REPUBLIC OF THE PHILIPPINES BUREAU OF INTERNAL REVENUE
DEPARTMENT OF FINANCE Dl a
BUREAU OF INTERNAL REVENUE | 10 Abn
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National Office Building Ni
Quezon City ~ RECOROS MGT. DIVISION
April 23, 2024
REVENUE MEMORANDUM CIRCULAR NO. 60~Z0JH
SUBJECT : Providing Clarifications and Guidance on Section 6 of
Revenue Regulations No. 4-2024 on the Repeal of Section 34
(K) of the National Internal Revenue Code of 1997, as
Amended
TO : All Internal Revenue Officials, Employees and Others
Concerned
This Circular is hereby issued to provide clarification and guidance on the
amendments introduced by Republic Act No. 11976 otherwise known as the “Ease of
Paying Taxes (EOPT) Act”, particularly on the repeal of Section 34 (K) of the
National Internal Revenue Code (Tax Code) of 1997, as amended. The amendment is
implemented through Section 6 of Revenue Regulations No. 4-2024,
Quoted hereunder is the provision of Section 34(K)of the Tax Code, as
amended:
“Section 34 (K) - Additional Requirements for Deductibility of
Certain Payments. — Any amount paid or payable which is otherwise
deductible from, or taken into account in computing gross income or for
which depreciation or amortization may be allowed under this Section,
shall be allowed as a deduction only if itis shown that the tax required to
be deducted and withheld therefrom has been has been paid to the Bureau
of Internal Revenue in accordance with this Section, Section 58 and 81 of
this Code.”
With the repeal of the above-quoted provision under the EOPT Act, a
particular income payment where a tax is required to be withheld can now be allowed
as deduction from the gross income, even if no tax was withheld, provided the same
isnecessary, ordinary and duly substantiated expense related to the registered business
of the taxpayer.
Since the EOPT Act took effect on January 22, 2024, a question arose if the
repeal of the said provision may be applied to all assessed cases and on-going audits
covering taxable periods prior to the effectivity of EOPT Act.
In this regard, all concerned are hereby advised of the following policies and
clarifications:On all ongoing audit covering taxable period prior to January 1, 2024 —
expenses subject to withholding tax shall be allowed as deductions from gross
income by the Revenue Officers (RO) only if the corresponding tax required
to be withheld have been paid, whether prior to audit or submission of the audit
report to the Reviewing Office.
. Ina scenario where taxpayer failed to withhold the tax required to be withheld
on expenses subject to withholding tax and the taxpayer did not pay the same
prior to submission of the audit report to the reviewing office, the RO has to
recommend for the issuance of assessment notice both on income and
withholding tax. This is in line with the provisions of Revenue Regulations
No. 6-2018.
}. On audit cases which are already submitted to the Reviewing Office
a. Paid Case—same application stated under item 1 hereof,
b. Assessed Case — apply the requirement of deductibility under the then
Section 34 (K) of the Tax Code, thus, assessment on both income tax and
withholding tax shall be issued.
For taxable year covering January 1, 2024 onwards, expenses/income
payments subject to withholding tax shall be allowed as deductions from gross income
for purposes of computing taxable income even if no tax was withheld, provided the
other requirements for deductibility have been met. However, the taxpayer shall still
be liable for the payment of the corresponding withholding tax due on said income
payments.
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All are enjoined to give this circular a wide publicity as possible.
‘BUREAU OF INTFPNAL REVENUE
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RECORDS MGT. DIVISION
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