Implementation of the Withholding Tax System

August 24, 1999 DILG MEMORANDUM CIRCULAR NO. 151-99 TO : All Provincial Governors, City Mayors, Municipal Mayors, Provincial, City and Municipal Treasurers, DILG Regional Directors and Others Concerned SUBJECT : Implementation of the Withholding Tax System This refers to Republic Act No. 8424, otherwise known as the Tax Reform Act of 1997. Pursuant to the said law and its implementing Revenue Regulations No. 2-98, as well as, other internal revenue laws and regulations. all government offices are required to deduct and withhold taxes from the compensation paid to their employees, income payments subject to the expanded withholding tax, income payments subject to final withholding tax and payments made to VAT and Non-VAT sellers of goods and services, whether individual or corporate. LibLex Relative to the above, and as per information from the Bureau of Internal Revenue, it appears that, for the past years, there has been a limited compliance, or non-compliance, with withholding tax laws and regulations by a large number of local government units thereby resulting into a relatively low tax collection. In view thereof, and in support of overall efforts to improve tax collection, all Provincial Governors, City Mayors and Municipal Mayors, and their Treasurers are hereby enjoined to strictly implement withholding tax laws and regulations, and are reminded of their responsibilities as withholding tax agents as provided for under Revenue Memorandum Order No. 14-98 and Revenue Memorandum Order No. 70-98. All concerned officers in charge of withholding taxes are hereby advised that failure to comply with the said requirements is subject to administrative and penal liabilities as provided for by law. Furthermore, Provincial Governors, City Mayors and Municipal Mayors are encouraged to provide full support to the BIR Regional Directors, Revenue District Officers and Withholding Agents Monitoring Division Personnel in the conduct dialogues, seminars or field verification efforts among local authorities. All DILG Regional Directors are likewise hereby directed to help disseminate this Memorandum Circular to all local government units within their jurisdictions, and to provide technical assistance, as appropriate and where necessary. For the information and guidance of all concerned. (SGD.) RONALDO V. PUNO Secretary