Change In The Creditable Withholding Tax Rate On Income Payments To Self-Employed Individuals Or Professionals

The following lncome Payments to Self-employed lndividuals or Professionals shall be subject to Eight Percent (8%): 

1. Professional fees, talent fees, commissions, etc. for services rendered by individuals; 

2. lncome distribution to beneficiaries of Estates and Trusts; 

3. lncome Payment to certain brokers and agents; 4. lncome Payments to partners of general professional partnership; 

5. Professionalfees paid to medical practitioners; and 6. Commission of independent and/or exclusive sales representatives, and marketing agents of companies.

Please refer of the full text of RMC No. 1-2018 https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2018/RMC%20No%201-2018.pdf

Procedures On The Use Of Withholding Tax Table On Compensation Income

To supplement Revenue Memorandum Circular (RMC) No. 105-2017 that was issued last December 28, 2017, the bureau has issued RMC No. 1-2018 dated January 4, 2018 to prescribes the Procedures on the use of Withholding Tax Table on Compensation Income with effective date of January 1, 2018 to December 31, 2022.

Steps in the Use of the Withholding Tax Table

Generally, every employer paying compensation to its employee/s shall deduct and withhold from such compensation a tax determined in accordance with the prescribed Revised Withholding Tax Tables, version 2 (Annex "A").

1. Determine the total amount of monetary and non-monetary compensation paid to an employee for the payroll period: monthly, semi-monthly, weekly or daily, as the case may be, segregating non-taxable benefits and mandatory contributions.

2. Use the appropriate table in Annex "A" for the applicable payroll period.

3. Determine the compensation range of the employee and apply the applicable tax rates prescribed thereon.

4. Compute the withholding tax due by adding the tax predetermined in the compensation range indicated on the column used and the tax on the excess of the total compensation over the minimum of the compensation range.

Sample Computations Using the Withholding Tax Tables

Example 1:

Example 2:

Example 3. 

Example 4.

 Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/2018/RMC%20No%201-2018.pdf of the full text of RMC No. 1-2018 and the Revised Withholding Tax Table