THE Supreme Court (SC) has affirmed the validity of a Bureau of Internal Revenue (BIR) regulation, which subjects nontaxable benefits of government employees such as allowances and bonuses to withholding tax.
In a media briefer, the SC Public Information Office said the Court voted unanimously to affirm the validity of Sections 3, 4 and 7 of Revenue Memorandum Order (RMO) 23-2014 issued by the BIR which classified as taxable compensation income allowances, bonuses, compensation for services granted to government employees and other benefits that have been enjoyed by government employees for some time now without any tax deductions, except for the 13th-month pay, in excess of P30, 000 and the loyalty pay.
Under RMO 23-2014, which took effect on July 7, 2014, all benefits received by employees and officers of government will be subject to 30-percent to 32-percent tax.
The Court, however, declared null and void Section 6 of RMO 23-2014, which compels local government officials, such as governors, city and municipal mayors, barangay captains and heads of office in government agencies and government-owned or -controlled corporations to withhold and remit withholding taxes.