AN ACT AMENDING
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
AND FOR OTHER
TAX ON INCOME
- As used in this Chapter:
- The term 'wages' means all remuneration (other than fees paid to a public
official) for services performed by an employee for his employer, including
the cash value of all remuneration paid in any medium other than cash,
except that such term shall not include remuneration paid:
(1) For agricultural
labor paid entirely in products of the farm where the labor is performed,
(2) For domestic
service in a private home, or
(3) For casual
labor not in the course of the employer's trade or business, or
(4) For services
by a citizen or resident of the Philippines for a foreign government or
If the remuneration paid
by an employer to an employee for services performed during one-half (1/2)
or more of any payroll period of not more than thirty-one (31) consecutive
days constitutes wages, all the remuneration paid by such employer to such
employee for such period shall be deemed to be wages; but if the remuneration
paid by an employer to an employee for services performed during more than
one -half (1/2) of any such payroll period does not constitute wages, then
none of the remuneration paid by such employer to such employee for such
period shall be deemed to be wages.
- The term 'payroll period' means a period for which payment of wages is
ordinarily made to the employee by his employer, and the term "miscellaneous
payroll period" means a payroll period other than, a daily, weekly,
biweekly, semi-monthly, monthly, quarterly, semi-annual, or annual period.
- The term 'employee' refers to any individual who is the recipient of
wages and includes an officer, employee or elected official of the Government
of the Philippines or any political subdivision, agency or instrumentality
thereof. The term "employee" also includes an officer of a corporation.
- The term "employer" means the person for whom an individual performs
or performed any service, of whatever nature, as the employee of such person,
(1) If the person
for whom the individual performs or performed any service does not
have control of the payment of the wages for such services, the term "employer"
(except for the purpose of Subsection (A) means the person having control
payment of such wages; and
(2) In the case
of a person paying wages on behalf of a nonresident alien individual, foreign
partnership or foreign corporation not engaged in trade or business within
the term "employer" (except for the purpose of Subsection (A) means
79. Income Tax Collected at Source.-
- 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.
Paid by Recipient.
- If the employer, in violation of the provisions of this Chapter, fails
to deduct and withhold the tax as required under this Chapter, and thereafter
the tax against which such tax may be credited is paid, the tax so required
to be deducted and withheld shall not be collected from the employer; but
this Subsection shall in no case relieve the employer from liability for
any penalty or addition to the tax otherwise applicable in respect of such
failure to deduct and withhold.
- When there has been an overpayment of tax under this Section, refund
or credit shall be made to the employer only to the extent that the amount
of such overpayment was not deducted and withheld hereunder by the employer.
-The amount deducted and withheld under this Chapter during any calendar
year shall be allowed as a credit to the recipient of such income against
the tax imposed under Section 24(A) of this Title. Refunds and credits
in cases of excessive withholding shall be granted under rules and regulations
promulgated by the Secretary of Finance, upon recommendation of the Commissioner.
Any excess of the taxes
withheld over the tax due from the taxpayer shall be returned or credited
within three (3) months from the fifteenth (15th) day of April.
Refunds or credits made after such time shall earn interest at the rate
of six percent (6%) per annum, starting after the lapse of the three-month
period to the date the refund of credit is made.
Refunds shall be made
upon warrants drawn by the Commissioner or by his duly authorized representative
without the necessity of counter-signature by the Chairman, Commission
on Audit or the latter's duly authorized representative as an exception
to the requirement prescribed by Section 49, Chapter 8, Subtitle B, Title
1 of Book V of Executive Order No. 292, otherwise known as the Administrative
Code of 1987.
- Unless otherwise provided by this Chapter, the personal and additional
exemptions applicable under this Chapter shall be determined in accordance
with the main provisions of this Title.
(a) When to
File. - On or before the date of commencement of employment with an
employer, the employee shall furnish the employer with a signed withholding
exemption certificate relating to the personal and additional exemptions
to which he is entitled.
of Status. - In case of change of status of an employee as a result
of which he would be entitled to a lesser or greater amount of exemption,
the employee shall, within ten (10) days from such change, file with the
employer a new withholding exemption certificate reflecting the change.
(c) Use of
Certificates. - The certificates filed hereunder shall be used by the
employer in the determination of the amount of taxes to be withheld.
to Furnish Certificate. - Where an employee, in violation of this Chapter,
either fails or refuses to file a withholding exemption certificate, the
employer shall withhold the taxes prescribed under the schedule for zero
exemption of the withholding tax table determined pursuant to Subsection
on Basis of Average Wages.
- The Commissioner may, under rules and regulations promulgated by the
Secretary of Finance, authorize employers to:
the wages which will be paid to an employee in any quarter of the calendar
the amount to be deducted and withheld upon each payment of wages to
such employee during such quarter as if the appropriate average of the
estimated constituted the actual wages paid; and
(3) deduct and
withhold upon any payment of wages to such employee during ;such quarter
such amount as may be required to be deducted and withheld during such
without regard to this Subsection.
- When a husband and wife each are recipients of wages, whether from the
same or from different employers, taxes to be withheld shall be determined
on the following bases:
(1) The husband
shall be deemed the head of the family and proper claimant of the additional
exemption in respect to any dependent children, unless he explicitly waives
his right in
favor of his wife in the withholding exemption certificate.(2) Taxes shall
be withheld from the wages of the wife in accordance with the schedule
zero exemption of the withholding tax table prescribed in Subsection (D)(2)(d)
- Wages paid to nonresident alien individuals engaged in trade or business
in the Philippines shall be subject to the provisions of this Chapter.
- On or before the end of the calendar year but prior to the payment of
the compensation for the last payroll period, the employer shall determine
the tax due from each employee on taxable compensation income for the entire
taxable year in accordance with Section 24(A). The difference between the
tax due from the employee for the entire year and the sum of taxes withheld
from January to November shall either be withheld from his salary in December
of the current calendar year or refunded to the employee not later than
January 25 of the succeeding year.
80. Liability for Tax.
- The employer shall be liable for the withholding and remittance of the
correct amount of tax required to be deducted and withheld under this Chapter.
If the employer fails to withhold and remit the correct amount of tax as
required to be withheld under the provision of this Chapter, such tax shall
be collected from the employer together with the penalties or additions
to the tax otherwise applicable in respect to such failure to withhold
- Where an employee fails or refuses to file the withholding exemption
certificate or willfully supplies false or inaccurate information thereunder,
the tax otherwise required to be withheld by the employer shall be collected
from him including penalties or additions to the tax from the due date
of remittance until the date of payment. On the other hand, excess taxes
withheld made by the employer due to:
or refusal to file the withholding exemption certificate; or(2) false and
inaccurate information shall not be refunded to the employee but shall
in favor of the Government.SEC.
81. Filing of Return and Payment of Taxes Withheld.
- Except as the Commissioner otherwise permits, taxes deducted and withheld
by the employer on wages of employees shall be covered by a return and
paid to an authorized agent bank; Collection Agent, or the duly authorized
Treasurer of the city or municipality where the employer has his legal
residence or principal place of business, or in case the employer is a
corporation, where the principal office is located.
The return shall be
filed and the payment made within twenty-five (25) days from the close
of each calendar quarter: Provided, however, That the Commissioner
may, with the approval of the Secretary of Finance, require the employers
to pay or deposit the taxes deducted and withheld at more frequent intervals,
in cases where such requirement is deemed necessary to protect the interest
of the Government.
The taxes deducted and
withheld by employers shall be held in a special fund in trust for the
Government until the same are paid to the said collecting officers.
82. Return and Payment in Case of Government Employees.
- If the employer is the Government of the Philippines or any political
subdivision, agency or instrumentality thereof, the return of the amount
deducted and withheld upon any wage shall be made by the officer or employee
having control of the payment of such wage, or by any officer or employee
duly designated for the purpose.
83. Statements and Returns.
- Every employer required to deduct and withhold a tax shall furnish to
each such employee in respect of his employment during the calendar year,
on or before January thirty-first (31st) of the succeeding year,
or if his employment is terminated before the close of such calendar year,
on the same day of which the last payment of wages is made, a written statement
confirming the wages paid by the employer to such employee during the calendar
year, and the amount of tax deducted and withheld under this Chapter in
respect of such wages. The statement required to be furnished by this Section
in respect of any wage shall contain such other information, and shall
be furnished at such other time and in such form as the Secretary of Finance,
upon the recommendation of the Commissioner, may, by rules and regulation,
- Every employer required to deduct and withhold the taxes in respect of
the wages of his employees shall, on or before January thirty-first (31st)
of the succeeding year, submit to the Commissioner an annual information
return containing a list of employees, the total amount of compensation
income of each employee, the total amount of taxes withheld therefrom during
the year, accompanied by copies of the statement referred to in the preceding
paragraph, and such other information as may be deemed necessary. This
return, if made and filed in accordance with rules and regulations promulgated
by the Secretary of Finance, upon recommendation of the Commissioner, shall
be sufficient compliance with the requirements of Section 68 of this Title
in respect of such wages.
- The Commissioner, under such rules and regulations as may be promulgated
by the Secretary of Finance, may grant to any employer a reasonable extension
of time to furnish and submit the statements and returns required under