Revenue Regulations (RRs)
RR NO. 4-2018, issued on January 15, 2018 pursuant to the provisions in Secs. 4 and 244 of RA No. 8424 and Sec. 84 of RA No. 10963, provides the rules and regulations implementing the rate adjustment of documentary stamp taxes under RA No. 10963 (TRAIN Law). The rates of DST on original issues, certificates, bills, bank checks, drafts, receipts, and other documents have generally increased. [Digest]
RR NO. 6-2018, issued on January 19, 2018, revokes RR No. 12-2013 relative to the requirements for deductibility of certain expenses, thereby reinstating the provisions of Sec. 2.58.5 of RR No. 14-2002, as amended by RR No. 17-2003. A deduction from gross income will be allowed in the following cases where no withholding of tax or incorrect withholding of tax was made: (a) payee reports the income, pays the tax due, and the withholding agent pays the tax including the interest and surcharges, if applicable, incidental to the failure to withhold the tax; (b) payee/recipient failed to report income on the due date, but the withholding agent/taxpayer pays the tax, including interest and surcharges, if applicable, incidental to the failure to withhold the tax; and (c) withholding agent erroneously underwithheld the tax but pays the difference between the correct withholding tax and the amount of tax withheld including interest and surcharges, if applicable, incidental to the error in withholding. [Digest]
RR NO. 7-2018, issued on January 31, 2018, amends certain sections of RR No. 12-1999, as amended by RR No. 18-2013, relative to the due process requirement in the issuance of a deficiency tax assessment. In the observance of the due process in tax audit investigation, an “Informal Conference” shall be issued first before the preliminary assessment. The Informal Conference shall last for not more than 30 days from taxpayer's receipt of the notice. If the taxpayer is still liable to deficiency taxes and the taxpayer is not amenable to the tax assessment after the Informal Conference, the BIR shall endorse the case for issuance of deficiency tax assessment within 7 days from conclusion of Informal Conference. [Digest]
Revenue Memorandum Orders (RMOs)
RMO NO. 2-2018, issued on January 10, 2018, prescribes the guidelines and procedures in implementing RA No. 10693, otherwise known as “Microfinance Non-Government Organizations (NGOs) Act.” The preferential rate of 2% tax shall be accorded to NGOs whose primary purpose is microfinance and only on their microfinance operations catering to the poor and low-income individuals, and must be based on gross receipts from microfinance operations referring to lending activities and insurance commission. [Digest]
Revenue Memorandum Circulars (RMCs)
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RMC NO. 1-2018 issued on January 5, 2018 prescribes the procedures on the use of Withholding Tax Table on Compensation Income and advises on the change of Creditable Withholding Tax Rate on certain income payments to individuals. Every employer paying compensation to its employee/s shall deduct and withhold from such compensation a tax determined in accordance with the prescribed Revised Withholding Tax Tables. Moreover, income payments to self-employed individuals or professionals shall be subject to 8% Creditable Withholding Tax. [Digest] [WT Table]
RMC NO. 3-2018, issued on January 9, 2018, provides the transition procedures for all taxpayers affected by the revised tax rates on Documentary Stamp Tax pursuant to the provisions of RA No. 10963 (TRAIN Law). The changes in tax rates for BIR Form Nos. 2000 and 2000-OT are not yet reflected and implemented in the Electronic Filing and Payment System (eFPS), Electronic BIR Forms (eBIRForms) and Manual Forms. Thus, work-around procedures in the filing of the said BIR forms/returns shall be adopted. [Digest]
RMC NO. 9-2018, issued on January 17, 2018, prescribes the additional mandatory requirements to be submitted by all Philippine Economic Zone Authority (PEZA) Ecozone developers/operators aside from those enumerated under RMO No. 15-2003, for the processing of Electronic Certificate Authorizing Registration (eCAR). The additional documentary requirements consist of: (a) Certified true copy of the latest PEZA Certificate of Registration; (b) Certified true copy of PEZA Registration Agreement; and (c) Certified true copy of PEZA certificate of available tax incentives as of the time of transaction. [Digest]
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RMC NO. 2-2018, issued on January 8, 2018, provides the transition procedures for all taxpayers filing tax returns affected by the revised tax rates pursuant to the provisions of RA No. 10963 (TRAIN Law). The changes in tax rates for BIR Form Nos. 1602, 1603, and 2552 are not yet reflected and implemented in Electronic Filing and Payment System (eFPS), Electronic BIR Forms (eBIRForms) and Manual Forms. Thus, work-around procedures in the filing of the said BIR forms/returns shall be adopted. [Digest]
RMC NO. 6-2018, issued on January 16, 2018, prescribes the CY 2018 BIR Priority Programs, which have taken into account the reforms under the TRAIN Program, and will address the BIR’s 3 principal objectives, namely: (1) attain collection targets; (2) improve taxpayer satisfaction; and (3) strengthen good governance. The said priority programs include Intensified Audit Investigations, Broaden the Taxpayer Base, Run After Tax Evaders, Oplan Kandado, Taxpayer Account Management Program Clean-up, and Electronic Sales Reporting, Invoicing and Receipting. [Digest] [Annex A]
RMC NO. 10-2018, issued on January 31, 2018, clarifies the time of withholding in view of the conflict on the guidelines and procedure under the Government Accounting Manual (GAM) and those in the BIR regulations. Pursuant to RMC No. 10-2018, the BIR rules on withholding should prevail, and it is hereby clarified that the obligation to withhold taxes already arises when an expense or asset is already recorded, whether or not the same has been paid, pursuant to RR No. 12-2001. For government projects, the obligation to withhold arises at the time the government agency books construction of PPE as Construction in Progress with the appropriate asset classification. [Digest]
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Court of Tax Appeals Decisions
CTA CASE NO. 8746, issued on January 17, 2018, denies the Petition for Review filed by Light Rail Transit Authority for lack of jurisdiction. Pursuant to Sec. 228 of the NIRC of 1997, as amended, prescribes that the taxpayer may file a valid protest against assessments by filing a request for reconsideration or reinvestigation within 30 days from receipt of the assessment. Otherwise, the assessment shall become final, executory, and demandable.
In this case, the taxpayer belatedly filed its protest against the assessment. Thus, the assessment already became final, executory, and unappealable upon the expiration of the 30-day period to protest. Once the case attained finality, the taxpayer is already precluded from disputing the correctness of the assessment.
In this case, the taxpayer belatedly filed its protest against the assessment. Thus, the assessment already became final, executory, and unappealable upon the expiration of the 30-day period to protest. Once the case attained finality, the taxpayer is already precluded from disputing the correctness of the assessment.
CTA CASE NOS. O-445, 446, 447 & 448, issued on January 17, 2018, acquit accused Maila Laxamana y Baluyot of the crimes of attempt to evade or defeat the payment of income tax for failure of the prosecution to prove her guilt beyond reasonable doubt. Pursuant to Sec. 254 of the NIRC of 1997, conviction for attempt to evade or defeat tax is established by 2 elements: (1) an attempt in any manner to evade or defeat any tax imposed under the NIRC or the payment thereof; and (2) willful attempt to evade or defeat tax filing and payment.
In this present case at bar, it is well established that there is payment of income tax that is less than what is legally due from the accused, and failure to file an income tax return (ITR) for a taxable year. As to the second element, the prosecution failed to prove that there is “willfulness” or deliberate intent on the part of the accused to evade or defeat payment of income taxes. Failure to provide circumstantial evidences to prove the accused’s willful intention shall be enough reason for the court to acquit accused of the charges of evasion.
In this present case at bar, it is well established that there is payment of income tax that is less than what is legally due from the accused, and failure to file an income tax return (ITR) for a taxable year. As to the second element, the prosecution failed to prove that there is “willfulness” or deliberate intent on the part of the accused to evade or defeat payment of income taxes. Failure to provide circumstantial evidences to prove the accused’s willful intention shall be enough reason for the court to acquit accused of the charges of evasion.
CTA CASE EB NOS. 1412, 1417, issued on January 17, 2018, acquit accused Maila Laxamana y Baluyot of the crimes of attempt to evade or defeat the payment of income tax for failure of the prosecution to prove her guilt beyond reasonable doubt. Pursuant to Sec. 254 of the NIRC of 1997, conviction for attempt to evade or defeat tax is established by 2 elements: (1) an attempt in any manner to evade or defeat any tax imposed under the NIRC or the payment thereof; and (2) willful attempt to evade or defeat tax filing and payment.
In this present case at bar, it is well established that there is payment of income tax that is less than what is legally due from the accused, and failure to file an income tax return (ITR) for a taxable year. As to the second element, the prosecution failed to prove that there is “willfulness” or deliberate intent on the part of the accused to evade or defeat payment of income taxes. Failure to provide circumstantial evidences to prove the accused’s willful intention shall be enough reason for the court to acquit accused of the charges of evasion.
In this present case at bar, it is well established that there is payment of income tax that is less than what is legally due from the accused, and failure to file an income tax return (ITR) for a taxable year. As to the second element, the prosecution failed to prove that there is “willfulness” or deliberate intent on the part of the accused to evade or defeat payment of income taxes. Failure to provide circumstantial evidences to prove the accused’s willful intention shall be enough reason for the court to acquit accused of the charges of evasion.
BIR Advisories
Monthly Filing of Expanded/Creditable and Final Withholding Tax Returns
Under RA No. 10963 (TRAIN Law), the final (BIR Form 1601-F/1602) and creditable withholding tax (BIR Form 1601-E/1606) returns (except for withholding tax on compensation and withholding VAT) shall be due quarterly on or before the last day of the month following the close of the calendar quarter (CQ). However, pursuant to the BIR’s advisory issued on January 31, 2018 and signed by Commissioner Dulay, monthly remittance of taxes withheld is still required for the first two months of the quarter. This shall be done through BIR Form 0605 on or before the 10thday following the month of withholding. The taxes withheld in the 3rdmonth shall be remitted using BIR Form 1601EQ or the applicable quarterly return.
Under RA No. 10963 (TRAIN Law), the final (BIR Form 1601-F/1602) and creditable withholding tax (BIR Form 1601-E/1606) returns (except for withholding tax on compensation and withholding VAT) shall be due quarterly on or before the last day of the month following the close of the calendar quarter (CQ). However, pursuant to the BIR’s advisory issued on January 31, 2018 and signed by Commissioner Dulay, monthly remittance of taxes withheld is still required for the first two months of the quarter. This shall be done through BIR Form 0605 on or before the 10thday following the month of withholding. The taxes withheld in the 3rdmonth shall be remitted using BIR Form 1601EQ or the applicable quarterly return.
Regular Income Tax Rates for Employees of RHQs, ROHQs, OBUs, and Petroleum Contractors
Pursuant to the advisory issued on January 31, 2018 and signed by Commissioner Dulay, all employees of RHQs, ROHQs, OBUs, and Petroleum Contractors enjoying the preferential tax rate of 15% prior to 2018 are now subject to regular withholding tax on compensation. The withholding tax table as prescribed under RMC No. 1-2018 shall be used.
Pursuant to the advisory issued on January 31, 2018 and signed by Commissioner Dulay, all employees of RHQs, ROHQs, OBUs, and Petroleum Contractors enjoying the preferential tax rate of 15% prior to 2018 are now subject to regular withholding tax on compensation. The withholding tax table as prescribed under RMC No. 1-2018 shall be used.