Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 8-2014)
Taxable income means the pertinent items of gross income specified in the Tax Code, less the deductions and/or personal and additional exemptions, if any, authorized for such types of income by the Code or other special laws.
Gross income is defined as all income derived from whatever source, including but not limited to compensation for services, gross income from trade or business, gains from property dealings, interests, rents, royalties, dividends, annuities, prizes and winnings, pensions, and a partner's distributive share from net income of a general professional partnership.
Examples include fees, salaries, wages, commissions, business income, gains from property dealings, interests, rents, royalties, dividends, annuities, prizes, winnings, pensions, and partners' distributive shares.
Sections 57 to 59 and Sections 78 to 83 of the Tax Code govern withholding taxes, along with Revenue Regulations No. 02-1998, as amended.
The concerned withholding agents must require all individuals and entities claiming tax exemption to provide a valid, current, and subsisting tax exemption certificate or ruling before payment of the related income.
It must explicitly recognize the grant of tax exemption and the corresponding exemption from the imposition of withholding tax.
The taxpayer will be subject to the payment of appropriate withholding taxes due on the transaction.
The withholding agent will face penalties under Section 251 and other pertinent sections of the Tax Code.
Yes, it revokes all other circulars or issuances inconsistent with it.
The circular took effect immediately upon its issuance on February 6, 2014.