BIR urged to defer tax on govt workers' allowances

by Willard Cheng, ABS-CBN News

Posted at Aug 07 2014 02:39 PM | Updated as of Aug 07 2014 10:39 PM

MANILA, Philippines - Senator Francis Escudero said it may be "prudent" for the Palace to ask the Bureau of Internal Revenue to defer implementing its memorandum order imposing income tax on state workers' allowances, bonuses and other benefits.

"Pwede palagi (for the Palace to prevail upon the BIR) because Commissioner Henares serves at the pleasure of the President, the BIR is under the Department of Finance and Secretary Purisima is the alter ego of the President," he said.

"Hindi para sa akin na dikatahan siya (President Aquino). Pero siguro it's more prudent to do that kaysa naman magkabanggaan at kaysa naman lumala ang problema. Gaya ng nasabi ko, kaunting pag-unawa lang siguro dahil 'di na nga tumaas ang sweldo, babawasan mo pa ang take-home pay," he added.

Escudero however declined to comment on the legality of the BIR's circular, saying it is up the courts to do so.

Also on Thursday, Henares defended a memorandum order that required the withholding of income taxes on government employees' bonuses, allowances and other benefits.

Henares said the Revenue Memorandum Order (RMO) 23-2014, which is being questioned at the Supreme Court, merely implements the National Internal Revenue Code.

Under the RMO, the BIR clarified that fringe benefits cited in the Tax Code and other bonuses exceeding P30,000 shall be taxed, and withholding officers will face fines for failing to make tax deductions.

"We would like to clarify that we did not impose any new tax. We issued an RMO to clarify that under Section 32 of the Tax Code, all compensation, whether in cash or in kind whatever they maybe called, are subject to income tax and therefore, proper withholding tax should have been deducted and remitted. Only exemption is up to P30,000 of the 13th month pay and bonuses. This has been the law since 1997," she said.