MANILA, Philippines - The Bureau of Internal Revenue (BIR) declared Wednesday that allowances and bonuses received by all officials and employees in government and the private sector are subject to income tax if the amount is in excess of P30,000 per year.
"There is no exemption," BIR Commissioner Kim S. Jacinto S. Henares stressed.
The BIR chief spelled out the requirement in the Internal Revenue Code (Sections 244 and 245) following disclosure at the Senate impeachment trial of Chief Justice Renato C. Corona that high tribunal justices were recipients of tax-free multi-million-peso bonuses and allowances through the years.
Supreme Court spokesman, Court Administrator Jose Midas Marquez, admitted that the extra income of the justices have not been placed under the withholding tax system since the time of Chief Justice Hilario Davide.
He said, however, that there is no problem if the BIR decides to collect the deficiency income taxes due from these allowances and bonuses.
But Henares would not say whether she has issued instructions to Manila Revenue Regional Director Pete Madulara to collect the back taxes, saying the audit on the extra income of the justices like any other investigation is "strictly confidential."
Other revenue officials said that under the Tax Code even the 13th-month pay and other Christmas bonuses are also subject to income tax if the amount goes beyond P30,000 per year.
The tax is slapped on the excess of the P30,000 threshold.
They said certain "de minimis" (small value) allowances are tax exempt under Revenue Regulations 2-28, including monetized unused vacation leave, medical cash allowance, rice subsidy and uniform, or clothing allowance.
The BIR earlier filed last month a P12 million tax evasion charges against Jesus Santos, counsel of former First Gentleman Mike Arroyo , for alleged non-declaration of his allowances and bonuses received from the Government Service Insurance System as member of its board of trustees from 2006 to 2009.
BIR insiders said Corona and other SC justices could not be charged for the same offense as their earnings from the SC are covered by the Substituted Filing System of the BIR in which the task of filing income tax returns is done by SC treasurers and accountants.
"If ever criminal complaints are filed, the respondents should be the justices, but it was the SC accountants who were designated as withholding agents of the BIR," one of the sources added.