Summary
RMC No. 116-2019, issued November 6, 2019, clarifies the tax treatment of income of alien individuals employed by Regional or Area Headquarters, Regional Operating Headquarters, Offshore Banking Units and Petroleum Service Contractors and Subcontractors, under Section 4.C of Revenue Regulations (RR) No. 8-2018.
Key points
- Taxed like regular employees. Their incomes are now taxed like those of regular employees of locally-established entities. They follow the same BIR requirements, including substituted filing, issuance of BIR Form No. 2316, inclusion in the Monthly Withholding Tax Remittance on Compensation, and the Alphalists.
- Seconded employees. Alien individuals employed by foreign principals and assigned exclusively to these local entities (seconded employees or secondees) pay regular Income Tax rates. This follows situs of taxation, since the services are performed in the Philippines, whoever pays the salaries. The local entities follow the same requirements except substituted filing.
- Alphalist and Form 2316 entries. A separate employment status for seconded employees is shown in the BIR Form No. 1604C list and in the Alphalist Data Entry and Validation Module version 6.1. Every BIR Form No. 2316 issued to them bears the phrase For Seconded Employee in bold capital letters in parentheses under the form title.
- Annual return. Seconded employees file their annual Income Tax Return and pay any tax due by April 15 of each year, attaching the BIR Form No. 2316 issued by the local entity.
- Early termination. If services end before the taxable year ends, the local entity computes withholding tax on the last salaries by the annualized method under Sec. 2.29.(B).(5).(b) of RR No. 2-98, as amended.
Who is affected
- Alien individuals employed by regional or area headquarters, ROHQs, offshore banking units and petroleum service contractors and subcontractors
- Seconded employees
- Local entities receiving seconded employees
Deadlines and effectivity
- Annual Income Tax Return: on or before April 15 of each year
Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.
Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.