FINAL INCOME TAXATION

A. Non-resident aliens General final tax rate

NRA-NETB 25%

NRFC 30%

B. Interest income or yield Individuals Corporations

Short term deposits 20% 20%

Long term deposits/investment

Exempt 20%
certificates

Tax on pretermination of long term deposits of individuals

Holding period Final tax

< 3 years 20%

3 years to < 4 years 12%

4 years to < 5 years 5%

5 years or more 0%

Foreign currency deposits with FCDB

Taxpayer Individuals Corporations

Residents 7.5% (15%) 7.5% (15%)

Non-residents Exempt Exempt

C. Dividends Individuals Corporations

Domestic 10% Exempt

Foreign Reg tax Reg tax

D. Royalties Individuals Corporations

Books, literary works, musicals 10% 20%

Books sold on e-copies 20% 0%

Cinematographic films of NRA-ETB,
25% 0%
NRA-NETB and NRFC

Other sources 20% 20%

E. Prizes Individuals Corporations

Exceeding Php 10,000 20% Reg tax

Not exceeding Php 10,000 Reg tax Reg tax

F. Winnings Individuals Corporations

PCSO or lotto winnings Exempt Exempt

Other winnings in general 20% Reg tax

CAPITAL GAINS TAXATION

Tax rates

Gain on the sale, exchange and other disposition of 5% general tax rate and 10% for any excess over Php
domestic stock directly to the buyer 100,000

Gain on the sale exchange and other disposition of real

6%
property of all individuals in the Philippines

REGULAR INCOME TAXATION

Corporations 30%

NRANETB 25% FTx on gross income

Special aliens/employees 15% FTx on gross income

Special tax regimes

PEZA-registered enterprises 5%
TIEZA-registered enterprises 5%

Optional standard deductions

Individuals 40% of GI xcluding NON-OI

Corporations 40% of GI

Regular income tax model

Gross Income x

Less: Allowable deductions x

Personal exemptions x

Taxable income x

Tax reporting of compensation income

Gross compensation income x

Less: Non-taxable compensation x

Gross taxable compensation income x

Less: Personal exemption x

Net taxable compensation income x

Tax reporting of business/professional income

A. INDIVIDUAL TAXPAYER

Net sales/revenues/receipts/fees x

Add: Other taxable income from operations not subject to FTx x

Total sales/revenues/receipts/fees x

Less: Cost of sales/services x

Gross income from business/profession x

Add: Non-operating income x

Total gross income x

Less: Allowable deductions x

Taxable income x

B. CORPORATE TAXPAYER

Net sales/revenues/receipts/fees x

Less: Cost of sales/services x

Gross income from operations x

Add: Other taxable income not subject to FTx x

Total gross income x

Less: Allowable deductions x

Taxable income x

Gains in dealings from properties

Selling price x

Less: Tax basis or adjusted basis of asset disposed x

Gain or loss x

Cash basis deductions

Cash expenses (paid) x

Amortization of prepaid expenses x

Depreciation of properties x

Cash basis deductions x

Accrual basis deductions

Accrued expenses (paid or unpaid) x

Amortization of prepaid expenses x

Depreciation of properties x

Accrual basis deductions x

Net operating loss carry-over

Gross income subject to RTx x

Less: Total deductions excluding NOLCO x

NOLCO x

1. Gains from dealings in properties

NON-OPERATING INCOME 2. Income distribution from GPP, taxable trust/estate or from exempt
joing venture

3. Casual active income

GICP
4. Passive income not subject to FTx

1. Gifts, bequests, devise, descent

2. Income exempt under treaty

EXCLUSION FROM GROSS INCOME
3. Retirement benefits, pensions, gratuities

4. Proceeds from life insurance policy

5. Compensation for injuries or sickness

GIRL C RM 6. Amount received by the insured as a return of premium

7. Miscellaneous items

1. Compensation for services in whatever form paid

2. Gross income in the conduct of trade/business/profession

INCLUSIONS IN GROSS INCOME SUBJECT
3. Gains from dealings in properties
TO REGULAR TAX
4. Interest

5. Rents
 6. Royalties

7. Dividends

8. Annuities

9. Prizes and winnings

10. Pensions

11. Income distribution from GPP

1. Basic pay
EXEMPT BENEFITS OF MINIMUM WAGE
2. Holiday pay
EARNERS
3. Hazard pay

4. Overtime pay
BaHo HON
5. Night shift differential

1. Monetized unused vacation leave credits of private employees not

exceeding 10 days during the year

2. Monetized unused vacation and sick leave credits paid to government

officials and employees

3. Medical cash allowance to dependents of employees not exceeding

P750 (P1,500) per employee per semester or P125 (P250) per month

4. Rice subsidy not exceeding P1,500 (P2,000) or 1 sack of 50 kg rice per

month amounting to not more than P1,500 (P2,000)

5. Uniform and clothing allowance not exceeding P5,000 (P6,000) per

annum
DE MINIMIS BENEFITS
6. Actual medical assistance e.g. medical allowance to cover medical and
healthcare needs, annual medical/executive check-up, maternity
assistance and routine consultations not exceeding P10,000 per annum

7. Laundry allowance not exceeding P300 per month

8. Employee achievement award e.g. for length of service or safety

achievement, which must be in the form of tangible property other than
cash or gift certificates with an annual monetary value not exceeding
P10,000 received by the employee under an established written plan
which does not discriminate in favor of highly paid employees

9. Gifts given during Christmas or major anniversary celebrations not

exceeding P5,000 per employee per annum
 10. Daily meal allowance for overtime work and night or graveyard shift
not exceeding 25% of the basic minimum wage on a per region basis

11. Benefits received by an employee by virtue of a collective bargaining

agreement (CBA) or productivity incentive schemes provided that the
total annual monetary value from both CBA and productivity incentive
scheme combined does not exceed P10,000 per employee per taxable
year

1. Housing benefits

2. Expenses

3. Vehicles of any kind

FRINGE BENEFITS
4. Household personnel

5. Interest for the difference of the market rate (12%) and the actual
interest granted

6. Membership fees, social and athletic club fees

7. Holiday and vacation expenses

HEV HIM HEEL 8. Expense for foreign travel

9. Educational assistance

10. Life, health and other non-life insurance premiums

1. Bad debts

2. Interest
REGULAR ALLOWABLE ITEMIZED
3. Taxes
DEDUCTIONS
4. Expenses

5. Depreciation

6. Depletion

7. Loss

BITE DeDe LOSS CPR 8. Charitable and other contributions

9. Pensions and trusts

10. Research and development