Provided, however, that any income received from all other sources within and without the Philippines

in the case of domestic subcontractors and within the Philippines in the case of foreign subcontractors
shall be subject to the regular income tax under NIRC.

The term “gross income” means all income earned or received as a result of the contract enter into by
the subcontractor with a service contractor engaged in petroleum operations in the Philippines under
Presidential Decree No. 87.

Note that the 89% final tax applies only to subcontractors whether individuals or corporations, resident
or non-resident. Petroleum service contractors are subject to the regular income tax.

Persons or entities contracted by a petroleum service contractor to locally supply goods and materials
that are required by and in, or that are in inherently necessary or incidental to, its exploration and
development of petroleum mineral resources and are entitled to the preferential 8% final tax on their
gross income derived from such contracts.

Note on Special Aliens

Under the old law, employees of offshore banking units, regional operating or regional administrative
headquarters of multinational companies, referred to as special aliens, are previously subject to 15%
final tax on gross compensation income. The special alien classification is now abolished by virtue of a
presidential veto to the TRAIN law. As such, these employees are now subject to regular income tax if
they are residents and 25% final tax if they are non-residents.

FINAL WITHHOLDING TAX RETURN

The final withholding tax return (BIR Form 0619-F), Monthly Remittance Return of Finance Income Taxes
Withheld, shall be filed in triplicate by every withholding agent or payor who is either an individual or
corporation for the first two months of the quarter.

Deadline and place for monthly manual filing

The return shall be filled and the tax shall be paid or before the 10 th day of the month following the
month in which withholding was made with:
a. The authorized agent bank of the revenue district office having jurisdiction over the withholding
agent’s place of business
b. In places where there are no authorized agent banks, to the revenue collection officer
c. the authorized city or municipality treasurer with the revenue district where the withholding agent’s
place of business is located.

Monthly deadline for eFPS filing

In accordance with the schedule set forth in RR No. 26-2002, the deadline for e-filing of returns is as
follows:
Group A- Fifteen (15) days following the end of the month
Group B- fourteen (14) days following the end of the month
Group C- Thirteen (13) days following the end of the month
Group D- Twelve (12) days following the end of the month
Group E- Eleven (11) days following the end of the month

Quarterly Filing
The withholding agent shall file (BIR Form 1601-FQ), Quarterly Remittance Return of Final Income Taxes
Withheld, on or before the last day of the month

Penalties for late Filing or Remittance of Final Income Taxes Withheld

The same penalties for late payment of income taxes apply for non-withholding or non-remittance of
final taxes.

ENTITIES EXEMPT FROM FINAL INCOME TAX

1. Foreign governments and foreign government owned and controlled corporations
2. International mission or organization with tax immunity
General professional partnership
4. Qualified employee trust fund

The first two categories are exempt on grounds of international comity, General professional
partnerships and qualified employee trust funds are expressly exempt from any income tax imposed
under the NIRC.

These entities are exempt from not only to final tax but also to capital gains and regular income tax.