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WITHHOLDING TAX ON

COMPENSATION
 Applicable Provisions of:

Revenue Regulations No. 2-98, as amended

Labor Code of the Philippines, Presidential Decree No. 442,as amended

Presented by:
NIKKI G. ESTORES, CPA, MBA

Compensation Income
Defined

Compensation means all remuneration for services
performed by an employee for his employer under an
employee-employer relationship unless exempted by this
Code.

GNP1 Marketing Corporation

Exemptions (cont…)

1. Remunerations received as an incident of employment
(retirement/separation)
2. GSIS, SSS, PHIC, HDMF contributions and Union Dues
 RMC 27-2011 and RMC 53-2011
 Voluntary contributions in excess of the amount considered
as compulsory are not excludible from the gross income of
the taxpayer and hence, not exempt from IT and
consequently from WT

GNP1 Marketing Corporation

Exemptions (cont…)

3. Thirtheenth (13th) Month Pay and Other Benefits not
exceeding P30,000
Other Benefits such as
Christmas bonus
Productivity
Loyalty award
Gifts in cash or in kind
Other benefits of similar nature
Excess over the prescribed ceiling of the “de minimis
benefits”

GNP1 Marketing Corporation

Exemptions (cont…)

4. Compensation of MWEs who work in the private sector
and being paid the Statutory Minimum Wage
applicable to the place where he is assigned.

GNP1 Marketing Corporation

2017) GNP1 Marketing Corporation .00 – Non-Agricultural Sector P303. Latest Minimum Wage  In Region VII-Class C (Tagbilaran City and all municipalities in Bohol province & Negros Oriental Province) P 323.00 – Agricultural Sector (effective March 10.

Other Compensation  The following compensation received by minimum wage earners shall likewise be exempt from income tax: Holiday pay Overtime pay Night shift differential pay Hazard pay GNP1 Marketing Corporation .

and night sift differential pay such as:  Commissions  Honoraria  Fringe benefits  Taxable allowances  And other taxable income SHALL NOT ENJOY THE PRIVILEGE OF BEING A MWE. hazard pay. holiday pay. overtime. TAKE NOTE!   An employee who receives additional compensation other than the SMW. GNP1 Marketing Corporation .

PROCEDURES FOR FILING 1902 Employee shall within 10 days upon employment 1902 (triplicate) 2305 RDO (within 10 days after change of (within 30 status) days after receipt) GNP1 Marketing Corporation .

Registration   Use BIR Form 1902 for new employees  Submit to the employer within 10 days from the date of employment  Use BIR Form 2305 in case of change/s of information data in previously submitted 1902  Submit to the employer within 10 days after the following changes  Status  Personal and additional exemption  Employment working status of the spouse  Multiple employment status  Amount of compensation income GNP1 Marketing Corporation .

Withheld and Apply Exemptions File Copy File Copy GNP1 Marketing Corporation . Duplicate - Employer Triplicate .RDO Employee Review. Employer: Original . Compute.

GNP1 Marketing Corporation . it shall be at the RDO where the main employer is registered. Registration   The employer shall review the exemptions of the employees  The employer shall transmit all copies after accomplishing the employer’s portion to the RDO where the employer is registered within 30 days following its receipt fr0m the employee  Registration of employees shall be at the RDO having jurisdiction over the employee’s place of assignment  In case of multiple employment.

Additional Requisites   Marriage contract  Birth certificate of each qualified dependent (child/ren certified by the Local Civil Registry Office/ National Statistics Office/ equivalent document issued by government office GNP1 Marketing Corporation .

Additional Requisites (cont…)   Certificate of employment if husband is working abroad  Sworn declaration and Waiver of Right to claim Exemptions of Qualified Dependent child(ren) by the husband in case wife is claiming the additional exemption GNP1 Marketing Corporation .

if physically/mentally incapacitated. Additional Requisites (cont…)   Medical Certificate of qualified dependent child.  Court decision of legal adoption of children  Death certificate GNP1 Marketing Corporation .

FAILURE TO FILE 1902/2305:  Failure to file 1902: Zero exemption shall be applied based on the revised withholding tax table Failure to file 2305: Employer shall withhold based on reported personal exemptions existing prior to change GNP1 Marketing Corporation .

IN CASE THE HUSBAND WAIVES HIS RIGHT TO EXEMPTION: Husband 1902 Accomplish 3 copies “Annex F” Wife’s employer: Deduct on the month Husband’s employer: Stopped deducting Employer of Triplicate Husband Employee acknowledge Original Wife’s Employer Duplicate Husband’s Stop employer Deducting GNP1 Marketing Corporation .

Waiver   Husband is the proper claimnant of dependent children  Wife shall claim full additional exemption  Husband is unemployed  Husband is a non-resident citizen deriving income from foreign sources  Husband waives his right  In case husband waives his right to claim the additional exemption  Shall accomplish Sworn Declaration and Waiver of Right to Claim Exemptions of Qualified Dependent Children GNP1 Marketing Corporation .

000 • Head of the Family 50.000 • Married 50. PERSONAL AND ADDITIONAL EXEMPTION  • Single P 50.000 • Qualified dependent child 25.000 GNP1 Marketing Corporation .

Right to Claim Withholding Tax Exemption   An employee receiving compensation income shall be entitled to withholding tax exemptions. provided he/she must file  1902 – Application for registration  2305 – Certificate of Update of Exemption and of Employer’s and Employee’s Information GNP1 Marketing Corporation .

he may claim the corresponding additional exemption in full for such year  If the taxpayer dies during the taxable year. the estate may claim the full exemptions as if he died at the close of the year GNP1 Marketing Corporation . On Exemptions   Every employer should ascertain whether or not a child being claimed is a qualified dependent  If taxpayer should have additional exemption during the taxable year.

On Exemptions   Taxpayer may still claim full exemptions during the taxable year on the following cases:  Spouse or any of the dependent dies  Any of such dependents marries  Becomes 21 years old  Becomes gainfully employed As if it occurred at the close of such year GNP1 Marketing Corporation .

2009 and beyond GNP1 Marketing Corporation . 2. 2008 c) Revised Withholding Tax Table ‐ January 1.79 (B) Computation of Withholding Tax  1) Withholding tax table a) Old table (effective January 1. 2006) ‐ January 1 to July 5. Sec. 2008 b) Revised Transitory Withholding Tax Table ‐ July 6 to December 31.

semi-monthly.jpg  Four tables for monthly. weekly and daily  Each tax table is grouped into Tables A and B  A for employees with no QDC  B for employees with QDC  1st column – exemption status  2nd column – amount of exemption in pesos  Columns 1 to 8 – reflect the portion of the amount of taxes  Z – for zero exemption  S – single  ME – married employee  Numerals – 1 to 4 represents the number of dependents GNP1 Marketing Corporation . Use of Withholding Tax Table   Withholding tax table Withholding-Tax-Table.

Compute the withholding tax due GNP1 Marketing Corporation . Steps to Determine the Amount of Tax to be Withheld  4. Use the appropriate tables 5. Fix the compensation level using the regular compensation income 6.

Article 83. GNP1 Marketing Corporation . Normal Hours of Work (paragraph 1)  The normal hours of work of any employee shall not exceed eight (8) hours a day.

Article 84. and (b) all time during which an employee is suffered or permitted to work Rest periods of short duration during working hours shall be counted as hours worked. GNP1 Marketing Corporation . Hours Worked  Hours worked shall include (a) all time during which an employee is required to be on duty or to be at a prescribed workplace.

it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. GNP1 Marketing Corporation . Meal Periods  Subject to such regulation as the Secretary of Labor may prescribed.Article 85.

an additional compensation equivalent to his regular wage plus at least twenty five percent (25%) thereof. Overtime Work  Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work.Article 87. GNP1 Marketing Corporation . Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.

Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter. GNP1 Marketing Corporation .Article 88. Undertime Not Offset by Overtime  Undertime work on any particular day shall not be offset by overtime work on any other day.

b) When the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled.Article 93. he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage. GNP1 Marketing Corporation . he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage for work performed on Sundays and holidays. An employee shall be entitled to such additional compensation for work performed on Sunday only when it is his established rest day. Compensation for Rest Day. Sunday or Holiday Work  a) Where an employee is made or permitted to work on his scheduled rest day.

the employer shall pay the higher rate. . Sunday or Holiday Work (cont…)  c) Work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the regular wage of the employee. Compensation for Rest Day.Article 93. Where such holiday work falls on the employee’s scheduled rest day. d) Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article. he shall be entitled to an additional compensation of at least fifty percent (50%) of his regular wage.

except in retail and service establishments regularly employing less than ten (10) workers. the fourth of July.Article 94. the thirtieth of November. Rights to Holiday Pay  a) Every worker shall be paid his regular daily wage during regular holidays. and c) As used in this Article. the first of May. the twenty-fifth of December and the day assigned by law for holding a general election. “holiday” includes: New Year’s Day. the ninth of April. b) The employer may require as employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate. Maundy Thursday. Good Friday. the twelfth of June.” GNP1 Marketing Corporation .

single with no dependent receives P5. 2017.00 for Pag-ibig contribution.Illustration A  Mr. A. GNP1 Marketing Corporation .30 and P 100. His SSS contribution is P 333.000 basic salary for payroll period January 1-15.

17 Tax on Excess (1.70 Tax on 3.70 Less: Compensation Level 3.00 Less: Gov’t dues (SSS and Pag-ibig) 433.70 X 15%) 185.333.233.233.00 Excess 1.333.30 Net Regular Compensation 4.000.566.Computation  Basic Salary 5.23 GNP1 Marketing Corporation .00 104.06 Withholding Tax for January 1-15. 2014 289.

married with no dependent receives P 4.70 and P 100.Illustration B  Mr.500 for payroll period January 1-15. A.00 for Pag-ibig contribution. 2017. His SSS contribution is P 266. GNP1 Marketing Corporation .

500.333.05 Withholding Tax for January 1-15.133.00 Excess 800.30 X 15%) 120.30 Less: Compensation Level 3.333.Computation  Basic Salary 4.00 Less: Gov’t dues (SSS and Pag-ibig) 366.30 Tax on 3.70 Net Regular Compensation 4.22 GNP1 Marketing Corporation .00 104.17 Tax on Excess (300. 2014 224.

Illustration C  Mr.00 for Pag-ibig contribution. His SSS contribution is P 266. GNP1 Marketing Corporation . 2017.500 for payroll period January 1-15. married with 1 dependent receives P 4. A.70 and P 100.

00 Excess 591.30 Less: Compensation Level 3.13 Withholding Tax for January 1-15.30 X 10%) 59. 2014 79.96 GNP1 Marketing Corporation .00 Less: Gov’t dues (SSS and Pag-ibig) 366.542.30 Tax on 3.83 Tax on Excess (591.542.70 Net Regular Compensation 4.00 20.Computation  Basic Salary 4.500.133.

2017. His approved overtime for the period is 6 hours. He has a computed incentive of P 3.Illustration D  Mr. GNP1 Marketing Corporation .00.30 and P 100. A.00 daily and has worked for 13 days for payroll period January 1-15.00 for Pag-ibig contribution. single with no dependent receives P 323.500. His SSS contribution is P 233.

266.00 Excess 2.51 Tax on 5.87 GNP1 Marketing Corporation .30 Net Regular Compensation 7.00 354.199.51 Less: Compensation Level 5.81 Add: Incentives 3.76X 20%) 533.000.00 Total Gross 8.500.000.668.70 Withholding Tax for January 1-15.00/8hours X 6hours X 125%) 302.Computation  Basic Salary (323.00 Add: Overtime (323.17 Tax on Excess (2.81 Less: Gov’t dues (SSS and Pag-ibig) 333.00 X 13days) 4. 2014 887.001.668.

He has a computed incentive of P 3.00. His approved overtime for the period is 6hours. 2017.00 for Pag-ibig contribution.Illustration E  Mr.00 daily and has worked for 13 days for payroll period January 1-15.30 and P 100.500. His SSS contribution is P 233. A. GNP1 Marketing Corporation . married with 2 dependents receives P 323.

27 GNP1 Marketing Corporation .10 Withholding Tax for January 1-15.51 Less: Compensation Level 7.17 Tax on Excess (585.Computation  Basic Salary (323.001.500.199. 2014 471.00 Add: Overtime (323.51 Tax on 7.30 Net Regular Compensation 7.00/8hours X 6hours X 125%) 302.00 X 13days) 4.81 Less: Gov’t dues (SSS and Pag-ibig) 333.81 Add: Incentives 3.083.00 Total Gross 8.51X 20%) 117.00 354.00 Excess 585.668.083.

Liability for Tax   Employer  Responsible for withholding and remittance of correct amount of tax  Employee  Responsible for submission of 1902/2305 GNP1 Marketing Corporation .

.  At year end. Take Note!   Monthly taxes withheld on your salary are on monthly withholding taxes on compensation only.  But. you also need to pay your income taxes. all taxes withheld on your salary for the year can be deducted to your annual income tax due.

Year End Adjustment (YEA) GNP1 Marketing Corporation .

500 32.000 180.000 200.500 EVEN 0 Payable 2.000 20. Basic Concept of Year-End Adjustment  A B C Compensation Income –net 200.000 200.500 Less: Tax Withheld Jan-Nov 32.000 20.000 180.000 Tax Due 32.500 30.500 32.000 Taxable Income 180.000 Less: Exemption (single) 20.000 34.500 Refundable (2.000) GNP1 Marketing Corporation .

 When computing for the year-end adjustment GNP1 Marketing Corporation . Annualized Computation   To be used when the employer-employee relationship is terminated before the end of the calendar year.

Determine the taxable regular and supplementary compensation 2. If the employee has previous employment during the year. Deduct the personal and additional exemptions of the employee GNP1 Marketing Corporation .Steps in the annualized computation  1. add the taxable regular and supplementary compensation paid to the present employer 3.

Determine the deficiency or excess  if Tax due > W/tax. Compute the amount of tax 5. the employer shall refund GNP1 Marketing Corporation . the employer shall pay difference  Is a matter of settlement between the employer and employee  If tax due < w/tax.Steps in the annualized computation  4.

00 over 125.500 + 15% 30.000.000.000 + 30% 250.00 5% 10.000.000.000.00 140.500 + 20% 70.00 30.00 250.000.00 70.00 500.Tax Table Over But not over  Amount rate Of excess over Not over 10.00 70.00 GNP1 Marketing Corporation .00 140.000.000.00 8.000.00 P500 + 10% 10.000.000.00 250.000.000.000 + 32% 500.00 500.00 50.00 2.000.000.00 22.000.00 30.500 + 25% 140.000.000.

30.00 GNP1 Marketing Corporation .000 and total special allowances of P 30. single with no dependents received P 120. Philhealth and Pag-ibig contributions for the year totaled P 6.000.Illustration F   Mr.116.76 through salary deduction  He also received incentives for the year for P 3. A.  He only paid total withholding taxes of P 913.  He received total 13th month pay of P 10.  His SSS.02.125 for the year 2016 and has total approved overtime of P 115.250.00 for the year.

373.Computation  Total Basic salary 120.116.00 Add: Allowances (non-taxable) 30.250.490.00 Total Gross 163.000.02 Less: 13th month pay (non-taxable) 10.00 Less: Gov’t dues (SSS and Pag-ibig) 6.000.30 Net Taxable Compensation 117.00 Add: Overtime 115.000.373.00 Compensation for Computation of Income Tax 67.000.125.02 Add: Incentives 3.00 Less: Allowances (non-taxable) 30.72 GNP1 Marketing Corporation .000 Add: 13th month pay (non-taxable) 10.72 Less: Personal Exemption 50.000.

373.72 X 15%) 5.Computation  Compensation for Income Tax Computation 67.76 Tax Still Due 7.606.30 GNP1 Marketing Corporation .72 Bracket 2.72 Bracket 30.00 Excess (37.500.06 Tax Withheld from Salary 916.000.373.192.06 Should be Income Tax 8.373.00 Excess 37.106.

Allowances was P24.75. GNP1 Marketing Corporation . 2016. Bob Uy.00.000. 13th month pay was P18. Philhealth and HDMF premiums. The taxes withheld were P21.000.083. He receives P18. with an eight year old son and a daughter born on December 29. married.000 as monthly regular compensation net of SSS.Illustration G  Mr. had his first job on January 2016.

00 Compensation for Computation of Income Tax 116.000.000.000.000.00 Net Taxable Compensation 216.00 Add: Allowances (non-taxable) 24.00 Less: 13th month pay (non-taxable) 18.000.000.000.00 Less: Allowances (non-taxable) 24.000.Computation  Total Basic salary (18.000.000 X 12) 216.00 Less: Additional Exemptions (25.00 Less: Personal Exemption 50.00 Add: 13th month pay (non-taxable) 18.000.000 X 2) 50.00 Total Gross 258.00 GNP1 Marketing Corporation .

00 Bracket 70.00 Bracket 8.Computation  Compensation for Income Tax Computation 116.700.383.500.200.00 Tax Withheld from Salary 21.75 Tax Refund (3.00 Excess (46.00 Excess 46.000.000.083.75) GNP1 Marketing Corporation .00 Should be Income Tax 17.000.000 X 20%) 9.

END - .THANK YOU -  ..