CHAPTER
XIIIWITHHOLDING
ON WAGES
SEC.
78. Definitions.
- As used in this Chapter:
(A) Wages.
- The term 'wages' means all remuneration (other than fees paid to a
public
official) for services performed by an employee for his employer,
including
the cash value of all remuneration paid in any medium other than cash,
except that such term shall not include remuneration paid:
(1) For
agricultural
labor paid entirely in products of the farm where the labor is
performed,
or
(2) For
domestic
service in a private home, or
(3) For casual
labor not in the course of the employer's trade or business, or
(4) For
services
by a citizen or resident of the Philippines for a foreign government or
aninternational organization.
If the remuneration paid
by an employer to an employee for services performed during one-half
(1/2)
or more of any payroll period of not more than thirty-one (31)
consecutive
days constitutes wages, all the remuneration paid by such employer to
such
employee for such period shall be deemed to be wages; but if the
remuneration
paid by an employer to an employee for services performed during more
than
one -half (1/2) of any such payroll period does not constitute wages,
then
none of the remuneration paid by such employer to such employee for
such
period shall be deemed to be wages.
(B) Payroll
Period.
- The term 'payroll period' means a period for which payment of wages
is
ordinarily made to the employee by his employer, and the term "miscellaneous
payroll period" means a payroll period other than, a daily, weekly,
biweekly, semi-monthly, monthly, quarterly, semi-annual, or annual
period.
(C) Employee.
- The term 'employee' refers to any individual who is the recipient of
wages and includes an officer, employee or elected official of the
Government
of the Philippines or any political subdivision, agency or
instrumentality
thereof. The term "employee" also includes an officer of a
corporation.
(D) Employer.
- The term "employer" means the person for whom an individual
performs
or performed any service, of whatever nature, as the employee of such
person,
except that:
(1) If the
person
for whom the individual performs or performed any service does nothave control of the payment of the wages for such services, the term "employer"(except for the purpose of Subsection (A) means the person having
control
of thepayment of such wages; and
(2) In the case
of a person paying wages on behalf of a nonresident alien individual,
foreignpartnership or foreign corporation not engaged in trade or business
within
the Philippines,the term "employer" (except for the purpose of Subsection (A)
means
such person.
SEC.
79. Income Tax Collected at Source.-
(A) Requirement
of Withholding.
- Every employer making payment of wages shall deduct and withhold
upon such wages a tax determined in accordance with the rules and
regulations
to be prescribed by the Secretary of Finance, upon recommendation of
the
Commissioner: Provided, however, That no withholding of a tax
shall
be required where the total compensation income of an individual does
not
exceed the statutory minimum wage, or five thousand pesos (P5,000.00)
per
month, whichever is higher.
(B) Tax
Paid by Recipient.
- If the employer, in violation of the provisions of this Chapter,
fails
to deduct and withhold the tax as required under this Chapter, and
thereafter
the tax against which such tax may be credited is paid, the tax so
required
to be deducted and withheld shall not be collected from the employer;
but
this Subsection shall in no case relieve the employer from liability
for
any penalty or addition to the tax otherwise applicable in respect of
such
failure to deduct and withhold.
(C) Refunds
or Credits.
-
(1) Employer.
- When there has been an overpayment of tax under this Section, refund
or credit shall be made to the employer only to the extent that the
amount
of such overpayment was not deducted and withheld hereunder by the
employer.
(2)
Employees.
-The amount deducted and withheld under this Chapter during any
calendar
year shall be allowed as a credit to the recipient of such income
against
the tax imposed under Section 24(A) of this Title. Refunds and credits
in cases of excessive withholding shall be granted under rules and
regulations
promulgated by the Secretary of Finance, upon recommendation of the
Commissioner.
Any excess of the taxes
withheld over the tax due from the taxpayer shall be returned or
credited
within three (3) months from the fifteenth (15th) day of
April.
Refunds or credits made after such time shall earn interest at the rate
of six percent (6%) per annum, starting after the lapse of the
three-month
period to the date the refund of credit is made.
Refunds shall be made
upon warrants drawn by the Commissioner or by his duly authorized
representative
without the necessity of counter-signature by the Chairman, Commission
on Audit or the latter's duly authorized representative as an exception
to the requirement prescribed by Section 49, Chapter 8, Subtitle B,
Title
1 of Book V of Executive Order No. 292, otherwise known as the
Administrative
Code of 1987.
(D) Personal
Exemptions.
-
(1) In
General.
- Unless otherwise provided by this Chapter, the personal and
additional
exemptions applicable under this Chapter shall be determined in
accordance
with the main provisions of this Title.
(2) Exemption
Certificate.
-
(a) When
to
File. - On or before the date of commencement of employment with an
employer, the employee shall furnish the employer with a signed
withholding
exemption certificate relating to the personal and additional
exemptions
to which he is entitled.
(b) Change
of Status. - In case of change of status of an employee as a result
of which he would be entitled to a lesser or greater amount of
exemption,
the employee shall, within ten (10) days from such change, file with
the
employer a new withholding exemption certificate reflecting the change.
(c) Use
of
Certificates. - The certificates filed hereunder shall be used by
the
employer in the determination of the amount of taxes to be withheld.
(d) Failure
to Furnish Certificate. - Where an employee, in violation of this
Chapter,
either fails or refuses to file a withholding exemption certificate,
the
employer shall withhold the taxes prescribed under the schedule for
zero
exemption of the withholding tax table determined pursuant to
Subsection
(A) hereof.
(E) Withholding
on Basis of Average Wages.
- The Commissioner may, under rules and regulations promulgated by the
Secretary of Finance, authorize employers to:
(1) estimate
the wages which will be paid to an employee in any quarter of the
calendar
year;
(2) determine
the amount to be deducted and withheld upon each payment of wages tosuch employee during such quarter as if the appropriate average of the
wages soestimated constituted the actual wages paid; and
(3) deduct and
withhold upon any payment of wages to such employee during ;such quartersuch amount as may be required to be deducted and withheld during such
quarterwithout regard to this Subsection.
(F) Husband
and Wife.
- When a husband and wife each are recipients of wages, whether from
the
same or from different employers, taxes to be withheld shall be
determined
on the following bases:
(1) The
husband
shall be deemed the head of the family and proper claimant of the
additionalexemption in respect to any dependent children, unless he explicitly
waives
his right infavor of his wife in the withholding exemption certificate.
(2) Taxes
shall
be withheld from the wages of the wife in accordance with the schedule
forzero exemption of the withholding tax table prescribed in Subsection
(D)(2)(d)
hereof.(G) Nonresident
Aliens.
- Wages paid to nonresident alien individuals engaged in trade or
business
in the Philippines shall be subject to the provisions of this Chapter.
(H) Year-End
Adjustment.
- On or before the end of the calendar year but prior to the payment of
the compensation for the last payroll period, the employer shall
determine
the tax due from each employee on taxable compensation income for the
entire
taxable year in accordance with Section 24(A). The difference between
the
tax due from the employee for the entire year and the sum of taxes
withheld
from January to November shall either be withheld from his salary in
December
of the current calendar year or refunded to the employee not later than
January 25 of the succeeding year.
SEC.
80. Liability for Tax.
-
(A) Employer.
- The employer shall be liable for the withholding and remittance of
the
correct amount of tax required to be deducted and withheld under this
Chapter.
If the employer fails to withhold and remit the correct amount of tax
as
required to be withheld under the provision of this Chapter, such tax
shall
be collected from the employer together with the penalties or additions
to the tax otherwise applicable in respect to such failure to withhold
and remit.
(B) Employee.
- Where an employee fails or refuses to file the withholding exemption
certificate or willfully supplies false or inaccurate information
thereunder,
the tax otherwise required to be withheld by the employer shall be
collected
from him including penalties or additions to the tax from the due date
of remittance until the date of payment. On the other hand, excess
taxes
withheld made by the employer due to:
(1) failure
or refusal to file the withholding exemption certificate; or
(2) false
and
inaccurate information shall not be refunded to the employee but shall
be forfeitedin favor of the Government.
SEC.
81. Filing of Return and Payment of Taxes Withheld.
- Except as the Commissioner otherwise permits, taxes deducted and
withheld
by the employer on wages of employees shall be covered by a return and
paid to an authorized agent bank; Collection Agent, or the duly
authorized
Treasurer of the city or municipality where the employer has his legal
residence or principal place of business, or in case the employer is a
corporation, where the principal office is located.
The return shall be
filed and the payment made within twenty-five (25) days from the close
of each calendar quarter: Provided, however, That the
Commissioner
may, with the approval of the Secretary of Finance, require the
employers
to pay or deposit the taxes deducted and withheld at more frequent
intervals,
in cases where such requirement is deemed necessary to protect the
interest
of the Government.cralaw:red
The taxes deducted and
withheld by employers shall be held in a special fund in trust for the
Government until the same are paid to the said collecting officers.cralaw:red
SEC.
82. Return and Payment in Case of Government Employees.
- If the employer is the Government of the Philippines or any political
subdivision, agency or instrumentality thereof, the return of the
amount
deducted and withheld upon any wage shall be made by the officer or
employee
having control of the payment of such wage, or by any officer or
employee
duly designated for the purpose.cralaw:red
SEC.
83. Statements and Returns.
-
(A) Requirements.
- Every employer required to deduct and withhold a tax shall furnish to
each such employee in respect of his employment during the calendar
year,
on or before January thirty-first (31st) of the succeeding
year,
or if his employment is terminated before the close of such calendar
year,
on the same day of which the last payment of wages is made, a written
statement
confirming the wages paid by the employer to such employee during the
calendar
year, and the amount of tax deducted and withheld under this Chapter in
respect of such wages. The statement required to be furnished by this
Section
in respect of any wage shall contain such other information, and shall
be furnished at such other time and in such form as the Secretary of
Finance,
upon the recommendation of the Commissioner, may, by rules and
regulation,
prescribe.cralaw:red
(B) Annual
Information Returns.
- Every employer required to deduct and withhold the taxes in respect
of
the wages of his employees shall, on or before January thirty-first (31st)
of the succeeding year, submit to the Commissioner an annual
information
return containing a list of employees, the total amount of compensation
income of each employee, the total amount of taxes withheld therefrom
during
the year, accompanied by copies of the statement referred to in the
preceding
paragraph, and such other information as may be deemed necessary. This
return, if made and filed in accordance with rules and regulations
promulgated
by the Secretary of Finance, upon recommendation of the Commissioner,
shall
be sufficient compliance with the requirements of Section 68 of this
Title
in respect of such wages.cralaw:red
(C) Extension
of time.
- The Commissioner, under such rules and regulations as may be
promulgated
by the Secretary of Finance, may grant to any employer a reasonable
extension
of time to furnish and submit the statements and returns required under
this Section.