Creditable Withholding Tax on Top 5,000 Corporations

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BIR REVENUE MEMORANDUM CIRCULAR NO. 28-94: Creditable Withholding Tax on Top 5,000 Corporations

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Title Supreme Court: Creditable Withholding Tax on Top 5,000 Corporations

Law: Bir (dof) Revenue Memorandum Circular No. 28-94

Decision Date: Jul 29, 1994

The BIR mandates a one percent creditable withholding tax on income payments made by the top 5,000 corporations to their local suppliers of goods, requiring compliance with specific reporting and remittance procedures.

income payments

top corporations

revenue regulations

A

Definition of "Goods"

Refers specifically to tangible personal property.
Excludes intangible personal property and real property.

Definition of "Local Suppliers of Goods"

Suppliers from whom top 5,000 corporations regularly purchase goods.
Casual or one-time purchases are generally excluded unless the amount reaches P100,000 or more, in which case withholding applies.

Identification and Notification of Withholding Agents

Corporations are not withholding agents unless notified in writing by the Commissioner that they are among the top 5,000 corporations.
Corporations classified and notified as large taxpayers by the BIR Large Taxpayers Division are considered part of the top 5,000 but must also receive written notice for withholding authority to be effective.

Remittance and Filing Requirements

Withholding agents must remit withheld taxes and file withholding tax returns by the 10th day of the following month.
Payment is made through accredited agent banks under the New Payment Control System (NPCS), authorized collection agents, or authorized treasurers of the municipality where the agent’s legal residence or principal business is located.

Submission of Regular Suppliers List

Withholding agents are required to submit a semestral list of regular suppliers to the Revenue District Office overseeing their principal place of business.
Deadlines for list submissions are June 30 and December 31 each year.

Issuance of Withholding Tax Statements

Withholding agents must issue tax statements to payees (individual or corporate) using prescribed BIR forms.
Statements must detail income payments and taxes withheld.
Issuance must occur within 15 days after the close of the taxable quarter used by the payee for quarterly income tax returns.
Taxes withheld can be credited against the payee's income tax liabilities.

Enforcement and Dissemination

All internal revenue officials and concerned parties are directed to give wide publicity to this Revenue Memorandum Circular to ensure proper compliance and awareness.

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