RMC No 130-2016 PDF
RMC No 130-2016 PDF
RMC No 130-2016 PDF
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'r{} rtll hlternal Revenue Sfficials, ilniptro1'ees and Otlie:'s Cotlce I'itctl
l'his Circuiar is issLrr:,.l to clarify ths rvithhokiing taxes imposerl on incorre paytlents it1,
ciepartments and agencies ol'the govelntnent, including go.,rerntnent otvned aud/or -controllcci
corporations and govcrnnrent financial instilritions (Cirls) to indiviciLrals r,+hose servic..s arc
eng:rgeci r-rnder a contracI c'lscrvice or job orcier ari'attgetrellt.
I}ACKGRO{JNI)
Sevcral ageircies of the National (loverni"netrt have been hiring persorttrcl orr aiob-order
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basis or contract olservice:; prrrsuant to Executive Crder (EO) )io. 782 ot'llO No. 3662 and its
Inrplcrrenting Rules and Regulations and in accortlance ''vith llBM CircuiarNo,2012-20 datcrl
I)eccmber 18. 2010.
A coinmon issue arises on the appropriate rate oli,vithholciing tar thiit rvill be imposed
oir ihe paynreni tiri"services rendered by these inclividuals hirecl by NatiorraI Coverirtlcirl
Agencies (NCAs). 'lhcre is, thus. a need tr: clarify tire taxatioii of remur-tet':tiion anci income
payilents to petsoltne! unilcr job oicier or contract of services itr olclei'to ha.re a cortsisteirt
applir.:;ition in aii governrnent offices anci agencies tlral are sirniiarly situiii.ed.
Tire cntployincnt of s,u,:h pelscrnnei rer;uires the e;<ecLition of any one oitire loiloi.r,irig:
coij liact ol selvir:es cr inerlloranclLrr:r t-,f agreeurent (lv{CA) or.iol; ol'cicr beti,veen the
-fhr:
' Datcd FebrLraiy I0.2009, Instituting Measules l-o Assist Worl:ers .,\ffectecl By Clobal lriirancial Cr isis Arrd
Teinporary Filling L.p OlVacairt l)ositions In The Govetntrient
I D:r',:rj October 4,2004. Direr:tln,r .r. Strategic P.evieiv Cf Thc Opcr.atri,:r, .rd :rnizatiolrs Of The F',xecLiti', r:
Bnririli .'1,rd i)r'oviciitrir Option:..\rd Ittccniir;s Fcr tiovc;'irtlierrt i:tlrgrlo.lee:; r iilr lle ,{ilecteC B; i irc
Ratir,'naii;:liiiorr (.:i'-[ hc ijr:nctir,rns .,\nci r\ricncies C;i i irr: lt.recuiiic i]rancit
govenrmelrt ageuc),concei'ned and the individual, in accordarrce rvith the rules and regulatiorrs
of the COA.
CLARIFICATIONS
It is settled that under existing policies and gLridelines oi'the Civil Service Conrnrissiorr
(CSC), definirrg tiie terms "Individual Conlract of'SenticesiJob Order" anC clarily,'ing the
terms "Contrctcl o.f'Service" and ",lob Ot'r{er", there is no enrployer-emplol,ee relationship
created Lrncler either a jolr orcier or con'Lract lor service, ancl ilrrit, servicc-s rcrrdelec-l pursuant
thereto shall not be consiclerecl as goveniment service, (CSC Circular No. l7-02 dater.i JLrne
24,240'2; CSC l{esolution No. 02-0790 dated .lur.re 22.2A02; CSt-l l{esolution I'io. 021480 dated
Novembcr ll2,2002'). Given this
tiamervork . the lollor,virrg ciaiit'ications .lre necessarl' fbr the
iax treatt-nent ol ren-tunerationii'ecs reccived b1, personnel iincier a job older cr contract lirr
serv ice:
A. Creditable Withhalclin:t T'ax under Seciion 2.57.2(.,1) o.l'Reyenue Re.qulations (RR) llo. 2_:
For professionais rvho are paid for the services lhcy render, the5, sp. subject to a
r,vithholding tax rate of 10"/o or 150/o, rvhichever is applicable, on their gross plofessional fee
per Secticn 2.57 .2(A) of RR. No. 2-98, as anrended.
:
iection l i- i--iu
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( 1) Those individuall,v- engaged in rhe practice of profe ssions
or cailings: [alvyers: certified pLrblic accountarrts; doctors
of n.redicine; architects; civil" electrical. chemical.
mechanical, structural, inciLrstriai. rlining. sanitary,
metallurgical and geodetic ctrgineers, urarine surve),ots;
doctors of veterinary sciencei dentist; prof'essional
appraisers; connoisseurs of tobaccol aciriaries; and
interior decorators; clesigners and all other professior-t
lequir:iitg .qovenllcnt licensure exantina,tiorrs andior
regr-rlaiecl by the Prolessional RegLrlrtions fjoiitmission,
Sui;renre CoLrrt. elc.;
(2) I entertaincrs. sLrci.r as, but ur,.t linritecj to.
Prof-essioni:
actors aitri actresscs, singers. iyricist. contposers and
entce0s;
(3) Prolcssiorral athlstes, iirclLreling basketbail play,ers.
peloiaris and jockeys;
(4) All directors and prociucers invoived in movies. stage,
radio, television arrd musical produciicns;
(5) Insui'ance agents and insurance adjLlslers:
(6) Managenrent and technical consultants;
(.1) Bookkeeping agents and agencies;
(8) Othcr recipient of talent f-ees;
(e) Fees of dil'r:ctors rvho are not emplol,,ees of tire company
paying sucir lees. rvhose duties are cori f rned to
attendance ;it and participation in ihe meetir-rgis of thc
board ofdiLectors."
XXX xxx
Sectioti i09(1XW)4, ho\\rever, exetttpts frorn VAT the annual gross receipts ol'thc
subject personnel if the sarne do not exceed One Miliion Nir:e Huncjred Nineteen'lhousancl
Five Hundred Pesos (P 1,919,500.00):
XXX
Section 116 of the same T'ax Codc neverilicloss subjects them to the Thlr:e irerceirt
(3%) percentage tax, to wit:
5
Increasing the r\tnount of Threshold Amounts for Sale of Residr:ntial Lot, Sale oi l--lousc ancl Lot,
Lease of Resiciential tJnit and Sale or l-ease cl Goods or Prope$ies or Perfornrance ol Service:;
g6'7i.:,.''i1 b), Scction 109 (P), ((-r) anLl (V) oi the Tax Code ci' l99l?. as Airl,:ndecl. Thereby
-f"tr :1 ,f
Nineteen ThoLrsand F-ive Hundi'ed Pesos I .919.500.00); (P
Provided, That every three (3) )/ears theieafter, the alrloLlnt herein
stated shali be adjusted to its present value Lrsing the Consunter
Price index, as publislied b;; the National Statistics Cffice (l.ll]C ).)
(Sec. i 16 of the 'fax Code); Provided. further', thai such
adjustinent shall be published through revenue regulatiorrs to be
issued irot later than NJarch 3 I of each vear."
As to the appiioable ivithhoiding tax rate. Sectior.: 5.1i6 o1'RR. No. 2-98, as anrcirried,
requiles the rvithirolcling oi percentage tax, tluis:
XXX XXX
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AlI other lssuances irrconsistent herewith are herebl, reltealeci or rnodifiecl accordinglv.
Ali coircerned are hereby,enjoined ro be guided accordingiS, and to give this Circular AS
u,ide publicity as possible.
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