RR No. 6-2009: Amends further pertinent provisions of Revenue Regulations No. 2-98, as amended, providing for additional criteria in the determination of Top 20,000 Private Corporations, including the threshold on their purchases of agricultural products and additional transactions subject to creditable withholding tax on income payments made by Top 5,000 Individual Taxpayers engaged in trade/business or practice of profession

Summary

RR No. 6-2009 further amends Revenue Regulations No. 2-98, as amended. It adds criteria for the Top 20,000 Private Corporations, sets a threshold for their purchases of agricultural products, and adds transactions subject to creditable withholding tax for the Top 5,000 Individual Taxpayers.

Key points

1. Withholding rates. Income payments of the Top 20,000 Private Corporations and the Top 5,000 Individual Taxpayers to local or resident suppliers, other than those under other withholding rates, are subject to creditable withholding tax of 1% for goods and 2% for services. This includes non-resident aliens engaged in trade or business in the Philippines.
2. Agricultural products. For agricultural products in their original state, tax is withheld only on purchases above a cumulative P 300,000 in the same taxable year. These products are limited to corn, coconut, copra, palay, rice, cassava, sugar cane, coffee, fruits, vegetables, marine food products, poultry and livestocks.
3. Top 20,000 Private Corporations. A corporation qualifies if notified by the BIR and it meets any criterion. These are automatic inclusion as a large taxpayer or Top 5,000 or Top 10,000 corporation, VAT of at least P 100,000, income tax due of at least P 200,000, percentage tax of at least P 100,000, gross sales of P 10,000,000 and above, gross purchases of P 5,000,000 and above, or excise tax of at least P 100,000, all for the preceding year.
4. Top 5,000 Individual Taxpayers. Individuals in trade, business or profession qualify on the same VAT, income tax, percentage tax, gross sales, gross purchases and excise tax criteria for the preceding year, once determined and notified by the BIR. Resident citizens with multiple lines of business count all lines, while other individuals count only Philippine-derived amounts.
5. Becoming and ceasing to be a withholding agent. An individual is a withholding agent only after written notice from the CIR of selection, and remains so until written notice otherwise. The status also ends on a notice of closure of all lines of business or failure to meet all criteria, followed by a written notice of deletion.
6. Supplier list and e-filing. The Top 5,000 Individual Taxpayers submit a list of regular suppliers to the RDO on or before July 31 and January 31 for the first and second semester. The initial list is due within 15 days from receipt of the notice. They must file returns and remit withheld taxes through the Electronic Filing and Payment System (EFPS).

Who is affected

• Top 20,000 Private Corporations
• Top 5,000 Individual Taxpayers engaged in trade, business or profession
• Local or resident suppliers of goods and services

Deadlines and effectivity

• Issued July 9, 2009
• Supplier list due July 31 and January 31 each year
• Initial supplier list within 15 days from receipt of notice

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