On April 30, 2021, the Bureau of Internal Revenue (BIR) released Revenue Memorandum Circular No. 67-2021.
This RMC aims to clarify some issues in relation to the changes to the Percentage Tax Rate under the “Corporate Recovery and Tax Incentives for Enterprises Act” (C.R.E.A.T.E.).
JuanTax has already implemented the changes with C.R.E.A.T.E. Law in mind. These were added to the JuanTax Platform and are shown in detail through these blogs: BIR Form 1702-RT (C.R.E.A.T.E. Law) and BIR Form 2551Q (C.R.E.A.T.E. Law).
How Does This Affect You?
With the new Tax Code changes in effect, the percentage tax will decrease from 3% to 1% starting July 1, 2020, until June 30, 2023. This applies to corporate taxpayers, self-employed individuals and working professionals whose gross sales or gross receipts do not exceed PHP 3,000,000 unless they are availing of the 8% income tax.
Percentage Tax Return Amendments will need to be filed using the new 1% tax rate for taxpayers who have filed their 3rd and 4th quarterly Percentage Tax Returns for 2020. Amendments will also have to be filed by those who may have filed their 1st quarter Percentage Tax Returns for 2021 using the old 3% tax rate.
Do You Get a Refund or Carry Over?
For affected taxpayers who file regularly and are expecting overpaid taxes due to changes with C.R.E.A.T.E. Law, they will be entitled to carry over the excess payment for future percentage tax payments. If you shifted from non-VAT to VAT-registered status or are opting to avail of the 8% income tax rate for the beginning tax year of 2021, you are entitled to a refund.
For percentage taxpayers who accidentally marked “tax refund” or “apply for Tax Credit Certificate (TCC)”, the BIR presumes that overpaid amounts will be carried over. Once carried over, their initial option will be replaced.
*If the taxpayer has claimed the 3% percentage tax as a deductible expense in order to compute their Annual Income Tax for 2020, then they are no longer eligible for a carry-over, nor to apply for a tax refund/TCC.
Need Help? We’ve Got You Covered.
For users who were not able to file with these changes in the past, you still have time to e-File amendments to Annual Income Tax Returns using JuanTax Fast File. Read our Help Centre article to learn more on how to amend tax reports.
Make sure to e-File and Pay with JuanTax today and get your #TaxDoneRight. For new users, sign up for a FREE account and make your tax filing season stress-free.