By: Andrei Kristoffer G. Macandog

The DOF and the BIR recently made the following pronouncements:

  1. Amendments to the criteria for identifying top withholding agents;
  2. Guidelines for the availment of 15% final withholding tax rate on intercompany dividends under the tax sparing rule; and
  3. Guidelines for the conduct of online meetings and conferences with the BIR.

Amendments to the Criteria for Identifying Top Withholding Agents

Revenue Regulations (RR) No. 31-2020, issued on December 18, 2020, amends the criteria for identifying the Top Withholding Agents as provided by Section 2 of RR No. 11-2018, (as previously amended by RR No. 7-2019).

Previously, RR No. 7-2019 provided that top withholding agents shall refer to those taxpayers whose gross sales/receipts or gross purchases or claimed deductible itemized expenses, as the case may be, amounted to P12,000,000 during the preceding taxable year.

However, with RR No. 31-2020, “top withholding agents” shall now refer to those taxpayers whose gross sales/receipts or gross purchases during the preceding taxable year shall fall under the following minimum thresholds:

RDO Group Classification Gross Sales/Receipts or Gross Purchases
Groups A and B At least P12,000,000
Groups C, D, and E At least P5,000,000


Evidently, with RR No 31-2020, a lower threshold is imposed for those withholding agents that belong to RDO groups C, D, and E in order to be identified as top withholding agents.

Annex A of RMO No. 13-2018 provides for the RDO Group Classifications (i.e. Class A, B, C, D and E) for purposes of determining the Top Withholding Agents.

Guidelines for the Availment of 15% Tax Rate on Intercompany Dividends Under the Tax Sparing Rule

Revenue Memorandum Order No. 46-2020, issued on December 23, 2020, prescribes the guidelines and procedures for the availment of the reduced rate of 15% on intercompany dividends paid by a domestic corporation to a non-resident foreign corporation (NRFC) pursuant to Section 28(B)(5)(b) of the NIRC or known as the tax sparing rule.

The RMO provides that the domestic corporation paying the dividends may remit outright the dividends to the NRFC and apply thereon the reduced rate of 15% without first securing a ruling from the BIR at the time of the withholding. The paying corporation, however, must determine whether the existing law of the home country of the payee (NRFC) allows a “deemed paid” tax credit in an amount equivalent to the 15% waived tax by the Philippines, or exempts the dividends received from tax.

Within 90 days from the remittance of the dividends, or from determination of the foreign tax authority of the “deemed paid” tax credit or exemption, whichever comes later, the NRFC or its representative shall file with the BIR a request for confirmation of the applicability of the 15% rate.

Holders of Philippine Depository Receipts (PDRs) are also entitled to the reduced rate, but subject to the following conditions:

  1. The PDR is coupled with a right to purchase the underlying shares; and
  2. The said right can be legally exercised (without violating the Constitution and special laws).

In case of denial, a BIR ruling signed by the Commissioner or his authorized representative shall be issued, containing the factual and legal basis for the BIR’s conclusion. Such denial may result in the imposition of a deficiency assessment for the 15% difference in the rate used, plus penalties. All unfavorable rulings are appealable to the Department of Finance within 30 days from receipt thereof.

RMO No. 46-2020 also mentions the documentary requirements which shall accompany the request for ruling on the applicability of the reduced rate of 15% in a given year. The BIR may also require the presentation of the original copies of documents, for verification purposes. It may request additional information or any related document which may be deemed necessary in the processing of the application.

Guidelines for the Conduct of Online Meetings and Conferences with the BIR

Revenue Memorandum Circular No. 130-2020, issued on December 10, 2020, provides for the policies and guidelines in the conduct of online meetings and conferences with the BIR.

All online meetings and conferences with taxpayers shall be hosted by the BIR. BIR officials and employees shall only use their BIR prescribed email addresses ([email protected]) and not their personal emails. Furthermore, all meetings must be pre-approved by the concerned Division Chief or Regional Director, and must be initiated by a memorandum request filed by the revenue official or employee, containing the following information:

  1. Name of taxpayer (or its authorized representative);
  2. Taxpayer Identification Number (TIN);
  3. Name of persons who will attend the online meeting/conference (for both the BIR and the taxpayer, stating their official positions);
  4. Date and time of the meeting;
  5. Agenda; and
  6. Details of Assessment (eLOA No., Date, Taxable year covered).

All representatives attending on behalf of the taxpayer shall have a duly notarized Special Power of Attorney from the taxpayer, including those with BIR Certificate of Accreditation. The meeting/conference shall only be conducted if the taxpayer (or its representative) has requested the virtual meeting through the BIR eAppointment System and has agreed to the eAppointment User Agreement, or has submitted a duly accomplished BIR Virtual Meeting Agreement.

All online proceedings shall remain confidential, and recording shall be strictly prohibited and punishable. The meeting may be rescheduled for reasons of power interruption and/or poor connectivity, at a date and time agreed upon by both parties.




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