By VIRGIL LOPEZ, GMA News, Feb 14, 2017
Minimum wage earners may soon get a tax refund from the government.
This developed after the Supreme Court (SC) ordered the Department of Finance (DOF) and Bureau of Internal Revenue (BIR) to grant a refund or tax credit to all individual taxpayers whose incomes in 2008 were subject of prorated increase in personal and additional exemption.
Also set to benefit are individual taxpayers whose minimum wage incomes were taxed for their receipt of the 13th month pay and other bonuses and benefits exceeding P30,000 under the National Internal Revenue Code of 1997.
In a decision dated January 24, the high court nullified on the ground of grave of abuse of discretion two provisions of Bureau of Internal Revenue (BIR) Revenue Regulations (RR) No. 10-2008 issued in September 2008 by then-BIR Commissioner Sixto Esquivias IV.
These provisions are Sections 1 and 3 as they disqualify minimum wage earners who earn purely compensation income from the law granting tax exemption (Republic Act 9504) in case they receive bonuses and other compensation-related benefits exceeding the statutory ceiling of P30,000.
Section 3 also limits the implementation of the income tax exemption only to the period starting from July 6, 2008, when the law was made effective, instead of applying the exemption to the entire year 2008.
Under RA 9504, a minimum wage earner’s daily salary, holiday pay, overtime pay, night shift differential pay and hazard pay are exempted from withholding tax.
“In sum, the proper interpretation of RA 9504 is that it imposes taxes only on the taxable income received in excess of the minimum wage, but the minimum wage earners (MWEs) will not lose their exemption as such,” the SC said.
“Workers who receive the statutory minimum wage their basic pay remain MWEs. The receipt of any other income during the year does not disqualify them as MWEs. They remain MWEs, entitled to exemption as such, but the taxable income they receive other than as MWEs may be subjected to appropriate taxes,” it added.
Also, if the law was to take effect beginning taxable year 2009 or half of the year 2008 only, the SC said the intent of Congress to cushion the impact of global increase in commodity prices in 2008 “would have been negated.”
The high court rejected the government’s position that anyone receiving 13th month pay and other benefits in excess of P30,000 cannot be classified as a minimum wage earner.
“They (respondents) seek to impose their own definition of MWE,” the decision stated. “Nothing to this effect can be read from RA 9504. The amendment is silent on whether compensation-related benefits exceeding the P30,000 threshold would make an MWE lose exemption.”
“We do not lose sight of the fact that RA 9504 is a tax relief that is long overdue,” the SC added.
The petition was filed by some taxpayers, the Trade Union Congress of the Philippines, Senator Francis Escudero and former Senator Manuel “Mar” Roxas II, the principal author of RA 9504. — MDM, GMA News
– See more at: http://www.gmanetwork.com/news/story/599559/money/personalfinance/sc-orders-tax-refund-for-minimum-wage-earners-for-year-2008#sthash.rubc7UMd.dpuf
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