RMC No. 60-2024: Providing clarifications and guidance on Section 6 of Revenue Regulations No. 4-2024 on the repeal of Section 34 (K) of the National Internal Revenue Code of 1997, as amended

Summary

RMC No. 60-2024 clarifies Section 6 of RR No. 4-2024 on the repeal of Section 34(K) of the NIRC, specifically how the repeal applies to audits and assessments for periods before the EOPT Act.

Key points

1. Effect of the repeal. A payment subject to withholding may be deducted from gross income even if no tax was withheld, if it is a necessary, ordinary and duly substantiated expense of the registered business. The EOPT Act took effect on January 22, 2024.
2. Ongoing audits before January 1, 2024. Revenue Officers allow the expense as a deduction only if the required withholding tax was paid, whether before the audit or before the audit report goes to the Reviewing Office. If it was not withheld or paid by then, the RO recommends assessment of both income tax and withholding tax, in line with RR No. 6-2018.
3. Cases already with the Reviewing Office. For paid cases, the rule on ongoing audits applies. For assessed cases, the then Section 34(K) requirements apply, so both income tax and withholding tax assessments are issued.
4. Taxable year 2024 onwards. For taxable years from January 1, 2024, expenses subject to withholding are deductible even if no tax was withheld, if other deductibility requirements are met. The taxpayer remains liable for the withholding tax due.

Who is affected

• Taxpayers under audit or assessment
• Revenue Officers

Deadlines and effectivity

• EOPT Act effective January 22, 2024
• Taxable years from January 1, 2024 onwards

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.