Collection at Source of Income Tax on Compensation Income of Employed Resident Citizens and Aliens, Non-Resident Citizens and Non-Resident Aliens engaged in trade or business in the Philippines

October 1, 1982 REVENUE REGULATIONS NO. 06-82 SUBJECT : Collection at Source of Income Tax on Compensation Income of Employed Resident Citizens and Aliens, Non-Resident Citizens and Non-Resident Aliens Engaged in Trade or Business in the Philippines TO : All Internal Revenue Officers and Others Concerned 1 . Scope . Recommending Approval Pursuant to the provisions of Section 328 of the National Internal Revenue Code and Section 91 of the same code the following regulations are promulgated relative to the collection at source of income tax on compensation income paid on or after January 1, 1982. The withholding of tax on compensation income (commonly referred to as pay-as-you-go or pay-as-you-earn) is a method of collecting income tax currently upon receipt of the income. It applies to all employed individuals deriving income from compensation, whether resident citizens and aliens or non-resident citizens or non-resident aliens engaged in trade or business in the Philippines. The employer is constituted as the withholding agent. (The pertinent provisions of applicable sections of the National Internal Revenue Code as amended by Batas Pambansa Blg. 135 are reproduced for reference.) "Sec. 28. Taxable compensation income . "(a) . . . "(b) Gross compensation income defined. Gross compensation income includes all income payments received as a result of an employer-employee relationship such as salaries, wages, honoraria, bonuses, pensions, allowances for transportation, representation, entertainment, fees (including director's fees) and other income of similar nature, including compensation paid in kind: Provided, however , that payments made by a general professional partnership to a partner for services rendered shall not be considered as gross compensation income but as a partner's distributive share of ordinary business income. "(c) Exclusion from gross compensation income. The following are excluded from the computation of gross compensation income: "(1) Actual, moral, exemplary and nominal damages received by the employee or his heirs pursuant to a final judgment or compromise agreement arising out of or related to an employer-employee relationship. "(2) All items excluded under paragraphs (c) (1) to (c) (8), inclusive, of Section 29." "Sec. 29. Taxable Net Income . - "(c) Exclusions from gross income. The following items shall not be included in gross income and shall be exempt from taxation under this Title: "(5) Compensation for injuries or sickness. Amounts received, through Accident or Health Insurance or under Workmen's Compensation Acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness. "(6) Income exempt under treaty. Income of any kind, to the extent required by any treaty obligation binding upon the Government of the Philippines. "(7) Retirement benefits, pensions, gratuities, etc. "(A) Retirement benefits received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided , That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty years of age at the time of his retirement: Provided, further , That the benefits granted under this subparagraph shall be availed of by an official or employee only once. For purposes of this subsection, the term "reasonable private benefit plan" means a pension, gratuity, stock, bonus or profit-sharing plan maintained by an employer for the benefit of some or all of his officials or employees, wherein contributions are made by such employer or officials and employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees. "(B) Any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee. "(C) The provisions of any existing law to the contrary notwithstanding, social security benefits, retirement gratuities, pensions and other similar benefits received by resident or non-resident citizen of the Philippines from foreign government agencies and other institutions, private or public. "(D) Payments of benefits due or to become due to any person residing in the Philippines under the laws of the United States Veterans Administration. "(E) Payments of benefits made under the Social Security Act of 1954, as amended. "(F) Benefits received from the GSIS and the retirement gratuity received by government officials and employees." "Sec. 90. Definitions . As used in this Chapter. (a) Wages. 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, or (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 an international organization. "If the remuneration paid by an employer to an employee for services performed during one-half or more of any payroll period of not more than thirty-one 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 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". "Sec. 21. Rates of tax on citizens or residents . "(a), (b), (c), (d), and (e) . . . "(f) On adjusted gross income. - A tax is hereby imposed upon the adjusted gross income derived by a non-resident citizen from all sources without the Philippines during each taxable year computed in accordance with the following schedule: "If the amount subject to tax is: Not over U.S. $6,000.00 1% Over U.S. $6,000.00 but not over U.S. $20,000.00 U.S. $60 plus 2% of excess over US $6,000.00 Over U.S. $20,000.00 U.S. $340 plus 3% of excess over U.S. $20,000.00 "For purposes of this paragraph, "adjusted gross income" means the gross income from all sources without the Philippines less the following: "(1) An allowance for personal exemption in the amount of Two thousand dollars (U.S.$2,000), if the person making the return is a single or a married person legally separated from his/her spouse; or Four thousand dollars (U.S.$4,000), if the person making the return is married or head of the family, as defined in Section 23 of this Code; and "(2) The total amount of the national income tax actually paid to the government of the foreign country of his residence. Every non-resident citizen availing of the special rates provided herein is required to support his declaration of gross income, exemption and deductions claimed by attaching to his Philippines income tax return a copy of the income tax return he has filed with the government of the foreign country of his residence." "Sec. 22. Tax on non-resident alien individuals . (a) Non-resident aliens engaged in trade or business within the Philippines. (1) In general. - Non-resident aliens engaged in trade or business in the Philippines shall be subject to tax in the same manner as resident citizens and aliens on taxable compensation income and/or other taxable net income received from all sources within the Philippines, except capital gains realized from buying and/or selling shares of stock of Philippine corporations listed in the dollar or any foreign currency board of stock exchange: 2 . C ompensatio n. (a) In general. For purposes of withholding tax the term "compensation" means all remuneration for services performed by an employee for his employer unless specifically excepted under Sections 28, 29 and 90 of the National Internal Revenue Code. The name by which the remuneration for services is designated is immaterial. Thus, salaries, wages, emoluments and honoraria, bonuses, allowances (such as transportation, representation, entertainment and the like), fringe benefits (monetary and non-monetary), fees, including director's fees, taxable pensions and retirement pay, and other income of a similar nature constitute compensation income. The basis upon which the remuneration is paid is immaterial in determining whether the remuneration constitutes compensation. Thus it may be paid on the basis of piecework, or a percentage of profits; and may be paid hourly, daily, weekly, monthly, or annually. Compensation may be paid in money or in some medium other than money, as, for example, stocks, bonds, or other forms of property. If services are paid for in a medium other than money, the fair market value of the thing taken in payment is the amount to be included as compensation subject to withholding. If the services are rendered at a stipulated price, in the absence of evidence to the contrary such price will be presumed to be the fair value of the remuneration received. If a corporation transfers to its employees its own stock as remuneration for services rendered by the employee, the amount of such remuneration is the fair market value of the stock at the time of the transfer. If a person receives as remuneration for services rendered by the employee, the amount of such remuneration is the fair market value of the stock at the time of the transfer. If a person receives as remuneration for services rendered a salary and in addition thereto living quarters or meals, the value to such person of the quarters and meals so furnished shall be added to the remuneration otherwise paid for the purpose of determining the amount of compensation subject to withholding. If, however, living quarters or meals are furnished to an employee for the convenience of the employer, the value thereof need not be included as compensation subject to withholding. Ordinarily, facilities or privileges (such as entertainment, medical services, or so-called "courtesy" discounts on purchases), furnished or offered by an employer to his employees generally, are not considered as compensation subject to withholding if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees. Where compensation is paid in property other than money, the employer shall make necessary arrangements to ensure that the amount of the tax required to be withheld is available for payment to the Commissioner of Internal Revenue. Tips or gratuities paid directly to an employee by a customer of an employer, and not accounted for by the employee to the employer, are not subject to withholding. Remuneration for services, unless such remuneration is specifically excepted by the statute, constitutes compensation even though at the time paid the relationship of employer and employee no longer exists between the person in whose employ the services are performed and the individual who performed them. (b) Pensions, retirement and separation pay. - Pensions, retirement and separation pay constitute compensation subject to withholding, except the following: (1) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer, if the following requirements are met: (i) The benefit plan must be approved by the Bureau of Internal Revenue; (ii) The retiring official or employee must have been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of retirement; and (iii) The retiring official or employee shall not have previously availed of the privilege under the retirement benefit plan of the same or another employer. (2) Any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee, such as retrenchment and redundancy and secession of business. The phrase "for any cause beyond the control of the said official or employee" connotes involuntariness on the part of the official or employee. The separation from the service of the official or employee must not be asked for or initiated by him. The separation was not of his own making. Whether or not the separation is beyond the control of the official or employee, being essentially a question of fact, shall be determined on the basis of prevailing facts and circumstances. It shall be duly established by competent evidence by the employer which should be attached by him in the quarterly return for the period in which the amount paid due to the involuntary separation was made. Any payment made by an employer to an employee on account of dismissal, that is, for causes other than those mentioned in paragraph (b) (2) hereof, constitutes compensation regardless of whether the employer is legally bound by contract, statute, or otherwise to make such payment. (3) The provision of any existing law to the contrary notwithstanding, social security benefits, retirement gratuities, pensions and other similar benefits received by resident or non-resident citizens of the Philippine or aliens who come to reside permanently in the Philippines from foreign government agencies and other institutions, private or public. (4) Payments of benefits due or to become due to any person residing in the Philippines under the law of the United States administered by the United States Veterans Administration. (5) Payments of benefits made under the Social Security System Act of 1954, as amended. (6) Benefits received from the GSIS and the retirement gratuity received by government officials and employees. (c) In general. Fixed or variable transportation, representation and other allowances, which are received by a public officer or employee, or officer or employee of a private entity, in addition to the regular compensation fixed for his position or office is compensation subject to withholding. "1) It is for ordinary and necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer. "2) The employee is required to, and does, make an accounting/ liquidation for such expense in accordance with the specific requirements of substantiation for each category of expense. However, if the reimbursements or advances exceed the actual expenses, the excess if not returned to employer constitutes taxable compensation. "Ordinary and necessary expenses. The term "ordinary" does not imply that the employee must incur a certain type of expense. Rather, it means normal, usual, or customary (in size and character) for the employer's trade or business. The main point is that it must be normal type of expenditure for the type of business involved. "An expenditure is "necessary" if it is appropriate and helps develop and maintain the employer's business. It must be reasonable to expect business benefits to result from the expense. "Inherent in the phrase "ordinary and necessary" is the element of reasonableness, which is related to the amount of expense. An expense is reasonable if it is not lavish, extravagant or excessive under the circumstances. "To account/liquidate means to submit to his employer an expense account/report or other required written statement to the employer showing the business nature and the amount of all the employee's expenses (including those charged directly or indirectly to the employer through credit cards or otherwise) broken down into such broad categories as travel, transportation, meals and lodging, representation or entertainment expenses, and to support by sufficient documentary evidence each element of expenditure. cd i "Documentary evidence is a receipt, paid bill, or similar evidence to support an expenditure. Sufficient or adequate documentary evidence will ordinarily disclose the amount, date, place and the essential character of the expenditure. "Invoices or "tapes" issued by cash register machines duly registered with the Bureau, as well as "expense vouchers" provided by employers for the use of employees to support small amounts of expenses for services, the suppliers of which cannot issue regular invoices, are deemed adequate documentary evidences, provided that, in the latter case, the said "expense voucher" is signed by the supplier of the services. "Reasonable amounts of reimbursement/advances for travelling and entertainment expenses which are pre-computed on daily basis, paid to an employee while on special assignment or duty need not be subject to this requirement. "A. Travelling Expenses "1) Meaning of travelling expenses . It refers to the ordinary and necessary expenses of foreign or domestic travel away from home in pursuit of the trade or business of the employer. In general, it may include meals and lodging en route and at one's destination; baggage services; air, rail, and bus fare; cost of transporting sample cases or display materials; laundry expenses; telephone and telegram expenses; cost of getting to or from airports, stations, or hotels or from one customer or place of work to another or from restaurant and hotels to work; automobile and other similar expenses incident to travel. "In addition to the substantiation requirements, the following conditions must be satisfied: "(i) The expense must be reasonable and necessary travelling expense, as that term is generally understood. This includes such item as transportation fares and food and lodging expenses incurred while travelling. "(ii) The expenses must be incurred while away from home, except automobile expenses, jeepney, bus or taxi fares to and from family residence to office or place of work, while in the pursuit of the business of the employer. "(iii) The expenses must be incurred in pursuit of business. This means that there must be a direct connection between the expenditure and the carrying on of the trade or business of the employer. Moreover, such expenditure must be necessary or appropriate to the development and pursuit of the business or trade. "Tax home for travelling expenses purposes, is the place of employment, station, or post of duty. The term "away from home" is limited to travel from post or station or place of employment to points where business transactions are made. cdt "Common automobile expenses include cost of gasoline, oil, repairs, batteries, insurance, depreciation, interest to purchase the car, taxes, registration fees, car washes, garage, rent, parking fees and toll fees. "If the reimbursement/advance payment satisfies the conditions prescribed herein, the employee may choose, in lieu of complying with the substantiation requirements, to claim the percentage of business use of an automobile, which is seventy per cent (70%) of the reimbursement/advance in the case of salesmen or field personnel (see Labor Code) and thirty per cent (30%) in case of other employees required to travel. "The rule shall apply irrespective of whether the vehicle is owned by the employee or provided for by the employer under any arrangement, except that in the latter case, the total amount of the automobile expenses to the employer shall be the basis of the limitation. "2) Substantiation requirements . Reimbursements or advances for travel expenses shall be considered part of compensation income unless the employee proves and substantiates the following: "(a) the amount of each separate expenditure such as the cost of transportation or lodging. The daily cost of taxpayer's meals and other incidental elements may be totalled, if they are grouped in reasonable categories such as meals and tax fares; "(b) the dates of departure and return home for each trip and the number of days spent on business; "(c) the destination or locality of travel described by the name of city or town, or other similar designation; "Each element of expenditure must be supported by sufficient documentary evidence. Approximations will not suffice." "B. Representation or Entertainment Expenses "1) Meaning of representation and entertainment expenses. Representation and entertainment are synonymous terms. They mean activities which are of the type generally considered to constitutes entertainment, amusement or recreation. cdt "With respect to an activity, the item must be directly related to, or, in the case of an item directly preceding or following a substantial and bonafide business discussion (including business meeting at a convention or otherwise), that such item was associated with the active conduct of the employer's trade, profession or business. "With respect to a facility used in connection with an activity, the facility was used primarily for the furtherance of the employer's trade or business, and that the item was directly related to the active conduct of such trade or business. An expenditure for entertainment is considered directly related to the active conduct of the employer's trade or business if it is established that the expenditure meets all of the three following requirement: "(a) there must be an expectation of some business benefit; "(b) the principal character of the combined business and entertainment must be for the active conduct of trade or business; "(c) the item of entertainment, amusement of recreation is not contrary to law or public morals. "Another expenditure which may be considered as directly related to entertainment is one occurring in a clear business setting directly in the furtherance of employer's trade or business. It will not be considered in a clear business setting unless the employee establishes that the recipient of the entertainment would have reasonably known that the employee have no significant motive in or business of his employer. Examples: (a) "hospitality room" at a convention at which goodwill is created through discussion or display of employer's products; (b) entertainment of business representative at the introduction of new consumer or industrial products or theatrical presentation. "As a general rule, entertainment which did not occur on the same day of business discussion will not be considered to have met the "directly preceding or following" requirement. However, all the relevant facts and circumstances must be considered as when entertainment of business associates from out of town on the evening prior to or following the day of the discussion. "Whether any meeting, negotiation or discussion constitutes a "substantial and bonafide business discussion", it must be shown that the employee attended a business meeting, negotiation, discussion to other bonafide transaction, other than entertainment, for the purpose of obtaining income or other specific trade or business benefit for the employer. "Reimbursements from expenses relating to entertainment facilities may be excluded from compensation income if (i) facility is used primarily for the furtherance of employer's trade or business and (ii) only to the extent allowable to the use of the facility which is directly related to the active conduct of the employer's trade of business. "Facilities in general also apply to dues or fees paid to any social, athletic, or sporting club or organization. It does not include, however, purchase of proprietary shares and playing rights. "(2) Requirements Reimbursements or advances for representation and entertainment expenses shall not form part of compensation income if - "(a) the employer requires the employee to make the expenditure for its benefits; cd i "(b) the expenses are ordinary and necessary; and "(c) that each of the following elements of expenditure are adequately substantiated: "(i) the amount of such expense; "(ii) the date and place of entertainment, amusement or recreation; "(iii) the profession or business purpose of the expense; and (iv) the business relationship to the person entertained." (As amended by section 2 of Revenue Regulations No. 9-83 dated October 24, 1983.) (d) Vacation and sick leave allowances. Amounts of so-called "vacation allowances" or "sick leave credits" paid to an employee constitute compensation. Thus, the salary of an employee on vacation, or on sick leave, paid notwithstanding his absence from work, constitutes compensation. (e) Deductions by employer from compensation of employee. - Any amount which is required by law to be deducted by the employer from the compensation of an employee including the withheld tax is considered to be part of the employee's compensation and is deemed to be paid to the employee as compensation at the time the deduction is made. (f) Remuneration for services as employee of non-resident alien individual or foreign entity. The term "compensation" includes remuneration for services performed by a citizen or resident of the Philippines, as an employee of a non-resident alien individual, foreign partnership or foreign corporation, whether or not such alien individual or foreign entity is engaged in trade or business within the Philippines. Any person paying compensation on behalf of a non-resident alien individual, foreign partnership, or foreign corporation not engaged in trade or business within the Philippines is subject to all provisions of law and regulations applicable to an employer. (g) Compensation for services performed outside the Philippines. Remuneration for services performed outside the Philippines by a citizen for domestic or resident foreign corporation or partnership, or for non-resident foreign corporation or partnership, or for non-resident individual not engaged in trade or business in the Philippines, the payment of which is made in the Philippines, is subject to withholding under Section 7 (B) hereof. Exceptions from withholding . The following income payments are excepted from the requirement of withholding: (a) Fees paid to a public official . Authorized fees paid to the public officials such as notaries public, clerks of courts, sheriffs, etc. for services rendered in the performance of their official duties are excepted from the definition of the term "compensation" and hence are not subject to withholding. However, salaries paid such officials by the Government or government agency or instrumentality, are subject to withholding. aisa dc (b) Remuneration paid for agricultural labor . (1) In general, remuneration for services which constitutes agricultural labor and paid entirely in products of the farm where the labor is performed is not subject to withholding. In general, however, the term "agricultural labor" does not include services performed in connection with forestry, lumbering or landscaping. (2) Services constituting agricultural labor. Remuneration paid entirely in products of the farm where the labor is performed for services performed on a farm by an employee of any person in connection with any of the following activities is excepted as remuneration for agricultural labor: (i) The cultivation of the soil; (ii) The raising, shearing, feeding, caring for, training, or management of livestock, bees, poultry, or wildlife; or (iii) The raising or harvesting of any other agricultural or horticultural commodity. The term "farm" as used in this subsection includes, but is not limited to, stock, dairy, poultry, fruit, and truck farms, plantations, ranches, nurseries, ranges, orchards, and such greenhouses and other similar structures as are used primarily for the raising of agricultural or horticultural commodities. (3) The remuneration paid entirely in products of the farm where labor is performed for the following services in the employ of the owner or tenant or other operator of one or more farms is excepted as remuneration for agricultural labor, provided the major part of such services is performed on a farm: (i) Services performed in connection with the operation, management, conservation, improvement, or maintenance of any such farms or its tools or equipment; or (ii) Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane or typhoon. The services described in (i) above may include, for example, services performed by carpenters, painters, mechanics, farm supervisors, irrigation engineers, bookkeepers, and other skilled or semi-skilled workers, which contribute in any way to the conduct of the farm or farms, as such, operated by the person employing them, distinguished from any other enterprise in which such person may be engaged. Since the services described in this owner or tenant or other operator of the farm, the exception does not extend to remuneration paid for services performed by employees of a commercial painting concern, for example, which contracts with a farmer to renovate his farm properties. (4) Remuneration paid entirely in products of the farm where labor is performed for services performed by an employee in the employ of any person in connection with any of the following operations is excepted as remuneration for agricultural labor without regard to the place where such services are performed: aisa dc (i) The making of copra, stripping of abaca, etc.; (ii) The hatching of poultry; (iii) The raising of fish; (iv) The operation or maintenance of ditches, canals, reservoirs, or waterways used exclusively for supplying or storing water for farming purposes; (v) The production or harvesting of crude gum from a living tree or the processing of such crude gum into gum spirits of turpentine and gum resin, provided such processing is carried on by the original producer of such crude gum. (5) Remuneration paid entirely in products of the farm where labor is performed for services performed by an employee in the employ of a farmer or a farmers' cooperative organization or group in the handling, planting, drying, packing, packaging, processing, freezing, grading, storing or delivering to storage or to market or to a carrier for transportation to market, of any agricultural or horticultural commodity, produced by such farmer or farmer-members of such organization or group, is excepted as remuneration for agricultural labor. Services performed by employees of such farmer or farmers' organization or group in the handling, planting, drying, or packing, packaging, processing, freezing, grading, storing, or delivering to storage or to market or to carrier for transportation to market of commodities produced by persons other than such farmer or members of such farmers' organization or group are not performed "as an incident to ordinary farming operations." All payments made in cash or other forms other than products of the farm where labor is performed, for services constituting agricultural labor as explained above, are not within the exception. c. Remuneration for domestic services . Remuneration paid for services of a household nature performed by an employee in or about the private home of the person by whom he is employed is not subject to withholding. A private home is the fixed place of abode of an individual or family. If the home is utilized primarily for the purpose of supplying board or lodging to the public as a business enterprise, it ceases to be a private home and the remuneration paid for services performed therein is not excepted. casia In general, services of a household nature in or about a private home include services rendered by cooks, maids, butlers, valets, laundresses, gardeners, chauffeurs of automobiles for family use. The remuneration paid for the services above enumerated is not within the exception if performed in or about rooming or lodging houses, boardinghouses, clubs, hotels, hospitals, or commercial offices or establishment. Remuneration paid for services performed as a private secretary, even though performed in the employer's home, in not within the exception. d. Remuneration for casual labor not in the course of employer's trade or business . The term "casual labor" includes labor which is occasional, incidental or irregular. The expression "not in the course of the employer's trade or business" includes labor that does not promote or advance the trade or business of the employer. Thus, remuneration paid for labor which is occasional, incidental or irregular, and does not promote or advance the employer's trade or business, is excepted. Example : A's business is that of operating a sawmill. He employs B, a carpenter, at an hourly wage to repair his home. B works irregularly and spends the greater part of two days in completing the work. Since B's labor is casual and is not in the course of A's trade or business, the remuneration paid for such services is excepted. The remuneration paid for casual labor, that is, labor which is occasional, incidental, or irregular, but which is in the course of the employer's trade or business, does not come within the above exception. Example : (1). C's business is that of operating a sawmill. He employs D for two hours, at an hourly compensation, to remove sawdust from his mill. D's labor is casual since it is occasional, incidental or irregular, but it is in the course of C's trade or business and the remuneration paid for such labor in not excepted. Example : (2). E is engaged in the business of operating a department store. He employs additional clerks for short periods. While the services of the clerks may be casual, they are in the course of the employer's trade or business and, therefore, the remuneration paid for such services is not excepted. Remuneration paid for casual labor performed for a corporation does not come within this exception. e. Compensation for services by a citizen or resident of the Philippines for a foreign government or an international organization . Remuneration paid for services performed as an employee of a foreign government for an international organization is excepted. The exception includes not only remuneration paid for services performed by ambassadors, ministers, and other diplomatic officers or employees but also remuneration paid for services performed as consular or other officer or employee of a foreign government or as a non-diplomatic representative of such government. Compensation paid for services in the United States government offices, military establishments and naval bases which under our Income Tax Law are not subject to income tax are also excepted from the withholding provisions. cdt However, the said employee is required to file his income tax return in compliance with Section 45 of the Tax Code. f. Damages . Actual, moral, exemplary and nominal damages received by the employee or his heirs pursuant to a final judgment or compromise agreement arising out of or related to an employer-employee relationship. g. Life insurance . The proceeds of life insurance policies paid to the heirs or beneficiaries upon the death of the insured, whether in a single sum or otherwise, but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income. h. Amount received by insured as a return of premium . The amount received by the insured, as a return of premium or premiums paid by him under life insurance, endowment, or annuity contracts, either during the term or at the maturity of the term mentioned in the contract or upon surrender of the contract. i. Compensation for injuries or sickness . Amounts received through Accident or Health Insurance or under Workmen's Compensation Acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness. j. Income exempt under treaty . Income of any kind to the extent required by any treaty obligation binding upon the Government of the Philippines. k. Payments made by a general professional partnership to a partner for services rendered [ (not considered as gross compensation income but as a partner's distributive share of ordinary business income, Section 28 (b)] "Sec. 90. (b) Payroll period. The term "payroll period" means a period for which a 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, bi-weekly, semi-monthly, monthly, quarterly, semi-annual or annual period." acd Pa yroll Period . The term "payroll period" means the period of service for which a payment of compensation is ordinarily made to an employee by his employer. It is immaterial that the compensation is not always paid at regular intervals. For example, if an employer ordinarily pays a particular employee for each calendar week at the end of the week, but if for some reason the employee in a given week receives a payment in the middle of the week for the portion of the week already elapsed and receives the remainder at the end of the week, the payroll period is still the calendar week; or if, instead, that employee is sent on a 3-week trip by his employer and receives at the end of the trip a single compensation payment for 3 weeks services, the payroll period is still the calendar week, and the compensation payment shall be treated as though it were 3 separate weekly compensation payments. For the purpose of determination of the tax, an employee can have but one payroll period with respect to compensation paid by any one employer. Thus, if an employee is paid a regular compensation for a weekly payroll and in addition thereto is paid supplemental compensation (for example, bonuses) determined with respect to a different period, the payroll period is the weekly payroll period. "Sec. 91. (c) E mploye e. 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." 5 . E m ployee . The term "employee" includes every individual performing services if the relationship between him and the person for whom he performs such services is the legal relationship of employer and employee. The term specifically includes officers and employees, whether elected or appointed, of the Government of the Philippines, or any political subdivision thereof or any agency or instrumentality of any one or more of the foregoing. Generally the relationship of employer and employee exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristics of an employer, but not necessarily present in every case, are furnishing the tools and furnishing of a place to work, to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is not an employee. Generally, physicians, lawyers, dentists, veterinarians, sub-contractors, public stenographers, auctioneers, and others who follow an independent trade, business, or profession, in which they offer their services to the public, are not employees. Whether the relationship of employer and employee exists will in doubtful cases be determined upon an examination of the particular facts of each case. If the relationship of employer and employee exists, the designation or description of the relationship by the parties as anything other than that of employer and employee is immaterial. Thus if such relationship exists, it is of no consequence that the employee is designated as a partner, co-adventurer, agent, or independent contractor. The measurement, method or designation of compensation is also immaterial, if the relationship of employer and employee in fact exists. cd No distinction is made between classes or grades of employees. Thus, superintendents, managers, and other superior employees are employees. An officer of a corporation is an employee of the corporation. An individual, performing services for a corporation, whether as an officer and director, or merely as a director whose duties are confined to attendance at and participation in meetings of the Board of Directors, is an employee. "Sec. 90 (d) E mp loyer . The term "employer" means the person for whom an individual performs or performed any service, of whatever nature, as the employee of such person, except that - "(1) If the person for whom the individual performs or performed any services does not have control of the payment of the wages for such services, the term "employer" [except for the purposes of sub-section (a)] means the person having control of the payment of such wages; and "(2) In the case of a person wages on behalf of a non-resident alien individual, foreign partnership or foreign corporation, not engaged in trade or business within the Philippines, the term "employer" [except for the purposes of sub-article (a)] means such person." Emplo ye r . The term employer means any person for whom an individual performs or performed any service, of whatever nature, as the employee of such person. It is not necessary that the services be continuing at the time the wages are paid in order that the status of employer may exists. Thus, for purposes of withholding, a person for whom an individual has performed past services for which he is still receiving compensation from such person is an "employer." If the person for whom the services are or were performed does not have legal control of the payment of the compensation for such services, the term "employer" means the person having such control. For examples, where compensation, such as certain types of pensions or retirement pay, are paid by a trust and the person for whom the services were performed has no legal control over the payment of such compensation, the trust is the "employer." The term "employer" also means any person paying compensation on behalf of a non-resident alien individual, foreign partnership, or foreign corporation, not engaged in trade or business within the Philippines. It is the basic purpose to centralize in the employer the responsibility for withholding, returning, and paying the tax and furnishing the statements required under this Title. The foregoing two special definitions of the term "employer" are designed solely to meet unusual situations. They are not intended as a departure from the basic purpose. As a matter of business administration, certain of the mechanical details of the withholding process may be handled by representatives of the employer. Thus, in the case of a corporate employer having branch offices, the branch manager or other representative may actually, as a matter of internal administration, withhold the tax or prepare the statements required under the law. Nevertheless, the legal responsibility for withholding, paying, and returning the tax and furnishing such statements rests with the corporate employer. acd An employer may be an individual, a corporation, a partnership, a trust, an estate, a joint-stock company, an association, or a syndicate, group, pool, joint venture, or other unincorporated organization, group or entity. A trust or estate, rather than the fiduciary acting for or on behalf of the trust or estate, is generally the employer. The term "employer" embraces not only individuals and organizations engaged in trade or business, but organizations exempt from income tax, such as charitable and religious organizations, clubs, social organizations and societies, as well as the Government of the Philippines, including its agencies, instrumentalities, and political subdivisions. "Sec. 91. Income tax collected at source . (a) Requirement of withholding. - Every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with regulations to be prepared by the Minister of Finance. . . . ." Requirement of withholding . Every employer or any person who pays or controls the payment of compensation to an employee, whether resident citizen or alien, non-resident citizen, or non-resident alien engaged in trade or business in the Philippines, must withhold from such compensation paid, an amount computed in accordance with these regulations. I. Withholding of tax on compensation paid to resident employees . (a) In general, an employer making payment of compensation shall deduct and withhold upon such compensation a tax determined in accordance with the prescribed tables. Legend of status and amount of exemptions 1) Zero (0.0) exemption for working wife with employed husband, employee with multiple employers which refers to second, third, etc. employers; employee who fails to file an exemption certificate; and non-resident alien employee whose country does not allow exemption, to a citizen of the Philippines. 2) S (3.0) for single or married but legally separated individual. 3) H/F (4.5) single with qualified dependent parent, sister or brother, legitimate, recognized natural, or legally adopted child. 4) H/F1 (6.5) H/F2 (8.5), H/F3 (10.5), H/F4 (12.5), H/F5 (13.5), H/F6 (14.5), H/F7 (15.5) The numerals affixed to the status symbol HF represent the number of qualified legitimate, recognized natural or adopted children. 5) M (6.0) married and not legally separated. 6) M1 (8.0), M2 (10.0), M3 (12.0), M4 (14.0), M5 (15.0), M6 (16.0), & M7 (17.0) The numerals affixed to the status symbol M represent the number of qualified legitimate, recognized natural adopted children. Computation of withholding tax (b) When remuneration consists of regular and supplementary compensation. 1) Use the appropriate table for the payroll period monthly, semi-monthly, weekly or daily as the case may be. 2) Ascertain the status and total exemption of the employee to determine the line column to be used. 3) Determine the total monetary and non-monetary (cash value) compensation paid to an employee. casia 4) Segregate the regular compensation from the supplementary compensation except when withholding under the cumulative average wage. Regular compensation includes basic salary, fixed allowances for representation, transportation, housing, cost of living and other allowances or benefits (monetary and non-monetary) paid to an employee per payroll period . Supplementary compensation includes payments to an employee in addition to the regular compensation such as commission, overtime pay, taxable retirement pay, vacation and sick leave pay, profit-sharing, bonus, 13th month pay, etc. with or without regard to a payroll period. 5) Fix the compensation level. In fixing the compensation level, use only the total amount of the regular compensation. The compensation level is the amount indicated in the line and column corresponding to the status and exemption of the employee. The regular compensation must be over the amount of the compensation level but not to exceed the amount indicated in the next columns. 6) Add the tax predetermined on the compensation level indicated at the top of the column to the product, which is computed by multiplying by the rate also indicated in the same column, the excess of the regular and supplementary compensation over the compensation level. Example 1 . An employee who is married with three (3) qualified dependent children entitled to total personal and additional exemptions of P12,000.00, receives regular monthly compensation of P1,500.00. Computation : Using the monthly withholding tax table, the monthly withholding tax is computed by referring to line of 10 of column 3 which shows a tax of P2.08 on P1.416 plus three percent of the excess (P1,500 + P1,416 = P84). Total compensation P1,500.00 Compensation level (line 10, col. 3) 1,416.00 Excess P84.00 Tax on P1,416 P2.08 Tax on excess(P84 x 3%) 2.52 Monthly withholding tax P4.60 Example 2 . An employee who is married with two (2) qualified dependent children receives a total of P5,000.00 as regular salary and commission on the same date, broken down as follows: Regular monthly salary P3,000.00 Commissions 2,000.00 Total P5,000.00 Computation : 1. Using the monthly withholding tax tables, the withholding tax on the monthly regular wage (P3,000.00) is computed by referring to line 8 of column 5, which show a tax of P72.92 on P2,500 plus 11% of the excess. 2. Aggregate the monthly salary (P3,000.00) and commissions (P2,000.00) and determine the amount of compensation in excess of P2,500.00 (see No. 1). cdt Monthly salary P3,000.00 Commissions 2,000.00 ======= Total compensation P5,000.00 ======= Less: Compensation level (Col. 5, line 8) 2,500.00 _________ Excess P2,500.00 _________ 3. Tax on P2,500.00 P72.92 Tax on excess (P2,500.00 x 11%) 275.00 ________ Withholding tax P347.92 ====== Example 3 . An employee who is married with two qualified dependent children receives P3,000.00 as his monthly regular salary from which the tax of P127,92 has already been deducted. In addition, he was paid P2,000.00 as bonus on a date other than the date of payment of the regular salary. Computation : Multiply the amount of bonus by the rate of tax given for the amount in excess of the regular compensation (P3,000.00), which is 11%, as per line 8 of col. 5. Tax on bonus (P2,000.00 x 11%) P220.00 Tax on salary already deducted 127.92 Total withholding tax P347.92 c) When the regular compensation is exempt from withholding, or when the supplemental compensation is equal to or more than the regular compensation . If, in respect of a particular employee, the regular compensation is exempt from withholding because the amount thereof is below the compensation level, but supplementary compensation is paid during a calendar quarter or year, the employer shall determine the tax to be deducted and withheld on the sum of compensation to be paid on the basis of the cumulative average compensation as follows: Step 1 . Add the amount of regular and supplementary compensation to be paid to an employee for the payroll period to the sum of regular and supplementary compensation paid since the beginning of the current year. Step 2 . Divide the aggregate amount of compensation computed in Step 1 by the number of payroll periods to which the amount relates. Step 3 . Compute the tax to be deducted and withheld on the cumulative average compensation determined in Step 2 in accordance with the appropriate table. Step 4 . Multiply the tax computed in Step 3 by the number of payroll periods to which it relates. casia Step 5 . Determine the excess, if any, of the amount of tax computed in Step 4 over the total amount of tax already deducted and withheld from the beginning payroll period to the last payroll period. The excess as computed shall be deducted and withheld from the compensation to be paid for the current or last payroll period. Example 4 . An employee, married with two (2) dependents, on a monthly basis received the following: No. of Payroll Regular Supplemental Total Periods Month Wage Wage Wage 1 January P1,000 P2,000 P3,000 2 February 1,000 4,000 5,000 3 March 1,000 4,000 5,000 Step 1. For January P3,000 + 0 = P3,000 For February P5,000 + 3,000 = P8,000 For March P5,000 + 8,000 = P13,000 Step 2. For January P3,000 + 1 = P3,000 For February P8,000 + 2 = P4,000 For March P13,000 + 3 = P4,333 Step 3. For January Tax on P2,500 (Col. 5, line 8) = P72.92 Tax on excess (P500 x 11%) = 55.00 Tax on P3,000 = P127.92 ====== For February Tax on P2,500 (Col. 5, line 8) = P72.92 Tax on excess (P1,500 x 11%) = 165.00 Tax on P4,000 = P237.92 ====== For March Tax on P4,166 (Col. 6, line 8) = P256.25 Tax on excess (P167 x 15%) = 25.05 Tax on P4,333 = P281.30 Step 4. For January P127.92 x 1 = P127.92 For February P237.92 x 2 = P475.84 For March P281.30 x 3 = P843.90 Step 5. For January P127.92 - 0 = P127.92 For February P475.84 - P127.92 = P347.92 For March P843.90 - P475.84 = P368.06 d) When the employer-employee relationship is terminated . If, in respect of a particular employee, the employer-employee relationship is terminated before the last payroll period, the tax to be deducted and withheld shall be computed on the average compensation for the payroll periods that have elapsed as follows: Step 1. Add the total regular and supplementary compensation from the beginning to the termination of the employer-employee relationship. Step 2. Divide the aggregate compensation computed in Step 1 by the number of payroll periods in a calendar year. Step 3. Compute the tax to be deducted and withheld on the average compensation determined in Step 2 in accordance with the appropriate table. Step 4. Multiply the tax computed in Step 3 by the number of payroll periods in a calendar year. Step 5. Determine the excess, if any, of the amount of tax computed in Step 4 over the total amount of tax already deducted and withheld from the beginning payroll period to the last payroll period. The excess as computed shall be deducted and withheld from the compensation (final payment) to be paid. cdt Example 5 . An employee, married with four (4) qualified dependent children receives P5,000 a month for six months from which the corresponding withholding tax of P331.20 a month was deducted. At the end of the 6th month, his employment was terminated and he received a taxable retirement pay of P100,000. Step 1. P100,000 + (P5,000 x 6) = P 130,000.00 Step 2. P130,000 + 12 = P 10,833.00 Step 3. Tax on P9,(Col. 8, line 13) = P 1,139.58 Tax on excess (P1,333 x 24) = P319.92 = P 1,459.50 Step 4. - P1,459.50 x 12 = P 17,514.00 Step 5. - Less: Tax withheld on P5,000 (P331.20 x 6) = P 1,987.20 Tax on Retirement pay = P 15,526.80 ========== e. Withholding of tax on annualized compensation. The employer shall, whether he is computing the tax to be deducted and withheld under either one of the three methods (I(b) (c) and (d) thereof, determine the tax on the sum of the regular and supplementary compensation for the entire calendar year before the payment of the last compensation, by taking the following steps: Step 1. Add the amount of compensation (regular and supplementary) to be paid by the employee for the last payroll period to the total compensation paid since the beginning of the current calendar year. Step 2. Deduct from the aggregate amount of compensation computed in Step 1 the amount of exemptions of the employee. Step 3. Compute the amount of tax on the taxable compensation income of the employee for the entire calendar year arrived at in Step 2 in accordance with the following schedule: Not over P2,500 0% Over P2,500 but not over P5,000 1% Over P5,000 but not over P10,000 P 25 + 3% of excess over P5,000 Over P10,000 but not over P20,000 P 175 + 7% of excess over P10,000 Over P20,000 but not over P40,000 P 875 + 11% of excess over P20,000 Over P40,000 but not over P60,000 P 3,075 + 15% of excess over P40,000 Over P60,000 but not over P100,000 P 6,075 + 19% of excess over P60,000 Over P100,000 but not over P250,000 P 13,675 + 24% of excess over P100,000 Over P250,000 but not over P500,000 P 49,675 + 29% of excess over P250,000 Over P500,000 P 122,175 + 35% of excess over P500,000 Step 4. Determine the excess or deficiency, if any, of the cumulative tax already deducted and withheld since the beginning of the current calendar year over the tax computed in Step 3. The deficiency tax (when the amount of cumulative tax already deducted and withheld is lesser than the tax computed in Step 3) shall be deducted and withheld from the last payment of compensation for the calendar year. The excess (when the amount of cumulative tax already deducted and withheld is greater than the tax computed in Step 3) shall be credited or refunded to the employee. In turn, employer is entitled to deduct the amount refunded from his remittance for the last month or quarter not later than the 25th day of January of the following year. Example 6. Employees A and B, both married with (2) qualified dependents, on a monthly basis received the following: Total compensation Tax deducted & Total compensation received from Jan. withheld from Jan. to be received in Employee to November to November December A P30,000 P1,077.12 P6,000 B 25,000 729.20 2,500 Step 1. Employee A P6,000 + P30,000 = P36,000 Employee B P2,500 + P25,000 = P27,500 Step 2. Employee A P36,000 - P10,000 = P26,000 Employee B P27,500 - P10,000 = P17,500 Step 3. Employee A Tax on P20,000 = P875.00 Tax on Excess (P6,000 x 11%) = P660.00 Tax on P26,000 = P1,535.00 Employee B Tax on P10,000 = P175.00 Tax on excess (P7,500 x 7%) = P525.00 = P700.00 Step 4. Employee A P 1,535.00 - P1,077.12 = P457.88 ======= Tax to be deducted and withheld from the P6,000 = P457.88 Employee B P700.00 - P729.20 = P(29.20) Tax to be refunded to the employee = P29.20 ======== (f) If compensation is paid than daily, weekly, semi-monthly or monthly, compute the tax to be deducted and withheld as follows: (i) annually Refer to computation on annualized income. (ii) quarterly and semi-annually Divide the compensation by 3 or 6, respectively, to determine the average monthly compensation. Use the monthly withholding tax table to compute the tax, and the tax so computed shall be multiplied by 3 or 6, accordingly. casia (iii) bi-weekly Divide the compensation by 2 to determine the average weekly compensation. Use the weekly withholding tax table to compute the tax, and tax so computed shall be multiplied by 2. (iv) Miscellaneous If compensation is paid irregularly, or for a period other than those mentioned above, divide the compensation by the number of days from last payment to date of payment (excluding Sundays and holidays). Use the daily tax table. The tax so computed shall be multiplied by the number of days. (g) When husband and wife are employed with separate employers, or an employee has multiple employers, etc. 1) Either employed husband or wife may request in writing his or her employer to withhold an additional amount of tax representing the excess of income tax computed on their consolidated compensation income of the preceding taxable year over the sum of the tax currently being withheld by their respective employers. The request shall be accomplished in triplicate and filed with the employer: original, for employers requested to make additional withholdings; duplicate, to be attached by the employer to the BIR Form W-1 for the quarter the additional tax withheld is remitted; and triplicate, for file of the requesting employee. The additional amount of tax requested to be withheld shall be specifically stated in the request without the necessity of indicating the basis of the computation. "Example 1. H and W, married with two qualified dependents are employed with separate employers. They receive monthly compensation of P3,000 and P2,000 on which the amounts of P127.92 and P109.66 are currently being withheld by their respective employers. The income tax due on their joint return of last year is P3,600.00. "Computation. "P3,600 + 12 = P300.00 Less: current w.t. (P127.92 + P109.66) 237.58 Additional w.t. = P62.48 ====== "2) The employee with multiple employers may also request his main employer (employer from whom he receives his biggest compensation) in writing in the same manner and form as in the case of husband and wife with different employers under subparagraph (1) hereof, to withhold the additional amount of tax representing the excess of the income tax on his income of the preceding taxable year over the sum of tax currently being withheld from him by all his employers. "EXAMPLE. "Employee E, married with two qualified dependents is employed by employers A, B & C. A is his main employer. The tax due on his consolidated compensation income in the preceding taxable year is P12,000. Presently, his compensation income and withholding taxes per month and per employer are as follows: Employer Income Withholding Tax A P5,000 P381.35 B 3,000 219.66 C 2,000 109.66 P10,000 P710.67 Computation. P12,000 - 12 = P1,000.00 Less: current w.t. from all employers (P219.66 + P109.66) 710.00 Additional w.t. P289.33" "(3) In like manner, any other employee may request his employer to deduct and withhold from his compensation an amount of tax in addition to the tax determined in accordance with the prescribed tax tables." "In all these instances in paragraphs 1, 2, and 3, the employer shall, for the requesting employee, no longer reconcile the tax required to be withheld and the tax withheld in the year-end adjustment. It shall consider the additional tax requested to be withheld as part of the tax required to be withheld." (As amended by section 3 of Revenue Regulations No. 9-83). II. Withholding of tax on compensation of a citizen for services performed outside the Philippines. a. The withholding of creditable income tax is prescribed on compensation received for services performed outside of the Philippines by a citizen irrespective of the number of days of such service during the calendar year. This requirement does not in any way determine the status of the income recipient as to whether he is a non-resident citizen or not. b. Every employer or person having the control, receipt, custody, disposal, or payment of such compensation shall deduct and withhold tax in accordance with the following: (1) If the compensation is paid by a resident employer, the basis of computation shall be the sum of the basic compensation and guaranteed payments stipulated in the contract of employment, whether totally or partially paid within or without the Philippines. i) Determine the compensation to be paid to an employee for the entire calendar year . cd i ii) Deduct fifteen per centum (15%) from the amount of compensation determined in Step 1 if the income of the citizen is subject to foreign income tax; if not, proceed to Step 3. iii) Deduct the amount of exemptions to which the employee is entitled ($2,000 for single or married but legally separated, and $4,000 for married or head of the family) from the difference of Step 1 and Step 2. iv) Compute the estimated withholding tax for the entire calendar year based on the adjusted compensation income as computed in Step 3, using the following schedules: Not over $6,000 1% Over $6,000 but not over $20,000 $60 + 2% of excess of $6,000 Over $20,000 $340 + 3% of excess of $20,000 v) Divide the amount of estimated withholding tax by the number of months for which compensation is paid during the year, and the quotient is the tax to be deducted and withheld per month. Example 1 Mr. X, a citizen who is married, has been employed by Razon International Stevedoring Corporation, a resident employer, to work in Malaysia (a country which imposes a tax on income of non-resident aliens) from April 1, 1982 to March 31, 1983. Under the contract of employment, Mr. X will receive; a) $1,000 as basic monthly salary b) 305 of basic monthly salary as guaranteed overtime pay c) $2,000 as vacation leave pay payable at the end of the contract For CY 1982 April 1, 1982 to December 31, 1982 Step 1: [$1,000/month + 30% ($1,000/month] x 9 mos. = 11,700 Step 2: $11,700 - 15% ($11,700) = $9,945 Step 3: $9,945 - $4,000 = $5,945 Step 4: 1% ($5,945) = $59.45 Step 5: $59.45 9 months = $6.61/month For CY 1983 January 1, 1982 to March 31, 1983 Step 1: [($1,000/month + 30% ($1,000/month) x 3 mos.] + $2,000 = $5,900 Step 2: $5,900 - 15% ($5,900) = $5,015 Step 3: $5,015 - $4,000 = $1,015. Step 4: 1% ($1,015) = $10.15 Step 5: $10.15 3 months = $3.38/month Example 2 Mr. X, a citizen who is single, has been employed by Construction Development Corporation, a resident employer, to work in Saudi Arabia (a country which does not impose a tax on income of non-resident aliens) from January 1, 1982 to December 31, 1983. Under the contract of employment, Mr. X will receive $1,500 a month as gross compensation. acd Computation of withholding tax CY 1983 - January 1, 1983 to December 31, 1983 Step 1: $1,500/month x 12 months = $18,000 Step 2: Disregard Step 2 because there is no foreign tax. Step 3: $18,000 - $2,000 = $16,000 Step 4: $60 + 2% ($16,000) = $260 Step 5: $260 12 months = $21.67/month (b) 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 the agent. Compute the estimated withholding tax based on each payment. Not over $500 1% Over $500 but not over $1,667 $5 plus 2% of excess amount over 500 Over $1,667 $28.34 plus 3% of excess amount over $1,667 (c) The tax deducted and withheld in US dollars shall be converted to its peso value. If the compensation is paid in other foreign currency, convert it first to its US dollar value. (d) The rules herein prescribed for the remittance of taxes as well as the filing and furnishing of returns and statements, with respect to withholding of tax on compensation of resident citizens or aliens, shall be applicable to the withholding of tax prescribed on compensation of a citizen for services performed outside the Philippines. Sec. 91. Income tax collected at source . (d) Personal exemptions. (1) In general. 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. (B) Change of Status . In case of change of status of an employee as a result of which he would be entitled to a lesser amount of exemption, the employee shall, within ten days from such change, file with the employer a new withholding exemption certificate reflecting the change. If the change would entitle the employee to a greater amount of exemption, he may furnish the employer with a new withholding exemption certificate reflecting such change. cd (C) Use of certificate . The certificate filed hereunder shall be used by the employer in the determination of the amount of taxes to be withheld. (D) Failure 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 in subsection (a)." III. Withholding of income tax on compensation paid to alien employees of certain employers. a. Salaries, wages, annuities, compensations, remunerations and other emoluments, such as honoraria and allowances paid by area or regional headquarters of multinational corporations and offshore banking units to its alien employees are subject to withholding of income tax equal to fifteen per centum (15%) of such gross income. b. The responsibility of withholding, returning and paying the tax and furnishing the statements required re governed under these regulations. c. The withholding of final income tax equal to fifteen per centum (15%) of the salaries, wages, annuities, compensations, remunerations and other emoluments, such as honoraria and allowances paid by service contractors and sub-contractors engaged in petroleum operations in the Philippines to its alien employees is governed by Sec. 54 of the Tax Code. 8 . Right to claim withholding exemption . An employee receiving compensation shall on any day be entitled to withholding exemptions as provided in Section 23 of the Tax Code. In order to receive the benefit of such exemptions, the employee must file with his employer a withholding exemption certificate. The withholding exemption to which an employee is entitled depends upon his status as single, married, head of the family and the number of additional exceptions or dependents (i.e., legitimate, recognized natural, and adopted children). In general, each employee may claim the following withholding exemptions in the withholding exemption certificate with respect to compensation paid on or after January 1, 1982. a) if single Three Thousand Pesos (P3,000) b) if married Six Thousand Pesos (P6,000) c) if head of family Four Thousand Five Hundred pesos (P4,500) d) additional exemption for each qualified dependent child but limited to four (4) dependents, Two thousand Pesos (P2,000); for each child, who otherwise qualifies as dependent and who was born prior to 1973, One thousand Pesos (P1,000). e) Beginning 1983, if the gross compensation income of an employee, including that of his/her employed spouse does not exceed Twenty Thousand Pesos (P20,000), he is further entitled to a SPECIAL EXEMPTION OF FOUR THOUSAND PESOS (P4,000). In the determination as to whether an employee is entitled to the special exemption, the amount of gross exemption paid to him as computed in the year-end and adjustment required to be made in accordance with Section 22 hereof shall be the final basis, without prejudice to the immediate application of the supplementary withholding tax tables. For this purpose, there is no need for an employee to file an amended withholding exemption certificate. The employer shall automatically add-up the amount of Four Thousand Pesos (P4,000) to the basic amount of personal exemption of an employee as established by him in his withholding exemption certificate (W-4). (As amended by Section 3 of Revenue Regulations No. 6-83). 9 . Withholding exemptions certificates . Except as hereinafter provided, every employee receiving compensation shall furnish his employer a signed withholding exemption certificate, or Form W-4, relating to the number of withholding exemptions he claims, which shall in no event exceed the number to which he is entitled. The employer is required to request a withholding exemption certificate from each employee, but if the employee fails to furnish such certificate, such employee shall be considered as claiming no withholding exemptions. Forms of certificate (Form W-4) will be supplied employers upon request from the Commissioner of Internal Revenue, Revenue District Officer or Collection Agent. In case the prescribed forms are not available for any reason, employers shall prepare and use forms substantially identical to the prescribed form and of the same size. The duplicate copies of the certificates must be retained by the employer as supporting record of the withholding exemption allowed. A withholding exemption certificate shall continue in effect with respect to the employee until another such certificate takes effect. The basis of determining the amount of the tax to be withheld by the employer is the exemption certificate filed by the employee. If no withholding exemption certificate is filed, the employer shall determine the tax to be withheld on the basis of the zero exemption. (a) Employee . Every individual employee as of January 1, 19872, must accomplish the Employer's Withholding Exemption Certificate in quadruplicate, and file the certificate with his employer not later than February 1, 1982; new employee, within five (5) days from the date of commencement of employment; and an employee with an increase or decrease of exemptions in a taxable year, within ten days after such change. casia The following shall be clearly indicated; (i) if the spouse is unemployed or employed, (ii) entitled or not entitled to exemptions, and (iii), names, dates of birth and relationships to dependents. The husband as head of the family is the proper claimant of exemption, and the employed wife is not entitled to any exemption (zero exemption). However, the employed wife may claim the exemptions if the husband is unemployed, or engaged in business or is a non-resident citizen deriving income from outside the Philippines, and such fact is indicated on the certificate. The wife may also claim the full exemption if the employed husband will waive his right to the exemptions in his sworn statement to be attached to his exemption certificate and that of his employed wife. An employee with multiple employers shall file the certificate with his main employer (the employer from whom the employee receives the highest compensation) and a separate certificate with his 2nd and or 3rd employer, etc. The employed husband and wife shall each file separate certificate with their employers. The employee with multiple employers and the employed wife shall both indicate on their separate exemption certificates to be filed with the second or third employers or employer of the wife that they are not entitled to any exemptions in which case the employer shall give effect to the exemption certificate filed with him and compute the tax under the zero exemption. The employee is liable to a fine of not more than P1,000 or imprisonment of not more than one (1) year or both, for willfully supplying false or fraudulent information or for willfully failing to supply information which would require an increase of tax to be withheld. (b) Employer . The employer with whom the employer exemption certificate is filed, must stamp the date of receipt on Employee's Exemption Certificate, and accomplish the Employer's Compensation Payment Certificate. The employer is required to transmit the original and duplicate copies of the Revenue District Officer in the city or municipality where it has its legal residence or place of business within thirty (30) days from February 1, 1982, on from date of receipt. The duplicate copy shall be retained while the 4th copy shall be given to the employee. The employer is liable to a fine of not more than P1,000 or an imprisonment of not more than one (1) year if it willfully accepts as a fact on true information the declaration given by the employee which would reduce the tax to be withheld. If the pursuit of the exemption certificate will result in a greater or lesser amount of tax to be withheld, the employer shall collect further the deficiency or refund the excess over the tax required to be withheld to the employee in the succeeding payroll period. The adjustment is required to be reflected in the quarterly return (W-1) for the quarter in which the collection or refund was made. 10 . Wages paid for payroll period of more than one year . If compensation is paid to an employee for a payroll period of more than one year, for the purpose of determining the amount of tax is required to be deducted and withheld in respect of such compensation, the amount of the tax shall be determined as if such period is an annual payroll period. 11 . Wages paid on behalf of two or more employers . If a payment of compensation is made to an employee by an employer through an agent, fiduciary, or other person who also has the control, receipt, custody, or disposal of, or pays the compensation payable by another employer to such employee, the amount of the tax required to be withheld on each compensation payment made through each agent, fiduciary, or person shall, whether the compensation is paid separately on behalf of each employer or paid in a lump sum on behalf of all such employers, be determined upon the aggregate amount of such compensation payment or payments in the same manner as if such aggregate amount had been paid by one employer. Hence, the tax shall be determined upon the aggregate amount of the compensation paid. In any such case, each employer shall be liable for the return and payment of a pro-rata portion of the tax so determined in the ratio which the amount contributed by the particular employer bears to the aggregate of such compensation. A fiduciary, agent, or other person acting for two or more employers may be authorized to withhold the tax under these regulations with respect to the wages of the employees of such employers. Such fiduciary, agent, or other person may also be authorized to make and file returns of the tax withheld at source on such compensation and to furnish the receipts required under these regulations. Application for authorization to perform such act should be addressed to the Commissioner of Internal Revenue. If such authority is granted by the Commissioner, all provisions of law (including penalties) and regulations prescribed in pursuance of law applicable in respect of an employer shall be applicable to such fiduciary, agent, or other person. However, the employer for whom such fiduciary, agent, or other person acts shall remain subject to all provisions of law (including penalties) and regulations prescribed in pursuance of law applicable in respect of employers. "Sec. 91 (e) Withholding on basis of average wages . The Commissioner of Internal Revenue may, under regulations promulgated by the Minister of Finance, authorize employers (1) to estimate the wages which will be paid to an employee in any quarter of the calendar year, (2) to determine the amount to be deducted and withheld upon each payment of compensation to such employee during such quarter as if the appropriate average of the compensation so estimated constituted the actual wages paid, and (3) to 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 quarter without regard to this subsection." cdt 12 . Withholding on basis of average compensation . The employer may withhold the tax under Chapter XI, Title 2, of the tax Code on the basis of the employee's average estimated compensation, with necessary adjustments, for any quarter. Before using such method the employer must notify the Commissioner of Internal Revenue. "Sec. 91 (f) H usband and Wif e. When a husband and wife each are recipients of wages, whether from the same or different employers, taxes to be withheld shall be determined on the following basis: "(1) The husband shall be deemed the head of the family and proper claimant of the additional exemption in respect to any dependent children; "(2) Taxes shall be withheld from the wages of the wife in accordance with the schedule for zero exemption of the withholding tax table in section (a)." 13 . Husband and wife both recipients of compensation . For the purpose of the provisions of the withholding tax on compensation where both husband and wife are the recipients of compensation either from the same or different employers, in the determination of the tax to be withheld, the husband is deemed be the head of the family and is entitled to the additional exemptions for the dependent children. From the compensation of the wife, the tax is determined by using for her the zero exemption in the withholding tax table. "Sec. 91(g) Non-resident aliens . Wages paid to non-resident alien individuals engaged in trade or business in the Philippines shall be subject to the provisions of this chapter." "Sec. 92. Liability for tax . The employer shall be liable for the payment of the tax required to be deducted and withheld under this Chapter and shall not be liable to any person for the amount of any such payment." "Sec. 91 (b) Tax 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 penalties or additions to the tax otherwise applicable in respect of such failure to deduct and withhold." 14 . Liability for the Tax . The employer is required to collect the tax by deducting and withholding the amount thereof from the employee's compensation as when paid, either actually or constructively. An employer is required to deduct and withhold the tax notwithstanding that the compensation is paid in something other than money (for example compensation paid in stocks or bonds) and to pay the tax to the collecting officer. If the compensation is paid in property other than money, the employer should make necessary arrangements to ensure that the amount of the tax required to be withheld is available for payment to the collecting officer. Every person required to deduct and withhold the tax from the compensation of an employee is liable for the payment of such tax whether or not collected from the employee. If, for example, the employer deducts less than the correct amount of tax, or if he fails to deduct any part of the tax, he is nevertheless liable for the correct amount of the tax. However, if the employer in violation of the provisions of Chapter XI, Title II of the Tax Code fails to deduct and withhold and thereafter the employee pays the tax, it shall no longer be collected from the employer. Such payment does not, however, operate to relieve the employer from liability for penalties or additions to the tax for failure to deduct and withhold within the time prescribed by law or regulations. The employer will not be relieved of his liability for payment of the tax required to be withheld unless he can show that the tax has been paid by the employee. The amount of any tax withheld collected by the employer is a special fund in trust for the Government of the Philippines. When the employer or other person required to deduct and withhold the tax under this Chapter XI, Title II of the Tax Code has withheld and paid such tax to the Commissioner of Internal Revenue or to any authorized collecting officer, then such employer or person shall be relieved of any liability to any person. "Sec. 91 (c) Refunds or credits . (1) Employer Where 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. "Sec. (2) Employees . 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 the main provisions of this Title. Refunds and credits in cases of excessive withholding shall be granted under rules and regulations promulgated by the Minister of Finance. "Any excess of the taxes withheld over the tax due from the taxpayer shall be returned or credited within three months from the fifteenth day of April. Refunds or credits Made after such time shall earn interest at the rate of six per centum (6%) per annum starting after the lapse of the three month period to the date of the refund or credit is made." casia 15 . Nondeductibility of tax and credit for tax withheld . The Tax deducted and withheld at source on compensation shall neither be allowed as a deduction from the employer's gross income nor from the recipient's gross compensation income. The entire amount of the compensation from which the tax is withheld shall be included in gross income in the return required to be made by the recipient of the tax income without deduction for such tax. The tax withheld at source, however, is allowable as a recipient of the income. Any excess of the tax withheld at source, over the tax ascertained to be due on the income tax return upon office audit in the Bureau of Internal Revenue shall be refunded or credited at his option, to the recipient of the income. Such refund on credit shall be without prejudice to whatever adjustments may be proper after field investigation or upon information relative to the taxpayer's income tax liability under the main provisions of Title II. If the tax has actually been withheld at source, credit or refund shall be made to the recipient of the income even though such tax has not been paid over to the Government by the employer. For the purpose of the credit, the recipient of the income is the person subject to tax imposed under the main provisions of Title II upon compensation from which the tax was withheld. "Sec. 93. Return and payment to the Government of taxes withheld. Taxes deducted and withheld hereunder by the employer on wages of employees shall be covered by a return and paid to the collection agent of the city or municipality in which the employer has the legal residence or principal place of business, or, in case the employer is a corporation, in which the principal office is located. The return shall be filed and the payment made within twenty-five days from the close of each calendar quarter. The taxes deducted and withheld by employers shall be held in special fund in trust for the Government until the same are paid to the said collecting officers. The Commissioner of Internal Revenue may, with the approval of the Minister of Finance, require 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." "Sec. 94. 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 wages shall be made by the officer or employee having control of the payment of such wages, or by any officer or employee duly designated for that purpose." 16 . Return and payment of income tax withheld on compensation . Every person required under the provisions of Chapter XI, Title II, to deduct and withhold the tax on compensation shall make a return and pay such tax on or before the 25th day of the month following the close of each calendar quarter ending March 31, June 30, September 30, and December 31. Such return is to be made on Form W-1 (Return of Income Tax Withheld on Compensation) and must be filed with the Commissioner of Internal Revenue or Revenue District Officer, or the Collection Agent or any authorized officer of the city or municipality in which is located the principal place of business or office of the employer or in which is located his legal residence. Every person required to withhold and pay any tax under Chapter XI, Title II, shall keep such records as will indicate the names and addresses of the persons employed during the year payments to whom are subject to withholding tax, the periods of employment, and the amounts and dates of payment to such persons. No specific form for such records has been prescribed. Such records shall be kept available at all times for inspection by internal revenue officers. The return must be signed by the employer or other person required to withhold and pay the tax and shall contain or be verified by a written declaration that is made under the penalties of perjury. If the person required to withhold and pay the tax under Chapter II, Title II, is a corporation, the return shall be made in the name of the corporation and shall be signed and verified by the president, vice-president, or authorized officer. With the respect to any tax required to be withheld under Chapter II, Title II by a fiduciary, the return shall be made in the name of the individual, estate, or trust for which such fiduciary acts, and shall be signed and verified by such fiduciary. In the case of two or more joint fiduciaries the return shall be signed and verified by one of such fiduciaries. If the government of the Philippines, its political subdivision or any agency or instrumentality, as well as government-owned or controlled corporation, is the employer, the return 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 that purpose. Except in the case of quarterly adjustments, as explained elsewhere in these regulations, a return on Form W-1 may not be made for more than one calendar quarter of the year nor may a portion of one calendar quarter be included with a portion of another calendar quarter in a single return on Form W-1 even though the entire period does not exceed three months. SECTION 17 . Final returns . The last return of Form W-1 for any employer required to withhold and pay any tax, who during the calendar year either goes out of business or otherwise ceases to pay compensation, shall be marked "final return" by such employer. Such final return shall be filed with the Office of the Commissioner of Internal Revenue or Revenue District Officer or Collection Agent of the city or municipality in which the legal residence or place of business of the employer is located within 25 days after the date on which the final payment of compensation is made for services performed for such employer, and shall plainly show the period covered and also the date of the last payment of compensation. There shall be executed as part of each final return a statement giving the address at which the records required by this section, will be kept, the name of the person keeping such records, and, if the business has been sold or otherwise transferred to another person, the name and address of such person and the date on which such sale or other transfer took effect. If no such date or transfer occurred or the employer does not know the name of the person to whom the business was sold or transferred, that fact should be included in the statement. An employer who has only temporarily ceased to pay compensation, including an employer engaged in seasonal activities, shall continue to file returns, but shall enter on the face of any return on which no tax is required to be reported a statement showing the date of the last payment of compensation and the date when he expects to resume paying compensation. SECTION 18 . Use of prescribed forms . Copies of the prescribed forms will so far as possible be regularly made available to employers in Revenue District Offices and offices of collection agents. An employer will not be excused from making the return, however, by the fact that no return form has been furnished to him. Employers not supplied with the proper forms should make application therefor to the Commissioner of Internal Revenue in ample time to have their returns prepared, verified, and filed with the Commissioner of Internal Revenue or Revenue District Officer or Collection Agent of the city or municipality in which his legal residence or place of business is located on or before the due date. If the prescribed form is not available, a statement made by the employer disclosing the amount of taxes due may be accepted as a tentative return. If filed within the prescribed time the statement so made will relieve the employer from liability for the addition to tax imposed for the delinquent filing of the return under this supplement, provided that without unnecessary delay such tentative return is supplemented by a return made on the proper form. 19 . Requirement for monthly remittance of taxes withheld in the amount of P500 or more It shall be the duty or every employer who withheld taxes of P500 or more during the month to pay within ten (10) days after the close of the calendar month either to the collection agent or authorized municipal treasurer or Commissioner of Internal Revenue all funds withheld as taxes during the calendar month. On or before the 25th day of the month following the close of each quarter of each calendar year, every employer shall make a return on Form W-1, in duplicate, to the Commissioner of Internal Revenue or to the Revenue District Officer, Collection Agent or authorized municipal treasurer in which the legal residence or place of business of the employer is located, covering the aggregate amount of taxes withheld during the quarter, and present as evidence of payment for the taxes shown thereon, the confirmation receipt issued by the authorized agent bank of the Central Bank in places where payment thru banks is prescribed, or the revenue official receipt issued by the collection agent or authorized municipal treasurer of the city or municipality; provided, however, that taxes withheld by the employer during the last month of the quarter shall be remitted to the Commissioner of Internal Revenue or the Collection agent or authorized municipal treasurer together with the quarterly return (W-1), i.e., not later than the 25th day from the close of the quarter. For the purpose of the monthly remittance, the employer shall accomplish in duplicate the Monthly Statement of Income Tax Withheld on Compensation (BIR Form W1-A) and file with the Revenue District Officer or collection agent or authorized treasurer of the municipality where the employer's legal residence or principal place of business is located. "Sec. 95. Statements and returns . (a) Requirements . Every employer required to deduct and withhold a tax in respect of the wages of an employee shall furnish to each such employee in respect of his employment during the calendar year, on or before January thirty-first of the succeeding year, or, if his employment is terminated before the close of such calendar year, on the day of which the last payment of wages is made, a written statement showing the wages paid by the employer to such employees during the calendar year, and the amount of the 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 wages shall be furnished at such other times, shall contain such other information, and shall be in such form as the Minister of Finance may, by regulations, prescribe. "(b) Returns . Every employer required to deduct and withhold the taxes in respect of the wages of his employees shall, on or before January thirty-first of the succeeding year, submit to the Commissioner of Internal Revenue a return of the total amount withheld in the preceding paragraph. This return, if made and filed in accordance with regulations promulgated by the Minister of Finance, shall be sufficient compliance with the requirements of Section seventy-seven of this Title in respect of such wages. "(c) Extension of time . The Commissioner of Internal Revenue under such regulations as may be promulgated by the Minister of Finance, may grant to any employer a reasonable extension of time to furnish and submit the statements and returns required under this Section." 20 . Employer's Withholding Statement. (a) In general. Every employer or other person required to deduct and withhold the tax shall furnish every employee from whose compensation taxes have been withheld the Certificate of Income Tax Withheld on Compensation on or before January 31 of the succeeding calendar year, or if his employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made. The employer shall furnish each employee with the original and duplicate copies of BIR Form W-2 showing the name and address of the employer and employer's identification number; the name and address of the employee, taxpayer's account number, the sum of compensation paid and the amount of tax withheld during the calendar year. The employer's withholding statement in substantially like form and size as Form W-2 will be acceptable. The statement must be signed by the employer or other authorized officer and shall contain or be verified by a written declaration that it is made under the penalties of perjury. If the employer is the Government of the Philippines, its political subdivision, agency or instrumentality or government-owned or controlled corporation, the statement shall be signed by the duly designated officer or employee. Extension of time for furnishing statements to employee . An extension of time, not exceeding 30 days, within which to furnish the Employer's Withholding Statement (BIR Form W-2) required by Section 95(a) upon termination of employment is hereby granted to any employer with respect to any employee whose employment is terminated during the calendar year. In the case of intermittent or interrupted employment where there is reasonable expectation on the part of both employer and employee of further employment, there is no requirement that an employer's withholding statement be immediately furnished the employee; but when such expectation ceases to exist, the statement must be furnished within 30 days from the date of termination of employment. The extension mentioned under this section refers to extension of time for furnishing the employee the employer's withholding statement (BIR Form W-2) upon termination of employment. (c) Information return at source as to payments of one thousand eight hundred pesos . The making of Information returns as to payments of P1,800 or more required under Section 77 of the National Interval Revenue Code, as amended, will not be required with respect to any compensation from which the tax has been withheld. 21 . Every employer or other person required to deduct and withhold the tax shall, on or before January thirty-first of the succeeding year, file with either the collection agent or authorized municipal treasurer or revenue district officer or Commissioner of Internal Revenue the Annual Return of Income Tax Withheld on Compensation (BIR Form W-3), to be submitted with an alphabetical list of employees, both in duplicate copies. cd i The annual Return of Income Tax Withheld on Compensation must show the following: a) Withholding agent's registered names, address, identification number and taxpayer's account number; b) Remittances for the four quarters; and c) The confirmation receipt numbers or revenue official receipt numbers, dates and places of payment of the monthly or quarterly remittances. The alphabetical list of employees must show the following: a) Name and taxpayer's account number of employee; b) Gross compensation paid; c) Amount of exemptions; d) The required to be withheld computed in accordance with Section 21 of the Tax Code; e) Tax withheld; and f) Adjustments, if any If the withholding agent is an employer of resident citizens or aliens, and at the same, employer of citizens performing services abroad or acts as an agent of non-resident employers, the resident employees must be separately listed from citizens being paid in compensation for services rendered outside the Philippines. SECTION 22 . Quarterly adjustment . (a) In general . If, for any quarter of the calendar year, except the last quarter, more or less than the correct amount of the tax is withheld, or more or less than the correct amount of the tax is paid to the Commissioner of Internal Revenue, or to any authorized revenue officer, proper adjustment, without interest and surcharge, may be made in subsequent quarter of the same calendar year. No adjustment shall, however, be made under the provisions of this section in respect of an underpayment for any quarter after receipt from the Commissioner of Internal Revenue or any authorized revenue officer of notice and demand for payment thereof based upon assessment, but the amount shall be paid in accordance with such notice and demand; nor shall any adjustment under the provisions of this section be made in respect of an over-payment for any quarter after the filing of a claim for refund thereof. Every return on which an adjustment for a preceding quarter is reported must have securely attached as part thereof a statement explaining the adjustment, and designating the quarterly return period in which the error occurred. If an adjustment of an overcollection of tax which the employer has repaid to an employee is reported on a return, such statement shall include the fact that such tax was repaid to the employee. Year-end adjustment . On or before the end of the calendar year, but prior to the payment of the compensation for the last payroll period, the employee shall determine the sum of the gross compensation paid to each employee for the entire year, including the last compensation to be paid and compute for the amount of income tax on the annualized gross compensation income in accordance with Section 21 of the National Internal Revenue Code. 1. Tax withheld is more than the correct amount . If after computation, the total amount of tax deducted and withheld, including that amount for the last compensation, is more than the correct amount of tax on the annualized gross compensation, the overcollection shall be repaid to such employee from the remittable amount of taxes deducted and withheld from the last quarter of the calendar year. Upon repayment of the overcollected amount, the employee shall be required to give a written acknowledgment showing the date and amount repaid, which shall form part of the records of the employer. 2. Tax withheld is less than the correct amount . If the computation shows that the total amount of tax deducted and withheld, including that amount for the last compensation, is less than the amount of tax on the annualized gross computation, the amount of tax withheld shall be deducted and withheld from the compensation to be paid to the employee in the last payroll period and remitted with the amount deducted and withheld for the last quarter of the calendar year. 3. Underwithheld tax more than the amount of last compensation . If no tax has been withheld, or if the amount of tax underwithheld is more than the amount of the last compensation to be paid an employee, the employer shall be liable to pay the amount of tax which cannot be collected from the employer. The obligation of the employee to the employer arising from the payment by the latter of the amount of tax which cannot be collected from compensation of the employee under the preceding paragraph is a matter for settlement between the employee and the employer. 4. Exemption from interest and surcharge . If the amount of tax required to be withheld is less than the amount of tax actually withheld and remitted, and the difference is not more than ten per cent (10%) of the correct amount of tax required to be withheld, the employer shall be exempt from the ad valorem penalties of 25% surcharge and 20% interest as well as from the penal liability incident to the underwithholding and late remittance of tax. The employer shall be entitled to this exemption in cases of quarterly and year-end adjustments. "Any amount of the tax previously withheld from an employee, whose compensation income is no longer subject to the withholding under the supplementary tax tables, or any excess thereof over the tax required to be withheld under the supplementary tax tables shall be treated in accordance with paragraph (b) of this section." As amended by Revenue Regulations No. 6-83 dated July 19, 1983.) 23 . Registration and issuance of withholding agent's identification number. Every person who makes payment or expects to make payment of compensation in the amount of P3,000 or more a year (P250 monthly, P125 semi-monthly), to any single employee shall register by filing in duplicate with the Revenue District Officer of the city or municipality in which the legal residence or place of business is located, an application, for withholding agent's identification number (BIR Form W-5) not later than ten (10) days after becoming an employer. The withholding agent's identification number, which shall be given by the Revenue District Officer with whom it is filed, shall be indicated in all returns and statements required under these regulations. cd In addition to the requirement of registration, every ministry, agency, office, or instrumentality shall submit to the Bureau of Internal Revenue the name and position of the employee or officer charged with the duty to withhold and remit taxes, not later than sixty (60) days from the issuance of this Order, and any change of designation thereafter shall reported within ten (10) d ays from the date thereof (Executive Order No. 651, effective February 16, 1981). "Sec. 96. Surcharge for failure to render returns; filing false or fraudulent returns; delinquency in payment of taxes; and failure to deduct and withhold . The surcharges and penalties prescribed in Sections 72 and 73 of this Title in cases of failure to render returns and for filing false or fraudulent returns shall apply to returns required under Sections 93 and 94. "In case the taxes deducted and withheld by the employer are not paid within the time prescribed, there shall be added a surcharge of twenty-five per centum and interest at the rate of twenty per centum per annum from the time the same become due until paid. "If the employer, in violation of the provisions of Section 91 hereof, fails to deduct and withhold the tax required, he shall be liable to pay a surcharge of twenty-five per centum . However, if the failure is due to willful neglect or with intent to defraud the government, a surcharge of fifty per centum shall be imposed. Interest at the rate of twenty per centum per annum shall likewise be imposed from the time the taxes were required to be withheld until the date of assessment. "If the withholding agent is the government or any of its agencies, political subdivisions, or instrumentalities, or is a government-owned or controlled corporation, the employee or officer thereof responsible for the withholding and/or remittance of the tax shall be personally liable for the surcharge and interest imposed herein." "Sec. 97. P enaltie s. (a) Penalties for failure to file; for filing false or fraudulent returns or statements; failure to deduct and withhold; and failure to remit. Any person who fails to file a return or statement as required in this Chapter, or who renders a false or fraudulent return, or who fails to deduct and withhold or fails to remit to the Commissioner or Internal Revenue the amount withheld by such agent, shall upon conviction, for each act or omission, be fined not less than one thousand pesos nor more than two thousand pesos and imprisoned for not more than one year." "(b) Penalties in respect of withholding exemption certificates . Any individual required to supply information who willfully supplies false or fraudulent information, or who willfully fails to supply information there under which would require an increase in the tax to be withheld under Section ninety-one, shall, in lieu of any penalty otherwise provided, upon conviction be fined not more than one thousand pesos or imprisoned for not more than one year, or both. "The same penalty shall apply to an employer who willfully accepts as a fact or as true information which would reduce the tax to be withheld under Section ninety-one hereof. "(c) Penalties on corporate officers . The penalties prescribed in this Section shall, in the case of an employer which is a corporation, partnership, or association, be imposed on the president, manager, treasurer, or other person responsible for the particular act or omission; Sec. 98. Verification of returns, etc . (a) Power of Commissioner of Internal Revenue to require. The Commissioner of Internal Revenue, under regulations promulgated by the Minister of Finance, may require that any return, statement, or other document required to be filed under this Chapter, or under regulations promulgated by the Minister of Finance, shall contain or be verified by a written declaration that it is made under the penalties of perjury, and such declaration shall be in lieu of any oath otherwise required. "(b) Penalties . Every person who willfully makes and subscribes and return, statement, or other document which contains or is verified by a written declaration that it is made under the penalties of every material matter, shall be guilty of a felony, and, upon conviction, shall be subject to the penalties prescribed for perjury under the Revised Penal Code." acd "Sec. 324. Preservation of books of accounts, and other accounting books . All the books of accounts including the subsidiary books, and other accounting records, of corporations, partnerships, or persons shall be preserved by them for a period beginning from the last entry in each book until the last day prescribed by Section 318 within which the Commissioner is authorized to make an assessment. The said books and records shall be subject to examination and inspection only once in a taxable year by internal revenue officers, except in the following cases: "(a) . . . "(b) . . . "(c) Verification of compliance with withholding tax laws and regulations. "(d) . . . "(e) . . . "Sec. 330. Statutory offenses of officials and employees . (b) Withholding agents under the provisions of this Code or Regulations promulgated thereunder. Every officer or employee of the government of the Republic of the Philippines or any of its agencies and instrumentalities, its political subdivisions, as well as government-owned or controlled corporations who, under the provisions of this Code or regulations promulgated thereunder, is charged with the duty to deduct and withhold any internal revenue tax and to permit the same in accordance with the provisions of this Code and other laws is guilty of any delinquency hereinbelow specified shall be punished by a fine of not less than five thousand pesos (P5,000) and imprisonment of not less than one year nor more than two years. acd "1. Those who fail or cause the failure to deduct and withhold any internal revenue tax under any of the withholding tax laws and implementing regulations." "2. Those who fail or cause the failure to remit taxes deducted and withheld within the time prescribed by law and implementing regulations." "3. Those who fail or cause the failure to file return or statement within the time prescribed, or render or furnish a false or fraudulent return or statement required under the withholding tax laws or regulations." SECTION 24 . Penalties for false returns . Section 98(b) provides for penalties in the case of any person who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter. Such person shall be guilty of a felony, and upon conviction, shall be subject to the penalties prescribed for perjury under the provisions of the Revised Penal Code. 25 . Applicability; constructive receipt of compensation . The withholding tax on compensation shall apply to compensation paid on or after January 1, 1982, regardless of when such compensation was earned. Thus, if an employee is paid compensation on January 1, 1982 for services performed during the calendar year 1981 or any preceding year, the withholding provisions of Chapter 2 and these regulations shall apply. Compensation is constructively paid within the meaning of these regulations when it is credited to the account of or set apart for an employee so that it may be drawn upon him at any time although not then actually reduced to possession. To constitute payment in such a case, the compensation must be credited or set apart for the employee without any substantial limitation or restriction as to the time or manner of payment or condition upon which payment is to be made, and must be made available to him so that it may be drawn upon at any time, and its payment brought within his control and disposition. SECTION 26 . Repealing Clause . The provisions of Revenue Regulations V-8, 1-70, 9-75, 2-76, 2-79, 5-81, 10-81, 20-81 are hereby repealed. Revenue Regulations No. 1-82 and all rules and regulations or parts thereof inconsistent with the provisions of these regulations are amended accordingly. SECTION 27 . Effectivity . These regulations shall take effect immediately upon approval hereof. (SGD.) CESAR VIRATA Minister of Finance Recommending Approval: (SGD.) RUBEN B. ANCHETA Acting Commissioner REQUIREMENT Elements to be substantiated Factors to be proven Substantiation (a) Amount Amount of each separate Receipts for expenditures for transportation, lodging/meals. lodging, and meals. Tickets for public Permissible to aggregate transportation incidental expenses in Dairy or log for reasonable categories, such incidental expenses. as gasoline and oil, taxis daily meals for travellers, etc. (b) Time Dates of departure and return Lodging receipts. for each trip, and number of Tickets for public days attributable to business transportation activities. Diary or log. (c) Place Destination by name of city Letter/order from or other appropriate employer. designation. (d) Business Business reason for travel Letter/order from Purpose or nature of business benefit employer. derived or expected to be Contracts or other derived. written evidence of business transacted. SPECIAL ADDITIONAL PERSONAL EXEMPTIONS Revenue Regulations No. 6-83 implementing PD No. 1868 provides special additional personal exemptions to employed individuals whose gross compensation income in a taxable year does not exceed Twenty Thousand Pesos (P20,000.00.) casia SUPPLEMENTARY WITHHOLDING TAX TABLES. Section 7 of Revenue Regulations No. 6-82 is hereby supplemented with withholding tax tables reflecting the basic and special additional personal exemptions of employed individuals whose gross compensation income does not exceed; daily, Sixty Seven Pesos (P67.00); weekly, Three Hundred Eighty Five Pesos (P385.00); semi-monthly, Eight Hundred Thirty Four Pesos (P834.00); and monthly, One Thousand Six hundred Sixty Seven Pesos (P1,667.00), attached herewith. SUPPLEMENTARY WITHHOLDING TAX TABLE FOR SEMI-MONTHLY INCOME OF P834 OR LESS EXEMPTIONS P0.00 P0.00 P1.04 P7.29 + 0% + 1% + 3% + 7% STATUS ('OOOP) OVER OVER OVER OVER O 0.0 0 P104 P208 P416 S 7.0 0 P395 P500 708 HF 8.5 0 458 562 770 M 10.0 0 520 625 834 HF/1 10.5 0 541 645 NA M/1 12.0 0 604 708 NA HF/2 12.5 0 625 729 NA M/2 14.0 0 687 791 NA HF/3 14.5 0 708 812 NA M/3 16.0 0 770 NA NA HF/4 16.5 0 791 NA NA HF/5 17.5 0 834 NA NA M/4 18.0 0 834 NA NA HF/6 18.5 0 834 NA NA M/5 19.0 0 834 NA NA HF/7 19.5 0 834 NA NA M/6 20.0 0 834 NA NA M/7 21.0 0 834 NA NA * If the semi-monthly income is over P834.00, use the main withholding tax tables. 1 The government is now undertaking the possibility of granting additional personal exemptions to low and fixed income earners to enable them to catch up with rising cost of living. cd SUPPLEMENTARY WITHHOLDING TAX TABLE FOR MONTHLY INCOME OF P1,667 OR LESS EXEMPTIONS P0.00 P0.00 P2.08 P14.58 + 0% + 1% + 3% + 7% STATUS ('OOOP) OVER OVER OVER OVER O 0.0 0 208 P416 P833 S 7.0 0 P791 P1,000 1,416 HF 8.5 0 916 1,125 1,541 M 10.0 0 1,041 1,250 1,667 HF/1 10.5 0 1,083 1,291 NA M/1 12.0 0 1,208 1,416 NA HF/2 12.5 0 1,250 1,458 NA M/2 14.0 0 1,375 1,583 NA HF/3 14.5 0 1,416 1,625 NA M/3 16.0 0 1,541 NA NA HF/4 16.5 0 1,583 NA NA HF/5 17.5 0 1,667 NA NA M/4 18.0 0 1,667 NA NA HF/6 18.5 0 1,667 NA NA M/5 19.0 0 1,667 NA NA HF/7 19.5 0 1,667 NA NA M/6 20.0 0 1,667 NA NA M/7 21.0 0 1,667 NA NA * If the monthly gross compensation is over P1,667, use the main withholding tax tables. SUPPLEMENTARY WITHHOLDING TAX TABLE FOR DAILY INCOME OF P67 OR LESS EXEMPTIONS P0.00 P0.00 P0.08 P0.58 + 1% + 1% + 3% + 7% STATUS ('OOOP) OVER OVER OVER OVER O 0.0 0 P8 P16 P33 S 7.0 0 P31 P39 P56 HF 8.5 0 36 44 61 M 10.0 0 41 49 67 HF/1 10.5 0 42 51 NA M/1 12.0 0 47 56 NA HF/2 12.5 0 49 57 NA M/2 14.0 0 54 62 NA HF/3 14.5 0 56 64 NA M/3 16.0 0 61 NA NA HF/4 16.5 0 62 NA NA HF/5 17.5 0 67 NA NA M/4 18.0 0 67 NA NA HF/6 18.5 0 67 NA NA M/5 19.0 0 67 NA NA HF/7 19.5 0 67 NA NA M/6 20.0 0 67 NA NA M/7 21.0 0 67 NA NA * If the daily gross compensation income is over P67.00, use the main withholding tax tables. casia SUPPLEMENTARY WITHHOLDING TAX TABLE FOR WEEKLY INCOME OF P385 OR LESS EXEMPTIONS P0.00 P0.00 P0.48 P3.37 + 0% + 1% + 3% + 7% STATUS ('OOOP) OVER OVER OVER OVER O 0.0 0 P48 P16 P192 S 7.0 0 P182 P230 P326 HF 8.5 0 211 259 355 M 10.5 0 240 288 NA HF/1 10.5 0 250 298 NA M/1 12.0 0 278 326 NA HF/2 12.5 0 288 336 NA M/2 14.0 0 317 365 NA HF/3 14.5 0 326 375 NA M/3 16.0 0 355 NA NA HF/4 16.5 0 365 NA NA HF/5 17.5 0 385 NA NA M/4 18.0 0 385 NA NA HF/6 18.5 0 385 NA NA M/5 19.0 0 385 NA NA HF/7 19.5 0 385 NA NA M/6 20.0 0 385 NA NA M/7 21.0 0 385 NA NA * If the weekly income is over P385.00, use the main withholding tax tables. EXAMPLE = A, B, and C, all married each with four (4) qualified dependents, received the following compensation and business incomes for CY 1983 respectively. A B C Compensation Income P20,000 10,000 P12,000 Business Income P16,000 10,000 10,000 ___ ___ ___ TOTAL INCOME P30,000 P26,000 P22,000 ====== ====== ====== Analysis of Exemptions of A, B, and C Basic Personal Exemption (married) P6,000 Add: Additional Exemption (4 dependents) 8,000 Total Basic Personal and Add'l. Exemption P14,000 Add: Special Personal Exemption (Compensation Income does not exceed P20,000) P4,000 ___ TOTAL EXEMPTIONS P18,000 ======= Computation of Taxable Income of A Compensation of Income P20,000 Less: Exemptions 18,000 ___ TAXABLE COMPENSATION INCOME P2,000 TAXABLE BUSINESS INCOME P10,000 Computation of Taxable Income of B Compensation Income P16,000 Less: Exemptions 18,000 Excess of Special Additional Personal Exemption Over Compensation Income 1 (P2,000) TAXABLE COMPENSATION INCOME P0 TAXABLE BUSINESS INCOME P10,000 Computation of Taxable Income of C Compensation Income P10,000 Less: Exemptions 18,000 Excess of Basic and Special Exemption Over Compensation Income (Basic-P2,000 and Special-P4,000) (P6,000) TAXABLE COMPENSATION INCOME P0 Business Income P10,000 Less: Excess of basic & additional exemptions over compensation income 2 P2,000 TAXABLE BUSINESS INCOME P8,000 ======= 1 Excess of Special Additional Exemption of P2,000 cannot be claimed. 2 Only the excess of Basic Personal and Additional Exemption can be claimed from other income. WITHHOLDING TAX TABLE DAILY 1 2 3 4 5 6 7 8 9 10 P0.00 P0.00 P0.00 P0.00 P00.0 P00.0 P00.0 P0.00 P00.0 P00.0 Exemptions + 0% + 1% + 3% + 7% + 11% + 15% + 19 + 24% + 29 + 35% Status ('OOOP) Over Over Over Over Over Over Over Over Over Over Zero 0.0 P0 P8 P16 P33 P66 P132 P198 P330 P825 P1650 1 S 3.0 0 18 26 42 75 141 207 339 834 1660 2 HF 4.5 0 23 31 47 80 146 212 344 839 1665 3 M 6.0 0 28 36 52 85 151 217 349 844 1669 4 HF/1 6.5 0 30 37 54 87 153 219 351 846 1671 5 M/1 8.0 0 35 42 59 92 158 224 356 851 1676 6 HF/2 8.5 0 36 44 61 94 160 226 358 853 1678 7 M/2 10.0 0 41 49 66 99 165 231 363 858 1683 8 HF/3 10.5 0 43 51 67 100 166 232 364 859 1684 9 M/3 12.0 0 48 56 72 105 171 237 369 864 1689 10 HF/4 12.5 0 50 57 74 107 173 239 371 866 1691 11 HF/5 13.5 0 53 61 77 110 176 242 374 869 1694 12 M/4 14.0 0 54 62 79 112 178 244 376 871 1696 13 HF/6 14.5 0 56 64 80 113 179 245 377 872 1698 14 M/5 15.0 0 58 66 82 115 181 247 379 874 1699 15 HF/7 15.5 0 59 67 84 117 183 248 381 876 1701 16 M/6 16.0 0 61 69 85 118 184 250 382 877 1702 17 M/7 17.0 0 64 72 89 122 188 254 386 881 1706 18 Legend: M Married S Single 1 .. 7 Number of Dependents HF Single but Head of Family WITHHOLDING TAX TABLE WEEKLY 1 2 3 4 5 6 7 8 9 10 P0.00 P0.00 P0.48 P3.37 P16.83 P59.13 P116.83 P262.98 P955.29 P2349.52 Exemptions +0% +1% +3% +7% +11% +15% +19 +24% +29 +35% Status ('OOOP) Over Over Over Over Over Over Over Over Over Over Zero 0.0 P0 P48 P96 P192 P384 P769 P1153 P1923 P4807 P9615 1 S 3.0 0 106 153 250 442 826 1211 1980 4865 9673 2 HF 4.5 0 135 182 278 471 855 1240 2009 4894 9701 3 M 6.0 0 163 211 307 500 884 1269 2038 4923 9730 4 HF/1 6.5 0 173 221 317 509 894 1278 2048 4932 9740 5 M/1 8.0 0 202 250 346 538 923 1307 2076 4961 9769 6 HF/2 8.5 0 212 259 355 548 823 1307 2076 4971 9778 7 M/2 110.0 0 240 288 384 576 961 1346 2115 5000 9807 8 HF/3 10.5 0 250 298 394 586 971 1355 2125 5009 9817 9 M/3 12.0 0 279 326 423 615 1000 1384 2153 5038 9846 10 HF/4 12.5 0 288 336 432 625 1009 1394 2163 5048 9855 11 HF/5 13.5 0 308 355 451 644 1028 1413 2182 5067 9875 12 M/4 14.0 0 317 365 461 653 1038 1423 2192 5076 9884 13 HF/6 14.5 0 327 375 471 663 1048 1432 2201 5086 9884 14 M/5 15.0 0 337 384 480 673 1057 1442 2211 5096 9903 15 HF/7 15.5 0 346 394 490 682 1067 1451 2221 5105 9913 16 M/6 16.0 0 356 403 500 692 1076 1461 2230 5115 9923 17 M/7 17.0 0 375 423 519 711 1096 1480 2250 5134 9942 18 Legend: M Married S Single 1 .. 7 Number of Dependents HF Single but Head of Family WITHHOLDING TAX TABLE SEMI-MONTHLY 1 2 3 4 5 6 7 8 9 10 P0.00 P0.00 P1.04 P7.29 P36.46 P128.13 P253.13 P569.79 P2069.79 P5090.63 Exemptions +0% +1% +3% +7% +11% +15% +19 +24% +29 +35% Status ('OOOP) Over Over Over Over Over Over Over Over Over Over Zero 0.0 P0 P104 P208 P416 P833 P1666 P2500 P4166 P10416 P20833 1 S 3.0 0 229 333 541 958 1791 2625 4291 10541 20958 2 HF 4.5 0 292 395 604 1020 1854 2687 4354 10604 21020 3 M 6.0 0 354 458 666 1083 1916 2750 4416 10666 21083 4 HF/1 6.5 0 375 479 687 1104 1937 2770 4437 10687 21104 5 HF/2 8.0 0 438 562 770 1187 2020 2854 4520 10770 21187 6 M/1 8.5 0 458 541 750 1166 2000 2833 4500 10750 21166 7 M/2 10.0 0 521 625 833 1250 2083 2916 4583 10833 21250 8 HF/3 10.5 0 542 645 854 1270 2104 2937 4604 10854 21270 9 M/3 12.0 0 604 708 916 1333 2166 3000 4666 10916 21333 10 HF/4 12.5 0 625 729 937 1354 2187 3020 4687 10937 21354 11 HF/5 13.5 0 667 770 979 1395 2229 3062 4729 10979 21395 12 M/4 14.0 0 688 791 1000 1416 2250 3083 4750 11000 21416 13 HF/6 14.5 0 708 812 1020 1437 2270 3104 4770 11020 21437 14 M/5 15.0 0 729 833 1041 1458 2291 3125 4791 11041 21458 15 HF/7 15.5 0 750 854 1062 1479 2312 3145 4812 11062 21479 16 M/6 16.0 0 771 875 1083 1500 2333 3166 4833 11083 21500 17 M/7 17.0 0 813 916 1125 1541 2375 3208 4875 11125 21541 18 Legend: M Married S Single 1 .. 7 Number of Dependents HF Single but Head of Family WITHHOLDING TAX TABLE MONTHLY 1 2 3 4 5 6 7 8 9 10 P0.00 P0.00 P2.08 P14.58 P72.92 P256.25 P506.25 P1139.58 P4139.58 P10181.25 Exemptions +0% +1% +3% +7% +11% +15% +19 +24% +29 +35% Status ('OOOP) Over Over Over Over Over Over Over Over Over Over Zero 0.0 P0 P208 P416 P833 P1666 P3333 P5000 P8333 P20833 P41666 1 S 3.0 0 458 666 1083 1916 3583 5250 8583 21083 41916 2 HF 4.5 0 583 791 1208 2041 3708 5375 8708 21208 42041 3 M 6.0 0 708 916 1333 2166 3833 5500 8833 21333 42166 4 HF/1 6.5 0 750 958 1375 2208 3875 5541 8875 21375 42208 5 M/1 8.0 0 875 1083 1500 2333 4000 5666 9000 21500 42333 6 HF/2 8.5 0 917 1125 1541 2375 4041 5708 9041 21541 42375 7 M/2 10.0 0 1042 1250 1666 2500 4166 5833 9166 21666 42500 8 HF/3 10.5 0 1083 1291 1708 2541 4208 5875 9208 21708 42541 9 M/3 12.0 0 1208 1416 1833 2666 4333 6000 9333 21833 42666 10 HF/4 12.5 0 1250 1458 1875 2708 4375 6041 9375 21875 42708 11 HF/5 13.5 0 1333 1541 1958 2791 4458 6125 9458 21958 42791 12 M/4 14.0 0 1375 1583 2000 2833 4500 6166 9500 22000 42833 13 HF/6 14.5 0 1417 1625 2041 2875 4541 6208 9541 22041 42875 14 M/5 15.0 0 1458 1666 2083 2916 4583 6250 9583 22083 42916 15 HF/7 15.5 0 1500 1708 2125 2958 4625 6291 9625 22125 42958 16 M/6 16.0 0 1542 1750 2166 3000 4666 6333 9666 21266 43000 17 M/7 17.0 0 1625 1833 2250 3083 4750 6416 9750 22250 43083 18 Legend: M Married S Single 1 .. 7 Number of Dependents HF Single but Head of Family