receive and conduct preliminary evaluation of the submitted application form together with the attachments provided by LTAD I & II/LTDO/RDO.
2. Determine the need for a systems demo and coordinate with LTAD I/II/TSS of LTDO/RDO for scheduling with the taxpayer of the date and venue and/or coordinate with the CSET of concerned BIR offices in case of evaluation of application involving branches within the jurisdiction of other offices.
3. Attend systems demonstration, which may be conducted on a test or production environment, if necessary.
4. Evaluate application and determine compliance to both technical and functional requirements.
(Note: CSET shall ensure that the computer generated invoice shall show the name and business style of seller, its address and TIN indicating whether it is a VAT or Non- VAT taxpayer, date of transaction, quantity, unit cost, description of merchandise or nature of service, total amount, name, business style, if any, and address of the purchaser, customer or client and its TIN and prepared at least in duplicate pursuant to Sec. 237, 238 and 113 of the Tax Reform Act of 1997)
5. Raise all issues and concerns before, during and after actual system demonstration, if any and coordinate with the taxpayer thru LTAD I/II, TSS of LTDO/RDO for their early resolutions.
6. Evaluate resolution/s provided.
7. Accomplish Functional and Technical Evaluation/Appraisal Checklist.
8. Prepare and forward recommendation for approval or disapproval of permit to LTAD I/II/TSS of LTDO/RDO together with accomplished Functional and Technical Evaluation/Appraisal Checklist or recommendation for issuance of temporary permit.
9. Conduct evaluation of the CAS of branch/es falling under its jurisdiction referred by the CSET of the BIR concerned office having jurisdiction over the Head Office where the pplication for CAS was filed; submit results of evaluation to the concerned office.
10. Conduct post system evaluation based on the Mission Order issued by Assistant ommissioner, Large Taxpayers Service or the Regional Director. Accomplish an updated Functional and Technical Evaluation/Appraisal Checklist.
11. Upon completion of post evaluation, submit to the approving office the recommendation for revocation or continued use of the permit issued to the taxpayer.
12. Receive periodically from ISG the Technical Bulletins on approved CAS software and file them for reference purposes.
C. Taxpayer Assistance Service (TAS)
1. Receive Temporary Permit together with the transmittal/endorsement memo from LTAD I or II, LTDO or RDO.
2. Evaluate justifications/reasons for issuance of Temporary Permit and if valid and meritorious, initial on the Temporary Permit.
3. Forward Temporary Permit to Deputy Commissioner, Information Systems Group for signature as recommending official and then to Deputy Commissioner, Operations Group for approval.
D. Taxpayer Service Programs and Monitoring Division (TSPMD)
1. Receive Quarterly Inventory of Permits Issued and Pending Applications to Use CAS (Annex ”L”) from LTAD I/II/LTDOs/RDOs.
2. Consolidate reports and submit to ACIR, Taxpayer Assistance Service and DCIR, Operations Group.
3. Monitor and conduct verification of permit register and inventory of pending applications to use CAS or components thereof maintained by LTAD I & II, LTDOs and RDOs, whenever necessary.
E. Information Systems Group
1. Prepare and maintain the updated list of Off-the-Shelf CAS approved by CSETs.
2. Issue periodically to the different CSETs a Technical Bulletin containing information on the approved CAS software for reference purposes.
VII. TRANSITORY PROVISION
Permits issued before RMO 21 – 2000 including those issued through BIR Rulings shall be ubject to re-evaluation by CSET but shall be valid until revoked whereas permits issued under RMO 21-2000 shall remain to be valid unless revoked upon post evaluation of the ystem or sub-systems previously approved.
VIII. REPEALING CLAUSE
This Order amends RMO No. 21-2000 dated July 17, 2000 and repeals and/or modifies accordingly all other issuances or portion/s thereof inconsistent herewith.
IX. EFFECTIVITY
This Order shall take effect immediately.
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
TO : All Internal Revenue Officials and Employees and Others Concerned
I. OBJECTIVE
This Order is issued to further prescribe policies, guidelines and procedures as well as define duties and responsibilities relative to the processing and approval of applications for Permit to Adopt Computerized Accounting System or Components Thereof.
II. DEFINITION OF TERMS
For purposes of this Order, the following definitions are provided:
A. Affiliated Corporations. This means that two or more organizations are allied with or closely connected with one another, or with a central body but each organization continues to exist. It does not bear the construction that one of the “affiliated” organizations is in all particulars identical with or covered by the parent or main organization with which it is affiliated.
B. Branch. A fixed establishment in a locality which conducts operation of the business as an extension of the principal office with at least one tax type.
C. Computerized Accounting System [CAS]. The integration of different component systems to produce computerized books of accounts and computer-generated accounting records and documents. For purposes of this issuance, it shall also refer to applications for the use of any or all of the CAS components.
D. Component of CAS. Any system application adopted to generate accounting records, reports and/or documents.
E. Computerized Books of Accounts. These refer to books of accounts such as General Ledger, General Journal, Sales Book, Purchase Book, Disbursement Book, etc., which are systems generated.
F. Computer Generated Accounting Records. This refers to official receipts, sales and cash invoices, cash vouchers, journal vouchers, billing statements, sales tickets and other underlying accounting records.
G. Computer Generated Receipts and Invoices. These are part of accounting records which are generated by the system with a capacity to produce sequential range of numbers.
H. Computer Generated Subsidiary Accounting Records. These refer to Cash Receipt Book, Cash Disbursement Book, Accounts Payable Book, Accounts Receivable Book, Debit/Credit Memo Book and other underlying subsidiary accounting records being generated under a computerized system.
I. CRM/POS Machines Linked to CAS. This refers to Cash Register Machines (CRM)/Point of Sale (POS) Machines that are electronically connected to a CAS or to a central server via network.
J. Database. A collection of information organized in such a way that a computer program can quickly select desired pieces of data.
K. Development Software. Programs used to compile, interpret and assemble many sort of programming languages.
L. Disaster Recovery Procedure (DRP), Backup and Recovery Strategy. A routine of procedures to restore from backup losses due to natural disasters, loss of power, internal sabotage or any form that can damage components of a computerized system.
This describes how an organization is to deal with potential and/or actual disasters; i.e., plan consisting of precautionary and remedial actions to be undertaken to minimize, maintain and /or immediately resume mission-critical functions in case of potential and/or actual disasters.
M. Electronic Archive. A copy of files in a long-term storage medium for back-up/retention purposes.
N. Functional Description. This refers to documents showing a high level description of the functions and features of a computerized accounting system under evaluation.
O. Global System. Refers to a system which is simultaneously used by a taxpayer for its Head Office and Branches worldwide.
P. Head Office. This refers to the principal place of business as appearing in the Articles of Incorporation. In the case of individual, the head office shall be the principal place of business where the main books of accounts and other related accounting records are kept and maintained.
Q. In-House/Customized CAS. This refers to the accounting system developed internally in accordance with prescribed user requirements.
R. Large Taxpayer. This refers to a taxpayer who has been classified and duly notified by the Commissioner of Internal Revenue as a Large Taxpayer (regular and excise) for having satisfied any or a combination of the set criteria as to tax payments, financial condition, and results of operations as prescribed in Revenue Regulations No. 1-98 and Section 245 of the NIRC of 1997, including amendatory provisions of law and regulations. S. National System. Refers to a system, which is simultaneously used by a taxpayer for its head office and branches nationwide.
T. Off-the-Shelf. This refers to a ready-made software or solution that is readily available in the market to support the business requirements of an establishment/company. It is also called packaged software.
U. Pre-printed Invoices/Receipts. Sequentially pre-numbered receipts/invoices with approved Authority to Print (ATP) reserved for systems downtime.
V. Process Flow. This refers to the flow of procedures presented in diagram form.
W. Regular Taxpayer. This refers to a taxpayer that has not been classified and notified as a large taxpayer pursuant to Sec. 245 of the Tax Code of 1997 and Revenue Regulations No. 1-98, including amendatory law and regulations.
X. Sales or Commercial Invoice. This is a written account of goods sold or services rendered and the prices charged therefor used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer of goods and services. For this purpose, Sales or Commercial Invoices shall be limited to the following:
X.1. Cash Sales Invoice. This is an invoice issued for every transaction involving sale or transfer of goods or rendition of services whether the same is paid in cash, check, or any other similar mode of payment.
X.2. Charge sales invoice. This is an invoice issued for every transaction involving sale or transfer of goods/rendition of services but the payment or consideration of which is on deferred or account basis.
X.3 Official Receipt. A receipt issued for the payment of services rendered or of goods sold on account.
Y. Stand alone CRM/POS Machines – are those that can run independently from CAS.
Z. System Demonstration. This refers to the presentation of the actual use of an accounting system or any of its components either on a test or production environment.
AA. System Enhancement. Any change or modification in the system software or architecture components of a computerized application system that will add value or further improve the system.
BB. System Flow. This represents the inputs, outputs and processes of a system.
CC. System Generated Number. Number generated automatically by a computerized system used in reference to a particular accounting document.
III. SCOPE OF IMPLEMENTATION
A. All taxpayers engaged in business, whether classified as regular or large taxpayers, who have Computerized Accounting System or components thereof shall apply for permit prior to its use.
B. Components of Computerized Accounting System shall be the following:
1. General Journal and other subsidiary records except General Ledger.
(Note: It shall be mandatory to apply for permit to adopt a complete CAS instead of applying a permit for General Ledger only);
2. Sales, Purchases, Accounts Receivable, Accounts Payable, Inventory, Payroll ledgers, subsidiary ledgers and other accounting records;
3. Any application system which generates subsidiary ledger which is part of official accounting documents such as official receipts [OR], sales and cash invoices, cash vouchers, journal vouchers, billing statements, sales tickets, etc.;
4. Any application system which generates report as required by the BIR (e.g., a separate report for void and suspended transactions to explain the deduction from sale, compilation of their Integrated/consolidated sales report produced every end of the day); and
5. Point of Sale (POS) machine/Cash Register Machine (CRM) connected thru a network or linked to CAS.
C. Taxpayer applying for e-invoicing system shall apply for a complete CAS provided the system is capable of generating hard copy of the invoice anytime.
IV. COMPUTERIZED SYSTEMS EVALUATION TEAM (CSET)
A. For purposes of this Order, a Computerized System Evaluation Team [CSET] shall be created in the National Office and Regional Offices. The CSET shall convene at least twice a month to conduct the appropriate evaluation and recommend the approval of applications to adopt Computerized Accounting System [CAS] or components thereof. The CSET shall be composed of the following members:
1. National Office
Group I
Head : Chief, Large Taxpayers Assistance Division (LTAD) I
Asst. Head : Chief, Computer Operations, Network and Engineering Division (CONED) - Information Systems Operations Service Data Center (ISOSDC)
Members :
Representative of Information Systems
Operations Service – Data Center (ISOS-DC)
Representative of LTAD I
Representative of Large Taxpayers Audit and
Investigation Division I
Group II
Head : Chief, Large Taxpayers Assistance Division (LTAD) II
Asst. Head : Chief, CONED - ISOS-DC
Members :
Representative of ISOS-DC
Representative of LTAD II
Representative of Large Taxpayers Audit and Investigation Division II
2. Large Taxpayers District Office (LTDO)
Head : Concerned Large Taxpayer District Officer
Asst. Head : Chief, CONED of the nearest RDC (As determined by DCIR, ISG)
Members :
Representative of concerned RDC Representative of Assessment Section of the LTDO
Representative of Taxpayer Service Section of the LTDO
3. Regional Office/Revenue District Office (RDO)
Head : Concerned Revenue District Officer
Asst. Head : Chief, CONED of the Revenue Data Center (RDC) concerned
Members :
Representative of concerned RDC
Representative of Assessment Section of the RDO
Representative of Taxpayer Service Section of the RDO
B. CSET shall refer for resolution legal issues that may arise in the course of their evaluation of the application for CAS to Law Division in the National Office or Legal Division in the Regional Offices.
C. Travel allowance or provision of service vehicle in shuttling CSET members to and from the taxpayer’s site, per diem and other related expenses for training, briefing, system demonstration, and ocular inspection shall be allocated and made available for the use of CSET.
CSET member shall secure a Certificate of Appearance from the taxpayer for any task undertaken at the taxpayer’s site.
D. A workshop shall be undertaken by the Human Resource Development Service (HRDS) in coordination with the Operation and Information Systems Groups to orient both the technical and the functional groups on the scope, substance and evaluation of CAS.
A group of Revenue Officers (ROs) from the Large Taxpayers Assistance Divisions I & II and Taxpayer Service Section and Assessment Section of the LTDOs and Revenue District Offices shall be trained in this workshop.
Furthermore, these ROs shall undergo on-the-job training in the evaluation of CAS on a rotation basis.
E. ROs who shall observe the taxpayer’s system demo, shall act as trainers/coaches of other ROs relative to the evaluation of applications for the use of CAS and/or components thereof and other functions relative to the use of CAS.
V. POLICIES
A. All applications for CAS, whether by Head Office or branches, shall be filed by the Head Office at LTAD I or II, LTDO and RDO having jurisdiction over the Head Office except in the following cases:
1. In case the branch adopts CAS ahead of the Head Office, the application shall be filed by the Branch with the RDO having jurisdiction over the branch with a certification that the Head Office does not use a CAS. In the event that the Head Office later adopts the same CAS and the branch with a previously issued permit shall be linked to it, the permit to be issued to the Head Office shall include a new permit for the said branch, which shall supersede the previously issued permit.
2. In case the branch adopts a different CAS from that of its Head Office, it shall apply for permit to adopt CAS at the BIR office having jurisdiction over the branch.
B. Affiliated companies, sister companies, franchisees and closely held corporations shall secure separate permits for the use of CAS at LTAD I or II, LTDO or RDO. This requirement is without regard whether they are sharing a server and using exactly the same system previously approved for use by its mother company or other sister companies.
C. Actual systems demo shall be dispensed with in cases of application for CAS of the following taxpayers provided a photocopy of the permit previously issued and a certification of the approved system from the concerned CSET Technical Team shall be submitted:
1. Head Office applying for CAS of additional branch/es.
2. Branch adopting the same system being used by another branch with previously issued permit.
3. Affiliated companies, sister companies, franchisees and closely held corporations using exactly the same system previously approved for use by its mother company or other sister companies.
D. Taxpayers whose CAS are provided by their consultants (i.e. accounting firms) shall apply for a separate permit for the use thereof. Taxpayers whose CAS is being outsourced to an accounting firm shall be required to keep and maintain copies of its book of accounts (whether in soft or hard copies) and other related accounting records and documents in its place of business.
E. Taxpayer applying for CAS or components thereof without computer generated receipts and invoices shall apply for Authority to Print (ATP) for his official receipts, invoices and the like following prevailing rules and procedures on the issuance of ATP.
F. Application for use of Point of Sale (POS) Machine/Cash Register Machine (CRM) linked to CAS shall be processed following the provisions of this RMO.
Application for use of stand-alone (not linked to CAS) POS Machine/CRM shall be processed under the provisions of RR 10-99 or any later regulations that may be issued amending RR 10-99.
G. Taxpayers who opt to maintain a pool of CRM/POS Machines in their business operations during peak season (stand-by/roving machines) shall identify such in their applications.
These machines shall be treated as Head Office machines and shall be issued permits by LTAD I or II, LTDO or RDO having jurisdiction over the Head Office. Only CRM/POS Machines belonging to the pool shall be allowed to be transported for use in the branches or to any place of business of the taxpayer.
Transfer to the taxpayer’s branch/es of CRM/POS machines belonging to the pool shall be subject to the approval of LTAD I or II, LTDO or RDO having jurisdiction over the Head Office which shall then inform the Branch/es RDOs where the machines shall be used.
H. In evaluating application for CAS by Head Office involving branches located outside the jurisdiction of the BIR concerned office having jurisdiction over the Head Office,
the concerned CSET shall coordinate and refer to the other CSET having jurisdiction over the branch/es the evaluation of the CAS of the branch/es concerned. The results of the cross RDO evaluation of the branch/es’ CAS shall be submitted to the CSET having jurisdiction over the Head Office which shall recommend approval/disapproval for issuance of permit to use CAS. The RDO having jurisdiction over the head office of the taxpayer shall issue to the said taxpayer-head office the applied permit for the branch.
I. Permit to adopt CAS and/or components thereof shall be issued to the taxpayer within the following period:
Application not requiring systems demo and no cross RDO evaluation - 10 days
Application not requiring systems demo with cross RDO evaluation - 20 days
Application requiring systems demo with no cross RDO evaluation - 30 days
Application requiring systems demo with cross RDO evaluation - 40 days
J. Stickers for CRM/POS Machine linked to CAS to be used by the branch/es shall be issued by the BIR office having jurisdiction over the branch/es upon presentation by the taxpayer and submission of a copy of the Branch Permit issued by the BIR office having jurisdiction over the Head Office.
K. No temporary permit to adopt CAS shall be issued except upon approval of the Deputy Commissioner for Operations Group. Temporary permit shall be issued only based on valid and meritorious cases (e. g., systems enhancement that need to be done abroad).
The validity of temporary permit approved by the Deputy Commissioner of Operations may either be shortened or renewed depending on the compliance on the reason(s) for issuance of the temporary permit by the taxpayer.
L. Taxpayers with approved CAS capable of generating reports such as but not limited to daily sales, accumulated sales, etc. need not be required to maintain manual Cash Register Machine Sales Book provided that all information required in the manual CRM Sales Book are reflected in the computerized reports. However, these computerized reports shall be made available during post system evaluation of CAS, or duly authorized tax audit of taxpayer’s records.
M. In case of systems downtime, taxpayers using computer generated receipts and invoices but whose system has no redundancy/automatic switchover shall be allowed to issue manual receipts using any of the following:
1. Remaining receipts/invoices out of the inventory of previously approved unused manually printed receipts and invoices; or
2. Manually pre-printed and pre-numbered receipts and invoices with approved authority to print (ATP) reserved or set aside for use during systems downtime which shall not exceed one thousand (1,000) sets.
N. Taxpayers with approved CAS capable of generating receipts and invoices, whether global or national system, shall be required to:
1. Secure advanced approval of the next set of Pre-Approved Range of Serial Number from BIR concerned offices within 30 days before full consumption or utilization of the previously approved range of serial numbers. The first number of the series of number to be issued or used by the taxpayer shall be the continuation in the next set of range of serial number for approval. (e.g. 1st Pre-Approved Range of Serial Number of Invoice: 1000-5000; next set of Pre-Approved Range of Serial Number of Invoice should be 5001-10000)
2. Submit a report on the range of serial numbers of receipts and invoices which have been consumed and/or cancelled during the immediately preceding taxable year to the concerned office within 30 days from the close of the taxable year.
However, taxpayers with global system and using invoices and receipts printed abroad (set as a precedent in BIR Ruling No. DA-295-98) shall not be required to seek advance approval of the next set of Pre-approved Range of Serial Number for use in the Philippines but shall present these pre-numbered invoices and receipts to BIR concerned office for registration prior to their use. The invoices/receipts herein referred to shall be tracked using office automation tools of the BIR office.
For global system under which invoices and receipts are system-generated, the serial number of invoices/receipts issued or used during the year shall be stated/presented in chronological sequence of issuance by date of issue in the CD-ROM that will be registered, together with other accounting records, with the BIR office having jurisdiction over the taxpayer within 30 days following the end of the accounting period.
O. With the implementation of the E-Commerce Law, the requirement of binding and stamping of computerized books of accounts and/or receipts and invoices generated by a duly approved Computerized Accounting System shall no longer be necessary, provided that:
1. Soft copy of the computerized books of accounts and other accounting records/documents in text file format shall be made available in any of the following mode:
a. In CD-ROM (read only) properly labeled with the name of taxpayer, taxable year and the Serial No. and Volume No. of the books of accounts and other accounting records/documents, duly stamped registered and signed by LTAD I or II, LTDO or RDO.
Adjustments to books of accounts and other accounting records/documents may still be submitted in a separate CD-ROM (read only) before the deadline for annual income tax return duly certified by the independent auditor indicating therein the adjustments made.
The separate CD-ROM (read only) containing the adjustments to books of accounts and other accounting records/documents shall be properly labeled with the name of taxpayer, taxable year and the Serial No. and Volume No. of the books of accounts and other accounting records/documents duly stamped registered and signed by LTAD I or II, LTDO or RDO; or
b. Electronically archived information in the books of accounts and other accounting records/documents. Archive of the books of accounts and other accounting records/documents shall be retained for three (3) years from due date of filing or actual filing of annual income tax return, whichever comes late.
In case taxpayer has no capability to submit in CD-ROM form, procedures under the manual system shall prevail.
2. A duly notarized certification in the form of an affidavit ascertaining/attesting the accuracy of the following shall be submitted to LTAD I or II, LTDO or RDO within 30 days from the close of taxable year:
a. The number of receipts and invoices used during the year; and
b. The soft copy of the books of accounts and other accounting records/document in text file format for the taxable year in CDROM duly stamped “Registered” and signed in the label by authorized official of LTAD I or II, LTDO or RDO or the archived books of accounts and other accounting records/documents for the taxable year, if applicable.
P. The taxpayer shall apply for a new permit to use CAS in case of any system enhancement that shall result in change in systems release and/or version number. In case a taxpayer is found using an enhanced system without the approval of the BIR, the permit originally issued shall be deemed automatically revoked from the time the enhanced system is adopted.
VI. PROCEDURES
A. Large Taxpayers Assistance Divisions I & II, Large Taxpayers District Office and Revenue District Office [Taxpayer Service Section (TSS)]:
1. Require the taxpayer to submit the following requirements:
a. Accomplished BIR Form 1900 Application for Authority to Use Computerized Accounting System and/or Components Thereof/Loose-leaf Books of Accounts, 2002 Enhanced version (Annex “A”) and/or BIR Form 1907 Application for Permit to Use Cash Register Machine/Point of Sale Machine, 2002 Enhanced version (Annex “B”)
b. Company Profile
b.1 Photocopy of BIR Certificate of Registration
b.2 Photocopy of Previously Issued Permit, if applicable
b.3 Photocopy of Current Registration Fee Payment
c. Location map of the place of business;
d. Inventory of previously approved unused Invoices and receipts, if applicable;
e. List of Branches that will use CAS, if any;
f. Technical Requirements
f.1 Application Name and Software Used (Development & Database)
f.2 Functions and Features of the Application.
f.3 System Flow/s
f.4 Process Flow
f.5 Back-up Procedure, Disaster and Recovery Plan
f.6 Sworn Statement (Annex “C” ) and Proof of System Ownership
f.7 List of Reports and Correspondences that can be generated from the system with their description, purpose and sample layout
f.8 Facsimile of System generated Loose-Leaf Books of Accounts and list thereof/ Receipts/ Invoices
g. Additional requirements in case of affiliated companies/sister companies, franchisees and branches:
g.1 Photocopy of Previously Issued Permit for mother/sister company or another branch using the same system, if applicable.
g.2 Certification from the CSET which previously evaluated the approved system.
2. Receive the requirements submitted by the taxpayer-applicant.
3. Evaluate validity of the application and review completeness of requirements submitted by checking the appropriate boxes in BIR Form 1900.
4. If requirements are complete, stamp “Received” BIR Form 1900 and/or BIR Form 1907, otherwise, return the documents submitted to the taxpayer-applicant with instruction to complete the requirements.
5. Distribute copies of submitted applications and requirements to CSET for evaluation.
6. Coordinate with CSET and taxpayer-applicant the date and the venue for the actual system demonstration of the proposed Computerized Accounting System applied, if deemed necessary.
7. Coordinate with the taxpayer and members of CSET for the timely resolution of issues and concerns raised during actual system demonstration.
8. Receive CSET’s recommendation for approval/disapproval of application together with the accomplished Functional and Technical Evaluation/Appraisal Checklist (Annex “D”) or for issuance of temporary permit upon approval of DCIR-Operations
8.1. If recommended for approval:
a. Prepare Permit to Adopt Computerized Accounting System or Components Thereof (Annex “E”) with the Schedule of Attachments in the Permit (Annex “E-1”) and if applicable, Branch Permit to Adopt Computerized Accounting System or Components Thereof, (Annex “F”) with the corresponding Schedule of Attachments in the Branch Permit (Annex “F-1”); Assign/indicate Permit Number using the following format:
For Permit per Annex “E”: Month and Year, RDO No. and Sequence Number (MMYY-RDO# -XXXXX). E.g. 0102-039-00001
For Branch Permit per Annex “F”: Month and Year, RDO No., Sequence Number and Branch Code (MMYY-RDO# -XXXXX–XXX). E.g. 0102-039-00001-001)
b. If applicable, prepare stickers for CRM/POS Machines (Annex “G”) linked to CAS to be used by the taxpayerapplicant himself.
(Note: LTAD I and II, LTDOs and computerized RDOs shall create a case for the CRM/POS Machines in the CMS and assign the same to a case officer prior to the preparation and issuance of the corresponding stickers. The corresponding template for CRM shall likewise be filled out by the case officer assigned.)
c. Forward permit or CRM/POS stickers, if applicable, for approval of the concerned officials:
c.1 For large taxpayers under LTS – ACIR, LTS
c.2 For large taxpayers under LTDO – Concerned LTDO officer
c.3 For regular taxpayers – RDO concerned
8.2. If recommended for disapproval; prepare Letter of Denial for Permit to Adopt CAS or Components Thereof (Annex “H”) and forward to the concerned officials mentioned in Item 1.8.1.c above for signature.
8.3. If recommended for issuance of temporary permit:
a. Prepare the Temporary Permit (Annex “I”) and transmittal/endorsement memo.
b. Forward Temporary Permit together with the transmittal/endorsement memo to Taxpayer Assistance Service for evaluation.
9. Receive from the concerned officials approved/signed permit/temporary permit and/or CRM/POS stickers or Letter of Denial.
10. Release the approved permit/Temporary Permit and/or CRM/POS stickers, if applicable or Letter of Denial to taxpayer-applicant.
11. Explain the contents of the permit to the taxpayer and instruct him/it to adhere and comply with the provisions stated in the issued permit.
12. Maintain and regularly update the MS Excel – based Register of Permit to Adopt Computerized Accounting System (Annex “J”).
13. Furnish the RDOs concerned of the List of Permits Issued to Branches (Annex “K”) within their respective area of jurisdiction on or before the 5th day after the end of each month.
14. Maintain files of the List of Permits Issued to Branches within its area of jurisdiction furnished by other RDOs/LTDO, LTAD, for reference purposes.
15. If a taxpayer requests for stickers for CRM/POS Machines linked to CAS for use by branch/es within its area of jurisdiction:
5.1 Require taxpayer to present the Branch Permit which includes CRM/POS Machines linked to CAS.
15.2 Verify authenticity of the presented Branch Permit by checking from its file of List of Permits Issued to Branch/es within its area of jurisdiction furnished by other RDOs/LTDO/LTAD or from the office which issued the permit.
15.3 Prepare CRM/POS stickers for signature of authorized officials.
(Note: LTAD I and II, LTDOs and computerized RDOs shall create a case for the CRM/POS Machines in the CMS and assign the same to a case officer prior to the preparation and issuance of the corresponding stickers. The corresponding template for CRM shall likewise be filled out by the case officer assigned.)
15.4 Issue CRM/POS stickers to taxpayer.
16. Prepare and submit Quarterly Inventory of Issued Permits to Use CAS and Taxpayers with Pending Applications (Annex “L”) to Taxpayer Service Programs and Monitoring Division (TSPMD) on or before the 15th day after the end of each quarter.
17. Receive from taxpayers with approved CAS capable of generating receipts and invoices the Report of the Range of Serial Numbers of Receipts and Invoices Consumed/Cancelled (Annex “M”) during the immediately preceding year within 30 days from the close of taxable year; File the said reports for reference purposes during audit of taxpayers.
18. In lieu of stamping of hardbound computer generated books of accounts and receipts and invoices and other accounting records:
18.1 Receive from the taxpayer an Affidavit on the Post Reporting Requirements for CAS in lieu of Hardbound Computer Generated Books of Accounts, Receipts and Invoices and other accounting records (Annex “N”), and soft copy in text file format of the books of accounts and other accounting records in CDROM properly labeled with the name of taxpayer, taxable year and serial no. and volume no. of the books of accounts and other accounting records, within 30 days from the close of the taxable year.
18.2 Stamp “Registered” and sign on the label of the CD-ROM.
18.3 Return CD-ROM to taxpayer.
B. Computerized System Evaluation Team (CSET):
1. Receive and conduct preliminary evaluation of the submitted application form together with the attachments provided by LTAD I & II/LTDO/RDO.
2. Determine the need for a systems demo and coordinate with LTAD I/II/TSS of LTDO/RDO for scheduling with the taxpayer of the date and venue and/or coordinate with the CSET of concerned BIR offices in case of evaluation of application involving branches within the jurisdiction of other offices.
3. Attend systems demonstration, which may be conducted on a test or production environment, if necessary.
4. Evaluate application and determine compliance to both technical and functional requirements.
(Note: CSET shall ensure that the computer generated invoice shall show the name and business style of seller, its address and TIN indicating whether it is a VAT or Non- VAT taxpayer, date of transaction, quantity, unit cost, description of merchandise or nature of service, total amount, name, business style, if any, and address of the purchaser, customer or client and its TIN and prepared at least in duplicate pursuant to Sec. 237, 238 and 113 of the Tax Reform Act of 1997)
5. Raise all issues and concerns before, during and after actual system demonstration, if any and coordinate with the taxpayer thru LTAD I/II, TSS of LTDO/RDO for their early resolutions.
6. Evaluate resolution/s provided.
7. Accomplish Functional and Technical Evaluation/Appraisal Checklist.
8. Prepare and forward recommendation for approval or disapproval of permit to LTAD I/II/TSS of LTDO/RDO together with accomplished Functional and Technical Evaluation/Appraisal Checklist or recommendation for issuance of temporary permit.
9. Conduct evaluation of the CAS of branch/es falling under its jurisdiction referred by the CSET of the BIR concerned office having jurisdiction over the Head Office where the pplication for CAS was filed; submit results of evaluation to the concerned office.
10. Conduct post system evaluation based on the Mission Order issued by Assistant ommissioner, Large Taxpayers Service or the Regional Director. Accomplish an updated Functional and Technical Evaluation/Appraisal Checklist.
11. Upon completion of post evaluation, submit to the approving office the recommendation for revocation or continued use of the permit issued to the taxpayer.
12. Receive periodically from ISG the Technical Bulletins on approved CAS software and file them for reference purposes.
C. Taxpayer Assistance Service (TAS)
1. Receive Temporary Permit together with the transmittal/endorsement memo from LTAD I or II, LTDO or RDO.
2. Evaluate justifications/reasons for issuance of Temporary Permit and if valid and meritorious, initial on the Temporary Permit.
3. Forward Temporary Permit to Deputy Commissioner, Information Systems Group for signature as recommending official and then to Deputy Commissioner, Operations Group for approval.
D. Taxpayer Service Programs and Monitoring Division (TSPMD)
1. Receive Quarterly Inventory of Permits Issued and Pending Applications to Use CAS (Annex ”L”) from LTAD I/II/LTDOs/RDOs.
2. Consolidate reports and submit to ACIR, Taxpayer Assistance Service and DCIR, Operations Group.
3. Monitor and conduct verification of permit register and inventory of pending applications to use CAS or components thereof maintained by LTAD I & II, LTDOs and RDOs, whenever necessary.
E. Information Systems Group
1. Prepare and maintain the updated list of Off-the-Shelf CAS approved by CSETs.
2. Issue periodically to the different CSETs a Technical Bulletin containing information on the approved CAS software for reference purposes.
VII. TRANSITORY PROVISION
Permits issued before RMO 21 – 2000 including those issued through BIR Rulings shall be ubject to re-evaluation by CSET but shall be valid until revoked whereas permits issued under RMO 21-2000 shall remain to be valid unless revoked upon post evaluation of the ystem or sub-systems previously approved.
VIII. REPEALING CLAUSE
This Order amends RMO No. 21-2000 dated July 17, 2000 and repeals and/or modifies accordingly all other issuances or portion/s thereof inconsistent herewith.
IX. EFFECTIVITY
This Order shall take effect immediately.
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
REVENUE REGULATIONS NO. 14-2002
NOTE: Amended in RR 17-2003
SUBJECT : Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as amended.
TO : All Internal Revenue Officers, Employees, Withholding Agents and Others Concerned.
SECTION 1. Scope. – Pursuant to the provisions of Section 244, in relation to Sections 57(B), 58, 114, 116 and other pertinent Sections, all of the National Internal Revenue Code of 1997 (Tax Code), in relation to P.D. 1354 and R.A. 9010, these Regulations are hereby promulgated to further amend portions of Revenue Regulations No. 2-98, as last amended by Revenue Regulations No 12-2001, providing for additional income payments to be subjected to withholding tax and clarifying pertinent provisions in relation thereto.
SECTION. 2. Income payments subject to creditable withholding tax and rates prescribed thereon. Section 2.57.2 of Revenue Regulations No. 2-98, as amended, is hereby further amended to read as follows:
“Sec. 2.57.2.– Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines:
xxx xxx xxx
(C) Rentals
(1) Real properties. – On gross rental for the continued use or possession of real property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity – Five percent (5%);
(2) Personal properties. – On gross rental or lease in excess of Ten Thousand Pesos (P10,000.00) per payment for the continued use or possession of personal property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity which include, but not limited to the following: land transport equipment, water transportequipment, air transport equipment, industrial equipment, commercial equipment, scientific equipment, agricultural machinery and equipment, construction/civil engineering machinery and equipment, telecommunication equipment, office furniture/machines/equipment, main frame computer and all other computer machines/equipment, materials handling equipment and auxiliary equipment – Five percent (5%);
However, the Ten Thousand Pesos (P10,000.00) threshold shall not apply when the accumulated gross rental or lease paid by the lessee to the same lessor exceeds or is reasonably expected to exceed P10,000.00 within the year.
In which case, the lessee shall withhold the five percent (5%) withholding tax on the entire amount.
(3) Poles, satellites and transmission facilities. - On gross rentals or lease for the use of poles, satellites and/or transponder and transmission facilities which include but not limited to the following: switchboards, land lines/aerial cables, underground cables and submarine cables - Five percent (5%);
(4) Billboards. - On gross rentals or lease of spaces used in posting advertisements in the form of billboards and/or structures similar thereto, posted in public places such as, but not limited to, buildings, vehicles, amusement places, malls, street posts, etc. - Five percent (5%)
(D) xxx xxx xxx
(E) Income payments to certain contractors.- On gross payments to the following contractors, whether individual or corporate- Two percent (2%)
xxx xxx xxx
(4) Other contractors -
xxx xxx xxx
(m) Persons engaged in the sale of computer services, computer programmers, software/program developer/designer, internet service providers, web page designing, computer data processing, conversion or base services and other computer related activities;
xxx xxx xxx
(F) xxx xxx xxx
(G) Income payments to certain brokers and agents. – On gross commissions of customs, insurance, stock, real estate, immigration and commercial brokers, and fees of agents of professional entertainers.- Ten percent (10%)
(H) xxx xxx xxx
(I) Professional fees paid to medical practitioners. – Any amount collected for and paid to medical practitioners (includes doctors of medicine, doctors of veterinary science and dentists) by hospitals and clinics or paid directly to the medical practitioners by patients who were ‘admitted and confined’ to such Hospitals or Clinics. – Ten percent (10%)
a) It shall be the duty and responsibility of the Hospital or Clinic to remit taxes withheld from the following:
xxx xxx xxx
b) Exception - The withholding tax herein prescribed shall not apply whenever there is proof that no professional fee has in fact been charged by the medical practitioner and paid by his patient. Provided, however, that this fact is shown in a sworn declaration jointly executed by the medical practitioner, and the patient or his duly authorized representative, in case the patient is a minor or otherwise incapacitated. This sworn declaration, to be executed in the form presented in Annex “A” of these Regulations, shall form part of the records of the hospital or clinic and shall constitute as part of its records and shall be made readily available to any duly authorized Revenue Officer for tax audit purpose.
Provided, further, that the said administrator of the hospital or clinic shall inform the Revenue District Office having jurisdiction over such hospital or clinic about any medical practitioner who fails or refuses to execute the sworn statement herein prescribed, within ten (10) days from the occurrence of such event.
c) Hospitals and Clinics shall submit the names and addresses of medical practitioners in the following classifications, every 15th day after the end of each calendar quarter, to the Collection Division of the Revenue Region for non-large taxpayers and at the Large Taxpayers Document Processing and Quality Assurance Division (LTDP&QAD) in the National Office or Large Taxpayers District Office (LTDO) in the Region for large taxpayers, where such hospital or clinic is registered, using the prescribed format.
xxx xxx xxx
d) For this purpose, the term 'medical practitioners' includes, medical technologists, allied health workers (e.g., occupational therapists, physical therapists, speech therapists, nurses etc.) and other medical practitioners who are not under an employer-employee relationship with the hospital or clinic.
e) Hospitals and clinics shall be responsible for the accurate computation of professional fees paid directly to hospitals and clinics and timely remittance of 10% expanded withholding tax. The list of all income recipientspayees in this Subsection shall be included in the Alphalist of Payees Subject to Expanded Withholding Tax attached to BIR Form No. 1604-E (Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax).
xxx xxxx xxxx
(N) Income payments by government. – Income payments, except any casual or single purchase of P10,000.00 and below, which are made by a government office, national or local including barangays, or their attached agencies or bodies, and government-owned or controlled corporations, on their purchases of goods from local suppliers – Two percent (2%);
A government-owned or controlled corporation shall withhold the tax in its capacity as a government-owned or controlled corporation rather than as a corporation stated in Subsection (M) hereof.
(O) Commissions of independent and exclusive distributors, medical/ technical and sales representatives, and marketing agents of multilevel marketing companies. – On gross commissions paid by multi-level marketing companies to independent and exclusive distributors, medical/technical and sales representatives, and marketing agents and sub-agents on their sale of goods or services by way of direct selling or similar arrangements. – Ten percent (10%);
‘Multi-level marketing’ is a system of direct selling in which consumer products are sold by individuals where consumer products and services are supplied by an established multi-level marketing company who encourages the distributor to build and manage his own sales force by recruiting, motivating, and training others to sell the product or service. A percentage on the sales of the distributor’s sales force would be his compensation in addition to his personal sales.
‘Multi-level marketing companies’ means any entity that is engaged in the sale of its products or services through individual that directly sell such products or services to the consumers.
(P) Tolling fees paid to refineries. - On the gross processing/tolling fees paid to refineries for the conversion of molasses to its by-products and raw sugar to refined sugar - Five percent (5%)
(Q) Payments made by pre-need companies to funeral parlors. - On gross payments made by pre-need companies to funeral parlors for funeral services rendered.- One percent (1%) (R) Payments made to embalmers. - On gross payments made to embalmers for embalming services rendered to funeral companies.- One percent (1%)
For purposes of these regulations, all income payments paid to subagents or their equivalent, whether paid directly or indirectly by the agent or the owner of the goods, shall be subject to withholding tax in the same manner as that of the agent.”
SECTION 3. Persons required to deduct and withhold. - Section 2.57.3 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“Sec. 2.57.3. Persons required to deduct and withhold. – The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.57.2:
(A) In general, any juridical person, whether or not engaged in trade or business;
(B) An individual, with respect to payments made in connection with his trade or business. However, insofar as taxable sale, exchange or transfer of real property is concerned, individual buyers who are not engaged in trade or business are also constituted as withholding agents;
(C) All government offices including government-owned or controlled corporations, as well as provincial, city and municipal governments and barangays.”
SECTION 4. Exemption from Withholding. – Section 2.57.5 of Revenue Regulations No. 2-98 is hereby amended to read as follows: “Sec. 2.57.5. Exemption from Withholding – The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to the following:
(A) National government agencies and its instrumentalities including provincial, city, municipal governments and barangays except governmentowned and controlled corporations.
(B) Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following:
(1) xxx xxx xxx
(2) Corporations duly registered with the Board of Investments, Philippine Export Processing Zones and Subic Bay Metropolitan Authority enjoying exemption from income tax pursuant to E.O. 226, as amended, R.A. 7916, the Omnibus Investment Code of 1997 and R.A. 7227, as amended, respectively;
(3) xxx xxx xxx
(4) General professional partnerships (5) Joint ventures or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal & other energy operations pursuant to an operating or consortium agreement under a service contract with the government. SECTION 5. Registration. – Sec. 2.58.2 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“Sec. 2.58.2. Registration
Registration with the Register of Deeds. - xxx xxx
The Register of Deeds shall annotate on the Original Certificate of Title, Transfer Certificate of Title or Condominium Certificate of Title of the said property such information required under Section 58(E) of the Tax Code. In case of any violation of the said requirement, he shall be liable to the penalties provided under Section 269 of the said Tax Code.”
SECTION 6. Requirements for Deductibility of Certain Expenses. – Section 2.58.5 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“Sec. 2.58.5. Requirements for Deductibility – Any income payment which is otherwise deductible under the Code shall be allowed as a deduction from the payor’s gross income only if it is shown that the income tax required to be withheld has been paid to the Bureau in accordance with Secs. 57 and 58 of the Code.
A deduction will also be allowed in the following cases where no withholding of tax was made:
(A) The payee reported the income and pays the tax due thereon and the withholding agent pays the tax including the interest incident to the failure to withhold the tax, and surcharges, if applicable, at the time of the audit investigation or reinvestigation/reconsideration.
(B) The recipient/payee failed to report the income on the due date thereof, but the withholding agent/taxpayer pays the tax, including the interest incident to the failure to withhold the tax, and surcharges, if applicable, at the time of the audit/investigation or reinvestigation/reconsideration.
(C) The withholding agent erroneously underwithheld the tax but pays the difference between the correct amount and the amount of tax withheld, including the interest, incident to such error, and surcharges, if applicable, at the time of the audit/investigation or reinvestigation/reconsideration. “
SECTION 7. Withholding of Value Added Tax. – Section 4.114 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“ Sec. 4.114. WITHHOLDING OF VALUE ADDED TAX
In general, value-added tax due on the sale of goods and services are not subject to withholding since the tax is not determinable at the time of sale. However, gross payments to non-residents by both government and private entities for services rendered in the Philippines shall be subject to final withholding tax at the rate of 10% to be filed and paid using BIR Form No. 1600 – Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld.
Moreover, sale of goods and services subject to VAT to the government shall be subject to withholding pursuant to Sec. 114(C) of the National Internal Revenue Code of 1997.
(A) Rates and basis of value-added tax to be withheld. – The gross payments made by the government to sellers of goods and services shall be subject to withholding tax at the rates herein prescribed.
(1) In general, payments by the government or any of its political subdivisions, instrumentalities or agencies including government-owned or controlled corporations (GOCCs) on account of its purchase of goods from sellers and services rendered by contractors/ service providers who are subject to the value-added tax –
On gross selling price for the purchase of goods (creditable) 3%
On gross payment for services rendered (creditable) 6%
(2) Payments made to government public works contractors (creditable) 8.5%
(3) Payments for services rendered in the Phils. by non-residents –
For lease or use of property or property rights owned by non-residents in the Phils. (final) 10%
Services rendered to local insurance companies, with respect to reinsurance premiums payable to non-resident insurance or reinsurance companies (final) 10%
Other services rendered in the Phil. by non-residents (final) 10%
(B) Persons required to deduct and withhold. – All local government units, represented by the Provincial Treasurer in the provinces, the City Treasurer in the cities, the Municipal Treasurer in the municipalities, and Barangay Treasurer in the barangays, Treasurers of GOCCs and the Chief Accountants or any person holding similar position and performing similar function in government offices and GOCCs, as withholding agents, shall deduct and withhold the value-added tax before making any payment to the seller of goods and services.
Where the government as herein defined has regional offices, branches or units, the withholding and remittance of the VAT withheld may be done on a decentralized basis. As such the treasurer or the chief accountant or any person holding similar function in said regional office, branch or unit shall deduct and withhold the VAT before making any payment to the seller of goods and services. Decentralized remittance, however, is not applicable if the taxpayerwithholding agent is classified as large taxpayer by the Commissioner of Internal Revenue.
Private entities are likewise considered as withholding agents on gross payments made to non-residents, applying the final withholding tax rate of ten (10%) percent.
(C) Returns and payment of taxes withheld. - The withholding agents shall accomplish the Monthly Remittance Returns of Value-Added Tax and Other Percentage Taxes Withheld (BIR Form No. 1600) in triplicate and the amount withheld paid upon filing the return with the authorized agent banks under the jurisdiction of the Revenue District Office (RDO)/ Large Taxpayers District Office (LTDO) where the withholding agent is required to register and file the return. In places where there is no authorized agent bank, the return shall be filed directly with the Revenue Collection Officer or the duly authorized Municipal/City Treasurer of the Revenue District Office where the withholding agent is required to register or file the return, except in cases where the Commissioner otherwise permits.
xxx xxx xxx”
SECTION 8. Withholding of Percentage Tax. – Section 5.116 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“Sec. 5.116. WITHHOLDING OF PERCENTAGE TAX – Bureaus, offices and instrumentalities of the government, including government-owned or controlled corporations as well as their subsidiaries, provinces, cities and municipalities making any money payment to private individuals, corporations, partnerships and/or associations are required to deduct and withhold the percentage taxes due from the payees on account of such money payments.
(A) Internal revenue taxes required to be withheld. - Percentage taxes on gross money payments to the following shall be subjected to withholding at the rates herein prescribed:
xxx xxx xxx
(12) On gross payments to stock, real estate, commercial, customs, insurance and immigration brokers based on gross receipts for services rendered pursuant to R.A. 9010. - Seven percent (7%).
(B) Returns and payments of taxes withheld. - No money payments shall be made by any government office or agency, unless the taxes due thereon shall have been deducted and withheld.
Taxes deducted and withheld shall be covered by the Monthly Remittance Return of VAT and Other Percentage Taxes Withheld (BIR Form No. 1600) in triplicate to be filed and the tax to be paid to the Authorized Agent Bank under the jurisdiction of the Large Taxpayers Service including the Large Taxpayer’s District Office, in case of large taxpayer, or the Authorized Agent Bank under the jurisdiction of the Revenue District Office where the withholding agent is located, for non-large taxpayer. In places where there are no authorized agent bank, the return shall be filed directly with the Revenue Collection Officer or the duly authorized Treasurer of the City or Municipality where the withholding agent is required to register except in cases where the Commissioner otherwise permits. The required return shall be filed and payments made within ten (10) days following the end of the month the withholding was made or the withholding tax has accrued.
xxx xxx xxx”
SECTION 9. Repealing Clause. – All existing rules and regulations or any revenue issuances or parts thereof which are inconsistent with the provisions of these regulations are hereby revoked or amended accordingly.
SECTION 10. Effectivity. – These Regulations shall take effect on October 1, 2002 and shall cover income payments to be paid or payable starting October 2002, which are required to be remitted to the Bureau of Internal Revenue within the month of November.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
J-2
10
ANNEX “A”
AFFIDAVIT-DECLARATION THAT NO PROFESSIONAL FEE
HAS BEEN CHARGED BY MEDICAL PRACTITIONER
Republic of the Philippines )
Province of ___________________ ) SS
City/Municipality of_____________ )
WE,
_____________________________, (Patient/ Authorized Representative) of legal age, single/married and
residing at __________________________________________,
_____________________________, (Medical Practitioner) of legal age, single/married residing at
________________________________________ ,
after having been duly sworn to in accordance with law, hereby depose & state:
1) That, ________________________ is a patient in the name of the hospital, having been
confined from _________ to _________________due to ______________________;
2) That, ________________________ is the authorized representative/guardian of the
herein-mentioned patient;
3) That, ________________________ is the attending physician of the herein-mentioned
patient for the duration of his stay in the herein-mentioned hospital;
4) That, no professional fee was charged by the aforesaid physician, the patient being his/her
______________________.
5) That, this affidavit has been executed as a requirement of Revenue Regulations
____________.
IN WITNESS WHEREOF, we have hereunto set our hands this ___ day of
_______, 20__, at ______________________.
Affiant-Declarant
_________________ ________________
Patient/Guardian Medical Practitioner
License No. _______
CTC No. ________ CTC No. _________
Issued at ________ Issued at _________
Issued on _______ Issued on ________
SUBSCRIBED and sworn to before me, in the City/Municipality of ______________________
this _____ day of ___________, 20___ .
_____________________________
Doc. No. _____; Notary Public
Page No. _____; Until _____________
Book No. _____; PTR No. __________
Series of _____.
SUBJECT : Amending Further Pertinent Provisions of Revenue Regulations No. 2-98, as amended.
TO : All Internal Revenue Officers, Employees, Withholding Agents and Others Concerned.
SECTION 1. Scope. – Pursuant to the provisions of Section 244, in relation to Sections 57(B), 58, 114, 116 and other pertinent Sections, all of the National Internal Revenue Code of 1997 (Tax Code), in relation to P.D. 1354 and R.A. 9010, these Regulations are hereby promulgated to further amend portions of Revenue Regulations No. 2-98, as last amended by Revenue Regulations No 12-2001, providing for additional income payments to be subjected to withholding tax and clarifying pertinent provisions in relation thereto.
SECTION. 2. Income payments subject to creditable withholding tax and rates prescribed thereon. Section 2.57.2 of Revenue Regulations No. 2-98, as amended, is hereby further amended to read as follows:
“Sec. 2.57.2.– Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines:
xxx xxx xxx
(C) Rentals
(1) Real properties. – On gross rental for the continued use or possession of real property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity – Five percent (5%);
(2) Personal properties. – On gross rental or lease in excess of Ten Thousand Pesos (P10,000.00) per payment for the continued use or possession of personal property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity which include, but not limited to the following: land transport equipment, water transportequipment, air transport equipment, industrial equipment, commercial equipment, scientific equipment, agricultural machinery and equipment, construction/civil engineering machinery and equipment, telecommunication equipment, office furniture/machines/equipment, main frame computer and all other computer machines/equipment, materials handling equipment and auxiliary equipment – Five percent (5%);
However, the Ten Thousand Pesos (P10,000.00) threshold shall not apply when the accumulated gross rental or lease paid by the lessee to the same lessor exceeds or is reasonably expected to exceed P10,000.00 within the year.
In which case, the lessee shall withhold the five percent (5%) withholding tax on the entire amount.
(3) Poles, satellites and transmission facilities. - On gross rentals or lease for the use of poles, satellites and/or transponder and transmission facilities which include but not limited to the following: switchboards, land lines/aerial cables, underground cables and submarine cables - Five percent (5%);
(4) Billboards. - On gross rentals or lease of spaces used in posting advertisements in the form of billboards and/or structures similar thereto, posted in public places such as, but not limited to, buildings, vehicles, amusement places, malls, street posts, etc. - Five percent (5%)
(D) xxx xxx xxx
(E) Income payments to certain contractors.- On gross payments to the following contractors, whether individual or corporate- Two percent (2%)
xxx xxx xxx
(4) Other contractors -
xxx xxx xxx
(m) Persons engaged in the sale of computer services, computer programmers, software/program developer/designer, internet service providers, web page designing, computer data processing, conversion or base services and other computer related activities;
xxx xxx xxx
(F) xxx xxx xxx
(G) Income payments to certain brokers and agents. – On gross commissions of customs, insurance, stock, real estate, immigration and commercial brokers, and fees of agents of professional entertainers.- Ten percent (10%)
(H) xxx xxx xxx
(I) Professional fees paid to medical practitioners. – Any amount collected for and paid to medical practitioners (includes doctors of medicine, doctors of veterinary science and dentists) by hospitals and clinics or paid directly to the medical practitioners by patients who were ‘admitted and confined’ to such Hospitals or Clinics. – Ten percent (10%)
a) It shall be the duty and responsibility of the Hospital or Clinic to remit taxes withheld from the following:
xxx xxx xxx
b) Exception - The withholding tax herein prescribed shall not apply whenever there is proof that no professional fee has in fact been charged by the medical practitioner and paid by his patient. Provided, however, that this fact is shown in a sworn declaration jointly executed by the medical practitioner, and the patient or his duly authorized representative, in case the patient is a minor or otherwise incapacitated. This sworn declaration, to be executed in the form presented in Annex “A” of these Regulations, shall form part of the records of the hospital or clinic and shall constitute as part of its records and shall be made readily available to any duly authorized Revenue Officer for tax audit purpose.
Provided, further, that the said administrator of the hospital or clinic shall inform the Revenue District Office having jurisdiction over such hospital or clinic about any medical practitioner who fails or refuses to execute the sworn statement herein prescribed, within ten (10) days from the occurrence of such event.
c) Hospitals and Clinics shall submit the names and addresses of medical practitioners in the following classifications, every 15th day after the end of each calendar quarter, to the Collection Division of the Revenue Region for non-large taxpayers and at the Large Taxpayers Document Processing and Quality Assurance Division (LTDP&QAD) in the National Office or Large Taxpayers District Office (LTDO) in the Region for large taxpayers, where such hospital or clinic is registered, using the prescribed format.
xxx xxx xxx
d) For this purpose, the term 'medical practitioners' includes, medical technologists, allied health workers (e.g., occupational therapists, physical therapists, speech therapists, nurses etc.) and other medical practitioners who are not under an employer-employee relationship with the hospital or clinic.
e) Hospitals and clinics shall be responsible for the accurate computation of professional fees paid directly to hospitals and clinics and timely remittance of 10% expanded withholding tax. The list of all income recipientspayees in this Subsection shall be included in the Alphalist of Payees Subject to Expanded Withholding Tax attached to BIR Form No. 1604-E (Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax).
xxx xxxx xxxx
(N) Income payments by government. – Income payments, except any casual or single purchase of P10,000.00 and below, which are made by a government office, national or local including barangays, or their attached agencies or bodies, and government-owned or controlled corporations, on their purchases of goods from local suppliers – Two percent (2%);
A government-owned or controlled corporation shall withhold the tax in its capacity as a government-owned or controlled corporation rather than as a corporation stated in Subsection (M) hereof.
(O) Commissions of independent and exclusive distributors, medical/ technical and sales representatives, and marketing agents of multilevel marketing companies. – On gross commissions paid by multi-level marketing companies to independent and exclusive distributors, medical/technical and sales representatives, and marketing agents and sub-agents on their sale of goods or services by way of direct selling or similar arrangements. – Ten percent (10%);
‘Multi-level marketing’ is a system of direct selling in which consumer products are sold by individuals where consumer products and services are supplied by an established multi-level marketing company who encourages the distributor to build and manage his own sales force by recruiting, motivating, and training others to sell the product or service. A percentage on the sales of the distributor’s sales force would be his compensation in addition to his personal sales.
‘Multi-level marketing companies’ means any entity that is engaged in the sale of its products or services through individual that directly sell such products or services to the consumers.
(P) Tolling fees paid to refineries. - On the gross processing/tolling fees paid to refineries for the conversion of molasses to its by-products and raw sugar to refined sugar - Five percent (5%)
(Q) Payments made by pre-need companies to funeral parlors. - On gross payments made by pre-need companies to funeral parlors for funeral services rendered.- One percent (1%) (R) Payments made to embalmers. - On gross payments made to embalmers for embalming services rendered to funeral companies.- One percent (1%)
For purposes of these regulations, all income payments paid to subagents or their equivalent, whether paid directly or indirectly by the agent or the owner of the goods, shall be subject to withholding tax in the same manner as that of the agent.”
SECTION 3. Persons required to deduct and withhold. - Section 2.57.3 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“Sec. 2.57.3. Persons required to deduct and withhold. – The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.57.2:
(A) In general, any juridical person, whether or not engaged in trade or business;
(B) An individual, with respect to payments made in connection with his trade or business. However, insofar as taxable sale, exchange or transfer of real property is concerned, individual buyers who are not engaged in trade or business are also constituted as withholding agents;
(C) All government offices including government-owned or controlled corporations, as well as provincial, city and municipal governments and barangays.”
SECTION 4. Exemption from Withholding. – Section 2.57.5 of Revenue Regulations No. 2-98 is hereby amended to read as follows: “Sec. 2.57.5. Exemption from Withholding – The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to the following:
(A) National government agencies and its instrumentalities including provincial, city, municipal governments and barangays except governmentowned and controlled corporations.
(B) Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following:
(1) xxx xxx xxx
(2) Corporations duly registered with the Board of Investments, Philippine Export Processing Zones and Subic Bay Metropolitan Authority enjoying exemption from income tax pursuant to E.O. 226, as amended, R.A. 7916, the Omnibus Investment Code of 1997 and R.A. 7227, as amended, respectively;
(3) xxx xxx xxx
(4) General professional partnerships (5) Joint ventures or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal & other energy operations pursuant to an operating or consortium agreement under a service contract with the government. SECTION 5. Registration. – Sec. 2.58.2 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“Sec. 2.58.2. Registration
Registration with the Register of Deeds. - xxx xxx
The Register of Deeds shall annotate on the Original Certificate of Title, Transfer Certificate of Title or Condominium Certificate of Title of the said property such information required under Section 58(E) of the Tax Code. In case of any violation of the said requirement, he shall be liable to the penalties provided under Section 269 of the said Tax Code.”
SECTION 6. Requirements for Deductibility of Certain Expenses. – Section 2.58.5 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“Sec. 2.58.5. Requirements for Deductibility – Any income payment which is otherwise deductible under the Code shall be allowed as a deduction from the payor’s gross income only if it is shown that the income tax required to be withheld has been paid to the Bureau in accordance with Secs. 57 and 58 of the Code.
A deduction will also be allowed in the following cases where no withholding of tax was made:
(A) The payee reported the income and pays the tax due thereon and the withholding agent pays the tax including the interest incident to the failure to withhold the tax, and surcharges, if applicable, at the time of the audit investigation or reinvestigation/reconsideration.
(B) The recipient/payee failed to report the income on the due date thereof, but the withholding agent/taxpayer pays the tax, including the interest incident to the failure to withhold the tax, and surcharges, if applicable, at the time of the audit/investigation or reinvestigation/reconsideration.
(C) The withholding agent erroneously underwithheld the tax but pays the difference between the correct amount and the amount of tax withheld, including the interest, incident to such error, and surcharges, if applicable, at the time of the audit/investigation or reinvestigation/reconsideration. “
SECTION 7. Withholding of Value Added Tax. – Section 4.114 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“ Sec. 4.114. WITHHOLDING OF VALUE ADDED TAX
In general, value-added tax due on the sale of goods and services are not subject to withholding since the tax is not determinable at the time of sale. However, gross payments to non-residents by both government and private entities for services rendered in the Philippines shall be subject to final withholding tax at the rate of 10% to be filed and paid using BIR Form No. 1600 – Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld.
Moreover, sale of goods and services subject to VAT to the government shall be subject to withholding pursuant to Sec. 114(C) of the National Internal Revenue Code of 1997.
(A) Rates and basis of value-added tax to be withheld. – The gross payments made by the government to sellers of goods and services shall be subject to withholding tax at the rates herein prescribed.
(1) In general, payments by the government or any of its political subdivisions, instrumentalities or agencies including government-owned or controlled corporations (GOCCs) on account of its purchase of goods from sellers and services rendered by contractors/ service providers who are subject to the value-added tax –
On gross selling price for the purchase of goods (creditable) 3%
On gross payment for services rendered (creditable) 6%
(2) Payments made to government public works contractors (creditable) 8.5%
(3) Payments for services rendered in the Phils. by non-residents –
For lease or use of property or property rights owned by non-residents in the Phils. (final) 10%
Services rendered to local insurance companies, with respect to reinsurance premiums payable to non-resident insurance or reinsurance companies (final) 10%
Other services rendered in the Phil. by non-residents (final) 10%
(B) Persons required to deduct and withhold. – All local government units, represented by the Provincial Treasurer in the provinces, the City Treasurer in the cities, the Municipal Treasurer in the municipalities, and Barangay Treasurer in the barangays, Treasurers of GOCCs and the Chief Accountants or any person holding similar position and performing similar function in government offices and GOCCs, as withholding agents, shall deduct and withhold the value-added tax before making any payment to the seller of goods and services.
Where the government as herein defined has regional offices, branches or units, the withholding and remittance of the VAT withheld may be done on a decentralized basis. As such the treasurer or the chief accountant or any person holding similar function in said regional office, branch or unit shall deduct and withhold the VAT before making any payment to the seller of goods and services. Decentralized remittance, however, is not applicable if the taxpayerwithholding agent is classified as large taxpayer by the Commissioner of Internal Revenue.
Private entities are likewise considered as withholding agents on gross payments made to non-residents, applying the final withholding tax rate of ten (10%) percent.
(C) Returns and payment of taxes withheld. - The withholding agents shall accomplish the Monthly Remittance Returns of Value-Added Tax and Other Percentage Taxes Withheld (BIR Form No. 1600) in triplicate and the amount withheld paid upon filing the return with the authorized agent banks under the jurisdiction of the Revenue District Office (RDO)/ Large Taxpayers District Office (LTDO) where the withholding agent is required to register and file the return. In places where there is no authorized agent bank, the return shall be filed directly with the Revenue Collection Officer or the duly authorized Municipal/City Treasurer of the Revenue District Office where the withholding agent is required to register or file the return, except in cases where the Commissioner otherwise permits.
xxx xxx xxx”
SECTION 8. Withholding of Percentage Tax. – Section 5.116 of Revenue Regulations No. 2-98 is hereby amended to read as follows:
“Sec. 5.116. WITHHOLDING OF PERCENTAGE TAX – Bureaus, offices and instrumentalities of the government, including government-owned or controlled corporations as well as their subsidiaries, provinces, cities and municipalities making any money payment to private individuals, corporations, partnerships and/or associations are required to deduct and withhold the percentage taxes due from the payees on account of such money payments.
(A) Internal revenue taxes required to be withheld. - Percentage taxes on gross money payments to the following shall be subjected to withholding at the rates herein prescribed:
xxx xxx xxx
(12) On gross payments to stock, real estate, commercial, customs, insurance and immigration brokers based on gross receipts for services rendered pursuant to R.A. 9010. - Seven percent (7%).
(B) Returns and payments of taxes withheld. - No money payments shall be made by any government office or agency, unless the taxes due thereon shall have been deducted and withheld.
Taxes deducted and withheld shall be covered by the Monthly Remittance Return of VAT and Other Percentage Taxes Withheld (BIR Form No. 1600) in triplicate to be filed and the tax to be paid to the Authorized Agent Bank under the jurisdiction of the Large Taxpayers Service including the Large Taxpayer’s District Office, in case of large taxpayer, or the Authorized Agent Bank under the jurisdiction of the Revenue District Office where the withholding agent is located, for non-large taxpayer. In places where there are no authorized agent bank, the return shall be filed directly with the Revenue Collection Officer or the duly authorized Treasurer of the City or Municipality where the withholding agent is required to register except in cases where the Commissioner otherwise permits. The required return shall be filed and payments made within ten (10) days following the end of the month the withholding was made or the withholding tax has accrued.
xxx xxx xxx”
SECTION 9. Repealing Clause. – All existing rules and regulations or any revenue issuances or parts thereof which are inconsistent with the provisions of these regulations are hereby revoked or amended accordingly.
SECTION 10. Effectivity. – These Regulations shall take effect on October 1, 2002 and shall cover income payments to be paid or payable starting October 2002, which are required to be remitted to the Bureau of Internal Revenue within the month of November.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
J-2
10
ANNEX “A”
AFFIDAVIT-DECLARATION THAT NO PROFESSIONAL FEE
HAS BEEN CHARGED BY MEDICAL PRACTITIONER
Republic of the Philippines )
Province of ___________________ ) SS
City/Municipality of_____________ )
WE,
_____________________________, (Patient/ Authorized Representative) of legal age, single/married and
residing at __________________________________________,
_____________________________, (Medical Practitioner) of legal age, single/married residing at
________________________________________ ,
after having been duly sworn to in accordance with law, hereby depose & state:
1) That, ________________________ is a patient in the name of the hospital, having been
confined from _________ to _________________due to ______________________;
2) That, ________________________ is the authorized representative/guardian of the
herein-mentioned patient;
3) That, ________________________ is the attending physician of the herein-mentioned
patient for the duration of his stay in the herein-mentioned hospital;
4) That, no professional fee was charged by the aforesaid physician, the patient being his/her
______________________.
5) That, this affidavit has been executed as a requirement of Revenue Regulations
____________.
IN WITNESS WHEREOF, we have hereunto set our hands this ___ day of
_______, 20__, at ______________________.
Affiant-Declarant
_________________ ________________
Patient/Guardian Medical Practitioner
License No. _______
CTC No. ________ CTC No. _________
Issued at ________ Issued at _________
Issued on _______ Issued on ________
SUBSCRIBED and sworn to before me, in the City/Municipality of ______________________
this _____ day of ___________, 20___ .
_____________________________
Doc. No. _____; Notary Public
Page No. _____; Until _____________
Book No. _____; PTR No. __________
Series of _____.
REVENUE REGULATIONS NO. 9-2002
NOTE: Amended in RR 26-2002, RR 5-2004, and RR 10-2007
SUBJECT: Amending Further Revenue Regulations (RR) No. 9-2001, as Amended by Revenue Regulations No. 2-2002, Implementing Filing of Tax Returns and Payment of Taxes thru the Electronic Filing and Payment System (EFPS) and likewise amending partly RR No. 1-98
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 (Code) in relation to Section 27 of Republic Act No. 8792, otherwise known as the “Electronic Commerce Act,” these Regulations are hereby promulgated to further amend certain provisions of Revenue Regulations (RR) No. 9-2001, as amended by RR 2-2002, and RR No. 1-98.
SEC. 2. DEFINITION OF TERMS. - Sections 2.2 and 2.11 of RR No. 9-2001 as amended by RR 2-2002, is hereby further amended to read as follows:
“Section 2. DEFINITION OF TERMS. -
“2.1 xxx xxx xxx
“2.2 (a) Authorized Agent Bank – 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.
“2.2 (b) EFPS AAB – refers to a BIR authorized agent bank (AAB) that has passed the accreditation criteria for EFPS AAB such as being an internet-ready bank, indorsed by the Bureau of Treasury (BTR) for EFPS accreditation, certified by the Information Systems Group of the BIR that the applicant bank’s system is acceptable and compatible with the EFPS of the BIR.
“ xxx xxx xxx
“2.11 Acknowledgement Number - refers to the control number issued by the AAB to the BIR to confirm that tax payment has been credited to the account of the government or recognized as revenue (internal revenue tax collection) by the Bureau of Treasury.
“xxx xxx xxx”
SEC. 3. COVERAGE. - Section 3.1 of RR No. 9-2001, as amended by RR 2-2002 is hereby further amended to read as follows:
“Section 3. COVERAGE. –
“3.1 Large Taxpayers. –(a) Beginning the calendar year 2001 and all fiscal years as well as calendar years thereafter, Large Taxpayers shall e-file their final adjustment income tax returns for the said calendar/fiscal years and e-pay the taxes due thereon through the EFPS on or before the 15th day of the fourth month following the close of the taxable year. Nonetheless, epayment shall be optional for tax returns that will be filed until July 31, 2002. Thus, until July 31, 2002, if a taxpayer does not opt to pay electronically, payment shall be made manually.
(b) Beginning July 1, 2002, Large Taxpayers shall e-file all the tax returns that can be filed electronically through the EFPS but e-payment shall nonetheless remain optional until July 31, 2002. However, unless otherwise notified by the Commissioner of Internal Revenue (CIR), for all returns that will be filed starting August 1, 2002, e-payment of the taxes due thereon thru EFPS shall become mandatory.
“3.2 Non-Large Taxpayers. - Beginning July 1, 2002, two hundred (200) Non-Large Taxpayers identified by the BIR shall have the option to avail of the EFPS in filing their returns which taxes due thereon may be paid manually or via EFPS.
SEC. 4. ENROLLMENT FOR SYSTEM USAGE. - The second paragraph of Section 4 of RR 9-2001, as amended by RR 2-2002 , is hereby further amended to read as follows:
“Section 4. ENROLLMENT FOR SYSTEM USAGE.- xxx xxx
“ xxx xxx xxx
“In addition , a taxpayer that will e-pay shall enroll with any EFPS AAB where he/it intends to pay through the bank debit system. However, Large Taxpayers’ enrollment shall be limited only to the EFPS AABs authorized to serve them and who are capable to accept e-payments.
SEC. 5. TIME AND PLACE OF PAYMENT. - Section 8.1 of Section 8 of RR No. 9-2001 as amended by RR 2-2002 is hereby further amended to read as follows:
“Section 8. TIME AND PLACE OF PAYMENT. -
“8.1 Large Taxpayers. -
(a) Large Taxpayers who will e-pay shall enroll with any EFPS AAB authorized to serve them and who is capable to accept e-payments. E-payments shall be made within the day the return is electronically filed following the “pay-as-youfile” principle.
Accreditation of an existing BIR AAB as an EFPS AAB authorized to service taxpayers classified and notified by the BIR as large taxpayers shall be opened to such number of commercial/universal banks as may be necessary to provide efficient and effective service to all the large taxpayers.
“(b) For Large Taxpayers who intend to pay their taxes manually, the same shall be made at the AABs servicing the aforesaid taxpayers with respect to Large Taxpayers registered with the LTS or at the AABs servicing the taxpayers under the jurisdiction of the LTDOs with respect to Large Taxpayers registered with the LTDOs. Manual payments, where allowed, shall be made within the banking hours of the day when the return was electronically filed following the “pay-as–you-file” principle.
“8.2 Non-Large Taxpayers –
“ (a) xxx xxx xxx”
“(b) xxx xxx xxx”
The provisions of the foregoing paragraphs notwithstanding, the filing of the return ahead of the payment of the tax due thereon is still in accordance with “pay-as-you-file” principle as long as the payment of the tax is made on or before the due date of the applicable tax.
SEC. 6. CONFIRMATION OF RECEIPT OF RETURN/S/DOCUMENTS AND PAYMENT/S OF TAXES. - Section 9.1 of RR 9-2001 is hereby amended to read as follows :
“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 AAB to the BIR to confirm that the tax payment has been credited to the account of the government or recognized as revenue (internal revenue tax collection) by the Bureau of Treasury.
SEC. 7. REPEALING CLAUSE. - Any revenue issuance or portion thereof inconsistent herewith is hereby revoked, modified or amended accordingly.
SEC. 8. EFFECTIVITY CLAUSE. - These Regulations shall take effect fifteen (15) days after publication in a 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: Amending Further Revenue Regulations (RR) No. 9-2001, as Amended by Revenue Regulations No. 2-2002, Implementing Filing of Tax Returns and Payment of Taxes thru the Electronic Filing and Payment System (EFPS) and likewise amending partly RR No. 1-98
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 (Code) in relation to Section 27 of Republic Act No. 8792, otherwise known as the “Electronic Commerce Act,” these Regulations are hereby promulgated to further amend certain provisions of Revenue Regulations (RR) No. 9-2001, as amended by RR 2-2002, and RR No. 1-98.
SEC. 2. DEFINITION OF TERMS. - Sections 2.2 and 2.11 of RR No. 9-2001 as amended by RR 2-2002, is hereby further amended to read as follows:
“Section 2. DEFINITION OF TERMS. -
“2.1 xxx xxx xxx
“2.2 (a) Authorized Agent Bank – 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.
“2.2 (b) EFPS AAB – refers to a BIR authorized agent bank (AAB) that has passed the accreditation criteria for EFPS AAB such as being an internet-ready bank, indorsed by the Bureau of Treasury (BTR) for EFPS accreditation, certified by the Information Systems Group of the BIR that the applicant bank’s system is acceptable and compatible with the EFPS of the BIR.
“ xxx xxx xxx
“2.11 Acknowledgement Number - refers to the control number issued by the AAB to the BIR to confirm that tax payment has been credited to the account of the government or recognized as revenue (internal revenue tax collection) by the Bureau of Treasury.
“xxx xxx xxx”
SEC. 3. COVERAGE. - Section 3.1 of RR No. 9-2001, as amended by RR 2-2002 is hereby further amended to read as follows:
“Section 3. COVERAGE. –
“3.1 Large Taxpayers. –(a) Beginning the calendar year 2001 and all fiscal years as well as calendar years thereafter, Large Taxpayers shall e-file their final adjustment income tax returns for the said calendar/fiscal years and e-pay the taxes due thereon through the EFPS on or before the 15th day of the fourth month following the close of the taxable year. Nonetheless, epayment shall be optional for tax returns that will be filed until July 31, 2002. Thus, until July 31, 2002, if a taxpayer does not opt to pay electronically, payment shall be made manually.
(b) Beginning July 1, 2002, Large Taxpayers shall e-file all the tax returns that can be filed electronically through the EFPS but e-payment shall nonetheless remain optional until July 31, 2002. However, unless otherwise notified by the Commissioner of Internal Revenue (CIR), for all returns that will be filed starting August 1, 2002, e-payment of the taxes due thereon thru EFPS shall become mandatory.
“3.2 Non-Large Taxpayers. - Beginning July 1, 2002, two hundred (200) Non-Large Taxpayers identified by the BIR shall have the option to avail of the EFPS in filing their returns which taxes due thereon may be paid manually or via EFPS.
SEC. 4. ENROLLMENT FOR SYSTEM USAGE. - The second paragraph of Section 4 of RR 9-2001, as amended by RR 2-2002 , is hereby further amended to read as follows:
“Section 4. ENROLLMENT FOR SYSTEM USAGE.- xxx xxx
“ xxx xxx xxx
“In addition , a taxpayer that will e-pay shall enroll with any EFPS AAB where he/it intends to pay through the bank debit system. However, Large Taxpayers’ enrollment shall be limited only to the EFPS AABs authorized to serve them and who are capable to accept e-payments.
SEC. 5. TIME AND PLACE OF PAYMENT. - Section 8.1 of Section 8 of RR No. 9-2001 as amended by RR 2-2002 is hereby further amended to read as follows:
“Section 8. TIME AND PLACE OF PAYMENT. -
“8.1 Large Taxpayers. -
(a) Large Taxpayers who will e-pay shall enroll with any EFPS AAB authorized to serve them and who is capable to accept e-payments. E-payments shall be made within the day the return is electronically filed following the “pay-as-youfile” principle.
Accreditation of an existing BIR AAB as an EFPS AAB authorized to service taxpayers classified and notified by the BIR as large taxpayers shall be opened to such number of commercial/universal banks as may be necessary to provide efficient and effective service to all the large taxpayers.
“(b) For Large Taxpayers who intend to pay their taxes manually, the same shall be made at the AABs servicing the aforesaid taxpayers with respect to Large Taxpayers registered with the LTS or at the AABs servicing the taxpayers under the jurisdiction of the LTDOs with respect to Large Taxpayers registered with the LTDOs. Manual payments, where allowed, shall be made within the banking hours of the day when the return was electronically filed following the “pay-as–you-file” principle.
“8.2 Non-Large Taxpayers –
“ (a) xxx xxx xxx”
“(b) xxx xxx xxx”
The provisions of the foregoing paragraphs notwithstanding, the filing of the return ahead of the payment of the tax due thereon is still in accordance with “pay-as-you-file” principle as long as the payment of the tax is made on or before the due date of the applicable tax.
SEC. 6. CONFIRMATION OF RECEIPT OF RETURN/S/DOCUMENTS AND PAYMENT/S OF TAXES. - Section 9.1 of RR 9-2001 is hereby amended to read as follows :
“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 AAB to the BIR to confirm that the tax payment has been credited to the account of the government or recognized as revenue (internal revenue tax collection) by the Bureau of Treasury.
SEC. 7. REPEALING CLAUSE. - Any revenue issuance or portion thereof inconsistent herewith is hereby revoked, modified or amended accordingly.
SEC. 8. EFFECTIVITY CLAUSE. - These Regulations shall take effect fifteen (15) days after publication in a newspaper of general circulation.
(Original Signed)
JOSE ISIDRO N. CAMACHO
Secretary of Finance
Recommending Approval:
(Original Signed)
RENÉ G. BAÑEZ
Commissioner of Internal Revenue
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