TAX PAYABLE

Taxes payable are the amount of money a company owes in federal, provincial
and municipal taxes. Harmonized sales tax(HST), income taxes and
property taxes all contribute to taxes payable and appear under liabilities on the
balance sheet.

Corporate Taxes
Tax Base For Resident and Foreign Companies
A foreign corporation that is duly licensed to engage in trade or business within
the Philippines is referred to as a "resident foreign corporation".
The Philippines adopt the United Nations Model Convention (together with the
OECD model) to identify a permanent establishment.

Tax Rate
Income Tax The rate is 30% on net income but there are some preferential rates and
exemptions (educational institutions and non-profit hospitals).

Tax on Regional Operating Headquarters (ROHQ) 10%

Minimum corporate income tax (MCIT) 2%

Imposed on gross income, MCIT is levied when the company has no
taxable income in a tax year (or when it has negative income) or when the
amount of MCIT due exceeds that of the corporate income tax.
Imposed where the CIT at 30% is less than 2% MCIT on gross income.
 Individual Taxes

Tax Base or Residents and Non-Residents

According to Philippine regulations, a resident alien is an individual who is
stateless or is a national of another country and who lives in the Philippines with
no definite intention as to length of stay, but who is not a mere transient or
sojourner (for example, an expat with an indefinite period contract).
A non-resident alien individual who comes to the Philippines and stays for more
than 180 days during any calendar year will be deemed a non-resident alien
engaged in trade or business in the Philippines.

Tax Rate

Income Tax Rates vary between 5% and 32%

From PHP 0 to 250,000 0%

From PHP 250,000 to 400,000 20%

From PHP 400,000 to 800,000 25%

From PHP 800,000 to 2 million 30%

From 2 million to 8 million 32%

Over PHP 8 million 35%

Fringe Benefit tax 35% (25% for non-resident alien not engaged in trade
(levied on benefits furnished to managerial and or business)
supervisory-level employees)

Tax on business income If an individual's gross sales/receipts and other non-

operating income are below PHP 3,000,000, he/she
may opt to be taxed 8% tax on gross sales/receipts
and other non-operating income in excess of PHP
250,000 in lieu of the standard graduated income tax
rates
 Accounting Practices and Accounting Rules

Tax Year
The fiscal year begins on 1 January and ends on 31 December of the same year.
A different fiscal year may be used.

Accounting Reports
The general balance sheet and/or the declaration writ ten under oath of the non
holding of an annual meeting, and the financial statements.
a journal and a ledger or their equivalents. The Philippine Tax Code mandates
taxpayers to keep

Publication Requirements
Companies must publish an annual financial report and submit it to the Securities
and Exchange Commission (SEC). Corporations, companies, partnerships or
persons whose gross quarterly sales, earnings, receipts or output exceed PHP
150,000 are required to have their books of accounts audited and examined
yearly by an independent Certified Public Accountant and their income tax
returns must be accompanied by audited financial statements.

Tax Rate For Foreign Companies

A domestic corporation is subject to tax on its worldwide income, whereas a
foreign resident corporation is subject to tax only on Philippine-source income (at
the same rates as local companies).
Non-resident foreign corporations are generally taxed on gross income received
from sources within the Philippines, at a 30% rate. Interest on foreign loans is
taxed at 20%.