Amending pertinent provisions of the Revenue Regulations 6-82, as amended, otherwise known as the Withholding Tax Regulations on Compensation

August 1, 1986 January 1, 1986 REVENUE REGULATIONS NO. 12-86 SUBJECT : A mending Pertinent Provisions of the Revenue Regulations 6-8 2, as Amended, Otherwise Known as the Withholding Tax Regulations on Compensation TO : All Internal Revenue Officers, Withholding Agents and Others Concerned SECTION 1 . Scope . Pursuant to Section 277 and 82 of the National Internal Revenue Code in relation to Executive Order No. 37 series of 1986, these regulations are hereby promulgated prescribing the collection at source of income tax on compensation income paid on or after January 1, 1986 under the Withholding Tax tables (ANNEX "A") which take into account the increase of personal exemption and the option of married individuals to compute separately their individual income tax based on their respective taxable income. SECTION 2 . Section 2 of the Revenue Regulations No. 6-82, as amended, is hereby further amended to read as follows: "Sec. 2. Definition of terms . As used herein, the following terms and phrases shall have the meaning hereunder indicated: 1. Taxable income on compensation . means gross compensation income as defined herein less the authorized deduction under Section 30(1) of the NIRC. 2. Gross compensation income . (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 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 directors 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 a 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 market 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 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 to the convenience of the employer, the value thereof need not be included as compensation subject to withholding. cd 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 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 constitutes a 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 the 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 other cause beyond the control of the said official or employee, such as retrenchment, redundancy and cessation 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. aisa dc Whether or not the separation is beyond the control of the said official or employee shall be determined on the basis of prevailing facts and circumstances. This shall be duly established through competent evidence to be submitted by the employer which should be attached in his monthly return for the period in which the amount was paid due to involuntary separation. 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) Social security benefits, retirement gratuities, pensions and other similar benefits received by resident or non-resident citizen of the Philippines or aliens who come to reside permanently in the Philippines from foreign government agencies and other institutions, private or public. (4) Payment of benefits 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) I n general . Fixed or variable transportation, representation and other allowances which are received by any officer or employee, in addition to the regular compensation fixed for his position or office is compensation subject to withholding. Amounts received by an employee, either as advance or reimbursement for transportation, representation and other bona-fide ordinary and necessary expenses incurred or reasonably expected to be incurred by the employee in the performance of his duties are not compensation subject to withholding. However, if the reimbursement exceeds the actual expenses, the excess if not returned to the employer, constitutes taxable income. Transportation and other reimbursed expenses must be identified either by making a separate payment or by specifically indicating the separate amounts where both compensation and expense allowances are combined in a single payment. (d) Vacation and sick leave allowances . Amounts received by an employee as "vacation allowances" or "sick leave credits" constitute compensation income. Thus, the salary of an employee on vacation, or on sick leave, paid notwithstanding his absence from work, constitutes taxable compensation income. (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 tax is considered to be part of the employee's compensation and is deemed to have been constructively 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 employer is engaged in trade or business within the Philippines. Any person paying compensation on behalf of such an employer which is 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 received by a citizen for services performed outside the Philippines for a domestic foreign corporation or partnership, or for a non-resident foreign corporation or partnership, or for a 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(II) of Revenue Regulations 6-82, as amended. 3. Head of family . Means an unmarried or legally separated man or woman with one or both parents, or with one or more brothers or sisters, or with one or more legitimate, recognized natural, or legally adopted children living and dependent upon him for their chief support, where such brothers or sisters or children are not more than twenty-one (21) years of age, unmarried and not gainfully employed or where such children, brothers, or sisters, regardless of age are incapable of self-support because of mental or physical defect. 4. Dependent . means a legitimate, recognized natural or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect. 3 . S ection 3 of Revenue Regulations 6-82, as amended, is hereby further amended to read as follows: "Sec. 3. Exemptions from withholding . The following income payments are excepted from the requirement of withholding: (a) Fees paid to a public official . Authorized fees paid to public officials such as notaries public, clerks of court, 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. (b) Remuneration paid for agricultural labor . (1) In general . Remuneration for services which constitute 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 soil; (ii) The raising, shearing, feeding, caring for, training, or management of livestock, bees, poultry, or wildlife; or acd (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 such 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 tenet 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 paragraph must be performed in the employ of the 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 the 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 services are performed: (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 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 farmer's cooperative organization or group in the handling, planting, drying, packing, packaging, processing, grading, storing or delivering to storage or to market or for 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." aisa dc 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 his employer 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 to the employee for services performed therein is not excepted. In general, services of a household nature in or about a private home include services rendered by cooks, maid, butlers, valets, laundresses, gardeners and chauffeurs. The remuneration paid for the services above enumerated is not within the exception if performed in or about rooming or lodging houses, boarding houses, clubs, hotels, hospitals, or commercial offices or establishments. Remuneration paid for services performed as a private secretary, even though performed in the employer's home, is 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 regular. The expression "not in the course of employers trade or business" includes labor that does not promote or does not 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 work is casual and is not in the course of A's trade or business, the remuneration paid for such services is excepted. cdt 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 is 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 or an international organization is excepted. The exception includes not only remuneration paid for services performed by ambassadors, ministers and other diplomatic officers and employees but also remuneration paid for services performed as a consular or other officer or employee of a foreign government or as a non-diplomatic representative of such government. However, compensation paid to Filipino civilian employees for services performed in military and naval bases and facilities of the United States within the Philippines which is subject to income tax is also subject to withholding tax. All such employees who are citizens or residents are required to file their income tax returns in compliance with Section 45 of the Tax Code. (f) 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 an interest thereon, the interest payments shall be included in gross income. cd (g) Amount received by insured as return of premium . The amount received by the insured as a return of 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. (h) Compensation for injuries or sickness . Amounts received, through Accidents or Health Insurance or under Workmen's Compensation Acts, as compensation for personal injuries or sickness, plus the amounts of any damages received whether by suit or agreement on account of such injuries or sickness. (i) Income except under treaty . Income of any kind, to the extent required by any treaty obligation binding upon the government of the Philippines. (j) Retirement benefits, pensions, gratuities, etc . 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 50 years of age at the time of his retirement: Provided, further , That the benefits granted under this paragraph 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 or 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 to be used for, or be diverted to, any purpose other than for the exclusive benefit of the said official or employees. (k) Payments made by a general professional partnership to a partner for services rendered." SECTION 4 . S ectio n 7 of Revenue Regulation 6-82, as amended, is hereby further amended to read as follows: "Sec. 7. Requirement of withholding . xxx xxx xxx 1. Withholding of tax compensation paid to resident employees . (a) In general, an employer making payment of compensation shall deduct and withhold from such compensation a tax determined in accordance with the prescribed new Withholding Tax Tables, Effective January 1, 1986 (ANNEX "A"). A. Legend of symbols used and the amount of exemptions: (1) The symbols used in the Withholding Tax Tables represent the following: (a) Z Zero exemption for employee with multiple employers with respect to second, third, etc., employer and for the employee who fails to file an exemption certificate. (b) S Single or married but legally separated individual. (c) EW(HE) Employed wife whose husband is also employed. (d) HF Single with qualified dependent parent, sister or brother, legitimate, recognized natural or legally adopted child; married but legally separated individual with a qualified dependent child. (e) EH(WE) Employed husband whose wife is also employed. (f) M(OSE) Married where only husband or wife is employed. (2) The numerals affixed to the status symbols represent the number of qualified legitimate, recognized natural or legally adopted children. (3) The asterisks (**) under column SAPE represent special additional personal exemption of Four Thousand Pesos (P4,000.00) to be allowed if the gross compensation income of a single, married or legally separated individual, or head of family, does not exceed the aggregate amount of Twenty Thousand Pesos (P20,000.00) during the calendar year (monthly, P1,667.00; Semi-monthly, P833.00; Weekly, P385.00; and Daily, P66.00). (4) Exemption The amount of exemption in Thousand of Pesos an employee is entitled to claim as a deduction from gross compensation income in accordance with his status, number of qualified dependents and applicable special additional personal exemption. B . Computation of withholding tax 1. " In general . The employer shall determine the tax to be deducted and withheld in accordance with the following: (a) Use the appropriate table for the payroll period: monthly, semi-monthly, weekly, daily, as the case may be. (b) Determine the total monetary and non-monetary (cash value) compensation paid to an employee. (c) Segregate the regular compensation from the supplementary compensation. 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. aisa dc (d) Determine the line (horizontal) to be used corresponding to the status and number of qualified dependents. Except in the case of the employed wife whose husband is also employed, use the appropriate status symbol with the corresponding asterisks ( ** ) indicated under the SAPE column if the gross compensation income does not exceed: Monthly, One Thousand Six Hundred Sixty Seven Pesos (P1,667.00); Semi-monthly, Eight Hundred Thirty Three Pesos (P833.00); Weekly, Three Hundred Eighty Five Pesos (P385.00); Daily, Sixty-Six Pesos (P66.00). If the gross compensation income exceeds the respective foregoing amounts us the status symbol without any asterisks. (e) Determine the column to be used by fixing the compensation level taking into account only the total amount of regular compensation income. The compensation level is the amount indicated in the line (as predetermined in paragraph B.1 (d)) to which the regular compensation is equal or in excess, but not to exceed the amount in the next column of the same line: Provided, However , That with respect to an employee entitled to a special additional personal exemption, the compensation level is the amount indicated in the line to which the gross compensation is equal or in excess, but not to exceed the amount in the next column of the same line. (f) Compute the withholding tax due by adding the tax predetermined in the compensation level indicated at the top of the column to the product, which is computed by multiplying the excess of the total regular and supplementary compensation over the compensation level by the rate also indicated at the top of the same column." EXAMPLE 1 Mr. A, single, with no qualified dependent, receives P1,200.00 as regular monthly compensation. COMPUTATION: Using the monthly Withholding Tax Tables, the monthly withholding tax is computed by referring to line A.4 S with double asterisks (gross compensation income does not exceed: Monthly, P1,667.00) of column 2, which shows a tax of P0.00 on P1,042.00 +1% of the excess (P1,200.00 - P1,042.00 = P158.00) Total Compensation P1,200.00 Less: Compensation level(line A.4 col. 2) 1,042.00 _______ Excess 158.00 Tax on (P1,042.00) 0.00 Tax on excess (P158.00 x 1%) 1.58 Monthly Withholding tax 1.58 ====== EXAMPLE 2 Mr. B, head of the family with no qualified dependent, receives P2,200.00 as regular monthly compensation and P300.00 as supplementary compensation for January or a total of P2,500.00. cd i COMPUTATION: Using the monthly withholding Tax Tables, the withholding tax for January is computed by referring to line A.5 HF of column 4 (fixed compensation level taking into account only the regular compensation income of P2,200.00) which shows a tax of P14.58 on P1,458.00 plus 7% of the excess (P2,500.00 - P1,458.00 = P1,042.00). Total Compensation P2,500.00 Less: Compensation level (line A.5 col. 4) 1.458.00 _______ Excess P1,042.00 ======== Tax on P1,458.00 P14.58 Tax on excess (P1,042 x 7%) 72.94 _______ Withholding tax for January P87.52 ======= EXAMPLE 3 Mrs. C married with two (2) qualified dependents receives P1,500.00 as regular monthly compensation. Mr. C, her husband is also employed. COMPUTATION: Using the monthly Withholding Tax Tables, the withholding tax due is computed by referring to line A.2 EW(HE) of column 4 which shows a tax of P14.58 on P1,333.00 plus 7% of the excess (P1,500.00 - P1,333.00 = P167.00) Total Compensation P1,500.00 Less: Compensation level (line A.2 col. 4) 1,333.00 ________ Excess P167.00 ======= Tax on P1,333.00 P14.58 Tax on excess (P167.00 x 7%) 11.69 _________ Monthly withholding tax P26.67 ======= EXAMPLE 4 Mr. D, married with two (2) qualified dependents receives P900.00 as regular semi-monthly compensation. Mrs. D, his wife, is also employed. COMPUTATION: Using the semi-monthly Withholding Tax Tables, the withholding tax is computed by referring to line D.3 EH(WE) of col. 3, which shows a tax of P1.04 on P708.00 plus 3% of the excess (P900.00 - P708.00 = P192.00). Total Compensation P900.00 Less: Compensation level (line D.3 col. 3) 708.00 _______ Excess P192.00 ====== Tax on P708.00 P1.04 Tax on excess (P192.00 x 3%) 5.76 _______ Semi-monthly withholding tax P6.80 ====== EXAMPLE 5 Mr. E, married with two (2) qualified dependents receives P1,200.00 as regular semi-monthly regular compensation. Mrs. E, his wife, is not employed. cd COMPUTATION: Using the semi-monthly Withholding Tax Tables, the withholding tax due is computed by referring to line C.2 M2(OSE) of column 4 which shows a tax of P7.29 on P1,167.00 plus 7% of the excess (P1,200.00 - P1,167.00 = P33.00) Total Compensation P1,200.00 Less: Compensation level (line C.2 col. 4) P1,167.00 __________ Excess P33.00 ======== Tax on P1,167.00 P7.29 Tax on excess (P33.00 x 7%) 2.31 _________ Semi-monthly withholding tax P9.60 ======= 2 . Exceptions "(a) Cumulative average method . If in respect of a particular employee, the regular compensation is exempt from withholding, but supplementary compensation is paid during the calendar year/or the supplementary compensation is equal to or more than the regular compensation to be paid, the employer shall determine the tax to be deducted and withheld in accordance to the cumulative average method provided hereunder. (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 calendar year. (2) Divide the aggregate amount of compensation computed in No. (1) by the number of payroll periods to which the amount relates. (3) Compute the tax to be deducted and withheld on the cumulative average compensation determined in No. (2) in accordance with the appropriate table. (4) Multiply the tax computed in No. (3) by the number of payroll periods to which it relates. (5) Determine the excess, if any, of the amount of tax computed in No. 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 last payroll period of the current calendar year. cdt The cumulative average method, once applicable to a particular employee at anytime during the calendar year, shall be the same method to be consistently used for the remaining payroll period/s of the same calendar year." EXAMPLE 6: Mr. F, married with four (4) qualified dependents and whose spouse is not employed received the following compensation. NOTE: Regular monthly compensation is exempt from withholding but supplementary compensation is paid during the calendar year. Month Regular Supplementary Total Compensation Compensation Compensation Jan. P2,000.00 P1,500.00 P3,500.00 Feb. 2,000.00 1,500.00 3,500.00 Mar. 2,000.00 - 2,000.00 COMPUTATION: 1. For Jan. P3,500 + 0 = P3,500.00 For Feb. P3,500 + 0 = P7,000.00 For Mar. P2,000 + P3,500 + P3,500 = P9,000.00 2. For Jan. P3,500/1 = P3,500.00 For Feb. P7,000/2 = P3,500.00 For Mar. P9,000/3 = P3,000.00 3. For Jan. Tax on P2,833.00 (line C.4, col. 4) P14.58 Tax on excess (P667.00 x 7%) 46.69 ________ Tax on P3,500.00 P61.27 ====== For Feb. Tax on P2,833.00 (line C.4, col. 4.) P14.58 Tax on excess (P667.00 x 7%) 46.69 ________ Tax on P3,500.00 P61.27 ====== For Mar. Tax on P2,833.00 (line C.4, col. 4) P14.58 Tax on excess (P167.00 x 7%) P11.69 _______ Tax on P3,000.00 P26.27 ====== 4. For Jan. P61.27 x 1 = P61.27 For Feb. P61.27 x 2 = P122.54 _______ For Mar. P26.27 x 3 = P78.81 ======= 5. For Jan. P61.27 - 0 = P61.27 For Feb. P122.54 - P61.27 = P61.27 For Mar. P78.81 - P122.54 = NO W/HOLDING TAX EXAMPLE 7: Mr. G, married with one (1) qualified dependent and whose spouse is also employed received the following compensation. Month Regular Supplementary Total Compensation Compensation Compensation Jan. P3,000.00 P2,000.00 P5,000.00 Feb. 3,000.00 5,000.00 8,000.00 Mar. 3,000.00 2,000.00 5,000.00 COMPUTATION: For Jan. Total Compensation P5,000.00 Less: Compensation level (line D.1 col. 5) 2,417.00 _________ Excess P2,583.00 ======= Tax on P2,417.00 P72.92 Tax on excess (P2,583.00 x 11%) 284.13 _______ Withholding Tax for January P357.05 ======= For Feb. and Mar. 1. Feb. P8,000.00 + P5,000.00= P13,000.00 Mar. P5,000.00 + P13,000.00 = P18,000.00 2. Feb. P13,000/2 = P6,500.00 Mar. P18,000/3 = P6,000.00 3. Feb. Tax on P5,750.00 P506.25 Tax on excess (P750.00 x 19%) 142.50 ________ Tax on P6,500.00 P648.75 ======= 4. Feb. P648.75 x 2 = P1,297.50 Mar. P533.75 x 3 = P1,661.25 5. Feb. P1,297.50 - P357.05 = P940.45 _______ Mar. P1,661.25 - P1,297.50 = P363.75 ====== NOTE: The supplemental compensation of P2,000.00 is less than the regular compensation of P3,000.00 for March. The rule to be followed will still be the cumulative average method. (b) Annualized Withholding tax method . (1) When the employer-employee relationship is terminated before the end of the calendar year, and (2) when computing for the year-end adjustment to determine the amount to be either withheld in December of the current calendar year or refunded as excess withheld taxes, the employer shall determine the tax on the sum of the regular and supplementary compensation for the entire calendar year before the payment of the last compensation in accordance with the following procedures: (1) Employer-employee relationship terminated: 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. 2. Deduct from the aggregate amount of compensation computed in No. 1 the amount of total exemptions of the employee. 3. Compute the amount of tax on the difference arrived at in No. 2. in accordance with the following schedule: OVER BUT NOT AMOUNT RATE OF EXCESS OVER OVER 0 P 2,500 0% P 2,500 P 5,000 P 0 + 1% P 2,500 P 5,000 P 10,000 P 25 + 3% P 5,000 P 10,000 P 20,000 P 175 + 7% P 10,000 P 20,000 P 40,000 P 875 + 11% P 20,000 P 40,000 P 60,000 P 3,075 + 15% P 40,000 P 60,000 P 100,000 P 6,075 + 19% P 60,000 P 100,000 P 250,000 P 13,675 + 24% P 100,000 P 250,000 P 500,000 P 49,675 + 29% P 250,000 P 500,000 P 122,175 + 35% P 500,000 4. Determine the deficiency or excess, if any, of the tax computed in No. 3 over the cumulative tax already deducted and withheld since the beginning of the current calendar year. The deficiency tax (when the amount of tax computed in No. 3 is greater than the amount of cumulative tax already deducted and withheld) shall be deducted from the last payment of compensation for the calendar year. The excess tax (when the amount of cumulative tax already deducted is greater than the tax computed in No. 3) shall be credited or refunded from the remittable amount of taxes withheld in the current month in which the refund was made, and in the succeeding months thereafter until the amount refunded by the employer is fully repaid. aisa dc (2) Year-end adjustment : The tax due from each employee for the entire year shall be decreased by the sum of the taxes withheld from the salary of such employee from January to November. The difference shall be the amount to be withheld in December of the current calendar year or amount to be refunded if the sum of the taxes withheld from January to November is greater than the tax due from such employee for the entire year. EXAMPLE 8: Employer-employee relationship terminated: Mr. X, head of the family with no qualified dependent children receives P4,000.00 as monthly regular compensation starting January 1, 1986. On June 1, 1986 he filed his resignation effective June 30, 1986. Tax withheld from January to May 1986 was P1,312.75. COMPUTATION 1. Total compensation received from January 1 to May 31, 1986 P20,000.00 Compensation to be received on June 4,000.00 __________ Gross Compensation P24,000.00 ======== 2. Gross compensation P24,000.00 Less: Personal exemption 7,500.00 __________ Taxable compensation income P16,500.00 ======== 3. Tax on P10,000 P175.00 Tax on excess (P6,500 x 7%) 455.00 _________ Tax on P16,500 P630.00 ======== 4. Tax Due P630.00 Less: Tax withheld from January to May P1,312.75 _________ Tax to be refunded to Employee X (P682.75) ======= EXAMPLE 9: Annualized Withholding tax (year-end adjustment) XYZ Company employer has the following employees: 1. Mr. A, married with one dependent receives a salary of P3,000.00 a month. Sometime in October his wife who is also employed, gave birth to a second child thereby increasing their additional exemption to P6,000.00. However, he was able to file an amended W-4 only in December, hence the need for adjustment. 2. Mr. B, married and whose wife is not employed, receives a monthly salary of P2,500.00. 3. Mr. C, receives a monthly salary of P1,500.00 and in claiming personal exemption of P6,000.00 as an employed wife whose husband is also employed. 4. Mr. D, started working only in August 1986 and is claiming personal exemption of P7,500.00 as head of the family receives a monthly salary of P3,000.00. 5. XYZ Company gave a 50% of their monthly salary as bonus for December to employees A, B, C and D for the calendar year 1986. COMPUTATION: Alphabetical List of Employees from whom taxes were withheld. NAME OF TAN GROSS COM- AMOUNT OF TAX DUE TAX WITHHELD DECEMBER EMPLOYEE PENSATION PERSONAL (COMPU- FROM JAN. TO YEAR-END INCOME EXEMPTION TED UN- NOV. (COMPU- ADJUSTMENT FROM JAN. DER SEC. TED MONTH- TO DEC. IN- 21 (a) NIRC LY UNDER CLUDING ON NET THE WITH BONUS TAXABLE HOLDING COMPEN- TAX TABLE) SATION INCOME MR. A P37,500 P12,000 P1,480.00 P1,507.55 (P27.55) * MR. B 31,250 12,000 822.50 673.97 148.53 ** MR. C 18,750 6,000 367.50 288.97 78.53 ** MR. D 16,500 11,500 25.00 603.20 (578.20) * ---- ---- ----- ----- ---- P104,000 P2,695.00 P3,073.69 P(378.69) *** ----- ----- ----- ----- NOTE. The W-2 to be given to the employees will show gross compensation and tax withheld as adjusted as follows: cd i GROSS COMPENSATION TAX WITHHELD Mr. A. P37,500.00 P1,480.00 Mr. B. 31,250.00 822.50 Mr. C. 18,750.00 367.50 Mr. D. 16,500.00 25.00 ___________ ________ P104,000.00 P2,695.00 __________ ________ * Amount to be refunded by XYZ Company to the employee not later than January 31, 1987. ** Amount to be deducted from the December salary of the employee. *** Creditable against remittances of taxes withheld for the month of January. A Monthly Return of Income Tax Withheld (BIR Form 1743W) for December is still required to be filed by XYZ Company whether or not taxes have been withheld. SECTION 5 . S ection 8 of Revenue Regulations No. 6-82, as amended, is hereby further amended to read as follows: "Sec. 8. Right to claim the following exemption . xxx xxx xxx Each employee may claim the following exemptions, with respect to compensation paid on or after January 1, 1986. (a) If single P6,000.00. (b) If married, and both spouses are employed, the spouses shall each be entitled to a personal exemption of P6,000.00. cdt (c) If married, and only one spouse is employed, the employed spouse is entitled to P12,000.00. (d) If head of family P7,500.00. (e) Additional exemption for each qualified dependent child but not to exceed four (4) dependents P3,000.00; in excess of four (4) dependent children, for each child who otherwise qualified as a dependent prior to January 1, 1980 under the provision of Presidential Decree, meaning children who were born prior to 1973 P1,000.00. For purposes of compliance with the requirements of withholding tax on compensation income, the husband shall be deemed the proper claimant of the additional exemption for dependent children in the case of married individuals. The option of claiming additional exemption, and the special additional personal exemption by either husband or wife shall be exercised and reflected in the joint income tax return. (f) If the gross compensation income of single, married or legally separated individual, or heads of family does not exceed the aggregate amount of P20,000.00, he is further entitled to a special additional personal exemption of P4,000.00. There is no need for an employee to file an amended withholding exemption certificate unless there is a change in his exemption unit during the year. The employer shall automatically compute the tax to be withheld based on the increased amount of exemptions in accordance with the Withholding Tax Tables, effective January 1, 1986. SECTION 6 . Paragraphs (a) and (b) of Section 22 or Revenue Regulations 6-82 as amended, is hereby further amended to read as follows: "Sec. 22. Monthly adjustments . (a) In general . If for any month of the calendar year, except the last month, 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: Provided , That the deficiency shall be paid not later than the next remittance date in the following month. No adjustment shall, however, be made under the provisions of this section in respect of underpayment for any month 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 overpayment for any month after the filing of a claim for refund thereof. Every adjustment shall be reported in the "Adjustment for Previous Month" portion of BIR Form 1743W indicating the month/months when the underwithholding/overwithholding occurred: correct amount due and the amount erroneously paid; TCC encashed; and the adjusted amount. (b) Annualized withholding tax (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 employer 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. The tax due from each employee for the entire year shall be decreased by the sum of the taxes withheld from the salary of such employee from January to November. The difference shall be the amount to be withheld in December of the current calendar year or amount to be refunded by the employer to the employee, if the sum of the taxes withheld from January to November is greater than the tax due from such employee for the entire year. The total amount actually refunded by the employer to his employees resulting from the year-end adjustment shall be repaid from the remittable amount of taxes withheld for the month of December of the current year and succeeding months of the following year until the total amount actually refunded is fully repaid. SECTION 7 . Repealing Clause . All existing rules and regulations or parts thereof which are inconsistent with the provisions of these regulations are hereby revoked. SECTION 8 . Effectivity . These regulations shall take effect on compensation income from January 1, 1986. SECTION 9 . Transitory provision . 1. Refund or credit . A. Employee . (a) Any amount of tax previously withheld from an employee whose compensation income is no longer subject to withholding under the Withholding Tax Tables effective January 1, 1986 shall be refunded by the employer to his employee. (b) Any excess over the amount of tax already withheld from the compensation of employees from the months of January to July 31, 1986 over the tax required to be withheld for the same period under the Withholding Tax Tables effective January 1, 1986 shall be credited against the withholding tax due from such employee from August and the succeeding months of the current calendar year. B. Employer . The total amount actually refunded by the employer to his employees shall be repaid from the remittable amount of taxes withheld for the current month in which the refund was made and in succeeding months thereafter until the overwithheld tax is fully paid. (2) Report on refunds and credits . In addition to the mandatory requirement of filing the Monthly Remittance Return of Income Tax Withheld (BIR Form 1743W) by withholding agents on compensation, whether there are taxes to be remitted or no taxes are remittable, such agents shall also submit for the calendar year 1986 an Interim Report ( ANNEX "B" ) showing taxes, withheld from January to July 1986 computed under the Withholding Tax Tables effective January 1, 1986 and the total amount of excess taxes withheld which shall be refunded and/or credited to the employees beginning August and the succeeding months of the current year. (SGD.) JAIME V. ONGPIN Minister of Finance Recommending Approval: (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue MONTHLY WITHHOLDING TAX TABLE Effective January 1, 1986 ANNEX A 1 2 3 4 5 6 7 8 9 10 Exemption P0.00 P0.00 P2.08 P14.58 P72.92 P256.25 P506.25 P1,139.58 P4,139.58 P10,181.25 Status SAPE +0% +1% +3% +7% +11% +15% +19 +24 +29% +35% (000P) over over over over over over over over over over LEGEND: Z- Zero A. Table for employees without dependent children and for employed wife whose husband is also employed: 1. Z 0.0 0 208 417 833 1,667 3,333 5,000 8,333 20,833 41,667 2. EW(HE) 6.0 0 708 917 1,333 2,167 3,833 5,500 8,822 21,333 42,167 3. S/EH(WE) 6.0 0 NA NA 1,333 2,167 3,822 5,500 8,833 21,333 42,167 4. S/EH(WE)** 10.0 0 1,042 1,250 1,667 NA NA NA NA NA NA 5. HF 7.5 0 NA NA 1,458 2,292 3,958 5,625 8,958 21,458 42,292 6. HF** 11.5 0 1,167 1,375 1,667 NA NA NA NA NA NA 7. M(OSE) 12.0 0 NA 1,417 1,833 2,667 4,333 6,000 9,333 21,833 42,667 8. M(OSE)** 16.0 0 1,542 1,667 NA NA NA NA NA NA NA B. Table for Heads of Family with dependent children: 1 HF 1 10.5 0 NA 1,292 1,708 2,542 4,208 5,875 9,208 21,708 42,542 2 HF1** 14.5 0 1,417 1,625 1,667 NA NA NA NA NA NA 3 HF2 13.5 0 NA 1,542 1,958 2,792 4,458 6,125 9,458 21,958 42,792 4 HF2** 17.5 0 1,667 NA NA NA NA NA NA NA NA 5 HF3 16.5 0 1,583 1,792 2,208 3,042 4,708 6,375 9,708 22,208 43,042 6 HF3** 20.5 0 1,667 NA NA NA NA NA NA NA NA 7 HF4 19.5 0 1,833 2,042 2,458 3,292 4,958 6,625 9,958 22,458 43,292 8 HF5 20.5 0 1,917 2,125 2,542 3,375 5,042 6,708 10,042 22,542 43,375 9 HF6 21.5 0 2,000 2,208 2,625 3,458 5,125 6,792 10,125 22,625 43,458 10 HF7 22.5 0 2,083 2,292 2,708 3,542 5,208 6,875 10,208 22,708 43,542 C. Table for Married individuals where only one spouse is employed; Employed spouse is entitled to full exemption 1 M1(OSE) 15.0 0 NA 1,667 2,083 2,917 4,583 6,250 9,583 22,083 42,917 2 M2(OSE) 18.0 0 1,708 1,917 2,333 3,167 4,833 6,500 9,833 22,333 43,016 3 M3(OSE) 21.0 0 1,958 2,167 2,583 3,417 5,083 6,750 10,083 22,583 43,417 4 M4(OSE) 24.0 0 2,208 2,417 2,833 3,667 5,333 7,000 10,333 22,833 43,667 5 M5(OSE) 25.0 0 2,292 2,500 2,917 3,750 5,417 7,083 10,417 22,917 43,750 6 M6(OSE) 25.0 0 2,375 2,583 3,000 3,833 5,500 7,167 10,500 23,000 43,833 7 M7(OSE) 27.0 3,458 2,667 3,083 3,917 5,583 7,250 10,583 23,083 43,917 D. Table for employed husband whose wife is also employed: Husband is entitled to claim dependent children cdasia 1 EH1(WE) 9.0 0 NA NA 1,583 2,417 4,083 5,750 9,083 21,583 42,417 2 EH1(WE)** 13.0 0 1,667 NA NA NA NA NA NA NA NA 3 EH2(WE) 12.0 0 NA 1,417 1,833 2,667 4,333 6,000 9,333 21,833 42,667 4 EH2(WE)** 16.0 0 1,667 NA NA NA NA NA NA NA NA 5 EH3(WE) 15.0 0 NA 1,667 2,083 2,917 4,583 6,250 9,583 22,083 42,917 6 EH4(WE) 18.0 0 1,708 1,917 2,333 3,167 4,833 6,500 9,833 22,333 43,167 7 EH5(WE) 19.0 0 1,792 2,000 2,417 3,250 4,917 6,583 9,917 22,417 43,250 8 EH6(WE) 20.0 0 1,875 2,083 2,500 3,333 5,000 6,667 10,000 22,500 43,333 9 EH7(WE) 21.0 0 1,958 2,167 2,583 3,417 5,083 6,750 10,083 22,583 43,417 LEGEND: Z-Zero exemption S-Single HF-Head of the Family EW(HE) Employed wife whose husband is employed EH (WE) Employed husband whose wife is also employed M(OSE) Married where only husband or wife is employed 1...7 Number of qualified dependents. SAPE ** Special Additional Personal Exemption for employees whose total monthly gross compensation does not exceed P1,667.00. SEMI-MONTHLY WITHHOLDING TAX TABLE Effective January 1, 1986 ANNEX A 1 2 3 4 5 6 7 8 9 10 Exemption P0.00 P0.00 P1.04 P7.29 P36.46 P128.13 P253.13 P569.79 P2,069.79 P5,090.63 Status SAPE +0% +1% +3% +7% +11% +15% +19 +24 +29% +35% (000P) over over over over over over over over over over A. Table for employees without dependent and for employed wife whose husband is also employed: 1 Z 0.0 0 104 208 417 833 1,667 2,500 4,167 10,417 20,833 2 EW(HE) 6.0 0 354 458 667 1,083 1,917 2,750 4,417 10,667 21,083 3 S/EH(WE) 6.0 0 NA NA 667 1,083 1,917 2,750 4,417 10,667 21,083 4 S/EH(WE)** 10.0 0 521 625 833 NA NA NA NA NA NA 5 HF 7.5 0 NA NA 729 1,146 1,979 2,813 4,479 10,729 21,146 6 HF** 11.5 0 583 688 833 NA NA NA NA NA NA 7 M(OSE) 12.0 0 NA 708 917 1,333 2,167 3,000 4,667 10,917 21,333 8 M(OSE)** 16.0 0 771 833 NA NA NA NA NA N A NA B. Table for Heads of family with dependent children; 1 HF1 10.5 0 NA 646 854 1,271 2,104 2,938 4,604 10,854 21,271 2 HF2** 14.5 0 708 813 833 NA NA NA NA NA NA 3 HF2 13.5 0 NA 771 979 1,396 2,229 3,063 4,729 10,979 21,396 4 HF2** 17.5 0 833 NA NA NA NA NA NA NA NA 5 HF3 16.5 0 792 896 1,104 1,521 2,354 3,188 4,854 11,104 21,521 6 HF3** 20.5 0 833 NA NA NA NA NA NA NA NA 7 HF4 19.5 0 917 1,021 1,229 1,646 2,479 3,313 4,979 11,229 21,646 8 HF5 20.5 0 958 1,063 1,271 1,688 2,521 3,354 5,021 11,271 21,688 9 HF6 21.5 0 1,000 1,104 1,313 1,729 2,563 3,396 5,063 11,313 21,729 10 HF7 22.5 0 1,042 1,146 1,354 1,771 2, 604 3,438 5,104 11,354 21,771 C. Table for Married individual where only one spouse is employed: Employed spouse is entitled to full exemption 1 M1(OSE) 15.0 0 NA 833 1,042 1,458 2,292 3,125 4,792 11,042 21,458 2 M2(OSE) 18.0 0 854 958 1,167 1,583 2,417 3,250 4,917 11,167 21,583 3 M3(OSE) 21.0 0 979 1,083 1,292 1,708 2,542 3,375 5,042 11,292 21,708 4 M4(OSE) 24.0 0 1,104 1,208 1,417 1,833 2,667 3,500 5,167 11,417 21,833 5 M5(OSE) 25.0 0 1,146 1,250 1,458 1,875 2,708 3,542 5,208 11,458 21,875 6 M6(OSE) 26.0 0 1,188 1,292 1,500 1,917 2,750 3,583 5,250 11,500 21,917 7 M7(OSE) 27.0 0 1,229 1,333 1,542 1,958 2,792 3,625 5,292 11,542 21,958 D. Table for employed husband whose wife is also employed: Husband is entitled to claim dependent children 1 EH1(WE) 9.0 0 NA NA 792 1,208 2,042 2,875 4,542 10,792 21,208 2 EH1(WE)** 13.0 0 833 NA NA NA NA NA NA NA NA 3 EH2(WE) 12.0 0 NA 708 917 1,333 2,167 3,000 4,667 10,917 21,333 4 EH2(WE)** 16.0 0 833 NA NA NA NA NA NA NA NA 5 EH3(WE) 15.0 0 NA 833 1,042 1,458 2,292 3,125 4,792 11,042 21,558 6 EH4(WE) 18.0 0 854 958 1,167 1,583 2,417 3,250 4,917 11,167 21,583 7 EH5(WE) 19.0 0 896 1,000 1,208 1,625 2,458 3,292 4,958 11,208 21,625 8 EH6(WE) 20.0 0 938 1,042 1,250 1,667 2,500 3,333 5,000 11,250 21,667 9 EH7(WE) 21.0 0 979 1,083 1,292 1,708 2,542 3,375 5,042 11,292 21,708 LEGEND: Z-Zero exemption S-Single HF-Head of the Family EW(HE) Employed wife whose husband is employed EH (WE) Employed husband whose wife is also employed M(OSE) Married where only husband or wife is employed 1...7 Number of qualified dependents. SAPE ** Special Additional Personal Exemption for employees whose total monthly gross compensation does not exceed P1,667.00. WEEKLY WITHHOLDING TAX TABLE Effective January 1, 1986 ANNEX A 1 2 3 4 5 6 7 8 9 10 Exemption P0.00 P0.00 P0.48 P13.37 P16.83 P59.13 P116.83 P262.98 P955.29 P2,349.52 Status SAPE +0% +1% +3% +7% +11% +15% +19 +24 +29% +35% (000P) over over over over over over over over over over A. Table for employees without dependent children and for employed wife whose husband is also employed: 1 Z 0.0 0 48 96 192 385 769 1,154 1,923 4,808 9,615 2 EW(HE) 6.0 0 163 212 308 500 885 1,269 2,038 4,923 9,731 3 S/EH(WE) 6.0 0 NA NA 308 500 885 1,269 2,038 4,923 9,731 4 S/EH(WE)** 10.0 0 240 288 385 NA NA NA NA NA NA 5 HF 7.5 0 NA NA 337 529 913 1,298 2,067 4,952 9,760 6 HF** 11.5 0 269 317 385 NA NA NA NA NA NA 7 M(OSE) 12.0 0 NA 327 423 615 1,000 1,385 2,154 5,038 9,846 8 M(OSE)** 16.0 0 356 385 NA NA NA NA NA NA NA B. Table for Heads of family with dependent children: 1 HF1 10.5 0 NA 298 394 587 971 1,356 2,125 5,010 9,817 2 HF1** 14.5 0 327 375 385 NA NA NA NA NA NA 3 HF2 13.5 0 NA 356 452 644 1,029 1,413 2,183 5,067 9,875 4 HF2** 17.5 0 385 NA NA NA NA NA NA NA NA 5 HF3 16.5 0 365 413 510 702 1,087 1,471 2,240 5,125 9,933 6 HF3** 20.5 0 385 NA NA NA NA NA NA NA NA 7 HF4 19.5 0 423 471 567 760 1,144 1,529 2,298 5,183 9,990 8 HF5 20.5 0 442 490 587 779 1,163 1,548 2,317 5,202 10,010 9 HF6 21.5 0 462 510 606 798 1,183 1,567 2,337 5,221 10,029 10 HF7 22.5 0 481 529 625 817 1,202 1,587 2,356 5,240 10,048 C. Table for Married individuals where only one spouse is employed. Employed spouse is entitled to full exemption cdtai 1 M1(OSE) 15.0 0 NA 385 481 673 1,058 1,442 2,212 5,096 9,904 2 M2(OSE) 18.0 0 394 442 538 731 1,115 1,500 2,269 5,154 9,962 3 M3(OSE) 21.0 0 452 500 596 788 1,173 1,558 2,327 5,212 10,019 4 M4(OSE) 24.0 0 510 558 654 846 1,231 1,615 2,385 5,269 10,077 5 M5(OSE) 25.0 0 529 577 673 865 1,250 1,635 2,404 5,288 10,096 6 M6(OSE) 26.0 0 548 596 692 885 1,269 1,654 2,423 5,308 10,115 7 M7(OSE) 27.0 0 567 615 712 904 1,288 1,673 2,442 5,327 10,135 D. Table for employed husband whose wife is also employed: Husband is entitled to claim dependent children 1 EH1(WE) 9.0 0 NA NA 365 558 942 1,327 2,096 4,981 9,788 2 EH1(WE)** 13.0 0+ 385 NA NA NA NA NA NA NA NA 3 EH2(WE) 12.0 0 NA 327 423 615 1,000 1,385 2,154 5,038 9,846 4 EH2(WE)** 16.0 0 385 NA NA NA NA NA NA NA NA 5 EH3(WE) 15.0 0 NA 385 481 673 1,058 1,442 2,212 5,096 9,904 6 EH4(WE) 18.0 0 394 442 538 731 1,115 1,500 2,269 5,154 9,962 7 EH5(WE) 19.0 0 413 462 558 750 1,135 1,519 2,288 5,173 9,981 8 EH6(WE) 20.0 0 433 481 577 769 1,154 1,538 2,308 5,192 10,000 9 EH7(WE) 21.0 0 452 500 596 788 1,173 1,558 2,327 5,212 10,019 LEGEND: Z-Zero exemption S-Single HF-Head of the Family EW(HE) Employed wife whose husband is employed EH (WE) Employed husband whose wife is also employed M(OSE) Married where only husband or wife is employed 1...7 Number of qualified dependents. SAPE ** Special Additional Personal Exemption for employees whose total monthly gross compensation does not exceed P1,667.00. DAILY WITHHOLDING TAX TABLE Effective January 1, 1986 ANNEX A 1 2 3 4 5 6 7 8 9 10 Exemption P0.00 P0.00 P0.08 P0.58 P2.89 P10.15 P20.05 P45.13 P163.94 P403.22 Status SAPE +0% +1% +3% +7% +11% +15% +19 +24 +29% +35% (000P) over over over over over over over over over over A. Table for employees without dependent children and for employed wife whose husband is also employed: 1 Z 0.0 0 8 17 33 66 132 198 330 825 1,650 2 EW(HE) 6.0 0 28 36 53 86 152 218 350 845 1,670 3 S/EH(WE) 6.0 0 NA NA 53 86 152 218 350 845 1,670 4 S/EH(WE)** 10.0 0 41 50 66 NA NA NA NA NA NA 5 HF 7.5 0 NA NA 58 91 157 223 355 850 1,675 6 HF** 11.5 0 46 54 66 NA NA NA NA NA NA 7 M(OSE) 12.0 0 NA 56 73 106 172 238 370 865 1,690 8 M(OSE)** 16.0 0 61 66 NA NA NA NA NA NA NA B. Table for Heads of family with dependent children 1 HF1 10.5 0 NA 51 68 101 167 233 365 860 1,685 2 HF1** 14.5 0 56 64 NA NA NA NA NA NA NA 3 HF2 13.5 0 NA 61 78 111 177 243 375 870 1,695 4 HF2** 17.5 0 66 NA NA NA NA NA NA NA NA 5 HF3 16.5 0 63 71 87 120 186 252 384 880 1,705 6 HF3** 20.5 0 64 NA NA NA NA NA NA NA NA 7 HF4 19.5 0 73 81 97 130 196 262 394 889 1,715 8 HF5 20.5 0 76 84 101 134 200 266 398 893 1,718 9 HF6 21.5 0 79 87 104 137 203 269 401 896 1,721 10 HF7 22.5 0 83 91 107 140 206 272 404 899 1,724 C. Table for married individuals where only one spouse is employed: Employed spouse is entitled to full exemption 1 M1(OSE) 15.0 0 NA 66 83 116 182 248 380 875 1,700 2 M2(OSE) 18.0 0 68 76 92 125 191 257 389 884 1,710 3 M3(OSE) 21.0 0 78 86 102 135 201 267 399 894 1,719 4 M4(OSE) 24.0 0 87 96 112 145 211 277 409 904 1,729 5 M5(OSE) 25.0 0 91 99 116 149 215 281 413 908 1,733 6 M6(OSE) 26.0 0 94 102 119 152 218 284 416 911 1,736 7 M7(OSE) 27.0 0 97 106 122 155 221 287 419 914 1,739 D. Table for employed husband whose wife is also employed: Husband is entitled to claim dependent children 1 EH1(WE) 9.0 0 NA NA 63 96 162 228 360 855 1,680 2 EH1(WE)** 13.0 0 66 NA NA NA NA NA NA NA NA 3 EH2(WE) 12.0 0 NA 56 72 106 172 238 370 865 1,690 4 EH2(WE)** 16.0 0 66 NA NA NA NA NA NA NA NA 5 EH3(WE) 15.0 0 NA 66 83 116 182 248 370 875 1,700 6 EH4(WE) 18.0 0 68 76 92 125 191 257 389 884 1,710 7 EH5(WE0 19.0 0 71 79 96 129 195 261 393 888 1,713 8 EH6(WE) 20.0 0 74 83 99 132 198 264 396 891 1,716 9 EH7(WE) 21.0 0 78 86 102 135 201 267 399 894 1,719 LEGEND: Z-Zero exemption S-Single HF-Head of the Family EW(HE) Employed wife whose husband is employed EH (WE) Employed husband whose wife is also employed M(OSE) Married where only husband or wife is employed 1...7 Number of qualified dependents. SAPE ** Special Additional Personal Exemption for employees whose total monthly gross compensation does not exceed P1,667.00. casia INSTRUCTIONS A. Who shall file . This return shall be filed monthly in duplicate WHETHER OR NOT taxes have been withheld by: 1. Every employed required to deduct and withheld tax on compensation paid to his employees (Schedule 1(a)); 2. Every individual, corporation, partnership, association or government office or agency required to deduct and withhold the tax from income payments made to resident payees, as enumerated in Schedule 1 (b) of this return; 3. Every individual, corporation, partnership, association or government required to deduct and withhold the tax from income payments to non-resident aliens and non-resident foreign corporations as well as resident payees as enumerated in Schedule 2. This return shall be filed for all types of income taxes withheld. EXCEPT for taxes withheld on interest on bank deposits and deposit substitutes. B. When and where to file . This returns shall be filed on or before the 10th day after the end of the month which the taxes were withheld with the Revenue District Office of Collection Agency or duly authorized Treasurer of the municipality where the withholding agent's legal residence or principal place of business is located. C. When and where to remit . The taxes withheld shall be remitted upon filing of this return. Remittance shall be made to an accredited Agent Bank. In places where there are no such banks, remittance shall be made to the Collection Agent or authorized Municipal Treasurer. D. Adjustment . This refers to under or over withholding/remittance of taxes for previous month(s) corrected in this return. Present details in the spaces provided, If adjustments involve more than one month, indicate total amount only. INSTRUCTIONS The Employer or authorized Officer shall: 1. Accomplish this form in quadruplicate copies TO BE DISTRIBUTED BY REV. DISTRICT OFFICE CONCERNED AS FOLLOWS: acd Original Rev. Computer Center Duplicate Employer Triplicate Withholding Tax Division Quadruplicate Rev. District Office's file copy. 2. File this form with the Rev. District Office concerned, not later than September 10, 1986, together with the Monthly Remittance of Income Taxes Withheld (BIR Form 1743-W), whether or not taxes have been withheld and deducted from the salary of employees for the month of August, 1986.