Withholding Tax Code (SAP Library

Withholding Tax Code

Definition

Use

When you create a company code using the template for the Philippines, the system sets up sample withholding tax codes – for different income payments subject to creditable tax ( expanded withholding tax), final tax, expanded VAT on sale to government entity, and payees exempt from withholding tax – as listed in the tables below.

Each withholding tax code corresponds to an official withholding tax key. These keys are used to categorize withholding tax transactions into different natures of income payment (ATC code), as required by Philippine BIR form 1601.

Expanded Withholding Tax

Withholding tax code	Description	Tax rate (%)	Official withholding tax key
1	Professional/talent fees paid to juridical persons	5	C010
2	Rentals (corporations)	5	C100
3	Cinematographic film rentals (corporations)	5	C110
4	Prime contractors/subcontractors (corporations)	1	C120
5	Amounts paid to certain brokers and agents (corporations)	5	C140
6	Payments to medical practitioners through a duly registered professional partnership	5	C141
7	Payments made by credit card companies to juridical persons	0.5	C156
8	Payments made by government offices on their local purchase of goods from juridical persons (corporations)	1	C157
9	Income payments made by top 5000 corporations to their local suppliers of goods (corporations)	1	C158
10	Professionals (lawyers, CPAs, engineers, etc.)	10	I010
11	Professional entertainers	10	I020
12	Professional athletes	10	I030
13	Movie, stage, radio, TV, and musical directors	10	I040
14	Management and technical consultants	10	I050
15	Business and bookkeeping agents and agencies	10	I060
16	Insurance agents and adjusters	10	I070
17	Other recipients of talent fees	10	I080
18	Fees of directors who are not employee of the company	10	I090
19	Rentals (individuals)	5	I100
20	Cinematographic film rentals (individuals)	5	I110
21	Prime contractors/subcontractors (individuals)	1	I120
22	Income distribution to beneficiaries of estates and trusts	15	I130
23	Amounts paid to customs, real estates, insurance and commercial brokers and agents of professional entertainers (individuals)	5	I140
24	Payments to medical practitioners through hospitals/clinics	10	I151
25	Payments to partners in general professional partnership	10	I152
26	Payments made by credit card companies to individuals	0.5	I156
27	Payments made by government offices on their local purchase of goods from juridical persons (individuals)	1	I157
28	Payments made by top 5000 corporations to their local suppliers of goods (individuals)	1	I158
29	Additional payments to government personnel from importers, shipping and airline companies or their agents (for overtime services)	15	I159

Final Tax

Withholding tax code	Description	Tax rate (%)	Official withholding tax key
1	Interest on foreign loans payable to non-resident foreign corporations (NRFCs)	20	C180
2	Interest and other income payments on foreign currency transactions/loans payable to offshore banking units (OBUs)/foreign currency deposit units (FCDUs)	10	C190
3	Cash dividend payments by domestic corporations to citizens and resident aliens	10	I202
4	Property dividend payments by domestic corporations to citizens and resident aliens	10	I203
5	Cash dividend payments by domestic corporations to NRFCs	32	C212
6	Property dividend payments by domestic corporations to NRFCs	32	C213
7	Cash dividend payments by domestic corporations to NRFCs whose countries allowed tax deemed paid credit (subject to tax sparing rule)	15	C222
8	Property dividend payments by domestic corporations to NRFCs whose countries allowed tax deemed paid credit (subject to tax sparing rule)	15	C223
9	Cash dividend payments by domestic corporations to non-resident aliens engaged in trade or business within the Philippines (NRAETBs)	20	I224
10	Property dividend payments by domestic corporations to NRAETBs	20	I225
11	Share to NRAETB in the distributable net income after tax of a partnership (except GPP), an association, a joint account/venture taxable as a corporation of which he is a partner/member/co-venturer	20	I226
12	On other payments to NRFCs	32	C230
13	Distributive share of individual partners in a taxable partnership, etc.	10	I240
14	Other royalty payments to citizens, resident aliens and NRAETBs (other than I380 and I341)	20	I250
15	All kinds of royalty payments to domestic and resident foreign corporations	20	C250
16	On prizes exceeding P10,000 and other winnings paid to individuals	20	I260
17	Branch profit remittances by all corporations except PEZA/SBMA/CDA registered	15	C280
18	On gross rentals/lease/charter fees payable to non-resident lessors of foreign vessels	4.5	C290
19	On gross rentals/charter and other fees payable to non-resident lessors of aircraft, machinery and other equipment	7.5	C300
20	On payments to individuals engaged by OBUs, foreign petroleum service contractors & subcontractors, and by regional or area headquarters and regional operating headquarters of multinational companies, including any of its Filipino employees occupying the same position	15	I320
21	On payments to non-resident aliens not engaged in trade or business (NRANETBs)	25	I330
22	On payments to non-resident foreign corporate cinematographic film owners, lessors or distributors	25	C340
23	On payments to NRAETBs for cinematographic films and similar works	25	I341
24	On royalties paid to citizens, resident aliens and NRAETBs on books, other literary works and musical composition	10	I380

Expanded VAT on Sale to Government Entity

Withholding tax code	Description	Tax rate (%)	Official withholding tax key
3	Expanded VAT withheld by government entity	3	EVAT

Exempt from Withholding Tax

Withholding tax code	Description	Tax rate (%)	Official withholding tax key
1	Payees exempt from withholding tax	0	EX01

If you create your own withholding tax type and code for payees exempt from withholding tax, make sure you assign it the official withholding tax key EX01.

Treaty rates

If a treaty agreement exists between the Philippines and another country regarding a different rate of withholding tax, you can maintain these rates directly in Customizing for Financial Accounting. First, for these formulas to be used in the withholding tax calculation, you must set the W.tax form. (Calculate withholding tax according to formula) indicator when you define the withholding tax codes (menu path listed above). Then, you can maintain the rates under Financial Accounting Global Settings ® Withholding Tax ® Extended Withholding Tax ® Calculation ® Withholding Tax Codes ® Define Formulas for Calculating Withholding Tax.

In the case of scaled tax rates for treaty withholding tax rates, note that the withholding tax reporting tool can only display the first bracket of the rate table.