Simplified Rules on Income Within and Without (Section 40 of the NIRC):

Income Test of Source of Income

1. Interest Residence of the debtor
2. Dividends Income within
a. From DC 1. Income within if 50% or more of the
b. From foreign corporation gross income of the FC for the
preceding 3 years prior to the
declaration of dividend, was derived
from sources with the Philippines. [but
only to the amount that bears with the
percentage]
2. Income without if less than 50% subject
to the same condition.
(Use also in other unallocated
income/expenses)
Formula:

3-year Gross Income from within

= 50% Rule
3-year Gross Income from all sources

3. Services Place of performance Service performed in the

4. Rentals
5. Royalties
6. Sale of Real Property
7. Sale of Personal Property
a. Produced within and sold without
(vice versa)
b. Purchased within and sold without
(vice versa)
8. Shares of stocks in a DC
Philippines
Location of property located in the Philippines
Place of use of intangibles used in the
Philippines
Location of property located in the Philippines
Partly within and without
Entirely in the country sold
Entirely from sources within
Taxability of Income Simplified

Taxpayer Items on Gross Income

Within Without
1. RC  
2. RA, NRC, NRAETB, NRANETB  X
3. DC  
4. RFC and NRFC  X

Income Taxation Simplified

Base of Tax Icome Tax Rates NIRC

1. RC Taxable Income 0% - 35% or 8% Sec. 24 (A)(2)(a)(b)(c)
Gross sales or gross
receipts
2. NRC Same Same Same
3. RA Same Same Same
4. NRAETB Same Same Sec. 25 (A)
5. NRANETB Gross Income 25% Sec. 25 (B)
6. AEMOP Gross Income 15% Sec. 25 (C)(D)(E)
7. DC Taxable Income 30% Sec. 27(A)
8. PEIH Taxable Income 10% Sec. 27 (B)
9. RFC Taxable Income 30% Sec. 28 (A)
10. IC-RFC GPB 2.5% Sec. 28 (A)(a)(b)
11. OBU-ROHM Interest Income 10% Sec. 28 (A)(4)
12. NRFC Gross Income 30% Sec. 28 (B)(1)
13. NRCFOLD- Gross Income 25% Sec. 28 (B)(2)
NRFC
14. NROLV-NRFC Gross Rental 4.5% Sec. 28 (B)(3)
15. NROLAMO- Gross Rental 7.5% Sec. 28 (B)(4)
NRFC
Individual Income Taxation Simplified

 - Taxable NIT – Net Income Tax TI- Taxable Income

X – Not taxable GIT – Gross Income Tax GI – Gross Income
Individual Taxpayer Source of Income Kind of Tax Tax Base Tax Rate
Within Without
1. RC   NIT/ OGIT T.I/ GS or 0%-35% or
GR 8%
2. NRC  X NIT/ OGIT T.I/ GS or 0%-35% or
GR 8%
3. OCW  X NIT/ OGIT T.I/ GS or 0%-35% or
GR 8%
4. RA  X NIT/ OGIT T.I/ GS or 0%-35% or
GR 8%
5. NRAETB  X NIT/ OGIT T.I/ GS or 0%-35% or
GR 8%
6. NRANETB  X GIT G.I 25%

Capital Gains Tax Simplified

TAXPAYERS RC, NRC, RA, NRAETB, and NRANETB

1. On the Gross Selling Price or Fair 6%
Market Value, real property Located
within and classified as Capital asset
2. On the net capital gain on shares of 15%
stock not listed and traded through
stock exchange