Atty. Eden Devela Sarne

November 9, 2009 BIR RULING [DA-(C-257) 658-09] RR 2-98; BIR Ruling No. 128-99 & 003-08, DA-676-99, DA-512-03, DA-197-04 & DA470-07 Atty. Eden Devela Sarne Unit 103 Heart Tower Condo 108 Valero Street Salcedo Village, Makati City Madam : This refers to your letter dated March 13, 2009 requesting on behalf of your client, Philippine Psychiatric Association, Inc. for an opinion or a ruling on the tax implication of payment of honoraria by your client to lecturers/speakers. aTADcH As represented, the Philippine Psychiatric Association, Inc., with Taxpayer Identification No. 211-844-223-000, is a non-stock, non-profit domestic association of professional Filipino psychiatrists in the Philippines with principal office at Unit 1011, 10th Floor, Medical Plaza Bldg., San Miguel Avenue, Ortigas, Pasig City. It is registered with the Securities and Exchange Commission (SEC) under SEC Registration No. 34259 dated September 21, 1973. Association members are either invited or volunteer to become lecturers/speakers in scientific meetings held every month and during conventions held twice a year. Presently, the amount of honoraria paid to lecturers/speakers range from PhP1,000.00 to PhP5,000.00 within and outside Metro Manila. In reply, please be informed that where no employer-employee relationship exists, the company engaged in conducting the lecture/seminar, as withholding agent, is required to deduct and withhold the creditable tax on income payments to lecturers/speakers at the rate of 10% pursuant to Section 2.57.2 (A) (8) and (B) of Revenue Regulations No. 2-98, as amended. The withholding taxes on money/income payments are required to be paid/remitted on or before the 10th day of the month following the month in which withholding was made. The amounts subject to withholding tax shall include not only fees, but also per diems, allowances and any other form of income payments not subject to withholding tax on compensation. However, if an employer-employee relationship exists between the company engaged in conducting the seminar/lecture and the lecturers/speakers, the professional fees, teaching or lecture fees or honoraria form part of their gross compensation and subject to income tax on wages under Revenue Regulations No. 2-98, as amended, and shall be computed pursuant to Section 24 (A) (1) (c) of the Tax Code of 1997, in accordance with and at the rates established in the following schedule: Not over P 10,000 5% Over P10,000 but not over P30,000 P500 + 10% of the excess over P10,000 Over P30,000 but not over P70,000 P2,500 + 15% of the excess over P30,000 Over P70,000 but not over P140,000 P8,500 + 20% of the excess over P70,000 Over P140,000 but not over P250,000 P22,500 + 25% of the excess over P140,000 Over P250,000 but not over P500,000 P50,000 + 30% of the excess over P250,000 Over P500,000 P125,000 + 32% of the excess over P500,000 Please be guided accordingly. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service