Legal basis and prior regulation amended
- Section 1 grounds the issuance on Section 244 in relation to Section 245 of the National Internal Revenue Code of 1997 (Tax Code of 1997), as amended.
- Section 2 directs that Sections 2 and 14 of Revenue Regulations No. 11-2018 are amended.
- Section 2(a) renumbers and further amends Section 2.57.2 of RR No. 2-98 as reflected through the amendment to RR No. 11-2018.
Scope and coverage of withholding tax items
- Section 1 limits the amendment to specific provisions of Revenue Regulations No. 11-2018.
- Section 2(a) amends Section 2.57.2 on Income Payments Subject to Creditable Withholding Tax and Rates.
- Section 2(a) requires withholding of a creditable income tax at the rates specified for each class of payee.
- Withholding under Section 2(a) applies to income payments from the items listed, including professional fees, promotional and talent fees, and any other form of remuneration for services rendered.
- Section 2(a) covers persons residing in the Philippines for purposes of the creditable withholding tax rule stated.
Credit withholding rates for services remuneration
- Section 2(a) provides that withholding is imposed on the gross professional, promotional, and talent fees or any other form of remuneration for services rendered.
- For individual payees, the applicable rate depends on gross income for the current year:
- If gross income for the current year did not exceed P3M, the withholding rate is 5%.
- If gross income is more than P3M, the withholding rate is 10%.
- VAT Registered regardless of amount is subject to 10%.
- For non-individual payees, the applicable rate depends on gross income for the current year:
- If gross income for the current year did not exceed P720, 000, the withholding rate is 10%.
- If gross income exceeds P720, 000, the withholding rate is 15%.
- Section 2(a) states that these rates apply except as otherwise provided.
Transitory process for availing exemption from rates
- Section 14 applies to an income recipient/payee who is subject to withholding tax under Section 2 (Section 2.57.2) and avails to be exempt from the prescribed withholding tax rates.
- The income recipient/payee must submit on or before April 20, 2018 a duly accomplished Income Payee as Sworn Declaration of Gross Receipts/Sales together with a copy of the Certificate of Registration (COR) to his/her income payor/withholding agent.
- The income payor/withholding agent who received the Income Payee as Sworn Declaration and the COR copy must submit on or before April 30, 2018 a duly accomplished Income Payor/Withholding Agent as Sworn Declaration together with the List of Payees who submitted the declarations and copies of CORs.
- If an income payor/withholding agent withholds in excess of what is prescribed in these regulations, the excess must be refunded to the payee by the income payor/withholding agent.
- The income payor/withholding agent must treat the refund as an adjustment to the remittable withholding tax due for the first quarter withholding tax return, and must also reflect the adjusted amount in the Alphabetical List of Payees attached to the first (1st) quarter return.
- The same list of payees subject to refund—because of change of rates of withholding or because the income recipient/payee submitted the Income Payee as Sworn Declaration of Gross Receipts/Sales and COR to qualify for exemption—must be attached to the return filed on or before April 30, 2018.
- If BIR Form No. 2307 (Certificate of Tax Withheld at Source) has already been given to the payee, the payee must return it to the payor upon receipt of the refunded amount, together with a corrected BIR Form No. 2307, if still applicable.
- If BIR Form No. 2307 was not already corrected/returned, the certificate to be given to the payee on or before the twentieth (20th) day after the close of the first (1st) quarter must reflect the corrected amount of tax withheld.
- Section 14 prohibits using BIR Form No. 2307 twice for the same amount of income payment from the same income payor/withholding agent for the same period.
Amendment effect, repeal, and final rule
- Section 3 revokes all existing rules and regulations or parts thereof that are inconsistent with these regulations.
- Section 4 states that the regulations take effect immediately.