Let's Get on the TRAIN

 

The Bureau of Internal Revenue (BIR) issued the following issuances.

 

REVENUE MEMORANDUM CIRCULAR (RMC) No. 1-2018

 

RMC No. 1-2018, dated 4 January 2018, is entitled “Prescribes the Procedures on the use of Withholding Tax Table on Compensation Income and Advises on the Change of Creditable Withholding Tax Rate on Certain Income Payments to Individuals”.

 

Why this matters

The circular provides the guidelines in using the revised withholding tax table with sample computations to supplement the recently issued RMC No. 105-2017. It also enumerates the income payments to self-employed individuals or professionals subject to the eight percent (8%) creditable withholding tax rate.

 

Key Points to Consider

As prescribed in the circular, the total amount of monetary and non-monetary compensation paid to employees after segregating the non-taxable benefits and mandatory contributions, shall be considered as taxable compensation. The applicable rates on the revised withholding tax table shall be applied depending on the compensation range, and the predetermined taxes shall be added. Below is the summary of the sample computations provided in the circular.

 

	DAILY	WEEKLY	SEMI-MONTHLY	MONTHLY
Total taxable compensation net of  mandatory contributions	2,500.00	9,500.00	15,500.00	170,500.00
Less: Compensation Range  (Minimum)	2,192.00	7,692.00	10,417.00	166,667.00
Excess	308.00	1,808.00	5,083.00	3,833.00
Add: Supplemental Compensation	-	-	-	5,000.00
Total taxable compensation for the  month	308.00	1,808.00	5,083.00	8,833.00
Withholding tax shall be computed  as follows:	356.16	576.92	-	40,833.00
Predetermined tax	92.40	452.00	1,016.60	2,826.56
Add: Tax on excess	92.40	452.00	1,016.60	2,826.56
Total Withholding Tax	448.56	1,028.92	1,016.60	43,659.89

On the other hand, the income payments to the following professionals and self-employed individuals are now subject to the 8% creditable withholding tax:

1. Professional fees, talent fees, commissions, etc. for services rendered by individuals;

2. Income distribution to beneficiaries of Estates and Trusts;

3. Income Payment to certain brokers and agents;

4. Income Payments to partners of general professional partnership;

5. Professional fees paid to medical practitionaers; and 

6. Commission of independent and/or exclusive sales representatives, and marketing agents of companies.

Previously, the above income payments were subject to the 10%/15% creditable withholding tax.

 

RMC No. 2-2018

 

RMC No. 2-2018, dated 4 January 2018, is entitled “Transition Procedures for All Taxpayers Filing Tax Returns Affected by the Revised Tax Rates Pursuant to the Provisions of Republic Act (RA) No. 10963, Otherwise Known as the Tax Reform for Acceleration and Inclusion (TRAIN)”.

Why this matters

The changes in tax rates implemented by the TRAIN are not yet reflected and implemented in the Electronic Filing and Payment System (eFPS), Electronic Bureau of Internal Revenue Form (eBIRForms) and Manual Forms. Hence, the RMC provides for transition procedures while current BIR Forms/Returns are being developed or enhaced.

Key Points to Consider

The forms/returns being enhanced and the Alphanumeric Tax Codes (ATC) affected by the TRAIN are as follows:

BIR FORM NO.	FORM NAME	ATC AFFECTED	CHANGES IN TAX RATE
1. 1602	Monthly Remittance Return of Final Income Taxes Withheld	WI 170 and WC 170	From 7 1/2 % to 15%
2. 1603	Quarterly Remittance Return of Final Income Taxes Withheld	WF 320	From 15% to 35%
3. 2252	Percentage Tax Return for Transactions Involving Shares of Stock Listed and Traded Through the Local Stock Exchange or Through Initial and/or Secondary Public Offering	PT 200	From 1/2 to 1% to 6/10 of 1%

eFPS filers shall file  and pay online the corresponding taxes due. This will result in a deficiency tax, in which case, the eFPS filer shall file and pay the deficiency tax online using BIR Form No. 0605. The enhanced versions of the forms will be announced through an RMC. 

eBIRForms Users/Filers shall file online using the existing BIR Form in the eBIRForms Package then pay the corresponding taxes due through the stated modes in the RMC. The resulting deficiency taxes will be paid through the same means and by filing a BIR Form No. 0605. Both eFPS filers and eBIRForms Users/Filers should accordingly fill in the Tax Type and must indicate ATC MC 031 – Deficiency Tax in the corresponding ATC field.

Manual filers shall fill in the applicable BIR form using the new tax rates then compute the tax due thereon. Payment shall be made via over-the-counter of AABs under the respective jurisdiction of the RDO where the taxpayer is registered.

The taxpayer must ensure that the correct tax due had been declared and paid. Deficiency taxes discovered in the validation/audit process shall be subject to all applicable penalties.

 

REVENUE MEMORANDUM ORDER (RMO) No. 1-2018

 

RMO No. 1-2018, dated 22 December 2017, is entitled “Creation of Alphanumeric Tax Code (ATC) for Sweetened Beverages”.

The RMO indicates the ATCs created for Sweetened Beverages in order to properly identify tax collection pursuant to the TRAIN law. BIR Form 2200-S/0605 should be used for tax collection and must indicate the following ATCs:

ATC	DESCRIPTION	TAX RATE
XB020	Tax on Sweetened Beverages 1. Using purely caloric and non-caloric sweetener           a. Sweetened Juice Drinks	Per Liter   P6.00
XB030	b. Sweetened Beverages	P6.00
XB040	c. Carbonated Beverages	P6.00
XB050	d. Flavored Water	P6.00
XB060	e. Energy and Sports Drinks	P6.00
XB070	f. Powdered Drinks not classified as Milk, Juice, Tea and Coffee	P6.00
XB080	g. Cereal and Grain Beverages	P6.00
XB090	h. Other Non-alcoholic beverages that contain added Sugar	P6.00
XB0100	2. Using purely high fructose corn syrup	P12.00
	3. Using purely coconut sap sugar and purely Steviol Glycosides	Exempt

Full text of the issuances are attached for your reference.

Revenue Memorandum Circular No. 1-2018

RMO No. 1-2018

Annex A to RMC No. 1-2018

RMC No. 2-2018

 

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