TOPIC OUTLINE
• Taxation of Individuals Engaged in Providing Services
under a Service Contract with no Employer-Employee
Relationship
• Revenue Regulations No. 19-2011
• Revenue Regulations No. 6-2012
• Revenue Regulations No. 8-2012
• Revenue Memorandum Circular No. 23-2012
Presented by:
ROSANA P. SAN VICENTE
Chief, Withholding Tax Division
July 23, 2012
1
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Registration Requirement:
Section 236 of the Tax Code –
“(A) Requirements.- Every person subject to any internal
revenue tax shall register once with the appropriate Revenue
District Officer:
(1)
(2)
(3)
(4)
Within ten (10) days from the date of employment, or
On or before the commencement of business, or
Before payment of any tax due, or
Upon filing of a return, statement or declarations as required
in this Code.”
2
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Registration Requirement:
BIR Form to be accomplished –
BIR Form 1901, to be submitted to the RDO having
jurisdiction over the place where the service is being
rendered, with the following attachments:
> Birth Certificate or any document showing
name, address and birth date of the individual;
> Contract of Service /Job Order
> Proof of payment of Annual Registration Fee
of P500 [Sec. 236(B) of the Tax Code]
3
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
Section 237 of the Tax Code –
“Sec. 237. Issuance of Receipts or Sales or Commercial
Invoices.- All persons subject to an internal revenue tax shall, for
each sale or transfer of merchandise or for services rendered
valued at Twenty-five pesos (25.00) or more, issue duly
registered receipts or sales or commercial invoices, prepared at
least in duplicate, showing the date of transaction, quantity, unit
cost and description of merchandise or nature of service:
Provided, however, That in the case of sales, receipts or
transfers in the amount of One hundred pesos (100.00) or more,
or regardless of amount, where the sale or transfer is made by a
4
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
cont…
person liable to value-added tax to another person also liable to
value-added tax; or where the receipt is issued to cover payment
made as rentals, commissions, compensation or fees, receipts
or invoices shall be issued which shall show the name, business
style, if any, and address of the purchaser, customer or client;
Provided, further, That where the purchaser is a VAT-registered
person, in addition to the information herein required, the invoice
or receipt shall further show the Taxpayer identification Number
(TIN) of the purchaser.”
5
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
cont…
“The original of each receipt or invoice shall be issued to
the purchaser, customer or client at the time the transaction is
effected, who, if engaged in business or in the exercise of
profession, shall keep and preserve the same in his place of
business for a period of three (3) years from the close of the
taxable year in which such invoice or receipt was issued, while
the duplicate shall be kept and preserved by the issuer, also in
his place of business, for a like period.”
6
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement: SAMPLE OFFICIAL RECEIPT
7
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
BIR Form to accomplish
BIR Form No. 1906 –Application for Authority to Print
Receipts and Invoices, to be filed with the RDO where
the individual is registered, with the following
attachments:
> Certificate of Registration
> Proof of Payment of RF, current
> Final and clear sample of Receipt/Invoice;
> Previous ATP (for additional SI/OR to be printed);
> Last booklet printed (for additional SI/OR to be printed)
8
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
Can the issuance of SI/OR be dispensed with?
> Under Sec. 237, the Commissioner may, in meritorious
cases, exempt any person subject to an internal revenue
tax from the compliance with the issuance of SI/OR
How?
The individual shall apply for the “substituted issuance of
OR” pursuant to the provisions of RR 14-2003.
9
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
Sec. 2 of RR 14-2003 – inserting new provisions under RR 2-98,
as amended –
“Sec. 5.128. xxxxx
F) Substituted Official Receipt. - For sellers of services whose
gross receipts have been subjected to the withholding of the 3%
percentage tax, they shall be exempted from the obligation of
issuing duly registered non-VAT receipts covering their
receipt of payments for services sold. In lieu thereof, the issued
“Certificate of Final Tax Withheld at Source” (BIR Form No.
2306), for payee with just one payor, or “Certificate of Creditable
Tax Withheld at Source” (BIR Form No. 2307), for payee with
several payors, shall be constituted and treated as the
substituted official receipt, pursuant to the provisions of Section
237 of the Code”
10
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
Sec. 3 of RR 14-2003 – inserting new provisions under RR 2-98,
as amended –
“Sec. 9.245. xxxxx
F) Substituted Official Receipt. - For sellers of services whose
gross receipts have been subjected to 12% final VAT, they shall
be exempted from the obligation of issuing duly registered
VAT official receipts covering their receipt of payments for
services sold. In lieu thereof, the issued “Certificate of Final Tax
Withheld at Source” (BIR Form No. 2306), for payee with just
one payor, or “Certificate of Creditable Tax Withheld at Source”
(BIR Form No. 2307), for payee with several payors, shall be
constituted and treated as the substituted official receipt,
pursuant to the provisions of Section 237 of the Code”
11
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
Seller of services whose gross receipts were subjected
to withholding of 3% percentage tax/12% VAT are exempted
from issuing Non-VAT/VAT receipts. In lieu thereof, the following
shall be constituted and treated as the substituted OR:
“Certificate of Final Tax Withheld at Source” (BIR Form No.
2306) - for payees with just one payor;
“Certificate of Creditable Tax Withheld at Source” (BIR Form
No. 2307) - for payees with several payors
12
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
How will the payor know that the payee will
avail of the “substituted OR” option?
Payee is required to submit to the withholding
agent-payor a “Notice of Availment of the
Option to Pay the Tax through the
Withholding
Process”,
copy-furnished
Revenue District Offices having jurisdiction
over the payor and the payee
13
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
BIR FORM NO.__________
Republic of the Philippines
Department of Finance
BUREAU OF INTERNAL REVENUE
Revenue Region No. ___
Revenue District Office No. ___
______________________________________________________________________________________________
NOTICE OF AVAILMENT OF THE OPTION TO PAY THE TAX
THROUGH THE WITHHOLDING PROCESS
Date __________________
Name of Taxpayer ______________________________________________________
Address ______________________________________________________________
Taxpayer Identification Number __________________________________________
Class of Profession or Calling ___________________________________________
CERTIFICATION
This is to certify that I am availing of the option to pay my percentage tax/VAT through the withholding
process pursuant to the provisions of REVENUE REGULATIONS NO. ____; that, in accordance with the said
Regulations and Revenue Regulations No. 2-98, as amended, gross receipts on account of my sale of
goods/service shall be withheld at 3% Percentage Tax or 10% VAT, as the case may be, by the withholding
agent-payor; that, such tax withheld shall be constituted as a final tax provided that my source of income
comes only from one payor, otherwise, the same shall be considered creditable which shall be applied
against the total percentage taxes/VAT due for the month when such tax was withheld; and that, I have
executed this Declaration under penalty of perjury, pursuant to the provisions of Section 267, National
Internal Revenue Code of 1997.
____________________________
Taxpayer’s Name and Signature
14
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Invoicing Requirement:
Withholding agent-payor is required to prepare BIR Form Nos. 2306 or
2307 in quadruplicate, to be distributed as follows: (Note: BIR Form 2306
must be signed by both payor and payee)
2 copies for the payee
2306
2307
1 copy to the payor
1 copy to be attached by the payor
to BIR Form 1600
2 copies for the payee
1 copy to the payor
1 copy to be attached by the payor
to BIR Form 1600
15
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Bookkeeping Requirement:
“Sec. 232. Keeping of Books of Accounts.(A) Corporations, Companies, Partnerships or Persons
Required to Keep Books of Accounts.- All corporations,
companies, partnerships or persons required by law to pay
internal revenue taxes shall keep a journal and a ledger or their
equivalents: Provided, however, That those whose quarterly
sales, earnings, receipts, or output do not exceed Fifty
thousand pesos (P50,000) shall keep and use simplified set of
bookkeeping records duly authorized by the Secretary of
Finance wherein all transactions and results of operations are
shown and from which all taxes due the Government may
16
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Bookkeeping Requirement:
readily and accurately be ascertained and determined any time
of the year: Provided, further, That corporations, companies,
partnerships or persons whose quarterly sales, earnings,
receipts or output exceed One hundred fifty thousand pesos
(P150,000), shall have their books of accounts audited and
examined yearly by independent Certified Public Accountants
and their income tax returns accompanied with a duly
accomplished Account Information Form (AIF) which shall
contain, among others, information lifted from certified balance
sheets, profit and loss statements, schedules listing incomeproducing properties and the corresponding income therefrom
and other relevant statements.”
17
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Bookkeeping Requirement:
Registration of Books of Accounts – included in BIR
Form 1901, the registered books of accounts shall be used
until all the pages are consumed. However, if the taxpayer
wishes to use separate books of accounts for every calendar
year, the registration thereof must be made on or before
December 31 of each year.
Preservation of Books of Accounts … shall be
preserved for a period beginning from the last entry in each
book until the last day prescribed by Section 203 within which
the Commissioner is authorized to make assessment.
18
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Filing of Required Tax Returns:
Income Tax Return –
BIR Form
Due Dates
BIR Form No. 1701
On or before April 15 following the close of calendar
year
BIR Form No.
1701Q
1st Quarter –On or before April 15 of the current CY;
2nd Qtr - on or before August 15 of the current year
3rd Qtr – on or before November 15 of the current
year
19
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Filing of Required Tax Returns:
Percentage Tax Return –
BIR Form
Due Dates
BIR Form No. 2551 M Within twenty days following the close of the month
Value Added Tax Return BIR Form
Due Dates
BIR Form No. 2550 M Within twenty days following the close of the month
BIR Form No. 2550Q
Within twenty-five days following the close of the
taxable quarter
20
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Filing of Required Tax Returns:
Option to Avail of the Substituted Filing of Percentage Tax
Return/VAT return –
Who is qualified to avail?
Individual with only one payor
How to avail of such option?
Individual must file with the RDO where he/she is registered
the following:
1. Notice of Availment of the Option to Pay the Tax Through the
Withholding Process”,;
2. Notice of Availment of the Substituted Filing of Percentage
Tax Return
21
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
BIR FORM NO.__________
Republic of the Philippines
Department of Finance
BUREAU OF INTERNAL REVENUE
Revenue Region No. ___
Revenue District Office No. ___
________________________________________________________________________________
NOTICE OF AVAILMENT OF THE SUBSTITUTED FILING OF
PERCENTAGE TAX RETURN
Date __________________
Name of Taxpayer ______________________________________________________
Address ______________________________________________________________
Taxpayer Identification Number __________________________________________
Class of Profession or Calling/Business __________________________________
CERTIFICATION
This is to certify that I am a NON-VAT registered person pursuant to the provisions of REVENUE
REGULATIONS NO. ____; that, in accordance with the said Regulations, I have availed of the
“Optional Registration under the 3% Final Percentage Tax Withholding, in lieu of the 3% Creditable
Percentage Tax Withholding” System, in order to be entitled to the privileges accorded by the
“Substituted Percentage Tax Return System” prescribed thereunder; that, this Declaration is
sufficient authority of the Withholding Agent to withhold 3% Percentage Tax from payments to me on
my sale of goods and/or services, in lieu of the said 3% Creditable Percentage Tax Withholding; and
that, I have executed this Declaration under penalty of perjury pursuant to the provisions of Section
267, National Internal Revenue Code of 1997.
____________________________
22
Taxpayer’s Name and Signature
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
BIR FORM NO.__________
Republic of the Philippines
Department of Finance
BUREAU OF INTERNAL REVENUE
Revenue Region No. ___
Revenue District Office No. ___
________________________________________________________________________
NOTICE OF AVAILMENT OF THE SUBSTITUTED FILING OF
VALUE-ADDED TAX RETURN
Date __________________
Name of Taxpayer _________________________________________________
Address _________________________________________________________
Taxpayer Identification Number _____________________________________
Class of Profession or Calling/Business______________________________
CERTIFICATION
This is to certify that I am a VAT-registered person pursuant to the provisions of REVENUE
REGULATIONS NO. ____; that, in accordance with the said Regulations, I have availed of the
“Optional Registration under the 12% Final VAT Withholding, in lieu of the 12% Creditable VAT
withholding,” in order to be entitled to the privileges accorded by the “Substituted VAT Return
System” prescribed thereunder; that, this Declaration is sufficient authority of the withholding agent
to withhold 12% VAT from payments to me on my sale of goods and/or services; that, I have
executed this Declaration under penalty of perjury pursuant to the provisions of Section 267,
National Internal Revenue Code of 1997.
____________________________
23
Taxpayer’s Name and Signature
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
SWORN DECLARATION AND WAIVER OF THE PRIVILEGE TO CLAIM
INPUT TAX CREDITS UNDER SECTION 110 OF THE TAX CODE
In accordance with the provisions of Sections 106 and 108 of the National Internal
Revenue Code of 1997, I hereby voluntarily depose and say:
1. That I am a VAT-registered seller of goods and/or service;
2. That I availed of the option to be taxed at 12% VAT;
3. That I hereby waive my right/privilege to claim input tax credits provided under
Section 110 of the National Internal Revenue Code of 1997 that may be otherwise
claimed against the output tax due on my sale of goods and/or services; and
4. That this waiver shall be effective until cancelled through the execution of a notice
prepared for the purpose.
I hereby declare under penalties of perjury that the foregoing representations are true
and correct and the waiver of right/privilege is voluntarily and knowingly made in accordance with
the provisions of the National Internal Revenue Code of 1997.
_______________________
Date and Name of Taxpayer
24
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
BIR FORM NO.__________
Republic of the Philippines
Department of Finance
BUREAU OF INTERNAL REVENUE
Revenue Region No. ___
Revenue District Office No. ___
___________________________________________________________________________________
NOTICE OF CANCELLATION OF AVAILMENT OF THE OPTION TO PAY THE TAX
THROUGH THE WITHHOLDING PROCESS
Date __________________
Name of Taxpayer ______________________________________________________
Address _______________________________________________________________
Taxpayer Identification Number __________________________________________
Class of Profession or Calling/Business _____________________________________
CERTIFICATION
This is to certify that in accordance with the REVENUE REGULATIONS NO.____, I have
availed of the “Option To Pay The Tax Through The Withholding Process”; that, I am hereby
cancelling and withdrawing my said NOTICE OF AVAILMENT TO PAY THE TAX THROUGH
THE WITHHOLDING PROCESS effective ___________________, 200__; and that, I have
executed this Declaration under penalty of perjury, pursuant to the provisions of Section 267,
National Internal Revenue Code of 1997.
____________________________
25
Taxpayer’s Name and Signature
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
BIR FORM NO.__________
Republic of the Philippines
Department of Finance
BUREAU OF INTERNAL REVENUE
Revenue Region No. ___
Revenue District Office No. ___
________________________________________________________________________
NOTICE OF CANCELLATION OF AVAILMENT OF
THE SUBSTITUTED FILING OF PERCENTAGE TAX / VAT RETURN
Date _______________
Name of Taxpayer ______________________________________________________
Address ______________________________________________________________
Taxpayer Identification Number __________________________________________
Class of Profession or Calling/Business __________________________________
Type of Registration [ ] VAT Taxpayer [ ] Non-VAT Taxpayer
CERTIFICATION
This is to certify that I am a Non-VAT/VAT -registered person pursuant to the provisions of REVENUE
REGULATIONS NO. ____; that, in accordance with the said Regulations, I have availed of the “Optional
Registration under the 3% final Percentage Tax on the Sale of Goods and/or Service /10% final VAT Withholding on
the Sale of Goods and/or Service” in order to be entitled to the privileges accorded by the “Substituted Filing of
Percentage Tax/VAT Return” prescribed thereunder; that, I am hereby cancelling and withdrawing my said NOTICE
OF AVAILMENT OF THE SUBSTITUTED FILING OF
PERCENTAGE TAX/VAT RETURN SYSTEM, effective ___________________, 200__; and that, I have executed
this Declaration under penalty of perjury, pursuant to the provisions of Section 267, National Internal Revenue Code
of 1997.
____________________________
Taxpayer’s Name and Signature
26
Taxation of Individuals Engaged in Providing
Services under a Service Contract with no
Employer-Employee Relationship
 Filing of Required Tax Returns:
Notarized Sworn Declaration –
• To be prepared in three copies (2 for the BIR & 1 for the
TP, but shall be photocopied so that all his current income
payors shall be provided with a copy);
• To be submitted to the Collection Division having jurisdiction
over the RDO where the individual is registered;
• To be submitted fifteen (15) days after the end of the month
where the individual’s income reaches P720,000 or June 30
of each year, whichever comes earlier. (However, if after
June 30, the individual’s income reaches P720,000, another
sworn declaration must be submitted)
27
SUMMARY OF THE TAX OBLIGATIONS OF
INDIVIDUALS HIRED UNDER “CONTRACT
OF SERVICE”
> Register with BIR using BIR Form 1901;
> Pay Annual Registration Fee of P500;
> Keep Books of Accounts;
> Issue Official Receipt for every receipt of
income (not applicable to those who opted to
pay PT/VAT through the withholding
process);
> File Required Tax Returns and information
return;
> Submit required document as may be
required in any future revenue issuance
28
WHAT THE HIRING AGENCY SHOULD REQUIRE FROM THE
INDIVIDUALS HIRED UNDER THE “CONTRACT OF SERVICE”/
“JOB ORDER” SCHEME?
REQUIRE THE INDIVIDUAL TO REGISTER WITH THE BIR
AS INDIVIDUAL ENGAGED IN BUSINESS OR PRACTICE OF
PROFESSION, WHICHEVER IS APPROPRIATE
CERTIFICATE OF REGISTRATION (COR) OF THE
INDIVIDUAL ISSUED BY THE BIR UPON HIS
REGISTRATION
OFFICIAL RECEIPT FOR EVERY PAYMENT OF INCOME/
BIR FORM 2306 DULY-SIGNED BY BOTH PAYOR AND
PAYEE
COPY OF THE SWORN DECLARATION OF INCOME DULY
RECEIVED BY THE BIR
29
INDIVIDUALS HIRED UNDER
“CONTRACT OF SERVICE”
 APPLICABLE WITHHOLDING TAX:
EWT PRESCRIBED UNDER SECTION 2.57.2 OF RR NO.
2-98
DEPENDS ON THE NATURE OF SERVICE RENDERED
IF THE NATURE OF SERVICE IS NOT AMONG THE
EXISTING ENUMERATIONS UNDER RR NO. 2-98, AS
AMENDED, APPLY THE REQUIRED WITHHOLDING AS
GOVERNMENT ENTITY UNDER SEC. 2.57.2 (N) OF RR
NO. 2-98, AS AMENDED
VAT OR PERCENTAGE TAX WITHHOLDING SHALL
ALSO APPLY (REFER TO THE GOVERNMENT
EXPENSE CHART)
30
REVENUE REGULATIONS NO. 19-2011
What are the objectives of RR 19-2011?
1. To prescribe the use of new Income Tax
Returns (Annual)
2. Modify the provisions under RMC 57-2011
What are the new ITR forms?
1. BIR Form 1700
2. BIR Form 1701
3. BIR Form 1702
31
REVENUE REGULATIONS NO. 19-2011
BEFORE (BIR Form No. 1700)
NOW (BIR Form No. 1700)
Marking of an “X” on all applicable
boxes
Shading of all applicable circle
3 choices for ATC (II011; II 040; II041
2 choices for ATC (II041; II011)
No question as to “joint filing”
With question as to “joint filing”
Information can be provided either
through script writing or print
All information is required to be written
in all capital letters on each box
provided
No question as to “gender”
With question as to “gender”
Email address is not being asked
Space is provided for the email address
Three digits for the branch code
Four digits for the branch code
32
REVENUE REGULATIONS NO. 19-2011
BEFORE (BIR Form No. 1700)
NOW (BIR Form No. 1700)
For the information on qualified
For the information on qualified
dependent children, there is no question dependent children, there is a question
if mentally or physically incapacitated
if mentally or physically incapacitated
Personal and additional exemption is
lumped under one data field
Separate fields were provided for
personal and additional exemption
No Part IV – the return is composed of
three (3) parts only.
With Part IV – Supplemental
Information
No space provided for “new address” in
case the registered address is no longer
the current address
Space is provided for the “new address”
of the taxpayer, in case the registered
address is no longer the current address
33
REVENUE REGULATIONS NO. 19-2011
What are the information required under Part IV?
• Gross Income/Receipts subjected to Final Withholding
Tax on income
• Gross Income/Receipts exempt from income tax
Under RMC 57-2011, declaration of information required
under Part IV of the tax return is optional for calendar year
2011 but for 2012 onwards, the disclosure of these
information is mandatory.
Under RR 19-2011, it amended RMC 57-2011 wherein the
filling-up of the fields provided under Part IV is made
optional. However, in case information shall be provided, the
same must be properly documented and/or substantiated
34
REVENUE REGULATIONS NO. 19-2011
BEFORE (BIR Form No. 1701)
NOW (BIR Form No. 1701)
Marking of an “X” on all applicable
boxes
Shading of all applicable circle
3 choices for ATC (II011; II 040; II041
2 choices for ATC (II041; II011)
No question as to “joint filing”
With question as to “joint filing”
Information can be provided either
through script writing or print
All information is required to be written
in all capital letters on each box
provided
No question as to “gender”
With question as to “gender”
Email address is not being asked
Space is provided for the email address
Three digits for the branch code
Four digits for the branch code
35
REVENUE REGULATIONS NO. 19-2011
BEFORE (BIR Form No. 1701)
NOW (BIR Form No. 1701)
For the information on qualified
For the information on qualified
dependent children, there is no question dependent children, there is a question
if mentally or physically incapacitated
if mentally or physically incapacitated
Personal and additional exemption is
lumped under one data field
Separate fields were provided for
personal and additional exemption
Part III-Details of Payment
Part III- Availment of Tax Income
Incentives/Exemptions
No Part IV – the return is composed of
three (3) parts only.
With additional parts (Part IV –IX)
IV- Details of Payment
V- Breakdown of Income
VI-Schedules
VII-Details of Income Tax
Incentives/Exemptions
VIII- Applicable to Estate and Trust
IX-Supplemental Information
36
REVENUE REGULATIONS NO. 6-2012
Amended the EWT rate applicable on the purchase of
minerals, mineral products and quarry resources –
Section 2.57.2 (T) of RR 2-98, as amended
Before
Now
10%
5%
RR 7-2007
RR 6-2012
37
REVENUE REGULATIONS NO. 8-2012
Amended RR 5-2011 –
RR 5-2011
Uniform and clothing
allowance not
exceeding P4,000 per
annum
RR 8-2011
Uniform and clothing
allowance not
exceeding P5,000 per
annum
38
REVENUE MEMORANDUM CIRCULAR
NO. 23-2012
Subject of this RMC - Reiteration of the responsibilities of employees
and officials of government offices for the withholding of taxes on
certain income payments subject to withholding taxes and the
imposition of penalties for non-compliance thereof
What are these responsibilities?
1. register;
2. require employee to accomplish registration/update form;
3. withhold;
4. remit;
5. do the year-end adjustment (withhold deficiency tax or refund
excess tax withheld);
6. Issue certificate of income paid and tax withheld (BIR Form 2316;
2306; 2307)
7. file annual information return
39
REVENUE MEMORANDUM CIRCULAR
NO. 23-2012
Penalties for Non-Compliance:
Violation
Non-withholding of
required tax
Under-withholding
of tax
Penalties
Legal Basis
Amount of tax not withheld
Sec. 251, Tax Code
20% interest
Sec. 249, Tax Code
Fine of not less than P10,000 and
suffer imprisonment of not less than
I year but nor more than 10 years,
upon conviction
Sec. 255, Tax Code
Amount of Under-withheld tax
Sec. 251, Tax Code
20% interest
Sec. 249, Tax Code
40
REVENUE MEMORANDUM CIRCULAR
NO. 23-2012
Penalties for Non-Compliance:
Violation
Penalties
Non-remittances of taxes Amount of tax not remitted
withheld
Late remittance /Late
filing of withholding tax
returns
Legal Basis
Sec. 251, Tax Code
20% interest
Sec. 249, Tax Code
Fine of not less than P10,000
and suffer imprisonment of not
less than I year but nor more
than 10 years, upon conviction
Sec. 255, Tax Code
25% surcharge on the amount
remitted late
Sec. 248, Tax Code
20% interest
Sec. 249, Tax Code
41
REVENUE MEMORANDUM CIRCULAR
NO. 23-2012
Penalties for Non-Compliance:
Violation
Penalties
Failure to refund
Amount of tax not refunded
excess taxes withheld 20% interest
on compensation
Failure to file
withholding tax
return or certain
information return
Legal Basis
Sec. 252, Tax Code
Sec. 249, Tax Code
Fine of not less than P10,000 and
suffer imprisonment of not less
than 1 year but not more than 10
years, upon conviction
Sec. 255, Tax Code
P1,000 for each failure but not to
exceed P25,000 during a calendar
year
Sec. 250, Tax Code
Fine of not less than P10,000 and
suffer imprisonment of not less
than 1 year but not more than 10
years, upon conviction
Sec. 255, Tax Code
42
REVENUE MEMORANDUM CIRCULAR
NO. 23-2012
Penalties for Non-Compliance:
Violation
Penalties
Legal Basis
Failure to supply
correct and accurate
information
Fine of not less than P10,000 and
suffer imprisonment of not less
than 1 year but not more than 10
years, upon conviction
Sec. 255, Tax Code
Violations of
withholding tax
regulations committed
by Public Officers
charged with the duty
to deduct and withhold
any internal revenue
tax and to remit the
same
Penalty of not less than P5,000
but not more than P50,000 or
suffer imprisonment of not less
than 6 months and 1 day but not
more than 2 years, or both, for
each act or omission, upon
conviction
Sec. 272, Tax Code
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REVENUE MEMORANDUM CIRCULAR
NO. 23-2012
Penalties for Non-Compliance:
Violation
Penalties
Legal Basis
Acts or omissions
Fine of not less than P50,000 but
penalized under the
not more than P100,000, for each
Tax Code committed act or omission, upon conviction
by any corporation,
association or general
co-partnership
Sec. 256, Tax Code
Violations of any
provision of the Tax
Code or any rule for
which no specific
penalty is provided
Sec. 275, Tax Code
Penalty of P1,000 or suffer
imprisonment of not more than 6
months, or both, for each act or
omission, upon conviction
44
ADDITIONS TO THE TAX
Section
248
• Liable for the payment of 25% surcharge
for any of the following violations:
Filing of tax return with an internal revenue other than those with whom the return
is required to be filed
Failure to pay the full or part of the amount of tax shown on any return required to
be filed under the provisions of the Tax Code , or the full amount of the tax due
for which no return is required to be filed, on or before the date prescribed for its
payment
Failure to pay the deficiency tax within the time prescribed for its payment in the
notice of assessment
45
ADDITIONS TO THE TAX
Section
249
• Liable to the payment of interest on any
unpaid amount of tax at the rate of twenty
percent (20%) per annum, until the amount
is fully paid
Section
251
• Liable to the payment of the tax supposed to
be withheld but not withheld, or tax
withheld but not remitted, inclusive of
penalties for such failures
Section
252
• Liable to penalty equivalent to the amount
not refunded to the employee , in case of
failure to refund to the employee the excess
tax withheld
46
CRIMINAL LIABILITIES
Section
255
Section
256
• Failure to file return, supply correct and
accurate information, pay tax, withhold and
remit tax and refund excess tax withheld on
compensation – criminal penalty of not less than
P10,000.00 or imprisonment of not more than 1
year but not more than 10 years
• Penal Liability of Corporations/associations
or general co-partnerships for any of the
acts or omissions penalized under the Tax
Code - Fine of not less than Fifty thousand pesos
(P50,000) but not more than One Hundred
Thousand pesos (P100,000)
47
CRIMINAL LIABILITIES
Section
272
Section
275
• Failure to withhold and remit tax withheld
committed by a government officer or
employee charged with the duty to
withhold- Fine of not less than P5,000 but not
more than P50,000 or imprisonment of not less
than 6 months and I day but not more than 2
years, or both
• Violation of other provisions of
the Tax Code or revenue
regulations – compromise
penalty of P1,000
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Thank you
49