WITHHOLDING TAX AT SOURCE

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

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

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

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

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

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

29. Exemption from Withholding on Income Tax • Shall not apply to income payments made to the ff: • National government and its instrumentalities, including provincial, city or municipal governments and barangays except GOCCs (RR 14-2002) • B. Persons enjoying exemption from payment of Income Tax • 1. HLURB/HDUCC registered • BOI/PEPZ/SBMA/Omnibus Investment Code

30. Exemption from Withholding on Income Tax • C. Corporation which are exempt from Income Tax • GSIS • SSS • PHIC • Local Water District (RMC 28-2010) • PCSO • D. Gen. Professional Partnerships • E. Joint ventures or consortium (RR 14-2002)

31. FINAL WITHHOLDING TAX

32. Income Payments Subject to Final Withholding Tax • Interest from any peso bank deposit, and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements – 20% • Royalties (except on books as well as other literary works and musical compositions – 20% • Prizes (except prizes amounting to P10,000.00 or less )– 20% • Winnings (except Philippines Charity Sweepstakes Winnings and lotto winnings ) - 20%

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

34. Income Payments Subject to Final Withholding Tax: • Cash and/or property dividends (received by individuals) - 10% • Net capital gains from sale, barter, exchange of shares of stocks in a domestic (except through stock exchange ): • Not over P100,000.00 - 5% • On any amount in excess of P100,000.00 – 10%

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

36. WITHHOLDING TAX ON VALUE ADDED TAX AND PERCENTAGE TAX

37. Withholding Tax of VAT • General Rule: VAT due on sales of goods and services are not subject to withholding since the tax is not determinable at the time of sale. • Except: • Gross payments to non-residents by both gov’t. and private entities for services rendered in the Philippines • For lease or use of property or property rights to non-resident owners(final) - 10% • Services rendered to local insurance companies with respect to reinsurance premiums payable to non-resident insurance or reinsurance companies (final) - 10% • Other services rendered in the Philippines by non-residents (final) - 10% • 2. Sale of goods and services to government

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

39. Withholding on Percentage Tax • Persons exempt from VAT - 3% • Domestic carriers and keepers of garages - 3% • Cars for rent or hire • Transportation contractors • Domestic carriers by land, air or water • International carriers doing business in the Phils. - 3% • Franchises –radio and TV - 3% • - electric, gas, and water utilities - 2% • 5. Banks and non-bank financial intermediaries - 0%, 1%, 3%, 5% • Finance Companies - 0%, 1%, 3%, 5% • 7. Life insurance premiums (w/ certain exclusions) - 5%

40. Withholding on Percentage Tax • 8 . Agents of foreign insurance companies - 10%, 5% • Amusements - 18%, 10%, 15%, 30% • Sale, barter or exchange of shares or stocks listed • or traded through local stock exchange - ½ of 1% • Shares of stock sold or exchanges through initial public offering - 1%, 2%, 4% • 12. On gross payments to stock, real estate, • commercial, customs, insurance and immigration • brokers based on gross receipts - 7%

41. Illustration • The Office of the Provincial Capitol of Davao del Sur purchased the following goods and services for the month of Feb. 2012. Invoice Price • Rice - P50,000.00 • Construction Materials - 44,800.00 • Repair of Aircon Units - 22,400.00 • Rental of equipments - 33,600.00 Compute for the withholding tax on government money payments assuming the seller is: a) Non-VAT registered b) VAT taxpayer

42. Answer – Non VAT Supplier

43. Answer – VAT Supplier

44. ON MANDATORY ATTACHMENTS RR No. 2-2006

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

46. Monthly Alpha list of Payees(MAP) • is aconsolidated alpha listof income earnersfrom whom taxes have beenwithheldby the payor of incomefor a given return period and in whose behalf, the taxes were remitted. • It contains a summary of information on taxes withheld and remitted through the monthly remittance returns (BIR Form Nos. 1601-E, 1601-F, 1600) showing , among others; • total amounts of income/gross sales/gross receipts and • taxes withheld and remitted.

47. Annex “B” BIR REGISTERED NAME TRADE NAME ADDRESS TIN MONTHLY ALPHALIST OF PAYEES (MAP) RETURN PERIOD (mm/yy) I declare under the penalties of perjury, that this has been made in good faith, verified by me, and to the best of my knowledge and belief, is true and correct pursuant to the provisions of the NIRC, and the regulations issued under the authority thereof; that the information contained herein completely reflects all income payments with the corresponding taxes withheld from payees are duly remitted to the BIR and proper Certificates of Creditable Withholding Tax at Source (BIR Form Nos. 2304/2307/2306/2316) have been issued to payees; that, the information appearing herein shall be consistent with the total amount remitted and that, inconsistent information shall result to denial of the claims for expenses. __________________________ Signature over printed name Taxpayer/Authorized representative Attachments to BIR Form Nos. 1601-E, 1601-F, 1600

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

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

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