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    Preferential Tax

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    attymaneka
    This document provides a summary of preferential tax treatments for certain individuals and corporations in the Philippines. For individuals, a 15% final withholding tax is imposed on employment income earned by foreigners working in specific industries in the Philippines. Foreign source income is not taxable for non-resident citizens in certain situations. For corporations, non-profit educational institutions and hospitals receive preferential tax rates depending on their income sources and profit status. Foreign corporations operating in the Philippines are also subject to preferential tax rates that vary based on their resident or non-resident status and type of business.

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    Preferential Tax

    Uploaded by

    attymaneka
    123 views2 pages
    This document provides a summary of preferential tax treatments for certain individuals and corporations in the Philippines. For individuals, a 15% final withholding tax is imposed on employment income earned by foreigners working in specific industries in the Philippines. Foreign source income is not taxable for non-resident citizens in certain situations. For corporations, non-profit educational institutions and hospitals receive preferential tax rates depending on their income sources and profit status. Foreign corporations operating in the Philippines are also subject to preferential tax rates that vary based on their resident or non-resident status and type of business.

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    This document provides a summary of preferential tax treatments for certain individuals and corporations in the Philippines. For individuals, a 15% final withholding tax is imposed on employment income earned by foreigners working in specific industries in the Philippines. Foreign source income is not taxable for non-resident citizens in certain situations. For corporations, non-profit educational institutions and hospitals receive preferential tax rates depending on their income sources and profit status. Foreign corporations operating in the Philippines are also subject to preferential tax rates that vary based on their resident or non-resident status and type of business.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    123 views2 pages

    Preferential Tax

    Uploaded by

    attymaneka
    This document provides a summary of preferential tax treatments for certain individuals and corporations in the Philippines. For individuals, a 15% final withholding tax is imposed on employment income earned by foreigners working in specific industries in the Philippines. Foreign source income is not taxable for non-resident citizens in certain situations. For corporations, non-profit educational institutions and hospitals receive preferential tax rates depending on their income sources and profit status. Foreign corporations operating in the Philippines are also subject to preferential tax rates that vary based on their resident or non-resident status and type of business.

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    © All Rights Reserved
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    of 2

    San Beda College of Law

    MEMORY AID IN TAXATION LAW

    2004 CENTRALIZED BAR OPERATIONS

    ANNEX C
    1. PREFERENTIAL TAX TREATMENT ON CERTAIN INDIVIDUALS
    GENERAL
    CATEGORIES

    RESIDENTS

    CITIZENS
    NON-RESIDENTS

    RESIDENTS

    ALIENS
    NRAEBT

    NRANEBT

    SOURCE OF INCOME

    ALL SOURCES

    WITHIN THE PHIL.

    WITHIN THE PHIL.

    WITHIN THE PHIL.

    WITHIN THE PHIL.

    15% Final Withholding


    Income Tax (FWIT)

    A tax rate of 15% is imposed on gross income(salaries,


    wages, etc. received by every Filipino employee occupying the
    same position as an alien employed by any of the following:
    a. Multinational company which is foreign firm or entity
    engaged in international trade with an established branch
    in the Phils. as follows:
    i) Regional or Area Headquarters
    ii) Regional Operating Headquarters
    b. Offshore Banking Units
    c. Foreign petroleum service contractor or sub-contractor

    Foreign
    Source
    Compensation. Income
    not subject to income
    tax

    C.1. Regardless of the period of stay in the Phils., foreign


    source (compensation income) is not taxable if received by
    any of the following non-resident citizen.
    a) Immigrant
    b) Foreign-based employee on a permanent basis
    c) Overseas Contract Worker, including overseas seaman
    2. A Filipino employed as a Philippine Embassy/Consultant
    service personnel of the Phil. Embassy/consulate is not to be
    treated as a non-resident citizen, hence, his income is taxable.

    A tax rate of 15% is imposed on gross income (salaries, wages, annuition, compensation,remuneration,
    other emoluments such as honoraria and allowances)
    a. Regional or area Headquarters
    b. Regional Operating Headquarters
    c. Offshore Banking Units (OBUs) established in the Phil.
    d. Foreign petroleum service contractor or subcontractor engaged in Petroleum Operations in the Phil.

    NOT TAXABLE

    99

    San Beda College of Law

    MEMORY AID IN TAXATION LAW

    2004 CENTRALIZED BAR OPERATIONS

    ANNEX C
    2. PREFERENTIAL TAX TREATMENT ON CERTAIN CORPORATION
    DOMESTIC CORPORATION
    1. Educational Institution
    2. Hospital
    1.

    2.

    A NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTION is EXEMPT


    from Income Tax on its Revenue as educational institution and
    from the operation of ancillary activities located within the school
    premises
    a. Cafeteria/canteen
    b. Dormitories
    c. Bookstores
    d. School Bus
    e. Hospitals
    f. Pharmacies or Drugstores and from banks deposits subject to
    certain condition.
    PROPRIETARY/ PROFIT ORIENTED EDUCATIONAL INSTITUTION, AND
    NON-STOCK, NON-PROFIT HOSPITAL
    (a) 10% OF THE TAXABLE INCOME - If gross income from
    unrelated trade business or other activity does not exceed
    50% of the total gross income derived from all sources
    (b) Regular Domestic Rate - If gross income from unrelated
    trade business or other activity exceeds 50% of the total gross
    income derived from all sources,

    3.

    FOREIGN CORPORATIONS
    RESIDENT FOREIGN CORPORATION

    NON-RESIDENT FOREIGN CORP.

    1. INTERNATIONAL CARRIER (within) 2.5% of Gross


    Phil. Billings

    1. CINEMATOGRAPHIC FILM OWNER, LESSOR OR DISTRIBUTOR


    25% of gross income(within)

    2. OFFSHORE BANKING UNIT (OBU) Income derived


    by OBU from foreign currency transaction with local
    commercial bankers, including branches of foreign
    bank, including any interest income derived from
    foreign currency loans granted to residents.
    10% - Final Tax

    2. OWNER OR LESSOR OF SEA VESSEL CHARTERED BY


    PHILIPPINE NATIONALS 4.5% of Gross rental, lease or
    charter fees

    3. BRANCHES (Except those registered with PEZA). Any


    profit remitted to the head office (total profit applied
    or earmarked for remittance without any deduction
    for the tax component thereof).
    15% - FWT
    4. REGIONAL OR AREA HEADQUARTERS not subject to
    Income Tax
    5. REGIONAL OPERATING HEADQUARTERS 10% of the
    taxable income (within)

    Regardless of the proportion explained in item No. 2(a) and (b) a


    profit oriented hospital will be treated as an ordinary domestic
    corporation, hence subject to the Normal Domestic rate.

    100

    3. OWNER OR LESSOR OF AIRCRAFT, MACHINERIES AND OTHER


    EQUIPMENT 7.5% of gross rentals or fees (within)

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