ROHQ workers lose tax privileges
The Bureau of Internal Revenue (BIR) said employees of regional operating headquarters (ROHQ) who used to enjoy preferential tax rates, will no longer be able to avail them beginning this year.
In a tax advisory, the BIR said in view of the recent amendment of the provisions of Section 25(B), 25(C), 25(D) and 25 (E) of the National Intemal Revenue Code (NIRC), as amended by Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act that were subject of the President’s Veto Message, the said pronouncement shall take effect.
“All employees of regional headquarters and regional operating headquarters of multinational companies; offshore banking units; and petroleum service contractors and subcontractors, enjoying preferential tax treatment prior to 2018 are now subject to regular income tax rates,” the advisory said.
“Thus, withholding taxes on compensation of these employees shall be enforced based on withholding tax table per revenue memorandum circular no. 1-2018,” it added.
The advisory was signed by Caesar Dulay, BIR commissioner.
Under the previous law, employees in ROHQs that occupy a managerial or technical position with gross annual taxable compensation of at least P975,000 are entitled to a tax rate of 15 percent.
President Duterte earlier vetoed the provision in the TRAIN law granting a special tax treatment of 15 percent on the gross income of employees of regional headquarters, regional operating headquarters, offshore banking units, and petroleum service contractors and subcontractors.
However, some sectors ended up confused as to whether the President’s veto on the preferential tax treatment of ROHQ employees automatically removes the tax perks.
“It is clear to us, it’s not clear to them. We will tell them that our interpretation is that the info is vetoed,” Carlos Dominguez III, finance secretary, previously said.
Antonette Tionko, finance undersecretary, earlier said the intention under the veto is to repeal.
Tionko said that only those earning P975,000 and up, or he high-earning employees, will be affected.
“It’s mostly the high earning employees of ROHQs that benefit from the 15 percent rate… but most of the employees of ROHQs are not covered by the special rate,” Tionko said.
