TRAIN Revenue Issuances

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2 TRAIN Revenue Issuances REVISED TAX RATES Revenue Memorandum Circular No Transition Procedures on the Use of Withholding Table on Compensation Income Revenue Memorandum Circular No Procedures for all taxpayers Filing Returns Revenue Memorandum Circular No Transition Procedures on Documentary Stamp Revenue Memorandum Circular No Transition Procedures for all Efps Filers TAX ADVISORIES Filing of Application for VAT Zero-Rate on sale of goods and services by suppliers of registered business entities (RBEs) Change of Status from VAT to Non-VAT by self-employed individuals/professionals. 2

3 RMC No Prescribes the Procedures on the use of Withholding Table on Compensation Income and Advises on the Change of Creditable Withholding Rate on Certain Income Payments to Individuals Steps in the Use of the Withholding Table In general, every employer paying compensation to its employee/s shall deduct and withhold from such compensation a tax determined in accordance with the prescribed Revised Withholding Tables, version 2 This Revenue Memorandum Circular (RMC) is issued pursuant to them amendments to the National Internal Revenue Code introduced under Republic Act No , effective January 1, 2018, with the following objectives: 1. To supplement RMC No dated December 28, 2017 by providing the steps on how to use the revised Withholding Table on Compensation; and 2. To advise on the change in the Creditable Withholding Rate on Income Payments to Self-employed Individuals or Professionals. Step 1. Determine the total amount of monetary and non-monetary compensation paid to an employee for the payroll period: monthly, semi monthly, weekly or daily, as the case may be, segregating non-taxable benefits and mandatory contributions. Step 2. Use the appropriate table for the applicable payroll period. Step 3. Determine the compensation range of the employee and apply the applicable tax rates prescribed thereon. Step 4. Compute the withholding tax due by adding the tax predetermined in the compensation range indicated on the column used and the tax on the excess of the total compensation over the minimum of the See next page for the Revised Withholding Table 3

4 REVISED WITHHOLDING TAX TABLE DAILY Compensation Range 685 and below 685-1,095 1,096-2,191 2,192-5,478 5,479-21,917 21,918 and above Prescribed Minimum Withholding % over % over 1,096 30% over 2,192 1, % over 5,479 6, % over 21,918 WEEKLY Compensation Range 4,808 and below 4,808-7,691 7,692-15,384 15,385-38,461 38, , ,846 and above Prescribed Minimum Withholding % over 4, % over 7,692 2, % over 15,385 9, % over 38,462 46, % over 153,846 Prescribed Minimum Withholding SEMI- MONTHLY Compensation 10,417 Range and below 10,417-16, % over 10,417 16,667-33,332 1, % over 16,667 33,333-83,332 5, % over 33,333 83, ,332 20, % over 83, ,333 and above 100, % over 333,333 MONTHLY Compensation Range 20,833 and below 20,833-33,332 33,333-66,666 66, , , , ,667 and above Prescribed Minimum Withholding % over 20,833 2, % over 33,333 10, % over 66,667 40, % over 166, , % over 666,667 4

5 RMC No Transition Procedures for all payers Filing Returns Affected by the Revised Pursuant to the Provisions of Republic Act (R.A) No , otherwise known as the Reform for the Acceleration and Inclusion (TRAIN) Change in the Creditable Withholding Rate on Income Payments to Self-employed Individuals or Professionals The following Income Payments to Self-employed Individuals or Professionals shall be subject to Eight Percent (8%): 1. Professional fees, talent fees, commissions, e tc. 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 practitioners; and 6. marketing agents of companies. and In line with implementation of the provisions of RA No (known as TRAIN), various Bureau of Internal Revenue (BIR) Forms/Returns are being developed or enhanced and the Alphanumeric Codes (ATCs) affected are as follows: The changes in tax rates mentioned above are not yet reflected and implemented in the following: BIR Forms Type to be Used 1602 WB Withholding Banks and Other Financial Institutions 1603 WR Withholding Fringe Benefits 2552 ST Percentage - Stocks Electronic Filing and Payment System (efps) Electronic Bureau of Internal Revenue Forms (ebirforms) Manual Forms ATC All Efps filers shall use ATC MC 031 Deficiency A. efps filers shall 5

6 continuation... BIR Forms to Type 1602 WB Withholding Banks and Other Financial Institutions 1603 WR Withholding Fringe Benefits 2552 ST Percentage - Stocks ATC All Efps filers shall use ATC MC 031 Deficiency online, thru GCash, LBEPS or BDPTO, or pay manually via OTC of AABs under Once the enhanced versions of the aforesaid forms are available in efps, there will be a notification/announcement through a R e v e n u e Memorandum Circular (RMC). Guidelines shall be issued accordingly if there is a necessity whether or not to amend the previously filed returns in efps. B. ebirforms Users/Filers shall Online payment thru Gcash, Landbank Electronic Payment Service (LBEPS) or BIR-DBP Pay Online (BDPTO); or Manual payment via over-the-counter (OTC) of Authorized Agent Banks (AABs) under the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. BIR Form No. Form Name Monthly Remittance Return of Final Income es Withheld 1603 Quarterly Remittance Return of Final Income es Withheld 2552 Percentage Return for Transactions Involving Shares of Stock (IPO/LSE) ATC Affected WI 170 and WC 170 WF 320 Changes in Rate From 7 ½% to 15% From 15% to 35% PT 200 From ½ of 1% to 6/10 of 1% 6

7 continuation... C. Fill-in the applicable BIR form [pre-printed or downloaded form in BIR website ( under the BIR Forms section of the website] using the new tax rates then compute the tax due thereon. File and pay manually via OTC of AABs under the jurisdiction of the RDO where the taxpayer is registered. RMC No Transition Procedures for All payers Affected by the Revised Rates on Documentary Stamp Pursuant to the Provisions of Republic Act (RA) No , Otherwise Known as the Reform for Acceleration and Inclusion (TRAIN) BIR FORM NO OT Form Name Documentary Stamp Declaration/ Return Documentary Stamp Declaration/ Return - One Time Transactions The changes in tax rates mentioned above are not yet reflected and implemented in the following: 1. Electronic Filing and Payment System (efps) 2. Electronic Bureau of Internal Revenue Forms (ebirforms); and 3. Manual Forms ATC Affected DS 101, 102, 104 to 109, 112, 114 to 121, 125, 126, 130 to 132 Ds 102 and 125 Changes in Rate Increase in the tax rate is 100% except for DS 106, which is 50% only Increase in the tax rate is 100% This circular is issued to provide transition procedures for all taxpayers who are affected in filing the documentary stamp tax returns (BIR Form Nos and 2000-OT) due to the revised tax rates pursuant to the provisions of RA NO The abovementioned BIR forms are being enhanced and the Alphanumeric Codes (ATCs) affected by the increase in tax rates are as follows: Thus, the following work around procedures in filing the BIR Form/Return mentioned above shall be adopted by the following taxpayers: efps Filers of BIR Form No shall Use the existing BIR Form in the Efps; Fill in the required information (e.g., date of transactions, parties to the transactions, etc.); Click and choose the applicable ATC, nature of transaction, tax rate and tax due will automatically appear; Change the amount of tax due computed by the system with the correct amount using the new tax rate as follows: 7

8 continuation... ATC Description New Rate a. DS 101 b. DS 102 c. DS 125 d. DS 104 e. DS10 5 f. DS 106 g. DS 107 h. DS 108 Original issue of Shares of Stocks Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Shares or Certificates of Stock with par value In case of stock without par value Certificates of Profits or Interest in Property or Accumulations Bank Checks, Drafts, Certificates of Deposit not Bearing Interest and Other Instruments Original Issue of All Debt Instruments Acceptance of Bills of Exchange or Order drawn in a Foreign Country but payable in the Philippines Foreign Bills of Exchange and Letters of Credit P 2.00/200 P1.50/200 50% of DST paid on original issue P1.00/200 P3.00 P1.50/200 of issue price or a fraction of 365 days for Instrument with term of less than 1 year P0.60/200 P0.60/200 i. DS 109 j. DS 112 k. DS 114 l. DS11 5 m.ds 116 n. DS 117 Life Insurance Policies amount: Does not exceed P 100,000 but does not exceed P 300,000 Exceeds P 100,000 but does not exceed P 300,000 Exceeds P 300,000 but does not exceed P 500,000 Exceeds P 500,000 but does not exceed P 750,000 Exceeds P 750,000 but does not exceed P 1,000,000 Exceeds P 1,000,000 Policies of Annuities Pre-Need Plans Exempt P20.00 P P P P P 1.00/200 of the premium or installment payment on contract price collected P 0.40/200 of the premium or contribution collected Certificates (Sec. 188 of P the Code) Warehouse Receipts P with value above 200 Jai-alai, Horse Race Tickets, Lotto or Other Authorized Number Games Bills of Lading or Receipts P 0.20/ P 1.00 P 100,000 to P 1,000 P 2.00 Above P 1,000 P

9 continuation... File the return then proceed to payment and pay the corrected tax due thereon. o. DS 118 p. DS 119 q. DS 120 r. DS 121 s. DS 126 t. DS 130 u. DS 131 v. DS 132 Proxies for voting at any P30.00 election Powers of Attorney P10.00 Leases and Other Hiring Agreements Mortgages, Pledges and Deeds of Trust Bills of Exchange or Drafts Charter Parties and Similar Instruments if gross tonnage of the ship, vessel or steamer is 1,000 tons and below 1st P 2,000 P 6.00 In excess (P2.00/ P1,000) 1st P 5,000 P In excess (P20.00/ P5,000) P0.6. on each P 200 1st 6 months P 1,000 In excess + P 100 1,001 to 10,000 tons 1st 6 months P 2,000 In excess + P 200 Over 10,000 tons 1st 6 months P 3,000 In excess + P 300 ebirforms Users/Files of BIR Form Nos and/ or 2000-OT shall File online using the existing BIR form in the ebirforms Package then pay the corresponding taxes due thereon via: 1. Online payment thru Gcash, Landbank Electronic Payment Service (LBEPS) or BIR-DBP Pay Online (BDPTO); or 2. Manual payment via over-the-counter (OTC) of Authorized Agent Banks (AABs)...under the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. The above transactions will result to deficiency tax, and to cover the deficiency tax, ebirforms users/ filers shall likewise file online and pay online, thru GCash, LBEPS or BDPTO, or pay manually via OTC of AABs under the jurisdiction of the RDO where the taxpayer is registered, the deficiency tax using BIR Form No and fill in the corresponding information in the Type and ATC fields stated below in lieu of the correct BIR form that should have been used: Supposed BIR Form to be used OT Type DS Documentary Stamp DS Documentary Stamp - One Time ATC All ebir Forms filers shall use ATC MC Deficiency Manual Filers of BIR Form Nos and/ 2000-OT shall Fill-in the applicable BIR form [pre-printed or downloaded form in BIR website ( under the BIR Forms section of the website] using the tax rates then compute the tax due thereon. File and pay manually via OTC of AABs under the jurisdiction of the RDO where the taxpayer is registered. 9

10 RMC No Transition Procedure for All Electronic Filing and Payment System (efps) Filers in Filing Return Affected by the Revised Rates on Excisable Articles Pursuant to the Provisions of Republic Act (RA) No , Otherwise Known as the Reform for Acceleration and Inclusion (TRAIN), specifically Sections 42, 43, 45, 46, 47, and 48 thereof, governing excise tax on Cigars and Cigarettes, Petroleum Products, Automobiles, Non-essential Services (Invasive Cosmetics Procedures), Sweetened Beverages, and Mineral Products, respectively. The following BIR forms are being introduced to wit: 1) BIR Form No S (Excise Return for Sweetened Beverages); and 2) BIR Form No XC (Final Withholding of Excise on Cosmetic Procedures). In as much as the changes in the excise tax rates are not yet reflected in the efps, hence, the following procedures shall be adopted by all efps filers pending enhancement to e-payment. 1. E-file using the existing online forms (BIR Form No T/ BIR No P/ BIR Form No AN/ BIR Form No M) in order to proceed to e-payment. Relative to the implementation of the Revised Rates on Cigars and Cigarettes, Petroleum Products, Automobiles, and Mineral Products and introduction of new excise tax forms for Non-essential Services (Invasive Cosmetic Procedures) and Sweetened Beverages, pursuant to the provisions of Republic Act (RA) No , otherwise known as the Reform for Acceleration and Inclusion (TRAIN), the following BIR forms are being enhanced: 1. BIR Form No T (Excise Return for Tobacco Products); 2. BIR Form No P (Excise Return for Petroleum Products); Go to Part II (Manner of Payment) and tick the 2 nd box in item No. 15( Prepayment/ Advance Deposit) of BIR Form No T or BIR Form No P or BIR Form No AN or BIR Form No M Proceed to Item No. 23A ( payment/ Deposit) in Part III (Payments and Application of the aforementioned forms and key-in the amount to be paid/deposited in the field provided). Click the Validate button to check system computation. If all figures are correct, click Submit button. Click Proceed to Payment button to effect payment/deposit transaction. 3. BIR Form No AN (Excise Return for Automobiles & Non-essential Products); 4. BIR Form No M (Excise Mineral Products); Returns Involving Payment on Actual Removals Go to Part II (Manner of Payment) and tick the 1 st box in Item No. 15 (Payment on... 10

11 ...Actual Removal) of BIR Form No T or BIR Form No P or BIR Form No AN or BIR Form No M. Schedule 1 Summary of Removals and Excise Due on Cigars and Cigarettes, Petroleum Products, Automobiles, Mineral Products and Mineral Products Chargeable against Payments will appear on the screen. Since the revised rates on alcohol products and tobacco products are not yet in place, fill up 4. OTHERS (please specify) for details of removals using XA as ATC Codes for alcohol products, XT for tobacco products, XP Petroleum Products, XGAN for Automobiles and XM for Mineral Products. The Total Due will automatically be populated to Item No. 16 (Excise Due from Schedule 1). E-pay by clicking Proceed to Payment button to effect payment transaction. 2. Once the enhanced version of the aforesaid forms are available in efps, there will be an announcement via the BIR Website as to the guidelines if there is a necessity to amend previously filed excise tax returns in efps. For newly introduced BIR forms, specifically BIR Form No S (Excise Return for Sweetened Beverages) and BIR Form No XC (Final Withholding of Excise on Cosmetic Procedures ), the following procedures shall be adopted to wit: 1. Fill in the applicable BIR form [pre-printed or downloaded form in BIR website ( under the BIR Forms section of the website] using the new tax rates then compute the tax due thereon. 2. File and pay manually via over-the counter of Authorized Agent Banks (AABs) under the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. TRAIN RELATED ADVISORIES TO ALL CONCERNED TAXPAYERS AND REVENUE OFFICIALS AND EMPLOYEES: 1) In line with the filing of Application for VAT Zero-Rate on sale of goods and services by suppliers of registered business entities (RBEs) granted incentives by investment promotion agencies (IPAs) under special laws, please be advised that the concerned offices under the large taxpayers service and assessment service shall continue to receive and process said applications to ensure proper monitoring and documentation of the said tax incentives following the existing guidelines and procedures in the processing of the aforementioned applications. 2) Purely self-employed individuals and/or professionals who are VAT-registered taxpayers and whose gross sales/ receipts and other non-operating income do not exceed the new Value-Added (VAT) threshold of 3,000,000 in the preceding year, may elect to change his/her status from VAT to Non-VAT by filing the duly accomplished BIR Form 1905 Application for Registration Information Update to the Revenue District Office having jurisdiction of the head office of the concerned taxpayers on or before March 31, 2018, following the existing procedures on updates of Registration. The said non-vat payers shall have the option to avail of: 11

12 continuation The graduated rates under Section 24 (A) (2) (a) of the Code, as amended or, 2. An eight percent (8%) tax on and other non -operating income in excess of the two hundred fifty thousand pesos (250,000) in lieu of the graduated income tax rates under Section 116 under the Code, as amended: Unless the taxpayer signifies in the 1 st Quarter Return of the taxable year the intention to elect the 8% Income Rate. The taxpayer shall be considered as having availed of the graduated rates under Section 24(A) of the Code, as amended and such election shall be irrevocable for the taxable year. 12

13 EDITORIAL BOARD Unit 3207 Cityland Pasong Tamo Condominium, Pasong Tamo St., Barangay Pio del Pilar, Makati City Telephone: (+632) FLOYD C. PAGUIO Managing Partner KEN JOHN B. ASADON Supervisor Floyd C. Paguio: Ken John B. Asadon: Aileen P. Melchor Aira Iza G. Gallegos: AILEEN P. MELCHOR Senior Specialist AIRA IZA G. GALLEGOS Specialist We are a team of Certified Public Accountants, who aim to be the accounting firm of choice for business entities in terms of: Audit and Assurance ation Business Process Outsourcing Management Consultancy 13