Revenue Regulations No. 2 - 2014 dated 24 January 2014

05 February 2014

The Commissioner of Internal Revenue (“CIR”) has issued Revenue Regulation (“RR”) No. 2-2014 dated 24 January 2014 prescribing the use of the revised income tax forms for individuals, estates, trusts, (taxable and exempt) corporations and partnerships:

The salient portions of the RR are as follows:

1. The new set of income tax forms shall be used by taxpayers in filing and reporting their income taxes beginning the taxable year ended December 31, 2013 and every year thereafter.

2. For corporations: the old BIR Form No. 1702 is now replaced by three BIR Form Nos. 1702- namely:

A. BIR Form No. 1702-RT version June 2013 ENCS (Annual Income Tax Return for Corporations, Partnerships and Other Non-Individual Taxpayers Subject Only to the REGULAR Income Tax Rate);

  • This form shall be accomplished by corporations whose income/profit is solely taxed at the regular income tax rate (i.e. 30%).

B. BIR Form No. 1702-EX version June 2013 ENCS (Annual Income Tax Return for Use Only by Corporations, Partnerships and Other Non-Individual Taxpayers EXEMPT Under the Tax Code and Other Special Laws, with NO Other Taxable Income); and

  • This form shall be accomplished by corporations who are exempt under Sec. 27 and Sec. 30 of the Tax Code and those exempt from special laws, provided they have no other taxable income.
  • Income tax exempt corporations stated above should have filed their request for tax exemption before the CIR before filing up this form. Failure of a taxpayer to file the request would subject their income to the regular income tax rate, thus they should use the BIR Form under sub paragraph A of this tax alert.

C. BIR Form No. 1702-MX version June 2013 ENCS (Annual Income Tax Return for Corporations, Partnerships and Other Non-Individual with Mixed Income Subject to Multiple Income Tax Rates or with Income Subject to Special/Preferential Rate).

  • This form shall be accomplished by corporations earning mixed income which are subjected to different rates of income tax (e.g. PEZA and BOI registered companies).

3. For Individuals: the BIR Forms No. 1700 and 1701 version June 2013 ENCS are for individuals receiving purely compensation income and self-employed individuals, estates and trusts respectively.

4. Taxpayers who filed using old forms for their 2013 ITRs must re-file using the new income tax forms.

5. The requirement of entering centavos has been deleted. Tax liabilities in centavos are to be dropped if the same is less than 49 and rounded up if the same amounts to 50.

6. Tax exempt corporations/individuals, those subject special preferential tax rates and those subject to mixed tax regimes (regular individual or corporate tax rates and special/preferential tax rates) are mandated to use the itemized deductions.

7. The new income tax forms are available at the BIR portal (www.bir.gov.ph) together with their respective mandatory attachments.

RR No. 2-2014 is effective fifteen days after publication in two newspapers of general circulation. As of release of this alert, RR No. 2-2014 has yet to be published.