Tax notes: GPPs exempt from presenting certificate of exemption

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Monday, July 28, 2014


UNDER Revenue Memorandum Circular (RMC) No. 8-2014, dated February 6, 2014, failure on the part of the taxpayer claiming exemption to provide a copy of a valid, current and subsisting tax exemption certificate or Bureau of Internal Revenue (BIR) ruling shall subject him to the payment of appropriate withholding taxes due on the transaction.

This is contrary to RMC No. 3-2012, dated January 11, 2012, which confirmed the exemption of income payments made to general professional partnerships (GPPs), from income tax and consequently, to withholding tax in relation to Section 2.57.5 of the Revenue Regulations No. 2-98, as amended.

Note that the exemption is valid without the requirement of presentation of tax exemption certificate or BIR ruling on such exemption.

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The conflicting circulars may be reconciled by the recently issued RMC No. 60-2014 dated July 24, 2014, which exempts GPPs from the presentation of tax exemption certificate or BIR ruling, to avail of exemption from income tax and withholding tax.

Thus, income payments to GPPs remain to be exempt from income tax and consequently to withholding tax without further requirement.

(Source: Punongbayan & Araullo)

Published in the Sun.Star Cebu newspaper on July 29, 2014.

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