Tax Development

REVENUE MEMORANDUM CIRCULAR (RMC) NO. 16-2010

On February 26, 2010, Revenue Memorandum Circular No. 16-2010 was issued by the Bureau of Internal Revenue (BIR) to require the taxpayers to disclose their election to avail of the Optional Standard Deduction (OSD) for taxable year 2009.

Under the said RMC, taxpayers who are electing to avail of the OSD are required to check the appropriate box in the income tax return filed for the first quarter of taxable year 2009, whether such taxpayer is adopting the calendar or fiscal year. Once the election is made, the same type of deduction must be consistently applied for all the succeeding quarterly returns and in the final income tax return for the taxable year.

The taxpayer’s failure to indicate the election to avail of the OSD shall be considered as having availed of the itemized deductions allowed under Section 34 of the Tax Code, as amended. Moreover, any taxpayer who is required but fails to file income tax return for the first quarter shall be considered as having availed of the itemized deductions option for taxable year 2009. Provided, however, that newly registered taxpayers shall disclose their election to avail of the OSD in their initial quarterly income tax return, which is required to be filed for the taxable year 2009.

The foregoing RMC further provides that the election to avail of the OSD or itemized deduction, as signified in the return, shall be irrevocable for taxable year 2009 upon filing thereof. Any subsequent amendment of such income tax return filed for the first/initial quarter of the taxable year 2009 shall not affect the irrevocable character of the election to avail of the OSD or itemized deduction, as the case may be.

RMC NO.  21-2010

RMC No. 21-2010 dated March 8, 2010 was issued by the BIR to emphasize the obligation of the employers to withhold, remit and perform year-end adjustment on withholding taxes on compensation of their employees. The applicable penalties for failure to comply with such tax obligations are also reiterated to ensure compliance with all the existing revenue laws and regulations relative to withholding tax on compensation.

Failure to comply with the provisions relative to withholding taxes on compensation and its year-end adjustment may result in the following violations of the employer/withholding agent:

a.     Non-withholding of tax – when employer fails to withhold the tax on the taxable income of the employee

b.     Underwithholding – when employer fails to correctly withhold the tax which should be equal to the tax due of the employee for the taxable year.

c.     Non remittance – when employer fails to remit total amount withheld.

d.     Underremittance – when employer fails to correctly remit total amount withheld or when total amount of remittance is lesser than the total amount withheld.

e.     Late remittance – when employer remits the correct amount withheld beyond the prescribed due date.

f.      Failure to refund excess taxes withheld – when employer fails/refuses to refund excess taxes withheld to its employees.

The applicable penalties for non-compliance with the existing tax laws and regulations relative to withholding are as follows:

1.     Additions to the tax in the form of penalties or interest

2.     Criminal Liabilities in the form of fine or imprisonment or both

In certain instances, a compromise penalty in lieu of criminal liability may be imposed and collected.

RMC NO. 24-2010

RMC No. 24-2010 dated March 1, 2010 was issued by the BIR to further defer until June 30, 2010 the implementation of Revenue Regulations No. 7-2009 relative to the Electronic Documentary Stamp Tax (eDST) System.

The said RMC provides that after the said date, no further request for deferment on the mandatory use of the said system shall be entertained.

During the interim period of suspension, taxpayers who are already technically capable to use the eDST system may voluntarily avail of the same. However, those taxpayers who cannot as yet comply with the requirements of the said system are advised to adopt the Constructive Stamping/Receipt System (CS/RS) of Documentary Stamp Tax provided under RMC No. 1-2010.

RMC NO. 31-2010

On March 17, 2010, RMC No. 31-2010 was issued by the BIR to prescribe the use of the new Documentary Stamp Tax (DST) to be affixed to taxable documents of taxpayers mandated to use the Electronic Documentary Stamp Tax (eDST) System.

The new stamp, whose new features are specified in this Circular, shall be used effective January 2010.

Taxpayers/users who still cannot comply with the requirements of the eDST system are allowed to use the Constructive Stamping/Receipt System (CS/RS) pursuant to the provisions of RMC No. 24-2010, which defers the full implementation of the said system until June 30, 2010. The affixture of the DST under the CS/RS is made by attaching the Documentary Stamp Tax Declaration Return (BIR Form 2000) and the duly issued Confirmation Receipt/Deposit Slip by the Authorized Agent Bank (AAB) to the taxable document.

RMC NO. 30-2010

On March 26, 2010, RMC No. 30-2010 was issued to clarify RMC No. 72-2009, which reiterated the imposition of Value Added Tax (VAT) on tollway operators.

It was provided in the said RMC that the imposition of VAT shall be initially applicable to toll fees collected from private motor vehicles by the tollway operators effective April 1, 2010. The VAT on the toll fees from other transportation vehicles shall be implemented subsequently.