RR No. 11-2014: Amends further the provisions of Section 2.57.2 of RR No. 2-98, as amended, creating a separate sub-section for the withholding of creditable Income Tax on Real Estate Investment Trust (REIT) and reclassifying the treatment of locally- produced raw sugar as a separate sub-section for purposes of the creditable withholding tax

Key points

1. REIT payments. Under new sub-section (Z), income payments to corporate taxpayers registered as REITs with the Large Taxpayers Regular Audit Division 3 (now Regular LT Audit Division 3) are subject to 1% creditable withholding tax. This applies to REITs availing the incentives of Republic Act No. 9856, as implemented by RR No. 13-2011.
2. Locally produced raw sugar. Under new sub-section (AA), sugar mill or refinery proprietors on their mill share, and direct buyers of Quedans or Molasses Storage Certificates, withhold 1%. The base price is ONE THOUSAND PESOS (P1,000.00) per FIFTY (50) kg bag of raw sugar and FOUR THOUSAND PESOS (P4,000.00) per metric ton of molasses, adjustable by the Commissioner after consulting the SRA Administrator.
3. Authorization to release sugar. The Regional Director, on the Revenue District Officer’s recommendation, issues the Authorization Allowing the Release of Locally Produced Raw Sugar/Molasses. The written request must attach proof of payment of the withholding tax, namely validated BIR Form No. 1601-E and the bank slip or BIR Form No. 2524.
4. No relief for exempt operators. Even with proof of exemption from income tax (such as a BIR ruling or special law), the mill or refinery operator or Quedan or Molasses Storage Certificate buyer must still withhold and remit the creditable withholding tax.
5. Agricultural supplier provisions. Sub-section (S) keeps a 1% rate on payments to agricultural suppliers above a cumulative P300,000.00 in the same taxable year. It defines agricultural suppliers and products, with examples covering livestock, poultry and marine products, and polished and/or husked rice, corn grits and ordinary salt count as agricultural food products.

Who is affected

• Real Estate Investment Trusts
• Sugar mill and refinery proprietors or operators
• Direct buyers of Quedans or Molasses Storage Certificates
• Withholding agents paying agricultural suppliers

Deadlines and effectivity

• Effective January 1, 2015, following publication in a newspaper of general circulation
• Suspension of withholding on agricultural suppliers under RR No. 3-2004 is lifted for locally produced raw sugar