THE Bureau of Internal Revenue (BIR) may increase the tax rate on the expanded creditable withholding tax that is levied on self-employed individuals.

On its official website, the bureau announced Monday that it will conduct a public hearing on December 1 regarding the possible increase in income payments subject to expanded creditable withholding tax.

The BIR said that income payments to certain brokers and agents on gross commissions or service fees of customs, insurance, stock, real estate, immigration and commercial brokers and fees of agents of professional entertainers may already be subject to 15 percent tax if the gross income for the given year exceeds P720, 000.

Less than that amount, however, the income earner will be levied 10 percent. The new rate may also apply to commissions received by independent or exclusive sales and marketing agents.

At present, such class of income earners is subject to 10 percent creditable withholding tax if their income exceeds P720, 000 a year, and to 5 percent if lower.

“Creditable withholding tax” is being withheld by the payor or debtor before it settles its monetary obligation to a payee or creditor.

After withholding the tax, the payor or debtor would then provide a tax certificate along with its monetary payment to the payee or creditor. The payor is also obliged to report to the BIR such withholding of tax.

For example, if the agreed professional fee is P1,000, the payor would pay only P900 to the payee since the P100 has already been withheld, provided further that said payee earns more than P720,000 a year.

Such withholding made by the payor or debtor will be the “creditable withholding tax,” which would then be presented to the BIR by the payee on the date they file their income tax return to ask for the deduction on their tax due.

The income tax rate ranges from 5 percent to 32 percent depending on the income of the individual.

The same certificate would also be deducted from the tax due of the debtor or creditor, individual or corporate, to warrant deduction or to reflect as an expense to warrant lower income tax.

Other kinds of incomes that the BIR may raise the withholding tax rates for are those against certain contractors, certain income payments made by credit card companies, payments made by the top 20,000 private corporations to their suppliers and service providers, and payments made by the government to its supplier of services.

The public hearing will also tackle the possible increase in the withholding tax rate that is levied on payments made by pre-need companies to funeral parlors and embalmers.

Income payments made by the top 5,000 individual taxpayers to their suppliers of goods and services other than those covered by other rates of withholding tax will also be discussed on the said public hearing.