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Filipinos to welcome 2018 with new withholding tax rates

MANILA, Philippines – Payroll managers in the country will need to update their employees' compensation records starting January 1, after the Bureau of Internal Revenue (BIR) issued a memorandum on the revised withholding tax table.

Under the revised withholding tax table issued by the bureau, employees who are earning P685 per day or P20,833 per month will be exempted from withholding tax come 2018.

Unlike the previous one, the revised table showed that the government has standardized the withholding tax rates, applying the exemptions to all, whether empoyees have or do not have dependents.

This comes after both houses of Congress early this December agreed to exempt from income tax payment annual earnings of up to P250,000 to increase the take-home pay of workers.

On Thursday, December 28, BIR Commissioner Caesar Dulay issued a memorandum circular, directing all internal revenue officers to ensure that come Monday, January 1, "everyone making compensation payments to their respective employees shall deduct and withhold from such compensation a tax determined in accordance with the revised withholding tax table."

Withholding tax is an amount of an employee's pay withheld by the employer and sent straight to the government as partial payment of his or her income tax.

Here are the revised withholding tax rates starting January 1, according to the BIR:

REVISED. BIR issues a revised withholding tax table effective January 1, 2018.

Screenshot from BIR's circular memorandum

"[I]t is imperative that a smooth transition as to withholding tax rates is ensured," Dulay said in the memorandum circular. (READ: Duterte signs 1st tax reform package into law)

The revised withholding tax comes in line with the forthcoming effectivity of Republic Act No. 10963, otherwise know as the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Although the new tax law would mean higher take-home pay for most employees, this would also result to pricier cars, fuel, tobacco by 2018. – Rappler.com