Supreme Court rules on government allowances, benefits subject to tax

The Supreme Court, sitting on the bench, upheld the memorandum of the Bureau of the Internal Revenue (BIR) that allowances, bonuses and other benefits granted to public servants are subject to the rule of law. tax. 19659003] The court had partially granted a petition of 2014 that claimed that it was marginal and not insignificant benefits.

According to a statement released Wednesday by the SC's information office, the petition challenged the revenue of the Bureau of Internal Revenue (BIR). Memorandum Order (RMO) No. 23-2014 "which classified as taxable income allowance, bonuses, compensation for services provided to government employees."

The memorandum, which came into force on July 7, 2014, stipulated all benefits received. Government employees are subject to the benefits tax.

At a unanimous vote Tuesday, the High Court "canceled Section VI of RMO 23-2014 but upheld the validity of the Sectio. III, IV and VII, which subject the tax-free marginal and tax-free benefits to de minimis and obliges the government, as employer, to withhold the amount corresponding to the tax, "states the statement [19659021] The income received by an employee of his employer is presumed taxable and subject to withholding, "the court ruled.

The statement stated, "[i] n supporting sections III and IV, the court ruled that no additional tax is imposed that the two sections simply reflect the relevant provisions of the Act. Internal Revenue Code of 1997 on Income Tax Withholding Remuneration. "

Section III of the RMO states that government offices, including GOCC-owned companies) are incorporated as retained at the source of the credited tax to be deducted from the remuneration paid to the employees, while the benefits listed in section IV, such as the remuneration of 13 are not subject to the tax on the returned. withholding tax. Section VII lists the penalties for not complying with the RMO.

The statement adds: "The Court declared Division IV of the OMN 23-2014 null and void only when it appoints the governor, the mayor, the mayor and Captain Barangay Office heads in government agencies , state-owned or government-controlled companies and other government offices, as persons required to withhold and remit taxes. "

The High Court has ruled that the RIB exceeded the provisions of the 1997 National Internal Revenue Code (NIRC) by issuing Section VI that the 1997 NIRC does not require any of these agents to deduct, withhold, and remit the exact amount of deductions

According to the SC, the BIR "acted abusing its discretion by publishing Section VI" of the memorandum as "imposing on these officials an obligation not provided for by law or in the terms and conditions of the law". The execution (the BIR) was not simply put an interpretative rule aimed at providing guidelines for law enforcement, but supplanted the details – a power conferred by law only to the secretary of finance. "

CS's statement noted that the decision must be applied prospectively – Danish Angelo M. Enerio