The Bureau of Internal Revenue (BIR) said the reduction of the percentage rate from three to one percent under the Corporate Recovery and Tax Incentives (CREATE) Act applies to both corporate and individual taxpayers.
It noted, however, that cooperatives, self-employed, and professionals are excluded if they availed of the eight percent income tax schedule.
BIR Commissioner Caesar R. Dulay came out with these clarifications in Revenue Memorandum Circular No. 67-2021, which primarily answered queries on the temporary reduction of the tax rate as prescribed by CREATE.
CREATE reduced the percentage tax from three to one percent starting July 1, 2020, up to June 30, 2023.
“Previous issuances where the three percentage tax was mentioned were deemed modified and reduced to one percent,” the circular stated.
The circular advised taxpayers to submit amended percentage tax returns for the third and fourth quarters of 2020 and the first quarter of 2021 to get back excess payments without penalty. The overpaid taxes may be applied to the succeeding period.
The BIR collects the percentage tax from taxpayers whose annual gross sales or receipts are not more than P3 million and value-added tax if the amount exceeds the threshold.