By Jun Ramirez The Bureau of Internal Revenue (BIR) has come out with a new withholding tax table to guide employers on the income tax rate that shall be withheld from the salaries of their employees effective Jan. 1, 2018. 2018 Revenue Memorandum Circular No. 1-2018
(Source: www.bir.gov.ph/MANILA BULLETIN BIR Commissioner Ceasar R. Dulay signed Revenue Memorandum Circular 1-2018 revising the withholding tax table on compensation and the creditable withholding tax rate on income payments to self-employed individuals or professionals. The changes arose from the implementation of the Tax Reform Acceleration and Inclusion Law which exempts P250,000 yearly income of individual taxpayers from taxation. In general, every employer is required to deduct and withhold from compensation a tax determined in accordance with the prescribed Revised Withholding Tax Table (Version 2). The withholding process involves the determination of the total amount of monetary and nonmonetary compensation paid to an employee for the payroll period, whether monthly, weekly or daily, segregating nontaxable benefits and mandatory contributions. Employers must compute the withholding tax due by adding the tax predetermined in the compensation range indicated on the column used and the tax on the excess of the total compensation over the minimum of the compensation range. To illustrate, an employee receiving daily pay of P2,500 shall be referred to column 4 of the tax table which ranges from P2,192 - P5,478 with a predetermined tax of P356.16 plus 30% in excess of P2,192, or a total withholding tax of P448.56. Exempted from income tax are individuals receiving daily compensation of not more than P685, P4,808 weekly or P20,833 monthly.