Question

Explain withholding taxes, and tax credits applicable based on "Train" Law

Answer 1

The provisions of TRAIN (Tax reform for Accelration & Inclusion )Law has been amended with respect to withholding tax rates. the description for the same has been given below:

Type of Income Payment	New CWT rate
1.For professional fees, talent fees etc. for services rendered and 2.professional fees paid to medical practitioners by hospitals and clinics or paid directly by HMOs or similar establishments,3. income payment to brokers & agents 4. commision of independent or exclusive sales representative &marketing agents of companies	1. Individual- a. If the gross income for the current year does not exceed P3 million -5%             b. If the gross income for the current year is more than P3 million -10%        2.Non Individual-a. If the gross income for the current year does not exceed P720000-10%            b.If the gross income for the current year does not exceed P720000-15%
Income distribution to beneficiaries	15%
Income payment to partners of general professional partnerships	a. If the gross income for the current year doesnot exceed P720000-10%              b. if gross income for the current year does exceed P720000-15%

2.)Exemption from withholding tax for individual payeeswhose total income is less than P250000from lone income payer.

3.) The coverage of withholding tax agents who are required to withhold 1% or 2 % from regular supplies of goods & services & casual purchases worth P10000 or more was expanded to include Medium tax payers shall be classified as Top Withholding Agents.