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withholding tax

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withholding tax

Post by riddler on Wed Apr 15, 2009 11:56 am

to the BIR, DBM, and Accountants,

May I ask a clear definition of Withholding Tax? what are its components? kindly include na lang circulars or memorandum, etc. thanks.
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Re: withholding tax

Post by engrjhez® on Wed Apr 15, 2009 12:38 pm

I second the question. And please have us furnished a link to the circular or guidelines regarding the tax computations based on our salaries (and what happens if salaries+honoraria+etc exceeded some values). I think everyone should know if they are properly deducted their taxes.

Sometimes, it pays to check for yourself. (I have seen some inconsistent deductions on WT on several employees of same rank, increment, marital, and independent status on some accounting offices).

Very Happy
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Re: withholding tax

Post by RDV @ GP3i on Wed Apr 15, 2009 3:09 pm

ruel t. wrote:to the BIR, DBM, and Accountants,

May I ask a clear definition of Withholding Tax? what are its components? kindly include na lang circulars or memorandum, etc. thanks.

Di kaya OT (out of topic) na sa procurement ang query ni engr ruel?

At any rate, it should not be addressed to DBM, as we are not involved in withholding taxes, but BIR. All of us government employees are subjected to it. As a matter of fact, because of BIR assessments, we are being made to pay back withholding taxes starting 2006, some of us up to tens of thousands pesos per year.
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Re: withholding tax

Post by engrjhez® on Wed Apr 15, 2009 3:31 pm

RDV wrote:Di kaya OT (out of topic) na sa procurement ang query ni engr ruel?

At any rate, it should not be addressed to DBM, as we are not involved in withholding taxes, but BIR. All of us government employees are subjected to it. As a matter of fact, because of BIR assessments, we are being made to pay back withholding taxes starting 2006, some of us up to tens of thousands pesos per year.
I think this has something to do with the brackets of withholding tax when the honoraria (25% max from BAC) is applied in addition to the basic salary. He (Engr. Ruel) said something about "increased" taxation on him in the other topic. Very Happy
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Re: withholding tax

Post by RDV @ GP3i on Wed Apr 15, 2009 4:12 pm

engrjhez wrote:
RDV wrote:Di kaya OT (out of topic) na sa procurement ang query ni engr ruel?

At any rate, it should not be addressed to DBM, as we are not involved in withholding taxes, but BIR. All of us government employees are subjected to it. As a matter of fact, because of BIR assessments, we are being made to pay back withholding taxes starting 2006, some of us up to tens of thousands pesos per year.
I think this has something to do with the brackets of withholding tax when the honoraria (25% max from BAC) is applied in addition to the basic salary. He (Engr. Ruel) said something about "increased" taxation on him in the other topic. Very Happy

Although OT pa rin, anybody knowledgeable can answer. Rolling Eyes
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Re: withholding tax

Post by shobe on Wed Apr 15, 2009 6:08 pm

ruel t. wrote:to the BIR, DBM, and Accountants,

May I ask a clear definition of Withholding Tax? what are its components? kindly include na lang circulars or memorandum, etc. thanks.


Hi Ruel.

I'm not a Tax expert, but if you want to know something about the rationale and procedures re Withholding Tax, kindly look at Chapter XIII, Title II Tax on Income, at the the National Internal Revenue Code.

Likewise, SEC. 79. Income Tax Collected at Source of the NIRC, provides:

(A) Requirement of Withholding. - Every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner: Provided, however, That no withholding of a tax shall be required where the total compensation income of an individual does not exceed the statutory minimum wage, or five thousand pesos (P5,000.00) per month, whichever is higher.
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Re: withholding tax

Post by venom.0420 on Wed Apr 15, 2009 11:04 pm

I think this is indeed related to Sir Ruel's previous post regarding the tax computation of his honorarium. If I'm your accountant I'll compute your income tax due like this:

Gross Annual Salary...................................................................... xxx,xxx.xx
Less-GSIS, Philhealth & Pag-ibig Contributions .................................. xxx,xxx.xx
Taxable Compensation Income........................................................ xxx,xxx.xx
Add-Honoraria and Overtime Payments Received ............................... xxx,xxx.xx
Bonuses & Allowances (less tax exempt amount of Php 30,000.00).. xxx,xxx.xx
Gross Income ............................................................................. xxx,xxx.xx
Less-Personal Exemptions ............................................................. xxx,xxx.xx
Taxable Income .......................................................................... xxx,xxx.xx

Once your taxable income is computed, you can refer to the income tax table below for the computation of your tax due.

Over But Not Over Rate
P10,000 5%
P10,000 P30,000 P500 + 10% of the Excess over P10,000
P30,000 P70,000 P2,500 + 15% of the Excess over P30,000
P70,000 P140,000 P8,500 + 20% of the Excess over P70,000
P140,000 P250,000 P22,500 + 25% of the Excess over P140,000
P250,000 P500,000 P50,000 + 30% of the Excess over P250,000
P500,000 P125,000 + 34% of the Excess over P500,000 in 1998
Note: Effective January 1, 1999, the maximum rate shall be thirty-three percent (33%) and thirty-two percent (32%) on January 1, 2000.

For example, if your taxable income is Php 400,000, you'll fall under the bracket of Over Php 250,000 But Not Over Php 500,000. Your income tax will be computed as follows:

Taxable Income ......................................... Php 400,000.00
Less ........................................................ 250,000.00
Total ....................................................... 150,000.00
Multiplied by .............................................. 30%
Tax due in excess of Php 250,000 ................. 45,000.00
Add-Tax due in Php 250,000 ........................ 50,000.00
Income Tax Due ........................................ Php 95,000.00

Further, once you know your taxable income, you'll be able to determine what tax rate will be used to compute for your monthly withholding tax. In the example above, the taxpayer will be deducted 30% of his/her monthly honorarium as well as his monthly salary and other benefits.

But I still suggest that you discuss this matter to your respective accountants in your offices because they are the ones who know the whole details.
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Re: withholding tax

Post by riddler on Thu Apr 16, 2009 10:04 am

ngeeek! mali ata tanong ko ah Rolling Eyes Rolling Eyes.. anyway, thanks for the swarming replies 'wiz people! to venom thanks, kudos to shobe...now i know how to compute my share of tax. but wait, I'll expound my query a little bit..

its all about the preparation of our ABC (i privately e-mailed a portion of this problem to the e-address of RDV):

In the preparation of the Individual Program of Work (IPW) and the ABC, our Estimators included a 12% VAT or E-VAT to the IPW. In one situation, we awarded a contract to a bidder without a thorough evaluation (simply overlooked) on the details of the winning Bid. Only when we realized during the claims for billing that the VAT is not included in the winning Bid. The contractor wrote a letter not to deduct the VAT in its claim for billing because accordingly, it is not included under Sec. 14.1 of the Bid Data Sheet (BDS) of the Philippine Bidding Documents which the Contractor bought to our BAC Secretariat.

SEc. 14.1 of the BDS which is included in our Contract, states that "the following shall be imposed on the successful bidder: WITHHOLDING TAX, Business Tax payable to the City, and other Applicable Regulatory Fees."

It is our contention that the VAT form part of the Bid. As engrjhez said, advantage dapat lagi ang gbyerno.

Now, going back to my previous query, Is the VAT or E-VAT under the coverage of the WITHHOLDING TAX? kINDLY also send me any Regulations or circulars that LGU's are authorized as withholding agents of the BIR and mandated to withhold this VAT and others. Sus! hirap mag english!!! Mad Mad Neutral
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Re: withholding tax

Post by engrjhez® on Thu Apr 16, 2009 10:22 am

venom.0420 wrote:I think this is indeed related to Sir Ruel's previous post regarding the tax computation of his honorarium. If I'm your accountant I'll compute your income tax due like this:

Gross Annual Salary...................................................................... xxx,xxx.xx
Less-GSIS, Philhealth & Pag-ibig Contributions .................................. xxx,xxx.xx
Taxable Compensation Income........................................................ xxx,xxx.xx
Add-Honoraria and Overtime Payments Received ............................... xxx,xxx.xx
Bonuses & Allowances (less tax exempt amount of Php 30,000.00).. xxx,xxx.xx
Gross Income ............................................................................. xxx,xxx.xx
Less-Personal Exemptions ............................................................. xxx,xxx.xx
Taxable Income .......................................................................... xxx,xxx.xx
Thanks venom, for the elaborate explanation.

Btw, does the term "(less tax exempt amount of Php 30,000.00)" means all bonuses and allowances exceeding 30,000 shall be taxable? And this does not apply to honoraria? And it follows honoraria, therefore, is also being taxed? scratch

Can you please provide us also a table of deductions? Thanks. (Abuso ba? Our accounting office is too hot kasi to handle for this).

Very Happy
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Re: withholding tax

Post by riddler on Thu Apr 16, 2009 10:42 am

enghrjhez, i wish i have not "stirred the hornest's nest". Most accountants do not deduct WT to honoraria(sana tayo din) both, of our Accountants kasi maybe overzealous in doing there duties kaya bow ako sa kanila. Hirap ako mag debate sa taxation.
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Re: withholding tax

Post by venom.0420 on Thu Apr 16, 2009 10:50 am

Your welcome sir engrjhez! Unfortunately yes, bonuses and other allowances in excess of Php 30,000 is taxable whether monetary and nonmonetary. Honoraria, overtime and NSD payments are 100% taxable. For employed individual taxpayers, the only deduction allowed are personal exemptions. Personal exemption effective July 1, 2008 whether single, head of the family or married is Php 50,000. For qualified dependents, additional exemption is allowed at Php 25,000.00 per dependent. Very Happy
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Re: withholding tax

Post by venom.0420 on Thu Apr 16, 2009 11:02 am

Sir Ruel,

Yes, EVAT are also covered by the withholding tax requirement. For a more detailed discussion on withholding taxes, please click this link http://www.bir.gov.ph/taxinfo/tax_withld.htm.

My bidding lang kami sir, I'll try to come back with a more detailed discussion on your query later this afternoon.

To the mods, is Taglish acceptable in this forum? As sir Ruel mentioned, nosebleed na nga. Very Happy
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Re: withholding tax

Post by riddler on Sun Apr 19, 2009 2:26 pm

shobe wrote:
ruel t. wrote:to the BIR, DBM, and Accountants,

May I ask a clear definition of Withholding Tax? what are its components? kindly include na lang circulars or memorandum, etc. thanks.


Hi Ruel.

I'm not a Tax expert, but if you want to know something about the rationale and procedures re Withholding Tax, kindly look at Chapter XIII, Title II Tax on Income, at the the National Internal Revenue Code.

Likewise, SEC. 79. Income Tax Collected at Source of the NIRC, provides:

(A) Requirement of Withholding. - Every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner: Provided, however, That no withholding of a tax shall be required where the total compensation income of an individual does not exceed the statutory minimum wage, or five thousand pesos (P5,000.00) per month, whichever is higher.


Hi shob, I navigated to the underlined chapter of the NIRC you sent me, but i think the Sec. 79 speaks of personal withholding tax (employer-employee relation). Venom has linked me the site, and i am already quite clear of its definition on mandatory deduction for LGU. But, looking back to my other query, WHAT ARE THE THINGS OR COMPONENTS INCLUDED IN THE WITHHOLDING TAX beside personal tax? Does it specifically includes VAT or EVAT in its components?
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Re: withholding tax

Post by venom.0420 on Tue Apr 21, 2009 5:02 pm

ruel t. wrote:enghrjhez, i wish i have not "stirred the hornest's nest". Most accountants do not deduct WT to honoraria(sana tayo din) both, of our Accountants kasi maybe overzealous in doing there duties kaya bow ako sa kanila. Hirap ako mag debate sa taxation.

Withholding taxes should not be viewed as a burden to us taxpayers but rather an opportunity to pay our taxes in installments. Just imagine if you were not deducted every month by the applicable withholding tax, you're going to pay it in lump sum at the end of the year. Sad
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Re: withholding tax

Post by engrjhez® on Wed Apr 22, 2009 7:53 am

Make no mistake. I am in no objection to taxation. I am just particular in the "right" and "just" deduction of tax - that's all. Funny is this thing: taxpayer's keep on paying tax, while non-taxpayers (evaders) keep on not paying. Doesn't it bother anyone that while we keep on complying, the others are not affected at all?

Now here is a good poll question (especially to gov't employees):

SHOULD GOVERNMENT EMPLOYEES BE EXEMPTED FROM INCOME TAX DEDUCTIONS FROM THEIR WORK/SERVICE TO THE GOVERNMENT AGENCY?
Very Happy

(Now this is a real OT-out of topic, hehe. Twisted Evil )
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