Withholding tax is a tax liability collected by the Bureau of Internal Revenue from individuals or businesses who earn income. If you need a guide on the withholding tax expanded basics, this article is for you.
Who Needs to File EWT
If you are an income-earning entity, tax services in Manila affirm that it is part of your obligation to file your income taxes. Through the EWT or the Expanded Withholding Tax, the government is permitted to collect your income tax payments ahead of your quarterly and yearly payment deadlines.
You need a withholding tax agent like expert accounting services in the Philippines to manage the payments related to the expanded withholding tax. You need someone to file the return on your behalf. The tax rates will depend on the nature of your income payment and the type of payee.
If you fail to pay your tax on time, you will be subject to a surcharge of 25%, a compromise penalty, and an interest of 12% per annum. The BIR may also not allow your payment to be a deductible expense because of non-withholding if they are to conduct an audit.
New Tax Obligations under Tax Reform for Acceleration and Inclusion Law
- Professional & Talent Fees for Rendered Services
Individual payees:
- VAT Registered or Gross income above PHP 3 million = 10%
- Gross Income not exceeding PHP 3 million = 5%
Non-individual payees:
- gross income above Php 720,000 = 15%
- gross income not exceeding Php 720,000 = 10%
2. Personal Property Rentals = 5% of gross payment but annual gross income should exceed PHP 10,000 for payee to be required.
3. Income payments to Contractors = 2% of gross payment
4. Income payments to General Professional Partnerships partners:
- Gross income above Php 720,000 = 15%
- Gross income not exceeding Php 720,000 = 10%
5. Income distributions to estate and trust beneficiaries = 15% of income
6. Real Property Sales
Habitually engaged in the business:
- Php 500,000 and below = 1.5%
- Php 500,000 above but not exceeding Php 2,000,000 = 3%
- Php 2,000,000 above = 5%
Not habitually engaged in business = 6%
Exempted from creditable withholding tax = 0%
7. Importers’ Income payments to government = 15% of gross additional payments
8. Credit card firms’ income payments to establishments = 50% of 1% of gross payments
9. Top withholding agents’ payments to local regular suppliers:
Goods = 1%
Services = 2%
10. Cash payments from Government to local suppliers:
Goods = 1%
Services = 2%
11. Tolling fees to refineries = 5%
12. Company payments to funeral parlors = 1%
13. Payments to embalmers = 1%
14. Payments to agricultural product suppliers = 1%
15. Locally made sugar payments = 1%
16. Quarry Resources Payments = 5% but 1% for BSP payments
17. MERALCO refunds and interest payments:
Refunds:
- Active contracts = 25%
- Inactive contracts = 32%
Interest Payments:
- Resident & general service customers = 10%
- Non-resident service customers = 20%
18. Electric distribution companies refunds = 10% or 20%
19. Political contributions = 5% of gross contribution
20. Real Estate Investment Trust Payments = 1%
21. Interest income for debt instruments = 20%
How to File and Pay Expanded Withholding Tax
Discover the hassle-free path to fulfilling your Expanded Withholding Tax (EWT) obligations. If you wish to make your life simpler, expert help from tax and audit services in the Philippines can make things simpler. In this section, we’ll walk you through the simple steps for filing and paying EWT with ease.
Monthly
Fill out the BIR Form No. 0619E and submit on or before the 10th of the following month if you are filing manually. If you are filing via eFPS you must submit it within the 11th to 15th of the following month.
Take note of these crucial details:
- Remittance Date
- Total Amount for Remittance
- Penalties (if applicable)
Quarterly
Submit the following:
- BIR Form No. 1601EQ
- Quarterly alphalist of payees (QAP)
You must submit it via email on or before the last day of the month following the close of the quarter when you made the withholding.
Annually
Submit the following:
- BIR Form 1604-E
- Alphalist of Payees subject to Expanded Withholding Tax
- Alphalist of Other Payees who are exempt from withholding tax but subject to income tax
You may manually file your return via eBIR or file it electronically via eFPS. You must accomplish this every March 1 of the year following the calendar year that’s subject to income tax.
You may pay through any payment facility connected to your online banking system if you filed through eFPS. For eBIR filers, you can pay through authorized agent banks (AAB) within your RDO or pay via GCash or Paymaya.
Final Thoughts
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