Withholding Taxes of Top 20,000 Corporations in Philippines


By: Tax and Accounting Center Philippines

Withholding tax of top 20,000 corporations in the Philippines notified by the Bureau of Internal Revenue (BIR or Tax Authorities) is the most misunderstood tax rule in the Philippines. As such, let us drop some lines and share our understanding of the withholding tax rules in the Philippines for top 20,000 taxpayers (TTC).

Withholding tax on regular items

The tax rules and regulations has provided withholding tax rules in the Philippines applicable to all taxpayers engaged in business or practice of profession with respect to certain income payments that they claim as deductible expense for income tax purposes. These rules apply also to top 20,000 corporations and the same rates are required to be withheld upon payment or accrual of top 20,000 corporations. Hereunder are some of them enumerated in Revenue Regulations No. 2-98, as amended:

  • Rental or lease payments – 5%
  • Professional fees – 10%/15%;
  • Payments to contractors – 2%
  • Payments to advertising agencies – 2%
  • Payments to specialty contractors – 2%

Special rates for top 20,000 taxpayers

For top 20,000 taxpayers, the tax rules in the Philippines provided an additional withholding tax obligation. For expenses or income payments to others that are not listed in the specific income payments subject to withholding taxes under Revenue Regulations No. 2-98, as amended, they are required to withhold as follows:

  • Purchase of goods – 1%
  • Purchase of services – 2%

The above rates apply to purchases from their regular supplier of goods or services or from those whom they had at least six (6) transactions during the taxable year. It likewise applies to casual purchases or single transaction from non-regular supplies worth at least P10,000.00. Please note that the supplier or sellers to top 20,000.00 need not be a top-20,000.00 in themselves. What is being referred to in here as subject to withholding taxes are the payments of top 20,000.00 taxpayers to be subject to withholding tax.  Payments to top-20,000 taxpayer from a non-top 20,000 or from another top 20,000 is another thing so please do not be confused.

 Withholding tax exemptions of top 20,000 taxpayers

Exemptions from withholding tax in the Philippines could apply in two (2) ways – payments BY top 20,000 taxpayer, or payments TO top twenty thousand corporations. In general, the following payments by top twenty thousand corporations are exempt from withholding tax in the Philippines:

  • Payments that does not constitute income on the part of the payee (e.g. reimbursable expenses)
  • Payments to government agencies;
  • Payments to income tax exempt entities

We hope the above simply laid rules will help you in your compliance with the withholding tax for top 20,000 corporations.


Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may please send mail at 

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