1998 REVENUE REGULATIONS
DIGEST OF 1998 REVENUE REGULATIONS
REVENUE REGULATIONS NO. 2-98 issued May 17, 1998 prescribes the regulations to implement Republic Act (RA) No. 8424 relative to the Withholding on Income subject to the Expanded Withholding Tax and Final Withholding Tax, Withholding of Income Tax on Compensation, Withholding of Creditable Value- Added Tax and Other Percentage Taxes. Said Regulations will take effect on compensation income paid beginning January 1,1998. No penalties for non-compliance with the new features of the Tax Code will apply until May 15, 1998.
REVENUE REGULATIONS NO. 3-98 issued June 4, 1998 implements Section 33 of the National Internal Revenue Code (NIRC), as amended by RA No. 8424, relative to the special treatment of fringe benefits granted or paid by the employer to employees, except rank and file employees, beginning January 1, 1998. The definition of fringe benefits as well as the determination of the amount subject to the fringe benefits tax are specified in the Regulations.
REVENUE REGULATIONS NO. 4-98 issued June 29, 1998 implements the provision of RA No. 6734 relative to the proportionate share of the provinces compromising the Autonomous Region in Muslim Mindanao (ARMM) in the national collections from businesses operating in the Region. Pursuant to ARMM Executive Order No. 9, as amended, the BIR and other national collecting officers will be responsible for the remittance of the following: a) 30% share of the province where the revenues were generated through the Provincial Treasurer; b) 30% share of the Regional Government in the national collections of the ARMM through the Regional Treasurer; and c) 40% National Government share to the Bureau of Treasury through the nearest Authorized Government Depository Banks (AGDB) branch. The responsibilities of the BIR Collection Agents in the ARMM, the Regional Treasurer - ARMM, the Provincial Treasurer - AGDB branch and the Fiscal Examiner are specified in the Regulations.
REVENUE REGULATIONS NO. 5-98 issued July 1, 1998 implements Sections 21 and 23 of RA No. 8479 relative to the payment made by certain oil companies of their respective specific taxes through "Reimbursement Certificates" issued by the Department of Energy (DOE). The Reimbursement Certificates issued by the DOE covering all outstanding claims against the Oil Price Stabilization Fund (OPSF) will be honored and accepted by the Bureau of Customs and the Bureau of Internal Revenue as payment to the extent of ten percent (10%) per payment of the tariff duties and specific taxes due from the creditor-claimants against the OPSF until such claims are settled in full; Provided, that the Reimbursement Certificates: a) has been duly issued by the DOE and duly approved by the COA; b) will be accepted by the BIR only in payment of specific taxes on the Oil Company's local production and removal of petroleum products subject to specific taxes; and c) will be accepted only by the collection agency where each certificate has been initially applied, among others.
REVENUE REGULATIONS NO. 6-98 issued July 20, 1998 amends Section 2 of Revenue Regulations No. 4-97 by providing for the recognition of checks as one of the acceptable modes of payment to facilitate payment of taxes with the BIR. To effect payment of taxes through the bank debit system or credit facility with a bank, a credit company or similar institution, the taxpayer will have to open/maintain a bank account with any Authorized Agent Bank of the BIR where he intends to file his tax return/form/declaration and pay his tax liabilities.
REVENUE REGULATIONS NO 7-98 issued August 20, 1998 implements Section 230 of the NIRC, as amended by RA No. 8242, relative to the treatment of cash refunds and of Tax Credit Certificates (TCC). Specifically, issued cash refund/TCC, which remains unclaimed or uncashed/unutilized after five (5) years from the date of issue, will be considered invalid (unless revalidated)/forfeited in favor of the government, and the amount thereof will revert to the General Fund. However, a TCC issued by the Commissioner or his duly authorized representative prior to January 1, 1988, which remains unutilized or has a creditable balance as of said date, may be presented for revalidation with the Commissioner or his duly authorized representative on or before August 31, 1998. For this purpose, the taxpayer will have to file a written application for revalidation with the Bureau's Chief of the Appellate Division, and surrender the original copy of the unutilized TCC for verification and cancellation.
REVENUE REGULATIONS NO. 8-98 issued September 2, 1998 amends pertinent portions of Revenue Regulations Nos. 11-96 and 2-98 relative to the tax treatment of the sale, transfer or exchange of real property. Specifically, the Capital Gains Tax (CGT) Return will be filed by the seller within 30 days following each sale or disposition of real property. Payment of the CGT will be made to an Authorized Agent Bank (AAB) located within the Revenue District Office (RDO) having jurisdiction over the place where the property being transferred is located. Creditable withholding taxes, on the other hand, deducted and withheld by the withholding agent/buyer on the sale, transfer or exchange or real property classified as ordinary asset will be paid by the withholding agent/buyer upon filing of the return with the AAB located within the RDO having jurisdiction over the place where the property being transferred is located. Payment will have to be done within 10 days following the end of the month in which the transaction occurred, provided, however, that taxes withheld in December will be filed on or before January 25 of the following year.
REGULATIONS NO. 9-98 issued September 2, 1998 prescribes the regulations
to implement RA No. 8424 relative to the imposition of the Minimum Corporate
Income Tax (MCIT) on domestic corporations and resident foreign corporations.
Specifically, an MCIT of 2% of the gross income as of the end of the taxable
year is imposed upon any domestic corporations beginning the 4th taxable
year immediately following the taxable year in which such corporation
commenced its business operations. The MCIT will be imposed whenever such
operation has zero or negative taxable income or whenever the amount of
MCIT is greater than the normal income tax due from such operation. In
the case of a domestic corporation whose operations or activities are
partly covered by the regular income tax system and partly covered under
a special income tax system, the MCIT will apply on operations covered
by the regular income tax system.
REVENUE REGULATIONS NO. 10-98 issued September 2, 1998 prescribes the regulations to implement RA No. 8424 relative to the imposition of income taxes on income derived under the Foreign Currency Deposit and Offshore Banking Systems. Specifically, interest income which is actually or constructively received by a resident citizen of the Philippines or by a resident alien individual from a foreign currency bank deposit will be subject to a final withholding tax of 7.5%. The depository bank will withhold and remit the tax. If a bank account is jointly in the name of a non-resident citizen, 50% of the interest income from such bank deposit will be treated as exempt while the other 50% will be subject to a final withholding tax of 7.5%. The Regulations will apply on taxable income derived beginning January 1, 1998 pursuant to the provisions of Section 8 of RA 8424. In case of deposits which were made in 1997, only that portion of interest which was actually or constructively received by a depositor starting January 1, 1998 is taxable.
REVENUE REGULATIONS NO. 11-98 issued September 24, 1998 amends further Revenue Regulations No. 5-98 which implements Section 21 of RA No. 8479 entitled "An Act Deregulating the Downstream Oil Industry, and For Other Purposes" by deleting a portion of Section 3(a) of the said Regulations which read as follows: "The Reimbursement Certificate has been duly issued by the Department of Energy".
REVENUE REGULATIONS NO. 12-98 issued September 25, 1998 amends Section 2.57.2 of Revenue Regulations No. 2-98 relative to the collection of the creditable withholding tax on income payments from medical practitioners. It will be the duty and responsibility of the hospital or clinic to collect from any patient admitted by such hospital or clinic the professional fee of the attending medical practitioner and to withhold the tax prescribed in the Regulations. The withholding tax prescribed in the regulations will not apply whenever there is proof that no professional fee has in fact been charged by the medical practitioner and paid by his patient, provided, however, that this fact is shown in a sworn declaration jointly executed by the medical practitioner, the patient or his duly authorized representative and the administrator of the hospital or clinic.
REVENUE REGULATIONS NO. 13-98 issued December 14, 1998 prescribes the regulations to implement Republic Act No. 8424 entitled "An Act Amending the National Internal Revenue Code as amended", specifically Section 34 (H) relative to the deductibility of contributions or gifts actually paid or made to accredited donee institutions in computing taxable income.