BIR rejects licensed professionals, artists pretending as marginal income earners

Internal Revenue Commissioner Kim Jacinto-Henares has issued a memorandum circular clarifying that marginal income earners, who enjoy certain tax exemptions, do not include licensed professionals, consultants and the like.

Henares issued Memorandum Circular 7-2014 which said that licensed professionals, consultants, artists, sales agents, brokers and other similarly situated cannot be registered as a “minimum income earner” as defined by the laws.

Under Revenue Regulations No. 7-2012, a marginal income earner is defined as “those individuals whose business do not realize gross sales or receipts exceeding P100,000 in any 12-month period.”

The new memorandum circular provided additional qualifications for an individual taxpayer to be considered as a marginal income earner.

“The individual referred to in that section is an individual not deriving compensation as an employee under an employer-employee relationship but who is self-employed and deriving gross sales or receipts not exceeding P100,000 in any 12-month period,” the circular said.

It said that the activities of the marginal income earner should also be principally for subsistence or livelihood.

“The marginal income earner, as herein defined, shall include but not limited to agricultural growers/producers [farmers/fishermen] selling directly to ultimate consumers, small sari-sari stores, small carinderias or turo-turos, drivers/operators of a single-unit tricycle and such, but shall not include licensed professionals, consultants, artists, sales agents, brokers and other similarly situated, including all others whose income have been subjected to withholding tax,” the circular said.

A marginal income earner enjoys privileges and minimum registration and tax compliance requirements, such as, exemption from the Annual Registration Fee of P500, and exemption from payment of business taxes.

source:  Manila Times