RMC No. 39-2012: Requires the withholding of Income Tax on backwages, allowances and benefits received by employees through garnishments of debts or credits pursuant to a labor dispute award

Key points

1. Authority to withhold. Persons who control the payment of wages or salaries may deduct and withhold the Withholding Tax due. Garnishees, who owe debts to the employer or hold credits the employer is entitled to, control payment of the backwages, allowances and benefits. They may deduct the income tax due and are liable for those deductions.
2. Garnishees as withholding agents. Garnishees of a judgment award in a labor dispute are constituted as withholding agents. They deduct Withholding Tax equal to 5% of the portion of the award representing taxable backwages, allowances and benefits.

Who is affected

• Garnishees of judgment awards in labor disputes
• Employees receiving backwages, allowances and benefits under a labor dispute award