Resident citizens (RC):

Passive income (PI) from within the Phils. - Final Tax (20%)

Interest on bank deposits (peso currency): 20%

Interest on bank deposits (foreign currency): 15%
Interest on long term deposits not pre-terminated for 5 yrs: EXEMPT, If pre-terminated on the 4th yr rate is 5%,
pre-terminated on the 3 rd yr rate is 12%, pre-terminated prior to 3 yrs, back to regular rate of 20%

5 years or more = exempt

4 years but less than 5 = 5%
3 years but less than 4 = 12%
Less than 3 years = 20%

Royalties: 20% except for literary and musical compositions 10%

PCSO/LOTTO winnings: not exceeding P 10,000: EXEMPT; if exceeding P 10,000.00 subject to 20% FWT;
Other PRIZES AND WINNINGS: 20% except prizes and winnings of P 10,000.00 or less which are subject to
NIT or 8%;

PRIZES AND AWARDS EXCLUDED FROM COMPUTATION OF GI: NO INCOME TAX

1. Prizes and awards in sports competitions sanctioned by the national sports commission;
2. Prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary,
or civic achievements but only if the recipient was selected without any action on his part to enter the contest or pro-
ceeding and the recipient is not required to render substantial future services as a condition to receiving the prize or
award;

Passive income (PI) from outside the Phils. - all PI received by a resident citizen from outside of the Philippines are
subject to Net Income Tax (NIT) OR 8% RATE , not FWT;

Dividends:
1. Issued by DC – 10% Final Tax
2. Issued by FC – NIT OR 8% RATE

Sale of Shares of Stocks treated as capital assets

1. Gains from Sale of capital shares of stocks - Capital Gains Tax (CGT of 15%/FWT) if not traded thru the local
stock exchange. If traded thru the stock exchange, .60 of 1% of the GSP (percentage tax under Section 127 of the
NIRC);
2. Gains from Sale of shares of stocks classified as ordinary asset – NIT OR 8% RATE

Notes:
Sale of shares of stocks in a foreign corporation, all gains are subject to NIT OR 8% RATE;

Sale of shares of stocks in DC and FC, in case of loss ( ex: if sold for insufficient consideration), if untraded thru the
local stock exchange, impose donor’s or estate tax on the difference bet the FMV and the consideration. However, if
sold thru the local stock exchange, % tax plus donor’s or estate tax. (Basis: Section 24 C in relation to Sections 85,
100, 127 NIRC). Note that if the sale is bonafide sale and lacking in donative intent, no donor’s or estate tax compo-
nent;

Sale of Real Property

1. If the property is within the Philippines and capital in character whether sold at a gain or loss - 6% CGT (FWT).
Otherwise, NIT or 8% RATE if an ordinary asset.
2. If the property is outside the Philippines it is always subject to NIT or 8% RATE whether ordinary or capital asset.
3. If property (whether located within or outside of the Philippines) is sold for insufficient consideration and not
property described in Section 24(D), impose donor’s tax (Section 100) or estate tax (Section 85g) subject to the rule
on bonafide sale lacking in donative intent; Note that if the sale is bonafide sale and lacking in donative intent, no
donor’s or estate tax component;
Exemption from CGT for sale of real property: Requisites [Sec 24 (D)(2), NIRC]:
i. The real property must be the actual principal residence of the taxpayer/seller;
ii. Seller must inform the BIR of his intention to avail of the exemption (within 30 days from sale);
iii. Seller must build or purchase another principal residence within 18 months from sale;
iv. Proceeds from the sale should be used in building/purchasing new principal residence;
v. 6% CGT will be applied proportionately to proceeds not used for new principal residence.