RMC No. 91-2012 — Supplements the guidelines in RMC No. 63-2012 on invoicing and recording of income payments for media advertising placements Digest | Full Text

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE December 28, 2012 REVENUE MEMORANDUM CIRCULAR NO. 91-2012 Subject: Supplement to Revenue Memorandum Circular No. 63-2012 on Invoicing and To: Recording of Income Payments for Media Advertising Placements All Revenue Officials, Employees and Others Concerned This Circular is being issued to supplement the guidelines laid down in Revenue Memorandum Circular No. 63-2012 dated October 29, 2012 to cover invoicing and recording of income payments for media advertising placements under a split payment scheme or arrangement. Under a split payment arrangement, the advertiser may engage or contract directly with a media entity/supplier and an advertising agency for media advertising placements. As such, the income payments directly made by the advertiser to the media supplier and to the advertising agency is limited to the cost of the service provided by each entity (i.e. billing of the media supplier for the total cost of production and media placement and billing of advertising agency for commission/service fee). The following are the accounting entries to guide concerned taxpayers in their invoicing and recording of income payments and receipts in relation to media advertising placements. Assuming that the total cost of the advertiser for the total media advertisement is P100,000 comprised of P85,000 media entity/supplier billing and P15,000 advertising agency commissioner/service fee, inclusive of VAT: A. Accounting entries in the Books of Account of the Advertiser: Receipt of billing from media entity/supplier Debit Credit P85,000 P95,200 Advertising Expense Deferred Input VAT 10,200 Accounts Payable � Media Entity/Supplier

Payment to Media Entity/Supplier Accounts Payable � Media Entity/Supplier Debit Credit Creditable IT Withheld P95,000 Cash P 1,700 93,500 Receipt of Billing from Advertising Agency Service Expense Debit Credit Deferred Input VAT P15,000 P16,800 Accounts Payable � Advertising Agency 1,800 Payment to Advertising Agency Accounts Payable � Advertising Agency Debit Credit Creditable IT Withheld P16,800 Cash P 300 16,500 B. Accounting Entries in the Books of Account of the Media Entity/Supplier Billing to Client/Advertiser for the Media Placement Accounts Receivable � Advertiser Debit Credit Income/Fees � Media Placement P95,200 Deferred VAT Payable P85,000 10,200 Receipt of Income Payment from Advertiser Cash Debit Credit Creditable Withholding Tax P93,500 P95,200 Accounts Receivable � Advertiser 1,700 C. Accounting entries in the books of account of the Advertising Agency Billing to Client/Advertiser for the Commission/Service Fee Accounts Receivable � Advertiser Debit Credit Commission Income/Service Fees P16,800 Deferred VAT Payable P15,000 1,800

Receipt of Income Payment from Advertiser Cash Debit Credit Creditable IT Withheld P16,500 P16,800 Accounts Receivable � Advertiser 300 All revenue officers and employees are hereby enjoined to give this Circular as wide a publicity as possible. (Original Signed) KIM S. JACINTO-HENARES Commissioner of Internal Revenue