Guidelines and Procedures on the Withholding of Income Tax on Backwages, Allowances and Benefits by Virtue of Labor Dispute Awards

November 16, 2012NLRC ADMINISTRATIVE ORDER NO. 11-17-12RE:Guidelines and Procedures on the Withholding of Income Tax on Backwages, Allowances and Benefits by Virtue of Labor Dispute Awards Pursuant to Revenue Memorandum Circular No. 39-2012 Dated August 03, 2012   TO:All Officials and Employees Concerned In compliance to Revenue Memorandum Circular No. 39-2012 dated August 03, 2012 issued by the Bureau of Interval Revenue, Department of Finance, the following guidelines and procedures shall be observed: A. Judgment Awards Subject to Withholding Income Tax1. The five percent (5%) withholding tax shall be imposed on the total judgment awards on backwages, allowances and benefits which constitute renumerations for services that would have been performed by the employee in the year when actually received, or during the period of his dismissal from the service which was subsequently ruled to be illegal. Hence, the following labor dispute awards are subject to 5% withholding income tax:a. Backwagesb. Reinstatement Wagesc. Allowancesd. Salary Differentials or Underpayment of Salariese. Unpaid Salaries, Wagesf. 13th Month Payg. Overtime Payh. Commissioni. Benefits provided under CBA except for sickness benefits...