Philippine Shipping Update - (Issue 2013/01)


  • Date: 29/01/2013

In this issue:

  • Withholding of Income Tax on Backwages, Allowances and Benefits Received by Employees Through Garnishments of Debts or Credits Pursuant to a Labor Dispute Award

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Withholding of Income Tax on Backwages, Allowances and Benefits Received by Employees Through Garnishments of Debts or Credits Pursuant to a Labor Dispute Award

On 3 August 2012, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 39-2012 with the subject “Withholding of Income Tax on Backwages, Allowances and Benefits Received by Employees Through Garnishments of Debts or Credits Pursuant to a Labor Dispute Award”.  The circular allows garnishees (such as the NLRC) to withhold the amount of 5% from the total award issued in favour of the employee which would represent the taxable backwages, allowances and benefits of the employee.
 
Pursuant to this circular, the NLRC issued Administrative Order No. 11-17, Series of 2012 dated 16 November 2012 which provides for guidelines and procedures on the withholding of income tax on backwages, allowances and benefits by virtue of labor dispute awards.
 
We have formally written the NLRC to inquire as to the applicability of the mentioned administrative order to claims of seafarers (wages, disability and death benefits) as we believe that the circular of the BIR as well as the NLRC administrative order will not apply to seafarers’ cases because the law exempts them from payment of income tax pursuant to Section 23 (C) of the National Internal Revenue Code and Revenue Regulations No. 1-2011. 
 
The NLRC has now replied confirming that our position is correct that in case of wage claims (compensation of seafarers for services rendered abroad) filed by the seafarer, the same is not subject to withholding tax.  In the same manner, claims for death and disability benefits are likewise not subject to withholding tax pursuant to our tax code

Industry developments

Polar Shipping

Legal, navigational and environmental resources, news and updates on the development of polar shipping. Read more


US VRP Compliance

With effect from 30th January 2014 non-tank as well as tankships calling at US ports will be required to submit VRPs.  For Club and other resources to assist in compliance click here


International Environmental compliance

Environmental Compliance resource page collates material in respect of International environmental compliance issues affecting our Members. Information from the Club, Loss Prevention and external resources has been collated in one place for ease of reference.


MLC 2006

The Maritime Labour Convention enters into force in August 2013 - resources, news & advice on implementation can be found in this dedicated section.  READ MORE


International sanctions

Recent guidance & corresponding material in respect of international sanctions against various countries has been updated with respect to temporary easing of sanctions against Iran.  READ MORE


Piracy

Essential precautions and preparation against piracy, as well as additional information and resources, loss prevention advisories and useful external web links


Emergency Contacts


If you need to call our offices out of hours and at weekends, click After Office hours for a up to date list of the names of the Duty Executives and their mobile phone numbers. 

Ship Finder


This Ship Finder is updated on a daily basis. Members who need to advise the Club of updates to their recorded ships' details should advise their usual underwriting contact.