Bir - Train - It & WT - 20180418 PDF

Briefing on RA 10963:
Tax Reform for Acceleration and

Inclusion (TRAIN) –
Revenue Regulations No. 8-2018
on Income Tax
19 April 2018
Atty. Elenita B. Quimosing
2
NIRC NIRC TRAIN
Provision
Section 24 Taxable income of individuals are subject to the Revised personal income tax
Income tax following graduated rates: brackets of 2018-2022:
rates on Tax Schedule Tax Schedule effective January 1,
individual 2018 to December 31, 2022
citizen and Not over P10,000 5%
individual Not over 0%
Over P10,000 but not P500 + 10% of over
resident alien
over P30,000 P10,000
P250,000
of the
Philippines Over P30,000 but not P2,500 + 15% of over
over P70,000 P30,000
Over P70,000 but not P8,500 + 20% of over
over P140,000 P70,000
Over P140,000 but not P22,500 + 25% of
over P250,000 over P140,000
TRAIN Briefing – IT & WT

VER 2.0 – April 2018
3 NIRC NIRC TRAIN
Provision
Section 24 Taxable income of individuals are subject Revised personal income tax brackets of
Income tax to the following graduated rates: 2018-2022:
rates on Tax Schedule Tax Schedule effective January 1, 2018 to
individual December 31, 2022
citizen and Over P250,000 but P50,000 + 30% of Over P250,000 but 20% of the excess over
individual not over P500,000 the excess over not over P400000 P250,000
resident alien P250,000
Over P400,000 but P30,000 + 25% of the
of the Over P500,000 P125,000 + 32% of not over P800,000 excess over P400,000
Philippines the excess over Over P800,000 but P130,000 + 30% of the
P500,000 not over P2million excess over P800,000
Over P2Million but P490,000 + 32% of the

not over P8Million excess over P2Million
Over P8Million P2,410,000 + 35% of
the excess over
P8Million
4 NIRC NIRC TRAIN
Provision
Section 24 For 2023 onwards:
Income tax rates Tax Schedule effective January 1, 2023 onwards
on individual
citizen and Not over P250,000 0%
individual resident
Over P250,000 but 15% of the excess over
alien of the
not over P400,000 P250,000
Philippines
Over P400,000 but P22,500 +20% of the
not over P800,000 excess over P400,000
Over P800,000 but P102,500 + 25% of the
not over P2,000,000 excess over P800,000
Over P2Million but P402,500 + 30% of the
not over P8Million excess over P2Million
Over P8Million P2,202,500 + 35% of the
excess over P8Million

5
Individuals Earning Purely Compensation Income
• Taxed based on the graduated income tax rates

Sec. 3 prescribed.
Income Tax • Taxable income is the gross compensation
Rates on income less non-taxable income/benefits such
Individual as but not limited to:
Citizen & 1. 13th month pay and other benefits
Individual (subject to limitations)
Resident 2. de minimis benefits
Alien 3. employee’s share in the SSS, GSIS,
PHIC, Pag-ibig contributions
4. union dues.

6
Individuals Earning Purely Compensation Income.
1. Minimum wage earners (MWE) shall be
Sec. 3 exempt from income tax:
Income Tax • statutory minimum wage
Rates on • holiday pay
Individual
Citizen & • overtime pay
Individual • night shift differential pay and
Resident • hazard pay
Alien 2. Husband & wife shall compute their individual
income tax separately based on their
respective taxable income;
7 NIRC NIRC TRAIN
Provision
Section 24 Taxable income For purely self-employed and/or professionals

Income tax of self- whose gross sales/receipt and other non-
employed and/or
is subject to the
professionals same graduated operating income do not exceed the VAT
rates threshold of P3Million, the tax shall be, at the
taxpayer’s option, either:
1. Income tax based on the graduated income
tax rates for individuals; OR
2. 8% income tax on gross sales/receipts and
other non-operating income in excess of
P250,000 in lieu of the graduated income tax
rates and the percentage tax under Sec. 116

8
Taxpayer shall be considered as having

availed of the graduated income tax rates
Sec. 3
Income Tax • unless signifies the intention to elect the
Rates on 8% income tax rate in the 1st Quarter
Individual Percentage and/or Income Tax Return
Citizen &
or on the initial quarter return;
Individual
Resident • election shall be irrevocable and no
Alien amendment of option shall be made

9
The option to be taxed at 8% income tax rate is NOT

available to::
Sec. 3
Income Tax • individuals with gross sales/receipts and other
Rates on non-operating income which exceeded
Individual ₱3,000,000.00
Citizen & • a VAT-registered taxpayer
Individual • those subject to Other Percentage Taxes under
Resident Title V of the Tax Code, as amended, except
Alien under Section 116
• partners of a General Professional Partnership
(GPP)
• have not signified intention to avail of this
10
A taxpayer who signifies the intention to avail of the 8%
income tax rate option, and is conclusively qualified for
said option at the end of the taxable year:
Sec. 3
Income Tax • shall compute the final annual income tax due
based on the actual annual gross sales/receipts
Rates on
and other non-operating income
Individual
Citizen & • Income tax is in lieu of the graduated rates of
Individual income tax and the percentage tax under Sec.
Resident 116
Alien • Financial Statements (FS) is not required
• Bookkeeping and invoicing/ receipting rules still
apply

11
Automatically subject to the graduated rates

Sec. 3 even if initially selected the 8% income tax rate
Income Tax option:
Rates on • if taxpayer’s gross sales/receipts and other
Individual non-operating income exceeded the VAT
Citizen &
threshold of P3,000,000 at any time
Individual
Resident • allowed a tax credit for the previous
Alien quarter/s income tax payment/s under the
8% income tax rate option

12
Automatically be subjected to the graduated
rates ….
Sec. 3
• A taxpayer subject to the graduated income
Income Tax tax rates (either selected this or failed to
Rates on signify chosen intention or failed to qualify)
Individual is also subject to the applicable business
Citizen & tax, if any.
Individual • FS shall be required
Resident • Audited FS mandatory for those with gross
Alien sales/receipts of more than the VAT
threshold

13
Taxable income - self-employment/

Sec. 3 practice of profession:
Income Tax
Rates on • net income, if opted to be taxed at
Individual graduated rates or failed to signify the
Citizen & chosen option
Individual
• the gross sales/receipts and other
Resident
Alien non-operating income if option availed
is the 8% IT rate

14 NIRC NIRC TRAIN
Provision
Section 24 Taxable income For mixed income earners (earning both compensation
Income tax of is subject to the income and income from business and/or practice of
mixed income same graduated profession), their income taxes shall be:
earners rates 1. For income from compensation: based on graduated
income tax rates for individuals, AND
2. For income from business and/or practice of profession:
a.Gross sales/receipts and other non-operating income
which do not exceed the VAT threshold of P3Million –
income tax based on graduated income tax rates on
taxable income OR 8% income tax on gross
sales/receipts and other non-operating income, at the
taxpayer’s OPTION
b.Gross sales/receipts and other non-operating income
which exceeds the VAT threshold of P3Million – income
tax based on graduated tax rates for individuals

15
Under Section 24(A)(2)(b) on option of 8%

Sec. 3 income tax rate on gross sales/receipts and
Income Tax
Rates on other non-operating income in excess of
Individual P250,000.00 –
Citizen &
• only to purely self-employed individuals
Individual
Resident and/or professionals.
Alien • not applicable to mixed income earners

16 Mixed Income (Continuation) under 8%...
• The excess of the P250,000.00 over the actual
taxable compensation income is not a reduction
Sec. 3 against the taxable income from business/practice
Income Tax of profession under the 8% income tax rate option.
Rates on
Individual • The total tax due shall be the sum of:
Citizen & (1) tax due from compensation computed using
Individual the graduated income tax rates; and
Resident
(2) tax due from self-employment/practice of
Alien
profession (product of 8% IT rate multiply
with the total gross sales/receipts and other
non-operating income)
17
Mixed Income (Continuation) graduated…
Sec. 3 • option to be taxed under the graduated

Income Tax income tax rates for income from
Rates on
business/practice of profession, tax due
Individual
Citizen & shall be based on the total taxable income:
Individual
Resident combine the taxable income from both
Alien compensation and business/practice of
profession multiply by the graduated tax
rate
18
A taxpayer who initially presumed that the gross
sales/receipts for the taxable year and other non-operating
income will not exceed the ₱3,000,000.00 VAT threshold
Sec. 12 but has actually exceeded the same during the taxable
Registration year, shall
Updates • immediately update registration from non-VAT to a
VAT taxpayer
• update registration immediately within the month
following the month the sales/receipts exceeded the
VAT threshold
• be liable to VAT prospectively starting on the first day
following the month when the threshold is breached

19 A taxpayer who initially presumed that the gross
sales/receipts for the taxable year and other non-operating
income will not exceed the P3,000,000.00 …, shall:
(continuation)
Sec. 12
• pay the required percentage tax from the beginning of
Registration the taxable year or commencement of
Updates business/practice of profession until the time the
taxpayer becomes liable for VAT - without imposition
of penalty if timely paid on the immediately succeeding
month/quarter.
Thus, there may be an instance when a taxpayer files two

(2) business tax returns in a month/quarter – i.e.,
percentage and VAT returns.

20
A VAT taxpayer who did not exceed the VAT
threshold within the immediately preceding three (3)
Sec. 12 year period, may opt to be a non-VAT taxpayer and
avail of the 8% income tax rate option:
Registration
• update the registration records on or before
Updates
the first quarter of a taxable year
• remain liable for VAT for as long as there is no
update of registration and VAT-registered
invoices/receipts are continuously issued
• updates shall be subject to existing rules and
regulations

21 A non-VAT taxpayer who volunteers to be a VAT taxpayer
knowing that sales/receipts and other non-operating income
will exceed the VAT threshold, shall update registration
records - becomes liable to VAT on the day when updating
Sec. 12 is made.
Registration • automatically be subject to the graduated IT rates if the
Updates 8% IT rate option is initially selected; any income tax
paid previously shall be deducted from the income tax
due under the graduated IT rates; percentage tax due
from the beginning shall be due on the month/quarter
immediately following registration update.
• However, if the graduated income tax rates is selected
from the beginning - ceases to be liable to percentage
tax and instead is now liable to VAT.

22 In connection with the provision on the 8% income tax
rate option under Section 24(A)(2)(b) and Section
24(A)(2)(c)
Sec. 13 - All existing VAT registered taxpayers whose gross
sales/receipts and other non-operating income in
Transitory the preceding year did not exceed the VAT
Provisions threshold of ₱3,000,000.00:
• option to update their registration to non-
VAT on or before March 31, 2018 (now April
30, 2018)
• existing procedures on registration updates,
and the inventory and
surrender/cancellation of unused VAT
invoices/receipts shall apply
23
NIRC Provision NIRC TRAIN
Section 24 (B) Philippine Charity Philippine Charity Sweepstakes

(1) Sweepstakes and Lotto and Lotto winnings of more than
Final tax on winnings – exempt from the P10,000 shall be subject to the
winnings 20% final tax 20% final tax
Section 24 (B) Interest income received by The rate of final tax on interest
(1) an individual taxpayer income received by resident
Final tax on (except a non-resident individual taxpayer under the
interest on individual) from a depository expanded foreign currency
foreign currency bank under the expanded deposit system increased from
deposit foreign currency deposit 7.5% to 15% final tax
(EFCD) system is subject to
7.5% final tax
24
Section 24 (C) The capital gains tax on net The final tax rate of 15% for net
Capital gains tax capital gains realized from capital gains realized during the
on sale of sale, barter, or exchange or taxable year from the sale, barter,
shares not other disposition of shares of exchange or other disposition of
traded through stock in a domestic corporation shares of stock in a domestic
the stock not traded through the stock corporation except shares sold or
exchange exchange is: disposed of through the stock
exchange
Not over P100,000 – 5%
On any amount in excess of

P100,000 – 10%

25 NIRC Provision NIRC TRAIN
Section 31 Means the pertinent items of gross The phrase “and/or personal and
Definition of income specified in this Code, less additional exemptions” is removed in
Taxable Income the deductions and/or personal the definition.
and additional exemptions, if any,
authorized for such types of
income by this Code or other
special laws
Section 35 Individual taxpayers are entitled to: The Basic Personal and Additional
Personal Basic Personal Exemption – Exemptions of individual taxpayers
Exemptions P50,000 are removed.
and
The related provision on furnishing
Additional Exemption – P25,000 exemption certificate is likewise
per qualified dependent child removed.

Section 32 (B) The amount of tax-exempt 13th The amount of tax-exempt 13th
Tax exempt 13th month pay and other benefits is month pay and other benefits is
month pay P82,000. increased to P90,000.
Section 33 (A) Fringe benefits given to non- The Fringe Benefits Tax is
Tax on fringe rank and file employees are increased to 35% effective
benefits given to subject to 32% final tax January 1, 2018
non-rank and file The grossed up monetary The grossed up monetary value of
employees value of the fringe benefit the fringe benefit given to non-
given to non-rank and file rank and file employees shall be
employees shall be determined by dividing the actual
determined by dividing the monetary value by 65%
actual monetary value by 68%

27
Section 33 (A) Fringe benefits given to non- Fringe benefits furnished to

Tax on fringe rank and file employees are employees and taxable under
benefits given to subject to 32% final tax Subsections (B) of Sec. 25 shall
non-rank and file The grossed up monetary be taxed at the applicable rates
employees value of the fringe benefit imposed
given to non-rank and file The grossed-up monetary value of
employees shall be the fringe benefit shall be
determined by dividing the determined by dividing the actual
actual monetary value by 68% monetary value of the fringe
benefit by the difference between
100% and the applicable rates of
income tax under Subsections (B)
of Sec. 25

Section 34 (M) The allowable deduction for Allowable deduction for premium
Allowable premium payments on health payments on health and/or hospitalization
deduction for and/or hospitalization insurance insurance of an individual taxpayer is
premium payments of an individual taxpayer is removed.
on health and/or P2400 per year or P200 per
hospitalization month, subject to a gross family
insurance income threshold of P250,000.
Section 51 An individual whose gross Individual taxpayers whose taxable income

Filing of individual income does not exceed his does not exceed P250,000 shall not be
income tax return total personal and additional required to file an income tax return:
exemptions for dependents are Provided, That a citizen or alien individual
not required to file income tax engaged in business or practice of
return (ITR). profession within the Phils. shall file an ITR
regardless of the amount of gross income

29
Section 51-A No provision Substituted filing of ITRs is available for

Substituted Filing individual taxpayers (requirements):
of income tax Receiving purely compensation income,
returns by regardless of amount
employees From only one employer in the Philippines
receiving purely for the calendar year
compensation The income tax of which has been correctly
income from only withheld by the employer (i.e., tax due = tax
one employer in withheld)
the Philippines The Certificate of Withholding filed by the
employers duly stamped “RECEIVED” by the
BIR shall be the substituted filing by such
employees.

Section 56 (A) (2) When tax due exceeds ₱2,000, The new deadline of payment of
Installment the taxpayer (other than a second installment is October 15
Payment of tax corporation) may elect to pay the following the close of the
due for individuals tax in two equal installments. calendar year. (TY 2018
and corporations Payment of installments: onwards)
First installment – time of filing
of return
Second installment – on or
before July 15 following the
close of the calendar year.
Section 62 There is allowed personal The exemption for estates and
Exemption for exemption of ₱50,000 from the trusts is removed.
estates and trusts income of the estate or trust.

Section 51 (C) The return of individual The return of individual required
(1) required to file an income tax to file an income tax return shall
Filing of return shall be filed on or be filed on or before April 15 of
Individual Tax before April 15 of each year each year covering income for
Return covering income for the the preceding taxable year.
preceding taxable year. (Note: The TRAIN Law did not
remove this provision)
Section 74 Every individual subject to The deadline for filing of

Declaration of income tax shall make and file declaration estimated income for
estimated a declaration of his estimated the current taxable year is on or
income for income for the current taxable before May 15 of the same
individuals year on or before April 15 of taxable year.
the same taxable year.

Section 74 The amount of estimated The payment shall be made:
Declaration of income with respect to which First – May 15
estimated a declaration is required shall Second – August 15
income for be paid in four (4) Third – November 15
individuals installments: Fourth – on or before April
First – at time of 15 of the following calendar
declaration year when the final adjusted
Second – August 15 income tax return is due to be
Third – November 15 filed [Sec. 77(B)]
Fourth – on or before April
15 of the following calendar
year when the final
adjusted income tax return
is due to be filed.

33
Summary: Individual Taxpayers – Resident Citizen/Alien
Particulars Graduated IT Rates 8% IT Rates

Basis of IT net taxable income gross sales/receipts
and other non-
operating income
Deductions Allowable itemized or OSD (40%) n/a
Business Tax PT/VAT Not subject to PT

Financial Statements 1. If Itemized: if qualified: No FS
FS if gross is less than 3M; required
Audited FS if gross is more than
3M
2. If OSD: no FS required
34
Summary: Individual Taxpayers – Resident Citizen/Alien
Source of Graduated and 8% IT Rates Remarks
Income IT Rates /or
Basis of IT net taxable gross sales/receipts
income and other non-
operating income
a. Purely Yes n/a n/a No option
Compensation
b. Purely Yes OR Yes, if qualified: Option when sales/receipts and other
Business/ gross sales/receipts income did not exceed VAT threshold;
Practice of and other non- if graduated IT rates – subject to
Profession operating income did applicable business tax/es;
not exceed ₱3M if 8% IT rate- taxable on amount in
threshold excess of ₱250Th and shall be in lieu of
graduated rates and PT under Sec. 116

35 Summary: Individual Taxpayers – Resident Citizen/Alien
and/
Source of Income Graduated IT Rates 8% IT Rates Remarks
or
c. Mixed Income
c1. compensation Yes n/a n/a No option
c2. business/ Yes or Yes, if qualified: Option available to taxpayers who
practice of gross sales/receipts did not exceed VAT threshold:
profession and other non- 1. if graduated IT rates – subject
operating income did to applicable business tax/es; or
not exceed ₱3M 2. if 8% IT rate- based on entire
threshold gross amount and the IT rate is in
lieu of graduated income tax rates
& PT-Sec. 116
Note: If both under Note: Total Income Tax For business/practice of
graduated IT rates – Due is the sum of the profession: in case of deductions
income tax due is Income tax due from
compensation
under the graduated IT rate -
based on the sum of option to elect itemized or OSD to
(graduated), and the
both the taxable income tax due from compute the net taxable income
income from business/practice of subject to income tax
compensation and profession (8% of gross
business/profession sales/receipts & other non-
VER 2.0 – April 2018 operating income)
Briefing on RA 10963:
Tax Reform for Acceleration and
Inclusion (TRAIN) –
Revenue Regulations No. 11-2018
on Withholding Tax
19 April 2018
Atty. Elenita B. Quimosing
37
A. Professional fees, talent fees, etc. for

services rendered:
Sec. 2.57.2
Income
Payments payee:
• Individual payee
Subject to • Gross income of P3M and below – 5%
Creditable • Gross income above P3M/VAT-registered TP - 10%
Withholding
Tax Non--Individual Payee
• Non Payee:
• Gross income P720,000 and below – 10%
• Gross income above P720,000 – 15%

38
Included under this section are payments

Sec. 2.57.2
previously under the following subsections:
Income
• Subsection B – professional fees, talent fees, etc. for
Payments
services rendered by juridical persons
Subject to • Subsection G – payments to certain brokers and
Creditable agents
Withholding • Subsection I – payment to medical practitioners
Tax • Subsection O – Commissions of independent and/or
exclusive sales representatives

39
How the Withholding Agent Determine the Applicable

Withholding Tax Rates to be Applied to the Payee?
Sec. 2.57.2
Income • The individual payee shall execute a sworn declaration (Annex
Payments B-1 of the RR) and, together with a copy of COR, provide all
Subject to income payors every January 15 of each year, or prior to the
initial income payment
Creditable
• Withholding agent shall likewise execute sworn statement
Withholding (Annex C of the RR) declaring the number of payees who have
Tax executed sworn declaration (Annex B-1, B-2, B-3 of the RR),
and submit the same not later than January 30 of each year or
within fifteen (15) days following the month when new recipient of
income have submitted a sworn declaration with a copy of COR

40
Sec. 2.57.2
What Shall be the Applicable
Income Withholding Tax Rates If the
Payments Individual Payee Did Not Submit Any
Subject to Sworn Declaration to the Payor?
Creditable
Withholding
Tax
• The withholding agent shall withhold the higher
rate of withholding TAX WHICH IS 10%

41
Section 2.57.2 Income Payments Subject to Creditable
Withholding Tax
Nature of Income Payments Old New
Rate
(No Change in Rate)
Rate) Sub Sec Sub Sec
Rentals C B 5%
Income Payments to Certain Contractors E C 2%
Income Distribution to the Beneficiaries F D 15%
Income Payments to Partners of GPP H E 15%
Gross Selling Price or Total Amount of
1.5% /
Consideration or Its Equivalent Paid to the
J F 3% / 5%
Seller/Owner for he Sale, Exchange or Transfer
/ 6%
of Real Property Classified as Ordinary Asset

42
Withholding Tax
(No Change in Rate) Rate
Sub Sec Sub Sec
Additional Income Payments to Government Personnel
from Importers, Shipping and Airline Companies, or their K G 15%
Agents
1% of
Certain Income Payments Made by Credit Card
L H ½ of
Companies
Gross
1% /
Income Payments Made by Top Withholding Agents M, W I
2%
1% /
Income Payments made by the Government N J
2%
Tolling Fees Paid by the Refineries P K 5%
43
Withholding Tax
Sub Sec Sub Sec
Payments Made by Pre-Need Companies to
Q L 1%
Funeral Parlors
Payments Made to Embalmers R M 1%
Payments Made to Suppliers of Agricultural
S N 1%
Products
Income Payments on Purchases of Minerals,
T O 1% / 5%
Mineral Products and Quarry Resources
MERALCO Payments U P 10%

44
Withholding Tax
Sub Sec Sub Sec
Interest Income on the Refund Paid by Other Electric 10% /
Distribution Utilities (DUs) V Q
20%
Income Payments Made by Political Parties and
Candidates of Local and National Election X R 5%
Interest Income Derived from Any Other Debt

Instruments Not Within the Coverage of Deposit Y S 20%
Substitutes
Income Payments to Real Estate Investment Trust
Z T 1%
(REIT)
Income Payments on Sugar AA U 1%

45
Amendments pertain to:

Sec. 2.57.3
Persons • Refusal of seller/payee to be subjected to withholding
Required tax – may be imposed penalties pursuant to Section 275
to Deduct of the Tax Code (in addition to the conduct of audit)
and • Inclusion of provisions regarding non-withholding of tax
from individuals whose gross income in a year does not
Withhold exceed P250,000 from a lone payor subject to certain
requirements

46
Requirements:
Sec. 2.57.3
Persons • Individual shall execute a sworn declaration of gross
income (with provided format-Annex B-2 of the RR);
Required • The sworn declaration shall be submitted to the lone
to Deduct payor;
and • The lone payor shall likewise execute a sworn
Withhold declaration (format also provided –Annex C of the RR)
which shall be submitted to the concerned BIR office,
together with the list of payees who shall not be
subjected to withholding tax

47
Sec. 2.57.3 What if the individual did not

Persons submit the sworn declaration and
Required a copy of COR to the lone payor?
to Deduct
and
Withhold • The lone payor is required to withhold the
prescribed rate of withholding on the
entire payments made

48
Sec. 2.57.3 What if the income payments exceed

Persons P250,000 but the individual payee
Required submitted the sworn declaration?
to Deduct
and
Withhold • The lone payor is required to withhold the
prescribed rate of withholding only on the
excess over P250,000

49
Illustration 1
Ms. Tina supplies special cupcakes on a regular basis to
RPSV Supermarket, a top withholding agent pursuant to
Sec. 2.57.3 Section 2.57.2 (I) of these regulations. Prior to 2018, her
Persons annual sales to RPSV Supermarket never exceeded
₱250,000. She only bakes cupcakes upon order. RPSV
Required Supermarket is her lone payor of income; thus, she executed
to Deduct the sworn declaration of gross receipts stating that her gross
and expected receipts shall not exceed ₱250,000 for the year
from RPSV Supermarket. However, in the latter part of 2018,
Withhold RPSV Supermarket noted that its purchase of cupcakes shall
exceed ₱250,000. As expected, in 2018 the total purchase of
cupcakes by RPSV Supermarket from Ms. Tina amounted to
₱300,000. Compute for the amount to be withheld.
50
Illustration 1: Computation
Gross Receipts ₱ 300,000.00

Less: Amount not subject to withholding tax 250,000.00
Income subject to withholding tax ₱ 50,000.00
Multiply by EWT rate X 1%
Amount of withholding tax ₱ 500.00
*RPSV Supermarket is included as “Top Withholding Agent,”

thus, the rate of income tax withholding is 1% for the payments
made to Ms. Tina, the supplier of goods

51
A. National government agencies and instrumentalities, except GOCCs
B. Persons enjoying exemption from income tax, as follows:
Sec. 2.57.5
Exemption • Sale of real property by person engaged in social housing project where
the SP does not exceed the socialized housing price applicable to the
from area as prescribed by HLURB/HUDCC
Withholding • Corporations duly registered with the Board of Investments (BOI),
Philippine Export Processing Zones and Subic Bay Metropolitan
of CWT Authority enjoying exemption from income tax pursuant to E.O. 226;
• Corporations exempt from income tax under Section 30 of the Tax Code
Withhold as amended and GOCCs, namely: GSIS; SSS; PHIC and LWDs;
• GPPs;
• Joint Ventures or consortium formed for the purpose of undertaking
construction project…
• Individuals who earn P250,000 and below from a lone payor subject to
compliance with some requirements

52
Section 2.58 Returns and Payment of Taxes
Withheld at Source
Manual Not later than the last day

of the month following the
close of the quarter
But, withheld taxes are required to be

remitted not later than the 10th day following
the close of the month (for the first two
months of the quarter)

53
Withheld at Source
Not later than the last day of the

eFPS month following the close of the
quarter
But, withheld taxes are required to be

remitted not later than the 15th day
following the close of the month (for the
first two months of the quarter)

54
Withheld at Source
Expanded • 0619-
0619-E BIR Form 1601-EQ
Withholding • (first 2
Tax • months)
Final
• 0619-
0619-F BIR Form 1601-FQ
BIR Form 1602
Withholding • (first 2
BIR Form 1603
Tax • months)
months)

55
Withheld at Source
For Sale of Real Property Considered For Sale of Real
Capital Asset and Shares of Stock Not Property Considered
Traded Thru a Local Stock Exchange Ordinary Asset
Due date is within thirty (30) days from the date Due date is on or
of transactions
before the tenth (10TH)
BIR Form to be used:
day following the
BIR Form 1706 – Sale of Real Property
Considered Capital Asset
month of transaction
BIR Form 1707 – Sale of Shares of Stocks
BIR Form to be used:
Not Traded in Local Stock Exchange BIR FORM NO. 1606

56
Withheld at Source
Certificate/Statement of Tax Withheld at Source
Expanded/Creditable • BIR Form 2307 (20 days from the

Withholding Tax close of the quarter or upon demand
of the payee)
• BIR Form 2306 (20 days from the

Final Withholding Tax close of the quarter or upon demand
of the payee)

57
Withheld at Source
Annual Information Return
Expanded • BIR Form 1604-

1604-E (March 1)
1)
Withholding Tax
Final Withholding • BIR Form 1604-

1604-F (January
(January 31)
Tax

58
Section 2.78.1 Withholding of Income Tax on
Compensation
Amendments Pertain to:
• Increase in Medical Cash Allowance to dependents of

“De Minimis” employee to P1,500 per semester or P250 per month
• Increase in Rice Subsidy to P2,000 per month
Benefits
• Increase in uniform and clothing allowance
• Increase in threshold of the “13th month pay and other

benefits” to P90,000
Exemption from • Income payment paid to Minimum Wage Earner (MWE)
Withholding Tax on by the same employer, other than the basic SMW,
Holiday pay, Hazard pay, Overtime pay, Night-Shift
Compensation differential pay – shall be taxable and subject to WT;
• Compensation during the year not exceeding P250,000

59
Illustration 2
Ms. Alona is employed in CSO Corporation. She
Sec. 2.78.1 received the SMW for 2018 in the total amount of
Withholding ₱175,000, inclusive of the 13th month pay. In the
same year, she also received overtime pay of
Tax on ₱40,000 and night-shift differential of ₱25,000. She
Compensation also received commission income from the same
employer of ₱20,000, thus, total income received
amounted to ₱260,000.
Compute for the withholding tax due.

60
The employer of Ms. Alona shall determine the nature of income payments. The amount to be
subjected to income tax withholding shall be computed as follows:
Total Income received ₱ 260,000.00
Less: Income exempt from tax
Basic SMW ₱175,000.00
Overtime Pay 40,000.00
Night Shift Differential 25,000.00
Total Exempt Income as MWE 240,000.00
Taxable Income-
Income- Commission ₱ 20,000.00
Tax Due:
On not over P250,000.00 (₱20,000.00 x 0%) ₱ 0.00
* Taxpayer’s income of SMW, overtime pay, and night shift differential pay are expressly
exempt from income tax under the law and consequently from withholding tax.
* Commission income from the same employer is taxable, however, under the graduated
income tax rates since it is less than ₱250,000, there is no tax due.

61
Illustration 3
Ms. Cyril is employed in MAFD Corporation and is

Sec. 2.78.1
also a part-time real estate agent for a real estate
Withholding
broker. In addition to the SMW of ₱180,000 she
Tax on
received from her employer, she likewise received
Compensation
₱75,000 as commissions from her real estate
dealings for the year 2018.
Compute for the tax due.

62
The amount subject to income tax and withholding tax shall be

computed depending on the income tax regime selected by Ms.
Cyril, since she is qualified to avail of such option (income from
business/practice of profession did not exceed ₱3,000,000) and
such option was reflected in the payee’s sworn declaration given
by the taxpayer to the payor/withholding tax agent-real estate
broker, as follows:

63
1. Under the graduate income tax (IT) regime:
Less: Income exempt from income tax – SMW 180,000.00
Taxable Income- Commission ₱ 75,000.00
▹Tax Due
▹On not over ₱250,000.00 (₱75,000.00 x 0%) ₱ 0.00
2. Under the 8% IT regime:

regime
Less: Income exempt from income tax- SMW 180,000.00
Taxable Income- Commission ₱ 75,000.00
▹Tax Due
▹₱75,000.00 x 8% ₱ 6,000.00

64
Section 2.79 Income Tax Collected at Source on
Compensation Income
• No reference to number of dependents due to

removal of personal and additional exemptions
• Change in Income tax rates
Withholding Tax • Change in compensation range
Table • Applicability of the withholding table to employees of
Area or Regional Headquarters of Multinational
companies, ROHQ, OBUs, and Petroleum Service
contractors and sub-contractors
Fringe Benefits • Increase to 35% for citizen, resident alien and alien
Rate engaged in trade or business in the Philippines

65 Withholding Tax Rates
(January 1, 2018 Until December 31, 2022)
Range of Taxable Tax Due = a + (b x c)
Income
Over Not Over Basic Amount Additional Rate Of Excess Over
(a) (b) (c)
- 250,000.00 - - -
250,000.00 400,000.00 - 20% 250,000.00
400,000.00 800,000.00 30,000.00 25% 400,000.00
800,000.00 2,000,000.00 130,000.00 30% 800,000.00

2,000,000.00 8,000,000.00 490,000.00 32% 2,000,000.00
8,000,000.00 - 2,410,000.00 35% 8,000,000.00

66 Withholding Tax Table (To be used until Dec. 31, 2022)
REVISED WITHHOLDING TAX TABLE
Effective January 1, 2018 to December 31, 2022
DAILY 1 2 3 4 5 6
P21,918 and
Compensation Range P 685 and below P685 – P1,095 P1,096 – P2,191 P2,192 – P5,478 P5,479 – P21,917
above
0.00 P 82.19 P 356.16 P 1,342.47 P 6,602.74
Prescribed
0.00 + 25% over P + 35% over
Withholding Tax
+ 20% over P 685 1,096 + 30% over P2,192 + 32% over P 5,479 P21,918
WEEKLY 1 2 3 4 5 6
P 4,808 and P 38,462 – P 153,846 and
Compensation Range below P 4,808 – P 7,691 P 7,692 – P15,384 P 15,385 – P 38,461
P153,845 above
0.00 P 576.92 P 2,500.00 P 9,423.08 P 46,346.15
Prescribed
0.00 + 20% over P + 25% over P + 30% over P + 32% over P + 35% over P
Withholding Tax
4,808 7,692 15,385 38,462 153,846
SEMI-MONTHLY 1 2 3 4 5 6
P 10,417 and P 10,417 – P 16,667 – P P 83,333 – P 333,333 and
Compensation Range P 33,333 – P 83,332
below P16,666 33,332 P333,332 above
0.00 P 1,250.00 P 5,416.67 P 20,416.67 P 100,416.67
Prescribed
0.00 + 20% over P + 25% over P + 30% over P + 32% over P + 35% over P
Withholding Tax
10,417 16,667 33,333 83,333 333,333
MONTHLY 1 2 3 4 5 6
P 20,833 and P 20,833 – P P 33,333 – P P 66,667 – P P 166,667 – P 666,667 and
Compensation Range
below 33,332 66,666 166,666 P666,666 above
Prescribed
0.0 P 2,500.00 P 10,833.33 P 40,833.33 P 200,833.33
TRAIN Briefing
Withholding Tax –IT & WT 0.00
VER 2.0 – April 2018 + 20% over P + 25% over P + 30% over P + 32% over P +35% over P
20,833 33,333 66,667 166,667 666,667
67 Withholding Tax Rates
(Starting January 1, 2023)
Range of Taxable Tax Due = a + (b x c)
Income
Over Not Over Basic Amount Additional Of Excess
(a) Rate Over
(b) (c)
- 250,000.00 - - -
250,000.00 400,000.00 - 15% 250,000.00
400,000.00 800,000.00 22,500.00 20% 400,000.00
800,000.00 2,000,000.00 105,000.00 25% 800,000.00

2,000,000.00 8,000,000.00 402,500.00 30% 2,000,000.00
8,000,000.00 - 2,202,500.00 35% 8,000,000.00

68 Withholding Tax Table (Starting Jan. 1, 2023)
REVISED WITHHOLDING TAX TABLE
Effective January 1, 2023 and onwards
DAILY 1 2 3 4 5 6
Compensation P 685 and below P 685 – P 1,095 P 1,096 – P 2,191 P 2,192 – P 5,478 P 5,479 – P 21,917 P 21,918 and above
Range
0.00 0.00 P 61.65 P 280.85 P 1,102.60 P 6,034.00.30
Prescribed
+ 20% over P
Withholding Tax
+ 15% over P 685 1,096 + 25% over P2,192 + 30% over P 5,479 + 35% over P 21,918
WEEKLY 1 2 3 4 5 6
Compensation P 4,808 and P 4,808 – P 7,691 P 7,692 – P P 15,385 – P P 38,462 – P 153,845 P 153,846 and above
Range below 15,384 38,461
0.00 0.00 P 432.60 P 1,971.20 P 7,740.45 P 42,355.65
Prescribed
+ 15% over P + 20% over P + 25% over P + 35% over P
Withholding Tax
4,808 7,692 15,385 + 30% over P 38,462 153,846
SEMI-MONTHLY 1 2 3 4 5 6
Compensation P 10,417 and P 10,417 – P P 16,667 – P P 33,333 – P P 83,333 – P 333,332 P 333,333 and above
Range below 16,666 33,332 83,332
0.00 0.00 P 937.50 P 4,270.70 P 16,770.70 P 91,770.70
Prescribed
+ 15% over P + 20% over P + 25% over P + 35% over P
Withholding Tax
10,417 16,667 33,333 + 30% over P 83,333 333,333
MONTHLY 1 2 3 4 5 6
Compensation P 20,833 and P 20,833 – P P 33,333 – P 66,667 – P P 166,667 – P666,666 P 666,667 and above
Range below 33,332 P66,666 166,666
0.00 0.00 P 1,875.00 P 8,541.80 P 33,541.80 P 183,541.80
Prescribed
+ 15% over P + 20% over P + 25% over P + 30% over P + 35% over P
Withholding Tax2018
VER 2.0 – April 20,833 33,333 66,667 166,667 666,667
69 Illustration 4
Ms. Lyn, an employee of MAG Corp. is receiving regular monthly
compensation in the amount of ₱165,000, net of mandatory
contributions, with supplemental compensation in the amount of
Sec. 2.79
₱5,000 for the month.
Income Tax Computation:
Collected at By using the monthly withholding tax table, the withholding tax
Source on beginning January 2018 is computed by referring to
Compensation compensation range under column 4 which shows a
Income predetermined tax of ₱10,833.33 on ₱66,667 plus 30% of the
excess of Compensation Range (Minimum) amounting to
₱103,833 (₱165,000.00 – ₱ 66,667.00 + ₱5,000), which is
₱30,999.90. As such, the withholding tax to be withheld by the
employer shall be ₱43,659.89.
Compute for the amount to be withheld.
70
▸Total taxable compensation ₱ 165,000.00
▸Less: Compensation Range (Minimum) 66,667.00
▸Excess ₱ 98,333.00
▸Add: Supplemental Compensation 5,000.00
▸Total ₱ 103,333.00
▸Withholding tax shall be computed as follows:

▸On ₱66,667.00 ₱ 10,833.33
▸On Excess (₱165,000.00 - ₱66,667.00 +
▸Supplemental compensation of ₱5,000.00) x 30% 30,999.90
▸Total monthly withholding tax ₱ 41,833.23

71
Section 2.79.1 Application for Registration for
Individuals Earning Compensation Income
• Name/Taxpayer’s identification
Require Number/residential address
Information • Civil status of employee, whether single,

married, legally separated, widow or widower
• Occupational status of the spouse
Required • Reduced requirements to 2, namely:

• Any identification issued by any government
Forms and body
Attachments • Copy of marriage contract, if married

72
EMPLOYEE
EMPLOYER FILL-OUT
ACCOMPLISHES BIR BIR RECEIVES THE
PART IV OF THE BIR
FORM 1902 AND DULY ACCOMPLISHED
FORM 1902 AND
SUBMITS TO BIR FORM 1902
SUBMITS TO BIR
EMPLOYER
Within Ten (10) Days From Date of

Employment

73
WITHIN TEN (10) WITHIN THE LAST DAY
DAYS FROM SUCH OF THE MONTH OF
CHANGE RECEIPT OF THE ‘1905’
EMPLOYEE EMPLOYER
BIR RECEIVES THE
ACCOMPLISHES BIR RECEIVES THE
DULY
FORM 1905 AND ACCOMPLISHED BIR
ACCOMPLISHED BIR
SUBMITS TO FORM 1905 AND
FORM 1905
EMPLOYER SUBMITS TO BIR
In Case of Update of Registration Information

74
Distribution of BIR Form Nos. 1902/1905
Copy For Employee

T
R
Copy for Employer D
U I
O P P
R L
Copy for BIR L
I
I I
C C
G
A A
I T
T
N E
E
A
L

75
Section 2.79.1 Failure to File Application for
Registration
“SECTION 79..2. Failure to file Application for
2.79
Registration (BIR Form No
No.. 1902)
1902) – Where an employee,
in violation of these regulations either fails or refuses to
file an Application for Registration (BIR Form No. 1902)
together with the required attachments, the employer shall
withhold the taxes prescribed under the revised
withholding tax table (Annex “D” or “E”, whichever is
applicable).”

76
Section 2.79.4 Husband and Wife
“SECTION 2.79.79.4. Husband and Wife – Where both husband

and wife are each recipients of compensation either from the
same or different employers, taxes shall be withheld
separately in accordance with the applicable revised
withholding tax table (Annex “D” or “E”).”

77
Section 2.80 Liability for Tax
Interest – There shall be assessed and collected on any unpaid amount of
tax, interest at the rate of double the legal interest rate for loans or
forbearance of any money in the absence of an express stipulation set by
the Bangko Sentral ng Pilipinas from the date prescribed for payment until
the amount is fully paid. Provided, that in no case shall the deficiency and
the delinquency interest prescribed under Subsections (B) and (C) of
Section 249 of the Tax Code, be imposed simultaneously.
Deficiency Interest – Any deficiency in the tax due, as the term is defined in
this Code, shall be subject to the interest prescribed in Subsection (A) of
Section 249 of the Tax Code, which interest shall be assessed and
collected from the date prescribed for its payment until the full payment
thereof, or upon issuance of a notice and demand by the Commissioner of
Internal Revenue, whichever comes earlier.

78
Section 2.83.1 Employees Withholding Statement
(BIR Form 2316)
DUPLICATE
FOR THE BIR
EMPLOYER BIR FORM

SHALL ISSUE NOT 2316 TRIPLICATE
BIR FORM LATER FOR THE
THAN
ORIGINAL
2316 TO JANUARY COPY FOR EMPLOYER
EMPLOYEES (TO BE RETAINED
31 THE FOR A PERIOD OF
EMPLOYEE 10 YEARS)

79
(BIR Form 2316)
The Certificate shall indicate the following information:
a. Name and address of the employee;
b. Employee’s Taxpayer Identification Number (TIN);
c. Name and Address of the Employer;
d. Employer’s TIN;
e. The sum of compensation paid, including the non-taxable benefits;
f. The amount of statutory minimum wage received if employee is
MWE;
g. Overtime pay, holiday pay, night shift differential pay, and hazard
pay received if employee is MWE;
h. The amount of tax due, if any; and
i. The amount of tax withheld, if any.
80
(BIR Form 2316)
CERTIFIED
LIST OF
EMPLOYEES
DUPLICATE QUALIFIED NOT LATER
COPIES OF FOR THAN
BIR FORM SUBSTITUTED FEBRUARY
28
BIR
2316 FILING OF
ANNUAL
INCOME TAX
RETURN (AITR)

81
Section 2.83.4 Substituted Filing of Income Tax
Returns by Employees Receiving Purely
Compensation Income
CERTIFIED LIST CONCERNED BIR OFFICE

OF SHALL STAMP
“RECEIVED” THE
EMPLOYEES CERTIFIED LIST OF
QUALIFIED FOR NOT LATER EMPLOYEES QUALIFIED
SUBSTITUTED THAN TO AVAIL OF THE
FEBRUARY SUBSTITUTED FILING OF
FILING OF 28 AITR, WHICH SHALL BE
ANNUAL TANTAMOUNT TO BIR
INCOME TAX FORM 1700 (AITR) OF
THE QUALIFIED
RETURN (AITR) EMPLOYEES

82 Section 2.83.4 Substituted Filing of Income Tax Returns
by Employees Receiving Purely Compensation Income
Individual not qualified for Substituted Filing of AITR :

1. Those deriving compensation from two or more employers concurrently or
successively
2. Those income tax of which has not been withheld correctly;
3. Those deriving other non-business, non-professional-related income in
addition to compensation income not otherwise subject to a final tax.
4. Individuals receiving purely compensation from a single employer with
income tax due has been correctly withheld, but whose spouse falls any of
the aforesaid items under (1), (2) and (3);
5. Non-resident aliens engaged in trade or business in the Philippines, deriving
purely compensation income, or compensation income and other non-
business, non-professional-related income.
83
For individuals subject to expanded withholding tax
under Section 2.57.2 of RR No. 2-98, as amended, but
availing to be exempt from the said withholding must
Transitory satisfy the following:
Provisions
A. The gross receipts/sales in a year must not exceed
P250,000;
B. The income of the said individual comes only from
a lone payor;
C. The individual must submit the “Sworn Declaration
of Gross Receipts/Sales” not later than April 20,
2018, to his/her lone payor.

84
What the income payor should do in case of receipt from
individual payees of the “Sworn Declaration of Gross
Receipts/Sales” ?
Transitory
1. Execute Sworn Declaration and submit the same to the
Provisions concerned RDO, with the List of Payees who submitted
the “Sworn Declaration of Gross Receipts/Sales”;
2. Refund to the individual the excess tax withheld on
income payments made prior to the issuance of RR 11-
2018;
3. Issue the correct Certificate of Tax Withheld (BIR Form
2307); and
4. The list of payees who were refunded shall also be
attached to the 1st Quarterly Withholding Tax Return
Tax Rates If Graduated IT rates If 8% IT rate
Particulars Tax Taxability WT Taxability WT
Gross IT Taxable at 0% Not subject Exempt, if earnings from purely No, for purely
P250,000 business/practice of profession; business;
and below 8% if mixed income earner, based on
gross sales/receipts & other non- Yes, if mixed
operating income income earner
BT PT/VAT Subject, if Not subject to PT Not subject
govt payor
Doc Payee’s Sworn Declaration Payee’s Sworn Declaration
Above IT Taxable at Subject at 8% on gross sales/receipts and other Subject to
250,000 to applicable grad applicable non-operating income; however, for applicable rate
3M rates on net rates purely business/practice – entitled to
income reduction of P250,000
BT PT/VAT Subject, if Not subject to PT Not subject
govt payor
Doc Payee’s Sworn Declaration Payee’s Sworn Declaration
Above IT Subject to subject Not entitled to avail
P3M applicable rate
BT VAT Subject WT of
TRAIN Briefing – IT & WT VAT, if govt
VER 2.0 – April 2018 payor
86
Sworn Declarations
1. Annex A: Affidavit-Declaration that No Professional Fee Has Been
Charged by Medical Practitioner
2. Annex B-1: Income Payee’s Sworn Declaration of Gross
Receipts/Sales (For Self-Employed and/or Engaged in the Practice of
Profession with Several Income Payors)
Receipts/Sales (For Self-Employed and/or Engaged in the Practice of
Profession with Lone Income Payor)
Receipts/Sales (For Non-Individual Taxpayer with Several Income
Payors)
5. Annex C: Income Payor/Withholding Agent’s Sworn Declaration
6. Annex F: Certification

87
Thank you from the
Income Tax Team Members
Team Head:
Head: Elenita B. Quimosing
Asst. Head : Gerry O. Dumayas
Members:
Members:
Jose Maria L. Hernandez Rosana P. San Vicente
Grace Evelyn A. Lacerna Mariza R. Uy
Ma. Cristina U. Dacumos Marvin A. Gonzales
Alona Margaret B. Sancho Cyril C. Fidel
Wilnerson B. Villanueva Gerlo C. Cacatian
Jocelyn A. Bacorro Ma.
Ma. Haydee Lourdes C. Organo
Christian S. Oprin

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Briefing on RA 10963:

Tax Reform for Acceleration and

TRAIN Briefing – IT & WT

Over P2Million but P490,000 + 32% of the

TRAIN Briefing – IT & WT

• Taxed based on the graduated income tax rates

TRAIN Briefing – IT & WT

Section 24 Taxable income For purely self-employed and/or professionals

TRAIN Briefing – IT & WT

Taxpayer shall be considered as having

TRAIN Briefing – IT & WT

The option to be taxed at 8% income tax rate is NOT

TRAIN Briefing – IT & WT

Automatically subject to the graduated rates

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

Taxable income - self-employment/

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

Under Section 24(A)(2)(b) on option of 8%

TRAIN Briefing – IT & WT

Sec. 3 • option to be taxed under the graduated

TRAIN Briefing – IT & WT

Thus, there may be an instance when a taxpayer files two

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

Section 24 (B) Philippine Charity Philippine Charity Sweepstakes

On any amount in excess of

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

Section 33 (A) Fringe benefits given to non- Fringe benefits furnished to

TRAIN Briefing – IT & WT

Section 51 An individual whose gross Individual taxpayers whose taxable income

TRAIN Briefing – IT & WT

Section 51-A No provision Substituted filing of ITRs is available for

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

Section 74 Every individual subject to The deadline for filing of

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

Particulars Graduated IT Rates 8% IT Rates

Business Tax PT/VAT Not subject to PT

TRAIN Briefing – IT & WT

A. Professional fees, talent fees, etc. for

TRAIN Briefing – IT & WT

Included under this section are payments

TRAIN Briefing – IT & WT

How the Withholding Agent Determine the Applicable

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

MERALCO Payments U P 10%

Interest Income Derived from Any Other Debt

TRAIN Briefing – IT & WT

Amendments pertain to:

TRAIN Briefing – IT & WT

TRAIN Briefing – IT & WT

Sec. 2.57.3 What if the individual did not

TRAIN Briefing – IT & WT

Sec. 2.57.3 What if the income payments exceed

TRAIN Briefing – IT & WT