Rules on Withholding of Income by Top Withholding Agents under Revenue Regulations No. 11-2018

The Bureau of Internal Revenue (BIR) issued, on 31 January 2018, Revenue Regulations No. 11-2018, concerning withholding income tax, to implement the changes under Republic Act No. 10963, also known as the “Tax Reform for Acceleration and Inclusion (TRAIN)” Law. RR 11-2018 amends certain provisions of Revenue Regulations No. 2-98, as amended. The regulations cover, among others, taxpayers categorized as top withholding agents.

Who are considered Top Withholding Agents?

Top withholding agents shall include the following:

A. Classified and duly notified by the Commissioner as either any of the following unless previously de-classified as such or had already ceased business operations:

(1) A large taxpayer under Revenue Regulations No. 1-98, as amended,

(2) Top twenty thousand (20,000) private corporations under RR No. 6-2009, or

(3) Top five thousand (5,000) individuals under RR No. 6-2009.

B. Taxpayers identified and included as Medium Taxpayers, and those under the Taxpayer Account Management Program (TAMP).

In a Notice to the Public, the Commissioner of Internal Revenue indicated that it has identified the withholding agents required to deduct either the one percent (1%) or two percent (2%) creditable withholding tax from their suppliers of goods and services. This list will also be posted in the BIR’s website (

The obligation to withhold under the new rules shall commence on the first (1st) day of the month following the month of publication.

What are the applicable withholding tax rates?

Income payments made by any of the top withholding agents, as determined by the Commissioner, to their local/resident supplier of goods/services, including non-resident aliens engaged in trade or business in the Philippines, shall be subjected to the following withholding tax rates:

Supplier of goods – One percent (1%)

Supplier of services – Two percent (2%)

What are considered “goods”?

The term “goods” pertains to tangible personal property. It does not include intangible personal property, as well as agricultural products, as defined under the RR.

Who are “local resident suppliers of goods/suppliers of services”?

The term “local resident suppliers of goods/suppliers of services” pertains to a supplier from whom any of the top withholding agents, regularly makes its purchases of goods/services. As a general rule, this term does not include a casual purchase of goods/services, that is, purchase made from a non-regular supplier and oftentimes involving a single purchase.

However, a single purchase which involves Ten thousand pesos (?10,000) or more shall be subject to withholding tax under this subsection.

Who are considered “regular suppliers”?

The term “regular suppliers”, for purposes of these regulations, refers to suppliers who are engaged in business or exercise of profession/calling with whom the taxpayer-buyer has transacted at least six (6) transactions, regardless or amount per transaction, either in the previous year or current year.

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