Request for Approval for Extension of Deadline in the Remittance of Monthly Withholding Tax on Compensation

August 18, 1998 BIR RULING NO. 121-98 RR 4-93, RR 18-93-000-00-121-98 C. F. Sharp Crew Management, Inc. Casa Rocha 290-292 General Luna Street Intramuros, Manila Attention: Ms . Olga B . Oronce VP for Finance & Treasurer Gentlemen : This refers to your letter dated November 20, 1997 and follow-up letter requesting approval for extending deadline in the remittance of your monthly withholding tax on compensation from the 10 th of each month to 25 th for the following reasons which you cited: 1. That you are a company engaged in crewing services with an average monthly withholding tax remittance of P1,600,000.00 as shown in the Monthly Withholding Tax Remittance for the months of August, September, October and November, 1997; 2. That you have previously acquired the status as a large taxpayer under the name of C.F. SHARP & CO., INC. from February 2, 1994 until the cessation of your operations on June 31, 1995, the fact of which was duly certified by this Office, Large Taxpayers Division, this Office; 3. That C.F. SHARP & CO., INC., the original registered name of the company to which you belong, had split up into various corporations depending on their respective line of operations, i.e., C.F. Sharp Crew Management, Inc. for crewing services, and C.F. Sharp Holdings, Inc. for management services. The crewing operations was registered in its new name, the C.F. Sharp Crew Management, Inc. in April 1995; 4. That your request is prompted by the fact that payments of salaries of personnel and crew come from various principals abroad, and which do not fall on the same date. The deadline set on the 10 th of every month is not enough time for you to accumulate the whole amount of withholding taxes expected and required to be remitted to the government on or before the aforesaid date; and 5. That as a result, you are forced to use your own funds intended for other operating expenses, which effectively drain the corporation's cashflow. In reply, please be informed that pursuant to Revenue Memorandum Circular No. 3-98, the filing and remittance of the taxes withheld on compensation, creditable withholding tax and final tax shall continue to be implemented under Revenue Regulations Nos. 3-93 and 4-93, the same to be enforced in relation to the 2 nd paragraph of Section 81 of the Tax Code of 1997 which in part reads, viz: "SEC. 81. Filing of Return and Payment of Taxes Withheld . . . . "The return shall be filed and the payment made within twenty-five (25) days from the close of each calendar quarter: Provided , however , That the Commissioner may, with the approval of the Secretary of Finance, require the employers to pay or deposit the taxes deducted and withheld at more frequent intervals, in case where such requirement is deemed necessary to protect the interest of the Government." which provision is the same as that provided in the 1977 Tax Code, as amended. In this connection, Section 8 of Revenue Regulations No. 4-93, implementing Republic Act No. 7497, otherwise known as "An Act Amending Pertinent provisions of the National Internal Revenue Code, as amended, relative to the Final Withholding Tax on Pure Compensation Income", provides as follows: prLL "SEC. 8. Sec. 16 of Revenue Regulations 6-82, as amended, is hereby further amended to read, as follows: "SEC. 16. Return and payment of income taxes withheld on compensation BIR Form 1743-W . Every person required under the provisions of Chapter X, Title II of the NIRC, to deduct and withhold the tax on compensation shall make a return and pay such tax on or before the 10 th day of the month following the month in which withholding was made to any authorized agent bank within the Revenue District Office or in places where there are no agent banks, to the Revenue District Officer of the City or Municipality where the Withholding Agent/Employer's legal residence or place of business or office is located: Provided, However, That taxes withheld from the last compensation (December) for the calendar year shall be paid not later than January 25 of the succeeding year." The aforecited Revenue Regulations clearly states the time within which the taxes withheld on compensation should be remitted to the government through duly accredited banks or Revenue District Officers having jurisdiction over Withholding Agent/Employer's legal residence or place of business or office, i.e., every 10 th day of the month following the month in which withholding was made, and on the 25 th of January of the succeeding year for the last compensation (December). The same, however, is subject to the proviso of Section 2 of Revenue Regulations No. 18-93, amending further Rev. Regs. 5-85, as amended by Revenue Regulations No. 3-93, which states, that taxes withheld by Large Taxpayers , as identified and notified by the Bureau of Internal Revenue pursuant to Republic Act No . 7646 , as implemented by Revenue Regulations No . 12-93 , shall be remitted within twenty-five (25) days after the end of each calendar month with the filing of the appropriate return (BIR Form 1743-W) . Your request was prompted by reasons abovecited, among which, is the fact that your monthly withholding taxes amounted to P1,600,000.00 as shown in your "Monthly Withholding Tax Remittance", which you believe will qualify you as a large taxpayer, as you have been before the cessation of your operations. This Office is of the opinion that with your average monthly withholding tax remittance of P1.6 M a month, you are considered to be within the bracket of this country's large taxpayers. Thus, you can avail of the privilege of remitting your monthly withholding taxes on the 25 th day of the month following the month in which the withholding was made, subject to the condition, however, that you should re-apply with the Large Taxpayer's Division, this Bureau, for re-enlistment in the List of Large Taxpayers. Accordingly, you are hereby advised to apply for conversion of your present status as regular taxpayer to large taxpayer under your new name, C.F. Sharp Crew Management, with our Large Taxpayers Division. You may therefore inform the concerned Revenue District Officer having jurisdiction over your place of business of your pending application. Meanwhile, this Office, subject to the above conditions, interposes no objection on your intention to change your monthly remittance of your withholding tax on compensation from the 10 th to the 25 th of each month following the month in which the withholding was made. cdll Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue