8box Solutions Inc.

4_20230710_150500_0001

Contact Number: 09369340340
Email: sales@8box.solutions

REVENUE REGULATIONS NO. 10-2008 issued on September 24, 2008 implements certain provisions of Republic Act (RA) No. 9504 entitled “An Act Amending Sections 22, 24, 34, 35, 51 and 79 of RA No. 8424, as Amended, Otherwise Known as The National Internal Revenue Code” relative to the withholding of Income Tax on compensation, increase of personal and additional exemptions, compensation received by Minimum Wage Earners (MWEs) and other concerns. Section 2.78.1 of Revenue Regulations (RR) No. 2-98, as amended, is further amended to read as follows: “Sec. 2.78.1. Withholding of Income Tax on Compensation Income.- (A) Compensation Income Defined. – xxx xxx xxx xxx xxx (3) Facilities and privileges of relatively small value. — Ordinarily, facilities and privileges (such as entertainment, medical services, or so-called “courtesy” discounts on purchases), otherwise known as “de minimis benefits,” furnished or offered by an employer to his employees, are not considered as compensation subject to income tax and consequently to withholding tax, if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as means of promoting the health, goodwill, contentment, or efficiency of his employees. The following shall be considered as “de minimis” benefits not subject to income tax, hence, not subject to withholding tax on compensation income of both managerial and rank and file employees: (a) Monetized unused vacation leave credits of employees not exceeding ten (10) days during the year and the monetized value of leave credits paid to government officials and employees; (b) Medical cash allowance to dependents of employees not exceeding P 750.00 per employee per semester or P 125 per month; (c) Rice subsidy of P 1,500.00 or one (1) sack of 50-kg. rice per month amounting to not more than P 1,500.00; (d) Uniforms and clothing allowance not exceeding P 4,000.00 per annum; (e) Actual yearly medical benefits not exceeding P 10,000.00 per annum; (f) Laundry allowance not exceeding P 300.00 per month; (g) Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P 10,000.00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees; (h) Gifts given during Christmas and major anniversary celebrations not exceeding P 5,000.00 per employee per annum; (i) Flowers, fruits, books, or similar items given to employees under special circumstances, e.g., on account of illness, marriage, birth of a baby, etc.; and (j) Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic minimum wage. The amount of ‘de minimis’ benefits conforming to the ceiling herein prescribed shall not be considered in determining the P 30,000.00 ceiling of ‘other benefits’ excluded from gross income under Section 32(b)(7)(e) of the Code. Provided that, the excess of the ‘de minimis’ benefits over their respective ceilings prescribed by these regulations shall be considered as part of ‘other benefits’ and the employee receiving it will be subject to tax only on the excess over the P 30,000.00 ceiling. Provided, further, that MWEs receiving ‘other benefits’ exceeding the P 30,000.00 limit shall be taxable on the excess benefits, as well as on his salaries, wages and allowances, just like an employee receiving compensation income beyond the SMW. Any amount given by the employer as benefits to its employees, whether classified as “de minimis” benefits or fringe benefits, shall constitute as deductible expense upon such employer. Where compensation is paid in property other than money, the employer shall make necessary arrangements to ensure that the amount of the tax required to be withheld is available for payment to the Bureau of Internal Revenue. xxx xxx xxx (B) Exemptions from Withholding Tax on Compensation.- The following income payments are exempted from the requirements of withholding tax on compensation: xxx xxx xxx (13) Compensation income of MWEs who work in the private sector and being paid the Statutory Minimum Wage (SMW), as fixed by Regional Tripartite Wage and Productivity Board (RTWPB)/ National Wages and Productivity Commission (NWPC), applicable to the place where he/she is assigned. The aforesaid income shall likewise be exempted from income tax. ‘Statutory Minimum Wage’ (SMW) shall refer to the rate fixed by the Regional Tripartite Wage and Productivity Board (RTWPB), as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of Labor and Employment (DOLE). The RTWPB of each region shall determine the wage rates in the different regions based on established criteria and shall be the basis of exemption from income tax for this purpose. Holiday pay, overtime pay, night shift differential pay and hazard pay earned by the aforementioned MWE shall likewise be covered by the above exemption. Provided, however, that an employee who receives/earns additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of P 30,000.00, taxable allowances and other taxable income other than the SMW, holiday pay, overtime pay, hazard pay and night shift differential pay shall not enjoy the privilege of being a MWE and, therefore, his/her entire earnings are not exempt from income tax and, consequently, from withholding tax. MWEs receiving other income, such as income from the conduct of trade, business, or practice of profession, except income subject to final tax, in addition to compensation income are not exempted from income tax on their entire income earned during the taxable year. This rule, notwithstanding, the SMW, Holiday pay, overtime pay, night shift differential pay and hazard pay shall still be exempt from withholding tax. For purposes of these regulations, hazard pay shall mean the amount paid by the employer to MWEs who were actually assigned to danger or strife-torn areas, disease-infested places, or in distressed or isolated stations and camps, which expose them to great danger of contagion or peril to life. Any hazard pay paid to MWEs which does not satisfy the above criteria is deemed subject to income tax and consequently, to withholding tax. In case of hazardous employment, the employer shall attach to the Monthly Remittance Return of Withholding Tax on Compensation (BIR Form No. 1601C) for return periods March, June, September and December a copy of the list submitted to the nearest DOLE Regional/Provincial Offices – Operations Division/Unit showing the names of MWEs who received the hazard pay, period of employment, amount of hazard pay per month; and justification for payment of hazard pay as certified by said DOLE/allied agency that the hazard pay is justifiable. The NWPC shall officially submit a Matrix of Wage Order by region (Annex “A”), and any changes thereto, within ten (10) days after its effectivity to the Assistant Commissioner, Collection Service, for circularization in the BIR. Any reduction or diminution of wages for purposes of exemption from income tax shall constitute misrepresentation and therefore, shall result to the automatic disallowance of expense, i. e. compensation and benefits account, on the part of the employer. The offenders may be criminally prosecuted under existing laws. (14) Compensation income of employees in the public sector with compensation income of not more than the SMW in the nonagricultural sector, as fixed by RTWPB/NWPC, applicable to the place where he/she is assigned . The aforesaid income shall likewise be exempted from income tax. The basic salary of MWEs in the public sector shall be equated to the SMW in the non-agricultural sector applicable to the place where he/she is assigned. The determination of the SMW in the public sector shall likewise adopt the same procedures and consideration as those of the private sector. Holiday pay, overtime pay, night shift differential pay and hazard pay earned by the aforementioned MWE in the public sector shall likewise be covered by the above exemption. Provided, however, that a public sector employee who receives additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of P 30,000.00, taxable allowances and other taxable income other than the SMW, holiday pay, overtime pay, night shift differential pay and hazard pay shall not enjoy the privilege of being a MWE and, therefore, his/her entire earnings are not exempt from income tax and, consequently, from withholding tax. MWEs receiving other income, such as income from the conduct of trade, business, or practice of profession, except income subject to final tax, in addition to compensation income are not exempted from income tax on their entire income earned during the taxable year. This rule, notwithstanding, the SMW, Holiday pay, overtime pay, night shift differential pay and hazard pay shall still be exempt from withholding tax. For purposes of these regulations, hazard pay shall mean the amount paid by the employer to MWEs who were actually assigned to danger or strife-torn areas, disease-infested places, or in distressed or isolated stations and camps, which expose them to great danger of contagion or peril to life. Any hazard pay paid to MWEs which does not satisfy the above criteria is deemed subject to income tax and consequently to withholding tax. In case of hazardous employment, the employer shall attach to the Monthly Remittance Return of Withholding Tax on Compensation (BIR Form No. 1601C) for return periods March, June, September and December a copy of Department of Budget and Management (DBM) circular/s, or equivalent, as to who are allowed to receive hazard pay. Section 2.78.5 shall be inserted to RR No. 2-98, as amended, to read as follows: “Sec. 2.78.5. Computation of Wages . The basis of the computation of the minimum wage rates prescribed by law shall be the normal working time of eight (8) hours a day. The computation of wages shall be in accordance with the Collective Bargaining Agreement (CBA), if any, or the provisions of the Labor Code as implemented. Unless otherwise amended or repealed by subsequent pertinent laws, rules and regulations, the holiday pay, overtime pay, night shift differential and hazard pay shall be understood to be computed based on such agreement or labor law provisions. In the determination of the minimum wage on a monthly basis, the withholding agent shall be guided by the prevailing minimum wage as reflected in the latest Matrix of Wage Order and its own policy on whether employees are (a) not considered paid on Saturdays and Sundays or rest days, (b) not considered paid on Sundays or rest days, (c) considered paid on rest days, special days and regular holidays, or (d) required to work everyday including Sundays or rest days, special days and regular holidays. The resulting number of days in the above enumerated categories are referred to as the factor or number of working/paid days in a year. (Annex “B”) On the first classification, the monthly SMW is computed by multiplying the applicable daily wage rate by the factor of 261 days and divide the same by twelve; the semi-monthly at one-half (½) of the monthly rate and the weekly SMW is arrived at by spreading the annual minimum basic wage over fifty-two (52) weeks. Thus, on a P 382.00 minimum daily wage in Metro Manila, the monthly SMW is P 8,308.00, the semi-monthly at P 4,154.00 and weekly at P 1,917.00. On the second category, the monthly SMW is computed by multiplying the applicable daily wage rate by the factor of 313 days and divide the product by twelve. Hence, on a P 382.00 minimum daily wage, the monthly SMW is P 9,964.00, the semi-monthly at P 4,982.00 and weekly at P 2,300.00. On the third classification, the monthly SMW is computed by multiplying the applicable daily wage rate by the factor of 365 days, divided by twelve. Thus, on a 382 minimum daily wage, the monthly SMW is P 11,619.00, the semi-monthly at P 5,810.00 and weekly at P 2,681.00. On the fourth classification, the monthly SMW is computed by multiplying the applicable daily wage rate by the factor of 392.5 days, divided by twelve. Hence, on a 382 minimum daily wage, the monthly SMW is P 12,495.00, the semi-monthly at P 6,247.00 and weekly at P 2,883.00.” Every employer must withhold from compensation paid an amount computed in accordance with these Regulations. Provided, that no withholding of tax shall be required on the SMW, including holiday pay, overtime pay, night shift differential and hazard pay of MWEs in the private/public sectors as defined in these Regulations. Provided, further, that an employee who receives additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of P 30,000.00, taxable allowances and other taxable income other than the SMW, holiday pay, overtime pay, hazard pay and night shift differential pay shall not enjoy the privilege of being a MWE and, therefore, his/her entire earnings are not exempt from income tax and, consequently, shall be subject to withholding tax. The procedures provided in the Regulations shall govern the computation of Withholding Tax on the taxable compensation income of the employees. Provided, however, that taxable fringe benefits received by employees other than the rank and file, as defined in the Labor Code of the Philippines, as amended, shall be subject to a Fringe Benefits Tax, instead of the rates prescribed in the Revised Withholding Tax Tables pursuant to Sec. 24(A) of the Code, as amended. In general, every employer making payment of compensation shall deduct and withhold from such compensation a tax determined in accordance with the prescribed Revised Withholding Tax Tables (Annex “C” of the Regulations) which shall be used starting January 1, 2009. There are four (4) withholding tax tables prescribed in the Regulations as follows: a. Monthly Tax Table – to be used by employers using the monthly payroll period; b. Semi-Monthly Tax Table – to be used by employers using the semimonthly payroll period; c. Weekly Tax Table – to be used by employers using the weekly payroll period; d. Daily Tax Table – to be used by employers using the daily payroll period. If the compensation is paid other than daily, weekly, semi-monthly or monthly, the tax to be withheld shall be computed as follows: a. Annually – use the annualized computation referred to in Section 2.79(B)(5)(b) of the Regulations; b. Quarterly and semi-annually – divide the compensation by three (3) or six (6) respectively, to determine the average monthly compensation. Use the monthly withholding tax table to compute the tax, and the tax so computed shall be multiplied by three (3) or six (6) accordingly. For the year 2008, however, being the initial year of implementation of RA 9504, there shall be a transitory withholding tax table for the period from July 6 to December 31, 2008 (Annex “D” of the Regulations) determined by prorating the annual personal and additional exemptions under RA 9504 over a period of six months. Thus, for individuals, regardless of personal status, the prorated personal exemption is P 25,000, and for each qualified dependent child (QDC), P 12,500. The components of the withholding tax table and the steps to determine the amount of tax to be withheld are specified in the Regulations. If in respect of a particular employee, the regular compensation is exempt from withholding tax because the amount thereof is below the compensation level, but supplementary compensation is paid during the calendar year or the supplementary compensation is equal to or more than the regular compensation to be paid; or the employee was newly hired and had a previous employer/s within the calendar year, other than the present employer doing this cumulative computation, the present employer shall determine the tax to be deducted and withheld in accordance with the cumulative average method provided in the Regulations. The cumulative average method, once applicable to a particular employee at any time during the calendar year, shall be the same method to be consistently used for the remaining payroll period/s of the same calendar year. When the employer-employee relationship is terminated before the end of the calendar year and when computing for the year-end adjustment, the employer shall determine the amount to be withheld from the compensation on the last month of employment or in December of the current calendar year in accordance with the procedures specified in the Regulations. The annualized computation done for each employee shall be reflected by the employer at the alphabetical list attached to BIR Form No. 1604-CF. The provisions of Section 2.58.5 of RR No. 2-98, as amended, shall apply. Provided, that compensation income where no income taxes were withheld pursuant to Section 2.79(A) of these Regulations, shall be allowed as deduction from an employer’s gross income when the required employees withholding statement (BIR Form No. 2316) have been issued to subject employees in accordance with Section 2.83.1 of RR No. 2-98, as amended. Provided, further, that the Alphabetical List of the subject employees, including MWEs, shall be submitted under BIR Form No. 1604-CF in accordance with Section 2.83.2 of RR No. 2-98, as amended. An employee receiving compensation shall be entitled to withholding exemptions as provided in the Code, as amended. In order to receive the benefit of such exemptions, the employee must file the Application for Registration (BIR Form No. 1902), upon employment, or a Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305), in case of updates on changes in his exemption. The withholding exemption to which an employee is entitled depends upon his status and the number of dependents qualified for additional exemptions. Each employee shall be allowed to claim the following amount of exemptions, with respect to compensation paid on or after July 6, 2008. Individual taxpayers regardless of status are entitled to P 50,000 personal exemption. An individual, whether single or married, shall be allowed an additional exemption of Twenty Five Thousand Pesos (P 25,000) for each qualified dependent child, provided that the total number of dependents for which additional exemptions may be claimed shall not exceed four (4) dependents. The additional exemptions for QDC shall be claimed by only one of the spouses in the case of married individuals. A dependent means a legitimate, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect. The husband shall be the proper claimant of the additional exemption for qualified dependent children unless he explicitly waives his right in favor of his wife in the Application for Registration (BIR Form No. 1902) or in the Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305), whichever is applicable. Provided, however, that where the spouse of the employee is unemployed or is a non-resident citizen deriving income from foreign sources, the employed spouse within the Philippines shall be automatically entitled to claim the additional exemptions for children. Every employer should ascertain whether or not a child being claimed is a qualified dependent under the provisions of these Regulations. If the employee should have additional dependent(s) during the taxable year, he may claim the corresponding additional exemption, as the case may be, in full for such year. If the taxpayer dies during the taxable year, his estate may still claim the personal and additional exemptions for himself and his dependent(s) as if he died at the close of such year. If the spouse or any of the dependents dies or if any of such dependents marries, becomes twenty-one (21) years old or becomes gainfully employed during the taxable year, the taxpayer may still claim the same exemptions as if the spouse or any of the dependents died, or as if such dependents married, became twenty-one (21) years old or became gainfully employed at the close of such year. Provided, that in 2008, the pro-rated personal and additional exemptions shall apply as stated in the Regulations. The personal and additional exemptions above stated shall apply after the transitory period. The application for registration for individuals earning compensation income (BIR Form No. 1902) shall be accomplished by both employer and employee relating to the following information and other requirements: A. Employee i. Name/Taxpayer’s Identification Number (TIN)/Address of employee/ other information required as stated in BIR Form No. 1902; ii. Status of employee whether single/legally separated/widow or widower with no dependent child or married; iii. Status of spouse of the employee. – If the employee is legally married, the Name/TIN, if any, of the spouse and whether said spouse is employed, unemployed, employed abroad, or is engaged in trade or business should be indicated on the application; iv. Qualified dependents – Name and date of birth of qualified dependent/s child(ren); v. Claimant of exemption for children. – The husband is the proper claimant of additional exemptions for qualified dependent children. However, the wife shall claim full additional exemption for children in the following cases: a. Husband is unemployed; b. Husband is a non-resident citizen deriving income from foreign sources; and c. The husband waives his right to claim the exemptions of children (waiver should be for all children) in a sworn statement to be attached to his Application for Registration (BIR Form No. 1902) and that of his wife’s, in accordance with the procedures prescribed. vi. Required forms and attachments – Upon filing the Application for Registration (BIR Form No. 1902) or Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305), whichever is applicable, the taxpayer is required to attach any of the following documents to establish the status of the taxpayer, if applicable, to the application: a. Marriage Contract; b. Birth Certificate of each qualified dependent child(ren), certified by the Local Civil Registry Office/National Statistics Office (NSO)/equivalent document issued by a government office previously requiring certified copy showing the name of parent/s and the name of the QDC with birth date (e.g. passport of QDC as certified by company’s Human Resource Officer); c. Certificate of employment of the husband if he is working abroad; d. Sworn Declaration and Waiver of Right to Claim Exemptions of Qualified Dependent Child(ren) by the Husband in case wife is claiming the additional exemptions of the children; e. Medical Certificate of qualified dependent child, if physically/ mentally incapacitated; f. Court decision of legal adoption of children; g. Death Certificate; and h. Other documentary evidence, where the above documents are not available. vii. Concurrent multiple employments – An employee who is employed concurrently by two or more employers within the same period of time during the taxable year shall file the Application for Registration (BIR Form No. 1902) with his main employer (employer to whom the said employee renders his services for most of his time during the taxable year) and shall furnish a copy of the duly received application with his secondary employers (2nd , 3 rd, etc. employers). The employed husband and wife shall each file a separate application with their respective employers; viii.Successive multiple employment – An employee who transferred to another employer during the taxable year, shall furnish his new Employer with a Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305) indicating therein his previous employments during the taxable year (name of employer/s, address/es, TIN/s and the date/s of his separation) and attach to the said certificate, a copy of the Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) for compensation payment with or without withholding tax for the calendar year issued by previous employer/s. For an employee with successive employment beginning July 6, 2008 to December 31, 2008, the employer/s for the second semester shall apply the pro-rated exemption prevailing for the first semester ending July 5, 2008 based on BIR Form No. 2316 issued by the previous employer which was submitted by the employee and the prorated exemption prevailing for the second semester ending December 31, 2008 in the computation of year-end adjustment; ix. Mixed income – An individual receiving a combination of compensation and business/ professional income shall first deduct the allowable personal and additional exemptions from compensation income, only the excess can be deducted from business or professional income. In the case of husband and wife, the husband shall be the proper claimant of the additional exemptions unless he waives it in favor of his wife. B. Employer – The employer with whom the Application for Registration (BIR Form No. 1902) is filed, must indicate the date of receipt thereon and accomplish Part V of the said application pertaining to employer’s Information such as TIN, Employer’s Registered Name, and other relevant information. The following are the procedures for the filing of the Application for Registration (BIR Form No. 1902): i. All employers shall require their employees to accomplish in triplicate the Application for Registration BIR Form 1902 (Original copy-RDO; Duplicate-employer; Triplicate- employee) described above as follows: a. New employee/s shall accomplish and file the Application for Registration for Individuals Earning Compensation Income (BIR Form No, 1902) within ten (10) days from the date of employment; b. In case of changes in the information data in the Application for Registration (BIR Form No. 1902) previously submitted by the employee, consisting of changes in status and personal and additional exemptions, employment/working status of the spouse of the employee, multiple employment status and amount of compensation income, a Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305) reflecting the changes, together with the required documents/ evidence of changes must be submitted to the employer within ten (10) days after such change. The employer shall then make the necessary adjustments on the withholding tax of the employee based on the new information; ii. The employer shall transmit all copies of the Application for Registration (BIR Form No. 1902) or Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305), whichever is applicable, (after accomplishing the portion of Employer’s information of either forms) to the RDO where the employer is registered within thirty (30) days following its receipt from the employee. The RDO or his duly authorized representative, where the employer is registered, shall receive and stamp the three copies. The triplicate copy duly stamped received by the BIR shall be given to the employee. iii. The employer shall review the exemptions of the employees and shall, in the computation of taxes required to be withheld on the compensation of employees, apply the correct and applicable exemptions as provided in these Regulations. iv. In case the husband waives his right to claim the additional exemptions of children in favor of his wife, he shall accomplish a Sworn Declaration and Waiver of Right to Claim Exemptions of Qualified Dependent Child(ren) by the Husband (Annex “F” of the Regulations) in accordance with the following procedures: a. Fill up three (3) copies of the prescribed waiver form. b. Submit the waiver form together with the BIR Form No. 1902 to his employer within ten (10) days from employment, for acknowledgement in the space provided for that purpose. The employer of the husband shall: · After filling up the acknowledgement portion of the waiver form, retain the duplicate copy of the form and furnish the employee the original and triplicate copies for submission to the employer of the wife and for file of the employee, respectively. · Stop deductions of additional exemptions for qualified dependent children from the husband’s compensation income starting the following month. The employer of the wife shall, upon receipt of copy of the waiver form duly acknowledged by the employer of the husband, start deducting additional exemptions for children from the wife’s income on the month when the employer of the husband stopped deducting the exemptions of children from the husband’s income. c. The employed husband and wife shall apply the waiver in the computation of their respective taxable income in the Income Tax Return required to be filed by them following the procedure for filing the waiver under Section 2.79.1 (C)(4) of these Regulations, that is, the husband shall not deduct exemptions of children from his compensation income because he has waived the same (exemptions of children) in favor of his wife who will now deduct said exemptions from her income in computing her tax due. Waiver exercised during the calendar year shall be made only once in a calendar year and shall take effect for the present calendar year and succeeding year/s until revoked by the husband. Any waiver/ revocation of such waiver shall take effect only starting the succeeding calendar year. In no case should an employer of the wife deduct exemptions of children from the wife’s income unless the waiver by the husband has been duly acknowledged by the employer of the husband. Registration of employees receiving purely compensation income shall be at the RDO having jurisdiction over the employee’s place of assignment considering that the employee submits application for registration/exemption updates to their employer. In cases of multiple employment, it shall be at the RDO where the main employer is registered. Where an employee, in violation of these Regulations either fails or refuses to file an Application for Registration (BIR Form No. 1902) together with the required attachments, the employer shall withhold the taxes prescribed under the Schedule for Zero Exemption of the Revised Withholding Tax Table. In case of failure to file the Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305) together with the attachments, the employer shall withhold the taxes based on the reported personal exemptions existing prior to the change of status and without reflecting any change. Any refund or underwithholding that shall arise due to the violations shall be covered by the penalties prescribed in Section 80 of the NIRC, as amended. In general, the employer shall be responsible for the withholding and remittance of the correct amount of tax required by deducting and withholding from the compensation income of his employees. If the employer fails to withhold and remit the correct amount of tax, such tax shall be collected from the employer together with the penalties or additions to the tax otherwise applicable. The employer who is required to collect, account for and remit any tax imposed by the NIRC, as amended, who willfully fails to collect such tax, or account for and remit such tax or willfully assist in any manner to evade any payment thereof, shall in addition to other penalties provided for in the Code, as amended, be liable, upon conviction, to a penalty equal to the amount of the tax not collected nor accounted for or remitted. Any employer/withholding agent who fails, or refuses to refund excess withholding tax not later than January 25 of the succeeding year shall, in addition to any penalties provided in Title X of the Code, as amended, be liable to a penalty equal to the total amount of refund which was not refunded to the employee resulting from any excess of the amount withheld over the tax actually due on their return. Where an employee fails or refuses to file the Application of Registration or Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305) together with the attachments or willfully supplies false or inaccurate information thereunder after due written notice by the employer, the tax otherwise to be withheld by the employer shall be collected from him including penalties or additions to the tax from the due date of remittance until the date of payment. On the other hand, where the employee, after due written notice from the employer, willfully fails or refuses to file the Application for Registration or the Certificate of Update of Exemption and of Employer’s and Employee’s Information, whichever is applicable, or willfully supplies false and inaccurate information, the excess taxes withheld by the employer shall not be refunded to the employee but shall be forfeited in favor of the government. In general, every employer or other person who is required to deduct and withhold the tax on compensation including fringe benefits given to rank and file employees, shall furnish every employee from whose compensation taxes have been withheld the Certificate of Compensation Payment /Tax Withheld (BIR Form No. 2316) on or before January 31 of the succeeding calendar year, or if employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made. Failure to furnish the same shall be a ground for the mandatory audit of payor’s Income Tax liabilities (including withholding tax) upon verified complaint of the payee. Employers of MWEs are still required to issue BIR Form No. 2316 (June 2008 Encs version) to the MWEs on or before January 31 of the following year. The employer shall furnish each employee with the original and duplicate copies of BIR Form No. 2316 showing the name and address of the employer; employer’s TIN; name and address of the employee; employee’s TIN; amount of exemptions claimed amount of premium payments on health and/or hospitalization insurance not exceeding P 2,400.00, if any; the sum of compensation paid including the non-taxable benefits; the amount of statutory minimum wage received by MWEs; Overtime pay, holiday pay, night shift differential pay and hazard pay received by MWEs; the amount of tax due; the amount of tax withheld during the calendar year and such other information as may be required. The statement must be signed by both the employer or other authorized officer and the employee, and shall contain a written declaration that it is made under the penalties of perjury. If the employer is the Government of the Philippines, its political subdivision, agency or instrumentality or government-owned or controlled corporation, the statement shall be signed by the duly designated officer or employee. The Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) shall contain a certification to the effect that the employer’s filing of BIR Form No. 1604-CF shall be considered as a substituted filing of the employee’s Income Tax Return to the extent that the amount of compensation and tax withheld appearing in BIR Form No. 1604CF as filed with the BIR is consistent with the corresponding amounts indicated in BIR Form No. 2316. It shall be signed by both the employee and employer attesting to the fact that the information stated therein has been verified and is true and correct to the best of their knowledge. However, the withholding agents/employers are required to retain copies of the duly signed BIR Form No. 2316 for a period of three (3) years as required under the NIRC. Where the employee is a MWE defined under RA 9504 whose income is exempt from Income Tax and, consequently, from Withholding Tax, BIR Form No. 2316 shall show the sum of non-taxable SMW paid including the non-taxable benefits such as holiday pay, overtime pay, night shift differential pay and hazard pay earned during the calendar year and such other information as may be required. Provided, that the applicable box for MWEs under BIR Form No. 2316 (June 2008 Encs. version) are sufficiently filled-up. This serves as proof of financial capacity for purposes of loans, and for other purposes with various government agencies. Separated/terminated employees within the period from January 1 to July 5, 2008, where the total exemptions (e.g. married-P32,000) used in the annualized computation were likewise shown in the issued BIR Form 2316, shall be reported by the employer under the alphalist of terminated employees with date of termination/ separation. For those with changes in exemptions, such as that of having an additional dependent child, or for those with successive employment for taxable year 2008, the applicable apportioned exemption for January 1 to July 5, 2008 shall be applied for the first semester and the applicable apportioned exemption for July 6 to December 31, 2008 shall be applied for the second semester. The employee who is qualified for substituted filing of Income Tax Return under these Regulations shall no longer be required to file Income Tax Return (BIR Form No. 1700) since BIR Form No. 1604-CF with alphalists of employees shall be considered a substituted return filed by the employer. BIR Form No. 2316, duly certified by both employee and employer, shall serve the same purpose as if a BIR Form No. 1700 had been filed, such as proof of financial capacity for purposes of loan, credit card, or other applications, or for the purpose of availing tax credit in the employee’s home country and for other purposes with various government agencies. This may be used for purposes of securing travel tax exemption, when necessary. However, information referring to the certification, appearing at the bottom of BIR Form No. 2316, shall not be signed by both the employer and the employee if the latter is not qualified for substituted filing. In which case, BIR Form No. 2316 furnished by the employer to the employee shall be attached to the employee’s Income Tax Return (BIR Form Nos. 1700 or 1701 in the case of mixed income earners) to be filed on or before April 15 of the following year. In case of successive employments during the taxable year, an extra copy of BIR Form No. 2316 shall be furnished by the employee, duly certified by his previous employer/s and by him, to his new employer. Every employer or other persons required to deduct and withhold the tax is required to file with the Large Taxpayers Assistance Division (LTAD)/Large Taxpayers District Office (LTDO)/RDO where the payor/employer is registered as Withholding Agent on or before January 31 of the following year an Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form No. 1604-CF, to be submitted with the alphabetical list of employees/payees. The Annual Information Return of Income Taxes Withheld on Compensation must show, among others, the Withholding Agent’s registered name, address and Taxpayers Identification Number (TIN). The alphabetical list of employees must show the following: a. Name and TIN of employees; b. Gross compensation paid by present and previous employers for the calendar year; c. Taxable 13th month pay/ other benefits for the rank and file employees; Taxable fringe benefits for managerial employees; d. Non-taxable 13th month pay/ other benefits (Present employer); e. Non-taxable statutory minimum wage; f. Non-taxable holiday pay, overtime pay, night shift differential pay and hazard pay (minimum wage earners only); g. For 2008, Amount of Exemptions (January 1 to July 5, 2008) and Amount of Exemptions (July 6 to December 31, 2008); For 2009 and thereafter, Amount of Exemptions; h. Amount of premium payments on health and/or hospitalization insurance not exceeding P 2,400.00, if any; i. Tax required to be withheld computed in accordance with Section 24 (A) of the Code; j. Tax withheld by all present employers for the calendar year; and k. (11) Adjustment, if any. The alphabetical list of employees shall be prepared indicating, among others, separate listings of the following: a. Employees Separated/Terminated before December 31 of the taxable year (indicate date of separation/termination); b. Employees whose compensation income are exempt from Withholding Tax but subject to income tax; c. Employees whose total compensation income are exempt from Withholding Tax and not subject to Income Tax (indicate if MWE); d. Employees as of December 31 of the taxable year with no previous employment within the year; e. Employees as of December 31 of the taxable year with previous employment within the year; f. Employees who received Fringe Benefits subjected to Fringe Benefit Tax; g. Alien employees subject to withholding tax. Employers with centralized accounting system, or those mandated to consolidate remittances (e.g. large taxpayers), shall prepare alphalists on a regional basis or per branch office, due to the identification of SMW per region where the employee is assigned, which shall be submitted to the BIR where the head office is located. In cases where no information was provided by a previous employer, such fact shall be stated in BIR Form No. 1604-CF and the present employer shall not be liable to any penalties. In addition to the manually prepared alphabetical list of employees and list of payees and income payments subject to creditable and final withholding taxes which are required to be attached as integral part of the Annual Information Returns (BIR Form No. 1604CF/ 1604E), Monthly Remittance Returns (BIR Form No. 1601C etc.), the withholding agent may submit soft copy in 3.5-inch floppy diskettes/CD or email to esubmission@bir.gov.ph, containing the said alphalists. However, taxpayers whose number of employees or income payees are ten (10) or more, are mandatorily required to submit the said lists in 3.5-inch floppy diskettes/CD or email to esubmission@bir.gov.ph using the existing CSV data file format, together with the manually prepared alphabetical list. In order to comply with this format, the withholding agents shall have the option to use any of the following: a. Excel format provided under Revenue Regulations No. 7-2000, as amended, following the technical specifications required by the BIR; b. Their own extract program that shall meet the technical specifications required by the BIR; or c. Data Entry Module using Visual FoxPro that will be available upon request or by downloading from the BIR’s web site at http://www.bir.gov.ph with the corresponding job aid. For those who would choose either option a or b, such taxpayers shall use a validation module developed by the BIR, which can be downloaded from the BIR website. In any case, the withholding agents are required to save the same to a secondary storage as back up for a period of three (3) years from submission of the diskette, as aforementioned, for future reference. For withholding agents classified as large taxpayers and excise taxpayers falling within the jurisdiction of the Large Taxpayers Service and/or Large Taxpayers District Office, the Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form No. 1604-CF) and the Annual Information Return of Creditable Income Taxes Withheld (Expanded)/ Income Payments Exempt from Withholding Tax (BIR Form No. 1604-E) shall be submitted to the Large Taxpayers Assistance Division (LTAD), Large Taxpayers District Offices (LTDO) or Excise Taxpayers Assistance Division, as the case may be. For other withholding agents, the aforesaid annual returns shall be submitted to their respective Revenue District Offices (RDO). BIR Form No. 1604-CF shall be submitted on or before January 31 of the succeeding year while BIR Form No. 1604- E shall be filed on or before March 1 of the following year. Only diskettes/CD/email: esubmission@bir.gov.ph readable and virus free files upon submission shall be considered as duly filed “Alphabetical List of Employees/ Payees” by the employer. Violation hereof, shall be a ground for the mandatory audit of violator’s Income Tax liabilities (including withholding tax). Diskettes/CDs must be uploaded by the abovementioned offices within fifteen (15) days from receipt. The manually prepared (hard copy for below 10 employees/payees) alphabetical list of employee shall be filed in triplicate copies (two copies for the BIR) to be stamped “received” by the BIR-LTAD, LTDO or the Excise Taxpayers Assistance Division, or the RDO where the payor/employer is registered as Withholding Agent. Manually filed alphalists must be encoded and uploaded by the above-mentioned offices within thirty (30) days from receipt. Individual taxpayers receiving purely compensation income, regardless of amount, from only one employer in the Philippines for the calendar year, the Income Tax of which has been withheld correctly by the said employer (tax due equals tax withheld) shall not be required to file BIR Form No. 1700. In lieu of BIR Form No. 1700, the Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form No. 1604-CF) (hard copy) filed by their respective employers, duly stamped “received” by the BIR, shall be tantamount to the substituted filing of Income Tax Returns by said employees. MWEs, including employees of the government of the Philippines, or any political subdivisions, agencies or instrumentalities, with Salary Grades 1 to 3 whose income were not subjected to Withholding Tax but subject to Income Tax from January 1 to July 5, 2008 are not qualified for substituted filing and therefore still required to file BIR Form No. 1700 in accordance with the existing Regulations. In case of married individuals who are still required to file returns under existing provisions of the law, i.e. in those instances not covered by the substituted filing of returns, only one return for the taxable year shall be filed by either spouse to cover the income of the spouses, which return shall be signed by the husband and wife, unless it is physically impossible to do so, in case signature of one of the spouses would suffice. Employees not qualified for substituted filing but are required to file the Income Tax Return shall file the same not later than April 15 of the year immediately following the taxable year. Provided, that employees with previous/successive employer/s within the taxable year shall furnish their new employer with BIR Form No. 2316 issued by the previous employer/s. Any person who makes payment or expects to make payment of compensation in the amount exceeding the statutory minimum wage, to any single employee shall register by filing in duplicate, with the RDO of the city or municipality where his legal residence or place of business is located, an Application for Registration as a withholding agent using the form prescribed by the Bureau not later than ten (10) days after becoming an employer. In the implementation of these Regulations, the following provisions shall apply during the transition period: a. For taxable year 2008, all employees with change in status and number of qualified dependent children shall accomplish and file the Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305), for employees already registered with the BIR, reflecting the changes in information, if any/Application for Registration (BIR Form No. 1902) for those with no TIN reflecting the claimed exemption, together with the required documents/evidence of exemption. The same must be submitted to their employers not later than October 31, 2008 The employers shall transmit both the original and duplicate copies of BIR Form No. 2305 on or before November 28, 2008 (after accomplishing the portion of employer’s information) to the RDO where the employee is registered. For those who shall register for the first time, BIR Form No. 1902 shall be submitted to the RDO either of the principal/head office of employment/place of business or place of residence of the employee-taxpayer at the option of the latter. In both cases, the employer shall furnish a copy of the duly received BIR Form No. 2305/1902 to the LTAD/ LTDO/RDO having jurisdiction over the principal/head office of the employer, in case of centralized payroll process, or to the LTAD/LTDO/ RDO having jurisdiction over the branch office, in case of decentralized payroll process. For those with no change of status and number of qualified dependents, it is incumbent with employer to change in their records the new amount of personal and additional exemptions of such employees. b. The Withholding Tax from July 6 to December 31, 2008 shall be computed using the Revised Transitional Withholding Tax Table (Annex “D” of the Regulations). c. The personal and additional exemptions applicable for calendar year 2008 shall be as follows: i. For the period from January 1 to July 5, 2008, single taxpayers are entitled to P 10,000.00, head of the family at P 12,500.00, each married individual at P 16,000.00, and for each qualified dependent child, not exceeding 4 children, P 4,000.00, computed on a pro-rata basis of the full-year exemptions under the old law. ii. For the period from July 6 to December 31, 2008, the pro-rated personal exemption shall be P 25,000.00, regardless of status, and P 12,500 for each qualified dependent child, not exceeding 4 children, as additional exemption. d. Towards the end of 2008 and using the annualized withholding tax method, withholding agents are required to undertake/conduct the final year-end adjustments consolidating the compensation data for the entire year of 2008 but taking into consideration the following transitory personal and additional exemptions, which are rounded off for administrative ease: January 1 to July 6 to July 5 December 31 Total Personal exemption Single P 10,000 P 25,000 P 35,000 Head of the family 12,500 25,000 37,500 Married 16,000 25,000 41,000 Additional exemption for Every QDC 4,000 12,500 16,500 Employers are required to ensure that tax due is equal to the tax withheld for the year-end adjustment computation. Submit BIR Form No. 1604-CF on or before January 31, 2009. e. The alphabetical list for 2008 shall be analyzed by the concerned LTAD/ LTDO/RDO by comparing the compensation figures reported in 2007 as against 2008 to ensure that there is no diminution in the compensation structure of employees. f. MWEs whose compensation earned from January 1 to July 5, 2008 were not subjected to Withholding Tax but are, after considering the relevant exemptions, still subject to Income Tax, shall be required to file an Income Tax Return covering the period from January 1 to July 5, 2008, on or before April 15, 2009. These Regulations shall take effect beginning July 6, 2008