RMC No. 120-2022: Prescribes additional guidelines and procedures on the manner of payment of penalty relative to violations incurred by Registered Business Enterprises in the Information Technology-Business Process Management sector on the conditions prescribed regarding Work-From-Home arrangement for the period April 1, 2022 until September 12, 2022

Key points

1. The penalty. Failing the conditions of FIRB Resolution No. 017-22 for at least one day suspends the RBE’s income tax incentives for that month. The RBE pays the regular income tax of either twenty-five percent (25%) or twenty percent (20%), whichever applies, for that month, and violations from September 13, 2022 onwards may subject it to applicable taxes.
2. How to pay. The penalty is paid using BIR Form No. 0605 under ‘Others’ in ‘Voluntary Payment’, with the phrase ‘Penalty pursuant to FIRB Res. No. 017-22’. The tax type code stays ‘IT’ and the ATC is ‘MC 200’.
3. Quarterly and annual returns. RBEs file and pay the Quarterly Income Tax Return as if no violation occurred, with a separate penalty computation in a schedule attached to BIR Form No. 0605. For the annual return they keep using BIR Form No. 1702-EX (ITH) or BIR Form No. 1702-MX (GIT or mixed), and must complete the allowable deductions schedules.
4. Computation rules. NOLCO is not part of the penalty computation and is not deducted from total taxable income. A violation in the last quarter of the fiscal year is computed as prescribed in RMC No. 39-2022, and the same method applies to violations of FIRB Resolution No. 19-21.
5. Payment timing. The penalty is paid on or before the due date for filing or paying the quarterly income tax, subject to adjustment on the annual return. For fiscal quarters already ended with returns filed, payment is due within ten (10) days after the Circular’s issuance, or administrative penalties apply.

Who is affected

• Registered Business Enterprises in the IT-BPM sector

Deadlines and effectivity

• Covers April 1, 2022 until September 12, 2022
• Past quarters: pay within ten (10) days after the Circular’s issuance
• Effective immediately and in force until September 12, 2022