Tuesday, October 8, 2013

RR 12-2013 on Mandatory Withholding in Philippines

Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 12-2013 dated July 12, 2013 (RR No. 12-2013) amending Section 2.85.5 of Revenue Regulations No. 2-98 (RR No.2-98), as amended, relative to the requirements for deductibility of certain income payments.

Under RR No. 12-2013, no deduction shall be allowed on income payments if it is shown that the applicable withholding taxes required by  the rules had not been withheld. No deduction will also be allowed even if during tax assessment on deficiency withholding taxes for alleged failure to withhold, the taxpayer paid the withholding taxes.

In effect RR No. 12-2013 makes it mandatory for taxpayers to withhold on expenses required to be withheld for purposes of expense deduction for income tax purposes in the Philippines. For easy reference, please refer below to the copy of Revenue Regulations No. 12-2013 from the BIR website.

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RR No. 9-2013 on Tax Compromise Fee in Philippines

The Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 9-2013 dated May 10, 2013 (RR No. 9-2013) amending Revenue Regulations No. 30-2002 (RR No. 30-2002) relative to the amount of compromise payment of deficiency internal revenue taxes.

In the past under RR No. 30-2002, the rule was to apply for compromise of deficiency taxes under any of the following and upon approval, the compromise amount shall then be paid:

  • Minimum amount of 40% of basic tax due based on doubtful validity; or
  • Minimum amount of 10% of basic tax due based on financial incapacity.

Under RR No. 9-2013, the compromise offer shall be paid by the taxpayer upon filing of the application for compromise settlement and the application for compromise shall not be processed unless the compromise amount is paid. In case of disapproval of the application, the amount paid shall be deducted from the total outstanding tax liabilities.

Please see below Revenue Regulations No. 9-2013 for easy reference.


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