InTAX: October 2021 Issue 2 | Volume 1

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

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Bureau of Internal Revenue

 

The Bureau of Internal Revenue (BIR) issued the following:

Revenue Memorandum Circular (RMC) No. 108-2021, 14 October 2021, to clarify certain issues on the utilization of Tax Payment Certificate (TPC) issued under the Comprehensive Automotive Resurgence Strategy (CARS) program.

For the guidance of all Eligible and Registered Participants (ERPs), including other concerned stakeholders, the RMC clarifies that TPC is not used for the following:

1.     As an advance payment or deposit for excise tax due;

2.    For payment of deficiency tax liability; and

3.   For payment of Quarterly Income Tax Return (QITR) and monthly Value-Added Tax (VAT) due;

TPCs, however, can be applied to the annual Income Tax Return (ITR) and quarterly VAT returns, such being the final returns. It is indicated in the “Details of Payment” (Part III) portion of the annual ITR and quarterly VAT returns specifically under the item “Others” and “Others (specify below)”, wherein the corresponding boxes are provided for the details of payment. TPCs, utilized as payment of the tax due, shall already stop the running of period of validity once the 1) TPC's details are declared in the tax return with the amount of TPC applied against the tax due and copies of the tax return, and 2) TPCs are filed with the RDO.

The TPCs shall be authenticated only after the receipt of its hard copy, during submission of the hard copies of the abovementioned tax returns and corresponding prescribed attachments to the Revenue District Office (RDO), where the taxpayer is duly registered within a prescribed period according to the filing and payment facilities availed by the taxpayer. 

Moreover, TPCs are intended for tax payments, hence, mere receipt of the same is not taxable.

In case the TPC is found to be spurious, the ERP shall be liable for the amount of tax still due, inclusive of applicable penalties for failure to pay the tax, without prejudice to the filing of an appropriate criminal or civil action against the ERP for using a spurious TPC.

Finally, for the removal of automobiles that are covered by the CARS Program, the ERP shall attach to the excise tax return a Detailed Schedule of Removals of Automobiles (Please refer to Annex "A" for the template), as a breakdown to Schedule 1A under Part V of the excise tax return (BIR Form No. 2200-AN).

RMC No. 107-2021, 18 October 2021, to circularize Republic Act (RA) No. 11590 Entitled “An Act Taxing Philippine Offshore Gaming Operations, amending for the Purpose Sections 22, 25, 27, 28, 106, 108, and adding New Sections 125-A and 288 (G) of the National Internal Revenue Code of 1997, as Amended, and For Other Purposes””.

The salient changes in the 1997 National Internal Revenue Code, as amended (Tax Code) made by RA 11590 are as follows:

  • The definition of “offshore gaming licensee” was added to Section 22 of the Tax Code and shall be considered engaged in doing business in the Philippines.
  • The definition of “offshore gaming licensee-gaming agent” was added to Section 22 of the Tax Code who acting as such, shall neither be involved with the business operations of the offshore gaming licensee nor derive income therefrom.
  • Section 125-A of the Tax Code was added to include gaming tax on services rendered by offshore gaming licensees.

 

Particulars

Details

Gaming tax rate

5% tax in lieu of all other direct and indirect internal revenue taxes and local taxes on the entire gross gaming revenue or receipts or the agreed predetermined minimum monthly revenue or receipts from gaming, whichever is higher

Filing and remittance

On or before the 20th day following the end of each month

 

  • Summarized below are the income tax implication applicable to the following persons/entities:

 

Persons/Entities

Tax implications

Alien individuals employed by an offshore gaming licensee and its accredited service providers, regardless of term and class of working permit or visa

Subject to 25% Final Withholding Tax (FWT) based on gross income earned from all other sources within the Philippines or PHP12,500.00 per taxable month, whichever is higher. (Note: All offshore gaming licensees and service providers shall submit to the BIR an original copy of the notarized contract of employment clearly stating therein the annual salary and other benefits as well as the entitlements of the concerned alien.)

Required to have a Tax Identification Number (TIN)

In case of failure to withhold and remit the required taxes of the alien employees, penalties in accordance with the provisions of the Tax Code will apply and the concerned alien individual may also be subject to deportation and may be barred from reentering the Philippines or blacklisted as a foreign employee.

Offshore Gaming Licensees (on non-gaming revenues)

Philippine-based (domestic corporations): subject to 25% regular corporate income tax based on the taxable income derived during each taxable year from all sources within and without the Philippines

Foreign-based (resident foreign corporations): subject to 25% regular corporate income tax based on the taxable income derived during each taxable year from all sources within the Philippines

Accredited Service Providers**

** Provides ancillary services to offshore gaming licensees, which may include, but shall not be limited to, customer and technical relations and support, information technology, gaming software, data provision, payment solutions, and live studio and streaming services

 Subject to 25% regular corporate income tax based on the taxable income derived during each taxable year from all sources within and without the Philippines and to all other applicable local and national taxes;

 Not subject to the gaming tax under the new Section 125-A of the Tax Code

 

  • Sales to offshore gaming licensees subject to gaming tax under Section 125-A of the Tax Code are subject to 0% VAT.
  • Services rendered to offshore gaming licensees subject to gaming tax under Section 125-A of the Tax Code, by service providers (including accredited service providers) are subject to 0% VAT.
  • The implementing rules and regulations shall be issued within 90 days after the effectivity of this law by the Secretary of Finance upon the recommendation of the Commissioner on Internal Revenue.

 

Attached are the full texts of the issuances.

Republic Act No. 11590

Revenue Memorandum Circular No. 107-2021

Revenue Memorandum Circular No. 108-2021

Revenue Memorandum Circular No. 108-2021 Annex A

Revenue Memorandum Circular No. 108-2021 Annex B

 

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