Year-end is nearly approaching. Annual income tax filing is as well. Some companies may claim tax credit on creditable withholding tax deducted by their customers or clients.

But what are the requirements to be qualified for the claim? It is not sufficient that you have the Certificate of Creditable Tax Withheld at Source or BIR Form No. 2307.

In case of overpayment, taxpayer should not forget to choose whether the excess will be refunded, be applied for tax credit certificate, or be carried over as tax credit next year or next quarter. The “Irrevocability Rule” provides that once you have chosen an option and once it is already done, the taxpayer could no longer choose another option for such taxable year.

Furthermore, the Supreme Court, in its recent decision*, states that in claiming the refund of excess creditable withholding tax, the taxpayer must show compliance with the following basic requirements:

(1) The claim for refund was filed within two years as prescribed under Section 229 of the NIRC of 1997;

(2) The income upon which the taxes were withheld were included in the return of the recipient; and

(3) The fact of withholding is established by a copy of a statement duly issued by the payor (withholding agent) to the payee showing the amount paid and the amount of tax withheld therefrom.

Hence, taxpayer must make sure that the amount of income payments in the income tax return must correspond and tally to the amount indicated in the certificate of withholding.

If you need assistance in filing your income tax return, availment of tax refund, tax consultation or any tax related matters, contact Triple i Consulting.

*United International Pictures AB vs. Commissioner of Internal Revenue, GR. No. 168331, October 11, 2012