Guideline on the withholding of final income tax on the share of individual partners in the net profit of taxable partnership

January 16, 1984 REVENUE REGULATIONS NO. 02-84 SUBJECT : Guideline on the Withholding of Final Income Tax on the Share of Individual Partners in the Net Profit of Taxable Partnership TO : All Internal Revenue Officers, Withholding Agents and Others Concerned SECTION 1 . Scope . Pursuant to the provisions of Section 326 in relation to Section 21(3), 22(a) (2) and 83(d) of the National Internal Revenue Code, as amended, these Regulations are promulgated. SECTION 2 . Basis of Withholding Tax . The income tax imposed in Section 21(e) and Section 22(a) (2) of the Tax Code on the distributive share of a partner in a taxable partnership shall be deducted and withheld at the rates of fifteen per centum (15%), if the partner is a citizen or resident alien, or thirty per centum (30%), if the partner is a non-resident alien engaged in trade or business in the Philippines. The basis of the withholding shall be the "after-tax net profit", whether distributed or not, of the said payor-partnership. The term "after-tax net profit means the net profit of the partnership computed in accordance with generally accepted principles of accounting, less the corporate income tax imposed in Section 24 of the Tax Code. cd i SECTION 3 . Time of Withholding . Pursuant to Section 83(d) of the Tax Code, the share of an individual partner in the net profit of a taxable partnership shall be deemed to have been actually or constructively received by the partner in the same taxable year in which the net income of the partnership has been declared. The tax shall therefor be deducted and withheld not later than sixty (60) days following the close of the said taxable year. SECTION 4 . Return and payment of taxes withheld . Taxes deducted and withheld shall be covered by a return (BIR-Form 1743C) and paid to the Revenue District Officer, Collection Agent or duly authorized Treasurer of the city or municipality where the principal place of business of the partnership is located. The return shall be filed and the payment made on or before April 25 after the close of the quarter in which withholding is made. If the partnership has not withheld any other final income tax, the return filed shall be considered as an annual return. SECTION 5 . Withholding tax on compensation paid to partners . Salaries, fees, bonuses, allowances and similar income payments to an individual partner for personal services rendered to the partnership shall be subject to withholding of tax as compensation income under Revenue Regulations No. 6-82 as supplemented by Revenue regulations No. 6-83. aisa dc SECTION 6 . Effectivity . These Regulations shall take effect immediately upon approval. (SGD.) CESAR A. VIRATA Minister of Finance Recommending Approval: (SGD.) RUBEN B. ANCHETA Acting Commissioner