Additional condition for 5% EWT on professional fees; extended deadlines for sworn declarations

(Revenue Regulations No. 14-2018)

This Tax Alert is issued to inform all concerned on the amended rules on creditable withholding tax on professional, talent and commission fees payable to individual payees.

Under RR No. 11-2018, professional, talent, and commission fees payable to individual payees shall be subject to 5% withholding tax if gross income for the current year does not exceed P3M, or 10% withholding tax if gross income for the current year exceeds P3M.

In addition, pursuant to RR No. 14-2018, the higher 10% withholding tax shall also apply in case of professional, talent and commission fees payable to VAT registered individual payees, regardless of the amount of payee’s gross income for the current year. Thus, to be subject to a lower withholding tax rate of 5%, the following conditions must apply:

  1. the amount of gross income of the individual payee for the current year should not exceed P3M ; and,
  2. his/her BIR Certificate of Registration (COR) should indicate that he/she is non-VAT taxpayer (new condition).

Submission deadline of Income Payee’s Sworn Declaration of Gross Receipts/Sales, together with a copy of COR, to the income payor was extended until April 20, 2018 from previous April 06, 2018. While submission deadline of Income payor/withholding agent’s sworn declaration to the BIR was extended to April 30, 2018 from April 20, 2018.