Group 5

BIR Tax
Deduction
Wilaine Chan, Jasmine Gurtiza, Charles Ong,
Jarred Dy, Aldrich Chua
Agenda
What is BIR Tax Deduction
Importance of Tax Deduction
Benefits of Tax Deduction
Classification of Withholding Taxes
Withholding Tax on Compensation
Why We Do Taxations
Benefits of Why We We Have Taxes
How to Calculate
BIR Tax Deduction
If someone is using the term "BIR Tax
Deduction," they might be referring to the
BIR's role in overseeing the deduction of taxes
at the source, commonly known as withholding
tax.

Refers to allowable expenses or deductions

that can reduce your taxable income. It is a
concept related to income tax computation,
where certain expenses are subtracted from
your total income before determining the tax
you owe.
Withholding Tax
a portion of your income that your employer
or payer takes out before giving you your
money
It's a way for the government to make sure it
gets its share of taxes from your earnings.
BIR Tax Deduction
often used informally to mean the same as
withholding tax
It's the process overseen by the government
agency (BIR) to make sure taxes are taken
from your income before you receive it.
Importance
It is considered as an effective tool in the
collection of taxes for the following reasons:

of Tax It encourages voluntary compliance

Deduction It reduces cost of collection effort

It prevents delinquencies and revenue loss

It prevents dry spell in the fiscal conditions of the

government by providing revenues throughout the
taxable year
Benefits of
BIR Tax
Deduction
Benefits of Encourages Investments

BIR Tax
BIR tax deductions attract more investors by making it
financially attractive to invest in the Philippines, which helps
the country grow economically.

Deductions Stimulates Business Expansion

Tax deductions help businesses grow by giving them a break on

taxes, allowing them to reinvest and expand, creating more
opportunities

Supports Small Businesses

Tax relief supports small businesses by lightening their

financial load, helping them compete better and contribute to
the economy.
Benefits of Incentivizes Research and Development

BIR Tax
Deductions encourage companies to invest in new ideas and
technology, making the country more innovative.

Deductions Promotes Job Creation

Reduced taxes for businesses mean they can hire more people,
leading to a healthier job market.

Enhances Global Competitiveness

Attractive tax breaks make the Philippines more appealing to

global companies, bringing in international investment and
improving the country's standing globally.
Benefits of Promotes Environmental Sustainability

BIR Tax
Tax breaks for eco-friendly practices encourage businesses to
be environmentally responsible, contributing to global
conservation efforts.

Deductions Supports Infrastructure Development

Some tax deductions are linked to building better

infrastructure, making it easier for businesses to operate and
supporting overall economic growth.

Encourages Compliance

Aligning deductions with tax compliance encourages businesses

to accurately fulfill their tax obligations, creating a fair and
transparent business environment.
Benefits of Support for Education

BIR Tax Tax deductions are often structured to support education-

related expenses. This could include deductions for tuition

Deductions
fees, educational plans, and other educational expenditures.
By lessening the financial burden associated with education,
these deductions contribute to the accessibility of quality
education for families.

Healthcare Deductions:

The BIR supports your health by offering tax deductions for

medical expenses and health insurance premiums. This helps
ease the financial load of staying healthy, ensuring that you
can prioritize well-being without straining your budget. Stay
updated on BIR guidelines to make the most of these
healthcare deductions and keep your health and finances in
good shape.
Classification of
Withholding Taxes
Creditable withholding tax
Compensation
Expanded
Withholding Tax on GMP - Value Added Taxes
(GVAT)
Withholding Tax on Government Money
Payments (GMP) - Percentage Taxes
Final Withholding Tax
Withholding
Compensation or Wages - refers to all remuneration for
Tax on services performed by an employee for his employer
under an employee-employer relationships unless
Compensation exempted by the NIRC and pertinent laws.
Kinds of Compensation
Regular
Basic Salary
Fixed Allowances

Supplementary
Commission Sick Leave
Overtime Pay Fringe Benefits received by rank and file employees
Fees, including directors Hazard Pay
fees Taxable 13th Month Pay and other benefits
Profit Sharing Other Remuneration received from employee-
Monetized Vacation Leave employer relationships
Why We Do Taxations
The purpose of taxes is to generate
revenue for the government so that it can
provide public goods and services. Some
examples of public goods and services that
are funded by taxes include national
defense, healthcare, education, and
infrastructure.
Benefits of
Why We
Have Taxes
Benefits of Why We Have Taxes

Funding Public Services Infrastructure Development Economic Stability

Taxes are the primary source of revenue Tax revenue is often used to build and Taxes are a tool for the government to
for the government. Without taxes, the maintain infrastructure manage economic stability.
government would lack the necessary
funds to provide services to citizens.
Benefits of Why We Have Taxes

National Defense Healthcare Services Foreign Aid and Diplomacy

Taxes fund the military and national Taxes fund public healthcare services, Tax revenue can be allocated to support
defense, ensuring the security and including hospitals, clinics, and public foreign aid programs and diplomatic
sovereignty of a country. health initiatives. efforts.
 How to Calculate Withholding Tax
1. Determine Your Gross Income
2. Identify Taxable and Non-Taxable Income
3. Determine Exemptions and Deductions
4. Use the Appropriate Withholding Tax
Table
5. Calculate the Withholding Tax
a. Withholding Tax=Taxable
Income×Applicable Withholding Tax
Rate
6. Consider Tax Credits
7. Final Withholding Tax
 How to Calculate Withholding Tax

https://www.bir.gov.ph/tax_calculator/wt_calculator.html
References
https://cloudcfo.ph/blog/taxes/withholding-tax-
compensation
https://www.bir.gov.ph/index.php/tax-
information/withholding-tax.html
https://www.proseso-consulting.com/blog/resources-
1/philippines-payroll-in-2023-everything-you-need-
to-know-77
https://study.com/academy/lesson/tax-overview-
purpose-
examples.html#:~:text=The%20purpose%20of%20tax
es%20is,healthcare%2C%20education%2C%20and%2
0infrastructure.
Thank You for
Listening
Do you have any questions?