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Summary on the Tax briefing

held on November 9, 2018 at the


Ground Floor of Atrium Building, Makati City

The first part of the seminar is about RR 11-2018 and discussed by Ms. Erlinda Cariño, from the
Miscellaneous Operations Monitoring Division of the National Office. The discussion covers the
following:

Expanded Withholding Tax

Professional Fee, Talent Fee, and for services rendered by individual payees:

 GI below ₱3M – 5%
 GI ₱3M and above or for VAT registered where income regardless if income
received is below ₱3M – 10%

Professional Fee, Talent Fee, and for services rendered by non-individual payees:

No changes, same rate at 10% or 15% and limit at ₱720,000.00.

It must be noted that in order for the withholding agent to determine the applicable tax rate to be
applied is through the submission of the SWORN STATEMENT of the payee.

Annex B1 – For Self-Employed and/or Engaged in the Practice of Profession with


Several/Multiple Income Payors

Annex B2 - For Self-Employed and/or Engaged in the Practice of Profession with Lone Income
Payor on NO PAYOR

Annex B3 - For Non-Individual Taxpayer with Several Income Payors

Annex C - For INCOME PAYOR/WITHHOLDING AGENT’S SWORN DECLARATION

The above-mentioned SWORN STATEMENT shall be given by the individual payee to their
withholding agent who shall submit it to the BIR. Prior to the implementation of the TRAIN
Law, the professionals or individual payee submits their respective affidavit to the BIR and
presented to the withholding agent. The deadline for submission of SWORN STATEMENT this
year was on April 30, 2018 and for next year (2019), on or before the initial payment of income
or before January 15 of each year, whichever is applicable.

Failure to submit SWORN STATEMENT, higher rates shall be used regardless of the amount of
gross income.

For other income subjected to expanded withholding tax not mentioned, the rate shall be the
same.
Emphasis on Income payment to certain contractors:

 Regular tax payer – only those income payments those enumerated in certain contractors
will be subjected to 2%
 Top withholding Agent –all transaction shall be subjected to 2% wtax on services

They gave emphasis on SECTION 2.57.2. (I) or Income payment made by top withholding
agents, either private corporations or individuals, to their local/resident supplier of goods and
local/resident supplier of services other than those covered by other rates of withholding tax

 Supplier of goods – One percent (1%)


 Supplier of services – Two percent (2%)

This only applies to the regular suppliers of top withholding agents.

The term “regular suppliers”, for purposes of these regulations, refer to suppliers who are
engaged in business or exercise of profession/calling with whom the taxpayer-buyer has
transacted at least six (6) transactions, regardless or amount per transaction, either in the
previous year or current year.

In cases where income payment or the purchase is made to a Non-regular supplier/Single


purchase not exceeding ₱10,000.00, the same shall not be taxable. If the single purchase
involves Ten thousand pesos (₱10,000) or more, the income payment shall now be subjected to
withholding tax.

The speaker also talked about the amendment on Section 2.57.3 of RR No. 2-98 or Persons
Required to Deduct and Withhold where the BIR imposed ground for the mandatory audit of all
internal revenue tax liabilities, as well as the imposition of penalties pursuant to Section 275 of
the Tax Code for unjustifiable refusal of the seller-income earner/payee to be subjected to
withholding. However, the BIR provided an exception to the rule.

Individual seller-income earner/payee may NOT be subjected to withholding provided that:

1. Source of income comes from a lone income payor


2. Total income payment is less than ₱250,000 in a taxable year.
3. Concerned individual shall execute an Income Payee’s Sworn Declaration of gross
receipts/sales (Annex “B-2”) that shall be submitted to the lone payor and must be
submitted on or before the initial payment of income or before January 15 of each year,
whichever is applicable

In the event that the individual payee’s cumulative gross receipts in a year exceed ₱250,000, the
income payor/withholding agent shall withhold the prescribed withholding tax based on the
amount in excess of ₱250,000.00, despite the prior submission of the individual income payee’s
sworn declaration. On the other hand, if the individual income payee failed to submit an income
payee’s sworn declaration to the lone income payor/withholding agent, the income payment
shall be subject to the applicable withholding tax even though in a taxable year the income
payment is ₱250,000 and below.

Wihholding tax of Income Tax on Compensation

Increase in the threshold of De Miniminis benefits:

 ₱1,500.00 per semester or ₱250.00 per month for Medical cash allowance of 2
dependents per employee.
 From ₱1,500.00 to ₱2,000.00 of rice subsidy
 Non taxable uniform and clothing allowance has been increased to ₱6,000 per annum
from ₱5,000
 13th month and other benefits from ₱82,000.00 to ₱90,000.00 starting 2018.

After the short break, the speaker proceeded with the second part of the seminar which was more
of a review of what was discussed earlier about RR 11-2018.

It started with the lecture of the basic of Withholding Tax: Who and When to withhold?

For minimum wage earners, the basis of the amount is where the service of the employee is
rendered and not necessarily where he is employed. Say for instance, he is employed in Manila
with minimum wage earnings of ₱537.00 but is deployed in Cebu at ₱250.00, the compensation
shall be taxable.

For MWEs receiving other remuneration in excess of ₱250,000.00 shall be taxable.

FAQs:

“You ate in a restaurant with the bill in the amount exceeding ₱10,000.00. Are we required to
withhold and bring BIR Form 2307?”

Answer: Yes for your expense to be deductible. Non withholding disallows the expense to be
deductible. If the restaurant refused, present to them the NOTICE from the BIR that they are one
of the Top Withholding Agent or have them check with the BIR Official Website.

“In case of doubt, WITHHOLD.”


Love, BIR