RR No. 10-08

(1) (2) (3)
July 8, 2008
REVENUE REGULATIONS NO. 10-08
SUBJECT : Implementing Pertinent Provisions of Republic Act No. 9504,

"An Act Amending Sections 22, 24, 34, 35, 51, and 79 of
Republic Act No. 8424, as Amended, Otherwise Known as The
National Internal Revenue Code" Relative to the Withholding
of Income Tax on Compensation and Other Concerns
TO : All Internal Revenue Officers and Others Concerned
Pursuant to Secs. 244 and 245 of the National Internal Revenue Code
of 1997, as amended, in relation to the implementation of Republic Act No. 9504,
amending Secs. 22, 24, 34, 35, 51 and 79 of Republic
Act No. 8424, as amended, these Regulations are hereby promulgated to amend
Sections 2.78.1 (A), 2.78.1 (B), 2.79 (A), (B), (F), (I), 2.79.1 and 2.79.2, 2.80, and
2.83 of Revenue Regulations No. 2-98 (RR 2-98), as amended, with respect to
the withholding tax on compensation income, increase of personal and additional
exemptions, compensation received by minimum wage earners (MWEs) and other
concerns.
SECTION 1. Section 2.78.1 of RR 2-98, as amended, is hereby further

amended to read as follows:
"Sec. 2.78.1. Withholding of Income Tax on Compensation

Income. —
(A) Compensation Income Defined. — . . .
xxx xxx xxx
(3) Facilities and privileges of relatively small value. — Ordinarily,

facilities, and privileges (such as entertainment, medical services, or so-called
"courtesy" discounts on purchases), otherwise known as "de minimis
Copyright 2020 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia First Release 2020 1
benefits," furnished or offered by an employer to his employees, are not
considered as compensation subject to income tax and consequently to
withholding tax, if such facilities or privileges are of relatively small value
and are offered or furnished by the employer merely as means of promoting
the health, goodwill, contentment, or efficiency of his employees. ADSIaT
The following shall be considered as "de minimis" benefits not subject

to income tax, hence, not subject to withholding tax on compensation income
of both managerial and rank and file employees:
(a) Monetized unused vacation leave credits of employees not

exceeding ten (10) days during the year and the monetized value of leave
credits paid to government officials and employees; CAaSED
(b) Medical cash allowance to dependents of employees not

exceeding P750.00 per employee per semester or P125 per month;
(c) Rice subsidy of P1,500.00 or one (1) sack of 50-kg. rice per
month amounting to not more than P1,500.00;
(d) Uniforms and clothing allowance not exceeding P4,000.00 per

annum;
(e) Actual yearly medical benefits not exceeding P10,000.00 per

annum;
(f) Laundry allowance not exceeding P300.00 per month;
(g) Employees achievement awards, e.g., for length of service or

safety achievement, which must be in the form of a tangible personal property
other than cash or gift certificate, with an annual monetary value not
exceeding P10,000.00 received by the employee under an established written
plan which does not discriminate in favor of highly paid employees;
(h) Gifts given during Christmas and major anniversary celebrations

not exceeding P5,000.00 per employee per annum;
(i) Flowers, fruits, books, or similar items given to employees under

special circumstances, e.g., on account of illness, marriage, birth of a baby,
etc.; and
(j) Daily meal allowance for overtime work not exceeding twenty
five percent (25%) of the basic minimum wage.
The amount of 'de minimis' benefits conforming to the ceiling herein

prescribed shall not be considered in determining the P30,000.00 ceiling of
'other benefits' excluded from gross income under Section 32 (b) (7) (e)
of the Code. Provided that, the excess of the 'de minimis' benefits over their
respective ceilings prescribed by these regulations shall be considered as part
of 'other benefits' and the employee receiving it will be subject to tax only on
the excess over the P30,000.00 ceiling. Provided, further, that MWEs
receiving 'other benefits' exceeding the P30,000.00 limit shall be taxable on
the excess benefits, as well as on his salaries, wages and allowances, just like
an employee receiving compensation income beyond the SMW. DcAEIS
Any amount given by the employer as benefits to its employees,

whether classified as "de minimis" benefits or fringe benefits, shall constitute
as deductible expense upon such employer.
Where compensation is paid in property other than money, the

employer shall make necessary arrangements to ensure that the amount of the
tax required to be withheld is available for payment to the Bureau of Internal
Revenue. ScaHDT
xxx xxx xxx
(B) Exemptions from Withholding Tax on Compensation. — The

following income payments are exempted from the requirements of
withholding tax on compensation:
xxx xxx xxx
(13) Compensation income of MWEs who work in the private sector

and being paid the Statutory Minimum Wage (SMW), as fixed by Regional
Tripartite Wage and Productivity Board (RTWPB)/National Wages and
Productivity Commission (NWPC), applicable to the place where he/she is
assigned.
The aforesaid income shall likewise be exempted from income tax.
'Statutory Minimum Wage' (SMW) shall refer to the rate fixed by the
Regional Tripartite Wage and Productivity Board (RTWPB), as defined by
the Bureau of Labor and Employment Statistics (BLES) of the Department of
Labor and Employment (DOLE). The RTWPB of each region shall determine
the wage rates in the different regions based on established criteria and shall
be the basis of exemption from income tax for this purpose.
Holiday pay, overtime pay, night shift differential pay and hazard pay
earned by the aforementioned MWE shall likewise be covered by the above
exemption. Provided, however, that an employee who receives/earns
additional compensation such as commissions, honoraria, fringe benefits,
benefits in excess of the allowable statutory amount of P30,000.00, taxable
allowances and other taxable income other than the SMW, holiday pay,
overtime pay, hazard pay and night shift differential pay shall not enjoy the
privilege of being a MWE and, therefore, his/her entire earnings are not
exempt from income tax, and consequently, from withholding tax. ESIcaC
MWEs receiving other income, such as income from the conduct of

trade, business, or practice of profession, except income subject to final tax, in
addition to compensation income are not exempted from income tax on their
entire income earned during the taxable year. This rule, notwithstanding, the
SMW, Holiday pay, overtime pay, night shift differential pay and hazard pay
shall still be exempt from withholding tax.
For purposes of these regulations, hazard pay shall mean the amount
paid by the employer to MWEs who were actually assigned to danger or
strife-torn areas, disease-infested places, or in distressed or isolated stations
and camps, which expose them to great danger of contagion or peril to life.
Any hazard pay paid to MWEs which does not satisfy the above criteria is
deemed subject to income tax and consequently, to withholding tax.
In case of hazardous employment, the employer shall attach to the

monthly Remittance Return of Withholding Tax on Compensation (BIR Form
No. 1601C) for return periods March, June, September and December a copy
of the list submitted to the nearest DOLE Regional/Provincial Offices —
Operations Division/Unit showing the names of MWEs who received the
hazard pay, period of employment, amount of hazard pay per month; and
justification for payment of hazard pay as certified by said DOLE/allied
agency that the hazard pay is justifiable.
The NWPC shall officially submit a Matrix of Wage Order by region

(Annex "A"), and any changes thereto, within ten (10) days after its effectivity
to the Assistant Commissioner, Collection Service, for circularization in the
BIR. aSTHDc
Any reduction or diminution of wages for purposes of exemption from

income tax shall constitute misrepresentation and therefore, shall result to the
automatic disallowance of expense, i.e. compensation and benefits account,
on the part of the employer. The offenders may be criminally prosecuted
under existing laws.
(14) Compensation income of employees in the public sector with

compensation income of not more than the SMW in the non-agricultural
sector, as fixed by RTWPB/NWPC, applicable to the place where he/she is
assigned.
The aforesaid income shall likewise be exempted from income tax.

AIaSTE
The basic salary of MWEs in the public sector shall be equated to the
SMW in the non-agricultural sector applicable to the place where he/she is
assigned. The determination of the SMW in the public sector shall likewise
adopt the same procedures and consideration as those of the private sector.
Holiday pay, overtime pay, night shift differential pay and hazard pay
earned by the aforementioned MWE in the public sector shall likewise be
covered by the above exemption. Provided, however, that a public sector
employee who receives additional compensation such as commissions,
honoraria, fringe benefits, benefits in excess of the allowable statutory amount
of P30,000.00, taxable allowances and other taxable income other than the
SMW, holiday pay, overtime pay, night shift differential pay and hazard pay
shall not enjoy the privilege of being a MWE and, therefore, his/her entire
earnings are not exempt from income tax and, consequently, from withholding
tax. ISaTCD
MWEs receiving other income, such as income from the conduct of

trade, business, or practice of profession, except income subject to final tax, in
addition to compensation income are not exempted from income tax on their
entire income earned during the taxable year. This rule, notwithstanding, the
SMW, Holiday pay, overtime pay, night shift differential pay and hazard pay
shall still be exempt from withholding tax.
For purposes of these regulations, hazard pay shall mean the amount
paid by the employer to MWEs who were actually assigned to danger or
strife-torn areas, disease-infested places, or in distressed or isolated stations
and camps, which expose them to great danger of contagion or peril to life.
Any hazard pay paid to MWEs which does not satisfy the above criteria is
deemed subject to income tax and consequently to withholding tax.
In case of hazardous employment, the employer shall attach to the

Monthly Remittance Return of Withholding Tax on Compensation (BIR Form
No. 1601C) for return periods March, June, September and December a copy
of Department of Budget and Management (DBM) circular/s, or equivalent,
as to who are allowed to receive hazard pay."
SECTION 2. Section 2.78.5 shall be inserted to RR 2-98, as amended, to

read as follows:
"Sec. 2.78.5. Computation of Wages. — aTADCE
The basis of the computation of the minimum wage rates prescribed

by law shall be the normal working time of eight (8) hours a day. SaHcAC
The computation of wages shall be in accordance with the Collective

Bargaining Agreement (CBA), if any, or the provisions of the Labor Code as
implemented. Unless otherwise amended or repealed by subsequent pertinent
laws, rules and regulations, the holiday pay, overtime pay, night shift
differential and hazard pay shall be understood to be computed based on such
agreement or labor law provisions.
In the determination of the minimum wage on a monthly basis, the

withholding agent shall be guided by the prevailing minimum wage as
reflected in the latest Matrix of Wage Order and its own policy on whether
employees are (a) not considered paid on Saturdays and Sundays or rest days,
(b) not considered paid on Sundays or rest days, (c) considered paid on rest
days, special days and regular holidays, or (d) required to work everyday
including Sundays or rest days, special days and regular holidays. The
resulting number of days in the above enumerated categories are referred to as
the factor or number of working/paid days in a year. (Annex "B")
On the first classification, the monthly SMW is computed by

multiplying the applicable daily wage rate by the factor of 261 days and
divide the same by twelve; the semi-monthly at one-half (1/2) of the monthly
rate and the weekly SMW is arrived at by spreading the annual minimum
basic wage over fifty-two (52) weeks. Thus, on a P382.00 minimum daily
wage in Metro Manila, the monthly SMW is P8,308.00, the semi-monthly at
P4,154.00 and weekly P1,917.00.
On the second category, the monthly SMW is computed by

multiplying the applicable daily wage rate by the factor of 313 days and
divide the product by twelve. Hence, on a P382.00 minimum daily wage, the
monthly SMW is P9,964.00, the semi-monthly at P4,982.00 and weekly at
P2,300.00. TDCAHE
On the third classification, the monthly SMW is computed by

multiplying the applicable daily wage rate by the factor of 365 days, divided
by twelve. Thus, on a 382 minimum daily wage, the monthly SMW is
P11,619.00, the semi-monthly at P5,810.00 and weekly at P2,681.00. aIcDCH
On the fourth classification, the monthly SMW is computed by

multiplying the applicable daily wage rate by the factor of 392.5 days, divided
by twelve. Hence, on a 382 minimum daily wage, the monthly SMW is
P12,495.00, the semi-monthly at P6,247.00 and weekly at P2,883.00."
SECTION 3. Section 2.79 of RR 2-98, as amended, is hereby further

"Sec. 2.79. Income Tax Collected at Source on Compensation

Income. —
(A) Requirement of Withholding. — Every employer must withhold

from compensation paid an amount computed in accordance with these
Regulations. Provided, that no withholding of tax shall be required on the
SMW, including holiday pay, overtime pay, night shift differential and hazard
pay of MWEs in the private/public sectors as defined in these Regulations.
Provided, further, that an employee who receives additional compensation
such as commissions, honoraria, fringe benefits, benefits in excess of the
allowable statutory amount of P30,000.00, taxable allowances and other
taxable income other than the SMW, holiday pay, overtime pay, hazard pay
and night shift differential pay shall not enjoy the privilege of being a MWE
and, therefore, his/her entire earnings are not exempt from income tax and,
consequently, shall be subject to withholding tax.
(B) Computation of Withholding Tax on Compensation Income in

General. — The procedures provided herein below shall govern the
computation of withholding tax on the taxable compensation income of the
employees. Provided, however, that taxable fringe benefits received by
employees other than the rank and file, as defined in the Labor Code of the
Philippines, as amended, shall be subject to a Fringe Benefits Tax, instead of
the rates prescribed in the Revised Withholding Tax Tables pursuant to Sec.
24 (A) of the Code, as amended. TcHDIA
(1) Use of Withholding Tax Tables. — In general, every employer

making payment of compensation shall deduct and withhold from such
compensation a tax determined in accordance with the prescribed Revised
Withholding Tax Tables (Annex "C") which shall be used starting January 1,
2009.
There are four (4) withholding tax tables prescribed in these

regulations, as follows:
(a) Monthly Tax Table — to be used by employers using the

monthly payroll period; THIAaD
(b) Semi-Monthly Tax Table — to be used by employers using the

semi-monthly payroll period;
(c) Weekly Tax Table — to be used by employers using the weekly
payroll period;
(d) Daily Tax Table — to be used by employers using the daily

payroll period.
If the compensation is paid other than daily, weekly, semi-monthly or

monthly, the tax to be withheld shall be computed as follows:
(a) Annually — use the annualized computation referred to in Sec.

2.79 (B) (5) (b) of these Regulations;
(b) Quarterly and semi-annually — divide the compensation by

three (3) or six (6) respectively, to determine the average monthly
compensation. Use the monthly withholding tax table to compute the tax, and
the tax so computed shall be multiplied by three (3) or six (6) accordingly.
For the year 2008, however, being the initial year of implementation
of R.A. 9504, there shall be a transitory withholding tax table for the
period from July 6 to December 31, 2008 (Annex "D") determined by
prorating the annual personal and additional exemptions under R.A. 9504
over a period of six months. Thus, for individuals, regardless of personal
status, the prorated personal exemption is P25,000, and for each qualified
dependent child (QDC), P12,500.
(2) Components of the Withholding Tax Table. —
(a) Each tax table is grouped into Tables A and B.

HCaIDS
A — Table for employees with no QDC
B — Table for employees with QDC
(b) The columns in the Tables reflect the following:

aCcADT
1st column — reflects the exemption status of

employee represented by letter symbols. (refer to the
explanation of the legend of symbols in letter (d)
below)
2nd column — reflects the total amount of

personal and additional exemption, in pesos, to which
an employee is entitled.
(c) Column numbers 1 to 8 reflect the portion of the

amount of taxes to be withheld on the amount of compensation
of the employees. Every amount in all the columns within
Tables A and B represent the compensation level.
(d) Legend of symbols — The symbols used in the

new withholding tax table represents the following:
Z — Zero exemption
(a) Employee with multiple employers

simultaneously, with respect to second, third, etc.,
employer; and
(b) Employee who fails to file Application for

Registration (BIR Form No. 1902);
S — Single, legally separated spouses/widow/widower:
ME — Married employee who is not legally separated;
The numerals (1-4) affixed to the status symbols "ME" and "S"
represent the number of qualified legitimate, illegitimate, or legally adopted
children.
Exemption — means the amount of exemption in thousand pesos an

employee is entitled to claim as a deduction from gross compensation income
in accordance with the status and number of qualified dependent children. ECaITc
(3) Steps to determine the amount of tax to be withheld. —
Step 1. Determine the total monetary and non-monetary

compensation paid to an employee for the payroll period, segregating gross
benefits which include thirteenth (13th) month pay, productivity incentives,
Christmas bonus, other benefits, received by the employee per payroll period,
and employees' contributions to SSS, GSIS, HDMF, PHIC, and union dues.
Gross benefits which are received by officials and employees of both public
and private entities in the amount of thirty thousand pesos (P30,000.00) or
less shall be exempted from income and withholding taxes. The 13th Month
Pay is equivalent to the total basic salary earned during the year divided by 12
months. aDcETC
Step 2. Segregate the taxable from the non-taxable compensation
income paid to the employee for the payroll period. The taxable income refers
to all remuneration paid to an employee not otherwise exempted by law from
income tax and consequently from withholding tax. The non-taxable income
are those which are specifically exempted from income tax by the Code or by
other special laws as listed in Sec. 2.78.1 (B) hereof (e.g. benefits not
exceeding P30,000, non-taxable retirement benefits and separation pay).
Step 3. Segregate the taxable compensation income as

determined in Step 2 into regular taxable compensation income and
supplementary compensation income. Regular compensation includes basic
salary, fixed allowances for representation, transportation and other
allowances paid to an employee per payroll period. Supplementary
compensation includes payments to an employee in addition to the regular
compensation such as commission, overtime pay, taxable retirement pay,
taxable bonus and other taxable benefits, with or without regard to a payroll
period.
Representation & Transportation Allowance (RATA) granted to public

officers and employees under the General Appropriations Act and the
Personnel Economic Relief Allowance (PERA) which essentially constitute
reimbursement for expenses incurred in the performance of government
personnel's official duties shall not be subject to income tax and consequently
to withholding tax. IHAcCS
Step 4. Use the appropriate tables mentioned under Section 2.79

(B) (1) for the payroll period: monthly, semi-monthly, weekly or daily, as the
case may be. TEAaDC
Step 5. Fix the compensation level as follows:
(i) Determine the line (horizontal) corresponding to

the status and number of qualified dependent children using the
appropriate symbol for the taxpayer status.
(ii) Determine the column to be used by taking into

account only the total amount of taxable regular compensation
income. The compensation level is the amount indicated in the
line and column to which the regular compensation income is
equal to or in excess, but not to exceed the amount in the next
column of the same line.
Step 6. Compute the withholding tax due by adding the tax

predetermined in the compensation level indicated at the top of the column, to
the tax on the excess of the total regular and supplementary compensation
over the compensation level, which is computed by multiplying the excess by
the rate also indicated at the top of the same column/compensation level.
(4) Sample Computations on the use of the Withholding Tax Tables:
EXAMPLE I: Mr. A, single with no dependent, receives P12,000.00

(net of SSS/GSIS, PHIC, HDMF employee share only) as monthly regular
compensation and P5,000.00 as supplementary compensation for January
2009 or a total of P17,000.00.
COMPUTATION: Using the monthly withholding tax table (Revised

Withholding Tax Tables beginning January 1, 2009), the withholding tax for
January 2009 is computed by referring to Table A line 2 S of column 5 (fix
compensation level taking into account only the regular compensation income
of P12,000.00 which shows a tax of P708.33 on P10,000.00 plus 20% of the
excess of P2,000.00 (P12,000.00 less P10,000.00) plus P5,000.00
supplementary compensation. TIcEDC
Regular compensation P12,000.00

Less: compensation level
(line A-2 Column 5) 10,000.00
–––––––––
Excess P2,000.00
Add: Supplementary compensation 5,000.00
–––––––––
Total P7,000.00
–––––––––
Tax on P10,000.00 P708.33
Tax on excess (P7,000 x 20%) 1,400.00
–––––––––
Withholding tax for January 2009 P2,108.33
========
MONTHLY 1 2 3 4 5 6 7 8
Exemption 0.00 0.00 41.67 208.33 708.33 1,875.00 4,166.57 10,416.67
Status (000P +0% over +5% over +10% over +15% over +20% over +25% over +30% over +32% over
A. Table for employees without qualified dependent.
1. Z 0.0 1 0 833 2,500 5,833 11,667 20,833 41,667
2. S/ME 50.0 1 4,167 5,000 6,667 10,000 15,833 25,000 45,833
EXAMPLE II: Mr. B, married with three (3) qualified dependent

children receives P12,000.00 (net of SSS/GSIS, PHIC, HDMF employee
share only) as regular semi-monthly compensation. Mrs. B, his wife, is also
employed. Mr. B did not waive his right in favor of the wife to claim for the
additional exemptions.
COMPUTATION: Using the semi-monthly withholding tax tables

(Revised Withholding Tax Tables beginning January 1, 2009), the
withholding tax due is computed by referring to Table B line 3 ME3 of
column 6 which shows a tax of P937.50 on P11,042 plus 25% of the excess
(P12,000–11,042 = P958.00) AEaSTC
Total taxable compensation P12,000.00

Less: compensation level
(line B-3 Column 6) 11,042.00
Excess P958.00
––––––––––
Tax on P11,042 P937.50
Tax on excess (P958 x 25%) 239.50
––––––––––
Semi-monthly withholding tax P1,177.00
=========
SEMI-MONTHLY 1 2 3 4 5 6 7 8
Exemption 0.00 0.00 20.83 104.17 354.17 937.50 2,083.33 5,208.33
A. Table for employees without qualified dependent
1. Z 0.0 1 0 417 1,250 2,917 5,833 10,417 20,833
2. S/ME 50.0 1 2,083 2,500 3,333 5,000 7,917 12,500 22,917
B. Table for employees with qualified dependent child(ren)
1. ME 1/S1 75.0 1 3,125 3,542 4,375 6,042 8,958 13,542 23,958
2. ME 2/S2 100.0 1 4,167 4,583 5,417 7,083 10,000 14,583 25,000
3. ME 3/S3 125.0 1 5,208 5,625 6,458 8,125 11,042 15,625 26,042
4. ME 4/S4 150.0 1 6,250 6,667 7,500 9,167 12,083 16,667 27,083
EXAMPLE III: For the month of August 2008, Mrs. C, married with
three qualified dependent children, with a basic salary equivalent to the
SMW, receives P9,964.00 (P382/day x 313 days ÷ 12) as statutory monthly
minimum wage plus other compensation such as commission of P10,000,
transportation allowance of P2,000, hazard pay of P1,000, overtime pay of
P5,000 and night shift differential pay of P2,000.00. Compute the withholding
tax of Mrs. C for the month of August 2008 using the Revised Transitional
Withholding Tax Table for the period July 6 to December 31, 2008.
COMPUTATION:
Statutory Minimum Wage P9,964.00
Gross Benefits
Hazard pay 1,000.00
Overtime Pay 5,000.00
Night Shift Differential 2,000.00 8,000.00
––––––––– –––––––––
Sub-total P17,964.00
========
Taxable compensation
Commission * 10,000.00
Transportation allowance * 2,000.00 12,000.00
–––––––– –––––––––
Total Taxable Compensation Income P29,964.00
========
Regular compensation P9,964.00
Less: Compensation level (line B-3 column 4) 7,708.00
–––––––––
Excess P2,256.00
Add: Supplementary compensation (8,000 + 12,000) 20,000.00
–––––––––
Total P22,256.00
–––––––––
Tax on P9,964.00 (Line B3, col. 4) P208.33
Tax on excess (P22,256.00 x 15%) 3,338.40
–––––––––
Withholding tax for the month of August 2008 P3,546.73
========
MONTHLY 1 2 3 4 5 6 7 8
Exemption 0.00 0.00 41.67 208.33 708.33 1,875.00 4,166.67 10,416.67
A. Table for employees without qualified dependent
1. Z 0.0 1 0 833 2,500 5,833 11,667 20,833 41,667
2. S/ME 25.0 1 2,083 2,917 4,583 7,917 13,750 22,917 43,750
B. Table for employees with qualified dependent child(ren)
1. ME1/S1 37.5 1 3,125 3,958 5,625 8,958 14,792 23,958 44,792
2. ME2/S2 50.0 1 4,167 5,000 6,667 10,000 15,833 25,000 45,833
3. ME3/S3 62.5 1 5,208 6,042 7,708 11,042 16,875 26,042 46,875
4. ME4/S4 75.0 1 6,250 7,083 8,750 12,083 17,917 27,083 47,917
* An employee who receives compensation other than the SMW,

holiday, overtime, night shift differential and hazard pay shall not enjoy the
privilege of being a minimum wage earner, and his entire earnings are no
longer considered exempt. SEDICa
(5) Use of Exceptional Computations
(a) Cumulative average method — If in respect of a particular

employee, the regular compensation is exempt from withholding tax because
the amount thereof is below the compensation level, but supplementary
compensation is paid during the calendar year or the supplementary
compensation is equal to or more than the regular compensation to be paid; or
the employee was newly hired and had a previous employer/s within the
calendar year, other than the present employer doing this cumulative
computation, the present employer shall determine the tax to be deducted and
withheld in accordance with the cumulative average method provided
hereunder:
Step 1. Add the amount of taxable regular and supplementary

compensation to be paid to an employee for the payroll period subject of
computation to the sum of the taxable regular and supplementary
compensation since the beginning of the current calendar year including the
compensation paid by the previous employers within the same calendar year,
if any;
Step 2. Divide the aggregate amount of compensation computed

in step 1 by the number of payroll period to which the amount relates; aTcIAS
Step 3. Compute the tax to be deducted and withheld on the

cumulative average compensation determined in Step No. (2) in accordance
with the withholding tax table;
Step 4. Multiply the tax computed in Step No. (3) by the number
of payroll period to which it relates;
Step 5. Determine the excess, if any, of the amount of tax

computed in Step No. (4) over the total amount of tax already deducted and
withheld from the beginning payroll period to the last payroll period,
including that withheld by the previous employer/s within the calendar year, if
any. The excess, as computed, shall be deducted and withheld from the
compensation to be paid for the last payroll period of the current calendar
year.
The cumulative average method, once applicable to a particular

employee at any time during the calendar year, shall be the same method to be
consistently used for the remaining payroll period/s of the same calendar year.
HITAEC
EXAMPLE IV: The regular compensation is exempt from withholding
tax but supplementary compensation (commission) is paid during the calendar
year.
Employee A, married, with three (3) qualified dependents (ME3),

received the following compensation beginning January, 2009.
Month Regular Supplementary Total

Compensation Compensation Compensation
January P8,500.00 P15,000.00 P23,500.00

February P8,500.00 P15,000.00 P23,500.00
March P8,400.00 P15,500.00 P23,900.00
COMPUTATION:
1. For Jan. P23,500.00 + 0 = P23,500.00
For Feb. P23,500.00 + 23,500.00 = P47,000.00
For Mar. P23,500.00 + 23,500.00 + 23,900.00 = P70,900.00
2. For Jan. P23,500.00/1 = P23,500.00
For Feb. P47,000.00/2 = P23,500.00
For Mar. P70,900.00/3 = P23,633.33
3. For January
Tax on P22,083.00 (Line B.3, Col. 6) = P1,875.00
Tax on excess (P1,417.00 x 25%) = P354.25
–––––––––
Tax on P23,500.00 P2,229.25
========
For February
Tax on excess (P1,417.00 x 25%) = 354.25
–––––––––
Tax on P23,500.00 = P2,229.25
========
For March
Tax on excess (P1,550.33 x 25%) = 387.58
––––––––
Tax on P23,633.33 = P2,262.58
=======
4. For Jan. P2,229.25 x 1 = P2,229.25
For Feb. P2,229.25 x 2 = P4,458.50
For Mar. P2,262.58 x 3 = P6,787.74
5. For Jan. P2,229.25 – 0 = P2,229.25
For Feb. P4,458.50 – 2,229.25 = P2,229.25
For Mar. P6,787.74 – 4,458.50 = P2,329.24
EXAMPLE V: Supplementary compensation is equal to or more than

the regular compensation received:
Employee B, married with three (3) qualified dependents (M3) whose

spouse is also employed, received the following compensation beginning
January, 2009.
Month Regular Supplementary Total

Compensation Compensation Compensation
January P11,000.00 P11,000.00 P22,000.00

February P11,000.00 P11,500.00 P22,500.00
March P11,000.00 P12,000.00 P23,000.00
COMPUTATION:
1. For Jan. P22,000.00 + 0 = P22,000.00
For Feb. P22,000.00 + 22,500.00 = P44,500.00
For Mar. P22,000.00 + 22,500.00 + 23,000.00 = P67,500.00
2. For Jan. P22,000.00/1 = P22,000.00
For Feb. P44,500.00/2 = P22,250.00
For Mar. P67,500.00/3 = P22,500.00
3. For January
Tax on P16,250.00 (Line B.3, Col. 5) = P708.33
Tax on excess (P5,750.00 x 20%) = P1,150.00
–––––––––
Tax on P22,000.00 P1,858.33
========
For February
Tax on excess (P167 x 25%) = P41.75
–––––––––
Tax on P22,250.00 = P1,916.75
========
For March
Tax on excess (P417 x 25%) = P104.25
––––––––
Tax on P22,500.00 = P1,979.25
=======
4. For Jan. P1,858.33 x 1 = P1,858.33
For Feb. P1,916.75 x 2 = P3,833.50
For Mar. P1,979.25 x 3 = P5,937.75
5. For Jan. P1,858.33 – 0 = P1,858.33
For Feb. P3,833.50 – 1,858.33 = P1,975.17
For Mar. P5,937.75 – 3,833.50 = P2,104.25
EXAMPLE VI: A newly hired employee with previous employer

within the calendar year 2009.
Employee C, single, was hired by Z Company on July 6, 2009. Her

total taxable income per month is P15,000.00. She was previously employed
by X Company from January to June 30, 2009 with a monthly taxable income
of P13,000.00 or P13,000.00 x 6 months = P78,000 for 6 months. Per BIR
Form No. 2316 (Certificate of Compensation Payment/Tax Withheld) issued
by the previous employer, which was presented by Employee C to her present
employer, the total tax withheld is P7,849.98. In computing for the tax
withheld on the compensation of Employee C starting the month of July 6,
2000, Z Company shall use the cumulative average method. HAICTD
Month Present Total Total

Compensation Previous Taxable
Income Income Income
July 6 P15,000.00 P78,000.00 P93,000.00

August 15,000.00 15,000.00
September 15,000.00 15,000.00
October 15,000.00 15,000.00
November 15,000.00 15,000.00
December 15,000.00 15,000.00
––––––––– –––––––––– –––––––––––
P90,000.00 P78,000.00 P168,000.00
========= ========= =========
COMPUTATION:
STEP 1 —
For July 6 P15,000.00 + P78,000.00 = P93,000.00
For Aug. P93,000.00 + P15,000.00 = P108,000.00
For Sep. P93,000.00 + P15,000.00 + P15,000.00 = P123,000.00
For Oct. P93,000.00 + P15,000.00 + P15,000.00 + P15,000.00 = P138,000.00
For Nov. P93,000.00 + P15,000.00 + P15,000.00 + P15,000.00 + P15,000.00 = P153,000.00
STEP 2 —
For July 6 P93,000.00/7 = P13,285.71
For Aug. P108,000.00/8 = P13,500.00
For Sep. P123,000.00/9 = P13,666.67
For Oct. P138,000.00/10 = P13,800.00
For Nov. P153,000.00/11 = P13,909.09
STEP 3 —
For July 6 P13,285.71
Tax On P10,000.00 = P708.33
Tax On Excess (P3,285.71 x 20%) 657.14
––––––––
Tax On P13,285.71 = P1,365.47
========
For August P13,500.00
Tax On P10,000.00 = P708.33
Tax On Excess (P3,500.00 x 20%) 700.00
––––––––
Tax On P13,500.00 = P1,408.33
========
For Sept. P13,666.67
Tax On P10,000.00 = P708.33
Tax On Excess (P3,666.67 x 20%) 733.33
––––––––
Tax On P13,666.67 = P1,441.66
========
For October P13,800.00
Tax On P10,000.00 = P708.33
Tax On Excess (P3,800.00 x 20%) = 760.00
––––––––
Tax On P13,800.00 = P1,468.33
========
For November P13,909.09
Tax On P10,000.00 = P708.33
Tax On Excess (P3,909.09 x 20%) = 781.82
––––––––
Tax On P13,818.18 = P1,490.15
========
STEP 4 —
For July 6 P1,365.47 x 7 = P9,558.29
For August 1,408.33 x 8 = P11,266.64
For September 1,441.66 x 9 = P12,974.94
For October 1,468.33 x 10 = P14,683.30
For November 1,490.15 x 11 = P16,391.65
Step 5 —
For July 6 P9,558.29 - P7,849.98 = P1,708.31
For August 11,266.64 - P9,558.29 = P1,708.35
For September 12,974.94 - P11,266.64 = P1,708.30
For October 14,683.30 - P12,974.94 = P1,708.36
For November 16,391.65 - P14,683.30 = P1,708.35
(b) Annualized withholding tax method. — (1) When the

employer-employee relationship is terminated before the end of the calendar
year; and (2) when computing for the year-end adjustment, the employer shall
determine the amount to be withheld from the compensation on the last month
of employment or in December of the current calendar year in accordance
with the following procedures:
Step 1. Determine the taxable regular and supplementary

compensation paid to the employee for the entire calendar year. Refer to steps
1 to 3 of Sec. 2.79 (B) (3), as amended, using as basis the compensation
received for the calendar year.
Step 2. If the employee has previous employment/s within the

year, add the amount of taxable regular and supplementary compensation paid
to the employee by the present employer doing the annualized computation to
the taxable compensation income received from previous employer/s during
the calendar year.
(i) When the employer-employee relationship is

terminated before December — The taxable regular and
supplementary compensation income shall be the amount paid
since the beginning of the current calendar year to the
termination of employment;
(ii) Year-end adjustment — The taxable regular and

supplementary compensation income shall be the amount paid
since the beginning of the current calendar year to December;
ETIDaH
(iii) Taxable fringe benefits received by employees

holding managerial or supervisory positions shall be subject to
a final fringe benefit tax as prescribed in Section 2.79 (D) of
RR 2-98, as amended. Hence, the same shall not form part of
the taxable supplementary compensation, of managers and
supervisors, subject to the withholding tax tables.
Step 3. Deduct from the aggregate amount of compensation

computed in Step No. (2) the amount of the total personal and additional
exemptions of the employee.
Step 4. Deduct the amount of premium payments on Health
and/or Hospitalization Insurance of employees who have presented evidence
that they have paid during the taxable year premium payments (the deductible
amount shall not exceed P2,400 or P200 per month whichever is lower) and
that their family's total gross income does not exceed P250,000 for the
calendar year. For purposes of substantiating the claim of insurance expense
and determining the aggregate family income, the policy contract shall be
presented to the employer together with the original official receipt of the
premium payment for the current year, BIR Form No. 2316 for the current
year or Certificate of Gross Income for the Current Year (Annex "E") issued
by the employer/s of the nuclear family.
Total family income includes primary income and other income from
sources received by all members of the nuclear family, i.e. father, mother,
unmarried children living together as one household, or a single parent with
children. A single person living alone is considered as a nuclear family.
The spouse claiming the additional exemptions for the QDC shall be
the same spouse to claim the deductions for premium payments.
Step 5. Compute the amount of tax on the difference arrived at in

Step 4, in accordance with the schedule provided in Sec. 24 (A) of the Code,
as follows:
OVER BUT NOT AMOUNT/RATE OF

OVER EXCESS
OVER
Not over 10,000 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
Step 6. Determine the deficiency or excess, if any, of the tax

computed in Step 5 over the cumulative tax already deducted and withheld
since the beginning of the current calendar year. The deficiency tax (when the
amount of tax computed in Step 5 is greater than the amount of cumulative tax
already deducted and withheld or when no tax has been withheld from the
beginning of the calendar year) shall be deducted from the last payment of
compensation for the calendar year. If the deficiency tax is more than the
amount of last compensation to be paid to an employee, the employer shall be
liable to pay the amount of tax which cannot be collected from the employee.
The obligation of the employee to the employer arising from the payment by
the latter of the amount of tax which cannot be collected from the
compensation of the employee is a matter of settlement between the employee
and employer. CTaIHE
The excess tax (when the amount of cumulative tax already deducted
and withheld is greater than the tax computed in Step 5) shall be credited or
refunded to the employee not later than January 25 of the following year.
However, in case of termination of employment before December, the refund
shall be given to the employee at the payment of the last compensation during
the year. In return, the employer is entitled to deduct the amount refunded
from the remittable amount of taxes withheld from compensation income in
the current month in which the refund, was made, and in the succeeding
months thereafter until the amount refunded by the employer is fully repaid.
EXAMPLE VII: (Use of annualized computation when

employer-employee relationship was terminated before December) —
a) Mr. D, single with a qualified dependent brother receives

P18,000 as monthly regular compensation starting January 1, 2008. On June
1, 2008, he filed his resignation effective June 30, 2008 and was not
reemployed for the rest of the year. The tax withheld from January to May
was P15,208.75.
COMPUTATION:
Total compensation received from
January 1 to May 31, 2008 P90,000.00
Add: Compensation to be received on June 18,000.00
––––––––––
Gross compensation Jan-June 108,000.00
Less: Personal Exemption (HF old exemption) 25,000.00

––––––––––
Net Taxable Compensation P83,000.00
––––––––––
Tax Due P11,100.00 *
Less: Tax Withheld from Jan to May P15,208.75
–––––––––––
To be refunded to Mr. D (P4,108.75)
––––––––––
* Tax on P70,000.00 8,500.00
Tax on excess (P13,000 x 20%) 2,600.00
–––––––––––
Tax on P83,000.00 P11,100.00
==========
b) Mr. Z, single with a qualified dependent brother receives

P18,000 as monthly regular compensation starting January 1, 2008. On June
1, 2008, he filed his resignation effective June 30, 2008 and was subsequently
reemployed on July 6, 2008. The BIR Form 2316 he gave to his new
employer showed that the amount he received from his previous employer
was P108,000 and a tax withheld of P11,100. His withholding tax from the
new employer amounted to P15,000. SHCaDA
COMPUTATION:
Previous employer P108,000.00
Add: Compensation from new employer 115,000.00
–––––––––––
Gross compensation 223,000.00
Less: Personal Exemption (HF) 37,500.00
–––––––––––
Tax Due P33,875.00*
Less: Tax Withheld (11,100 + 15,000) 26,100.00
–––––––––––
To be deducted from Mr. Z P7,775.00
––––––––––
* Tax on P140,000.00 P22,500.00
Tax on excess (P45,500 x 25%) 11,375.00
–––––––––––
Tax on P185,500.00 P33,875.00
==========
c) Mr. Y, single with a qualified dependent brother, had his first job
on July 2008. He receives P18,000 as monthly regular compensation. The tax
withheld was P12,083.75.
COMPUTATION:
July to November 2008 P90,000.00
Add: Compensation to be received in December 18,000.00
––––––––––
Gross compensation 108,000.00
Less: Personal Exemption (pro-rated) 37,500.00
––––––––––
Tax Due P8,600.00 *
Less: Tax Withheld 12,083.75
–––––––––––
To be refunded to Mr. Y (P3,483.75)
*Tax on P70,000.00 P8,500.00
Tax on excess (P500 x 20%) 100.00
––––––––––
Tax on P83,000.00 P8,600.00
=========
EXAMPLE VIII: (Year-end adjustments computation) — For taxable

year 2009, WTD Corporation (Full exemption per R.A. 9504 shall be used for
calendar year 2009) has the following employees:
1. Mr. E, married with two qualified dependent children who

received the following compensation for the year:
Basic Monthly Salary P45,000.00

Overtime Pay for November P5,000.00
Thirteenth Month Pay P45,000.00
Other Benefits P12,000.00
Withholding tax (Jan.-Nov.) P98,082.00
2. Mr. F, married, whose wife is also employed, with two qualified

dependent children, received for the year:

Withholding tax (Jan.-Nov.) P12,924.23
3. Mr. G, single, who was hired on July 6, 2009 received the

following:

Monthly Salary from Previous
Employer (Jan.-June) P6,000.00
Withholding tax — Previous employer P2,899.68
Present employer 17,500.50
He paid for the year an annual premium on health and hospitalization
insurance amounting to P2,400.00.
4. Mrs. H, married, whose husband is also working received the

following:

Thirteenth Month Pay (8/12 x 35,000.00) P23,333.33
Withholding tax (Jan.-August) 57,333.36
She resigned effective August 31, 2009.
COMPUTATION OF WITHHOLDING TAX FOR DECEMBER 2009
1. Mr. E
Compensation Received
For the Year Non-Taxable Taxable
Basic Salary (45,000 x 12mos.) P540,000 P540,000
Overtime (Nov.) 5,000 5,000
13th month pay 45,000 P30,000 15,000
Other benefits 12,000 12,000
––––––––– –––––––– ––––––––
Totals P602,000 P30,000 P572,000
–––––––– –––––––– =========
Total Gross Compensation P572,000.00
Less: Personal exemption P50,000.00
Additional exemption (2 x P25,000) 50,000.00 100,000.00
––––––––– –––––––––––
Net Taxable compensation P472,000.00
–––––––––––
Tax Due *
250,000 P50,000.00
222,000 x 30% 66,600.00
––––––––––
116,600.00
Less: Tax withheld from previous months (Jan.-Nov.) 98,082.27
––––––––––
Tax to be collected in December 2009 P18,517.73
=========
* Tax Due is computed by using the rates prescribed in Sec. 24 (A), NIRC.
2. Mr. F
Basic Salary P198,000 P198,000
13th month pay 16,500 P16,500
Other benefits 16,500 13,500 3,000 *
–––––––– –––––––– ––––––––
Totals P231,000 P30,000* P201,000
======= ======= =======
* Excess of 13th month pay and other benefits over the P30,000.00
ceiling under Sec. 32 (b) (7) (e).
Total Compensation P201,000.00

Less: Personal and additional exemptions (ME2) 100,000.00
–––––––––––
Net taxable compensation income P101,000.00
Tax Due P14,700.00
––––––––––
Amount to be withheld in December 2009 P1,775.77
=========
3. Mr. G, Single — Computation of withholding tax for December

Compensation from previous employer (Jan. to June) P36,000.00
Compensation from present employer (July 6 to Dec.) 120,000.00
––––––––––
Total taxable compensation (Jan. to Dec.) 156,000.00
Less: Personal exemptions 50,000.00
Premium payments on health &
hospitalization insurance * 2,400.00 52,400.00
–––––––– –––––––––
Net taxable compensation P103,600.00
––––––––––
Tax Due P15,220.00
Less: Taxes Withheld —
** Previous employer P2,899.68
*** Present employer 17,500.50 20,400.18
––––––––– –––––––––
Amount to be refunded in December (P5,180.18)
========
* Premium payment on health and/or hospitalization shall be allowed
considering that gross compensation amounted to P156,000 only and did not
exceed P250,000.00.
** Refer to Certificate of Compensation Payment/Tax Withheld (BIR

Form No. 2316) issued by previous employer.
*** Taxes withheld from July 6 to December 31, 2008 computed by

the present employer using the cumulative computation. aHECST
4. Mrs. H, married (computation of tax upon resignation):

Thirteenth Month Pay 8/12 x 35,000 P23,333.33
She resigned effective August 31, 2009.
Basic Salary P280,000.00 P280,000.00
13th month pay 23,333.33 P23,333.33
Other benefits 20,000.00 6,666.67 13,333.33
––––––––––– –––––––––– –––––––––––
Totals P323,333.33 30,000.00 P293,333.33
==========
Total Compensation P293,333.00
Less: Personal and additional exemptions 50,000.00
–––––––––––
Net taxable compensation income P243,333.33
Tax Due (Jan. to August 31, 2009) P48,333.33
Less: Tax withheld (Jan.-August 31, 2009) 57,333.36
–––––––––––
Excess tax withheld, to be refunded in August (P9,000.03)
==========
EXAMPLE IX: (Year-end adjustments computation) — For taxable

year 2008, WTD Service Company employed Mr. J, married with two
qualified dependent children. He received the following compensation for the
year:
Basic Monthly Salary

(excluding SSS/HDMF/PHIC employee's share) P45,000.00
Overtime Pay per month P5,000.00
Hazard Pay per month P2,000.00
Thirteenth Month Pay given Dec. 2008 P45,000.00
Other Benefits given Dec. 2008 P12,000.00
COMPUTATION:
Total Compensation
(681,000 - 30,000 non-taxable benefits)* P651,000.00
Less: Personal 41,000.00
Additional exemptions 33,000.00 74,000.00
–––––––––– ––––––––––
Net taxable compensation income 577,000.00
––––––––––
Tax Due *
500,000 125,000.00
77,000 x 32% 24,640.00
––––––––––
149,640.00
––––––––––
Tax to be collected in December 2008 P13,030.07
=========
* Exempt from taxation per Sec. 32 (B) (7) (e) of the Tax Code, as
amended re: 13th month pay and other benefits not exceeding P30,000.
The annualized computation done for each employee shall be reflected

by the employer at the alphabetical list attached to BIR Form No. 1604-CF.
c) If the compensation is paid other than daily, weekly,

semi-monthly or monthly, compute the tax to be deducted and withheld as
follows:
a) Annually — refers to computation on annualized income; EHaDIC
b) Quarterly and semi-annually — divide the compensation by

three (3) or six (6) respectively, to determine the average monthly
compensation. Use the monthly withholding tax table to compute the tax, and
the tax so computed shall be multiplied by three (3) or six (6), accordingly;
c) Bi-weekly — divide the compensation by two (2) to determine

the average weekly compensation. Use the weekly withholding tax table to
compute the tax, and the tax so computed shall be multiplied by two (2);
d) Miscellaneous — if compensation is paid irregularly, or for a

period other than those mentioned above, divide the compensation by the
number of days from last payment to day of payment (excluding Sundays and
holidays). Use the daily tax table, the tax so computed shall be multiplied by
the number of days.
(C) . . .
(D) . . .
(E) . . .
(F) Requirement for Deductibility. — The provisions of Sec. 2.58.5

of RR 2-98, as amended, shall apply. Provided, that compensation income
where no income taxes were withheld pursuant to Section 2.79 (A) of these
regulations, shall be allowed as deduction from an employer's gross income
when the required employees withholding statement (BIR Form No. 2316)
have been issued to subject employees in accordance with Sec. 2.83.1 of RR
2-98, as amended. Provided, further, that the Alphabetical List of the subject
employees, including MWEs, shall be submitted under BIR Form No.
1604-CF in accordance with Sec. 2.83.2 of RR 2-98, as amended.
(G) . . .
(H) . . .
(I) Right to Claim Withholding Exemptions. — An employee

receiving compensation shall be entitled to withholding exemptions as
provided in the Code, as amended. In order to receive the benefit of such
exemptions, the employee must file the Application for Registration (BIR
Form No. 1902), upon employment, or a Certificate of Update of Exemption
and of Employer's and Employee's Information (BIR Form No. 2305), in case
of updates on changes in his exemption. The withholding exemption to which
an employee is entitled depends upon his status and the number of dependents
qualified for additional exemptions. Each employee shall be allowed to claim
the following amount of exemptions, with respect to compensation paid on or
after July 6, 2008.
(1) Personal and additional exemptions. —
(a) Basic personal exemptions. —
Individual taxpayers regardless of status are entitled to P50,000

personal exemption.
(b) Additional exemptions for taxpayers with dependents. — An

individual whether single or married, shall be allowed an additional
exemption of Twenty Five Thousand Pesos (P25,000) for each qualified
dependent child, provided that the total number of dependents for which
additional exemptions may be claimed shall not exceed four (4) dependents.
The additional exemptions for QDC shall be claimed by only one of the
spouses in the case of married individuals.
A dependent means a legitimate, illegitimate or legally adopted child

chiefly dependent upon and living with the taxpayer if such dependent is not
more than twenty-one (21) years of age, unmarried and not gainfully
employed or if such dependent, regardless of age, is incapable of self-support
because of mental or physical defect.
The husband shall be the proper claimant of the additional exemption

for qualified dependent children unless he explicitly waives his right in favor
of his wife in the Application for Registration (BIR Form No. 1902) or in the
Certificate of Update of Exemption and of Employer's and Employee's
Information (BIR Form No. 2305), whichever is applicable: Provided,
however, that where the spouse of the employee is unemployed or is a
non-resident citizen deriving income from foreign sources, the employed
spouse within the Philippines shall be automatically entitled to claim the
additional exemptions for children.
Every employer should ascertain whether or not a child being claimed

is a qualified dependent under the provisions of these Regulations. If the
employee should have additional dependent(s), as defined above, during the
taxable year, he may claim the corresponding additional exemption, as the
case may be, in full for such year.
If the taxpayer dies during the taxable year, his estate may still claim
the personal and additional exemptions for himself and his dependent(s) as if
he died at the close of such year. If the spouse or any of the dependents dies
or if any of such dependents marries, becomes twenty-one (21) years old or
becomes gainfully employed during the taxable year, the taxpayer may still
claim the same exemptions as if the spouse or any of the dependents died, or
as if such dependents married, became twenty-one (21) years old or became
gainfully employed at the close of such year. Provided, that in 2008, the
pro-rated personal and additional exemptions shall apply as stated in the
regulations. CSaIAc
The personal and additional exemptions herein above stated shall

apply after the transitory period.
EXAMPLE X: Mr. M got married on July 20, 2008, when his

girlfriend was four (4) months pregnant. On December 26, 2008, the wife
gave birth to twins. Earnings from January 1 to July 5, 2008 is P150,000.00
and for the rest of 2008, he earned P200,000.00 more. The tax due for 2008 is
computed as follows:
Compensation Income (January 1-July 5, 2008) P150,000.00

Compensation Income (July 6 to December 31, 2008) 200,000.00
––––––––––
Total Compensation for 2008 350,000.00
=========
Less: Personal Exemption P41,000.00
Additional Exemption (16,500 x 2) 33,000.00 74,000.00
Taxable Compensation Income P276,000.00
–––––––––––
Tax Due: 250,000.00 P50,000.00
266,000.00 x 30% 7,800.00
–––––––––––
Total P57,800.00"
==========
SECTION 4. Section 2.79 (1) and 2.79.2 of RR 2-98, as amended, is

hereby amended to read as follows:
"Sec. 2.79.1 Application for Registration for Individuals Earning

Compensation Income (BIR Form No. 1902) — The application for
registration of employees shall be accomplished by both employer and
employee relating to the following information and other requirements:
(A) Employee —
(1) Name/Taxpayer's Identification Number (TIN)/Address of

employee/other information required as stated in BIR Form No. 1902; AcSEHT
(2) Status of employee whether SINGLE/legally separated/widow or

widower with no dependent child or married;
(3) Status of spouse of the employee. — If the employee is legally

married, the Name/TIN, if any, of the spouse and whether said spouse is
employed, unemployed, employed abroad, or is engaged in trade or business
should be indicated on the application;
(4) Qualified dependents. — Name and date of birth of qualified

dependent/s child(ren);
(5) Claimant of exemption for children. — The husband is the

proper claimant of additional exemptions for qualified dependent children.
However, the wife shall claim full additional exemption for children in the
following cases: SAcCIH
(a) Husband is unemployed;
(b) Husband is a non-resident citizen deriving income

from foreign sources;
(c) The husband waives his right to claim the

exemptions of children (waiver should be for all children) in a
sworn statement to be attached to his Application for
Registration (BIR Form No. 1902) and that of his wife's, in
accordance with the procedures prescribed in this Section;
(6) Required forms and attachments — Upon filing the

Application for Registration (BIR Form No. 1902) or Certificate of
Update of Exemption and of Employer's and Employee's Information (BIR
Form No. 2305), whichever is applicable, the taxpayer is required to attach
any of the following documents to establish the status of the taxpayer, if
applicable, to the application:
(a) Marriage Contract;
(b) Birth Certificate of each qualified dependent

child(ren), certified by the Local Civil Registry Office/National
Statistics Office (NSO)/equivalent document issued by a
government office previously requiring certified copy showing
the name of parents/and the name of the QDC with birth date
(e.g. passport of QDC as certified by company's Human
Resource Officer); DAcaIE
(c) Certificate of employment of the husband if he is

working abroad;
(d) Sworn Declaration and Waiver of Right to Claim

Exemptions of Qualified Dependent Child(ren) by the Husband
(Annex "F") in case wife is claiming the additional exemptions
of the children;
(e) Medical Certificate of qualified dependent child,

if physically/mentally incapacitated;
(f) Court decision of legal adoption of children;
(g) Death Certificate; and
(h) Other documentary evidence, where the above

documents are not available.
(7) Concurrent multiple employments. — An employee who is

employed concurrently by two or more employees within the same period of
time during the taxable year shall file the Application for Registration (BIR
Form No. 1902) with his main employer (employer to whom the said
employee renders his services for most of his time during the taxable year)
and shall furnish a copy of the duly received Application with his secondary
employers (2nd, 3rd, etc. employers). The employed husband and wife shall
each file a separate application with their respective employers; IHCacT
(8) Successive multiple employment — An employee who transferred

to another employer during the taxable year, shall furnish his new Employer
with a Certificate of Update of Exemption and of Employer's and Employee's
Information (BIR Form No. 2305) indicating therein his previous
employments during the taxable year (name of employer/s, address/es, TIN/s
and the date/s of his separation) and attach to the said certificate, a copy of the
Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) for
compensation payment with or without withholding tax for the calendar year
issued by previous employer/s.
For an employee with successive employment beginning July 6, 2008

to December 31, 2008, the employer/s for the second semester shall apply the
pro-rated exemption prevailing for the first semester ending July 5, 2008
based on BIR Form No. 2316 issued by the previous employer which was
submitted by the employee and the pro-rated exemption prevailing for the
second semester ending December 31, 2008 in the computation of year-end
adjustment;
(9) Mixed Income — An individual receiving a combination of

compensation and business/professional income shall first deduct the
allowable personal and additional exemptions from compensation income,
only the excess therefrom can be deducted from business or professional
income. In the case of husband and wife, the husband shall be the proper
claimant of the additional exemptions unless he waives it in favor of his wife.
(B) Employer. — The employer with whom the Application for

Registration (BIR Form No. 1902) is filed, must indicate the date of receipt
thereon and accomplish Part V of the said Application pertaining to
Employer's Information such as TIN, Employer's Registered Name, and other
relevant information. TcIHDa
(C) Procedures for the filing of the Application for Registration (BIR
Form No. 1902)
(1) All employers shall require their employees to accomplish in

triplicate the Application for Registration BIR Form 1902 (Original
copy-RDO; Duplicate-employer; Triplicate-employee) described above as
follows:
(a) New employee/s shall accomplish and file the

Application for Registration for Individuals Earning
Compensation Income (BIR Form No. 1902) within ten (10)
days from the date of employment;
(b) In case of changes in the information data in the

Application for Registration (BIR Form No. 1902) previously
submitted by the employee, consisting of changes in status and
personal and additional exemptions, employment/working
status of the spouse of the employee, multiple employment
status and amount of compensation income, a Certificate of
Update of Exemption and of Employer's and Employee's
Information (BIR Form No. 2305) reflecting the changes,
together with the required documents/evidence of changes
must be submitted to the employer within ten (10) days after
such change. The employer shall then make the necessary
adjustments on the withholding tax of the employee based on
the new information; ESAHca
(2) The employer shall transmit all copies of the Application for
Registration (BIR Form No. 1902) or Certificate of Update of Exemption and
of Employer's and Employee's Information (BIR Form No. 2305), whichever
is applicable, (after accomplishing the portion of Employer's information of
either forms) to the RDO where the employer is registered within thirty (30)
days following its receipt from the employee. The RDO or his duly authorized
representative, where the employer is registered, shall receive and stamp the
three copies. The triplicate copy duly stamped received by the BIR shall be
given to the employee.
(3) The employer shall review the exemptions of the employees and
shall, in the computation of taxes required to be withheld on the compensation
of employees, apply the correct and applicable exemptions as provided in
these regulations.
(4) In case the husband waives his right to claim the additional
exemptions of children in favor of his wife, he shall accomplish a Sworn
Declaration and Waiver of Right to Claim Exemptions of Qualified
Dependent Child(ren) by the Husband (Annex "F") in accordance with the
following procedures:
(a) Fill up three (3) copies of the prescribed waiver

form.
(b) Submit the waiver form together with the BIR

Form No. 1902 to his employer within ten (10) days from
employment, for acknowledgment in the space provided for
that purpose. EDSHcT
The employer of the husband shall:
(i) After filling up the acknowledgment portion of

the waiver form, retain the duplicate copy of the form and
furnish the employee the original and triplicate copies for
submission to the employer of the wife and for file of the
employee, respectively.
(ii) Stop deductions of additional exemptions for

qualified dependent children from the husband's compensation
income starting the following month.
The employer of the wife shall, upon receipt of copy of

the waiver form duly acknowledged by the employer of the
husband, start deducting additional exemptions for children
from the wife's income on the month when the employer of the
husband stopped deducting the exemptions of children from
the husband's income.
(c) The employed husband and wife shall apply the waiver in the
computation of their respective taxable income in the income tax return
required to be filed by them following the procedure for filing the waiver
under Section 2.79.1 (C) (4) of these regulations, that is, the husband shall not
deduct exemptions of children from his compensation income because he has
waived the same (exemptions of children) in favor of his wife who will now
deduct said exemptions from her income in computing her tax due. DAEaTS
Waiver exercised during the calendar year shall be made only once in
a calendar year and shall take effect for the present calendar year and
succeeding year/s until revoked by the husband. Any waiver/revocation of
such waiver shall take effect only starting the succeeding calendar year. In no
case should an employer of the wife deduct exemptions of children from the
wife's income unless the waiver by the husband has been duly acknowledged
by the employer of the husband.
Registration of employees receiving purely compensation income shall

be at the RDO having jurisdiction over the employee's place of assignment
considering that the employee submits application for registration/exemption
updates to their employer. In cases of multiple employment, it shall be at the
RDO where the main employer is registered.
Sec. 2.79.2. Failure to file Application for Registration (BIR Form

No. 1902) or Certificate of Update of Exemption and of Employer's and
Employee's Information (BIR Form No. 2305). — Where an employee, in
violation of these regulations either fails or refuses to file an Application for
Registration (BIR Form No. 1902) together with the required attachments, the
employer shall withhold the taxes prescribed under the Schedule for Zero
Exemption of the Revised Withholding Tax Table. In case of failure to file the
Certificate of Update of Exemption and of Employer's and Employee's
Information (BIR Form No. 2305) together with the attachments, the
employer shall withhold the taxes based on the reported personal exemptions
existing prior to the change of status and without reflecting any change. Any
refund or underwithholding that shall arise due to the violations shall be
covered by the penalties prescribed in Section 80 of the NIRC, as amended."
HEDSIc

"Section 2.80. Liability for Tax. —
(A) Employer. —
(1) In general, the employer shall be responsible for the withholding

and remittance of the correct amount of tax required by deducting and
withholding from the compensation income of his employees. If the employer
fails to withhold and remit the correct amount of tax, such tax shall be
collected from the employer together with the penalties or additions to the tax
otherwise applicable.
(2) The employer who is required to collect, account for and remit
any tax imposed by the NIRC, as amended, who willfully fails to collect such
tax, or account for and remit such tax or willfully assist in any manner to
evade any payment thereof, shall in addition to other penalties provided for in
the Code, as amended, be liable, upon conviction, to a penalty equal to the
amount of the tax not collected nor accounted for or remitted. AcICHD
(3) Any employer/withholding agent who fails, or refuses to refund
excess withholding tax not later than January 25 of the succeeding year shall,
in addition to any penalties provided in Title X of the Code, as amended, be
liable to a penalty equal to the total amount of refund which was not refunded
to the employee resulting from any excess of the amount withheld over the tax
actually due on their return. EcATDH
(B) Employee. — Where an employee fails or refuses to file the

Application of Registration or Certificate of Update of Exemption and of
Employer's and Employee's Information (BIR Form No. 2305) together with
the attachments or willfully supplies false or inaccurate information
thereunder after due written notice by the employer, the tax otherwise to be
withheld by the employer shall be collected from him including penalties or
additions to the tax from the due date of remittance until the date of payment.
On the other hand, where the employee, after due written notice from the
employer, willfully fails or refuses to file the Application for Registration or
the Certificate of Update of Exemption and of Employer's and Employee's
Information, whichever is applicable, or willfully supplies false and
inaccurate information, the excess taxes withheld by the employer shall not be
refunded to the employee but shall be forfeited in favor of the government.
xxx xxx xxx."

"Sec. 2.83. Statements and Returns. —
Section 2.83.1. Employees Withholding Statements (BIR Form

No. 2316). — In general, every employer or other person who is required to
deduct and withhold the tax on compensation including fringe benefits given
to rank and file employees, shall furnish every employee from whose
compensation taxes have been withheld the Certificate of Compensation
Payment/Tax Withheld (BIR Form No. 2316) on or before January 31 of the
succeeding calendar year, or if employment is terminated before the close of
such calendar year, on the day on which the last payment of compensation is
made. Failure to furnish the same shall be a ground for the mandatory audit of
payor's income tax liabilities (including withholding tax) upon verified
complaint of the payee. DHCcST
Employers of MWEs are still required to issue BIR Form No. 2316
(June 2008 Encs version) to the MWEs on or before January 31 of the
following year. cHaADC
The employer shall furnish each employee with the original and
duplicate copies of BIR Form No. 2316 showing the name and address of the
employer; employer's TIN; name and address of the employee; employee's
TIN; amount of exemptions claimed amount of premium payments on health
and/or hospitalization insurance not exceeding P2,400.00, if any; the sum of
compensation paid including the non-taxable benefits; the amount of statutory
minimum wage received by MWEs; Overtime pay, holiday pay, night shift
differential pay and hazard pay received by MWEs; the amount of tax due; the
amount of tax withheld during the calendar year and such other information as
may be required. The statement must be signed by both the employer or other
authorized officer and the employee, and shall contain a written declaration
that it is made under the penalties of perjury. If the employer is the
Government of the Philippines, its political subdivision, agency or
instrumentality or government-owned or controlled corporation, the statement
shall be signed by the duly designated officer or employee.
The Certificate of Compensation Payment/Tax Withheld (BIR Form

No. 2316) shall contain a certification to the effect that the employer's filing
of BIR Form No. 1604-CF shall be considered as a substituted filing of the
employee's income tax return to the extent that the amount of compensation
and tax withheld appearing in BIR Form No. 1604CF as filed with the BIR is
consistent with the corresponding amounts indicated in BIR Form No. 2316.
It shall be signed by both the employee and employer attesting to the fact that
the information stated therein has been verified and is true and correct to the
best of their knowledge. However, the withholding agents/employers are
required to retain copies of the duly signed BIR Form No. 2316 for a period
of three (3) years as required under the NIRC.
Where the employee is a MWE defined under R.A. 9504 whose income
is exempt from income tax and, consequently, from withholding tax, BIR Form
No. 2316 shall show the sum of non-taxable SMW paid including the
non-taxable benefits such as holiday pay, overtime pay, night shift differential
pay and hazard pay earned during the calendar year and such other
information as may be required. Provided, that the applicable box for MWEs
under BIR Form No. 2316 (June 2008 Encs. version) are sufficiently filled-up.
This serves as proof of financial capacity for purposes of loans, and for other
purposes with various government agencies. cDCaTS
Separated/terminated employees within the period from January 1 to

July 5, 2008, where the total exemptions (e.g. married-P32,000) used in the
annualized computation were likewise shown in the issued BIR Form 2316,
shall be reported by the employer under the alphalist of terminated employees
with date of termination/separation.
For those with changes in exemptions, such as that of having an
additional dependent child, or for those with successive employment for
taxable year 2008, the applicable apportioned exemption for January 1 to July
5, 2008 shall be applied for the first semester and the applicable apportioned
exemption for July 6 to December 31, 2008 shall be applied for the second
semester. TIESCA
The employee who is qualified for substituted filing of income tax

return under these regulations shall no longer be required to file income tax
return (BIR Form No. 1700) since BIR Form No. 1604-CF with alphalists of
employees shall be considered a substituted return filed by the employer. BIR
Form No. 2316, duly certified by both employee and employer, shall serve the
same purpose as if a BIR Form No. 1700 had been filed, such as proof of
financial capacity for purposes of loan, credit card, or other applications, or
for the purpose of availing tax credit in the employee's home country and for
other purposes with various government agencies. This may be used for
purposes of securing travel tax exemption, when necessary.
However, information referring to the certification, appearing at the

bottom of BIR Form No. 2316, shall not be signed by both the employer and
the employee if the latter is not qualified for substituted filing. In which case,
BIR Form No. 2316 furnished by the employer to the employee shall be
attached to the employee's Income Tax Return (BIR Form Nos. 1700 or 1701
in the case of mixed income earners) to be filed on or before April 15 of the
following year.
In case of successive employments during the taxable year, an extra

copy of BIR Form No. 2316 shall be furnished by the employee, duly certified
by his previous employer/s and by him, to his new employer. HCIaDT
Section 2.83.2. Annual Information Return of Income Taxes

Withheld on Compensation and Final Withholding Taxes (BIR Form No.
1604-CF). — Every employer or other persons required to deduct and
withhold the tax is required to file with the Large Taxpayers Assistance
Division (LTAD)/Large Taxpayers District Office (LTDO)/RDO where the
payor/employer is registered as Withholding Agent on or before January 31
of the following year an Annual Information Return of Income Taxes
Withheld on Compensation and Final Withholding Taxes (BIR Form No.
1604-CF), to be submitted with the alphabetical list of employees/payees.
(A) The Annual Information Return of Income Taxes Withheld on

Compensation must show among others, the following:
(1) Withholding Agent's registered name, address and

Taxpayer's Identification Number (TIN). CaDSHE
(B) The alphabetical list of employees must show the following: acEHCD
(1) Name and TIN of employees;
(2) Gross compensation paid by present and previous

employers for the calendar year;
(3) (a) Taxable 13th month pay/other benefits for the

rank and file employees; (b) Taxable fringe benefits for
managerial employees;
(4) Non-taxable 13th month pay/other benefits

(Present employer);
(5) Non-taxable statutory minimum wage;
(6) Non-taxable holiday pay, overtime pay, night shift

differential pay and hazard pay (minimum wage earners only);
(7) (a) For 2008, Amount of Exemptions (January 1

to July 5, 2008) and Amount of Exemptions (July 6 to
December 31, 2008); (b) For 2009 and thereafter, Amount of
Exemptions;
(8) Amount of premium payments on health and/or

hospitalization insurance not exceeding P2,400.00, if any; DSEIcT
(9) Tax required to be withheld computed in

accordance with Sec. 24 (A) of the Code;
(10) Tax withheld by all present employers for the

calendar year; and
(11) Adjustment, if any.
(C) The alphabetical list of employees shall be prepared indicating,

among others, separate listings of the following:
(1) Employees Separated/Terminated before

December 31 of the taxable year (indicate date of
separation/termination); STaCIA
(2) Employees whose compensation income are
exempt from withholding tax BUT subject to income tax; EIDTAa
(3) Employees whose total compensation income are

exempt from withholding tax and not subject to income tax
(indicate if MWE);
(4) Employees as of December 31 of the taxable year

with no previous employment within the year;
(5) Employees as of December 31 of the taxable year

with previous employment within the year;
(6) Employees who received Fringe Benefits

subjected to Fringe Benefit Tax;
(7) Alien employees subject to withholding tax.
Employers with centralized accounting system, or those mandated to

consolidate remittances (e.g. large taxpayers), shall prepare alphalists on a
regional basis or per branch office, due to the identification of SMW per
region where the employee is assigned, which shall be submitted to the BIR
where the head office is located.
In cases where no information was provided by a previous employer,

such fact shall be stated in BIR Form No. 1604-CF and the present employer
shall not be liable to any penalties. ScaAET
Section 2.83.3. Requirement for list of payees. — In addition to

the manually prepared alphabetical list of employees and list of payees and
income payments subject to creditable and final withholding taxes which are
required to be attached as integral part of the Annual Information Returns
(BIR Form No. 1604CF/1604E), Monthly Remittance Returns (BIR Form No.
1601C etc.), the withholding agent may submit soft copy in 3.5-inch floppy
diskettes/CD or email: [email protected], containing the said
alphalists.
However, taxpayers, whose number of employees or income payees

are ten (10) or more, are mandatorily required to submit the said lists in
3.5-inch floppy diskettes/CD or email: [email protected] using the
existing CSV data file format, together with the manually prepared
alphabetical list. In order to comply with this format, the withholding agents
shall have the option to use any of the following: cEHITA
1. Excel format provided under Revenue

Regulations No. 7-2000, as amended, following the
technical specifications required by the BIR;
2. Their own extract program that shall meet the

technical specifications required by the BIR; or
3. Data Entry Module using Visual FoxPro that will

be available upon request or by downloading from the BIR's
web site at http://www.bir.gov.ph with the corresponding job
aid.
For those who would choose either option 1 or 2, such taxpayers shall
use a validation module developed by the BIR, which can be downloaded
from the BIR website. ISaCTE
In any case, the withholding agents are required to save the same to a
secondary storage as back up for a period of three (3) years from submission
of the diskette, as aforementioned, for future reference.
For withholding agents classified as large taxpayers and excise

taxpayers falling within the jurisdiction of the Large Taxpayers Service and/or
Large Taxpayers District Office, the Annual Information Return of Income
Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form
No. 1604-CF) and the Annual Information Return of Creditable Income Taxes
Withheld (Expanded)/ Income Payments Exempt from Withholding Tax (BIR
Form No. 1604-E) shall be submitted to the Large Taxpayers Assistance
Division, Large Taxpayers District Offices or Excise Taxpayers Assistance
Division, as the case may be. For other withholding agents, the aforesaid
annual returns shall be submitted to their respective Revenue District Offices.
BIR Form No. 1604-CF shall be submitted on or before January 31 of the
succeeding year while BIR Form No. 1604-E shall be filed on or before
March 1 of the following year. Only diskettes/CD/email:
[email protected] readable and virus free files upon submission shall
be considered as duly filed "Alphabetical List of Employees/Payees" by the
employer. Violation hereof, shall be a ground for the mandatory audit of
violator's income tax liabilities (including withholding tax). Diskettes/CDs
must be uploaded by the above-mentioned offices within fifteen (15) days from
receipt. TSHcIa
The manually prepared (hard copy for below 10 employees/payees)

alphabetical list of employee shall be filed in triplicate copies (two copies for
the BIR) to be stamped "received" by the BIR-Large Taxpayers Assistance
Division, Large Taxpayers District Office or the Excise Taxpayers Assistance
Division, or the Revenue District Office where the payor/employer is
registered as Withholding Agent. Manually filed alphalists must be encoded
and uploaded by the abovementioned offices within thirty (30) days from
receipt.
xxx xxx xxx
Section 2.83.4. Substituted Filing of Income Tax Returns by

Employees Receiving Purely Compensation Income. — Individual taxpayers
receiving purely compensation income, regardless of amount, from only one
employer in the Philippines for the calendar year, the income tax of which has
been withheld correctly by the said employer (tax due equals tax withheld)
shall not be required to file BIR Form No. 1700. In lieu of BIR Form No.
1700, the Annual Information Return of Income Taxes Withheld on
Compensation and Final Withholding Taxes (BIR Form No. 1604-CF) (hard
copy) filed by their respective employers, duly stamped "received" by the
BIR, shall be tantamount to the substituted filing of income tax returns by said
employees.
The following individuals, however, are not qualified for substituted

filing and therefore, still required to file BIR Form No. 1700 in accordance
with existing regulations: HaSEcA
(A) . . .
(B) . . .
(C) Minimum wage earners including employees of the government

of the Philippines, or any political subdivisions, agencies or instrumentalities,
with Salary Grades 1 to 3 whose income were not subjected to withholding
tax but subject to income tax from January 1 to July 5, 2008.
(D) . . .
(E) . . .
(F) ...
In case of married individuals who are still required to file returns

under existing provisions of the law, i.e., in those instances not covered by the
substituted filing of returns, only one return for the taxable year shall be filed
by either spouse to cover the income of the spouses, which return shall be
signed by the husband and wife, unless it is physically impossible to do so, in
which case signature of one of the spouses would suffice. HcSETI
Employees not qualified for substituted filing but are required to file
the Income Tax Return shall file the same not later than April 15 of the year
immediately following the taxable year. Provided, that employees with
previous/successive employer/s within the taxable year shall furnish their new
employer with BIR Form No. 2316 issued by the previous employer/s. HDIaST
Section 2.83.5. Registration as withholding agent. — Any person

who makes payment or expects to make payment of compensation in the
amount exceeding the statutory minimum wage, to any single employee shall
register by filing in duplicate, with the Revenue District Office (RDO) of the
city or municipality where his legal residence or place of business is located,
an Application for Registration as a withholding agent using the form
prescribed by the Bureau not later than ten (10) days after becoming an
employer.
Sec. 2.83.6. . . .
Sec. 2.83.7. . . ."
SECTION 7. Transitory Provisions. — In the implementation of these

Regulations, the following provisions shall apply during the transition period:
1. For taxable year 2008, all employees with change in status and number of
qualified dependent children shall accomplish and file the Certificate of Update of
Exemption and of Employer's and Employee's Information (BIR Form No. 2305), for
employees already registered with the BIR, reflecting the changes in information, if
any/Application for Registration (BIR Form No. 1902) for those with no TIN
reflecting the claimed exemption, together with the required documents/evidence of
exemption. The same must be submitted to their employers not later than October 31,
2008. HDAaIS
The employers shall transmit both the original & duplicate copies of BIR Form
No. 2305 on or before November 28, 2008 (after accomplishing the portion of
employer's information) to the RDO where the employee is registered. For those who
shall register for the first time, BIR Form No. 1902 shall be submitted to the RDO
either of the principal/head office of employment/place of business or place of
residence of the employee-taxpayer at the option of the latter. In both cases, the
employer shall furnish a copy of the duly received BIR Form No. 2305/1902 to the
LTAD/LTDO/RDO having jurisdiction over the principal/head office of the
employer, in case of centralized payroll process, or to the LTAD/LTDO/RDO having
jurisdiction over the branch office, in case of decentralized payroll process. DaScAI
For those with no change of status and number of qualified dependents, it is

incumbent with employer to change in their records the new amount of personal and
additional exemptions of such employees.
2. The withholding tax from July 6 to December 31, 2008 shall be computed
using the Revised Transitional Withholding Tax Table (Annex "D").
3. The personal and additional exemptions applicable for calendar year 2008
shall be as follows:
a) For the period from January 1 to July 5, 2008, single taxpayers are
entitled to P10,000.00, head of the family at P12,500.00, each married
individual at P16,000.00, and for each qualified dependent child, not
exceeding 4 children, P4,000.00, computed on a pro-rata basis of the
full-year exemptions under the old law.
b) For the period from July 6 to December 31, 2008, the pro-rated personal
exemption shall be P25,000.00, regardless of status, and P12,500 for
each qualified dependent child, not exceeding 4 children, as additional
exemption.
4. Towards the end of 2008 and using the annualized withholding tax
method, withholding agents are required to undertake/conduct the final year-end
adjustments consolidating the compensation data for the entire year of 2008 but
taking into consideration the following transitory personal and additional exemptions,
which are rounded off for administrative ease:
January 1 to July 6 to
July 5 December 31 Total
Personal exemption
Single P10,000 P25,000 P35,000
Head of the family 12,500 25,000 37,500
Married 16,000 25,000 41,000
Additional exemption for
Every QDC 4,000 12,500 16,500
Employers are required to ensure that tax due is equal to the tax withheld for
the year-end adjustment computation. Submit BIR Form No. 1604-CF on or before
January 31, 2009. SADECI
5. The alphabetical list for 2008 shall be analyzed by the concerned

LTAD/LTDO/RDO by comparing the compensation figures reported in 2007 as
against 2008 to ensure that there is no diminution in the compensation structure of
employees. aDcHIC
6. MWEs whose compensation earned from January 1 to July 5, 2008 were
not subjected to withholding tax but are, after considering the relevant exemptions,
still subject to income tax, shall be required to file an income tax return covering the
period from January 1 to July 5, 2008, on or before April 15, 2009.
SECTION 8. Repealing Clause. —
All existing rules and regulations or parts thereof which are inconsistent with
the provisions of these Regulations are hereby modified, amended or revoked.
SECTION 9. Effectivity. —
These Regulations shall take effect beginning July 6, 2008. CcaASE
(SGD.) MARGARITO B. TEVES

Secretary
Department of Finance
RECOMMENDING APPROVAL:
(SGD.) LILIAN B. HEFTI

Commissioner
Bureau of Internal Revenue
ANNEX A
SUMMARY OF CURRENT REGIONAL DAILY MINIMUM WAGE RATES

Non-Agriculture, Agriculture
As of June 2008
(In pesos)
Agriculture
REGION WO No. Date of Effectivity Non-
Agriculture Plantation Non-Plantation
NCR a/ WO 14 June 14, 2008 345.00-382.00 345.00 P345.00

CAR b/ WO 13 June 16, 2008 243.00-260.00 226.00-242.00 226.00-242.00
I c/ WO 13 June 22, 2008 220.00-240.00 220.00 195.00
II d/ WO 13 June 15, 2008 227.00-235.00 215.00-223.00 215.00-223.00
III e/ WO 14 June 16, 2008 251.00-302.00 236.00-272.00 216.00-256.00
IV-A f/ WO 13June 01, 2008 236.00-320.00 216.00-295.00 196.00-275.00
IV-B g/ WO 04June 19, 2008 240.00-252.00 198.00-207.00 178.00-187.00
V h/ WO 13July 1, 2008 196.00-239.00 207.00-217.00 187.00-197.00
VI i/ WO 16July 6, 2008 240.00-250.00 218.00 208.00
VII j/ WO 14June 16, 2008 222.00-267.00 202.00-249.00 202.00-249.00
VIII k/ WO 15June 16, 2008 238.00 219.00 219.00
IX l/ WO 15July 03, 2008 240.00 215.00 195.00
X m/ WO 14June 01, 2008 241.00-256.00 229.00-244.00 229.00-244.00
XI n/ WO 15June 16, 2008 265.00 255.00 255.00
XII o/ WO 15June 16, 2008 245.00 225.00 220.00
XIII p/ WO 09June 20, 2008 233.00 223.00 203.00
ARMM q/ WO 1115 days after 210.00 210.00 210.00
publication
* Source: National Wages Productivity Commission (NWPC)
July 2008
ANNEX B
FACTOR OR NUMBER OF WORKING/PAID DAYS IN A YEAR

(Source: National Wages and Productivity Commission)
1. For those who do not work and are not considered paid on Saturdays and
Sundays or rest days:
Equivalent Monthly Rate (EMR) = Applicable Daily Wage Rate (ADR) x 261 days
––––––––––––––––––––––––––––––––––––––
12 months
Where 261 days: 247 — ordinary working days
11 — regular holidays
3 — Special days
–––
261 — Total number of days/year
===
2. For those who do not work and are not considered paid on Sundays or rest days:
––––––––––––––––––––––––––––––––––––––
12 months
3 — Special days
–––
===
3. For those who do not work but are considered paid on rest days, special days
and regular holidays: HSDCTA
––––––––––––––––––––––––––––––––––––––
12 months
52 — Sundays/rest days
3 — Special days
–––
===
4. For those required to work everyday including Sundays or rest days, special
days and regular holidays:
Equivalent Monthly Rate (EMR) =Applicable Daily Wage Rate (ADR) x 392.5 days
––––––––––––––––––––––––––––––––––––––
12 months
Where 392.5 days: 299 — ordinary working days
67.6 — 52 rest days x 130%
3.9 — 3 special days x 130%
–––
392.5 — Total number of days/year
===
ANNEX C
REVISED WITHHOLDING TAX TABLES

Effective JANUARY 1, 2009
ANNEX D
REVISED TRANSITIONAL WITHHOLDING TAX TABLES

FOR THE PERIOD JULY 6, 2008 TO DECEMBER 31, 2008
ANNEX E
___________________________
(Name of Company)
________________
(Date)
CERTIFICATE OF GROSS INCOME FOR THE YEAR
This is certify that Mr./Ms./Mrs. ___________________________ received the

amount of ______________________ (P___) as compensation income for the period
___________________________ from this company/enterprise, broken down as follows:
DIEACH
______________________________________________________________
______________________________________________________________
______________________________________________________________
I declare, under the penalties of perjury, that the above information are verified by
me, and to the best of my knowledge true and correct.
__________________________________
(Employer's Authorized Representative &
Designation)
ANNEX F
SWORN DECLARATION AND WAIVER OF RIGHT TO CLAIM EXEMPTIONS OF

QUALIFIED DEPENDENT CHILDREN
In accordance with the provisions of Section 29 (1) (2) (A) of the National Internal
Revenue Code, as amended, I Mr. ______________________________________, hereby
voluntarily depose and say:
1. That my wife and I are both income earners;
2. That we file a joint income tax return on our taxable income;
3. That I am a (check pls.): _____ self employed; ____ engaged in business;

____ practice profession;
4. That this waiver will be effective for the taxable year _____ and shall
continue for the succeeding years unless sooner revoked;
5. That I hereby waive my right to claim the additional exemption for all our
qualified dependent children in favor of my wife presently employed with:
Name of wife: _________________________________________________
Name of wife's employer: ________________________________________
Address of employer: ____________________________________________
TIN of employer _____________________ Tel No. ________ Fax No. _____
Name of qualified dependent child(ren) Date of Birth (mm/dd/yy)
1. ____________________ ____________________
2. ____________________ ____________________
3. ____________________ ____________________
4. ____________________ ____________________
I hereby declared under penalties of perjury that the foregoing representations are true and
correct and that the waiver of right is voluntarily and knowingly made in accordance with the
provisions of the National Internal Revenue Code, as amended. EIaDHS
_________________________________ _______________ ____________

(Signature of husband over printed name) TIN Date
ACKNOWLEDGMENT OF HUSBAND'S EMPLOYER
Name of husband's employer: ______________________________________
____________________________________________ __________________
(Signature over printed name of husband's employer/ Date (mm/dd/yy)
Chief Accountant/Head, Personnel Office)
ACKNOWLEDGMENT OF WIFE'S EMPLOYER
This is to acknowledge receipt of the above waiver of right to claim additional

exemptions of Mr. ______________________________ in favor of his wife Mrs./Mr. who
shall be entitled to claim the additional exemptions for all their qualified dependent children
effective (Month) _________ (taxable year) __________.
Name of wife's employer: _________________________________________
____________________________________________ __________________
(Signature over printed name of wife's employer/ Date (mm/dd/yy)
Chief Accountant/Head, Personnel Office)
Note: If husband engaged in business, disregard the portion on Acknowledgment of

Husband's Employer. Must be signed by both employers of husband and wife before
effecting changes in the payroll of their respective employers.
Must be attached to BIR Form No. 2305 or BIR Form No. 1902. CacHES
Endnotes
1 (Popup - Popup)
RA 9504
OCA Circular No. 38-17
2 (Popup - Popup)
Annex A
Annex B
Annex C
Annex D
Annex E
Annex F
3 (Popup - Popup)
In the case of Soriano v. Secretary of Finance, G.R. Nos. 184450, 184508, 184538 &
185234, January 24, 2017, the following provisions are declared NULL and VOID:
(i) Sections 1 and 3, insofar as they disqualify MWEs who earn purely compensation income
from the privilege of the MWE exemption in case they receive bonuses and other
compensation-related benefits exceeding the statutory ceiling of P30,000; and
(ii) Section 3 insofar as it provides for the prorated application of the personal and additional
exemptions under R.A. 9504 for taxable year 2008, and for the period of applicability of the MWE
exemption to begin only on 6 July 2008.

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(1) (2) (3)

REVENUE REGULATIONS NO. 10-08

SUBJECT : Implementing Pertinent Provisions of Republic Act No. 9504,

TO : All Internal Revenue Officers and Others Concerned

SECTION 1. Section 2.78.1 of RR 2-98, as amended, is hereby further

"Sec. 2.78.1. Withholding of Income Tax on Compensation

(A) Compensation Income Defined. — . . .

xxx xxx xxx

(3) Facilities and privileges of relatively small value. — Ordinarily,

The following shall be considered as "de minimis" benefits not subject

(a) Monetized unused vacation leave credits of employees not

(b) Medical cash allowance to dependents of employees not

(d) Uniforms and clothing allowance not exceeding P4,000.00 per

(e) Actual yearly medical benefits not exceeding P10,000.00 per

(f) Laundry allowance not exceeding P300.00 per month;

(g) Employees achievement awards, e.g., for length of service or

(h) Gifts given during Christmas and major anniversary celebrations

(i) Flowers, fruits, books, or similar items given to employees under

The amount of 'de minimis' benefits conforming to the ceiling herein

Any amount given by the employer as benefits to its employees,

Where compensation is paid in property other than money, the

xxx xxx xxx

(B) Exemptions from Withholding Tax on Compensation. — The

xxx xxx xxx

(13) Compensation income of MWEs who work in the private sector

The aforesaid income shall likewise be exempted from income tax.

MWEs receiving other income, such as income from the conduct of

In case of hazardous employment, the employer shall attach to the

The NWPC shall officially submit a Matrix of Wage Order by region

Any reduction or diminution of wages for purposes of exemption from

(14) Compensation income of employees in the public sector with

The aforesaid income shall likewise be exempted from income tax.

MWEs receiving other income, such as income from the conduct of

In case of hazardous employment, the employer shall attach to the

SECTION 2. Section 2.78.5 shall be inserted to RR 2-98, as amended, to

The basis of the computation of the minimum wage rates prescribed

The computation of wages shall be in accordance with the Collective

In the determination of the minimum wage on a monthly basis, the

On the first classification, the monthly SMW is computed by

On the second category, the monthly SMW is computed by

On the third classification, the monthly SMW is computed by

On the fourth classification, the monthly SMW is computed by

SECTION 3. Section 2.79 of RR 2-98, as amended, is hereby further

"Sec. 2.79. Income Tax Collected at Source on Compensation

(A) Requirement of Withholding. — Every employer must withhold

(B) Computation of Withholding Tax on Compensation Income in

(1) Use of Withholding Tax Tables. — In general, every employer

There are four (4) withholding tax tables prescribed in these

(a) Monthly Tax Table — to be used by employers using the

(b) Semi-Monthly Tax Table — to be used by employers using the

(d) Daily Tax Table — to be used by employers using the daily

If the compensation is paid other than daily, weekly, semi-monthly or

(a) Annually — use the annualized computation referred to in Sec.

(b) Quarterly and semi-annually — divide the compensation by

(2) Components of the Withholding Tax Table. —

(a) Each tax table is grouped into Tables A and B.

A — Table for employees with no QDC

B — Table for employees with QDC

(b) The columns in the Tables reflect the following:

1st column — reflects the exemption status of