8box Solutions Inc.


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

REVENUE REGULATIONS NO. 17-2003 issued on May 6, 2003 amends further pertinent provisions of RR Nos. 2-98, 8-98 and 13-99, as amended, by providing for additional income payments subject to creditable withholding tax; clarifying existing provisions on income payments subject to creditable/expanded withholding tax and the requirements for deductibility of certain payments; providing for withholding as the mode of remitting final Capital Gains Tax on the sale of real property classified as capital asset, and for other purposes. The following forms of income payments shall be subject to final withholding tax at the rates herein specified: 1) income payments to a citizen or to a resident alien individual on capital gains presumed to have been realized from the sale, exchange or other disposition of real property located in the Philippines classified as capital assets, including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value, whichever is higher – 6%; and 2) income payments to a domestic corporation on capital gains presumed to have been realized from the sale, exchange or other disposition of land and building located in the Philippines classified as capital assets, based on the gross selling price or fair market value, whichever is higher – 6%. In case of sale on installment of real property classified as capital asset, the procedures on the sale of real property classified as ordinary asset shall apply, with the exception that the withholding tax on the former shall be final whereas that on the latter shall be creditable. In case of dispositions of real property classified as capital asset by individuals to the government or any of its political subdivisions or agencies or to government-owned or controlled corporations, the tax to be imposed shall be determined either under Section 24(A) of the Tax Code for the normal rate of income tax for individual citizens or residents, or under Section 24(D)(1) of the Code for the final tax on the presumed capital gains from sale of property at 6%, at the option of the taxpayer-seller. In case of sale/transfer of principal residence, the Buyer/Transferee shall withhold from the Seller and shall deduct from the agreed selling price/consideration the 6% Capital Gains Tax, which shall be deposited in cash or manager’s check in interest-bearing account with an Authorized Agent Bank (AAB) under an Escrow Agreement between the concerned Revenue District Officer (RDO), the Seller and the Transferee, and the AAB to the effect that the amount so deposited, including its interest yield, shall only be released to such Transferor upon certification by the said RDO that the proceeds of the sale/disposition thereof has, in fact, been utilized in the acquisition or construction of the Seller’s/Transferor’s new principal residence within eighteen (18) calendar months from date of the said sale or disposition. A creditable Income Tax shall be withheld at the rates herein specified from the following items of income payments made to persons residing in the Philippines: NATURE OF INCOME PAYMENT RATE 1) Gross rental or lease in excess of P 10,000.00 annually for the continued use or possession of personal property used in business, which the payor or obligor has not taken or is not taking title, or in which he has no equity, except those under financial lease arrangements with leasing and finance companies authorized to operate under the Financing Company Act of 1998 5% 2) Gross payments to labor recruiting agencies and/or “laboronly” contractors, whether individual or corporate 2% 3) Gross commissions or service fees of customs, insurance, stock, real estate, immigration and commercial brokers and fees of agents of professional entertainers 10% 4) Professional fees paid to medical practitioners 10% 5) Gross selling price or its equivalent paid in installment to the seller/owner of real property classified as ordinary assets Tax to be deducted and withheld by the buyer from every installment payment shall be based on the ratio of actual collection of consideration vs. the agreed consideration appearing in the Contract to Sell 6) Income payments made by the top 10,000 private corporations to their local/resident supplier of goods and services, including non-resident alien engaged in trade or business in the Philippines 1% for supplier of goods 2% for supplier of services 7) income payments made by the government to its local/resident supplier of goods and of services, except any casual or single purchase of P10,000.00 and below 2% 8) Gross commissions, rebates, discounts and other similar considerations paid/granted to independent and/or exclusive sales representatives and marketing agents and sub-agents of companies, including multi-level marketing companies, on their sale of goods or services by way of direct selling or similar arrangements where there is no transfer of title over the goods from the seller to the agent/sales representative 10% 9) income payments made to regular agricultural suppliers such as those, but not limited to, payments made by hotels, restaurants, resorts, caterers, food processors, canneries, supermarkets, livestock, poultry, fish and marine food product dealers and all other establishments, except for income payments to casual agricultural suppliers where the annual gross purchases therefrom do not exceed P 20,000 1% 10) Income payments on purchases of minerals, mineral products, and quarry resources such as but not limited to silver, gold, marble, granite, gravel, sand, boulders and other materials /products 1% Insofar as taxable sales, exchanges or transfers of real property are concerned, the buyers, whether or not engaged in trade or business, are constituted as withholding agents. In any case, no Certificate Authorizing Registration (CAR)/Tax Clearance Certificate (TCL) shall be issued to the buyer unless the withholding tax due on the sale, transfer or exchange of real property has been duly paid. The provisions of the Regulations shall cover income payments made starting June 1, 2003.