Notes On Withholding Tax and Income Tax Filing

IMPORTANCE OF WITHHOLDING TAX SYSTEM
Source: https://www.bir.gov.ph/index.php/tax-information/withholding-tax.html
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
 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
 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
a. Basic Salary
b. Fixed allowances
 Supplmentary
a. Commission
b. Overtime pay
c. Fees, including directors fees
d. Profit sharing
e. Monetized vacation leave in excess of ten (10) days
f. Sick leave
g. Fringe benefits received by rank and file employees
h. Hazard pay
i. Taxable 13th month pay and other benefits
j. Other remuneration received 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;
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;
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
of Minimum Wage earners in the private/public sectors as defined by these Regulations.
WITHHOLDING TAX FORMS
WITHHOLDING TAX
DESCRIPTION
FORMS
REGISTRATION
FORM
Application for Registration for Self-Employed and Mixed Income Individuals, Estates and
BIR FORM NO. 1901
Trusts
Application for Registration for Individuals Earning Purely Compensation Income and Non-
BIR FORM NO. 1902
Residnet Citizens/Resident Alien Employee
Application for Registration for Corporations/Partnerships (Taxable/Non-Taxable), including
BIR FORM NO. 1903
GAIs and LGUs
Application for Registration for One-time Taxpayer and Persons Registering under E.O. 98
BIR FORM NO. 1904
(Securing a TIN to be able to transact with any government office)
BIR FORM NO. 1905 Application for Information Update
PAYMENT FORM
BIR FORM NO. 0605 Payment form
BIR FORM NO. 0619-
Monthly Remittance Form of Creditable Income Taxes Withheld (Expanded)
E
BIR FORM NO. 0619-F Monthly Remittance Form of Final Income Taxes Withheld
REMITTANCE FORM
BIR FORM NO. 1600-
Monthly Remittance Return of Value-Added Tax
VT
BIR FORM No. 1600-
Monthly Remittance Return of Percentage Tax
PT
BIR FORM NO. Remittance Return of Percentage Tax on Winnings and Prizes Withheld by Race Track
1600WP Operators
BIR FORM NO. 1601-
Monthly Remittance Return of Income Taxes Withheld on Comnpensation
C
BIR FORM NO. 1601-
Quarterly Remittance Return of Creditable Income Taxes withheld (Expanded)
EQ
BIR FORM NO. 1601-
Quarterly Remittance Return of Final Income Taxes Withheld
FQ
BIR FORM NO. 1602- Quarterly Remittance Return of Final Taxes Withheld on Interest Paid on Deposits and
Q Deposits Substitutes/Trusts/Etc.
BIR FORM NO. 1603- Quarterly Remittance Return of Final Income Taxes Withheld on Fringe benefits Paid to
Q Employees Other Than Rank and File
CERTIFICATES
Certificate of Income Payment Not Subject to Withholding Tax (Excluding Compensation
BIR FORM NO. 2304
Income)
BIR FORM NO. 2306 Certificate of Final Tax Withheld at Source
BIR FORM NO. 2307 Certificate of Creditable Tax Withheld at Source
BIR FORM NO. 2316 Certificate of Compensation Payment/Tax 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 following the
BIR FORM NO. 0619-F Payment - on or before the fiftenth (15th) close of the month
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 following the
Filing - see Schedule in RR 26-2002
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 close last day of the month following the close of
BIR FORM NO. 1602-Q of the quarter the quarter
BIR FORM NO. 1603-Q
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 filed 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.
Tax Rates
TAX ATC
TAX TYPE DESCRIPTION
RATE IND CORP
WE Professional fees (Lawyers, CPA's, Engineers, etc.)
- if the gross income for the current year did not exceed P3M 5% WI010
- if gross income is more than 3M or VAT registered regardlessof
10% WI011
amount
WE Professional fees (Lawyers, CPA's, Engineers, etc.)
- if gross income for the current year did not exceed P720,000 10% WC010
- if gross income exceeds P720,000 15% WC011
Professional entertainer such as, but not limited to actors and
WE
actresses, singers, lyricist, composers, emcees
- if gross income is more than 3M or VAT registered regardless of
10% WI021
amount
Professional entertainer such as, but not limited to actors and
WE
actresses, singers, lyricist, composers, emcees
Professional athletes including basketball players, pelotaris and
WE
jockeys
10% WI031
amount
Professional athletes including basketball players, pelotaris and
WE
jockeys
All directors and producers involved in movies, stage, television and
WE
musical productions
10% WI041
amount
All directors and producers involved in movies, stage, television and
WE
musical productions
WE Management and technical consultants
10% WI051
amount
WE Management and technical consultants
WE Business and Bookkeeping agents and agencies
10% WI061
amount
WE Business and Bookkeeping agents and agencies
WE Insurance agents and insurance adjusters
10% WI071
amount
WE Insurance agents and insurance adjusters
WE Other Recipients of Talent Fees
10% WI081
amount
WE Other Recipients of Talent Fees
WE Fees of Director who are not employees of the company
10% WI091
amount
Rentals Oon gross rental or lease for the continued use or
possession of personal property in excess of P10,000 annually and
WE real property used in business which the payor or obligor has not 5% WI100 WC100
taken title or is not taking title, or in which has no equity; poles,
satellites, transmission facilities and billboards
Cinemathographic film rentals and other payments to resident
WE indivduals and corporate cinematographic film owners, lessors and 5% WI110 WC110
distributors
WE Income payments to certain contractors 2% WI120 WC120
WE Income distribution to the beneficiaries of estate and trusts 15% WI130
Gross Commission of service fees of customs, insurance, stock,
immigration and commercial brokers, fees of agents of professional
WE
entertainers and real estate service practitioners (RESPs)(i.e. real
estate consultants, real estate appraisers and real estate brokers
10% WI140
amount
Gross Commission of service fees of customs, insurance, stock,
immigration and commercial brokers, fees of agents of professional
WE
entertainers and real estate service practitioners (RESPs)(i.e. real
estate consultants, real estate appraisers and real estate brokers
Professional fees paid to medical practitioners (includes doctors of
WE medicine, doctors of veterinary science & dentist) by hospitals &
clinics or paid directly by HMO and/or other semilar establishments
10% WI150
amount
Professional fees paid to medical practitioners (includes doctors of
WE medicine, doctors of veterinary science & dentist) by hospitals &
clinics or paid directly by HMO and/or other semilar establishments
Payment by the General Professional Partnership (GPPs) to its
WE
partners
- if gross income for the current year did not exceed P720,000 10% WI152
- if gross income exceeds P720,000 15% WI153
1% OF
1/2 of
WE Income payments made by credit card companies WI158 WC158
gross
amount
Additional Income Payments to govt personnel from importers,
WE 15% WI159
shipping and airline companies or their agents for overtime services
Income Payment made by NGAs, LGU, & etc to its local/resident
WE suppliers of goods other than those covered by other rates of 1% WI640 WC640
withholding tax
Income Payment made by NGAs, LGU, & etc to its local/resident
WE suppliers of services other than those covered by other rates of 2% WI157 WC157
withholding tax
Income Payment made by top withholding agents to their
WE local/resident suppliers of goods other than those covered by other 1% WI158 WC158
rates of withholding tax
Income Payment made by top withholding agents to their
WE local/resident suppliers of services other than those covered by 2% WI160 WC160
other rates of withholding tax
Commissions, rebates, discounts and other similar considerations
paid/granted to independent and/or exclusive sales representatives
WE
and marketing agents and sub-agents of companies, including
multi-level marketing companies
- if the gross income for the current year did not exceed P3M 5% WI515 WC515
- if the gross income is more than P3M or VAT registered regardless
10% WI516 WC516
of amount
WE Gross payments to embalmers by funeral parlors 1% WI530
WE Payments made by pre-need companies to funeral parlors 1% WI535 WC535
WE Tolling fees paid to refineries 5% WI540 WC540
Income payments made to suppliers of agricultural supplier
WE products in excess of cumulative amount of P300,000 within the 1% WI610 WC610
same taxable year
Income payments on purchases of minerals, mineral products and
quarry resources, such as but not limited to silver, gold, granite,
WE 5% WI630 WC630
gravel, sand, boulders and other mineral products except purchases
by Bangko Sentral ng Pilipinas
Income payments on purchases of minerals, mineral products and
WE quarry resources by Bangko Sentral ng Pilipinas ((BSP) from gold 1% WI632 WC632
miners/suppliers under PD 1899, as amended by RA No. 7076
On gross amount of refund given by MERALCO to customers with
WE 15% WI650 WC650
active contracts as classified by MERALCO
On gross amount of refund given by MERALCO to customers with
WE 15% WI651 WC651
terminated contracts as classified by MERALCO
On gross amount of interest on the refund of meter deposits
whether paid directly to the customers or applied against
WE customer's billings of Residential and General Service customers 10% WI660 WC660
whose monthly electricity consumption exceeds 200 kwh as
classified by MERALCO
On gross amount of interest on the refund of meter deposits
whether paid directly to the customers or applied against
WE 10% WI661 WC661
customer's billings of Non-Residential customers whose monthly
electricity consumption exceeds 200 kwh as classified by MERALCO
On gross amount of interest on the refund of meter deposits whether paid
directly to the customers or applied against customer's billings of
WE Residential and General Service customers whose monthly electricity 10% WI662 WC662
consumption exceeds 200 kwh as classified by other by other electric
Distribution Utilities (DU)
On gross amount of interest on the refund of meter deposits whether paid
directly to the customers or applied against customer's billings of Non-
WE 10% WI663 WC663
Residential customers whose monthly electricity consumption exceeds
200 kwh as classified by other electric Distribution Utilities (DU)
Income payments made by political parties and candidates of local and
national elections on all their purchases of goods and services relkated to
WE campaign expenditures, and income payments made by individuals or 5% WI680 WC680
juridical persons for their purchases of goods and services intented to be
given as campaign contribution to political parties and candidates
WE Income payments received by Real Estate Investment Trust (REIT) 1% WC690
Interest income denied from any other debt instruments not within the
WE 15% WI710 WC710
coverage of deposit substitutes and Revenue Regulations 14-2012
WE Income payments on locally produced raw sugar 1% WI720 WC720
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 primari;y 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.
TAX ATC
TAX TYPE DESCRIPTION
RATE IND CORP
Interest on Foreign loans payable to Non-Resident Foreign Corporation
WF 20% WC180
(NRFCs)
Interest and other income payments on foreign currency transactions/loans
WF 10% WC190
payable of Offshore Banking Units (OBUs)
Interest and other income payments on foreign currency transactions/loans
WF 10% WC191
payable of Foreign Currency Deposits Units (FCDUs)
Cash dividend payment by domestic corporation to citizens ans residents 10% W1202
WF
aliens/NRFCs 30% WC212
Property dividend payment by domestic corporation to citizens and resident 10% WI203
WF
aliens/NRFCs 30% WC213
Cash dividend payment by domestic corporation to NFRCs whose countries
WF 15% WC222
allowed tax deemed paid credit (subject to tax sparing rule)
Property dividend payment by domestic corporation to NFRCs whose
15% WC223
countries allowed tax deemed paid credit (subject to tax sparing rule)
Cash dividend payment by domestic corporation to non-resident alien
WF 20% WI224
engaged in Trade or Business within the Philippines (NRAETB)
WF Property dividend payment by domestic corporation to NRAETB 20% WI225
Share of NRAETB in the distributable net income after tax of a partnership
(except GPPs) of which he is a partner, or share in the net income after tax of
WF 20% WI226
an association, joint account or a joint venture taxable as a corporation of
which he is a member or a co-venturer
WF On other payments to NRFCs 30% WC230
Distributive share of individual partners in a taxable partnership, association,
WF 10% WI240
joint account or joint venture or consortium
All kinds of royalty payments to citizens, resident aliens and NRAETB (other
WF 20% WI250 WC250
than WI380 and WI341), domestic and resident foreign corporations
WF On prizes exceeding P10,000 and other winnings paid to individuals 20% WI260
Branch profit remittance by all corporations except PEZA/SBMA/CDA
WF 15% WC280
registered
On the gross rentals, lease and charter fees derived by non-resident owner or
WF 4.5% WC290
lessor of foreign vessels
On gross rentals, charter and other fees derived by non-resident lessor or
WF 7.5% WC300
aircraft, machineries and equipment
WF On payments to oil exploration service contractors/sub-contractors 8% WI310 WC310
Payments to non-resident alien not engage in trade or business within the
WF Philippines (NRANETB) except on sale of shares in domestic corporation and 25% WI330
real property
On payments to non-residnet individual/foreign corporate cinematographic film
WF 25% WI340 WC340
owners, lessors or distributors
WF Royalties paid to NRAETB on cinematographic films and similar works 25% WI341
Final tax on interest or other payments upon tax-free covenant bonds,
WF mortgages, deeds of trust or other obligations under Sec. 57C of the NIRC of 30% WI350
1997, as amended
Royalties paid to citizens, resident aliens and nraetb on books, other literary
WF 10% WI380
works and musical compositions
WF Informers cash reward to individuals/juridical persons 10% WI410 WC410
WF Cash on property dividend paid by a Real Estate Investment Trust 10% WI700 WC700
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.
TAX
DESCRIPTION RATE ATC
TYPE
Applicable to Government Withholding Agent Only
WV VAT withholding on Purchase of Goods 5% WV010
WV VAT Withholding on Purchase of Services 5% WV020
Applicable to Both Government and Private Withholding Agents
WV VAT Withholding from non-residents (Government Withholding Agents) 12% WV040
WV VAT Withholding from non-residents (Private Withholding Agents) 12% WV050
VAT Withholding on Purchases of Goods (with waiver of privilege to claim tax credit)
WV 12% WV012
creditable
VAT Withholding on Purchases of Goods (with waiver of privilege to claim input tax
WV 12% WV014
credit) final
VAT Withholding on Purchases of Services (with waiver of privilege to claim input tax
WV 12% WV022
credit) creditable
VAT Withholding on Purchases of Services (with waiver of privilege to claim input tax
WV 12% WV024
credit) final
Applicable to Government Withholding Agent Only
WB Tax on Carriers and Keepers of Garages 3% WB030
WB Franchise Tax on Gas and Utilities 2% WB040
Franchise tax on radio & TV broadcasting companies whose annual gross receipts do
WB 3% WB050
not exceed P10M & who are not-VAT registered taxpayer
WB Tax on Life insurance premiums 2% WB070
WB Tax on Overseas Dispatch, Message or Conversation from the Philippines 10% WB090
WB Business tax on Agents of Foreign Insurance companies - Insurance Agents 4% WB120
WB Business tax on Agents of Foreign Insurance companies - owner of the property 5% WB121
WB Tax on international carriers 3% WB130
WB Tax on Cockpits 18% WB140
Tax on amusement places, such as cabarets, night and day clubs, videoke bars,
WB karaoke bars, karaoke televion, karaoke boxes, music lounges and other similar 18% WB150
establishments
WB Taxes on Boxing exhibitions 10% WB160
WB Taxes on professional basketball games 15% WB170
WB Tax on jai-alai and race tracks 30% WB180
Tax on sale barter or exchange of stocks listed and traded through Local Stock 6/10 of
WB WB200
Exchange 1%
Tax on shares of stocks sold or exchanged through initial and secondary public WB201
4% 2%
WB offering - Not over 25% - Over 25% but not exceeding 33 1/3% - Over 33 WB202
1%
1/3% WB203
Tax on Banks and Non-banks Financial Intermediaries Performing Quasi Banking
WB
Dunctions
A. On interest, commissions and discounts from lending activities as well as income
from financial leasing on the basis of the remaining maturities of instruments from which 5% WB301
receipts are derived - Maturity period is five years or less - Maturity period is 1% WB302
more than five years
B. On dividends and equity shares and net income of subsidiaries 0% WB102
C. On royalties, rentals of property, real or personal, profits from exchange and all
7% WB103
other items treated as gross income under the Code
D. On net trading gains within the taxable year on foreign currency, debt securities,
7% WB104
derivatives and other similar financial instruments
Tax on Other Non-Banks Financial Intermediaries nor performing Quasi-Banking
WB
Functions
A. On interest, commissions and discounts from lending activities as well as income
from financial leasing on the basis of the remaining maturities of instruments from which 5% WB108
such receipts are derived - Maturity period is five years or less - Maturity 1% WB109
period is more than five years
B. On all other items treated as gross income under the Code 5% WB110
APPLICABLE TO BOTH GOVERNMENT AND PRIVATE WITHHOLDING AGENTS
Persons exempt from VAT under Sec. 108BB (creditable) Government Withholding
3% WB080
Agent
Persons exempt from VAT under Sec. 108BB (creditable) Private Withholding Agent 3% WB082
Persons exempt from VAT under Section 109BB (Section 116 applies) 3% WB084
Income Tax Description
https://www.bir.gov.ph/index.php/tax-information/income-tax.html
Income Tax is a tax on a person's income, emoluments, profits arising from property, practice of profession,
conduct of trade or business or on the pertinent items of gross income specified in the Tax Code of 1997 (Tax Code),
as amended, less the deductions if any, authorized for such types of income, by the Tax Code, as amended, or other
special laws.
Who are Required to File Income Tax Returns?
Individuals
 Resident citizens receiving income from sources within or outside the Philippines
o Employees deriving purely compensation income from two or more employers, concurrently or
successively at any time during the taxable year
o Employees deriving purely compensation income regardless of the amount, whether from a single or
several employers during the calendar year, the income tax of which has not been withheld correctly
(i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return
o Self-employed individuals receiving income from the conduct of trade or business and/or practice of
profession
o Individuals deriving mixed income, i.e., compensation income and income from the conduct of trade
or business and/or practice of profession
o Individuals deriving other non-business, non-professional related income in addition to compensation
income not otherwise subject to a final tax
o Individuals receiving purely compensation income from a single employer, although the income of
which has been correctly withheld, but whose spouse is not entitled to substituted filing
 Non-resident citizens receiving income from sources within the Philippines
 Aliens, whether resident or not, receiving income from sources within the Philippines
Non-Individuals
 Corporations including partnerships, no matter how created or organized.

 Domestic corporations receiving income from sources within and outside the Philippines
 Foreign corporations receiving income from sources within the Philippines
 Estates and trusts engaged in trade or business
Annual Income Tax For Individuals Earning Purely Compensation Income (Including Non-
Business/Non-Profession Related Income)
BIR Form 1700 - Annual Income Tax For Individuals Earning Purely Compensation Income (Including Non-
Business/Non-Profession Related Income)
Documentary Requirements
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)

2. Duly approved Tax Debit Memo, if applicable
3. Proofs of Foreign Tax Credits, if applicable
4. Income Tax Return previously filed and proof of payment, if filing an amended return for the same taxable
year.
Procedures
1. For Electronic Filing and Payment System (eFPS) Filer

a. Fill-up applicable fields in the BIR Form No. 1700
b. Pay electronically by clicking the "Proceed to Payment" button and fill-up the required fields in the
"eFPS Payment Form" click "Submit" button.
c. Receive payment confirmation from eFPS-AABs for successful e-filing and e-payment.
2. For Non-eFPS Filer
a. Fill-up applicable fields in the BIR Form No. 1700 in the downloaded Electronic Bureau of Internal
Revenue Form (eBIRForm) Package
b. Print the duly accomplished BIR Form No. 1700
c. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the Revenue District
Office where you are registered and present the duly accomplished BIR Form 1700, together with
the required attachments and your payment.
d. In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized
City or Municipal Treasurer located within the Revenue District Office where you are registered and
present the duly accomplished BIR Form 1700, together with the required attachments and your
payment.
e. Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue
Collection Officer/duly Authorized City or Municipal Treasurer.
3. For Manual Filer
a. Fill-up the BIR Form No. 1700 in triplicate copies.
b. Proceed to the Revenue District Office where you are registered or to any Tax Filing Center
established by the BIR and present the duly accomplished BIR Form 1700, together with the
required attachments.
c. Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center
representative.
Deadline
On or before the 15th day of April of each year covering taxable income for calendar year 2018 and thereafter
Annual Income Tax For Individuals, Estates, and Trusts
BIR Form 1701 - Annual Income Tax Return Individuals, Estates and Trusts
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if applicable

2. Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form 2304), if applicable
3. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
5. Proof of Foreign Tax Credits, if applicable
6. Income Tax Return previously filed and proof of payment, if filing an amended return for the same year
7. Account Information Form (AIF) or the Certificate of the independent Certified Public Accountant (CPA) with
Audited Financial Statements if the gross annual sales, earnings, receipts or output exceed three million pesos
(P3,000,000.00)
8. Account Information Form or Financial Statements not necessarily audited by an independent CPA if the gross
annual sales, earnings, receipts or output do not exceed P3,000,000.00 and is subject to graduated income
tax rates under Section 24(A)(2)(a)
9. Proof of prior year’s excess tax credits, if applicable
Procedures
1. For eFPS Filer

b. Pay electronically by clicking the “Proceed to Payment” button and fill-up the required fields in the
“eFPS Payment Form” then click “Submit” button.
a. Fill-up fields in the BIR Form No. 1701 in the downloaded Electronic Bureau of Internal Revenue
Form (eBIRForm) Package
payment.
3. For Manual Filer
established by the BIR and present the duly accomplished BIR Form 1701, together with the required
attachments.
representative.
Deadline
Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of April of each year covering
income for calendar year 2018 and thereafter
Account Information Form For Self-Employed Individuals, Estates And Trusts (Including
Those With Mixed Income, i.e., Compensation Income and Income from Business and/or
Practice of Profession)
BIR Form 1701 AIF - Account Information Form for Self-Employed Individuals, Estates and Trusts (Including those with
Mixed Income, i.e., Compensation Income and Income from Business and/or Practice of Profession) and Estates and
Trusts (Engaged in Trade or Business)
NOTE: Pursuant to Sec. 71 of RA 10963, otherwise known as Tax Reform Acceleration and Inclusion Act, amending
Sec. 232 of the Tax Code, as amended, in relation to Revenue Memorandum Circular No. 6 – 2001, corporations,
companies or persons whose gross annual sales, earnings, receipts or output exceed P3,000,000 may not accomplish
this form. In lieu thereof, they may file their annual income tax returns accompanied by balance sheets, profit and loss
statement, schedules listing income-producing properties and the corresponding income therefrom, and other relevant
statements duly certified by an independent CPA.
None
Procedures
1. Accomplish BIR Form 1701 AIF in triplicate.

2. Attach the same to BIR Form 1701.
Deadline
Same deadline as BIR Form 1701 - On or before the 15th day of April of each year covering taxable income for
calendar year 2018 and thereafter
Quarterly Income Tax For Individuals, Estates And Trusts Including Those With Mixed
Income, i.e., Compensation Income and Income from Business and/or Practice of
Profession
BIR Form 1701Q - Quarterly Income Tax Return For Individuals, Estates and Trusts

3. Proof of other payment/s made, if applicable
4. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at Source
(SAWT), if applicable
Procedures
1. For eFPS Filer

a. Fill-up applicable fields in the BIR Form No. 1701Q
b. Pay electronically by clicking the “Proceed to Payment” button and fill-up the required fields in the “eFPS
Payment Form” then click “Submit” button.
a. Fill-up applicable fields in the BIR Form No. 1701Q in the downloaded Electronic Bureau of Internal Revenue
b. Print the duly accomplished BIR Form No. 1701Q
c. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the Revenue District Office
where you are registered and present the duly accomplished BIR Form 1701Q, together with the required
attachments and your payment.
d. In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or
Municipal Treasurer located within the Revenue District Office where you are registered and present the duly
accomplished BIR Form 1701Q, together with the required attachments and your payment.
e. Receive your copy of the duly stamped and validated tax return and BIR prescribed deposit slip from the teller
of the AABs or Electronic Revenue Official Receipt (eROR) from the Revenue Collection Officer/duly
Authorized City or Municipal Treasurer.
3. For Manual Filer
a. Fill-up the BIR Form No. 1701Q in triplicate copies (Compensation Income need not be reported in the
Quarterly Income Tax Return and is to be declared only on the Annual Income Tax Return).
b. Proceed to the Revenue District Office where you are registered or to any Tax Filing Center established by the
BIR and present the duly accomplished BIR Form 1701Q, together with the required attachments.
c. Receive your copy of the duly stamped and validated form from the RDO.
Deadlines
 May 15 of the current taxable year– for the first quarter

 August 15 of the current taxable year – for the second quarter
 November 15 of the current taxable year – for the third quarter
Annual Income Tax For Corporations And Partnerships
BIR Form 1702 - Annual Income Tax Return (For Corporations and Partnerships)
1. Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form 2304), if applicable
4. Proof of Foreign Tax Credits, if applicable
5. Income tax return previously filed and proof of payment, if amended return is filed for the same taxable year
6. Account Information Form (AIF) or the Certificate of the independent CPA with Audited Financial
Statements, if the gross annual sales, earnings, receipts or output exceed P3,000,000.
7. Proof of prior year’s excess tax credits, if applicable
Procedures
1. For eFPS Filer

a. Fill-up fields in the BIR Form No. 1702 in the downloaded Electronic Bureau of Internal Revenue
payment.
3. For Manual Filer
established by the BIR and present the duly accomplished BIR Form 1702, together with the required
attachments.
representative.
Deadline
Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of the fourth month following the
close of the taxpayer’s taxable year
Quarterly Income Tax For Corporations And Partnerships
BIR Form 1702Q - Quarterly Income Tax Return (For Corporations and Partnerships)

3. Previously filed return, if an amended return is filed for the same quarter
Procedures
1. For eFPS Filer

a. Fill-up applicable fields in the BIR Form No. 1702Q
a. Fill-up applicable fields in the BIR Form No. 1702Q in the downloaded Electronic Bureau of Internal
Revenue Form (eBIRForm) Package
b. Print the duly accomplished BIR Form No. 1702Q
Office where you are registered and present the duly accomplished BIR Form 1702Q, together with
present the duly accomplished BIR Form 1702Q, together with the required attachments and your
payment.
e. Receive your copy of the duly stamped and validated tax return and BIR prescribed deposit slip from
the teller of the AABs or Electronic Revenue Official Receipt (eROR) from the Revenue Collection
Officer/duly Authorized City or Municipal Treasurer.
3. For Manual Filer
a. Fill-up the BIR Form No. 1702Q in triplicate copies.
established by the BIR and present the duly accomplished BIR Form 1702Q, together with the
required attachments.
c. Receive your copy of the duly stamped and validated form from the RDO.
Deadline
Corporate Quarterly Declaration or Quarterly Income Tax Return - On or before the 60th day following the close of each
of the quarters of the taxable year
Improperly Accumulated Earnings Tax For Corporations
BIR Form 1704 - Improperly Accumulated Earnings Tax Return (For Corporations)
1. Photocopy of Annual Income Tax Return (BIR Form 1702) with Audited Financial Statements and/or Account
Information Form of the covered taxable year duly received by the BIR; and
2. Sworn declaration as to dividends declared taken from the covered year's earnings and the corresponding tax
withheld, if any.
Procedures
1. Fill-up BIR Form 1704 in triplicate.

2. If there is payment:
o Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are
registered and present the duly accomplished BIR Form 1704, together with the required attachments
and your payment.
o In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized
present the duly accomplished BIR Form 1704.
o Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue
3. If there is no payment:
o Proceed to the Revenue District Office where you are registered and present the duly
accomplished BIR Form 1704, together with the required attachments.
o Receive your copy of the duly stamped and validated form from the RDO representative
Deadline
Within fifteen (15) days after the close of the taxable year
Annual Income Information Form for General Professional Partnerships
Sec. 55. Returns of General Professional Partnership (Tax Code of 1997, as amended)
Every general professional partnership shall file, in duplicate, a return of its income, except income exempt under
Section 32 (B) of this Title, setting forth the items of gross income and of deductions allowed by this Title, and the
names, Taxpayer Identification Numbers (TIN), addresses and shares of each of the partners.
Income Tax Rates
I. For Individual Citizens and Resident Aliens Earning Purely Compensation Income and Individuals Engaged
in Business and Practice of Profession
A. Graduated Income Tax Rates under Section 24(A)(2) of the Tax Code of 1997, as amended by
Republic Act No. 10963
Amount of Net Taxable Income Rate

Over But Not Over
- P250,000 0%
P250,000 P400,000 20% of the excess over P250,000
P400,000 P800,000 P30,000 + 25% of the excess over P400,000
P800,000 P2,000,000 P130,000 + 30% of the excess over P800,000
P2,000,000 P8,000,000 P490,000 + 32% of the excess over P2,000,000
P8,000,000 P2,410,000 + 35% of the excess over P8,000,000
B. For Purely Self-Employed Individuals and/or Professionals Whose Gross Sales/Receipts and Other
Non-Operating Income Do Not Exceed the VAT Threshold of P3,000,000, the tax shall be, at the
taxpayer’s option:
1. 8% Income Tax on Gross Sales or Gross Receipts in Excess of P250,000 in Lieu of the
Graduated Income Tax Rates and the Percentage Tax; Or
2. Income Tax Based on the Graduated Income Tax Rates
C. For Individuals Earning Both Compensation Income and Income from Business and/or Practice of
Profession, their income taxes shall be:
1. For Income from Compensation: Based on Graduated Income Tax Rates; and
2. For Income from Business and/or Practice of Profession:
a. If the total Gross Sales/Receipts Do Not Exceed VAT Threshold of P3,000,000,
the Individual Taxpayer May Opt to Avail:
i. 8% Income Tax on Gross Sales/Receipts and Other Non-Operating
Income in Lieu of the Graduated Income Tax Rates and the Percentage
Tax; Or
ii. Income Tax Based on Graduated Income Tax Rates
b. If the total Gross Sales/Receipts Exceed VAT Threshold of P3,000,000
i. Income Tax Based on Graduated Income Tax Rates
D. On Certain Passive Income of Individual Citizens and Resident Aliens
Passive Income Tax Rate

1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical compositions) 10%
- In general 20%
3. Prizes (P10,000 or less ) Graduated Income
Tax Rates
- Over P10,000 20%
4. Winnings (except from PCSO and Lotto amounting to P10,000 or less ) 20%
- From PCSO and Lotto amounting to P10,000 or less exempt
5. Interest Income from a Depository Bank under the Expanded Foreign Currency 15%
Deposit System
6. Cash and/or Property Dividends received by an individual from a domestic 10%
corporation/ joint stock company/ insurance or mutual fund companies/ Regional
Operating Headquarter of multinational companies
7. Share of an individual in the distributable net income after tax of a partnership (except 10%
GPPs)/ association, a joint account, a joint venture or consortium taxable as corporation
of which he is a member or co-venture
8. Capital gains from sale, exchange or other disposition of real property located in the 6%
Philippines, classified as capital asset
9. Net Capital gains from sale of shares of stock not traded in the stock exchange 15%
10. Interest Income from long-term deposit or investment in the form of savings, common Exempt
or individual trust funds, deposit substitutes, investment management accounts and other
investments evidenced by certificates in such form prescribed by the Bangko Sentral ng
Pilipinas (BSP)
Upon pre-termination before the fifth year, there should be imposed on the entire
income from the proceeds of the long-term deposit based on the remaining maturity
thereof:
Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%
II. For Non-Resident Aliens Not Engaged in Trade or Business
A. Tax Rate in General – on taxable income from all sources within the same manner as
Philippines individual citizen
and resident alien
individual
B. Certain Passive Income Tax Rates
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical compositions) 10%
- In general 20%
3. Prizes (P10,000 or less ) Graduated Income
Tax Rates
- Over P10,000 20%
4. Winnings (except from PCSO and Lotto) 20%
- From PCSO and Lotto exempt
5. Cash and/or Property Dividends received from a domestic corporation/ joint stock 20%
company/ insurance/ mutual fund companies/ Regional Operating Headquarter of
multinational companies
6. Share of a non-resident alien individual in the distributable net income after tax of a 20%
partnership (except GPPs) of which he is a partner or from an association, a joint
account, a joint venture or consortium taxable as corporation of which he is a member
or co-venture
7. Interest Income from long-term deposit or investment in the form of savings, common Exempt
or individual trust funds, deposit substitutes, investment management accounts and other
investments evidenced by certificates in such form prescribed by the Bangko Sentral ng
Pilipinas (BSP)
Upon pre-termination before the fifth year, there should be imposed on the entire
income from the proceeds of the long-term deposit based on the remaining maturity
thereof:
Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%
8. Capital from the sale, exchange or other disposition of real property located in the 6%
Philippines classified as capital asset
9. Net Capital gains from sale of shares of stock not traded in the Stock Exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%
III. For Non-resident Aliens Not Engaged in Trade or Business
1. Gross amount of income derived from all sources within the Philippines 25%
2. Capital gains from the exchange or other disposition of real property located in the Philippines 6%
3. Net Capital gains from the sale of shares of stock not traded in the Stock Exchange
- Not Over P100,000 5%
- Any amount in excess of P100,000 10%
IV. For Alien Individuals Employed by Regional Headquarters (RHQ) or Area Headquarters and Regional
Operating Headquarters (ROH) of Multinational Companies, Offshore Banking Units (OBUs), Petroleum
Service Contractor and Subcontractor
On the gross income consisting of salaries, wages, annuities, compensation, Graduated Income
remuneration and other emoluments, such as honoraria and emoluments derived from Tax Rates
the Philippines
V. For General Professional Partnerships
Net Income of the Partnerships 0%
VI. For Domestic Corporations
Rates of Tax on Certain Passive Income of Corporations Tax Rate
1. Interest from currency deposits, trust funds, deposit substitutes and similar 20%
arrangements received by domestic corporations
2. Royalties from sources within the Philippines 20%
3. Interest Income from a Depository Bank under Expanded Foreign Currency Deposit 15%
System
4. Cash and Property Dividends received by a domestic corporation from another 0%
domestic corporation
5. Capital gains from the sale, exchange or other disposition of lands and/or building 6%
6. Net Capital gains from sale of shares of stock not traded in the stock exchange 15%
VII. *Beginning on the 4th year immediately following the year in which such corporation commenced its
business operations, when the minimum corporate income tax is greater than the tax computed using the
normal income tax.
VIII. For Resident Foreign Corporation
1) a. In General – on taxable income derived from sources within the Philippines 30%
b. Minimum Corporate Income Tax – on gross income 2%
c. Improperly Accumulated Earnings – on improperly accumulated taxable income 10%
2) International Carriers – on gross Philippine billings 2½%
3) Regional Operating Headquarters of Multinational Companies– on taxable income 10%
4.) Regional or Area Headquarters of Multinational Companies exempt
5) Corporation Covered by Special Laws Rate specified
under the
respective special
laws
6) Offshore Banking Units (OBUs) 10%
In general – Income derived by OBUs from foreign currency transactions with non- Exempt
residents, other OBUs, local commercial banks and branches of foreign banks
authorized by BSP
On interest income derived from foreign currency loans granted to residents other 10%
than offshore banking units or local commercial banks, local branches of foreign banks
authorized by BSP to transact business with OBUs
7) Income derived under the Expanded Foreign Currency Deposit System
Interest income derived by a depository bank under the expanded foreign currency 7½%
deposit system.
On Income derived by depository banks under the expanded foreign currency deposit exempt
systems from foreign currency transactions with non-residents, OBUs in the
Philippines, local commercial banks including branches of foreign banks that may be
authorized by BSP
On interest income derived from foreign currency loans granted by depository banks 10%
under the expanded foreign currency deposit systems to residents other than offshore
banking units in the Philippines or other depository banks under the expanded system
8.) Branch Profit Remittances – on total profits applied or earmarked for remittance 15%
without any deduction for the tax component thereof (except those activities which are
registered with the Philippines Economic Zone Authority)
9.) Interest from currency deposits, trust funds, deposit substitutes and similar 20%
arrangements
10. Royalties derived from sources within the Philippines 20%
Related Revenue Issuances
RMO No. 23-2018, RR No. 8-2018, RA No. 10963, RR No. 12-2007, RR No. 14-2002, RA No. 9337, RR No. 9-98,
RR No. 1-98, RR No. 5-97, RR No. 4-96

Notes On Withholding Tax and Income Tax Filing

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Notes On Withholding Tax and Income Tax Filing

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IMPORTANCE OF WITHHOLDING TAX SYSTEM

 It encourages voluntary compliance;

PERSONS REQUIRED TO WITHHOLD WITHHOLDING TAXES

 Individuals engaged in business or practiced of profession

CLASSIFICATION OF WITHHOLDING TAXES

 Creditable withholding tax

WITHHOLDING TAX ON COMPENSATION

RESPONSIBILITIES OF THE EMPLOYER

EXEMPTIONS AND EXCLUSIONS FROM GROSS INCOME

MINIMUM WAGE EARNERS

of Minimum Wage earners in the private/public sectors as defined by these Regulations.

WITHHOLDING TAX FORMS

1. Receives purely compensation income regardless of amount;

EXPANDED WITHHOLDING TAX

FINAL WITHHOLDING TAX

WITHHOLDING TAX ON GOVERNMENT MONEY PAYMENTS (GMP) - PERCENTAGE TAXES

Who are Required to File Income Tax Returns?

 Corporations including partnerships, no matter how created or organized.

1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)

1. For Electronic Filing and Payment System (eFPS) Filer

Annual Income Tax For Individuals, Estates, and Trusts

1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if applicable

1. For eFPS Filer

1. Accomplish BIR Form 1701 AIF in triplicate.

1. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

1. For eFPS Filer

 May 15 of the current taxable year– for the first quarter

Annual Income Tax For Corporations And Partnerships

1. For eFPS Filer

Quarterly Income Tax For Corporations And Partnerships

1. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

1. For eFPS Filer

Improperly Accumulated Earnings Tax For Corporations

1. Fill-up BIR Form 1704 in triplicate.

Annual Income Information Form for General Professional Partnerships

Income Tax Rates

Amount of Net Taxable Income Rate

Passive Income Tax Rate

II. For Non-Resident Aliens Not Engaged in Trade or Business

III. For Non-resident Aliens Not Engaged in Trade or Business

V. For General Professional Partnerships

Net Income of the Partnerships 0%

VI. For Domestic Corporations

Rates of Tax on Certain Passive Income of Corporations Tax Rate

Related Revenue Issuances

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