AMENDING REVENUE REGULATIONS NO. 3-2002 AND FURTHER AMENDING SECTION 2.83 OF REVENUE REGULATIONS NO. 2-98 AS AMENDED, RELATIVE TO SUBSTITUTED FILING OF INCOME TAX RETURN OF EMPL…

SECTION 2.       Amendment.
— Section 2.83.1 of Revenue Regulations No. 2-98, as amended by Section
2 of Revenue Regulations No. 3-2002, is hereby further amended to read
as follows:

“Section 2.83.1. Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316). —
In general, every employer or other person who is required to deduct
and withhold the tax on compensation including fringe benefits given to
rank and file employees, shall furnish every employee from whose
compensation taxes have been withheld the Certificate of Compensation
Payment/Tax Withheld (BIR Form No. 2316), on or before January 31 of the
succeeding calendar year, or if the employment is terminated before the
close of such calendar year, on the day on which the last payment of
compensation is made.  Failure to furnish the same shall be a ground for the mandatory audit of payor’s income tax liabilities (including withholding tax) upon verified complaint of the payee.

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The Certificate of Compensation
Payment/Tax Withheld (BIR Form No. 2316) shall contain a certification
to the effect that the employer’s filing of BIR Form No. 1604-CF shall
be considered as a substituted filing of the employee’s income tax
return to the extent that the amount of compensation and tax withheld
appearing in BIR Form No. 1604-CF as filed with BIR is consistent with
the corresponding amounts indicated in BIR Form No. 2316.  It shall be signed by both the employee and employer attesting to the fact that the information stated therein has been verified and is true and correct to the best of their knowledge.  However,
the withholding agents/employers are required to retain copies of the
duly signed BIR Form No. 2316 for a period of three (3) years as
required under the National Internal Revenue Code.

The employee
who is qualified for substituted filing of income tax return under
these regulations, shall no longer be required to file income tax return
(BIR Form No. 1700) since BIR Form No. 1604-CF shall be considered a
substituted return filed by the employer,BIR Form No. 2316, duly
certified by both employee and employer, shall serve the same purpose as
if a BIR Form No. 1700 had been filed, such as proof of financial
capacity for purposes of loan, credit card, or other applications, or
for the purpose of availing tax credit in the employee’s home country
and for other purposes with various government agencies.  This may also be used for purposes of securing travel tax exemption, when necessary.

However, information referring
to the certification, appearing at the bottom of BIR Form No. 2316,
shall not be signed by both the employer and the employee if the latter
is not qualified for substituted filing.  In which
case, BIR Form No. 2316 furnished by the employer to the employee shall
be attached to the employee’s Income Tax Return (BIR Form No. 1700) to
be filed on or before April 15 of the following year.

For the implementation of these
Regulations, BIR Form No. 2316 herein referred to shall be BIR Form No.
2316 version October 2002 or any later version.  Thus,
the old version cannot be used for this purpose although may be used
for those taxpayers still required to file BIR Form No. 1700.”

SECTION 3.       Repealing Clause.
— The provisions of existing regulations and issuances inconsistent
with the provisions of these Regulations are hereby repealed, amended or
modified accordingly.

SECTION 4.       Effectivity Clause. — These Regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation in the Philippines.

Adopted: 11 Oct. 2002

(SGD.) GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue