Post on 21-Dec-2015
transcript
TAX UPDATES:WITHHOLDING TAX ONCOMPENSATION(REVENUE REGULATION 3-2015)
Department of Health
May 7, 2015
By: Andy B. Bisares
Revenue Officer III - Assessment
RDO 31, Sta. Cruz, Manila
INTRODUCTION
EmployeeYou have a J.O.B.
5% - 32%Time = Money
Business Owner You own a
SYSTEM 0% - 30%
People works with you = Money
Self-employed
You own a J.O.B.5% - 32%
Time = Money
InvestorYou own INVESTMENTS
5% – 20%Your money works for you =
Money
CashflowQuadrant
ACTIVE INCOME PASSIVE INCOME
OVERVIEW ON WITHHOLDING TAX
A system designed to effectively collect taxes.It encourages voluntary complianceIt reduces cost of collection effortIt prevents delinquencies and revenue lossIt prevents dry spell in the fiscal condition of the
government by providing revenues throughout the taxable year
OVERVIEW ON WITHHOLDING TAX
Types of Withholding Taxes:1) Withholding Tax on Compensation
2) Expanded Withholding Tax
3) Final Withholding Tax
4) Withholding Tax on Government Money Payments
OVERVIEW ON WITHHOLDING TAX
Withholding Tax on CompensationCompensation or Wages – means all remuneration
for services performed by an employee for his employer under an employer-employee relationship unless exempted by the Code
OVERVIEW ON WITHHOLDING TAX
Compensation includes:1) Salaries and wages
2) Emoluments
3) Honoraria
4) Allowances
5) Commissions
6) Director’s fees if at the same time an employee
6) Taxable bonuses and fringe benefits unless subject to Fringe Benefit Tax
7) Taxable pensions and retirement pay
8) Other income of similar nature
OVERVIEW ON WITHHOLDING TAX
Other Considerations on Compensation:
1) Compensation paid in kind
2) Living quarters and meals
3) De Minimis Benefits
4) Tips and Gratuities
5) Pensions, retirement and separation pay
6) Transpo, representation & other allowances (RATA, PERA & ACA)
7) Vacation and sick leave allowances
8) Deductions made by employer from compensation of employees
9) Remuneration for services as employee of a non-resident alien.
10) Compensation for services performed outside the Philippines
OVERVIEW ON WITHHOLDING TAX
Exemptions from Withholding Tax on Compensation1. Remuneration received as an incident of employment
(Retirement benefits received under RA 7641)
2. Remuneration paid for agricultural labor (Sakada)
3. Remuneration paid for domestic services (Katulong)
4. Remuneration for casual labor not in the course of an employee’s trade or business (Casual employees in the government)
OVERVIEW ON WITHHOLDING TAX
Exemptions from Withholding Tax on Compensation5. Compensation for services by a citizen or resident of the
Philippines for a foreign government or International organization
6. Damages (Actual, Moral, Exemplary and Nominal)
7. Life Insurance
8. Amounts received by the insured as a return of premium
9. Income exempt under treaty
OVERVIEW ON WITHHOLDING TAX
Exemptions from Withholding Tax on Compensation
10. GSIS, SSS, Medicare and other contributions
11. Minimum wage earners or annual income of P60,000 whichever is higher
12. Government employees with salary grades 1-3
13. De Minimis Benefits
14. Thirteenth (13th) month pay and other benefits
OVERVIEW ON WITHHOLDING TAX
DE MINIMIS BENEFITS1) Monetized unused vacation leave of private employees
credits not exceeding 10 days (RR 8-00) and monetized value of leave credits of gov’t. employees (RR10-00)
2) Medical cash allowance - P750 per semester/employee
3) Rice subsidy –P1,000 or 1 sack of rice (not more than P1,000)
4) Clothing allowance – P3,000 per annum
5) Medical Benefits – P10,000 per annum
6) Laundry allowance – P300 per month
OVERVIEW ON WITHHOLDING TAX
DE MINIMIS BENEFITS7) Christmas or anniversary gifts – P5,000 per annum.
8) Gifts given to employees under special circumstances
9) Daily meal allowance for overtime work not exceeding 25% of the basic minimum wage.
OVERVIEW ON WITHHOLDING TAX
DE DUCTIONS FROM GROSS COMPENSATION INCOME:
1) Basic Personal Exemptions – P50,000 per taxpayer
2) Additional Exemptions for qualified dependent children – P25,000 per child, maximum of 4
3) Health or Medical Insurance – 2,400 per year
REVENUE REGULATION 3-2015
Implementing the provisions of Republic Act 10653
Subject: An Act Adjusting the 13th Month Pay and Other Benefits Ceiling Excluded from the Computation of Gross Income
Latest amendment to the Withholding Tax Law: Republic Act 8424 as implemented by RR 2-98
REVENUE REGULATION 3-2015
13th Month Pay & Other Benefits:1) 13th Month Pay – 1 month basic salary
2) Other benefits include the following: Christmas bonus
Productivity incentive bonus
Loyalty awards
Gifts in cash or in kind
Other benefits if similar in nature including Additional Compensation Allowance (ACA)
REVENUE REGULATION 3-2015
NEW LAW 13TH Month Pay & Other Benefits:
P82,000.00Note:
1) It does not apply to self-employed individuals and income generated from business
2) It applies to 13th Month pay and Other benefits paid or accrued beginning January 1, 2015.
OLD LAW 13th Month Pay & Other
Benefits:
P30,000.00
“TAXES are part of our world and will always be
part of our lives. So instead of complaining, lets simply understand them and put them to good use in our
lives”Tom Wheelright