CLASSIFICATION OF INCOME

1. (NORMAL TAX – TAXABLE INCOME)

2. (NORMAL TAX – TAXABLE
INCOME

3.
(FINAL TAX) (PIDRO)
4.
(FINAL TAX) (SHARES NOT
TRADED AND REAL PROPERTY AS CAPITAL ASSET)

5. OTHERS – NORMAL TAX

TAXABLE INCOME DEFINED
SPECIFIED
AUTHORIZED

FORMULA:
GROSS INCOME P XXX
ALLOWABLE DEDUCTIONS (XXX)
TAXABLE INCOME P XXX
TAXABLE INCOME

(SEC. 32 – 33)
(SEC. 34 – 42)
(SEC. 31)
TAX ON INDIVIDUALS

o RC; NRC; RA; NRA ENGAGED IN BUSINESS,

o
o
o

o NRA NOT ENGAGED IN BUSINESS

o
 TAX TABLE (GRADUATED)- SEC. 24A
EFFECTIVE JANUARY 1, 2018 TO DECEMBER 31, 2022
NOT OVER P 250,000 0%
OVER P 250,000 BUT NOT OVER P 400,000 ……….. 20% OF THE EXCESS OVER P 250,000
OVER P 400,000 BUT NOT OVER P 800,000 ………..P 30,000 + 25% OF THE EXCESS OVER P 400,000
OVER P 800,000 BUT NOT OVER P 2,000,000 ……...P130,000 + 30% OF THE EXCESS OVER P 800,000
OVER P 2,000,000 BUT NOT OVER P 8,000,000 ……P 490,000 + 32% OF THE EXCESS OVER P 2,000,000
OVER P 8,000,000 …………………………………..P2,410,000 + 35% OF THE EXCESS OVER P 8,000,000

EFFECTIVE JANUARY 1, 2023 AND ONWARDS – DIFFERENT TAX TABLE

NORMAL/
o BASIC TAX (TAXABLE INCOME)
1.
2.
3.
4.
o
THE SAID INCOME ARE
TAXABLE

o
o FOR PROFESSIONALS OR SELF - EMPLOYED:
o

o
o FOR MIXED INCOME EARNERS:
o
o
o

o FOR MORE THAN VAT THRESHOLD, AND TAXPAYER SUBJECT TO

OTHER PERCENTAGE TAX OTHER THAN SEC. 116, THE GRADUATED
TAX RATE SHALL BE USED.
NOT ALLOWED TO AVAIL 8%

•
•
•
•
•
•
1. SPECIAL EMPLOYEES
a.

b.
c.

2.

3. THAT THE TAX RATE IS SEC. 24A (TAX TABLE)

TAXES ON INDIVIDUALS (GPP)

o
 DC and RFC NRFC

Regular Corporate 30% of net taxable 30% of gross

Income Tax (RCIT) income (Sec. 27A income (Sec. 28B)
& 28A)
Minimum 2% of gross income N/A
Corporate Income (Sec. 27E & 28A(2))
Tax (MCIT)
Optional Standard 40% of gross N/A
Deduction in liue of income (Sec. 34L)
itemized deduction
o REGULAR RATE OF 30% OF TAXABLE INCOME EXCEPT:
o

THE TAX IS
10% OF THE TAXABLE INCOME.

o GOCC, AGENCIES OR INSTRUMENTALITIES TAXABLE (PROPRIETARY)

EXCEPT:
o
o
o MINIMUM CORPORATE INCOME TAX (MCIT) 2% OF THE GROSS
INCOME

o
o

o
o
o

o
o

(HENIO)

NOTE: IN SERVICE BUSINESS, FOR PURPOSES OF MCIT, GROSS INCOME = GROSS

SALES/RECEIPTS – COST OF SERVICE.
1. 2.5% OF
GROSS BILLINGS,

2. 10% FROM INTEREST INCOME

SPECIAL RESIDENT FOREIGN CORPORATION
o GROSS PHILIPPINE BILLINGS FOR INTERNATIONAL AIR CARRIER
✓

✓
SPECIAL RESIDENT FOREIGN CORPORATION

o GROSS PHILIPPINE BILLINGS UNDER INTERNATIONAL SHIPPING CARRIER

o
o OFFSHORE BANKING UNITS
NON-RESIDENTS,

EXEMPT

o RESIDENTS
OTHER THAN OFFSHORE BANKING UNITS, LOCAL COMMERCIAL BANKS, INCLUDING LOCAL
BRANCHES OF FOREIGN BANKS, IS 10% FINAL TAX RATE.
SPECIAL RESIDENT FOREIGN CORPORATION
o TAX ON BRANCH PROFITS REMITTANCES 15% BASED ON TOTAL PROFITS

o
o REGIONAL OR AREA HEADQUARTERS (SUPERVISORY,
COMMUNICATING, AND COORDINATING CENTER) EXEMPT

o REGIONAL OPERATING HEADQUARTERS 10% OF TAXABLE

INCOME
NON-RESIDENT FOREIGN CORPORATION
o 30% OF THE GROSS
INCOME

o
o
25% OF GROSS INCOME
o
– 4.5% OF GROSS INCOME
o
7.5% OF THE GROSS INCOME
JOINT VENTURE OR CONSORTIUM

•
TAXES ON CORPORATIONS (IAET)

o 10% OF THE IMPROPERLY ACCUMULATED TAXABLE INCOME;

o
TAXES ON CORPORATIONS (IAET)

o
o
o
o

o
TAXES ON CORPORATIONS (IAET)

✓
✓
✓
✓
o
✓
✓
o
1. NOT
FOR PROFIT

2.

WITHOUT PROFIT

3. FOR THE EXCLUSIVE

BENEFIT OF THE MEMBERS

4. BENEFIT OF ITS
MEMBERS
5. EXCLUSIVELY
FOR RELIGIOUS, CHARITABLE, SCIENTIFIC, ATHLETIC, OR CULTURAL PURPOSES OR FOR THE
REHABILITATION OF VETERANS

6. NOT ORGANIZED
FOR PROFIT

7. NOT ORGANIZED FOR PROFIT

8. NONSTOCK AND NONPROFIT

9.
10.

SOLE PURPOSE OF
MEETING ITS EXPENSES;

11.
MARKETING THE PRODUCTS OF ITS MEMBERS

❖ THE INCOME OF WHATEVER KIND AND CHARACTER OF THE FOREGOING ORGANIZATIONS FROM ANY
OF THEIR PROPERTIES, REAL OR PERSONAL, OR FROM ANY OF THEIR ACTIVITIES
CONDUCTED FOR PROFIT, REGARDLESS OF THE DISPOSITION MADE OF SUCH INCOME, SHALL BE
SUBJECT TO TAX.