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Once Again, Payment of Withholding Tax at the Time of Audit Considered Compliant with Withholding Tax Requirements for Deductible of Expenses - Philippines 

by Carina Laforteza, Renz Jeffrey Ruiz

Published: April, 2018

Submission: April, 2018


Earlier this year, Department of Finance (“DOF”) Secretary Carlos G. Dominguez issued RR No. 6-2018 which revoked RR No. 12-2013 and reinstated Section 2.58.5 of RR No. 2-1998, as amended by RR Nos. 14-2002 and 17-2003. Section 2.58.5 of RR No. 2-1998 implements the requirement of withholding of income tax for deductibility of expenses. RR No. 6-2018 was published in the Manila Bulletin on January 23, 2018 and took effect on February 7, 2018.

Prior to its amendment by RR No. 12-2013, Section 2.58.5 of RR No. 2-1998 , as amended by RR Nos. 14-2002 and 17- 2003, allowed a taxpayer or withholding agent to deduct income payments against gross income despite failure to withhold income tax thereon at the time of the payment provided that the withholding agent or taxpayer pays the withholding tax, including the interest incident to the failure to withhold the tax, and surcharges, if applicable, at the time of audit or investigation or reinvestigation or reconsideration.

On July 12, 2013,4 then DOF Secretary Cesar V. Purisima issued RR No. 12-2013 and amended Section 2.58.8 to provide a stricter policy on withholding of taxes. RR No. 12-2013 provides that no deduction against gross income will be allowed in cases where no withholding of tax was made even if the taxpayer or withholding agent pays the withholding tax at the time of the audit investigation or reinvestigation or reconsideration.

Download and read the complete Tax Bulletin on RR No. 6-2018. The bulletin was authored by SyCipLaw partner Carina C. Laforteza and associate Renz Jeffrey A. Ruiz.

Carina C. Lafortezais a lawyer and a certified public accountant with extensive tax and corporate practice. Her tax work ranges from tax structuring for both corporations (including how investments are to be made into, and repatriated from, the Philippines) and individuals (including tax planning) to tax compliance (including assisting clients in audits by the Philippine Bureau of Internal Revenue) to tax litigation (including petitions questioning the legality of revenue issuances and local tax ordinances), and tax-related arbitration.

Renz Jeffrey A. Ruizis currently rotating through the firm’s various practice groups. He passed the CPA Licensure Examination in 2010. Prior to joining the SyCipLaw, he was a tax associate at a leading Philippine accounting firm and an accounting supervisor at the Philippine subsidiary of a publicly listed Japanese corporation.


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