Regulations Governing the Method of Computing Corporate Quarterly Income Tax on a Cumulative Basis

October 3, 1977 REVENUE REGULATIONS NO. 10-77 SUBJECT : Regulations Governing the Method of Computing Corporate Quarterly income Tax on a Cumulative Basis TO : All Internal Revenue Officers and others concerned Pursuant to the provisions of Section 326 in relation to Section 4 both of the National Internal Revenue Code of 1977, the regulations governing the method of computing corporate quarterly income tax on a cumulative basis are hereby promulgated and shall be known as Revenue Regulations No. 10-77. SECTION 1. Scope . These regulations shall govern the method of computing the corporate quarterly income tax on a cumulative basis by corporations or partnerships subject to the payment of income tax pursuant to the provisions of Section 24 of the National Internal Revenue Code of 1977. SECTION 2. General provisions . A return of summary declaration of gross income and deductions on a cumulative basis shall be filed every quarter of the taxable year by every corporation or partnership subject to income tax. SECTION 3. What should be declared . (a) The gross income and deductions on a cumulative basis for the preceding quarter and quarters, and the income tax due computed in accordance with the provisions of Section 24, Title II of the National Internal Revenue Code of 1977, after deducting the amount of Income tax previously paid or assessed during the preceding quarter/s shall be declared in the quarterly return. (B.I.R. Form No. 17.02Q). (b) If the results of operations for the quarter and the preceding quarters should show no amount of tax due, a return showing the cumulative gross income and deductions should nevertheless be filed every quarter. SECTION 4. Computation of quarterly income tax . The income tax due every quarter shall be computed in accordance with the provisions of Section 24, Title II of the National Internal Revenue Code on the cumulative net taxable income for the quarter and preceding quarters. ILLUSTRATION The result of operations of a corporation whose taxable year is on a calendar year basis is as follows: GROSS DEDUCTION NET INCOME INCOME 1st quarter (Jan. 1 - March 31) P300,000.00 P150,000.00 P150,000.00 2nd quarter (April 1 - June 30) 350,000.00 200,000.00 150,000.00 3rd quarter (July 1 - Sept. 30) 250,000.00 150,000.00 100,000.00 The return to be filed for the 1st quarter shall show the following: Gross income this quarter P300,000.00 Less: Deductions 150,000.00 Net taxable income P150,000.00 ========= Income tax due: 100,000 @ 25% P25,000.00 50,000 @ 35% 17,500.00 P42,500.00 Less: Tax credit for overpaid income tax for the preceding year (if any) 10,000.00 Balance of tax to be paid this quarter P32,500.00 ======== The return for the 2nd quarter to be filed shall show the following: Gross income this quarter P350,000.00 Add: Gross income for 1st quarter 300,000.00 Gross income for 1st and 2nd quarters P650,000.00 Less: Deductions: 1st quarter P150,000.00 2nd quarter 200,000.00 P350,000.00 Net taxable income P300,000.00 Income tax due: 100,000 @ 25%: P25,000.00 200,000 @ 35% 70,000.00 P95,000.00 Less: Tax due for previous quarter: 1st quarter 42,500.00 Income tax due this quarter P52,500.00 ========= The return to be filed for the 3rd quarter shall show the following: Gross income this quarter P250,000.00 Add: Gross income for previous quarters: 1st quarter P300,000.00 2nd quarter 350,000.00 650,000.00 Gross income for 1st, 2nd and 3rd quarters P900,000.00 Less: Deductions: 1st quarter 150,000.00 2nd quarter 200,000.00 3rd quarter 150,000.00 500,000.00 Net taxable income P400,000.00 Income tax due: 100,000.00 @ 25% P25,000.00 300,000.00 @ 35% 105,000.00 P130,000.00 Less: Income tax due for previous quarters: 1st quarter P42,500.00 2nd quarter 52,500.00 95,000.00 Income tax due this quarter P35,000.00 ========= SECTION 5. Time for filing quarterly tax return and payment of income tax . A summary declaration of the cumulative gross income and deductions for the preceding quarter shall be filed and the income tax due thereon computed in accordance with Section 85, Title II of the National Internal Revenue Code. The tax as computed shall be paid within sixty (60) days after the close of each of the first three (3) quarters of the taxable calendar or fiscal year. SECTION 6. Place of filing of declaration and paying of income tax . The quarterly declaration shall be filed with, and the tax due thereon paid to, the Commissioner of Internal Revenue, Regional Director, Revenue District Officer or the Collection Agent of the City or Municipality in which is located the principal office and where the books of accounts and other data from which the return is prepared are kept; in case a corporation has no office of any kind or agency in the Philippines, then the return shall be filed and the tax thereon paid with the Commissioner of Internal Revenue. cd SECTION 7. Filing of final or adjustment return and final payment of income tax . A final or an adjustment return on B.I.R. Form No. 1702 covering the total taxable income of the corporation for the preceding calendar or fiscal year shall be filed on or before the 15th day of the fourth month following the close of the calendar or fiscal year. The return shall include all the items of gross income and deductions for the taxable year. The amount of income tax to be paid shall be the balance of the total income tax shown on the final or adjustment return after deducting therefrom the total quarterly income taxes paid during the preceding first three quarters of the same calendar or fiscal year. Any excess of the total quarterly payments over the actual income tax computed and shown in the adjustment or final corporate income tax return shall either (a) be refunded to the corporation, or (b) may be credited against the estimated quarterly income tax liabilities for the quarters of the succeeding taxable year. The corporation must signify in its annual corporate adjustment return its intention whether to request for the refund of the overpaid income tax or claim for automatic tax credit to be applied against its income tax liabilities for the quarters of the succeeding taxable year by filling up the appropriate box on the corporate tax return (B.I.R. Form No. 1702 ). SECTION 8. Additions to the tax in case of non-payment . Tax shown on the return . Where the amount shown by the taxpayer as tax on its return or part of such amount is not paid on or before the date prescribed for its payment, there shall be collected as part of the tax, interest upon such unpaid amount of tax at the rate of fifteen per centum (15%) per annum from the date prescribed for its payment until it is paid but not later than the fifteenth day of April or the fifteenth day of the fourth month following the close of the taxable fiscal year. SECTION 9. Interest on deficiency . Interest upon the amount determined as a deficiency shall be assessed at the same time as the deficiency, shall be paid upon notice and demand from the Commissioner of Internal Revenue and shall be collected as part of the tax at the rate of fifteen per centum (15%) per annum from the date prescribed for the payment of the tax to the date the deficiency is assessed; Provided, That the maximum amount that may be collected as interest on deficiency shall in no case exceed the amount corresponding to a period not later than the fifteenth day of April or the fifteenth day of the fourth month following the close of the taxable year. Provided, further, That no interest on deficiency quarterly tax shall be assessed at any time after final assessment of the actual income tax due for the taxable year. SECTION 10. Declaration under Penalties of perjury . (a) The returns required under these regulations pursuant to Sections 85 and 87, Title II of the National Internal Revenue Code of 1977, shall contain a written declaration that they are made under the penalties of perjury. (b) Any person who willfully files a return containing information which is not true and correct as to every material matter shall, upon conviction, be subject to the penalties prescribed for perjury under the Revised Penal Code. SECTION 11. Transitory provisions . To enable corporations on a fiscal or calendar year basis to declare a more realistic quarterly net income and tax due during the year 1977, the gross income and deductions for the quarter or quarters immediately preceding June 30, 1977 may be collated with that of the quarter or quarters ending on or after June 30, 1977 and the income tax due computed on the total cumulative net income. The tax so computed shall be decreased by the amount of tax previously paid or assessed during the preceding quarters and the balance paid within the prescribed period. SECTION 12. Repealing clause . All regulations, rulings or orders, or portions thereof, issued in connection with the implementation of Presidential Decree No. 30, which are inconsistent with the provisions of these regulations are hereby revoked. SECTION 13. Effectivity The provisions of these regulations take effect immediately. ALFREDO PIO DE RODA Acting Secretary of Finance Recommended by: EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8