Tax Obligations of LGUs, Foundations and NGOs

Duties & Obligations To register To withhold To remit the taxes withheld and to file the applicable Withholding Tax Returns To submit Annual Information Returns To issue Withholding Tax Certificate

To register with Revenue District Office having jurisdiction over the head office/principal office or branch or facility before payment of any tax due/ before or upon filing of any applicable tax return, statement or declaration as required by the Code, as amended. - Sec. 236 of NIRC; Revenue Regulations No. 11- 2008

To withhold: INCOME TAX c. Withholding Tax on Compensation a. Final Withholding Tax b. Creditable Withholding Tax c. Withholding Tax on Compensation BUSINESS TAX (for gov’t only) a. Percentage Tax (creditable) b. Value Added Tax (final)

WITHHOLDING TAX A manner of collecting a kind of tax which is an advance payment of the tax due.

WHO ARE REQUIRED TO WITHHOLD? In general, any juridical person, whether or not engaged in business An individual with respect to payments made in connection with his trade or business All government offices, including government owned and controlled corporations, provincial, city, municipal governments and barangays.

REVENUE MEMORANDUM ORDER NO. 8-2003 dated March 3, 2003 Identified the Government officials designated as withholding agents personally responsible for the correct withholding of tax and its timely remittances. RESPONSIBILITY OF GOVERNMENT OFFICIALS They are charged with the DUTY to correctly withhold taxes on compensation, expanded and final withholding taxes as well as government money payments to persons registered as NVAT and VAT taxpayers and the timely remittance of taxes withheld.

GOVERNMENT OFFICE RESPONSIBLE OFFICIAL 1.) Local Government Units a. Provinces b. Cities c. Municipalities d. Barangays Governor, Provincial Treasurer, Provincial Accountant Mayor, City Treasurer, City Accountant Mayor, Municipal Treasurer, Municipal Accountant Barangay Captain and Barangay Treasurer 2.) National Government Agencies Heads of offices – officials, holding the highest positions Chief Accountants Other persons holding similar positions in departments, bureaus, agencies, and instrumentalities officially designated as such by the head office 3.) Government Owned or Controlled Corporations (GOCC) Head of offices (official holding the highest positions) officially designated as such by the head office

RESPONSIBILITY AND LIABILITY of these officials under this GOVERNMENT OFFICE RESPONSIBLE OFFICIAL 4.) Other Government Offices Head of offices (official holding the highest positions) Chief Accountants Other persons holding similar positions officially designated as such by the head office 5.) Government Offices with Decentralized Accounting System and/or Branches/ Regional Offices/ District Offices registered with their respective RDO’s Head of such Offices/Regional/District Offices (persons holding the highest positions) Other persons holding similar positions designated such as: BIR Regional Offices – Regional Director BIR Chief, Finance Division DECS – Regional Director DECS – Chief, Budget & Finance Division All these officials shall be EQUALLY LIABLE to the penalties as prescribed under the Tax Code. RESPONSIBILITY AND LIABILITY of these officials under this Memorandum SHALL NOT BE DELEGATED TO SUBORDINATE OFFICIALS OR EMPLOYEES.

PUNISHABLE ACTS OR OMMISSIONS A. Fails or causes the failure to deduct and withhold any internal revenue tax under any of the withholding tax laws and implementing regulations. Fails or causes the failure to remit the taxes deducted and withheld within the time prescribed by law. Fails or causes the failure to file a return or statement within the time prescribed, or render or furnish a false or fraudulent return or statement required under withholding tax laws & regulations.

Every officer or employee of the government of the republic of the philippines or any of its agencies and instrumentalities, its political subdivisions, as well as goccs charged with the duty to deduct and withhold any internal revenue tax and to remit the same in accordance with these regulations shall, upon conviction for each act or omission, herein specified, be fined in a sum of not less than p5000.00 but not more than p50,000.00 or imprisoned for a term of not less than 6 months and one day but not more than two years, or both. (Section 272 of NIRC)

WHEN TO WITHHOLD? The obligation of the payor to deduct and withhold the tax arises at the time an income payment is paid or payable, whichever comes first. The term “payable” means the date the obligation becomes due, demandable or legally enforceable .

WHO ARE EXEMPTED FROM WITHHOLDING? National government and its instrumentalities, including provincial, city or municipal governments Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special

To remit the taxes withheld & to file withholding tax returns The taxes withheld shall be remitted and the return shall be filed in triplicate copies on or before the 10th day of the month following the month in which withholding was made except taxes for December which shall be filed/paid on or before January 15 of the succeeding year.

Where to file and to remit/pay? The return shall be filed and the tax paid/remitted with the Authorized Agent Bank or Revenue Collection Officer, or the duly Authorized City or Municipal Treasurer of the Revenue District Office having jurisdiction over the withholding agent’s place of business/office.

To submit Annual Information Returns BIR Form No. 1604 CF– Annual Information Return of Income Taxes Withheld on Compensation & Final Withholding Taxes - shall be filed in triplicate to the Revenue District Office where the payor/employer is registered as Withholding Agent on or before January 31 of the following year, together with the alphabetical list of employees.

BIR Form No. 1604E – Annual Information Return of Creditable Income Taxes Withheld - shall be filed in triplicate together with the Annual Alphalist of Payees to Revenue District Office where the payor is registered as Withholding Agent on or before March 1 of the following year

Revenue Regulations No. 2-2006 dated December 1, 2005 MONTHLY ALPHALIST OF PAYEES Is a consolidated alphalist of income earners from whom taxes have been withheld for a given period. This is required to be submitted as an attachment to the monthly withholding tax returns (1601e, 1601f, 1600) Not more ten (10) payees- hard copy More than ten (10) payees-electronic copy

To issue Withholding Tax Certificate BIR Form No. 2316 – Certificate of Compensation Payment/Tax Withheld (with or without taxes withheld) - shall be furnished to the employee in triplicate 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. BIR Form No 2307 – Certificate of Creditable Tax Withheld at Source - Creditable Income Tax shall be issued in quadruplicate on or before 20th day following the close of the taxable quarter or upon request/demand of the payee. - Creditable Percentage Tax shall be issued in quadruplicate on or before the 5th of the following month. (RR No. 12- 2001) BIR Form No. 2306 – Certificate of Final Tax Withheld at Source - shall be issued in quadruplicate within ten (10) days following the month the withholding was made.

END OF PRESENTATION THANK YOU!!!

REVENUE DISTRICT OFFICE No. 056 Calamba City Telephone Nos. 545 -9910 /545 -3573 BIR WEBSITE: www.bir.gov.ph