If you are a withholding agent, you, in general, are required to withhold or deduct 1% of income payments for purchases of goods; 2% of income payments for purchases of services from your local or regular supplier.
Due to the timing differences of recording of expenses and actual remittance of payments to suppliers, withholding agents often encounter this question “when to deduct and remit the taxes withheld to BIR?”
Sec. 2.57.4 Time of Withholding – The obligation of the payor to deduct and withhold the tax under Sec 2.57 of these regulations arises at the time an income payment is accrued or recorded as an expense, or asset, whichever is applicable, in the payor’s book, whichever comes first. The term “payable” refers to the date the obligation becomes due, demandable or legally enforceable. Provided, however, that where income is not yet paid or payable but the same has been recorded as an expense or asset, whichever is applicable, in the payor’s books, the obligation to withhold taxes shall arise in the last month of the return period in which the same is claimed as an expense. (RR 12-2001. Sec.4 – Time of Withholding)
