REVENUE MEMORANDUM ORDER NO.

23-2014 issued on June 20, 2014 clarifies and

consolidates the obligations of government agencies, bureaus and instrumentalities as
Withholding Agents.
All government offices, including government-owned or controlled corporations
(GOCCs) such as but not limited to the Bangko Sentral ng Pilipinas (BSP), Metropolitan
Waterworks and Sewerage System (MWSS), Philippine Deposit Insurance Corporation (PDIC),
Government Service Insurance System (GSIS), Social Security System (SSS), as well as
provincial, city and municipal governments are constituted as Withholding Agents for purposes
of the creditable tax required to be withheld on the following:
A. Withholding of Creditable Income Tax
 Income payments to certain contractors - On gross payments to contractors,
whether individual or corporate - 2%
Said contractors include, general engineering contractors, general building
contractors, specialty contractors and other contractors.
 Income payments to its local/resident supplier of goods and local/resident supplier
of services other than those covered by other rates of Withholding Tax —
Supplier of goods - 1%
Supplier of services - 2%
However, casual government purchases amounting to not more than Ten
Thousand Pesos (P10,000.00) are not subject to the 1% or 2% withholding of
Income Tax.
 Rentals - On gross rental for the continued use or possession of real property used
in business which the government has not taken or is not taking title, or in which
it has no equity - 5%
B. Withholding Tax on Government Money Payments-
 On purchases of goods and services from VAT-registered suppliers/ payees - 5%
of the gross payment.
However, if the payment for lease or use of properties or property rights
is due to non-resident owners, the rate shall be 12% Withholding Tax at the time
of payment.
Purchases of the government that are covered by Purchase Orders duly
signed by the authorized official/s as well as purchases using the Petty Cash Fund
shall be subject to the 5% final VAT withholding. However, purchases by any
government official and employee recorded as reimbursable allowance, benefit or
incentive to government official and employee by the concerned government
office are not covered by the withholding of 5% final VAT.
 On purchases of goods and services from non-VAT registered suppliers/payees –
3% of the gross payment
 Other withholding of taxes on transactions which are applicable to the functions
of a particular GOCCs, as well as provincial, city and municipal governments,
government agency, institution or instrumentality such as, but not limited to,
withholding tax on interest and purchase of gold by the Bangko Sentral ng
Pilipinas.
 The same rates of Withholding Taxes shall apply to Resident Foreign Contractors.
C. For Non-Resident Foreign Contractors, the following withholding tax rates shall
apply, subject to applicable tax treaty:
 For Individuals - 25%
 For Foreign Corporations - 30%
 D. Such other Withholding Taxes that may be mandated from time to time by the Bureau
of Internal Revenue in the implementation of the National Internal Revenue Code
(NIRC) of 1997, as amended.
As an employer, government offices, including GOCCs (such as but not limited to the
BSP, MWSS, PDIC, GSIS, SSS) as well as provincial, city and municipal governments, are
constituted as Withholding Agents for purposes of the creditable tax required to be withheld
from compensation paid for services of its employees.
Compensation for services, in whatever form paid and no matter how called, form part of
gross income. Compensation income includes, among others, salaries, fees, wages, emoluments
and honoraria, allowances, commissions (e.g. transportation, representation, entertainment and
the like); fees including director's fees, if the director is, at the same time, an employee of the
employer/corporation; taxable bonuses and fringe benefits, except those which are subject to the
fringe benefits tax under Section 33 of the NIRC; taxable pensions and retirement pay; and other
income of a similar nature.
The foregoing also includes allowances, bonuses, and other benefits of similar nature
received by officials and employees of the Government of the Republic of the Philippines or any
of its branches, agencies and instrumentalities, its political subdivisions, including GOCCs.
Any amount paid either as advances or reimbursements for expenses incurred or
reasonably expected to be incurred by the official and employee in the performance of his/her
duties are not compensation subject to withholding, if the employee was duly authorized to incur
such expenses on behalf of the government; and has complied with pertinent laws and
regulations on accounting and liquidation of advances and reimbursements, including, but not
limited to, Withholding Tax rules. The expenses should be duly receipted for and in the name of
the government office concerned.
Other than those pertaining to intelligence funds duly appropriated and liquidated, any
amount not in compliance with the foregoing requirements shall be considered as part of the
gross taxable compensation income of the taxpayer. Intelligence funds not duly appropriated and
not properly liquidated shall form part of the compensation of the government officials/personnel
concern, unless returned.
The following income received by officials and employees in the public sector are not
subject to Income Tax and withholding tax on compensation:
a. Thirteenth (13th) Month Pay and Other Benefits not exceeding Thirty Thousand Pesos
(P30,000.00) paid or accrued during the year. Any amount exceeding P30,000.00 are
taxable compensation.
b. Facilities and privileges of relatively small value or “De Minimis Benefits” as defined in
existing issuances and conforming to the ceilings prescribed therein;
c. Fringe benefits which are subject to the fringe benefits tax under Section 33 of the NIRC,
as amended;
d. Representation and Transportation Allowance (RATA) granted to public officers and
employees under the General Appropriations Act;
e. Personnel Economic Relief Allowance (PERA) granted to government personnel;
f. Monetized value of leave credits paid to government officials and employees;
g. Mandatory/compulsory GSIS, Medicare and Pag-Ibig Contributions, provided that,
voluntary contributions to these institutions in excess of the amount considered
mandatory/compulsory are not excludible from the gross income of the taxpayer and
hence, not exempt from Income Tax and Withholding Tax;
h. Union dues of individual employees;
 i. Compensation income of employees in the public sector with compensation income of
not more than the Statutory Minimum Wage (SMW) in the non-agricultural sector
applicable to the place where he/she is assigned;
j. Holiday pay, overtime pay, night shift differential pay, and hazard pay received by
Minimum Wage Earners (MWEs);
k. Benefits received from the GSIS Act of 1937, as amended, and the retirement
gratuity/benefits received by government officials and employees under pertinent
retirement laws;
l. All other benefits given which are not included in the above enumeration but are
exempted from Income Tax as well as withholding tax on compensation under existing
laws, as confirmed by BIR.
In case of doubt in the appreciation of the taxability of a compensation given by a
government agency or instrumentality falling under items (i) above, Confirmation of Exemption
of the benefit shall be secured through a ruling issued by the Commissioner of Internal Revenue
or his duly authorized representative.
The following officials are duty bound to deduct, withhold and remit taxes:
a. For Office of the Provincial Government-province - the Chief Accountant, Provincial
Treasurer and the Governor;
b. For Office of the City Government-cities - the Chief Accountant, City Treasurer and
the City Mayor;
c. For Office of the Municipal Government-municipalities - the Chief Accountant,
Municipal Treasurer and the Mayor;
d. Office of the Barangay - Barangay Treasurer and Barangay Captain
e. For NGAs, GOCCs and other Government Offices - the Chief Accountant and the
Head of Office or the Official holding the highest position (such as the President,
Chief Executive Officer, Governor, General Manager).
In case of non-compliance with their obligation as Withholding Agents, the
abovementioned officials shall be liable for the sanctions specified in the Order.
All revenue officials and employees concerned shall take measures to ensure the full
enforcement of the provisions of this Order and in case of any violation thereof, shall commence
the appropriate legal action against the erring Withholding Agent.