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    Mastering Withholding Taxes

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    vics
    The document discusses tax compliance procedures related to final taxes. It covers the nature and purpose of withholding taxes, who is required to withhold taxes, and the obligations of withholding agents. Specifically, it explains that final withholding tax is a type of withholding tax where the liability is final and no further tax obligation exists after payment. Individuals, non-individuals, and government agencies can all be required to withhold taxes depending on their role.

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    Mastering Withholding Taxes

    Uploaded by

    vics
    75 views15 pages
    The document discusses tax compliance procedures related to final taxes. It covers the nature and purpose of withholding taxes, who is required to withhold taxes, and the obligations of withholding agents. Specifically, it explains that final withholding tax is a type of withholding tax where the liability is final and no further tax obligation exists after payment. Individuals, non-individuals, and government agencies can all be required to withhold taxes depending on their role.

    Original Title

    MASTERING WITHHOLDING TAXES

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    The document discusses tax compliance procedures related to final taxes. It covers the nature and purpose of withholding taxes, who is required to withhold taxes, and the obligations of withholding agents. Specifically, it explains that final withholding tax is a type of withholding tax where the liability is final and no further tax obligation exists after payment. Individuals, non-individuals, and government agencies can all be required to withhold taxes depending on their role.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    75 views15 pages

    Mastering Withholding Taxes

    Uploaded by

    vics
    The document discusses tax compliance procedures related to final taxes. It covers the nature and purpose of withholding taxes, who is required to withhold taxes, and the obligations of withholding agents. Specifically, it explains that final withholding tax is a type of withholding tax where the liability is final and no further tax obligation exists after payment. Individuals, non-individuals, and government agencies can all be required to withhold taxes depending on their role.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    Tax Compliance Procedure –Final Taxes

    Objective and agenda


    Learning Objectives: At the end of this Module, you will be able to
    • Understand the nature and concept of withholding taxes
    • Explain the risk and responses associated in auditing withholding
    taxes
    • Describe the procedures in the auditing final taxes
    Coverage:
    • Nature and purpose of withholding tax (WHT)
    • Who are required to withhold
    • Obligations of a withholding agent
    • Effect of non-withholding
    Nature of Withholding Tax
    • Withholding tax is NOT a tax on the part of the withholding agent.

    It is a method of collecting the income tax of the income earner.


    Goods/Services

    Cash Payment, net of tax


    +
    BIR FORM 2307
    Remittance of
    withholding
    taxes to ABB
    Using BIR FORM
    Cash deposited on 0619E, 1601EQ,
    BIR Bank Account 1601C, 0619F, 1601F

    4
    Purpose of Withholding Tax
    1. To provide the taxpayer a convenient manner to meet his probable
    income tax liability.
    2. To ensure the collection of the income tax which could otherwise be
    lost or substantially reduced through failure to file the
    corresponding returns.
    3. To improve the government's cash flow.
    Nature of Withholding Tax
    Final Withholding Tax (FWT):
    • Is a type of withholding tax
    • Full payment of income tax due
    • Liability is final; no further obligation to file an ITR and/or pay
    additional tax
    Coverage
    Nature and purpose of withholding tax (WHT):
    • Who are required to withhold
    • Obligations of a withholding agent
    • Effect of non-withholding
    Lesson 1: Understanding final taxes
    Who are required to withhold

    • Individuals engaged in business or practiced of profession

    • Non-individuals, whether engaged in business or not, but not limited


    to corporations, associations, partnership, cooperatives.

    • Government agencies and its instrumentalities (National Government


    Agencies (NGAs), Government-owned or Controlled Corporations
    (GOCCs), Local Government Units including Baranggays.
    Withholding Agent
    A WITHHOLDING AGENT - is any person or entity who is in control of
    the payment subject to withholding tax and therefore is required
    to deduct and remit taxes withheld to the government
    Who are required to withhold?
    • Individuals engaged in business or practiced of profession

    • Non-individuals, whether engaged in business or not, but not limited


    to corporations, associations, partnership, cooperatives.

    • Government agencies and its instrumentalities (National Government


    Agencies (NGAs), Government-owned or Controlled Corporations
    (GOCCs), Local Government Units including Baranggays.
    Question

    What are the two types


    of withholding taxes?
    Answer
    • Withholding Taxes on Compensation
    • Creditable/Expanded Withholding Taxes
    • Withholding Taxes on Final Taxes
    • Withholding Taxes on Government Money Payments – Percentage
    Taxes/Value-Added Taxes
    What is Withholding Tax on Compensation?
    it is tax withheld from income payments to individuals
    arising from an employer-employee relationship.

    What is Compensation or wages?


    refers to all remuneration for services performed by an employee for his
    employer under an employee-employer relationships unless exempted by
    the NIRC and pertinent laws.
    Kinds of Compensation
    • Regular • Supplementary
    a. Basic Salary a. Commission
    b. Fixed allowances b. Overtime pay
    c. Fees, including director’s fees
    d. Profit sharing
    e. Monetized vacation leave in excess of ten (10) days
    f. Sick leave
    g. Fringe benefits received by rank-and-file employees
    h. Hazard pay
    i. Taxable 13th month pay and other benefits
    j. Other remuneration received from an employee-
    employer relationships
    • https://www.coursehero.com/file/44777278/Module-31-
    Withholding-tax-on-Compensationpdf/

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