Entering content frameObject documentation Withholding Tax Code 

Definition

See

Structure linkWithholding Tax Codes.

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 alien 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

Note

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.

Note

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.

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