WITHHOLDING TAXES &

RELATED ISSUANCES
RO LANOEL S. LAJA,CPA
Legal Basis
RA 8424 CTRP January 1, 1998
RA 9337, RA 9504
RR 2-98, RR 10-2008, RMC 27-2011
Basic Concepts of Withholding
Taxes
Withholding Tax- A method of collecting in
advance the income tax and business tax of
certain taxpayers who are liable to pay
income tax or business tax in the Philippines.
3-fold Purpose of Withholding Tax System
1. To provide the taxpayer with a convenient
way of paying his tax liability;
2. To ensure the collection of tax; and
3. To improve the governments cashflow
Basic Concepts of Withholding
Taxes
Who are constituted as withholding Agents?
A withholding agent is any person or entity who
is required to deduct and remit the taxes
withheld to the government.
The following are hereby constituted as
withholding agents:
a. In general, any juridical person, whether
engaged or not engaged in trade or
business;
b. Individual, with respect to payments made in
connection with his trade or business;
Withholding Agents
c. All government offices, including GOCCs, as
well as provincial, city and municipal
governments and barangays;
d. All individuals, juridical persons and political
parties with respect to their income payments
made as campaign expenditures and/or
purchase of goods and services intended for
campaign contributions.
Duties and Obligation of
Withholding Agents
a. To register as withholding agent
b. To deduct and withhold taxes
c. To remit the tax withheld
d. To file Annual Information Return
e. To issue withholding tax certificates
Kinds of Withholding Taxes
Kinds of Withholding Taxes
Withholding Taxes on Compensation
Expanded Withholding Tax(1% goods in
general, 2% Services in general, specific rate
(rental 5%, Prof. Fee 10%/15%)
Final Withholding Tax
Government Money Payment
Withholding Taxes on Compensation

Basic Concept :
The withholding tax on compensation income is a
method of collecting income tax at source upon
receipt of the income. It applies to all employed
individuals, whether citizens or aliens, deriving
compensation for services rendered in the
Philippines. The employer is constituted as the
withholding agent.
Compensation Income Defined
In general, the term compensation means all
remuneration for services performed by an
employee for his employer under an employer-
employee relationship, unless specifically
excluded by the code.
Remuneration for services constitutes
compensation even if the relationship of employer
and employee does not exist any more at the time
when payment is made between the person in
whose employ the services had been performed
and the individual who performed them.
Honoraria paid to elected and appointed
barangay officials are Compensation Income
Computing the Tax Due
Basic Compensation Income xxx
Taxable Other Benefits xxx
Total Compensation Income xxx
Less: GSIS/SSS/ Philhealth /Union Dues xxx
Net Taxable xxx
Less: Exemptions
BPE/APE/Premium Payment on Hosp, if any
xxx
Compensation Income Subject to Tax xxx
Tax Due (Sect 24 a NIRC) xxx
 Tax Table
OVER NOT OVER EXCESS
OVER
10,000.00 5%

10,000.00 30,000.00 500.00 +10% 10,000.00

30,000.00 70,000.00 2,500.00+ 15% 30,000.00

70,000.00 140,000 8,500+ 20% 70,000.00

140,000. 250,000 22,500 + 25% 140,000.00

250,000 500,000 50,000 + 30% 250,000.00

Illustration

Honorarium (18,000 x 12 months) P 216,000.00

Brgy. Official has 1 Qualified Dependent Child
 Computation
Basic Salary P 216,000.00
Less: Non taxable Compensation
GSIS/PHIC, HDMF, UD 0.00
Net Taxable Compensation 216,000.00
Less: Exemptions
PE P 50,000.00
AE 25,000.00 75,000.00
Compensation Income Subject to Tax 141,000.00
Computation Tax Due
Tax on P 140,000.00 22,500.00
Excess 1,000.00 (25%) 250.00
Total Tax Due 22,750.00
Divide by: No. of months 12
Monthly W/TAX 1,895.83

*Computation made at the start of the year

** No increase in Honorarium during the year
Effecting Tax Remittance
Withholding Tax-Compensation is remitted on
a monthly basis using BIR Form 1601-C
Deadline on or before 10th of Succeeding
Month, Except december remittance which is
due on January 15 of the succeeding year.
(Illustration- Withholding tax for Month of July
2017- must be remitted on or before Aug. 10,
2017)
Annual Information Return & Year
End Adjustment
Barangay Official should ensure that the
Annual Information Return of Income Taxes
Withheld on Compensation and Final
Withholding Taxes (BIR Form 1604-CF) and
the required Alphabetical List of Employees is
filed on or before January 31 of the following
year.
Expanded Withholding Tax
Income Tax Withheld at Source
Services, in general (2%)
Goods, in general (1%)
Specific Rate
Rental (5%)
Professional Fee (10 %) or (15%)
Government Money Payments
Business Tax Withheld at Source
Government VAT( GVAT) Payment (5%)
Government Percentage Tax Payment (3%)
Computing EWT/GMP
Scenario 1. Barangay 123 engaged the
services of Ma Ga Ling, a Non-VAT Supplier,
to renovate the Barangay Hall for the contract
price in the amount of P 50,000.00.
 Computing EWT/GMP
Scenario 1. Computation
PARTICULARS AEWT GMP

TAX BASE P 50,000.00 P 50,000.00

Multiply by: Tax Rate 2% 3%

(Services)
Witholding Tax P 1,000.00 P 1,500.00

BIR FORM (To Remit) 1601E 1600

Deadline 10th day of succeeding 1Oth day of succeeding

Month, except Month including month
December January 15 of December
 Computing Net Amount Payable to
Supplier
Scenario 1. Computation
PARTICULARS AMOUNT AMOUNT PAID/REMITTED
TO

BILLING P 50,000.00

Less: W/TAXES

EWT P 1,000.00 BIR THRU BANK

(1601 E)
GMP 1,500.00 2,500.00 BIR THRU BANK
(1600)
NET AMOUNT P 47,500.00 SUPPLIER
PAYABLE
Computing EWT/GMP
Scenario 2. Barangay Mahangin purchase
office supplies from May Ne Gosyo, a VAT
Supplier in the total invoice amount of
P 112,000.00.
Vatable P 100,000.00
Exempt 0.00
Zero-Rated 0.00
12% VAT 12,000.00
Total Invoice Price 112,000.00
 Computing EWT/GMP
PARTICULARS EWT GMP

TAX BASE P 100,000.00 P 100,000.00

Multiply by: Tax Rate 1% 5%

(Goods)
Withholding Tax 1,000.00 5,000.00

BIR FORM (To Remit) 1601E 1600

Deadline 10th day of succeeding 1Oth day of succeeding

Month, except Month including month
December January 15 of December
 Computing Net Amount Payable to
Supplier
PARTICULARS AMOUNT AMOUNT PAID/REMITTED
TO

INVOICE P 112,000.00
AMOUNT
Less: W/TAX

EWT 1,000.00 BIR THRU BANK

(1601E)

GMP 5,000.00 6,000.00 BIR THRU BANK

(1600)

NET AMOUNT 106,000.00 SUPPLIER

PAYABLE
Important Notes
To determine whether a supplier is VAT or
Non-VAT
Request for a copy of its BIR 2303 (Certificate
of Registration)
If Invoice/Official Receipt is already issued, its
classification whether VAT or Non-VAT is
readily determinable
e.g. TIN 123-456-789-000 V ( Vat Supplier)
TIN 123-456-789-000 NV( Non-Vat
Supplier)
Important Notes
For VAT Suppliers- Tax base must be the
amount net of VAT
If the invoice price/official receipt does not
show the 12% VAT separately or is
incorrectly computed, Tax Base is total
amount billed divided by 1.12
Illustration
Total Amount billed 168,000.00
Divide by : 1.12
Tax Base (Net of Vat) 150,000.00
Important Reminders When
Remitting EWT/GMP
One Return per Month, regardless of number
of suppliers
Meaning: 1 Return for BIR 1601-E
Summarizing all suppliers for the month
whether they be suppliers of goods, services
or those covered by specific rates
1 Return for BIR 1600 summarizing all
suppliers for the month whether they be VAT
or Non-VAT suppliers.
If no transaction (No purchases for the month)
A Return must still be filed to avoid Open Case
Annual Information Return
Annual Information Return of Creditable
Income Tax Withheld and the required
Alphabetical List of Payees (BIR 1604 E) are
filed with the RDO on or before March 1 of
the following year.
No Annual Information Return for BIR 1600
Accountable Barangay Officials on
Withholding Taxes
The Barangay Chairman and the Barangay
Treasurer are personally charged with the
duty to correctly withhold taxes and timely
remit the same.
If paid beyond the Due Date
Penalties Apply
1. Surcharge 25%
2. Interest 20% p.a.
3. Compromise Penalty (Based on the Basic)
 END NOTES
Thank you ..have a nice day.