Common Errors on Withholding Tax

Time of Withholding RMC 10-2018

Section 2.57.4 The obligation of the payor to deduct and withhold the tax arises at the time an Income payment is paid or payable, or their income  payment is accrued or recorded as an expense or asset whichever is applicable, in the payors books, whichever comes first.

How to apply the "All Events' Test"

The accrual of Income and Expense is permitted when the All- Events test has been met. This test requires :

W-Tax Relative to Deductibility of Expenses RR 6-2018 revoking RR 12-2013

A deduction will also be allowed in the ff cases:

A. Payee reported the Income/paid thet tax due and W-agent pays the tax plus interest and surcharges, if applicable at the time of audit. 

B. Payee failed to report the income on the due date thereof, but W-Agent/ taxpayer pays the tax plus interest and surcharges, at the time of audit. 

C. The W-Agent erronoeusly underwithheld the tax but pays the difference plus interest and surcharges at the time of the audit.