If the director receiving the director’s fees is also an employee of the same entity, the fees shall form part of the compensation subject to withholding tax on compensation. However, if the director is not an employee of the income payer then the subject taxpayer is considered a professional subject to the creditable expanded withholding tax prescribed for a professional, and subject also to the applicable business tax. Moreover, in the case of government employee who seats as board member of other Government Owned & Controlled Corporations (GOCCs) and is receiving the director’s fees, honoraria and/or other benefits at 10%. The said income shall be reported by the payee as other income to be included as part of the compensation income in arriving at the total taxable income. The corresponding withholding tax shall form part of the tax credits against the income tax due.
when they are checking whether your business is complying with its Tax obligations,