Republic of the PhilippinesDEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS

MEMORANDUM CIRCULAR ,NO. 2013-52

UndersecretariesAssistant SecretariesHeads of Sectoral Offices and Attached Agencies

and CorporationsHead Executive AssistantService DirectorsRMC ChairmenDivision ChiefsThis Department

For

For your information and dissemination, transmitted herewith are:

NATURE DATE SUBJECT

BIR-Revenue MemorandumCircular No. 46-2013

May 26, 2013 "CLARIFICATION ON THETAXABILITY OF BENEFITSUNDER COLLECTIVENEGOTIATIONS AGREEMENT((CNA) GRANTED TOGOVERNMENT EMPLOYEES'ORGANIZA TIONS DULYAPPROVED/ACCREDITED BYTHE CIVIL SERVICECOMMISSION (CSC) . "

BIR-Revenue RegulationsNo. 11-2013

May 20.2013 "FILING/SUBMISSION OF HARDCOpy OF THE CERTIFICATE OFCOMPENSATIONPA YMENT IT AX WITHHELD (BIRFORM 2316) COVERINGEMPLOYEES WHO AREQUALIFIED FOR SUBSTITUTEDFILING, THEREBY AMENDINGREVENUE REGULA nONS (RR)NO. 2-98, AS LAST AMENDED BYRR NO. 010-08L- ~ ~~~~~~~ _

ROWENA~UEDirector IIIAdministrative Service

TELEFAX: (632) 723-4925 (A lf~tTRUNKLlNE: 727-7960 TO 79 - I 'i>DOTC ACTION CENTER HOTLlNE: 7890 .

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THE COLUMBIA TOWER ~-6BRGY. WACK-WACK, ORTIGAS AVENUE1555 MANDALUYONG CITY, PHILIPPINES

REPUBLIC OF THE PHILIPPINESDEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

BUREAU OF INTERNAL RIV!RECORDS MOT. nms

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RECEIVEMay 26, 2013

REVENUE MEMORANDUM CIRCULAR NO. 4& - )f)/?JSUBJECT Clarification on the Taxability of Benefits under Collective Negotiations

Agreement (CNA) Granted to Government Employees' Organizations DulyApproved/Accredited by the Civil Service Commission (CSC)

TO All Internal Revenue Officials, Employees and Others Concerned

This Circular is issued to clarify the taxabil ity of the benefits gran\ed to government employees'organizations duly approved/accredited by the Civil Service Commission (CSC) through CNA.

BACKGROUND

Executive Order No. 180 dated June I, 1987 provides guidelines for the exercise of the right toorganize of government employees by creating a Public Sector Labor-Management Council (PSLMC)while Executive Order No. 135 dated December 27, 2005 authorized the grant of CNA incentives ,toemployees in Government Agencies. Such grant was affirmed by the DBM through Budget Circular No.2006-1 dated February 1, 2006.

CLARIFICATION

The Bureau had occasion to rule in BIR Ruling No. [DA-(ECB-023) 642-09] dated November 4,2009 that incentives arising from CNA qualify as "other benefits" under Section 32(B)(7)(e) of the TaxCode of 1997. The ruling reads in part:

" x x x A reading of the aforementioned Circular (DBM Circular No.2006-1 dated February 1, 2006) shows that the CNA incentive qualifies as "otherbenefits". Thus, the VQLueof the "other benefits" when added to the thirteenthmonth pay must not exceed the threshold ~(P 30,000 in order that it may be exemptfrom income lax and consequently from the withholding tax. Ifthe value exceedsthe P30,000 ceiling, then the excess of the "other benefits" and the thirteenthmonth pay is considered as part of compensation subject to income tax andconsequently to the withholding tax"

Based on the foregoing, the CNA incentive is included in the "other benefits" under Section32(B)(7)(e) of the Tax Code of 1997. It is exempt from income tax and withholding tax provided that, theCNA benefits, when added to the 13th month pay and other benefits, shall not exceed the threshold ofP30,OOO [CNA + (13the month pay + other benefusrs P30,OOO.00)]. Any excess in the threshold shall betaxable to the employee, whether rank and file or supervisory.

All concerned revenue officials and employees are hereby enjoined to give this Circular as wide apublicity as possible.

KIM S. J}; O-HENARESCommissiIe~of Internal Revenue

.I-2/jnb 0164951-

REPUBLIC OF THE PHILIPPINESDEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

REVENUE REGULATIONS NO. 11-2013

. May 20, 2013

SUBJECT: Filing/Submission of Hard Copy of the Certificate of Compensation. Payment/Tax Withheld (BIR Form 2316) Covering Employees Who

are Qualified for Substituted Filing, thereby Amending RevenueRegulations (RR) No. 2-9S, as last amended by RR No. 010-0S.

T 0 All Internal Revenue Officers, Employees and Others Concerned

SECTION 1. Background. - These Regulations are issued in order to prescribeadditional forms/documents to be filed by withholding agents in compliance with their dutyto report income of their employees under the law.

SECTION 2. Amendment. Section 2.83 ofRR 2-98, as amended, is herebyfurther amended to read as follows:

"Sec.2.S3. Statements and Returns. -

Section 2.83.1.Employees Withholding Statements (BIR Form No. 2316). -In general, every employer or other person who is required to deduct andwithhold the tax on compensation including fringe benefits given to rank andfile employees, shall furnish every employee from whose compensation taxeshave been withheld the Certificate of Compensation Payment/Tax Withheld(BIR Form No. 2316) on or before January 31 ofthe succeeding calendar year,or if employment is terminated before the close of such calendar year, on theday on which the last payment of compensation is made. Failure to furnish thesame shall be a ground for the mandatory audit of payor's income tax liabilities(including withholding tax) upon verified complaint of the payee.

Employers of MWEsare still required to issue BIR Form No. 2316 (June2008 Encsversion) to the MWEs on or before January 31 of the followingyear:

As a rule, the employer shall furnish each employee with the original andduplicate copies of BIR Form No. 2316 showing the name and address of theemployer; employer's TIN; name and address of the employee; employee'sTIN; amount of exemptions claimed, amount of premium payments on healthand/or hospitalization insurance not exceeding P 2,400.00, if any; the sum of

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compensation paid including the non-taxable benefits; the amount of statutoryminimum wage received by MWEs; Overtime pay, holiday pay, night shiftdifferential pay and hazard pay received by MWEs; the amount of tax due; theamount of tax withheld during the calendar year and such other information asmay be required. The statement must be signed by both the employer or otherauthorized officer and the employee, and shall contain a written declarationthat it is made under the penalties of perjury. If the employer is the Governmentof the Philippines, its political subdivision, agency or instrumentality orgovernment-owned or controlled corporation, the statement shall be signed bythe duly designated officer or employee.

However, in cases covered by substituted filing, the employer shallfurnish each employee with the original copy of BIR Form No. 2316 andfile/submit to the BIR the duplicate copy not later than February 28following the close of the calendar year.

xxxx xxxx xxxx"

SECTION 3. Penal Provisions - Any employer/withholding agent, includingthe government or any of its political subdivisions and government owned andcontrolled corporations, who/which fails to comply with the above filing/submissionof BlR Form 2316 within the time required by this Regulations, may be held liableunder Section 250 of the Tax Code reading, "In the case of each failure to file aninformation return, statement or list, or keep any record, or supply any informationrequired by this Code or by the Commissioner on the date prescribed therefor, unlessit is shown that such failure is due to reasonable cause and not to willful neglect, thereshall, upon notice and demand by the Commissioner, be paid by the person failing tofile, keep or supply the same, one thousand pesos (P1,000) for each such failure:Provided, however, That the aggregate amount to be imposed for all such failuresduring a calendar year shall not exceed twenty-five thousand pesos (P25,000).

However, any employer/withholding agent, including the government or anyof its political subdivisions and government owned and controlled corporations,who/which fails to comply with the above filing/submission of BrR Form 2316 withinthe time required by this Regulations for two consecutive years may be dealt with inaccordance with Section 255 which provides in part that "Any person required underthis Code or by rules and regulations promulgated thereunder to pay any tax, makeany return, keep any record, or supply correct and accurate information, whowilfully fails to pay such tax, make such return, keep such record, or supply suchcorrect and accurate information, or withhold or remit taxes withheld, or refundexcess taxes withheld on compensation, at the time or times required by law or rulesand regulations shall, in addition to other penalties provided by law, upon convictionthereof, be p'flnished by afine of not less than Ten Thousand Pesos (P10,000.00) and

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suffer imprisonment of not less than one (1) year but not more than ten (10) years."In settlement under this situation, the compromise fee shall be Pl,OOO for each BIRForm No. 2316 not filed without any maximum threshold.

SECTION 4. Effectivity. This regulations shall take effect beginning with thecalendar year 2013.

(Original Signed)CESAR V. PURISIMASecretary of Finance

Recommending Approval:

(Original Signed)KIM S. JACINTO-HENARES

Commissioner of Internal Revenue

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