WITHHOLDING OF TAXES ON MONEY PAYMENTS BY GOVERNMENT OFFICES, AGENCIES AND INSTRUMENTALITIES
Revenue Code in relation to Section 3 of Republic Act No. 1051, these
regulations are hereby promulgated to govern the manner of the
withholding and remittance of taxes due on account of money payments
made by government offices, instrumentalities and agencies.
SECTION 1. Offices Required to Deduct and Withhold.
— All bureaus, offices and instrumentalities of the government,
including government owned or controlled corporations, as well as their
subsidiaries; provinces, cities and municipalities shall, before making
any money payment to private individuals, corporations, partnerships
and/or associations, deduct and withhold the taxes due from the said
payees on account of such money payments.
SECTION 2. Internal Revenue Taxes Required to be Withheld. — Percentage taxes on gross money payments to the following are subject to withholding:
(a) Proprietors or operators of restaurants, refreshment
parlors and other eating places, including clubs and caterers, four
percent (4%) on their gross receipts;Proprietors or operators of restaurants, bars, cafes and other
places, including clubs where distilled spirits, fermented liquors or
wines are served, four percent (4%) on their gross receipts from the
sale of food or refreshments and eight percent (8%) on their gross
receipts from sale of distilled spirits, fermented liquors or wines.
Two (2) sets of commercial invoices or receipts serially numbered in
duplicate shall be separately prepared and issued one for each sale of
food or refreshment served and another for each sale of distilled
spirits, fermented liquors or wines served, the originals of the
invoices or receipts to be issued to the purchaser or customer.Proprietors or operators of restaurants, refreshment parlors, bars,
cafes and other eating places which are maintained within the premises
or compound of a cockpit, cabaret, night or day club, Jai-Alai, race
track, or which are accessible to patrons of such cockpit, cabaret,
night or day club, Jai-Alai, or race track by means of a connecting door
or passage, twelve percent (12%) in the case of cockpit, cabaret, night
or day club, and twenty five percent (25%) in the case of Jai-Alai and
race track on their gross receipts.(b) Proprietors, operators, or keepers of hotels, motels, rest
houses, pension houses, lodging houses and resorts, twelve per cent
(12%) on their gross receipts derived from room occupancy.(c) Keepers of garages, cars for rent or hire driven by the
lessee, transportation contractors, persons who transport passengers or
freight for hire, and common carriers by land, air or water, except
owners of bancas and owners of animal-drawn two wheeled vehicles, three
percent (3%) on their gross receipts.(d) Franchise grantees on their gross receipts from the
business covered by the law granting the franchise, at the following
rates:1. On electric utilities, city gas and water supplies . . .
Two (2%) percent, except electric and local waterworks cooperatives
pursuant to Memorandum Order No. 65, dated January 21, 1987 of the President.2. On telephone and/or telegraph system, and radio or broadcasting stations . . . Three (3%) per cent.
3. On other franchise . . . Five (5%) per cent.
(e) Persons doing insurance business, five (5%) per centum on the total premiums collected except on reinsurance premiums.
(f) Sellers of goods or services whose aggregate gross annual
sales do not exceed P200,000, if they have not opted to be registered
for VAT purposes, two per cent (2%) on gross sales or receipts.
However, no withholding shall be required in the case of sellers of
goods or services who are exempt from the value-added tax if they have
elected to register and be subjected to the value-added tax.
SECTION 3. Exemptions . — The withholding tax herein prescribed shall not apply on money payments to —
(a) Government agencies or instrumentalities, including
provincial, city or municipal government, received in the exercise of
their governmental functions.(b) Private individuals or corporations, partnerships, and
associations exempt from the payment of the taxes mentioned in Section 2
hereof. The exemption, however, shall be allowed only if the payee
shall have presented to the paying government office or entity a
certificate of exemption issued by the Commissioner of Internal Revenue
or his duly authorized representatives.
SECTION 4. Basis of Computation .
(a) Caterer’s Tax: — The basis for computing
the 4% or 8% tax on the gross receipts to be withheld is the gross money
payment for food or refreshment and for distilled spirits, fermented
liquors or wines respectively: Provided, that separate invoices or
receipts shall be issued for the sale of food and refreshment and
another for distilled spirits, etc. If the sale of food and liquor is
not separately invoiced, from the sale of distilled spirits, etc., the
total money payment is subject to 8%.In the case of restaurants, refreshment parlors, bars, cafes and
other eating places within the premises specified in paragraph (a) Sec. 2
hereof, the basis for the tax is the gross money payment to the
proprietor or operator.b. Room occupancy tax: — In the case of
proprietors, operators of hotels, motels, etc., the basis for computing
the tax is the gross money payments for room occupancy.c. Common carrier’s tax: — The basis for computing the tax is the gross money payments to the common carrier.
d. Franchise tax: — The basis for computing
the various rates of the tax indicated in Sec. 2(d) hereof is the gross
money payment to the franchise holder or grantee.e. Premium tax: — The basis for computing the tax is the gross insurance premium paid in money, notes, credits or any substitute for money.
f. Percentage tax on persons exempt from value-added tax (VAT): — The basis for computing the tax is the gross quarterly sales or receipts.
SECTION 5. Returns and Payment of Taxes . —
No money payment shall be made by any government office or agency unless
the taxes due thereon shall have been deducted and withheld under these
Regulations.
Taxes deducted and withheld shall be covered by the Monthly Return of
Internal Revenue Taxes Withheld on Government Money Payment under RA
No. 1051 (BIR Form 7.50A) and paid to the Revenue
District Officer, Collection Agent or duly authorized Treasurer of the
city or municipality where the government office, agency or corporate
government entity is located. The return in triplicate copies shall be
filed and the payment made within ten (10) days following the close of
the calendar month during which withholding was made.
In places where payment thru banks is authorized, the proper Revenue
District Officer or Collection Agent shall prepare the corresponding
Payment Acceptance Order (PAO).
If the payment through banks is not authorized, the proper Revenue
District Officer or Collection Agent shall prepare the corresponding
payment Acceptance Order (PAO)
The Confirmation Receipt or the payment Acceptance Order Number as
the case may be shall be indicated in the proper spaces provided for in
the return.
SECTION 6. Certificate of Internal Revenue Taxes Withheld.
— Every withholding government office, agency or entity shall furnish
each proprietor, operator, caterer, common carrier or franchise holder
from whom taxes under these regulations had been deducted and withheld,
the Certificate of Internal Revenue Taxes Withheld on Money Payments (BIR Form 7.50B).
The certificate shall be accomplished in triplicate, two copies to be
given to the payee simultaneously with the money payment upon request
but not later than the fifteenth day of the month after the close of the
calendar quarter. The third copy of said Certificate shall be the file
copy of the withholding government office, agency or entity.
SECTION 7. Nature of Tax Withheld. — The
amount of tax herein withheld and paid as evidenced by the certificate
(BIR Form 7.50B) is creditable against the sales tax or percentage tax
for the franchise tax liability of the payee, provided that the amount
withheld is included in the return as part of the gross sales or
receipts for the taxable quarter or year.
SECTION 8. Punishable Acts or Omissions, Penalties —
a Pursuant to Sec. 271 (formerly 306) of the Tax Code,
as amended 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 government owned or controlled
corporations who, being charged with the duty to deduct and withhold any
internal revenue tax and to remit the same in accordance with these
regulations, is guilty of any of the delinquencies herein-below
specified shall, upon conviction for each act or omission, be fined in a
sum of not less than five thousand pesos (P5,000.00) but not more than
fifty thousand pesos (P50,000) or imprisoned for a term of not less than
six months and one day but not more than two years, or both in addition
to dismissal from the service:1. Fails or causes the failure to deduct and withhold any internal revenue tax covered by this regulations.
2. Fails or causes the failure to remit taxes deducted and withheld within the time prescribed herein.
3. Fails or causes the failure to file the return or certificate required.
SECTION 9. Repealing Clause . — All existing
rules and regulations or parts thereof which are inconsistent with the
provisions of these regulations are hereby revoked.
SECTION 10. Effectivity . — These regulations shall take effect immediately.
Adopted: 21 Jan. 1988
(Sgd.) VICENTE R. JAYME
Secretary of Finance