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    Revenue Memorandum Circular No. 116-19: October 18, 2019

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    rian.lee.b.tiangco
    This document provides clarification on the tax treatment of alien individuals employed in the Philippines by certain multinational companies and petroleum service contractors. It specifies that these alien individuals will now be taxed similarly to regular local employees and outlines the administrative requirements that must be followed, such as withholding taxes, reporting procedures, and deadlines for tax filings.

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    Revenue Memorandum Circular No. 116-19: October 18, 2019

    Uploaded by

    rian.lee.b.tiangco
    17 views2 pages
    This document provides clarification on the tax treatment of alien individuals employed in the Philippines by certain multinational companies and petroleum service contractors. It specifies that these alien individuals will now be taxed similarly to regular local employees and outlines the administrative requirements that must be followed, such as withholding taxes, reporting procedures, and deadlines for tax filings.

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    243970-2019-Clarifications_on_the_Treatment_of_Alien20210930-11-r9eiev

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    This document provides clarification on the tax treatment of alien individuals employed in the Philippines by certain multinational companies and petroleum service contractors. It specifies that these alien individuals will now be taxed similarly to regular local employees and outlines the administrative requirements that must be followed, such as withholding taxes, reporting procedures, and deadlines for tax filings.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views2 pages

    Revenue Memorandum Circular No. 116-19: October 18, 2019

    Uploaded by

    rian.lee.b.tiangco
    This document provides clarification on the tax treatment of alien individuals employed in the Philippines by certain multinational companies and petroleum service contractors. It specifies that these alien individuals will now be taxed similarly to regular local employees and outlines the administrative requirements that must be followed, such as withholding taxes, reporting procedures, and deadlines for tax filings.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    October 18, 2019

    REVENUE MEMORANDUM CIRCULAR NO. 116-19

    SUBJECT : Clarifications on the Treatment of Alien Individuals


    Employed in the Philippines by Regional or Area
    Headquarters and Regional Operating Headquarters of
    Multinational Companies, Offshore Banking Units and
    Petroleum Service Contractors and Subcontractors
    Pursuant to Section 4.C of Revenue Regulations No. 8-
    2018

    To : All Internal Revenue Officials, Employees and Others


    Concerned

    I. BACKGROUND
    The pertinent provisions of Republic Act No. 10963, otherwise known
    as the "Tax Reform for Acceleration and Inclusion (TRAIN) Law" introduced
    the new tax treatment on the income earned by alien individuals from
    certain entities in the Philippines, which were, however, vetoed by the
    President. Its implementing provisions under Section 4.C of Revenue
    Regulations (RR) No. 8-2018 provide that:
    "The preferential income tax rate under Subsection (C), (D) and (E) of
    Section 25 of the Tax Code, as amended, shall no longer be applicable
    without prejudice to the application of preferential tax rates under
    existing international tax treaties, if warranted. Thus, all concerned
    employees of regional or area headquarters and regional operating
    headquarters of multinational companies, offshore banking units and
    petroleum service contractor and subcontractor shall be subject to
    the regular tax rate under Sec. 24(A)(2)(a) of the Tax Code, as
    amended."
    II. CLARIFICATIONS
    The respective incomes of the alien individuals employed by the
    above-stated entities are now similarly taxed as income of regular
    employees of locally established entities. Accordingly, these alien individuals
    are subject to the same administrative requirements of this Bureau being
    imposed on other regular employees, such as the substituted filing, issuance
    of BIR Form No. 2316, inclusion in the monthly withholding tax remittance on
    compensation, as well as in the prescribed alphalists, etc. HTcADC

    With respect to those alien individuals who are employed by foreign


    principals and who are assigned to render services exclusively to these local
    entities, otherwise known as "seconded employees or secondees," they are
    likewise subject to the regular income tax rates. It is grounded on the
    principle of situs of taxation considering that the services rendered by these
    alien individuals are being performed within the Philippines, regardless of
    whether their salaries are being paid by the foreign principals or advanced
    CD Technologies Asia, Inc. © 2021 cdasiaonline.com
    by these local entities.
    For this purpose, the local entities, to whom the "seconded employees"
    render their services, shall comply the same administrative requirements,
    except for substituted filing, imposed by this Bureau for regular employees.
    In addition to these prescribed requirements, the following procedures shall
    be complied by all concerned:
    (a) A separate employment status and description for "seconded
    employees" shall be provided in the "Current Employment
    Status" of the Alphabetical List of Employees/Payees from Whom
    Taxes Were Withheld under BIR Form No. 1604C, as well as in the
    Alphalist Data Entry and Validation Module version 6.1.
    (b) These "seconded employees" shall file their annual income tax
    return and pay the income tax due, if applicable, on or before the
    prescribed deadline of April 15 of each year, together with the
    attached BIR Form No. 2316 duly issued by the local entities.
    (c) In all copies of BIR Form No. 2316 to be issued to these
    employees, the phrase "For Seconded Employee" shall be typed
    or printed in bold capital letters enclosed in open and close
    parenthesis immediately under the form's title "Certificate of
    Compensation Payment/Tax Withheld."
    (d) In case of termination of their services before the end of the
    taxable year, the local entities shall ensure that the withholding
    tax on their last salaries shall be computed using the annualized
    withholding tax method, pursuant to the provisions of Sec. 2.29
    (B) (5) (b) of RR No. 2-98, as amended.
    All internal revenue officers and employees are hereby enjoined to give
    this Circular as wide a publicity as possible.

    (SGD.) CAESAR R. DULAY


    Commissioner of Internal Revenue

    CD Technologies Asia, Inc. © 2021 cdasiaonline.com

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