Legal basis and related statutes
- Section 1 is issued pursuant to Sections 245 and 72 of the National Internal Revenue Code, in relation to Republic Act No. 7167.
- Section 1 ties the withholding at source to the Revised Withholding Tax Tables in ANNEX “A” effective January 1, 1992.
- Section 2 and Section 3 amend Sections 7 and 8 of Revenue Regulations No. 6-82, respectively, as amended by Revenue Regulations No. 12-86.
Policy and purpose
- Section 1 requires employers to collect income tax at the point of payment for compensation paid on or after January 1, 1992, using Revised Withholding Tax Tables that reflect the increase of personal and additional exemptions.
Coverage: withholding on compensation
- Section 1 covers income tax on compensation income paid on or after January 1, 1992.
- Section 2 applies to an employer making payment of compensation to resident employees.
- Section 2 requires withholding using the Revised Withholding Tax Tables (ANNEX “A”) effective January 1, 1992.
- Section 3 governs what exemptions each employee may claim for compensation paid on or after January 1, 1992.
Withholding requirement for employers
- Section 2 (amending Section 7) provides that an employer making payment of compensation shall deduct and withhold a tax from such compensation.
- The withheld tax must be determined in accordance with the Revised Withholding Tax Tables (ANNEX “A”) effective January 1, 1992.
- Section 2 frames the rule as withholding on compensation paid to resident employees.
Employee exemptions for withholding compliance
- Section 3 provides that each employee is allowed to claim the following exemptions with respect to compensation paid on or after January 1, 1992:
- Single or married but judicially declared as legally separated with no qualified dependents: PHP 9,000.00 (Section 3(a)).
- Married, with both spouses employed: each spouse is entitled to a personal exemption of PHP 9,000.00 (Section 3(b)).
- Married, with only one spouse employed: the employed spouse is entitled to PHP 18,000.00 (Section 3(c)).
- Head of the family: PHP 12,000.00 (Section 3(d)).
- Section 3(e) provides additional exemption for each qualified dependent child, capped at not to exceed four (4) dependent children, at PHP 5,000.00 each.
- Section 3(e) deems the husband the proper claimant of the additional exemption for dependent children for married individuals.
- Section 3(e) requires that the option of claiming additional exemption and the special additional personal exemption by either husband or wife must be exercised and reflected in the joint income tax return.
- Section 3(f) provides a special additional personal exemption of PHP 4,000.00 for a single, married or legally separated individual, or head of family whose gross compensation income does not exceed the aggregate amount of Twenty Thousand Pesos (PHP 20,000.00), computed as the combined compensation income of husband and wife for married individuals.
Repealing clause and revocation
- Section 4(a) revokes all existing rules and regulations or portions thereof that are inconsistent with the provisions of BIR Revenue Regulation No. 1-92.