TAX UPDATE RR

Transcription

1 TAX UPDATE RR Katherine Uy Sobremonte, CPA, CMA, MBA, REB 1

2 NEW EWT Rate per RR Individual Payee (Professionals) EWT Rate (OLD) EWT Rate If Gross Income for the year is Php 3 Mil or LESS 8% 5% If Gross Income is MORE than Php 3 Million (RR ) 10% Non-Individual Payee (Professional Corporation/Partnership) EWT Rate (OLD) EWT Rate (NEW) If Gross Income for the year is Php 720,000 or LESS 8% 10% If Gross Income is MORE than Php 720,000 (RR ) 15% 2

3 INDIVIDUAL PROFESSIONALS Submit Sworn Declaration of Income on or before Jan. 15 & BIR certificate of registration (COR) to Withholding Agent Gross Sales/ Receipts Below Php 250,000 Gross Sales/ Receipts Php 3 Million & Below Gross Sales/ Receipts ABOVE Php 3 Million Exempted From EWT 5% EWT 10% EWT 3

4 Individuals - to qualify for 5% EWT WHO: Individual Payees whose gross receipts in a taxable year shall not exceed Php 3 million WHAT: Required to submit the following to the Payor or Withholding Agents: 1. Sworn Declaration of his/her gross receipts (Annex B-1) 2. Copy of Certificate of Registration (COR) WHEN: On or before January 15 of each year or at least prior to initial payment of professional fee FAILURE TO SUBMIT: EWT will be based on 10% 4

5 PROFESSIONAL CORPORATION/ PARTNERSHIPS Submit Sworn Declaration of Income on or before Jan. 15 & BIR certificate of registration (COR) to Withholding Agent General Professional Partnership Gross Sales/ Receipts Php 720,000 & Below Gross Sales/ Receipts ABOVE Php 720,000 Exempted From EWT 10% EWT 15% EWT 3

6 Corporation/ Partnership to qualify for 10% EWT WHO: Non- Individual Payees whose gross receipts in a taxable year shall not exceed Php 720,000 WHAT: Required to submit the following to the Payor or Withholding Agents: 1. Sworn Declaration of his/her gross receipts (Annex B-3) 2. Copy of Certificate of Registration (COR) WHEN: On or before January 15 of each year or at least prior to initial payment of professional fee FAILURE TO SUBMIT: EWT will be based on 15% 6

7 EXCEPTIONS FROM EWT Income Exempt from Income Tax is EXEMPT from EWT Income of Payor is Less than Php 250,000 Casual Purchases or Purchases made from non-regular supplier and oftentimes involving a single purchase which is less than Php 10,000 and not more than 5 purchase transaction. If there are at least 6 purchase transactions, either in previous or current year, then the purchase is considered regular and NOT CASUAL anymore. Therefore, TWA is required to withhold EWT. 7

8 HOSPITALS & CLINICS Required to submit a list containing the NAMES and ADDRESS of the medical practitioners every 15 th day after the end of each calendar quarter: 1. Medical practitioners whose professional fees was paid by patients directly to the hospital or clinic 2. Medical practitioners who did not charge any professional fee from their patients MEDICAL PRACTITIONERS include: a. Doctors b. Medical Technologist c. Occupational Therapists d. Physical Therapist e. Speech Therapists f. Nurses, etc 8

9 A. Those classified and duly notified by BIR unless previously de-classified or has ceased business operations: 1. Large Taxpayer under RR Top 20,000 Corporation under RR Top 5,000 Individuals under RR B. Those identified and included in 1. Medium Taxpayers 2. Taxpayer Account Management Program (TAMP) Kind of Transaction EWT Rate Supplier of Goods 1% Supplier of Service 2% All TWAs are required to withhold 9

10 WITHHOLDING TAX ON COMPENSATION Type of Remuneration Salaries & Wages Above Minimum Wage Additional Compensation such as: 1. Commission 2. Honoraria 3. Fringe Benefits 4. Benefits in excess of Php 90, Taxable Allowances 6. Other Taxable Income given to an MWE by the same ER other than those which are expressly exempt from income tax Rate New Graduated Income Tax (First Php 250,000 Exempt; Tax Rate 20% to 35%) Added in the Salaries & Wages and SUBJECT TO Graduated Income Tax 10

11 WITHHOLDING TAX ON COMPENSATION Type of Remuneration Minimum Wage Earner (MWE) Including holiday pay, overtime pay, night shift differential pay, hazard pay* Rate Exempt *Employer need to show proof of hazardousness like DOLE certification to be attached in BIR 1604C or Department of Budget Management (DBM) for public sector. QUESTION: What happens if employer reduces the wages of employee reported for purposes of exemption from income tax? Any reduction or diminution of wages for purposes of exemptions from Income Tax Misrepresentation + Disallowance of Payroll as IT deduction + Criminal Prosecution 11

12 NEW FORMS AND DEADLINES PERIOD Expanded Withholding Tax Form (RR ) Final Withholding Tax Form (RR ) Deadline January 0619-E 0619-F February 10 February 0619-E 0619-F March 10 March 1601-EQ + QAP 1601-FQ + QAP April 30 April 0619-E 0619-F May 10 May 0619-E 0619-F June 10 June 1601-EQ + QAP 1601-FQ + QAP July 30 July 0619-E 0619-F August 10 August 0619-E 0619-F September 10 September 1601-EQ + QAP 1601-FQ + QAP October 30 October 0619-E 0619-F November 10 November 0619-E 0619-F December 10 December 1601-EQ + QAP 1601-FQ + QAP January 30 12

13 NEW FORMS AND DEADLINES Annual Information Return Type of Return Deadline Expanded/ Creditable Withholding 1604-E March 1 Final Withholding 1604-F January 31 Compensation 1604-C January 31 Certificates Type of Form Deadline Certificate of withholding tax on Compensation 2316 January 31 of the following year Certificate of expanded withholding tax th day at the close of every quarter Income Tax Type of Form Deadline 1 st Quarter ITR 1701Q May 15 2 nd Quarter ITR 1701Q August 15 3 rd Quarter ITR 1701Q November 15 Annual Income Tax 1701 April 15 of the ff year 13

14 TRANSITORY PROVISION shall submit the following to withholding agent on or before APRIL 6, 2018: a. Income PAYEE s Sworn Declaration of Gross Receipts/Sales b. his/her BIR Certificate of registration (COR) submit the following on or before APRIL 20, 2018: a. Income PAYOR s/withholding Agent s Sworn Declaration b. List of Payees who have submitted Income Payee s Sworn Declaration of Gross Receipts/Sales c. Copies of the CORs 14

15 TRANSITORY PROVISION Is Income Tax withheld by payor/ withholding agent in excess of what is the prescribed in RR ? Did you issue 2307 already? Issue 2307 Cert on or before 20 th day of the quarter 1. Get 2307 Cert issued 2. Refund the excess 3. Issue new 2307 Cert 1. Refund excess to the payee 2. Reflect the refund & adjustment in 1601-EQ 3. Issue 2307 Cert 15

16 DE MINIMIS BENEFIT Type of De Minimis Benefit Old Rate New Rate Monetized unused vacation leave credits of private employees (MAX 10 days) Monetized value of vacation and sick leave credits paid to government employees Medical Cash Allowance to Dependents of Employees Rice Subsidy Exempt up to 10 days; in excess of 10 days taxable Php 125/mo. Or Php 750/semester per Employee Php 1,500/ mo. or 1 sack of 50Kg/mo. Exempt Php 250/mo per EE Or Php 1,500 per semester per EE Php 2,000/ mo. or 1 sack of 50Kg/mo. Uniform and clothing allowance Php 5,000/ year Php 6,000 / year Total of 13 th month pay and all other benefits such as Christmas bonus, productivity incentives, loyalty award, gift in cash or in kind, and other benefits is exempt up to Php 90,000. ANY AMOUNT IN EXCESS OF PHP 90,000 THRESHOLD IS TAXABLE. 16