by Gil Christopher N. Paredes and Mervin Bryann G. Ledesma
The Bureau of Internal Revenue (BIR) recently issued Revenue Memorandum Circular (RMC) No.61-2016 dated June 13, prescribing policies and guidelines for accounting and recording transactions involving "netting" or "offsetting".
The said RMC "strictly prohibit[s]," for taxatoin purposes, the accounting and recording practice of offsetting due to and due from transactions, as well as the practice of offsetting payables and receivables. Thus, the said issuance provides that accrued receivables or payables arising from sale or lease of goods or properties or the performance of service hall, "at all times", be recognized at gross for income and value-added tax (VAT) or percentage tax purposes. Further, the said RMC states that income payments subject to creditable or final withholding taxes shall be recorded at gross, regardless of whether the transactions are actually offset, or the same provides for net settlement of cash flows. Finally, the RMC provides that any amount offset against the income payment by the payor not subjected to creditable or final withholding tax shall not be allowed as a deductible expense of the payor.
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