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Tax Rate A. For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession
Tax Rate A. For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession
Tax Rate A. For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession
A. For Individuals Earning Purely Compensation Income and Individuals Engaged in Business
and Practice of Profession
P10,000 5%
P500,000 P125,000 + 32% of the Excess over P500,000 in 2000 and onward
1. Domestic Corporations:
a. In General 30% (effective Jan. 1, Net taxable income from all sources
2009)
2. Proprietary Educational Institution 10% Net taxable income provided that the gross
income from unrelated trade, business or
other activity does not exceed 50% of the
total gross income
3. Non-stock, Non-profit Hospitals 10% Net taxable income provided that the gross
income from unrelated trade, business or
other activity does not exceed 50% of the
total gross income
7. Exempt Corporation
a. On Exempt Activities 0%
12. Offshore Banking Units (OBUs) 10% Gross Taxable Income On Foreign Currency
Transaction
13. Foreign Currency Deposit Units (FCDU) 10% Gross Taxable Income On Foreign Currency
Transaction
Passive Income
1. Interest from currency deposits, trust funds and deposit substitutes 20%
- In general 20%
3. Prizes (P10,000 or less ) 5%
7. On capital gains presumed to have been realized from sale, exchange or other disposition
6%
of real property (capital asset)
8. On capital gains for shares of stock not traded in the stock exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%
9. 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
Exempt
Upon pretermination 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
1) What is income?
Income means all wealth, which flows into the taxpayer other than as a mere return of capital.
Taxable income means the pertinent items of gross income specified in the Tax Code as
amended, less the deductions and/or personal and additional exemptions, if any, authorized for
such types of income, by the Tax Code or other special laws.
Compensation for services, in whatever form paid, including but not limited to
fees, salaries, wages, commissions and similar item
Gross income derived from the conduct of trade or business or the exercise of
profession
Gains derived from dealings in property
Interest
Rents
Royalties
Dividends
Annuities
Prizes and winnings
Pensions
Partner's distributive share from the net income of the general professional
partnerships
o
Life insurance
Amount received by insured as return of premium
Gifts, bequests and devises
Compensation for injuries or sickness
Income exempt under treaty
Retirement benefits, pensions, gratuities, etc.
Miscellaneous items
o
o income derived by foreign government
o income derived by the government or its political subdivision
o prizes and awards in sport competition
o prizes and awards which met the conditions set in the Tax Code
o 13th month pay and other benefits
o GSIS, SSS, Medicare and other contributions
o gain from the sale of bonds, debentures or other certificate of
indebtedness
o gain from redemption of shares in mutual fund
Except for taxpayers earning compensation income arising from personal services rendered
under an employer-employee relationships where the only deduction provided that the gross
family income does not exceed P250,000 per family is the premium payment on health and/or
hospitalization insurance, a taxpayer may opt to avail any of the following allowable deductions
from gross income:
a)Optional Standard Deduction - an amount not exceeding 40% of the net sales for individuals
and gross income for corporations; or
Expenses
Interest
Taxes
Losses
Bad Debts
Depreciation
Depletion of Oil and Gas Wells and Mines
Charitable Contributions and Other Contributions
Research and Development
Pension Trusts
In addition, individuals who are either earning compensation income, engaged in business or
deriving income from the practice of profession are entitled to personal and additional
exemptions as follows:
Personal Exemptions:
For single individual or married individual judicially decreed as legally separated with no
qualified dependents………………………………………P 50,000.00
Note: In case of married individuals where only one of the spouses is deriving gross income,
only such spouse will be allowed to claim the personal exemption.
Additional Exemptions:
The husband who is deemed the head of the family unless he explicitly waives
his right in favor of his wife
The spouse who has custody of the child or children in case of legally separated
spouses. Provided, that the total amount of additional exemptions that may be
claimed by both shall not exceed the maximum additional exemptions allowed
by the Tax Code.
The individuals considered as Head of the Family supporting a qualified
dependent
Individuals
Resident citizens receiving income from sources within or outside the Philippines
b. An individual whose gross income does not exceed his total personal and additional
exemptions
c. An individual whose compensation income derived from one employer does not exceed P
60,000 and the income tax on which has been correctly withheld
d. An individual whose income has been subjected to final withholding tax (alien employee as
well as Filipino employee occupying the same position as that of the alien employee of regional
headquarters and regional operating headquarters of multinational companies, petroleum
service contractors and sub-contractors and offshore-banking units, non-resident aliens not
engaged in trade or business)
e. Those who are qualified under “substituted filing”. However, substituted filing applies only if
all of the following requirements are present :
a) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact
of his physical presence abroad with a definite intention to reside therein
b) A citizen of the Philippines who leaves the Philippines during the taxable year to reside
abroad, either as an immigrant or for employment on a permanent basis
c) A citizen of the Philippines who works and derives income from abroad and whose
employment thereat requires him to be physically present abroad most of the time during the
taxable year
d) A citizen who has been previously considered as a non-resident citizen and who arrives in the
Philippines at any time during the year to reside permanently in the Philippines will likewise be
treated as a non-resident citizen during the taxable year in which he arrives in the Philippines,
with respect to his income derived from sources abroad until the date of his arrival in the
Philippines.
An individual citizen of the Philippines who is working and deriving income from abroad as an
overseas Filipino worker is taxable only on income from sources within the Philippines;
provided, that a seaman who is a citizen of the Philippines and who receives compensation for
services rendered abroad as a member of the complement of a vessel engaged exclusively in
international trade will be treated as an overseas Filipino worker.
11) How is Income Tax payable of individuals (resident citizens and non-resident citizens)
computed?
Income Tax Due: Tax withheld (per BIR From 2316/2304) P ___________
Through withholding
Pay the balance as you file the tax return, computed as follows: