Orientation on Withholding Tax for Job Order Contractors

Orientation on Withholding Tax for Job Order Contractors BUREAU OF INTERNAL REVENUE REGION 19, DAVAO CITY Susan D. Tusoy, CPA, MPS Asst. Chief, Assessment Division

Upon Registration v. Use Form 1901 for self-employed v. Job Orders v. Use Form 1902 for Employed

Registration type v. Non-VAT Taxpayer • Not subject to percentage tax • Subject to percentage tax v. 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: v. Registration Requirement (Form 1901) v. Annual Registration Fee v. Quarterly Income Tax Return (1 st – 3 rd qtr) v. Annual Income Tax Return v. Monthly Percentage Tax or VAT Returns v. Books of Accounts v. Issuance of Invoices

Percentage Tax v. Subject to 3% percentage tax q. Gross sales/receipts for not exceed the VAT threshold q. Use form 2551 M q. Due every 20 th day of the following month

VAT v. Threshold is P 1, 919, 500. 00 v. Monthly VAT – use Form 2550 M qdue every 20 th day of the following month q. For the 1 st two months of the quarter v. Quarterly VAT – use Form 2550 Q q. Due every 25 th day of the following quarter q. For 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 Tax q. Creditable against Percentage Tax (for Non-VAT) 3% of gross receipts q. Withholding Tax on VAT by gov’t. agencies 5% creditable against VAT (for VAT taxpayer)

Job Order Contractor v. Services rendered by job order personnel shall not be considered as government service v. No employer-employee relationship v. Said 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 Licensed Professionals (whether or not doing their respective field of expertise Non-licensed professionals/clerical works Laborers (when qualified as MIE) INCOME TAX QUARTERLY ANNUAL (special arrangement) PT / VAT × × × × ×

WITHHOLDING TAXES FOR JOs Expanded WTax GI<P 720 K Licensed Prof. (whether or not doing their respective field of expertise 10% Business Tax GI>P 720 K % Tax VAT 15% 3% 5% (12% if TP will avail of the substituted filing under RR 14 -2003) Non-licensed professionals 2% Laborers 2% 2% 3% 5% (12% if TP will avail of the substituted filing under RR 14 -2003) n/a n/a

Filing of Percentage Tax Returns for JOs q. Qualified taxpayers may avail of substituted filing by submitting a duly filled-up: q Annex A (Notice of Availment of the Substituted Filing of Percenage Tax) of RR 14 -2003 q. 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 q. Qualified taxpayers may avail of substituted filing by submitting a duly filled-up (RR 14 -2003): q Annex B (Notice of Availment of the Substituted Filing of VAT) q. Annex C (Sworn Declaration and Waiver of the Privilege to Claim Input Tax Credits Under Section 110 of the Tax Code) q. 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 Less: Optional Standard Deduction Net Income Less: Personal Exemption 50, 000 Net Taxable Income Tax Due Tax Withheld (1 st to 4 th Qtr) Quarterly Income Tax Payment Payable - April 15 (40%) P 200, 000 80, 000 P 120, 000 P 70, 000 P 4, 000 0 8, 500 4, 000 P 4, 500

INCOME TAX TABLE OVER 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 + 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 17

Income Tax Due Dates Income Tax Period 1 st Quarter 2 nd Quarter 3 rd Quarter Annual Return Fo rs e d r O r Job Due Date Individual April 15 Aug. 15 Nov. 15 April 15

Withholding Agent’s Responsibility q. Issue BIR Form 2306 –Cert. of Final Tax Withheld at Source duly signed by both the payor and the payee (for lone payor) qshall attach duly signed Form 2306 to BIR Form 1600 q. 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

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