Revenue Regulation 16-2008 as amended by Revenue Regulation 2-2010

1.

Individuals:
Resident Citizen ii. Non-resident Citizens iii. Resident Alien iv. Taxable estates and trusts
i.

1.

Corporation:
Domestic Corporation ii. Resident foreign corporation
i.

For individual taxpayers:

40% of GROSS SALES OR GROSS RECEIPTS

For Corporation:
40% of GROSS INCOME

For trading & manufacturing concern:

Invoice cost; Import duties; Freight-in; and Insurance while the goods are in transit.

For manufacturing concern:

Raw materials used; Direct labor; Manufacturing overhead; Freight cost; Insurance; and Other costs.

For sellers of services:

All direct costs and expenses necessarily incurred to provide the services including:
Salaries & employees benefits of personnel, consultants and specialists; and Cost of facilities directly utilized in providing the service such as depreciation or rental of equipment used and cost of supplies.
* Interest expense not allowed as deduction from gross receipts except in the case of banks and other financial institutions.

Pursuant to Sec. 26 of the Code, a GPP is not subject to income tax. However, the partners shall be liable to pay income tax on their separate and individual capacities for their respective distributive share in the net income of the GPP.

For the purposes of computing the distributive share of the partners, the net income of the GPP shall be computed in the same manner as a corporation. As such a GPP may claim either itemized deduction or OSD.

The net income determined by either claiming itemized deduction or OSD from GPPs gross income is the distributable net income from which the share of each partner is to be determined. Each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership.

The following shall govern the claim of the partners of deductions from their share in the net income of partnership, viz:
1.

If the GPP availed of the itemized deduction in computing its net income, the partners may still claim itemized deductions from the said share. However, the partners cannot avail of OSD. If the GPP avails of OSD in computing its net income, the partners comprising it can no longer claim further deduction from their share in the said net income.

2.

3.

Since one-layer of income tax is imposed on the income of the GPP and the individual partners where the law had placed the statutory incidence of tax in the hands of the latter, the type of deduction chosen by the GPP must be the same type of deduction that can be availed of by the partners.

If the partner also derives other gross income from trade, business or profession apart and distinct from his share in the net income of the GPP who opts for the OSD, the individual partner may still claim OSD but not to include his share from the net income of the GPP.

A taxpayer who elected to avail of the OSD: Shall signify in his/its return such intention, otherwise he/it shall be considered as having availed himself of the itemized deduction. Once the election to avail of the OSD or itemized deduction signified in the return, it shall be irrevocable for the taxable year.

The election to claim either OSD or the itemized deduction for the taxable year must be signified by checking the appropriate box in the income tax return filed for the first quarter of the taxable year. Once the election is made, the same type of deduction must be consistently applied for all the succeeding quarterly returns and in the final income tax return for the taxable year.

A taxpayer who fails to an income tax return for the first quarter of the taxable year, shall have to claim itemized deductions for the rest of the year. An individual taxpayer who is entitled to and claimed OSD shall not be required to submit with his tax return such financial statements otherwise required under the Code.

End of presentation

Revenue Regulation 12-2011

These Regulations are hereby promulgated to ensure that all owners or sub-lessors deal only with BIR-registered taxpayers, to establish the procedure for the submission of essential information by the owners of commercial establishments/buildings/spaces, and to impose the appropriate sanctions to ensure observance and compliance thereof.

It shall be the primary responsibility of all owners or sub-lessors of commercial/buildings/spaces to ensure that the person intending to lease their commercial space is a BIR- registered taxpayer.
* A BIR-registered taxpayer should have TIN, a BIR Certificate of Registration and duly registered receipts, sales or commercial invoice.

Every 31st of January of the CY (for tenants as of Dec. 31st of the previous year) and 31st of July of the CY (for tenants as of June 30th of the CY), all owners or sub-lessors who are leasing or renting out such commercial space to any person doing business therein are hereby required to submit to the BIR Revenue District Office (RDO) the following information, under oath, in hard and soft copies:

Building / space layout of the entire area being leased with proper unit/space address or reference; Certified True Copy of the Contract of Lease per tenant; and The lesee Information Statement shall be presented in the prescribed format, as follows: (Using excel format: printed copy & soft copy stored in a CD-R)

Lessee Information Statement (for initial Filing):

Name of owner/Lessor_____________________________________ TIN: ____________________________ Address:_________________________________________________________________________________ Tenants Profile As of {June 30, _______} or { Dec. 31, ________} Location of Building/Space for commercial lease:________________________________________________ Location Flr/Unit # Name of Total Leased Monthly Start of Tenant Area Rental Lease Duration /Period of BIR-Registration Profile TIN No. Authority to POS/CRM Permit No.* Print No.

* For taxpayers also using Point of Sale (POS) / Cash Register Machine (CRM) in dispensing receipts.

Lessee Information Statement (for Subsequent Filing):

Name of owner/Lessor_____________________________________ TIN: ____________________________ Address:_________________________________________________________________________________ Tenants Profile For the period {January 1, ___ to June 30,____} or { July 1, ____ to Dec. 31, _____} Location of Building/Space for commercial lease:________________________________________________ i. NEW TENANTS Location Flr/Unit # Name of Total Leased Tenant Area Monthly Start of Rental Lease Duration /Period of BIR-Registration Profile TIN No. Authority to POS/CRM Print No. Permit No.*

* For taxpayers also using Point of Sale (POS) / Cash Register Machine (CRM) in dispensing receipts.

ii. Terminated Tenants Location Flr. / Unit # Name of Tenant TIN Total Leased Area Date of lease ended

* Lessors may seek assitance with the Revenue District Officer to verify the correctness of TIN submitted by their tenants.

The first filing of tenants profile will cover tenants as of July 31, 2011. All owners/ sub- lessors are required to comply with these regulations by submitting the ff. Documents on or before September 1, 2011: Building / space layout of the entire area being leased with proper unit/space address or reference; Certified True Copy of the Contract of Lease per tenant; and The lesee Information Statement shall be presented in the prescribed format, as follows: (Using excel format: printed copy & soft copy stored in a CD-R)

Name of owner/Lessor_____________________________________ TIN: ____________________________ Address:_____________________________________________________________________________ ____ Tenants Profile

As of July 31, 2011

Location of Building/Space for commercial lease:______________________________________________ Location Name of Total Leased Flr/Unit # Tenant Area POS/CRM Permit No.* Monthly Start of Rental Lease Duration /Period of BIR-Registration Profile TIN No. Authority to Print No.

* For taxpayers also using Point of Sale (POS) / Cash Register Machine (CRM) in dispensing receipts.

END OF PRESENTATION