[Ask the Tax Whiz] Updates on Alphanumeric Tax Codes for certain income payments under CREATE MORE

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The Philippine Tax Whiz explains the new provisions on Alphanumeric Tax Codes for specific income payments

How did CREATE MORE impact tax rates for registered business enterprises (RBEs) and credit card companies?

Under CREATE MORE, corporate income tax rate for domestic and resident foreign corporations classified as registered business enterprises (RBEs) under the Enhanced Deductions Regime (EDR) was reduced from 25% to 20% on their taxable income derived from registered activities during the taxable year, applicable starting November 28, 2024. 

Further, certain income payments made by credit card companies are now subject to ½% (previously 1% of ½) withholding tax on their gross payments to any business entity representing the sales made by the said entity to cardholders.

Why did the Bureau of Internal Revenue modify and create new Alphanumeric Tax Codes for such payments?

Updated Alphanumeric Tax Codes (ATCs) were issued for the Bureau of Internal Revenue (BIR) to properly identify and monitor the unique income tax payments of concerned taxpayers with respect to Republic Act 12066, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises Maximize Opportunities for Reinvigorating the Economy (CREATE MORE).

What changed with the new RMOs?

The issuances modified, dropped, and created ATCs and rates for certain taxpayers to align the codes with CREATE MORE. See a summary of the updates below.

Where can I find and use the updated ATCs?

The modified and newly created codes for withholding (starting with ‘W’) shall be used by income payors in filling out BIR Form 2307 or the Certificate of Creditable Tax Withheld at Source. For the same period, they must remit the amount stated in the form through BIR Form 1601EQ and their Quarterly Alphalist of Payees.

Meanwhile, ATCs provided for RBEs’ income (starting with ‘I’) shall be used by corporations for their quarterly (BIR Form 1702Q) and annual income tax returns (BIR Form 1702-RT) or BIR Form 1702-MX for those with multiple sources of income or whose income is subject to special rates.

The information provided in the article above is for general knowledge and information. #GotQuestionsAboutTaxes? We’re always happy to hear from you! If you want to know how these regulations affect your business, CONSULT ACG or email us at consult@acg.ph.