WITHHOLDING TAX ON GOVERNMENT MONEY PAYMENTS Presented by: Susan D. Tusoy, CPA, MPS Asst. Chief, Assessment Division

Withholding Tax of VAT RATE General Rule: VAT due on sales of goods and services are not subject to withholding since the tax is not determinable at the time of sale. Except: Gross payments to non-residents by both gov’t. and private entities for services rendered in the Phils. For lease or use of property or property rights to non-resident owners(final) b. Services rendered to local insurance companies with respect to reinsurance premiums payable to non-resident insurance or reinsurance companies (final) 12%*

Withholding Tax of VAT RATE Other services rendered in the Phils. by non-residents (final) 12%* 2. Sale of goods and services to government 5% *RMC 7-2006 circularizing the increase in VAT Rate

5% Final VAT Final Withholding VAT on Government Purchases RA 9337 Payments by the government or any of its political subdivisions, instrumentalities or agencies, including government-owned and controlled corporations (GOCCs) on account of its purchase of goods and services who are subject to VAT 5% Final VAT

Withholding on Percentage Tax Rate Persons exempt from VAT under Sec. 109 (z) of the Tax Code 3% Domestic carriers and keepers of garages Cars for rent or hire Transportation contractors Domestic carriers by land, air or water International carriers doing business in the Phils. Franchises on radio/tv Franchise on electric, gas, and water utilities 2% Banks and non-bank financial intermediaries 0%, 1%, 3%, 5% Finance Companies

Withholding on Percentage Tax Rate Life insurance premiums (w/ certain exclusions) 2% (RMC 22-2010) Agents of foreign insurance companies 10% /5% Amusements (RMC 18-2010 – includes karaoke bars/videoke bars) 18%,10%, 15%, 30% Sale, barter or exchange of shares or stocks listed or traded through local stock exchange ½ of 1% Shares of stock sold or exchanges through initial public offering 1%, 2%, 4% On gross payments to stock, real estate, commercial, customs, insurance and immigration brokers based on gross receipts 7%

I. WITHHOLD TAXES TIME TAX BASE COMPENSATION WHEN PAID / CONTRUCTIVELY PAID TAXABLE COMPENSATION INCOME EXPANDED GMP (VAT PAYEE) WHEN PAID / PAYABLE GROSS PAYMENT (NET OF VAT) (NON VAT PAYEE) FINAL OTHER FINAL FRINGE BENEFITS WHEN PAID GROSS –UP MONETARY VALUE

II. WITHHOLING TAX REMITTANCE TYPES FORM MANUAL FILING/ PAYMENT EFPS FILING EFPS PAYMENT COMPEN-SATION 1601-C 10th day of the ff month except for the month of December which is due on the Jan. 15 Staggered Filing (RR 26-2002) 15th day of the ff month except for the month of December which is due on the Jan. 20 EXPANDED 1601-E BANKS 1602 Real Property (Ordinary Asset) 1606 10th day of the ff month Not applicable FINAL OTHER FINAL 1601-F 15th day of the ff month W/TAX ON VAT & PERCENTAGE 1600 (ALPHALIST) FRINGE BENEFITS 1603 10th day of the month following the end of the qtr. 15th day of the month ff the end of the quarter

III. WITHHOLDING TAX CERTIFICATES TYPES FORM TIME COMPENSATION 2316 Jan 31 of the ff year For terminated employees - last payment of salary EXPANDED 2304 (Exempt) 20 days ff. close of the quarter or upon demand 2307 (Taxable) GOV’T. MONEY PAYMENTS 2307 For Non-VAT : 10th day of the ff month 2306 For VAT : 10th day on the month ff month FINAL TAX Jan. 31 of the following year FRINGE BENEFITS

IV. ANNUAL RETURNS TYPE FORM DESCRIPTION TIME COMPEN-SATION 1604 CF Alphalist of employees Less than 10 employees – manual filing 10 employees or more - softcopy eFPS Filer - e-attach Jan. 31 of the ff year EXPANDED 1604E Alphalist of payees Less than 10 payees – manual filing 10 payees or more - softcopy eFPS Filer - e-attach March 1 of the ff year

ON MANDATORY ATTACHMENTS RR No. 2-2006

REVENUE REGULATIONS NO. 2-2006 Mandatory Attachments : Summary Alphalist of Withholding Agents of Income Payments Subjected to Tax Withheld at Source (SAWT) to Tax Returns With Claimed Tax Credits due to Creditable Tax Withheld At Source

REVENUE REGULATIONS NO. 2-2006 2. Monthly Alphalist of Payees (MAP) Whose Income Received Have Been Subjected to Withholding Tax in the Withholding Tax Remittance Return Filed by the Withholding Agent/Payor of Income Payments

SAWT - defined to be submitted by the payee-recipient of income as attachment to its duly filed return for a given period which Summary List contains a summary of information showing, among others, total amounts of income/gross sales/gross receipts and claimed tax credits taken from all Certificates of Creditable Withholding Tax at Source (BIR Form Nos. 2307/2304/2306/2316) issued by the payors of income payment

SAWT- defined S- Summary A- Alphalist of withholding agents a consolidated Summary alphalist of withholding agents from whom income was earned or received and subjected to withholding tax S- Summary A- Alphalist of withholding agents W- subjected to Withholding T- Tax

FORMAT Annex “A” BIR REGISTERED NAME TRADE NAME ADDRESS TIN SUMMARY ALPHALIST OF WITHHOLDING AGENTS OF INCOME PAYMENTS SUBJECTED TO WITHHOLDING TAX AT SOURCE (SAWT) From _______________ to _________________ Seq no. 1 TIN Inclu-ding branch code 2 Registered name (Alphalist) 3 Return period From Mm/dd/yy 4a Return Period To 4b ATC 5 Nature of income payment 6 AMOUNT Tax base 7 Tax rate 8 Tax Withheld 9 4 TOTAL AMOUNT P I declare under the penalties of perjury, that this certificate has been made in good faith, verified by me, and to the best of my knowledge and belief, is true and correct pursuant to the provisions of the NIRC, and the regulations issued under the authority thereof ; that the information contained herein completely reflects a summary of information on all Certificates of Creditable Withholding Tax at Source (BIR Form No. 2307/2304/2306/2316) issued by the payor; that, the income payments has been declared part of the gross income/receipt in the our Income Tax/ VAT/ Percentage Tax Returns where the taxable income was earned or received; that, the information appearing herein is consistent with the information contained in the Certificate of Tax Withheld at Source and that, inconsistent information shall result to denial of the claims for refund/tax credit. _ _________________________ Signature over printed name Taxpayer/Authorized representative Attachments to BIR Form Nos. 1700, 1701Q, 1701, 1702Q, 1702, 2550M, 2550Q, 2551M, 2553

Monthly Alphalist of Payees(MAP) is a consolidated alphalist of income earners from whom taxes have been withheld by the payor of income for a given return period and in whose behalf, the taxes were remitted. It contains a summary of information on taxes withheld and remitted through the monthly remittance returns (BIR Form Nos. 1601- E, 1601-F, 1600) showing , among others, total amounts of income/gross sales/gross receipts and taxes withheld and remitted.

Attachments to BIR Form Nos. 1601-E, 1601-F, 1600 FORMAT Annex “B” BIR REGISTERED NAME TRADE NAME ADDRESS TIN MONTHLY ALPHALIST OF PAYEES (MAP) RETURN PERIOD (mm/yyyy) Seq no. 1 TIN Inclu-ding branch code 2 Registered Name (Alphalist) 3 Return period mm/yy 4 ATC 5 Nature of income payment 6 AMOUNT Tax base 7 Tax rate 8 Tax Withheld 9 TOTAL AMOUNT P I declare under the penalties of perjury, that this has been made in good faith, verified by me, and to the best of my knowledge and belief, is true and correct pursuant to the provisions of the NIRC, and the regulations issued under the authority thereof; that the information contained herein completely reflects all income payments with the corresponding taxes withheld from payees are duly remitted to the BIR and proper Certificates of Creditable Withholding Tax at Source (BIR Form Nos. 2304/2307/2306/2316) have been issued to payees; that, the information appearing herein shall be consistent with the total amount remitted and that, inconsistent information shall result to denial of the claims for expenses. __________________________ Signature over printed name Taxpayer/Authorized representative Attachments to BIR Form Nos. 1601-E, 1601-F, 1600

Below 10 payees - hard copy SAWT/MAP Below 10 payees - hard copy 10 or more payees - softcopy (diskette, CD etc.) EFPS regardless of the - e-attach number of income payees/ income recipient

Illustration A local government unit purchased the following goods and services for the month of November 2013. Invoice Price Fertilizers - P56,000.00 Construction Materials - 44,800.00 Repair of Aircon Units - 22,400.00 Rental of equipments - 33,600.00 Compute for the withholding tax on government money payments assuming the seller is: a) Non-VAT registered b) VAT taxpayer

Answer – Non VAT Supplier Invoice Price Tax Base Tax Rate EWT GMP % Tax Fertilizers 56,000.00 EWT 1% GMP - none 560.00 0.00 Const. Materials 44,800.00 EWT – 1% GMP – 3% 448.00 1,344.00 Repair of Aircon Untis 22,400.00 EWT – 2% 672.00 Rental of Equipments 33,600.00 EWT – 5% 1,680.00 1,008.00

Answer – VAT Supplier Invoice Price Tax Base Tax Rate EWT GMP VAT Fertilizers 56,000.00 EWT 1% 560.00 None Const. Materials 44,800.00 40,000.00 EWT – 1% GMP – 5% 400.00 2,000.00 Repair of Aircon Untis 22,400.00 20,000.00 EWT – 2% 1,000.00 Rental of Equipments 33,600.00 30,000.00 EWT – 5% 1,500.00

The usefulness of the cup is its emptiness. -Bruce Lee

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