1. WITHHOLDING TAX AT SOURCE
(Revenue Regulations No. 2-98, as amended)
Presented by:
SHARA MAE C. PONTERO, CPA
Revenue Officer
Revenue Region No. 19-Davao City

2. Duties & Obligations of a Withholding Agent
To register
To deduct and withhold
To remit the tax withheld
To file withholding tax returns
To issue withholding tax certificate

3. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
A. Professional
fees, talent fees,
etc., for services
rendered by
individuals
15% if gross income exceeds P720T
10% if otherwise
On the gross professional, promotional and talent fees or any other form of remuneration for the services rendered.
Those engaged in the practice of profession – all profession requiring government licensure examination and/or regulated by PRC, Supreme Court, etc.
Professional entertainers
Professional athletes

4. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Directors and producers of movies, stage, etc.
Insurance agents and adjusters
Management and technical consultants
Bookkeeping agents and agencies
Other recipients of talent fees
Fees of directors who are not employees of the company including per diems, allowances and any other form of income payments not subject to w/holding tax on compensation.

5. DISCLOSURE REQUIREMENT
Every individual shall periodically disclose his gross income for the current year to the BIR by submitting a Notarized Sworn Declaration to the Collection Division of the Regional Office having jurisdiction of the income earner in (3) copies.
Can also be filed by the income payor on behalf of the professionals/talents/directors whose services were being rendered exclusively to the aforesaid payor;
Should be filed on June 30 of each year or w/in 15 days after the end of the month the professional/talent/directors income reaches P720T, w/c ever comes first.

6. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
B. Professional
fees, talent fees,
etc., for services
of taxable
juridical persons
15% if gross income exceeds P720T
10% if otherwise
On the gross professional, promotional and talent fees or any other form of remuneration for the services rendered.

7. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
C. Rentals
1.) On real properties – 5%
2.) On personal properties - on gross rental or lease in excess of P10,000 annually (The P10,000 threshold shall not apply when the accumulated gross rental or lease exceeds or reasonably expected to exceed P10,000 within the year.)
“Reasonably expects” - is determined when it clearly shows in the documents like lease contracts/agreement the amount to be received within a given period.
3.) Poles, satellites and transmission facilities – 5%
4.) Billboards – 5%

8. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
D. Cinematographic
film rental and …other payments
Income Payments to
certain contractors
5% on gross payment
2% on gross payments of the ff:
1. General engineering contractors
2. General building contractors
3. Specialty contractors
4. Other contractors
a. Filling, demolition, salvage work
contractors and operators of mine drilling
apparatus;
b. Operators of dockyards;

9. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Other Contractors (con’t.)
c) Persons engaged in the installation of water system, and gas or electric light, heat or power;
d) Operators of stevedoring, warehousing or forwarding establishments;
e) Transportation contractors, where the gross payments to the same payee amounts to at least P2,000/mo. regardless of the number of shipments during the month
f) Printers, bookbinders, lithographers and publishers (with certain exceptions)

10. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Other Contractors (con’t.)
g) Messengerial, janitorial, private detective and/or collection agencies and other business agencies
Advertising agencies, exclusive of gross payments to media;
Independent producers of TV, radio and stage performances or shows;
Independent producers of “jingles”;
Labor recruiting agencies and/or “labor-only” contractors

11. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Other Contractors (con’t.)
l ) Persons engaged in the installation of elevators, central air-conditioning units, computer machines and other equipment and machineries and the maintenance services thereon;
m) Persons engaged in the sale of computer services, computer programmers, software/program developer/designer, internet service providers, web page designing, computer data processing, conversion or base services and other computer related services;

12. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Other Contractors (con’t.)
n) Persons engaged in landscaping services;
o) Persons engaged in collection and disposal of garbage;
p) TV and radio station operators on sale of TV and radio airtime; and
q) TV and radio block timers on sale of TV and radio commercial spots.

13. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Income distribution to the beneficiaries
G. Gross payments to certain brokers and agents
Income payments to partners of general professional partnerships
15% on the income distributed to the beneficiaries of estates and trusts
10% on gross commissions or service fees
On income payments made to partners such as drawings, advances, sharing, allowances and stipends
15% if gross income exceeds P720T
10% if otherwise

14. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Professional fees paid to medical practitioners
15% if gross income exceeds P720T
10% if otherwise
On PF paid by hospitals or clinics, or paid directly to the medical practitioners by patients who were admitted and confined
PF paid by HMOs to medical practitioners

15. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
It shall be the duty of the hospital/clinic/HMO to remit taxes withheld from professional fees
The W/tax shall not apply if there is proof that no PF has in fact been charged in a form of sworn declaration
The hospital shall inform the BIR about any medical practitioner who fails or refuses to execute the sworn declaration within ten days from occurrence

16. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Hospitals and clinics shall submit the names and address of medical practitioners every 15th day after end of each quarter
The hospitals and clinics shall be responsible for the accurate computation, timely remittance and issuance of withholding tax certificates every 20th day following close of the taxable quarter or upon request of the payee

17. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
J. Gross selling price or total amount of consideration or its equivalent paid to seller/owner for the sale, exchange, or transfer of real property classified ad ordinary asset
Seller/transferor is exempt from Creditable Withholding Tax (CWT) in accordance with Sec of the regulation
Seller/transferor is habitually engaged in the real estate business:
Selling price is P500k of less %
SP <P500K but => P2M %
SP <P2M %
Seller/transferor is not habitually
engaged in the real estate business %

18. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Additional income payments to gov’t. personnel from importers, shipping and airline companies
Certain income payments made by credit card companies
On gross additional payments to gov’t. personnel for overtime services as authorized by law %
1% on ½ of the gross amounts paid

19. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
Income payments made by the top 20K private corp. to their local/ resident supplier of goods/services other than those covered by other w/tax rates
Supplier of goods – 1%
Supplier of services – 2%
Withholding tax on Agricultural Purchases in their original state shall apply only on excess of the cumulative amount of P300,000 within the same taxable year.

20. INCOME PAYMENTS SUBJEC TO EWT
DESCRIPTION
Income payments made by the government to its local/resident supplier of goods/services other than those covered by other w/tax rates
Supplier of goods – 1%
Supplier of services – 2%
Income payments, except any single purchase which is P10,000 and below, which are made by a government office on their purchase of goods/services from local resident supplier.
GOCCs shall withhold taxes as GOCC rather than as corporation.

21. INCOME PAYMENTS SUBJEC TO EWT
DESCRIPTION
Commissions of independent and/or exclusive sales representatives, and marketing agents and companies
Tolling fees paid to refineries
10% on gross commissions, rebates, discounts, and other similar considerations
5% on gross processing/tolling fees

22. INCOME PAYMENTS SUBJEC TO EWT
DESCRIPTION
Payments made by pre-need companies to funeral parlor
Payments to embalmers
Income payments to suppliers of agricultural products
1% on gross payments
1% on gross payment
1% (suspended by RR )

23. INCOME PAYMENTS SUBJEC TO EWT
DESCRIPTION
Income payments on purchases to minerals, mineral products and quarry resources as defined and discussed in Sec. 151 of the Tax Code
MERALCO payments
Interest income on the refund paid either through direct payment or application against customers’ billing by other electric distribution utilities.
10% on income payments
10% / 20%

24. INCOME PAYMENTS SUBJECT TO EWT
DESCRIPTION
W. Income payments made by the top 5K individual taxpayers to their local/resident supplier of goods/services other than those covered by other w/tax rates
Individuals engaged in trade or business including non resident aliens engaged in trade or business in the Philippines.
Withholding tax on Agricultural Purchases in their original state shall apply only on excess of the cumulative amount of P300,000 within the same taxable year.
Supplier of goods – 1%
Supplier of services – 2%

25. Persons Required to Deduct & Withhold
Agents, employees or any person purchasing goods or services/paying for and in behalf of the aforesaid withholding agents
shall likewise withhold in their behalf
the official receipts/invoices must be issued in the name of the person whom the former represents
the withholding tax certificate must be issued immediately

26. Persons Required to Deduct & withhold RR 30-2003
All income payments which are required to be subjected to WT shall be subject to the corresponding rate to be withheld by the person having control over the payment and who claims the expenses.
Utilities even if the meter or billing statement is in the name of the payor
With valid proof, like contract between reg. user and payor

27. Time of Withholding (RR 12-2001)
The obligation to deduct and withhold arises at the time an income payment is
paid or payable or
an income payment in accrued or recorded as an expense or asset in the payor’s book, whichever comes first.
The term payable refers to the date the obligation becomes due, demandable or legally enforceable.

28. Time of Withholding (RR 12-2001)
Provided however, that were income is not yet paid or payable but the same has been recorded as an expense or asset, the obligation to withhold shall arise in the last month of the return period in which the same is claimed as an expense or amortized for tax purposes.

29. Exemption from Withholding on Income Tax
Shall not apply to income payments made to the ff:
National government and its instrumentalities, including provincial, city or municipal governments and barangays except GOCCs (RR )
B. Persons enjoying exemption from payment of Income Tax
1. HLURB/HDUCC registered
BOI/PEPZ/SBMA/Omnibus Investment Code

30. Exemption from Withholding on Income Tax
C. Corporation which are exempt from Income Tax
GSIS
SSS
PHIC
Local Water District (RMC )
PCSO
D. Gen. Professional Partnerships
E. Joint ventures or consortium (RR )

31. FINAL WITHHOLDING TAX

32. Income Payments Subject to Final Withholding Tax
Interest from any peso bank deposit, and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements – 20%
Royalties (except on books as well as other literary works and musical compositions – 20%
Prizes (except prizes amounting to P10, or less )– 20%
Winnings (except Philippines Charity Sweepstakes Winnings and lotto winnings ) - 20%

33. Income Payments Subject to Final Withholding Tax:
Royalties on books, as well as other literary works and musical compositions – 10%
Interest income received by a resident individual taxpayer from a depository bank under the Foreign Currency Deposit System – 7.5%

34. Income Payments Subject to Final Withholding Tax:
Cash and/or property dividends (received by individuals) - 10%
Net capital gains from sale, barter, exchange of shares of stocks in a domestic (except through stock exchange ):
Not over P100, %
On any amount in excess of P100, – 10%

35. Income Payments Subject to Final Withholding Tax:
Interest income from long-term deposit or investment :
Four years to less than five years – 5%
Three years to less than four years – 12%
Less than three years – 20%
On capital gains from sale, exchange, or other disposition of real property classified as capital assets - 6%

36. WITHHOLDING TAX ON
VALUE ADDED TAX
AND
PERCENTAGE TAX

37. Withholding Tax of VAT
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 Philippines
For lease or use of property or property rights to non-resident owners(final) %
Services rendered to local insurance companies with respect to reinsurance premiums payable to non-resident insurance or reinsurance companies (final) %
Other services rendered in the Philippines by non-residents (final) %
2. Sale of goods and services to government

38. Final Withholding VAT on Government Purchases
OLD NIRC
RA 9337
Contractors by the government or any of its political subdivisions, instrumentalities or agencies, including government-owned and controlled corporations (GOCCs) 3%
on gross payment for the purchase of goods 6%
on gross receipts for services by contractors
8.5%
on government public works contractors } 5%
Final VAT

39. Withholding on Percentage Tax
Persons exempt from VAT %
Domestic carriers and keepers of garages - 3%
Cars for rent or hire
Transportation contractors
Domestic carriers by land, air or water
International carriers doing business in the Phils. - 3%
Franchises – radio and TV %
- electric, gas, and water utilities %
5. Banks and non-bank financial intermediaries %, 1%, 3%, 5%
Finance Companies %, 1%, 3%, 5%
7. Life insurance premiums (w/ certain exclusions) %

40. Withholding on Percentage Tax
8 . Agents of foreign insurance companies - 10%, 5%
Amusements %, 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 %, 2%, 4%
12. On gross payments to stock, real estate,
commercial, customs, insurance and immigration
brokers based on gross receipts - 7%

41. Illustration
The Office of the Provincial Capitol of Davao del Sur purchased the following goods and services for the month of Feb
Invoice Price
Rice P50,000.00
Construction Materials ,800.00
Repair of Aircon Units ,400.00
Rental of equipments ,600.00
Compute for the withholding tax on government money payments assuming the seller is:
a) Non-VAT registered
b) VAT taxpayer

42. Answer – Non VAT Supplier
Invoice Price
Tax Base
Tax Rate
EWT
GMP
% Tax
Rice
50,000.00
EWT 1%
500.00
None
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

43. Answer – VAT Supplier Invoice Price Tax Base Tax Rate EWT GMP VAT Rice
50,000.00
EWT 1%
500.00
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

44. ON MANDATORY ATTACHMENTS
RR No

45. REVENUE REGULATIONS NO. 2-2006
Mandatory Attachment :
Monthly Alpha list 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

46. Monthly Alpha list of Payees(MAP)
is a consolidated alpha list 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 E, 1601-F, 1600) showing , among others;
total amounts of income/gross sales/gross receipts and
taxes withheld and remitted.

47. Attachments to BIR Form Nos. 1601-E, 1601-F, 1600
Annex “B”
BIR REGISTERED NAME
TRADE NAME
ADDRESS
TIN
MONTHLY ALPHALIST OF PAYEES (MAP)
RETURN PERIOD (mm/yy)
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 E, 1601-F, 1600

48. Monthly Alpha List of Payees
Below 10 payees hard copy
10 or more payees compact disc recordable (CDR)
EFPS regardless of the e-attach
number of income payees/
income recipient

49. 1601-E
MAP
WITHHOLDING AGENTS (PAYORS)
1601-F
BIR
MAP
1600
MAP

50. Statements and Returns
Requirement for List of Payees
Less than ten (10) payees
- Manually prepared alpha list
With ten(10) or more payees
- Manually prepared alpha list + softcopy
(In cd or

51. TIME TAX BASE WITHHOLD TAXES 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

52. II. WITHHOLING TAX REMITTANCE
TYPES
FORM
MANUAL FILING/
PAYMENT
EFPS FILING
EFPS PAYMENT
COMPENSATION
1601-C
10th day of the ff month except for the month of December which is due on the Jan. 15
Staggered Filing (RR )
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

53. II. WITHHOLING TAX REMITTANCE
TYPES
FORM
MANUAL FILING/
PAYMENT
EFPS FILING
EFPS PAYMENT
FINAL
OTHER FINAL
1601-F
10th day of the ff month
Staggered Filing (RR )
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

54. 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

55. IV. ANNUAL RETURNS TYPE FORM DESCRIPTION TIME COMPENSATION 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

56. The End