Withholding Tax

ISO 9001: 2015 Certification No. : AJA17-0078

 National Internal Department of Courts
Revenue Code Education
(NIRC - RA 8424) (NGA)

ISO 9001: 2015 Certification No. : AJA17-0078

 WHAT is Withholding Tax?

ISO 9001: 2015 Certification No. : AJA17-0078

 WHAT is Withholding Tax?
• It is the amount WITHHELD and sent directly to the
government as partial payment of income tax.

Example:

DepEd (Payor – Withholding Agent) – Disbursement /

Payment
Supplier/Merchant (Payee) - Income

ISO 9001: 2015 Certification No. : AJA17-0078

 Classification of Withholding Tax
• Percentage Tax on Non-VAT
• Withholding Tax on
VAT Registered Entities
• Expanded Withholding Tax – EWT

ISO 9001: 2015 Certification No. : AJA17-0078

 WHY do we need to withhold
taxes?

ISO 9001: 2015 Certification No. : AJA17-0078

 • It is mandated
under the National
Internal Revenue
Code Sec. 57 & 58.

ISO 9001: 2015 Certification No. : AJA17-0078

 WHO are required to
prepare Withholding
Taxes?

ISO 9001: 2015 Certification No. : AJA17-0078

 • Individuals engaged in business or practiced of
profession
• Non-individuals (corporations, associations,
partnertship, cooperatives) whether engaged in
business or not
• Government agencies and its instrumentalities
(National Government Agentcies (NGAs), Government-
owned or Controlled Corporations (GOCCs), Local
Government Units including Baranggays (LGUs

A WITHHOLDING AGENT - is any person or entity who is

in control of the payment subject to withholding tax and
therefore is required to deduct AND remit taxes withheld
to the government.
ISO 9001: 2015 Certification No. : AJA17-0078
 WHEN do we deduct Withholding
Taxes?

ISO 9001: 2015 Certification No. : AJA17-0078

  When making PAYMENTS to
Suppliers of Goods and
Services

 When we PAY bills such as

telephone, internet and
cable, utility bills such as
electric and water

ISO 9001: 2015 Certification No. : AJA17-0078

 COMMON PAYMENTS WITHOUT
WITHHOLDING TAX

1. Minimum Wage Earners

2. Other Government Agencies
3. Cooperatives

ISO 9001: 2015 Certification No. : AJA17-0078

 HOW does withholding tax affect
School MOOE?

ISO 9001: 2015 Certification No. : AJA17-0078

 SCHOOL MOOE DOWNLOADED
SCHOOL ALLOTMENT
(Thru Cash Advance)
ES 100,000 95,000

W/O W/
Taxes Withheld Taxes Withheld
Total Cash Advance received for the
95,000 95,000
month of Aug.
Invoice Amount for Goods / Services 95,000 95,000
Taxes withheld (Due to BIR) - (5,000)
Cash Payment 95,000 90,000
Cash Advance, Balance - 5,000

ISO 9001: 2015 Certification No. : AJA17-0078

 Preparing Withholding
Taxes

ISO 9001: 2015 Certification No. : AJA17-0078

 BIR Forms to be used:
WITHHOLDING TAX BIR FORM

Expanded Withholding Tax BIR Form 2307

Percentage Tax on Non-VAT

BIR Form 2306
Withholding Tax on VAT
Registered Entities

ISO 9001: 2015 Certification No. : AJA17-0078

 Is the Supplier VAT reg.
or Non-VAT reg.?

ISO 9001: 2015 Certification No. : AJA17-0078

 Check the Sales
Invoice or Official
Receipt

ISO 9001: 2015 Certification No. : AJA17-0078

ISO 9001: 2015 Certification No. : AJA17-0078
 2307 2306
PARTICULAS TAX RATE
ATC TAX RATE ATC

WI640 /
Goods WC640
1% WV010

WI157 /
VAT Services WC157
2% 5%
WV020

Utilities
WB040 2%
(Primewater)
WI640 /
NON-VAT / Goods WC640 1%
Percentage WB080 3%
Tax WI157 /
Services WC157 2%

ISO 9001: 2015 Certification No. : AJA17-0078

 NET OF VAT

ISO 9001: 2015 Certification No. : AJA17-0078

 SAMPLE COMPUTATION
• VAT registered:
• Goods: 160.72 X 1% = 1.61 (BIR Form 2307)
160.72 x 5% = 8.04 (BIR Form 2306)

• Services: 160.72 X 2% = 3.21 (BIR Form 2307)

160.72 x 5% = 8.04 (BIR Form 2306)

Gross Amount P180.00

Less: Taxes Withheld (P1.61+8.04) 9.65
Net Amount P170.35

ISO 9001: 2015 Certification No. : AJA17-0078

ISO 9001: 2015 Certification No. : AJA17-0078
 SAMPLE COMUTATION
• Non-VAT registered
• Goods: 4,000 X 1% = 40 (BIR Form 2307)
4, 000 x 3% = 120 (BIR Form 2306)

• Services: 4,000 X 2% = 80 (BIR Form 2307)

4, 000 X 3% = 120 (BIR Form 2306)

Gross Amount P4,000.00

Less: Taxes Withheld (P40+120) 160.00
Net Amount P3,840.00

ISO 9001: 2015 Certification No. : AJA17-0078

ISO 9001: 2015 Certification No. : AJA17-0078
 Payee / Supplier
Withholding Tax Agent
Wtax Due = Invoice Amount ÷ 1.12 x 2%
Invoice Amount ÷ 1.12 (Net of VAT)
Month / Period of Payment

ISO 9001: 2015 Certification No. : AJA17-0078

ISO 9001: 2015 Certification No. : AJA17-0078
ISO 9001: 2015 Certification No. : AJA17-0078
ISO 9001: 2015 Certification No. : AJA17-0078
 Tax Rates
Tax Rate ATC Tax Rate ATC

GOODS 1% WC640 5% WV010

Non -
Individual
SERVICES 2% WC157 5% WV020

GOODS 1% WI640 N/A N/A

PROFESSIONAL 5% or 10% WI010 N/A N/A
Individual
NON -
2% WI157 3% WB080
PROFESSIONAL

ISO 9001: 2015 Certification No. : AJA17-0078

 Withholding Tax Agent
Payee / Supplier

ISO 9001: 2015 Certification No. : AJA17-0078

ISO 9001: 2015 Certification No. : AJA17-0078
 Withholding Tax Agent
Payee / Supplier
Wtax Due = Invoice Amount ÷ 1.12 x 2%
Invoice Amount ÷ 1.12 (Net of VAT)
Month / Period of Payment

ISO 9001: 2015 Certification No. : AJA17-0078

ISO 9001: 2015 Certification No. : AJA17-0078
ISO 9001: 2015 Certification No. : AJA17-0078
 Withholding Tax Agent

Payee / Supplier

ISO 9001: 2015 Certification No. : AJA17-0078

ISO 9001: 2015 Certification No. : AJA17-0078
 Website and links…
For BIR Forms and updates
Please GO TO:

https://bir.gov.ph/
 Quick Links
 BIR Forms

ISO 9001: 2015 Certification No. : AJA17-0078

 Thank You!!!

ISO 9001: 2015 Certification No. : AJA17-0078