Classification of Individual Taxpayers:

1. Resident Citizen
2. Non-resident Citizen
3. Resident Alien
4. Non-resident Alien Engaged in Trade or Business
5. Non-resident Alien Not Engaged in Trade or Business

 Income Tax Rates

(Reference:https://www.bir.gov.ph/index.php/tax-information/income-tax.html last visit-10/20/20

I. For Individual Citizens and Resident Aliens Earning Purely Compensation Income
Graduated Income Tax on Taxable Compensation Income

II. For Purely Self-Employed Individuals and/or Professionals

A. Gross Sales/Receipts and Other Non-Operating Income Do Not Exceed the VAT

B. Gross Sales/Receipts and Other Non-Operating Income Exceed the VAT Thresh

III. For Individuals Earning Both Compensation Income and Income from Business and/or Practice o
1. For Income from Compensation: Based on Graduated Income Tax Rates; and
2. For Income from Business and/or Practice of Profession:
A. If the total Gross Sales/Receipts Do Not Exceed VAT Threshold of P3,000,000, t
i. 8% Income Tax on Gross Sales/Receipts and Other Non-Operating Income in Lie
ii. Income Tax Based on Graduated Income Tax Rates with 3% percentage tax
B. If the total Gross Sales/Receipts Exceed VAT Threshold of P3,000,000 or the ta
i. Income Tax Based on Graduated Income Tax Rates with Value-added tax or oth
On Certain Passive Income of Individual Citizens and Resident Aliens
For Non-Resident Alien Engaged in Trade or Business 
For Non-resident Aliens Not Engaged in Trade or Business 
For Alien Individuals Employed by Regional Headquarters (RHQ) or Area Headquarters and Regiona
Companies, Offshore Banking Units (OBUs), Petroleum Service Contractor and Subcontractor  
on of Individual Taxpayers:

t Alien Engaged in Trade or Business

t Alien Not Engaged in Trade or Business

ates

ps://www.bir.gov.ph/index.php/tax-information/income-tax.html last visit-10/20/2020)

al Citizens and Resident Aliens Earning Purely Compensation Income

Graduated Income Tax on Taxable Compensation Income

Self-Employed Individuals and/or Professionals

A. Gross Sales/Receipts and Other Non-Operating Income Do Not Exceed the VAT Threshold of P3,000,00
1. 8% Income Tax on Gross Sales or Gross Receipts in Excess of P250,000 in Lieu of the Graduate
2. Income Tax Based on the Graduated Income Tax Rates with 3% percentage tax
B. Gross Sales/Receipts and Other Non-Operating Income Exceed the VAT Threshold of P3,000,000 or the
- Income Tax Based on the Graduated Income Tax Rates and Value-added tax or other percentage

uals Earning Both Compensation Income and Income from Business and/or Practice of Profession, their incom
1. For Income from Compensation: Based on Graduated Income Tax Rates; and
2. For Income from Business and/or Practice of Profession:
A. If the total Gross Sales/Receipts Do Not Exceed VAT Threshold of P3,000,000, the Individual Taxpayer M
i. 8% Income Tax on Gross Sales/Receipts and Other Non-Operating Income in Lieu of the Graduated Inco
ii. Income Tax Based on Graduated Income Tax Rates with 3% percentage tax
B. If the total Gross Sales/Receipts Exceed VAT Threshold of P3,000,000 or the taxpayer is subject to othe
i. Income Tax Based on Graduated Income Tax Rates with Value-added tax or other percentage tax
sive Income of Individual Citizens and Resident Aliens

Passive Income

1. Interest from currency deposits, trust funds and deposit substitutes

2. Royalties (on books as well as literary & musical compositions)

    - In general

3. Prizes (P10,000 or less )

    - Over P10,000

4. Winnings (except from PCSO and Lotto amounting to P10,000 or less )

-   From PCSO and Lotto amounting to P10,000 or less

5. Interest Income from a Depository Bank under the Expanded Foreign

Currency Deposit System
6. Cash and/or Property Dividends received by an individual from a domestic
corporation/ joint stock company/ insurance or mutual fund companies/
Regional Operating Headquarter of multinational companies
7. Share of an individual in the distributable net income after tax of a
partnership (except GPPs)/ association, a joint account, a joint venture or
consortium taxable as corporation of which he is a member or co-venture
8. Capital gains from sale, exchange or other disposition of real property
located in the Philippines, classified as capital asset
9. Net Capital gains from sale of shares of stock not traded in the stock
exchange
 10. Interest Income from long-term deposit or investment in the form of
savings, common or individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced by certificates in such
form prescribed by the Bangko Sentral ng Pilipinas (BSP)

Upon pre-termination before the fifth year, there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:

Holding Period
- Four (4) years to less than five (5) years

- Three (3) years to less than four (4) years

- Less than three (3) years

ent Alien Engaged in Trade or Business 

A. Tax Rate in General – on taxable income from all sources within the
Philippines

B. Certain Passive Income

1. Interest from currency deposits, trust funds and deposit substitutes
2. Royalties (on books as well as literary & musical compositions)
    - In general
3. Prizes (P10,000 or less )

    - Over P10,000

4. Winnings (except from PCSO and Lotto)
   -  From PCSO and Lotto
 5. Cash and/or Property Dividends received from a domestic corporation/ joint
stock company/ insurance/ mutual fund companies/ Regional Operating
Headquarter of multinational companies

6. Share of a non-resident alien individual in the distributable net income after

tax of a partnership (except GPPs) of which he is a partner or from an
association, a joint account, a joint venture or consortium taxable as
corporation of which he is a member or co-venture

7. Interest Income from long-term deposit or investment in the form of savings,

common or individual trust funds, deposit substitutes, investment management
accounts and other investments evidenced by certificates in such form
prescribed by the Bangko Sentral ng Pilipinas (BSP)

Upon pre-termination before the fifth year, there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:

Holding Period
  - Four (4) years to less than five (5) years
  - Three (3) years to less than four (4) years
  - Less than three (3) years
8. Capital from the sale, exchange or other disposition of real property located
in the Philippines classified as capital asset
9. Net Capital gains from sale of shares of stock not traded in the Stock
Exchange
   - Not over P100,000
   - Any amount in excess of P100,000

ent Aliens Not Engaged in Trade or Business 

1. Gross amount of income derived from all sources within the Philippines

2. Capital gains from the exchange or other disposition of real property located
in the Philippines
 3. Net Capital gains from the sale of shares of stock not traded in the Stock
Exchange
- Not  Over  P100,000
- Any amount in excess of P100,000

iduals Employed by Regional Headquarters (RHQ) or Area Headquarters and Regional Operating Headquarte
ffshore Banking Units (OBUs), Petroleum Service Contractor and Subcontractor  

On the gross income consisting of salaries, wages, annuities, compensation,

remuneration and other emoluments, such as honoraria and emoluments
derived from the Philippines
0/2020)

VAT Threshold of P3,000,000, the tax shall be, at the taxpayer’s option:
000 in Lieu of the Graduated Income Tax Rates and the Percentage Tax; Or
rcentage tax
reshold of P3,000,000 or the taxpayer is subject to other percetage taxes, the tax shall be:
ded tax or other percentage tax

ce of Profession, their income taxes shall be:

; and

00, the Individual Taxpayer May Opt to Avail:

n Lieu of the Graduated Income Tax Rates and the Percentage Tax; Or

e taxpayer is subject to other percetage taxes

other percentage tax
 Tax Rate

20%

10%

20%

Graduated Income
Tax Rates
20%

20%

exempt

15%

 10%

10%

6%

15% 
 Exempt

5%

12%

20%

same manner as
individual citizen and
resident alien
individual

Tax Rates
20%
10%
20%
Graduated Income
Tax Rates
20%
20%
exempt
 20%

20%

Exempt

5%
12%
20%
6%

5%
10%

25%

6%
 5%
10%

onal Operating Headquarters (ROH) of Multinational

Graduated Income
Tax Rates
1. Purely compensation income earner
Total Compensation Income ₱ xx
Less: Non-taxable Income
          13th month pay and other benefits (max)      90,000
Taxable Compensation Income ₱ xx
Multiply by Graduated Income Tax Rate (0% to 35%) xx
Tax Due on Compensation ₱ xx

2. Purely Self-employed/in business or in practice of profession

Did not exceed ₱3,000,000

Option 1: 8% Income Tax

Gross Sales or Gross Receipts ₱ xx

Add: Non-operating Income xx
Total ₱ xx
Less: Deduction   250,000
Taxable Income ₱ xx
Multiply by Tax Rate 8%
Tax Due ₱ xx

Option 2: GIT(Graduated Income Tax)

Gross Sales/Receipts ₱ xx
Add: Non-operating Income xx
Total ₱ xx
Less: Allowable Deductions (Itemized or Optional) xx
Taxable Income ₱ xx
Multiply by GIT(Graduated Income Tax Rate (0% to 35%) xx
Income Tax ₱ xx

Percentage tax:
Gross Sales ₱ xx
Multiply by: 3%
Percentage tax ₱ xx

Exceed ₱3,000,000 or subject to other percentage taxes

Gross Sales/Receipts ₱ xx
Add: Non-operating Income xx
Total ₱ xx
Less: Allowable Deductions (Itemized or Optional) xx
Taxable Income ₱ xx

Multiply by GIT(Graduated Income Tax Rate (0% to 35%) xx

Income Tax ₱ xx

With Value-added tax or other percentage taxes

2. Mixed Inome Earner

Gross sales or receipts from business did not exceed
₱3,000,000 or subject to other percentage taxes

Option 1: 8% Income Tax

Total Compensation Income ₱ xx

Less: Non-taxable Income
          13th month pay and other benefits (max)      90,000
Taxable Compensation Income ₱ xx
Multiply by Graduated Income Tax Rate (0% to 35%) xx
Tax Due on Compensation ₱ xx

Gross Sales or Gross Receipts ₱ xx

Add: Non-operating Income xx
Total ₱ xx
Multiply by Tax Rate 8%
Tax Due ₱ xx

Option 2: GIT(Graduated Income Tax)

Total Compensation Income
Less: Non-taxable Income
          13th month pay and other benefits (max)
Taxable Compensation Income
Add: Taxable Income from business/profession
Gross Sales/Receipts ₱ xx
Add: Non-operating Income xx
Total ₱ xx
Less: Allowable Deductions (Itemized or Optional) xx
Taxable Income
Multiply by GIT(Graduated Income Tax Rate (0% to 35%)
Income Tax

Percentage tax:
Gross Sales
Multiply by:
Percentage tax
Graduated Income Tax Rates under Section 24(A)(2) of the Tax
Code of 1997, as amended by Republic Act No. 10963 
Taxable Income
₱0 - ₱ 250,000 0%
250,000 - 400,000 20%
400,000 - 800,000 25%
800,000 - 2,000,000 30%
2,000,000 - 8,000,000 32%
over ₱8,000,000 35%
Centavos?
for taxable income-drop
for tax-50 cents or more plus 1 peso
₱ xx

     90,000
₱ xx

xx
xx
₱ xx

₱ xx
3%
₱ xx
on 24(A)(2) of the Tax
ct No. 10963 

-
-
₱ 30,000
130,000
490,000
2,410,000