INSTITUTE OF ACCOUNTS BUSINESS AND FINANCE

Department of Accountancy
2nd Sem
INCOME TAXATION 2020-2021

MODULE 4.1 – SCHEDULE OF WITHHOLDING TAXES

FINAL TAX RATES ON CERTAIN PASSIVE INCOMES

(Sec. 24 B, 25 A (2), 27 D, 28 A (7); 28 B (5), NIRC, as amended by TRAIN Law)
PASSIVE INCOME RC NRC RA NRAETB NRANETB DC RFC NRFC
INTEREST:
Interest or yield on local currency deposit:
1. Bank deposit (savings, time)
2. Deposit substitute 20% 20% 20% 20% 25% 20% 20% 30%
3. Money market placements
4. Trusts funds (CTF, UITF, IMA)
Interest income from long term deposit or investment
1. Common or Individual Trust Funds
2. Deposit
3. Deposit substitute
4. Investment Management Accounts Exempt Exempt Exempt Exempt 25% 30% RCIT 30% RCIT 30%
5. Investments in the form of savings RMC 7-2015 RMC 7-2015
6. Other investments evidenced by certificates prescribed by the BSP
Pre-termination of long-term deposit or investment:
1. Less than 3 years held 20% 20% 20% 20%
2. 3 years to less than 4 years held 12% 12% 12% 12% 25% 30%
3. 4 years to less than 5 years held 5% 5% 5% 5%
Interest Income on FCDU Deposit from a depositary bank 15% Exempt 15% Exempt Exempt 15% 15% Exempt
DIVIDENDS (Cash or Property):
1. From a Domestic Corporation, ordinary partnership, etc 10% 10% 10% 20% 25% Exempt Exempt 15% or 30%
2. From a Foreign Corporation (resident and non-resident) Pre-dominant income is within, same rule as DC, if without Regular Income Tax rules apply to RC and DC.
ROYALTIES:
1. In general (not books, not literary works, not musical compositions) 20% 20% 20% 20% 25%
2. From books, literary works and musical compositions 10% 10% 10% 10% 25% 20% 20% 30%

PRIZES:
1. P10,000 and below Graduated tax rate 30% RCIT 30% RCIT 30% FT
2. Above P10,000 20% 20% 20% 20% 25% 30% RCIT 30% RCIT 30% FT

WINNINGS
1. In general 20% 20% 20% 20% 25% 30% RCIT 30% RCIT 30% FT
2. PCSO and Lotto winnings Php 10,000 is exempt; exceeding Php 10,000 shall be subject to the 20% final tax
INFORMER’S TAX REWARD 10% of (Php 1 Million OR 10% of amount collected whichever is lower)

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INSTITUTE OF ACCOUNTS BUSINESS AND FINANCE
Department of Accountancy
2nd Sem
INCOME TAXATION 2020-2021

SCHEDULE OF EXPANDED WITHHOLDING TAX (EWT)

Income Payment EWT Income Payment EWT
Professional/Management/Consultancy fees (Individual) Gross receipts 3M or below - 5% Purchase of goods or properties or services by Top Withholding 1% - goods
Gross receipts over 3M or VAT-reg – 10% Agents (TWA) - 2% - service
Professional/Management/Consultancy fees (Non- Gross receipts 720,000 or below - 10% Partners in general professional partnerships (drawings, 720,000 or less -10%
Individual) Gross receipts over 720,000 – 15% advances, sharings, allowances, etc.) Above 720,000 – 15%
Contractors/subcontractors (security, janitorial, etc.) 2% Commission (if not employee) 10%
Director’s fees (if not employee) 10% or 15% (720,000 threshold) Income distributed to beneficiaries of estates/trusts 15%
Rental 5%

REVISED WITHHOLDING TAX TABLE (COMPENSATION)

Effective January 1, 2018 to December 31, 2022
DAILY 1 2 3 4 5 6
Compensation Range 685 and below 685-1,095 1,096-2,191 2,192-5,478 5,479-21,917 21,918 and above
Prescribed Withholding Tax 0 0 82.19 356.16 1,342.47 6,602.74
+ 20% over 685 + 25% over 1,096 + 30% over 2,192 + 32% over 5,479 + 35% over 21,918
WEEKLY 1 2 3 4 5 6
Compensation Range 4,808 and below 4,808-7691 7,692-15,384 15,385-38,461 38-462-153,845 153,846 and above
Prescribed Withholding Tax 0 0 576.92 2,500 9,423.08 46,346.15
+ 20% over 4,808 + 25% over 7,692 +30% over 15,385 + 32% over 38,462 + 35% over 153,846
SEMI-MONTHLY 1 2 3 4 5 6
Compensation Range 10,417 and below 10,417-16,666 16,667-33,332 33,333-83,332 83,333-333,332 333,333 and above
Prescribed Withholding Tax 0 0 1,250 5,416.67 20,416.67 100,416.67
+ 20% over 10,417 + 25% over 16,667 + 30% over 33,333 + 32% over 83,333 + 35% over 333,333
MONTHLY 1 2 3 4 5 6
Compensation Range 20,833 and below 20,833-33,332 33,333-66,666 66,667-166,666 166,667-666,666 666,667 and above
Prescribed Withholding Tax 0 0 2,500 10,833.33 40,833.33 200,833.33
+ 20% over 20,833 + 25% over 33,333 + 30% over 66,667 + 32% over 166,667 + 35% over 666,667

References:
1. Republic Act No. 8424 – National Internal Revenue Code of 1997 (NIRC)
2. Republic Act No. 10963 – Tax Reform for Acceleration and Inclusion Act (TRAIN)

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