REVENUE REGULATIONS NO.

11-2018
Amending Certain Provisions of Revenue Regulations No. 2-98, as Amended, to Implement Further
Amendments Introduced by Republic Act No. 10963, Otherwise Known as the “Tax Reform for Acceleration
and Inclusion (TRAIN)” Law, Relative to Withholding of Income Tax.
“SECTION 2.57.1. Income Payments Subject to Final Withholding Tax. The following forms of income
shall be subject to final withholding tax at the rates herein specified:
(A) Income Payments to a Citizen or to a Resident Alien Individual:

(1) Interest from any peso bank deposit, and yield or Twenty percent (20%)
any monetary benefit from deposit substitutes and
from trust funds and similar arrangements; royalties
(except on books, as well as other literary and
musical compositions), prizes (except prizes
amounting to Ten thousand pesos [₱10,000] or less
which shall be subject to tax under Subsection (A) of
Section 24 of the Tax Code, as amended); and other
winnings (except winnings from Philippine Charity
Sweepstakes and lotto amounting to ₱10,000 or less
which shall be exempt) derived from sources within
the Philippines –
(3) Interest income received by an individual Fifteen percent (15%).
taxpayer from a depository bank under the
Expanded Foreign Currency Deposit system
(5) Cash and/or property dividends actually or Ten percent (10%)
constructively received from a domestic corporation,
joint stock company, insurance or mutual fund
companies and regional operating headquarters of
multinational companies, or on the share of an
individual in the distributable net income after tax of
a 2 / 47 partnership (except general professional
partnership) of which he is a partner, or on the share
of an individual in the net income after tax of an
association, a joint account or a joint venture or
consortium taxable as a corporation of which he is a
member or co-venturer
(8) Capital Gains from Sale of Shares of Stock Not Fifteen percent
Traded in the Stock Exchange. – On the net capital
gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of
stock in a domestic corporation

(B) Income Payments to Non-resident Aliens Engaged in Trade or Business in the Philippines.

(6) Capital Gains from Sale of Shares of Stock Not Fifteen percent (15%)
Traded in the Stock Exchange. – On net capital
gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of
stock in a domestic corporation

(C) Income Derived from All Sources Within the Philippines by a Non-resident Alien Individual
Not Engaged in Trade or Business Within the Philippines.

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 (3) Capital Gains from Sale of Shares of Stock Not Fifteen percent (15%)
Traded in the Stock Exchange. – On net capital
gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of
stock in a domestic corporation

(D) Income Payment to a Domestic Corporation. [formerly under letter (G)]

(3) Interest income derived from a depository bank Fifteen percent (15%)
under the Expanded Foreign Currency Deposit
system
(7) Capital Gains from Sale of Shares of Stock Not Fifteen percent (15%)
Traded in the Stock Exchange. – On net capital
gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of
stock in a domestic corporation

(E) Income Payment to a Resident Foreign Corporation. [formerly under letter (H)]
(F) Income Derived from All Sources Within the Philippines by Non-Resident Foreign
Corporation. [formerly under letter (I)]
(G)Fringe Benefits Granted to the Employee (Except Rank-and-File Employee). – [formerly under
letter (J)] – On the grossed-up monetary value of the fringe benefits granted or furnished by the
employer to his employees (except rank-andfile as defined in the Code)

Employee is a citizen/resident alien/non-resident Thirty-five percent (35%)

alien engaged in trade or business within the
Philippine
Employee is a non-resident alien not engaged in Twenty-five percent (25%)
trade or business within the Philippines
The grossed-up value of the fringe benefit shall be
determined by dividing the actual monetary value of
the fringe benefit by the difference between one
hundred percent (100%) and the applicable rate of
income tax. The actual monetary value of the fringe
benefit shall be divided by sixty-five percent (65%)
to get the grossed-up value subject to 35% fringe
benefit tax (FBT); while the divisor shall be seventy-
five percent (75%) to get the grossed-up value
subject to 25% FBT

(H) Informer’s Reward to Persons Instrumental in the Discovery of Violations of the National
Internal Revenue Code and the Discovery and Seizure of Smuggled Goods. [formerly under letter (K)]
SECTION 2. Certain items of Section 2.57.2 of RR No. 2-98 is hereby renumbered and further amended
to read as follows:
“SECTION 2.57.2. Income Payments Subject to Creditable Withholding Tax and Rates
Prescribed Thereon. – Except as herein otherwise provided, there shall be withheld a creditable
income tax at the rates herein specified for each class of payee from the following items of income
payments to persons residing in the Philippines:

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(A) Professional fees, talent fees, etc. for services rendered – On the gross professional, promotional,
and talent fees or any other form of remuneration for the services rendered by the following:

Individual payee:
If gross income for the current year did not exceed - Five percent (5%);
₱3M

If gross income is more than ₱3M - Ten percent (10%)

Non-individual payee:
If gross income for the current year did not exceed -Ten percent (10%)
₱720,000;

If gross income exceeds ₱720,000 - Fifteen percent (15%)

If the recipient of the aforementioned income, however, is an employee of the lone income payor, such fees or
payments shall be considered supplemental compensation subject to the withholding tax on compensation
under Section 2.78 of these Regulations. Individual payees whose gross receipts/sales in a taxable year shall
not exceed ₱3M, are required to submit a sworn declaration of his/her gross receipts/sales (Annex “B1”),
together with a copy of Certificate of Registration (COR), to all the income payor/withholding agents not later
than January 15 of each year or at least prior to the initial payment of the professional fees/commissions/talent
fees, etc in order for them to be subject to five percent (5%). The ten percent (10%) withholding tax rate shall
be applied in the following cases: (1) the payee failed to provide the income payor/withholding agent of such
declaration; or (2) the income payment exceeds ₱3M, despite receiving the sworn declaration from the income
payee. In the case of individual payees with only one payor, the sworn declaration to be accomplished shall be
Annex “B-2” and submitted, together with a copy of their COR, to the said lone income payor
In the case of non-individual payees, if the company or corporation’s gross income is estimated not to exceed
₱720,000 during the taxable year, the authorized officer is required to provide all its income payors/withholding
agents with a notarized sworn statement to that effect (Annex “B-3”), together with a copy of the COR, not later
than January 15 of each year or prior to the initial income payment so that the income payor/withholding agent
shall only withhold ten percent (10%). The fifteen percent (15%) withholding tax rate shall be applied in the
following cases: (1) the payee failed to provide the income payor/withholding agent of such declaration; or (2)
the income payment exceeds ₱720,000, despite receiving the sworn declaration from the income payee. The
sworn declaration shall be executed by the president/managing partner of the corporation/company/general
professional partnerships.
Moreover, income payors/withholding agents shall subsequently execute a sworn declaration (Annex “C”)
stating the number of payees who have submitted the income payees’ sworn declarations (Annexes “B-1”, “B-
2” and “B-3”) with the accompanying copies of their COR. Such declaration of the income payors/withholding
agents shall be submitted, together with the list of payees, to the concerned BIR office where registered on or
before January 31 of each year or fifteen (15) days following the month when a new income recipient has
submitted the payee’s sworn declaration.
(B) Rentals [formerly under letter (C)]

(1) Real Properties - On gross rental for the

continued use or possession of real property used in Five percent (5%)
business which the payor or obligor has not taken or
is not taking title, or in which he has no equity
(2) Personal Properties – On gross rental or lease in
excess of Ten Thousand Pesos (₱10,000) annually
for the continued use or possession of personal
property used in business which the payor or obligor Five percent (5%)
has not taken or is not taking title, or in which he has
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 no equity, except those under financial lease
arrangements with leasing and finance companies
authorized to operate under Republic Act No. 8556
(Financing Company Act of 1998).
However, the Ten Thousand Pesos (₱10,000)
threshold shall not apply when the accumulated
gross rental or lease paid by the lessee to the same
lessor exceeds or is reasonably expected to exceed
₱10,000 within the year. In which case, the lessee
shall withhold the five percent (5%) withholding tax
on the entire amount.
(3) Poles, satellites and transmission facilities - On
gross rentals or lease for the use of poles, satellites
and/or transponder and transmission facilities which Five percent (5%)
include but not limited to the following: switchboards,
land lines/aerial cables, underground cables and
submarine cables
(4) Billboards - On gross rentals or lease of spaces
used in posting advertisements in the form of
billboards and/or structures similar thereto, 9 / 47 Five percent (5%)
posted in public places such as, but not limited to,
buildings, vehicles, amusement places, malls, street
posts, etc.
(5) Cinematographic film rentals and other payments
[formerly under letter (D)]– On gross payments to Five percent (5%)
resident individuals and corporate cinematographic
film owners, lessors or distributors.

(C) Income payments to certain contractors [formerly under letter (E)] – On gross payments to the
following contractors, whether individual or corporate — Two percent (2%)
(D) Income distribution to the beneficiaries [formerly under letter (F)] – On income distributed to
the beneficiaries of estates and trust as determined under Sec. 60 of the Code, except such income subject to
final withholding tax- and tax-exempt income — Fifteen percent (15%)
(E) Income payments to partners of general professional partnerships [formerly under letter (H)]
– Income payments made periodically or at the end of the taxable year by a general professional partnership to
the partners, such as drawings, advances, sharings, allowances, stipends, etc. — Fifteen percent (15%), if
the gross income for the current year exceeds P720,000; and Ten percent (10%), if otherwise
(F) Gross selling price or total amount of consideration or its equivalent paid to the seller/owner
for the sale, exchange, or transfer of real property classified as ordinary asset [formerly under letter
(J)] – A creditable withholding tax based on the gross selling price/total amount of consideration or the fair
market value determined in accordance with Section 6(E) of the Code, whichever is higher, paid to the
seller/owner for the sale, transfer or exchange of real property, other than capital asset, shall be imposed upon
the withholding agent/buyer, in accordance with the following schedule:

A. Where the seller/transferor is exempt from the Exempt

creditable withholding tax in accordance with Sec.
2.57.5 of these regulations
B. Upon the following values of real property, where
the seller/transferor is habitually engaged in the real
estate business:

With a selling price of five hundred thousand pesos 1.5%

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 (P500,000.00) or less

With a selling price of more than five hundred

thousand pesos (P500,000.00) but not more than 3.0%
two million pesos (P2,000,000.00)

With selling price of more than two million pesos 5.0%

(P2,000,000.00)
C. Where the seller/transferor is not habitually
engaged in the real estate business 6.0%

(G) Additional income payments to government personnel from importers, shipping and airline
companies, or their agents [formerly under letter (K)] – On gross additional payments by importers, shipping
and airline companies, or their agents to government personnel for overtime services as authorized by law —
Fifteen percent (15%); For this purpose, the importers, shipping and airline companies or their agents, shall
be the withholding agents of the Government.
(H) Certain income payments made by credit card companies [formerly under letter (L)] – On one-
half (1/2) of the gross amounts paid by any credit card company in the Philippines to any business entity,
whether a natural or juridical person, representing the sales of goods/services made by the aforesaid business
entity to cardholders — One percent (1%)
(I) Income payment made by top withholding agents, either private corporations or individuals,
to their local/resident supplier of goods and local/resident supplier of services other than those
covered by other rates of withholding tax. [formerly under letters (M) and (W)] – Income payments made by
any of the top withholding agents, as determined by the Commissioner, to their local/resident supplier of
goods/services, including non-resident aliens engaged in trade or business in the Philippines, shall be
subjected to the following withholding tax rates:

Supplies of goods One percent (1%)

Supplies of services Two percent (2%)

(J) Income Payments made by a government office, national or local, including barangays, or
their attached agencies or bodies, and government-owned or controlled corporations to its
local/resident supplier of goods/services, other than those covered by other rates of withholding tax.
[formerly under letter (N)] – Income payments, except any single purchase which is P10,000 and below, which
are made by a government office, national or local, including barangays, or their attached agencies or bodies,
and government-owned or controlled corporations, on their purchases of goods and purchases of services
from local/resident suppliers:

Supplies of goods One percent (1%)

Supplies of services Two percent (2%)
A government-owned or controlled corporation shall withhold the tax in its capacity as a government-owned or
controlled corporation rather than as a corporation stated in Subsection (I) hereof.
(K) Tolling fees paid to refineries [formerly under letter (P)] – On the gross processing/tolling fees
paid for the conversion of molasses to its by-products and raw sugar to refined sugar. – Five percent (5%)
(L) Payments made by pre-need companies to funeral parlors [formerly under letter (Q)] – On the
gross payments made by pre-need companies to funeral parlors for funeral services rendered. – One percent
(1%).
(M) Payments made to embalmers [formerly under letter (R)] – On the gross payments made to
embalmers for embalming services rendered to funeral companies. – One percent (1%)

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 (N) Income payments made to suppliers of agricultural products [formerly under letter (S)] –
Income payments made to agricultural suppliers such as those, but not limited to, payments made by hotels,
restaurants, hotels, restaurants, resorts, caterers, food processors, canneries, supermarkets, livestock, poultry,
fish and marine product dealers, hardwares, factories, furniture shops, and all other establishments, in excess
of the cumulative amount of Three hundred thousand pesos (₱300,000.00) within the same taxable year. -
One percent (1%)
(O) Income payments on purchases of minerals, mineral products and quarry resources as
defined and discussed in Section 151 of the Tax Code [formerly under letter (T)] – Income payments on
purchases of minerals, mineral products, and quarry resources such as but not limited to silver, gold, marble,
granite, gravel, sand, boulders and other materials/products. – Five percent (5%). However, BSP is required
to withhold one percent (1%) of gross payments made, and remit the same to the Government.
(R)Income payments made by political parties and candidates of local and national elections on
all their purchase of goods and services related to campaign expenditures, and income payments
made by individuals or juridical persons for their purchases of goods and services intended to be
given as campaign contributions to political parties and candidates [formerly under letter (X)] – Five
percent (5%)
(S) Interest income derived from any other debt instruments not within the coverage of ‘deposit
substitutes’ and Revenue Regulations 14-2012, unless otherwise provided by law or regulations
[formerly under letter (Y)] – Twenty Percent (20%)
(T) Income payments to Real Estate Investment Trust (REIT) [formerly under letter (Z)] – Income
payments made to corporate taxpayers duly registered with the LTS-Regular LT Audit Division as REIT for
purposes of availing the incentive provisions of Republic Act No. 9856, otherwise known as “The Real Estate
Investment Trust Act of 2009”, as implemented by RR 13-2011 - One percent (1%)

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