Withholding of tax on purchases arises even if no payment has yet been made.

Pursuant to Section 2.57.4 of RR 2-98, a taxpayer is required to withhold tax when the income payment is paid or becomes payable, or the income payment is accrued or recorded as expense or asset, whichever is applicable in the taxpayer’s books, whichever comes first. If the taxpayer recorded its payments as expense, although they were not yet paid or payable, the obligation to withhold shall be within the last month of the return period in which payments were claimed as expense for tax purposes. Accordingly, it is not always the payment that necessitates the withholding of taxes on purchases. Even if payment is yet to occur, withholding shall be made once the obligation becomes demandable, or was accrued or claimed as expense for income tax purposes, whichever comes first. (Social Security System vs. Alfredo V. Misajon, CTA Case No. 8564, June 24, 2015)