Types of Withholding Taxes and Duties and Obligation of a Withholding Agent

Types of Withholding Taxes:

1. Withholding Tax on Gross Compensation
2. Expanded or Creditable Withholding Tax (Service Income / Purchases of Goods)
3. Final Withholding Tax (Passive Investment Income) - Interest, Dividends, Royalties, Prizes, Winnings and Capital Gain
4. Withholding Tax on Government Money Payment - Income Tax; VAT; Percentage Tax
5. Quarterly Withholding Tax - Individual Engage in Business or Profession; Corporation

Duties and obligations of Withholding Agent:

1.To deduct and withhold
2. To remit the tax withheld
3. To file withholding tax returns
4. To register
5. To issue withholding tax certificate

Duties and Privileges of employer and employee with regards to withholding tax on gross compensation:

Employer - Issues the proper withholding statement (BIR Form 2316) and include the employees in the Alphalist under Schedule 7.2 of BIR form no. 1604 CF. Salaries allowed as deductible expenses even without WT.

Employee - File ITR and pay income tax. If any, on or before April 15. Shall not qualify for Substituted Filing even if no tax payable at year end.