Let's Get on the TRAIN
The Bureau of Internal Revenue (BIR) issued the following issuances.
REVENUE MEMORANDUM CIRCULAR (RMC) No. 1-2018
RMC No. 1-2018, dated 4 January 2018, is entitled “Prescribes the Procedures on the use of Withholding Tax Table on Compensation Income and Advises on the Change of Creditable Withholding Tax Rate on Certain Income Payments to Individuals”.
Why this matters
The circular provides the guidelines in using the revised withholding tax table with sample computations to supplement the recently issued RMC No. 105-2017. It also enumerates the income payments to self-employed individuals or professionals subject to the eight percent (8%) creditable withholding tax rate.
Key Points to Consider
As prescribed in the circular, the total amount of monetary and non-monetary compensation paid to employees after segregating the non-taxable benefits and mandatory contributions, shall be considered as taxable compensation. The applicable rates on the revised withholding tax table shall be applied depending on the compensation range, and the predetermined taxes shall be added. Below is the summary of the sample computations provided in the circular.
Total taxable compensation net of
Less: Compensation Range
|Add: Supplemental Compensation||-||-||-||5,000.00|
Total taxable compensation for the
Withholding tax shall be computed
|Add: Tax on excess||92.40||452.00||1,016.60||2,826.56|
|Total Withholding Tax||448.56||1,028.92||1,016.60||43,659.89|
On the other hand, the income payments to the following professionals and self-employed individuals are now subject to the 8% creditable withholding tax:
1. Professional fees, talent fees, commissions, etc. for services rendered by individuals;
2. Income distribution to beneficiaries of Estates and Trusts;
3. Income Payment to certain brokers and agents;
4. Income Payments to partners of general professional partnership;
5. Professional fees paid to medical practitionaers; and
6. Commission of independent and/or exclusive sales representatives, and marketing agents of companies.
Previously, the above income payments were subject to the 10%/15% creditable withholding tax.
RMC No. 2-2018
RMC No. 2-2018, dated 4 January 2018, is entitled “Transition Procedures for All Taxpayers Filing Tax Returns Affected by the Revised Tax Rates Pursuant to the Provisions of Republic Act (RA) No. 10963, Otherwise Known as the Tax Reform for Acceleration and Inclusion (TRAIN)”.
Why this matters
The changes in tax rates implemented by the TRAIN are not yet reflected and implemented in the Electronic Filing and Payment System (eFPS), Electronic Bureau of Internal Revenue Form (eBIRForms) and Manual Forms. Hence, the RMC provides for transition procedures while current BIR Forms/Returns are being developed or enhaced.
Key Points to Consider
The forms/returns being enhanced and the Alphanumeric Tax Codes (ATC) affected by the TRAIN are as follows:
|BIR FORM NO.||FORM NAME||ATC AFFECTED||CHANGES IN TAX RATE|
|1. 1602||Monthly Remittance Return of Final Income Taxes Withheld||WI 170 and WC 170||From 7 1/2 % to 15%|
|2. 1603||Quarterly Remittance Return of Final Income Taxes Withheld||WF 320||From 15% to 35%|
|3. 2252||Percentage Tax Return for Transactions Involving Shares of Stock Listed and Traded Through the Local Stock Exchange or Through Initial and/or Secondary Public Offering||PT 200||From 1/2 to 1% to 6/10 of 1%|
eFPS filers shall file and pay online the corresponding taxes due. This will result in a deficiency tax, in which case, the eFPS filer shall file and pay the deficiency tax online using BIR Form No. 0605. The enhanced versions of the forms will be announced through an RMC.
eBIRForms Users/Filers shall file online using the existing BIR Form in the eBIRForms Package then pay the corresponding taxes due through the stated modes in the RMC. The resulting deficiency taxes will be paid through the same means and by filing a BIR Form No. 0605. Both eFPS filers and eBIRForms Users/Filers should accordingly fill in the Tax Type and must indicate ATC MC 031 – Deficiency Tax in the corresponding ATC field.
Manual filers shall fill in the applicable BIR form using the new tax rates then compute the tax due thereon. Payment shall be made via over-the-counter of AABs under the respective jurisdiction of the RDO where the taxpayer is registered.
The taxpayer must ensure that the correct tax due had been declared and paid. Deficiency taxes discovered in the validation/audit process shall be subject to all applicable penalties.
REVENUE MEMORANDUM ORDER (RMO) No. 1-2018
RMO No. 1-2018, dated 22 December 2017, is entitled “Creation of Alphanumeric Tax Code (ATC) for Sweetened Beverages”.
The RMO indicates the ATCs created for Sweetened Beverages in order to properly identify tax collection pursuant to the TRAIN law. BIR Form 2200-S/0605 should be used for tax collection and must indicate the following ATCs:
Tax on Sweetened Beverages
1. Using purely caloric and non-caloric sweetener
a. Sweetened Juice Drinks
|XB030||b. Sweetened Beverages||P6.00|
|XB040||c. Carbonated Beverages||P6.00|
|XB050||d. Flavored Water||P6.00|
|XB060||e. Energy and Sports Drinks||P6.00|
|XB070||f. Powdered Drinks not classified as Milk, Juice, Tea and Coffee||P6.00|
|XB080||g. Cereal and Grain Beverages||P6.00|
|XB090||h. Other Non-alcoholic beverages that contain added Sugar||P6.00|
|XB0100||2. Using purely high fructose corn syrup||P12.00|
|3. Using purely coconut sap sugar and purely Steviol Glycosides||Exempt|
Full text of the issuances are attached for your reference.
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