REVENUE MEMORANDUM CIRCULAR NO. 47-2023 issued on May 3, 2023 reiterates the proper time of remittance of Withholding Taxes by National Government Agencies (NGAs) and instrumentalities, Local Government Units (LGUs), and Government Owned and Controlled Corporations (GOCCs).
                Per Section 2.57.4 of Revenue Regulations No. 2-98, the obligation of the payor to deduct and withhold the tax under Section 2.57 of said Regulations arises at the time an income payment is paid or payable, or the income payment is accrued or recorded as an expense or asset, whichever is applicable, in the payor’s books, whichever comes first.
               Provided, however, that where income is not yet paid or payable but the same has been recorded as an expense or asset, whichever is applicable, in the payor’s books, the obligation to withhold shall arise in the last month of the return period in which the same is claimed as an expense or amortized for tax purposes.
                   On the other hand, the accrual basis of accounting was already prescribed by the Commission on Audit in the Government Accounting Manuals for NGAs and LGUs since 2002, pursuant to the Philippine Public Sector Accounting Standards that are harmonized with the International Public Sector Accounting Standards. Hence, a long period of departure from the cash basis of accounting which is, apparently, still being adopted by these concerned government entities where their duty to deduct and withhold the tax is erroneously grounded.
                     All concerned NGAs, LGUs, and GOCCs and other government entities are hereby requested to strictly comply with the proper time of remittance of the withholding tax obligations to avoid payment of the corresponding penalties.