Revenue Regulations Supplementing Revenue Regulations No. 13-78, Otherwise Known as the Expanded Withholding Tax Regulations

June 4, 1979 REVENUE REGULATIONS NO. 06-79 SUBJECT : Revenue Regulations Supplementing Revenue Regulations No. 13-78, Otherwise Known as the Expanded Withholding Tax Regulations TO : All Internal Revenue Officers and Others Concerned Pursuant to the provisions of Presidential Decree No. 1351 and in accordance with the provisions of Section 326 in relation to Section 4, both of the National Internal Revenue Code of 1977, the following Regulations supplementing Revenue Regulations No. 13-78, are hereby promulgated and shall be known as Revenue Regulations No. 6-79. SECTION 1. Subparagraph (1) of paragraph (a) of Section 1 of Revenue Regulations No. 13-78 is hereby amended to read as follows: cdta "(1) Those individually engaged in the practice of professions or callings: lawyers, certified public accountants; doctors of medicine; architects, civil, electrical, chemical, mechanical, structural, industrial, mining, sanitary, and metallurgical engineers, doctors of veterinary science; dentists; professional appraisers or connoisseurs of tobacco and other domestic or foreign products; actuaries; interior decorators ten per centum (10%)." SECTION 2. Subparagraph 2 of Section 1 of Revenue Regulations No. 13-78 is hereby amended to read as follows: "The term actors and actresses shall not include "bit players", "extras" and "radio talents or character players" whose roles or performances in a movie, television and radio program or stage presentation are subordinate to the actors or actresses and to whom payments made per role, performance or per payment by the same payor does not exceed five hundred pesos (P500.00)." SECTION 3. Subparagraph 4 of paragraph (a) of Section 1 of Revenue Regulations No. 13-78 is hereby amended to read as follows: "(4) Movie, stage, radio, television and musical directors ten per centum (10%)." SECTION 4. Section 1 of Revenue Regulations No. 13-78 is hereby amended by adding a new paragraph to read as follows: "(6) Geodetic engineers and marine surveyors five per centum (5%)." SECTION 5. Subparagraph 6 of paragraph (a) of Section 1 and the paragraph immediately following of Revenue Regulations No. 13-78 are hereby amended to read as follows: "(7) Insurance agents and Insurance adjusters five per centum (5%)." The amount subject to withholding under this paragraph shall include not only the fees, but also per diems, allowances and other remunerations paid. In the case of professional entertainers and athletes, the amount subject to withholding tax shall also include amounts paid to them in consideration of the use of their names or pictures, public appearances either on stage, in print, broadcast, or other media for purposes of advertisements or sales promotion." SECTION 6. Paragraph (c) of Section 1 of Revenue Regulations No. 13-78 is hereby amended to read as follows: "(c) Rentals . When the gross rental or other payment required to be made as a condition to the continued use or possession of property, whether real or personal, to which the payor or obligor has not taken or is not taking title or in which he has no equity, exceeds five hundred pesos (P500.00) per contract or payment whichever is greater five per centum (5%)." SECTION 7. Paragraph (e) of Section 1 or Revenue Regulations No. 13-78 is hereby amended to read as follows: "(e) Amounts paid to certain contractors . On fifteen per cent (15%) of gross payments to the following contractors, whether individual or corporate three per centum (3%). "1. General engineering, general building and specialty contractors "(a) General Engineering Contractors. Those whose principal contracting business is in connection with fixed works requiring specialized engineering knowledge and skill including the following divisions for subjects: "1) Reclamation works; "2) Railroads; "3) Highways, streets and roads; "4) Tunnels; "5) Airports and airways; "6) Waste reduction plants; "7) Bridges, overpasses, underpasses and other similar works; "8) Pipelines and other systems for the transmission of petroleum and other liquid or gaseous substances; "9) Land levelling; "10) Excavating; "11) Trenching; "12) Paving; and 13) Surfacing work. "b) General Building Contractors. Those whose principal contracting business is in connection with any structure built, being built or to be built, for the support, shelter and enclosure of persons, animals, chattels or movable property of any kind, requiring in its construction the use of more than two unrelated building trades or crafts, or to do or superintend the whole or any part thereof. Such structure includes sewers and sewerage disposal plants and systems, parks, playgrounds and other recreational works, refineries, chemical plants and similar industrial plants requiring specialized engineering knowledge and skill, powerhouse, power plants and other utility plants and installation, mines and metallurgical plants, cement and concrete works in connection with the abovementioned fixed works. "c) Specialty Contractors. Those whose operations pertain to the performance of construction work requiring special skill and whose principal contracting business involves the use of specialized building trades or crafts. "(2) Other Contractors "a) Filling, demolition and salvage work contractors and operators of mine drilling apparatus; "b) Operators of dockyards; "c) Persons engaged in the installation of water system, and gas or electric light, heat, or power; "d) Operators of stevedoring, warehousing or forwarding establishments; "e) Printers, bookbinders, lithographers and publishers except those principally engaged in the publication or printing of any newspaper, magazine, review or bulletin which appears at regular intervals, with fixed prices for subscription and sale; "f) Messengerial, janitorial, private detective and/or security agencies and credit and/or collection agencies; "g) Advertising agencies; "h) Independent producers of television, radio and stage performances or shows; "i) Independent producers of "jingles"; "j) Bookkeeping agencies; "k) Insurance and insurance adjusters agencies; "l) Management and consultancy agencies; "m) Labor recruiting agencies; "n) Electrical and plumbing agencies; "o) Persons engaged in the installation of elevators, central air-conditioning units, computer machines and other equipment and machineries, and the maintenance services thereon; "p) Persons engaged in the sale of computer services; "q) Persons engaged in landscaping and interior decoration services; and "r) Persons engaged in the collection and disposal of garbage." SECTION 8. Section 1 of Revenue Regulations No. 13-78 is hereby amended by adding new paragraphs (h), (i) and (j), to read as follows: "(h) Interest Payments on Bonds or Similar Indebtedness . On interest payments other than interest which is exempt from income tax under Section 29 (b) (8) (D) of the National Internal Revenue Code, as amended, on bonds or similar evidences of indebtedness, except tax-free covenant bonds, the interest or other payment on which is subject to withholding under Section 53 of the tax code, issued by any corporation and by all government agencies including government-owned or controlled corporations fifteen per centum (15%)." "(i) Amounts Paid to Certain Brokers and Agents . On gross payments to customs and real estate brokers and agents of professional entertainers five per centum (5%)." "(j) Amounts Paid to Directors of Corporations . On gross payments of per diems, allowances, and other forms of remunerations for services performed as member of board of directors of corporations ten per centum (10%)." SECTION 9. Section 1 (f) of Revenue Regulations No. 13-78 is hereby amended to read as follows: "(f) Awards and Prizes . On awards and prizes in the amount of, or the cash value of which exceeds three thousand pesos P3,000.00) ten per centum (10%)." SECTION 10. Revenue Regulations No. 13-78 is hereby amended by adding a new section to be known as Section 3 to read as follows: "SEC. 3. Time of Withholding . The obligation of the payor to deduct and withhold under these regulations arises at the time an income which is subject to withholding under Section 1 hereof is payable or paid." SECTION 11. Revenue Regulations No. 13-78 is hereby amended by adding a new section to be known as Section 4 to read as follows: "SEC. 4. Exemption from withholding . The withholding of tax herein prescribed shall not apply to income payments to the following: "(a) National government and its instrumentalities, including provincial, city or municipal governments, as well as government-owned or controlled corporations; "(b) Persons enjoying income tax exemptions; and "(c) Exempt organizations under Section 27 of the National Internal Revenue Code as amended, except income derived from real or personal property, or from any activity conducted for profit. "The exemption shall be allowed only if the payee above-mentioned in sub-paragraphs (b) and (c) shall have presented to the payor a certificate of exemption issued by the Commissioner of Internal Revenue." SECTION 12. Section 4 of Revenue Regulations No. 13-78 is hereby amended by consolidating paragraphs (a) and (b) thereof, to read as follows: "SEC. 6. Every payor required to deduct and withhold taxes under these Regulations shall furnish each corporate or individual payee a written statement (BIR Form 1743) upon payment or at the time he is required to withhold, showing the income payment made by him and the amount of taxes deducted and withheld therefrom. The statement must be signed by the payor or his authorized officer. "The amount so withheld shall be allowed as a tax credit against the income tax liability of the payee in the taxable year or quarter in which the income was earned or received." SECTION 13. Section 6 of Revenue Regulations No. 13-78 is hereby amended to read as follows: "SEC. 8. Any failure to comply with the provisions of these regulations shall be subject to ad valorem and specific penalties. (a) Surcharges for failure to render returns, and for rendering false or fraudulent returns; delinquency in payment of taxes . In case of any failure to make and file a return (BIR Form 1743A) within the time prescribed herein, not due to willful neglect, there shall be added to the tax twenty-five per centum (25%) of the amount of such tax, except that when a return is voluntarily and without notice from the Commissioner or any other revenue officer filed after such time, and it is shown that the failure to file it was due to reasonable cause, no such addition shall be made to the tax. "In case the failure to make and file a return is due to willful neglect or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax to be remitted, in case any payment has been made on the basis of such return before the discovery of the falsity or fraud, a surcharge of fifty per centum (50%) of the amount of such tax or deficiency tax. "In case the taxes deducted and withheld by the payor are not paid or remitted within the time prescribed, there shall be added a surcharge of five per centum (5%) on the amount of tax unpaid and interest at the rate of fourteen per centum (14%) per annum upon the amount required to be paid and from the time the same became due until paid. "(b) Penalties for failure to file return and for filing fraudulent returns or statements, or to pay tax . Any payor liable to pay or remit the tax, to make a return or to furnish the statement of income payment and taxes withheld from the payee required under these Regulations, who refuses or neglects to pay such tax, to make such returns at the time or times herein specified shall be punished by a fine of not more than two thousand pesos (P2,000.00) and by imprisonment for not more than six (6) months. "Any individual or any officer of any corporation or general co-partnership required by law to make, render, sign, and verify any return, who makes any false or fraudulent statement with intent to defeat or evade withholding under these regulations, shall be punished by a fine of not more than five thousand pesos (P5,000.00) and imprisonment of not less than two (2) years. "If any corporation or duly registered co-partnership shall refuse or neglect to make a return at the time or times herein before specified, or shall render a false or fraudulent return, such corporation or partnership shall be liable to a fine of not exceeding twenty thousand pesos (P20,000.00). SECTION 14. Sections 3, 4, 5, 6, 7, 8, 9, of Revenue Regulations No. 13-78, are hereby renumbered as Sections 5, 6, 7, 8, 9, 10, 11, respectively. SECTION 15. Effectivity . These supplementary regulations shall apply to income payments made beginning July 1, 1979. cd CESAR VIRATA Minister of Finance Recommending Approval: EFREN I. PLANA Acting Commissioner