TAXABLE

INDIVIDUALS/ CORPORATION/ ALIEN

INCOME WITH AND WITHOUT ONLY INCOME WITHIN THE

THE PHILIPPINES PHILIPPINES

 Citizen of the  Nonresident citizen

Philippines  Individual citizen
 Domestic Corporation (working/deriving
income from abroad)
 Alien Individual
(resident or not)
 Foreign corporation
(engage or not business
in the Philippines)

TAX ON INDIVIDUALS- INCOME TAX RATES

GRADUATED INCOME TAX RATES OF INDIVIDUALS

Not over 250,000 0%

Over 250,000, < 400,000 15% of the excess over 400,000

Over 400,000, < 800,000 22,500 + 20% of excess over

400,000
Over 800,000, < 2,000,000 102,500 + 25% of excess over
800,000
Over 2,000,000, < 8,000,000 402, 500 + 30% of the excess over
8,000,000
Over 8,000,000 2,202,500 + 35% of the excess over
8,000,000

CATEGORY EXEMPTIONS/ BASIS FOR TAX RATES TAX RATE

PROVISIONS
 Married Compute separately  Taxable income  Graduated
Individuals income tax based on Income Tax
their respective taxable Rate
income.
If income cannot be
determined who
earned, then it shall be
divided equally.

 Minimum Holiday pay, overtime  Taxable income  Exempt

Wage Earners pay, night shift
differential pays, hazard
 pay
 Purely Self-  Gross sales and  Gross sale or  8%
employed/ Gross Receipts gross receipts
Professionals and non-
operating
income does  Non-operating  Graduated
not exceed income Income tax rate
Value Added
Tax threshold.
 In Excess of
250,000
 Mixed Income  All income from  Graduated
Earners Compensation Income tax rate
 All income from  8% or
Business or Graduated
Practice of income tax rate
Profession
(gross
sales/receipts/
non-operating
income not
exceeding VAT)
 Gross  Graduated
sales/receipts/ Income tax rate
other non-
operating
income exceeds
VAT

PASSIVE INCOME
CATEGORY EXEMPTIONS/ BASIS FOR TAX RATES TAX RATE
PROVISIONS
 Interest,  any currency Amount of interest  20%
Royalties, bank deposit
Prizes, and and yield/ any
Other trust funds and
Winnings similar
arrangements;
royalties
 EXCEPT: books,  10%
literary works,
musical
composition.
 PRIZES and  Graduated
EXCEPT: PRIZES/ other winnings income tax rate
WINNINGS 10,000 or  EXEMPT
 less from PCSO
EXCEPT: nonresident
 Individual individual
Taxpayer -Interest income from Interest Income-  15%
long-term deposit, depository bank
savings investment,
individual trust funds,
deposits substitutes,
investment
management account,
other investment
EVIDENCED BY
CERTIFICATES
PRESCRIBE BY BSP
-If certificate is
terminated before 5th  4yrs less 5yrs-
year Interest Income 5%
 3yrs less 4yrs-
12%
 Less than 3yrs-
20%
 Cash and/or Received from  10%
Property domestic corporation,
Dividends joint stock company,
insurance, mutual fund
companies, ROH of
multinational
companies. Share of
individual in
distributable net
income after tax
EXCEPT: GPP
 Capital Gains Net capital gains  15%
from Sale of
Shares of
Stock not
Traded in the
Stock
Exchange
 Capital Gains GENERAL RULE Gross selling price or  6%
from the Sale Fair market value-
of Real whichever is higher-
Property CAPITAL GAINS
EXCEPTIONS: the
capital gains are fully
utilized in acquiring or  EXEMPT
constructing a new
 principal residence
within 18 calendar
months from the date
of sale. the historical
cost or adjusted basis
of the real property
sold or disposed shall
be carried over to the
new principal residence
built or acquired. the
Commissioner shall
have been duly notified
by the taxpayer within
thirty (30) days from
the date of sale or
disposition through a
prescribed return of his
intention to avail of the
tax exemption herein
mentioned. TAX
EXEMPTION CAN ONLY
BE AVAIL ONCE EVERY
10 YEARS.
-if not fully utilized
capital gains is
multiplied by the
fraction which utilized
amount bears to the
gross selling price.

TAX ON NON-RESIDENT ALIEN INDIVIDUAL

CATEGORY EXEMPTIONS/ BASIS FOR TAX RATE TAX RATE

PROVISIONS
 Nonresident GENERAL: alien  Taxable income  Graduated Tax
Alien Engaged engaged in trade and received from rate
in Trade or business in the sources within
Business Philippines- same the Philippines
Within the treatment for
Philippines. individual citizen and
resident alien
individual
 Cash and/or  any currency  Amount of  20%
Property bank deposit interest
Dividends from and yield/ any
a Domestic trust funds and
Corporation or similar
 Joint Stock arrangements;
Company, or royalties
Insurance or  EXCEPT: books,  10%
Mutual Fund literary works,
Company or musical
Regional composition.
Operating  Graduated
Headquarter or EXCEPT: PRIZES/  PRIZES and income tax rate
Multinational WINNINGS 10,000 or other winnings  EXEMPT
Company, or less from PCSO
Share in the EXCEPT: nonresident
Distributable individual
Net Income of -Interest income from  15%
a Partnership long-term deposit, Interest Income-
(Except: GPP), savings investment, depository bank
Joint Account, individual trust funds,
Joint Venture deposits substitutes,
Taxable as a investment
Corporation or management account,
Association, other investment
Interests, EVIDENCED BY
Royalties, CERTIFICATES
Prizes, and PRESCRIBE BY BSP
Other -If certificate is
Winnings. terminated before 5th  4yrs less 5yrs-
year 5%
Interest Income  3yrs less 4yrs-
12%
 Less than 3yrs-
20%
 Capital Gains  Net capital  15%
from Sale of gains
Shares of
Stock not
Traded in the
Stock
Exchange
 Nonresident  Entire income  25%
Alien sources within
Individual Not the Philippines
Engaged in
Trade or
Business
Within the
Philippines
 Alien  Levied  Gross income  15%
Individual collected and
 Employed by paid
Regional or
Area
Headquarters
and Regional
Operating
Headquarters
of
Multinational
Companies
(same with
Filipinos
employed in
the
multinational
company)
 Alien  Levied  Gross income  15%
individuals collected and
employed by paid
Offshore
Banking Units.
(also applies
to Filipinos
employed in
offshore
banking units
established in
the
Philippines)
 Alien  salaries, wages,  15%
Individual annuities,
Employed by compensation,
Petroleum remuneration,
Service and other
Contractor and emoluments,
Subcontractor. such as
(also applies honoraria and
to Filipinos) allowances,
received from
such contractor
or
subcontractor

MEMBERS OF GENERAL PROFESSIONAL PARTNERSHIPS

 general professional partnership not be subject to the income tax
 the person engages in business as partner Individual income tax

TAX ON CORPORATIONS- DOMESTIC

CATEGORY EXEMPTIONS/ BASIS FOR TAX RATE TAX RATE
PROVISIONS
 Domestic GENERAL: Taxable Income 25%
Corporation
Net Taxable income
not exceeding
5,000,000 with total
assets not exceeding 20%
100,000,000 (XCLDING
land on which the
business entity’s office,
plant and equipment
are situated)
 Proprietary General Rule: Taxable Income 10%
Educational NONPROFIT
Institutions and “unrelated, trade
Hospitals. business or other
activity not exceeding
50% of total gross
income.
Exemption: unrelated,
trade business, other Taxable Income 25%
activity exceeding 50%
of total gross income
 Government- EXCEPT: GSIS, SSS, Taxable Income 25%
owned or HDMF, PHIC, LOCAL
Controlled WATER DISTRICT
Corporations,
Agencies or
Instrumentalities
.

PASSIVE INCOME
CATEGORY EXEMPTIONS/ BASIS FOR TAX RATE TAX RATE
PROVISIONS
 Interest from  CURRENCY Interest Income 20%
Deposits and BANK- sources received.
Yield or Any within the
Other Philippines
Monetary  DEPOSITORY
 Benefit from BANK-
Deposit expanded
Substitutes foreign Interest Income 15%
and from Trust currency derived
Funds and deposits
Similar
Arrangements,
and Royalties
 Capital Gains EXCEPT shares sold or Capital Gains 15%
from the Sale disposed of through
of Shares of the stock exchange
Stock Not
Traded in the
Stock
Exchange
 Tax on Income  Interest Income Exempt
Derived under Income derived
the Expanded by a depository
Foreign bank currency
Currency transactions
Deposit with
System. nonresidents,
offshore
banking units
in the
Philippines,
local
commercial
banks, foreign
banks
authorized by
BSP.
EXCEPT: Net Income 25%
from such transactions
as may be specified by
the Secretary of
Finance, upon
recommendation by
the Monetary Board to
be subject to the
regular income tax
payable by banks
 Interest 10%
Income from
loan granted by
depository
bank under
 said expanded
system to
RESIDENTS
 Intercorporate  Dividends Exempt if the
Dividends. received by a prerequisites are met.
domestic
corporation
REQUISITES FOR THE
EXEMPTIONS:
*Funds received or
remitted into the
Philippines are
reinvested in the
business operation of
the domestic
corporation in the
Philippines within the
next taxable year from
the time the foreign-
sourced dividends were
received and shall be
limited to funding the
working capital
requirements, capital
expenditures, dividend
payments, investment
in domestic
subsidiaries, and
infrastructure project.
*the domestic
corporation holds
directly at least 20% of
the outstanding shares
of the foreign
corporation and has
held the shareholdings
for a minimum of 2
years at the time of the
dividends distribution.
 Capital Gains  Gain presumed GAIN based on the 6%
Realized from to have been gross selling price or
the Sale, realized on the fair market value.
Exchange or sale, exchange HIGHER
Disposition of or disposition
Lands and/or of lands and/or
Buildings. buildings which
are not actually
 used in the
business of a
corporation
and are treated
as capital
assets.

MINIMUM CORPORATE INCOME TAX ON DOMESTIC CORPORATION

CATEGORY EXCEPTIONS/PROVISIONS/ BASIS FOR TAX RATE TAX RATE

DEFINITION
 minimum End of taxable year. Gross income 2%
corporate beginning on the fourth
income tax taxable year immediately
following the year in which
such corporation commenced
its business operations, when
the minimum income tax is
greater than the tax
computed under RCIT for the
taxable year:
 Excess of MCIT Carry forward and credited
over RCIT against the RCIT/ normal
income tax for 3 immediately
succeeding taxable years.
 Relief from The Secretary of Finance is
the Minimum hereby authorized to
Corporate suspend the imposition of
Income Tax the minimum corporate
Under Certain income tax on any
Conditions. corporation which suffers
losses on account of
prolonged labor dispute, or
because of force majeure, or
because of legitimate
business reverses.
 Gross Income Gross Sales
Less: Sales Return, discounts,
and allowances
Less: COGS
 COGS all business expenses directly
incurred to produce the
merchandise to bring them
to their present location
 COGS for Invoice COGS
trading and Add: import duties, freight in,
Merchandisin including insurance while the
 g Concern goods are in transit.
 COGS for a Cost of production of finished
Manufacturin goods: Raw Materials, Direct
g concern Labor, Manufacturing
 (cost of goods overhead, freight cost,
sold and insurance premiums and
manufactured other costs incurred to bring
) the raw materials to the
warehouse/ factory.
 Sale of Service GROSS INCOME:
Gross Receipts
Less: sales return,
allowances, discounts and
cost of service
 Cost of Service all direct costs and expenses
necessarily incurred to
provide the services required
by the customers and clients
including (A) salaries and
employee benefits of
personnel, consultants and
specialists directly rendering
the service and (B) cost of
facilities directly utilized in
providing the service such as
depreciation or rental of
equipment used and cost of
supplies. FOR BANKS “cost of
service” includes interest
expense

RATES OF INCOME TAX ON FOREIGN CORPORATIONS

(Tax on Resident Foreign Corporations)
CATEGORY EXCEPTIONS/ BASIS FOR TAX RATES TAX RATES
PROVISIONS/
DEFINITION
 Regular Income Except: as provided in Taxable income derived 25%
Tax Rate for this code from all sources within
foreign the Philippines
corporations.
 Minimum Gross income 2%
Corporate
Income Tax on
Resident
Foreign
 Corporations.
 International Gross Philippine Billings 2.5%
Carrier
 Gross Philippine amount of gross revenue
Billings derived from carriage of
persons, excess baggage,
cargo and mail
originating from the
Philippines in a
continuous and
uninterrupted flight,
irrespective of the place
of sale or issue and the
place of payment of the
ticket or passage
documents: Provided,
That tickets revalidated,
exchanged and/or
indorsed to another
international airline
form part of the Gross
Philippine Billings if the
passenger boards a
plane in a port or point
in the Philippines. :
Provided, further, That
for a flight which
originates from the
Philippines, but
transshipment of
passenger takes place at
any port outside the
Philippines on another
airline, only the aliquot
portion of the cost of
the ticket corresponding
to the leg flown from the
Philippines to the point
of transshipment shall
form part of Gross
Philippine Billings.

 International ''Gross Philippine

Shipping. Billings' means gross
revenue whether for
passenger, cargo or mail
originating from the
 Philippines up to final
destination, regardless
of the place of sale or
payments of the passage
or freight documents.
International carriers
doing business in the
Philippines may avail of
a preferential rate or
exemption from the tax
herein imposed on their
gross revenue derived
from the carriage of
persons and their excess
baggage on the basis of
an applicable tax treaty
or international
agreement to which the
Philippines is a signatory
or on the basis of
reciprocity such that an
international carrier,
whose home country
grants income tax
exemption to Philippine
carriers, shall likewise be
exempt from the tax
imposed under this
provision
 Offshore The same treatment 10% on loan transaction
Banking Units. with the domestic with the residents
corporation.

 Tax on Branch interests, dividends, total profits applied or 15%

Profits rents, royalties, including earmarked for
Remittances. remuneration for remittance without any
technical services, deduction for the tax
salaries, wages, component thereof
premiums, annuities, (except those activities
emoluments or other which are registered
fixed or determinable with the Philippine
annual, periodic or Economic Zone
casual gains, profits, Authority)
income and capital gains
received by a foreign
corporation during each
taxable year from all
sources within the
 Philippines NOT
TREATED AS PROFIT
UNLESS THE SAME ARE
CONNECTED WITH THE
CONDUCT OF ITS TRADE
OR BUSINESS IN THE
PHILIPPINES.
 Regional or Exempt
area
headquarters
 Regional effective January 1, Taxable income 10% (before 2022)
operating 2022, regional operating
headquarters headquarters shall be 25% (2022- onwards)
subject to the regular
corporate income tax

TAX ON CERTAIN INCOMES RECEIVED BY A RESIDENT FOREIGN CORPORATION

CATEGORY EXCEPTIONS/ BASIS FOR TAX RATE TAX RATE

PROVISIONS
 Interest from Interest from any Interest 20%
Deposits and currency bank deposit
Yield or any and yield or any other
other monetary benefit from
Monetary deposit substitutes and
Benefit from from trust funds and
Deposit similar arrangements
Substitutes, and royalties derived
Trust Funds from sources within the
and Similar Philippines.
Arrangements  Interest income Interest income 15%
and Royalties. derived by a
resident foreign
corporation
from a
depository bank
under the
expanded
foreign
currency
deposit system
 Income Derived Income derived by a Interest income derived Exempt
under the depository bank from
Expanded currency transactions
Foreign with nonresidents
Currency offshore banking units
Deposit in the Philippines, local
 System. commercial banks,
foreign banks that may
be authorized by BSP.
EXCEPT net income
from such transactions
as may be specified by 25%
the Secretary of
Finance, upon
recommendation by the
Monetary Board to be
subject to the regular
income tax payable by
banks
Interest income from
foreign currency loans 10%
to residents
 Capital Gains EXCEPT shares sold or net capital gains 15%
from Sale of disposed of through the
Shares of Stock stock exchange.
Not Traded in
the Stock
Exchange.
 Intercorporate Dividends received by a Not subject to income
Dividends. resident foreign tax
corporation from a
domestic corporation
liable to tax under this
Code

TAX ON NONRESIDENT FOREIGN CORPORATION

CATEGORY EXCEPTIONS/PROVISIONS BASIS FOR TAX RATE TAX RATE

 Foreign all sources within the 25%

corporation not Philippines. such as Gross income
engaged in interests, dividends, rents, received
trade or royalties, salaries, premiums
business in the (except reinsurance
Philippines. premiums), annuities,
emoluments or other fixed
or determinable annual,
periodic or casual gains,
profits and income, and
capital gains.
EXCEPT Capital Gains from
Sale of Shares of Stock not
Traded in the Stock
 Exchange
 Nonresident Sources within the Gross income 25%
Cinematographi Philippines
c Film Owner,
Lessor or
Distributor.
 Nonresident gross rentals, lease 4.5%
Owner or Lessor or charter fees from
of Vessels leases or charters to
Chartered by Filipino citizens or
Philippine corporations, as
Nationals approved by the
Maritime Industry
Authority.
 Nonresident Rentals, charters and other Gross rentals or fees 7.5%
Owner or Lessor fees derived by a
of Aircraft, nonresident lessor of
Machineries and aircraft, machineries and
Other other equipment
Equipment.

TAX ON CERTAIN INCOMES RECEIVED BY A NONRESIDENT FOREIGN CORPORATION

CATEGORY EXCEPTIONS/ BASIS FOR TAX RATES TAX RATE

PROVISIONS
 Interest on Interest income 20%
Foreign Loans
 Intercorporate subject to the amount of cash and/or 15%
Dividends condition that the property dividends
country in which the received from a
nonresident foreign domestic corporation
corporation is
domiciled, shall allow a
credit against the tax
due from the
nonresident foreign
corporation taxes
deemed to have been
paid in the Philippines
equivalent to fifteen
percent (15%), which
represents the
difference between the
regular income tax and
the fifteen percent
(15%) tax on dividends
as provided in this
 subparagraph
 Capital Gains EXCEPT shares sold or net capital gains 15%
from Sale of disposed of through
Shares of the stock exchange.
Stock not
Traded in the
Stock
Exchange.