Minimum wage earners (MWE) may soon get a tax refund from the government following an order by the Supreme Court (SC) to the Department of Finance (DOF) and Bureau of Internal Revenue (BIR) to grant a refund or tax credit to individual taxpayers whose incomes in 2008 were subject of prorated increase in personal and additional exemption.
The Supreme Court has declared null and void several provisions of BIR order in 2008 that restricts the enforcement of Republic Act 9504 which among others provides tax exemption for minimum wage earners in the country as well as an increase in personal and additional exemptions for individual taxpayers.
In its decision, the SC’s en banc declared null and void Sections 1 and 3 of Revenue Regulation No.10-2008 which disqualify minimum wage earners who earn purely compensation income from the privilege of the exemption in case they receive bonuses and other compensation-related benefits exceeding the statutory ceiling of P30,000.
This means 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 would get a refund.
The high court also declared as null and void the provision in Section 3 that provides for the prorated application of the personal and additional exemptions under R.A 9504 for taxable year 2008, and for the period of applicability of the exemption to begin only on July 6, 2008.
The ruling penned by Chief Justice Maria Lourdes Sereno said the Department of Finance and the BIR committed grave abuse of discretion in promulgating the assailed provisions of the said revenue regulation.
“Sections 1 and 3 of RR l0-2008 add a requirement not found in the law by effectively declaring that an MWE who receives other benefits in excess of the statutory limit of P30,000 is no longer entitled to the exemption provided by R.A. 9504,” part of the 56-page ruling dated January 24 said.
The high court explained that the increased exemptions were already available much earlier than the required time of filing of the return on April 15, 2009 while R.A. 9504 came into law on July 6, 2008.
“In the present case, the increased exemptions were already available much earlier than the required time of filing of the return on 15 April 2009. R.A. 9504 came into law on 6 July 2008, more than nine months before the deadline for the E-filing of the income tax return for taxable year 2008. Hence, individual taxpayers were entitled to claim the increased amounts for the entire year 2008. This was true despite the fact that incomes were already earned or received prior to the law’s effectivity on 6 July 2008,” the SC said.