Deletion and Creation of Alphanumeric Tax Codes (ATCs) of Revenue Sources for Proper Classification of Taxes

September 30, 2002 REVENUE MEMORANDUM ORDER NO. 25-02 SUBJECT : Deletion and Creation of Alphanumeric Tax Codes (ATCs) of Revenue Sources for Proper Classification of Taxes TO : All Collection Agents, Revenue District Officers and Other Internal Revenue Officers Concerned I. Objectives : To facilitate the proper identification and monitoring of Withholding Tax collections based on BIR Form No. 1606 (Withholding Tax Remittance Return for Onerous Transfer of Real Property Other Than Capital Asset-Including Taxable and Exempt), BIR Form 1600 (Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld) and BIR Form No. 0605 (Payment Form), and for Integrated Tax System (ITS) purposes, the following ATCs are hereby deleted and/or created: A. The following ATCs are hereby deleted: KIND OF TAXES ISSUANCE/LEGAL BASIS/ REASONS ATC 1. ATCs on Creditable There are only two ATCs assigned for Withholding Tax on Sale, individual & corporate creditable Exchange or Transfer of Real withholding taxes across four tax rates. Property Other Than Capital For proper monitoring of collection from Assets, Sold by an Individual, this source, each tax rate for individuals Corporation, Estate, Trust & corporations will have separate ATCs a. Individual (1.5%, 3%, 5%, WI155 7.5%) b. Corporate (1.5%,3%, 5%, WC155 7.5%) 2. On Percentage Taxes Withheld: a. Tax on banks and non- For purposes of proper monitoring of WB101 banks financial collections on percentage tax withheld, intermediaries - on interest, the existing ATC across all rates should commissions and discounts be deleted. Separate ATCs must be paid to banks and non-bank assigned per rate financial intermediaries arising out of lending activities as well as financial leasing , on basis of the remaining maturities of the instrument. Tax rates: 5%, 3%, 1%, 0%. b. Tax on finance companies - -do- WB112 on interest, commissions and discounts paid from their loan transactions from finance companies as well as financial leasing based on the remaining maturities of the instrument. Tax rates: 5%, 3%, 1%, 0%. c. Tax on agents of foreign -do- WB120 insurance companies. Tax rates: 5% and 10% d. Tax on sale, barter or -do- exchange of shares of stock: Sale or exchange through WB201 initial public offering - Tax rates: 1%, 2%, 4% Sale or exchange through WB202 secondary public offering - Tax rates: 1%, 2%, 4% B. The following ATCs are hereby created: 1. Creditable Withholding Tax on Sec. 2.57.2(J) of RR No. 2-98 as Sale, Exchange or Transfer of amended by RR No. 6-2001 and RR No. Real Property Other Than 12-2001 Capital Assets, Sold by an Individual, Corporation, Estate, Trust: a. Individual 1.5% WI555 3% WI556 5% WI557 6% WI558 b. Corporate 1.5% WC555 3% WC556 5% WC557 6% WC558 2. On Percentage Taxes Withheld: Sec. 121 of RA 8424 a. Tax on banks and non-banks Sec .5.116(A)(5)(a) of financial intermediaries - on RR No. 2-98 interest, commissions and discounts paid to banks and non-bank financial intermediaries arising out of lending activities as well as financial leasing , on basis of the remaining maturities of the instrument. Short term maturity (not in excess WB301 of 2 yrs.) - 5% tax rate Medium -term maturity (over 2 WB302 yrs to 4 yrs.) - 3% tax rate Long-term maturity (over 4 yrs to WB303 7 yrs) - 1% tax rate Over 7 years - 0% tax rate WB304 b. Tax on finance companies - Sec. 122 of RA 8424 on interest, commissions and Sec. 5.116(A)(5)(a) of discounts paid from their RR No. 2-98 loan transactions from finance companies as well as financial leasing based on the remaining maturities of the instrument: Short term maturity (not in WB311 excess of 2 yrs.) - 5% tax rate Medium-term maturity WB312 (over 2 yrs to 4 yrs.) - 3% tax rate Long-term maturity (over 4 WB313 yrs to 7 yrs) - 1 % tax rate Over 7 years - 0% tax rate WB314 c. Tax on agents of foreign Sec. 124 of RA No. 8424 insurance companies: Sec. 5.116(A)(8) of RR No. 2-98 RR No. 4-2002 Insurance Agents - 10% WB120 tax rate Owner of the Property - 5% WB121 tax rate d. Tax on sale, barter or exchange of shares of stock: Sale or exchange through Sec. 127(B) of RA No. 8424 initial public offering Sec. 5.116(A)(11) of RR No. 2-98 i) Not over 25% - 4% WB201 tax rate ii) Over 25% but not exceeding 33 1/3% - 2% WB202 tax rate iii) Over 33 1/3% - 1% tax WB203 rate Sale or exchange through Sec. 127(C) of RA No. 8424 secondary public offering in relation to RA No. 1051 & Sec. 5.11(A)(11) of RR No. 2-98 i) Not over 25% - 4% WB206 tax rate ii) Over 25% but not WB207 exceeding 33 1/3% - 2% tax rate iii) Over 33 1/3% - 1% WB208 tax rate 3. On Fines and Penalties: Fines and Penalties on Monthly Sec. 248 of RA No. 8424 FP041 Percentage Tax Withheld (tax RR 2-98 as amended by RR 6-2001, rate: 50%, 25%) RR 12-2001 and RR 4-2002 The existing ATC FP040 under RMO No. 14-99 shall refer to the fines and penalties on quarterly percentage taxes and the new ATC FP041 shall pertain to the fines and penalties on monthly percentage taxes. II. Repealing Clause This Revenue Memorandum Order revises portions of all other issuances inconsistent herewith. III. Effectivity This Revenue Memorandum Order shall take effect immediately. (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue