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WITHHOLDING TAX AT SOURCE

WITHHOLDING TAX AT SOURCE. (Revenue Regulations No. 2-98, as amended). Presented by: Ms. Susan D. Tusoy, cpa, mps Asst. Chief, Assessment Division RR 19- Davao City. Importance of Withholding Tax System. It is an effective tool in the collection of taxes for the following reasons:

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WITHHOLDING TAX AT SOURCE

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  1. WITHHOLDING TAX AT SOURCE (Revenue Regulations No. 2-98, as amended) Presented by: Ms. Susan D. Tusoy, cpa, mps Asst. Chief, Assessment Division RR 19- Davao City

  2. Importance of Withholding Tax System • It is 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 spells in the fiscal condition of the government by providing revenues throughout the taxable year.

  3. Types of Withholding Taxes • Withholding Tax on Compensation • Expanded Withholding Tax • Final Withholding Tax; and • Withholding Tax on Government Money Payment

  4. I. REGISTER 1901SELF-EMPLOYED/PROFESSIONALS/TRUST 1903 CORPORATIONS / GOCC /PARTNERSHIP 1903GOVERNMENT AGENCIES / LGUs WHEN:ON OR BEFORE COMMENCEMENT OF BUSINESS/ BEFORE PAYMENT OF ANY TAX DUE/ UPON FILING A RETURN 10 DAYS AFTER BECOMING AN EMPLOYER ( SEC 2.83.6 Rev. Regulations No. 2-98) WHERE: RDO

  5. II. WITHHOLD TAXES

  6. III. WITHHOLING TAX REMITTANCE

  7. IV. WITHHOLDING TAX CERTIFICATES

  8. V. ANNUAL RETURNS

  9. DIFFERENCE: FINAL AND CREDITABLE WITHHOLDING TAX

  10. EXPANDED WITHHOLDING TAX

  11. Persons Required to Deduct & withhold • Juridical persons, whether or not engaged in trade or business; • Individuals in connection with his trade or business, however, individual buyers of real properties are also constituted as withholding agents; • All government offices.

  12. On Agricultural Products • For purchases involving agricultural products in their original state, the tax required to be withheld shall only apply to purchases in excess of the cumulative amount of P300,000.00 within the same taxable year.

  13. Illustration:

  14. Amount of EWT: • In 2009 - not subject • In 2010 - P20,000 x 1% = P200.00 • In 2011 - P100,000 x 2% = P1,000 • In 2012 - not subject

  15. On Agricultural Products • Agricultural Products in their original state shall only include: • corn • rice • coffee • coconut • cassava • fruits • copra • sugar cane • marine food products • vegetables • palay • poultry and livestocks

  16. FINAL WITHHOLDING TAX

  17. Income Payments Subject to Final Withholding Tax: Interest from any peso bank deposit, and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements – 20% Royalties (except on books as well as other literary works and musical compositions – 20% Prizes (except prizes amounting to P10,000.00 or less )– 20% Winnings (except Philippines Charity Sweepstakes Winnings and lotto winnings ) - 20%

  18. Income Payments Subject to Final Withholding Tax: Royalties on books, as well as other literary works and musical compositions – 10% Interest income received by a resident individual taxpayer from a depository bank under the Foreign Currency Deposit System – 7.5%

  19. Income Payments Subject to Final Withholding Tax: Cash and/or property dividends (received by individuals) - 10% Net capital gains from sale, barter, exchange of shares of stocks in a domestic (except through stock exchange ): Not over P100,000.00 - 5% On any amount in excess of P100,000.00 – 10%

  20. Income Payments Subject to Final Withholding Tax: Interest income from long-term deposit or investment : Four years to less than five years – 5% Three years to less than four years – 12% Less than three years – 20% On capital gains from sale, exchange, or other disposition of real property classified as capital assets - 6%

  21. ON GOVERNMENT MONEY PAYMENTS RMC 56-2009

  22. Final Withholding VAT on Government Purchases NIRC RA 9337 Contractors by the government or any of its political subdivisions, instrumentalities or agencies, including government-owned and controlled corporations (GOCCs) 3% on gross payment for the purchase of goods 6% on gross receipts for services by contractors 8.5% on government public works contractors } 5% Final VAT

  23. Illustration • The Office of the Provincial Capitol of Davao del Sur purchased the following goods and services for the month of Feb. 2011. Invoice Price • Rice - P50,000.00 • Construction Materials - 44,800.00 • Repair of Aircon Units - 22,400.00 • Rental of equipments - 33,600.00 Compute for the withholding tax on government money payments assuming the seller is: a) Non-VAT registered b) VAT taxpayer

  24. Answer – Non VAT Supplier

  25. Answer – VAT Supplier

  26. FRINGE BENEFITS TAX (FBT)

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