Use of Non-Thermal Paper

To all establishments using Cash Registering Machines (CRM),  Point of Sale (POS) Machine or other machines, a recently published Revenue Regulations (RR) No.10-2015 of the BIR tackles the mandatory use of Non-Thermal Paper.

I can hear grumbling!  ano na naman ito ?!?!

but wait... the BIR is considerate of the transition cost so...  Section 4 of the RR provides for the staggered implementation dates. So here goes:

    Machines registered on                                    Implementation Dates

    July 14, 2014 onwards                                  on or before July 1,2018
    July 1, 2013-June 30,2014                            on or before July 1,2017
    prior to July 1, 2012 - June 30, 2013             on or before Sept. 1, 2016

This new issuance is in relation to the prescribed ten (10) year period of preservation of the Accounting records. Since, printed matters in the thermal papers do not last for a long time, it was then decided by BIR people to implemented the use of non-thermal papers on the said machines.

Announcement: The Newest Version of eBIR Forms Package v5.1

A blessed Sunday to you all ! As mentioned in my previous post, here now is the new version of the eBIR Forms Package as provided in Revenue Memorandum Circular (RMC) No. 58-2015 announcing the availability of the New eBIR Forms Package version 5.1.

Taxpayers who are mandated to use the eBIR Forms for eFiling may download the said version from the BIR website or at the following sites:

          Websites: www.knowyourtaxes.ph; www.dof.gov.ph
          Direct link: http://ftp.pregi.net/bir/ebirforms_package_v5.1.zip

The instructions for installation of the latest version is also provided in the said RMC. I just like to reiterate that the eBIR Forms 1700, 1701, 1702RT, 1702MX, 1702EX and 1707A are now available on the said version and may be submitted online except for BIR Form1707A.

Good  day !

Philippine Taxation on Non-Filipinos.

Today, I will be writing about some general information on  taxation by Philippine Government on non-Filipinos, specifically on non-resident alien individual. I hope this will be of use to you, your relatives and friends. 

First of all, there are two classifications of  these foreigners and they are as follows:

      1) Those who are engaged in trade or business - which means that they are foreign individuals who stay here in the Philippines for more than 180 days. Usually, their income is subject to Income Tax just like an ordinary citizen of the Philippines or resident alien doing business in the Philippines. Thus, gross taxable income less their personal exemption equals net taxable income which is subject to the graduated rate ranging from 5% to 32 %. This is based on Section 25(A)(1) of the Philippine Tax Code which states that:

          SEC. 25. Tax on Nonresident Alien Individual. -

          (A) Nonresident Alien Engaged in trade or Business Within the Philippines. -

      (1) In General. - A nonresident alien individual engaged in trade or business in the Philippines shall be subject to an income tax in the same manner as an individual citizen and a resident alien individual, on taxable income received from all sources within the Philippines. A nonresident alien individual who shall come to the Philippines and stay therein for an aggregate period of more than one hundred eighty (180) days during any calendar year shall be deemed a 'nonresident alien doing business in the Philippines'. Section 22 (G) of this Code notwithstanding.

Likewise, these individuals are required to file their Income Tax Return using the BIR Form 1701(Annual Income Tax Return for Self-Employed Individuals, Estates and Trusts) with the Accredited Agent Banks on our before April 15 the next calendar year.

      2) Those who are not engaged in trade or business - which means that they stay here in the Philippines for less than 180 days. Their usual income are their passive income (such as interest, dividends, rents,etc.)  and it is subject to the Final Income Tax at the flat rate of 25%. Except for the sale of  real property considered as capital asset which is subject to 6%. This is in accordance with Section 25(B) of the same code, thus:

       SEC. 25. Tax on Nonresident Alien Individual. -

       (B) Nonresident Alien Individual Not Engaged in Trade or Business Within the Philippines. - There shall be levied, collected and paid for each taxable year upon the entire income received from all sources within the Philippines by every nonresident alien individual not engaged in trade or business within the Philippines as interest, cash and/or property dividends, rents, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable annual or periodic or casual gains, profits, and income, and capital gains, a tax equal to twenty-five percent (25%) of such income. Capital gains realized by a nonresident alien individual not engaged in trade or business in the Philippines from the sale of shares of stock in any domestic corporation and real property shall be subject to the income tax prescribed under Subsections (C) and (D) of Section 24.

In addition to Income Tax, they are also subject to Value Added Tax (VAT) and Documentary Stamp Tax (DST), if applicable.

In the second classification, it is the obligation of the Filipino payor, who is considered the withholding agents, to deduct the corresponding Final Income Tax  from the total amount of income of the foreign individual and remit it to the Accredited Agent Bank using the BIR Form 1601F (Monthly Remittance Return of Final Income Taxes Withheld). 

However, there are Tax Treaties, which provides for the tax exemptions of foreign individuals. You may seek assistance from the International Tax Affairs Division of the Bureau of Internal Revenue (BIR) regarding this to avail of the exemptions.

Taxation on Foreign Corporation will be tackled in my incoming post. So keep reading and enjoy!

As always... God bless and good day!

Taxability of Retirement / Separation Benefits.

Hello and Good Day!

Somebody asked me: "Are Retirement or Separation Fees subject to Tax?"

There are several conditions to consider to determine whether such fee received by an employee is taxable or exempt from tax and these are as follows:

For Retirement Benefits:

             

           1) 50 years old and above

           2) 10 years in service
           3) Availed by employee only once

For Separation Benefits:

          1) Due to death, sickness and other physical disability           

          2) Or any cause beyond the control of the employee such as:redundancy, laying-off, severance and others

The absence of the above conditions will not merit tax exemptions of separation fees received from employer. Thus, the retirement/separation benefit to be paid to him shall be subjected to income tax and consequently to withholding tax.

Such conditions are based on Section 32 (B) (6) (a) and (b) of the Tax Code which states that:

      TAX CODE:

      Sec. 32. Gross Income. –

                                            xxx                              xxx                              xxx

      (B) Exclusions from Gross Income. - The following items shall not be included in gross income and shall be exempt from taxation under this title:

            (6)  Retirement Benefits, Pensions, Gratuities, etc.-

a)     Retirement benefits received under Republic Act No. 7641 and those received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided, That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of his retirement: Provided, further, That the benefits granted under this subparagraph shall be availed of by an official or employee only once. For purposes of this Subsection, the term 'reasonable private benefit plan' means a pension, gratuity, stock bonus or profit-sharing plan maintained by an employer for the benefit of some or all of his officials or employees, wherein contributions are made by such employer for the officials or employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees.

b)    Any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer because of death sickness or other physical disability or for any cause beyond the control of the said official or employee.

The Tax Code is available in the BIR Website.

Goodnight and GOD bless us all !