ITEMS SUBJECT TO EXPANDED WITHHOLDING TAX UNDER TRAIN LAW RA 10963

Here is the thing,  my friend was asked by her supplier to withhold because they said they saw an EWT in their 2303-Certificate of Registration in BIR. Upon checking they are not required to withhold at all.

Ladies and gentlemen, just because you see EWT -Expanded Withholding Tax  in the BIR form 2303, the Certificate of Registration, you have to automatically withhold in all of your transactions. That's not right at all.

So, here is the list of items that are subject to EWT - Expanded Withholding Tax for your reference. 

The  summary of the items that are subject to EWT Expanded Withholding Tax based on the TRAIN Law.

1. On gross Professional Fees, Talent Fees, Promotional Fees, or any other form of remuneration, for services rendered:
   1. Individual payee- 5% of the gross income for the current year provided it did not exceed Php 3 Million- 10% of the gross income if it exceeded Php 3 Million
   2. Non-individual payee– 10% of the gross income if the income for the current year did not exceed Php 720,000- 15% if it exceeded Php 720,000
   Who are covered?
   Individuals engaged in the practice of profession or calling including lawyers, architects, engineers, CPAs, medical practitioners, and all other profession that requires government licensure examination regulated by the Philippine Regulations Commission, Supreme Court, etc.; professional entertainers, professional athletes, directors and producers, insurance agents and adjusters, consultants, bookkeepers, corporate directors, selected brokers and agents, and company sales representatives or marketing agents.
   How to apply?
   You need to submit to the BIR a sworn declaration of your gross receipts/sales along with a copy of the BIR Certificate of Registration not later than January 15 of the current year prior to the receipt of professional fees.
2. On rentals:
   1. Real properties – 5% of the gross rental
   2. Personal properties – 5% of the gross rental/lease in excess of Php 10,000 annually, except those operating under RA 8556
   3. Poles, satellites, transmission facilities – 5% of the gross rental
   4. Billboards – 5% of the gross rental
   5. Cinematographic film rentals and other payments – 5% of the gross payments
3. On income payments to certain contractors:2% of the gross payments to the following contractors, whether individual or not:
   1. General engineering contractors
   2. General building contractors
   3. Specialty contractors
   4. Other contractors
   You may refer to RR 11-2018 for the description and complete list of contractors.
4. On income distribution to the beneficiaries of estates and trusts:15% of the income based on Section 60 of the Code, except income subject to final withholding tax and tax exempt income.It basically applies on the income earned by the estates of the deceased through the administrator or other authorized representative, to the legal heirs/beneficiaries before or during the distribution of such estates, either judicially or extra judicially.
5. On income payments to partners of general professional partnerships:15% of the income payments made by a general professional partnership, including drawings, sharings, advances, stipends, and allowances if the gross income for current year exceeds Php 720,000. If lesser than Php 720,000, a 10% rate will apply.
6. On sale, exchange, or transfer of real property classified as ordinary asset: A creditable withholding tax based on the gross selling price/total amount or the fair market value shall be imposed based on the following schedule:
   1. If seller/transferor is exempted from creditable withholding tax based on Sec. 2.57.5 (e.g. HLURB socialized housing)
      – EXEMPT
   2. If seller/transferor is habitually engaged in the real estate business, tax will be imposed upon the following values:
      • b.1. With a selling price of Php 500,000 or less – 1.5%
      • b.2. With a selling price of more than Php 500,000 but not more than Php 2,000,000 – 3%
      • b.3. With a selling price of more than Php 2,000,000 – 5%
   3. If the seller/transferor is NOT habitually engaged in the real estate business – 6%
7. On gross additional income payments from importers, shipping and airline companies, or their agents to government personnel – 15% of the said additional payments based on overtime services authorized by law.
8. On certain income payments made by credit card companies – One-half of 1% of the gross amounts paid by a credit card company to a business entity that represents the sales of goods or services made by such establishment to a cardholder.
9. On income payment made by top withholding agents as classified and identified by the BIR.For supplier of goods – 1%
   For supplier of services – 2%The top withholding agents shall include the following:
   1. Classified and notified by the Commissioner as any of the following unless there was cessation of business or previous declassification:
      1. Large taxpayer under RR No. 1-98
      2. Top twenty thousand (20,000) private corporations under RR No. 6-2009
      3. Top five thousand (5,000) individuals under RR No. 6-2009
   2. Taxpayers included as Medium Taxpayers and those identified under Taxpayer Account Management Program (TAMP)
10. On income payments made by a government offices, agencies, instrumentalities, and GOCCs to local suppliers of goods and/or services.For supplier of goods – 1%
    For supplier of services – 2%
11. On gross processing/tolling fees paid to refineries for the conversion of molasses to its by-products, and conversion of raw sugar to refined – 5%
12. On gross payments to funeral parlors made by pre-need companies – 1% tax for funeral services rendered.
13. On gross payments made to embalmers – 1% tax for embalming services rendered to funeral companies.
14. On income payments made by an establishments to suppliers of agricultural products – 1% of the amount in excess of the cumulative amount of Php 300,000 within the same taxable year.Agricultural suppliers shall include sellers of agricultural, forest and marine food and non-food products, livestock and general poultry, breeding stock, and the like.Establishments shall include hotels, restaurants, caterers, resorts, canneries, food processors, supermarkets, agricultural product dealers, and the like.
15. On income payments made for the purchase of minerals, mineral products, and quarry resources, including silver, gold, marble, gravel, granite, sand, boulders, and other products– 5%However, the BSP is required to withhold 1% of gross payments made and shall remit the same to the Government.
16. On MERALCO interest payments/ refunds: (as per Supreme Court case G.R. No. 14814 dated 2003For refunds:With active contracts – 25%
    Without active contracts – 32%For interest income on meter deposits:Residential/General service customers – 10%
    Non-resident service customers – 20 %
17. On refund paid either through direct payment or application against the customers’ billings by other electric distribution utilities in reference to ERC Resolution No. 8, Series of 2008, relative to the mandates of Article 8 of the Magna Carta for Residential Electricity Consumers, and Article 3.4.2 of DSOAR – 10% / 20%.
18. On income payments made on the purchase of goods/services related to campaign expenditures by political parties and candidates of local and national elections; and on income payments made by individuals/juridical entities on the purchase of goods/services intended to be given as campaign contributions – 5% of gross contribution.
19. On interest income derived from other debt instruments that are not within the coverage of “deposit substitutes” of the Tax Code an d RR No. 14-2012, unless otherwise provided – 20%.
20. On income payments made to corporate taxpayers registered as Real Estate Investment Trust (REIT) under Republic Act 9856 as implemented by RR No. 13-2011 – 1%.
21. On income payments made by proprietors/operators of sugar mills/refineries, and direct buyers form sugar planters on locally produced raw sugar/molasses – 1%.

Below is a list of the BIR forms that you need to file for EWT: 

1. Monthly Remittance Form of Creditable Income Taxes Withheld (Form No. 0619E) – 1st month of the quarter.
2. Monthly Remittance Form of Creditable Income Taxes Withheld (Form No. 0619E) – 2nd month of the quarter.
3. Quarterly Remittance Form of Creditable Income Taxes Withheld and Quarterly Alphalist of Payees – (Form No. 1601EQ and QAP) – 3rd month of the quarter.
4. Annual Information Return of Creditable Income Taxes Withheld (Form No. 1604E) – on or before March 1 after the taxable year.

The above returns are filed through eBIRForms or eFPS, and shall be paid through eFPS or Authorized Agent Bank (AAB) of the RDO where the taxpayer is registered.

Reference: Revenue Regulations No. 11-2018

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