Orientation on Withholding Tax for Job

Order ContractorsBUREAU OF INTERNAL REVENUE

REVENUE REGION 19, DAVAO CITY

Susan D. Tusoy, CPA, MPSAsst. Chief, Assessment Division

Upon RegistrationUse Form 1901 for self-employed

Job Orders

Use Form 1902 for Employed

Registration typeNon-VAT Taxpayer•Not subject to percentage tax•Subject to percentage tax

VAT Taxpayer•Engaged in VAT taxable transaction•Sales/Receipts exceed the threshold•Those who opt to register

Self-Employed/Engaged in Business or Practice of Profession

Subject to:Registration Requirement (Form 1901)Annual Registration FeeQuarterly Income Tax Return (1st – 3rd qtr)Annual Income Tax ReturnMonthly Percentage Tax or VAT ReturnsBooks of AccountsIssuance of Invoices

Percentage TaxSubject to 3% percentage tax

Gross sales/receipts for not exceed the VAT thresholdUse form 2551MDue every 20th day of the following month

VAT

Threshold is P1,919,500.00Monthly VAT – use Form 2550M

due every 20th day of the following monthFor the 1st two months of the quarter

Quarterly VAT – use Form 2550QDue every 25th day of the following quarterFor every quarter ending

Withholding Tax Creditable Against Income Tax

2% EWT for those not engaged in the practice of profession (services)

or

10% or 15% for those engaged in the practice of profession (licensed holder)

Withholding TaxCreditable against Percentage Tax (for Non-VAT)

3% of gross receipts

Withholding Tax on VAT by gov’t. agencies 5% creditable against VAT (for VAT taxpayer)

Job Order ContractorServices rendered by job order personnel shall not be considered as government serviceNo employer-employee relationshipSaid personnel are only entitled to the basic salary of the position

Job Order - Registration Form – 1901 Where to Register – preferably in the RDO having

jurisdiction over the place of assignment Due date - 30 days from date of signing of contract Attachment: 1. photocopy of NSO certified BC of applicant 2. photocopy of NSO certified BC of dependent, if applicable

3. photocopy of marriage contract, if applicable

REGISTRATION TAX TYPE – FOR JOs

REG. FEE

INCOME TAXPT / VATQUARTERLY

(special arrangement)ANNUAL

Licensed Professionals (whether or not doing their respective field of expertise

×

Non-licensed professionals/clerical works

×

Laborers (when qualified as MIE) ×

×

×

WITHHOLDING TAXES FOR JOsExpanded WTax Business Tax

GI<P720K GI>P720K % Tax VAT

Licensed Prof. (whether or not doing their respective field of expertise

10% 15%

3%

5% (12% if TP will avail of the substituted filing under RR 14-2003)

Non-licensed professionals

2% 2% 3%5%

(12% if TP will avail of the substituted filing

under RR 14-2003)

Laborers 2% n/a n/a n/a

Filing of Percentage Tax Returns for JOsQualified taxpayers may avail of substituted filing by submitting a duly filled-up:

Annex A (Notice of Availment of the Substituted Filing of Percenage Tax) of RR 14-2003

Annex E (Notice of Availment of the Option to Pay the Tax Through the Withholding Tax Process (may not be necessary because Wtax is mandatory for gov’t agencies)

Filing of VAT Returns for JO

Qualified taxpayers may avail of substituted filing by submitting a duly filled-up (RR 14-2003):

Annex B (Notice of Availment of the Substituted Filing of VAT)

Annex C (Sworn Declaration and Waiver of the Privilege to Claim Input Tax Credits Under Section 110 of the Tax Code)

Annex E (Notice of Availment of the Option to Pay the Tax Through the Withholding Tax Process (may not be submitted because Wtax is mandatory for gov’t agencies)

Sample Computation of Income Tax Optional Standard Deduction

Gross Receipts P 200,000Less: Optional Standard Deduction(40%) 80,000Net Income P 120,000Less: Personal Exemption 50,000Net Taxable Income P 70,000

Tax Due P 8,500Tax Withheld (1st to 4th Qtr) 4,000Quarterly Income Tax Payment 0 4,000Payable - April 15 P 4,500

INCOME TAX TABLEOVER BUT NOT OVER AMOUNT RATE OF EXCESS OVER

Not over 10,0000 5%

10,000 30,000 500 + 10% 10,000

30,000 70,000 2,500 + 15% 30,000

70,000 140,000 8,500 + 20% 70,000

140,000 250,000 22,500 + 25% 140,000

250,000 500,000 50,000 + 30% 250,000

500,000 over 125,000 + 32% 500,000

Advantages of using optional standard deduction

shall not be required to submit with his tax return such financial statements otherwise required under the Code

shall keep such records pertaining to his gross sales or gross receipts only

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Income Tax Due Dates

Income Tax Period Due Date Individual

1st Quarter April 152nd Quarter Aug. 153rd Quarter Nov. 15Annual Return April 15

For Job Orders

Withholding Agent’s ResponsibilityIssue BIR Form 2306 –Cert. of Final Tax Withheld at Source duly signed by both the payor and the payee (for lone payor)

shall attach duly signed Form 2306 to BIR Form 1600

For JOs with more than one payors, the Wtax Agent shall issue BIR

FORM 2307 – for Withholding tax on Percentage

- shall be treated ad creditable wtax

The end