Minimum wage earners told to pay income tax for ’06, ’07
By Michelle Remo
Philippine Daily Inquirer
First Posted 02:44:00 07/02/2008
Filed Under: State Budget & Taxes
MANILA, Philippines--Minimum wage earners have to remit unpaid income taxes covering January 2006 to June 2008, the Bureau of Internal Revenue (BIR) said Tuesday.
The BIR clarified that the recently passed Republic Act 9504, which exempts minimum wage earners from paying income tax, will not be applied retroactively.
This means that income taxes for January 2006 to June 2008 of minimum wage earners that were not withheld by their employers should be remitted to the government, the BIR said.
“The law is clear about the date of effectivity of the income tax exemption of minimum wage earners—that is, 15 days after the law’s publication in newspapers, or July 6. The BIR therefore cannot state in the revenue regulations that the exemption should start January 2006,” BIR Deputy Commissioner Nelson Aspe said at a public hearing at the BIR.
The hearing was called to discuss the proposed regulations to implement RA 9504.
Before January 2006, employers were required to withhold the income taxes of their employees earning minimum wage. That requirement was lifted following issuance of an executive order that was meant to provide temporary relief to minimum wage earners while Congress was deliberating on a bill formally exempting them from income tax.
The executive order does not exempt the minimum wage earners from the tax. They are still obliged to pay taxes by April 15.
However, most minimum wage earners did not pay income taxes for 2006 and 2007, BIR officials said.
BIR Deputy Commissioner Nelson Aspe said the bureau collects roughly P200 million a year in income tax from minimum wage earners.
Assuming most of them did not remit income taxes during the two-and-a-half year period, then the BIR could get about P500 million in back taxes, he said.
RA 9504 also increases the allowable deductions of individual taxpayers to P50,000. With editing by INQUIRER.net
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