Essay About Withholding Tax

Withholding tax is the most basic tax type that each taxpayers engaged in business, trade, or practice of profession is familiar with(Tax and Accounting Center, Inc.). There are three types of withholding tax based on how the individual earns: The withholding tax on compensation, expanded withholding tax, and final withholding tax. Withholding tax on compensation is the tax withheld from employees by the employers. Expanded withholding taxes is prescribed on individuals whose particular income earned is creditable against the taxable quarter or year. Final withholding taxes are paid in full and final amount with regards to the amount of income(Bureau of Internal Revenue).

The Bureau of Internal Revenue (BIR) is the institution assigned by

The tax code exempts an individual whose income does not exceed his total personal and additional exemptions from dependents who is a citizen of the Philippines and any foreign individual engaged in business or practice of profession within the Philippines, an individual who is exempted based on the provisions of the tax code and other laws like a minimum wage earner, an individual whose compensation is based from services in whatever form paid which includes wages and other forms of income, and an individual whose income falls under the final withholding tax that could be exempted by the Secretary of Finance upon recommendation of the BIR Commissioner which should be subject to rules and regulations. All of the exempted individuals are still required to file income tax return regardless of amount but they will not pay taxes (Bureau of Internal Revenue;