The

Withholding
Tax System
Group 10
 CODAL REFERENCE AND RELATED ISSUANCES

 Republic Act Nos. 8424, 9337, 9442, 9504, 10963

 Sections 57 to 58 and 78 to 83 of the National Internal Revenue Code
(NIRC)
 Revenue Regulation Nos. 2-98, 17-2003, 30-2003, 10-2008, 11-2018
 Revenue Memorandum Circular Nos. 72-2004, 91-2010, 50-2018, 51-
2018
 IMPORTANCE OF WITHHOLDING TAX SYSTEM

 It is considered as an effective tool in the collection of taxes for the

following reasons:
 It encourages voluntary compliance;
 It reduces cost of collection effort;
 It prevents delinquencies and revenue loss; and
 It prevents dry spell in the fiscal conditions of the government by
providing revenues throughout the taxable year.
 PERSONS REQUIRED TO WITHHOLD WITHHOLDING TAXES

 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.
 CLASSIFICATION OF WITHHOLDING TAXES

1. Creditable withholding tax   

a. Compensation - is the tax withheld from income payments to individuals arising from an employer-employee
relationship.
b. Expanded - is a kind of withholding tax which is prescribed on certain income payments and is creditable
against the income tax due of the payee for the taxable quarter/year in which the particular income was earned.
c. Withholding Tax on GMP - Value Added Taxes (GVAT) - is the tax withheld by National Government Agencies
(NGAs) and instrumentalities, including government-owned and controlled corporations (GOCCs) and local
government units (LGUs), before making any payments to VAT registered taxpayers/suppliers/payees on
account of their purchases of goods and services.
d. Withholding Tax on Government Money Payments (GMP) - Percentage Taxes - is the tax withheld by
National Government Agencies (NGAs) and  instrumentalities, including government-owned and controlled
corporations (GOCCs) and local government units (LGUs), before making any payments to non-VAT registered
taxpayers/suppliers/payees
 CLASSIFICATION OF WITHHOLDING TAXES

 Final Withholding Tax is a kind of withholding tax which is prescribed on certain

income payments and is not creditable against the income tax due of the payee on
other income subject to regular rates of tax for the taxable year. Income Tax withheld
constitutes the full and final payment of the Income Tax due from the payee on the
particular income subjected to final withholding tax.
 WITHHOLDING TAX ON COMPENSATION

 Compensation or Wages - refers to all remuneration for services performed by an employee for
his employer under an employee-employer relationships unless exempted by the NIRC and
pertinent laws.
KINDS OF COMPENSATION
Regular Supplementary
1. Basic Salary 1. Commission 6. Sick leave
2. Fixed Allowances 2. Overtime Pay 7. Fringe benefits received by rank
and file employees
3. Fees, including Director fees 8. Hazard pay
4. Profit Sharing 9. Taxable 13th month pay and
other benefits
5. Monetized vacation leave in 10. Other remuneration received
excess of ten (10) days from an employee-employer
relationships
 RESPONSIBILITIES OF THE EMPLOYER

 Submit the duly accomplished BIR Form Nos. 1902 and/or 1905 to the RDO within thirty (30) days
from receipt;
 Withhold the tax due from the employees following the prescribed manner;
 Remit the amount of tax withheld from the employee within the prescribed due dates;
 Do the year-end adjustment;
 Submit Annual Information return (BIR Form 1604-C, 1604-F and 1604-E), including the required
alphabetical list of employees/payees on or before January 31 following the close of the calendar
year;
 Issue the Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) to the
employees; and
 Refund excess tax withheld.
 EXEMPTIONS AND EXCLUSIONS FROM GROSS INCOME

a. Remuneration received as an incident of employment (RA 7641; those with approved reasonable
private retirement plan; Social Security Act of 1954, as amended; GSIS Act of 1937, as amended; and
etc.
b. Remuneration paid for agricultural labor;
c. Remuneration for domestic services;
d. Remuneration for casual labor not in the course of an employer's trade or business;
e. Compensation for services by a citizen or a resident of the Philippines for a foreign government or
international organization;
f. Damages (Actual, moral, exemplary and nominal);
g. Life insurance;
 EXEMPTIONS AND EXCLUSIONS FROM GROSS INCOME

h. Amounts received by the insured as a return of premium;

i. Compensation for injuries or sickness;
j. Income exempt under treaty
k. 13th Month pay and other benefits
l. GSIS, SSS, Medicare and other contributions (employee's share only)
m. Compensation income of minimum wage earners (MWEs) who work in the private sector and
being paid the Statutory Minimum Wage (SMW), as fixed by the Regional Tripartite Wage and
Productivity Board (RTWPB)/National Wages Productivity Commission (NWPC), applicable to
the place where he/she is assigned;
 EXEMPTIONS AND EXCLUSIONS FROM GROSS INCOME

n. Compensation income of employees in the public sector with compensation income of not
more the the SMW in the non-agricultural sector as fixed by the RTWPB?NWPC applicable to
the place where he/she is assigned.
o. De Minimis benefits
p. Fringe benefits given to employees other than rank and file and subjected to Fringe Benefit Tax
(FBT);
q. Personnel Economic Relief Allowance (PERA) given to government employees; and
Representation and transportation allowance (RATA granted to public officers and employees
under the General Appropriations Act.
 MINIMUM WAGE EARNERS

 No withholding tax shall be required on the Statutory Minimum Wage (SMW) of the
Minimum Wage earner in the private/public sectors as defined in RR 2-98, as
amended by RR 11-2018, including:
 Holiday pay
 Overtime pay
 Night shift differential
 Hazard pay
 Minimum Wage earners in the private/public sectors as defined by these Regulations.
 DE MINIMIS BENEFITS NOT SUBJECT TO WITHHOLDING
TAX
a. Monetized unused vacation leave credits to employees not exceeding ten (10) days during the year;
b. Monetized value of vacation and sick leave credits paid to government officials and employees;
c. Medical cash allowance to dependents of employees, not exceeding P1,500 per employee per
semester of P250 per month;
d. Rice subsidy of P2,000 or one sack of 50kg rice per month amounting to not more than P2,000;
e. Uniform and clothing allowance not exceeding P6,000 per annum;
f. Actual medical assistance, e.g. medical allowance to cover medical and healthcare needs, annual
medical/executive check-up, maternity assistance, and routine consultations, not exceeding
P10,000.00 per annum;
g. Laundry allowance not exceeding P300 per month;
 DE MINIMIS BENEFITS NOT SUBJECT TO WITHHOLDING
TAX
h. Employees achievement awards, e.g. for length of service or safety achievement, which 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 major anniversary celebrations not exceeding P5,000 per
employee per annum;
j. Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic
minimum wage;
k. Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and
productivity incentive schemes provided that the total annual monetary value received from both
CBA and productivity incentive schemes combined do not exceed ten thousand pesos (Php
10,000.00)per employee per taxable year;
 WITHHOLDING TAX TABLE
 REVISED WITHHOLDING TAX TABLE
Effective January 1, 2018 to December 31, 2022 
DAILY 1 2 3 4 5 6
Compensation Range  P685 and below P685 -P1,095 P1,096 - P2,191 P2,192 - P5,478 P5,479 - P21,917 P21,918 and above

Prescribed Withholding Tax 0.00 0.00 +20% over P685 P82.19 +25% over P1,096 P356.16 +30% over P2,192 P1,342.47 +32% over P5,479 P6,602.74 +35% over P21,918

WEEKLY 1 2 3 4 5 6
Compensation Range P4,808 and below P4,808 - P7,691 P7,692 - P15,384 P15,385 - P38,461 P38,462 - P153,845 P153,846 and above

P46,346.15 +35% over

Prescribed Withholding Tax 0.00 0.00 +20% over P4,808 P576.92 +25% over p7,692 P2,500.00 +30% over p15,385 P9,423.08 +32% over P38,462
P153,846

SEMI-MONTHLY 1 2 3 4 5 6
Compensation Range P10,417 and below P10,417 - P16,666 P16,667 - P33,332 P33,333 - P83,332 P83,333 - P333,332 P333,333 and above

P100,416.67 +35% over

Prescribed Withholding Tax 0.00 0.00 +20% over P10,417 P1,250.00 +25% over P16,667 P5,416.67 +30% over P33,333 P20,416.67 +32% over P83,333
P333,333

MONTHLY 1 2 3 4 5 6
Compensation Range P20,833 and below P20,833 - P33,332 P33,333 - P66,666 P66,667 - P166,666 P166,667 - P666,666 P666,667 and above

P40,833.33 +32% over P200,833.33 +35% over

Prescribed Withholding Tax 0.00 0.00 +20% over P20,833 P2,500.00 +25% over 33,333 P10,833.33 +30% over P66,667
P166,667 P666,667  
 WITHHOLDING TAX TABLE
 REVISED WITHHOLDING TAX TABLE
Effective January 1, 2023 and onwards
DAILY 1 2 3 4 5 6
Compensation Range  P685 and below P685 -P1,095 P1,096 - P2,191 P2,192 - P5,478 P5,479 - P21,917 P21,918 and above

Prescribed Withholding Tax 0.00 0.00 +15% over P685 P82.19 +20% over P1,096 P356.16 +25% over P2,192 P1,342.47 +30% over P5,479 P6,602.74 +35% over P21,918

WEEKLY 1 2 3 4 5 6
Compensation Range P4,808 and below P4,808 - P7,691 P7,692 - P15,384 P15,385 - P38,461 P38,462 - P153,845 P153,846 and above

P46,346.15 +35% over

Prescribed Withholding Tax 0.00 0.00 +15% over P4,808 P576.92 +20% over p7,692 P2,500.00 +25% over p15,385 P9,423.08 +30% over P38,462
P153,846

SEMI-MONTHLY 1 2 3 4 5 6
Compensation Range P10,417 and below P10,417 - P16,666 P16,667 - P33,332 P33,333 - P83,332 P83,333 - P333,332 P333,333 and above

P100,416.67 +35% over

Prescribed Withholding Tax 0.00 0.00 +15% over P10,417 P1,250.00 +20% over P16,667 P5,416.67 +25% over P33,333 P20,416.67 +30% over P83,333
P333,333

MONTHLY 1 2 3 4 5 6
Compensation Range P20,833 and below P20,833 - P33,332 P33,333 - P66,666 P66,667 - P166,666 P166,667 - P666,666 P666,667 and above

P40,833.33 +30% over P200,833.33 +35% over

Prescribed Withholding Tax 0.00 0.00 +15% over P20,833 P2,500.00 +20% over 33,333 P10,833.33 +25% over P66,667
P166,667 P666,667   
 ANNUAL TAX TABLE

EFFECTIVE DATE JANUARY 1, 2018 to DECEMBER

EFFECTIVE DATE JANUARY 1, 2023
31, 2022 
Not over P250,000 0%
Not over P250,000 0%
Over P250,000 but not over 20% of the excess over
P400,000 P250,000 Over P250,000 but not over
15% of the excess over P250,000
Over P400,000 but not over P30,000 + 25% of the excess P400,000
P800,000 over P400,000 Over P400,000 but not over P22,500 + 20% of the excess over
P800,000 P400,000
Over P800,000 but not over P130,000 + 30% of the excess Over P800,000 but not over P102,500 + 25% of the excess over
P2,000,000 over P800,000 P2,000,000 P800,000

Over P2,000,000 but not P490,000 + 32% of the excess Over P2,000,000 but not over P402,500 + 30% of the excess over
over P8,000,000 over P2,000,000 P8,000,000 P2,000,000
P2,202,500 + 35% of the excess
Over P8,000,000
P2,410,000 + 35% of the over P8,000,000
Over P8,000,000
excess over P8,000,000
 YEAR-END-ADJUSTMENT

 On or before the calendar year and prior to the payment of the compensation for last payroll
period, the employer shall determine the sum of the taxable regular and supplementary
compensation paid to each employee for the whole year and must ensure that the tax due is
equal to tax withheld.
 ANNUALIZED WITHHOLDING TAX FORMULA

 Gross Compensation Income (present + previous employer)                                     Px x x x 

 Less: Non-Taxable/Exempt Compensation Income
1. 13th month pay and other benefits                                         P90,000.00
2. SSS, GSIS, PHIC, HDMF and union dues (employee share)    x x x x x x
3. Other Non-Taxable salaries (P250,000)                                     x x x x x x                     x x x x 
 Taxable Compensation Income                                                                                        Px x x x
 Tax Due                                                                                                                                P x x x x
 Less: Tax Withheld (January to November/termination date)                                    P x x x x 
 Tax to be withheld for December/last payroll period                                                   Px x x  x
 ANNUALIZED WITHHOLDING TAX FORMULA

 Collectible : Tax Due> tax withheld  - collect before payment of last salary
 Refund:      Tax Due< tax withheld -  refund on or before January 25th of the year/ last payment
of salary
 Break even:  Tax due = tax withheld    - no more withholding for December salary
 ANNUALIZED WITHHOLDING TAX FORMULA

 Collectible : Tax Due> tax withheld  - collect before payment of last salary
 Refund:      Tax Due< tax withheld -  refund on or before January 25th of the year/ last payment
of salary
 Break even:  Tax due = tax withheld    - no more withholding for December salary
Example:

 Mr. Kim receives P120,000 as monthly regular compensation (net of SSS, GSIS,
PHIC, HDMF employee share only) starting January 1, 2020 from ABC Company.
On June 1, 2020, he filed his resignation effective June 30, 2020 and was suddenly
reemployed in XYZ Company on July 1, 2020 with a monthly compensation of
P130,000. The previous employer withheld P134,164.50. On December 15, 2020,
he received a commission of P15,000 from his new employer. His new employer
withheld P178,997.40 from his income.
Computation:

Total Compensation Received from Previous Employer

(120,000 x 6) P720,000
Regular Compensation from the New Employer
(130,000 x 6) 780,000
Supplementary Income 15,000
Total Taxable Compensation Income P1,515,000
Computation:

Tax Due:
On P800,000 P130,000.00
On Excess (P1,515,000-P800,000) x 30% 214,500.00
Total Tax Due P344,500.00
Less: Tax Withheld (134,164.50 + 178,997.40) 313,161.90
Amount to be Deducted by XYZ Company from P31,338.10
Mr. Kim for December, 2020
 WITHHOLDING TAX FORMS
WITHHOLDING TAX FORMS
REGISTRATION FORM
BIR FORM NO. 1901
BIR FORM NO. 1902
BIR FORM NO. 1903
BIR FORM NO. 1904
BIR FORM NO. 1905
DESCRIPTION
 
Application for Registration for Self-Employed and
Mixed Income Individuals, Estates and Trusts
Application for Registration for Individuals Earning
Purely Compensation Income and Non-Resident
Citizens/Resident Alien Employee
Application for Registration for
Corporations/Partnerships (Taxable/Non-Taxable),
including GAIs and LGUs
Application for Registration for One-time Taxpayer
and Persons Registering under E.O. 98 (Securing a
TIN to be able to transact with any government
office)
Application for Information Update
 WITHHOLDING TAX FORMS
PAYMENT FORM
BIR FORM NO. 0605
BIR FORM NO. 0619-E
BIR FORM NO. 0619-F
REMITTANCE FORM
BIR FORM NO. 1600-VT
BIR FORM No. 1600-PT
BIR FORM NO. 1600WP
BIR FORM NO. 1601-C
BIR FORM NO. 1601-EQ
BIR FORM NO. 1601-FQ
BIR FORM NO. 1602-Q
BIR FORM NO. 1603-Q
 
Payment form
Monthly Remittance Form of Creditable Income Taxes
Withheld (Expanded)
Monthly Remittance Form of Final Income Taxes Withheld 
 
Monthly Remittance Return of Value-Added Tax 
Monthly Remittance Return of Percentage Tax 
Remittance Return of Percentage Tax on Winnings and Prizes
Withheld by Race Track Operators
Monthly Remittance Return of Income Taxes Withheld on
Comnpensation
Quarterly Remittance Return of Creditable Income Taxes
withheld (Expanded)
Quarterly Remittance Return of Final Income Taxes Withheld
Quarterly Remittance Return of Final Taxes Withheld on
Interest Paid on Deposits and Deposits Substitutes/Trusts/Etc.
Quarterly Remittance Return of Final Income Taxes Withheld
on Fringe benefits Paid to Employees Other Than Rank and File
 WITHHOLDING TAX FORMS

CERTIFICATES  

Certificate of Income Payment Not Subject to

BIR FORM NO. 2304 Withholding Tax (Excluding Compensation
Income)

BIR FORM NO. 2306 Certificate of Final Tax Withheld at Source

Certificate of Creditable Tax Withheld at
BIR FORM NO. 2307
Source

Certificate of Compensation Payment/Tax

BIR FORM NO. 2316
Withheld
 MODE OF FILING AND PAYMENT
DUE DATE  
WITHHOLDING TAX FORMS
eFPS Manual/EBIRForms
PAYMENT FORM    
BIR FORM NO. 0605    
BIR FORM NO. 0619-E
Filing - see Schedule in RR 26-2002
on or before the tenth (10th) day
Payment - on or before the fifteenth
BIR FORM NO. 0619-F following the close of the month
(15th) day of the following month
REMITTANCE FORM    
BIR FORM NO. 1600-VT
on or before the tenth (10th) day
BIR FORM NO. 1600-PT
following the close of the month
BIR FORM NO. 1600WP
on or before the tenth (10th) day
Filing - see Schedule in RR 26-2002 following the close of the month 
BIR FORM NO. 1601-C Payment - on or before the fiftenth
(15th) day of the following month 
BIR FORM NO. 1601-EQ
BIR FORM NO. 1601-FQ last day of the month following the last day of the month following the
BIR FORM NO. 1602-Q close of the quarter    close of the quarter 
BIR FORM NO. 1603-Q
 SCHEDULE OF STAGGERED FILING

Filing via eFPS

Group A - Fifteen (15) days following the end of the month
Group B - Fourteen (14) days following the end of the month
Group C - Thirteen (13) days following the end of the month
Group D - Twelve (12) days following the end of the month
Group E -  Eleven (11) days following the end of the month

C:\Users\User\OneDrive\Desktop\Reporting\1710rr26_02.pdf
Note: The staggered manner of filing is only allowed to taxpayers using the Electronic Filing
and Payment System (EFPS) based on the industry classification groupings per RR No. 26-
2002.
However, the staggered filing of returns allowed for withholding agents/taxpayers enrolled in
the EFPS facility of the Bureau shall not apply in the case of the NGAs per RR 1-2013.
 SUBSTITUTED FILING
 An individual taxpayer will no longer have to personally file his own Income Tax Return (BIR Form 1700) but instead
the employer's Annual Information Return on Income Taxes Withheld (BIR Form No. 1604-C) filed will be considered as
the "substitute" ITR of the employee.
REQUISITES FOR INDIVIDUALS QUALIFIED FOR SUBSTITUTED FILING OF BIR FORM NO. 1700
1. Receives purely compensation income regardless of amount;
2. Compensation from only one employer in the Philippines for the calendar year;
3. Income tax has been withheld correctly by the employer (tax due equals tax withheld);
4. the employee's spouse also complies with all the three conditions stated above;
5. Employer files the BIR Form No. 1604-C; and
6. The employer issues each employee BIR Form No. 2316 (latest version)
NOTE:
 All the above requisites must be present. The annual Information Return of Income Taxes Withheld on Compensation
(BIR Form No. 1604-C) filed by their respective employers duly submitted to the eSubmission facility of the BIR.
 REQUISITES FOR INDIVIDUALS NOT QUALIFIED FOR
SUBSTITUTED FILING OF BIR FORM NO. 1700

1. Individuals with two or more employers concurrently and/or successively at anytime during the taxable
year.
2. Employees whose income tax have not been withheld correctly resulting to collectible or refundable
return.
3. Individuals deriving other non-business, non-profession-related income in addition to compensation
income not otherwise subject to final tax.
4. Individuals receiving purely compensation income from a single employer whose income tax has been
correctly withheld but whose spouse does not qualify tor substituted filing.
5. Non-resident aliens engaged in trade or business in the Philippines deriving purely compensation
income or compensation income and other non-related business, non-profession-related income.
 SUBMISSION OF BIR FORM NO. 2316 

 The employer are required to submit the duplicate original copy of BIR Form No. 2316 to the
Revenue District Office where they are registered on or before February 28 
 For Large Taxpayer or other Non-LT Taxpayers who opted to submit thru the Digital Versatile
Disk (DVD) prescribed under RR2-2015 shall use Universal Storage BUS (USB) memory stick
or other similar storage devices may be used in the absence or unavailability of the DVD's
provided that the scanned copies of the said forms shall be made uneditable format.
 For Large Taxpayer or Non-LT taxpayers shall use the prescribed format (Annex F) in RR 11-
2018 for the preparation of the Certified List of Employees Qualified for Substituted Filing of
ITR. 
 EXPANDED WITHHOLDING TAX

 The Withholding of Creditable Tax at Source or simply called Expanded Withholding Tax is a
tax imposed and prescribed on the items of income payable to natural or juridical persons,
residing in the Philippines, by a payor-corporation/person which shall be credited against the
income tax liability of the taxpayer for the taxable year.

 WITHHOLDING TAX Rates_023941.docx

 FINAL WITHHOLDING TAX

 The amount of income tax withheld by the withholding agent is constituted as a full and final
payment of income tax due from the payee of the said income.
           The liability for payment of tax rests primarily on the payor as a withholding agent.
Failure to withhold the tax or in case of under withholding, the deficiency tax shall be collected
from payor/withholding agent.
           The payee is not required to file an income tax return for the particular income.
 WITHHOLDING TAX Rates_023941.docx
 FRINGE BENEFITS GRANTED TO EMPLOYEES (EXCEPT
RANK AND FILE EMPLOYEES)
 FringeBenefit means any good, service or other benefits furnished or granted in cash or in kind by an employer to an
individual employee (except rank and file) such as but not limited to the following:
a.Housing

b.Expense account
c.Vehicle of any kind
d.Household personnel (maid, driver and others)
e.Interest on loan at less than market rate to the extent of the difference between the market rate and actual rate granted
f.membership fees, dues and other expenses borne by the employer for the employee in social and athletic clubs or other
similar organizations
g.Expenses for foreign travel
h.Holiday and vacation expenses
i. Educational assistance to employee or his dependents; and
j. Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows.
 WITHHOLDING TAX ON GOVERNMENT MONEY
PAYMENTS (GMP) - PERCENTAGE TAXES

 Withholding Tax on Government Money Payments (GMP) - Percentage Taxes - is the tax
withheld by National Government Agencies (NGAs) and instrumentalities, including
government-owned and controlled corporations (GOCCs) and local government units (LGUs),
before making any payments to non-VAT registered taxpayers/suppliers/payees.

WITHHOLDING TAX Rates_023941.docx