Law Summary
Income Payments Subject to Creditable Withholding Tax
- Establishes withholding of creditable income tax at specified rates for each class of payee.
- New paragraph (L) targets additional compensation paid to customs personnel.
Definition and Coverage of Additional Compensation
- Includes gross additional payments made by importers, shipping companies, or their agents to customs personnel.
- Payments relate specifically to overtime services and reimbursement of meal allowances.
Withholding Tax Rate and Withholding Agent
- Prescribes a 15% creditable withholding tax rate on the gross additional payments described.
- Designates importers, shipping companies, or their agents as the withholding agents responsible for remitting the tax to the government.
Effective Date and Implementation
- The regulation is effective immediately upon publication.
- Signed by the Secretary of Finance on July 30, 1991.
Important Legal Concepts
- Creditable withholding tax: a tax withheld on income payments that can be credited against the payee's income tax liability.
- Withholding agent: the person or entity required to withhold and remit the tax to the government.
- Ensures compliance and facilitates tax collection specifically on additional compensation paid within customs operations.