REVENUE REGULATIONS NO. 30-2003 issued on December 15, 2003 amends further pertinent provisions of RR Nos. 2-98 and 8-98, as amended, providing for withholding as a mode of remitting final Capital Gains Tax on the sale of real property classified as capital assets by non-resident aliens, increasing the withholding tax rates on certain income payments, inclusion of non-food products in the coverage of expanded withholding tax, providing sanctions to payees who refuse the withholding of tax on their income/receipts, and for other purposes. 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, shall be subject to a 6% final withholding tax in the hands of a non-resident alien individual engaged or not engaged in trade or business within the Philippines. 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 Sec. 24(A) of the Tax Code, for the normal rate of income tax for individual citizens or residents, or under Sec. 24(D)(1) of the Tax Code, for the final tax on the presumed capital gains from sale of property at 6% at the option of the taxpayer-seller. The following income payments are subject to creditable withholding tax at the rates specified: a) Income payments made by the government to its local/resident supplier of goods and local resident supplier of services other than those covered by other rates of withholding tax ! 1% – supplier of goods ! 2% – supplier of services b) Income payments made to suppliers of agricultural products ! 1% (except for income payments made to casual agricultural suppliers where the annual gross purchases therefrom do not exceed P 20,000) c) Income payments to general engineering contractors, general building contractors, specialty contractors and other contractors ! 2% on gross payments d) Professional fees, talent fees, etc. paid for services rendered by individuals, taxable juridical persons and medical practitioners, including income payments to partners of general professional partnerships ! 15% if the gross income/income payments for the current year exceeds P 720,000 ! 10% if the gross income/income payments for the current year is P 720,000 and below In order to determine the applicable tax rate (10% or 15%) to be applied/withheld by the withholding agent, every individual professional/talent/ corporate directors shall periodically disclose his gross income for the current year to the BIR by submitting a notarized sworn declaration (3 copies). The disclosure should be filed on June 30 of each year or within 15 days after the end of the month the professional/talent/director’s income reaches P 720,000, whichever comes earlier. In case his total gross income is less than P 720,000 as of June 30, he/she shall submit a second disclosure within 15 days after the end of the month that his/her gross income for the current year to date reaches P 720,000. The payee – professional/talent/director shall furnish each payor a copy of the BIR duly stamped received sworn declaration not later than five (5) days from the date of receipt by the BIR. In case of failure to submit the June 30 annual declaration/disclosure to the BIR, and to furnish the payor/s a copy thereof, the payor shall withhold the tax at the rate of 15%. The aforesaid requirements shall likewise apply to taxable juridical persons (sworn declaration shall be executed by the president/managing partner of the corporation/company), partners of general professional partnerships and medical practitioners. Agents, employees or any person purchasing goods or services/paying for and in behalf of the aforesaid withholding agents shall withhold in their behalf, provided that the official receipts of payment/sales invoice shall be issued in the name of the person whom the former represents and the corresponding certificate of taxes withheld (BIR Form No. 2307) shall immediately be issued upon withholding of the tax. All income payments required to be subjected to withholding tax shall be subject to the corresponding withholding tax rate to be withheld by the person having control over the payment and who, at the same time, claims the expenses. Income payments made through brokers or agents or other person authorized to collect/receive payments for and on behalf of the payee, whether for consideration or otherwise, shall likewise be subject to the corresponding withholding tax rates to be withheld by the payor/person having control over the payment with the corresponding issuance of certificate of taxes withheld in the name of the payee whom the agent represents. The obligation to withhold is imposed upon the buyer-payor of income although the burden of tax is really upon the seller-income earner. Hence, unjustifiable refusal of the latter to be subjected to withholding shall be a ground for the mandatory audit of his income tax liabilities (including withholding tax) upon verified complaint of the buyerpayor. Accrued income earned prior to January 1, 2004 (the effectivity date of this Revenue Regulations) shall be based on the prevailing withholding tax rate at the time of accrual and must be withheld and remitted at the time the income accrues.