Tax Alert No. 25 [Revenue Memorandum Circular (RMC) No. 60-2024 issued on 9 May 2024]

Clarifications and guidance on Section 6 of RR No. 4-2024 on the Repeal of Section 34 (K) of the National Internal Revenue Code (“NIRC”) of 1997, as amended

Please be informed that the BIR issued Revenue Memorandum Circular (“RMC”) No. 60-2024 on 9 May 2024 clarifying the provisions under Section 6 of Revenue Regulations (“RR”) No. 4-2024 on the repeal of Section 34(K) of the Tax Code, as amended by Republic Act (“RA”) No. 11976 otherwise known as the Ease of Paying Taxes (“EOPT”) Act.

The RMC reiterated that the repeal of the said Section allows taxpayers to deduct an expense from gross income, even if no tax was withheld, provided that the same is necessary, ordinary and duly substantiated.

The application of the repeal shall be subject to the following guidelines:

• On all ongoing audits covering taxable periods prior to 1 January 2024, expenses subject to withholding tax shall be allowed as deductions from gross income only if the corresponding tax required to be withheld has been paid, whether prior to audit or submission of the audit report to the Reviewing Office. The same will apply to paid cases.
• In case the taxpayer failed to withhold the tax required to be withheld on expenses subject to withholding tax and did not pay the same prior to or after the submission of audit report to the reviewing office, the revenue officer has to recommend for the issuance of assessment notice for both income and withholding tax.
• On the other hand, for taxable periods covering 1 January 2024 onwards, expenses/income payments subject to withholding tax shall be allowed as deductions from gross income even if no taxes were withheld, provided that the other requirements for deductibility have been met. Provided further that the taxpayer shall still be liable for paying the corresponding withholding due on said income payments.

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.