Special InTAX: May 2021 Issue 1 | Volume 3

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

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special intax


Bureau of Internal Revenue


The Bureau of Internal Revenue (BIR) issued the following:

Revenue Memorandum Circular (RMC) No. 67-2021, 30 April 2021, to clarify issues relative to the temporary reduction of Percentage Tax rate imposed under Section 116 of the National Internal Revenue Code of 1997, as Amended (Tax Code) by Section 13 of Republic Act (RA) No. 11534, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.

The salient points of the Circular are as follows:

1.     The decrease of Percentage Tax rate from three percent (3%) to one percent (1%), effective 1 July 2020 until 30 June 2023 pursuant to Section 13 of R.A. No. 11534, applies to both corporate taxpayers and self-employed individuals and professionals whose gross sales or gross receipts are not exceeding the three million pesos (P3,000,000.00) threshold, except for cooperatives and self-employed individuals and professionals availing the 8% income tax rate.

2.     The 1% percentage tax rate covers the whole Section 116 of the Tax Code which provides that any person whose sales or receipts are exempt under Section 109(1)(CC) of the Tax Code from the payment of VAT and who is not a VAT-registered person, provided that the taxpayer did not opt to be VAT-registered even if the P3,000,000.00 threshold was not breached.

The reduced rate of 1% for percentage tax prescribed under Section 116 is imposed on transactions or activities which are neither specifically exempt under Section 109 of the Tax Code nor are subject to VAT, because they have not reached the P3,000,000.00 VAT threshold as provided for under Section 109(1)(CC) of the same Code.

3.     Taxpayers who filed their 3rd and 4th quarter Percentage Tax returns(BIR Form No. 2551Q) for 2020 and those who may have filed their 1st quarter percentage tax returns for 2021 using the 3% rate are required to amend their duly filed Percentage Tax returns using the 1% rate to reflect the overpaid taxes.

4.     Amendment of the Percentage Tax returns is not subject to penalty for affected taxpayers which/who will carry over the overpaid percentage taxes.

5.     The transitory provisions in Revenue Regulations (RR) No. 4-2021 allows flexibility to affected taxpayers by allowing them to carry over the overpaid taxes for taxpayers to utilize the overpaid amount against future percentage tax liabilities. Thus, the taxpayer is already precluded from claiming tax refund for the overpayment. The carry-over is intended for Percentage Taxpayers who are regularly filing the returns and are expected to have overpaid taxes as a result of the retroactive application of CREATE starting 1 July 2020.

6.     Percentage taxpayers who have overpaid taxes as a result of the decrease of tax rate from 3% to 1% starting 1 July 2020 until the effectivity of RR No. 4-2021 are allowed for a tax refund in the event that:

a.     The taxpayer shifted from non-VAT to VAT-registered status; or

b.     The taxpayer has opted to avail the eight percent (8%) income tax rate at the beginning of TY 2021.

7.     The only option reflected in Percentage Tax Return (BIR Form No. 2551Q) is refund or issuance of Tax Credit Certificate (TCC). The percentage taxpayer who shall carry-over the overpaid amount should observe the following guidelines:

a.     For taxpayers filing BIR Form No. 2551Q manually, neither of the options "To be Refunded" or "To be Issued a Tax Credit Certificate" shall be marked in the said tax return but rather write the phrase "To be Carried Over" on the return; or

b.     For eFPS and eBIRForms filers, the option "To be Issued Tax Credit Certificate" shall be marked as a workaround procedure to proceed with the electronic filing. For purposes of the transitory provisions in Section 3 of RR No. 4-2021, it is presumed that the taxpayer will carry over the overpaid tax to the succeeding taxable quarter once the said option has been chosen. However, if the taxpayer is intent in having the overpaid tax to be refunded or issued with TCC for any of the reason stated in No. 6, the BIR shall be informed thru BIR Form No. 1914 or the "Application for Tax Credits/Refunds" by indicating therein that it shall be in the form of refund or TCC.

The same procedure shall be undertaken, whether the return was filed manually or electronically, by the percentage taxpayer until the overpaid amount has been fully utilized.

8.     If the percentage taxpayer will carry over the overpayment but has inadvertently marked either tax refund or issuance of TCC on the return, the Bureau will presume that the overpaid amount will be carried over. Once the overpayment has been carried forward, the option initially chosen shall automatically be superseded.

9.     The carried over percentage tax will be disallowed in the event that the percentage taxpayer carried over the alleged overpayment without amending the affected Percentage Tax returns to any quarter/s starting 2021. The amended Percentage Tax returns showing the overpayment shall be the basis for the carry-over.

10.  The withholding agent/government agency shall be responsible in refunding the overpaid taxes of Individuals under Job Order or Service Contract Agreement who availed of substituted filing on Percentage Tax pursuant to RMC No. 51-2018. Individual contractors claiming the refund shall issue an authorization and shall surrender the certificates of withholding of percentage taxes (BIR Form 2306) with the withholding agent/government agency.

For Percentage taxpayers who are not substituted filers, the overpayment shall be carried forward to the succeeding quarter/s pursuant to the transitory provisions in Section 3 of RR No. 4-2021, assuming that the percentage taxpayer has not shifted from non-VAT to VAT registration status or did not avail of the 8% income tax rate pursuant to RMC No. 51-2018.

11.  The government, its instrumentalities, LGUs, SUCs, including GOCCs and GFIs shall amend previously filed returns including the respective Alphalists, if any, but the reduction or resulting overpayment shall only be to the extent of the amount to be refunded.

12.  Under the CREATE, only the rate was reduced for percentage tax imposed in Section 116 of the Tax Code from 3% to 1% effective 1 July 2020 until 30 June 2023. Consistent with the repealing clause of Section 4 of RR No. 4-2021, previous issuances where the 3% percentage tax was mentioned were deemed modified and reduced to 1%.

13.  It is to be emphasized that there are two (2) types of withholding taxes involving government money payments pursuant to the provisions of RR No. 2-98, as amended, summarized as follows:

a.       Income Tax - in the form of creditable withholding taxes with the rates depending on the nature of the transaction as required under existing issuances; and

b.       Sales Tax - in the form of 5% creditable withholding VAT if the supplier is VAT-registered or 1% percentage tax if the supplier is subject to percentage tax under Section 116 of the Tax Code, or any other applicable rate depending on the transaction as prescribed under existing issuances.

14.  If the whole amount of 3% percentage tax has been claimed as deductible expense for purposes of computing the income tax due, the taxpayer can no longer be allowed as carry over or apply for tax refund/ICC the alleged overpaid percentage tax.

15.  Only the Annual Income Tax Returns (AITRs) filed are needed to be amended to qualify for the carry-over or refund of the overpaid percentage taxes, without necessarily amending the corresponding Audited Financial Statement (AFS). However, if the AFS will not be amended, the overpaid percentage tax shall be reflected as a reconciling item in the amended AITR/s.

RMC No. 66-2021, 18 May 2021, to circularize the availability of BIR Form Nos. 1702Q January 2018 (ENCS) in the Electronic Filing and Payment System (eFPS) and 1702Qv2008C in the Electronic Bureau of Internal Revenue Forms (eBIRForms),

The Circular is issued to disseminate the availability of the following versions of BIR Form No. 1702Q:

1.     BIR Form No. 1702Q January 2018 (ENCS) - This form is already available in eFPS and the reduced rates pursuant to CREATE Law are already included/updated. The taxpayer shall select the ATC with the corresponding tax rate to be used. Non-individual eFPS users shall file and pay their quarterly income tax return [BIR Form No. 1702Q January 2018 (ENCS)] using the eFPS Facility.

2.     BIR Form No. 1702Qv2008C - The January 2018 version of the form is not yet available in the Offline eBIRForms Package. Instead, the 2008 version has been modified as follows:


Item/Field No.




Tax Rate (except MCIT Rate)

Fields/Items are editable and enterable

Schedule 1

Tax Rate (in row 2)


The abovementioned version of the form is already available in the Offline eBIRForms Package v7.9.1 and the new package is downloadable from the following sites:

Non-individual eBIRForms users shall file their quarterly income tax return by using BIR Form No. 1702Qv2008C in the Offline eBIRForms Package v7.9.1. Payment of the tax due thereon, if any, shall be made thru:

1.     Manual Payment - with the AAB located within the territorial jurisdiction of the Large Taxpayer Service (LTS)/Revenue District Office (RDO) where the taxpayer (Head Office of the business establishment) is registered; or

In places where there are no AABs, the return shall be filed and tax due shall be paid with the Revenue Collection Officer (RCO) under the jurisdiction of the RDO where the taxpayer (Head Office of the business establishment) is registered using MRCOS facility.

2.     Online Payment through: (a) Gcash/PayMaya; (b) Landbank of the Philippines (LBP) Link.BizPortal; (c) Development Bank of the Philippines (DBP) Tax Online; (d) Union Bank Online Web and Mobile Payment Facility; or (e) PESONet through LBP Link.Biz Portal.


Attached are the full texts of the issuances.

Revenue Memorandum Circular No. 66-2021

Revenue Memorandum Circular No. 67-2021

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