Taxation Bir Website

Description

Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale.

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Final Capital Gains Tax for Onerous Transfer of Real Property Classified as Capital Assets (Taxable and Exempt)

Tax Form

BIR Form 1706 – Final Capital Gains Tax Return (For Onerous Transfer of Real Property Classified as Capital Assets -Taxable and Exempt)

Documentary Requirements

1) One original copy and one photocopy of the Notarized Deed of Sale or Exchange

2) Photocopy of the Original Certificate of Title; Transfer Certificate of Title; or Condominium Certificate of Title in case of a condo unit

3) Certified True Copy of the tax declaration on the lot and/or improvement during nearest time of sale

4) “Certificate of No Improvement” issued by the Assessor’s office where the property has no declared improvement, if applicable or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees

5) Copy of BIR Ruling for tax exemption confirmed by BIR, if applicable

6) Duly approved Tax Debit Memo, if applicable

7) “Sworn Declaration of Intent” as prescribed under Revenue Regulations 13-99, if the transaction is tax-exempt

8) Documents supporting the exemption

Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.

Procedures

http://www.bir.gov.ph/index.php/bir-forms/income-tax-return.html#itr1706

http://www.bir.gov.ph/index.php/tax-information/capital-gains-tax.html#index

File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the property is located. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the RDO where the property is located or electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)

Tax Rates

For real property - 6%.

Deadline

Within 30 days after each sale, exchange, transfer or other disposition of real property.

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Capital Gains Tax for Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange

Tax Form

BIR Form 1707 - Capital Gains Tax Return (For Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange)


1) One original copy and one photocopy of the Notarized Deed of Sale/ Exchange of shares of stock

2) Photocopy of the Deed of Acquisition or proof of cost/ fair market value of the stocks at the time of acquisition

3) Photocopy of certificate of shares of stock

4) Photocopy of evidences of expenses related to sale

5) Photocopy of Audited Financial Statements duly certified by an independent certified public accountant with computation of fair market value per share at the time of sale.


http://www.bir.gov.ph/index.php/bir-forms/income-tax-return.html#itr1707



Procedures

File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the seller or transferor of stocks is registered. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the RDO where the seller or transferor of stocks is registered or electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)

Tax Rates

For Shares of Stocks Not Traded in the Stock Exchange

- Not over P100,000 - 5%- Any amount in excess of P100,000 - 10%

Deadline

Within 30 days after each sale or disposition of shares of stocks or real property. In case of installment sale, the return shall be filed within 30 days following the receipt of the first down payment and within 30 days following the subsequent installment payments. Only one return shall be filed for multiple transactions within the day.

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Annual Capital Gains Tax for Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange

Tax Form

BIR Form 1707A - Annual Capital Gains Tax Return (For Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange)

Procedures

File the Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the seller or transferor of stocks is registered. In places where there are no AAB, the return

http://www.bir.gov.ph/index.php/bir-forms/income-tax-return.html#itr1707a


will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

Tax Rates

For Shares of Stocks Not Traded in the Stock Exchange


Deadline

Individual Taxpayers – On or before April 15 of each year covering all stock transactions of the preceding taxable year

Corporate Taxpayers – On or before the fifteenth (15) day of the fourth (4) month following the close of the taxable year covering all transactions of the preceding taxable year

Note: For onerous transfer of real property other than capital asset (including taxable and exempt), a creditable withholding tax based on the gross selling price/total amount of consideration or the fair market value determined in accordance with Section 6(E) of the Code, whichever is higher, paid to the seller/owner for the sale, transfer or exchange of real property, other than capital asset, shall be imposed upon the withholding agent/buyer. (sec. 3 (j), RR NO. 6-2001)

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Related Revenue Issuances

Revenue Regulations (RR) Nos. 2-1998, 8-1998, 4-1999, 13-1999, 7-2003, 17-2003, 30-2003, 4-2008, 6-2008, 5-2009, 6-2013, 6-2014

Revenue Memorandum Order (RMO) No. 15-2003

Revenue Memorandum Circular (RMC) No. 50-2003

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Codal Reference


http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/rmc03_50.pdf

http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/rmo03_15.pdf

http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/RR%206-2014.pdf

http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/Revenue%20Regulations%20No.%2006-2013.pdf

http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/rr%20no.%205-2009.pdf



http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/rr03_30.pdf




http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/RR-13-99.doc





Sec. 24C, Sec. 24D, Sec. 27D(2), Sec. 27D(5), Sec. 28(A)(7)(c), Sec. 28(B)(5)(c) and Sec. 39A of the National Internal Revenue Code (NIRC)

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Frequently Asked Questions

1) What is meant by capital asset?

Capital asset means property held by the taxpayer (whether or not connected with his trade or business), but does not include –

a) stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year; orb) property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; orc) property used in the trade or business of a character which is subject to the allowance for depreciation provided in subsection (F) of Sec. 34 of the Code; ord) real property used in trade or business of the taxpayer.

2) What is meant by ordinary asset?

Ordinary asset refers to all properties specifically excluded from the definition of capital assets under Sec. 39 (A)(1) of the NIRC.

3.) What is meant by "Stock classified as Capital Asset"? (Sec 2(a) of RR 6-2008)

This refers to stocks and securities held by taxpayers other than dealers in securities.

4.) What is meant by "Dealer in Securities"? (Sec 2(b) of RR 6-2008)

Dealer in Securities refers to a merchant of stocks or securities, whether an individual, partnership or corporation, with an established place of business, regularly engaged in the purchase of securities and the resale thereof to customers; that is one, who as merchant buys securities and re-sells them to customers with a view to the gains and profits that may be derived therefrom. "Dealer in securities" means any person who buys and sells securities for his/her own account in the ordinary course of business (Sec. 3.4, SRC).

5.) What is meant by real property?

Real property shall have the same meaning attributed to that term under Article 415 of Republic Act No. 386, otherwise known as the “Civil Code of the Philippines.


6.) What does a real estate dealer refer to?

A real estate dealer refers to any person engaged in the business of buying and selling or exchanging real properties on his own account as a principal and holding himself out as a full or part-time dealer in real estate.

7.) What does a real estate developer refer to?

Real estate developer refers to any person engaged in the business of developing real properties into subdivisions, or building houses on subdivided lots, or constructing residential or commercial units, townhouses and other similar units for his own account and offering them for sale or lease.

8.)What does a real estate lessor refer to?

Real estate lessor refers to any person engaged in the business of leasing or renting real properties on his own account as a principal and holding himself out as a lessor of real properties being rented out or offered for rent.

9.) Who are considered engaged in the real estate business?

Taxpayers who are considered engaged in the real estate business refer collectively to real estate dealers, real estate developers and/or real estate lessors. A taxpayer whose primary purpose of engaging in business, or whose Articles of Incorporation states that its primary purpose is to engage in the real estate business shall be deemed to be engaged in the real estate business.

10.) Who are considered not engaged in the real estate business?

Taxpayers who are considered not engaged in the real estate business refer to persons other than real estate dealers, real estate developers and/or real estate lessors.

11.) Who are considered habitually engaged in the real estate business?

Real estate dealers or real estate developers who are registered with the Housing and Land Use Regulatory Board (HULRB) or HUDCC

12.) How can you determine whether a particular real property is a capital asset or an ordinary asset?

a) Real properties shall be classified with respect to taxpayers engaged in the real estate business as follows:

i) All real properties acquired by the real estate dealer shall be considered as ordinary assets.

ii) All real properties acquired by the real estate developer, whether developed or undeveloped as of the time of acquisition, and all real properties which are held by the real estate developer primarily for sale or for lease to customers in the ordinary course of his trade or business or which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year and all real properties used in the trade or business, whether in the form of land, building, or other improvements, shall be considered as ordinary assets.

iii) All real properties of the real estate lessor, whether land, building and/or improvements, which are for lease/rent or being offered for lease/rent, or otherwise for use or being used in the trade or business shall likewise be considered as ordinary assets.

iv) All real properties acquired in the course of trade or business by a taxpayer habitually engaged in the sale of real property shall be considered as ordinary assets.

Note: Registration with the HLURB or HUDCC as a real estate dealer or developer shall be sufficient for a taxpayer to be considered as habitually engaged in the sale of real estate.

If the taxpayer is not registered with the HLURB or HUDCC as a real estate dealer or developer, he/it may nevertheless be deemed to be engaged in the real estate business through the establishment of substantial relevant evidence (such as consummation during the preceding year of at least six (6) taxable real estate sale transactions, regardless of amount; registration as habitually engaged in real estate business with the Local Government Unit or the Bureau of Internal Revenue, etc.

A property purchased for future use in the business, even though this purpose is later thwarted by circumstances beyond the taxpayer’s control, does not lose its character as an ordinary asset. Nor does a mere discontinuance of the active use of the property change its character previously established as a business property. (Sec 3(a)(4)of RR 7-2003)

b) In the case of taxpayer not engaged in the real estate business, real properties, whether land, building, or other improvements, which are used or being used or have been previously used in trade or business of the taxpayer shall be considered as ordinary assets.

c) In the case of taxpayers who changed its real estate business to a non-real estate business, real properties held by these taxpayer shall remain to be treated as ordinary assets.

d) In the case of taxpayers who originally registered to be engaged in the real estate business but failed to subsequently operate, all real properties acquired by them shall continue to be treated as ordinary assets.

e) Real properties formerly forming part of the stock in trade of a taxpayer engaged in the real estate business, or formerly being used in the trade or business of a taxpayer engaged or not engaged in the real estate business, which were later on abandoned and became idle, shall continue to be treated as ordinary assets. Provided however, that properties classified as ordinary assets for being used in business by a taxpayer engaged in business other than real estate business are automatically converted into capital assets upon showing proof that the same have not been used in business for more than two years prior to the consummation of the taxable transactions involving said properties

f) Real properties classified as capital or ordinary asset in the hands of the seller/transferor may change their character in the hands of the buyer/transferee. The classification of such property in the hands of the buyer/transferee shall be determined in accordance with the following rules:

i) Real property transferred through succession or donation to the heir or donee who is not engaged in the real estate business with respect to the real property inherited or donated, and who does not subsequently use such property in trade or business, shall be considered as a capital asset in the hands of the heir or donee.

ii) Real property received as dividend by the stockholders who are not engaged in the real estate business and who do not subsequently use such property in trade or business, shall be considered as a capital asset in the hands of the recipients even if the corporation which declared the real property dividends is engaged in real estate business.

iii) The real property received in an exchange shall be treated as ordinary asset in the hands of the case of a tax-free exchange by taxpayer not engaged in real estate business to a taxpayer who is engaged in real estate business, or to a taxpayer who, even if not engaged in real estate business, will use in business the property received in exchange.

g) In the case of involuntary transfers of real properties, including expropriations or foreclosure sale, the involuntariness of such sale shall have no effect on the classification of such real property in the hands of the involuntary seller, either as capital asset or ordinary asset as the case may be.

13.) What is the basis in the valuation of property?

The value of the real property will be based on the selling price, fair market value as determined by the Commissioner (zonal value) or the fair market value as shown in the schedule of values of the Provincial or City Assessor, whichever is higher.

If there is no zonal value, the taxable base is whichever is higher of the gross selling price per sales documents or the fair market value that appears in the latest tax declaration.

If there is an improvement, the FMV per latest tax declaration at the time of the sale or disposition, duly certified by the City/Municipal Assessor shall be used. No adjustments shall be added on the said value, provided that the tax declaration bears the upgraded fair market value of the said property pursuant to Section 219 of R.A. No. 7160, otherwise known as the Local Government Code of 1991 and the last paragraph of the Local Assessment Regulations No. 1-92 dated October 6, 1992.

In case the tax declaration being presented was issued three (3) or more years prior to the date of sale or disposition of the real property, the seller/transferor shall be required to submit a certification from the City/Municipal Assessor whether or not the same is still the latest tax declaration covering the said real property. Otherwise, the taxpayer shall secure its latest tax declaration and shall submit a copy thereof duly certified by the said Assessor. (RAMO 1-2001)

For shares of stocks, it will be based on the net capital gains realized from the sale, barter, exchange or other disposition of shares of stocks in a domestic corporation, considered as capital assets not traded through the local stock exchange.

14.) What is meant by "Net Capital Gains"? (Sec 2(o) of RR 6-2008)

"Net Capital Gain" means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges.

15.) What are the rules for the determination of amount and recognition of gain or loss in the sale, barter, or exchange of shares of stock not traded through the Local Stock exchange? (Sec 7(c ) of RR 6-2008)

(A.) Determination of Selling Price. — In determining the selling price, the following rules shall apply:

(a.1) In the case of cash sale, the selling price shall be the total consideration per deed of sale.(a.2) If the total consideration of the sale or disposition consists partly in money and partly in kind, the selling price shall be sum of money and the fair market value of the property received.(a.3) In the case of exchange, the selling price shall be the fair market value of the property received.(a.4) In case the fair market value of the shares of stock sold, bartered, or exchanged is greater than the amount of money and/or fair market value of the property received, the excess of the fair market value of the shares of stock sold, bartered or exchanged over the amount of money and the fair market value of the property, if any, received as consideration shall be deemed a gift subject to the donor's tax under sec. 100 of the Tax Code, as amended.

(B.) Definition of "fair market value" of the Shares of Stock.

(b.1) In the case of listed shares which were sold, transferred or exchanged outside of the trading system and/or facilities of the Local Stock Exchange, the closing price on the day when the shares are sold, transferred, or exchanged. When no sale is made in the Local Stock Exchange on the day when the Listed shares are sold, transferred, or exchanged, the closing price on the day nearest to the date of sale, transfer or exchange of the shares shall be the fair market value. Sec 2 of RR 6-2013(b.2) In the case of shares of stock not listed and traded in the local stock exchanges, the value of the shares of stock at the time of sale shall be the fair market value. In determining the value of the shares, the Adjusted Net Asset Method shall be used whereby all assets and liabilities are adjusted to fair market values. The net of adjusted asset minus the liability values is the indicated value of the equity.

The appraised value of real property at the time of sale shall be the higher of –

(1) The fair market value as determined by the Commissioner, or(2) The fair market value as shown in the schedule of valued fixed by the Provincial and City Assessors, or(3) The fair market value as determined by Independent Appraiser.

(b.3) In the case of a unit of participation in any association, recreation or amusement club (such as golf, polo, or similar clubs), the fair market value thereof shall be its selling price or the bid price nearest published in any newspaper or publication of general circulation, whichever is higher.

(C.) Determination of Gain or Loss from Sale or Disposition of Shares of Stock. — The gain from the sale or other disposition Stock. — The gain from the sale or other disposition of shares of stock shall be the excess of the amount realized therefrom over the basis or adjusted basis for determining gain, and the loss shall be the excess of the basis or adjusted basis for determining loss over the amount realized. The amount realized from the sale or other disposition of property shall be the sum of money received plus the fair market value of the property (other than money) received, if any.

16.) What are the applicable tax rates of Capital Gains Tax under the National Internal Revenue Code of 1997?

a) Real Properties - 6 %

b) For Shares of Stocks not Traded in the Stock Exchange, on the net Capital Gains


17.) Who are required to file the Final Capital Gains Tax return?

Every person, whether natural or juridical, resident or non-resident, including estates and trusts, who sells, transfers, exchanges or disposes real properties located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales or shares of stocks in domestic corporations not traded through the local stock exchange classified as capital assets.

18.) What is the procedure in the filing of Final Capital Gains Tax return?

File the Final Capital Gains Tax return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the seller or transferor is registered, for shares of stocks or where the property is located, for real property. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

19.) Who/what are considered exempt from the payment of Final Capital Gains Tax?

Dealer in securities, regularly engaged in the buying and selling of

securities An entity exempt from the payment of income tax under existing

investment incentives and other special laws An individual or non-individual exchanging real property solely for shares

of stocks resulting in corporate control A government entity or government-owned or controlled corporation

selling real property If the disposition of the real property is gratuitous in nature Where the disposition is pursuant to the CARP law

20.) Who are conditionally exempt from the payment of Final Capital Gains Tax?

Natural persons who dispose their principal residence, provided that the following criteria are met:

The proceeds of the sale of the principal residence have been fully utilized

in acquiring or constructing new principal residence within eighteen (18) calendar months from the date of sale or disposition;

The historical cost or adjusted basis of the real property sold or disposed will be carried over to the new principal residence built or acquired;

The Commissioner has been duly notified, through a prescribed return, within thirty (30) days from the date of sale or disposition of the person’s intention to avail of the tax exemption;

Exemption was availed only once every ten (10) years; and There is no full utilization of the proceeds of sale or disposition. The

portion of the gain presumed to have been realized from the sale or disposition will be subject to Capital Gains Tax.

In case of sale/transfer of principal residence, the Buyer/Transferee shall withhold from the seller and shall deduct from the agreed selling price/consideration the 6% capital gains tax which shall be deposited in cash or manager’s check in interest-bearing account with an Authorized Agent Bank (AAB) under an Escrow Agreement between the concerned Revenue District Officer, the Seller and the Transferee, and the AAB to the effect that the amount so deposited, including its interest yield, shall only be released to such Transferor upon certification by the said RDO that the proceeds of the sale/disposition thereof has, in fact, been utilized in the acquisition or construction of the Seller/Transferor’s new principal residence within eighteen (18) calendar months from date of the said sale or disposition. The date of sale or disposition of a property refers to the date of notarization of the document evidencing the transfer of said property. In general, the term “Escrow” means a scroll, writing or deed, delivered by the grantor, promisor or obligor into the hands of a third person, to be held by the latter until the happening of a contingency or performance of a condition, and then by him delivered to the grantee, promise or obligee.

21.) What is a Certificate Authorizing Registration?

Certificate Authorizing Registration (CAR) is a certification issued by the Commissioner or his duly authorized representative attesting that the transfer and conveyance of land, buildings/improvements or shares of stock arising from sale, barter or exchange have been reported and the taxes due inclusive of the documentary stamp tax, have been fully paid.

With the implementation of the Electronic Certificate Authorizing Registration (eCAR) System, the CAR shall now be electronically generated.

22.) What is eCAR System?

eCAR stands for Electronic Certificate Authorizing Registration. A web-based facility that automates the generation of CAR with barcode, eCAR will also enable electronic linkage between the BIR and the Land Registration Authority. (Participant Guide)

eCARs shall have a validity of one (1) year from date of issue. For other manually issued CARs that are outstanding and not yet presented to the Register of Deeds, i.e., CARs more than one (1) year from the date of issuance which are due for revalidation and expired CARs which are more than two (2) years from the date of issuance, are not anymore valid for presentation to the Registry of Deeds. The said CARs shall be replaced with an eCAR by the concerned Revenue District Offices or Large Taxpayers Divisions. A certification fee shall be charged for each released eCAR issued/reprinted after affixture of P15.00 Documentary Stamp Tax on Certificates (Sec 188 of the NIRC of 1997) and the prescribed Certification Fee of One Hundred Pesos (P100.00) under Executive Order No. 197 to the taxpayer/authorized representative.

23.) How do we determine the fair market value of shares of stocks not traded through the Local Stock Exchange?

In determining the value of the shares, the Adjusted Net Asset Method shall be used whereby all assets and liabilities are adjusted to fair market values. The net of adjusted asset minus the adjusted liability value is the indicated value of the equity.

For purposes of this item, the appraised value of real property at the time of sale shall be the highest among the following:

(a) The fair market value as determined by the Commissioner, or

(b) The fair market value as shown in the schedule of values fixed by the Provincial and City Assessors, or

(c) The fair market value as determined by Independent Appraiser. (RR NO. 6-2013)

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Description

Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto.

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Tax Forms

BIR Form 2000 (Documentary Stamp Tax Declaration Return);

BIR Form 2000-OT Documentary Stamp Tax Declaration Return (ONE- TIME TRANSACTIONS)

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1) Photocopy of document(s) to which the documentary stamp shall be affixed, in case of constructive affixture of Documentary Stamp Tax

2) Proof of exemption under special law, if applicable


http://www.bir.gov.ph/index.php/tax-information/documentary-stamp-tax.html#index

http://www.bir.gov.ph/index.php/bir-forms/documentary-stamp-tax-return.html#dstr2000ot

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4) Proof of payment of documentary stamp tax paid upon the original issue of the stock, if applicable.

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Tax Rates

Tax Code

Section

Document Taxable Unit Tax Due Per Unit

% of Unit

Taxable Base

174 Original Issue of Shares of Stock with par value Original Issue of Shares of Stock without par value Stock Dividend

P200.00 or fraction thereof P200.00 or fraction thereof P200.00 or fraction thereof

1.00

1.00

1.00

.5%

.5%

.5%

Par value of shares of stocks Actual consideration for the issuance of shares of stocks Actual value represented by each share

175 Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Shares or Certificates of Stock Stock without par value

P200.00 or fraction thereof

.75 3.75% 25%

Par value of such stock DST paid upon the original issuance of said stock.

176 Bonds, Debentures, Certificate of Stock or Indebtedness issued in foreign Countries


.75 3.75% Par value of such bonds, debentures, Certificate of Stock or Indebtedness

177 Certificate of Profits or Interest in Property or Accumulation


.50 .25% Face value of such certificate / memorandum

178 Bank Checks, Drafts, Certificate of Deposit not bearing interest and other

On each Document 1.50


Instruments

179 All Debt Instruments P200.00 or fraction thereof

1.00 .5% Issue price of any such instruments

180 All Bills of Exchange or Drafts


.30 .15% Face value of any such bill of exchange or draft

181 Acceptance of Bills of Exchange or order for the payment of money purporting to be drawn in a foreign country but payable in the Philippines


.30 .15% Face value of such bill of exchange or order or the Philippine equivalent of such value, if expressed in foreign currency

182 Foreign Bills of Exchange and Letters of Credit


.30 .15% Face value of such bill of exchange or letter of credit or the Philippine equivalent of such value, if expressed in foreign currency

183 Life Insurance Policies If the amount of insurance does not exceed P100,000.00 If the amount of insurance exceeds P100,000.00 but does not exceed P300,000.00 If the amount of insurance exceeds P300,000.00 but does not exceed P500,000.00 If the amount of insurance exceeds P500,000.00 but does not exceed P750,000.00 If the amount of insurance exceeds P750,000.00 but does not exceed P1,000,000.00

exempt 10.00 25.00 50.00 75.00

Amount of Insurance Amount of Insurance Amount of Insurance Amount of Insurance Amount of Insurance Amount of Insurance

If the amount of insurance exceeds P1,000,000.00

100.00

184 Policies Of Insurance upon Property

P4.00 premium or fraction thereof

.50 12.5% Premium charged

185 Fidelity Bonds and other Insurance Policies

P4.00 premium or fraction thereof


186 Policies of Annuities or other instruments Pre-Need Plans

P200.00 or fraction thereof P200.00 or fraction thereof

.50 .20

.25% .10%

Premium or installment payment or contract price collected Premium or contribution collected

187 Indemnity Bonds P4.00 or fraction thereof


188 Certificates of Damage or otherwise and Certificate or document issued by any customs officers, marine surveyor, notary public and certificate required by law or by rules and regulations of a public office

Each Certificate 15.00

189 Warehouse Receipts (except if value does not exceed P200.00)

Each Receipt 15.00

190 Jai-alai, Horse Race Tickets, lotto or Other Authorized Number Games

P1.00 cost of ticket Additional P0.10 on every P1.00 or fraction thereof if cost of ticket exceeds P1.00

.10 10% Cost of the ticket Cost of the ticket

191 Bills of Lading or Receipts(except charter party)

If the value of such goods exceeds P100.00 and does not exceed P1,000.00

1.00

Value of such goods

If the value exceeds P1,000.00 Freight tickets covering goods, merchandise or effects carried as accompanied baggage of passengers on land and water carriers primarily engaged in the transportation of passengers

10.00 Exempt

Value of such goods

192 Proxies(except proxies issued affecting the affairs of associations or corporations, organized for religious, charitable or literary purposes)

Each proxy 15.00

193 Powers of Attorney(except acts connected with the collection of claims due from or accruing to the Government of the Republic of the Philippines, or the government of any province, city or Municipality)

Each Document 5.00

194 Lease and other Hiring agreements or memorandum or contract for hire, use or rent of any land or tenements or portions thereof

First 2,000 or fractional part thereof For every P1,000 or fractional part thereof in excess of the first P2,000 for each year of the term of the said contract or agreement

3.00 1.00

.15% .1%

195 Mortgages Pledges of lands, estate, or property and Deeds of Trust

First 5,000 On each P5,000 or fractional part thereof in excess of 5,000

20.00 10.00

.4% .2%

Amount Secured Amount Secured

196 Deed of Sale, instrument or First 1,000 15.00 1.5% Consideration or Fair

writing and Conveyances of Real Property (except grants, patents or original certificate of the government)

For each additional P1,000 or fractional part thereof in excess of P1,000

15.00

1.5%

Market Value, whichever is higher (if government is a party, basis shall be the consideration) Consideration or Fair Market Value, whichever is higher (if government is a party, basis shall be the consideration)

197 Charter parties and Similar Instruments

1,000 tons and below 1,001 to 10,000 tons Over 10,000 tons

P500.00 for the first 6 months Plus P50 each month or fraction thereof in excess of 6 months P1,000 for the first 6 months Plus P100 each month or fraction thereof in excess of 6 months P1,500 for the first 6 months Plus P150 each month or fraction thereof in excess of 6 months

Registered gross tonnage Registered gross tonnage Registered gross tonnage

198 Stamp Tax on Assignments and Renewals or Continuance of Certain Instruments

At the same rate as that imposed on the original instrument.

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Procedures

File BIR Form No. 2000 or BIR Form No. 2000-OT in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the seller or transferor is registered, for shares of stocks or where the property is located, for real property. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.

One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the RDO where the seller or transferor is registered, for shares of stocks or where the property is located, for real property or electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)

Submit all documentary requirements and proof of payment to the Revenue District Office having jurisdiction over the place of residence of the seller.

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Deadlines

The Documentary Stamp Tax return (BIR Form 2000) shall be filed in triplicate (two copies for the BIR and one copy for the taxpayer) within five (5) days after the close of the month when the taxable document was made signed, issued, accepted or transferred; upon remittance by Collection Agents of collection from sale of loose stamps. The Documentary Stamp Tax shall be paid upon filing of the return.

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Revenue Regulations (RR) Nos. 9-2000, 6-2001, 13-2004, 7-2009, 6-2014

Revenue Memorandum Order (RMO) Nos. 8-1998, 15-2001, 13-2008, 14-2008

Revenue Memorandum Circular (RMC) Nos. 1-2010, 24-2010, 51-2010, 24-2011, 46-2014

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http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/Revenue%20Memorandum%20Circular%20No.%2046-2014.pdf






http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/Revenue%20Memorandum%20Order%20No.%2014-2008.pdf


http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/Revenue%20Memorandum%20Order%20No.%2015-2001.doc

http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/Revenue%20Memorandum%20Order%20No.%208-1998.doc





http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/Revenue%20Regulations%20No.%209-2000.doc



Codal Reference

Sec. 173 to Sec. 201 of the National Internal Revenue Code

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1) Who are required to file Documentary Stamp Tax Declaration Return?

a) In case of constructive affixture of documentary stamps, by the persons making, signing, issuing, accepting or transferring documents, instruments, loan agreements and papers, acceptances, assignments, sales and conveyances of the obligation, right or property incident thereto wherever the document is made, signed, issued, accepted or transferred when the obligation or right arises from Philippine sources or the property is situated in the Philippines at the same time such act is done or transaction had;

b) By using the web-based Electronic Documentary Stamp Tax (eDST) System in the payment/remittance of its/his/her DST liabilities and the affixture of the prescribed documentary stamp on taxable documents; and

c) By Revenue Collection Agent, for remittance of sold loose documentary stamps.

Note: Wherever one party to the taxable document enjoys exemption from the tax imposed, the other party who is not exempt will be the one directly liable to file Documentary Stamp Tax Declaration and pay the applicable stamp tax.

2) Where is the Documentary Stamp Tax Declaration Return filed?

In the Authorized Agent Bank (AAB) within the territorial jurisdiction of the RDO which has jurisdiction over the residence or principal place of business of the taxpayer or where the property is located in case of sale of real property or where the Collection Agent is assigned. In places where there is no Authorized Agent Bank, the return will be filed with the Revenue Collection Officer or duly authorized City or Municipal Treasurer where the taxpayer's residence or principal place of business is located or where the property is located in case of sale of real property or where the Collection Agent is assigned.

3) What are the documents/papers not subject to Documentary Stamp Tax? (sec. 9, RR No. 13-2004)

Policies of insurance or annuities made or granted by a fraternal or beneficiary society, order, association or cooperative company, operated on the lodge system or local cooperation plan and organized and conducted solely by the members thereof for the exclusive benefit of each member and not for profit


Certificates of oaths administered by any government official in his official capacity or acknowledgement by any government official in performance of his official duty

Written appearance in any court by any government official in his official capacity

Certificates of the administration of oaths to any person as to the authenticity of any paper required to be filed in court by any person or party thereto, whether the proceedings be civil or criminal

Papers and documents filed in court by or for the national, provincial, city or municipal governments

Affidavits of poor persons for the purpose of proving poverty Statements and other compulsory information required of persons or corporations

by the rules and regulations of the national, provincial, city or municipal government exclusively for statistical purposes and which are wholly for the use of the Bureau or office in which they are filed, and not at the instance or for the use or benefit of the person filing them

Certified copies and other certificates placed upon documents, instruments and papers for the national, provincial, city or municipal governments made at the instance and for the sole use of some other branch of the national, provincial, city or municipal governments

Certificates of the assessed value of lands, not exceeding P200 in value assessed, furnished by the provincial, city or municipal Treasurer to applicants for registration of title to land

Borrowing and lending of securities executed under the Securities Borrowing and Lending Program of a registered exchange, or in accordance with regulations prescribed by the appropriate regulatory authority: Provided, however, That any borrowing or lending of securities agreement as contemplated hereof shall be duly covered by a master securities borrowing and lending agreement acceptable to the appropriate regulatory authority, and which agreement is duly registered and approved by the Bureau of Internal Revenue (BIR)

Loan agreements or promissory notes, the aggregate of which does not exceed Two hundred fifty thousand pesos (P250,000), or any such amount as may be determined by the Secretary of Finance, executed by an individual for his purchase on installment for his personal use or that of his family and not for business or resale, barter or hire of a house, lot, motor vehicle, appliance or furniture: Provided, however, That the amount to be set by the Secretary of Finance shall be in accordance with a relevant price index but not to exceed ten percent (10%) of the current amount and shall remain in force at least for three (3) years

Sale, barter or exchange of shares of stock listed and traded through the local stock exchange (R.A 9648)

Assignment or transfer of any mortgage, lease or policy of insurance, or the renewal or continuance of any agreement, contract, charter, or any evidence of obligation or indebtedness, if there is no change in the maturity date or remaining period of coverage from that of the original instrument.

Fixed income and other securities traded in the secondary market or through an exchange.

Derivatives: Provided, That for purposes of this exemption, repurchase agreements and reverse repurchase agreements shall be treated similarly as derivatives

Interbranch or interdepartmental advances within the same legal entity All forebearances arising from sales or service contracts including credit card and

trade receivables: Provided, That the exemption be limited to those executed by the seller or service provider itself.

Bank deposit accounts without a fixed term or maturity All contracts, deeds, documents and transactions related to the conduct of

business of the Bangko Sentral ng Pilipinas Transfer of property pursuant to Section 40(C)(2) of the National Internal

Revenue Code of 1997, as amended Interbank call loans with maturity of not more than seven (7) days to cover

deficiency in reserves against deposit liabilities, including those between or among banks and quasi-banks

4) What are the implications of failure to stamp taxable documents?

The untaxed document will not be recorded, nor will it or any copy thereof or any record of transfer of the same be admitted or used in evidence in court until the requisite stamp or stamps have been affixed thereto and cancelled

No notary public or other officer authorized to administer oaths will add his jurat or acknowledgment to any document subject to Documentary Stamp Tax unless the proper documentary stamps are affixed thereto and cancelled.

5) What is Electronic Documentary Stamp Tax (eDST) System? (sec. 5 (1), RR No. 7-2009)

The eDST is a web-based application created for taxpayers and the BIR that is capable of affixing a secured documentary stamp on the taxable documents as defined under the appropriate provisions under Title VII of the National Internal Revenue Code of 1997, as amended, thru the use of a computer unit, any laser printer with at least 1200 dpi resolution, and Internet Explorer 7.0 It is also capable of providing a 3-layer watermark on stamps for added security.

6) Is DST Law applicable on Electronic Documents? (sec. 10, RR No. 13-2004)

The DST rates as imposed under the Code, as amended by R.A. 9243 shall be applicable on all documents not otherwise expressly exempted by the said law, notwithstanding the fact that they are in electronic form. As provided for by R.A. 8792, otherwise known as the Electronic Commerce Act, electronic documents are the functional equivalent of a written document under existing laws, and the issuance thereof is therefore tantamount to the issuance of a written document, and therefore subject to DST.

7) What are the inclusions of a debt instrument? (sec. 5, RR No. 13-2004)

“Debt Instrument” shall mean instruments representing borrowing and lending transaction including but not limited to:

debentures, certificates of indebtedness, due bills, bonds, loan agreements, including those signed abroad wherein the object of the

contract is located or used in the Philippines, instruments and securities issued by the government or any of its

instrumentalities, deposit substitute debt instruments, certificates or other evidences of deposits that are drawing

instrument significantly higher than the regular savings deposit taking into consideration the size of the deposit and the risks involved,

certificates or other evidences of deposits that are drawing interest and having a specific maturity date,

promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation.

8) Is any document, transaction or arrangement entered into under Financial Lease subject to Documentary Stamp Tax? (RMC No. 46-2014)

Financial lease is akin to a debt rather than a lease. A nature of an obligation than a lease of personal property. The mere act of extending credit is already a means of facilitating an obligation or advancing in behalf of the lessee certain property in lieu of cash in exchange for a definitive amortization to be paid to the lessor with profit margin included. Section 179 of the NIRC, as amended, covers all debt instruments. Therefore, being a nature of an obligation, any document, transaction or arrangement entered into under financial lease is subject to DST under such Section of the NIRC, as amended.

Description

Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer. It shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect and whether the property is real or personal, tangible or intangible.

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Tax Form

http://www.bir.gov.ph/index.php/tax-information/donor-s-tax.html#index

BIR Form 1800 – Donor’s Tax Return

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The following requirements must be submitted upon field or office audit of the tax case before the Tax Clearance Certificate/Certificate Authorizing Registration can be released:

1. Deed of Donation

2. Sworn Statement of the relationship of the donor to the donee

3. Proof of tax credit, if applicable

4. Certified true copy(ies) of the Original/Transfer/Condominium Certificate of Title (front and back) of lot and/or improvement donated, if applicable

5. Certified true copy(ies) of the latest Tax Declaration (front and back pages) of lot and/or improvement, if applicable

6. “Certificate of No Improvement” issued by the Assessor’s office where the properties have no declared improvement, if applicable

7. Proof of valuation of shares of stocks at the time of donation, if applicable

For listed stocks - newspaper clippings or certification issued by the Stock Exchange as to the par

value per share For unlisted stocks - Audited Financial Statements duly certified by an independent certified public

accountant with computation of fair market value per share at the time of donation.

8. Proof of valuation of other types of personal properties, if applicable

9. Proof of claimed deductions, if applicable

10. Copy of Tax Debit Memo used as payment, if applicable


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Tax Rates



http://www.bir.gov.ph/index.php/bir-forms/transfer-tax-return.html

Effective January 1, 1998 to present (Republic Act No. 8424)

Net Gift Over But not Over The Tax Shall be Plus Of the Excess Over

100,000.00 exempt

100,000.00 200,000.00 0 2% 100,000.00

200,000.00 500,000.00 P 2,000.00 4% 200,000.00

500,000.00 1,000,000.00 14,000.00 6% 500,000.00

1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00

3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00

5,000,000.00 10,000,000.00 404,000.00 12% 5,000,000.00

10,000,000.00 and over 1,004,000.00 15% 10,000,000.00

Notes:

1. Rate applicable shall be based on the law prevailing at the time of donation.

2. When the gifts are made during the same calendar year but on different dates, the donor's tax shall be computed based on the total net gifts during the year.

Donation made to a stranger is subject to 30% of the net gift. A stranger is a person who is not a:

brother, sister (whether by whole or half blood), spouse, ancestor

and lineal descendants; or relative by consanguinity in the collateral line within the fourth

degree of relationship.

Effective July 28, 1992 to December 31, 1997 (Republic Act No. 7499)


50,000.00 exempt

50,000.00 100,000.00 1.5% 50,000.00

100,000.00 200,000.00 P 750.00 3% 100,000.00

200,000.00 500,000.00 3,750.00 5% 200,000.00

500,000.00 1,000,000.00 18,750.00 8% 500,000.00

1,000,000.00 3,000,000.00 58,750.00 10% 1,000,000.00

3,000,000.00 5,000,000.00 258,750.00 15% 3,000,000.00

5,000,000.00 and over 558,750.00 20% 5,000,000.00

Donation made to a stranger is subject to 10% of the net gift. A stranger is a person who is not a:

brother, sister (whether by whole or half blood), spouse, ancestor and

lineal descendants; or relative by consanguinity in the collateral line within the fourth degree of

relationship.

Effective January 16, 1981 to July 27, 1992 (Presidential Decree No. 1773)


1,000.00 exempt

1,000.00 50,000.00 1.5% 1,000.00

50,000.00 75,000.00 P 735.00 2.5% 50,000.00

75,000.00 100,000.00 1,360.00 3% 75,000.00

100,000.00 150,000.00 2,110.00 6% 100,000.00

150,000.00 200,000.00 5,110.00 9% 150,000.00

200,000.00 300,000.00 9,610.00 12% 200,000.00

300,000.00 400,000.00 21,610.00 15% 300,000.00

400,000.00 500,000.00 36,610.00 18% 400,000.00

500,000.00 625,000.00 54,610.00 21% 500,000.00

625,000.00 750,000.00 80,860.00 24% 625,000.00

750,000.00 875,000.00 110,860.00 28% 750,000.00

875,000.00 1,000,000.00 145,860.00 32% 875,000.00

1,000,000.00 2,000,000.00 185,860.00 36% 1,000,000.00

2,000,000.00 3,000,000.00 545,860.00 38% 2,000,000.00

3,000,000.00 925,860.00 40% 3,000,000.00

Donation made to a stranger shall be either the amount computed in accordance with the preceding schedule or twenty percent (20%) of the net gifts, whichever is higher. A stranger is a person who is not a:

brother, sister (whether by whole or half blood), spouse, ancestor and

lineal descendant; or relative by consanguinity in the collateral line within the fourth degree of

relationship.

Please note that the donor’s tax rates will vary depending on the law applicable at the time of the gift. The pertinent laws are as follow:

Commonwealth Act. No. 466 – effective July 1, 1939 to September 14,

1950 Republic Act No. 579 – effective September 15, 1950 to August 3, 1969 Republic Act No. 6110 – effective August 4, 1969 to December 31, 1972 Presidential Decree No. 69 – effective January 1, 1973 to January 15,

1981 Presidential Decree No. 1773 – effective January 16, 1981 to July 27,

1992 Republic Act No. 7499 – effective July 28, 1992 to December 31, 1997 Republic Act No. 8424 – effective January 1, 1998 to present

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Procedures

File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with any Authorized Agent Bank (AAB) of the RDO having jurisdiction over the place of the domicile of the donor at the time of the transfer. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer where the donor was domiciled at the time of the transfer, or if there is no legal residence in the Philippines, with Revenue District No. 39 - South Quezon City.


In the case of gifts made by a non-resident alien, the return may be filed with Revenue District No. 39 - South Quezon City, or with the Philippine Embassy or Consulate in the country where donor is domiciled at the time of the transfer.

Submit all documentary requirements and proof of payment to the Revenue District Office having jurisdiction over the place of residence of the donor.

One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the RDO having jurisdiction over the place of the domicile of the donor at the time of the transfer or electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)

Please note that the time of filing and payment will vary depending on the law applicable at the time of gift.

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Deadlines

Within thirty days (30) after the date the gift (donation) is made. A separate return will be filed for each gift (donation) made on the different dates during the year reflecting therein any previous net gifts made during the same calendar year.

If the gift (donation) involves conjugal/community/property, each spouse will file separate returns corresponding to his/ her respective share in the conjugal/community property. This rule will also apply in the case of co-ownership over the property.

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Revenue Regulations Nos. 2-2003, 6-2013, 6-2014

Revenue Memorandum Circular Nos. 63-2009 and 53-2013

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Codal Reference










Related Laws

Republic Act Nos. 579, 3062, 3676, 3850, 6110, 7499, 8424, 9159, 9275, 9500, 9647, 10066, 10072, 10073, 10083, 10174, 10390, 10618

Presidential Decree Nos. 69, 181, 205, 292, 294, 1773

Executive Order No. 419

Commonwealth Act No. 466

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1. Who are required to file the Donor’s Tax Return?

Every person, whether natural or juridical, resident or non-resident, who transfers or causes to transfer property by gift, whether in trust or otherwise, whether the gift is direct or indirect and whether the property is real or personal, tangible or intangible.

2. What donations are tax exempt?

A. In the Case of Gifts made by a Resident (Sec. 101 (A), NIRC as amended)

Dowries or donations made on account of marriage before its celebration

or within one year thereafter, by parents to each of their legitimate, recognized natural, or adopted children to the extent of the first P10,000

Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government

Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-government organization, trust or philantrophic organization or research institution or organization, provided not more than 30% of said gifts will be used by such donee for administration purposes

B. In the Case of Gifts Made by a Nonresident not a Citizen of the Philippines (Sec. 101 (B), NIRC as amended)


Gifts made to or for the use of the National Government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the said Government

Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-government organization, trust or philantrophic organization or research institution or organization, provided not more than 30% of said gifts will be used by such donee for administration purposes

C. Tax Credit for Donor's Taxes Paid to a Foreign Country (Sec. 101 (C), NIRC as amended)

In General. - The tax imposed by this Title upon a donor who was a citizen

or a resident at the time of donation shall be credited with the amount of any donor's tax of any character and description imposed by the authority of a foreign country.

Limitations on Credit. - The amount of the credit taken under this Section shall be subject to each of the following limitations:

- The amount of the credit in respect to the tax paid to any country shall not exceed the same proportion of the tax against which such credit is taken, which the net gifts situated within such country taxable under this Title bears to his entire net gifts; and- The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken, which the donor's net gifts situated outside the Philippines taxable under this title bears to his entire net gifts.

3. What are the bases in the valuation of property?

If the gift is made in property, the fair market value at that time will be considered the amount of gift.

In case of real property, the taxable base is the fair market value as determined by the Commissioner of Internal Revenue (Zonal Value) or fair market value as shown in the latest schedule of values fixed by the provincial and city assessor (MV per Tax Declaration), whichever is higher. (Sec. 88 and 102, NIRC as amended)

If there is no zonal value, the taxable base is the fair market value that appears in the tax declaration at the time of the gift

4. For purposes of Donor’s Tax, what does the term “Net Gift” mean?

For purposes of the donor’s tax, “NET GIFT” shall mean the net economic benefit from the transfer that accrues to the donee. Accordingly, if a mortgaged property is transferred as a gift, but imposing upon the donee the obligation to pay the mortgage liability, then

the net gift is measured by deducting from the fair market value of the property the amount of mortgage assumed. (sec. 11, RR No. 2-2003)

5. Under R.A. No. 7166, any contribution in cash or in kind to any candidate or political party or coalition of parties for campaign purposes shall not be subject to the payment of any gift tax. What instance will it be subject to Donor’s Tax?

Those contributions in cash or in kind NOT duly reported to the Commission on Elections (COMELEC) shall not be subject to donor’s tax.

Section 99 (C) of the Tax Code, as amended, provides that any contribution in cash or in kind for campaign purposes shall be governed by R.A. No. 7166 or the Election Code.

Section 13 of the R.A. No. 7166 specifically states that any provision of law to the contrary notwithstanding any contribution in cash or kind to any candidate or political party or coalition of parties for campaign purposes, duly reported to the Commission shall not be subject to the payment of any gift tax (donor’s tax). Accordingly, the BIR can impose donor’s tax on contributions of this nature. (Q-14, RMC No. 63-2009)

6. For purposes of Donor’s Tax, is a legally adopted child considered stranger?

A legally adopted child is entitled to all the rights and obligations provided by law to legitimate children, and therefore, donation to him shall not be considered as donation made to stranger. (sec. 10, RR No. 2-2003)

7. For purposes of Donor’s Tax, are donations between businesses considered donations made between strangers?

Donation made between business organizations and those made between an individual and a business organization shall be considered as donation made to a stranger. (sec. 10, RR No. 2-2003)

8. Are gratuitous donations to Homeowners’ Associations subject to Donor’s Tax?

Gifts, donations, and other contributions received by the Homeowners’ Associations (Associations) are subject to the payment of donor’s tax pursuant to Section 98 and 99 of the Tax Code, as amended. Endowment or gifts received by such associations are not exempt from donor’s tax considering that gifts to Associations are not qualified for exemption under Section 101(A)(3) of the Tax Code. (II, RMC No. 53-2013)

9. Is an onerous donation or donation in exchange for goods, services or use or lease of properties to Homeowners’ Association subject to Donor’s Tax?

Pursuant to RMC No. 9-2013, Associations are subject to the corresponding internal revenue taxes imposed under the Tax Code of 1997 on their income of whatever kind and character. In this regard, contributions to associations in exchange for goods, services and

use of properties constitute as other assessments/charges from activity in exchange for the performance of a service, use of properties or delivery of an object. As such, these fees are income on the part of the associations that are subject to income tax under Section 27 of the Tax Code, as amended. (III, RMC No. 53-2013)

10. What is the proper treatment for transactions involving transfer of property other than real property referred to in Section 24 (D) for less than adequate and full consideration?

Where property, other than real property referred to in Section 24 (D) of the NIRC, as amended, is transferred for less than adequate and full consideration in money or money’s worth, then the amount by which the fair market value of the property exceeded the value of the consideration shall, for the purpose of Donor’s Tax, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year. (Sec. 100, NIRC, as amended)

11. What entities are considered exempted from Donor’s Tax under special laws?

The list below consists of entities considered Donor’s Tax exempt under special laws including, but not limited to the following:

Rural Farm School (Sec. 14, R.A. No. 10618) People’s Television Network, Incorporated (Sec. 15, R.A. No. 10390) People’s Survival Fund (Sec. 13, R.A. No. 10174) Aurora Pacific Economic Zone and Freeport Authority (Sec. 7, R.A. No.

10083) Girl Scouts of the Philippines (Sec. 11, R.A. No. 10073) Philippine Red Cross (Sec. 5, R.A. No. 10072) Tubbataha Reefs Natural Park (Sec. 17, R.A. No. 10067) National Commission for Culture and the Arts (Sec. 35, R.A. No. 10066) Philippine Normal University (Sec. 7, R.A. No. 9647) University of the Philippines (Sec. 25, R.A. No. 9500) National Water Quality Management Fund (Sec. 9, R.A. No. 9275) Philippine Investors Commission (Sec. 9, R.A. No. 3850) Ramon Magsaysay Award Foundation (Sec. 2, R.A. 3676) Philippine-American Cultural Foundation (Sec. 4, P.D. 3062) International Rice Research Institute (Art. 5(2), PD 1620) Task Force on Human Settlements (Sec. 3(b)(8), E.O. 419) National Social Action Council (Sec. 4, P.D. 294) Aquaculture Department of the Southeast Asian Fisheries Development

Center (Sec. 2, P.D. 292) Development Academy of the Philippines (Sec. 12, PD 205) Integrated Bar of the Philippines (Sec. 3, PD 181)

12. How do we determine the fair market value of the unlisted stocks?





(c) The fair market value as determined by Independent Appraiser. (RR NO. 6-2013) (Annex U)

Description

Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition. It is not a tax on property. It is a tax imposed on the privilege of transmitting property upon the death of the owner. The Estate Tax is based on the laws in force at the time of death notwithstanding the postponement of the actual possession or enjoyment of the estate by the beneficiary.

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Tax Form

BIR Form 1801 - Estate Tax Return

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1. Notice of Death duly received by the BIR, if gross estate exceeds P20,000 for deaths occurring on or after Jan. 1, 1998; or if the gross estate exceeds P3,000 for deaths occurring prior to January 1, 1998

2. Certified true copy of the Death Certificate

3. Deed of Extra-Judicial Settlement of the Estate, if the estate is settled extra judicially

http://www.bir.gov.ph/index.php/tax-information/estate-tax.html#index

http://www.bir.gov.ph/images/bir_files/assessment_performance_and_monitoring_1/BIR%20Form%20No.%201801%20Estate%20Tax%20Return.pdf


4. Court Orders/Decision, if the estate is settled judicially;

5. Affidavit of Self-Adjudication and Sworn Declaration of all properties of the Estate

6. A certified true copy of the schedule of partition of the estate and the order of the court approving the same, if applicable

7. Certified true copy(ies) of the Transfer/Original/Condominium Certificate of Title(s) of real property(ies) (front and back pages), if applicable

8. Certified true copy of the latest Tax Declaration of real properties at the time of death, if applicable

9. "Certificate of No Improvement" issued by the Assessor's Office declared properties have no declared improvement or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees

10. Certificate of Deposit/Investment/Indebtedness owned by the decedent and the surviving spouse, if applicable

11. Photo copy of Certificate of Registration of vehicles and other proofs showing the correct value of the same, if applicable

12. Photo copy of certificate of stocks, if applicable

13. Proof of valuation of shares of stocks at the time of death, if applicable

For listed stocks - newspaper clippings or certification from the Stock Exchange For unlisted stocks - Audited Financial Statements duly certified by an

independent certified public accountant with computation of fair market value per share at the time of death

14. Proof of valuation of other types of personal property, if applicable

15. Proof of claimed tax credit, if applicable

16. CPA Statement on the itemized assets of the decedent, itemized deductions from gross estate and the amount due if the gross value of the estate exceeds two million pesos, if applicable

17. Certification of Barangay Captain for claimed Family Home

18. Duly notarized Promissory Note for "Claims against the Estate" arising from Contract of Loan

19. Accounting of the proceeds of loan contracted within three (3) years prior to death of the decedent

20. Proof of the claimed "Property Previously Taxed"

21. Proof of claimed "Transfer for Public Use"

22. Copy of Tax Debit Memo used as payment, if applicable


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Tax Rates

Effective January 1, 1998 up to Present

If the Net Estate is

Over But not Over The Tax Shall be Plus Of the Excess Over

P 200,000.00 Exempt

P 200,000.00 500,000.00 0 5 % P 200,000.00

500,000.00 2,000,000.00 P 15,000.00 8 % 500,000.00

2,000,000.00 5,000,000.00 135,000.00 11 % 2,000,000.00

5,000,000.00 10,000,000.00 465,000.00 15 % 5,000,000.00

10,000,000.00 1,215,000.00 20 % 10,000,000.00

Effective July 28, 1992 up to December 31, 1997 (Section 77 of the NIRC, as amended (Republic Act No. 7499)



P 200,000.00 Exempt

P 200,000.00 500,000.00 5 % P 200,000.00

500,000.00 2,000,000.00 P 15,000.00 8 % 500,000.00


2,000,000.00 5,000,000.00 135,000.00 12 % 2,000,000.00

5,000,000.00 10,000,000.00 495,000.00 21% 5,000,000.00

10,000,000.00 1,545,000.00 35 % 10,000,000.00

Effective January 1, 1973 to July 27, 1992 (Section 85 of the NIRC, as amended (Presidential Decree No. 69)



P 10,000.00 Exempt - -

P 10,000.00 50,000.00 3% - P 10,000.00

50,000.00 75,000.00 P 1,200.00 4 % 50,000.00

75,000.00 100,000.00 2,200.00 5 % 75,000.00

100,000.00 150,000.00 3,450.00 10% 100,000.00

150,000.00 200,000.00 8,450.00 15 % 150,000.00

200,000.00 300,000.00 15,950.00 20% 200,000.00

300,000.00 400,000.00 35,950.00 25% 300,000.00

400,000.00 500,000.00 60,950.00 30% 400,000.00

500,000.00 625,000.00 90,950.00 35% 500,000.00

625,000.00 750,000.00 134,700.00 40% 625,000.00

750,000.00 875,000.00 184,700.00 45% 750,000.00

875,000.00 1,000,000.00 240,950.00 50% 875,000.00

1,000,000.00 2,000,000.00 303,450.00 53% 1,000,000.00

2,000,000.00 3,000,000.00 833,450.00 56% 2,000,000.00

3,000,000.00 - 1,393,450.00 60% 3,000,000.00

Effective September 15, 1950 to December 31, 1972 (Section 85 of the NIRC, as amended (Republic Act No. 579)

Estate and Inheritance Tax


Over But not Over ESTATE INHERITANCE

0 5,000.00 Exempt Exempt

5,000.00 12,000.00 1.0% 2%

12,000.00 30,000.00 2.0% 4%

30,000.00 50,000.00 2.5% 6%

50,000.00 70,000.00 3.0% 8%

70,000.00 100,000.00 5.0% 12%

100,000.00 150,000.00 7.0% 14%

150,000.00 250,000.00 9.0% 16%

250,000.00 500,000.00 11.0% 18%

500,000.00 1,000,000.00 13% 20%

1,000,000.00 15% 22%

Effective July 1, 1939 to September 14, 1950 (Section 85 of the NIRC, as amended (Commonwealth Act No. 466)

Estate and Inheritance Tax


Over But not Over ESTATE INHERITANCE

0 3000.00 Exempt 1.0%

3,000.00 10,000.00 1.0%

10,000.00 30,000.00 1.5% 2.0%

30,000.00 50,000.00 2.0% 3.0%

50,000.00 80,000.00 2.5% 4.0%

80,000.00 110,000.00 3.0% 5.0%

110,000.00 150,000.00 3.5% 6.0%

150,000.00 190,000.00 4.0% 7.0%

190,000.00 240,000.00 4.5% 8.0%

240,000.00 290,000.00 5.0% 9.0%

290,000.00 350,000.00 5.5% 10.0%

350,000.00 420,000.00 6.0% 11.0%

420,000.00 500,000.00 6.5% 12.0%

500,000.00 600,000.00 7.0% 13.0%

600,000.00 720,000.00 7.5% 14.0%

720,000.00 850,000.00 8.0% 15.0%

850,000.00 1,000,000.00 8.5% 16.0%

1,000,000.00 1,200,000.00 9.0% 17.0%

1,200,000.00 1,500,000.00 9.5% 17.0%

1,500,000.00 10.0% 17.0%

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Procedures

The heirs/authorized representative/administrator/executor shall file the estate tax return (BIR Form 1801) and pay the corresponding estate tax with the Authorized Agent Bank (AAB), Revenue Collection Officer (RCO) or duly authorized Treasurer of the city or municipality in the Revenue District Office having jurisdiction over the place of domicile of the decedent at the time of his death, pursuant to Section 90(D) of the Tax Code, as amended.

In case of a non-resident decedent, with executor or administrator in the Philippines, the estate tax return shall be filed with the AAB of the RDO where such executor/administrator is registered or is domiciled, if not yet registered with the BIR.

For non-resident decedent with no executor or administrator in the Philippines, the estate tax return shall be filed with the AAB under the jurisdiction of RDO No. 39 South Quezon City.

The heir/authorized representative/administrator/executor shall submit all the applicable documentary requirements as prescribed in Annexes A-6 and A-6.1 of Revenue Memorandum Order (RMO) No. 15-2003 and proof of payment to the RDO having jurisdiction over the place of residence of the decedent or the RDO where the executor or administrator is registered, or RDO No. 39 – South, Quezon City, whichever is applicable. (part II, par.(4)of RMC No. 34-2013)

Payment of Estate Tax by installment - In case the available cash of the estate is not sufficient to pay its total estate tax liability, the estate may be allowed to pay the tax by


installment and a clearance shall be released only with respect to the property, the corresponding/computed tax on which has been paid. (Section 9(F) of RR 2-2003)

One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIRForms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIRForms Offline Package in the Revenue District Office having jurisdiction over the place of domicile of the decedent at the time of his death or electronically through the use of the Online eBIRForms System. (Sec. 3(2) RR No. 6-2014)

Please note that the time of payment will vary depending on the law applicable at the time of the decedent’s death.

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Deadlines

File the return within six (6) months from decedent's death. However, the Commissioner may, in meritorious cases, grant extension not exceeding thirty (30) days.

The Estate Tax imposed shall be paid at the time the return is filed by the executor or administrator or the heirs. However, when the Commissioner finds that payment on the due date of the Estate Tax or of any part thereof would impose undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof not to exceed five (5) years, in case the estate is settled through the courts or two (2) years in case the estate is settled extra-judicially.

In all cases of transfers subject to tax, or where, though exempt from tax, the gross value of the estate exceeds Twenty Thousand Pesos (P 20,000), Section 89 of the National Internal Revenue Code of 1997 (Tax Code), as amended, provides that the executor, administrator or any of the legal heirs, shall send a written notice of death to the Commissioner within two (2) months after the decedent’s death or within a like period after an executor or administrator qualify as such. (part II, par.(1)of RMC No. 34-2013)

Please note that the time of filing will vary depending on the law applicable at the time of the decedent’s death.

Extension of Time of Filing:

When the Commissioner finds that the payment of the estate tax or of any part thereof would imposed undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or any part thereof not to exceed five (5) years in case the estate is settled through the courts, or two (2) years in case it settled extra-judicially.

Where the request for extension is by reason of negligence, intentional disregard of rules and regulations, or fraud on the part of the taxpayer, no extension will be granted by the Commissioner.


If an extension is granted, the Commissioner or his duly authorized representative may require the executor, or administrator, or beneficiary, as the case may be, to furnish a bond in such amount, not exceeding double the amount, not exceeding double the amount of tax and with such sureties as the Commissioner deems necessary, conditioned upon the payment of the said tax in accordance in the terms of extension.

The request for extension shall be filed with the Revenue District Officer (RDO) where the estate is required to secure its TIN and file the estate tax return. The application shall be approved by the Commissioner or his duly authorized representative.

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Revenue Regulations (RR) No. 2-2003, 6-2013, 6-2014

Revenue Memorandum Order (RMO) Nos. 26-82, 31-82, 15-2003

Revenue Memorandum Circular (RMC) Nos. 1-98, 34-2013

Related Laws

Commonwealth Act No. 466 – effective July 1, 1939

Republic Act No. 579 – effective September 15, 1950

Republic Act No. 6110 – effective August 4, 1969

Presidential Decree No. 69 – effective January 1, 1973



Republic Act No. 7499 – effective July 28, 1992

Republic Act No. 8424 – effective January 1, 1998

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Codal Reference









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1. Who are required to file the Estate Tax return?

a) The executor or administrator or any of the legal heirs of the decedent or non-resident of the Philippines under any of the following situation:

- In all cases of transfer subject to Estate Tax;

- Where though exempt from Estate Tax, the gross value of the estate exceeds two hundred thousand P 200,000.00; and

- Where regardless of the gross value, the estate consists of registered or registrable property such as real property, motor vehicle, share of stocks or other similar property for which a clearance from the Bureau of Internal Revenue (BIR) is required as a prerequisite for the transfer of ownership thereof in the name of the transferee. (part II par.(1.#3) of RMC No. 34-2013)

b) Where there is no executor or administrator appointed, qualified and acting within the Philippines, then any person in actual or constructive possession of any property of the decedent must file the return.

c) The Estate Tax imposed under the Tax Code shall be paid by the executor or administrator before the delivery of the distributive share in the inheritance to any heir or beneficiary. Where there are two or more executors or administrators, all of them are severally liable for the payment of the tax. The estate tax clearance issued by the Commissioner or the Revenue District Officer (RDO) having jurisdiction over the estate, will serve as the authority to distribute the remaining/distributable properties/share in the inheritance to the heir or beneficiary.

d) The executor or administrator of an estate has the primary obligation to pay the estate tax but the heir or beneficiary has subsidiary liability for the payment of that portion of the estate which his distributive share bears to the value of the total net estate. The extent of his liability, however, shall in no case exceed the value of his share in the inheritance.

2. What are included in gross estate?

For resident alien decedents/citizens:

a) Real or immovable property, wherever located


b) Tangible personal property, wherever located

c) Intangible personal property, wherever located

For non-resident decedent/non-citizens:

a) Real or immovable property located in the Philippines

b) Tangible personal property located in the Philippines

c) Intangible personal property - with a situs in the Philippines such as:

- Franchise which must be exercised in the Philippines- Shares, obligations or bonds issued by corporations organized or constituted in the Philippines- Shares, obligations or bonds issued by a foreign corporation 85% of the business of which is located in the Philippines- Shares, obligations or bonds issued by a foreign corporation if such shares, obligations or bonds have acquired a business situs in the Philippines ( i. e. they are used in the furtherance of its business in the Philippines)- Shares, rights in any partnership, business or industry established in the Philippines

3. What are excluded from gross estate?

GSIS proceeds/ benefits Accruals from SSS Proceeds of life insurance where the beneficiary is irrevocably appointed Proceeds of life insurance under a group insurance taken by employer (not taken

out upon his life) War damage payments Transfer by way of bona fide sales Transfer of property to the National Government or to any of its political

subdivisions Separate property of the surviving spouse Merger of usufruct in the owner of the naked title Properties held in trust by the decedent Acquisition and/or transfer expressly declared as not taxable

4. What will be used as basis in the valuation of property?

The properties subject to Estate Tax shall be appraised based on its fair market value at the time of the decedent's death.

The appraised value of the real estate shall be whichever is higher of the fair market value, as determined by the Commissioner (zonal value) or the fair market value, as shown in the schedule of values fixed by the Provincial or City Assessor.

If there is no zonal value, the taxable base is the fair market value that appears in the latest tax declaration.

If there is an improvement, the value of improvement is the construction cost per building permit or the fair market value per latest tax declaration.

5. What are the allowable deductions for Estate Tax Purposes?

Applicable for deaths occurring after the effectivity of RA 8424 which is January 1, 1998

For a citizen or resident alien

A. Expenses, losses, indebtedness and taxes

(1) Actual funeral expenses (whether paid or unpaid) up to the time of interment, or an amount equal to five percent (5%) of the gross estate, whichever is lower, but in no case to exceed P200,000.

(2) Judicial expenses of the testamentary or intestate proceedings.

(3) Claims against the estate.

(4) Claims of the deceased against insolvent persons where the value of the decedent’s interest therein is included in the value of the gross estate; and,

(5) Unpaid mortgages, taxes and casualty losses

B. Property previously taxed (Vanishing Deduction) (Section 86(2) of the NIRC as amended by Republic Act No. 8424)

An amount equal to the value specified below of any property forming a part of the gross estate situated in the Philippines of any person who died within five (5) years prior to the death of the decedent, or transferred to the decedent by gift within five (5) years prior to his death, where such property can be identified as having been received by the decedent from the donor by gift, or from such prior decedent by gift, bequest, devise or inheritance, or which can be identified as having been acquired in exchange for property so received:

One hundred percent (100%) of the value, if the prior decedent died within one (1) year prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

Eighty percent (80%) of the value, if the prior decedent died more than one (1) year but not more than two (2) years prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

Sixty percent (60%) of the value, if the prior decedent died more than two (2) years but not more than three (3) years prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

Forty percent (40%) of the value, if the prior decedent died more than three (3) years but not more than four (4) years prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death; and

Twenty percent (20%) of the value, if the prior decedent died more than four (4) years but not more than five (5) years prior to the death of the decedent, or if the property was transferred to him by gift within the same period prior to his death;

These deductions shall be allowed only where a donor’s tax or estate tax imposed was finally determined and paid by or on behalf of such donor, or the estate of such prior decedent, as the case may be, and only in the amount finally determined as the value of such property in determining the value of the gift, or the gross estate of such prior decedent, and only to the extent that the value of such property is included in the decedent’s gross estate, and only if in determining the value of the estate of the prior decedent, no Property Previously Taxed or Vanishing Deduction was allowable in respect of the property or properties given in exchange therefor. (Section 6 & 7 of RR 2-2003)

C. Transfers for public use

D. The family home - fair market value but not to exceed P1,000,000.00

The family home refers to the dwelling house, including the land on which it is situated, where the husband and wife, or a head of the family, and members of their family reside, as certified to by the Barangay Captain of the locality. The family home is deemed constituted on the house and lot from the time it is actually occupied as a family residence and is considered as such for as long as any of its beneficiaries actually resides therein. (Arts. 152 and 153, Family Code)

E. Standard deduction – A deduction in the amount of One Million Pesos (P1,000,000.00) shall be allowed as an additional deduction without need of substantiation.

F. Medical expenses – All medical expenses (cost of medicines, hospital bills, doctor’s fees, etc.) incurred (whether paid or unpaid) within one (1) year before the death of the decedent shall be allowed as a deduction provided that the same are duly substantiated with official receipts. For services rendered by the decedent’s attending physicians, invoices, statements of account duly certified by the hospital, and such other documents

in support thereof and provided, further, that the total amount thereof, whether paid or unpaid, does not exceed Five Hundred Thousand Pesos (P500,000).

G. Amount received by heirs under Republic Act No. 4917-Any amount received by the heirs from the decedent’s employer as a consequence of the death of the decedent-employee in accordance with Republic Act No. 4917 is allowed as a deduction provided that the amount of the separation benefit is included as part of the gross estate of the decedent.

H. Net share of the surviving spouse in the conjugal partnership or community property

For a non-resident alien

A. Expenses, losses, indebtedness and taxes

B. Property previously taxed

C. Transfers for public use

D. Net share of the surviving spouse in the conjugal partnership or community property

No deduction shall be allowed in the case of a non-resident decedent not a citizen of the Philippines, unless the executor, administrator, or anyone of the heirs, as the case may be, includes in the return required to be filed in the Section 90 of the Code the value at the time of the decedent’s death of that part of his gross estate not situated in the Philippines.

Please note that the allowable deductions will vary depending on the law applicable at the time of the decedent’s death.

6. What does the term "Funeral Expenses" include? (Sec 6 (A)(1) of RR 2-2003)

The term "FUNERAL EXPENSES" is not confined to its ordinary or usual meaning. They include:

(a) The mourning apparel of the surviving spouse and unmarried minor children of the deceased bought and used on the occasion of the burial;

(b) Expenses for the deceased’s wake, including food and drinks;

(c) Publication charges for death notices;

(d) Telecommunication expenses incurred in informing relatives of the deceased;

(e) Cost of burial plot, tombstones, monument or mausoleum but not their upkeep. In case the deceased owns a family estate or several burial lots, only the value corresponding to the plot where he is buried is deductible;

(f) Interment and/or cremation fees and charges; and

(g) All other expenses incurred for the performance of the rites and ceremonies incident to interment.

Expenses incurred after the interment, such as for prayers, masses, entertainment, or the like are not deductible. Any portion of the funeral and burial expenses borne or defrayed by relatives and friends of the deceased are not deductible. Actual funeral expenses shall mean those which are actually incurred in connection with the interment or burial of the deceased. The expenses must be duly supported by official receipts or invoices or other evidence to show that they were actually incurred.

7. What does the term "Judicial Expenses" include? (Sec 6 (A)(2) of RR 2-2003)

Expenses allowed as deduction under this category are those incurred in the inventory-taking of a assets comprising the gross estate, their administration, the payment of debts of the estate, as well as the distribution of the estate among the heirs. In short, these deductible items are expenses incurred during the settlement of the estate but not beyond the last day prescribed by law, or the extension thereof, for the filing of the estate tax return. Judicial expenses may include:

(a) Fees of executor or administrator;

(b) Attorney’s fees;

(c) Court fees;

(d) Accountant’s fees;

(e) Appraiser’s fees;

(f) Clerk hire;

(g) Costs of preserving and distributing the estate;

(h) Costs of storing or maintaining property of the estate; and

(i) Brokerage fees for selling property of the estate.

Any unpaid amount for the aforementioned cost and expenses claimed under “Judicial Expenses” should be supported by a sworn statement of account issued and signed by the creditor.

8. What are the requisites for deductibility of claims against the Estate? (Sec 6(A)(3) of RR 2-2003)

(a) The liability represents a personal obligation of the deceased existing at the time of his death except unpaid obligations incurred incident to his death such as unpaid funeral expenses (i.e., expenses incurred up to the time of interment) and unpaid medical expenses which are classified under a different category of deductions pursuant to these Regulations;

(b) The liability was contracted in good faith and for adequate and full consideration in money or money’s worth;

(c) The claim must be a debt or claim which is valid in law and enforceable in court;

(d) The indebtedness must not have been condoned by the creditor or the action to collect from the decedent must not have prescribed.

9. How do we determine the fair market value of the unlisted stocks? (RR NO. 6-2013) (Annex U)





(c) The fair market value as determined by Independent Appraiser.

Description

Income Tax is a tax on a person's income, emoluments, profits arising from property, practice of profession, conduct of trade or business or on the pertinent items of gross income specified in the Tax Code of 1997 (Tax Code), as amended, less the deductions and/or personal and additional exemptions, if any, authorized for such types of income, by the Tax Code, as amended, or other special laws.

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Who Are Required To File Income Tax Returns

Individuals

Resident citizens receiving income from sources within or outside the Philippines o employees deriving purely compensation income from 2 or more

employers, concurrently or successively at anytime during the taxable yearo employees deriving purely compensation income regardless of the

amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return

o self-employed individuals receiving income from the conduct of trade or business and/or practice of profession

o individuals deriving mixed income, i.e., compensation income and income from the conduct of trade or business and/or practice of profession

o individuals deriving other non-business, non-professional related income in addition to compensation income not otherwise subject to a final tax

o individuals receiving purely compensation income from a single employer, although the income of which has been correctly withheld, but whose spouse is not entitled to substituted filing

o marginal income earners Non-resident citizens receiving income from sources within the Philippines Aliens, whether resident or not, receiving income from sources within the

Philippines Corporation shall include partnerships, no matter how created or organized. Domestic corporations receiving income from sources within and outside the

Philippines Foreign corporations receiving income from sources within the Philippines Estates and trusts engaged in trade or business

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Annual Income Tax For Individuals Earning Purely Compensation Income (Including Non-Business/Non-Profession Related Income) and For Marginal Income Earners

Tax Form

http://www.bir.gov.ph/index.php/tax-information/income-tax.html#index


BIR Form 1700 - Annual Income Tax Return (For Individual Earning Purely Compensation Income Including Non-Business/Non-Profession Related Income)


1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)

2. Waiver of the Husband’s right to claim additional exemption, if applicable

3. Duly approved Tax Debit Memo, if applicable

4. Proof of Foreign Tax Credits, if applicable

5. Income Tax Return previously filed and proof of payment, if filing an amended return for the same taxable year

Procedures

1. Fill-up BIR Form 1700 in triplicate.

2. If there is payment:

• Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form 1700, together with the required attachments and your payment.

• In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1700, together with the required attachments and your payment.

• Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.

3. For "No Payment" Returns including refundable returns, and for tax returns qualified for second installment:

• Proceed to the Revenue District Office where you are registered or to any Tax Filing Center established by the BIR and present the duly accomplished BIR Form 1700, together with the required attachments.

• Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center representative.

Deadline

On or before the 15th day of April of each year covering taxable income for the preceding taxable year

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Annual Income Tax For Self-Employed Individuals, Estates And Trusts (Including Those With Mixed Income,i.e., Compensation Income and Income from Business and/or Practice of Profession )

Tax Form

BIR Form 1701 - Annual Income Tax Return (For Self-Employed Individuals, Estates and Trusts Including Those With Both Business and Compensation Income)


1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if applicable

2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable

3. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

4. Waiver of the Husband’s right to claim additional exemption, if applicable



7. Income Tax Return previously filed and proof of payment, if filing an amended return for the same year

8. Account Information Form (AIF) or the Certificate of the independent CPA with Audited Financial Statements if the gross quarterly sales, earnings, receipts or output exceed P 150,000.00

9. Proof of prior year’s excess tax credits, if applicable

Procedures


1. Fill-up BIR Form 1701 in triplicate copies.



• In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1701, together with the required attachments and your payment.

• Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer

3. For "No Payment" including refundable/ creditable returns, returns with excess tax credit carry over, and returns qualified for second installment:

• Proceed to the Revenue District Office where you are registered or to any established Tax Filing Centers established by the BIR and present the duly accomplished BIR Form 1701, together with the required attachments.


Deadline

Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of April of each year covering income for the preceding year

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Account Information Form For Self-Employed Individuals, Estates And Trusts (Including Those With Mixed Income , I.E., Compensation Income and Income from Business and/or Practice of Profession)

Tax Form

BIR Form 1701 AIF - Account Information Form For Self-Employed Individuals, Estates and Trusts (Including those with Mixed Income, i.e., Compensation Income


and Income from Business and/or Practice of Profession) and Estates and Trusts (Engaged in Trade or Business)

NOTE: Pursuant to Revenue Memorandum Circular No. 6 – 2001, corporations, companies or persons whose gross quarterly sales, earnings, receipts or output exceed P 150,000.00 may not accomplish this form. In lieu thereof, they may file their annual income tax returns accompanied by balance sheets, profit and loss statement, schedules listing income-producing properties and the corresponding income therefrom, and other relevant statements duly certified by an independent CPA.


None

Procedures

1. Accomplish BIR Form 1701 AIF in triplicate.

2. Attach the same to BIR Form 1701.

Deadline

Same deadline as BIR Form 1701 - On or before the 15th day of April of each year covering taxable income for the preceding year

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Quarterly Income Tax For Self-Employed Individuals, Estates And Trusts (Including Those With Mixed Income, I.E., Compensation Income and Income from Business and/or Practice of Profession)

Tax Form

BIR Form 1701Q - Quarterly Income Tax Return For Self-Employed Individuals, Estates and Trusts (Including those with both Business and Compensation Income)


1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable

2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable



4. Previously filed return, if an amended return is filed for the same quarter

Procedures

1. Fill-up BIR Form 1701Q in triplicate.


• Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you registered and present the duly accomplished BIR Form 1701 Q, together with the required attachments and your payment.

• In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1701Q, together with the required attachments and your payment.


3. For "No Payment" Returns including refundable/ creditable returns with excess tax credit carry over and returns qualified for second installment:

• Proceed to the Revenue District Office where you are registered or to any Tax Filing Center established by the BIR and present the duly accomplished BIR Form 1701Q, together with the required attachments.


Deadlines

• April 15 – for the first quarter

• August 15 – for the second quarter

• November 15 – for the third quarter

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Annual Income Tax For Corporations And Partnerships

Tax Form

BIR Form 1702 - Annual Income Tax Return (For Corporations and Partnerships)


1. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304), if applicable

2. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable



5. Income tax return previously filed and proof of payment, if amended return is filed for the same taxable year

6. Account Information Form (AIF) and/or the Certificate of the independent CPA with Audited Financial Statements, if the gross quarterly sales, earnings, receipts or output exceed P150,000.00

7. Proof of prior year’s excess tax credits, if applicable

Procedures




• In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702 with the required attachments and your payments.


3. For "No Payment" Returns including refundable/ creditable returns and returns with excess tax credit carry over:

• Proceed to the Revenue District Office where you are registered or to any Tax Filing Center established by BIR and present the duly accomplished BIR Form 1702, together with the required attachments.

• Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center representative

Deadline

Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of the fourth month following the close of the taxpayer’s taxable year

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Account Information Form For Corporations And Partnerships

Tax Form

BIR Form 1702 AIF - Account Information Form (For Corporations and Partnerships)

NOTE: Pursuant to Revenue Memorandum Circular No. 6 – 2001, corporations, companies or persons whose gross quarterly sales, earnings, receipts or output exceed P 150,000.00 may not accomplish this form. In lieu thereof, they may file their annual income tax returns accompanied by balance sheets, profit and loss statement, schedules listing income-producing properties and the corresponding income therefrom, and other relevant statements duly certified by an independent CPA.


None

Procedures

1. Accomplish BIR Form 1702 AIF in triplicate.

2. Attach the same to BIR Form 1702.

Deadline


Same deadline as BIR Form 1702 - On or before the 15th day of the fourth month following the close of the taxpayer’s taxable year

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Quarterly Income Tax For Corporations And Partnerships

Tax Form

BIR Form 1702 Q - Quarterly Income Tax Return (For Corporations and Partnerships)


1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable

2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304), if applicable


4. Previously filed return, if an amended return is filed for the same quarter

Procedures

1. Fill-up BIR Form 1702 Q in triplicate.


• Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702 Q, together with the required attachments and your payment.

• In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702 Q.


3. For Refundable Returns and for those returns with second installment:


• Proceed to the Revenue District Office where you are registered and present the duly accomplished BIR Form 1702 Q, together with the required attachments.

• Receive your copy of the duly stamped and validated form from the RDO representative.

Deadline

Corporate Quarterly Declaration or Quarterly Income Tax Return - On or before the 60th day following the close of each of the quarters of the taxable year

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Improperly Accumulated Earnings Tax For Corporations

Tax Form

BIR Form 1704 - Improperly Accumulated Earnings Tax Return (For Corporations)


1. Photocopy of Annual Income Tax Return (BIR Form 1702) with Audited Financial Statements and/or Account Information Form of the covered taxable year duly received by the BIR; and

2. Sworn declaration as to dividends declared taken from the covered year's earnings and the corresponding tax withheld, if any

Procedures




• In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form 1704



3. If there is no payment:

• Proceed to the Revenue District Office where you are registered and present the duly accomplished BIR Form 1704, together with the required attachments.

• Receive your copy of the duly stamped and validated form from the RDO representative

Deadline

Within fifteen (15) days after the close of the taxable year

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Annual Income Information Form for General Professional Partnerships

Sec. 55. Returns of General Professional Partnership (Tax Code of 1997, as amended)

Every general professional partnership shall file, in duplicate, a return of its income, except income exempt under Section 32 (B) of this Title, setting forth the items of gross income and of deductions allowed by this Title, and the names, Taxpayer Identification Numbers (TIN),addresses and shares of each of the partners.

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Tax Rate

A. For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession

Amount of Net Taxable Income

Rate

Over But Not Over

P10,000 5%

P10,000 P30,000 P500 + 10% of the Excess over P10,000



P30,000 P70,000 P2,500 + 15% of the Excess over P30,000




P500,000 P125,000 + 32% of the Excess over P500,000 in 2000

and onward

Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second installment 15 of the same year at on or before July the Authorized Agent Bank (AAB) within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered.

Tax Rate Taxable Base

1. Domestic Corporations:

a. In General 30% (effective Jan. 1, 2009)

Net taxable income from all sources

b. Minimum Corporate Income Tax*

2% Gross Income

c. Improperly Accumulated Earnings

10% Improperly Accumulated Taxable Income

2. Proprietary Educational Institution

10% Net taxable income provided that the gross income from unrelated trade, business or other activity does not exceed 50% of the total gross income

3. Non-stock, Non-profit Hospitals 10% Net taxable income provided that the gross income from unrelated trade, business or other activity does not exceed 50% of the total gross income

4. GOCC, Agencies & Instrumentalities

a. In General 30% Net taxable income from all sources


2% Gross Income



5. National Gov't. & LGUs



2% Gross Income



6. Taxable Partnerships



2% Gross Income



7. Exempt Corporation

a. On Exempt Activities 0%

b. On Taxable Activities 30% Net taxable income from all sources

8. General Professional Partnerships

0%

9. Corporation covered by Special Laws

Rate specified under the respective

special laws

10. International Carriers 2.5% Gross Philippine Billings

11. Regional Operating Head 10% Taxable Income

12. Offshore Banking Units (OBUs)

10% Gross Taxable Income On Foreign Currency Transaction

30% On Taxable Income other than Foreign Currency Transaction

13. Foreign Currency Deposit Units (FCDU)

10% Gross Taxable Income On Foreign Currency Transaction

30% On Taxable Income other than

Foreign Currency Transaction

*Beginning on the 4th year immediately following the year in which such corporation commenced its business operations, when the minimum corporate income tax is greater than the tax computed using the normal income tax.

Passive Income

1. Interest from currency deposits, trust funds and deposit substitutes 20%

2. Royalties (on books as well as literary & musical composition) 10%

- In general 20%

3. Prizes (P10,000 or less ) 5%

- In excess of P10,000 20%

4. Winnings (except from PCSO and lotto) 20%

5. Interest Income of Foreign Currency Deposit 7.5%

6. Cash and Property Dividends

- To individuals from Domestic Corporations 10 %

- To Domestic Corporations from Another Domestic Corporations 0%

7. On capital gains presumed to have been realized from sale, exchange or other disposition of real property (capital asset)

6%

8. On capital gains for shares of stock not traded in the stock exchange

- Not over P100,000 5%

- Any amount in excess of P100,000 10%

9. Interest Income from long-term deposit or investment in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments evidenced by certificatesUpon pretermination before the fifth year , there should be imposed on the entire income from the proceeds of the long-term deposit based on the remaining maturity thereof:Holding Period

Exempt

- Four (4) years to less than five (5) years 5%

- Three (3) years to less than four (4) years 12%

- Less than three (3) years 20%

B. For Non-Resident Aliens Engaged in Trade or Business

1. Interest from currency deposits, trust funds and deposit substitutes 20%

2. Interest Income from long-term deposit or investment in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments evidenced by certificatesUpon pretermination before the fifth year, there should be imposed on the entire income from the proceeds of the long-term deposit based on the remaining maturity thereof:Holding Period:

Exempt

-Four (4) years to less than five (5) years 5%

-Three (3) years to less than four (4) years 12%

-Less than three (3) years 20%

3. On capital gains presumed to have been realized from the sale, exchange or other disposition of real property

6%

4. On capital gains for shares of stock not traded in the Stock Exchange

- Not over P100,000 5%


C) For Non-Resident Aliens Not Engaged in Trade or Business

1. On the gross amount of income derived from all sources within the Philippines

25%

2. On capital gains presumed to have been realized from the exchange or other disposition of real property located in the Phils.

6%

3. On capital gains for shares of stock not traded in the Stock Exchange

- Not Over P100,000 5%


D) On the gross income in the Philippines of Aliens Employed by Regional Headquarters (RHQ) or Area Headquarters and Regional Operating Headquarters (ROH), Offshore Banking Units (OBUs), Petroleum Service Contractor and Subcontractor

On the gross income in the Philippines of Aliens Employed by Regional Headquarters (RHQ) or Area Headquarters and Regional Operating Headquarters (ROH), Offshore Banking Units (OBUs), Petroleum Service Contractor and Subcontractor

15%

E) General Professional Partnerships

General Professional Partnerships 0%

F) Domestic Corporations

1) a. In General – on net taxable income 30%

b. Minimum Corporate Income Tax – on gross income 2%

c. Improperly Accumulated Earnings – on improperly accumulated taxable income

10%

2) Proprietary Educational Institution and Non-profit Hospitals 10%

- In general (on net taxable income) 10%

- If the gross income from unrelated trade, business or other activity exceeds 50% of the total gross income from all sources

30%

4) GOCC, Agencies & Instrumentalities

a. In General - on net taxable income 30%



10%

5) Taxable Partnerships

a. In General – on net taxable income 30%



10%

6) Exempt Corporation

a. On Exempt Activities 0%

b. On Taxable Activities 30%

8) Corporation covered by Special Laws Rate specified under the respective

special laws

G) Resident Foreign Corporation

1) a. In General – on net taxable income 30%



10%

2) International Carriers – on gross Philippine billings 2.50%

3) Regional Operating Headquarters on gross income 10%

4) Corporation Covered by Special Laws Rate specified under the respective

special laws

5) Offshore Banking Units (OBUs) on gross income 10%

6) Foreign Currency Deposit Units (FCDU) on gross income 10%

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RR No. 4-95, RR No. 4-96, RR No. 5-97, RR No. 1-98, RA 9337, RR 14-2002, RR 12-2007

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Codal Reference

Sections 23-59, 67-73 and 74-77 of the National Internal Revenue Code

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1) What is income?

Income means all wealth, which flows into the taxpayer other than as a mere return of capital.




2) What is Taxable Income?

Taxable income means the pertinent items of gross income specified in the Tax Code as amended, less the deductions and/or personal and additional exemptions, if any, authorized for such types of income, by the Tax Code or other special laws.

3) What is Gross Income?

Gross income means all income derived from whatever source.

4) What comprises gross income?

Gross income includes, but is not limited to the following:

Compensation for services, in whatever form paid, including but not

limited to fees, salaries, wages, commissions and similar item

Gross income derived from the conduct of trade or business or the exercise of profession

Gains derived from dealings in property

Interest

Rents

Royalties

Dividends

Annuities

Prizes and winnings

Pensions

Partner's distributive share from the net income of the general professional partnerships

5) What are some of the exclusions from gross income?

o

Life insurance

Amount received by insured as return of premium

Gifts, bequests and devises

Compensation for injuries or sickness

Income exempt under treaty

Retirement benefits, pensions, gratuities, etc.

Miscellaneous items

oo income derived by foreign government

o income derived by the government or its political subdivision

o prizes and awards in sport competition

o prizes and awards which met the conditions set in the Tax Code

o 13th month pay and other benefits

o GSIS, SSS, Medicare and other contributions

o gain from the sale of bonds, debentures or other certificate of indebtedness

o gain from redemption of shares in mutual fund

6) What are the allowable deductions from gross income?

Except for taxpayers earning compensation income arising from personal services rendered under an employer-employee relationships where the only deduction provided that the gross family income does not exceed P250,000 per family is the premium payment on health and/or hospitalization insurance, a taxpayer may opt to avail any of the following allowable deductions from gross income:

a)Optional Standard Deduction - an amount not exceeding 40% of the net sales for individuals and gross income for corporations; or

b) Itemized Deductions which include the following:

Expenses

Interest

Taxes

Losses

Bad Debts

Depreciation

Depletion of Oil and Gas Wells and Mines

Charitable Contributions and Other Contributions

Research and Development

Pension Trusts

In addition, individuals who are either earning compensation income, engaged in business or deriving income from the practice of profession are entitled to personal and additional exemptions as follows:

Personal Exemptions:

For single individual or married individual judicially decreed as legally separated with no qualified dependents………………………………………P 50,000.00

For head of family……………………………P 50,000.00

For each married individual *…………P 50,000.00

Note: In case of married individuals where only one of the spouses is deriving gross income, only such spouse will be allowed to claim the personal exemption.

Additional Exemptions:

For each qualified dependent, an P25,000 additional exemption can be

claimed but only up to 4 qualified dependents

The additional exemption can be claimed by the following:

The husband who is deemed the head of the family unless he explicitly

waives his right in favor of his wife

The spouse who has custody of the child or children in case of legally separated spouses. Provided, that the total amount of additional

exemptions that may be claimed by both shall not exceed the maximum additional exemptions allowed by the Tax Code.

The individuals considered as Head of the Family supporting a qualified dependent

The maximum amount of P 2,400 premium payments on health and/or hospitalization insurance can be claimed if:

Family gross income yearly should not be more than P 250,000

For married individuals, the spouse claiming the additional exemptions for the qualified dependents shall be entitled to this deduction

7) Who are required to file the Income Tax returns?

Individuals

Resident citizens receiving income from sources within or outside the Philippines

o employees deriving purely compensation income from 2 or more

employers, concurrently or successively at anytime during the taxable year

o employees deriving purely compensation income regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return

o self-employed individuals receiving income from the conduct of trade or business and/or practice of profession

o individuals deriving mixed income, i.e., compensation income and income from the conduct of trade or business and/or practice of profession

o individuals deriving other non-business, non-professional related income in addition to compensation income not otherwise subject to a final tax

o individuals receiving purely compensation income from a single employer, although the income of which has been correctly withheld, but whose spouse is not entitled to substituted filing

o marginal income earners

Non-resident citizens receiving income from sources within the

Philippines

Aliens, whether resident or not, receiving income from sources within the Philippines

Corporations no matter how created or organized including partnerships

o domestic corporations receiving income from sources within and

outside the Philippines

o foreign corporations receiving income from sources within the Philippines

o taxable partnerships

Estates and trusts engaged in trade or business

8) Who are not required to file Income Tax returns?

a. An individual who is a minimum wage earner

b. An individual whose gross income does not exceed his total personal and additional exemptions

c. An individual whose compensation income derived from one employer does not exceed P 60,000 and the income tax on which has been correctly withheld

d. An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors and offshore-banking units, non-resident aliens not engaged in trade or business)

e. Those who are qualified under “substituted filing”. However, substituted filing applies only if all of the following requirements are present :

the employee received purely compensation income (regardless of

amount) during the taxable year

the employee received the income from only one employer in the Philippines during the taxable year

the amount of tax due from the employee at the end of the year equals the amount of tax withheld by the employer

the employee’s spouse also complies with all 3 conditions stated above

the employer files the annual information return (BIR Form No. 1604-CF)

the employer issues BIR Form No. 2316 (Oct 2002 ENCS version ) to each employee.

9) Who are exempt from Income Tax?

Non-resident citizen who is:

a) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein

b) A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis

c) A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be physically present abroad most of the time during the taxable year

d) A citizen who has been previously considered as a non-resident citizen and who arrives in the Philippines at any time during the year to reside permanently in the Philippines will likewise be treated as a non-resident citizen during the taxable year in which he arrives in the Philippines, with respect to his income derived from sources abroad until the date of his arrival in the Philippines.

Overseas Filipino Worker, including overseas seaman

An individual citizen of the Philippines who is working and deriving income from abroad as an overseas Filipino worker is taxable only on income from sources within the Philippines; provided, that a seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel engaged exclusively in international trade will be treated as an overseas Filipino worker.

NOTE: A Filipino employed as Philippine Embassy/Consulate service personnel of the Philippine Embassy/consulate is not treated as a non-resident citizen, hence his income is taxable.

10) What are the procedures in filing Income Tax returns (ITRs)?

For “with payment” ITRs (BIR Form Nos. 1700 / 1701 / 1701Q / 1702 / 1702Q / 1704)

File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) of the place where taxpayer is registered or required to be registered. In places where there are no AABs, the return will be filed directly with the Revenue Collection Officer or duly Authorized Treasurer of the city or municipality in which such person has his legal residence or principal place of business in the Philippines, or if there is none, filing of the return will be at the Office of the Commissioner.

For “no payment” ITRs -- refundable, break-even, exempt and no operation/transaction, including returns to be paid on 2nd installment and returns paid through a Tax Debit Memo(TDM)

File the return with the concerned Revenue District Office (RDO) where the taxpayer is registered. However, "no payment" returns filed late shall be accepted by the RDO but instead shall be filed with an Authorized Agent Bank (AAB) or Collection Officer/Deputized Municipal Treasurer (in places where there are no AABs), for payment of necessary penalties.

11) How is Income Tax payable of individuals (resident citizens and non-resident citizens)computed?

Gross Income P ___________

Less: Allowable Deductions (Itemized or Optional) ___________

Net Income P ___________

Less: Personal & Additional Exemptions ___________

Net Taxable Income P ___________

Multiply by Tax Rate (5 to 32%) ____________

Income Tax Due: Tax withheld (per BIR From 2316/2304) P ___________

Income tax payable P____________

12) How is Income Tax paid?

Through withholding

o

o

o Generally 10% or 15% if the gross annual business or professional income exceeds P720,000 per year

o 20% - Fees paid to directors who are not employees and 20% of professional fees paid to non-individuals

o Other withholding tax rates

Pay the balance as you file the tax return, computed as follows:

Income Tax Due P ___________

Less: Withholding Tax ___________

Net Income Tax Due P ___________

13) Is the Minimum Corporate Income Tax (MCIT) an addition to the regular or normal income tax?

No, the MCIT is not an additional tax. An MCIT of 2% of the gross income as of the end of taxable year (whether calendar or fiscal year, depending on the accounting period employed) is imposed on a corporation taxable under Title II of the Tax Code, as amended, beginning on the 4th taxable year immediately following the taxable year in which such corporation commenced its business operations when the MCIT is greater than the regular income tax. The MCIT is compared with the regular income tax, which is due from a corporation. If the regular income is higher than the MCIT, then the corporation does not pay the MCIT but the amount of the regular income tax.

Notwithstanding the above provision, however, the computation and the payment of MCIT, shall likewise apply at the time of filing the quarterly corporate income tax as prescribed under Section 75 and Section 77 of the Tax Code, as amended. Thus, in the computation of the tax due for the taxable quarter, if the computed quarterly MCIT is higher than that quarterly normal income tax, the tax due to be paid for such taxable quarter at the time of filing the quarterly income tax return shall be the MCIT which is two percent (2%) of the gross income as of the end of the taxable quarter. In the payment of said quarterly MCIT, excess MCIT from the previous taxable year/s shall not be allowed to be credited. Expanded withholding tax, quarterly corporate income tax payments under the normal income tax, and the MCIT paid in the previous taxable quarter/s are allowed to be applied against the quarterly MCIT due.

14) Who are covered by MCIT?

The MCIT covers domestic and resident foreign corporations which are subject to the regular income tax. The term “regular income tax” refers to the regular income tax rates under the Tax Code. Thus, corporations which are subject to a special corporate tax system do not fall within the coverage of the MCIT.

For corporations whose operations or activities are partly covered by the regular income tax and partly covered by the preferential rate under special law, the MCIT shall apply on operations by the regular income tax rate. Newly established corporations or firms which are on their first 3 years of operations are not covered by the MCIT.

15) When does a corporation start to be covered by the MCIT?

A corporation starts to be covered by the MCIT on the 4th year of its business operations. The period of reckoning which is the start of its business operations is the year when the corporation was registered with the BIR. This rule will apply regardless of whether the corporation is using the calendar year or fiscal year as its taxable year.

16) When is the MCIT reported and paid? Is it quarterly?

The MCIT is paid on an annual basis and quarterly basis. The rules are governed by Revenue Regulations No. 12-2007.

17) How is MCIT computed?

The MCIT is 2% of the gross income of the corporation at the end of the year.

“Gross income” means gross sales less sales returns, discounts and cost of goods sold. Passive income, which have been subject to a final tax at source do not form part of gross income for purposes of the MCIT.

Cost of goods sold includes all business expenses directly incurred to produce the merchandise to bring them to their present location and use.

For trading or merchandising concern, cost of goods sold means the invoice cost of goods sold, plus import duties, freight in transporting the goods to the place where the goods are actually sold, including insurance while the goods are in transit.

For a manufacturing concern, cost of goods manufactured and sold means all costs of production of finished goods such as raw materials used, direct labor and manufacturing overhead, freight cost, insurance premiums and other costs incurred to bring the raw materials to the factory or warehouse.

For sale of services, gross income means gross receipts less sales returns, allowances, discounts and cost of services which cover all direct costs and expenses necessarily incurred to provide the services required by the customers and clients including:

o

Salaries and employees benefits of personnel, consultants and specialists directly rendering the service;

Cost of facilities directly utilized in providing the service such as depreciation or rental of equipment used;

Cost of supplies

Interest Expense is not included as part of cost of service, except in the case of banks and other financial institutions.

“Gross Receipts” means amounts actually or constructively received during the taxable year. However, for taxpayers employing the accrual basis of accounting, it means amounts earned as gross income.

18) What is the carry forward provision under the MCIT?

Any excess of the MCIT over the normal income tax may be carried forward on an annual basis and be credited against the normal income tax for 3 immediately succeeding taxable years.

19) How would the MCIT be recorded for accounting purposes?

Any amount paid as excess minimum corporate income tax should be recorded in the corporation’s books as an asset under account title “Deferred charges-MCIT”

20) How long can we amend our income tax return?

There is no prescription period for amending the return. When the taxpayer has been issued a Letter of Authority, he can no longer amend the return.

21) Can a benefactor of a senior citizen claim him/her as additional dependent in addition to his/her 3 qualified dependent children at P 25,000 each?

No, pursuant to Revenue Regulations 2-94, the benefactor of a senior citizen cannot claim the additional exemption.

22) What is a tax treaty?

A tax treaty formally known as convention or agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (and on capital) could be defined in terms of its purpose. First, a tax treaty is intended to promote international trade and investment in several ways, the most important of which is by allocating taxing jurisdiction between the Contracting States so as to eliminate or mitigate double taxation of income. Second, a tax treaty is intended to permit the Contracting States to better enforce their domestic laws so as to reduce tax evasion. These purposes are in fact incorporated in the title and the preamble.

23) What are the effective Philippine tax treaties?

The Philippines has thirty-seven (37) effective tax treaties. The following tax treaties and their dates of effectivity as as follows:

Effective Philippine Tax Treaties (as of June 2010)

Country Date of Effectivity

Date and Venue of Signature

1. Australia January 1, 1980 May 11, 1979, Manila, Philippines

2. Austria January 1, 1983 April 4, 1981, Vienna, Austria

3. Bahrain January 1, 2004 November 7, 2001, Manila, Philippines

4. Bangladesh January 1, 2004 September 8, 1997, Manila, Philippines

5. Belgium January 1, 1981 October 2, 1976, Manila, Philippines

6. Brazil January 1, 1992 Sept. 29, 1983, Brasilia, Brazil

7. Canada January 1, 1977 March 11, 1976, Manila, Philippines

8. China January 1, 2002 November 18, 1999, Beijing, China

9. Czech January 1, 2004 November 13, 2000, Manila, Philippines

10. Denmark (Renegotiated) January 1, 1998 June 30, 1995, Copenhagen, Denmark

11. Finland January 1, 1982 October 13, 1978, Manila, Philippines

12. France January 1, 1978 January 9, 1976, Kingston, Jamaica

13. Germany January 1, 1985 July 22, 1983, Manila, Philippines

14. Hungary January 1, 1998 June 13, 1997, Budapest, Hungary

15. India January 1, 1995 February 12, 1990, Manila,

Philippines

16. Indonesia January 1, 1983 June 18, 1981, Manila, Philippines

17. Israel January 1, 1997 June 9, 1992, Manila, Philippines

18. Italy January 1, 1990 December 5, 1980, Rome, Italy

19. Japan January 1, 1981 February 13, 1980, Tokyo, Japan

20. Korea January 1, 1987 February 21, 1984, Seoul, Korea

21. Malaysia January 1, 1985 April 27, 1982, Manila, Philippines

22. Netherlands January 1, 1992 March 9, 1989, Manila, Philippines

23. New Zealand January 1, 1981 April 29, 1980, Manila, Philippines

24. Norway January 1, 1998 July 9, 1987, Manila, Philippines

25. Pakistan January 1, 1979 February 22, 1980, Manila, Philippines

26. Poland January 1, 1998 September 9, 1992, Manila, Philippines

27. Romania January 1, 1998 May 18, 1994, Bucharest, Romania

28. Russia January 1, 1998 April 26, 1995, Manila, Philippines

29. Singapore January 1, 1977 August 1, 1977, Manila, Philippines

30. Spain January 1, 1994 March 14, 1989, Manila, Philippines

31. Sweden (Renegotiated) January 1, 2004 June 24, 1998, Manila, Philippines

32. Switzerland January 1, 2002 June 24, 1998, Manila, Philippines

33. Thailand January 1, 1983 July 14, 1982, Manila,

Philippines

34. United Arab Emirates January 1, 2009 September 21, 2003, Dubai, UAE

35. United Kingdom of Great Britain and Northern Ireland

January 1, 1979 June 10, 1976, London, United Kingdom

36. United States of America January 1, 1983 October 1, 1976, Manila, Philippines

37. Vietnam January 1, 2004 November 14, 2001, Manila, Philippines

24) What office can we inquire about the said tax treaties?

The International Tax Affairs Division (ITAD).

25) What taxes are covered by Philippine tax treaties?

Income taxes imposed by the domestic laws of the Contracting States, including substantially similar taxes that may be imposed later, in addition to, or in place, are covered by the tax treaties. In the Philippines, this is generally limited to Title II (Tax on Income) of the National Internal Revenue Code of 1997, as amended.

26) How is business income treated under our tax treaties?

The business profits of a resident of a Contracting State shall not be taxable in the Philippines unless that enterprise of a resident of a Contracting State carries on business in the Philippines through a permanent establishment.

27) What is the concept of permanent establishment (PE) as used in tax treaties?

PE is defined as a fixed place of business through which the business of the enterprise is wholly or partly carried on. The concept of permanent establishment is used to determine the rights of a Contracting State to tax the business profits of enterprises of the other Contracting State. Under this concept, profits of an enterprise of a Contracting State are not taxable by the other Contracting State, unless the enterprise carries on business through a permanent establishment situated in the other Contracting State.

A list of places, circumstances, and activities which constitute a permanent establishment is provided under the different tax treaties which the Philippines has with other countries.

28) What is the Most-Favored-Nation clause (MFN)?

The appearance of the MFN clause in the tax treaty means that a Contracting State will grant to a resident of the other Contracting State the same lower rate of tax or exemption the former has granted to a resident of a third State.

29) What is the tax treatment on immovable property?

Income from an immovable property is taxable in the Contracting State where the property is situated. This term is generally defined under the domestic laws of the Contracting States. However, this is further defined in the tax treaties.

30) How are capital gains taxed under our tax treaties?

Gains from the alienation of immovable property or movable property forming part of the business property of a permanent establishment or pertaining to a fixed base are taxed in the Philippines if the immovable property or permanent establishment or fixed base is located here.

Description

Percentage tax is a business tax imposed on persons or entities/transactions:

a.1. Who sell or lease goods, properties or services in the course of trade or business and are

exempt from value-added tax (VAT) under Section 109 (w) of the National Internal Revenue Code, as amended, whose gross annual sales and/or receipts do not exceed Php 1,919,500 and who are not VAT-registered; and

2. Engaged in the following industries/ transactions:

a. Cars for rent or hire driven by the lessee, transportation contractors, including persons who transport passengers for hire, and other domestic carriers of passengers by land (except owners of animal-drawn two-wheeled vehicle) and keepers of garages

b. International air/shipping carriers doing business in the Philippines on their gross receipts derived from transport of cargo from the Philippines to another country

c. Franchise grantees of –

radio and/or television broadcasting whose gross annual receipts for the preceding year do not exceed Php 10,000,000.00 and did not opt to register as VAT taxpayers

gas and water utilitiesd. Overseas dispatch, message or conversation transmitted from the Philippines,

except those transmitted by the Philippine government, any embassy and consular offices of a foreign government, public international organizations enjoying exemptions pursuant to an international agreement and news messages to a bona fide correspondent furnishing general news service

e. Banks and non-bank financial intermediaries performing quasi-banking functions

f. Other non-bank financial intermediaries (including pawnshops)

g. Person, company or corporation (except purely cooperative companies or associations) doing life insurance business

h. Fire, marine or miscellaneous agents of foreign insurance companies

i. Proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, Jai-Alai and racetracks, including videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music lounges

j. Winnings in horse races

k. Sale, barter or exchange of shares of stock listed and traded through the local stock exchange or through initial public offering

[return to index]

Who are required to file Percentage Tax Returns monthly?

Every person/entity subject to percentage tax as enumerated in items 1, 2.a, 2.b, 2.c, 2.e, 2.f, 2.g and 2.h above

Who are required to file Percentage Tax Returns quarterly?

1.1. Operator, manager or person in chage of:

cockpits,

cabarets, day or night clubs, videoke bars, karaoke bars, karaoke televisions,

karaoke boxes and music lounges

boxing exhibitions

professional basketball games

Jai-alai and race tracks2. Telephone and communication companies on their overseas dispatch, message or

conversation originating and transmitted from the Philippines

[return to index]

Monthly Percentage Tax

Tax Form

BIR Form 2551M - Monthly Percentage Tax Return


http://www.bir.gov.ph/images/bir_files/old_files/pdf/267692551M%20final.pdf

http://www.bir.gov.ph/index.php/tax-information/percentage-tax.html#index


1. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable


3. For amended return, proof of payment and the return previously filed

4. Authorization letter, if filed by an authorized representative

Procedures

1. Fill-up BIR Form 2551M in triplicate copies2. If there is payment:

Proceed to any Authorized Agent Bank (AAB) located within the territorial jurisdiction of

the Revenue District Office (RDO) where the taxpayer is registered and present the duly

accomplished BIR Form 2551M, together with the required attachments and payment. The

Percentage Tax shall be paid at the time the return is filed by the taxpayer.

In places where there are no AABs, the duly accomplished BIR Form 2551M,

together with the required attachments and payment, shall be filed/paid with the Revenue

Collection Officer (RCO) or duly authorized Treasurer of the city or municipality where said

business or principal place of business is located.

Receive the taxpayer's copy of BIR Form 2551M duly validated/stamp-received by

the AAB/RCO/authorized City or Municipal Treasurer.

For eFPS filers, you may click this link (https://efps.bir.gov.ph) for the Job Aid in filing and payment thru said system.

3. I there is no payment:

Proceed to the RDO where the taxpayer is registered or with the concerned RCO and

present the duly accomplished BIR Form 2551M, together with the required attachments.

Receive the taxpayer's copy of BIR Form 2551M duly stamp-received by the RDO representative.

Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall be paid at the concerned AAB.

When to File/Pay

Manual Filing

Within twenty (20) days following the end of each month



https://efps.bir.gov.ph/index.html





http://www.bir.gov.ph/images/bir_files/old_files/pdf/16832307%20Final.pdf

Electronic Filing

For taxpayers enrolled with the Electronic Filing and Payment System (eFPS), in accordance with the schedule set forth in RR No. 26-2002 as follows:

Group A : Twenty five (25) days following the end of the month Group B : Twenty four (24) days following the end of the month Group C : Twenty three (23) days following the end of the month Group D : Twenty two (22) days following end the of the month Group E : Twenty one (21) days following the end of the month

[return to index]

Quarterly Percentage Tax

Tax Form

BIR Form 2551Q - Quarterly Percentage Tax Return



2. Duly approved Tax Debit Memo, if applicable3. For amended return, proof of payment and the return previously filed4. Authorization letter, if filed by an authorized representative

Procedures

1. Fill-up BIR Form 2551Q in triplicate copies.2. If there is payment:

Proceed to any AAB located within the territorial jurisdiction of the RDO where the

taxpayer is registered and present the duly accomplished BIR Form 2551Q, together with the required attachments and payment. The Percentage Tax shall be paid at the time the return is filed by the taxpayer.

In places where there are no AABs, the duly accomplished BIR Form 2551Q, together with the required attachments and payment, shall be filed/paid with the RCO or duly Authorized Treasurer of the city or municipality where said business or principal place of business is located.

Receive the taxpayer's copy of BIR Form 2551Q duly validated/stamp-received by the AAB/RCO/authorized City or Municipal Treasurer.

For eFPS filers, you may click this link (https://efps.bir.gov.ph) for the Job Aid in filing and payment thru said system



http://www.bir.gov.ph/images/bir_files/old_files/pdf/274722551Q.pdf






Proceed to the Revenue District Office where the taxpayer is registered or with the concerned RCO and present the duly accomplished BIR Form 2551Q, together with the required attachments.

Receive the taxpayer's copy of BIR Form 2551Q duly stamp-received by

the RDO representative.


When to File/Pay

Within twenty (20) days after the end of each taxable quarter

[return to index]

Percentage Tax Return For Transactions Involving Shares of Stocks Listed and Traded Through the Local Stocks Exchange or Through Initial and/or Secondary Offering

Tax Form

BIR Form 2552 - Percentage Tax Return for Transactions Involving Shares of Stocks Listed and Traded Through the Local Stocks Exchange or Through Initial and/or Secondary Offering



2. Proof of Exemption for transactions not subject to tax, if applicable


4. Previously filed return and proof of payment, for amended return

Procedures


http://www.bir.gov.ph/images/bir_files/old_files/pdf/41742552(99).pdf





1. Fill-up BIR Form 2552 in triplicate copies.


Proceed to the nearest Authorized Agents Banks (AABs) of the

Revenue District Office where the local stock exchange is located and present the duly accomplished BIR Form 2552, together with the required attachments and payment. (The Percentage Tax imposed shall be paid at the time the return is filed by the taxpayer.)

Receive taxpayer's copy of the duly stamped and validated form from the teller of the AAB


Proceed to the Revenue District Office where the local stock

exchange is located and present the duly accomplished BIR Form 2552, together with the required attachments.

Receive taxpayer's copy of the duly stamped and validated form from the RDO representative.


Deadline

For tax on sale of shares of stocks listed and traded through the local stock

exchange (LSE) – within five (5) banking days from the date of collection

For tax on shares of stocks sold or exchanged through primary offering - within 30 days from the date of listing in the LSE

For tax on shares of stocks sold or exchanged through secondary public offering - within five (5) banking days from the date of collection

[return to index]

Tax Rates


Coverage Basis Tax Rate

Persons exempt from VAT under Sec. 116

Gross Sales or Receipts 3%

Domestic carriers and keepers of garages

Gross Receipts 3%

International Carriers:

International air/shipping carriers doing business in the Philippines

Gross Receipts 3%

Franchise Grantees:

Electric , gas and water utilities Gross Receipts 2%

Radio and television broadcasting companies whose annual gross receipts of the preceding year do not exceed P 10,000,000 and did not opt to register asVAT taxpayer

Gross Receipts 3%

Banks and non-bank financing intermediaries

Interest, commissions and discounts from lending activities as well as income from leasing on the basis of remaining maturities of instruments:

• Short term maturity (not over 2 years) 5%

• Medium term maturity (over 2 years but not over 4 years)

3%

• Long term maturity

ο Over 4 years but not over 7 years

1%

ο Over 7 years

0%

On Dividends 0%

On royalties, rentals of properties, real or personal, profits from exchange and all other items treated as gross income under Sec. 32 of the Code

5%

Finance Companies On interest, discounts and other items of gross income paid to finance companies and other financial intermediaries not performing quasi

5%

banking functions

Interest, commissions and discounts paid from their loan transactions from finance companies as well as income from financial leasing shall be taxed based on the remaining maturities of instruments:

• Short term maturity (not over 2 years) 5%

• Medium term (over 2 years but not over 4 years)

3%

• Long Term Maturity

ο Over 4 years but not over 7 years 1%

ο Over 7 years 0%

Life Insurance Companies (except purely cooperative companies or associations)

Total premiums collected 5%

Agents of foreign insurance companies: (except reinsurance premium)

Total premium collected 10%

Total premium collected 5%

Proprietors, lessee or operator of the following:

Cockpits Gross receipts 18%

Cabarets, Night or Day Clubs Gross receipts 18%

Boxing exhibitions Gross receipts 10%

Professional basketball games Gross receipts 15%

Jai-alai and race track (operators shall withheld tax on winnings)

Gross receipts 30%

Every stock broker who effected a sale, barter, exchange or other disposition of shares of stock listed and traded through the Local Stock Exchange (LSE) other than the sale by a dealer in securities

Gross selling price or gross value in money of shares of stocks sold, bartered, exchanged or otherwise disposed

½ of 1%

A corporate issuer/stock broker, Gross selling price or gross value of in

whether domestic of foreign, engaged in the sale, barter, exchange or other disposition through Initial Public Offering (IPO)/secondary public offering of shares of stock in closely held corporations

money of shares of stocks sold, bartered, exchanged or otherwise disposed in accordance with the proportion of stocks sold, bartered or exchanged or after listing in the stock exchange

• Up to 25 % 4%

• Over 25% but not over 33 1/3% 2%

• Over 33 1/3 % 1%

[return to index]


RR No. 4-95, RR 7-95, RR No. 5-97, RR No. 2-98, RR No. 7-95, RR No. 6-2001, RR No. 12-2001, RR No. 4-2002, RR No. 26-2002, RR No. 14-2003, RR No. 9-2004, RR No. 10-2004, RMC No. 6-2003, RMC No. 73-2004

[return to index]

Codal Reference

Sections 116 to 128 of the National Internal Revenue Code

[return to index]

DESCRIPTION

Value-Added Tax is a form of sales tax. It is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines and on importation of goods into the Philippines. It is an indirect tax, which may be shifted or passed on to the buyer, transferee or lessee of goods, properties or services.

[return to index]

WHO ARE REQUIRED TO FILE VAT RETURNS

http://www.bir.gov.ph/index.php/tax-information/value-added-tax.html#index




Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases goods or properties and renders services subject to VAT, if the aggregate amount of actual gross sales or receipts exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00).

A person required to register as VAT taxpayer but failed to register

Any person, whether or not made in the course of his trade or business, who imports goods

[return to index]

MONTHLY VAT DECLARATIONS

Tax Form

BIR Form 2550M - Monthly Value-Added Tax Declaration (February 2007 ENCS)


1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307), if applicable

2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source (SAWT), if applicable


4. Duly approved Tax Credit Certificate, if applicable

5. Authorization letter, if return is filed by authorized representative.

Procedures

1. Fill-up BIR Form No. 2550M in triplicate copies (two copies for the BIR and one copy for the taxpayer)


File the Monthly VAT declaration, together with the required

attachments, and pay the VAT due thereon with any Authorized Agent Bank (AAB) under the jurisdiction of the Revenue District Office (RDO)/Large Taxpayers District Office (LTDO) where the

http://www.bir.gov.ph/index.php/contact-us/directory/revenue-district-offices.html

http://www.bir.gov.ph/index.php/contact-us/directory/revenue-district-offices.html

http://www.bir.gov.ph/index.php/list-of-authorized-agent-banks.html

http://www.bir.gov.ph/index.php/list-of-authorized-agent-banks.html

http://www.bir.gov.ph/images/bir_files/old_files/zip/267652550M.zip

http://www.bir.gov.ph/images/bir_files/old_files/zip/16832307.zip


http://www.bir.gov.ph/images/bir_files/old_files/zip/267652550M.zip


taxpayer (head office of the business establishment) is registered or required to be registered.

The taxpayer must accomplish and submit BIR-prescribed deposit slip, which the bank teller shall machine validate as evidence that payment was received by the AAB. The AAB receiving the tax return shall stamp mark the word "Received" on the return and machine validate the return as proof of filing the return and payment of the tax.

In places where there are no duly accredited agent banks, file the Monthly VAT declaration, together with the required attachments and pay the VAT due with the Revenue Collection Officer (RCO) or duly authorized Treasurer of the Municipality where such taxpayer (head office of the business establishment) is registered or required to be registered.

The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt upon payment of the tax.


File the Monthly VAT Declaration, together with the required

attachments with the RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly authorized Municipal/ City Treasurer of Municipality/City where the taxpayer (head office of the business establishment) is registered or required to be registered.

Deadline

Manual Filing

Not later than the 20th day following the end of each month

Through Electronic Filing and Payment System (eFPS):

Business Industry Period for filing Monthly VAT Declarations

Group A Insurance and Pension Funding

25 days following the end of the month

Activities Auxiliary to Financial IntermediationConstruction


Water TransportHotels and RestaurantsLand Transport Group B Manufacture and Repair of Furniture 24 days following the end of the

monthManufacture of Basic MetalsManufacture of Chemicals and Chemical ProductsManufacture of Coke, Refined Petroleum & Fuel ProductsManufacture of Electrical Machinery & Apparatus N.E.C.Manufacture of Fabricated Metal ProductsManufacture of Food, Products & BeveragesManufacture of Machinery & Equipment NECManufacture of Medical, Precision, Optical InstrumentsManufacture of Motor Vehicles, Trailer & Semi-TrailersManufacture of Office, Accounting & Computing MachineryManufacture of Other Non-Metallic Mineral ProductsManufacture of Other Transport EquipmentManufacture of Other Wearing ApparelManufacture of Paper and Paper ProductsManufacture of Radio, TV & Communication Equipment/ ApparatusManufacture of Rubber & Plastic ProductsManufacture of TextilesManufacture of Tobacco ProductsManufacture of Wood & Wood ProductsManufacturing N.E.C.Metallic Ore MiningNon-Metallic Mining & Quarrying Group C Retail Sale 23 days following the end of the

monthWholesale Trade and Commission TradeSale, Maintenance, Repair of Motor Vehicle, Sale of Automotive FuelCollection, Purification and Distribution of WaterComputer and Related ActivitiesReal Estate Activities Group D Air Transport 22 days following the end of the

monthElectricity, Gas, Steam & Hot Water SupplyPostal & Telecommunications

Publishing, Printing & Reproduction of Recorded MediaRecreational, Cultural & Sporting ActivitiesRecyclingRenting of Goods & EquipmentSupporting & Auxiliary Transport Services Group E Activities of Membership Organizations, Inc. 21 days following the end of the

monthHealth and Social WorkPublic Admin & Defense Compulsory Social SecurityResearch and DevelopmentAgricultural, Hunting, and ForestryFarming of AnimalsFishingOther Service ActivitiesMiscellaneous Business ActivitiesUnclassified

[return to index]

QUARTERLY VALUE-ADDED TAX RETURN

Tax Form

BIR Form No. 2550Q - Quarterly Value-Added Tax Return (February 2007 ENCS)

Attachments to the Return

1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if applicable

2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source (SAWT), if applicable


4. Duly approved Tax Credit Certificate, if applicable

5. Previously filed return and proof of payment, for amended return

6. Authorization letter, if return is filed by authorized representative

Procedures


http://www.bir.gov.ph/images/bir_files/old_files/zip/41652550Q.zip


1. Fill-up BIR Form 2550Q in triplicate copies (two copies for the BIR and one copy for the taxpayer)


File the Quarterly VAT Return, together with the required

attachments, and pay the VAT due thereon with any AAB under the jurisdiction of the RDO/LTDO where the taxpayer (head office of the business establishment) is registered or required to be registered.

The taxpayer must accomplish and submit BIR- prescribed deposit slip, which the bank teller shall machine validate as evidence that payment was received by the AAB. The AAB receiving the tax return shall stamp mark the word "Received" on the return and machine validate that return as proof of filing the return and payment of the tax.

In places where there are no duly accredited agent banks, file the Quarterly VAT Return, together with the required attachments and pay the VAT due with the Revenue Collection Officer (RCO) or duly authorized Treasurer of the Municipality where such taxpayer (head office of the business establishment) is registered or required to be registered.

The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt upon payment of the tax.


File the Quarterly VAT Return, together with the required

attachments with the RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly authorized Municipal/City Treasurer of Municipality/City where the taxpayer (head office of the business establishment) is registered or required to be registered.

Reminders:

1. Only one consolidated Monthly VAT Declaration/Quarterly VAT Return shall be filed covering the results of operation of the head office as well as the branches for all lines of business subject to VAT.

2. The Quarterly List of Sales and Purchases shall be submitted in magnetic form using 3.5-inch floppy diskette following the format provided under Section 4.114-3(g) of RR No. 16-2005.

http://www.bir.gov.ph/images/bir_files/old_files/pdf/26116rr16-2005.pdf

http://www.bir.gov.ph/images/bir_files/old_files/zip/41652550Q.zip

3. The Quarterly List of Sales and Purchases shall be submitted through electronic filing facility for taxpayers under the jurisdiction of the Large Taxpayers Service (LTS) and those enrolled under the eFPS.

Deadline

Within twenty five (25) days following the close of taxable quarter.

[return to index]

TAX RATES

On sale of goods and properties - twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged

On sale of services and use or lease of properties - twelve percent (12%) of gross receipts derived from the sale or exchange of services, including the use or lease of properties

On importation of goods - twelve percent (12%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such as tax to be paid by the importer prior to the release of such goods from customs custody; provided, that where the customs duties are determined on the basis of quantity or volume of the goods, the VAT shall be based on the landed cost plus excise taxes, if any.

On export sales and other zero-rated sales - 0%

[return to index]

RELATED REVENUE ISSUANCES

REVENUE REGULATIONS (RRs)

Issuance No. Subject Matter Date of Issue

RR No. 13-2008 Consolidated Regulations on Advance Value-Added Tax on the Sale of Refined Sugar; Amending and/or Revoking All Revenue Issuances Issued to this Effect, and for Other Related Purposed

(published in Philippine Star on October 7, 2008)Digest | Full Text | Annex A-B, E-J | Annex C | Annex D

September 9,2008

RR No. 13-2007 Prescribing the Rules on the Advance Payment of Value-Added Tax/Percentage Tax on the Transport of Naturally Grown Planted Timber Products(published in Philippine Daily Inquirer on December 7, 2007) Digest | Full Text | Annex A

December 5,2007

RR No. 11-2007 Suspension of the Implementation of Revenue August 28,

http://www.bir.gov.ph/images/bir_files/old_files/doc/37626RR%20No.%2013-2007_annex%20a.doc

http://www.bir.gov.ph/images/bir_files/old_files/pdf/37626rr%20no.%2013-2007.pdf

http://www.bir.gov.ph/images/bir_files/old_files/pdf/37626rr%2013-2007.pdf

http://www.bir.gov.ph/images/bir_files/old_files/doc/42385rr%20no.13-2008_annex%20d.doc

http://www.bir.gov.ph/images/bir_files/old_files/doc/42385rr%20no.13-2008_annex%20c.doc

http://www.bir.gov.ph/images/bir_files/old_files/others/42385rr%20no.%2013-2008_annexes%20a-b,%20e-j.xls






Regulations No. 6-2007 (published in Manila Bulletin on August 29, 2007)Digest | Full Text

2007

RR No. 6-2007 Consolidated Regulations on Advance Value-Added Tax on the Sale of Refined Sugar, Amending and/or Revoking all Revenue Issuances Issued to this Effect, and for Other Related Purposes(published in Manila Bulletin on May 11, 2007)Digest | Full Text | Annex A-E | Annex F-J

May 9, 2007

RR No. 4-2007 Amending Certain Provisions of RR No. 16-2005, As Amended, Otherwise Known as the Consolidated Value-Added Tax Regulations of 2005(published in Manila Bulletin on March 22, 2007)Digest | Full Text

March 20,2007

RR No. 2-2007 Amending Certain Provisions of RR No. 16-2005, As Amended, Otherwise Known as the Consolidated Value-Added Tax Regulations of 2005(published in Manila Bulletin on January 12, 2007)Digest | Full Text

January 11,2007

RR No. 16-2005 Consolidated Value-Added Tax Regulations of 2005(published in Manila Times on October 21, 2005)Digest | Full Text

October 19,2005

RR No. 7-2004 Implementing Sec. 109(bb) and (cc) of the National Internal Revenue Code, as Amended by RA 9238, Excluding Services Rendered by Doctors of Medicine duly Registered with the Professional Regulatory Commission (PRC), and Services Rendered by Lawyers Duly Registered with the Integrated Bar of the Philippines (IBP) from the Coverage of Value-Added Tax(published in Philippine Star on May 28, 2004)Digest | Full Text

May 21, 2004

RR No. 4-2004 Supplementing the Rules on the Advance Payment of Value-Added Tax on Sale of Refined Sugar as Provided for in RR 2-2004

(published in Taliba on March 31, 2004)Digest | Full Text

March 26,2004

RR No. 2-2004 Further Enhancing the Rules on the Advance Payment of Value-Added Tax on Sale of Refined Sugar, Amending RR 7-89 and 29-2002(published in Manila Standard on February 28, 2004)Digest | Full Text

February 26, 2004

RR No. 29-2003 Advance Payment of VAT on the Sale of Flour(published in Manila Times on December 2, 2003)Digest | Full Text

December 1,2003

http://www.bir.gov.ph/images/bir_files/old_files/pdf/615rr03_29.pdf

http://www.bir.gov.ph/images/bir_files/old_files/pdf/615RR%2029-2003.pdf







http://www.bir.gov.ph/images/bir_files/old_files/pdf/21429RR15-2005.pdf






http://www.bir.gov.ph/images/bir_files/old_files/doc/34859rr%20no.%206-2007_annex%20f-j.doc

http://www.bir.gov.ph/images/bir_files/old_files/doc/34859rr%20no.%206-2007_annex%20a-e.doc





RR No. 28-2003 Amending Further Pertinent Provisions of RR 2-98 as Amended, Relative to the Issuance of Certificate of Value-Added Tax Withheld at Source, Thereby Amending RR 4-2002; and For the Purpose(published in Manila Times on November 25, 2003)Digest | Full Text

November 20,2003

RR No. 27-2003 Regulations Further Amending the Transitory Provisions of RR 18-99 as Amended by RR 12-2003, Pertaining to the Deadline for the Usage of Properly Stamped Unused Non-VAT Invoices or Receipts(published in Manila Times on October 10, 2003)Digest | Full Text

October 9,2003

RR No. 5-2003 Rules and Regulations To Implement The Remittance of the Following: (a) 70% Share of the ARMM in the Withholding Tax Payments of National Government Agencies (NGAs) and in the National Collections from Taxpayers Other Than NGAs Provided for Under Section 9, Article IX of RA 9054, Amending Therein Certain Sections of RR 4-98; (b)Allotment to the Regional Government (RG) of the 30% Share of the National Government (NG) of all Current Year Collections of Internal Revenue Taxes Within ARMM for a Period of Five (5) Years as may be Provided in the Annual Appropriations Act as Provided for Under Section 15, Article IX of RA 9054; and c) 50% of the 80% Share of the NG from the Yearly Incremental Revenue From VAT Collections Within ARMM Received by the Central Government as Provided for Under Section 15, in Relation to Section 9, both of Article IX of RA 9054 As Well As in Relation to Section 283 of the National Internal Revenue Code (NIRC) of 1997Digest | Full Text

February 4,2003

RR No. 29-2002 Enhancing the Rules on the Advance Payment of Value- Added Tax on the Sale of Refined Sugar, thereby Amending RR 7-89, and Other Purposes(published in Philippine Star on December 22, 2002)

Digest | Full Text

December 20,2002

RR No. 8-2002 Amending Further Pertinent Provisions of RR 7-95, as Amended , With Respect to the Time of Filing of Quarterly VAT Returns; Contents and Submission of Quarterly Total of Monthly Sales and Purchases Per Supplier or Customer, and Providing for the Penalties and Effect of Non-Submission Thereof; and Clarifying Further the Mode of Remittance of VAT

June 24,2002


http://www.bir.gov.ph/images/bir_files/old_files/pdf/RR_29-2002.pdf







Due From Non-Residents(published in Philippine Daily Inquirer on June 27, 2002)Digest | Full Text | Attachment 2550 (front) | Attachment 2550 (back)

RR No. 2-98 Implementing Republic Act No. 8424, "An Act Amending the National Internal Revenue Code (NIRC) as Amended" relative to the Withholding on Income Subject to the Expanded Withholding Tax and Final Withholding Tax, Withholding of Income Tax on Compensation, Withholding of Creditable VAT and other Percentage TaxesDigest

May 17, 1998

REVENUE MEMORANDUM ORDERS (RMOs)


RMO No. 3-2009

Amendment and Consolidation of the Guidelines in the Conduct of Surveillance and Stock-Taking Activities, and the Implementation of the Administrative Sanction of Suspension and Temporary Closure of BusinessDigest | Full Text | Annex A | Annex B | Annex D | Annex E | Annex F | Excel File Annexes

January 23,2009

RMO No. 6-2008

Prescribing the Guidelines and Procedures in the Printing, Requisition, Reporting, Issuance and Distribution of Certificate of Advance Payment of Value-Added Tax/ Percentage Tax on the Transport of Naturally Grown and Planted Timber Products as Prescribed in RR No. 13-2007 Dated October 15, 2007Digest | Full Text | Annex A | Annex B-F

February 20,2008

RMO No. 16-2007

Prescribing Additional Procedures in the Audit of Input Taxes Claimed in the VAT Returns by Revenue Officers and Amending "Annex B" of RMO No. 53-98 With Respect to the Checklist of Documents to be Submitted by a Taxpayer Upon Audit of his/its VAT Liabilities as well as the Mandatory Reporting Requirements to be Prepared by the Assigned Revenue Officer/s Relative Thereto, All of Which Shall Form an Integral Part of the DocketDigest | Full Text

July 23, 2007

RMO No. 7-2006

Prescribing the guidelines and procedures in the processing of applications for zero-rating of effectively zero-rated transactions for Value-Added Tax purposesDigest | Full Text | Annex A | Annex B-B2 | Annex

February 28,2006

http://www.bir.gov.ph/images/bir_files/old_files/others/28688Annex%20C-D.xls

http://www.bir.gov.ph/images/bir_files/old_files/others/28688Annex%20B-B2.xls

http://www.bir.gov.ph/images/bir_files/old_files/others/28688Annex%20A.xls

http://www.bir.gov.ph/images/bir_files/old_files/pdf/28688RMO%207-2006.pdf

http://www.bir.gov.ph/images/bir_files/old_files/pdf/28688rmo06_07.pdf



http://www.bir.gov.ph/images/bir_files/old_files/others/38422Annex%20B-F.xls

http://www.bir.gov.ph/images/bir_files/old_files/others/38422Annex%20A%20%20Form%202330version1.xls



http://www.bir.gov.ph/images/bir_files/old_files/others/43677ANNEX%20C,G-L.xls

http://www.bir.gov.ph/images/bir_files/old_files/doc/43677ANNEX%20F%20-%20LIFTING%20OF%20CLOSURE%20ORDER.doc

http://www.bir.gov.ph/images/bir_files/old_files/doc/43677ANNEX%20E%20-%20CLOSURE%20ORDER.doc

http://www.bir.gov.ph/images/bir_files/old_files/doc/43677ANNEX%20D%20-%205-DAY%20VAT%20COMPLIANCE%20NOTICE.doc

http://www.bir.gov.ph/images/bir_files/old_files/doc/43677ANNEX%20B%20-%20APPREHENSION%20SLIP.doc

http://www.bir.gov.ph/images/bir_files/old_files/doc/43677ANNEX%20A%20-%20MISSION%20ORDER.doc



http://www.bir.gov.ph/images/bir_files/old_files/pdf/rr98_02.pdf

http://www.bir.gov.ph/images/bir_files/old_files/pdf/2381back_rr8-2002.pdf

http://www.bir.gov.ph/images/bir_files/old_files/pdf/2381front_rr8-2002_.pdf


http://www.bir.gov.ph/images/bir_files/old_files/pdf/RR_8-2002.pdf

C-D

RMO No. 26-2005

Suspension of issuance of assessments for deficiency Value-Added Tax against cinema/theater operators/ownersDigest | Full Text

October 21,2005

RMO No. 22-2004

Value-Added Tax (VAT) Exemption Certificate/ Identification Card Issued to qualified foreign embassies and their qualified personnel Amending/ Modifying RMO No. 81-99Digest | Full Text

May 24, 2004

RMO No. 5-2004

Prescribing the guidelines and procedures in the implementation of RR No. 29-2003 on the advance payment of Value-Added Tax on the sale of flourDigest | Full Text | Annex A

February 4,2004

RMO No. 35-2002

Prescribing the guidelines and procedures in the processing and issuance of Authority to Release Imported Goods (ATRIG) for Excise and Value-Added Tax PurposesDigest | Full Text | Annex A | Annex B | Annex C | Annex D | Flowchart

December 11,2002

RMO No. 9-2000

Tax treatment of sales of goods, properties and services made by VAT- registered suppliers to BOI-registered manufacturers-exporters with 100% export salesDigest

March 29,2000

RMO No. 81-99 Issuance of Value-Added Tax (VAT) Exemption Certificate to all qualified embassies and their personnelDigest

November 5,1999

RMO No. 40-94 Prescribing the Modified Procedures on the Processing of Claims for VAT Credit/ Refund

REVENUE MEMORANDUM CIRCULARS (RMCs)


RMC No. 77-2008

Taxability of Director’s Fees Received By Directors Who are not Employees of the Corporation for VAT or Percentage Tax Purposes as Espoused Under Revenue Memorandum Circular No. 34-2008Digest | Full Text

December 3,2008

RMC No. 46-2008

Clarification of Issues Concerning Common Carriers by Air and Their Agents Relative to the Revenue and Receipt from Transport of Passengers, Goods/Cargoes and Mail, and from Excess BaggageDigest | Full Text

June 20, 2008

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RMC No. 34-2008

Tax Treatment of Director’s Fees for Income Tax and Business Tax PurposesDigest | Full Text

April 18,2008

RMC No. 59-2007

Clarifying the Effect of Suspension of RR No. 6-2007, Otherwise Known As the "Consolidated Regulations on Advance Value-Added Tax on the Sale of Refined Sugar, Amending and/or Revoking All Revenue Issuances Issued to this Effect and for Other Related Purposes"Digest | Full Text

September 14,2007

RMC No. 53-2007

Reiteration of the Amendment Made by RA No. 9337 Imposing VAT on the Sale of Non-Food Agricultural Products, Marine and Forest Products and on the Sale of Cotton and Cotton Seeds in their Original StateDigest | Full Text

August 7,2007

RMC No. 39-2007

Clarifying the Income Tax and VAT Treatment of Agency Fees/Gross Receipts of Security Agencies Including the Withholding of Taxes Due ThereonDigest | Full Text | Annex A

June 13,2007

RMC No. 35-2006

Clarifying the Proper VAT and EWT Treatment of Freight and Other Incidental Charges Billed by Freight ForwardersDigest | Full Text

June 30,2006

RMC No. 31-2006

Value Added Tax (VAT) on the Construction or Renovation of Official Buildings or Properties of the United States of America EmbassyDigest | Full Text | Annex A

May 30,2006

RMC No. 30-2006

Prescribing the Submission of a Narrative Memorandum Report to Accompany the VAT Credit Evaluation Report and Requiring the Attachment of Certain Documents Prior to Approval of the Tax Credit Certificate (TCC) Recommended by the Tax and Revenue Group (TRG), Department of Finance One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (DOF-OSS)Digest | Full Text

May 22, 2006

RMC No. 22-2006

Clarifying certain issues relating to the implementation of the increase in the Value-Added Tax rate from 10% to 12% on the sale of goods pursuant to Republic Act No. 9337Digest | Full Text

April 6, 2006

RMC No. 21-2006

Clarification of Issues on How to Fill-up the new Version of VAT Forms (September, 2005 Version) and other Related Issues

April 6, 2006





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Digest | Full Text

RMC No. 8-2006Clarifying certain issues relating to the implementation of the increase in the VAT rate from 10% to 12% pursuant to Republic Act No. 9337Digest | Full Text

February 1,2006

RMC No. 5-2006Prescribing the use of the Government Money Payment Chart Implementing Sections 2.57.2, 4.114 and 5.116 of Revenue Regulations No. 2-98 as amended by Revenue Regulations No. 16-2005 in relation to Sections 57 (B), 114 (C) and 116 to 123 of Republic Act No. 8424 as amended by Republic Act No. 9337Digest | Full Text | Annex A

January 20,2006

RMC No. 72-2005

Transition procedures for all Electronic Filing and Payment System filers (Large Taxpayers/Top 10,000 Corporations) in filing tax returns affected by the new VAT Law (R.A. 9337)Digest | Full Text

December 22,2005

RMC No. 68-2005

Enhanced VAT forms – BIR Form No. 2550M (Monthly Value-Added Tax Declaration) and BIR Form No. 2550Q (Quarterly Value-Added Tax Return) – September 2005 versionDigest | Full Text | Annex A-1 | Annex A-2 | Annex B-1 | Annex B-2

December 8,2005

RMC No. 62-2005

Revised guidelines in the registration and invoicing requirements including clarification on common issues affecting Value-Added Tax (VAT) taxpayers Pursuant to RA No. 9337 (An Act Amending Sections 27, 28, 34, 106, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of 1997, as Amended, and for other Purposes)Digest | Full Text

November 3,2005

RMC No. 57-2005

Attachments to the quarterly VAT return to be filed starting October 25, 2005Digest | Full Text

October 20,2005

RMC No. 52-2005

Value-Added Tax (VAT) Liability of the Tollway IndustryDigest | Full Text

October 3,2005

RMC No. 29-2005

Clarifying the provisions of Republic Act No. 9337 (VAT Law of 2005) applicable to the petroleum industryDigest | Full Text

July 1,2005

RMC No. 70- Clarification on proper determination of amount of November 23,









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2004 Value-Added Tax on VAT invoices or VAT official receiptsDigest | Full Text

2004

RMC No. 60-2004

Clarification regarding the withholding of creditable Value-Added Tax by government offices for purchases of P1,000.00 and belowDigest | Full Text

September 23,2004

RMC No. 37-2004

Settlement of the Value-Added Tax liabilities of pawnshops for taxable years 1996 to 2002Digest | Full Text | Annex A | Annex 1 | Annex 2

June 16,2004

RMC No. 9-2004Guidelines and Policies Applicable to the Business Tax Applicable to Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions and other Non-Bank Financial Intermediaries As A Result of the Enactment and Effectivity of Republic Act No. 9238, An Act Amending Certain Provisions of the National Internal Revenue Code of 1997, As Amended, byExcluding Several Services from the Coverage of the Value-Added Tax and Re-Imposing the Gross Receipts Tax on Banks and Non-Bank Financial IntermediariesPerforming Quasi-Banking Functions and Other Non-Bank Financial Intermediaries Beginning January 1, 2004Digest | Full Text | RA No. 9238

February 20,2004

RMC No. 2-2004Clarifying the Issues on VAT Taxable Transactions of Philippine Ports Authority Amending Revenue Memorandum Circular No. 20-88, Pursuant to Republic Act No. 7716 as Implemented by Revenue Regulations No. 7-95Digest | Full Text

January 7,2004

RMC No. 6-2003Clarifying Certain Issues Relative to the Services Rendered by Individual Professional Practitioners, General Professional Partnerships, Entertainers, and Professional Athletes Who Are Subject to the Value-Added Tax or Percentage Tax, Whichever is Applicable, Beginning January 1, 2003Digest | Full Text | Annex A

January 22,2003

RMC No. 61-2003

Issuance of VAT Invoices/Receipt for Non-VAT/Exempt Sale of Goods, Properties or ServicesDigest | Full Text

October 8,2003

RMC No. 49-2003

Amending Answer to Question Number 17 of Revenue Memorandum Circular No. 42-2003 and Providing Additional Guidelines on Issues Relative

August 27,2003

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to the Processing of Claims for Value-Added Tax (VAT) Credit/Refund, Including Those Filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department of Finance (OSS-DOF) by Direct ExportersDigest | Full Text

RMC No. 42-2003

Clarifying certain issues raised relative to the processing of claims for Value-Added Tax (VAT) credit/refund, including those filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department of Finance (OSS-DOF) by Direct ExportersDigest | Full Text

July 23,2003

RMC No. 30-2003

Clarification of Paragraph 1-Q of Revenue Memorandum Circular No. 28-2003Digest | Full Text

May 21,2003

RMC No. 56-2002

Taxability of Health Maintenance Organizations (HMOs) for VAT purposesDigest

December 18,2002

RMC No. 45-2001

Taxability of Pawnshop Operators for VAT Purposes October 12,2001

RMC No. 28-2001

Taxability of Movie/Cinema House Operators for VAT Purposes

July 2,2001

RMC No. 25-99 Disseminating the Ruling of the Commissioner of Internal Revenue on the Non-eligibility for VAT Zero-Rating of Automobile Sales to Entities Registered with PEZA, SBMA and Clark Development Authority

March 18,1999

RMC No. 32-99 Japanese Contractors undertaking Overseas Economic Cooperation Fund of Japan (OECF) Funded Project are Exempt from the eight and one half percent (8.5%) creditable VAT imposed under Section 114(C) of the Tax Code of 1997 and to the One Percent (1%) Expanded Withholding Tax (EWT) imposed under Section 2.57.2(E) of RR No. 2-98 implementing Section 57(B) of the Tax Code of 1997

May 3,1999

[return to index]

CODAL REFERENCE









Title IV, Sections 105 to 115 of the National Internal Revenue Code of 1997, as amended

[return to index]

FREQUENTLY ASKED QUESTIONS

I. General VAT Queries

Who are liable to register as VAT taxpayers?

Any person who, in the course of trade or business, sells, barters or exchanges goods or properties or engages in the sale or exchange of services shall be liable to register if:

a. His gross sales or receipts for the past twelve (12) months, other than those that are exempt under Section 109 (A) to (U), have exceeded One Million Five Hundred Thousand Pesos (P1,500,000.00): or

b. There are reasonable grounds to believe that his gross sales or receipts for the next twelve (12) months, other than those that are exempt under Section 109 (A) to (U), will exceed One Million Five Hundred Thousand Pesos (P1,500,000.00).

When is a new VAT taxpayer required to apply for registration and pay the registration fee?

New VAT taxpayers shall apply for registration as VAT Taxpayers and pay the corresponding registration fee of five hundred pesos (P500.00) using BIR Form No. 0605 for every separate or distinct establishment or place of business before the start of their business following existing issuances on registration.

Thereafter, taxpayers are required to pay the annual registration fee of five hundred pesos (P500.00) not later than January 31, every year.

What compliance activities should a VAT taxpayer, after registration as such, do promptly or periodically?

The following compliance activities must be performed by a VAT-registered taxpayer:

a. Pay the annual registration fee of P500.00 for every place of business or establishment that generates sales;

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b. Register the books of accounts of the business/occupation/calling, including practice of profession, before using the same;

c. Register the sales invoices and official receipts as VAT-invoices or VAT official receipts for use on transactions subject to VAT. (If there are other transaction not subject to VAT, a separate set of non-VAT invoices or non-VAT official receipts need to be registered for use on transactions not subject to VAT);

d. Filing of the Monthly Value-added Tax Declaration on or before the 20th day following the end of the taxable month (for manual filers)/on or before the prescribed due dates enunciated in RR No. 16-2005 (for e-filers) using BIR Form No. 2550M and of the Quarterly VAT Return on or before the 25th day following the end of the taxable quarter using BIR Form No. 2550Q, reflecting therein gross receipts (for seller of service)/ gross sales (for seller of goods) and output tax (VAT on sales); purchases of goods and services made in the course of trade or business/exercise of profession and input tax (VAT on purchases), other allowable tax credits as in the case of advance VAT payment and VAT withheld by government payors, and VAT payable or excess input VAT, whichever is applicable, with the accredited agent banks (AABs) of the BIR or Revenue Collection Officers (RCOs) of the BIR (in areas without AAB), for returns with payment, or with the RDO/LTDO having jurisdiction over the taxpayer (home RDO/LTDO), for returns without payment. (The monthly VAT Declaration and the Quarterly VAT Return shall reflect the consolidated total for all the taxable lines of activity and all the establishments - head office and branches);

e. Submit with the RDO/LTDO having jurisdiction over the taxpayer, on or before the deadline set in the filing of the Quarterly VAT Return, the soft copy of the Quarterly Schedule of Monthly Sales and Output Tax (if the quarterly sales exceed P2,500,000.00), and the soft copy of the Quarterly Schedule of Monthly Domestic Purchases and Input Tax/ the soft copy of the Schedule of Transactional/Individual Importation ( if the quarterly total purchases exceed P1,000,000.00), reflecting therein the required data prescribed under existing revenue issuances.

How do we determine the main or principal business of a taxpayer who is engaged in mixed business activities?

In determining the main or principal business of a taxpayer, we apply the predominance test. Under this test, if more than fifty (50%) of its gross sales and/or gross receipts comes from its business/es subject to VAT, its main/principal business falls within the VAT system making its status as a VAT person. Otherwise, he can not be considered as a VAT person eligible for the election provided for under Section 109(2) of the Tax Code.

What is the liability of a taxpayer becoming liable to VAT and did not register as such?

Any person who becomes liable to VAT and fails to register as such shall be liable to pay the output tax as if he is a VAT-registered person, but without the benefit of input tax credits for the period in which he was not properly registered.

Who may opt to register as VAT and what will be his liability?

1. Any person who is VAT-exempt under Sec. 4.109-1 (B) (1) (V) not required to register for VAT may, in relation to Sec. 4.109-2, elect to be VAT-registered by registering with the RDO that has jurisdiction over the head office of that person, and pay the annual registration fee of P500.00 for every separate and distinct establishment.

2. Any person who is VAT-registered but enters into transactions which are exempt from VAT (mixed transactions) may opt that the VAT apply to his transactions which would have been exempt under Section 109(1) of the Tax Code, as amended [Sec. 109(2)].

3. Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do not exceed ten million pesos (P10,000,000.00) derived from the business covered by the law granting the franchise may opt for VAT registration. This option, once exercised, shall be irrevocable. (Sec. 119, Tax Code).

4. Any person who elects to register under optional registration shall not be allowed to cancel his registration for the next three (3) years.

The above-stated taxpayers may apply for VAT registration not later than ten (10) days before the beginning of the calendar quarter and shall pay the registration fee unless they have already paid at the beginning of the year. In any case, the Commissioner of Internal Revenue may, for administrative reason deny any application for registration. Once registered as a VAT person, the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day of the month following registration.

What are the instances when a VAT-registered person may cancel his VAT registration?

1. If he makes a written application and can demonstrate to the commissioner's satisfaction that his gross sales or receipts for the following twelve (12) months, other than those that are exempt under Section 109 (A) to (U), will not exceed one million five hundred thousand pesos (P1,500,000.00); or

2. If he has ceased to carry on his trade or business, and does not expect to recommence any trade or business within the next twelve (12) months.

When will the cancellation for registration be effective?

The cancellation for registration will be effective from the first day of the following month the cancellation was approved.

What is the invoicing/ receipt requirement of a VAT-registered person?

A VAT registered person shall issue :

1. A VAT invoice for every sale, barter or exchange of goods or properties; and

2. A VAT official receipt for every lease of goods or properties and for every sale, barter or exchange of services.

May a VAT-registered person issue a single invoice/ receipt involving VAT and Non-VAT transactions?

Yes. He may issue a single invoice/ receipt involving VAT and non-VAT transactions provided that the invoice or receipt shall clearly indicate the break-down of the sales price between its taxable, exempt and zero-rated components and the calculation of the Value-Added Tax on each portion of the sale shall be shown on the invoice or receipt.

May a VAT- registered person issue separate invoices/ receipts involving VAT and Non-VAT transactions?

Yes. A VAT registered person may issue separate invoices/ receipts for the taxable, exempt, and zero-rated component of its sales provided that if the sales is exempt from value-added tax, the term "VAT-EXEMPT SALE" shall be written or printed prominently on the invoice or receipt and if the sale is subject to zero percent (0%) VAT, the term "ZERO-RATED SALE" shall be written or printed prominently on the invoice or receipt.

How is the Value-Added Tax presented in the receipt/ invoice?

The amount of the tax shall be shown as a separate item in the invoice or receipt.

Sample:

Sales Price

P 100,000.

00 VAT 12,000.00 Invoice Amount 112,000.00

What is the information that must be contained in the VAT invoice or VAT official receipt?

1. Name of Seller

2. Business Style of the Seller

3. Business Address of the Seller

4. Statement that the seller is a VAT-registered person, followed by his TIN

5. Name of Buyer

6. Business Style of Buyer

7. Address of Buyer

8. TIN of buyer, if VAT- registered and amount exceed P1,000.00

9. Date of transaction

10. Quantity

11. Unit cost

12. Description of the goods or properties or nature of the service

13. Purchase price plus the VAT, provided that:

The amount of tax shall be shown as a separate item in the invoice

or receipt; If the sale is exempt from VAT, the term "VAT-EXEMPT SALE"

shall be written or printed prominently on the invoice or receipt; If the sale is subject to zero percent (0%) VAT, the term "ZERO-

RATED SALE" shall be written or printed prominently on the invoice receipt; and

If the sale involves goods, properties or services some of which are subject to and some of which are zero-rated or exempt from VAT, the invoice or receipt shall clearly indicate the breakdown of the sales price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt.

14. Authority to Print Receipt Number at the lower left corner of the invoice or receipt.

What is the liability of a taxpayer not registered as VAT and issues a VAT invoice/ receipt?

The non-VAT registered person shall, in addition to paying the percentage tax applicable to his transactions, be liable to VAT imposed in Section 106 or 108 of the Tax Code without the benefit of any input tax credit plus 50% surcharge on the VAT payable (output tax). If the invoice/ receipts contain the required information, purchaser shall be allowed to recognize an input tax credit.

What is the liability of a VAT-registered person in the issuance of a VAT invoice/ receipt for VAT-exempt transactions?

If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT-exempt transaction but fails to display prominently on the invoice or receipt the words "VAT-EXEMPT SALE", the transaction shall become taxable and the issuer shall be liable to pay the VAT thereon. The purchaser shall be entitled to claim an input tax credit on his purchase.

What is "output tax"?

Output tax means the VAT due on the sale, lease or exchange of taxable goods or properties or services by any person registered or required to register under Section 236 of the Tax Code.

What is "input tax"?

Input tax means the VAT due on or paid by a VAT-registered on importation of goods or local purchase of goods, properties or services, including lease or use of property in the course of his trade or business. It shall also include the transitional input tax determined in accordance with Section 111 of the Tax Code, presumptive input tax and deferred input tax from previous period.

What comprises "goods or properties"?

The term "goods or properties" shall mean all tangible and intangible objects, which are capable of pecuniary estimation and shall include, among others:

a. Real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business;b. The right or the privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right;c. The right or privilege to use in the Philippines of any industrial, commercial or scientific equipment;d. The right or the privilege to use motion picture films, films, tapes and

discs; ande. Radio, television, satellite transmission and cable television time.

What comprises "sale or exchange of services"?

The term "sale or exchange of services" means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, whether in kind or in cash, including those performed or rendered by the following:

a. Construction and service contractors;

b. Stock, real estate, commercial, customs and immigration brokers;

c. Lessors of property, whether personal or real;

d. Persons engaged in warehousing services;

e. Lessors or distributors of cinematographic films;

f. Persons engaged in milling, processing, manufacturing or repacking goods for others;

g. Proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts, theatres, and movie houses;

h. Proprietors or operators of restaurants, refreshment parlors, cafes, and other eating places, including clubs and caterers;

i. Dealers in securities;

j. Lending investors;

k. Transportation contractors on their transport of goods or cargoes, including persons who transport goods or cargoes for hire and other domestic common carriers by land relative to their transport of goods or cargoes;

l. Common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines;

m. Sales of electricity by generation, transmission, and/or distribution companies;

n. Franchise grantees of electric utilities, telephone and telegraph, radio and/or television broadcasting and all other franchise grantees, except franchise grantees of radio and/or television broadcasting whose annual

gross receipts of the preceding year do not exceed Ten Million Pesos (P10,000,000.00), and franchise grantees of gas and water utilities;

o. Non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies; and

p. Similar services regardless of whether or not the performance thereof calls for the exercise of use of the physical or mental faculties.

The phrase "sale or exchange of services" shall likewise include:

a. The lease of use of or the right or privilege to use any copyright, patent, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right;

b. The lease or the use of, or the right to use of any industrial, commercial or scientific equipment;

c. The supply of scientific, technical, industrial or commercial knowledge or information;

d. The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the application or enjoyment of any such property, or right or any such knowledge or information;

e. The supply of services by a nonresident person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any brand, machinery or other apparatus purchased from such non-resident person;

f. The supply of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme;

g. The lease of motion picture films, films, tapes and discs; and

h. The lease or the use of or the right to use radio, television, satellite transmission and cable television time.

What is a zero-rated sale?

It is a sale, barter or exchange of goods, properties and/or services subject to 0% VAT pursuant to Sections 106 (A) (2) and 108 (B) of the Tax Code. It is a taxable transaction for VAT purposes, but shall not result in any output tax. However, the input tax on purchases of goods, properties or services, related to such zero-rated sales, shall be available as tax credit or refund in accordance with RR No. 16-2005.

What transactions are considered as zero-rated sales?

The following services performed in the Philippines by VAT-registered person shall be subject to zero percent (0%) rate:

a. Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);

b. Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);

c. Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;

d. Services rendered to persons engaged in international shipping or air transport operations, including leases of property for use thereof; Provided, however, that the services referred to herein shall not pertain to those made to common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines, the same being subject to twelve percent (12%) VAT under Sec. 108 of the Tax Code starting Feb. 1, 2006;

e. Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceeds seventy percent (70%) of total annual production;

f. Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country. Gross receipts of international air carriers doing business in the Philippines and international sea carriers doing business in the Philippines are still liable to a percentage tax of three percent (3%) based on their gross receipts as provided for in Sec. 118 of the Tax Code but shall not be liable to VAT; and

g. Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other shipping sources using technologies such as fuel cells and hydrogen fuels; Provided, however that zero-rating shall apply strictly to the sale of power or fuel generated through renewable sources of

energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power .

The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:

a. Export sales

The sale and actual shipment of goods from the Philippines to

a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported, paid in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);

The sale of raw materials or packaging materials to a non-resident buyer for delivery to as resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer's goods, paid for in acceptable foreign currency, and accounted for in accordance with the rules and regulations of the BSP;

The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales exceed seventy percent (70%) of total annual production;

Sale of gold to the BSP; Transactions considered export sales under Executive Order

No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws; and

The sale of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations; Provided, that the same is limited to goods, supplies, equipment and fuel pertaining to or attributable to the transport of goods and passengers from a port in the Philippines directly to a foreign port, or vice-versa without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad, or to load passengers and/or cargoes bound for abroad; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other than the mentioned in this paragraph, such portion of fuel, goods and supplies shall be subject to twelve percent (12%) output VAT.

b. Foreign Currency Denominated Sales

The sale to a non-resident of goods, except those mentioned in Sections 149 and 150 of the Tax Code, assembled or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP.

c. Sales to Persons or Entities Deemed Tax-exempt under Special Law or International Agreement

Sale of goods or property to persons or entities who are tax-exempt under special laws or international agreements to which the Philippines is a signatory, such as, Asian Development Bank (ADB), International Rice Research Institute (IRRI), etc.

Where will taxpayers file their applications for VAT zero-rating?

Taxpayers shall file their application directly with the Audit Information, Tax Exemption and Incentives Division (AITEID) under the Assessment Service, or with the LTAID I and II, BIR National Office, as the case may be.

What is a Contractor's Final Payment Release Certificate and where should taxpayers file their application for this?

The Contractor's Final Payment Release Certificate is issued by the BIR before a government contractor is fully paid for his contract with the government. Taxpayers may file their application at the BIR National Office at the Audit Information, Tax Exemption and Incentives Division (AITEID)

What transactions are considered deemed sales?

The following transactions are considered as deemed sales:

a. Transfer, use or consumption, not in the course of business, of goods or properties originally intended for sale or for use in the course of business. Transfer of goods or properties not in the course of business can take place when VAT-registered person withdraws goods from his business for his personal use;

b. Distribution or transfer to:

Shareholders or investors as share in the profits of the VAT-

registered person; or Creditors in payment of debt or obligation

c. Consignment of goods if actual sale is not made within sixty (60) days following the date such goods were consigned. Consigned goods returned by the consignee within the 60-day period are not deemed sold;

d. Retirement from or cessation of business, with respect to all goods on hand, whether capital goods, stock-in-trade, supplies or materials as of the date of such retirement or cessation, whether or not the business is continued by the new owner or successor. The following circumstances shall, among others, give rise to transactions "deemed sale";

Change of ownership of the business. There is a change in the

ownership of the business when a single proprietorship incorporated; or the proprietor of a single proprietorship sells his entire business.

Dissolution of a partnership and creation of a new partnership which takes over the business.

What is VAT-exempt sale?

It is a sale of goods, properties or service and the use or lease of properties which is not subject to output tax and whereby the buyer is not allowed any tax credit or input tax related to such exempt sale.

What are the VAT-exempt transactions?

a. Sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials therefore;

b. Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals considered as pets);

c. Importation of personal and household effects belonging to residents of the Philippines returning from abroad and non-resident citizens coming to resettle in the Philippines; Provided, that such goods are exempt from custom duties under the Tariff and Customs Code of the Philippines;

d. Importation of professional instruments and implements, wearing apparel, domestic animals, and personal household effects (except any vehicle, vessel, aircraft, machinery and other goods for use in the manufacture and merchandise of any kind in commercial quantity) belonging to persons coming to settle in the Philippines, for their own use and not for sale, barter or exchange, accompanying

such persons, or arriving within ninety (90) days before or after their arrival, upon the production of evidence satisfactory to the Commissioner of Internal Revenue, that such persons are actually coming to settle in the Philippines and that the change of residence is bonafide;

e. Services subject to percentage tax under Title V of the Code, as amended;

f. Services by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar cane into raw sugar;

g. Medical, dental, hospital and veterinary services except those rendered by professionals;

h. Educational services rendered by private educational institutions duly accredited by the Department of Education (DepED), the Commission on Higher Education (CHED) and the Technical Education and Skills Development Authority (TESDA) and those rendered by the government educational institutions;

i. Services rendered by individuals pursuant to an employer-employee relationship;

j. Services rendered by regional or area headquarters established in the Philippines by multinational corporations which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn or derive income from the Philippines;

k. Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws except those granted under P.D. No. 529 - Petroleum Exploration Concessionaires under the Petroleum Act of 1949;

l. Sales by agricultural cooperatives duly registered and in good standing with the Cooperative Development Authority (CDA) to their members, as well as of their produce, whether in its original state or processed form, to non-members, their importation of direct farm inputs, machineries and equipment, including spare parts thereof, to be used directly and exclusively in the production and/or processing of their produce;

m. Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered and in good standing with the Cooperative Development Authority;

n. Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with and in good standing with CDA; Provided, that the share capital contribution of each member does not exceed Fifteen Thousand Pesos (P15,000.00) and regardless of the aggregate capital and net surplus ratably distributed among the members;

o. Export sales by persons who are not VAT-registered;

p. The following sales of real properties are exempt from VAT, namely:

1. Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business;

2. Sale of real properties utilized for low-cost housing as defined by RA No. 7279, otherwise known as the "Urban Development and Housing Act of 1992" and other related laws, such as RA No. 7835 and RA No. 8763;

3. Sale of real properties utilized for specialized housing as defined under RA No. 7279, and other related laws, such as RA No. 7835 and RA No. 8763, wherein price ceiling per unit is P225,000.00 or as may from time to time be determined by the HUDCC and the NEDA and other related laws;

4. Sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000.00) and below, or house and lot and other residential dwellings valued at Two Million Five Hundred Thousand Pesos (P2,500,000.00) and below where the instrument of sale/ transfer/ disposition was executed on or after July 1, 2005; Provided, that not later than January 31, 2009 and every three (3) years thereafter, the amounts stated herein shall be adjusted to its present value using the Consumer Price Index, as published by the National Statistics Office (NSO); Provided, further, that such adjustment shall be published through revenue regulations to be issued not later than March 31 of each year.

q. Lease of residential units with a monthly rental per unit not exceeding Ten Thousand Pesos (P10,000.00), regardless of the amount of aggregate rentals received by the lessor during the year; Provided, that not later than January 31, 2009 and every three (3) years thereafter, the amount of P10,000.00 shall be adjusted to its present value using the Consumer Price Index, as published by the NSO;

r. Sale, importation, printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisements;

s. Sale, importation or lease of passenger or cargo vessels and aircraft, including engine equipment and spare parts thereof for domestic or international transport operations; Provided, that the exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shall be limited to those of one hundred fifty (150) tons and above, including engine and spare parts of said vessels; Provided, further, that the vessels to be imported shall comply with the age limit requirement, at the time of acquisition counted from the date of the vessel's original

commissioning, as follows: (a) for passenger and/or cargo vessel, the age limit is fifteen (15) years old, (b) for tankers, the age limit is ten (10) year old, and (c) for high-speed passengers crafts, the age limit is five (5) years old; Provided, finally, that exemption shall be subject to the provisions of Section 4 of Republic Act No. 9295, otherwise known as "The Domestic Shipping Development Act of 2004";

t. Importation of life-saving equipment, safety and rescue equipment and communication and navigational safety equipment, steel plates and other metal plates including marine-grade aluminum plates, used for shipping transport operations; Provided, that the exemption shall be subject to the provisions of Section 4 of Republic Act No. 9295, otherwise known as "The Domestic Shipping Development Act of 2004".

u. Importation of capital equipment, machinery, spare parts, life-saving and navigational equipment, steel plates and other metal plates including marine-grade aluminum plates to be used in the construction, repair, renovation or alteration of any merchant marine vessel operated or to be operated in the domestic trade. Provided, that the exemption shall be subject to the provisions of Section 19 of Republic Act No. 9295, otherwise known as the "The Domestic Shipping Development Act of 2004".

v. Importation of fuel, goods and supplies engaged in international shipping or air transport operations; Provided, that the said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a foreign port, or vice-versa, without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated form abroad, or to load passengers and/or cargoes bound for abroad; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other that the mentioned in the paragraph, such portion of fuel, goods and supplies shall be subject to 12% VAT;

w. Services of banks, non-bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries, such as money changers and pawnshops, subject to percentage tax under Sections 121 and 122, respectively of the Tax Code; and

x. Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the amount of One Million Five Hundred Thousand Pesos (P1,500,000.00). Provided, that not later than January 31, 2009 and every three (3) years thereafter, the amount of P1,500,000.00 shall be adjusted to its present value after using the Consumer Price Index, as published by the NSO.

What are the previously exempt transactions that are now subject to VAT?

Medical services such as dental & veterinary services rendered by professionals; Legal services;

Non-food agricultural products;

Marine and forest products;

Cotton and cotton seeds;

Coal and natural gas;

Petroleum products;

Passenger cargo vessels of more than 5,000 tons;

Work of art, literary works, musical composition;

Generation, transmission and distribution of electricity including that of electric cooperatives;

Sale of residential lot valued at more than P1,500,000.00;

Sale of residential house & lot/dwellings valued at more than P2,500,000.00;

Lease of residential unit with a monthly rental of more than P10,000;

II. RELIEF-Related Queries

What is "RELIEF"?

RELIEF means Reconciliation of Listing for Enforcement. It supports the third party information program of the Bureau through the cross referencing of third party information from the taxpayers' Summary Lists of Sales and Purchases prescribed to be submitted on a quarterly basis.

Who are required to submit Summary List of Sales?

VAT taxpayers with quarterly total sales/receipts (net of VAT), exceeding Two Million Five Hundred Thousand Pesos (P2,500,000.00) are required to submit a Summary List of Sales.

Who are required to submit Summary List of Purchases?

VAT taxpayers with quarterly total purchases (net of VAT) of goods and services, including importation exceeding One Million Pesos (P1,000,000.00) are required to submit Summary List of Purchases.

What are the Summary Lists required to be submitted?

Quarterly Summary List of Sales to Regular Buyers/ Customers Casual

Buyers/ Customers and Output Tax Quarterly Summary of List of Local Purchases and Input tax; and Quarterly Summary List of Importation.

When is the deadline for submission of the above Summary Lists?

The Summary List of Sales/Purchases, whichever is applicable, shall be submitted on or before the twney-fifth (25th) day of the month following the close of the taxable quarter -- calendar quarter or fiscal quarter.

What are the penalties for failure to submit the Summary Lists?

For failure to file, keep or supply a statement, list or information required

on the date prescribed shall pay and administrative penalty of One Thousand Pesos (P1,000.00) for each such failure, unless it is shown that such failure is due to reasonable cause and not to willful neglect; and

An aggregate amount to be imposed for all such failures during a taxable year shall not exceed Twenty-Five Thousand Pesos (P25,000.00).

III. What is the treatment for Withholding of VAT on Government Money Payments?

The goverment or any of its political subdivisions, instrumentalities or

agencies, including government-owned or controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods and/or services taxed at twelve percent (12%) VAT pursuant to Sections 106 and 108 of the Tax Code, deduct and withhold a Final VAT due at the rate of five percent (5%) of the gross payment.

The five percent (5%) final VAT withholding rate shall represent the net VAT payable of the seller. The remaining seven percent (7%) effectively accounts for the standard input VAT for sales of goods or services to government or any of its political subdivisions, instrumentalities or agencies including GOCCs in lieu of the

actual input VAT directly attributable or ratably apportioned to such sales. Should actual input VAT attributable to sales to government exceeds seven percent (7%) of gross payments, the excess may form part of the sellers' expense or cost. On the other hand, if actual input VAT attributable to sale to government is less than seven percent (7%) of gross payment, the difference must be closed to expense or cost.

The government or any of its political subdivisions, instrumentalities or

agencies including GOCCs, as well as private corporation, individuals, estates and trusts, whether large or non-large taxpayers, shall withhold twelve percent (12%) VAT with respect to the following payments:

1. Lease or use of properties or property rights owned by non-residents; and

2. Other services rendered in the Philippines by non-residents.

IV. In what grounds can the Commissioner of Internal Revenue suspend the business operations of a taxpayer?

The Commissioner or his authorized representative is empowered to suspend the business operations and temporarily close the business establishment of any person for any of the following violations:

(a) In the case of a VAT-registered Person:

Failure to issue receipts or invoices; Failure to file a value-added-tax return as required under

Section 114; or Understatement of taxable sales or receipts by thirty percent

(30%) or more of his correct taxable sales or receipts for the taxable quarter.

(b) Failure to any Person to Register as Required under Section 236

The temporary closure of the establishment shall be for the

duration of not less than five (5) days and shall be lifted only upon compliance with whatever requirements prescribed by the Commissioner in the closure order.

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Description


Withholding Tax on Compensation is the tax withheld from income payments to individuals arising from an employer-employee relationship.

Expanded Withholding Tax is a kind of withholding tax which is prescribed on certain income payments and is creditable against the income tax due of the payee for the taxable quarter/year in which the particular income was earned.

Final Withholding Tax is a kind of withholding tax which is prescribed on certain income payments and is not creditable against the income tax due of the payee on other income subject to regular rates of tax for the taxable year. Income Tax withheld constitutes the full and final payment of the Income Tax due from the payee on the particular income subjected to final withholding tax.

Withholding Tax on Government Money Payments (GMP) - Percentage Taxes - is the tax withheld by National Government Agencies (NGAs) and instrumentalities, including government-owned and controlled corporations (GOCCs) and local government units (LGUs), before making any payments to non-VAT registered taxpayers/suppliers/payees

Withholding Tax on GMP - Value Added Taxes (GVAT) - is the tax withheld by National Government Agencies (NGAs) and instrumentalities, including government-owned and controlled corporations (GOCCs) and local government units (LGUs), before making any payments to VAT registered taxpayers/suppliers/payees on account of their purchases of goods and services.

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Codal Reference

Republic Act Nos. 8424, 9337, 9442, 9504

Sections 57 to 58 and 78 to 83 of the National Internal Revenue Code (NIRC)

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Monthly Remittance of Taxes Withheld on Compensation

Tax Form

BIR Form 1601-C : Monthly Remittance Return of Income Taxes Withheld on Compensation

http://www.bir.gov.ph/index.php/tax-information/withholding-tax.html#index


Who Are Required To File

Every registered withholding agent on compensation, which includes, but not limited to the following:

1) Individuals engaged in business or practice of profession with employees subject to income tax

2) All Juridical persons (e.g., Corporations, general partnerships, associations, etc.) whether or not engaged in business.

3) Government Agencies and Instrumentalities (e.g.,NGAs, GOCCs, etc.), including local government units (LGUs)

Documentary Requirements/Attachments to the tax return:

1) For amended return, proof of remittance and the return previously filed.

2) For those with advance payments, BIR Form No. 0605

3) For Private Sector, copy of the list of MWEs who received hazard pay submitted to the DOLE Regional/Provincial Offices-Operations Division/Unit, for the return period March, June, September and December, if applicable.

4) For Public Sector, copy of Department of Budget and Management (DBM) circular/s or equivalent on MWEs allowed to receive hazard pay, for the return period March, June, September and December, if applicable.

5) Electronic Tax Remittance Advice (eTRA) previously Tax Remittance Advice (TRA) for National Government Agencies (NGAs) as required under DOF-DBM Joint Circular No. 1-2000A and RR 1-2013.

Procedures for Filing and Payment

1. Read instructions indicated in the tax return.

2. Accomplish correctly BIR Form No. 1601-C in triplicate copies.

3. If there is tax required to be remitted:

- Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office (RDO) where you are registered or withholding agent is registered and present the duly accomplished BIR Form No. 1601-C, together with the required attachments (if applicable) and your payment.

- In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered or withholding agent is registered and present the duly accomplished BIR Form No. 1601- C, together with the required attachments (if applicable) and your payment.

- Receive your copy of the duly stamped and validated form from the teller of the AAB's/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.

4. If there is no tax required to be remitted:

- Proceed to the Revenue District Office where you are registered or where the withholding agent is registered and present the duly accomplished BIR Form No. 1601-C, together with the required attachments.

- Receive your copy of the duly stamped and validated BIR Form from the RDO.

Deadline

Filing Via EFPS

Group A - Fifteen (15) days following end of the monthGroup B - Fourteen (14) days following end of the monthGroup C - Thirteen (13) days following end of the monthGroup D - Twelve (12) days following end of the monthGroup E - Eleven (11) days following end of the month

Note: The staggered manner of filing is only allowed to taxpayers using the Electronic Filing and Payment System (EFPS) based on the industry classification groupings per RR No. 26-2002.

However, the staggered filing of returns allowed for withholding agents/taxpayers enrolled in the EFPS facility of the Bureau shall not apply in the case of the NGAs per RR 1-2013.

Payment Via EFPS

On or before the fifteenth (15th) day of the month following the month withholding was made, except for taxes withheld for the month of December which shall be paid on or before January 20 of the succeeding year.

Provided however that, in the case of NGAs, all returns must be electronically filed (e-filed) and payment of the tax due must also be made on the same day the return is e-filed which shall be on or before the 10th day following the month in which

withholding was made, except for taxes withheld for the month of December of each year, which shall be filed on or before January 15 of the succeeding year.

Manual Filing and Payment

On or before the tenth (10th) day of the month following the month the withholding was made, except for taxes withheld for the month of December which shall be filed and paid on or before January 15 of the succeeding year

Tax Rates

REVISED WITHHOLDING TAX TABLESEffective January 1, 2009

DAILY 1 2 3 4 5 6 7 8

Exemption 0.00 0.00 1.65 8.25 28.05 74.26 165.02 412.54

Status (‘000P) +0% over +5% over +10% over +15% over +20% over +25% over +30% over +32% over

A. Table for employees without qualified dependent

1. Z 0.0 1 0 33 99 231 462 825 1,650

2. S/ME 50.0 1 165 198 264 396 627 990 1,815

B. Table for single/married employee with qualified dependent child(ren)

1. ME1 / S1 75.0 1 248 281 347 479 710 1,073 1,898

2. ME2 / S2 100.0 1 330 363 429 561 792 1,155 1,980

3. ME3 / S3 125.0 1 413 446 512 644 875 1,238 2,063

4. ME4 / S4 150.0 1 495 528 594 726 957 1,320 2,145

WEEKLY 1 2 3 4 5 6 7 8

Exemption 0.00 0.00 9.62 48.08 163.46 432.69 961.54 2,403.85

Status +0% over +5% over +10% over +15% over +20% over +25% over +30% over +32% over


1. Z 0.0 1 0 192 577 1,346 2,692 4,808 9,615

2. S/ME 50.0 1 962 1,154 1,538 2,308 3,654 5,769 10,577


1. ME1 / S1 75.0 1 1,442 1,635 2,019 2,788 4,135 6,250 11,058

2. ME2 / S2 100.0 1 1,923 2,115 2,500 3,269 4,615 6,731 11,538

3. ME3 / S3 125.0 1 2,404 2,596 2,981 3,750 5,096 7,212 12,019

4. ME4 / S4 150.0 1 2,885 3,077 3,462 4,231 5,577 7,692 12,500

SEMI-MONTHLY 1 2 3 4 5 6 7 8

Exemption 0.00 0.00 20.83 104.17 354.17 937.50 2,083.33 5,208.33



1. Z 0.0 1 0 417 1,250 2,917 5,833 10,417 20,833

2. S/ME 50.0 1 2,083 2,500 3,333 5,000 7,917 12,500 22,917


1. ME1 / S1 75.0 1 3,125 3,542 4,375 6,042 8,958 13,542 23,958

2. ME2 / S2 100.0 1 4,167 4,583 5,417 7,083 10,000 14,583 25,000

3. ME3 / S3 125.0 1 5,208 5,625 6,458 8,125 11,042 15,625 26,042

4. ME4 / S4 150.0 1 6,250 6,667 7,500 9,167 12,083 16,667 27,083

MONTHLY 1 2 3 4 5 6 7 8

Exemption 0.00 0.00 41.67 208.33 708.33 1,875.00 4,166.67 10,416.67



1. Z 0.0 1 0 833 2,500 5,833 11,667 20,833 41,667

2. S/ME 50.0 1 4,167 5,000 6,667 10,000 15,833 25,000 45,833


1. ME1 / S1 75.0 1 6,250 7,083 8,750 12,083 17,917 27,083 47,917

2. ME2 / S2 100.0 1 8,333 9,167 10,833 14,167 20,000 29,167 50,000

3. ME3 / S3 125.0 1 10,417 11,250 12,917 16,250 22,083 31,250 52,083

4. ME4 / S4 150.0 1 12,500 13,333 15,000 18,333 24,167 33,333 54,167

Legend: Z-Zero exemption S-Single ME-Married Employee 1;2;3;4-Number of qualified dependent children

S/ME = P50,000 EACH WORKING EMPLOYEE Qualified Dependent Child = P25,000 each but not exceeding four (4) children

USE TABLE A FOR SINGLE/MARRIED EMPLOYEES WITH NO QUALIFIED DEPENDENT

1. Married Employee (Husband or Wife) whose spouse is unemployed.2. Married Employee (Husband or Wife) whose spouse is a non-resident citizen receiving income from foreign sources3. Married Employee (Husband or Wife) whose spouse is engaged in business4. Single6. Zero Exemption for employees with multiple employers for their 2nd, 3rd…..employers (main employer claims personal & additional exemption7. Zero Exemption for those who failed to file Application for Registration

USE TABLE B FOR THE FOLLOWING SINGLE/MARRIED EMPLOYEES WITH QUALIFIED DEPENDENT

1. Employed husband and husband claims exemptions of children2. Employed wife whose husband is also employed or engaged in business; husband waived claim for dependent children in favor of the employed wife3. Single with qualified dependent children

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Monthly Remittance Of Income Taxes Withheld (Expanded) [Except for Transactions Involving Onerous Transfer of Real Property Classified as Ordinary Asset]

Tax Form

BIR Form No. 1601-E : Monthly Remittance Return of Income Taxes Withheld (Expanded) [Except for Transactions Involving Onerous Transfer of Real Property Classified as Ordinary Asset]


Every registered withholding agent on Expanded Withholding Tax, which may include, but not limited to the following:

1) In general, any juridical person, whether or not engaged in trade or business

2) 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.

3) Government agencies and instrumentalities (e.g., National Government Agencies, Government-Owned or Controlled Corporations, Local Government Units, etc.)

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


1. Return previously filed and proof of remittance, if amended return

2. Monthly Alphalist of Payees (MAP), except income payments made by political parties, candidates and income payments made by individual or juridical person on the purchase of goods and services as campaign contributions to political parties and candidates

3. For advance payment, BIR Form No. 0605

4. Electronic Tax Remittance Advice (eTRA) previously Tax Remittance Advice (TRA) for National Government Agencies (NGAs) as required under DOF- DBM Joint Circular No. 1-2000A and RR 1-2013



2. Accomplish BIR Form No. 1601-E in triplicate copies.


- Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1601- E, together with the required attachments and your payment.

- In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form 1601-E, together with the required attachments and your payment

- Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.


- Proceed to the Revenue District Office where you are registered and present the duly accomplished BIR Form 1601-E, together with the required attachments.

- Receive your copy of the duly stamped and validated form from the RDO representative.

Deadline

Filing Via EFPS




Payment Via EFPS

On or before the fifteenth (15th) day of the month following the month withholding was made, except for taxes withheld for the month of December which shall be paid on or before January 20th of the succeeding year.

Provided however that, in the case of NGAs, all returns must be electronically filed (e-filed) and payment of the tax due must also be made on the same day the return is e-filed which shall be on or before the 10th day following the month in which withholding was made, except for taxes withheld for the month of December of each year, which shall be filed on or before January 15 of the succeeding year.



Tax Rates

BIR FORM TAX TYPE DESCRIPTION ATCTAX

RATES

BIR FORM NO. 1601-E MONTHLY REMITTANCE RETURN OF CREDITABLE INCOME TAXES WITHHELD (EXPANDED)

1601-E/2307 WEProfessionals (lawyers, CPAs, engineers, etc.), talent fees paid to individuals - If the current year’s gross income is P720,000 and below

WI010 10%

1601-E/2307 WEProfessionals (lawyers, CPAs, engineers, etc.), talent fees paid to individuals - If the current year’s gross income exceeds P 720,000

WI011 15%

1601-E/2307 WEProfessionals/ talent fees paid to juridical persons - If the current year’s gross income is P720,000 and below

WC010 10%

1601-E/2307 WEProfessionals/ talent fees paid to juridical persons - If the current year’s gross income exceeds P 720,000

WC011 15%

1601-E/2307 WE

Professional entertainers, such as, but not limited to, actors and actresses, singers, lyricist, composers, emcees - If the current year’s gross income is P 720,000 and below

WI020 10%

1601-E/2307 WE

Professional entertainers, such as, but not limited to, actors and actresses, singers, lyricist, composers, emcees - If the current year’s gross income exceeds P 720,000

WI021 15%

1601-E/2307 WE Professional athletes, including basketball players, pelotaris and jockeys - If the current

WI030 10%

year’s gross income is P 720,000 and below

1601-E/2307 WEProfessional athletes including basketball players, pelotaris and jockeys - If the current year’s gross income exceeds P720,000

WI031 15%

1601-E/2307 WEMovie, stage, radio, television and musical directors and producers - If the current year’s gross income is P720,000 and below

WI040 10%

1601-E/2307 WEMovie, stage, radio, television and musical directors and producers - If the current year’s gross income exceeds P 720,000

WI041 15%

1601-E/2307 WEManagement and technical consultants paid to individuals. If the current year’s gross income is P 720,000 and below

WI050 10%

1601-E/2307 WEManagement and technical consultants paid to individuals - If the current year’s gross income exceeds P 720,000

WI051 15%

1601-E/2307 WEManagement and technical consultants paid to juridical person - If the current year’s gross income is P 720,000 and below

WC050 10%

1601-E/2307 WEManagement and technical consultants paid to juridical person - If the currents year’s gross income exceeds P720,000

WC051 15%

1601-E/2307 WEBusiness and bookkeeping agents and agencies - If the current year’s gross income is P 720,000 and below

WI060 10%

1601-E/2307 WEBusiness and bookkeeping agents and agencies - If the current year’s gross income exceeds P 720,000

WI061 15%

1601-E/2307 WEInsurance agents and insurance adjusters - If the current year’s gross income is P 720,000 and below

WI070 10%

1601-E/2307 WEInsurance agents and insurance adjusters - If the current year’s gross income exceeds P 720,000

WI071 15%

1601-E/2307 WEOther recipients of talent fees - If the current year’s gross income is P 720,000 and below

WI080 10%

1601-E/2307 WEOther recipients of talent fees - If the current year’s gross income exceeds P 720,000

WI081 15%

1601-E/2307 WEFees of directors who are not employees of the company - If the current year’s gross income is P 720,000 and below

WI090 10%

1601-E/2307 WEFees of directors who are not employees of the company - If the current year’s gross income exceeds P 720,000

WI091 15%

1601-E/2307 WERentals- real/personal properties, poles, satellites & transmission facilities, billboards - Individual

WI100 5%

1601-E/2307 WERentals- real/personal properties, poles, satellites & transmission facilities, billboards - Corporate

WC100 5%

1601-E/2307 WE Cinematographic film rentals - Individual WI110 5%

1601-E/2307 WE Cinematographic film rentals - Corporate WC110 5%

1601-E/2307 WEIncome payments to prime contractors/sub-contractors - Individual

WI120 2%

1601-E/2307 WEIncome payments to prime contractors/sub-contractors - Corporate

WC120 2%

1601-E/2307 WEIncome distribution to beneficiaries of estates and trusts

WI130 15%

1601-E/2307 WE

Gross commission or service fees of custom, insurance, stock, real estate, immigration and commercial brokers & fees of agents of professional entertainers - Individual

WI140 10%

1601-E/2307 WE

Gross commission or service fees of custom, insurance, stock, real estate, immigration and commercial brokers & fees of agents of professional entertainers - Corporate

WC140 10%

1601-E/2307 WE

Payments to medical practitioners by a duly registered professional partnership for the practice of the medical profession - If the currents year's income payments to the medical practitioner is P720,000 and below

WI141 10%

1601-E/2307 WE

Payments to medical practitioners by a duly registered professional partnership for the practice of the medical profession - If the currents year's income payments to the medical practitioner exceeds P720,000

WI142 15%

1601-E/2307 WE

Payments for medical/dental/veterinary services thru Hospitals/ Clinics/Health Maintenance Organizations, including direct payments to service providers - If the current year's income payments for the medical/dental/veterinary services exceeds P 720,000

WI150 15%

1601-E/2307 WE

Payments for medical/dental/veterinary services thru Hospitals/ Clinics/Health Maintenance Organizations, including direct payments to service providers - If the current year's income payments for the medical/dental/veterinary services is P 720,000 and below

WI151 10%

1601-E/2307 WEPayment by the general professional partnerships GPP) to its partners - If the current year's income payments to the partners is P 720,000 and below

WI152 10%

1601-E/2307 WEPayment by the general professional partnerships GPP) to its partners - If the current year's income payments to the partners exceeds P 720,000

WI153 15%

1601-E/2307 WEPayments made by credit card companies - Individual

WI156 1% of 1/2

1601-E/2307 WEPayments made by credit card companies - Corporate

WC156 1% of 1/2

1601-E/2307 WEIncome payments made by the government to its local/resident suppliers of goods - Individual

WI640 1%

1601-E/2307 WEIncome payments made by the government to its local/resident suppliers of goods - Corporate

WC640 1%

1601-E/2307 WEIncome payments made by the government to its local/resident suppliers of service - Individual

WI157 2%

1601-E/2307 WEIncome payments made by the government to its local/resident suppliers of services - Corporate

WC157 2%

1601-E/2307 WEIncome payments made by top 20,000 private corporations to their local/resident suppliers of goods - Individual

WI158 1%

1601-E/2307 WEIncome payments made by top 20,000 private corporations to their local/resident suppliers of goods - Corporate

WC158 1%

1601-E/2307 WEIncome payments made by top 20,000 private corporations to their local/resident suppliers of services - Individual

WI160 2%

1601-E/2307 WEIncome payments made by top 20,000 private corporations to their local/resident suppliers of services - Corporate

WC160 2%

1601-E/2307 WEAdditional payments to government personnel from importers, shipping and airline companies or their agents for overtime services

WI159 15%

1601-E/2307 WE

Commission, rebates, discounts and other similar considerations paid/granted to independent & exclusive distributors, medical/technical & sales representatives & marketing agents & sub-agents of multi-level marketing companies - Individual

WI515 10%

1601-E/2307 WE

Commission, rebates, discounts and other similar considerations paid/granted to independent & exclusive distributors, medical/technical & sales representatives & marketing agents and sub-agents of multi-level marketing companies - Corporate

WC515 10%

1601-E/2307 WE Gross payments to embalmers by funeral parlors WI530 1%

1601-E/2307 WEPayments made by pre-need companies to funeral parlors - Individual

WI535 1%

1601-E/2307 WEPayments made by pre-need companies to funeral parlors - Corporate

WC535 1%

1601-E/2307 WE Tolling fee paid to refineries - Individual WI540 5%

1601-E/2307 WE Tolling fee paid to refineries - Corporate WC540 5%

1601-E/2307 WEIncome payments made to suppliers of Agricultural products - Individual

WI610 1%

1601-E/2307 WEIncome payments made to suppliers of Agricultural products - Corporate

WC610 1%

1601-E/2307 WEIncome payments on purchases of minerals, mineral products & quarry resources - Individual

WI630 5%

1601-E/2307 WEIncome payments on purchases of minerals, mineral products & quarry resources - Corporate

WC630 5%

1601-E/2307 WE

Income payments on purchases of gold by Bangko Sentral ng Pilipinas (BSP) from gold miners/suppliers under PD 1899, as amended by RA No. 7076- Individual

WI632 5%

1601-E/2307 WE

Income payments on purchases of gold by Bangko Sentral ng Pilipinas (BSP) from gold miners/suppliers under PD 1899, as amended by RA No. 7076 - Corporate

WC632 5%

1601-E/2307 WEOn gross amount of refund given by Meralco to customers with active contracts as classified by Meralco - Individual

WI650 25%

1601-E/2307 WEOn gross amount of refund given by Meralco to customers with active contracts as classified by Meralco - Corporate

WC650 25%

1601-E/2307 WEOn gross amount of refund given by Meralco to customers with terminated contracts as classified by Meralco - Individual

WI651 32%

1601-E/2307 WEOn gross amount of refund given by Meralco to customers with terminated contracts as classified by Meralco - Corporate

WC651 32%

1601-E/2307 WE Withholding on gross amount of interest on the refund of meter deposit whether paid directly to the customers or applied against customer's billing - Residential and General Service

WI660 10%

customers whose monthly electricity consumption exceeds 200 kwh as classified by MERALCO - Individual

1601-E/2307 WE

Withholding on gross amount of interest on the refund of meter deposit whether paid directly to the customers or applied against customer's billing - Residential and General Service customers whose monthly electricity consumption exceeds 200 kwh as classified by MERALCO - Corporate

WC660 10%

1601-E/2307 WE

Withholding on gross amount of interest on the refund of meter deposit whether paid directly to the customers or applied against customer's billing - Non-Residential customers whose monthly electricity consumption exceeds 200 kwh as classified by MERALCO - Individual

WI661 10%

1601-E/2307 WE

Withholding on gross amount of interest on the refund of meter deposit whether paid directly to the customers or applied against customer's billing - Non-Residential customers whose monthly electricity consumption exceeds 200 kwh as classified by MERALCO - Corporate

WC661 10%

1601-E/2307 WE

Withholding on gross amount of interest on the refund of meter deposit whether paid directly to the customers or applied against customer's billing - Residential and General Service customers whose monthly electricity consumption exceeds 200 kwh as classified by other electric Distribution Utilities (DU) - Individual

WI662 10%

1601-E/2307 WE

Withholding on gross amount of interest on the refund of meter deposit whether paid directly to the customers or applied against customer's billing - Residential and General Service customers whose monthly electricity consumption exceeds 200 kwh as classified by other electric Distribution Utilities (DU) - Corporate

WC662 10%

1601-E/2307 WE

Withholding on gross amount of interest on the refund of meter deposit whether paid directly to the customers or applied against customer's billing - Non-Residential customers whose monthly electricity consumption exceeds 200 kwh as classified by other electric Distribution Utilities (DU) - Individual

WI663 20%

1601-E/2307 WE

Withholding on gross amount of interest on the refund of meter deposit whether paid directly to the customers or applied against customer's billing - Non-Residential customers whose monthly electricity consumption exceeds 200 kwh as classified by other electric Distribution Utilities (DU) - Corporate

WC663 20%

1601-E/2307 WE

Income payments made by the top five thousand (5,000) individual taxpayers to their local/resident suppliers of goods other than those covered by other rates of withholding tax - Individual

WI670 1%

1601-E/2307 WE

Income payments made by the top five thousand (5,000) individual taxpayers to their local/resident suppliers of goods other than those covered by other rates of withholding tax - Corporation

WC670 1%

1601-E/2307 WE Income payments made by the top five thousand WI672 2%

(5,000) individual taxpayers to their local/resident suppliers of services other than those covered by other rates of withholding tax - i) Individual

1601-E/2307 WE

Income payments made by the top five thousand (5,000) individual taxpayers to their local/resident suppliers of services other than those covered by other rates of withholding tax - ii) Corporation

WC672 2%

1601-E/2307 WE

Income payments made by political parties and candidates of local and national elections of all their purchase of goods and services as campaign expenditures, and income payments made by individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates - Individual

WI680 5%

1601-E/2307 WE

Income payments made by political parties and candidates of local and national elections of all their purchase of goods and services as campaign expenditures, and income payments made by individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates - Corporation

WC680 5%

1601-E/2307 WEIncome payments received by Real Estate Investment Trust (REIT)

WC690 1%

1601-E/2307 WE

Interest income derived from any other debt instruments not within the coverage of deposit substitutes and Revenue Regulations No. 14-2012 subject to Creditable/ Expanded Withholding Tax - Individual

WI710 20%

1601-E/2307 WE

Interest income derived from any other debt instruments not within the coverage of deposit substitutes and Revenue Regulations No. 14-2012 subject to Creditable/ Expanded Withholding Tax - Corporate

WC710 20%

[return to index]

Monthly Remittance Of Value-Added Taxes And Other Percentage Taxes Withheld

Tax Form

BIR Form No. 1600 - Monthly Remittance Return of Value-Added Taxes and Other Percentage Taxes Withheld


1. All government offices, bureaus, agencies or instrumentalities, local government units, government owned and controlled corporation on money payments made to private individuals, corporations, partnerships, associations and other


judicial/artificial entities as required under RA Nos. 1051, 7649, 8241, 8424 and 9337.

2. Payors of income subject to Value-Added Tax to Non-residents.

3. Payors of income to persons, natural or juridical, who opted to remit his/its VAT or percentage tax through the withholding and remittance of the same by the withholding agent/payor which option is manifested by filing the “Notice of Availment of the option to Pay the Tax through the Withholding Process”, copy furnished the withholding agent-payor and the revenue district offices of both the payor and payee.


1. Alphabetical list of payees (MAP) indicating the following:

- Month and Year - TIN of withholding agent - Name of Withholding Agent - TIN of Payee - ATC- Nature of Payment - Name of Payee- Amount of Payment - Tax Rate- Tax Required to be Withheld

2. Return previously filed and proof of tax payments, if amended return

3. Certificate of Tax Treaty Relief, if applicable

4. Authorization Letter, if the return is filed by the authorized representative


6. BIR Form 0605, for advance payment.


1. Read instructions indicated at the back of the tax return.

2. Accomplish BIR No. Form 1600 in triplicate copies.


- Proceed to the nearest Authorized Agents Banks (AABs) of the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No.1600, together with the required attachments and your payment.

- In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1600, together with the required attachments and your payment.

- Receive your copy of the duly stamped and validated form from the teller of the AABs /Revenue Collection Officer/duly authorized City or Municipal Treasurer.


- Proceed to the Revenue District Office where you are registered and present the duly accomplished BIR Form No. 1600, together with the required attachments.


Deadline

On or before the tenth (10th) day of the month following the month the withholding was made, whether EFPS or manual filing and payment.

Tax Rates

BIR FORM TAX TYPE DESCRIPTION ATC TAX RATES

BIR FORM NO. 1600 MONTHLY REMITTANCE RETURN OF VALUE-ADDED TAX AND OTHER PERCENTAGE TAXES WITHHELD

1600/2306 WG FWVAT on payments for purchases of Goods WV010 5%

1600/2306 WG FWVAT on payments for purchases of Services WV020 5%

1600/2306 WGLease or use of properties or property rights owned by non-residents (Government Withholding Agent)

WV040 12%

1600/2306 WGLease or use of properties or property rights owned by non-residents (Private Withholding Agent)

WV050 12%

1600/2306 WGOther services rendered in the Philippines by non-residents (Government Withholding Agent)

WV060 12%

1600/2306 WGOther services rendered in the Philippines by non-residents (Private Withholding Agent)

WV070 12%

1600/2307 WG Tax on carriers and keepers of garages WB030 3%

1600/2307 WG Franchise Tax on Gas and Water Utilities WB040 2%

1600/2307 WG

Franchise Tax on radio & TV broadcasting companies whose annual gross receipts does not exceed P10M & who are not VAT registered taxpayers

WB050 3%

1600/2307 WG Tax on life insurance premiums WB070 2%

1600/2307 WGPersons exempt from VAT under Sec. 109(v) (creditable)-Government Withholding Agent

WB080 3%

1600/2307 WGTax on overseas dispatch, message or conversation originating from the Philippines

WB090 10%

1600/2307 WG

Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions. On interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of remaining maturities of instruments from which such receipts are derived: - Maturity period is five years or less

WB301 5%

1600/2307 WG

Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions. On interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of remaining maturities of instruments from which such receipts are derived: - Maturity period is more than five years

WB303 1%

1600/2307 WG

Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions. On dividends and equity shares and net income of subsidiaries

WB102 0%

1600/2307 WG

Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions. On royalties, rentals of property, real or personal, profits from exchange and all other items treated as gross income under the Code

WB103 7%

1600/2307 WG

Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions. On net trading gains within the taxable year on foreign currency, debt securities, derivatives, and other similar financial instruments

WB104 7%

1600/2307 WG

Tax on Other Non-Banks Financial Intermediaries Not Performing Quasi-Banking Functions. On interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of the remaining maturities of instrument from which such receipts are derived: - Maturity period is five years or less

WB108 5%

1600/2307 WG

Tax on Other Non-Banks Financial Intermediaries Not Performing Quasi-Banking Functions. On interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of the remaining maturities of instrument from which such receipts are derived: - Maturity period is more than five years

WB109 1%

1600/2307 WG Tax on Other Non-Banks Financial Intermediaries WB110 5%

Not Performing Quasi-Banking Functions. On all other items treated as gross income under the Code

1600/2307 WGBusiness Tax on Agents of foreign insurance co. - insurance agents

WB120 4%

1600/2307 WGBusiness Tax on Agents of foreign insurance co. - owner of the property

WB121 5%

1600/2307 WG Tax on International Carriers WB130 3%

1600/2307 WG Tax on cockpits WB140 18%

1600/2307 WG

Tax on amusement places, such as cabaret, night or day clubs, videoke bars, karaoke bars, karaoke television, karaoke boxes, music lounges and other similar establishments

WB150 18%

1600/2307 WG Tax on boxing exhibitions WB160 10%

1600/2307 WG Tax on professional basketball games WB170 15%

1600/2307 WG Tax on jai-alai & race tracks WB180 30%

1600/2307 WGTax on sale, barter or exchange of shares of stocks listed and traded through the Local Stock Exchange

WB200 1/2 of 1%

1600/2307 WGTax on shares of stock sold or exchanged through initial and secondary public offering - Not over 25%

WB201 4%

1600/2307 WGTax on shares of stock sold or exchanged through initial and secondary public offering - Over 25% but not exceeding 33 1/3%

WB202 2%

1600/2307 WGTax on shares of stock sold or exchanged through initial and secondary public offering - Over 33 1/3%

WB203 1%

1600/2307 WGVAT Withholding on Purchase of Goods (with waiver of privilege to claim input tax credit (creditable)

WV012 12%

1600/2306 WGVat Withholding on Purchase of Goods (with waiver of privilege to claim input tax credit (final)

WV014 12%

1600/2307 WGVAT Withholding on Purchase of Services (with waiver of privilege to claim input tax credit (creditable)

WV022 12%

1600/2306 WGVAT Withholding on Purchase of Services (with waiver of privilege to claim input tax credit (final)

WV024 12%

1600/2307 WGPersons exempt from VAT under Section 109v (creditable) - Private Withholding Agent

WB082 3%

1600/2306 WGPersons exempt from VAT under Section 109v (final)

WB084 3%

[return to index]

Monthly Remittance of Final Income Taxes Withheld

Tax Form


BIR Form 1601-F : Monthly Remittance Return of Final Income Taxes Withheld


Every withholding agent/payor who is either an individual or non-individual required to deduct and withhold taxes on income payments subject to Final Withholding Taxes


1. Return previously filed and proof of remittance, if amended return

2. Monthly Alphalist of Payees (MAP)

3. For advance payment, BIR Form No. 0605

4. Electronic Tax Remittance Advice (eTRA) previously Tax Remittance Advice (TRA) for National Government Agencies (NGAs) as required under DOF-DBM Joint Circular No. 1-2000A and RR 1-2003



2. Accomplish BIR Form No. 1601-F in triplicate copies.


- Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1601F, together with the required attachments and your payment.

- In places where there are no AAB, the return shall be filed and the tax paid with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer within the Revenue District Office where the withholding agent’s place of business/office is located who will issue a Revenue Official Receipt (BIR Form No. 2524) therefor;


- Proceed to the Revenue District Office where you are registered and present the duly accomplished BIR Form 1601-F, together with the required attachments.


Deadlines

Filing Via EFPS




Payment Via EFPS

On or before the fifteenth (15th) day of the month following the month withholding was made, except for taxes withheld for the month of December which shall be paid on or before January 20 of the succeeding year.

Provided however that, in the case of NGAs, all returns must be electronically filed (e-filed) and payment of the tax due must also be made on the same day the return is e-filed which shall be on or before the 10th day following the month in which withholding was made, except for taxes withheld for the month of December of each year, which shall be filed on or before January 15 of the succeeding year.



Tax Rates


BIR FORM NO. 1601-F MONTHLY REMITTANCE RETURN OF FINAL INCOME TAXES WITHHELD

1601-F/2306 WFInterest on foreign loans payable to non-resident foreign corporations (NRFCs)

WC180 20%

1601-F/2306 WF Interest and other income payments on foreign WC190 10%

currency transactions/loans payable to OBUs

1601-F/2306 WFInterest and other income payments on foreign currency transactions/loans payable to FCDUs

WC191 10%

1601-F/2306 WFCash dividend payments by domestic corporation to citizens and resident aliens

WI202 10%

1601-F/2306 WFProperty dividend payments by domestic corporation to citizens and resident aliens

WI203 10%

1601-F/2306 WFCash dividend payment by domestic corporation to Non-Resident Foreign Corporations

WC212 30% - Effective Jan.

1, 2009

1601-F/2306 WFProperty dividend payment by domestic corporation to Non-Resident Foreign Corporations


1, 2009

1601-F/2306 WF

Cash dividend payment by domestic corporation to Non-Resident Foreign Corporations whose countries allow tax deemed paid credit (subject to tax sparing rule)

WC222 15%

1601-F/2306 WF

Property dividend payment by domestic corporation to Non-Resident Foreign Corporations whose countries allowed tax deemed paid credit (subject to tax sparing rule)

WC223 15%

1601-F/2306 WFCash dividend payment by domestic corporation to non-resident alien engaged in trade or business (NRAETB)

WI224 20%

1601-F/2306 WFProperty dividend payment by domestic corporation to non-resident alien engaged in trade or business (NRAETB)

WI225 20%

1601-F/2306 WF

Share of a NRAETB in the distributable net income after tax of a partnership (except GPP) of which he is a partner, or share in the net income after tax of an association, joint account, or a joint venture taxable as a corporation of which he is a member or a co-venturer

WI226 20%

1601-F/2306 WFOn other payments to non-resident foreign corporations (NRFCs)


1, 2009

1601-F/2306 WFDistributive share of individual partners in a taxable partnerships, association, joint account, or joint venture or consortium

WI240 10%

1601-F/2306 WFAll kinds of royalty payments to citizens, resident aliens and non-resident aliens engaged in trade or business (other than WI 380 and WI 341)

WI250 20%

1601-F/2306 WFAll kinds of royalty payments to domestic and resident foreign corporation

WC250 20%

1601-F/2306 WFOn prizes exceeding P10,000 and other winnings paid to individuals

WI260 20%

1601-F/2306 WFBranch profit remittances by all corporations except PEZA/SBMA/CDA registered

WC280 15%

1601-F/2306 WFOn gross rentals, lease and charter fees derived by non-resident owner or lessor of foreign vessels

WC290 4.5%

1601-F/2306 WF On the gross rentals, lease and charter fees derived by non-resident lessor of aircraft,

WC300 7.5%

machineries and other equipment

1601-F/2306 WFOn payments to oil exploration service contractors and subcontractors (OESS) - Individual (NRAETB)

WI310 8%

1601-F/2306 WF

On payments to oil exploration service contractors and subcontractors (OESS) - Corporate (non-resident foreign corporation engage in trade or business)

WC310 8%

1601-F/2306 WF

Payments to Filipinos or alien individuals employed by Foreign Petroleum Service Contractors/Subcontractors, Offshore Banking Units and Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies occupying executive/managerial and technical positions

WI320 15%

1601-F/2306 WFPayments to NRANETB except on sale of shares in domestic corporation and real property

WI330 25%

1601-F/2306 WFOn payments to non-resident individual cinematographic film owners, lessors or distributors

WI340 25%

1601-F/2306 WFOn payments to foreign corporate cinematographic film owners, lessors or distributors

WC340 25%

1601-F/2306 WFRoyalties paid to NRAETB on cinematographic films and similar works

WI341 25%

1601-F/2306 WF

Final tax on interest or other payments upon tax-free covenant bonds, mortgages, deeds of trust or other obligations under Sec. 57C of the NIRC of 1997

WI 350 30%

1601-F/2306 WFRoyalties paid to citizens, resident aliens and NRAETB on books, other literary works and musical composition

WI380 10%

1601-F/2306 WF Informer's cash reward paid to individuals WI410 10%

1601-F/2306 WF Informer's cash reward paid to juridical persons WC410 10%

1601-F/2306 WFCash or property dividends paid by a Real Estate Investment Trust (REIT) to individuals

WI700 10%

1601-F/2306 WFCash or property dividends paid by a Real Estate Investment Trust (REIT) to corporations

WC700 10%

[return to index]

Remittance Return of Percentage Tax On Winnings And Prizes Withheld By Race Track Operators

Tax Form

BIR Form No. 1600-WP : Remittance Return of Percentage Tax on Winnings and Prizes Withheld by Race Track Operators



- Operators of race tracks


1. Alphalist of Payees indicating the following:

- Tax Year and Month - TIN of withholding agent - Name of Withholding Agent - TIN of Payee - Name of Payee - ATC- Nature of Payment- Amount of Payment- Tax Rate- Tax Required to be Withheld

2. Return previously filed and proof of tax payments, if amended return

Procedures for Manual Filing and Payment

1. Accomplish BIR Form 1600-WP in triplicate copies.


- Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1600-WP, together with the required attachments and your payment.

- In places where there are no AAB, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1600-WP, together with the required attachments and your payment



- Proceed to the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1600-WP, together with the required attachments.

- Receive your copy of the duly stamped and validated form from the RDO representative

Deadline

Within twenty (20) days from the date the tax was deducted and withheld

Tax Rates


BIR FORM NO. 1600-WP -REMITTANCE RETURN OF PERCENTAGE TAX ON WINNINGS AND PRIZES WITHHELD BY RACE TRACK OPERATORS

1600-WP/2306 WWTax on Winnings from double, forecast/quinella and trifecta bets on horse races paid by government withholding agent

WB191 4%

1600-WP/2306 WW

Tax on Winnings or prizes paid to winners of winning horse race tickets other than double, forecast/quinella and trifecta bets; and owners of winning race horses paid by government withholding agent

WB192 10%

1600-WP/2306 WWTax on Winnings from double, forecast/quinella and trifecta bets on horse races paid by private withholding agent

WB193 4%

1600-WP/2306 WW

Tax on Winnings or prizes paid to winners of winning horse race tickets other than double, forecast/quinella and trifecta bets; and owners of winning race horses paid by private withholding agent

WB194 10%

[return to index]

Quarterly Remittance Of Final Income Taxes Withheld On Fringe Benefits Paid To Employees Other Than Rank And File

Tax Form

BIR Form No. 1603 - Quarterly Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other than Rank and File


Every withholding agent/payor who is either an individual or non-individual required to deduct and withhold taxes on fringe benefits furnished to employees other than rank and file employees subject to Final Withholding Tax



1. Return previously filed and proof of tax payments , if amended return




2. Accomplish BIR Form No. 1603 in triplicate copies.


- Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1603, together with the required attachments and your payment.

- In places where there are no AAB, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1603, together with the required attachments and your payment.



- Proceed to the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1603, together with the required attachments.

- Receive your copy of the duly stamped and validated form from the RDO representative

Deadline

Filing and Payment Via EFPS

On or before the fifteenth (15th) day of the month following the end of the calendar quarter in which the fringe benefits were granted to the recipient.Provided however that, in the case of NGAs, it shall be e-filed and paid on or before the 10th day of the month following the quarter.


On or before the tenth (10th) day of the month following the end of the calendar quarter in which the fringe benefits were granted to the recipient.

Tax Rates


BIR FORM NO. 1603 QUARTERLY REMITTANCE RETURN OF FINAL INCOME TAXES WITHHELD

1603/2306 WRAlien & Filipino employed & occupying the same position as those of aliens employed in selected multinational companies

WF320

15%Percentage

Divisor- 85%

1603/2306 WRPayment of fringe benefits to Non-Resident Alien Not Engaged in Trade or Business (NRAETB)

WF330

25%Percentage Divisisor

- 75%

1603/2306 WREmployees other than rank and file (Fringe Benefit Tax) based on the grossed up monetary value

WF360

32%Percentage Divisisor

- 68%

[return to index]

Monthly Remittance Of Final Income Taxes Withheld On Interest Paid And Yield On Deposit Substitutes, Trust, Etc.

Tax Form

BIR Form No. 1602 - Monthly Remittance Return of Final Income Taxes Withheld on Interest Paid and Yield on Deposit Substitutes/Trust/Etc.


Banks, non-bank financial intermediaries, finance corporations, investment and trust companies and other institutions required to withhold final income tax on interest paid/accrued on deposit and yield or any other monetary benefit from deposits substitutes and from trust fund and similar arrangements.


Return previously filed and proof of tax payments, if amended return

Procedures (for Manual filing of tax returns)

1. Accomplish BIR Form No. 1602 in triplicate copies.



- Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR FormNo. 1602, together with the required attachments and your payment.

- In places where there are no AAB, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer within the Revenue District Office where the withholding agent’s place of business/office is located and present the duly accomplished BIR Form No. 1602, together with the required attachments and your payment who will issue a Revenue Official Receipt (BIR Form No. 2524) therefor.

- Receive your copy of the duly stamped and validated form from the teller of the AAB's/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.


- Proceed to the Revenue District Office where you are registered or taxpayer concerned is registered and present the duly accomplished BIR Form No. 1602, together with the required attachments.

Deadline

Filing Via EFPS

On or before the fifteenth (15th) day of the month following the month withholding was made

Payment Via EFPS

On or before the fifteenth (15th) day of the month following the month withholding was made, except for taxes withheld for the month of December which shall be paid on or before January 20th of the succeeding year


On or before the tenth (10th) day of the month following the month the withholding was made, except for taxes withheld for the month of December which shall be filed and paid on or before January 15 of the succeeding year.

Tax Rates


BIR FORM NO. 1602 MONTHLY REMITTANCE RETURN OF FINAL INCOME TAXES WITHHELD

1602/2306 WB From bank deposits - Savings/Time - Individual WI161 20%

1602/2306 WB From bank deposits - Savings/Time - Corporate WC161 20%

1602/2306 WBFrom Treasury Bills and Other Government Securities - Individual

WI162 20%

1602/2306 WBFrom Treasury Bills and Other Government Securities - Corporate

WC162 20%

1602/2306 WBFrom deposit substitutes, trusts funds and other similar arrangements - Individual

WI163 20%

1602/2306 WBFrom deposit substitutes, trusts funds and other similar arrangements - Corporate

WC163 20%

1602/2306 WBOn foreign currency deposits Resident - Individual

WI170 7.5%

1602/2306 WBOn foreign currency deposits Resident - Corporate

WC170 7.5%

1602/2306 WBInterest payments to taxpayers enjoying preferential tax rates (i.e. PEZA Registered Enterprises)

WC390 5%

1602/2306 WB

On interest income from long-term deposit in the form of savings trust funds, deposit substitutes which was pre-terminated by the holder before the 5th year - individual (Less than 3 years)

WI440 20%

1602/2306 WB

On interest income from long-term deposit in the form of savings trust funds, deposit substitutes which was pre-terminated by the holder before the 5th year - individual (3 years to less than 4 years)

WI441 12%

1602/2306 WB

On interest income from long-term deposit in the form of savings trust funds, deposit substitutes which was pre-terminated by the holder before the 5th year - individual ( 4 years to less than 5 years)

WI442 5%

1602/2306 WB

On interest income from long-term deposit in the form of savings trust funds, deposit substitutes which was pre-terminated by the holder before the 5th year - corporate

WC440 20%

[return to index]

Annual Information Return On Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt From Withholding Tax

Tax Form

BIR Form No. 1604-E : Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax



Every withholding agent/payor who is either an individual or non-individual required to deduct and withhold taxes on income payments subject to Expanded/Creditable Withholding Taxes


1. Alphalist of Payees subjected to Expanded Withholding Tax

2. Alphalist of Other Payees Whose Income Payments Are Exempt from Withholding Tax but subject to Income Tax

3. Return previously filed and proof of tax payment for amended return

Note: Above alphalists are to be submitted in accordance with RR 1-2014 as amended.

Procedures for Manual Filing

1. Accomplish BIR Form No. 1604-E in triplicate copies.

2. Proceed to the Revenue District Office where you are registered and present the duly accomplished BIR Form No. 1604-E, together with the required attachments.

3. Receive your copy of the duly stamped and validated form from the RDO representative

Deadline

On or before March 1 of the year following the calendar year in which the income payments subjected to expanded withholding taxes or exempt from withholding tax were paid.

[return to index]

Annual Information On Income Taxes Withheld On Compensation And Final Withholding Taxes

Tax Form

BIR Form No. 1604-CF : Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding taxes.



Every withholding agent/payor who is either an individual or non-individual required to deduct and withhold taxes on:

- compensation paid to employees

- income payments subject to Final Withholding Taxes


1. Alphalist of Employees as of December 31 With no Previous Employer within the year

2. Alphalist of Employees as of December 31 with Previous Employer/s within the year

3. Alphalist of Employees Terminated Before December 31

4. Alphalist of Employees Whose Compensation Income Are Exempt from Withholding Tax But Subject to Income Tax

5. Alphalist of Minimum Wage Earners

6. Alphalist of Employees other than Rank and File Who Were Given Fringe Benefits During the Year

7. Alphalist of Payees Subjected to Final Withholding Tax

8. Return previously filed and proof of tax payment for amended return

Note: Above alphalists are to be submitted in accordance with RR 1-2014 as amended.

Procedures

1. Accomplish BIR Form No. 1604-CF in triplicate copies and attach the necessary schedules in prescribed form (hard and soft copy)

2. Proceed to the Revenue District Office where you are registered and present the duly accomplished BIR Form No. 1604-CF, together with the required attachments.

3. Receive your copy of the duly stamped and validated form from the RDO representative.

Deadline

On or before January 31 following the calendar year in which the compensation payment and other income payments subjected to final withholding taxes were paid or accrued.

[return to index]


RR No. 2-98, RR No. 3-98, RR No. 8-98, RR No. 10-98, RR No. 12-98, RR No. 3-99, RR No. 8-2000, RR No. 10-2000, RR No. 6-2001, RR No. 12-2001, RR No. 9-2001, RR No. 3-2002, RR No. 4-2002, RR No. 14-2002, RR No. 19-2002, RR No. 26-2002, RR No. 14-2003, RR No. 16-2003, RR No. 17-2003, RR No. 30-2003, RR 1-2004, RR 3-2004, RR No. 5-2004, RR No. 8-2005, RR 1-2006, RR 2-2006, RR 4-2006, RR 4-2007, RR 4-2008, RR 5-2008, RR 6-2008, RR 7-2008, RR 14-2008, RR No. 10-2008, RR 1-2009, RR 2-2009, RR 3-2009, RR 5-2009, RR 6-2009, RR 8-2009, RR 10-2009, RR No. 11-2010, RR No. 5-2011, RR No. 7-2011, RR No. 13-2011, RR No. 3-2012, RR No. 6-2012, RR No. 8-2012, RR No. 14-2012, RR No. 16-2012, RR No. 1-2013, RR No. 10-2013, RR No. 11-2013

[return to index]


1) What are the types of Withholding Taxes?

There are two main classifications or types of withholding tax. These are:

a) Creditable Withholding Tax

- Withholding Tax on Compensation- Expanded Withholding Tax- Withholding of Business Tax (VAT and Percentage)

b) Final Withholding Tax

2) What is compensation?

It means any remuneration received for services performed by an employee from his employer under an employee-employer relationship.

3) What are the different kinds of compensation?



a) Regular compensation - includes basic salary, fixed allowances for representation, transportation and others paid to an employee

b) Supplemental compensation - includes payments to an employee in addition to the regular compensation such as but not limited to the following:

- Overtime Pay- Fees, including director's fees- Commission- Profit Sharing- Monetized Vacation and Sick Leave- Fringe benefits received by rank & file employees- Hazard Pay- Taxable 13th month pay and other benefits- Other remunerations received from an employee-employer relationship

4) What are exempted from Withholding Tax on Compensation?

1. Remuneration as an incident of employment, such as the following:

a. Retirement benefits received under RA 7641

b. Any amount received by an official or employee or by his heirs from the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee such as retrenchment, redundancy or cessation of business

c. Social security benefits, retirement gratuities, pensions and other similar benefits

d. Payment of benefits due or to become due to any person residing in the Philippines under the law of the US administered by the US Veterans Administration

e. Payment of benefits made under the SSS Act of 1954, as amended

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

2. Remuneration paid for agricultural labor and paid entirely in products of the farm where the labor is performed

3. Remuneration for domestic services

4. Remuneration for casual labor not in the course of an employer's trade or business

5. Compensation for services by a citizen or resident of the Philippines for a foreign government or an international organization

6. Payment for damages

7. Proceeds of Life Insurance

8. Amount received by the insured as a return of premium

9. Compensation for injuries or sickness

10. Income exempt under Treaty

11. Thirteenth (13th) month pay and other benefits (not to exceed P 30,000)

12. GSIS, SSS, Medicare and other contributions

13. Compensation Income of Minimum Wage Earners (MWEs) with respect to their Statutory Minimum Wage (SMW) as fixed by Regional Tripartite Wage and Productivity Board (RTWPB)/National Wage and Productivity Commission (NWPC), including overtime pay, holiday pay, night shift differential and hazard pay, applicable to the place where he/she is assigned.

14. Compensation Income of employees in the public sector if the same is equivalent to or not more than the SMW in the non-agricultural sector, as fixed by RTWPB/NWPC, including overtime pay, holiday pay, night shift differential and hazard pay, applicable to the place where he/she is assigned.

5) What are De Minimis Benefits?

- These are facilities and privileges of relatively small value and are offered or furnished by the employer to his employees merely as means of promoting their health, goodwill, contentment or efficiency. The following shall be considered "De Minimis" benefits not subject to income tax, hence not subject to withholding tax on compensation income of both managerial and rank and file employees:

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

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

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

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

• Uniform and clothing allowance not exceeding P5,000 per annum;

• Actual medical assistance, e.g. medical allowance to cover medical and healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000 per annum;

• Laundry allowance not exceeding P300.00 per month;

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

• Gifts given during Christmas and major anniversary celebration not exceeding P5,000.00 per employee perannum;

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

6) What is substituted Filing of income tax returns (ITR)?

Substituted Filing of ITR is the manner by which declaration of income of individuals receiving purely compensation income the taxes of which have been withheld correctly by their employers. Instead of the filing of Individual Income Tax Return (BIR Form 1700), the employer’s annual information return (BIR Form No. 1604-CF) duly stamped received by the BIR may be considered as the “substitute” Income Tax Return (ITR) of the employee, inasmuch as the information provided therein are exactly the same information required to be provided in his income tax return (BIR Form No. 1700). However, said employees may still file ITR at his/her option.

7) Who are qualified to avail of the substituted filing of ITR?

Employees who satisfies all of the following conditions:

a. Receiving purely compensation income regardless of amount;

b. Working for only one employer in the Philippines for the calendar year;

c. Tax has been withheld correctly by the employer (tax due equals tax withheld);

d. The employee’s spouse also complies with all three (3) conditions stated above.

e. The employer files the annual information return (BIR Form No. 1604-CF)

f. The employer issues BIR Form No. 2316 to each employee.

Note: For those employees qualified under the substituted filing, the employer

8) What income payments are subject to Expanded Withholding Tax?

a) Professional fees / talent fees for services rendered by the following:

- Those individually engaged in the practice of professions or callings such as lawyers; certified public accountants; doctors of medicine; architects; civil, electrical, chemical, mechanical, structural, industrial, mining, sanitary, metallurgical and geodetic engineers; marine surveyors; doctors of veterinary science; dentist; professional appraisers; connoisseurs of tobacco; actuaries; interior decorators, designers, real estate service practitioners (RESPs), (i. e. real estate consultants, real estate appraisers and real estate brokers) requiring government licensure examination given by the Real Estate Service pursuant to Republic Act No. 9646 and all other profession requiring government licensure examinations and/or regulated by the Professional Regulations Commission, Supreme Court, etc.

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

- Professional athletes including basketball players, pelotaris and jockeys

- Directors and producers involved in movies, stage, radio, television and musical productions

- Insurance agents and insurance adjusters

- Management and technical consultants

- Bookkeeping agents and agencies

- Other recipient of talent fees

- Fees of directors who are not employees of the company paying such fees whose duties are confined to attendance at and participation in the meetings of the Board of Directors

b) Professional fees, talent fees, etc for services of taxable juridical persons

c) Rentals:

- Rental of real property used in business

- Rental of personal properties in excess of P 10,000 annually

- Rental of poles, satellites and transmission facilities

- Rental of billboards

d) Cinematographic film rentals and other payments

e) Income payments to certain contractors

- General engineering contractors

- General building contractors

- Specialty contractors

- Other contractors like:

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

2. Operators of dockyards

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

4. Operators of stevedoring, warehousing or forwarding establishments

5. Transportation Contractors

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

7. Advertising agencies, exclusive of payments to media

8. Messengerial, janitorial, security, private detective, credit and/or collection agenciesand other business agencies

9. Independent producers of television, radio and stage performances or shows

10. Independent producers of "jingles"

11. Labor recruiting agencies and/or “labor-only” contractors

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

13. Persons engaged in the sale of computer services, computer programmers, software developer/designer, etc.

14. Persons engaged in landscaping services

15. Persons engaged in the collection and disposal of garbage

16. TV and radio station operators on sale of TV and radio airtime, and

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

f) Income distribution to the beneficiaries of estates and trusts

g) Gross commissions of customs, insurance, stock, immigration and commercial brokers, fees of agents of professional entertainers and real estate service practitioners (RESPs), (i. e. real estate consultants, real estate appraisers and real estate brokers) who failed or did not take up the licensure examination given by and not registered with the Real Estate Service under the Professional Regulations Commission

h) Income payments to partners of general professional partnerships

i) Payments made to medical practitioners

j) Gross selling price or total amount of consideration or its equivalent paid to the seller/owner for the sale, exchange or transfer of real property classified as ordinary asset

k) Additional income payments to government personnel from importers, shipping and airline companies or their agents

l) Certain income payments made by credit card companies

m) Income payments made by the top 20,000 private corporations to their purchase of goods and services from local/resident suppliers other than those covered by other rates of withholding

n) Income payments by government offices on their purchase of goods and services, from local/resident suppliers other than those covered by other rates of withholding

o) Commission, rebates, discounts and other similar considerations paid/granted to independent and exclusive distributors, medical/technical and sales representatives and marketing agents and sub-agents of multi level marketing companies.

p) Tolling fees paid to refineries

q) Payments made by pre-need companies to funeral parlors

r) Payments made to embalmers by funeral parlors

s) Income payments made to suppliers of agricultural products (suspended per RR 3-2004)

t) Income payments on purchases of mineral, mineral products and quarry resources

u) On gross amount of refund given by MERALCO to customers with active contracts as classified by MERALCO;

v) Interest income on the refund paid through direct payment or application against customers' billing by other electric Distribution Utilities in accordance with the rules embodied in ERC Resolution No. 8 series of 2008 dated June 4, 2008 governing the refund of meter deposits which was approved and adopted by ERC in compliance with the mandate of Article 8 of the Magna Carta for Residential Electricity Consumers and Article 3.4.2 of DSOAR exempting all electricity consumers, whether residential or non-residential from the payment of meter deposit.

w) Income payments made by the top 5,000 individual taxpayers to their purchase of goods and services from their local/resident suppliers other than those covered by other rates of withholding

x) Income payments made by political parties and candidates of local and national elections of all their campaign expenditures, and income payments made by individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates

y) Interest Income derived from any other debt instruments not within the coverage of deposit substitutes and RR No. 14-2012

z) Income payments subject to Withholding Tax received by Real Estate Investment Trust (REIT) (Sec.12 of RR No. 13-2011)

9) What income payments are subject to Final Withholding Tax?

a) Income Payments to a Citizen or to a Resident Alien Individual:

- Interest on any peso bank deposit- Royalties - Prizes [except prizes amounting to P10,000 or less which is subject to tax under Sec. 24(A)(1) of the Tax Code]- Winnings (except winnings from Philippine Charity Sweepstake Office and Lotto)- Interest income on foreign currency deposit- Interest income from long term deposit (except those with term of five years or more)- Cash and/or property dividends- Capital Gains presumed to have been realized from the sale, exchange or other disposition of real property

b) Income Payments to a Non-Resident Alien Engaged in Trade or Business in the Philippines

- On Certain Passive Income - cash and/or property dividend - Share in the distributable net income of a partnership- Interest on any bank deposits- Royalties- Prizes (except prizes amounting to P10,000 or less which is subject to tax under Sec. 25(A)(1) of the Tax Code.- Winnings (except from Philippine Charity Sweepstake Office and Lotto)- Interest on Long Term Deposits (except those with term of five years or more)- Capital Gains presumed to have been realized from the sale, exchange or other disposition of real property

c) Income Derived from All Sources Within the Philippines by a Non-Resident Alien Individual Not Engaged in Trade or Business

- On gross amount of income derived from all sources within the Philippines

- On Capital Gains presumed to have been realized from the sale, exchange or disposition of real property located in the Philippines

d) Income Derived by Alien Individual Employed by a Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies, Income Derived by Alien Individual Employed by Offshore Banking Units and Income of Aliens Employed by Foreign Petroleum Service Contractors and Subcontractors

e) Income Payment to a Domestic Corporation

- Interest from any currency bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements derived from sources within the Philippines

- Royalties derived from sources within the Philippines

- Interest income derived from a depository bank under the Expanded Foreign Currency Deposit (FCDU) System

- Income derived by a depository bank under the FCDU from foreign transactions with local commercial banks

- On capital gains presumed to have been realized from the sale, exchange or other disposition of real property located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value as determined in accordance with Sec. 6(E) of the NIRC, whichever is higher

f) Income Payments to a Resident Foreign Corporation

- Offshore Banking Units

- Tax on branch Profit Remittances

- Interest on any currency bank deposits and yield or any other monetary benefit from deposit substitute and from trust funds and similar arrangements and royalties derived from sources within the Philippines

- Interest income on FCDU

- Income derived by a depository bank under the expanded foreign currency deposits system from foreign currency transactions with local commercial banks

g) Income Derived from all Sources Within the Philippines by a Non-Resident Foreign Corporation

- Gross income from all sources within the Philippines such as interest, dividends, rents, royalties, salaries, premiums (except re-insurance premiums), annuities, emoluments or other fixed determinable annual, periodic or casual gains, profits and income or capital gains;

- Gross income from all sources within the Philippines derived by a non-resident cinematographic film owner, lessor and distributor

- On the gross rentals, lease and charter fees derived by a non-resident owner or lessor of vessels from leases or charters to Filipino citizens or corporations as approved by the Maritime Industry Authority

- On the gross rentals, charter and other fees derived by a non-resident lessor of aircraft, machineries and other equipment

- Interest on foreign loans contracted on or after August 1, 1986

h) Fringe Benefits Granted to the Employee (except Rank and File)

- Goods, services or other benefits furnished or granted in cash or in kind by an employer to an individual employee (except rank and file) such as but not limited to the following:

- Housing- Vehicle of any kind- Interest on loans- Expenses for foreign travel- Holiday and vacation expenses- Educational assistance to employees or his dependents- Membership fees, dues and other expense in social and athletic clubs or other - similar organizations- Health insurance

i) Informers Reward

j) Cash or property dividends paid by a Real Estate Investment Trust (REIT) pursuant to Section 13 of RR 13-2011

10) Aside from the required withholding of income tax by government agencies and instrumentalities on their payments to their suppliers of goods and services, what other tax types must be withheld by them.

a) Value Added Tax – on all income payments subject to VAT

b) Percentage Tax – on all payments subject to percentage tax such as payments to the following:

- Any person engaged in business whose gross sales or receipts do not exceed P1,919,500 (RR 3-2012) and who are not VAT-registered persons. (Persons exempt from VAT under Sec. 109V of the Tax Code)

- Domestic carriers and keepers of garages, except owners of bancas and owners of animal drawn two wheeled vehicle

- Operators of international carriers doing business in the Philippines.

- Franchise grantees of electric, gas or water utilities

- Franchise grantees of radio and/or television broadcasting companies whose gross annual receipts of the preceding year do not exceed Ten Million (P10,000,000.00) Pesos and did not opt to register as VAT Taxpayers

- Communication providers with regards to overseas dispatch, messages or conversation from the Philippines

- Banks and non-bank financial intermediaries and finance companies

- Life insurance companies

- Agents of foreign insurance companies

- Proprietor, lessee, or operator of cockpits, cabarets, night or day clubs, videoke/karaoke bars, karaoke television, karaoke boxes, music lounges and other similar establishments, boxing exhibitions, professional basketball games, jai-alai and race tracks

- Winners in horse races or owner of winning race horses

- Every stock broker who effected a sale, barter, exchange or other disposition of shares of stock listed and traded through the Local Stock Exchange (LSE) other than the sale by a dealer in securities

- A corporate issuer/stock broker, whether domestic or foreign, engaged in the sale, barter, exchange or other disposition through Initial Public Offering (IPO) /secondary public offering of shares of stock in closely held corporations

11) Who is a withholding agent?

A withholding agent is any person or entity who is required to deduct and remit the taxes withheld to the government.

12) What are the duties and obligations of the withholding agent?

The following are the duties and obligations of the withholding agent:

a) To Register - withholding agent is required to register within ten (10) days after acquiring such status with the Revenue District office having jurisdiction over the place where the business is located

b) To Deduct and Withhold - withholding agent is required to deduct tax from all money payments subject to withholding tax

c) To Remit the Tax Withheld - withholding agent is required to remit tax withheld at the time prescribed by law and regulations

d) To File Annual Return - withholding agent is required to file the corresponding Annual Information Return at the time prescribed by law and regulations

e) To Issue Withholding Tax Certificates - withholding agent shall furnish Withholding Tax Certificates to recipient of income payments subject to withholding

13) Who are considered TOP 20,000 Corporate Taxpayers?

Top twenty thousand (20,000) private corporations shall include a corporate taxpayer who has been determined and notified by the Bureau of Internal Revenue (BIR) as having satisfied any of the following criteria:

a) Classified and duly notified by the Commissioner as a large taxpayer under Revenue Regulation No. 1-98, as amended, or belonging to the top five thousand (5,000) private corporations under RR 12-94, or to the top ten thousand (10,000) private corporations under RR 17-2003, unless previously de-classified as such or had already ceased business operations (automatic inclusion);

b) VAT payment or payable whichever is higher, of at least P100,000 for the preceding year;

c) Annual income tax due of at least P200,000 for the preceding year;

d) Total percentage tax paid of at least P100,000 for the preceding year;

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

f) Gross purchases of P5,000,000 and above for the preceding year;

g) Total excise tax payment of at least P100,000 for the preceding year.

14) What are the obligations of Top 20,000 Corporate Taxpayers?

a) In addition to the above responsibilities of a withholding agent, Top 20,000 private corporations shall withhold the one percent (1%) creditable expanded withholding tax on the purchase of goods and two percent (2%) on the purchase of services (other than those covered by other withholding tax rates) from local suppliers where it regularly makes purchases. However, casual purchase of goods shall not be subject to withholding tax unless the amount of purchase at any one time involves P10,000 or more, in which case, it shall then be required to withhold the tax. The same rule apply to local/resident supplier of services other than those covered by separate rates of withholding tax. Provided, however, that for purchases involving agricultural products in their original state, the tax required to be withheld shall only apply to purchases in excess of the cumulative amount of P300,000 within the same taxable year. For this purpose, agricultural products in their original state shall only include corn, coconut, copra, palay, rice cassava, sugar cane, coffee, fruits, vegetables, marine food products, poultry and livestocks.

b) Taxes withheld shall be remitted using BIR Form 1601-E on a monthly basis thru the use of the Electronic Filing and Payment System (EFPS) on the dates prescribed for e-filers. Filing shall be done on a staggered basis provided under RR 26-2002 and payment shall be made every 15th day following the end of the month for Jan-Nov and Jan. 20 of the following year for the month of December.

c) Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) shall be issued to the payees within twenty (20) days following the close of such payees’ taxable quarter or upon demand of the payees;

d) A list of regular supplier of goods and/or services shall be submitted on a semestral basis through e-submission facility or as an attachment under Electronic Filing and Payment System (EFPS). Deadline for submission of the list is not later than July 31 and January 31 of each year. However, initial list of regular suppliers should be submitted within fifteen (15) days from actual receipt hereof.

15) Who are considered TOP 5,000 Individual Taxpayers?

Top 5,000 Individual Taxpayers shall refer to individual taxpayers engaged in trade or business or exercise of profession who have been determined and notified by the Bureau of Internal Revenue (BIR) as having satisfied any of the following criteria:

a) VAT payment or payable whichever is higher, of at least P100,000 for the preceding year;

b) Annual income tax due of at least P200,000 for the preceding year;

c) Total percentage tax paid of at least P100,000 for the preceding year;

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

e) Gross purchases of P5,000,000 and above for the preceding year;

f) Total excise tax payment of at least P100,000 for the preceding year.

16) What are the obligations of Top 5,000 Individual Taxpayers?

a) In addition to the obligations of a withholding agent, Top 5,000 Individual Taxpayers shall withhold the one percent (1%) creditable expanded withholding on the purchase of goods and two percent (2%) on the purchase of services (other than those covered by other withholding tax rates) from local suppliers where it regularly makes purchases. However, casual purchase of goods shall not be subject to withholding tax unless the amount of purchase at any one time involves P10,000 or more, in which case, it shall then be required to withhold the tax. The same rule apply to local/resident supplier of services other than those covered by separate rates of withholding tax. Provided, however, that for purchases involving agricultural products in their original state, the tax required to be withheld shall only apply to purchases in excess of the cumulative amount of P300,000 within the same taxable year. For this purpose, agricultural products in their original state shall only include corn, coconut, copra, palay, rice cassava, sugar cane, coffee, fruits, vegetables, marine food products, poultry and livestocks.

b) Taxes withheld shall be remitted under BIR Form 1601-E on a monthly basis thru the Electronic Filing and Payment System (EFPS) facility within the prescribed period.

c) Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307) shall be issued to the payees within twenty (20) days following the close of such payees’ taxable quarter or upon demand of the payees;

d) A list of regular supplier of goods and/or services shall be submitted on a semestral basis through e-submission facility or as an attachment under Electronic Filing and Payment System (EFPS). Deadline for submission of the list is not later than July 31 and January 31 of each year. However, initial list of regular suppliers should be submitted within fifteen (15) days from actual receipt hereof.

17) Who are the responsible officials in the government offices charged with the duty to deduct, withhold and remit withholding taxes?

The following officials are duty bound to deduct, withhold and remit taxes:

a) For Office of the Provincial Government-province- the Chief Accountant, Provincial Treasurer and the Governor;

b) For Office of the City Government-cities- the Chief Accountant, City Treasurer and the City Mayor;

c) For Office of the Municipal Government-municipalities- the Chief Accountant, Municipal Treasurer and the Mayor;

d) Office of the Barangay-Barangay Treasurer and Barangay Captain

e) For NGAs, GOCCs and other Government Offices, the Chief Accountant and the Head of Office or the Official holding the highest position.

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BASIC CONCEPT:

Excise Tax is a tax on the production, sale or consumption of a commodity in a country.

APPLICABILITY:

On goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition; and

On goods imported.

TYPES OF EXCISE TAX:

Specific Tax – refers to the excise tax imposed which is based on weight or volume capacity or any other physical unit of measurement

Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the goods/articles

MANNER OF COMPUTATION:

Specific Tax = No. of Units/other measurements x Specific Tax Rate Ad Valorem Tax = No. of Units/other measurements x Selling Price of any

specific value per unit x Ad Valorem Tax Rate

MAJOR CLASSIFICATION OF EXCISABLE ARTICLES AND RELATED CODAL SECTION:

1. Alcohol Products (Sections 141-143)


a. Distilled Spirits (Section 141)b. Wines (Section 142)c. Fermented Liquors (Section 143)

2. Tobacco Products (Sections 144-146)

a. Tobacco Products (Section 144)b. Cigars & Cigarettes (Section 145)c. Inspection Fee (Section 146)

3. Petroleum Products (Section 148)

4. Miscellaneous Articles (Section 149-150)

a. Automobiles (Section 149)b. Non-essential Goods (Section 150)

5. Mineral Products (Sections 151)

PERSONS LIABLE TO EXCISE TAX:

In General:

a. On Domestic or Local Articles

Manufacturer Producer Owner or person having possession of articles removed from the

place of production without the payment of the tax

b. On Imported Articles

Importer Owner Person who is found in possession of articles which are exempt

from excise taxes other than those legally entitled to exemption

Others:

On Indigenous Petroleum

Local Sale, Barter or Transfer

oo First buyer, purchaser or transferee

Exportation

oo Owner, lessee, concessionaire or operator of the mining

claim

TIME OF PAYMENT:

In General

o

On domestic products

oo Before removal from the place of production

On imported products

oo Before release from the customs' custody

[return to index]

EXCISE TAX RATES:

A. ALCOHOL PRODUCTS

PARTICULARS

NEW TAX RATES based on Republic Act No. 10351

Remarks2018

onwards2013 2014 2015 2016 2017

A. DISTILLED SPIRITS, AD VALOREM & SPECIFIC TAX

1) AD VALOREM TAX RATE - Based on the Net Retail

15% 15% 20% 20% 20% 20%

http://www.bir.gov.ph/index.php/tax-information/excise-tax.html#index

Price (NRP) per proof (excluding the excise and value-added taxes);and

2) SPECIFIC TAX - Per proof liter

Php20 Php20 Php20 Php20.80 Php21.63

Effective 1/1/2016,

the specific tax rate shall be

increased by 4%

every year thereafter

B. WINES, per liter of volume capacity

1) Sparkling wines/ champagnes, where the NRP (excluding the excise and VAT) per bottle of 750ml volume capacity, regardless of proof is:

Effective 1/1/2014,


increased by 4%

every year thereafterPhp500.00 or less Php250 Php260 Php270.40 Php281.22 Php292.47

More than Php500.00 Php700 Php728 Php757.12 Php787.40 Php818.90

2) Still wines and carbonated wines containing 14% of alcohol by volume or less

Php30.00 Php31.20 Php32.45 Php33.75 Php35.10

3) Still wines and carbonated wines containing more than 14% (of alcohol by volume) but not more 25% of alcohol by volume


4) Fortified wines containing more than 25% of alcohol by volume

Taxed as distilled spirits

C. FERMENTED LIQUORS , per liter of volume capacity

1) If the NRP (excluding excise and VAT) per liter of volume capacity is:

Effective 1/1/2018,


increased by 4%


Php 50.60 and below Php15.00 Php17.00 Php19.00 Php21.00 Php23.50

More than Php 50.60 Php20.00 Php21.00 Php22.00 Php23.00 Php23.50

2) If brewed and sold at microbreweries or small establishments such as pubs and restaurants, regardless of the NRP


Effective 1/1/2014,


increased by 4%


NOTE:IN CASE OF FERMENTED LIQUORS AFFECTED BY THE "NO DOWNWARD RECLASSIFICATION " PROVISION, THE 4% INCREASE SHALL APPLY TO THEIR RESPECTIVE APPLICABLE TAX RATES

B. TOBACCO PRODUCTS

PARTICULARS

NEW TAX RATES based on Republic Act No. 10351

Remarks2018

onwards2013 2014 2015 2016 2017

A. TOBACCO PRODUCTS, per kilogram

1. Tobacco Products

(a) Tobacco twisted by hand or reduced into a condition to be

Php1.75 Php1.82 Php1.89 Php1.97 Php2.05 Effective 1/1/2014,

the specific

consumed in any manner other than the ordinary mode of drying and curing;

tax rate shall be

increased by 4%


(b) Tobacco prepared or partially prepared with or without the use of any machine or instrument or without being pressed or sweetened; and


(c) Fine-cut shorts and refuse, scraps, clippings, cuttings, stems, midribs and sweepings of tobacco;


2. Chewing tobacco unsuitable for use in any other manner


B. CIGARS, per cigar

3. Cigars Effective 1/1/2014,


increased by 4%


(a) Based on the NRP per cigar (excluding the excise and value-added taxes), and

20% 20% 20% 20% 20%

(b) Per cigar Php5.00 Php5.20 Php5.41 Php5.62 Php5.85

C. CIGARETTES , per pack

1. Cigarettes packed by hand


Effective 1/1/2018, the specific tax rate shall be increased by 4% every year thereafter

2. Cigarettes packed by machine, where the

NRP (excluding excise and VAT) per pack is:

(a) Php11.50 and below Php12.00 Php17.00 Php21.00 Php25.00 Php30.00

(b) More than Php11.50 Php25.00 Php27.00 Php28.00 Php29.00 Php30.00

INSPECTION FEE - There shall be collected inspection fees on leaf tobacco, scrap, cigars, Cigarettes and other manufactured tobacco and tobacco products as follows:

PRODUCT TYPE INSPECTION FEE

(1) Cigars P 0.50 per thousand pieces or fraction thereof

(2) Cigarettes P 0.10 per thousand sticks or fraction thereof

(3) Leaf Tobacco P 0.02 per kilogram or fraction thereof

(4) Scrap and other manufactured tobacco P 0.03 per kilogram or fraction thereof

C. PETROLEUM PRODUCTS

PRODUCT TYPE TAX RATES

Lubricating oils and greases, including but not limited to base stock for lube oils and greases, high vacuum distillates, aromatic extracts and other similar preparations, and additives for lubricating oils and greases, whether such additives are petroleum based or not

P 4.50 per liter

Processed gas P 0.05 per liter

Waxes and petrolatum P 3.50 per kilogram

Denatured alcohol, if used for motive power [i.e. one hundred eighty (180) proof ninety percent (90%) absolute alcohol]. Provided, that unless otherwise provided by special laws, if the denatured alcohol is mixed with gasoline, the excise tax which has already been paid, only the alcohol content shall be subject to tax

P 0.05 per liter

Naphtha, regular gasoline and other similar products of distillation

P 4.35 per liter

Naphtha used as raw material in the production of petrochemical products or as replacement fuel for natural gas-fired combined cycle power plant, in lieu of locally-extracted natural gas during the non-availability thereof

P 0.00 per liter

Leaded premium gasoline P 5.35 per liter

Unleaded premium gasoline P 4.35 per liter

Aviation turbo jet fuel P 3.67 per liter

Kerosene P 0.00 per liter

Kerosene used as aviation fuel P 3.67 per liter

Diesel fuel oil, and on similar fuel oils having more or less the same generating power

P 0.00 per liter

Liquefied Petroleum Gas ; Provided, that if used for motive power, it shall be taxed at the equivalent rate as the Excise Tax on diesel fuel oil

P 0.00 per liter

Asphalt P 0.56 per kilogram

Bunker fuel oil, and on similar fuel oils having more or less the same generating power

P 0.00 per liter

D. MINERALS AND MINERAL PRODUCTS

PRODUCT TYPE TAX RATES

On coal and coke Ten Pesos (P10.00) per metric ton

All mineral and mineral products (non-metallic), quarry resources

Two percent (2%) bases on the actual market value, in the case of those locally-extracted or produced; and, in the case of importation or the value used by the Bureau of Customs in determining tariff and customs duties, net of Excise Tax and Value-Added Tax.

On locally-extracted natural gas and liquefied natural gas

P0.00

On indigenous petroleum Three percent (3%) of the fair international market price thereof

NOTE:In the case of mineral concentrates not traded in commodity exchanges in the Philippines or abroad, such as copper concentrate, the actual market value shall be the world price quotations of the refined mineral products content thereof prevailing in the said commodity exchanges, after deducting the smelting, refining and other charges incurred in the process of converting the mineral concentrates into refined metal traded in those commodity exchanges.

On minerals and mineral products sold or consigned abroad, the actual cost of ocean freight and insurance shall be deducted from the tax base.

E. AUTOMOBILES AND OTHER MOTOR VEHICLES

OVER UP TO RATE

0 P 600,000 2%

P600,000 P 1,100,000 P 12,000 + 20% in excess of P 600,000

P1,100,000 P2,100,000 P112,000+ 40% in excess of P1,100,000

P2,100,000 over P512,000 + 60% in excess of P2,100,000

F. NON-ESSENTIAL GOODS

Twenty percent (20%) based on the wholesale price or the value of

importation used by the Bureau of Customs in determining Tariff and Customs Duties, net of Excise and Value-Added taxes

[return to index]

I. RELATED REVENUE ISSUANCES

A. ALCOHOL PRODUCTS

RMC 18-2013 Further Clarifying the Taxability of Distilled Spirits Provided under Revenue Memorandum Circular No. 3-2013

RMC 3-2013 Clarifying Certain Provisions of Revenue Regulations No. 17-2012 Implementing the Provisions of Republic Act No. 10351 as well as the Provisions of Revenue Memorandum Circular No. 90-2012 Providing the Initial Tax Classifications of Alcohol and Tobacco Products

RMC 90-2012 Revised Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351

RR 17-2012 Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the Provisions of Existing Revenue Regulations

RR 2-97 Revenue Regulations Governing Excise Taxation on Distilled Spirits, Wines and Fermented Liquors


http://www.bir.gov.ph/images/bir_files/old_files/pdf/67478RMC%20No%2090-2012.pdf




RR 3-2006 Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products pursuant to the Provisions of Republic Act No. 9334, and Clarifying Certain Provisions of Existing Revenue Regulations Relative Thereto

B. TOBACCO PRODUCTS

RMO 23-2013 Guidelines and Procedures for the Implementation of the Electronic Official Register Book (eORB) System

RR 3-2013 Prescribing the Use of Electronic Official Register Book for Manufacturers of Tobacco Products and Regulated Raw Materials

RMC 3-2013 Clarifying Certain Provisions of Revenue Regulations No. 17-2012 Implementing the Provisions of Republic Act No. 10351 as well as the Provisions of Revenue Memorandum Circular No. 90-2012 Providing the Initial Tax Classifications of Alcohol and Tobacco Products

RMC 90-2012 Revised Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351

RR 17-2012 Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the Provisions of Existing Revenue Regulations

RR 3-2006 Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products pursuant to the Provisions of Republic Act No. 9334, and Clarifying Certain Provisions of Existing Revenue Regulations Relative Thereto

RR 1-97 Revenue Regulations Governing the Excise Taxation of Cigars and Cigarettes

C. Petroleum Products

RMC 50-2014 Reiteration and Clarification on the Requirement of Issuance of Withdrawal Certificate for Every Removal of Petroleum or Petroleum Products

RR 2-2012 Tax Administration Treatment of Petroleum and Petroleum Products Imported into the Philippines Including those Coming in Through Freeport Zones and Economic Zones and Registration of All Storage Tanks, Facilities, Depots and Terminals

RR 8-2006 Prescribing the Implementing Guidelines on the Taxation and Monitoring of the Raw Materials Used and the Bioethanol-Blended Gasoline (E-Gasoline) Produced under the Fuel Bioethanol Program of the Department of Energy (DOE)








http://www.bir.gov.ph/images/bir_files/old_files/pdf/68362RR3-2013.pdf



RR 8-96 An Act Restructuring the Excise Tax on Petroleum Products, Reclassifying Natural Gas and Liquefied Natural Gas under Non-Metallic Mineral and Quarry Resources and Reducing the Excise Tax on Indigenous Petroleum

RR 13-77 Petroleum Products Regulation

D. Miscellaneous Articles

D.1 automobiles:

RMO 21-2013 Amending the Provisions of Revenue Memorandum Order (RMO) No. 35-2002, as Amended by RMO No. 20-2006 Prescribing the Guidelines and Procedures in the Processing and Issuance of Authority to Release Imported Goods (ATRIG) for Excise Tax Purposes

RMO 20-2006 Amendment to Certain Sections of RMO No. 35-2002

RMC 60-2003 Clarifying Certain Issues Raised Relative to the Implementation of Revenue Regulations No. 25-2003 Governing the Imposition of Excise Tax on Automobiles Pursuant to Republic Act No. 9224

RR 25-2003 Amended Revenue Regulations Governing the Imposition of Excise Tax on Automobiles pursuant to the Provisions of Republic Act No. 9224, an Act Rationalizing the Excise Tax on Automobiles, Amending for the Purpose the NIRC of 1997, and for Other Purposes

RR 4-2003 Amending Certain Section of Revenue Regulations No. 14-97, as Amended by Revenue Regulations No. 14-99, Otherwise Known as the Revenue Regulations Governing the Imposition of Excise Tax on Automobiles

RR 14-99 Amending Section 2 of Revenue Regulations No. 14-97 Otherwise known as Revenue Regulations Governing the Imposition of Excise Taxes on Automobiles and Other Motor Vehicles

RR 14-97 Revenue Regulations Governing the Imposition of Excise Tax on Automobiles and Other Motor Vehicles

D.2 NON-ESSENTIAL GOODS:

RMC 33-2004 Revised Rules and Regulations Implementing Republic Act No. 8502, Otherwise Known As The “Jewelry Industry Development Act Of 1998”

RMC 17-2002 Green Cross Baby Cologne and All Other Cologne Products

RR 1-99 Rules and Regulations Implementing the Tax Incentives Provided under Section 3 (b) and (d) of Republic Act No. 8502 Otherwise known as the








http://www.bir.gov.ph/images/bir_files/old_files/pdf/31154RMO%2020-2006%20corrected%20version.pdf



“Jewelry Industry Development Act of 1998”

RR 8-84 Cosmetic Products Regulations

E. MINERAL PRODUCTS

RR 7-2008 Taxation on the Sale to the Bangko Sentral ng Pilipinas of Gold and Other Metallic Mineral Products Extracted or Produced by Small-scale Miners and further Amending Section 2.57.2 (t) of Revenue Regulations No. 2-98, as amended

RR 13-94 Revenue Regulations Governing the Imposition of Excise Tax on Minerals and Mineral Products

F. OTHERS (COMMON ISSUANCES FOR ALL EXCISABLE PRODUCTS)

RMO 14-2014 Guidelines and Procedures for the Processing and Issuance of An Electronic Authority to Release Imported Goods (eATRIG) for Excise Tax Purposes

RMC 10-2013 Transition Procedures for all Electronic Filing and Payment System (eFPS) Filers in Filing Tax Returns Affected by the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the provisions of Republic Act No. 10351, “An Act Restructuring the Excise Tax on Alcohol and Tobacco Products by Amending Sections 141, 142, 143, 144, 145, 8, 131 and 288 of Republic Act No. 8424, Otherwise Known as the National Internal Revenue Code of 1997, as Amended by republic Act No. 9334, and for Other Purposes

RMO 38-2003 Prescribing Uniform Guidelines and Procedures in the Processing of Various Permits for Excise Tax Purposes

RMO 35-2002 Prescribing the Guidelines and Procedures in the Processing and Issuance of Authority to Release Imported Goods (ATRIG) for Excise and Value-Added Tax Purposes

[return to index]

II. CODAL REFERENCE:

PARTICULARSECTION IN THE NIRC OF 1997,

AS AMENDED

ALCOHOL PRODUCTS 141-143





http://www.bir.gov.ph/images/bir_files/old_files/pdf/84389RMO%20No%2014-2014.pdf


TOBACCO PRODUCTS 144-147

PETROLEUM PRODUCTS 148

MISCELLANEOUS ARTICLES 149-150

MINERAL PRODUCTS 151

[return to index]


Taxation Bir Website

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