A Lecture on Tax Obligations
By Euney Marie Mata-Perez on December 2, 2021
Last Monday, November 29, 2021, I had the privilege of moderating a tax lecture sponsored by the Ateneo Law Alumni Association, Inc. (ALAAI) entitled “You Can Run But You Can’t Hide From Taxes”. The main speaker was Bureau of Internal Revenue (BIR) Deputy Commissioner for Legal Service Marissa Cabreros, a fellow Atenean.
The webinar, organized by the ALAAI’s teasurer and finance chair, former BIR Deputy Commissioner Estela Sales, covered various withholding tax and final withholding tax filing obligations, including the various annual or consolidated returns that should be filed in January 2022.
In a nutshell, Cabreros reminded taxpayers of the following deadlines with regard to withholding tax obligations:
- Submission of required forms to the BIR (such as BIR Form 1604-C) including an alphalist of employees and employees qualified for substituted filing on or before January 31, 2022. The return should be filed using eFPS/eBIR forms thru the BIR website, www.bir.gov.ph, or thru email to email@example.com.
- Issuance of certificate (BIR Form 2316) to all employees on or before on or before January 31 of the succeeding calendar year or on the day of last payment of compensation if employment had been terminated
- Refund or credit of any excess tax withheld to employees not later than January 25 of the following year. However, in case of termination of employment before December, the refund should be given to the employee at the payment of the last compensation during the year.
Cabreros also reminded participants as to who are qualified for substituted filing and emphasized the obligations of current employers to adjust the amount withheld on salaries of employees who have had more than one employer for the year, such that the amount withheld in December should be adjusted for any deficiency withholding tax that may have risen because of the transfer of employment.
She stressed that for those qualified under substituted filing, BIR Form 2316 could now be used as proof of financial capacity for loan, credit card, and other applications; proof of payment of tax or for availing tax credit in the employee’s home country; support for securing travel tax exemption, when necessary; and other purposes with various government agencies such as school scholarships.
Withholding agents were reminded to register as a withholding agent, withhold the correct amount of tax, remit taxes withheld using the proper forms (BIR Form 1601-E or 1601-F), submit the alphalist of income payees (using BIR Forms 1604-E and 1604-F), and issue the required withholding tax certificates (BIR Forms 2304, 2306 or 2307) to payees. They were also reminded to require payees to submit sworn affidavits prescribed by Revenue Regulations 11-2018 where the affiants, whose gross receipts should not exceed the P3-million threshold for value-added tax (VAT), formally indicate whether they would be availing of the eight percent income tax rate in lieu of VAT or regular income tax or opt to be subject to regular graduated rates under Section 24(A)(2)(a) of the Tax Code.
Cabreros also discussed the following developments:
- Draft revenue regulations on tax-free exchanges under Section 40(C)(2) of the Tax Code, as amended by the Create law (Republic Act 11534, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises Law) are still pending. Since no ruling is required for transactions that are qualified for income tax exemption, officers in relevant BIR Revenue District Offices will review and determine if the exemption applies to taxpayer transactions within their jurisdiction.
- She touched on the extension of the amnesty period, to June 14, 2023, pursuant to RA 11569 amending RA 11213 or the Tax Amnesty Act. The filing of executed extrajudicial settlement agreements are no longer mandatory before the tax amnesty return and the 6 percent amnesty tax can be paid. However, filing of the agreement is necessary before a certificate authorizing registration is issued.
- Cabreros reminded social medial influencers, as well as those transacting through the internet, to register as taxpayers. The BIR has launched an e-registration portal to make registration easier. BIR officials are also monitoring social media influencers and online transactions and are sharing information to officials who may have jurisdiction.
- She briefly spoke about RA 11590, which introduced amendments to various Tax Code sections dealing with the taxation of entities engaged in offshore gaming and their employees. Inter-agency revenue regulations to implement the law are still to be drafted.
- Cabreros also discussed House Bill 7425, recently approved on final reading by House of Representatives, which seeks to amend Section 105 of the Tax Code. (We discussed this in a TMT article published on November 25, 2021). HB 7425, she said, should also address income taxation and not just the imposition of VAT on digital transactions.
- Lastly, she discussed changes in procedures for the availment of tax treaty benefits pursuant to Revenue Memorandum Order (RMO) 14-2021 as clarified by RMO 77-2021. There are important changes that withholding agents should be aware, which will be discussed in my next column.
Euney Marie J. Mata-Perez is a CPA-lawyer and the managing partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer and has been ranked as one of the top 100 lawyers of the Philippines by the Asia Business Law Journal.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any questions or comments, you may email the author at firstname.lastname@example.org or visit the MTF website at www.mtfcounsel.com.