Withholding Tax on Resident Employees
- Employers must withhold tax using prescribed withholding tax tables.
- Exemptions vary by employee status: single, married, head of family, and number of qualified dependents.
- Special Additional Personal Exemption (SAPE) applies if gross compensation does not exceed P20,000.
- Withholding tax computed on regular and supplementary compensation.
- Detailed computation method prescribed including examples.
Exceptions and Withholding Methods
- Cumulative average method for cases where regular compensation is exempt but supplementary compensation is paid.
- Annualized withholding tax method for terminated employees and year-end adjustments.
- Procedures for computing withholding in these cases explained with examples.
Taxable Units for Married Couples
- Husband and wife considered separate taxable units.
- They file one consolidated return but compute taxes individually based on incomes.
Exemptions Allowed
- Basic personal exemptions: P9,000 for singles, P18,000 for married employees, P12,000 for heads of family.
- Additional exemption of P5,000 per qualified dependent child up to four dependents.
- Special additional personal exemption for gross incomes up to P20,000.
- Definitions for dependents and conditions to claim exemptions.
Withholding Certificate (BIR Form W-4)
- Employee must provide personal and exemption information via W-4.
- Details on multiple employments, claimants of exemptions, and procedures for filing.
- Employer’s responsibilities in validating and maintaining certificates.
- Procedures for waiver of exemptions claim between spouses.
Return and Payment of Withholding Tax
- Monthly returns filed and taxes paid by the 10th day of the following month.
- Last month’s withholding tax due by January 25 of the next year.
Filing of Income Tax Returns by Employees
- Employees with purely compensation income not exceeding P60,000 with correct tax withheld need not file a tax return.
- Exceptions include multiple employers, income exceeding thresholds, combination with business income.
- Special provisions for married couples.
Employee’s Withholding Statement (BIR Form W-2)
- Employers must furnish W-2 showing compensation and taxes withheld.
- Deadline for furnishing is January 31 or within 30 days of employment termination.
Annual Return of Income Tax Withheld (BIR Form W-3)
- Employers file annual returns including alphabetical list of employees.
- List must include detailed income, exemptions, taxes withheld and adjustments.
Liability for Tax Withholding
- Employers liable for correct withholding and remittance.
- Penalties for failure to withhold, remit or refund within prescribed periods.
- Employees liable if they fail to provide accurate information.
- Penalty rates include 25% to 50% of tax due and interest at 20% per annum.
- Specific penalties range from fines to imprisonment for willful violations.
Transitory Provisions
- Special rules for 1992 year, including handling of employment changes.
- Additional statements required with annual returns.
- Transitional treatment for married employees who resigned during the year.
Repealing and Effectivity
- All conflicting regulations revoked.
- These regulations effective for compensation income from January 1, 1992 onward.