Tax Alert No. 44 [Revenue Memorandum Circular (RMC) No. 120-2022 dated 18 August 2022]

Additional Guidelines and Procedures on the Manner of Payment of Penalty Relative to Violations Incurred by Registered Business Enterprises (RBEs) in the Information Technology - Business Process Management (IT-BPM) Sector on the Conditions Prescribed Regarding Work-From-Home (WFH) Arrangement for the Period 1 April 2022 until 12 September 2022

RMC No. 120-2022 has been issued to prescribe additional guidelines and procedures on payment of penalty relative to violations incurred by RBEs in the IT-BPM sector on the conditions prescribed under Fiscal Incentives Regulatory Board (FIRB) Resolution No. 017-22 regarding the WFH arrangement for the period 1 April 2022 until 12 September 2022.

It is provided that non-compliance with the prescribed conditions for at least one day shall result in the suspension of the income tax incentives for the month when the violation was committed. As a penalty, the RBEs shall pay the regular income tax for the aforesaid month using BIR Form No. 0605. Other information that must be indicated in this form is provided in this Circular. They shall also attach a separate computation of the penalty of the WFH arrangement’s conditions. In addition, violations after 13 September 2022 may subject the RBEs to applicable taxes.

Meanwhile, RBEs with violation shall continue to file and pay their Quarterly Income Tax Return following their usual procedure in computing their tax due as if no violation was committed. For their Annual Income Tax Return, they shall continue to file using either BIR Form No. 1702-EX for those with Income Tax Holiday (ITH) incentive, or BIR Form No. 1702-MX for those enjoying Gross Income Tax (GIT) incentive or those with mixed transactions. Moreover, they are also required to complete the information needed for the allowable deductions pursuant to existing tax laws and regulations. 

You may access the full version of the RMC through the BIR website.