RR No. 14-2002: Amends further pertinent provisions of RR No. 2-98 by providing for additional income payments to be subjected to withholding tax and clarifying pertinent provisions in relation thereto

Key points

1. Creditable tax at 5%. Rate of 5% applies to gross rental for continued use of real property used in business, and gross rental or lease above P 10,000.00 per payment for personal property used in business. It also applies to rentals for poles, satellites and/or transponder and transmission facilities, rentals of billboard and similar advertising spaces in public places, and gross processing/tolling fees paid to refineries for converting molasses to by-products and raw sugar to refined sugar.
2. Creditable tax at 2%. Rate of 2% applies to gross payments to persons in computer services, programming, software development, internet service, web page designing, data processing and other computer-related activities. It also applies to payments by government offices, including barangays and GOCCs, for goods from local suppliers, except a casual or single purchase of P 10,000.00 and below.
3. Creditable tax at 10% and 1%. Rate of 10% applies to gross commissions of customs, insurance, stock, real estate, immigration and commercial brokers and fees of agents of professional entertainers. It also applies to amounts collected for or paid to medical practitioners for patients “admitted and confined”, and gross commissions paid by multi-level marketing companies to distributors, representatives and agents. Rate of 1% applies to payments by pre-need companies to funeral parlors and payments to embalmers for services to funeral companies.
4. Non-residents. Gross payments to non-residents by government and private entities for services rendered in the Philippines are subject to Final Withholding Tax at 10%.
5. Government payments to VAT sellers. 3% on gross selling price of goods and 6% on gross payment for services, both creditable. 8.5% on payments to government public works contractors (creditable) and for services in the Philippines by non-residents. 10% (final) on lease or use of property or property rights owned by non-residents, services to local insurance companies for reinsurance premiums payable to non-resident companies, and other services in the Philippines by non-residents.
6. Percentage tax and effectivity. Percentage Tax on gross payments by government agencies to stock, real estate, commercial, customs, insurance and immigration brokers is withheld at 7% of gross receipts for services. The Regulations take effect October 1, 2002 and cover income payments paid or payable starting October 2002 that are remitted to the BIR within November.

Who is affected

• Payors of the listed income payments to persons residing in the Philippines
• Government agencies and entities paying non-residents for services in the Philippines
• Sellers of goods and services subject to VAT who are paid by the government

Deadlines and effectivity

• Effective October 1, 2002
• Covers income payments paid or payable starting October 2002 remitted to the BIR within November