TITLE II

TAX ON INCOME

(As Last Amended by RA No. 10653) [5]

CHAPTER XIII - WITHHOLDING ON WAGES

SEC. 78. Definitions. - As used in this employer, and the term 'miscellaneous payroll
Chapter: period'means a payroll period other than, a daily,
weekly, biweekly, semi-monthly, monthly,
(A) Wages. - The term 'wages' means all quarterly, semi-annual, or annual period.
remuneration (other than fees paid to a public
official) for services performed by an employee (C) Employee. - The term 'employee' refers to
for his employer, including the cash value of all any individual who is the recipient of wages and
remuneration paid in any medium other than includes an officer, employee or elected official
cash, except that such term shall not include of the Government of the Philippines or any
remuneration paid: political subdivision, agency or instrumentality
thereof. The term 'employee' also includes an
(1) For agricultural labor paid entirely in officer of a corporation.
products of the farm where the labor is
performed, or (D) Employer. - The term 'employer' means the
person for whom an individual performs or
(2) For domestic service in a private home, or performed any service, of whatever nature, as
the employee of such person, except that:
(3) For casual labor not in the course of the
employer's trade or business, or (1) If the person for whom the individual
performs or performed any service does not have
(4) For services by a citizen or resident of the
control of the payment of the wages for such
Philippines for a foreign government or an
services, the term 'employer' (except for the
international organization.
purpose of Subsection(A) means the person
If the remuneration paid by an employer to an having control of the payment of such wages; an
employee for services performed during one-half
(2) In the case of a person paying wages on
(1/2) or more of any payroll period of not more
behalf of a nonresident alien individual, foreign
than thirty-one (31) consecutive days constitutes
partnership or foreign corporation not engaged
wages, all the remuneration paid by such
in trade or business within the Philippines, the
employer to such employee for such period shall
term 'employer' (except for the purpose of
be deemed to be wages; but if the remuneration
Subsection(A) means such person.
paid by an employer to an employee for services
performed during more than one -half (1/2) of SEC. 79. Income Tax Collected at Source. -
any such payroll period does not constitute
wages, then none of the remuneration paid by
such employer to such employee for such period
shall be deemed to be wages. (A) Requirement of Withholding. - Except in the
case of a minimum wage earner as defined in
(B) Payroll Period. - The term 'payroll Section 22(HH) of this Code, every employer
period'means a period for which payment of making payment of wages shall deduct and
wages is ordinarily made to the employee by his withhold upon such wages a tax determined in

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 TITLE II

TAX ON INCOME

(As Last Amended by RA No. 10653) [5]

CHAPTER XIII - WITHHOLDING ON WAGES

accordance with the rules and regulations to be rate of six percent (6%) per annum, starting after
prescribed by the Secretary of Finance, upon the lapse of the three-month period to the date
recommendation of the Commissioner. [42] the refund of credit is made.

(B) Tax Paid by Recipient. - If the employer, in Refunds shall be made upon warrants drawn by
violation of the provisions of this Chapter, fails the Commissioner or by his duly authorized
to deduct and withhold the tax as required under representative without the necessity of counter-
this Chapter, and thereafter the tax against which signature by the Chairman, Commission on
such tax may be credited is paid, the tax so Audit or the latter's duly authorized
required to be deducted and withheld shall not representative as an exception to the requirement
be collected from the employer; but this prescribed by Section 49, Chapter 8, Subtitle B,
Subsection shall in no case relieve the employer Title 1 of Book V of Executive Order No. 292,
from liability for any penalty or addition to the otherwise known as the Administrative Code of
tax otherwise applicable in respect of such 1987. [43]
failure to deduct and withhold.
(D) Personal Exemptions.-
(C) Refunds or Credits. -
(1) In General. - Unless otherwise provided by
(1) Employer. - When there has been an this Chapter, the personal and additional
overpayment of tax under this Section, refund or exemptions applicable under this Chapter shall
credit shall be made to the employer only to the be determined in accordance with the main
extent that the amount of such overpayment was provisions of this Title.
not deducted and withheld hereunder by the
employer. (2) Exemption Certificate. -

(2) Employees. -The amount deducted and (a) When to File. - On or before the date of
withheld under this Chapter during any calendar commencement of employment with an
year shall be allowed as a credit to the recipient employer, the employee shall furnish the
of such income against the tax imposed under employer with a signed withholding exemption
Section 24(A) of this Title. Refunds and credits certificate relating to the personal and additional
in cases of excessive withholding shall be exemptions to which he is entitled.
granted under rules and regulations promulgated (b) Change of Status. - In case of change of
by the Secretary of Finance, upon status of an employee as a result of which he
recommendation of the Commissioner. would be entitled to a lesser or greater amount
Any excess of the taxes withheld over the tax of exemption, the employee shall, within ten
due from the taxpayer shall be returned or (10) days from such change, file with the
credited within three (3) months from the employer a new withholding exemption
fifteenth (15th) day of April. Refunds or credits certificate reflecting the change.
made after such time shall earn interest at the

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 TITLE II

TAX ON INCOME

(As Last Amended by RA No. 10653) [5]

CHAPTER XIII - WITHHOLDING ON WAGES

(c) Use of Certificates. - The certificates filed exemption in respect to any dependent children,
hereunder shall be used by the employer in the unless he explicitly waives his right in favor of
determination of the amount of taxes to be his wife in the withholding exemption
withheld. certificate.

(d) Failure to Furnish Certificate. - Where an (2) Taxes shall be withheld from the wages of
employee, in violation of this Chapter, either the wife in accordance with the schedule for
fails or refuses to file a withholding exemption zero exemption of the withholding tax table
certificate, the employer shall withhold the taxes prescribed in Subsection (D)(2)(d) hereof.
prescribed under the schedule for zero
exemption of the withholding tax table (G) Nonresident Aliens. - Wages paid to
determined pursuant to Subsection (A) hereof. nonresident alien individuals engaged in trade or
business in the Philippines shall be subject to the
(E) Withholding on Basis of Average Wages. - provisions of this Chapter.
The Commissioner may, under rules and
regulations promulgated by the Secretary of (H) Year-end Adjustment. - On or before the
Finance, authorize employers to: end of the calendar year but prior to the payment
of the compensation for the last payroll period,
(1) Estimate the wages which will be paid to an the employer shall determine the tax due from
employee in any quarter of the calendar year; each employee on taxable compensation income
for the entire taxable year in accordance with
(2) Determine the amount to be deducted and Section 24(A). The difference between the tax
withheld upon each payment of wages to such due from the employee for the entire year and
employee during such quarter as if the the sum of taxes withheld from January to
appropriate average of the wages so estimated November shall either be withheld from his
constituted the actual wages paid; and salary in December of the current calendar year
or refunded to the employee not later than
(3) Deduct and withhold upon any payment of
January 25 of the succeeding year.
wages to such employee during such quarter
such amount as may be required to be deducted
and withheld during such quarter without regard
to this Subsection. SEC. 80. Liability for Tax. -

(F) Husband and Wife. - When a husband and (A) Employer. - The employer shall be liable
wife each are recipients of wages, whether from for the withholding and remittance of the correct
the same or from different employers, taxes to amount of tax required to be deducted and
be withheld shall be determined on the withheld under this Chapter. If the employer
following bases: fails to withhold and remit the correct amount of
tax as required to be withheld under the
(1) The husband shall be deemed the head of provision of this Chapter, such tax shall be
the family and proper claimant of the additional collected from the employer together with the
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 TITLE II

TAX ON INCOME

(As Last Amended by RA No. 10653) [5]

CHAPTER XIII - WITHHOLDING ON WAGES

penalties or additions to the tax otherwise The return shall be filed and the payment made
applicable in respect to such within twenty-five (25) days from the close of
each calendar quarter: Provided, however, That
the Commissioner may, with the approval of the
Secretary of Finance, require the employers to
failure to withhold and remit.
pay or deposit the taxes deducted and withheld
at more frequent intervals, in cases where such
requirement is deemed necessary to protect the
(B) Employee. - Where an employee fails or interest of the Government.
refuses to file the withholding exemption
certificate or wilfully supplies false or inaccurate The taxes deducted and withheld by employers
information thereunder, the tax otherwise shall be held in a special fund in trust for the
required to be withheld by the employer shall be Government until the same are paid to the said
collected from him including penalties or collecting officers.
additions to the tax from the due date of
remittance until the date of payment. On the
other hand, excess taxes withheld made by the SEC. 82. Return and Payment in Case of
employer due to: Government Employees. - If the employer is
the Government of the Philippines or any
(1) Failure or refusal to file the withholding
political subdivision, agency or instrumentality
exemption certificate; or
thereof, the return of the amount deducted and
(2) False and inaccurate information shall not withheld upon any wage shall be made by the
be refunded to the employee but shall be officer or employee having control of the
forfeited in favor of the Government. payment of such wage, or by any officer or
employee duly designated for the purpose.

SEC. 81. Filing of Return and Payment of

Taxes Withheld. - Except as the Commissioner SEC. 83. Statements and Returns. -
otherwise permits, taxes deducted and withheld
(A) Requirements. - Every employer required to
by the employer on wages of employees shall be
deduct and withhold a tax shall furnish to each
covered by a return and paid to an authorized
such employee in respect of his employment
agent bank; Collection Agent, or the duly
during the calendar year, on or before January
authorized Treasurer of the city or municipality
thirty-first (31st) of the succeeding year, or if his
where the employer has his legal residence or
employment is terminated before the close of
principal place of business, or in case the
such calendar year, on the same day of which
employer is a corporation, where the principal
the last payment of wages is made, a written
office is located.
statement confirming the wages paid by the
employer to such employee during the calendar
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 TITLE II

TAX ON INCOME

(As Last Amended by RA No. 10653) [5]

CHAPTER XIII - WITHHOLDING ON WAGES

year, and the amount of tax deducted and

withheld under this Chapter in respect of such
wages. The statement required to be furnished
by this Section in respect of any wage shall
contain such other information, and shall be
furnished at such other time and in such form as
the Secretary

of Finance, upon the recommendation of the

Commissioner, may, by rules and regulation,
prescribe.

(B) Annual Information Returns. - Every

employer required to deduct and withhold the
taxes in respect of the wages of his employees
shall, on or before January thirty-first (31st) of
the succeeding year, submit to the
Commissioner an annual information return
containing a list of employees, the total amount
of compensation income of each employee, the
total amount of taxes withheld therefrom during
the year, accompanied by copies of the
statement referred to in the preceding paragraph,
and such other information as may be deemed
necessary. This return, if made and filed in
accordance with rules and regulations
promulgated by the Secretary of Finance, upon
recommendation of the Commissioner, shall be
sufficient compliance with the requirements of
Section 68 of this Title in respect of such wages.

(C) Extension of Time. - The Commissioner,

under such rules and regulations as may be
promulgated by the Secretary of Finance, may
grant to any employer a reasonable extension of
time to furnish and submit the statements and
returns required under this Section.

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