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    Withholding Taxes: Pagaduan & Donga

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    Kobe Bullmastiff
    Withholding tax is a method of collecting income tax in advance from the recipient's taxable income at its source. It is a mandatory system prescribed by law to ensure adequate revenue for the government. The payee is the taxpayer on whom the tax is imposed, while the payor acts as an agent of the government to collect and remit the tax. Withholding agents must deduct and remit taxes at the earlier of payment, accrual, or recording as an expense. They are liable for penalties for failure to withhold or remit taxes and the payee may lose deductions. Final withholding tax payments fully settle tax liability while creditable withholding tax payments are credited against the payee's final tax due.

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    Withholding Taxes: Pagaduan & Donga

    Uploaded by

    Kobe Bullmastiff
    39 views11 pages
    Withholding tax is a method of collecting income tax in advance from the recipient's taxable income at its source. It is a mandatory system prescribed by law to ensure adequate revenue for the government. The payee is the taxpayer on whom the tax is imposed, while the payor acts as an agent of the government to collect and remit the tax. Withholding agents must deduct and remit taxes at the earlier of payment, accrual, or recording as an expense. They are liable for penalties for failure to withhold or remit taxes and the payee may lose deductions. Final withholding tax payments fully settle tax liability while creditable withholding tax payments are credited against the payee's final tax due.

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    New Withholding Tax

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    Withholding tax is a method of collecting income tax in advance from the recipient's taxable income at its source. It is a mandatory system prescribed by law to ensure adequate revenue for the government. The payee is the taxpayer on whom the tax is imposed, while the payor acts as an agent of the government to collect and remit the tax. Withholding agents must deduct and remit taxes at the earlier of payment, accrual, or recording as an expense. They are liable for penalties for failure to withhold or remit taxes and the payee may lose deductions. Final withholding tax payments fully settle tax liability while creditable withholding tax payments are credited against the payee's final tax due.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    39 views11 pages

    Withholding Taxes: Pagaduan & Donga

    Uploaded by

    Kobe Bullmastiff
    Withholding tax is a method of collecting income tax in advance from the recipient's taxable income at its source. It is a mandatory system prescribed by law to ensure adequate revenue for the government. The payee is the taxpayer on whom the tax is imposed, while the payor acts as an agent of the government to collect and remit the tax. Withholding agents must deduct and remit taxes at the earlier of payment, accrual, or recording as an expense. They are liable for penalties for failure to withhold or remit taxes and the payee may lose deductions. Final withholding tax payments fully settle tax liability while creditable withholding tax payments are credited against the payee's final tax due.

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    © All Rights Reserved
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    of 11

    WITHHOLDING TAXES

    PAGADUAN & DONGA


    CONCEPT

    Withholding tax is a method of collecting


    income tax in advance from the taxable
    income of the recipient of income. It is a
    systematic way of collecting taxes at
    source, an indispensable method of
    collecting taxes to ensure adequate
    revenue for the government.
    CONCEPT

    The withholding of income tax on


    compensation income, on certain
    income payments made to resident
    taxpayers, and on income payments
    made to non-resident taxpayers is very
    important for all taxpayers, because the
    obligation to withhold and remit the tax is
    mandatory and prescribed by law.
    In the operation of the withholding tax
    system;

    while the payor, a separate


    The payee is the entity, acts no more than an
    taxpayer, the agent of the government for the
    person on whom collection of the tax in order to
    the tax is ensure its payment.
    imposed

    Bank of America v. Commissioner, [234 SCRA 320]


    Timing of Withholding
    Withholding tax shall be deducted and
    withheld by the withholding agent when
    the income payment is paid or payable or
    accrued or the income payment is
    accrued or recorded as an expense or
    asset, whichever is EARLIER.
    Withholding Agent (WA)
    A separate entity acting no more than an agent
    of the government for the collection of tax in
    order to ensure its payments.
    He is merely a tax collector, NOT a taxpayer. If
    a withholding agent was assessed for
    deficiency withholding tax under the Code, as
    such, it is being held liable in its capacity as a
    withholding agent and not its personality as a
    taxpayer. CIR v. CA, [G.R. No. 104151 March
    10, 1995]
    Withholding Agent (WA)
    The following persons are constituted as withholding agents:
    Juridical persons, whether or not engage in trade or business
    Individual, with respect to payments made n connection with his
    trade or business
    Individual buyers with regard to taxable sale, exchange, or
    transfer of real property, although not engaged in trade or
    business
    Returns and Payments of Taxes Withheld
    at Source [Sec. 58(A) of the NIRC]
    Taxes deducted and withheld by withholding agents shall be
    covered by a return and paid to, except in cases where the
    Commissioner otherwise permits, an authorized agent bank,
    Revenue District Officer, Collection Agent, or duly
    authorized Treasurer of the city or municipality where the
    withholding agent has his legal residence or principal place
    of business, or where the withholding agent is a
    corporation, where the principal office is located.
    Returns and Payments of Taxes Withheld
    at Source [Sec. 58(A) of the NIRC]
    The taxes deducted and withheld by the withholding
    agent shall be held as a special fund in trust for the
    government until paid to the collecting officers.
    Note that the payment of taxes is simultaneous with the
    filing of the returns (pay-as-you-file) except in cases of
    Large and Non-Large Taxpayers who files through the
    Electronic Filing and Payment System (EFPS).
    Consequences for Failure to Withhold
    i. Liable for surcharge or penalties
    ii. Liable upon conviction to a penalty equal to the total
    amount of the tax not withheld or not accounted for and
    remitted [Sec. 251 of the NIRC]
    iii. Any income payment which is otherwise deductible
    from the payors gross income will not be allowed it is
    shown that the income tax required to be withheld is not
    paid to the BIR. [Sec. 2.58.5 of RR 2-98]
    KINDS FINAL WITHHOLDING TAX CREDITABLE WITHHOLDING TAX

    Amount of Tax Collected


    Full and final payment of the income due from the Intended to equal or at least approximate the tax due
    payee on the said income from the said payee on the said income
    Who isPrimarily Liable
    Liability rests primarily on the withholding agent Liability rests primarily on the taxpayer
    Need to File a Return
    Payee is not required to file an income tax return for the Income recipient is still required to file an income tax
    particular income return and/or pay the difference between the tax
    withheld and the tax due on the income.
    Coverage
    All income subject to final taxes (i.e. passive income, Those income payments covered by EWT [RR 2-98]
    gross income of NRA-NETB) Examples:
    ? Fringe benefit ? Professional fees, talent fees
    ? Informers reward to persons instrumental to the ? Income payments to partners of GPP
    discovery of violations of the NIRC and the discovery
    and seizure of smuggled goods

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