Apr 242016
One of the withholding tax schemes adopted in the Philippines is the creditable withholding tax (CWT) system. Under the CWT, income payments made to Philippine residents enumerated in the CWT regulations should be subjected to the different CWT rates. The income subject to CWT still needs to be reported in the income tax return of the recipient, the income tax calculated thereon, and the CWT claimed against the CWT so withheld. Any excess of the tax income due on the return over the CWT withheld should then be paid by the recipient to the Bureau of Internal Revenue (BIR). On the other hand, if the CWT exceeds the income tax due on the return, then the excess CWT may either be refunded or carried over to the next period by the taxpayer.