Period to Pay and Remit Withholding Tax on Monthly Salaries of Overseas Workers

October 14, 1986 BIR RULING NO. 215-86 84 000-00 215-86 Gentlemen : This refers to your letter dated May 27, 1985, requesting that you be allowed to pay and remit to the Bureau of Internal Revenue withholding tax on the 70% of the monthly salaries of your overseas workers for any given month on or before the 20th day of the month following the month of payment of the said payroll. cdta It is represented that your company is acting on behalf of your foreign principals in the payment in the Philippines of 70% of the monthly basic salaries of your overseas workers; that you base the withholding tax deduction on the payrolls which are prepared monthly at the work sites sent to you about the 10th day of the following month and actually received by you between the 15th and 20th day of said month; that your preparation of the local payroll and the withholding tax and payment of the salaries of the workers as well as the withholding tax of the workers is dependent upon your receipt of the payroll and remittances of money from the project sites to cover the said payroll; that the volume of your workers' payroll averages about 1,000 workers monthly and it takes about three to five days to prepare the local payroll based on the payroll from the project sites; that without these payrolls from the project site you have no way of determining the amounts due each worker for salary for the previous month and withholding tax thereon cannot also be determined; and that you could withhold and remit the withholding tax for salaries of your overseas workers for any given month only between the 20th and end of the following month. In reply, please be informed that every employer or person having the control, receipt, custody, disposal or payment of compensation paid to and received by citizens of the Philippines for services performed outside of the country irrespective of the number of days of such service during the calendar year shall deduct and withhold income tax due thereon in accordance with Section 7.11 of Revenue Regulations No. 6-82 dated October 1, 1982 implementing Section 21(f) of the Tax Code as amended by B.P. Blg. 135. Paragraph (b) of said section also provides that "if the compensation is paid by a non-resident employer thru an agent in the Philippines, the basis of computation shall be the amount paid by such agent." Moreover, pursuant to Section 2 of Revenue Regulations No. 5-85 dated March 19, 1985, taxes deducted and withheld on compensation income shall be remitted within ten (10) days after the end of each calendar month. Such being the case, and since in behalf of your foreign principals, you pay only 70% of the monthly basic salaries of your overseas workers, you are allowed to deduct, withhold and remit to this Office the withholding tax on the said 70% within ten(10) days after the end of each calendar month. cdti Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue