Expanded Withholding Tax

July 6, 1999 DILG MEMORANDUM CIRCULAR NO. 111-99 TO : All Provincial Governors, City Mayors, Municipal Mayors, DILG Regional Directors and Others Concerned SUBJECT : Expanded Withholding Tax Quoted hereunder are pertinent provisions of Revenue Regulations No. 2-98 implementing Republic Act No. 8424, otherwise known as An Act Amending the National Internal Revenue Code , as Amended , as follows: SECTION 2.57.3 Withholding of Tax at Source . SECTION 2.57.3 Persons Required to Deduct and Withhold. The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.57.2: (c) All government offices including government-owned or controlled corporations, as well as provincial, city and municipal governments. SECTION 2.80. Liability for Tax . (a) Employer . (1) In general, the employer shall be responsible for the withholding and remittance of the correct amount of tax required to be deducted and withheld from the compensation income of his employees. If the employer fails to withhold and remit the correct amount of tax, such tax shall be collected from the employer together with the penalties or additions to the tax otherwise applicable. Cdphil (2) The employer who is required to collect, account for and remit any tax imposed by the NIRC, as amended, who willfully fails to collect such tax, or account for and remit such tax or willfully assist in any manner to evade any payment thereof, shall in addition to other penalties, provided for in the Code, as amended, be liable, upon conviction, to a penalty equal to the amount of the tax not collected nor accounted for or remitted. (3) Any employer/withholder agent who fails, or refuses to refund excess withholding tax not later than January 25 of the succeeding year shall, in addition to any penalties provided in Title X of the Code, as amended, be liable to a penalty equal to the total amount of refund which was not refunded to the employee resulting from any excess of the amount withheld over the tax actually due on their return. SECTION 2.82. Return and Payment in Case Where the Government is the Employer . If the Government of the Philippines, its political subdivision or any agency or instrumentally, as well as, government-owned or controlled corporation is the employer, the returns of the tax may be made by the officer or employee having control of payment of compensation or other officer or employee appropriately designated for the purpose. SECTION 4.114. Withholding of Creditable Value Added Tax . (b) Persons Required to Deduct and Withhold. All local government units, represented by the Provincial Treasurer in provinces, the City Treasurer in cities, the Municipal Treasurer in municipalities, and Barangay Treasurer in barangays, Treasurers of GOCCs and the Chief Accountant or any person holding similar position and performing similar function in national government offices, as withholding agents, shall deduct and withhold the prescribed creditable value-added tax before making any payment to the seller of goods and services. Where the government as herein defined has regional offices, branches or units, the withholding and remittance of the creditable VAT may be done on a decentralized basis as such, the treasurer or the chief accountant or any person holding similar function in said regional office, branch or unit shall deduct and withhold the creditable VAT before making any payment to the seller of goods and services. SECTION 5.116. Withholding of Percentage Tax . Bureaus, offices and instrumentalities of the government, including government-owned or controlled corporation, as well as, their subsidiaries, provinces, cities and municipalities making any money payment to private individuals, corporations, partnerships and/or associations are required to deduct and withhold the taxes due from the payees on account of such money payments. In this connection, all concerned Local Chief Executives are hereby enjoined to implement and enforce the applicable provisions of law and public policy, as cited above, in support of overall efforts to improve revenue collection thereby helping ensure the generation of funds for various development undertakings. All DILG Regional Directors are likewise hereby directed to cause the widest dissemination of this Memorandum Circular to all local government units within their jurisdictions. LibLex For the information and guidance of all concerned. (SGD.) RONALDO V. PUNO Secretary Department of Interior and Local Government