BANKING.docx

28a7c 28b2 28b3 28b4 28b5a 28b5b 28b5c 33 and 282 of

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28(A)(7)(c), 28(B)(2), 28(B)(3), 28(B)(4), 28(B)(5)(a), 28(B)(5)(b), 28(B)(5)(c), 33 and 282 of the Code on specified items of income shall be withheld by payor-corporation and/or person and paid in the same manner and subject to the same conditions as provided in Section 58 of this Code. Likewise, Section 2.57 of Revenue Regulations No. 2-98 (implementing the National Internal Revenue Code relative to the Withholding on Income subject to the Expanded Withholding Tax and Final Withholding Tax) states that the liability for payment of the tax rests primarily on the payor as a withholding agent. Section 2.57 reads: ChanRoblesVirtualawlibrary Sec. 2.57. WITHHOLDING OF TAX AT SOURCE. (A) Final Withholding Tax — Under the final withholding tax system the amount of income tax withheld by the withholding agent is constituted as a full and final payment of the income tax due from the payee of said income. The liability for payment of the tax rests primarily on the payor as a withholding agent. Thus, in case of his failure to withhold the tax or in case of under withholding, the deficiency tax shall be collected from the payor/withholding agent [.] ( Emphasis supplied ) From these provisions, it is the payor-borrower who primarily has the duty to withhold and remit the 20% final tax on interest income or yield from deposit substitutes. This does not mean, however, that only the payor-borrower can be constituted as withholding agent. Under Section 59 of the National Internal Revenue Code, any person who has control, receipt, custody, or disposal of the income may be constituted as withholding agent: ChanRoblesVirtualawlibrary SEC. 59. Tax on Profits Collectible from Owner or Other Persons. - The tax imposed under this Title upon gains, profits, and income not falling under the foregoing and not returned and paid by virtue of the foregoing or as otherwise provided by law shall be assessed by personal return under rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner. The intent and purpose of the Title is that all gains, profits and income of a taxable class, as defined in this Title, shall be charged and assessed with the corresponding tax prescribed by this Title, and said tax shall be paid by the owners of such gains, profits and income, or the proper person having the receipt, custody, control or disposal of the same . For purposes of this Title, ownership of such gains, profits and
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income or liability to pay the tax shall be determined as of the year for which a return is required to be rendered. ( Emphasis supplied ) The intent and purpose of the National Internal Revenue Code provisions on withholding taxes is also explicitly stated, i.e. , that all gains, profits, and income "are charged and assessed with the corresponding tax" 134 and said tax paid by "the owners of such gains, profits and income, or the proper person having the receipt, custody, control or disposal of the same." 135 chanrobleslaw The obligation to deduct and withhold tax at source arises at the time an income subject to withholding is paid or payable, whichever comes first.
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