WITHHOLDING WHTAXES

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WITHHOLDING (WH)TAXES

• Nature of Withholding Taxes
• Withholding Agents-Payors
• Persons Exempt from Withholding
• Determination of Applicable Rates
• Kinds of Withholding Taxes
• Liabilities of W/H Agents and Consequences of
  Late/ Non Compliance

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I- NATURE OF W/H TAXES

• Final Withholding Tax
• Liability rests primarily on WH Agent
• Full and final payment of tax
• Payee is not required to file the return

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• Creditable Withholding Tax
• Considered as an Advanced payment of tax,
  whether business or IT
• Intended to equal or approximate the tax due
  from the taxpayer-payee
• Payee is required to file the return-
  Income, VAT, NON-VAT, Percentage, etc. tax
  returns

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II. WITHHOLDING AGENTS- PAYORS

• 1. Persons ( natural or juridical )

2. National Government Agencies
3. Local Government Units
4. Government-owned and Controlled
Corporations (GOCCs)
5. Other Government Offices
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EFFECTIVE JANUARY, 2004

• Agents or employees of WH agents
• ( Provided the OR and certificate is in the
  name of the Principal or Employee)
• Persons who controls payment and claims expenses
• Brokers, agents or persons authorized to collect

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III. EXEMPT FROM WH TAX

• Payments for purchases of GOODS, SERVICES,
  ETC. (AS PAYEES) TO
• 1. Government offices, agencies, units,
  with respect to the performance of its
  functions.

2. Exempt corporations or entities
( Examples cooperatives, SSS, GSIS, PAGCOR,
PCSO, Phil Health )
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IV. DETERMINATION OF APPLICABLE RATES

• 1. Registration of Payee as to
• a. Tax Type VAT/NON-VAT/
  Percentage/Income, etc
• b. Nature of organization
• Single Proprietor or Corporation

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• 2. Nature of Income Payments
• a. Compensation
• b. Purchases in relation to
  Business/Trade/Profession
• c. Purchase of real/personal property
• 3. Kinds of WH Taxes
• Creditable
• Final
• Govt Money Payments

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V- KINDS OF WITHHOLDING TAXES
1. CREDITABLE WH TAX AT SOURCE a. Business
Taxes VAT, NON-VAT, PERCENTAGE b.
Income Tax Withholding Tax on Payments for
purchases of goods, services and certain
expenses and purchase of ordinary Assets
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2. FINAL WH TAXES on a. Compensation b.
Fringe Benefits c. VAT and Percentage d.
Passive Income e. Purchase of Capital Assets
3. W/H TAX ON GOVERNMENT MONEY PAYMENTS
(CREDITABLE EXPANDED WH FINAL WH taxes)
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I. CREDITABLE WITHHOLDING TAX AT
SOURCE
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TAX RATES
NATURE OF PAYMENTS
A- INDIVIDUAL 1. Professional, legal, medical
dental fees, etc., professional, entertainers,
emcees, production directors, directors of
Corp. GI lt P720th GI gt
P720th
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LIABILITIES OF W/H AGENTS AND CONSEQUENCES