Income Tax, VAT, Other Percentage Tax, Withholding g g Taxes 18 July 2012 Discussion Outline Income Tax General Principles Taxability of Individuals Taxability of Individuals Taxability of Corporations Gross Income Allowable Deductions from Gross Income Unallowable Deductions from Gross Income Filing of Returns and Administrative Requirements July 18, 2012 Slide 2 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 2 Discussion Outline Value-Added Tax General Principles Input VAT on Capital Goods p p Treatment of Excess Input VAT Filing of Returns and Administrative Requirements Other Percentage Taxes Persons Subject to Percentage Tax and Percentage Tax Rates Filing of Returns and Administrative Requirements Withholding Taxes Nature of Different Common Withholding Taxes July 18, 2012 Slide 3 Taxes Common to Taxpayers Nature of Different Common Withholding Taxes Withholding Agents Withholding Tax Rates Filing of Returns and Administrative Requirements Income Tax July 18, 2012 Slide 4 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 3 General Principles July 18, 2012 Slide 5 Taxes Common to Taxpayers Individuals Resident citizen: taxable on all income derived from sources within and without the Philippines N id t iti t bl l i d i d f ithi General Principles Non-resident citizen: taxable only on income derived from sources within the Philippines Corporations Domestic corporation - taxable on all income derived from sources within and without the Philippines Foreign Corporations (resident and non-resident) taxable only on Philippine sourced income July 18, 2012 Slide 6 Taxes Common to Taxpayers Philippine-sourced income July 18, 2012 Taxes Common to Taxpayers Page 4 Taxability of Individuals July 18, 2012 Slide 7 Taxes Common to Taxpayers Graduated tax rates: Taxability of Individuals Over But Not Over Amount / Rate Of Excess Over Not over 10,000 5% - 10,000 30,000 500 + 10% 10,000 30,000 70,000 2,500 + 15% 30,000 70,000 140,000 8,500 + 20% 70,000 140,000 250,000 22,500 + 25% 140,000 250,000 500,000 50,000 + 30% 250,000 500,000 over 125,000 + 32% 500,000 July 18, 2012 Slide 8 Taxes Common to Taxpayers Married individuals: Husband and Wife compute separately individual income tax Income which cannot be directly attributed to either of the spouse, divided equally between them. July 18, 2012 Taxes Common to Taxpayers Page 5 Personal exemptions: Basic personal exemption - P50,000 for each individual taxpayer Additional personal exemption - P25,000 for each dependent Taxability of Individuals not exceeding four (4) Husband proper claimant of additional personal exemption for children except: a. Husband is unemployed b. Husband is non-resident citizen deriving income from foreign sources c Husband waives his right to claim the exemptions of children July 18, 2012 Slide 9 Taxes Common to Taxpayers c. Husband waives his right to claim the exemptions of children (waiver should be for all children) in a sworn statement to be attached to his Application for Registration (BIR Form No. 1902) and that of his wife's Interests, royalties, prizes and other winnings 20% final tax, except if prizes does not exceed P10,000 Royalties on books literary works and musical compositions 10% final tax Passive Income Subject to Final Tax for Individuals tax Interest income received by an individual taxpayer from a depository bank under the expanded foreign currency deposit system 7.5% final tax Interest income from long term investment held for more than 5 years and in accordance with the prescribed rules exempt Cash and/or property dividends 10% final tax Capital gains from sale of shares of stocks not traded in the stock exchange 5% for not over P100,000 and 10% for in excess of P100,000 July 18, 2012 Slide 10 Taxes Common to Taxpayers g , , Capital gains from sale of real property 6% based on the gross selling price or current fair market value, whichever is higher. July 18, 2012 Taxes Common to Taxpayers Page 6 Taxability of Corporations July 18, 2012 Slide 11 Taxes Common to Taxpayers Domestic corporation: 30% Regular Corporate Income Tax (RCIT) Taxability of Corporations based on taxable income derived during each taxable year from all sources within and without the Philippines. 2% Minimum Corporate Income Tax (MCIT) Applicable if greater than 30% RCIT Beginning on the fourth taxable year immediately following the year in which such corporation commenced its operation. July 18, 2012 Slide 12 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 7 2% MCIT (contd): Excess MCIT over RCIT Carried forward and credited against the normal income tax for the three (3) i di t l di t bl Taxability of Corporations (3) immediately succeeding taxable years. Secretary of Finance - authorized to suspend imposition of MCIT on any corporation which suffers losses on account of prolonged labor dispute, or because of force majeure, or because of legitimate business reverses. Computed in quarterly income tax return and annual income tax return. July 18, 2012 Slide 13 Taxes Common to Taxpayers Interests, royalties, prizes and other winnings 20% final tax Interest income received by an domestic corporation from a depository bank under the expanded foreign currency deposit system 7.5% final tax I t t di id d di id d i d b d ti ti Passive Income Subject to Final Tax for Corporations Intercorporate dividends dividends received by a domestic corporation from another domestic corporation shall not be subject to tax Capital gains from sale of shares of stocks not traded in the stock exchange a final tax on the net capital gains realized as follows: Not over P100,000 5% Amount in excess of P100,000 10% Capital gains from sale of real property 6% based on the gross selling price or current fair market value whichever is higher July 18, 2012 Slide 14 Taxes Common to Taxpayers price or current fair market value, whichever is higher. July 18, 2012 Taxes Common to Taxpayers Page 8 10% of the improperly accumulated taxable income Applies to every corporation formed or availed for the purpose of avoiding th i t ith t t it h h ld th h h ld f 10% Improperly Accumulated Earnings Tax (IAET) the income tax with respect to its shareholders or the shareholders of any other corporation by permitting earnings and profits to accumulate instead of being divided or distributed. Exempt from IAET Banks and other non-bank financial intermediaries Insurance companies P bli l h ld ti July 18, 2012 Slide 15 Taxes Common to Taxpayers Publicly-held corporations Taxable partnerships Exempt from IAET (contd): Non-taxable joint ventures PEZA-registered enterprises 10% Improperly Accumulated Earnings Tax (IAET) BCDA-registered enterprises Other entities registered under special economic zones enjoying special tax rates on their registered operations or activities in lieu of other taxes, national or local Branches of a foreign corporation or resident foreign corporation. Closely-held corporations July 18, 2012 Slide 16 Taxes Common to Taxpayers Corporations at least 50% in value of the outstanding capital stock or at least 50% of the total combined voting power of all classes of stock entitled to vote is owned directly or indirectly by or for not more than 20 individuals. Domestic corporations not falling under this definition considered publicly- held corporations. July 18, 2012 Taxes Common to Taxpayers Page 9 Evidence of purpose to avoid income tax: Prima Facie Evidence Mere holding company or investment company 10% Improperly Accumulated Earnings Tax (IAET) Evidence Determinative of Purpose Earnings or profits of a corporation are permitted to accumulate beyond the reasonable needs of the business (i.e., retained earnings is in excess of 100% of paid up capital) unless proven to the contrary. Paid-up capital July 18, 2012 Slide 17 Taxes Common to Taxpayers Par value of the shares of stock (RMC No. 35-2011) Gross Income July 18, 2012 Slide 18 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 10 All income derived from whatever source, except certain items as provided by the Tax Code, including (but not limited to) the following: Compensation for services in whatever form paid, including, but not limited to fees, salaries, wages, commissions, and similar items Gross Income Gross income derived from the conduct of trade or business or the exercise of a profession Gains derived from dealings in property Interests (except those already subject to final tax or exempt from income tax) Rents Royalties Dividends (except those already subject to final tax or exempt from income tax) July 18, 2012 Slide 19 Taxes Common to Taxpayers Annuities Prizes and winnings (except those already subject to final tax or exempt from tax) Pensions Partner's distributive share from the net income of the general professional partnership. Exclusions: Life insurance however, interests, if any, shall be included in the gross income Amounts received by the Insured as return of premiums paid under life insurance Gift b t d d i Gross Income Gifts, bequests and devices Compensation for injuries and sickness including the amounts of any damages received, whether by suit or agreement, on account of such injuries and sickness Income exempt under Treaty Retirement benefits, pensions, gratuities, etc. Prizes and awards provided that the recipient was selected without any action on his part to enter the contest or proceeding and the recipient is not required to render substantial future services as a condition to receiving the prize or award July 18, 2012 Slide 20 Taxes Common to Taxpayers g p Gains from the sale of bonds, debentures or other certificate of indebtedness with a maturity of more than 5 years (applicable to individuals only) Gains from redemption of shares in mutual fund July 18, 2012 Taxes Common to Taxpayers Page 11 Allowable Deductions from Gross Income July 18, 2012 Slide 21 Taxes Common to Taxpayers Expenses Ordinary and necessary expenses paid or incurred during the taxable year Directly attributable to, the development, management, operation and/or d t f th t d b i i f f i Allowable Deductions from Gross Income conduct of the trade, business or exercise of a profession Interests Paid or incurred during the taxable year Related to indebtedness in connection with the taxpayer's profession, trade or business July 18, 2012 Slide 22 Taxes Common to Taxpayers If taxpayer has interest income subject to final tax Amount of interest expense reduced by 33% of such interest income. Interests paid to related parties not allowable deduction July 18, 2012 Taxes Common to Taxpayers Page 12 Taxes Paid or incurred within the taxable year Related to taxpayer's profession, trade or business Allowable Deductions from Gross Income Exception Income tax under Title II of the Tax Code Income taxes imposed by authority of any foreign country Estate and donors taxes Taxes assessed against local benefits of a kind tending to increase the value of the property assessed. July 18, 2012 Slide 23 Taxes Common to Taxpayers Taxes allowed as deduction (e.g., not among the exceptions above) are refunded or credited Part of gross income in the year of receipt subject to tax benefit doctrine Losses actually sustained during the taxable year not compensated for by insurance or other forms of indemnity Allowable Deductions from Gross Income Incurred in trade or business Property connected with trade or business (loss arising from fires, storms, shipwreck, or other casualties, or from robbery, etc.) Sworn declaration of loss submit to BIR within 45 days from discovery of the casualty or robbery, theft or embezzlement Net Operating Loss Carry-Over (NOLCO) deductible for the next 3 ti t bl i di t l f ll i th f h l July 18, 2012 Slide 24 Taxes Common to Taxpayers consecutive taxable years immediately following the year of such loss. Provided: taxpayer is not exempt from income tax during the year of the loss, and no substantial change in ownership of the business or enterprise July 18, 2012 Taxes Common to Taxpayers Page 13 Capital losses Deductible up to the extent of capital gains Individuals: any excess capital losses over the capital gains (in an amount not in excess of the net income for such year) after Allowable Deductions from Gross Income amount not in excess of the net income for such year), after considering the allowable percentage of deduction, may be carried over for not more than 12 months. Wash sales of stocks or securities Wagering losses Arising from wagers/betting games (other than those already subject to other percentage tax, such as illegal gambling, endings, etc.) Deductible only up to the extent of gains from such transaction July 18, 2012 Slide 25 Taxes Common to Taxpayers y p g Abandonment losses Depreciation Depletion of oil and gas wells and mines Charitable and other contributions Allowable Deductions from Gross Income Individuals not in excess of 10% of taxable income before donation Corporations not in excess of 5% of taxable income before donation Deductible in full donations to: Government Certain foreign institutions or international organization Accredited nongovernment organization subject to compliance with certain requirements July 18, 2012 Slide 26 Taxes Common to Taxpayers Certificate/s of Donation required as proof for deductibility July 18, 2012 Taxes Common to Taxpayers Page 14 Research and development Pension trusts Allowable Deductions from Gross Income Additional requirements for deductibility of certain payments properly subjected to appropriate withholding taxes (e.g., expanded withholding tax, final withholding tax, etc.) Optional Standard Deduction (OSD) July 18, 2012 Slide 27 Taxes Common to Taxpayers Available to: Individuals subject to the graduated tax rates (i.e., individuals who does not purely derive income from compensation) 40% of his gross sales or gross receipts 40% Optional Standard Deduction (OSD) g g p Corporations 40% of its gross income. Intention to avail of the OSD must be disclosed in 1 st quarter ITR Irrevocable for the taxable year Individuals availing of OSD not required to submit financial statements as attachment to ITR Records pertaining to gross sales/receipts or gross income must still be kept July 18, 2012 Slide 28 Taxes Common to Taxpayers Records pertaining to gross sales/receipts or gross income must still be kept July 18, 2012 Taxes Common to Taxpayers Page 15 Unallowable Deductions from Gross Income July 18, 2012 Slide 29 Taxes Common to Taxpayers Personal, living or family expenses Any amount paid out for new buildings or for permanent improvements, or betterments made to increase the value of any property or estate Any amount expended in restoring property or in making good the exhaustion Unallowable Deductions from Gross Income Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person financially interested in any trade or business carried on by the taxpayer, individual or corporate, when the taxpayer is directly or indirectly a beneficiary under such policy Losses from sales or exchanges of property directly or indirectly Between members of a family July 18, 2012 Slide 30 Taxes Common to Taxpayers Between an individual and a corporation more than 50% in value of the outstanding stock of which is owned by the individual July 18, 2012 Taxes Common to Taxpayers Page 16 Filing of Returns and Administrative Requirements July 18, 2012 Slide 31 Taxes Common to Taxpayers Individuals (contd): Where to file AAB, RDO, Collection Agent 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 be no legal residence Filing of Returns and Administrative Requirements p p p pp , g or place of business in the Philippines, with the Office of the Commissioner. When to file and pay: Declaration of income tax Every individual receiving self-employment income On or before April 15 of the same taxable year. July 18, 2012 Slide 32 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 17 Individuals (contd): When to file and pay (contd): Quarterly income tax return payment shall be made in 4 installments. 1 st installment: at the time of the declaration (on or before April 15) Filing of Returns and Administrative Requirements 1 installment: at the time of the declaration (on or before April 15) 2 nd installment: on or before August 15 of the current year 3 rd installment: on or before November 15 of the current year 4 th installment: on or before April 15 of the following calendar year Annual income tax return - Lump sum payment: on or before April 15 of the following calendar year Installment payment: applicable if tax due is in excess of P2,000 July 18, 2012 Slide 33 Taxes Common to Taxpayers p y pp , 1 st installment: at the time the return is filed 2 nd installment: on or before July 15 following the close of the calendar year. Individuals (contd): Married individuals, whether citizens, resident or nonresident aliens, who do not derive income purely from compensation file a return for the taxable year to include the income of both spouses, Filing of Returns and Administrative Requirements y p , If impracticable for the spouses to file one return each spouse may file a separate return of income BIR shall consolidate the filed returns for verification Income of unmarried minors derived from property received from a living parent shall be included in the return of the parent, except: when the donor's tax has been paid on such property July 18, 2012 Slide 34 Taxes Common to Taxpayers p p p y when the transfer of such property is exempt from donor's tax July 18, 2012 Taxes Common to Taxpayers Page 18 Corporations: Deadline for filing and payment: Quarterly income tax return (BIR Form No. 1702Q): 60 days after the close of each of the first 3 quarters of the taxable year Filing of Returns and Administrative Requirements close of each of the first 3 quarters of the taxable year. Annual income tax return (BIR Form No. 1702): 15 th day of the 4 th month following the end of the year Required attachments upon filing to the BIR: Audited financial statements Statement of Management Responsibility Original copies of creditable withholding taxes (CWT), if any H d ft f th l h li t f ithh ldi t (SAWT) July 18, 2012 Slide 35 Taxes Common to Taxpayers Hard or softcopy of the summary alphalist of withholding taxes (SAWT), as applicable Other supporting schedules, if applicable Value Added Tax (VAT) July 18, 2012 Slide 36 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 19 General Principles July 18, 2012 Slide 37 Taxes Common to Taxpayers Imposed on any person who sells, barters, exchanges, leases goods or properties and renders services in the course of trade or business Imposed on any person who imports goods. General Principles Indirect tax- amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. In the course of trade or business (Rule of Regularity) regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person or government entity. Incidental something necessary, appertaining to, or depending upon another which is termed the principal, something incident to the main July 18, 2012 Slide 38 Taxes Common to Taxpayers purpose. Annual sales and/or receipts does not exceed P1,919,500 not subject to VAT, but subject to percentage tax. July 18, 2012 Taxes Common to Taxpayers Page 20 VAT Rates Taxable General Rate: 12% S i l R t 0% General Principles Special Rate: 0% Exempt Zero-rated Sales Exempt Sales Subject to VAT at 0% rate. Not subject to VAT Input taxes allocable/ attributable to the zero-rated sale may be claimed as Input taxes allocable/ attributable to th VAT t l t b July 18, 2012 Slide 39 Taxes Common to Taxpayers the zero-rated sale may be claimed as input tax credit the VAT exempt sale cannot be claimed as input tax credit but shall form part of costs. VAT Base Sale of goods gross selling price General Principles Less: sales returns and allowances and sales discounts Add: charges for packaging, delivery & insurance Add: excise taxes if goods are subject to excise tax Sale of services gross receipts July 18, 2012 Slide 40 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 21 VAT invoice for sale, barter or exchange of goods or properties VAT OR for lease of goods or properties, and every sale, barter or exchange of services The amount of VAT shall be shown as a separate item in the invoice or Substantiation Requirements The amount of VAT shall be shown as a separate item in the invoice or receipt VAT-exempt sale shall be written or printed prominently on the invoice or receipt for VAT exempt transactions Zero-rated sale shall be written or printed prominently on the invoice or receipt for zero-rated transactions July 18, 2012 Slide 41 Taxes Common to Taxpayers Domestic purchases of goods or properties made in the course of trade or business VAT invoice Domestic purchase of services VAT OR Importation Original import entry internal revenue declaration (IEIRD) or Supporting documents for claiming input tax Importation Original import entry internal revenue declaration (IEIRD) or other equivalent document showing actual payment of VAT on importation Transitional input tax inventory of goods as shown in a detailed list to be submitted to the BIR Deemed sale transactions required invoices Payments to non-residents (such as for services, rentals or royalties) Monthly WVAT Return (BIR Form 1600) filed by the resident payor in behalf of the non-resident evidencing remittance of VAT due which was withheld by July 18, 2012 Slide 42 Taxes Common to Taxpayers the payor July 18, 2012 Taxes Common to Taxpayers Page 22 Input VAT on Capital Goods July 18, 2012 Slide 43 Taxes Common to Taxpayers Computation of input tax if the aggregate acquisition cost (exclusive of VAT) in a calendar month, regardless of acquisition cost of each capital good, shall: Exceed P1 million: - If estimated useful life of a capital good is 5 years or more: Input VAT on depreciable Capital Goods - If estimated useful life of a capital good is 5 years or more: - If estimated useful life of a capital good is less than 5 years NOT d P1 illi Months 60 Tax Input Total Tax Input Monthly Months in Life Useful Estimated Tax Input Total Tax Input Monthly July 18, 2012 Slide 44 Taxes Common to Taxpayers NOT exceed P1 million: - Total input tax allowed as credit against output tax in the month of acquisition July 18, 2012 Taxes Common to Taxpayers Page 23 Treatment of Excess Input VAT July 18, 2012 Slide 45 Taxes Common to Taxpayers Carried-over Claimed as Refund Claimed as Tax Credit Certificate (TCC) Treatment of Excess Input VAT Period of application: Zero-rated and effectively zero-rated sales Within 2 years after the close of taxable quarter when such sales were made Cancellation of VAT registration Registration is cancelled due to retirement from, cessation of business, or d t h i ti f t t VAT t July 18, 2012 Slide 46 Taxes Common to Taxpayers due to changes in or cessation of status as VAT taxpayer Within 2 years from date of cancellation July 18, 2012 Taxes Common to Taxpayers Page 24 Filing of Returns and Administrative Requirements July 18, 2012 Slide 47 Taxes Common to Taxpayers If manual: Monthly VAT declaration: within 20 days following the end of each month Quarterly VAT return: within 25 days following the close of each taxable quarter Filing of Returns and Administrative Requirements q Quarterly returns should reflect the cumulative totals of the sales, purchases, output tax and input tax for the taxable quarter Withholding VAT return: on the 10 th day of the following month If through Electronic Filing and Payment System (EFPS): Monthly VAT declaration: Filing: depends on the industry classification of the taxpayer July 18, 2012 Slide 48 Taxes Common to Taxpayers g p y p y Payment: 25 days from the end of the month Quarterly VAT return: same as the deadline for manual Withholding VAT return: same as the deadline for manual July 18, 2012 Taxes Common to Taxpayers Page 25 Quarterly Summary Lists of Sales (QSLS) and Quarterly Summary Lists of Purchases (QSLP) are required for the following: Persons liable for VAT Filing of Returns and Administrative Requirements Persons liable for VAT Before January 1, 2012 Required for taxpayers with quarterly purchases not exceeding P1,000,000 and quarterly sales not exceeding P2,500,000 are not required to submit QSLS/P Beginning January 1, 2012 All taxpayers July 18, 2012 Slide 49 Taxes Common to Taxpayers Manner of Submission: Manual: USB/CD/DVD to the RDO or LTDO or LTAD Filing of Returns and Administrative Requirements USB/CD/DVD to the RDO or LTDO or LTAD within 25 days following the close of each taxable quarter EFPS Through EFPS within 30 days following the close of each taxable quarter July 18, 2012 Slide 50 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 26 Other Percentage Taxes July 18, 2012 Slide 51 Taxes Common to Taxpayers Tax on persons exempt from VAT Gross annual sales and/or receipts do not exceed P1,500,000, and not VAT-registered Th h ld i d f P1 500 000 t P1 919 500 b i i Persons Subject to Percentage Tax and the Applicable Percentage Tax Rates Threshold increased from P1,500,000 to P1,919,500 beginning January 1, 2012 pursuant to RR No. 11-2011 Cooperatives exempt from the 3% gross receipts tax. Rate: 3% of his gross monthly sales or receipts July 18, 2012 Slide 52 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 27 Filing of Returns and Administrative Requirements July 18, 2012 Slide 53 Taxes Common to Taxpayers Payment: not be later than the 20 th day following the end of each month. For person retiring from a business notify nearest RDO, file return and pay the tax due thereon within 20 days after closing of business Filing of Returns and Administrative Requirements Filing shall be made with: Authorized Agent Bank (AAB) within the territorial jurisdiction of the Revenue District Office where the taxpayer is required to register/conducting business. In case no AABs with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer within the Revenue District Office where the taxpayer is required to register/conducting business. Consolidated return for head office and branches July 18, 2012 Slide 54 Taxes Common to Taxpayers Consolidated return for head office and branches Required for large taxpayers Others may opt to file either consolidated or individual returns July 18, 2012 Taxes Common to Taxpayers Page 28 Withholding Taxes July 18, 2012 Slide 55 Taxes Common to Taxpayers Different Kinds of Common Withholding Taxes Kinds Expanded Withholding Tax Nature Income tax withheld on income payments creditable against income t d f Final Withholding Tax Withholding Value-Added Tax (VAT) Fringe Benefit Tax tax due from payee Income tax withheld on income payments full payment of income tax due from payee VAT withheld may be final or creditable against VAT liability of payee Income tax withheld on benefits of ffi f ll t f l t d July 18, 2012 Slide 56 Taxes Common to Taxpayers Fringe Benefit Tax Withholding Tax on Wages officers full payment of related income tax due from officers Income tax withheld on compensation of employees payment of income tax due on compensation to employees July 18, 2012 Taxes Common to Taxpayers Page 29 Who are Withholding Agents? Who are Withholding Agents? Any juridical person, whether or not engaged in trade or business; An individual, with respect to payments made in connection with his trade or business trade or business. In exchanges or transfers of real property, the buyers, whether or not engaged in trade or business, are constituted as withholding agents. In any case, no Certificate Authorizing Registration (CAR)/ Tax Clearance Certificate (TCC) shall be issued to the buyer unless the withholding tax due on the sale, transfer or exchange of property has been duly paid. All government offices including government owned or controlled July 18, 2012 Slide 57 Taxes Common to Taxpayers All government offices including government-owned or controlled corporations, as well as provincial, city, and municipal governments and barangays; Agents, employees, or any person purchasing goods or services/paying for and in behalf of the aforesaid withholding agents Provided that the ORs of payment/sales invoice shall be issued in Who are Withholding Agents? Who are Withholding Agents? the name of the person whom the former represents and the corresponding certificate of taxes withheld (BIR Form No. 2307) shall immediately be issued upon withholding of the tax. (RR 30- 03 dated December 12, 2003) Person having control over the payment and who, at the same time, claims the expenses July 18, 2012 Slide 58 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 30 When the obligation to withhold arises When the obligation to withhold arises At the time an income payment is: Paid, or Payable, or y , Accrued or recorded as an expense or asset, whichever is applicable, in the payors books whichever comes first (Section 2.57.4 of RR No. 2-98 as amended by Section 4 of RR No. 12-2001) July 18, 2012 Slide 59 Taxes Common to Taxpayers Expanded Withholding Tax (EWT) July 18, 2012 Slide 60 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 31 Basic Principles Basic Principles Only payments enumerated under the EWT regulations are subject to EWT. Payee and the payor must be residents of the Philippines (except payments to non-resident aliens engaged in trade or business in the Philippines). N t fi l t Not a final tax. EWT Base: Gross billing on payments made to a Non-VAT registered supplier of goods or services; Gross amount paid exclusive or net of VAT on payments made to a VAT-registered supplier of goods and services CWT Certificate (BIR Form 2307) July 18, 2012 Slide 61 Taxes Common to Taxpayers CWT Certificate (BIR Form 2307) Furnished in triplicate within 20 days following the close of the taxable quarter employed by the payee in filing his/its quarterly ITR unless requested by the payee to be submitted simultaneously with the income payment. Payments to which entities are not subject to withholding Payments to which entities are not subject to withholding Section 2.57.5 of RR 2-98 A. National government and its instrumentalities and barangays except government-owned and controlled corporations. B. Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following: 1. Sales of real property by a corporation which is registered with and certified by the Housing and Land Use Regulatory Board (HLURB) or HUDCC as engaged in socialized housing project where the selling price of the house and lot or only the lot does not exceed P180,000 in Metro Manila and other highly urbanized areas and P150,000 in other areas or such adjusted amount of selling price for socialized July 18, 2012 Slide 62 Taxes Common to Taxpayers P150,000 in other areas or such adjusted amount of selling price for socialized housing as may later be determined and adopted by the HLURB, as provided under R.A. No. 7979 and its implementing regulations (Underscored phrase amendment introduced by RR No. 14-2002) July 18, 2012 Taxes Common to Taxpayers Page 32 2. Corporations duly registered with the BOI, PEZA and SBMA enjoying exemption from income tax 3. Corporations which are exempt from the income tax under Section 30 of the Tax Code: Government Service Insurance System (GSIS); Payments to which entities are not subject to withholding Payments to which entities are not subject to withholding Government Service Insurance System (GSIS); Social Security System (SSS); Philippine Health Insurance Corporation (PHIC); Philippine Charity Sweepstakes Office (PCSO); and However, the income payments arising from any activity which is conducted for profit or income derived from real or personal property shall be subject to a withholding tax as prescribed in these regulations. 4. General Professional Partnerships (RR 14-2002) 5 Joint ventures or consortia formed for the purpose of undertaking construction July 18, 2012 Slide 63 Taxes Common to Taxpayers 5. Joint ventures or consortia formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal & other energy operations pursuant to an operating or consortium agreement under a service contract with the government (RR 14-2002) (Underscored phrase amendment introduced by RR No. 14-2002) EWT Rates EWT Rates Payee Tax Base Tax Rate Taxable Individuals Gross professional, promotional and talent fees, or any other form of 15 %* -- if the current years gross income of payee exceeds y remuneration (Fees, per diems, allowances, and any other form of income payments NOT subject to withholding tax on compensation) p y P 720,000 10 %* -- if the current years gross income of payee does not exceed P 720,000 10% - if without sworn declaration stating that his gross income has exceeded P720,000 July 18, 2012 Slide 64 Taxes Common to Taxpayers 15% - if without sworn declaration that its gross income did not exceed P720,000 starting July 1 15% - for the subsequent payments if accumulated payments within the year exceeding P720,000 to a particular payee, July 18, 2012 Taxes Common to Taxpayers Page 33 EWT Rates EWT Rates Payee Tax Base Tax Rate Taxable Juridical Persons Gross professional, promotional and talent fees or any other form f i f 15% -- if the current years gross income of payee exceeds P 20 000 of remuneration for services P720,000 10% -- if the current years gross income of payee does not exceed P720,000 (refer to previous slide) Lessors of: a Real Properties Gross rental 5% July 18, 2012 Slide 65 Taxes Common to Taxpayers a. Real Properties b. Personal Properties c. Poles, satellites, and transmission facilities d. Billboards Gross rental 5% Rentals of Real Properties
Income Payments EWT Application Rentals of Real Property 5% Rentals of Real Property 5% 1. Advance Rentals Subject to EWT at the time of payment (RR No. 2-98, as amended) 2. Subsequent Rental Payments Subject to EWT at the time paid, payable, or accrued (last month of the quarter claimed as expense), whichever comes first (RR No. 2-98, as amended) 3.
Security Deposits Subject to EWT at the time applied as rentals July 18, 2012 Slide 66 Taxes Common to Taxpayers y p (BIR Ruling UN-042-2-8-94 dated January 24, 1988) 4. Real Property Taxes If paid by the lessee in behalf of the lessor subject to EWT (RR No. 2)
July 18, 2012 Taxes Common to Taxpayers Page 34 EWT Rates EWT Rates Payee Tax Base Tax Rate Cinematographic film owners lessor or Gross payment 5% owners, lessor, or distributors, whether individual or corporate General Engineering/ Building/ Specialty Contractors Gross payment 2% Other Contractors Gross payment 2% July 18, 2012 Slide 67 Taxes Common to Taxpayers p y RMC No. 39-2007 dated January 22, 2007 RMC No. 39-2007 dated January 22, 2007 Tax Type Treatment Tax treatment of agency fees and salaries of security guards Income Tax Agency fees and salaries of the guards - deductible from gross income (subject to withholding tax rules) Amount deductible should be net of VAT (except if taxpayer is not VAT registered) Value-Added Tax Can claim input tax on agency fees, if supported by VAT ORs (except if taxpayer is non-VAT) Generally, no input VAT claimable on salaries of the guards July 18, 2012 Slide 68 Taxes Common to Taxpayers Withholding Tax Agency fee subject to 2% EWT Salaries of guards not subject to EWT if certain conditions are met July 18, 2012 Taxes Common to Taxpayers Page 35 EWT Rates EWT Rates Payee Tax Base Tax Rate Customs, insurance, stock, real estate, immigration and Gross commissions or service fees (RR 17-2003) 10% immigration and commercial brokers and agents of professional entertainers 17-2003) Business establishments on payments made by credit card companies for sale of goods/services by each business entity to dh ld One-half (1/2) of gross payments 1% July 18, 2012 Slide 69 Taxes Common to Taxpayers cardholders EWT Rates EWT Rates Payee Tax Base Tax Rate Medical practitioners (including doctors of medicine veterinarians Professional fees 15% -- if the income payments to medical practitioner exceeds medicine, veterinarians and dentists) practitioner exceeds P720,000 10% -- if the income payments to medical practitioner does not exceed P720,000 July 18, 2012 Slide 70 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 36 EWT Rates EWT Rates Payee Tax Base Tax Rate Income payments by Top 20,000 private corporations* to their local/resident suppliers of their local/resident suppliers of goods and services other than those covered by other rates of withholding tax a. Supplier of goods Gross Selling Price, or total amount of goods or its equivalent 1% July 18, 2012 Slide 71 Taxes Common to Taxpayers b. Supplier of goods Gross Payments 2% * If notified by the BIR as Top 20,000 Corporation (TTC) Payments to Meralco by TTC/GO/LT- EWT base: current amount due appearing in the billing statement. Payments to telecommunication companies by TTC/GO/LT on overseas dispatch message or con ersation originating in the Philippines EWT Clarifications in RMC No. 72-2004 EWT Clarifications in RMC No. 72-2004 dispatch, message or conversation originating in the Philippines EWT rate: 2% EWT base: amount paid less the overseas communications tax. Payment to Meralco and telecommunications companies by the TTC/GO/LT EWT rate: 2% as payment for services Payment for movie/concert tickets EWT t 2% t f i July 18, 2012 Slide 72 Taxes Common to Taxpayers EWT rate: 2% as payment for services Payment of interest on bank loans by the TTC/GO/LT and other fees paid to the bank EWT rate: 2% July 18, 2012 Taxes Common to Taxpayers Page 37 Payments for life and non-life insurance premium by the TTC/GO/LT to domestic/resident foreign insurance companies EWT rate: 2% as payment for services P i t t i i th h b k t EWT Clarifications in RMC No. 72-2004 EWT Clarifications in RMC No. 72-2004 Premium payments to insurance companies through brokers or agents or any other person authorized to receive/collect payment on behalf of the insurance company EWT rate: 2% Withholding agent: payor or person having control over the payment. However, payor is required to issue the certificate of taxes withheld (BIR Form No. 2307) in the name of the insurance company, not in the name of the insurance broker. July 18, 2012 Slide 73 Taxes Common to Taxpayers Payment made to Health Maintenance Organizations (HMOs) by TTC/GO/LT EWT rate: 2% as payment for services Final Withholding Tax (FWT) July 18, 2012 Slide 74 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 38 Basic Principles Basic Principles Full and final payment of the income tax due from the payee on a particular type of income subject to FWT (e.g., interest on deposits, royalties, etc.) Limited only to the payees income tax liability and does not extend Limited only to the payee s income tax liability and does not extend to other taxes that may be imposed on said income. Liability for the payment of the tax rests primarily on the payor as withholding agent. Payee is not required to file an income tax return for the particular income subjected to FWT. July 18, 2012 Slide 75 Taxes Common to Taxpayers Commonly used FWT Rates Commonly used FWT Rates Income Payment Tax Rate Payee Gross income derived from all sources within the Philippines such i t t di id d t 30% Non-resident Foreign Corporation as interests, dividends, rents, royalties, annuities emoluments, or other fixed or determinable annual, periodic or casual gains, profits and income and capital gains (except capital gains realized from sale, exchange, disposition of shares of stock in any domestic corporation hi h i bj t t CGT) Corporation July 18, 2012 Slide 76 Taxes Common to Taxpayers which is subject to CGT). Interest income on Foreign Loans contracted on or after August 1, 1986 20% Non-resident Foreign Corporation July 18, 2012 Taxes Common to Taxpayers Page 39 Tax Treaty Relief Tax Treaty Relief RMO No. 72-2010 The following Tax Treaty Relief Applications (TTRAs) forms shall henceforth be adopted to implement this RMO: henceforth be adopted to implement this RMO: Form No. Purpose BIR Form No. 0901-P For Business Profits BIR Form No. 0901-T For Profits from Shipping and Air Transport BIR Form No. 0901-D For Dividend Income BIR Form No. 0901-I For Interest Income BIR Form No 0901 R For Royalty Income July 18, 2012 Slide 77 Taxes Common to Taxpayers BIR Form No. 0901-R For Royalty Income BIR Form No. 0901-C For Capital Gains BIR Form No. 0901-S For Income from Services BIR Form No. 0901-O For Other Income Earnings Tax Treaty Relief Applications: RMO 72-2010 Tax Treaty Relief Applications: RMO 72-2010 Shall only be submitted to and received by the International Tax Affairs Division (ITAD). Must be made BEFORE the transaction or before the first taxable event. Disqualification failure to file with ITAD within the prescribed period July 18, 2012 Slide 78 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 40 Fringe Benefit Tax (FBT) July 18, 2012 Slide 79 Taxes Common to Taxpayers Basic Principles Basic Principles Fringe benefits furnished or granted to: Rank and file employees part of the employees gross p y p p y g compensation income subject to WTW. Non-rank and file employees subject to FBT. EMPLOYER is liable to FBT. July 18, 2012 Slide 80 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 41 Fringe Benefit Tax Rate and Base Fringe Benefit Tax Rate and Base FBT Rate and FBT Base Generally FBT rate = 32%; FBT base = monetary value of benefit divide by 68% Non-resident alien individual who is not engaged in trade or business i th Phili i FBT t 25% FBT b t l f in the Philippines FBT rate = 25%; FBT base = monetary value of benefit divide by 75% If given to: (1) an alien individual employed by regional or area headquarters of a multinational company or by regional operating headquarters of a multinational company; (2) an alien individual employed by an offshore banking unit of a foreign bank established in the Philippines; (3) an alien individual employed by a foreign service contractor or by a foreign service subcontractor engaged in petroleum operations in the Philippines; and (4) any of their Filipino July 18, 2012 Slide 81 Taxes Common to Taxpayers petroleum operations in the Philippines; and (4) any of their Filipino individual employees who are employed and occupying the same position as those occupied or held by the alien employees. FBT rate =15%; FBT base = monetary value of benefit divide by 85% Gross Monetary Value (GMV) = Value of Benefit + FBT Fringe Benefits NOT Subject to FBT Fringe Benefits NOT Subject to FBT 1. Fringe benefits which are authorized and exempted from income tax under the Code or under any special law; 2. Contributions of the employer for the benefit of the employee to retirement insurance and hospitalization benefit plans; retirement, insurance and hospitalization benefit plans; 3. Benefits given to the rank and file, whether granted under a collective bargaining agreement or not; 4. De minimis benefits as will be discussed in detail in later slides; 5. If the grant of fringe benefits to the employee is required by the nature of, or necessary to the trade, business or profession of the employer; or July 18, 2012 Slide 82 Taxes Common to Taxpayers 6. If the grant of the fringe benefit is for the convenience or advantage of the employer. If fringe benefit is exempt from FBT may still form part of employees gross compensation income subject to WTW July 18, 2012 Taxes Common to Taxpayers Page 42 Valuation of Fringe Benefits (FB) Valuation of Fringe Benefits (FB) 1. If FB is granted in money, or is directly paid for by the employer The value of the FB is the amount granted or paid for. 2. If the FB is granted or furnished by the employer in property other than money and ownership is transferred to the employee The value of the FB shall be equal to the FMV of the property as determined in accordance with Section 6(E) of the Tax Code (Authority of the Comm. To Prescribe Real Property Values). 3. If the FB is granted or furnished by the employer in property other than The value of FB is equal to the depreciation value of the property. July 18, 2012 Slide 83 Taxes Common to Taxpayers p y p p y money but ownership is not transferred to the employee p p p y Valuation of Fringe Benefits (FB) Valuation of Fringe Benefits (FB) Computation of the FBT would entail: 1. valuation of the benefit granted; and 2. determination of the proportion or percentage of the benefit which is subject to FBT j Nature of benefit given Valuation of Fringe Benefit 1. If FB is granted in money, or is directly paid for by the employer Amount granted or paid for 2. If the FB is granted or furnished by the employer in property other than money and ownership is transferred to the employee FMV of the property as determined in accordance with Section 6(E) of the Tax Code (Authority of the Comm. To Prescribe Real Property Values) July 18, 2012 Slide 84 Taxes Common to Taxpayers p y p y ) 3. If the FB is granted or furnished by the employer in property other than money but ownership is not transferred to the employee Depreciation of the property July 18, 2012 Taxes Common to Taxpayers Page 43 Common Benefits Common Benefits Housing Expense account Motor vehicle of any kind Household expenses Interest on loans at less than market rate to the extent of the difference between the market rate and actual rate granted Membership fees, dues, and other expenses borne by the employee in social and athletic clubs or other similar organizations Foreign travel expenses July 18, 2012 Slide 85 Taxes Common to Taxpayers Holiday and vacation expenses Educational assistance to the employee and his dependents Life or health insurance and other non-life insurance premiums Stock options Housing Privileges NRF Housing Privileges NRF Housing Privilege Monetary Value a. Lease of residential property for residential use of employees MV = 50% x rental payments Wh MV t l f FB Where: MV = monetary value of FB b. Assignment of residential property for use of employee as his usual place of residence MV = [5% (FMV or ZV, whichever is higher)] x 50% July 18, 2012 Slide 86 Taxes Common to Taxpayers Where: FMV = Fair market value of the land improvement, as declared in the Real Property Tax Declaration Form ZV = Zonal Value as determined by the Commissioner of Internal Revenue July 18, 2012 Taxes Common to Taxpayers Page 44 Housing Privileges NRF Housing Privileges NRF Housing Privilege Monetary Value c. Purchase of residential property on installment basis for use of employees and ownership is not MV = 5% x AC x 50% Wh AC A i iti C t employees and ownership is not transferred to employees Where: AC = Acquisition Cost, exclusive of interest d. Purchase of residential property and ownership is transferred in the name of the employees MV = AC or ZV, whichever is higher e. Purchase of residential property and transfer of ownership to employees for residential use, at a MV = FMV or ZV, (whichever is higher) - Cost to the employees July 18, 2012 Slide 87 Taxes Common to Taxpayers p y price less than the employers acquisition cost Motor Vehicle NRF Motor Vehicle NRF Motor vehicles provided by the employer to its employees shall be treated as follows: Motor Vehicle Monetary Value a. Purchase of motor vehicle in the name of the employee MV = AC MV = AC b. Cash is given to the employee for the purchase of the vehicle, ownership is placed in the name of the employee MV = Cash Received by the Employee However, if the cash given by the employer to its employee is subjected to WTW, the same shall not be subject to FBT July 18, 2012 Slide 88 Taxes Common to Taxpayers same shall not be subject to FBT. c. Purchase of car on installment basis, the ownership of which is placed in the name of the employee MV = AC / 5 Where: AC = Acquisition Cost, exclusive of interest July 18, 2012 Taxes Common to Taxpayers Page 45 Motor Vehicle NRF Motor Vehicle NRF Motor vehicles provided by the employer to its employees shall be treated as follows: Motor Vehicle Monetary Value d Employer shoulders a portion of the MV = Amount shouldered by the d. Employer shoulders a portion of the purchase price, the ownership of which is placed in the name of the employee MV = Amount shouldered by the employer e. Employer owns and maintains a fleet of motor vehicles for use of the business and the employees MV = (AC/5) x50% Exceptions: Motor vehicles in the fleet which are used for sales, freight, delivery, service and other non-personal use. July 18, 2012 Slide 89 Taxes Common to Taxpayers f. Employer leases and maintains a fleet of motor vehicles for the use of the business and the employees MV = 50% x rental payments Exceptions: Motor vehicles in the fleet which are used for sales, freight, delivery, service and other non-personal use Motor Vehicle NRF Motor Vehicle NRF Motor vehicles provided by the employer to its employees shall be treated as follows: Motor Vehicle Monetary Value g. The use of aircraft (including helicopters) owned and maintained by the employer shall be treated as used for business N/A (Not subject to FBT) h. Use of yacht, whether owned or maintained or leased by the employer MV = Depreciation over estimated useful life of 20 years July 18, 2012 Slide 90 Taxes Common to Taxpayers For a to d The entire MV of the benefit shall be treated as taxable fringe benefit regardless of whether the motor vehicle is used by the employee partly for his personal purpose and partly for the benefit of his employer. July 18, 2012 Taxes Common to Taxpayers Page 46 Withholding Tax on Wages (WTW) July 18, 2012 Slide 91 Taxes Common to Taxpayers Basic Principles Basic Principles Compensation All remuneration for services performed by an employee for his p y p y employer under an employer-employee relationship, unless specifically excluded by the Tax Code. Even if the relationship of employer and employee does not exist any longer at the time when payment is made July 18, 2012 Slide 92 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 47 WTW rate WTW rate Rates for computation of Annualized Income* Over But Not Amount Rate Of Excess Over Over not o er 10 000 5% not over 10,000 5% 10,000 30,000 500+10% 10,000 30,000 70,000 2,500+15% 30,000 70,000 140,000 8,500+20% 70,000 140,000 250,000 22,500+25% 140,000 250,000 500,000 50,000+30% 250,000 July 18, 2012 Slide 93 Taxes Common to Taxpayers 500,000 over 125,000+32% 500,000 * Note that there are different tax tables for monthly/ semi-monthly/ weekly/ bi-weekly rates depending on the payroll period. List of De Minimis Benefits: RR No. 5-2011 List of De Minimis Benefits: RR No. 5-2011 a) Monetized unused vacation leave credits of private employees not exceeding 10 days during the year; b) Monetized value of vacation and sick leave credits paid to government officials and employees; officials and employees; c) Medical cash allowance to dependents of employees, not exceeding P750 per employee per semester or P125 per month; d) Rice subsidy of P1,500 or 1 sack of 50 kg rice per month amounting to not more than P1,500; e) Uniform and clothing allowance not exceeding P4,000 per annum; (Now P5,000 effective January 1, 2012 per RR No. 8-2012) f) Actual medical assistance, e.g., medical allowance to cover medical and July 18, 2012 Slide 94 Taxes Common to Taxpayers ) g healthcare needs, annual medical/executive check-up, maternity assistance, and routine consultations, not exceeding P10,000 per annum; g) Laundry allowance not exceeding P300 per month; July 18, 2012 Taxes Common to Taxpayers Page 48 List of De Minimis Benefits List of De Minimis Benefits h) Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000, received by the employee under an established written plana which does not discriminate in favor of highly paid employees; i) Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum; j) Daily meal allowance for overtime work and night/graveyard shift not exceeding 25% of the basic minimum wage on a per region basis. B fi i h d b July 18, 2012 Slide 95 Taxes Common to Taxpayers Benefits given that are not enumerated above Not considered as de minimis benefits, Shall be subject to income tax as well as withholding tax on compensation income (shall mean FBT if given to NRF employees) Employees Qualified for Substituted Filing Employees Qualified for Substituted Filing a) Receiving purely compensation income (regardless of amount) during the taxable year b) Receiving the income only from one employer in the Philippines during b) Receiving the income only from one employer in the Philippines during the taxable year c) Amount of tax due from the employee at the end of the year equals the amount of tax withheld by the employer d) Spouse also complies with all 3 conditions stated above. e) Employer files the annual information return (BIR Form No. 1604-CF) July 18, 2012 Slide 96 Taxes Common to Taxpayers e) Employer files the annual information return (BIR Form No. 1604 CF) f) Employer issues BIR Form 2316 (Oct 2002 ENCS) version to each employee July 18, 2012 Taxes Common to Taxpayers Page 49 Employees NOT Qualified for Substituted Filing Employees NOT Qualified for Substituted Filing A. Deriving compensation from two or more employers concurrently or successively at anytime during the taxable year. B D i i ti i dl f th t h th f B. Deriving compensation income, regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return. C. Whose gross compensation income do not exceed the statutory minimum wage or Five Thousand Pesos (P5,000.00) per month (Sixty Thousand Pesos [PHP 60,000] a year, whichever is higher, including employees of the government of the Philippines or any of its political subdivisions July 18, 2012 Slide 97 Taxes Common to Taxpayers the government of the Philippines, or any of its political subdivisions, agencies or instrumentalities, with salary grades 1 to 3. Employees NOT Qualified for Substituted Filing Employees NOT Qualified for Substituted Filing D. Deriving other non-business, non-profession-related income in addition to compensation income not otherwise subject to a final tax. E R i i l ti i f i l l lth h E. Receiving purely compensation income from a single employer, although the income tax of which has been correctly withheld, but whose spouse falls under Section 2.83A(A), (B), (C) and (D) of these Regulations. F. Non-resident aliens engaged in trade or business in the Philippines deriving purely compensation income, or compensation income and other non-business, non-profession-related income. July 18, 2012 Slide 98 Taxes Common to Taxpayers July 18, 2012 Taxes Common to Taxpayers Page 50 Filing of Returns and Administrative Requirements July 18, 2012 Slide 99 Taxes Common to Taxpayers Deadlines for Filing and Payment of WT Information Manual EFPS 1. Monthly Return (BIR Form 1601)* Filing - Within 10 days after the end of each month except for taxes withheld for Filing - Within 15 days after the end of each month except for taxes withheld for except for taxes withheld for the month of December each year, which shall be filed on or before January 15 of the following year Payment - within 10 days after the end of each month, except for taxes withheld for the month of December except for taxes withheld for the month of December each year, which shall be filed on or before January 20 of the following year Payment - within 15 days after the end of each month, except for taxes withheld for the month of December July 18, 2012 Slide 100 Taxes Common to Taxpayers the month of December each year, which shall be paid on or before January 15 of the following year the month of December which shall be paid on or before January 20 of the following year * Pursuant to Revenue Regulation (RR) No. 26-2002, taxpayers enrolled in the EFPS shall observe the staggered filing deadlines of their tax returns of taxpayers based on industry classification. July 18, 2012 Taxes Common to Taxpayers Page 51 Information Manual EFPS 2. Monthly Alphalist of Payees (MAP) Whose Income Recei ed Ha e Within 10 days after the end of each month except for ta es ithheld for the Within 15 days after the end of each month except for ta es ithheld for the Deadlines for Filing and Payment of WT Income Received Have Been Subjected to Withholding Tax for taxes withheld for the month of December each year, which shall be filed on or before January 15 of the following year for taxes withheld for the month of December each year, which shall be filed on or before January 20 of the following year 3. Semestral List of Regular Suppliers of Goods and Services** On or before January 31 and July 31 of each year. On or before January 31 and July 31 of each year. July 18, 2012 Slide 101 Taxes Common to Taxpayers ** Only applicable to Companies that are considered as one of the Top 10,000 (Now Top 20,000) Private Corporations Information Manual EFPS 4. Annual Information Return of Creditable Income Taxes Withheld (E d d)/I On or before March 1 of the following year On or before March 1 of the following year Deadlines for Filing and Payment of WT (Expanded)/Income Payments Exempt from Withholding Tax (BIR Form 1604-E) 5. Certificates of Creditable Tax Withheld (BIR Form No. 2307) - to be issued by the payor to the payee Within twenty (20) days following the close of the taxable quarter employed by the payee in filing his quarterly income tax return Within twenty (20) days following the close of the taxable quarter employed by the payee in filing his quarterly income tax return July 18, 2012 Slide 102 Taxes Common to Taxpayers payee quarterly income tax return. quarterly income tax return. 6. Annual Information Return of Taxes Withheld (BIR Form No. 1604 - CF) to be filed with the revenue district office on or before January 31 of the following year in which payments were made. to be filed with the revenue district office on or before January 31 of the following year in which payments were made. July 18, 2012 Taxes Common to Taxpayers Page 52 Information Manual EFPS 7. Withholding VAT Return (BIR Form 1600) Deadline of filing and payment: 10 th day of the following month Deadline of filing and payment: 10 th day of the following month Deadlines for Filing and Payment of WT following month following month 8. Fringe Benefit Tax (BIR Form 1603) - Quarterly Remittance Return of Final Income Taxes Withheld on Fringe Benefits Paid to Employees Other than Deadline of filing and payment: 10 th day of the following month Deadline of filing and payment shall be five (5) days later than the deadline set under the manual filing and payment system July 18, 2012 Slide 103 Taxes Common to Taxpayers Employees Other than Rank and File Question and Answers July 18, 2012 Slide 104 Taxes Common to Taxpayers