Costeo por absorción: Costo del Producto Terminado y Vendido

Taxes withheld on certain income payments are intended to equal or at least approximate the tax due of the payee on the income. The income recipient is still required to file his income tax return as prescribed in Section 51 of the NIRC, wither to report the income and/or pay the difference between the tax withheld and the tax due on the income.

Expanded Withholding Tax

(a) a kind of withholding tax which is prescribed on certain income payments and is creditable against the income tax due of the payee for the taxable quarter/year in which the particular income was earned. (b) An income payment is subject to the

expanded withholding tax if the following conditions concur:

(1) An expense is paid or payable by the taxpayer, which is income to the recipient thereof subject to income tax;

(2) The income is fixed or determinable at the time of payment;

(3) The income is one of the income payments listed in the regulations that is subject to withholding tax;

(4) The income recipient is a resident of the Philippines liable to income tax; and

(5) The payor-withholding agent is also a resident of the Philippines.

Income payments subject to Expanded Withholding Tax:

77 (1) Professional fees / talent fees for services

rendered by the following individuals: (a) Those individually engaged in the

practice of profession or callings (b) Professional entertainers such as but

not limited to actors and actresses, singers and emcees

(c) Professional athletes including basketball players, pelotaris and jockeys

(d) Directors involved in movies, stage, radio, television and musical directors (e) Insurance agents and insurance

adjusters

(f) Management and technical consultants

(g) Bookkeeping agents and agencies (h) Other recipient of talent fees

(i) Fees of directors who are not employees of the company paying such fees whose duties are confined to attendance art and participation in the meetings of the Board of Directors (2) Professional fees, talent fees, etc for

services of taxable juridical persons (3) Rental of real property used in business (4) Rental of personal properties in excess of P

10,000 annually

(5) Rental of poles, satellites and transmission facilities

(6) Rental of billboards

(7) Cinematographic film rentals and other payments

(8) Income payments to certain contractors (a) General engineering contractors (b) General building contractors (c) Specialty contractors

(d) Other contractors like:

(1) Transportation contractors which include common carriers for the carriage of goods and merchandise of whatever kind by land, air or water, where the gross payments by the payor to the same payee amounts to at least two thousand

pesos (P2,000) per month, regardless of the number of shipments during the month (2) Filling, demolition and salvage

work contractors and operators of mine drilling apparatus

(3) Operators of dockyards

(4) Persons engaged in the installation of water system, and gas or electric light, hear or power

(5) Operators of stevedoring, warehousing or forwarding establishments

(6) Printers, bookbinders, lithographers and publishers, except those principally engaged in the publication or printing of any newspaper, magazine, review or bulletin which appears at regular intervals, with fixed prices for subscription and sale

(7) Advertising agencies, exclusive of payments to media

(8) Independent producers of television, radio and stage performances or shows

(9) Independent producers of "jingles" (10) Labor recruiting agencies

(11) Persons engaged in the installation of elevators, central air conditioning units, computer machines and other equipment and machineries and the maintenance services thereon (12) Messengerial, janitorial, security,

private detective and other business agencies

(13) Persons engaged in landscaping services

(14) Persons engaged in the collection and disposal of garbage

(15) TV and radio station operators on sale of TV and radio airtime, and (16) TV and radio blocktimers on sale of

78 (17) Persons engaged in the sale of

computer services, computer

programmers, software

developer/designer, etc.

(9) Income distribution to the beneficiaries of estates and trusts

(10) Gross commission or service fees of customs, insurance, stock, real estate, immigration and commercial brokers and fees of agents of professional entertainers (11) Commission, rebates, discounts and other

similar considerations paid/granted to independent and exclusive distributors, medical/technical and sales representatives and marketing agents and sub-agents of multi level marketing companies

(12) Income payments to partners of general professional partnerships

(13) Payments made to medical practitioners through a duly registered professional partnership

(14) Payments for medical/dental/veterinary services thru hospitals/clinics/health maintenance organizations, including direct payments to service providers

(15) Gross selling price or total amount of consideration or its equivalent paid to the seller/owner for the sale, exchange or transfer of real property

(16) Additional income payments to government personnel from importers, shipping and airline companies or their agents

(17) Certain income payments made by credit card companies

(18) Income payments made by the top 10,000 private corporations to their purchase of goods and services from their local/resident suppliers other than those covered by other rates of withholding (19) Income payments by government offices

on their purchase of goods and services, from local/resident suppliers

(20) Tolling fees paid to refineries

(21) Payments made by pre-need companies to funeral parlors

(22) Payments made to embalmers by funeral parlors

(23) Income payments made to suppliers of agricultural products

(24) Income payments on purchases of mineral, mineral products and quarry resources

Withholding tax on compensation

The tax withheld from income payments to individuals arising from an employer- employee relationship.

Compensation is any remuneration received for

services performed by an employee from his employer under an employee-employer relationship.

The different kinds of compensation are:

(1) Regular compensation - includes basic salary, fixed allowances for representation, transportation and others paid to an employee

(2) Supplemental compensation - includes payments to an employee in addition to the regular compensation such as but not limited to the following:

(a) Overtime Pay

(b) Fees, including director's fees (c) Commission

(d) Profit Sharing

(e) Monetized Vacation and Sick Leave (f) Fringe benefits received by rank & file

employees (g) Hazard Pay

(h) Taxable 13th month pay and other benefits

(i) Other remunerations received from an employee-employer relationship

79 Exemptions from Withholding tax on compensation:

Remuneration as an incident of employment (a) Retirement benefits received under RA

7641 (Retirement Pay Law) and those received by officials and employees of private firms, under a reasonable private benefit plan.

(b) Any amount received by an official or employee or by his heirs from the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee such as retrenchment, redundancy or cessation of business

(c) Social security benefits, retirement gratuities, pensions and other similar benefits

(d) Payment of benefits due or to become due to any person residing in the Philippines under the law of the US administered US Veterans Administration

(e) Payment of benefits made under the SSS Act of 1954, as amended

(f) Benefits received from the GSIS Act of 1937, as amended, and the retirement gratuity received by the government employee (g) Remuneration paid for agricultural labor (h) Remuneration for domestic services

(i) Remuneration for casual labor not in the course of an employer's trade or business (j) Compensation for services by a citizen or

resident of the Philippines for a foreign government or an international organization

(k) Payment for damages – actual, moral, exemplary damages received by an employee or his heirs pursuant to a final judgment or compromise agreement arising out of or related to an employer- employee relationship.

(l) Proceeds of Life Insurance – the proceeds of life insurance policies paid to the heirs or beneficiaries upon the death of the insured, whether in a single sum or otherwise;

provided however, that interest payments agreed under the policy for the amounts which are held by the insured under such an agreement shall be INCLUDED in the gross income.

(m) Amount received by the insured as a return of premium

(n) Compensation for injuries or sickness – amounts received through accident or health insurance or under Workmen’s Compensation Acts, as compensation for personal injuries or sickness, plus the amount of any damages received whether by suit or agreement on account of such injuries or sickness.

(o) Income exempt under Treaty

(p) Thirteenth (13th) month pay and other benefits (not to exceed P 30,000)

(1) Mandatory 1 month basic salary

received after the twelfth *12th_{) month}

pay

(2) Other benefits such as Christmas

bonus, productivity incentives, loyalty award, gift in cash or in kind and other benefits of similar nature actually received by officials and employees of both government and private offices including the Additional Compensation Allowance (ACA) granted and paid to all officials and employees of the Nations Government (NGAs) including State Universities and Colleges (SUCs), Government-Owned-or-Controlled Corporations (GOCCs), Government Financial Institutions (GFIs) and Local Government Units (LGUs)

(a) De minimis benefits, given in excess of the ceilings prescribed in regulations, shall be taxable to the recipient –employee only if such excess is beyond the P30,000 threshold.

(q) GSIS, SSS, Medicare and other contributions – GSIS, SSS, Medicare and

80 Pag-Ibig contributions, and union dues of individual employees

(r) Compensation income of MWEs who work in the private sector and being paid the statutory minimum wage (SMW), as fixed by Regional Tripartitie Wage and Productivity Board (RTWPB)/National Wages and Productivity Commission (NWPC), applicable to the place where he/she is assigned

(s) Compensation income of employees in the public sector with compensation income of not more than the SMW in the non- agricultural sector, as fixed by RTWPB/NWPC, applicable to the place where he/she is assigned.