Withholding Tax on Compensation is the

tax withheld from individuals receiving purely

compensation income.
 It is a tax credit, and Tax credits refer to
amounts allowed as deductions from the tax
due.
 Thus, Withholding Taxes on income are
being deducted from the income tax due and
not from gross income.
 Itapplies to all employed
individuals whether citizens or
aliens, deriving income from
compensation for services
rendered in the Philippines.
 The employer is constituted as the
Withholding Agent.
 1. Final Withholding Tax
 Under the Final withholding Tax
system, the amount of income
tax withheld by the withholding
agent is constituted as a full and
final payment of the income tax
due from the payee on the said
income.
 The liability for payment of the tax
rests primarily on the payor as a
withholding agent. Thus, in case of
his failure to withhold the tax or in
case of under-withholding, the
deficiency tax shall be collected from
the payor/withholding agent. The
payee is not required to file an income
tax return for the particular income.
Under the Creditable Withholding
tax system, taxes withheld on
certain income payments are
intended to equal or at least
approximate the tax due of the
payee on said income..
 The income recipient is still
required to file an income tax
return to report the income
and pay the difference
between the tax withheld and
the tax due on the income
 Considering that taxes withheld by the
withholding agents are held in trust for the
government and its availability is an
imperious necessity to ensure sufficient cash
inflow to the National treasury . Withholding
agents shall file BIR Monthly Remittance Form
(BIR Form No. 0619E and /or 0619F) every
tent (10th) day of the following month when
the withholding is made, regardless of the
amount withheld.
 For Withholding agents
using EFPS facility, the
due date is on the
fifteenth (15 ) day of the
th

following month.
1. Regular Compensation-
includes basic salary, fixed
allowances for
representation,
transportation and other paid
to an employee.
2. Supplemental Compensation- includes
payments to an employee in addition to the
regular compensation such as but not
limited to the following:
 Overtime pay
 Night shift differential pay
 Fees, including director’s fees
 Commission
 Profit sharing
 Monetized Vacation and Sick leave
 Fringe Benefits received by rank and file
employees
 Hazard Pay
 13th month Pay and other benefits
 Other remuneration received from an
employee-employer relationship.
“De Minimis Benefits “- are facilities
and privileges of relatively small
value are not subject to income tax
ad well as withholding tax on
compensation income of both
managerial, and rank and file
employees.
a. Monetized unused vacation leave credits of
private employees not exceeding ten(10)
days during the year;
b. Monetized value of vacation and sick leave
credits paid to government officials and
employees;
c. Medical cash allowance to dependents of
employees, not exceeding P1,500 per
employee per semester of P250 per month.
d. Rice subsidy of P2,000 or one
sack of 50-kg. rice per month
amounting to not more than
P2,000;
e. Uniform and clothing allowance
not exceeding P6,000 per
annum.
A. Thirteenth month pay equivalent to
the mandatory one (1 ) month basic
salary of officials and employees of the
government (whether national or
local), including government-owned or
controlled corporations, and /or private
offices received after the twelfth month
pay; and
B. Other benefits such as Christmas bonus,
productivity, incentives, loyalty award, gift in
cash or in kind, and other benefits of similar
nature actually received by officials and
employees of both government and private
offices, including the Additional Compensation
Allowance (ACA) granted and paid to all officials
and employees of the National Government
Agencies (NGAS) including State Universities and
Colleges(SUGS), Government-Owned and/or
Controlled Corporations (GOCCs), Government
Financial Institutions(GFIs) and Local Government
Units(LGUs).
The above stated exclusions under (a) and (b)
shall cover benefits paid or accrued during the
year, provided that the total amount shall not
exceed ninety thousand pesos {90,000}, which
may be increased through rules and
regulations issued by the Secretary of Finance,
upon recommendation of the Commissioner,
after considering among others, the effect on
the same of the inflation rate at the end of the
taxable year.
C. GSIS, SSS, Medicare and other contributions-
GSIS, SSS, Medicare and Pag-ibig contributions,
and union dues of individual employees.

D. Compensation income of Minimum Wage

Earners ( MWes) who work in the private sector
and being paid the Statutory minimum wage (
SMW).
1. Ms. Ann, an employee of
ABC Company, is receiving a
daily compensation in the
amount of P2,500, net of
mandatory contributions.
Solution: WT
Total taxable compensation P 2, 500
Less: Compensation Range (Minimum) 2, 192.00 P 356.16
Excess P 308
Add: Tax on the excess(P308 x 30% 92.40
Total daily withholding tax P 448.56
2. Ms. Trisha , an
employee of Star Corp., is
receiving weekly
compensation in the
amount of P9,500, net of
mandatory contributions.
Solution:
WT
Total taxable compensation P15,500
Less: Compensation Ran ge(minimum) 10,417 0
Excess P 5,083.00
Add: Tax on the excess x 20% 1,016.60
Total semi-monthly withholding tax P 1,016.60
3. Mr. Tan , an employee of
Shine Company, is receiving
semi-monthly compensation
in the amount of P 15,500,
net of mandatory
contribution.
Solution: WT
Total taxable compensation P15,500
Less: Compensation Range(minimum) 10,417.00 0
Excess P 5,083

Add: Tax on the excess x 20% 1,016.60

Total semi-monthly withholding Tax P 1,016.60
4. Mr. Santos, an employee of
Mark Corp. Is receiving regular
monthly compensation in the
amount of P165,000, net of
mandatory contributions, with
supplemental compensation in the
amount of P5,000 for the month.
Solution: WT
Total taxable compensation P165,000
Less: Compensation Range 66,667 P 10,833.33
Excess P 98,333
Add : Supplemental compensation 5,000
Total P 103,333
Tax rate on the excess x 30% 30, 999.90
Total monthly withholding Tax P 41,833.23

END