Consolidated Withholding Tax System Dep Ed Zamboanga Cityasofjan2012

WELCOME TO THE
WITHHOLDING
TAX SYSTEM
The withholding tax system

The withholding of tax is a system used to collect
tax in advance. Withholding tax is not an internal
revenue tax. The system is used to equal or at least
approximate or collect in full the tax due from the
payee on certain income payments. The taxes deducted
and withheld by the withholding agent shall be held as
a special trust fund in trust for the government until
paid or remitted by the withholding agent to collection
officers/banks [Section 58(A), Tax Code].
Importance of the withholding tax system

BIR experiences proved that the withholding tax
system is an effective tool in the collection of taxes.
It is important for the following reasons:
It encourages voluntary compliance;
It reduces cost of production effort;
It prevents delinquencies and revenue loss; and
It prevents dry spells in the fiscal condition of the
government by providing revenues throughout the
taxable year.
Types of withholding taxes

Withholding Tax on Compensation;
Withholding Tax at Source or Expanded

Withholding Tax;
Final Withholding Tax or simply known as Final
Tax; and
Withholding Tax on Government Money Payment
- to NON-VAT registered payees subject to
percentage tax
- to VAT-registered payees
Kinds of withholding taxes

1. Creditable withholding tax Under this kind of withholding tax, taxes
withheld on certain income payments are intended to equal or at least
approximate the tax due of the payee on said income payments. The
income recipient is still required to file income tax return or business
tax return to report the income and/or pay the difference between the
tax withheld and the tax due on the income. Taxes withheld on
transactions subject to expanded withholding tax (EWT),
withholding tax on compensation (WTC) and government Money
Payment to Non-VAT taxpayers (GMP) subject to percentage tax
are creditable in nature.
2. Non-creditable or final withholding tax Under this kind of
withholding tax, the amount of tax withheld by the withholding agent
is constituted as a full and final payment of the tax due from the payee
on the said income. The liability for payment/remittance of the tax
withheld rests primarily on the payor as the withholding agent.
WITHHOLDING TAX ON COMPENSATION
Requirement: There must be an employer-employee

relationship as defined under Section
2.78.3 of Revenue Regulations No.
2-98 (RR 2-98).
Note: Minimum wage earners are no longer subject
to income tax including their statutory
minimum wage, overtime pay, holiday pay,
hazard pay and night shift differential pay
pursuant to RA 9504 as implemented by RR
10-2008.
For a taxable income earner:

The following should be considered in the computation of
withholding tax per payroll period:
Gross compensation income all remuneration for services
performed by an employee for his employer under an
employer-employee relationship
-Non-taxable items of the gross compensation income:
Exclusions from gross income [Section 32(B), Tax Code]
Allowable deductions [Section 34(M), Tax Code]
Personal (P50,000) and additional exemptions (P25,000)
per qualified dependent child not exceeding four (4)
Payroll period
Withholding tax table per payroll period
GROSS COMPENSATION INCOME
All remuneration for services performed by an

employee for his employer, including the cash
value of all remuneration paid in any medium
other than cash. [Section 78(A), Tax Code]
EXCLUSIONS FROM GROSS INCOME

13TH Month pay and other BENEFITS up to
P30,000.00 for the TAXABLE YEAR. [see RA
6686 and PD 851, as amended by Memorandum Order
No. 28 8-13-86; Section 32(B)(7)(e), Tax Code]
GSIS, SSS, MEDICARE, PAG-IBIG

Contributions and Union Dues of individuals
[Section32(B)(7)(f), Tax Code]
ALLOWABLE DEDUCTIONS
FROM GROSS INCOME
PREMIUM PAYMENTS ON HEALTH
AND/OR HOSPITALIZATION INSURANCE
Provided that:
Gross Income per family is not more than
P250,000.00 for the taxable year.
Only the spouse, in case of married individuals
claiming the additional exemption for dependent children
shall be entitled.
It shall be taken at the year-end-adjustment with
substantiation (employee submits policy contract,
receipts, etc.)
ALLOWABLE EXEMPTIONS
PERSONAL EXEMPTIONS allowed for
individuals: P50,000.00 (50% beginning
July 6, 2008 / 100% beginning 2009 )
(pursuant to RA 9504 as implemented by RR 10-2008)
ADDITIONAL EXEMPTIONS for each

qualified dependent child not
exceeding four (4) P25,000.00
WHO IS A QUALIFIED
DEPENDENT CHILD?
Legitimate, illegitimate or legally adopted child
chiefly dependent upon & living with the
taxpayer, not more than 21 years old and not
gainfully employed
A dependent child, although above 21 years old
may still be qualified as a dependent if such
child is incapable of self-support because
he/she is mentally or physically challenged.
Medical certificate is required.
EXEMPTION CERTIFICATES
Important documents:
BIR FORM 1902 (TRU Form) to be submitted by
employee to employer within ten (10) days upon
commencement of employment.
BIR FORM 2305 - to be submitted by employee to
employer within ten (10) days after the change of
exemption unit. The employer is required to submit
the documents to the BIR within thirty (30) days after
receipt of aforesaid documents from the employees
WAIVER - The wife (if working) may claim the
additional exemption for the qualified dependent
children upon husbands execution of waiver.
DE MINIMIS BENEFITS
(Latest amendment is RR 5-2011)
Monetized unused VACATION LEAVE credits of private
employees not exceeding 10 days during the year;
Monetized value of vacation and sick leave credits paid to
government officials and employees;
Medical cash allowance to dependents of employees
not exceeding P750.00 per employee per semester or
P125.00/month;
Rice subsidy - P1,500.00 or one sack of 50 kg. rice/month
amounting to not more than P1,500.00;
Uniform & clothing allowance - Not exceeding
P4,000.00 per annum ;
Actual medical assistance, e.g. medical allowance to
DE MINIMIS BENEFITS
Laundry allowance- not exceeding P300.00/month
Employees achievement awards for length of service or
safety achievement which must be in the form of a personal
tangible property other cash or gift certificate with an
annual monetary value not exceeding P10,000.00 received
by the employee under an established written plan which
does not indiscriminate in favor of highly paid employees;
Gifts given during Christmas & anniversary celebrations not exceeding P5,000.00 per employee per annum
(Flowers, fruits, books or similar items given to
employees under special circumstances
revoked)
Daily meal allowance for overtime work and
ALL OTHER BENEFITS GIVEN BY

EMPLOYERS WHICH ARE NOT
INCLUDED IN THE ABOVE
ENUMERATION SHALL NOT BE
CONSIDERED AS DE MINIMIS
BENEFITS, AND HENCE, SHALL
BE SUBJECT TO INCOME TAX AS
WELL AS WITHHOLDING TAX ON
COMPENSATION INCOME.
OTHER INFORMATION
PAYROLL PERIOD - period of services for
which payment of compensation is
ordinarily
made to an employee by his employer. [Section
2.78.2, RR 2-98]
Daily, weekly, semi-monthly, monthly, etc.
WITHHOLDING TAX TABLE
Daily, weekly, semi-monthly & monthly
OTHER INFORMATION
Requirement of withholding: Every
employer must withhold from
compensation paid an amount computed
using the withholding tax table. The
statutory minimum wage, holiday pay,
overtime pay, hazard pay and night shift
differential pay received by minimum
wage earners (MWEs) shall not be
subject to income tax and withholding
tax. [Section 2.79(A), RR 10-2008]
RETIREMENT PAY
Generally TAXABLE
-EXEMPT if the following requirements are met by employers in
the private sector:
a. There must be a reasonable retirement benefit plan duly
approved by the BIR;
b. The retiring official or employee has been in the service
of the same employer for at least ten (10) years and not
less than fifty (50) years of age at the time of retirement; and
c. The retiring official or employee should not have previously
availed of the privilege under the retirement benefit plan of the
same or another employer. OR
d. If the retirement qualifies under RA 7641 (for employers
without retirement benefit plan)
SEPARATION PAY
Any amount received by an official, employee
or by his heirs from the employer due to death,
sickness or other physical disability or for any
cause beyond the control of the said official or
employee is NOT TAXABLE [Section 32(B)(6)(b) of
the Tax Code] (Please refer also to RMO 25-91 and RMO 262011)
Any amount received by the employee on

account of dismissal is taxable [Section 2.78.1(B)(b),
RR 2-98
Annualized
Withholding Tax
(Year-EndAdjustment)
21
Annualized Withholding Tax

(Year-End-Adjustment)
PURPOSE:
TAX DUE = TAX WITHHELD
WHEN:
On or before the end of the calendar year but
prior to the payment of compensation for the
last payroll period.
If terminated, on the day on which the last
payment of compensation is made.
22
Annualized Withholding Tax or the

Year-End-Adjustment
Section 79(H), Tax Code, Section 2.79(B)(5)(b), RR 2-98,
as amended by RR 10-2008
STEP 1 - Determine the taxable regular and Supplementary

compensation paid to the employee for the entire
calendar year;
STEP 2 - If the employee has previous employment/s within
the year, add the amount of taxable regular and
supplementary compensation paid to the employee
by the previous employer;
23

STEP 3 - Deduct from the aggregate amount of compensation
computed in Step 2 the amount of the total personal
and additional exemptions of the employee;
Personal Exemptions:
P50,000.00
Additional Exemption:
P 25,000 for each qualified dependent child
not exceeding four (4)
24

STEP 4 -
NOTE:
Deduct the amount of premium payments on

Health and or Hospitalization Insurance of
employees who have presented evidence that
they paid the same during the taxable year.
The deductible amount shall not exceed P 2,400/
annum or P 200/month whichever is lower and the
total family gross income does not exceed
P 250,000 for the calendar year. The employee is
required to furnish employer with copies of policy
contract and proof of payments before the
employer does the year-end adjustment.
25

STEP 5 - Compute the amount of tax on the difference arrived
at in Step 4.
Not over P10,000
5%
over P10,000 but not over P30,000
P500 + 10% of the excess over P10,000
over P30,000 but not over P70,000
P2,500 + 15% of the excess over P30,000
over P70,000 but not over P140,000 P8,500 + 20% of the excess over P70,000
over P500,000
P125,000 + 32% of the excess over P500,000

26

STEP 6 - Determine the deficiency or excess, if any,

of the tax computed in Step 5 over the
cumulative tax already deducted and
withheld
since the beginning
of the current calendar year.
27
Year-End Adjustment - Formula

GROSS COMPENSATION INCOME (previous + present employer)
Pxxx
LESS: Non-Taxable Items
a. 13th month pay, Christmas bonus
loyalty Award, gift in cash/kind
and other benefits [Sec. 2.78.1 (b)(11), RR 2-98]
P 30,000.00
b. SSS, GSIS, Medicare, Pag-ibig and
union dues of individual employees
xxxxx
c. 10 days monetized vacation leave
xxxxx
d. Other non-taxable compensation income
xxxxx
xxxx
GROSS TAXABLE COMPENSATION INCOME
Pxxx
Less: Total Exemptions
P
xxx
Premium paid on Health or Hospitalization
Insurance (Maximum of P2,400.00)
xxx
xxx
Taxable Compensation Income
Pxxx
Tax Due: Refer to Annualized Tax Table, Section 24(A), Tax Code
Less: Tax Withheld (Jan. to November, from previous & present employer)
Amount to be withheld in December /refunded on Jan. 25 ff year
Pxxx
xxx
Pxxx
28

or the Year-end Adjustment
RESULTS OF THE YEAR-END ADJUSTMENT:

COLLECTIBLE: Tax Due > Tax Withheld ----collect before
payment of last wage/compensation
REFUNDABLE: Tax Due < Tax Withheld ----- refund on or before
Jan. 25th of the ff. year/last payment of wages
BREAK-EVEN: Tax Due = Tax Withheld ----- do not withhold
from December salary
29
Sample Problem 1
Mr. Dexter, single receives P 25 ,000 (net of
SSS, Philhealth, HDMF and other non-taxable
items of gross income) as monthly regular
compensation starting January 1, 2009, he filed
his resignation effective June 30, 2009. The tax
withheld from January to May was
P15,000.00
30
Sample Problem 1
Computation:
Total compensation received from January 1 to May 31, 2009 P 125,000.00
Add: Compensation to be received on June
25,000.00
Gross Compensation Jan. June, 2009
P150,000.00
Less: Personal Exemption
50,000.00
Taxable Compensation
P 100,000.00
Tax Due *
P 14,500.00
Less: Tax Withheld from Jan. to May
Excess tax withheld to be refunded by employer
on or before June 30, 2009 of the current year
* Tax Due on P70,000.00
Tax on excess (P30,000 x 20%)
Tax on P23,000
15,000.00
P 500.00
P 8,500.00
6,000.00
P 14,500.00
31
Sample Problem 2
Ms. Allister, married with 2 qualified dependent children (with husbands waiver)
receives P25,000 monthly compensation (net of SSS, Philhealth, HDMF
contributions) in 2009 while tax withheld was P35,000.00.
Total Compensation Jan. - Nov. (P25,000 x 11 mos.) P 275,000.00
Add: Compensation to be received in Dec.
25,000.00
Gross Compensation Income
P 300,000.00
Less: Personal Exemption - Married
P 50,000
Additional Exemptions - 2 x P25,000
50,000
P100,000.00
Taxable Compensation Income
P200,000.00
Tax Due*
P 37,500.00
Less Tax Withheld from Jan. to Nov.
To be withheld from employees December salary
35,000.00
P 2,500.00
Tax on P140,000.00
P22,500.00
Tax on excess (P60,000.00 x 25%)
15,000.00
*TAX DUE
P37,500.00
32
Employers are REQUIRED to file Annual Information

Return (BIR Form 1604CF) and the Alphabetical List of
Employees
FOR NON-EFPS FILERS:
1. Manual Submission - 3 copies of BIR Form 1604-CF and the
alphabetical list of employees .
2. Diskette Submission - Employers with ten (10) or more
employees are required to submit 3.5inch diskette.
FOR EFPS FILERS: Submit through e-submission or any other
required
e-filing systems
33
Employers are required to submit the

ANNUAL INFORMATION RETURN OF INCOME
TAXES WITHHELD ON COMPENSATION AND
FINAL WITHHOLDING TAXES (BIR Form No. 1604CF) and the ALPHABETICAL LIST OF EMPLOYEES
WHEN : On or before January 31of the

following year
- WHERE: RDO, LTDO, LTS
RETE NTION: 3 years in a secondary storage
(diskette)
34
Substituted Filing of
Income Tax Return
(BIR Form No. 1700)
A scheme where the employee shall no longer
be required to file ITR and in lieu thereof, the
employers filing of the Annual Information
Return and issuance of BIR Form No. 2316
shall be sufficient provided that conditions set
forth in applicable Revenue Regulations and
other issuances on the matter are complied
with by both the employer and employee.
35
Individuals Qualified for Substituted Filing and are not

required to file BIR Form No. 1700
(RRs 3-2002, 19-2002, 10-2008, RMC 1-2003)
1. Receiving purely compensation income regardless of amount;

2. Working for one employer in the Philippines for the calendar
year;
3. Income tax has been withheld correctly by the employer (TAX
DUE = TAX WITHHELD)
4. The employees spouse also complies with all the three
conditions stated above, and
5. Employer file the Annual Information Return of Income Taxes
Withheld on Compensation and Final Withholding Taxes (BIR
Form 1604-CF).
36
NOTE: All of the above requisites must be

present. The Annual Information
Return
of Income Taxes Withheld on
Compensation
and Final Withholding
Taxes (BIR Form
1604-CF) filed by
their respective
employers duly
stamped Received,
shall be
tantamount to the substituted
filing of
income tax returns by said
employees.
37
Individuals NOT qualified for substituted filing

and MUST file BIR Form no. 1700
1. Individuals with two or more employers concurrently

and successively at anytime during the taxable year.
2. Employees whose income tax has not been withheld
correctly resulting to collectible or refundable return.
3. Employees whose monthly gross income does not
exceed P5,000 or the statutory minimum wage,
whichever is higher, and opted for non-withholding
of tax on said income. - DELETED BY RR 10-2008
38
Individuals NOT qualified for substituted

filing and MUST file BIR Form no. 1700
4. Individuals deriving other non-business, non-professionrelated income in addition to compensation income not
otherwise subject to a final tax.
5. Individuals receiving purely compensation income from a
single employer whose income tax has been correctly
withheld but whose spouse does not qualify for substituted
filing.
6. Non-resident aliens engaged in trade or business in the
Philippines deriving purely compensation income or
compensation income and other non-business, nonprofessional-related income.
39
Individuals NOT qualified for substituted

filing and MUST file BIR Form no. 1700
NOTE: In case of married individuals who are still required
to file returns, only ONE RETURN FOR THE
TAXABLE YEAR SHALL BE FILED by
either of the spouses to cover income of both. It
shall be SIGNED BY BOTH HUSBAND AND
WIFE unless physically impossible to do so, in
which
case, signature of one of the spouses would
be sufficient
40
Certificate of Income and Tax Withheld on

Compensation (BIR Form No. 2316)
Who shall issue: Employer
When to issue : a) on or before January 31 of the
following calendar year; or
b) on the day of last payment
of compensation, if there is termination
Number of copies:
Three (3) copies
Signed by: : Both employer and employee

(under the penalty of perjury)
41
Certificate of Income and Withheld on

Compensation (BIR Form 2316)
In case of successive employment:
The employee is required to furnish his new

employer with his duly certified copy of the
Certificate issued by the previous employer,
both within the taxable year.
42
Uses of BIR Form No. 2316

1. Proof of financial capacity for purposes of loan,
credit card, or other applications;
2. Proof of payment of tax or for availing tax credit
in the employees home country;
3. Securing travel exemption, when necessary; and
4. Other purposes with various government agencies.
JERRY N. BENANING
Withholding Tax Division
Telephone Numbers:
926-93-47 / 927-09-98
Telefax:
926-93-28
e-mail:
jerry.benaning@bir.gov.ph
44
or commonly known as EXPANDED

WITHHOLDING
TAX.
Again, under the expanded
withholding tax
system, taxes withheld on certain income
payments
are intended to equal or at least
approximate the
tax due of the payee on said income. The
income
recipient is still required to file income tax
returns,
report or declare the income and pay the
difference
WITHHOLDING TAX AT SOURCE

OR
EXPANDED WITHHOLDING TAX
(EWT)

A. STATUTORY BASES - Sec. 57-59, R.A. 8424 as
implemented by RR Nos. 2-98, 6-2001, 12-2001,
4-2002, 14-2002, 17-2003, 30-2003, 1-2004, 3-2004,
8-2005, 7-2008, 2-2009; 6-2009; 8-2009; 10-2009
B. RATES - 1% to 32%
C. TIME OF WITHHOLDING - When paid or when
recognized as a payable in the book of accounts of
the payor, whichever comes first. (RR 12-2001)

D. FILING AND REMITTANCE - [with MAP, RR 2-2006)]
For regular withholding agents, filing and remittance of
return shall be on or before the 10th day of the following
month after withholding was made for the months of
January to November. On or before January 15 of the
following year for the month of December.[with MAP (RR 2-2006)
For EFPS filers, filing of return shall be governed by the
provisions of RR 26-2002 (grouping by industry) while
remittance shall be additional five (5) days from that of
regular withholding agents. Remittance returns are BIR
Form No. 1601-E and BIR Form No. 1606 (for real property
transactions subject to EWT)

E. CERTIFICATES BIR Form No. 2307 - Certificate of Creditable Tax
Withheld at Source is issued by the WA to payee within 20 days
after close of quarter or upon request/demand. However, for
individual payees, upon request for the 1st calendar quarter.
F. ANNUAL RETURN Withholding Agent shall file the Annual Information Return
(BIR Form No. 1604-E) on or before March 1 of the following
year together with the Alphabetical List of payees in hard copy,
in diskette, thru e-submission or other mode of submission.
WITHHOLDING TAX AT SOURCE

G. NATURE OF TAX WITHHELD Creditable against the quarterly or annual
tax due.
income
H. TAX BASE
Gross amount paid excluding VAT for
taxpayers.
VAT
I. INCOME PAYMENTS SUBJECT TO EWT:
INCOME PAYMENT - EWT

A. Professional/Talent Fees for services rendered by
individuals 15% if the gross income for the
current year exceeds P720,000.00 and 10% if
otherwise. (RR 2-98,/6-2001/12-2001/30-2003)
1. Individually engaged in the practice of profession
(Lawyers, CPAs, Engineers, etc.)
2. Professional Entertainers, etc.
3. Professional athletes
4. Directors and producers involved in movies, stage,
TV & Musical production;
5. Insurance agents and Insurance Adjusters
6. Management & Technical Consultants

7. Bookeeping agents and agencies
8. Other recipients of talent fees
9. Fees of directors who are not employees of the
payor corporation the duties of which are
confined to attendance in the meetings of the
Board of Directors
NOTE : In order to determine the rate of EWT to be
used, payees are required to file with the
Collection Division of the BIR regional office
having jurisdiction over the place of business
of the taxpayer the duly notarized Sworn
Declaration of Income for the current year.

B. Professional/Talent Fees Paid to Juridical Persons 15% or 10% (RR 2-98/6-2001/30-2003)
C. Rentals of:
1. Real Property (RR 2-98/6-2001)
- 5%
2. Personal Property (RR 14-2002/17-2003) -5%
D. Cinematographic film rentals and
other payments (RR 2-98/^-2001)
- 5%
E. Income payments to contractors

(RR 2-98/6-2001/14-2002/17-2003)
- 2%
INCOME PAYMENT
F. Income distribution to beneficiaries of estates
and trusts under Section 60 of the Tax Code,
except such income is subject to final tax
and tax exempt income (RR 2-98/6-2001) - - - - - - - - 15%
G. Income payments to certain brokers and agents
(Customs, insurance, stock, real state, immigration
and
commercial brokers and fees of agents of professional
entertainers (RR 2-98/6-2001/14-2002/17-2003) - - - - - - - - 10%
H. Income payments to partners of General

Professional Partnership (GPP ) (RR 2-98/6-2001/30-2003)
15% or 10%
INCOME PAYMENT EWT

I. Professional fees paid to medical practitioners
by patients admitted and confined to hospitals
or clinics (RR 2-98/12-98/3-99/14-2002/17-2003/30-2003)
15% or 10%
J. Payment for the sale, exchange or transfer of real

property classified as ordinary asset if seller is
habitually engaged in the real estate business (RR 2-98/62001/17-2003)
- Exempt transaction
- 0%
- Selling price is not over P500,000
- 1.5%
- SP is over P500,000 but not over P2M
- 3%
- Selling price is over P2 M
- 5%
- Seller is not habitually engaged in REB - 6%
INCOME PAYMENT
K. Additional income payments to government
personnel from importers, shipping, airline
companies or their agents (RR 2-98/6-2001) 15%
L. Certain payments made by credit card companies
(RR 2-98/6-2001) 1% of of gross payment
M. Income payments made by the top 20,000 private
corporations (RRs 12-94,17-2003, 30-2003, 14-2008) . With
conditions on agricultural products per Section 2, RR 6-2009)
Goods - 1%
Services -
2%
INCOME PAYMENT
N. Income payments by government (RR 2-98/6-2001/142002/17-2003/30-2003)
Goods - 1%
Services -
2%
O. Commission of independent and exclusive

distributors, medical, technical and sales
representatives and marketing agents of multi-level
marketing companies (RR 2-98/17-2003) - 10%
P. Tolling fees paid to refineries (RR 14-2002) - 5%
Q. Payments made by pre-need companies to funeral
parlors (RR 14-2002) - 1%

R. Payments of funeral parlors to embalmers
- 1%
(RR 14-2002)
S. Income payments made to suppliers of agricultural

products [applies only to top 20000 corporations,
government offices and top 5000 individual taxpayers
(with conditions) (RR 17-2003/30-2003/1-2004/3-2004/6-2009)
--1%
T. Income payments on purchases of minerals, mineral
products and quarry resources as defined and discussed
in Section 151 of the Tax Code (RR 17-2003/7-2008) 10%
INCOME PAYMENT EWT

U. Meralco refund to customers arising from
Supreme Court decision under SC case
GR 14814 dated April 9, 2003 as approved
by ERC: (RR 8-2005/2-2009)
- With active contracts
- 25%
- With terminated contracts - 32%
V. Interest income on the refund of electric
meter deposits by Meralco and other
electric Distribution Utilities: (RR 2-2009)
INCOME PAYMENT EWT

1. Residential and General Service
customers whose monthly electric
consumption exceeds 200kwh
as classified by the concerned DU - 10%
2. Non-residential, etc. - - - - - - - - - - - 20%
INCOME PAYMENT EWT

W. Payments made by the Top 5,000 Individual TPs
to their local/resident suppliers of goods and services other than those covered by other rates of
withholding tax: (RR 6-2009) Goods - 1%
Services- 2%
X. Payments made by political parties and candidates
of local and national elections of all their purchase
of goods and services as campaign expenditures
and payments made by an individual or juridical
persons forming part of their campaign
contributions to candidates of local and national
elections and to political parties 5% (RR 8-2009/102009)
MARAMING SALAMAT PO!
JERRY N. BENANING
WITHHOLDING TAX DIVISION
Bureau of Internal Revenue
Telephone Numbers: 926-93-47

927-09-98
Telefax
:
926-93-28
Email:
jerry.benaning@bir.gov.ph
FINAL WITHHOLDING TAX
Under the Final Withholding Tax System, the

tax withheld by the withholding agent is
constituted as a full and final payment of the
income tax due from the payee on said
income. The payee is not required to file an
income tax return.

The following are payments or transactions subject
to final withholding tax or final tax:
A. Granting or payment by the employer of FRINGE
BENEFITS (good, service or other benefit in cash or in kind, in addition
to basic salaries) t o supervisors and managers such as:
(see RR 3-98)
Fringe Benefit
Valuation
1. Housing
a. Er leases residential property
Value of the benefit (VB)
which is the usual place of
shall be the amount of
residence of the employee
rental paid by the Er (per lease
contract).
The Monetary Value
(MV) is 50% of VB.

A. FBT Housing
Fringe Benefit
Valuation
1. b. Er owns residential property and
Annual VB is 5% of the market
the same is assigned for the use

value of land and improvement.
of his employee as his usual
The MV shall be 50% of the VB.
place of residence
MV = [5%(FMV or ZV] x 50%
c. Er purchases residential property
on installment basis and allows
Ee to use the same as his usual
place of residence
Annual VB is 5% of acquisition
cost, exclusive of interest. MV
is 50% of the VB.

A. FBT Housing
Fringe Benefit
Valuation
1. d. If Er purchases residential property MV shall be entire value

and transfers ownership in the name of the benefit
of Ee, the VB shall be the Ers acquisition cost or ZV
e. If Er purchases a residential property VB shall be the difference
& transfers ownership to Ee for his between the FMV or ZV
residential use, at a price less than the and the cost to the Er.
Ers acquisition cost
MV shall be the entire
value of the benefit

A. FBT 1. Housing The following housing
benefits shall not be considered fringe benefit
subject to fringe benefits tax:
1. f. Housing privilege for uniformed personnel of AFP;
g. A housing unit which is situated inside or adjacent
to the premises of the business. (located within the maximum of 50
meters from
h.
the perimeter of the premises)
Temporary housing for an employee who stays in a housing unit

for 3 months or less

A. FBT - 2. EXPENSE ACCOUNT
2.a. In general, expenses incurred by Ee but paid by Er shall be treated as
taxable FB, except when the expenditures are duly receipted for and in the
name of the Er and the expenditures do not partake the nature of a personal
expense attributable to the employee.
b. Expenses paid for by the but reimbursed by his Er shall be treated as
taxable FB except when the expenditures are duly receipted for and in the
name of the ER and the expenditures do not partake the nature of a personal
expense attributable to the said employee.
c. Personal expenses of the Ee (e.g. purchase of groceries for the personal
consumption of the employee and family members) paid for and reimbursed
by the Er to the Ee shall be treated as taxable FB whether the same are duly
receipted for on in the name of the Er,

A. FBT - 2. EXPENSE ACCOUNT
2. d. RATA which are fixed in amounts and are regularly received by
Ee as part of compensation income shall not be treated as taxable
FB but shall be considered taxable compensation income. [see Section
2.78.1(A)(6), RR 2-98, as amended by RR 8-2000]
3. MOTOR VEHICLE
Fringe Benefit
Valuation
3. a. Er purchases vehicle in the name of Ee VB is the cquisition

cost. MV is the entire
value of FB (regardless if
it is used by Ee
partly for
personal purpose and partly for

the benefit of Er)

A. FBT - MOTOR VEHICLE
Fringe Benefit
Valuation
3. b. Er provides Ee with cash for

VB is the amount of
the purchase of a motor vehicle, cash received
by Ee.
the ownership of which is
MV is the entire
placed in the name of the
value of
the FB (regardless Ee
if it is used by Ee partly for personal
purpose and partly for the benefit of
Er)
c. Er purchases car on installment, VB is the acquisition

the ownership of which is placed
cost exclusive of
in the name of the
Ee
interest, divided by 5
years. MV of FB
is
the entire value of the benefit (regardless it is
used by Ee partly for personal purpose and partly for Ers benefit.

Fringe Benefit
Valuation
3. d. Er shoulders portion of the

VB is the amount
amount of the purchase price
shouldered by Er. MV
of the vehicle the ownership
is the entire value of FB
of which is placed in the
(regardless if it is used by Ee partly for
of the Ee.
personal purpose and partly for the benefit
of the Er)
name
e. Er owns & maintains a fleet

VB is the acqusition cost of
of motor vehicles for the use
all vehicles NOT normally
of the business and employees used for
sales, freight, delivery service and
other nonpersonal use divided by 5 yrs.
MV of FB is 50% of VB or
MV = [(AC/5] x 50%

Fringe Benefit
Valuation
3. f. Er leases & maintains a fleet VB is the amount of

of motor vehicles for the use
rental payments for
of the
business & employees
vehicles not normally
used for sales, freight,
delivery, service and
other non-personal use.
MV is 50% of VB
g. Use of aircraft (including helicopters) owned and
maintained by Er shall be treated as business use and

Fringe Benefit
Valuation
3. h. Use of yacht, whether owned
VB is measured based
and maintained or leased by
on the depreciation of
the Er, shall be
treated as
the yacht at an estimataxable FB.
ted life of 20 years
4. HOUSEHOLD EXPENSES
Expenses of the Ee which are borned by the Er for
household personnel (salaries of household help, personal
driver or the Ee, or other similar expenses like payment for
homeowners association dues, garbage dues, etc) shall be

A. FBT - 5. INTEREST ON LOAN AT
LESS THAN MARKET VALUE
5. a.
Er lends money to Er free of interest or at a rate lower than

12%, such interest foregone by the Er or the difference of
the interest assumed by the Ee and the rate of 12% shall
be treated as taxable FB.
b. The benchmark interest rate of 12% shall remain in effect
c. Applies to installment payments or loans with interest rate
lower than 12% starting January 1, 1998.

A. FBT - 6. MEMBERSHIP FEES, DUES,
AND OTHER EXPENSES
BORNE BY THE ER FOR HIS
EE IN SOCIAL AND
ATHLETIC
CLUBS OR OTHER
SIMILAR
ORGANIZATIONS.
The expenditures shall be treated as taxable
FB of the employee in FULL.

A. FBT - 7.
EXPENSES FOR FOREIGN
TRAVEL
7. a. Expenses for foreign travel borne by the ER for
attending business meetings or conventions (as supported by documents)
are NOT taxable FB. Inland travel expenses (food, beverages and local
transpo) except lodging cost in a hotel (or similar establishments)
amounting to an average of $2300.00 or less per day is not
subject to FBT. The cost of economy and business class
airplane ticket is NOT subject to FBT. However, 30% of the
FIRST CLASS airplane ticket is subject to FBT.
b. Documentary evidences required [Sec. 2.33(B), RR 3-98]

A. FBT - 7.
EXPENSES FOR FOREIGN

TRAVEL
7. c. Travelling expenses which are paid by the Er for the

travel of the family members of the Ee shall be treated
as taxable FB of the employee.
8. HOLIDAY AND VACATION EXPENSESHoliday and vacation expenses of the employee borne by
his employer shall be treated as taxable FB.

A. FBT - 9. EDUCATIONAL ASSISTANCE
TO Ee OR HIS DEPENDENTS
9. a. Educational assistance which are borne
by the Er is taxable FB except if the grant is
directly connected with the Ers trade, business
or profession and there is a written contract that
Ee shall remain in the employ of Er for a period
of time they have mutually agreed upon.

A. FBT - 9. EDUCATIONAL ASSISTANCE
TO Ee OR HIS DEPENDENTS
9. b. The educational assistance extended by the Er to
the dependents of the Ee shall be treated as
taxable FB unless the assistance was provided
through competitive scheme under the scholarship
program of the company.

A. FBT - 10. LIFE OR HEALTH NSURANCE
AND OTHER NON-LIFE
INSURANCE PREMIUMS OR
SIMILAR AMOUNTS IN
EXCESS OF WHAT THE LAW
ALLOWS. The cost of life or health
insurance and other non-life insurance

premiums borne by the Er for his Ee is
taxable FB except a) contributions of the Er for
the benefit of the Ee, pursuant to the provisions
of existing laws and b) cost of premiums borne
by the Er for the group insurance of his Ees.

Other FBs not subject to FBT:
1. FBs which are authorized and exempted from tax under
the Tax Code or under any special law;
2. Contributions of Er for the benefit of the Ee to retirement,
insurance and hospitalization benefit plans;
3. Benefits given to rank and file, whether granted under a
CBA or not;
4. De Minimis benefits as defined under RR 3-98, as amended
by RR 8-2000, 10-2000 and 10-2008;
5. If the grant of the FBs to the employee is required by the
nature of, or necessary to the trade, business or profession
of the employer; or
6. If the grant of the FB is for the convenience of the Er.

A. OTHER FINAL TAXES:
Sec. 57-59, RA 8424, Sec. 2.57, RR 2-98,

RRs 10-98, 6-2001, 12-2001, 17-2003,
30-2003, 2-2006, etc.
1. Payment to Individual Citizen and Resident Alien
a. Interest on Phil. Currency bank deposits

& yield on deposit substitutes, etc. - - - - - - - 20%
b. Interest under the Foreign Currency
Deposit System - - - - - - - - - - - - - - - - - - - 7.5%
c. Royalties - - - - - - - - - - - - - - - - - - - - - - - 20%
d. Royalties on books, literary works and
musical arrangements - - - - - - - - - - - - - 10%
e. Prizes (except amounting to P10,000 or less) - - - - - - - 20%
f. Winnings (except PCSO & Lotto) - - - - - - - - - - - 20%

1. Payment to Individual Citizen and Resident Alien
Rate
f. Interest income from pre-termination
of certificate of longterm deposit:
4 years to less than 5 years - - - - - 5%
3 years to less than 4 years - - - - - - 12%
Less than 3 years - - - - - - - - - - - - 20%
g. Cash and/or property dividends - - - - - 10%

2. Payment to Non-resident Alien Individual:
a. Engaged in trade or business within the Phils:
Rate
1. Cash and/or property dividends, interest,
royalties, prizes (except amounting to P10,000 or less),
winnings (except PCSO & Lotto)
2. Royalties on books, literary works and
musical compositions
3. Cinematographic films and similar work
20%
10%
25%

a. Engaged in trade or business within the Phils:
4. Interest income from pre-termination
of certificate of long-term deposit:
4 years to less than 5 years - - - - - - - - - - - 5%
3 years to less than 4 years - - - - - - - - - - - 12%
Less than 3 years - - - - - - - - - - - - - - - - - 20%
5. Income from contracts by sub-contractors
from
service contractors engaged in
petroleum operations under PD 87 - - - - - - 8%
6. Share in the distributable net income after tax
of which payee is a partner or share in the
net income after tax of an association
where he is a member or co-venturer - - - - - - 20%

a. ENGAGED trade or business within the Phils:
Rate
6. Income derived by alien individuals
employed and occupying managerial
and technical positions (see RMC 41-2009)
in Regional or Area Headquarters
and Regional Operating Headquarters
and Representative Offices
in the Phils
of Multinational
Companies, Offshore
Banking Units
and Foreign Petroleum
Service
Contractors and Sub-contractors
15%

a. NOT ENGAGED in trade or business within the Phils:
- Cash and/or property dividends, rents,
salaries, wages, premiums, annuities,
compensation, remuneration, emoluments
or
other fixed or determinable annual
or
periodic or casual gains, profits
and income - - - - - - - - - - - - - - - - - - - - - - - - 25%
3. Payment to a Domestic Corporation

3. Payment to a Domestic Corporation
Deposit System - - - - - - - - - - - - - - - - - - - 7.5%
c. Royalties - - - - - - - - - - - - - - - - - - - - - - - - 20%
d. Intercorporate dividends - not subject to tax

4. Payment to a Resident Foreign Corporation
Deposit System - - - - - - - - - - - - - - - - - - - 7.5%
c. Royalties - - - - - - - - - - - - - - - - - - - - - - - - 20%
d. Dividends received from domestic corporation
is not subject to tax
e. Branch profit remittance - - - - - - - - - - - - - 15%
5. Income derived by OBU and FCDU from
foreign currency transactions with local
commercial banks - - - - - - - - - - - - - - - - - - - - 10%

4. Payment to a NON-RESIDENT FOREIGN CORPORATION
a. Cinematographic films and similar work - - - - - - 25%
b. Vessels chartered by Philippine nationals - - - - - - 4.5%
c. Lessor or aircraft, machineries & other eqpmt - - 7.5%
d. Interest on foreign loans - - - - - - - - - - - - - - - - - 20%
e. Cash or property dividends received from
domestic corporation* - - - - - - - - - - - - - - - - - - - 15%
[*with conditions under Section 28(B)(5)(b) of the Tax Code and
Section 2.57.1(I)((1) of RR 2-98]
f. Other payments to NRFC - - - - - - - - - - - - - - - - - - 30%

5. Informers reward [see Section 2.57(K) , RR 2-98, Section 57(A) and 282,
both of the Tax Code]

Remittance:
1. FBT: - For regular withholding agents, due
date is 10th day of the month following end of
calendar quarter.
For EFPS filers, additional
5 days
- Remittance return is BIR Form No.
1603 (quarterly)
- Venue for payment is at the AAB within
the RDO where WA is
registered/RCO/LTDO/LTS-NO

Remittance:
2. Interest on bank deposits:
- Due date is on or before the 10th day of the
following month.
- Remittance return is BIR Form No. 1602
- Venue for payment is at the AAB within the
RDO where WA is registered/RCO/LTDO/LTSNO.

Remittance:
3. Other Final Taxes
- Due date is on or before the 10th day of
the following month for the months of
January to November. For December, on or
before January 15 of the following year
- Remittance return is BIR Form No. 1601-F
- Venue for payment is at the AAB within the
RDO where WA is registered or at the
RCO/LTDO/LTS-NO

Certificate issued to payee:
- BIR Form No. 2306
- On or before January 31 of the ff. year
Nature of taxes withheld: Non-creditable
Annual information return:
a. FBT & OFT BIR Form No. 1604-CF
and alphalist of payees
b. Interest on bank deposit BIR Form No.
1604-CF but no alphalist of payees
GOVERNMENT MONEY PAYMENT

[Sections 4.114 and 5.116, RR 2-98, RA 9337 as implemented by RR 16(2005 )
A. STATUTORY BASES:
1. For NON-VAT payees - Sec. 5.116, RR
No. 2-98 (GMP)
2. For VAT taxpayers/payees - Sec. 114(C) ,
R.A. 8424, as amended by RA 9337; Sec.
4.114, RR No. 2-98, as amended by RR 162005 (GVAT)

B. WITHHOLDING AGENT:
- The
government or any of its political subdivisions,
instrumentalities, agencies, GOCC, etc. as
represented by their heads of offices, treasurers
and accountants (RMO 8-2003)
C. TIME OF WITHHOLDING - When paid or
payable
D. REMITTANCE - on or before the 10th day
of the following month after withholding was
made using BIR Form No. 1600.

E. ISSUANCE OF CERTIFICATE
a. For NON-VAT PAYEES - not later than
10 days after the end of the month using
BIR Form No. 2307. (RR 4-2002)
b. VAT PAYEES - not later than 10 days after
the end of each month using BIR Form No.
2306 (RR 4-2002, RR 16-2005)

F. DESIGNATION OF GOVERNMENT
OFFICIALS AS WITHHOLDING AGENT:
The heads of office, treasurers and accountants:
(RRs 1-
87, 6-96, 10-97, RMOs 14-98, 70-98, 8-2003)
G. NATURE OF TAX WITHHELD

a. GMP- creditable against percentage tax due
b. GVAT Non-creditable (see Section 4.114.2 of RR 16-2005)

TRANSACTIONS SUBJECT TO GMP (NV)
Payments to: [Section 5.116(A)(1to 11)]

1. Persons exempt from VAT
3%
2. Domestic carriers and keepers of garages

3. International carriers air/shipping
3%
3%
4. Franchise grantees
a. Radio and/or TV broadcasting companies
whose annual gross receipts of the preceding
year does not exceed P10M
3%
b. Gas and water utilities (electric utilities now
subject to VAT)
2%

5. Banks and Non-bank Financial Intermediaries Performing Quasi-Banking Functions - (Section

121, Tax Code, as amended by RA 9337)
On interest, commissions and discounts from lending activities as well as income
from financial leasing on the basis of the remaining maturities of instrument from which such
receipts are derived:
a. Maturity period is five years or less - - - - - - - - - - - - - - - - - - - - 5%
Maturity period is more than 5 years - - - - - - - - - - - - - - - - - - - 1%
b. On dividends and equity shares and net income of subsidiaries
0%
c. On royalties, rentals of property, real or personal, profits from
exchange and all other items treated as gross income under
Section 32 of the Tax Code- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7%
d. On the net trading gains within the taxable year on foreign
currency, debt securities, derivatives and other financial
instruments - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7%
6. Finance companies
a. On gross receipts derived by finance companies, as well as other financial
intermediaries NOT performing quasi-banking functions doing business
in the Phils. from interest, discounts and other items treated as gross income - 5%

6. Finance companies
b. On interest, commissions and discounts from lending
activities, as well as financial leasing based on the
remaining maturity of the instruments from which
such receipts are derived:
- Short term maturity (2 years below)
5%
- Medium-term (over 2 yrs but not exceeding 4 yrs)
3%
- Long-term maturity:
Over 4 yrs but not exceeding 7 years
Over 7 years
0%
1%

7. Life insurance premiums paid to persons doing
life insurance business of any sort in the Philippines 5%
[with conditions, Section 5.116(A)(7), RR 2-98]
8. Agents of foreign insurance companies:

a. On premiums paid to every fire, marine
or miscellaneous insurance agent
10%
[Section 124, Tax Code/Sec. 5.116(A)(8), RR 2-98]
b. On premium payments obtained directly . . . etc.

5.116(A)8(B), RR 2-98]
5%
[Section

9. Amusements - On gross payments to proprietor, lessee, or
operator of:
a. Cockpits
18%
b. Cabarets, night and day clubs
18%
c. Boxing exhibitions
10%
d. Professional basketball games
15%
e. Jai-alai and racetracks
30%
[Section 5.116(A)(9)(a to e), RR 2-98]
GOVERNMENT MONEY AYMENT

10. Sale, barter or exchange of shares of stock
listed and traded through the local stock exchange 1/2 of 1%
[Section 5.116(A)(10), RR 2-98]
11. Shares of stock sold or exchanged through initial

public offering: [Section 5.116(A)(11), RR 2-98]
- Not over 25%
4%
- Over 25% but nor exceeding 33 1/3%
2%
- Over 33 1/3%
1%

TRANSACTIONS SUBJECT TO GVAT:
B. VAT PAYEES
1. Purchase of Goods & Services
5%
2. Payment for lease or use of
properties or property rights
to non-resident owners
12%

3.
Payment for services rendered to local

insurance companies with respect to
reinsurance premiums payable to nonresident insurance or reinsurance
companies; - 12% and
4.
Services rendered in the Philippines by

non-residents - 12%
STEP-BY-STEP
PROCEDURES TO
DETERMINE THE AMOUNT
OF TAX
TO BE WITHHELD
[Section
2.79(B)(3)
of
Revenue Regulations (RR) No.
2-98, as last amended by RR
10-2008]
STEP 1. USE THE APPROPRIATE

WITHHOLDING TAX TABLE
for
the payroll period;
monthly,
semi-monthly, weekly or daily
as the case may be.
WEEKLY
Exemption
0.00
0.00
9.62
2. S/ME
0.0
50.0
1
1
0
962
192
1,154
163.4
961.5
48.08
6
432.69
4
Status
+0% +5% +10% +15%
over
over
over
over
(`000P)
A. Table for employees without qualified dependent
1. Z
577
1,538
2,403.
85
+20%
over
+25%
over
+30%
over
+32%
over
1,346
2,308
2,692
3,654
4,808
5,769
9,615
10,577
B. Table for employee with qualified dependent child(ren)

1. ME1 / S1
75.0
2. ME2 / S2
100.0
3. ME3 / S3
125.0
4. ME4 / S4
150.0
1,44
2
1,92
3
2,40
4
2,88
5
1,635
2,019
2,788
4,135
6,250
11,058
2,115
2,500
3,269
4,615
6,731
11,538
2,596
2,981
3,750
5,096
7,212
12,019
3,077
3,462
4,231
5,577
7,692
12,500
MONTHLY
Exemption
Status
(`000P)
0.0
0.00
0
+0
%
ove
r
+5%
over
41.6 208.3 708.3

7
3
3
+10%
over
+15%
over
+20%
over
1,875.
00
4,166.
67
10,41
6.67
+25%
over
+30%
over
+32%
over
A. Table for employees without qualified dependent

1. Z
2. S/ME
0.0
50.0
833
2,500
1 4,167 5,000 6,667
5,833
11,667
20,833
41,667
10,00
15,833
0
25,000
45,833
17,917
27,083
47,917
20,000
29,167
50,000
22,083
31,250
52,083
24,167
33,333
54,167
B. Table for employee with qualified dependent child(ren)

1. ME1 / S1
2. ME2 / S2
3. ME3 / S3
4. ME4 / S4
75.0
100.
0
125.
0
150.
0
1 6,250 7,083 8,750

1 8,333 9,167
10,41 11,25
7
0
12,50 13,33
1
0
3
1
10,83
3
12,91
7
15,00
0
12,08
3
14,16
7
16,25
0
18,33
3
MONETARY AND NON-MONETARY

COMPENSATION
paid
to
an
employee for the payroll period,
segregating gross benefits which
includes thirteenth (13th) month
pay,
productivity
incentives,
Christmas
bonus,
and
other
benefits received by the employee
per payroll period. Gross benefits
which are received by officials and
employees of public and private
entities in the amount of thirty
thousand pesos (P30,000.00) or
less shall be exempted from
income paid to the employee for the

payroll period. The taxable income
refers to all remuneration paid to an
employee not otherwise exempted
by law from income tax and
consequently from withholding tax.
The non-taxable income are those
which are specifically exempted
from income tax under the Tax Code
or by other special laws as listed in
Section 2.78.1(B) of RR 2-98,
as
amended
(e.g.
benefits
not
exceeding
P30,000,
non-taxable
retirement benefits and separation
COMPENSATION income as determined

in Step 3 into REGULAR taxable
compensation
income
and
SUPPLEMENTARY
compensation
income.
Regular
compensation
includes basic salary, fixed allowances
for representation, transportation and
other allowances paid to an employee
per payroll period which are not
substantiated
or
liquidated.
Supplementary compensation includes
payments to an employee in addition
to the regular compensation such as
commission, overtime pay, taxable
retirement pay, taxable bonus and
LEVEL
as follows:
Determine
the
line
(horizontal)
corresponding to the status and number of
qualified dependent children using the
appropriate symbol for the taxpayer
status.
Determine the column (vertical) to be
used by taking into account only the total
amount of taxable regular compensation
income. The compensation level is the
amount indicated in the line and column to
which the regular compensation income is
equal to or in excess, but not to exceed
STEP
6.
COMPUTE
THE
WITHHOLDING TAX by adding
the tax predetermined in the
compensation level indicated at
the top of the column, to the tax
on the excess of the total
regular
and
supplementary
compensation
over
the
compensation level which is
computed by multiplying the
excess by the rate also indicated
at the top of the same column.
Sample Computations
on the Use of the
Withholding Tax Table
EXAMPLE 1: Mr. A, single (S) with

no qualified dependent, receives
compensation income of P12,000.00
(net of all non-taxable items of gross
income) as
regular monthly
compensation for March, 2009.
Compute his withholding tax for the
month.
COMPUTATION:
Using
the
monthly
withholding tax table, the withholding tax is
computed by referring to Table A, line 2,
column 5 showing a tax of P708.33 on
P10,000.00 plus 20% of the excess
(P12,000.00 less P10,000.00 = P2,000.00).
Taxable compensation
P12,000.00
Less: Compensation level
(Table A, Line 2, Column 5)
10,000.00
Excess
P 2,000.00
Tax on P10,000.00
P
708.33
400.00
Withholding tax for March, 2009
P 1,108.33
EXAMPLE 2: Mr. B, single (S2) with

two (2) qualified dependent children,
receives P7,500.00.00 as semimonthly regular compensation (net
of non-taxable items) and P800.00 as
commission
(supplementary
compensation) for January, 2009, or
a total of P8,300.00.
COMPUTATION:
Using
the
semi-monthly
withholding tax table, the withholding tax for January,
2009 is computed by referring to Table B, Line 2,
Column 5 [Fix compensation level taking into account
only the regular semi-monthly compensation income of
P7,500.00] which shows a tax of P354.17 plus 20% of
the excess (P8,300.00 less P7,083.00 = P1,217.00).
Total taxable compensation
P8,300.00
Less: compensation level
(Table B, Line 2, Column 5)
7,083.00
Excess
P1,217.00
Tax on P7,083.00
P 354.17
243.40
Withholding tax for January, 2009
P
597.57
EXAMPLE 3:
Mrs. C, married
(ME) with two (2) children receives
on September, 2009, P20,00.00 as
regular compensation. Mr. C, her
husband, is also employed and
claims for the 2 qualified dependent
children (additional exemptions).
due is computed by referring to Table A, Line

2, Column 6 which shows a tax of
P1,875.00 on P15,833.00 plus 25% of the
excess (P20,000.00 less P15,833.00 =
P4,167.00).
Total taxable compensation
P20,000.00
Less: Compensation Level
(Table A, Line 2, Column 6)
15,833.00
Excess
P 4,167.00
Tax on P15,833.00
P
1,875.00
1,041.75
EXAMPLE 4: Mr. D, married, with

four (4) qualified dependent children
(ME4) receives P10,000.00 (net of
taxable items) as regular semimonthly
compensation
for
the
payroll period October 16 to 30,
2009.
Mrs. D, his wife, is also
employed. Mr. D did not waive his
right in favor of his wife to claim for
the additional exemptions.
COMPUTATION: Using the semi-monthly

withholding tax table, the withholding tax due
is computed by referring to Table B, Line 4,
Column5 which shows a tax of P354.17 on
P9,167.00 plus 20% in excess (P10,000.00
less P9,167.00 = P833.00).
P10,000.00
9,167.00
Excess
P 833.00
Tax on P9,167.00
P 354.17
Tax on excess (P833.00 x 20%)
166.60
W/Tax for October 16-30, 2009 P
EXAMPLE 5: Mr. E, married with

two
(2)
legitimate
dependent
children and one (1) legally adopted
child, receives P30,000.00 (net of
non-taxable
items)
as
regular
compensation for the month of
March, 2010 from the Department of
Agriculture where he works as a
supervisor. Mrs. E, his wife is not
employed and is the one taking care
of the children.
withholding tax table, the withholding tax

due is computed by referring to Table B,
Line 3, Column 6 which shows a tax of
P1,875.00 on P22,083.00 plus 25% of
the excess (P30,000.00 less P22,083.00
= P7,917.25).
P30,000.00
22,083.00
Excess
P 7,917.00
Tax on P22,083.00
P 1,875.00
Tax on excess(P7,917.25 x 25%)
1,979.25
EXAMPLE 6:
On December, 2009, Mrs. F,
married with three (3) qualified dependent
children receives P20,0000.00 as regular monthly
salary (consisting of her basic salary of P15,000
and other items of taxable compensation income
but net of SSS, Pag-ibig & Medicare and other
non-taxable items) from her private employer.
She also received during the month her 13th
month pay amounting to P15,000.00 plus other
benefits such as productivity incentive bonus (PIB)
of P10,000.00,and loyalty pay of P3,000.00. Mr. F,
her husband, who works as a section chief in the
Commission on Elections, waived his right to claim
the additional exemption for the children and
accordingly executed the required waiver on time.
Compute the withholding tax of Mrs. F for the
Gross Benefits:
13th month pay
P15,000.00*
Productivity IB
10,000.00*
Loyalty pay
3,000.00*
Total Gross Benefits
P 28,000.00*
*NOTE: Non-taxable because the 13th month pay

and other benefits does not exceed P30,000.00.
COMPUTATION: Using the monthly withholding tax table, the
withholding tax due is computed by referring to Table B, Line 3,
Column 5 which shows a tax of P708.33 on P16,250.00 plus 20%
of the excess (P20,000.00 less P16,250.00 = P3,750.00).
P 20,000.00
16,250.00
Excess
P 3,750.00
Tax on P16,250.00
P
708.33
750.00
Withholding tax for December, 2009
P
1,458.33
JERRY N. BENANING
Asst. Chief, Withholding Tax
Division
For inquiries on Withholding Taxes
You may call us at telephone numbers:
9269347/9269351
Or email add: jerry.benaning@bir.gov.ph
Republic Act No. 9994, Otherwise Known

as the
"Expanded Senior Citizens Act

2010
RR 7-2010
Presented by:
JERRY N. BENANING
Withholding Tax Division, BIR
of
SEC. 2. Definitions
Senior Citizen or Elderly
any Filipino citizen who is a resident of
the Philippines,
sixty (60) years old or above.
It may apply to senior citizens with dual
citizenship status provided they prove
their Filipino citizenship and have at least
six (6) months residency in the Philippines
SEC. 2. Definitions
Resident Citizen a Filipino Citizen with permanent/
legal residence in the Philippines, and shall include one,

who, having migrated to a foreign country, has returned
to the Philippines with a definite intention to reside
therein, and whose immigrant visa has been surrendered
to the foreign government.
Benefactor refers to any person whether related or not
to the senior citizen who provides care or who gives any

form of assistance to him/her, and on whom the senior
citizen is dependent on for primary care and material
support, as certified by the City or Municipal Social
Welfare and Development Officer (C/MSWDO).
SEC. 2. Definitions
Dependent a Senior Citizen, who may or may not
be related to his/her Benefactor and who is living with
and dependent upon his/her Benefactor for his/her chief
support.
Minimum Wage Earner a worker in the private

sector who is paid the statutory minimum wage, or an
employee in the public sector with compensation
income of not more than the statutory minimum wage
in the non-agricultural sector where he/she is assigned
OSCA the Office for Senior Citizens Affairs of cities

and municipalities, which is headed by a Senior Citizen
who shall serve for a term of three (3) years.
SEC. 3.
Income Tax of Senior

Citizens.
qualified Senior Citizens deriving returnable income
Generally,
during the taxable year, whether from compensation or
otherwise, are required to file their income tax returns and pay
the tax as they file the return.
However, if the returnable income of a Senior Citizen is in the

nature of compensation income but he qualifies as a minimum
wage earner under RA No. 9504, he shall be exempt from
income tax on the said compensation income subject to the rules
provided under Revenue Regulations No. 10-2008 applicable to
minimum wage earners.
Likewise, if the aggregate amount of gross income earned by the
not exceed the

amount of his personal exemptions (basic
and additional), he shall be exempt from
income tax and shall not be required to file
Senior Citizen during the taxable year does
Hence, he can still be liable for other taxes such as :
1.The 20% final withholding tax on interest income

from any currency bank deposit
2.The 7.5% final withholding tax on interest
income from a depository bank under the
expanded foreign currency deposit system (Sec. 24(B)(1),
Tax Code
3.If the Senior Citizen will pre-terminate his 5-year

long-term deposit or investment
Four years to less than five years 5%
Three years to less than four years 12%; and
Less than three years 20%
Hence, he can still be liable for other

taxes such as
4. The 10% final withholding tax
On cash and/or property dividends actually or constructively received
from a domestic corporation or from a joint stock company, insurance or
mutual fund company and a regional operating headquarters of a
multinational company; or
On the share of an individual in the distributable net income after tax of a
partnership (except a general professional partnership) of which he is a partner; or
On the share of an individual in the net income after tax of an
association, a joint account, or a joint venture or consortium taxable as a
corporation of which he is a member or a co-venturer (Sec. 24(B)(2), Tax Code).
5. Capital gains tax from sales of shares of stock not traded in

the stock exchange (Sec. 24(C), Tax Code); and
6. The 6% final withholding tax on presumed capital gains from

sale of real property, classified as capital asset, except capital gains
presumed to have been realized from the sale or disposition of principal
residence (Sec. 24(D), Tax Code).
Grant of Discounts to Senior

Citizens- 20%.
1.
Medicines, including influenza and pneumococcal vaccines,
SEC. 4.
and such other essential medical supplies, accessories and equipment

to be determined by the DOH.
On all drug stores, hospital pharmacies, medical and optical clinics and similar
establishments dispensing medicines, the discount for sales of drugs/medicines
shall be subject to the Guidelines to be issued by the BFAD-DOH, in coordination
with the PHILHEALTH.
both
prescription and nonprescription medicines,
and articles approved by the BFAD-DOH, which are intended for
For this purpose, the term "medicines" shall refer to
use in the diagnosis, cure, mitigation, treatment or prevention of disease in man;

but do not include food and devices or their components, parts, or accessories.
2.
On the professional fees of attending physician/s in all

private hospitals, medical facilities, outpatient clinics and home health care services,
where the discount shall be based on the compensation for services charged from
the Senior Citizen.
1.On professional fees of licensed professional health

workers providing home healthC.care services as endorsed by private hospitals
or employed through home health care employment agencies, where the discount
shall be based on the fees charged from the Senior Citizen.
On medical and dental services, diagnostic and laboratory

fees in all private hospitals, medical facilities, outpatient clinics, and home health
D.
care services, in accordance with the rules and regulations to be issued by the DOH,
in coordination with the PhilHealth.
. Medical services refers to hospital services, professional services of physicians
and other health care professionals and diagnostic and laboratory tests that are
necessary for the diagnosis or treatment of an illness or injury.
. Dental services refers to oral examination, cleaning, permanent and temporary
filling extractions and gum treatments, restoration, replacement or repositioning of

teeth, or alteration of the alveolar or periodontium process of the maxilla and the
mandible that are necessary for the diagnosis or treatment of an illness or injury.
. Home health care service refers to health or supportive care provided to the
Senior Citizen patient at home by licensed health care professionals to include but
not limited to, physicians, nurses, midwives, physical therapists and caregivers
e.In actual fare for land transportation travel in

public utility buses (PUBs),
public utility jeepneys (PUJs),
taxis,
Asian utility vehicles (AUVs),
shuttle services and
public railways, including
Light Rail Transit (LRT),
Mass Rail Transit (MRT), and
Philippine National Railways (PNR).
f. On actual transportation fare for domestic air

transport services and sea shipping vessels and
the like, based on the actual fare and advanced

booking.
G. On the utilization of services in hotels and similar

lodging establishments, restaurants and recreation
centers.
g.1 For hotels and similar lodging establishments, the

discount shall be for room accommodation and other
amenities offered by the establishment, such as, but
not limited to, massage parlor, sauna bath, food, drinks
and other services offered.
For this purpose, the term "hotel/hostel" shall refer to
the building, edifice or premises or a completely
independent part thereof, which is used for the regular
reception, accommodation or lodging of travelers and
tourists, and the provision of services incidental
thereto, for a fee.
"Lodging establishment" shall refer to a building, edifice,

structure, apartment or house including tourist inn, apartelle, motorist
hotel and pension house engaged in catering, leasing or providing facilities
to transients, tourists or travelers.
The following are considered as lodging establishments:
Tourist Inn a lodging establishment catering to transients, which does not meet
the minimum requirement of an economy hotel.
Apartelle a building or edifice containing several independent and furnished or
semi-furnished apartments, regularly leased to tourists and travelers for dwelling

on a more or less long-term basis and offering basic services to its tenants, similar
to hotels.
Motorist Hotel any structure with several separate units, primarily located along
the highway, with individual or common parking space, at which motorists may
obtain lodging and in some instance, meals.
Pension House a private, or family-operated tourist boarding house, tourist
guest house or tourist lodging house, regularly catering to tourist, and/or traveler,
containing several independent table rooms, providing common facilities, such as
toilets, bathrooms/showers, living and dining rooms and/or kitchen and where a
combination of board and lodging may be provided.
G4. The term lodging establishment shall

also include lodging houses, which
shall mean such establishments are
regularly engaged in the hotel
business, but which, nevertheless, are
not registered, classified and licensed
as hotels by reason of inadequate
essential facilities and services. Long
term arrangement for residential
purposes is not covered.
G.5. For restaurants, the discount shall be for the

sale of food, drinks, dessert and other consumable
items served by the establishments, including value
meals and promotional meals offered for the
consumption of the general public.
G.6. For this purpose, the term "restaurant" shall

refer to any establishment offering to the public,
regular and special meals or menu, fast food,
cooked food and short orders. Such eating places
may also serve coffee, beverages and drinks. Food
and goods sold by establishments that are not
restaurants are not covered, therefore not allowed to
give the 20% discount.

G.7 For
recreation
centers,
the
discount shall be for the utilization of
services in the form of fees, charges
and rental facilities, such as, but not
limited to, sports facilities and
equipment.
H. On admission fees charged by

theaters, cinema houses and concert
halls, circuses, carnivals, and other
similar places of culture, leisure and
amusement, where the discount shall
be on the admission fees charged by
the said establishments;
I. On funeral and burial services for

the death of Senior Citizens. The
beneficiary or any person who shall
shoulder the funeral and burial
expenses of the deceased Senior
Citizen shall claim the discount, such
as:
casket, embalmment, cremation

cost and other related services for
the Senior Citizen upon payment and
presentation of his death certificate;
Special Discount granted

to Senior Citizens and Senior
Citizens
Centers.
SEC. 5.
5% discount upon concurrence of the
following:
1.the individual meters in the name of the
Senior Citizen residing therein;
2.the monthly consumption does not exceed
100kwh of electricity and

30 m3 of water; and
3.the privilege is granted per household

regardless of the number of Senior
Citizens residing therein.
Special Discount granted

to Senior Citizens and Senior
Citizens Centers.
SEC. 5.
For water, electricity and telephone ,

there shall be granted by public utilities a
discount of at least 50% on the
consumption by a Senior Citizens Center
and residential care/group homes that are run
by the Government or by a non-stock, non-profit
domestic corporation organized and operated primarily
for the purpose of promoting the well-being of
abandoned, neglected, unattached, or homeless Senior
Citizens, subject to the guidelines formulated by the
DSWD.
The discount that shall be granted to the Senior

Citizen shall be the promotional discount or
the minimum discount prescribed in this
Regulation.
This means that, in no case shall the discount granted to Senior
Citizens be less than 20%, or in the case of water and electricity
supplied by public utility companies, be less than 5%.
The minimum discount shall not be treated as

an addition to the promotional discount,
provided that, if the promotional discount is less
than the minimum discount prescribed in the Act for
Senior Citizens, the seller shall increase the discount
to meet the said minimum discount prescribed for
Senior Citizens.
SEC. 6.
Determination of the Amount of Discount
. The grant of the discount is only

for the purchase of goods and
services enumerated in the Act for
THE EXCLUSIVE USE AND
ENJOYMENT OR AVAILMENT OF
THE SENIOR CITIZEN.
The following rules shall be observed in granting the discount: Medical-Related Privileges:
(a) MEDICINE AND DRUG PURCHASES

The 20% discount and VAT exemption shall apply to the
purchase of generic or branded medicines and drugs by
or for senior citizens, including the purchase of
influenza and pneumococcal vaccines.
The 20% discount and VAT exemption shall also be
granted to the purchase of vitamins and mineral
supplements which are medically prescribed by an
attending physician for prevention and treatment of
diseases, illness, or injury whose prescription is in the
name of the Senior Citizen.
Medical-Related Privileges:
(b) ESSENTIAL MEDICAL SUPPLIES,

ACCESSORIES AND EQUIPMENT The 20%
discount and VAT exemption privilege shall
also apply to the purchase of
eyeglasses, hearing aids,
dentures, prosthetics,
artificial bone replacements like
steel, walkers, crutches, wheelchairs whether manual or
electric-powered,
canes/quad canes,
geriatric diapers, and
other essential medical supplies, accessories and
equipment by or for senior citizens.
Medical-Related Privileges:
(c) MEDICAL AND DENTAL SERVICES IN PRIVATE
FACILITIES Medical and dental services,
diagnostic and
laboratory tests
such as but not limited to X-Rays,

computerized tomography scans, and blood tests, that are
requested by a physician as necessary for the diagnosis and/or
treatment of an illness or injury are subject to the 20% discount and
VAT exemption.
(d) PROFESSIONAL FEES OF ATTENDING PHYSICIAN/S in all

private hospitals, medical facilities, outpatient clinics and
home health care facilities shall be subject to the 20% discount and
VAT exemption.
(e) PROFESSIONAL FEES OF LICENSED HEALTH WORKERS

PROVIDING HOME HEALTH CARE SERVICES as endorsed by
private hospitals or employed through home health care
employment agencies are entitled to the 20% discount and VAT
exemption. agency given the health workers very minimal share
compared to the agency fee.
Domestic Transportation Privileges:

The DOTC, in coordination with the MARINA, PPA, CAB, LRTA, PNR, MRTA
and LTFRB, shall within thirty (30) days from effectivity of these Rules issue
the necessary circulars or directives on the following transportation
privileges of senior citizens:
(a) AIR AND SEA TRANSPORTATION PRIVILEGES

Fare for domestic air, and sea travel, including
advanced booking, shall be subject to the 20%
discount and VAT exemption, if applicable.
(b) PUBLIC LAND TRANSPORTATION PRIVILEGES

Fare in public railways, including LRT, MRT, and
PNR, fares in buses (PUB), jeepneys (PUJ), taxi and
shuttle services (AUV), are likewise subject to the
20% discount and VAT exemption, if applicable.
Hotels, Restaurants, Recreational Centers and

Places of Leisure, and Funeral Services
(a)HOTELS AND SIMILAR LODGING ESTABLISHMENTS The
discount shall be for room accommodation and other amenities
offered by the establishment such as but not limited to hotel-based
parlors and barbershops, restaurants, massage parlor, spa, sauna
bath, aromatherapy rooms, workout gyms, swimming pools, jacuzzis,
ktv bars, internet facilities, food, drinks and other services offered.
`The term hotel shall include beach and mountain resorts .
RESTAURANTS
(b)
The discount shall be for the purchase of food, drinks,

dessert, and other consumable items served by the establishments offered for
the consumption of the general public.
(c)
For Dine-in services
under paragraphs (a) and (b) of Section 3, and
Section 4, paragraph 2 of Article 7, the privilege
must be personally
availed of by the senior citizen as defined under these Rules,

and no proxies or authorization in favor of another
person who is not a senior citizen will be honored.
Hotels, Restaurants, Recreational Centers

and Places of Leisure, and Funeral Services
(d)The phrase exclusive use and enjoyment of
the senior citizen shall mean for the senior
citizens personal consumption only.
Shall not apply to childrens meals which are
primarily prepared and intentionally marketed for
children.
Similarly, shall not apply to pre-contracted party
packages or bulk orders.
Hotels, Restaurants, Recreational Centers

and Places of Leisure, and Funeral Services
(e)
Food, drinks and other consumable items provided in Section 3 (a) and
(b), and Section 4, paragraph 2 of Article 7
purchased by the
senior citizen shall be processed separately as an
independent transaction from his/her noneligible companions to ensure that it is for his/her
exclusive consumption and to enable computation of
the 20% discount and the exemption from the VAT,
which only the senior citizen is entitled to.
However, if the group of diners is composed entirely

of senior citizens, all of whom present valid senior
citizens IDs, each shall be entitled to a 20% discount
and exemption from Value Added Tax
Hotels, Restaurants, Recreational Centers and Places of

Leisure, and Funeral Services
(f) Apply to Take-Out/Take-Home/Drive-Thru orders
(excluding bulk orders) as long as it is the senior citizen
himself/herself who is present and personally ordering, and he/she
can show a valid senior citizen ID card.
(g)For Delivery Orders (excluding bulk orders), the 20% discount shall
likewise apply subject to certain conditions; i.e.
senior citizen ID card number must be given while making the order
over the telephone;
the senior citizen ID card must also be presented upon delivery to
verify the identity of the senior citizen
Delivery fee charged separately are not entitled to the

discount and is subject to tax.
Hotels, Restaurants, Recreational Centers and Places of

Leisure, and Funeral Services
(h)
For the above-mentioned transactions under paragraphs (f)

and (g) of Section 3 of Article 7, the
Combination (MEMC)
Most Expensive Meal
shall apply to food purchases by
senior citizens.
The MEMC is an amount corresponding to the combination of the
most expensive and biggest single-serving meal with beverage
served in a quick service restaurant, is deemed flexible and is
adjusted accordingly by food establishments to estimate a single
food purchase for an individual senior citizen.
Recreation Centers
The discount shall be for the utilization of services in the
form of fees, charges and rental for sports facilities or
equipment, including golfcart rentals and green fees, or
venues for ballroom dancing, yoga, badminton courts,
bowling lanes, table or lawn tennis, workout gyms, martial
arts facilities.
Non-profit, stock golf and country clubs which are not open
to the general public, and are private and for exclusive
membership only as duly proven by their official SEC
registration papers, are not mandated to give the 20%
senior citizens discount.
However, should restaurants and food establishments inside these
country clubs be independent concessionaires and food sold are not
consumable items under club membership dues, they must grant the 20%
senior citizen discount.
Admission fees Privilege

The discount shall be applied to
admission fees charged by theatres,
cinema houses and concert halls,
circuses, carnivals, and other similar
places of culture, leisure and
amusement such as museums and
parks.
Funeral and Burial Expenses

The beneficiary or any person who shall shoulder the
funeral and burial expenses of the deceased senior citizen,
shall claim the discount under this Rule for the deceased
senior citizen upon presentation of the death certificate.
Such expenses shall cover the:
purchase of casket or urn,
embalming,
cremation cost, and
other related services such as
viewing or wake cost,
pick-up from the hospital morgue,
transport of the body to intended burial site in the place of origin,
but shall exclude :
1. obituary publication and

2. the cost of the memorial lot
SEC. 7. Tax Treatment of

the Discount Granted to
Senior Citizens
May claim the discounts granted as a tax

deduction based on the cost of the goods sold
or services
By way of example, if a VAT-registered drug
store sells 10 pieces of Allopurinol at an
undiscounted selling price of P5.00 per piece,
the cost of the discount is computed as
follows:
Selling Price (VAT-exempt) of 10 pcs. at P5.00/pc. P50.00

Less: 20% Discount 10.00
Amount Payable by the Senior Citizen
P40.00
Tax Treatment of the

Discount
The selling price to be charged by the seller must be
SEC. 7.
net of VAT because the sale to Senior Citizens is

exempt from VAT.
The cost of the discount in the above illustration is P10.00 and shall be
allowed as a deduction from gross income for the same taxable year that the
discount is granted, provided that, the total amount of the claimed tax
deduction net of VAT, if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper documentation in
accordance with the provisions of the Tax Code. This means that for the
establishment to be allowed to claim the discount as a deduction, the
amount of sales that must be reported for tax purposes is the undiscounted
selling price and not the amount of sales net of the discount.
income statement of the seller must reflect the discount, not as

a reduction of sales to arrive at net sales, but as a deduction from
its gross income
The
(sales less cost of sales).
Entry to record the transaction in the

books of the seller
Debit Cash P40
Senior Citizen Discount Expense 10
Credit Sales P50
treated as an ordinary and necessary expenses
deductible from the gross income of the seller
falling under the category of itemized
deductions, and can only be claimed if the
seller does not opt for the Optional Standard
Deduction during the taxable quarter/year.
Deduction from the gross income of

the seller is subject to the following
conditions:
Only that portion of the gross sales exclusively used,
consumed or enjoyed by the Senior Citizen shall be eligible
for the deductible sales discount.
gross selling price and the sales discount must

be separately indicated in the official receipt or
sales invoice
) The
) Only the actual amount of the discount granted or a

sales discount not less than the statutory rate (20%,
5% or 50% when applicable),
whichever is
higher, based on the gross selling price can be deducted

from the gross income, net of value added tax, if applicable,
for income tax purposes, and from gross sales or gross
receipts of the business enterprise concerned, for VAT or
other percentage tax purposes.
) The seller must record its sales inclusive of the discount

conditions:
Only that portion of the gross sales exclusively used,

consumed or enjoyed by the Senior Citizen shall be
eligible for the deductible sales discount.
) The business establishment giving sales discounts to qualified
keep a separate and

accurate record of sales, which shall include the
Senior Citizens is required to
name of the Senior Citizen,

OSCA ID,
gross sales/receipts,
sales discount granted,
dates of transactions and
invoice numbers for every sale transaction to Senior
Citizen.

conditions:
Only business establishments selling any of
the qualified goods and services to Senior
Citizens where an actual discount was
granted may claim the deduction.
The seller must not claim the Optional

Standard Deduction during the taxable
year.
SEC. 8.
Availment of Income Tax
1. A Senior Citizen must first be qualified as such by the CIR or his duly
authorized representative (RDO having jurisdiction over the place where the
submitting a certified true copy of his

Senior Citizen Identification Card (OSCA ID) issued by the OSCA
Senior Citizen resides), by
of the city or municipality where he resides;
2. He must file a Sworn Statement on or before January 31 of every year

that his annual taxable income for the previous year does not exceed the poverty
level as determined by the NEDA thru the NSCB; and
3. If qualified, his name shall be recorded by the RDO in the Master List of TaxExempt Senior Citizens for that particular year, which the RDO is mandatorily
required to keep.
However, a Senior Citizen who is a compensation income earner deriving from

only one employer an annual taxable income exceeding the poverty level or the
amount determined by the NEDA thru the NSCB on a particular year, but whose
income had been subjected to the withholding tax on compensation, shall,
although not exempt from income tax, be entitled to the substituted filing of
income tax return under Revenue Regulations No. 2-98, as amended.
SEC. 9. Liability for Other Internal

Revenue Taxes
A Senior Citizen shall also be subject to the following internal revenue
taxes, among others, imposed under the Tax Code:
VAT or other Percentages Taxes, as the case may be.
If he is self-employed or engaged in business or practice of profession, and his
gross annual sales and/or receipts exceeds P1,500,000 or such amount to which
this may be adjusted pursuant to Sec. 109(1)(V) of the Tax Code, he shall be
subject to VAT. Otherwise, he shall be subject to the 3% percentage tax;
Donor's Tax All donations made by a Senior Citizen during any calendar
year, unless exempt under a specific provision of law, shall be subject to

the donors tax imposed under Title III of the Tax Code;
Estate Tax In the event of death, the estate of the Senior Citizen may
also be subject to the estate tax following the rules enunciated under
Title III of the Tax Code and its implementing Regulations;
Excise Tax on certain goods; and
Documentary Stamp Tax.
SEC. 10. Exemption from VAT of the sale to

Senior Citizens. Sales of any goods and services under Sections 4 and 5 of
these Regulations to Senior Citizens shall be exempt
from VAT .
To ensure the full entitlement of the Senior Citizen to the discount
prescribed in the Act, the sellers are precluded from billing any VAT
to the Senior Citizen.
The sale to a Senior Citizen must follow the

invoicing requirements prescribed under Revenue
Regulations No. 16-2005. If the seller uses a Point
of Sale Machine or a Cash Register Machine in
lieu of the regular sales invoice, the machine tape
must properly segregate the exempt sales from
the taxable sales.
SEC. 10. Exemption from VAT of the sale to

Senior Citizens.
input tax attributable to the

exempt sale shall not be allowed as an
The
input tax credit and must be closed to cost or
expense account by the seller.
The exemption herein granted will not cover

other indirect taxes that may be passed on by the
seller to a Senior Citizen buyer, such as
percentage tax, excise tax, etc.
In such a case, the discount must be on the total cost of
the goods or services charged by the seller exclusive of
the tax.
SEC. 11. Personal Exemptions of

Benefactors of Senior Citizens
The entitlement to claim the additional personal
exemption per dependent (not exceeding four)
is allowable only to individual taxpayers with a
qualified dependent child or children subject to
the conditions set forth under Section 35(B) of
the Tax Code, as amended.
If required to file an income tax return (ITR), the

Benefactor shall state therein the name,
birthday and OSCA ID number of the dependent
Senior Citizen.
SEC. 12. Additional Deduction

from Gross Income of Private
Establishments for Compensation
Paid to Senior Citizens
Private establishments employing Senior Citizens shall be entitled to
additional deduction from their gross income equivalent to 15% of
the total amount paid as salaries and wages to Senior Citizens

subject to the provision of Section 34 of the Tax Code and its
implementing rules and regulations provided the following conditions are
met:
1.
The employment shall have to continue for a period of at least 6 mos;
2.The annual taxable income of the Senior Citizen does not exceed the
poverty level as may be determined by the NEDA thru the NSCB.
For this purpose, the Senior Citizen shall submit to his employer a sworn
certification that his annual taxable income does not exceed the poverty level.
SEC. 13. Penalties and Other

Sanctions
1. For the first violation, a fine of not less than
P50,000.00 but not exceeding P100,000.00 and
imprisonment of not less than 2 years but not more
than 6 years; and
2.
For any subsequent violation, a fine of not less than

P100,000.00 but not exceeding P200,000.00 and
imprisonment for not less than 2 years but not less
than 6 years.
Any person who abuses the privileges granted herein

shall be punished with a fine of not less than
P50,000.00, but not more than P100,000.00, and
imprisonment of not less than 6 months.
SEC. 13. Penalties and Other

Sanctions
If the offender is an alien or a foreigner, he shall be
deported immediately after service of sentence without
further deportation proceedings.
If the offender is a corporation, organization or any similar

entity, the official/s thereof directly involved shall be liable
therefore.
Upon filing an appropriate complaint, and after due notice

and hearing, the proper authorities may also cause the
cancellation or revocation of the business permit, permit
to operate, franchise and other similar privileges granted
to any business entity that fails to abide by the provisions
of the Act and its IRR and these Regulations.
Salamat po!
JERRY N. BENANING
Room 207, National Office Bldg., BIR, Diliman, QC
926-9347 / 926-9451
BIR Contact Center: (02)-981-8888

e-mail: jerry.benaning@bir.gov.ph
Reasons Why the Government Gives Discounts to Senior

Citizens:
1. FOOD marami nang bawal.

2. TRANSPORTATION nahirapan nang
sumakay.
3. GROCERIES di na kayang buhatin.
4. CINEMA malabo na ang mata.
5. CONCERTS mahina na ang pandinig.
6. GAMOT hindi malunok.
7. HOTELS anong gagawin naman duon?
Enjoy life while youre still young, dont wait for

discounts.
UPDATES
1.
Revenue Regulations (RR) No. 1-2011 dated Feb.

24,
2011: Tax Treatment of Income Earnings and
Money Remittance of an Overseas Contract Worker
(OCW) or Overseas Filipino Worker (OFW):
As to income tax, taxable only on income
from sources within the Philippines.
Thus, if
the OFW has income earnings
from business
activities or properties
within the Philippines, such
income
earnings are subject to Philippine
income tax as follows:
a. Regular income tax at 5% to 32%
Passive incomes are subject to tax
Subject to business tax
b.
Passive incomes are subject to tax
c. Subject to business tax
Exempt from payment of travel tax and airport fee per

RA No. 10022 Migrant Workers and Overseas Filipinos
Act of 1995 upon proper showing of proof of
entitlement (that is Overseas Employment Certificate
issued by POEA)
Remittances of all OCWs and OFWs shall be exempt
from Documentary Stamp Tax (DST) upon showing of
valid OWWA Membership Certificate by the OCW or
OFW beneficiary or recipient. In the case of OCWs
and OFWs whose remittances are sent through the
banking system credited to beneficiaries or recipients
account in the Philippines and withdrawn through an
ATM, it shall be the responsibility of the OCW or OFW
to show the valid proof of entitlement when making
arrangement for his/her remittance transfers. A
PROOF OF ENTITLEMENT THAT IS NO LONGER VALID
SHALL NOT ENTITLE AN OCW OR OFW TO ANY DST
EXEMPTION.
2. RR 2-2011: Filing of ITR with the Annual Information

Return (AIR) -(Suspended indefinitely by RR 6-2011) but
RR 19-2011 requires the use of the new income tax
returns (1700, 1701 and 1702 November 2011 version) in
the filing of ITRs for CY 2011
3. RR 5-2011: De Minimis Benefits Not subject to
income tax and withholding tax. The following are
considered de minimis benefits:
a.
Monetized vacation leave credits of private
employees not exceeding ten (10) days during the
year;
b. Monetized value of vacation and sick leave
credits
paid to government officials and employees
[see BIR Ruling DA(ECB-028) 859-2009 dated
December 28, 2009 which states: Thus, the
monetized unused vacation leave credits of private
employees is limited to ten (10) days while leave
(sick and vacation) credits paid to government
employees is not subject to limitation.
c. Medical cash allowance to dependents of employees not

exceeding P750.00 per employee per semester or
P125.00 per month;
d. Rice subsidy of P1,500.00 or one (1) sack of 50 kg. rice per

month amounting to not more than P1,500.00;
e. Uniform and clothing allowance not exceeding P4,000.00

per annum;
f. Actual medical assistance, e. g. medical allowance to

cover medical and healthcare needs, annual
medical/executive check-up, maternity assistance and
routing consultations, not exceeding P10,000 per annum;
g. Laundry allowance not exceeding P300 per month;
h. Employees achievement awards, e.g. for length of

service or safety achieve, which must be in the form of
a tangible personal property other than cash or gift
certificate, with an annual monetary value not
exceeding P10,000 received by the employee under an
established written plan which does not discriminate in
favor of highly paid employees;
i.
Gifts given during Christmas and anniversasry

celebrations not exceeding P5,000 per employee per
annum; and
j. Daily meal allowance for overtime work and

night/graveyard shift not exceeding twenty-five percent
(25%) of the basic minimum wage on a per
region basis.
NOTE: All other benefits given by employers which are not

included in the above enumeration shall not be considered
de minimis benefits, and hence, shall be
subject to income
tax as well as withholding tax on
compensation income.
4. Revenue Memorandum Circular (RMC) No. 21-2011:

Additional COLA for Minimum Wage Earners (MWE) in the
NCR. Statutory Minimum Wage (SMW) in the NCR is now
P426.00/day pursuant to Wage Order No. NCR 16. Thus,
MWEs in NCR receiving the said SMW, holiday pay, overtime
pay, hazard pay and night shift differential shall be exempt
from income tax and withholding tax.
5. RMC 28-2010 : Circularized RA 10026 An Act Granting

Income Tax Exemption to Local Water Districts by Amending
Section 27(C) of the NIRC of 1997, as amended, and adding
Section 289-A to the Tax Code (Support for Local Water
Districts). Became subject to income tax is PAGCOR which
was previously not subject to income tax pursuant to RA
9337.
6. RMC No. 21-2010 : Reiteration of the applicable penalties

for employers who fail to withhold, remit, do the year-end
adjustment and refund excess taxes
withheld to employees
7. Unnumbered memorandum of the Commissioner dated

May 26, 2011: Reiteration that BIR shall no longer
process
any claim for tax refund of employees and
RDOs to remind
employers to strictly comply with the year-end adjustment
(tax due equals tax withheld)
8. RMC 27-2011 (undated) : Revokes previously issued

rulings stating that all contributions to SSS, GSIS, Medicare
and Philhealth are non-taxable. The non- taxable
contributions to these government offices cover only the
mandatory contributions and all other voluntary contributions
in excess of what the law
allows are subject to income tax
and withholding tax.
9. RMC 53-2011 dated November 4, 2011 : Effectivity of

the
taxability of voluntary contributions to SSS,
GSIS, Philhealth
and Pag-ibig is July 1, 2011.
10.
Revenue Regulations No. 16-2011 dated Oct. 27, 2011:
Increased the amounts for sale of residential lot , sale of
house and lot , lease of residential unit and sale or lease of
goods or properties or performance of services (2005), as
follows:
From
To
Sec. 109 (P) Sale of residential lot
P1,500,009
P1,919,500
Sec.109(P) Sale of house and lot
2,500,000
3,199,200
Sec. 109(Q) Lease of residential
unit @P10,000/month
10,000
12,800
Sec. 109(V) Sale or lease of goods
or properties
1,500,000
1,919,500
11. As of January 24, 2012: There were already 87 Run After
Tax Evaders (RATE) cases filed by BIR with the DOJ.
12. There is a proposed revenue

regulations increasing withholding tax
rates on certain income payments: Public
hearing was held on December 1, 2011 in
the National Training of the BIR attended
by an estimated 400 plus participants of
private and public offices. Notable among
the proposals is the increase in the EWT
rates for the purchase of goods from 1% to
2% and services from 2% to 4%.
SALAMAT PO!
JERRY N. BENANING
Room 207, National Office Bldg., BIR, Diliman, QC
926-9347 / 926-9451
BIR Contact Center: (02)-981-8888
e-mail: jerry.benaning@bir.gov.ph

Consolidated Withholding Tax System Dep Ed Zamboanga Cityasofjan2012

Caricato da

Informazioni sul documento

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Consolidated Withholding Tax System Dep Ed Zamboanga Cityasofjan2012

Caricato da

Copyright:

Formati disponibili

WELCOME TO THE

The withholding tax system

Importance of the withholding tax system

Types of withholding taxes

Withholding Tax at Source or Expanded

Kinds of withholding taxes

WITHHOLDING TAX ON COMPENSATION

Requirement: There must be an employer-employee

For a taxable income earner:

GROSS COMPENSATION INCOME

All remuneration for services performed by an

EXCLUSIONS FROM GROSS INCOME

GSIS, SSS, MEDICARE, PAG-IBIG

ADDITIONAL EXEMPTIONS for each

ALL OTHER BENEFITS GIVEN BY

Any amount received by the employee on

Annualized Withholding Tax

Annualized Withholding Tax or the

STEP 1 - Determine the taxable regular and Supplementary

Annualized Withholding Tax

Annualized Withholding Tax

Deduct the amount of premium payments on

Annualized Withholding Tax

over P10,000 but not over P30,000

P500 + 10% of the excess over P10,000

over P30,000 but not over P70,000

P2,500 + 15% of the excess over P30,000

P125,000 + 32% of the excess over P500,000

Annualized Withholding Tax

STEP 6 - Determine the deficiency or excess, if any,

Year-End Adjustment - Formula

Annualized Withholding Tax

RESULTS OF THE YEAR-END ADJUSTMENT:

Employers are REQUIRED to file Annual Information

Employers are required to submit the

WHEN : On or before January 31of the

Individuals Qualified for Substituted Filing and are not

1. Receiving purely compensation income regardless of amount;

NOTE: All of the above requisites must be

Individuals NOT qualified for substituted filing

1. Individuals with two or more employers concurrently

Individuals NOT qualified for substituted

Individuals NOT qualified for substituted

Certificate of Income and Tax Withheld on

Three (3) copies

Signed by: : Both employer and employee

Certificate of Income and Withheld on

The employee is required to furnish his new

Uses of BIR Form No. 2316

or commonly known as EXPANDED

WITHHOLDING TAX AT SOURCE

EXPANDED WITHHOLDING TAX

EXPANDED WITHHOLDING TAX

EXPANDED WITHHOLDING TAX

WITHHOLDING TAX AT SOURCE

I. INCOME PAYMENTS SUBJECT TO EWT:

INCOME PAYMENT - EWT

INCOME PAYMENT - EWT

INCOME PAYMENT - EWT

E. Income payments to contractors

H. Income payments to partners of General

INCOME PAYMENT EWT

J. Payment for the sale, exchange or transfer of real

- Selling price is not over P500,000