What You Need to Know About the New Expanded Withholding Tax (BIR Form 1604E)

BIR Form 1604E is also know as your Annual Information Return of Creditable Income Taxes Withheld (Expanded)/ Income Payments Exempt from Withholding Taxes.

Sounds like a mouthful, right? Now let’s dissect that one by one.

Withholding tax, in a nutshell, is the income tax liability deducted by the withholding agent from every working person’s salary.

Taxpayers pay their income tax annually using BIR Form 1701 or quarterly using BIR Form 1701Q. When it comes to withholding tax, they don’t have to wait until the end of the year or the next taxable quarter. Every 10th of the month, their income tax is automatically deducted from their salary by the withholding agent and remitted to the government for them.

Expanded withholding tax is to be paid by the withholding agent, and should contain the accumulation of all the monthly funds taken from the tax payer’s income.

Whether you use a tax calculator in the Philippines or not, these are all the new things you should know about Expanded Withholding Tax (BIR form 1604E). If you have recently become the withholding agent of the company you work for, then this article will have all the important info you need.

Who needs to pay Expanded Withholding Tax?

As the name implies, withholding agents remit the expanded withholding tax return (containing all income tax deductions) to the BIR for all their employees.

This applies to any of the following individuals or professions:

  • Licensed professionals
  • Supreme Court
  • Insurance agents and distributors
  • Corporate directors
  • Bookkeeping agents and agencies
  • Management and Technical Consultants
  • Entertainment Industry Employees

A withholding agent could also refer to an entire corporation. If this is the case in your company, for example, the return should be filed under the corporation’s name. Additionally, the return should contain the signatures of the president, vice president, or authorized officer and the treasurer.

Expanded Withholding Tax Rates

Expanded withholding tax rates depend on the annual salary of the individual. The only employees liable to pay withholding tax are those earning at least 250,000 pesos per year. Anyone earning less than that amount is exempted automatically. The different types of working individuals included are:

Insurance agents and distributors

  • If their salary is 720,000 and below, their EWT rate is 10%
  • If their salary is above 720,000, it is 15%

Bookkeeping agents and agencies

  • If their salary is 720,000 and below, their EWT rate is 10%
  • If their salary is above 720,000, it is 15%

Professionals

  • These include licensed professionals such as lawyers, engineers, doctors, CPA, etc.
  • If their salary is 720,000 and below, their EWT rate is 10%
  • If their salary is above 720,000, it is 15%

Professional athletes

  • If their salary is 720,000 and below, their EWT rate is 10%
  • If their salary is above 720,000, it is 15%

Entertainers, talent fee recipients, and Movie Directors

  • If their salary is 720,000 and below, their EWT rate is 10%
  • If their salary is above 720,000, it is 15%

Management and Technical Consultants

  • If their salary is 720,000 and below, their EWT rate is 10%
  • If their salary is above 720,000, it is 15%

How to File BIR Form 1604E

You need to file BIR Form 1604E on or before March 1 of the current taxable year.

Before you send through eFPS or eBIR Form, make sure you have all the important details filled, including:

  • Date of Remittance
  • Reference Number of Filing or Payment (N/A if not applicable)
  • Bank of Tax Payments Made (N/A if not applicable)
  • The overall amount of withholding tax to be remitted
  • Penalties, if any were made

After you fill out all of those details, you need to attach the Alphalist of Payees Subjected to Withholding Tax. This document is essentially a spreadsheet of the details related to the specific employees who paid their withholding contribution.

The info you should input includes:

  • Name
  • Annual income
  • Each employee’s TIN (taxpayer identification number).

If there are employees exempted, attach an Alphalist of Other Payees Whose Income is Exempted from Withholding Tax but still subjected to Income Tax.

As a withholding tax agent, making sure you file a withholding tax to avoid late penalties can be worrying. In fact, you could pay an additional 25% of your annual income tax return plus 20% of the same amount for non-filing compliance.

Taxumo Premium, a subscription tax calculator in the Philippines, can prevent this issue from occurring. With its completely transparent procedures and their user-friendly dashboard, filing your BIR Form 1604 has never been easier. It will show the computations, the form info you inputted earlier, and when it will file the tax. Since it knows the filing due date of all taxes, it will submit it to BIR for you in time. Forget the hassle of manually filing your BIR Form 1604 and use Taxumo Premium!

Key Takeaway

As a withholding agent, you are in charge of submitting the expanded withholding tax contributions of all the people who work with you. It can feel overwhelming to have this duty. Thus, this article has all the important information needed to make things easier for you.

Don’t worry about withholding taxes

Taxumo files your taxes for you!

5 thoughts on “What You Need to Know About the New Expanded Withholding Tax (BIR Form 1604E)”

  1. Suppose i have a real estate business here in Phils, and one my sales agent sold some house/lot, suppose, i will giving a 10% commission to them a their incentives, them how much should i need to withhold (as a witholding tax)? what rate?

    1. Michael John Villaver

      As I’ve read the article. those who are liable for withholding tax is to those who are earning 250,000 annually. So I don’t think that you’re sales agent is not liable for it. 🙂

  2. Who is the withholding agent? the one who lend the service or the payor? If the payor has no registered Withholding Tax – Expanded on his/her COR, is he applicable to pay the EWT?

  3. Hello,

    Just want to clarify on this part: “Expanded withholding tax rates are dependent on the annual salary of the individual. The only employees liable to pay withholding tax are those earning at least 250,000 pesos per year. Anyone earning less than that amount is exempted automatically.”

    Based on BIR RR 11-2018, before you are exempted from expanded withholding tax, you need to submit Certificate of Registration (COR) and a Sworn Statement of Gross Receipts and Sales. Is the above clause for for employees, as stated? ‘Cause it confuses the reader of this article whether it’s for employees or for those individuals who are subjected to EWT.

    Thanks for the clarification. God bless!

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