We can finally bid goodbye to 2020 and say hello to 2021! January is that time of the year where people are re-energized after a long stretch of holiday celebrations and vacation time. For accounting, finance and tax practitioners, it also means the start of the busy season as we get immensely absorbed with year-end calculations, Fringe Benefit Taxes, and Alphabetical List (Alphalist) filing deadlines.
Revised Annual Information Returns and Alphalists
Recall that the Annual Information Return of lncome Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form 1604-CF) have been separated into two annual information returns namely: BIR Form 1604-C for income taxes withheld on compensation and BIR Form 1604-F for final withholding taxes. As such, withholding agents are required to file separate annual information returns for withholding taxes on compensation and final withholding taxes.
Pursuant to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the Bureau of Internal Revenue (BIR) previously issued Revenue Memorandum Circular (RMC) No. 73-2019, dated 23 July 2019, to inform withholding tax agents of the availability of the revised Annual Information Returns [including BIR Form No. 1604-E for Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt From Withholding Tax] in the BIR website (www.bir.gov.ph).
Looking closely at the revised BIR Forms No. 1604-C and 1604-F, you may notice the following additions: (1) whether a private withholding agent is considered as a top withholding agent, (2) the Tax Remittance Advice (TRA) / Electronic Revenue Official Receipt (eROR) / Electronic Acknowledgment Receipt (eAR) reference number of the tax remittances, (3) confirmation of the the taxpayer’s approval to process his/her information as contemplated under the Data Privacy Act of 2012 for legitimate and lawful purposes.
Moreover, the required Alphalists of the BIR Form No. 1604-C has been reduced from from the previous five (5) Alphalists to two (2) (i.e. Alphalist of Employees and Alphalist of Minimum Wage Earners). The Alphalists also requires the following information: (1) employers are now required to indicate the nationality of its foreign national employees, (2) the current employment status of employees namely: Regular (R), Casual (C), Contractual/ Project based (CP), Seasonal (S), Probationary (P), Apprentice/ Learners (AL); and (3) the reason of separation, if applicable: Terminated (T), Transferred (TR), Retirement (R), and Death (D).
On the other hand, for BIR Form No. 1604-F, the withholding agent is required to indicate whether there are payees availing of tax relief under Special Law or International Tax Treaty. It’s corresponding Alphalists now include a new schedule for other payees whose income payments are exempt from withholding tax but subject to income tax. Further, the nature of Fringe Benefit is required to be indicated for employees other than rank and file who were given fringe benefits during the year.
Tax Year 2020 Alphalist Filing
In time for filing the 2020 Alphalist, the BIR issued RMC No. 118-2020, dated 06 November 2020, which circulates the availability of Offline Electronic Bureau of Internal Revenue Forms (eBIRForms) Package Version 7.7. The package now includes the January 2018 version of BIR Form Nos. 1604-C, 1604-F, and 1604-E.
| Form No. | Description | Filing Deadline |
1604-C |
Annual Information Return of Income Taxes Withheld on Compensation |
On or before 31 January of the year following calendar year. |
1604-F |
Annual Information Return of Income Payments Subjected to Final Withholding Taxes |
|
1604-E |
Annual Information Return of Creditable Income Taxes Withheld (Expanded) / Income Payments Exempt from Withholding Tax |
On or before 1 March of the year following calendar year. |
As of writing, the revised manual returns are already available in the BIR website and eBIRForms. However, they have yet to be available in the Electronic Filing and Payment System (eFPS). Moreover, the BIR has yet to issue an updated Alphalist Data Entry & Validation Module which would include both BIR Form Nos. 1604-C and 1604-F. This brings up questions such as: (1) can the BIR Forms be readily available in the eFPS? (2) will there be an updated Alphalist Data Entry and Validation Module which can be downloadable prior to the Alphalist submission deadline? (3) If one of the answers to the aforementioned questions is “No”, will the BIR then advise of using the consolidated BIR Form No. 1604-CF in online filing? and (4) will the BIR then extend the Alphalist submission deadline like it did the previous year?
One thing I learned during 2020 is this: the thing about change is that it occurs gradually, and it doesn’t just happen overnight. It is a wonderful thing that is proof that making strenuous efforts are made to better the situations in this world. Just like how we entered the new year with high hopes embracing changes, we also have that same optimism that the regulations, software, and online facility will be made available and updated prior to the Alphalist submission deadline.
Nicole U. Capinpuyan is an Assistant Manager from the Tax group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.
The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email ph-inquiry@kpmg.com or rgmanabat@kpmg.com.