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
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