Question & AnswerQ&A (Republic Act No. 7497)
The Act is known as the 'Finality of the Withholding Tax on Purely Compensation Income.'
The policy is to enhance the tax system development by simplifying the compliance and administration of the withholding tax system on purely compensation income.
Every employer making payment of compensation income shall deduct and withhold the tax.
Husband and wife shall compute separately their individual income tax based on their respective total taxable income; if income cannot be definitely attributed to either spouse, it shall be divided equally for computing taxable income.
For single individuals or legally separated married without dependents - P9,000; for head of family - P12,000; for each married individual - P18,000, with the proviso that if only one spouse has taxable income, only that spouse may claim the exemption.
A married individual or head of family can claim additional exemption of P5,000 for each dependent, not exceeding four dependents, and only one spouse can claim the additional exemptions.
An individual must file a return if deriving compensation concurrently from two or more employers at any time during the taxable year or if pure compensation income exceeds P60,000.
The husband shall be deemed the head of the family and proper claimant of additional exemptions unless he explicitly waives his right in favor of his wife in the withholding exemption certificate.
Before the last payroll of the calendar year, the employer must determine the tax due for the entire year, and either withhold the difference from the December salary or refund the excess by January 25 of the succeeding year.
The employer shall be liable for the tax due plus penalties or additions to the tax as applicable for failure to withhold or remit the correct tax.
The tax to be withheld shall be collected from the employee, including penalties; excess taxes withheld due to false or inaccurate information or refusal to file shall not be refunded but forfeited in favor of the government.
The employer shall be liable to a penalty equal to the total amount of refunds not refunded plus other penalties provided in the tax code.
Upon conviction, a fine of not less than P10,000 and imprisonment from one to ten years shall be imposed.