RMC No. 50-2018 — Provides clarifications on certain provisions of RR Nos. 8-2018 and 11-2018 implementing the Income Tax provisions of RA No. 10963 (TRAIN Act) Digesst |

BUREAU OF INTERNAL REVENUE REPUBLIC oF THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City HOREAU OF INTERNAL REVEN RECORDS MGT. DIVISION OYY NTYr 3:1b P.M. tM

May 11,2018

REVENUE MEMORANDUM CIRCULAR NO._50- 20/8

SUBJECT: Clarifies certain provisions of Revenue Regulations (RR) Nos. 8-2018 and 11-2018 Implementing the Income Tax Provisions of Republic Act (R.A.) No. 10963. Otherwise Known as the "Tax Reform for Acceleration and Inclusion (TRAIN)" Act

TO : All Internal Revenue Officers and Others Concerned

stated RRs were issued to implement the TRAIN law's income tax provisions including its consequent withholding tax. RR Nos. 8-2018 and 11-2018. as amended by RR Nos. 15-2018 and 14-2018, respectively. The Hereunder are the most frequently asked questions on income and withholding tax provisions of

Q 1 : Are the personal exemption and additional exemption still the same under the

A1 The personal and additional exemptions previously provided under Section 35 of TRAIN law?

the 1997 Tax Code, as amended, have been removed under the TRAIN Law.

with the first P250,000 of taxable income which is now subject to zero percent (0%) rate of income tax, practically exempting such income from income tax. Starting January 1, 2018, said exemptions of individual taxpayers were replaced

Q2 Under the TRAIN law. is there no change in the mandatory deductions such as Sss.

A2 Philhealth. Pag-ibig. etc. from Gross Conpensation of employces? Please clarify. There is no change in the mandatory deductions from gross compensation of

employees. The allowed deductions are the employee's share in the Sss, GSIS. Philhealth and Pag-ibig contributions (limited to compulsory contributions) as weli as the union dues. They are deductible to arrive at the taxable compensation income.

Q3 Is there a change in the non--taxability of "de minimis" benefits under the TRAIN

Law? A 3 No, there is no change in the tax treatment for "de minimis" benefits. It is still considered as compensation not subject to income tax and consequently, not subject to withholding tax, and neither to fringe benefit tax.

Q4 What are the benefits classified/considered as "de minimis"? Are there any updates in the amount of "de minimis" benefits? A 4 As of January l. 2018, the following are the "de minimis" benefits:

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a. Monetized unused vacation leave credits of private employees not exceeding

b. Monetized value of vacation and sick leave credits paid to government ten (10) days during the year:

C. Medical cash allowance to dependents of employees not exceeding officials and employees: P1.500.00 per employee per semester or P250.00 per month: d. Rice subsidy of P2,000.00 or one (1) sack of 50 kg. rice per month

amounting to not more than P2,000.00: C Uniform and clothing allowance not exceeding P6,000.00 per annum: 4 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 P10.000.00 per annum: 2 Laundry allowance not exceeding P300.00 per month: D 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 P10.000.00 received by the employee under an established written plan

i. Gifts given during Christmas and major anniversary celebrations not which does not discriminate in favor of highly paid employees;

exceeding P5.000.00 per employee per annum; 1 Daily meal allowance for overtime work and night/graveyard shift not

exceeding twenty-five percent (25%) of the basic minimum wage on a per

k. Benefits received by an employee by virtue of a collective bargaining region basis: and

agreement (CBA) and productivity incentive schemes provided that the total

schemes combined do not exceed ten thousand pesos (P10.000.00) per annual monetary value received from both CBA and productivity incentive

employee per taxable year.

All other benefits given by employers which are not included in the above enumeration shall not be considered as "de minimis" benefits. and hence, shall be subieet to income tax as well as withholding tax

Q5 What shall be the tax treatment of the "de minimis " benefits given to employees which are beyond the prescribed amount of benefits? A5 The benefits given in excess of the maximum amount allowed as "de minimis"

benefits shall be included as part of "other benefits" which is subject to the P90.000.00 ceiling. Any amount in excess of the P90,000 shall be subject to income tax. and consequently. to the withholding tax on compensation. Exumple: Ms. A received annual clothing allowance amounting to P10.000. Her 13th month pay is P80.000. No other benefits were received for the entire year. in this case, since the prescribed maximum amount for clothing allowance is only P6.000 the excess of P4.000 shail be added to the 13th month pay, thereby the entire benefits received amounted to P84.000. In this scenario. the same shall still be exempt from income tax since the ceiling amount for these other benefits is P90.000.00 3UREAU OF INiEKNA NTTT M. 2/18

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Q 6 A 6 Are incentives given to employees also taxable? If yes, how much is taxable? In general. any incentives given to employees shall form part of the compensation are in the nature of the previously enumerated "de minimis" benefits. subject to income tax. unless specifically exempted under a special law or incentives

A 7 Q 7 file or managerial/supervisory, under a group insurance shall be included as part of What is the treatment for the Premium on Health Card paid by the employer for the Supervisory" function? Premium on Health Card paid by the employer for all employees, whether rank and other benefits of these employees which are subject to the P90,000.00 threshold. employees holding managerial or supervisory functions are considered "fringe benefits" subject to fringe benefits tax. "rank and file" employees, as well as for those employees holding "managerial or However, individual premiums (not part of group insurance) paid for selected

Q8 What would be the treatment of the additional income as a result of the benefits

provided under the Attrition Law wherein employees who are performing well will receive rewards? A 8 The said additional income/benefits, whether in the form of cash or reward in kind. shall form part of the compensation income subject to withholding tax on compensation. The fair market value of the reward in kind shall be included in the taxable compensation.

Q 9 What would be the treatment of the commission given to an employee in addition

A 9 to the regular compensation received from the same employer (income payor/withholding agent)? Is the remittance of the withholding tax on commission The commission received from the same employer shall be considered as separate from the tax withheld on compensation? compensation. The tax withheld shall be filed monthly and remitted using BIR Form supplementary income. It shall be added to the regular compensation subject to income tax and consequently to withholding tax using the withholding tax table on N0.1601-0

Q 10 A 10 How do we determine if a government employee is considered a Minimum Wage Productivity Commission (NWPC) of the Department of Labor and Employment (DOLE). The copy of the wage matrix they provide the Bureau is circularized every time there are changes in the SMW. If the wage of the employee is equal or below the said prescribed SMw for a particular region, then the empioyee working within the same region is considered a MWE. Earner (MWE)? The government entity/employer must be aware of the Statutory Minimum Wage (SMW) prescribed for a particular geographical region by the National Wages and

Q 1 A1 Is the MWE exempt from income tax? The MWE is exempt from income tax on his basic SMW, overtime (OT) pay,

other than those mentioned are subject to income tax. holiday pay. night shift differential (NDP) pay and hazard pay. However, income

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Q12 : What if the MWE receives service charge which is not included in the enumerated

A 12 The MWE will still be exempt from income tax on his SMW including the other exemptions such as holiday pay, overtime pay, etc., will he still be exempt from income tax? If not, how will his income tax be computed?

income earned specifically enumerated as exempt under the law. However, income

income shall be multiplied to the applicable income tax rate using the prescribed tax other than those in the enumeration shall already be taxable. The taxable income shall be computed by deducting the non-taxabie/exempt portion and other deductions from the gross compensation income. Then, the resulting taxable

table to get the armount of income tax due.

Q 13 : For those whose basic pay is more than the SMW but does not exceed P250.000

A 13 are other income like holiday pay. OT, NDP. hazard pay & others also tax exempt? compensation. The employee is no longer considered an MWE since his basic pay is more than the SMW. Thus. the amount of basic pay, OT pay, holiday pay , NDP pay and hazard pay-shall be subject to income tax, and consequently, to the withholding tax on

Q 14 How do the employers present compensation exempt from tax under the TRAIN law in BIR Form No. 1601C (monthly remittance of withholding tax)? Will it be

Segregated from the schedule of MWEs? A 14 Compensation exempt from tax shall be included as part of those non-taxable

MWEs since their compensation is also non-taxable. compensation and there is no need to segregate the same from the schedule of

Q 15 A 15 Do the employees need to update their tax status and submit documents thereon to BIR? Employees are not required to update their tax status and submit documents thereon

to the BIR.

Q 16 Who are not qualified to avail of the 8% Income Tax rate? A The following indiviuals are not gualifed to avail of the 8% Ineome Tax rate

a) Ptrely conipensation income earners b) VAT-registered taxpayers, regardiess oi the amount of gross sales/receipts and c) Non-VAT taxpayers whose gross sales/receipts and other non-operating income exceeded the P3.000.000.00 VAT threshold: other non-operating income:

d) Taxpayers who are subject to Other Percentagc Taxes under Title V of the Tax e) Partners of a General Professional Partnership (GPP) since their distributive Code. as amended. except those under Section 116 of the same titie:

share from the GPP is already net of costs and expenses: and f) Individuals enjoying income tax exemption such as those registered under the allowed to avail of double or multiple tax exemptions under different laws. Barangay Micro Business Enterprises (BMBEs).etc., since taxpayers are not

unless specifically provided by law.

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Q 17 What are included in the "Other Percentage Taxes" under Title V of the Tax Code.

as amended? A 17 Other than Sec. 116, the following sections are included under the said Title V:

Sec. 1 17 -- Percentage tax (PT) on domestic carriers and keepers of garages Sec. 118 - PT on international carriers Sec. 119 -- Tax on Franchises Sec. 120 -- Tax on overseas dispatch, message or conversation originating from Sec. 121 - Tax on banks and non-bank financial intermediaries performing quasi the Philippines

Sec. 122 -- Tax on other non-bank financial intermediaries -banking functions

Sec. 123 -- Tax on life insurance premiums

Sec. 126 -- Tax on winnings Sec. 124 -- Tax on agents of foreign insurance companies Sec. 125 - Amusement taxes Sec. 127 -- Tax on sale, barter or exchange of shares of stock listed and traded

through the local stock exchange or through initial public offering

Q 18 A 18 What are the salient features of both the graduated and the 8% income tax rates? The features of Graduated Income Tax (IT) rates and 8% IT rate are as follows:

ParticuiarsGraduated IT Rates 8% IT Rates

Applicability1 In general, applicable May be availed by qualified individuals to all individual engaged in business/practice of

taxpavers profession whose gross sales/receipts and

other non-operating income did not exceed P3.000.000.00 Basis of IT net taxable income gross sales/receipts and other non- operating income

Leducticns owad deductions or Howable itenize Allowed reduction of f250.000.00 from the gross, only for individual whose

Optional Standard Deduction (OSD) business/practice of profession: income comes purely from

otherwise, no reduction/deduction allowed

Business Tax Percentage Tax (PT)If qualified: Not subject to PT or VAT

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Particulars. Graduated IT Rates 8% IT Rates

Required 1. If Itemized: If qualified: No FS required Financial (FS) Statenients 2.1f OSD: no FS required FS - if gross is less Audited FS - if gross is rnore than P3M thar P3M;

Q 19 How can individual taxpaycrs avail of the option of 8% income tax rate in lieu of the graduated income tax rates and percentage tax? A 19 The taxpayers who are qualified for the option to be taxed at 8% incone tax rate can avail of the 8% income tax rate by signifying his intention to avail of the same as soon as possible through the filing of any of the following:

1. For New Business Registrant (Individual)

1.a- BIR Form No. 1901 (Percentage Tax type shall still be registered but shall

1.b- Initial quarterly percentage or income tax return after the commencement of be suspended or end-dated in the BIR tax system) or

a new business/practice of profession.

2. For Existing Individual Business Taxpayers 2.a- BIR Form No. 1905:

2.b- 1s Quarteriy Percentage Tax Return; and/or 2.c- ist Quarteriy Income Tax Return:

The option to avail of the 8/ income tax rate must be signified anmially, on or before May 15. Such election shall be irrevocable and no amendment of option shal be made for the said taxable year, umless the gross sales/receipts and other non. Dneing ice sceeded the VaT threshoid of fs.o00.000.00 ir whien caso taxpoyer shall automauically be subject to the graduated income tax rate.

Q 20 What is the income tax regime of a taxpayer who is otherwise qualified to avail of the &% income tax rate but failed to signify this selection? A 20 An individual taxpayer who is qualified to avail of the 8% income tax rate but failed

to signify his intention to avail of the same shall be subject to the graduated income tax rates.

Q21 In the case of a purely self-employed/professional individual taxpaver who opted

A 21 No. he/she is no longer required to file and pay the 3% percentage tax. The 8% for the 8% income tax. does he/she still need to file and pay the 3% percentage tax?

incone tax rate is in lieu of the graduated income tax rates and the percentage tax under Section I16 of the Tax Code.

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0 22 A 22 The 8% income tax rate shall be based on the gross sales/receipts and other non What is the base amount of the 8% income tax rate?

operating income, net of returns and cash discounts. However. if the individual earns income purely from business or practice of profession. he/she is entitled to the reduction of P250.000.00 before computing for the 8% income tax.

Q 23 Who are entitled to reduce their taxable gross sales/receipts and other non-operating income by the amount of P250.000.00 for purposes of computing the income tax

due under the 8% income tax rate? A 23 Only individuals earning income purely from self-employment and practice of profession are entitied to the amount aliowed as reduction of P250.000.00 under Sec. 24(A)(2)(b) of the Tax Code, as amended, for the purpose of computing the

business/practice of profession) shall no longer be entitled to the P250.000.00 8% income tax. Thus. mixed income earners (earning both from compensation and

reduction on their income from business/practice of profession since said amount has already been applied in computing the income tax on compensation.

Q 24 A 24 For filing of quarterly ITR for individuals earning purely from practice of profession who opted for 8% income tax, how can the P250,000.00 be deducted. Is it gross receipts for the quarter less P62,500.00 (250,000 / 4) equals taxable income? There is no need to divide the amount of P250.000.00 aliowed as reduction into four quarters. The said amount was considered in the design of the revised quarterly income tax returns (Form 1701Q) which reflect a cumulative quarterly computation.

Q 25 compensation and self/employment (business or practice of profession)? What tax rates are applicable for individuals who are earning income from both

A 25 quulified, at taxpayer's option, be subject to the 8% income tax rate based on gross Compensation income shall be subject to the graduated income tax rates under practice of a profession shall be subject to the graduated income tax rates or if Section 24(A)(2)(a) of the Tax Code, as amended. The income from business or

sales/receipts.

C2 Are reurmuoie ceposis or denosits held in gust. like securiiy teposis under icase

A 26 In general. all deposits received are included in the definition of Gross Receipts agreements part of the definition of gross receipts? under Section 2(g) of RR 8-2018. However. returnabie deposits or deposits held in

trust and recorded as Liability are excluded.

Q 27 Wher does a taxpayer use the graduated income tax rates: or the option of 8% income tax rate? DUREAUOF TNTERNAL RT

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A 27: Applicability of IT Rates per Individual Taxpayer's Income Classification

Classification Graduated IT Rates S 2% IT Rates

a. Purely Compensation n/aNot applicable (n/a)

b.Purelv Business/ Practice of Profession:

b. I If gross sales/receipts and other non- operating income did not exceed P3M in a taxable year (at taxpayer's option) -subject to applicable business tax/es i OO if qualified, taxabie sales/receipts and other non-operating P250K: in lieu of on gross income in excess of

graduated rates and PT under Sec. 116 b.2 if gross sales/receipts & other non- exceed P3M in a taxable year operating income -subject to applicable business tax/es A Tg n13

c. Mixed (ncome (both compensation and business/practice of profession)

c I.compensation 1a /a

practiceof profession

c.2.1. If gross sales/ receipts & other non- operating income did not exeeed F3M in a taxable year (at taxpayer's option) -subject to applicable business tax/es; (Y -if qualified: taxable on gross: in lieu of graduated rates and PT under Sec. 116

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Classification Graduated IT Rates O 8% IT Rates

c.2.11. If gross sales/ taxable year receipts & other non- operating income exceed f3M in a business tax/es -subject to applicable N n a n/a

2. Total IT due = sum Under the graduated IT regime: I. allowed deductions of both the taxable compensation and multiply by graduated IT rate income from business/profession are the itemized deductions or the OSD (40%) to get taxabie net income Total IT due -- Income tax due compensation (using graduated from business/practice Under the 8% IT regime: rates) plus income tax due of profession (8% of gross sales/receipts & from

operating other non- income)

A 28 Q 28 Is an individual under a contract of service or job order arrangement considered self Yes, an individual under a contract of service or job order arrangement is considered self-employed. employed?

Q 29 A 29 What are the applicable withholding taxes and corresponding rates for individuals hired under a Job Order or Contract for Service scheme? I Hired by Public or Government Sector--

both income and the appiicable business taxes, if' any. However, if the payee's annual gross receipts will not exceed P250,000.00 from a lone payor, the income If the income-payor/witnhoiding agent is a 2overnniert cnuiy. h shall withhold No. 1 1-2018, together with the copy of the Certificate of Registration (COR) or withholding of percentage tax, if payee signified the option to avail the 8% payments may be exempt from both withholding tax on income upon submission of a Sworn Declaration of Gross Receipts/Sales attached as "Annex B-2" of RR Copy of the BIR Form 1901 (duly received by the concerned BIR office). and incone tax rate regine in the sworn declaration. 2. Hired by Private Sector.

P250.000.00 from a lone income payor, the income payments may be exempt lf the income-payor/withholding agent is a private entity. it shall withhold income tax only since the corresponding business tax shall be paid by the payee him/herself. However. if the pavee's annual gross receipis will not exceed

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the copy of the COR or Copy of the BIR Form 1901 (duly received by the concerned BIR office). from withholding tax on income upon submission of a Sworn Declaration of Gross Receipts/Sales attached as "Annex B-2" of RR No. 11-2018 together with

The nature of the service rendered shall determine the applicable withholding tax

(A) of RR No. l1-2018. the rates prescribed thereon shall be used, and all others not under the aforesaid section. shall be subject to two percent (2%). rates on income. For services rendered by individuals falling under Section 2.57.2

Q 30 Why do taxpayers need to submit a copy of the COR together with their Sworn Declaration to their Withholding Agent/Payor? A 30 payee is actually registered with the BIR, and if payee is a non-VAT taxpayer who sales/receipts and other non-operating income did not exceed P3M for the taxable may be qualified to avail of the option to be taxed at 8% flat income tax rate if gross The copy of the COR is reguired for the withholding agent/payor to determine if the

year.

Q 31 A 31 No. In general, all individuals rendering service are subject to income tax. Are individuals under a contract of service or job order arrangement exempt from income tax under the TRAIN iaw?

Q 32 A 32 If the Job Order personnel received only P6,000 or less per month, do they need to execute sworn statement under Annex B-2? Under the above scenario, since the income shall be less than P250,000.00 per annum, they need to execute the sworn declaration using the format of Annex B-2

payor/withholding agent on the stated income payment. so that no income tax withholding shall be made by the lone income

Q 33 In RR No. 8-2018, self-employed individual is defined/classified as professional or non-professional. In RR No. 11-2018. only professionals have the rates of 5% or

l 0%. what is the withholding tax rate for the non-professionals? A33 If the individual's service is not covered by the definition of a professional under

RR No. 8-2012 end does not fall under Section 2.37.2{A) of RR No. 2-98. as

withholding. anended by RR Mo. 11-2018. the same shall be subjected to 2% income tax

Q 34 A 34 If the director receiving the director's fees is aiso an employee of the same entity. What is the applicable withholding tax rate for director's fees?

the fees shall form pari of the compensation subiect to withholding tax on compensation. However, it the director is not an employee of the income payor then the subject taxpayer is considered a professional subject to the creditable expanded withholding tax presoribed for a professional, and subjeet also to the applicabie business tax. Moreover, in the case of government employee who seats as board menber of other Government Owned & Controlled Corporations (GOCCs) and is receiving director's fees. honora creditable withholding tax tne honc raria and/or other benefits shall be subiect to professional at 10%. The said

compensator trcome income shall be reported by n income. The corresponding e included as part of the

withholding tax shall form part of the tax credits against the income tax due.

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Q 35 A 35 Is a general professional partnership (GPP) subiect to the creditable expanded No, a GPP is not subject to income tax and thus, not subject to the creditable withholding tax?

expanded withhoiding tax. However, it is subject to the applicable business tax. Further, the partners of the GPP is subject to income tax and to the applicable withholding tax. Q 36 A 36 Are individual contractors also subject to the creditable expanded withholding tax? Yes. they are still subiect to the creditable expanded withholding tax at the same

withholding tax rate of 2%.

Q 37 Will the withholding tax rates to be used for doctors/consultant who submitted

sworn declaration and signified io be taxed at 8% income tax rate differ from those

A 37 No. The withholding tax rate for doctors/consultants who submitted the sworn who opted the graduated income tax? declaration (Annex B-2 of RR 1 1-2018) shali be 5%, regardless of whether they are

availing of the 8% income tax or the graduated income tax rates. If the income payor/withholding agent, however, is a government entity, it shall also withhold business tax if the payee selected to be taxed using the graduated income tax rates.

A 38 Q 38 approval of RR 11-2018, shall not be refunded by the income payor. The payee's income payments after receipt of such deciaration. What happens when Annex B-2 is submitted beyond the deadline of April 20, 2018? If the sworn declaration was only submitted by the income payee to the payor after the deadline of April 20, 2018, the payee's excess tax withheld, if any, prior to the executed sworn declaration shall only be applied by the withholding agent on all

A 39 Q 39 Is the Affidavit of Declaration of Gross income no ionger required for non- individuals in relation to the P720,000 threshold? It is still required under the existing rules and regulations and was not part of the

amendments under the TRAIN Act.

Q40 What is the withholding tax applicable to a diplomat's wife who is loeally

A 40 employed? An individual who is employed locaily is subject to withholding tax using the

withholding tax table on compensation.

Q 41 A 41 What is the applicable withholding tax on income payments made to self-employed percentage tax or 5% withholding VAT. whichever is applicable. professionals who failed to submit their sworn declaration to the payor? submit sworn declaration to the payor is 10% for income tax. Moreover, if the payor is a government entity, the same income payment is also subject to either 3% The applicable withholding tax rate for self-employed professionals who failed to

Q42 Can you provide a guide for individual taxpayers on the taxability of their earned

agents/payors on the treatment of income payments if the payee is under the not to withholding taxes (WT)? income from business and/or practice of profession, and for withholding graduated IT rates: if payee is qualified and opted for the &% IT rate: if subject or BUREAUOF INTERNS NNOT 3:ibPM1 11/18

A 42 : This will serve as a guide for individual taxpayers engaged in business and/or

practice of profession as well as for withholding agents/payors on the treatment of individual income earnings/payments:

P250.000 and below Gross Amt. Sales/Receipts IT Tax 0 Taxable at Taxability If Graduated IT rates Not subject WT Exempt, if taxpayer's entire income is derived Taxability If 8% IT rate No. for purely business WT

purely from business and/or and/or profession: practice of

PT Subiect Subject, if subject to 8%, if and business mixed incoine profession:t earner (with income from both other non- Not subject compensation. and/or profession) based on gross sales/receipts & operating income Not earner Yes, if mixed income

government subject

Above f250.000 T Doc Taxable at applicable Declaration and COR Payee's Sworn payor Subject at applicable 1"8% on gross I sales'receipts and anp!icable Payee's Sworn Declaration and COR Subject to

( graiuated Ir es oruer ron- I tae P3.000.000 rates on operating

net income I income: however, for

purely business/practice -- entitled to

PT Subject Subject, if reduction of P250.000 Not subject Not

government subiect payor Doc Pavee's Sworn Declaration and COR COR Payee's Sworn Declaration and

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Above P3.000.000 Gross Amt. Sales/Receipts ST Tax applicable Subject to Taxability If Graduated IT rates WT Subiect to WT Not entitled to avail Taxability. If 8% IT rate WT

rate BT subjeci to Now VAT if Subject to WT of VAT

government

IT Ineome tu.: WT Withholding. tax: PT -- Pereentage tax: BT - Business tax payor

Q 43 What shall be the treatment of withheld taxes remitted using the old BIR Form Nos

1601-E, 1601-F and 0605 for the first two (2) months of the quarter? A 43 The payments shall be deducted from the taxes due to be remitted for the entire

quarter.

Q 44 Are individuals with consecutive employers qualified to avail of the substituted

filing of annual Income Tax Return (AITR) if the iatest employer will consolidate income of the individual from previous employment to the current employment income and the entire income is subjected to the year-end adjustment wherein the tax due is computed prior to the payment of the last compensation for the year? A 44 Based on existing policy. individuals with consecutive employers are not qualified

to avail of the substituted filing of AlTR. Hence, they are required to file an AITR

Q 45 A 45 contract of service arrangement? The tax being withheld from an individual under Job order or Contract of Service arrangement is a creditable withholding tax; thus, the Certification that shall be What withholding tax certificate shall be issued to individuals under Job Order or

issued by the withholding agent shall be BIR Form 2307.

Q6 A 46 pension qualified for substituted filing of the annual income tax return (AlTR)? Is an eimpkovee with a Jone empioyer within a year but is receiving retirement Yes. the employee with a lone employer is still qualified to avail of the substituted

filing of AITR provided the income tax has heen withheld correctly. The retirement pension is not taxable.

Q47 and what is the responsibility of the employer? What form shall be used by an employee who is not qualified for substituted filing

A47 An empioyee who is not qualified for substituted filing of Income Tax Return is

required to either use BIR Form No. 1700 (for purely cornpensation income earner) or BIR Form No. 170i (for self-employed or mixed income earner). The responsibility of the employer is to provide the emplovee with BIR Form No. 2316 (Certificate of Compensation and Tax Withheld) not later than January 31 after the close of the calendar year. BUREAUOF INTE

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Q 48 Are the certificates of tax withheld filed by the employers and duly stamped

A 48 tax due on the compensation income was correctly withheld by the employer." Yes, it applies to all qualified employees. As discussed under RR No. 11-2018. Returns (AlTR) of the employees? "received" by the Bureau tantamount to the substituted filing of Annual Income 'Tax "Qualified employees are those whose incomc comes from a lone employer and the

Under the same RR. the Certificates of Tax Withheld shall refer to the Certified List

substituted filing of AITR of the concerned employees. of Employees Qualified for Substituted Filing prescribed in Annex "F" of the RR shall be stamped "Received" by the Bureau, and this stamping is tantamount to the with accompanying soft copy of the corresponding BIR Form No. 2316. The list

A 49 Q 49 The Creditable Withholding Tax Certificate and Form No. 1604C/F were not included in the TRAIN Law. Do we still need to file/issue them? Yes. existing rules shall still apply since the TRAIN Law did not make amendments on these issues.

A 50 Q 50 Can eFPS filers still use the staggered filing allowed before in filing the creditable Yes. the same rules still apply with regards to eFPs filers who can file the withholding tax forms/returns on staggered basis depending on industry grouping. and final withholding tax forms/returns to avoid eFPS downtime?

Q 51 A 51 Is an employee who-is earning purely compensation income not exceeding P250.000 No. an employee earning purely compensation income that does not exceed from a lone employer still need to file an Annual Income Tax Return (AITR)? P250.000 from a lone employer is not reguired to file an AITR. In this case, the

to the BIR. However. an employee is required to file an AiTR for compensation earned within the same taxable year from multiple employers. whether successive or concurrent. regardiess of the amount of compensation. employer shall include the name of such employee in the alphalist to be submitted

52 Is an cnplovee who resigned before the year encs vith oniy one empioyer for the

A 52 No. the employee is not required to file an AITR if there is only one ernployer during the year and the amount of withheld tax is equal to the income tax due for the taxable Year required to fie an Ar fk?

year.

A 53 Q 53 Are those who opted and are qualified for the 8% Income Tax rate still required to attach the Financial Statement when filing an AITR? No. the Financial Staicment is not reguired to be atuched when filing an AITR for those who opt and qualify for the 8% income tax rate.

Q 54 P54 income subject to the graduated ineome tax rates is exernpt from Fs submission. table but ciaimed the OSD. can he be exempt from FS submission? A professional or self-employed did not avail of the 8% and opt for the graduated Yes. a taxpayer who opts for the OsD as the deduction to arrive at the taxable

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Q 55 If a taxpayer opts to use the graduated income tax rate on income from business or

A 55 If a taxpayer opted to use the graduated tax rate on professional income, he shall file from practice of profession, when is the deadline for filing the 3% percentage tax?

a quarteriy return of the amount of gross sales. receipts or earnings and pay the 3% percentage tax due thereon within twenty-five (25) days after the end of each taxable quarter.

Q 56 What are the withholding tax forms that we can use? When are the due dates for

their filing? A 56 The matrix below shall serve as the taxpayer's guide on the withholding tax forms

to use and their due dates

"Withholding Tax on Compensation Withholding Frequency Monthly Remittance Return of 1601C -- Monthly Income Taxes Withheld on Compensation Forms/List On or before the 1oth foliowing the month of day of the month withholding (cFPS filers on staggered Due Dates

basis depending on

Annually 1604C - Annuall Information Returns of Income Taxes Withheld on Compensation and Annual Alphalist of year January 31 following grouping the close of the taxable

Employees 2316 -- Certificate of Compensation for Compensation Payment/Tax Withheld

Paymeni with or. without Tax Withhele

1 Form 2316 (For large (for employees) taxpayers- scanned Certified List of ITR with copies of Enployees Qualified for Substituted Filing of 28 following the close of the taxable year On or before February

copies of Form 2316 on storage media. i.e. usb. cd.etcy

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Expanded Withholding Tax Withholding (Ist two months of the quarter) Frequency Monthly 0619E -- Remittance of Creditable Income Taxes Withheld (Expanded) Forms/List On or before the 1oth staggered basis day following the close of the month (eFPS filers on depending on Due Dates

Quarterly at Source (for payees) 1601EQ - Quarterly Creditable Tax Withheld Remittance Return of Creditable Income Taxes Alpha list of Payees! (QAP) Withheld and Quarterly Form 2307-Certificate of On or before the 20th grouping) On or before the end of the month following the close of the quarter day after the close of the quarter or upon demand of the payee

Annually 1604E- Annual March l following the

Information Return of close of the taxable Creditable Income Taxes year

/Income Payments Withheld (Expanded) Exermpt from Withhoiding Tax and Annual Alphalist of Payees.

Tax Final Withholding (Ist two Monthly months of the Final Income Taxes 0619F -- Monthly Remittance Form of Withheld On or before the 1oth. close of the month (eFPS filers on day following the

quarter) Quarterly 1601FQ -- Quarterly Remittance Return of staggered basis On or before the end depending on of the month grouping)

Form 2306- Cerificate of I1 {QAP} Withheld: Quarterly Final Income Taxes Alphalist of Payees On or before the 20 the quarter following the close of

Final Tax Withheld at day after close of the Source (for payees) demand of payee quarter or upon

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Final Withholding Final WT on Withholding Tax on deposit. Payments Interest paid etc . Final WT on Fringe Benefits Money Government Annually Frequency Quarterly Quarterly Quarterly Monthly 1603Q -- Quarterly Withheld and Annual Alphalist of Payees Remittance Return of 1600 -- Monthly 1604F -- Annual Final Income Taxes Substitutes/Trusts/Etc. Final Income Taxes Other Percentage Taxes Information Return on 1602Q - Quarterly Remittance Return of Final Income Taxes Benefits Paid to Employees Other Than Rank and File: Annual Aiphalist of Employees Remittance Return of Value-Added Tax and Withheld Form 2307-Certificate of at Source (for payees) Withheld on Interest Paid on Deposit and Deposit Withheld on Fringe with Fringe Benefits Creditable Tax Withheld Forms/List January 31 following taxable year On or before the end On or before the 20th the quarter of the month the quarter the quarter or upon the close of the On or before the end of the month following the close of day following the day after the close of demand of the payee following the close of On or before the 10th close of the month Due Dates

Form 2306- Certificate cf - On or before the 20th Final Tax Withheldat Source (for pavecs) day after close of the quarter or upon demand of payee

Q 57 : For new forms like 160lEQ for quarterly remittance returns of creditable withholding tax. will there be an automatic updates on eFPS of the revised and new

forms? A 57 There will be workaround procedures in case of system downtime. Yes. the revised and new forms will also be available in the eFPS. Kindly wait for the advisory of its availability either in hard copy. in eBIRForms and finally in eFPS

Q 58 : Are the partners of the general professional partnership (GPP) required to register as professionals? Can they opt to choose the 8%? Is there any special registration

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A 58 avail the &% income tax rate since their distributive share in the net income of the Yes, they are required to register as professionals. However, there is no option to GPP is aiready net of cost ard expenses. No special registration is required.

Q 59 For the creditable expanded withholding tax, are we still required to submit the Monthly Alphalist (MAP)? A 59 No. The requirement is to submit a Quarterly Alphalist (QAP) as an attachment to

the quarterly creditable/expanded withholding tax returns (form 1601EQ)

Q 60 A 60 On the elecironic submission of Alpha List, are there changes in the formatting? Yes. there are revisions in the forrnatting of the quarterly as well as the annual Alpha

List. The Bureau shall issue an advisory on the availability of these formats and a memorandum circular for the procedures on its use.

Q 61 A 61 What is the retention period of our books of accounts under the TRAIN law? The TRAIN Law did not amend the retention period prescribed by Section 203 of the Tax code, as amended, and impiemented by RR No. 17-2013.

Q 62 For record keeping, can we scan the documents for the years 2017 and earlier to

A 62 Under RR No. 5-2014. within the first 5 years reckoned from the day following the comply with the BIR regulation of 10 years' record keeping?

deadline in filing a return or if filed after the deadline. from the date of the filing of the return. the taxpayer shall retain hardcopies of the books of accounts, including subsidiary books and other accounting records. Thereafter, taxpayer may retain

requirements under the said RR. Failure to meet the requirements of the RR, the only an electronic copy in an electronic storage system which complies with the

accounts and other accounting records for 10 years. taxpayer shall maintain and preserve the original hardcopy of the said books of

this Circular as wide a publicity as possible. All internal revenue officials. employees and other concerned are hereby enjoined to give

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