Revised payment guidelines for RBEs in violation of the WFH threshold

The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular (RMC) 39-2022, which implements revisions on the payment process for the penalties directed to Registered Business Enterprises (RBEs) in the Information Technology-Business Process Management (IT-BPM) sectors that are in violation of the Work-From-Home (WFH) threshold requirements implemented by the Fiscal Incentives Review Board (FIRB).

This RMC follows the guidelines previously established by BIR RMC 23-2022, which required the suspension of all tax incentives for RBEs operating in IT-BPM sectors if they do not comply with the WFH threshold given by the FIRB. All uncompliant RBEs must pay the regular income tax of 20% or 25% for the months in which the violations have occurred.

Additionally, the RMC explains RBEs that have no current transactions that are subject to regular income tax have the option to pay the penalty by indicating the taxable income under the column “regular” of BIR Form No. 1702-MX. The RBEs with existing transactions subject to the regular income tax must use BIR Form No. 0605 for voluntary payment of penalties.

The revisions of the RMC towards the guidelines are as follows:

1. RBEs are obligated to continue filing their Annual Income Tax Return (AITR) using BIR Form No. 1702-EX if they have an income Tax Holiday (ITH) incentive. If it is benefiting from a Gross Income Tax (GIT) incentive or has mixed transactions, it will have to utilize BIR Form No. 1702-MX. This process is to work as if the RBE is still entitled to incentives during the months of non-compliance. Furthermore, all RBEs are obligated by law to submit all the requested information related to allowable deductions regarding currently implemented tax regulations and rules.
2. All penalty payments must use BIR Form No. 0605, which is done by clicking the radio button named “Others”, which can be found under the “Voluntary Payment” tab and then type the following phrase in the field given “Penalty pursuant to FIRB Res. No. 19-2021”, then tax code will remain as "IT" and the ATC will be indicated as "MC 200".

The RMC explains that RBEs will need to compute the penalty using the guidelines given by the circular. The same amount will have to be paid within thirty (30) days after the due date prescribed for the payment of Income Tax. The same administrative penalties will be imposed if the payment is made AFTER the date given since the penalty pertains to ‘Income Tax’. The RMC then states that the penalty must be calculated as follows:
*Assume that the RBE committed violations in September, October, November and December of 2021.

*Annual Taxable Income must be computed based on existing tax laws and policies.

**Assuming the GIT per AITR is PHP 1,500,000 (inclusive of LGU share), the monthly GIT paid is PHP 125,000 multiplied by four months.