Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 14-2003)
The main purpose of BIR Revenue Regulations No. 14-2003 is to simplify, streamline, and make more efficient the collection of the percentage tax or the VAT on the sale of goods or services subject to the 3% percentage tax under Section 116 or VAT under Sections 106 and 108 of the National Internal Revenue Code through withholding tax at the source.
Any person, natural or juridical, who purchases goods or pays for services in the course of trade or business from non-VAT registered persons subject to the 3% percentage tax under Section 116 of the Code is required to withhold the 3% percentage tax.
The threshold is gross annual sales or gross annual receipts not exceeding five hundred fifty thousand pesos (P550,000.00), and these persons do not opt to be registered as VAT taxpayers.
The withheld percentage tax is remitted by the withholding agent using BIR Form No. 1600 (Monthly Remittance Return of Value-added Tax and Other Percentage Taxes Withheld) to the appropriate collection agents such as Accredited Agent Banks (AAB) or Revenue Collection Officers (RCO).
The notice allows the payee with only one payor to have the withholding agent's filed BIR Form No. 1600 serve as the substituted percentage tax return of the payee, thus exempting the payee from filing the regular monthly percentage tax return (BIR Form No. 2551M) for those receipts.
BIR Form No. 2306 serves as the Certificate of Final Tax Withheld at Source for the 3% percentage tax.
The penalties include additions to the tax and other penal sanctions prescribed under TITLE X of the National Internal Revenue Code and its implementing rules and regulations, applicable based on the violation.
The taxpayer-payee must change registration to VAT within one month from the close of the month when the threshold was exceeded and become VAT-registered starting the first day of the month following the VAT registration.
Any person, natural or juridical, purchasing goods or paying for services from VAT-registered persons subject to VAT under Sections 106 and 108 of the Code in the course of trade or business is required to withhold the 10% VAT.
The VAT-registered payee must execute the 'Waiver of the Privilege to Claim Input Tax Credits' and the 'Notice of Availment of the Option to Pay the Tax through the Withholding Process' and furnish copies to the payor and relevant Revenue District Offices.
They are exempted from the obligation of issuing duly registered VAT official receipts covering their receipts of payments for services sold. Instead, the Certificate of Final Tax Withheld at Source (BIR Form No. 2306) or Certificate of Creditable Tax Withheld (BIR Form No. 2307) shall be treated as the substituted official receipt.
The withholding tax returns and payments must be filed and made within ten (10) days following the end of the month the withholding was made or accrued.
Yes, the option once chosen remains the manner of remitting tax unless canceled by the payee by filing the appropriate Notice of Cancellation forms as provided.
The payee must file the regular percentage tax return (BIR Form No. 2551M) consolidating all taxable transactions and apply the taxes withheld by the several payors as creditable tax evidenced by BIR Form No. 2307.
Yes, VAT-registered sellers must comply with quarterly submission of summary lists of sales, domestic purchases, and importations as required by Revenue Regulations No. 8-2002.