Revenue memorandum Circular No 41-2009 My interpretation
Everything that I have written here is my own opinion so if you don’t agree to what I’m saying, feel free to comment back or react but personal bashing will not be tolerated, I will take revenge lol. This rant/reaction is unedited.
Yesterday, a sudden meeting to everyone was announced so that the higher-ups can explain about the RMC No 41-2009 by BIR and how it would affect us. The tension if the floor was very thick and I think a lot were murmuring silently (even the conference call was very noisy with random background noises) while I was eating a sandwich by from the Sandwich Guy.
Basically, the company where I work for pays a 15% tax on all monetary benefits. We do not have to do the computation or use the tax brackets (that people use when they file their income tax return). For us, it is simply a deduction of 15%. To be eligible for this, your company must be a ROHQ (hmm regional headquarters? What is O?) and has defined the roles which are Managerial and/or Technical. I believe we have these and as what I’ve heard BIR has approved this so we have 15% tax.
But thanks to the circular and the amendments contained within, we will lose this 15% tax on gross income and consequently have to pay bigger/smaller tax (depending on your calculation) which will take effect on our next payroll. Another thing is whatever balance you had in taxes since January 2010 will be returned/charged to you.
- If your computed tax is less than 15%, you can file an income tax return.
- If your computed tax is more than 15%, you owe the government money (this irked a lot of people) [Election money? hahaha].
This is how the circular defines the positions eligible for 15% tax.
Managerial Position – is one who is vested with powers or prerogatives to lay down and execute management policies and/or [insert action here] employees.
Technical Position – Positions that are highly technical in nature or where there are no Filipinos who are competent, able and willing to perform the services for the which aliens are desired
Actually if you read the circular, it doesn’t really define in concrete terms what the requirements to say that you are in a technical position. When you say “highly technical in nature”, that is still subjective. Let’s say for example, for a computer science graduate, programming might be easy as pie but for a commerce graduate, that would be highly technical. Or the use of autocad for engineers is their bread and butter but that would be highly technical for monks (lol).
I want to believe that our company is consulting with their lawyers and BIR to clearly define this circular because like what they mentioned, the circular is subject to interpretations and not everyone can interpret it the way BIR interpret or on what they really mean.
I also listened to the questions of the other people and honestly, I thought that some were irrelevant. I was telling myself, “compute before react” because since we will be following the tax brackets, each one of us has a different salary, supplemental income, dependents and other factors that affects our total income tax.
One question raised I thought was irrelevant was “attrition“. It sounded more like a threat than a question for me (“how dare you tax me more, I’ll resign!”) Although I liked the answer replied to that. To leave is a personal decision and this decision isn’t something that you can simply follow the crowd. If one person left the company, would it give them a shield against taxes? When they transfer to another company they will still pay taxes so I don’t understand what the point of raising the attrition topic? Oh well, I guess they can claim back that if they transfer to a new company, the new company will be giving them an offer usually higher than their current pay to make them feel good but still, they have to pay taxes and the higher your income, the higher taxes you get. Just because the tax percentage you might compute is lower doesn’t mean the amount related to that percentage is lower too (1% of 1 million vs 10% of 100).
Employee Morale – Yes, another blow to the employees. Although this one is out of their hands as it is mandated by law but I guess their timing was really bad. After another year of claims of company “growth” but not in terms of compensations + the fact that this circular will deduct more from the salaries will not make employees very happy.
Since the circular was released on mid year 2009, why has the company shared this to the employees now? I guess this is a discussion point. Since this circular will have an effect to the employees’ compensation, the company should have informed the employees that there is something going on and they are doing something about it. What the company did is they kept quiet about this and tried to continue their practices until BIR gave them a notice, and when they were about to comply , they informed the employees that, “hey , we will be following the BIR and will deduct more taxes from your payslip starting next month“. I would agree that the employees should have been informed as early as last year even just a “for your information, nothing to panic about”.
What else? Hmm well, the company is still trying to re assess the roles and hopefully they can do it faster so that we can recompute our taxes again.
Another thing is, I really don’t like it when someone gives out bad news then someone would try to cheer people up by saying, let’s continue to work hard etc .. and hope etc.. and all that stuff that doesn’t really help. Not only will that person get silent murmurs of “yeah right, whatever” but it will make the people much more mad. This is a serious issue and those things should not be said at all! Are you a politician for the May 2010 elections or what?
Anyway, I guess that’s it. I need to check on my laptop now , getting that 100% cpu usage error again and see you all on next payday.