Extension of Deadline for the Submission of Annual Information Return of Income Taxes (BIR Form Nos. I604C and 1604F)
Very recently The Bureau of Internal Revenue (BIR) has brought in procedural changes for filing tax forms through notification issued RMC No. 124-2019. All taxpayers are now to follow the Alphalist Data Entry and Validation Module (Version 6.1) for the purpose of submission of forms to the BIR.
In the light of these new changes a software is being developed, the deployment of which is still being determined until completion and until all technical issues are addressed. To avoid any hardship for the tax-payers, and to help the tax payer comply with these new procedures and requirements, submission of Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form Nos. 1604-C and 1604-F), including the Alphabetical List of Employees/ Payees From Whom Taxes Were Withheld, is extended from 31st January 2020 to 28th February 2020.
To go through the notification please refer the official link: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20Full%20Text%202019/RMC%20No.%20124-2019.pdf.
New Monthly Basic Salary Ceiling for Philhealth Contribution
The Government recently released the Universal Health Care Act (UHC) in-line with the ruling act. The monthly premium contribution of Philhealth Scheme has been introduced. As per this new rule, premium contribution rates would gradually increase by 0.5% yearly, while income ceilings for contributions would go up by PHP 10,000 per year, as follows:
|Year||Premium Rate||Income Floor||Income Ceiling||Range of Contribution|
|2019||2.75%||PHP 10,000||PHP 50,000||PHP 275 to PHP 1375|
|2020||3.00%||PHP 10,000||PHP 60,000||PHP 300 to PHP 1800|
|2021||3.50%||PHP 10,000||PHP 70,000||PHP 350 to PHP 2450|
|2022||4.00%||PHP 10,000||PHP 80,000||PHP 400 to PHP 3200|
|2023||4.50%||PHP 10,000||PHP 90,000||PHP 450 to PHP 4050|
|2024||5.00%||PHP 10,000||PHP 100,000||PHP 500 to PHP 5000|
|2025||5.00%||PHP 10,000||PHP 100,000||PHP 500 to PHP 5000|
Note: Philhealth Contribution should be calculated based on (BMS) Basic Monthly Salary but it shall not include Sales Commission, Overtime Pay, Allowances, 13th Monthly Pay, Bonuses or other gratuity payments.
The Effective date of the new basic monthly salary and rate of contribution was 9th December 2019.
To go through the notification please refer the official link: https://www.philhealth.gov.ph/circulars/2019/circ2019-0009.pdf
Bureau of Internal Revenue (BIR) approves the usage of Electronic Form/Certificate
The Bureau of Internal Revenue (BIR) has issued RMC No. 121-2019, to grant the requests of most withholding agents to use a computer / system generated for the BIR Certificates to be issued to their employees or BIR Form No. 2316 (Certificate of Compensation Payment / Tax Withheld.
Such an electronic would be considered valid only if the below conditions are complied with:
- The BIR Certificate must be in accordance with the latest version officially approved by the BIR
- The signatories must have been duly authorized by the taxpayer
- BIR Certificates must be signed by both parties involved for it to be valid and binding
Note: The person who affixes his/her signature shall be held administratively and criminally liable under the Tax Code and other existing laws for any misrepresentations indicated in the BIR Certificates. In case of Associations, Partnerships and Corporations, the partner, president, general manager, branch manager, treasurer, officer-in-charge and employees responsible will be liable for the violations.
The signature affixed must be with the intention of signing, approving and attesting to the truth and correctness of such certificate.
To go through the notification please refer the official link: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20Full%20Text%202019/RMC%20No.%20121-2019.pdf
Clarification on Foreign National Worker's Taxation and Compliance
The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular No. 116-2019 in order to clarify Section 4.C of Revenue Regulations No. 8-2018, stating that preferential income tax rate for
employees of the following entities, without prejudice on preferential tax rates under the existing international tax treaties, are no longer applicable and shall be subject to regular tax rate:
- Employees of Regional or Area Headquarters (RAHQs) and Regional Operating Headquarters (ROHQs) of Multinational Companies;
- Offshore Banking Units (OBUs) and;
- Petroleum Service Contractor and Subcontractor
RMC No. 116-2019 clarifies that the respective incomes of the alien
individuals employed by the abovestated entities are now similarly taxed as income of regular employees of locally established entities. Also all the administrative requirements by the BIR would be applicable to such employee as below:
- Employer's Annual Information Return of Income Taxes Withheld on Compensation (BIR Form No. 1604C) as a substitute income tax return of its employees in as much as the information reported in the employee's Certificate of Compensation Payment/ Tax Withheld (BIR Form No. 2316) is consistent with the information contained in the employer's BIR Form No. 1604C
- Issuance of BIR Form No. 2316 to its employees
- Inclusion in the monthly withholding tax remittance on compensation
- Inclusion in the prescribed Alphalist of Employees
For “Seconded Employees / Secondees” or those alien individuals who are employed by foreign principals but are assigned to render services exclusively to local entities, they are in the same way subject to regular
income tax rate and the local entities to where these alien individuals are employed must also comply with the same administrative requirements of the BIR stated above, except for substituted filing.
This is in line with the principle of situs of taxation, considering that their services are performed within the Philippines.
In addition to the requirements mentioned, the following points and procedure should be taken care of:
- Separate employment status and description for “seconded employees” shall be indicated in the “Current Employment Status” of the Alphalist of Employees under BIR Form No. 1604C, as well as in the Alphalist Data Entry and Validation Module version 6.1
- Seconded Employees shall file their Annual Income Tax Return and pay the income tax due, together with the attached BIR Form No 2316 issued by the local entities
- The BIR Form No. 2316 to be issued by the local entity's employer to its seconded employees must indicate the phrase (FOR SECONDED EMPLOYEE) under the form's title “Certificate of Compensation Payment / Tax Withheld
In case of termination of services before the end of taxable year, local entities must ensure that the withholding tax on their last salaries are computed using the annualized withholding tax method which is pursuant to the provisions of Sec. 2.29.(B).(5).(b) of RR No. 2-98, as amended.
To read further please refer the official link of the circular: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20Full%20Text%202019/RMC%20No%20116-2019.pdf
Treatment of Tax for 105 Day Expanded Maternity Benefit
As per the recent guideline released by the Department of Labour and Employment (DOLE) which provides the details of salary computation and taxation of salary in hand of women employees for the maternity period of 105 days.
Under this guideline, the differential salary paid (i.e. the salary differential between the full salary (monthly salary X maternity period in months) of female worker during her maternity leave, and the actual cash benefits received from the Social Security System (SSS) would be considered as taxable.
To understand the guideline and read further details read through ADP newsletter: https://bit.ly/2VOMB0m
However, further, The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular No. 105-2019, to clarify the tax treatment of such salary differential to be paid by the employer. Under the new circular, the department has clarified that any such salary differential paid by the employer to the female employee availing maternity benefits under the Expanded Maternity Leave Law is exempt from income and withholding tax.
Note: This exemption is based on the provisions of Expanded Maternity Leave Law asserting that the maternity benefit of the female worker received from SSS has been expanded from the previous 100% of the average daily salary credit to a full pay of salary which includes the salary differential as its component. Hence, the salary differential is considered as a benefit which is exempt under Section 2.78.1 (B)(1)(e) of Revenue Regulations No.2-98, “Payments of benefit made under the Social Security System Act of 1954, as amended”.
To read further, please refer the official link for the circular: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20Full%20Text%202019/RMC%20No%20116-2019.pdf
Philippines list of holiday 2020 released
Government of Philippines has released the National Public Holidays for 2020.
To check and go through the list please refer the official link: https://www.officialgazette.gov.ph/downloads/2019/11nov/20191115-PROC-845-RRD.pdf