By Moira Encina
Eagle News Service
The Supreme Court has ruled the allowances and fringe benefits received by government employees are subject to withholding tax.
In issuing the decision on Wednesday, July 4, the SC effectively junked the petition filed by some Regional Trial Court judges and the Confederation for Unity, Recognition and Advancement of Government Employees against Revenue Memorandum Order (RMO) 23-2014 which imposed the tax on these income allowances, bonuses, compensation and fringe benefits.
According to the SC, the provisions of the memorandum only mirrored the provisions in the Tax Code.
It said the fiscal autonomy of the judiciary, the Ombudsman and constitutional commissions did not mean they were exempted from the taxes imposed by law.
The SC, however, struck down Section VI of the memo, which gave the governor, mayor, barangay captain and head of government agencies and government-owned and -controlled corporations the responsibility to withhold and remit the withholding taxes.
It said with the provision, the Bureau of Internal Revenue abused of its power because the Tax Code does not obligate these individuals to perform such responsibilities.