TYPES OF INDIVIDUAL TAXPAYERS
Code.
CITIZENS
The following are citizens of the Philippines:
 Revenue Regulations No. 1-79:
(1) Those who are citizens of the Philippines at
the time of the adoption of the 1987
Constitution;
(2) Those whose fathers or mothers are citizens
of the Philippines;
(3) Those born before January 17, 1973, of
Filipino mothers, who elect Philippine
citizenship upon reaching the age of
majority; and
(4) Those who are naturalized in accordance
with law. (Article IV, Section 1, 1987 Philipine
Constitution)
 Natural-born citizens are those who are
citizens of the Philippines from birth without
having to perform any act to acquire or
perfect their Philippine citizenship.
 Those who elect Philippine citizenship in
accordance with paragraph (3), Section 1,
Article IV of the 1987 Constituion shall be
deemed natural-born citizens. (Article IV,
Section2)
NONRESIDENT CITIZENS: (Section 22 (E), Tax Code)
The term ‘nonresident citizen’ means:
(1) A citizen of the Philippines who establishes
to the satisfaction of the Commissioner the
fact of his physical presence abroad with a
definite intention to reside therein.
(2) A citizen of the Philippines who leaves the
Philippines during the taxable year to reside
abroad, either as an immigrant or for
employment on a permanent basis.
(3) A citizen of the Philippines who works and
derives income from abroad and whose
employment thereat requires him to be
physically present abroad most of the time
during the taxable year.
(4) A citizen who has been previously
considered as nonresident citizen and who
arrives in the Philippines at any time during
the taxable year to reside permanently in
the Philippines shall likewise be treated as a
nonresident citizen for the taxable year in
which he arrives in the Philippines with
respect to his income derived from sources
abroad until the date of his arrival in the
Philippines.
(5) The taxpayer shall submit proof to the
Commissioner to show his intention of
leaving the Philippines to reside
permanently abroad or to return to and
reside in the Philippines as the case may be
for purposes of this Section 22 of the Tax
a) Immigrant - one who leaves the Philippines
to reside abroad as an immigrant for which
a foreign visa as such has been secured.
b) Permanent employee - one who leaves the
Philippines to reside abroad for employment
on a more or less permanent basis.
c) Contract worker - one who leaves the
Philippines on account of a contract of
employment which is renewed from time to
time within or during the taxable year under
such circumstances as to require him to be
physically present abroad most of the time
during the taxable year.
To be considered physically present
abroad most of the time during the
taxable year, a contract worker must
have been outside the Philippines for
not less than 183 days during such
taxable year
Overseas Contract Worker (OCW) or Overseas
Filipino Worker (OFW)- Rev Regs. No. 1-11
 OCW refer to Filipino citizens employed in
foreign countries, commonly referred to as
OFWs, who are physically present in a
foreign country as a consequence of their
employment thereat. Their salaries and
wages are paid by an employer abroad
and is not borne by any entity or person in
the Philippines. To be considered as an
OCW or OFW, they must be duly registered
as such with the Philippine Overseas
Employment Administration (POEA) with a
valid Overseas Employment Certificate
(OEC).
 Seafarers or seamen are Filipino citizens who
receive compensation for services rendered
abroad as a member of the complement of
a vessel engaged exclusively in international
trade.
 To be considered as an OCW or OFW they
must be duly registered as such with the
Philippine Overseas Employment
Administration (POEA) with a valid Overseas
Employment Certificate (OEC) with a valid
Seafarers Identification Record Book (SIRB)
or Seaman's Book issued by the Maritime
Industry Authority (MARINA).
ALIENS: Section 22, (F) , (G) Tax Code
 “(F) The term ‘resident alien’ means an
individual whose residence is within the
Philippines and who is not a citizen thereof.”
  “(G) The term ‘nonresident alien’ means an
individual whose residence is not within the
Philippines and who is not a citizen thereof.”
Rev. Regs. No. 2-40, Section 5
 An alien actually present in the Philippines
who is not a mere transient or sojourner is a
resident of the Philippines for purposes of the
income tax. Whether he is a transient or not
is determined by his intentions with regard to
the length and nature of his stay
 A mere floating intention indefinite as to
time, to return to another country is not
sufficient to constitute him a transient. If he
lives in the Philippines and has no definite
intention as to his stay, he is a resident.
 One who comes to the Philippines for a
definite purpose which in its nature may be
promptly accomplished is a transient.
 But if his purpose is of such a nature that an
extended stay may be necessary for its
accomplishment, and to that end the alien
makes his home temporarily in the
Philippines, he becomes a resident, though
it may be his intention at all times to return
to his domicile abroad when the purpose for
which he came has been consummated or
abandoned.
Rev Regs. No. 2- 40, Section 6
Loss of residence by alien:
 An alien who has acquired residence in the
Philippines retains his status as a resident
until he abandons the same and actually
departs from the Philippines.
 An intention to change his residence does
not change his status as a resident alien to
that of a nonresident alien. Thus an alien
who has acquired a residence in the
Philippines is taxable as a resident for the
remainder of his stay in the Philippines.
NONRESIDENT ALIENS (NRA) : Classes of NRAs:
a) NRAs engaged in trade or business within
the Philippines; 
 Section 32 (A) SECTION 32. Gross Income. —
 A NRA is considered as engaged in
trade or business within the
Philippines if he comes to the
Philippines and stays therein for an
aggregate period of more than 180
days during any calendar year ;
b) NRAs not engaged in trade or business in
the Philippines. 
 items;
 A NRA is considered as NOT
engaged in trade or business within
the Philippines, if his stay in the
Philippines is for less than an
aggregate period of 180 days during
any calendar year.
How taxed:
 Resident citizens are taxable on worldwide
income.
 Citizens who qualify as nonresident citizens
are taxable only on Philippine –sourced
income.
 Aliens, whether resident or nonresident are
taxable only on Philippine-sourced income.
“(a) Income, in the broad sense, meaning all
wealth which flows into the tax-payer other than as
a mere return of capital. It includes the forms of
income specifically described as gains and profits,
including gains derived from the sale or other
disposition of capital assets.” xxx. (Section 36,
Income Tax Regulations)
“ xxxx, income may be defined as an amount of
money coming to a person or corporation within a
specified time, whether as payment for services,
interest or profit from investment. Unless otherwise
specified, it means cash or its equivalent. Income
can also be thought of as flow of the fruits of one's
labor. (Hernando B. Conwi, Jaime E. Dy-Liacco,
petitioners,
 vs. The Honorable Court Of Tax
Appeals and Commissioner Of Internal Revenue,
respondents G.R. No. 48532 August 31, 1992 citing
Fisher vs. Trinidad, 43 Phil. 973Madrigal vs. Rafferty,
38 Phil. 414. .)
Income is a flow of wealth. Capital maybe defined
as :
o A fund or material wealth that can be used
for the further production of wealth to satisfy
human wants;
o Tools of production or the resources of a
business enterprise
GROSS INCOME
(A) General Definition. — Except when otherwise
provided in this Title, gross income means all
income derived from whatever source, including
(but not limited to) the following items:
(1) Compensation for services in whatever form
paid, including, but not limited to fees,
salaries, wages, commissions, and similar
(2) Gross income derived from the conduct of
trade or business or the exercise of a
profession;
(3) Gains derived from dealings in property;
(4) Interests
 (5) Rents; 
 maintained by the employer:
(6) Royalties; Provided, That the retiring official or
(7) Dividends; 
 employee has been in the service of
(8) Annuities; 
 the same employer for at least ten
(9) Prizes and winnings; (10) years and is not less than fifty
(10)Pensions; and (50) years of age at the time of his
(11)Partner's distributive share from the net 
 retirement: Provided, further, That
income of the general professional partnership. the benefits granted under this
subparagraph shall be availed of by
an official or employee only once.
For purposes of this Subsection, the
EXCLUSIONS FROM GROSS INCOME Section 32 (B) term 'reasonable private benefit
plan' means a pension, gratuity,
The following items shall not be included in gross stock bonus or profit-sharing plan
income and shall be exempt from taxation : maintained by an employer for the
benefit of some or all of his officials
(1) Life Insurance. — The proceeds of life or employees, wherein contributions
insurance policies paid to the heirs or are made by such employer for the
beneficiaries upon the death of the insured, officials or employees, or both, for
whether in a single sum or otherwise, but if the purpose of distributing to such
such amounts are held by the insurer under officials and employees the earnings
an agreement to pay interest thereon, the and principal of the fund thus
interest payments shall be included in gross accumulated, and wherein it is
income. provided in said plan that at no time
(2) Amount Received by Insured as Return of shall any part of the corpus or
Premium. — The amount received by the income of the fund be used for, or
insured, as a return of premiums paid by him be diverted to, any purpose other
under life insurance, endowment, or annuity than for the exclusive benefit of the
contracts, either during the term or at the said officials and employees.
maturity of the term mentioned in the (b) Any amount received by an official
contract or upon surrender of the contract. or employee or by his heirs from the
(3) Gifts, Bequests, and Devises. — The value of employer as a consequence of
property acquired by gift, bequest, devise, separation of such official or
or descent: Provided, however, That income employee from the service of the
from such property, as well as gift, bequest, employer because of death,
devise, or descent of income from any sickness or other physical disability or
property, in cases of transfers of divided for any cause beyond the control of
interest, shall be included in gross income. 
 the said official or employee.
(4) Compensation for Injuries or Sickness. — (c) The provisions of any existing law to
Amounts received, through Accident or the contrary notwithstanding, social
Health Insurance or under Workmen's security benefits, retirement
Compensation Acts, as compensation for gratuities, pensions and other similar
personal injuries or sickness, plus the benefits received by resident or
amounts of any damages received, nonresident citizens of the
whether by suit or agreement, on account Philippines or aliens who come to
of such injuries or sickness. 
 reside permanently in the Philippines
(5) Income Exempt under Treaty. — Income of from foreign government agencies
any kind, to the extent required by any and other institutions, private or
treaty obligation binding upon the public.
Government of the Philippines. (d) Payments of benefits due or to
(6) Retirement Benefits, Pensions, Gratuities, become due to any person residing
etc. — in the Philippines under the laws of
(a) Retirement benefits received under the United States administered by
Republic Act No. 7641 and those the United States Veterans
received by officials and employees Administration.
of private firms, whether individual or (e) Benefits received from or enjoyed
corporate, in accordance with a under the Social Security System in
reasonable private benefit plan accordance with the provisions of
 Republic Act No. 8282. two thousand pesos (P82,000) which
(f) Benefits received from the GSIS shall cover:
under Republic Act No. 8291, o Benefits received by officials
including retirement gratuity and employees of the
received by government officials national and local
and employees. government pursuant to
(7) Miscellaneous Items. — Republic Act No. 6686; 

(a) Income Derived by Foreign o Benefits received by
Government. — income derived employees pursuant to
from investments in the Philippines in Presidential Decree No. 851,
loans, stocks, bonds or other as amended by
domestic securities, or from interest Memorandum Order No. 28,
on deposits in banks in the dated August 13, 1986; 

Philippines by (i) foreign o Benefits received by officials
governments, (ii) financing and employees not
institutions owned, controlled, or o covered by Presidential
enjoying refinancing from foreign th
governments, and (iii) international Decree No. 851( the 13
or regional financial institutions month pay law), as
established by foreign governments. amended by Memorandum
(b) Income Derived by the Government Order No. 28, dated August
or its Political Subdivisions. — Income 13, 1986; and 

derived from any public utility or o Other benefits such as
from the exercise of any essential productivity incentives and
governmental function accruing to Christmas bonus: Provided,
the Government of the Philippines or That every three (3) years
to any political subdivision thereof. after the effectivity of this
(c) Prizes and Awards. — Prizes and Act, the President of the
awards made primarily in Philippines shall adjust the
recognition of religious, charitable, amount herein stated to its
scientific, educational, artistic, present value using the
literary, or civic achievement but Consumer Price Index (CPI),
only if: as published by the National
i. The recipient was selected Statistics Office (NSO).”
without any action on his part (f) GSIS, SSS, Medicare and Other
to enter the contest or Contributions. — GSIS, SSS, Medicare
proceeding; and and Pag-Ibig contributions, and
ii. The recipient is not required union dues of individuals.
to render substantial future (g) Gains from the Sale of Bonds,
services as a condition to Debentures or other Certificate of
receiving the prize or award. Indebtedness. — Gains realized from
(d) Prizes and Awards in Sports the sale or exchange or retirement
Competition. — All prizes and of bonds, debentures or other
awards granted to athletes in local certificate of indebtedness with a
and international sports maturity of more than five (5) years.
competitions and tournaments (h) Gains from Redemption of Shares in
whether held in the Philippines or Mutual Fund. — Gains realized by
abroad and sanctioned by their the investor upon redemption of
national sports associations. shares of stock in a mutual fund
(e) 13th Month Pay and Other Benefits. company as defined in Section
— (as amended by Republic Act 22(BB) of this Code.
No. 10653

Gross benefits received by officials and

employees of public and TAXATION – EMPLOYED/ SALARIED INDIVIDUALS
private
 entities: Provided, however,
That the total exclusion under this General Principles:
subparagraph shall not exceed eighty-
 (1) As a general rule, employed or salaried
individuals are subject to tax on their gross
compensation income.
(2) The tax on the compensation is deducted
and withheld by the employer.
Who is considered an employee
o The term "employee" is an individual
performing services under an employer-
employee relationship.
o The term covers all employees, including
officers and employees, whether elected or
appointed, of the Government of the
Philippines, or any political subdivision
thereof or any agency or instrumentality.
Who is considered an employer.
o The term employer means any person for
whom an individual performs or performed
any service, of whatever nature, under an
employer-employee relationship.
o The employer and employee relationship
exists when the person for whom services
were performed has the right to control and
direct the individual who performs the
services, not only as to the RESULT to be
accomplished by the work but also as to the
DETAILS AND MEANS by which the result is
accomplished.
o An employee is subject to the will and
control of the employer not only as to what
shall be done, but how it shall be done.
The term “employer” also includes the following:
a) The person having control of the payment
of the compensation in cases where the
services are or were performed for a person
who does not exercise such control.
b) Any person paying compensation on behalf
of a non-resident alien individual, foreign
partnership, or foreign corporation, who is
not engaged in trade or business within the
Philippines.
c) The term "employer" as defined under a&b
above is intended to determine who is the
withholding agent.
DEFINITION OF COMPENSATION: Rev Regs. No. 2-98
 In general, the term "compensation" means all
remuneration for services performed by an
employee for his employer under an employer-
employee relationship, unless specifically
excluded by the Code.
 The name by which the remuneration for
services is designated is immaterial.
 Salaries, wages, emoluments and honoraria,
allowances, commissions (e.g. transportation,
representation, entertainment and the like);
fees including director's fees, if the director is, at
the same time, an employee of the
employer/corporation; taxable bonuses and
fringe benefits except those which are subject
to the fringe benefits tax under Sec. 33 of the
Code; taxable pensions and retirement pay;
and other income of a similar nature constitute
compensation income.
 The basis upon which the remuneration is paid is
immaterial in determining whether the
remuneration constitutes compensation.
 Thus, it may be paid on the basis of piece-work,
or a; percentage of profits and may be paid
hourly, daily, weekly, monthly or annually.
Compensation may be paid in kind.
a) Compensation may be paid in money or in
some medium other than money, as for
example, stocks, bonds or other forms of
property. If services are paid for in a
medium other than money, the fair market
value of the thing taken in payment is the
amount to be included as compensation
subject to withholding.
b) If the services are rendered at a stipulated
price, in the absence of evidence to the
contrary, such price will be presumed to be
the fair market value of the remuneration
received.
c) If a corporation transfers to its employees its
own stock as remuneration for services
rendered by the employee, the amount of
such remuneration is the fair market value of
the stock at the time the services were
rendered.
RULES on the FOLLOWING:
1. LIVING QUARTERS AND MEALS- convenience
of the employer rule
2. FACILITIES AND PRIVIELEGES OF RELATIVELY
SMALL VALUE
3. TIPS AND GRATUITIES
4. PENSIONS, RETIREMENT AND SEPARATION
PAY.
5. FIXED OR VARIABLE TRANSPORTATION,
REPRESENTATION AND OTHER ALLOWANCES
a. for ordinary and necessary travelling
and representation or entertainment
 expenses 
 maids, butlers, valets, laundresses,
b. Liquidation /substantiation - gardeners, chauffeurs of automobiles for
Advances 
 - Reasonabvle amounts- family use.
precomputed on adaiiy basis 
  The remuneration paid for the services
6. VACATION AND SICK LEAVE ALLOWANCES above enumerated which are
a. Commutation of VL credits 
 performed in or about rooming or
b. Can SL credits be commuted to lodging houses, boarding houses, clubs,
cash? 
 hotels, hospitals or commercial offices or
establishments is considered as
compensation
Deductions made by employer from compensation  Remuneration paid for services
of employee.- performed as a private secretary, even if
they are performed in the employer's
Any amount which is required by law to be home is considered as compensation.
deducted by the employer from the compensation 4. Remuneration for casual labor not in the
of an employee including the withheld tax is course of an employer's trade or business.
considered as part of the employee's  The term "casual labor" includes labor
compensation and is deemed to be paid to the which is occasional, incidental or
employee as compensation at the time the regular. The expression "not in the course
deduction is made. of the employer's trade or business"
includes labor that does not promote or
Exemptions from withholding tax on compensation. advance the trade or business of the
— employer.
 Thus, any remuneration paid for labor
1. Those classified as exclusions from gross which is occasional, incidental or
income. 
 irregular, and does not promote or
2. Remuneration paid for agricultural labor - advance the employer's trade or
Remuneration for services which constitute business, is not considered as
agricultural labor and paid entirely in compensation.
products of the farm where the labor is
performed is not subject to withholding. Withholding of the Tax.
 The term, "agricultural labor" does not
include services performed in  Every employer must withhold from
connection with forestry, lumbering or compensations paid, an amount of tax
landscaping. computed in accordance with the regulations.
 All payments made in cash or other  No withholding of tax shall be required where the
forms other than products of the farm total compensation income of an individual
where labor is performed, for services does not exceed the statutory minimum wage
constituting agricultural labor as (SMW), including holiday pay, overtime pay,
explained above, are not within the night shift differential and hazard pay
exception.
3. Remuneration for domestic services – Allowance of Personal Exemption for Individual
 Remuneration paid for services of a Taxpayer. –
household nature performed by an
employee in or about the private home  In General. - For purposes of determining the tax
of the person by whom he is employed is provided in Section 24(A) of this title, there shall
not subject to withholding. be allowed a basic personal exemption
 A private home is the fixed place of amounting to Fifty thousand pesos (P50,000) for
abode of an individual or family. each individual taxpayer.
 If the home is utilized primarily for the  In the case of married individual where only one
purpose of supplying board or lodging of the spouses is deriving gross income, only
to the public as a business enterprise, it such spouse shall be allowed the personal
ceases to be a private home and exemption.
remuneration paid for services
performed therein is not exempted. Additional Exemption for Dependents. – There shall
 In general, services of a household be allowed an additional exemption of Twenty-five
nature in or about a private home thousand pesos (25,000) for each dependent not
include services rendered by cooks, exceeding four (4).
  The additional exemption for dependents
shall be claimed by only one of the spouses
in the case of married individuals.
 In the case of legally separated spouses,
additional exemptions may be claimed only
by the spouse who has custody of the child
or children.
 The total amount of additional exemptions
that may be claimed by both shall not
exceed the maximum additional
exemptions herein allowed.
Dependents:
A "dependent" means-
 additional exemption for dependent
a) legitimate, illegitimate or legally adopted
child
b) chiefly dependent upon and living with the
taxpayer if such dependent is not more than
twenty-one (21) years of age,
c) unmarried and not gainfully employed or
d) if such dependent, regardless of age, is
incapable of self-support because of
mental or physical defect.
 The husband shall be the proper claimant of the
of the additional exemption for qualified
dependent children unless he explicitly waives
in favor of his wife in the application for
registration or in the Certificate of Update of
Exemption of Employer’s and employee’s
Information.
 Where the spouse of the employee is
unemployed or is a non-resident citizen deriving
income from foreign sources, the employed
spouse within the Philippines shall be
automatically entitled to claim the exemptions
for children.
 Every employer should ascertain whether or not a
child being claimed is a qualified dependent
under the provisions of the regulations.
 If the employee should have additional
dependents, during the taxable year he may
claim the corresponding additional exemption
as the case may be in full for such year.
Application for registration of the employee.-
The application for the registration of the
employees shall be accomplished by both
employer and employee stating the following
information:
1. Name/TIN, address of the employee, and
other information required under BIR Form
1902
2. Status of the employee- whether single,
legally separated, widow or widower with
no dependent child.
3. Status of the spouse of the employee-If the
employee is legally married the name/TIN, if
any, of the spouse and whether the spouse
is employed unemployed, employed
abroad or is engaged in trade or business
should be indicated in the application.
4. Qualified dependents- Name and date of
birth of qualified dependent children.
5. Claimant of exemption for children- the
husband is the proper claimant of the
additional exemption for dependent
children. However, the wife shall claim the
children in the following instances:
a) The husband is unemployed; 

b) The husband is a non-resident citizen

 deriving income from foreign
sources; 

c) The husband waives the right to
claim the exemptions of children in a
sworn statement to be attached in
the application for registration. 

MINIMUM WAGE EARNERS
Rep. Act No. 9504- AN ACT AMENDING SECTION 22,
24, 34, 35, 51, AND 79 OF REPUBLIC ACT NO. 8424,
AS AMENDED OTHERWISE KNOWN AS THE NATIONAL
INTERNAL REVENUE OF 1997
1. It increased the basic personal exemption from
P20,000 for a single individual, P25,000 for the
head of the family, and P32,000 for a married
individual to P50,000 for each individual.
2. It increased the additional exemption for each
dependent not exceeding four from P8,000 to
P25,000.
3. It raised the Optional Standard Deduction (OSD)
for individual taxpayers from 10% of gross
income to 40% of the gross receipts or gross
sales.
4. It introduced the OSD to corporate taxpayers at
no more than 40% of their gross income.
5. It granted MWEs exemption from payment of
income tax on their minimum wage, holiday
pay, overtime pay, night shift differential pay
and hazard pay.
 The term 'minimum wage earner' shall refer
to a worker in the private sector paid the
statutory minimum wage, or to an employee
in the public sector with compensation
income of not more than the statutory
minimum wage in the non-agricultural
sector where he/she is assigned."
  The term 'statutory minimum wage' shall
refer to rate fixed by the Regional Tripartite
Wage and Productivity Board, as defined by
the Bureau of Labor and Employment
Statistics (BLES) of the Department of Labor
and Employment (DOLE).
BIR RULING NO. 013-09
Golden Arches Corporation requested for
clarification on whether RA 9504 applied to part-
time employees.
It employs a large number of part-time, hourly-paid
employees for its stores and that most of these part-
time employees are students, working on a six- day
work week, performing about two (2) to four (4)
hours of work in a day.
The basis of the computation of the minimum wage
rates prescribed by law shall be the normal working
time of eight (8) hours a day. 
 taxable allowances and other taxable income
By practice, the statutory minimum wages fixed by
the Regional Tripartite Wage Boards (RTWB) are
daily rates based on an eight-hour workday.
Applying the aforementioned law and regulation, it
can be determined with ease whether an
employee who renders at least eight (8) hours of
work in a day would qualify as a minimum wage
earner — one only has to compare if the
employee's daily rate is equal to the minimum
wage rate as determined by the RTWB. 
 exempted from income tax on their entire income
This simple process of comparing rates, however,
will not apply if the employee renders work for less
than eight hours per day as in the case of part-time
employees who are paid by the hour. The difficulty
arises because the RTWB does not prescribe
minimum wage rates for hourly paid workers.
Hence, to determine whether a part-time
employee qualifies as a MWE, his hourly rate should
first be multiplied by eight (8) hours to arrive at his
daily rate. If the product is equal to the minimum
wage rate fixed by the RTWB, then the part- time
employee is a MWE entitled to the tax incentives
under RA 9504.
The minimum wage earners as defined in Section 22
(HH) of the Code shall be exempt from the
payment of income tax on their taxable income.
The following items of income received by a
minimum wage earner shall likewise be exempt
from income tax:
 the holiday pay

 overtime pay

 night shift differential pay and
 hazard pay
Hazard pay shall mean the amount paid by the
employer to MWEs who were actually assigned to
danger or strife-torn areas, disease-infested
places, or in distressed or isolated stations and
camps, which expose them to great danger of
contagion or peril to life.
Any hazard pay paid to MWEs which does not
satisfy the above criteria is deemed subject to
income tax and consequently to withholding tax.
Rev. Regs. No. 10-2008
An employee who receives/earns additional
compensation such as commissions, honoraria,
fringe benefits, benefits in excess of the allowable
statutory amount of P30,000.00, now P82,000,
other than the SMW, holiday pay, overtime pay,
hazard pay and night shift differential pay shall NOT
enjoy the privilege of being a MWE and, therefore,
his/her entire earnings are not exempt form income
tax, and consequently, from withholding tax.
MWEs receiving other income, such as income from
the conduct of trade, business, or practice of
profession, except income subject to final tax, in
addition to compensation income are NOT
earned during the taxable year.
This rule, notwithstanding, the SMW, Holiday pay,
overtime pay, night shift differential pay and hazard
pay shall still be exempt from withholding tax.
An employee who receives/earns additional
compensation such as commissions, honoraria,
fringe benefits, benefits in excess of the allowable
statutory amount of P30,000.00, now P82,000,
taxable allowances and other taxable income
other than the SMW, holiday pay, overtime pay,
hazard pay and night shift differential pay shall NOT
enjoy the privilege of being a MWE and, therefore,
his/her entire earnings are not exempt form income
tax, and consequently, from withholding tax.
This rule, notwithstanding, the SMW, Holiday pay,
overtime pay, night shift differential pay and hazard
pay shall still be exempt from withholding tax.