The Bureau of Internal Revenue (BIR) is reminding national and local government offices, including barangays, or their attached agencies or bodies, and Government Owned and Controlled Corporation (GOCC) on payment of their taxes.
Pursuant to Section 114 and Section 116 of the NIRC, as amended, respectively, and Revenue Regulations (RR) No. 13-2018 dated March 15, 2018, withholding Value-Added Tax (VAT) from sales to the government or any of its political subdivisions, instrumentalities, or agencies, including all government-owned or controlled-corporation (GOCCs) shall be treated as creditable tax.
For VAT taxpayers, five percent (5%) withholding VAT, beginning January 1, 2021, shall be imposed, however, three percent (3%) withholding percentage tax (PT), for non-VAT taxpayers beginning July 1, 2023.
According to Richard R. Oquendo, OIC-Revenue District Officer of BIR RD No. 78, Republic Act (RA) No.10963, or the Tax Reform for Acceleration and Inclusion (TRAIN ACT) as implemented by RR No. 11-2018 dated January 31, 2018, provides that income payments made by a government office, national or local, including barangays, or their attached agencies or bodies, and government-owned or controlled corporations, on their purchases of goods and purchases of services from local/resident suppliers except any single purchase amounting to P10,000 and below are also subject to creditable withholding tax on income of one percent (1%) for supplier of goods and two percent (2%) for supplier of services, a press release said.
Oquendo also said that the government or any its political subdivisions, instrumentalities or agencies, including barangays and GOCCs that are required to withhold creditable VAT must use BIR Form 1600-VT or the Monthly Remittance Return of Value Added Tax Withheld, and BIR Form 1600-PT or the Monthly Remittance Return of Other Percentage Taxes Withheld Form for Non-VAT taxpayers in filing and remitting the amount of taxes withheld.
To withhold and remit the creditable Income Tax (IT), the government or any of its political subdivisions, instrumentalities or agencies, including barangays and GOCCs must use BIR Form 0619-E or the Monthly Remittance Form for Creditable Income Taxes Withheld (Expanded) for the first and second month of every quarter and BIR Form 1601-EQ or the Quarterly Remittance Return of Creditable Income Taxes Withheld (Expanded) for quarterly filing of returns, Oquendo said.
Given that VAT withheld on sales to government is treated as creditable tax, a Certificate of Creditable Tax Withheld at Source (BIR Form 2307) using Alphanumeric Tax Code (ATC) WV010 for purchases of goods or WV020 for purchases of services shall be used instead of the Certificate of Final Tax Withheld at Source (BIR Form 2306). Hence, VAT taxpayers shall now use BIR Form 2307 in claiming their VAT credit in their monthly and quarterly VAT declarations.
Failure to comply with such obligations will be considered as tax fraud and/or tax evasion punishable under Section 57. Withholding of Tax at Source; Section 58. Return and Payment of Taxes Withheld at Source; Section 254. Attempt to Evade or Defeat Tax; Section 255.
Failure to File Return, Supply Correct and Accurate Information, Pay Tax, Withhold and Remit Tax; Section 256. Penal Liability of Corporation; and Section 257. Penal Liability for Making False Entries, Records or Reports, or Using Falsified or Fake Accountable Forms of the NIRC, as amended. For the filing of the Annual Income Tax Return (ITR) for the taxable year ending December 31, 2023.
Oquendo reminds all taxpayers that the deadline is on or before April 15, 2024.*
