Note that in case of a tax audit or investigation, the taxpayer who failed to withhold tax, on its income payment may be meted with a tax assessment for deficiency income tax (equivalent to 30 percent of the income payment not subjected to withholding tax), and deficiency withholding tax, plus interest and surcharges. This means taxpayers who failed to withhold need not suffer a deficiency income tax assessment. It is because upon payment of the deficiency withholding tax, the otherwise disallowed expense will already be deductible for income tax purposes. 6-2018 is beneficial to the taxpayers because the RR actually allows the deductibility of an expense for income tax purposes, provided the deficiency withholding tax is paid. Likewise, a plain reading of RR 6-2018 shows that the deficiency withholding tax and applicable penalties may be paid at the time of audit/investigation or reinvestigation/reconsideration.

Source: Philippine Star April 09, 2018 15:22 UTC