QuestionsQuestions (Republic Act No. 6110)
RA 6110 amending Section 5 makes it the duty of the Commissioner to prescribe, provide, and distribute licenses, internal revenue stamps, strip stamps, science stamps, and labels/tags used in sealing weights and measures, and all other forms, certificates, bonds, records, invoice books, instruments, and apparatus needed to administer laws under the BIR’s jurisdiction. It also provides that internal revenue stamps, strip stamps, science stamps, and labels shall be printed in the same manner as Philippine currency.
The Commissioner (or deputies) may request and obtain valuable information for discovering potential taxpayers from offices of national and local governments (e.g., Register of Deeds, SEC, Philippines Patent Office, mayors and treasurers, GSIS, SSS, etc.). Those offices must furnish the desired information within 30 days from receipt of the request.
It provides that the BIR shall have one chief known as the Commissioner of Internal Revenue and two assistant chiefs known as Deputy Commissioners.
It enumerates national internal revenue taxes to include: income tax; estate, inheritance and gift taxes; specific taxes on certain articles; privilege taxes on business or occupation; documentary and science stamp taxes; mining taxes; and miscellaneous taxes, fees, and charges such as taxes on banks, finance companies, insurance companies, franchise taxes, taxes on amusements, fees for sealing weights and measures, firearms license fees, tobacco inspection fees, water rentals, and other taxes imposed/collected by the BIR.
The taxpayer may claim the corresponding personal exemptions in full for the year.
If the taxpayer dies during the year, his estate may still claim the personal and additional deductions as if he died at the close of the year. If the spouse or any dependents die during the year, the taxpayer may still claim the same deductions as if they died at the close of the year.
For non-resident corporations, it imposes a tax equal to 35% of gross income received from sources within the Philippines, listing categories such as interests, dividends, rents, royalties, salaries/wages, premiums, annuities, technical services compensation, and other fixed or determinable income and capital gains, with a proviso that premiums do not include reinsurance premiums.
A foreign corporation engaged in trade or business within the Philippines (except foreign life insurance companies) is taxable under subsection (a) of Section 24 on its total net income received in the preceding taxable year from sources within the Philippines.
It targets corporations formed/availed of to prevent shareholder/member tax by accumulating gains instead of distributing them. The corporation is levied a tax equal to 25% of the undistributed portion of its accumulated profits or surplus, in addition to the tax imposed by Section 24, computed and collected in the same manner as that tax.
It includes development banks as provided in Republic Act No. 4093, as amended, among the items covered in Section 27.
Income derived as rewards under Republic Act No. 2338 is excluded from gross income (as reflected in the amended miscellaneous items subsection).
Only 25% of such dividends is returnable (i.e., included/treated for purposes of the tax imposed by Section 24).
For an individual, ordinary and necessary entertainment expenses are deductible only up to the amount not exceeding P1,000 or 5% of gross income, whichever is lesser. Any amount exceeding this allowance must be supported by corresponding vouchers/receipts.
The general rule limits deductible contributions to an amount not exceeding 6% (for individuals) or 3% (for corporations) of the taxpayer’s taxable net income computed without benefit of this paragraph. RA 6110 introduces that certain donations (enumerated items like to government-recognized schools under conditions; special named funds/institutions under special laws) shall be deductible in full and shall not be included in computing the maximum amount deductible under the general limitation.
Such contribution or gifts are allowable as deductions only if verified under rules and regulations prescribed by the Secretary of Finance.
An individual (other than a non-resident alien) may elect a standard deduction equal to P5,000 or 10% of gross income, whichever is lesser. The election must be signified in the tax return; otherwise, the taxpayer is considered to have availed of the deductions under the preceding subsection. The election is irrevocable for that taxable year.
Examples include: (A) an official or employee of the government or has a contract with the Government of the Republic of the Philippines (or any agency/instrumentality, including GOCCs), regardless of appointment duration; and (F) a person who has travelled abroad (except children below 18). (Other listed categories include being a professional, property owner/mortgagee, vehicle owner/mortgagee, stock/security owner or mortgagee, candidate for public office, engaged in trade or commerce, etc.)
It requires that the income tax return contain a declaration that the taxpayer or authorized representative made it under the penalties of perjury.
After assessment, returns and corrections are filed with the Commissioner and constitute public records open to inspection upon order of the President, subject to rules and regulations prescribed by the Secretary of Finance (within 60 days from effectivity). The Commissioner may also annually prepare and publish lists available for public inspection (upon written request and pursuant to regulations) showing names/addresses of persons who filed returns and amounts of income declared and income tax paid, and these lists for the preceding year in each municipality/city must be posted at the main entrance of the city hall/municipal building.
For deficiency determinations, interest is assessed at 12% per annum from the due date of the tax to the date the deficiency is assessed. RA 6110 amends Section 100 and inserts Section 118-A to apply the same 12% per annum interest concept to deficiency amounts upon notice and demand by the Commissioner, to be collected as part of the tax.