Making Sense of Expanded Withholding Tax – Forms 2307, 0619E, 1601EQ, and the QAP

First off, congratulations! You are now collecting taxes on behalf of the BIR through expanded withholding tax. Granted, you probably didn’t really have a choice but, fret not: compliance to this tax type is not as hard as you think. And with some tools (*cough*Taxumo*cough), it’s not much more effort!

Now, before you proceed with reading this article, note that this article is a guide for withholding agents / the employer. Now, if you are the one being withheld taxes / the payee, the article below may be more relevant for you:

Withholding Tax 101 (or, ‘Why Is My Pay Less Than What My Client Said It Would Be?’)

But hey, who’s stopping you? Nothing wrong with knowing more about expanded withholding tax (employer’s side of the story). Read on! 😉

What is Withholding Tax Anyway?

You know when employed people get their pay slips and they start complaining about how much taxes they’re paying? You didn’t see them go to the BIR though with the money so what do they mean? Well, the employer withheld the tax before giving the employee’s salary.

If you are a self-employed individual or some other entity, and you see this, that means you’re basically doing the same thing: withholding a certain percentage before giving your supplier’s the payment you owe them.

Can I appeal this to the BIR and ask them to remove it?

I believe you can. However, I have to warn you, for all the people I’ve heard who appealed to their RDO and asked for removal of WHT from their tax types, success has been few and far between. I would say around 5%. So you can take your chances and still try. Just fill out a 1905 and ask for removal of that tax type.

My RDO turned me down. Fine, how do I do this?

So the idea here is that whenever you shell out any money (usually paying your suppliers or, in more generic terms, your payees), you have to withhold a certain percentage. That percentage is determined by the nature of business your payee is in. Each nature/type of business has a corresponding Alphanumeric Tax Code and a corresponding rate for each:

Let me illustrate with a couple of scenarios:

Scenario #1: You are paying Oscar dela Renta, your landlord (the owner of your place of business), P25000 for rent.

Hence:

• You use code WI100.
• You withhold P1,250.00, so you hand over P23,750 to your landlord.
• You give your landlord a Form 2307 so that he can claim the P1,250 as deduction when he pays his income tax.

Scenario #2: You got popular actress, Jadine Bernardo, to act in your one-woman play “Natutulog ba ang Snorlax?” You agreed to pay her P100,000 for her performance.

Hence:

• You use code WI021 (because she’s probably earning more than P720K/year)
• You withhold P10,000, so you have over P90,000 to Jadine.
• You give Jadine a Form 2307 so that she can claim P20,000 as deduction when she pays her income tax.

 

What is Form 2307? How do I create one?

BIR Form 2307 is also called the Certificate of Creditable Tax Withheld At Source. This certificate shows the income subjected to expanded withholding tax paid by the withholding agent.

First, download a copy of the form from the BIR website. Filling one out is pretty straightforward but you do need to have the taxpayer details of the payee: primarily their name, TIN, address, and zip code.

Print two copies of this. Sign both, and have your payee sign both as well. Keep your copy in your records.

And that’s it? I’m done?

Oh you. You’re so funny. You have TWO more forms  + a list you’ll need to submit being the withholding agent that you are. They are as follows:

Form 0619E – Monthly Remittance of Creditable Income Tax Withheld

This is basically a form you fill out summing up all the taxes you’ve withheld for the previous month. You submit this every Feb, Mar, May, Jun, Aug, Sep, Nov, and Dec.

Strangely though, this form is nowhere to be seen on the BIR website. Many RMC’s reference it but no one seems to have uploaded a printable “manual” copy to the site yet.

Form 1601EQ – Quarterly Remittance of Creditable Income Tax Withheld

This is what you file every January, April, July, and October. Each form covers the quarter immediately preceding it. It’s basically similar to Form 0619E but with more details as to what you withheld.

You can download this form here: PDF / Guidelines.

QAP – Quarterly Alphalist of Payees

The BIR certainly loves their alphanumerics and alphalists, don’t they?

Anyway, this is a listing of the payees for which you withheld taxes: their name, TIN, date paid, how much you paid, how much you withheld, and the ATC you used for them.

If you want to submit this manually, it’s basically a listing you can create either on Excel or Word.

Yup. Don’t get me started.

Is there ANY WAY to make this easier?

How interesting that you asked! Why yes, there is certainly a way to make all of this SUPER EASY.

By using Taxumo, you simply have to enter expenses and details of the corresponding withheld taxes you did. The0619E, 1601EQ, and QAP forms are automatically filled out and we can file all of those for you. Did I mention you can also pay via any channel you want and we’ll remit the payment to the BIR for you? I didn’t. Well, you can choose any channel you want and we’ll remit the payment to the BIR for you!

How easy is that, you ask? Check out the following articles to see how easy all of that is on Taxumo:

How to do I enter withheld taxes if I am the withholding agent?

How to file a 0619E and a 1601EQ for taxes withheld

 

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