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STEPS ON HOW TO PAY TAX THRU GCASH

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ITEMS SUBJECT TO EXPANDED WITHHOLDING TAX UNDER TRAIN LAW RA 10963

Here is the thing,  my friend was asked by her supplier to withhold because they said they saw an EWT in their 2303-Certificate of Registration in BIR. Upon checking they are not required to withhold at all.

Ladies and gentlemen, just because you see EWT -Expanded Withholding Tax  in the BIR form 2303, the Certificate of Registration, you have to automatically withhold in all of your transactions. That's not right at all.

So, here is the list of items that are subject to EWT - Expanded Withholding Tax for your reference. 

The  summary of the items that are subject to EWT Expanded Withholding Tax based on the TRAIN Law.

1. On gross Professional Fees, Talent Fees, Promotional Fees, or any other form of remuneration, for services rendered:
   1. Individual payee- 5% of the gross income for the current year provided it did not exceed Php 3 Million- 10% of the gross income if it exceeded Php 3 Million
   2. Non-individual payee– 10% of the gross income if the income for the current year did not exceed Php 720,000- 15% if it exceeded Php 720,000
   Who are covered?
   Individuals engaged in the practice of profession or calling including lawyers, architects, engineers, CPAs, medical practitioners, and all other profession that requires government licensure examination regulated by the Philippine Regulations Commission, Supreme Court, etc.; professional entertainers, professional athletes, directors and producers, insurance agents and adjusters, consultants, bookkeepers, corporate directors, selected brokers and agents, and company sales representatives or marketing agents.
   How to apply?
   You need to submit to the BIR a sworn declaration of your gross receipts/sales along with a copy of the BIR Certificate of Registration not later than January 15 of the current year prior to the receipt of professional fees.
2. On rentals:
   1. Real properties – 5% of the gross rental
   2. Personal properties – 5% of the gross rental/lease in excess of Php 10,000 annually, except those operating under RA 8556
   3. Poles, satellites, transmission facilities – 5% of the gross rental
   4. Billboards – 5% of the gross rental
   5. Cinematographic film rentals and other payments – 5% of the gross payments
3. On income payments to certain contractors:2% of the gross payments to the following contractors, whether individual or not:
   1. General engineering contractors
   2. General building contractors
   3. Specialty contractors
   4. Other contractors
   You may refer to RR 11-2018 for the description and complete list of contractors.
4. On income distribution to the beneficiaries of estates and trusts:15% of the income based on Section 60 of the Code, except income subject to final withholding tax and tax exempt income.It basically applies on the income earned by the estates of the deceased through the administrator or other authorized representative, to the legal heirs/beneficiaries before or during the distribution of such estates, either judicially or extra judicially.
5. On income payments to partners of general professional partnerships:15% of the income payments made by a general professional partnership, including drawings, sharings, advances, stipends, and allowances if the gross income for current year exceeds Php 720,000. If lesser than Php 720,000, a 10% rate will apply.
6. On sale, exchange, or transfer of real property classified as ordinary asset: A creditable withholding tax based on the gross selling price/total amount or the fair market value shall be imposed based on the following schedule:
   1. If seller/transferor is exempted from creditable withholding tax based on Sec. 2.57.5 (e.g. HLURB socialized housing)
      – EXEMPT
   2. If seller/transferor is habitually engaged in the real estate business, tax will be imposed upon the following values:
      • b.1. With a selling price of Php 500,000 or less – 1.5%
      • b.2. With a selling price of more than Php 500,000 but not more than Php 2,000,000 – 3%
      • b.3. With a selling price of more than Php 2,000,000 – 5%
   3. If the seller/transferor is NOT habitually engaged in the real estate business – 6%
7. On gross additional income payments from importers, shipping and airline companies, or their agents to government personnel – 15% of the said additional payments based on overtime services authorized by law.
8. On certain income payments made by credit card companies – One-half of 1% of the gross amounts paid by a credit card company to a business entity that represents the sales of goods or services made by such establishment to a cardholder.
9. On income payment made by top withholding agents as classified and identified by the BIR.For supplier of goods – 1%
   For supplier of services – 2%The top withholding agents shall include the following:
   1. Classified and notified by the Commissioner as any of the following unless there was cessation of business or previous declassification:
      1. Large taxpayer under RR No. 1-98
      2. Top twenty thousand (20,000) private corporations under RR No. 6-2009
      3. Top five thousand (5,000) individuals under RR No. 6-2009
   2. Taxpayers included as Medium Taxpayers and those identified under Taxpayer Account Management Program (TAMP)
10. On income payments made by a government offices, agencies, instrumentalities, and GOCCs to local suppliers of goods and/or services.For supplier of goods – 1%
    For supplier of services – 2%
11. On gross processing/tolling fees paid to refineries for the conversion of molasses to its by-products, and conversion of raw sugar to refined – 5%
12. On gross payments to funeral parlors made by pre-need companies – 1% tax for funeral services rendered.
13. On gross payments made to embalmers – 1% tax for embalming services rendered to funeral companies.
14. On income payments made by an establishments to suppliers of agricultural products – 1% of the amount in excess of the cumulative amount of Php 300,000 within the same taxable year.Agricultural suppliers shall include sellers of agricultural, forest and marine food and non-food products, livestock and general poultry, breeding stock, and the like.Establishments shall include hotels, restaurants, caterers, resorts, canneries, food processors, supermarkets, agricultural product dealers, and the like.
15. On income payments made for the purchase of minerals, mineral products, and quarry resources, including silver, gold, marble, gravel, granite, sand, boulders, and other products– 5%However, the BSP is required to withhold 1% of gross payments made and shall remit the same to the Government.
16. On MERALCO interest payments/ refunds: (as per Supreme Court case G.R. No. 14814 dated 2003For refunds:With active contracts – 25%
    Without active contracts – 32%For interest income on meter deposits:Residential/General service customers – 10%
    Non-resident service customers – 20 %
17. On refund paid either through direct payment or application against the customers’ billings by other electric distribution utilities in reference to ERC Resolution No. 8, Series of 2008, relative to the mandates of Article 8 of the Magna Carta for Residential Electricity Consumers, and Article 3.4.2 of DSOAR – 10% / 20%.
18. On income payments made on the purchase of goods/services related to campaign expenditures by political parties and candidates of local and national elections; and on income payments made by individuals/juridical entities on the purchase of goods/services intended to be given as campaign contributions – 5% of gross contribution.
19. On interest income derived from other debt instruments that are not within the coverage of “deposit substitutes” of the Tax Code an d RR No. 14-2012, unless otherwise provided – 20%.
20. On income payments made to corporate taxpayers registered as Real Estate Investment Trust (REIT) under Republic Act 9856 as implemented by RR No. 13-2011 – 1%.
21. On income payments made by proprietors/operators of sugar mills/refineries, and direct buyers form sugar planters on locally produced raw sugar/molasses – 1%.

Below is a list of the BIR forms that you need to file for EWT: 

1. Monthly Remittance Form of Creditable Income Taxes Withheld (Form No. 0619E) – 1st month of the quarter.
2. Monthly Remittance Form of Creditable Income Taxes Withheld (Form No. 0619E) – 2nd month of the quarter.
3. Quarterly Remittance Form of Creditable Income Taxes Withheld and Quarterly Alphalist of Payees – (Form No. 1601EQ and QAP) – 3rd month of the quarter.
4. Annual Information Return of Creditable Income Taxes Withheld (Form No. 1604E) – on or before March 1 after the taxable year.

The above returns are filed through eBIRForms or eFPS, and shall be paid through eFPS or Authorized Agent Bank (AAB) of the RDO where the taxpayer is registered.

Reference: Revenue Regulations No. 11-2018

For more info and  inquiries,  please feel free to consult  us or email us at  mejiataxconsultancy@gmail.com

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NEW BIR TAX PAYMENT SCHEDULE

NEW BIR TAX PAYMENT SCHEDULE

Form No.	Requirement	Deadline for manual filers
0605	Payment Form 0 Annual Registration	January 31
1601-C	Monthly Remittance Return of Income Taxes Withheld on Compensation	Every 10th day of after the end of each month
1619-E	Monthly Remittance Form for Creditable Income Taxes WIthheld (Expanded)	Every 10th day of after the end of each month
1619-F	Monthly Remittance Form for Final Income Taxes Withheld	Every 10th day of after the end of each month
1601-EQ	Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded) (together with the Quarterly Alphabetical List of Payees)	Every Last Day of the month after the end of each quarter
1601-FQ	Quarterly Remittance Return of Final Income Taxes Withheld	Every Last Day of the month after the end of each quarter
1604-CF	Annual Information Return of Income Taxes Withheld on Compensation of Final Withholding Taxes	January 31
1604-E	Annual Information Return of Creditable Income Taxes Withheld (Expanded)	March 1
2550-M	Monthly Value Added Tax Declaration	Every 20th day after the end of each month
2551-M	Monthly Percentage Tax Return	Every 20th day after the end of each month
2550-Q	Quarterly Value Added Tax Return	Every 25th day after the end of each month
2551-Q	Quarterly Percentage Tax Return	Every 25th day after the end of each month
1701	Annual Income Tax Return (for self-employed individuals)	April 15
1701-Q	Quarterly Income Tax Return (for self-employed individuals)
	- 1st Quarter	May 15 or 45 days after end of each quarter
	- 2nd Quarter	August 15 or 45 days after end of each quarter
	- 3rd Quarter	November 15 or 45 days after end of each quarter
1702	Annual Income Tax Return (for corporations and partnerships)	April 15
1702-Q	Quarterly Income Tax Return (for corporations and partnerships)
	- 1st Quarter	May 29 or 60 days after end of each quarter
	- 2nd Quarter	August 29 or 60 days after end of each quarter
	- 3rd Quarter	November 29 or 60 days after end of each quarter
2000	Documentary Stamp Tax Declaration	5th day after the end of transaction month
1905	Registration renewal of manual books of accounts	December 29
1905	Registration for New Corporation
1902	Registration for Single Proprietor
1900	Registration of computerized books of accounts and other accounting records (together with affidavit attesting the completeness of the computerized accounting books/records)	January 30 or 30 days after the end of the fiscal year
1900	Registration of permanently bound computer-generated/loose leaf books of accounts and other accounting records	January 15 or 15 days after the end of the fiscal year
no form	Submission of Inventory List	January 30 or 30 days after the end of the fiscal year

NOTE:

* If the deadline falls on Saturday, Sunday or holiday, the next working day will be the deadline.

For more info and  inquiries,  please feel free to consult  us or email us ione.mejia@gmail.com.

WHAT'S INSIDE THE TAX AMNESTY BILL?

WHAT'S INSIDE THE TAX AMNESTY BILL?

THE TAX AMNESTY BILL IS ENTITLED AS " AN ACT ENHANCING REVENUE ADMINISTRATION AND COLLECTION BY GRANTING AN AMNESTY ON ALL UNPAID INTERNAL REVENUE TAXES IMPOSED BY THE NATIONAL GOVERNMENT FOR THE TAXABLE YEAR 2017 AND PRIOR YEARS WITH RESPECT TO ESTATE TAX, OTHER REVENUE TAXES, AND TAX ON DELINQUENCIES. "

The Tax Amnesty Bill  has already passed by the bicameral committee ( the Senate and the House of Representative).  The bill then will be submitted to the President for his final approval and signature.

It would grant those who have failed to pay for taxable year 2017 and prior years a one-time opportunity to settle tax obligations. 

Under the bill, there will be 3 types of tax amnesty: 

a) General Tax Amnesty;

 b) Tax Amnesty on Delinquencies; and 

c) Estate Tax Amnesty. The following are the salient provisions of the bill:

Here's a summary of what's inside the bill:

GENERAL TAX AMNESTY (GTA)

The GTA covers all national internal revenue taxes such as, but not limited to, 

1. income tax, 

2. withholding tax (except those withheld but not remitted),

3. capital gains tax, donor’s tax, 

4.VAT,

5.  other percentage taxes, 

6. excise tax and 

7.DST collected by the BIR, 

8. including VAT and excise taxes collected by the Bureau of Customs (BOC) for taxable year 2017 and prior years, with or without existing assessments, that have remained unpaid.

Any person, whether natural or juridical, has the following options to avail of the GTA:

Option 1 – Pay an amnesty tax at the rate of 2% of the taxpayer’s Total Assets as of December 31, 2017 as declared in the SALN.

Option 2 – Pay an amnesty tax based on Total Net Worth as of December 31, 2017 as declared in the SALN at the following rates:

Individual (whether resident or non-resident citizens, including resident or non-resident aliens), Trusts and Estates
5% of the Net worth or P75,000, whichever is higher

Corporations:

With subscribed capital of above P50 million
5% or P1,000,000, whichever is higher

With subscribed capital of above P20 million up to P50 million
5% or P500,000, whichever is higher

With subscribed capital of P5 million up to P20 million
5% or P250,000, whichever is higher

With subscribed capital of below P5 million
5% or P100,000, whichever is higher

Other juridical entities, including, but not limited to, cooperatives and foundations, that have become taxable as of December 31, 2017
5% or P75,000, whichever is higher

The GTA shall be availed of within 1 year from the effectivity of the IRR by filing a sworn General Tax Amnesty Return, with the notarized SALN as of December 31, 2017.

The Statement of Total Assets and SALN shall be conclusively presumed as true, correct, and final upon filing and shall be deemed complete upon full payment of the amount due.

The taxpayer shall be entitled to a corresponding reduction in the total amnesty tax due if the tax amnesty is availed of within the following periods:

If paid on or before the end of the 3rd calendar month from the effectivity of the IRR
20%

If paid after the end of the 3rd calendar month until the end of the 6th calendar month from the effectivity of the IRR
15%

If paid after the end of the 6th calendar month until the end of the 9th calendar month from the effectivity of the IRR
10%

TAXPAYERS WHO AVAIL OF THE GENERAL TAX AMNESTY (GTA) SHALL BE ENTITLED TOT HE FOLLOWING IMMUNITIES AND PRIVILEGES: 

With respect to the years covered by the GTA, the taxpayer shall be immune from the payment of taxes and additions thereto, as well as the related civil, criminal, administrative cases and penalties under the Tax Code, arising from the failure to pay any and all internal revenue taxes for taxable year 2017 and prior years, insofar as they relate to the assets, liabilities, net worth, and internal revenue taxes that are subject of the amnesty.

Any information or data contained in the Tax Amnesty Return, Statement of Total Assets or SALN, and appurtenant documents shall be confidential and shall not be used as evidence in any investigation or prosecution before any judicial, quasi-judicial and administrative bodies.

THE BOOKS OF ACCOUNT S AND RECORD OF THE TAX PAYER FOR THE YEARS COVERED BY THE TAX AMNESTY SHALL NOT BE EXAMINED BY THE BIR

TAX AMNESTY ON DELINQUENCIES (TAD)

The TAD covers all national internal revenue taxes such as, but not limited to,

1.income tax, withholding tax (including those withheld, but not remitted), 

2. capital gains tax, 

3. donor’s tax, 

4. VAT, 

5. other percentage taxes, 

6. excise tax 

7. and DST collected by the BIR, 

8. including VAT and excise taxes collected by the BOC for taxable year 2017 and prior years.Below are the instances when TAD may be availed and the corresponding tax amnesty rates:

Delinquencies and assessments, which have become final and executory
- 40% of the basic tax assessed

Tax cases subject of final and executory judgment by the courts
- 50% of the basic tax assessed

Pending criminal cases with the Department of Justice (DOJ) or the courts for tax evasion and other criminal offenses under Chapter II of Title X and Section 275 of the Tax Code
- 60% of the basic tax assessed

Withholding tax agents who withheld taxes but failed to remit the same to the BIR

- 100% of the basic tax


Those are the salient of features of the Tax Amnesty bill.
Hit us for more information. 

Got question or suggestion? Tax help? Email us: ione.mejia@gmail.com

WHAT IS BARANGAY MICRO BUSINESS ENTERPRISE/ BMBE?

QUESTION: CAN WE RUN A BUSINESS WITHOUT PAYING INCOME TAX, LEGALLY?

ANSWER: YES

QUESTION: HOW?

ANSWER: REGISTER AS A BARANGAY MICRO BUSINESS ENTERPRISE (BMBE)

REPUBLIC ACT 9178, BARANGAY MICRO BUSINESS ENTERPRISES ( BMBE’S) ACT OF 2002

WHAT IS THIS LAW ABOUT?

The BMBE’s Act of 2002 encourages the formation and growth of Barangay Micro Business Enterprises by granting them incentives and benefits.

WHAT ARE THE BENEFITS AND INCENTIVES OF REGISTERED BMBE’S?   

1.      Income tax exemption from income arising from the operations of the enterprise.

2.       Exemption from coverage of the Minimum Wage Law BUT BMBE employees will still receive the same social security and health care benefits like other employees.

3.       Priority to a special credit window set up specifically for financing requirements of BMBE’s

4.       Technological transfer, production and management training, and marketing assistance programs for BMBE’s beneficiaries.

WHAT IS BARANGAY MICRO BUSINESS ENTERPRISE (BMBE)?

Under Republic Act No. 9178 or the BMBE’s Act of 2002, a BMBE is referred to as any business entity or enterprises engaged in the production, processing or manufacturing of products or commodities, including agro-processing , trading and services whose total assets excluding land, shall not be more than P 3 million. Such assets shall include those arising from loans but not the land on which the plant and equipment are located.

SO, what exactly is a MICRO BUSINESS?

A micro business or enterprise is defined as any business activity or enterprise engaged in industry, agribusiness and or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of land on which the particular business entity’s office, plant and equipment are situated, must have value not more than three (3) million pesos. ( Sec. 3 of R.A. 9501 otherwise known as the Magna Carta for Micro, Small, Medium Enterprises. (MSMEs)

Total Asset  (exclusive of land) = 2.5 M

Land(where office, plant & equipment are situated ) = 4M

_______________________________

MICRO BUSINESS

Total Asset (exclusive of land)  = 4M

Land (where office, plant & equipment are situated ) = 1M

_______________________________

NOT MICRO BUSINESS

If your business or enterprise falls under micro business category, you MAY  BE eligible to be registered as a Barangay Micro Business Enterprise (BMBE) and enjoy the benefit and incentives of the “ Barangay Micro Business Enterprise Act of 2002 also known as R.A. 9178.

WHERE TO REGISTER AS A BMBE?

BARANGAY MICRO BUSINESS ENTERPRISE  (BMBE’S) CAN NOW REGISTER THEIR BUSINESSES, FREE OF CHARGE , AT THE DEPARTMENT OF TRADE AND INDUSTRY (DTI) THROUGH THE AGENCY’S NEGOSYO CENTERS.

GREAT!!! NEXT QUESTION!!

HOW DOES ONE REGISTER AS A BMBE?

Based on the revised guidelines issued by DTI, any person, natural or juridical, such as partnership, corporation, association and cooperation, having the qualification and none of the disqualifications shall be eligible to register as BMBEs.

A person applying  to be registered as a BMBE shall meet the following qualifications:                   

1.       With an asset f not more than three million pesos ( P 3,000,000.00) excluding land

2.       Engaged in the production , processing or manufacturing of products or commodities, including agro – processing , trading and services.

3.       Registered with the Department of Trade and Industry for Sole proprietorships, for juridical persons: with the Securities and Exchange Commission (SEC)  for corporation, partnerships and associations; and with the Cooperative Development Authority for cooperatives.

Applications for BMBE Certificate of Authority shall be filed with the Negosyo Centers established in each province, city or municipality, or in the DTI offices where Negosyo Centers have not been set up.

The following shall be submitted in support of the duly filled up BMBE application form:

A.      Certificate of Business Name Registration from the Department of Trade and Industry (DTI) or

B.      Certificate of Registration from the Securities and Exchange Commission (SEC) or

C.      Certificate of Registration from the Cooperative Development Authority (CDA).

WHAT IS THE PROCEDURE FOR REGISTRATION?

The applicant shall follow the steps herein enumerated in applying for BMBE Certificate of Authority (CA):

1.       Accomplish and file the application form for BMBE Certificate of Authority;

2.       The DTI , through the Negosyo Center, evaluates the application for purposes of determining the eligibility and qualification as a BMBE;

3.       The DTI after finding the applicant to be eligible and qualified, issues the BMBE Certificate of Authority within fifteen  (15) working days from receipt  of application with complete requirements;  otherwise, the BMBE CERTIFICATE OF AUTHORITY shall be deemed approved ( where in such a cases it becomes ministerial on the part of DTI to issue the BMBE Certificate of Authority).

WHAT IS THE VALIDITY PERIOD OF THE BMBE CERTIFICATE OF AUTHORITY REGISTRATION?

The BMBE Certificate  Authority shall be effective for a period of two (2) years commencing from the date of issuance. The CA may be renewed for the same period of two years (2) and every two years  thereafter subject to the applicant’s continued compliance with the eligibility requirements prescribed by law and DTI DAO No. 16-01 Series of 2016.

HOW MUCH WILL IT COST TO REGISTER?

The registration and issuance of the CA shall be FREE OF CHARGE

HOW CAN A BMBE AVAIL OF THE EXEMPTION FROM COVERAGE OF THE  MINIMUM WAGE LAW?

Once a BMBE is registered and issued with a Certificate of Authority, it is automatically EXEMPTED from the minimum wage law.

FINALLY!!

WHAT ARE THE STEPS IN AVAILING OF THE INCOME TAX EXEMPTION?

The  BMBE registers with the BIR Revenue District Office ( RDO) where the principal office or place of business is located and it’s submission of the necessary documents.

The ff are the documents to be submitted to BIR to avail of Income Tax Exemption:

1.       Copy of the BMBE’s Certificate of Authority

2.       Sworn Statement of Assets of the BMBE and/or its affiliates, supported by pertinent documents

3.       Certified list of branches, sales outlets, places of production, warehouses and storage facilities

4.       Certified list of affiliates

5.       Latest audited Financial Statement or Account Information Form .

WHAT DOCUMENT SHOULD BE FILED WITH BIR BY AN INCOME TAX EXEMPT BMBE?

Instead of an income tax return, an income tax exempt BMBE is required to submit an Annual Information Return. This is filed on or before the 15th day of the 4th month after the close of the

taxable year with an Account Information Form, which contains data from its financial statement and Sworn Statement of Assets Owned and/or Used.

CAN MY INCOME TAX EXEMPTION BE REVOKED?

YES!

YOUR INCOME TAX EXEMPTION CAN BE REVOKED FOR ANY OF THE FF REASONS:

1.       Transfer of place of business

2.       Value of its total assets exceeds P3M

3.       Voluntary surrender of the Certificate of Authority

4.       Death of the registered individual owner of the BMBE; violation or noncompliance with the provisions of R.A. 9178

5.       Merger or consolidation with an entity which is not eligible to be a BMBE

6.       Sale or transfer of the BMBE, if it is a sole proprietorship without prejudice to the transferee applying for registration

7.       Submission of fake or falsified documents;

8.       Retirement from business, or cessation/suspension of operations for one year; and

9.       Making false or omitting required declarations or statements

There you go, STEPS ON HOW TO REGISTER AS A BMBE for you to be exempted from income tax.  Good luck in your business.  We would like to hear from you. Please email us your experience in applying for your Certificate of Authority. Send it to  ione.mejia@gmail.com. Thank you.