The Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 11-2013 dated July 12, 2013 amending the requirements for deductibility of certain income payments under Section 2.58.5 of RR 2-98 as amended.

The rule is, any income payment shall be allowed as a deduction from the payor’s gross income only if it is shown that the income tax required to be withheld has been paid to the Bureau in accordance with Sections 57 and 58 of the Tax Code. In other words, payment of withholding tax was made on time. But as presently worded, Section 2.58.5 of RR 2-98 as amended, provides certain exceptions where a deduction will also be allowed even if no withholding tax was made on time, that is, made only during audit and investigation. The new RR removes such exceptions, not being expressly provided for by the Tax Code, and maintains the rule that any income payment shall be allowed as a deduction only if it shown that the income tax required to be withheld has been paid to the Bureau in accordance with Sections 57 and 58 of the Tax Code. This is in addition to the other requirements under the Tax Code.