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New BIR issuances

New BIR Issuances

The BIR has released the following issuances which set new rules and clarify the tax treatment of certain transactions, income, benefits or privileges of taxpayers.

1. Tax treatment of social clubs (RMC 35-2012) – Clarifies that clubs organized and operated exclusively for pleasure, recreation and other non-profit purposes are subject to income tax and VAT on their income from whatever source, including but not limited to membership fees, assessment dues, rental income, and service fees.

2. DST on documents issued by the Construction Industry Authority of the Philippines (RMC 36-2012) -  Certificates and other necessary documents issued by the Construction Industry Authority of the Philippines are subject to the Php 15.0 DST imposed under Section 188 of the Tax Code.

3. Requirement for CAR on transfer of shares of stock not traded in the stock exchange (RMC 37-2012) -  A Certificate Authorizing Registration (CAR) is a prerequisite for the transfer of ownership of shares of stock not traded in the stock exchange (i.e. those subject to the capital gains tax of 5% and 10%) .  The receipt evidencing payment of the tax is also required to be filed with and recorded by the secretary of the corporation

4. Clarification on the 20% discount, tax deduction of business establishments, and exemption from VAT of senior citizens (RMC 38-2012) – Clarifies the coverage and computation of the 20% discount and exemption from VAT of senior citizens.    

5. Witholding on back wages and other benefits received by employees through garnishment (RMC 39-2012) -   When an employee in a labor dispute is able to collect taxable backwages, allowances and benefits by virtue of a judgment award through garnishment of the employer's assets (e.g. loan receivables, bank deposits, financial interests, royalties or commissions), the person having control of such assets (e.g., the debtor, bank, financial institution) shall be liable to withhold tax on wages at  5% of the amount paid to the employee.

6. Validity of Rulings under Section 40(C)(2) of the Tax Code (RMC 40-2012) -  Rulings issued pursuant to Section 40(C)(2) of the Tax Code shall be valid only for 90 days reckoned from the date of receipt of the ruling by any parties to the exchange transaction.  This means that the properties and shares of stocks involved in the transfer should be conveyed to the transferee and transferor within the 90-day period.  Extension may be granted by the Commissioner in meritorious cases.

Please see attached copy of abovementioned RMCs issued by the BIR.