Nirc Vs Train

COMPARISON ON
NIRC AND TRAIN

(RA 10963)
As supplemented by RR 11-2018
Background of the Tax Reform
The Tax Reform for Acceleration and Inclusion amends certain provisions of
Republic Act No. 8424 (The National Internal Revenue Code of 1997), as
amended.
The enrolled bill was sent to President Duterte for approval and was signed into
law as Republic Act No. 10963 on December 19, 2017. The law takes effect this
January 1, 2018 following its complete publication in the Official Gazette last
December 27, 2017.
The law is just the first tax reform package. The second package (reduction of
corporate income tax and rationalization of fiscal incentives) is estimated to be
released by 2018.
Individual Income Tax Excise Tax on:
Final Income Tax -Automobiles
Estate Tax -Petroleum products
Donor’s Tax -Sweetened beverages
Value Added Tax -Mineral products
Documentary Stamp
Key Tax
-Cosmetic surgeries (non-
essential services)
amendments Some administrative
provisions
The amendments focus on:
Penalties
Final Withholding Taxes
TRANSACTION NIRC (RR 2-98) TRAIN (RR 11-2018)
On winnings Philippine Charity Philippine Charity
Sweepstakes and Lotto Sweepstakes and Lotto
winnings is exempt from the winnings in excess of
20% final tax ₱10,000 shall be subject to
the 20% final tax.
On interest on foreign Interest income received by The rate of final tax on
currency deposit an individual taxpayer interest income received by
(except a non-resident resident individual taxpayer
individual) from a under the expanded foreign
depository bank under the currency deposit system is
expanded foreign currency 15% final tax.
deposit (EFCD) system is
subject to 7.5% final tax.
Final Withholding Taxes
Capital gains tax on sale of Not over ₱100,000 – 5% flat rate of 15% CGT.
shares not traded through On any amount in excess of
the stock exchange ₱100,000 – 10%
Tax on fringe benefits given •Fringe benefits given to • The Fringe Benefits Tax is
to non-rank and file non-rank and file employees increased to 35% effective
employees are subject to 32% final tax. January 1, 2018.
•The grossed up monetary • The grossed up monetary
value of the fringe benefit value of the fringe benefit
given to non-rank and file given to non-rank and file
employees shall be employees shall be
determined by dividing the determined by dividing
actual monetary value by the actual monetary value
68%. by 65%.
Expanded Withholding Taxes
Professional fees, talent fees, If gross income for the Individual payee:
etc. for services rendered current year did not exceed If gross income for the
₱720,000; 10% current year did not exceed
If gross income exceeds ₱3M ; 5%
₱720,000; 15% If gross income is more than
₱3M; 10%
Non-individual payee:
If gross income for the
current year did not exceed
₱720,000; 10%
If gross income exceeds
₱720,000; 15%
Income payment made by Supplier of goods – One Supplier of goods – One
top withholding agents, percent (1%) Supplier of percent (1%) Supplier of
either private corporations services – Two percent (2%) services – Two percent (2%)
or individuals, to their
local/resident supplier of
goods and local/resident
supplier of services other
than those covered by other
rates of withholding tax
Top withholding agents 1. A large taxpayer under 1. A large taxpayer under
shall include the following Revenue Regulations No. Revenue Regulations No. 1-
1-98, as amended 98, as amended
2. Top twenty thousand
2. Top twenty thousand
(20,000) private corporations
(20,000) private under RR No. 6- 2009
corporations under RR 3. Top five thousand (5,000)
No. 6- 2009 individuals under RR No. 6-
3. Top five thousand (5,000) 2009
individuals under RR 4. Taxpayers identified and
No. 6-2009 included as Medium
Taxpayers, and those under
the Taxpayer Account
Management Program
(TAMP)
Additional Proviso Any income subject to
income tax may be subject to
withholding tax; however,
income exempt from income
tax is consequently exempt
from withholding tax.
Further, income not subject
to withholding tax does not
necessarily mean that it is
not subject to income tax
Final Withholding Tax and Expanded Withholding Tax
Returns
Return and payments of The return for FWT and the FWT and EWT returns shall
taxes withheld at source return for creditable be filed and the payment
withholding taxes (EWT made not later than the last
returns) shall be filed within day of the month following
ten (10) days after the end of the close of the quarter
each month [Sec. 2.58 of RR during which the
No. 2-98)] withholding was made.
SECTION 2.57.3. Persons Required to Deduct and
Withhold
Provided, however, that an individual seller-income earner/payee, may not be subjected
to withholding under Section 2.57.2 hereof if the source of income comes from a lone
income payor and the total income payment is less than ₱250,000 in a taxable year. In this
case, the concerned individual shall execute an Income Payee’s Sworn Declaration of
gross receipts/sales (Annex “B-2”) that shall be submitted to the lone payor. The payee’s
sworn declaration shall be submitted to the lone income payor of income before the
initial payment of income or before January 15 of each year, whichever is applicable. The
income payor/withholding agent shall in turn execute its own Income Payor/Withholding
Agent’s Sworn Declaration (Annex “C”) stating the number of payees who shall not be
subjected to withholding taxes and have duly submitted their income payees’ sworn
declarations and copies of COR. Together with the income payor/withholding agent’s
sworn declaration is the list of payees, who shall not be subjected to withholding tax,
which shall be submitted by the income payor/withholding agent to the concerned BIR
office on or before the last day of January of each year or on the fifteenth (15th) day of the
following month when a new income recipient submitted the payee’s sworn declaration
to the lone income payor/withholding agent.
Withhold
The income payor/withholding agent’s sworn declaration (Annex “C”) shall be filed in
two (2) copies with the concerned LTS/RR/RDO office where the income
payor/withholding agent is registered and shall be distributed as follows:
(1) Original copy for the BIR; and

(2) Duplicate copy for lone payor/withholding agent.
The duly received income payor/withholding agent’s sworn declaration including the
required list shall serve as proof that the income payments made are not subject to
withholding tax.
Withhold
In the event that the individual payee’s cumulative gross receipts in a year exceed
₱250,000, the income payor/withholding agent shall withhold the prescribed withholding
tax based on the amount in excess of ₱250,000, despite the prior submission of the
individual income payee’s sworn declaration. On the other hand, if the individual income
payee failed to submit an income payee’s sworn declaration to the lone income
payor/withholding agent, the income payment shall be subject to the applicable
withholding tax even though in a taxable year the income payment is ₱250,000 and
below.
Withhold
For individual payees, the income payor/withholding agent shall withhold the
prescribed withholding tax rate. In case there are two rates prescribed, the higher rate
shall apply if:
(1) the payee failed to provide the income payor/withholding agent of the required
declaration; or
(2) the income payment exceeds P3M, despite receiving the sworn declaration from the
income payee.
For non-individual payees, the income payor/withholding agent shall withhold the
prescribed withholding tax rate. In case there are two rates prescribed, the higher rate
shall apply if:
(1) the payee failed to provide the income payor/withholding agent of the required
declaration; or
(2) the income payment exceeds P720,000, despite receiving the sworn declaration from
the income payee.
Applications:
Applications:
SECTION 2.58. Returns and Payment of Taxes Withheld
at Source
(A)Manner, Venue and Time of Filing of Withholding Tax Returns and Payment of
Taxes Withheld at Source
Taxpayers mandated to electronically file and pay shall use the BIR’s electronic system,
while those not mandated has the option to either use the said electronic system, or file
with the Authorized Agent Banks (AABs) under the jurisdiction of the Revenue District
Office where they are registered. Withholding agents located at municipalities where
there is no AAB, the returns shall be filed with the Revenue Collection Officer assigned in
the said municipality. The filing of the withholding tax returns (BIR Form No. 1601EQ
for creditable withholding tax and Form Nos. 1602 for final tax on interest on bank
deposits, 1603 for final tax withheld on fringe benefits, and 1601FQ for all other final
withholding taxes) and payment of the taxes withheld at source shall be made not later
than the last day of the month following the close of the quarter during which the
withholding was made
at Source
For this purpose, the quarter shall follow the calendar quarter, e.g., for taxes withheld
during the quarter ending March 31, the same shall be remitted by the withholding
agent on or before April 30. The return filed shall be accompanied by the Quarterly
Alphabetical List of Payees (QAP), reflecting the name of income payees, Taxpayer
Identification Number (TIN), the amount of income paid segregated per month with total
for the quarter (all income payments prescribed as subject to withholding tax under these
regulations, whether actually subjected to withholding tax or not subjected due to
exemption), and the total amount of taxes withheld, if any.
at Source
Considering that taxes withheld by the withholding agents are held in trust for the
government and its availability is an imperious necessity to ensure sufficient cash inflow
to the National Treasury, withholding agents shall file BIR Monthly Remittance Form
(BIR Form No. 0619E and/or 0619F) every tenth (10th) day of the following month when
the withholding is made, regardless of the amount withheld. For withholding agents
using EFPS facility, the due date is on the fifteenth (15th) day of the following month.
Withholding agents with zero remittance are still required to use and file the same
form
at Source
In the case of sale of shares of stocks not traded thru a local stock exchange and sale of
real property considered as capital asset, the filing and payment of the tax due thereon
shall be made within thirty (30) days after the sale or disposition using BIR Form No.
1707 and 1706, respectively. For sale of real property considered as ordinary asset, the
remittance of tax withheld shall be made on or before the tenth (10th) day following the
month of transaction using BIR Form No. 1606.
at Source
(B) Withholding Tax Statement for Taxes Withheld
Every payor required to deduct and withhold taxes under this subsection shall furnish
each payee, a withholding tax statement, in triplicate, within twenty (20) days from the
close of the quarter. The prescribed form (BIR Form No, 2307 for creditable withholding
tax and BIR Form 2306 for final withholding tax) shall be used, showing the monthly
income payments made, the quarterly total, and the amount of taxes withheld. Provided,
however, that upon request of the payee, the payor must furnish such statement,
simultaneously with the income payment.
at Source
(C) Annual Information Return and Annual Alphabetical List of Payees for income tax
withheld at source
The withholding agent is required to file with the concerned office of the LTS/RR/RDO
where the withholding agent is registered, the following:
1. Annual Information Return of Creditable Taxes Withheld (Expanded)/Income

Payments Exempt from Withholding Tax (BIR Form No. 1604E) including the
corresponding Annual Alphabetical List of Payees - on or before March 1 of the
following year in which payments were made; and
2. Annual Information Return on Final Income Taxes Withheld (BIR Form 1604F)
including the corresponding Annual Alphabetical List of Payees – On or before
January 31 of the following year in which payments were made.”
Ignorantia juris non excusat

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COMPARISON ON

NIRC AND TRAIN

(1) Original copy for the BIR; and

1. Annual Information Return of Creditable Taxes Withheld (Expanded)/Income

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