BIR makes available new withholding tax matrix

MANILA, Philippines Pending the release of a revenue regulation on the tax relief law, employers can get hold of the transitional withholding tax matrix from the Bureau of Internal Revenue (BIR). In a telephone interview, BIR Deputy Commissioner Nelson M. Aspe said the 32-page revenue regulation is still up for signing by Commissioner Lilian B. Hefti and Finance Secretary Margarito B. Teves. "The concern of the employers is the computation of the withholding tax. What is important is the amount to be remitted by Aug. 10. The tax relief law is 90% to 95% ready. Employers have to get a copy of the transitional withholding tax table and compare that with the payroll for July. They still have time," he told BusinessWorld. Republic Act 9504 took effect on July 6. The law provides for an increase in personal and additional exemptions of individual taxpayers, and exemption of minimum wage income earners from income tax. The law also allows 40% optional standard deduction as an option for corporations. Firms have to decide if this is a better option than the itemized deduction scheme, wherein the taxpayer enumerates all expenses and the corresponding amounts incurred to determine the amount of allowable deductions. The option can be availed of only on an annual basis. Since the law will not be retroactive to the start of the year, there will be two computations and alphabetical lists for the periods covering Jan. to July 5, 2008, and July 6 to Dec. 31, 2008. Under the draft regulation, employers will deduct and withhold taxes based on the revised tables for compensation earned on July 6, 2008 to Dec. 31, 2008. The old table will be applied for January to June 2008. The revised withholding tax table will be fully implemented starting Jan. 1, 2009. — BusinessWorld