Tax Alert No. 22 [Revenue Regulations (RR) No. 4-2024 dated 22 March 2024]

April 2024

Filing of tax returns and other matters affecting the declaration of taxable income

Please be informed that the Secretary of Finance, through the recommendation of the Commissioner of Internal Revenue, has issued RR No. 4-2024 to implement Sections 22, 34, 51(A)(2)(e), 51(B), 51(D), 56(A)(1), 58(A), 58(C), 58(E), 77, 81, 90, 91, 103, 114, 128, 200 and 248 of the National Internal Revenue Code of 1997, as Amended by Republic Act No. 11976, otherwise known as the “Ease of Paying Taxes Act” (“EOPT”), on the filing of tax returns and payment of taxes and other matters affecting the declaration of taxable income.

The following are the salient points of the abovementioned revenue regulations::

The filing of tax returns shall be done electronically in any of the available electronic platforms.
In case of the unavailability of electronic platforms, manual filing of tax returns may be allowed.
Tax payments shall be made either electronically in any of the available electronic platforms or manually to any authorized agent bank (AAB) or revenue collection officer (RCO).
Electronic or manual filing is defined as follows -

Modes of Filing
Electronically	When the filing of tax return and payment of tax is done through electronic means using the BIR’s electronic platform (i.e., eBIRForms), epayment Channels of AAB( e.g., LinkBiz, PesoNet, UPay, MyEG, etc.) and ATSP (for specific returns as certified by BIR).
Manually	When the tax return is accomplished by writing or through the aid of electronic equipment, the act of submission and payment is done over-the-counter with any AAB or RCO of the BIR (RCO can accept cash payment up to Php20,000 while regardless of the amount for check payment).

AABs and RCOs shall only accept tax payments manually after taxpayers have electronically filed their tax returns, unless an advisory is issued allowing the same.
In the case of filing Income Tax Returns (“ITR”) by married individuals, the husband and wife, whether citizens, resident or nonresident aliens, who are both self-employed, either engaged in business or practice of profession, shall file the said return for the taxable year jointly. However, if the businesses are registered under two (2) different RDOs, each spouse shall file separately their respective ITRs.
Where the return is submitted to an internal revenue officer other than those with whom the return is required to be filed, the civil penalty of 25% of the amount payable shall no longer apply.
The following individuals are not required to file income tax returns:
- An Individual earning purely compensation income whose taxable income does not exceed Two Hundred Fifty Thousand Pesos (Php250,000);
- An Individual whose income tax has been correctly withheld by his employer, provided that the individual has only one(1) employer for the taxable year;
- A Minimum Wage earner as defined in the regulations;

In the above three cases, the Certified List of Employees Qualified for Substituted Filing of Income Tax Returns, shall be tantamount to the substituted filing of income tax returns by the said employees.

An Individual whose sole income has been subjected to Final Withholding Tax;

An Individual Citizen of the Philippines who is working and deriving income from abroad (i.e., Overseas Contract Worker “OCW” , Overseas Filipino Worker “OFW”).

Section 34(K) of the Tax Code, as amended, on additional requirements for the deductibility of certain payments (i.e. the tax required to be deducted and withheld was paid to the BIR) has been repealed.

Section 2.57.4 of RR No. 2-98 was amended such that the obligation of the payor to deduct and withhold creditable withholding tax (“CWT”) arises at the time the income becomes payable (i.e. the date the obligation becomes due, demandable and legally enforceable). The payor shall be obliged to deduct and withhold taxes at the time an income payment is accrued or recorded as an expense or asset, whichever is applicable, in the payor's books, or at the issuance by the seller of the sales invoice or other adequate document to support such payable, whichever comes first.

You may access a copy of RR No. 4-2024 through the BIR website.

PwC Comment: The EOPT law provides that the timing of withholding of CWT is when the income becomes payable. There is no qualification that the CWT shall be due when it is payable or accrued, whichever comes first. While the terms “payable” and “accrual” are closely related and expenses are generally accrued when it becomes payable, they are distinct terms. In fact, the issue on timing of withholding upon accrual was raised during the Senate public hearings and technical working group discussions. Hence, to address the concern, the law provided “payable” for clarity.

You may access the full version of this issuance through the BIR website.

For any inquiry or request for assistance, please feel free to contact anyone from our Tax Services group. You may also reach us through this link.