QuestionsQuestions (BIR REVENUE REGULATION NO. 4-93)
The regulation governs the collection at source of income tax on compensation income paid on or after January 1, 1992, covering compensation income from Philippine sources of employed individuals, whether resident citizens and aliens or non-resident citizens or non-resident aliens engaged in trade or business in the Philippines.
Every employer making payment of compensation to an employee must deduct and withhold tax from compensation income for the entire calendar year based on the prescribed withholding tax tables effective January 1, 1992.
Z means zero exemption for employees with multiple employers or those who fail to file an exemption certificate; S stands for single, legally separated, or widowed without dependents; ME is married employee not legally separated; HF is head of family (single, legally separated, widowed with qualified dependents).
SAPE of Four Thousand Pesos (₱4,000) is allowed for single, married, or head of family employees if their gross compensation income does not exceed ₱20,000 during the calendar year.
It is a method used when regular compensation is exempt from withholding but supplementary compensation is paid. The employer aggregates compensation since the year's start, computes an average, calculates tax on this average, and adjusts withholding accordingly over payroll periods, deducting any excess in the last payroll.
The employer adds all regular and supplementary compensation paid during the year plus the last payroll's compensation, deducts exemptions, computes the tax based on the tax table, and then determines any deficiency or excess withholding to be settled in the last compensation payment.
Personal exemptions: ₱9,000 for single individuals, ₱18,000 for married individuals, and ₱12,000 for heads of family. Additional exemption: ₱5,000 for each qualified dependent child up to four dependents, claimed by one spouse unless waived.
Employees must file the W-4 with their employer within specified deadlines, including information on status, spouse, dependents, and exemptions. New employees file within 5 days of employment start. Changes require amended certificates within 10 days. Employers keep records and file copies to the BIR.
Employers are liable for failure to withhold/remit the correct tax amount, subject to payment of tax plus penalties including a 25% penalty on the amount due, 50% penalty for willful neglect or false returns, interest at 20% per annum, and possible fines and imprisonment for willful violations.
Employees with purely compensation income from Philippine sources not exceeding ₱60,000 for the year, with correct withholding (tax withheld equals tax due), are exempt from filing. Exceptions include multiple employers, mixed income earners, excess income, incorrect withholding, and spouses with mixed income situations.