TAX CODE

1) BASIC INCOME TAX - GRADUATED INCOME TAX TABLE

Net Taxable Income Rate

but not
over over
1 - P250,000 0%
20% of the
excess over
2 P250,000 P400,000 P250,000
P30,000 + 25%
of the excess over
3 P400,000 P800,000 P400,000
P130,000 + 30%
of the excess over
4 P800,000 P2,000,000 P800,000
P490,000 + 32%
of the excess over
5 P2,000,000 P8,000,000 P2,000,000
P2,410,000 +
35% of the excess
6 P8,000,000 - over P8,000,000

2) FINAL WITHHOLDING TAX

NRA- NRA-
RC NRC RA ETB NETB
a Interest
Interest on Philippine currency bank deposit, yield or other monetary benefit from deposit
substitute, trust fund and similar arrangement 20% 20% 20% 20% 25%
Interest on foreign currency deposit under the expanded foreign currency deposit system 15% Exemp 15% Exemp Exempt
 (FCDS) t t
Exemp Exemp Exemp Exemp
Interest from long-term deposit or investments with maturity of not less than 5 years t t t t 25%
Proceeds of pre-terminated long-term deposit or investments, with holding period of:
More than 5 years Exemp Exemp Exemp Exemp
t t t t 25%
4 years to less than 5 years 5% 5% 5% 5% 25%
3 years to less than 4 years 12% 12% 12% 12% 25%
Less than 3 years 20% 20% 20% 20% 25%

b Royalties
Royalties from books, literary works and musical compositions 10% 10% 10% 10% 25%
Royalties (others) 20% 20% 20% 20% 25%

c Prizes
tax tax tax tax
Prizes of P10,000 or less table table table table 25%
Prizes over P10,000 20% 20% 20% 20% 25%

d Winnings
Exemp Exemp Exemp Exemp
PCSO and Lotto winnings of P10,000 or less t t t t 25%
Exemp
PCSO and Lotto winnings over P10,000 20% 20% 20% t 25%
Winnings (others) 20% 20% 20% 20% 25%

e Dividends - refer to "Dividends" sheet

r
f Share in net income
Share in the distributable net income after tax of a partnership (except GPPs), associations, 10% 10% 10% 20% 25%
 joint accounts, taxable joint ventures and consortiums

3) CAPITAL GAINS TAX

On sale of shares of stock of a domestic corporation not listed and traded, held as capital
a asset (net capital gains) 15% 15% 15% 15% 15%

b On sale of real property in the Philippines held as capital asset (highest of SP, FMV, ZV) 6% 6% 6% 6% 6%

Notes on Minimum Wage Earners (MWEs)

Revenue Regulations (RR) No. 11-2018 provides that for minimum wage earners, their statutory minimum wage, holiday pay, overtime pay, night shift differential pay, and
hazard pay shall be exempt from income tax and
withholding tax.

Additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the mandatory non-taxable amount of Php90,000, taxable allowances, and
other taxable income earned by a minimum wage
earner shall, however, be subject to withholding
tax using the revised withholding tax table under
the TRAIN Law.

In other words, the income tax exemption of minimum wage earners covers only their basic pay (statutory minimum wage), overtime pay, holiday pay, night shift differential
pay, hazard pay, and the non-taxable benefits up to
a maximum amount of Php90,000. Any additional
compensation and benefits are not covered by the
exemption and
shall therefore be subject to tax.
Gross Income

INCLUSIONS

Compensation for services in whatever

form paid, including, but not limited to
fees, salaries, wages, commissions, and
1 similar items
Gross income derived from the conduct
of trade or business or the exercsie of a
2 profession

3 Gains derived from dealings in property

4 Interests

5 Rents

6 Royalties

7 Dividends

8 Annuities

9 Prizes and winnings*

10 Pensions
Partner's distributive share from the net
income fo the general professional
11 partnership

*Prizes and
winnings

Within Without

Prizes
tax
P10,000 and below table tax table

More than P10,000 20% tax table

Winnings

PCSO and lotto not exceeding P10,000 exempt N/A

PCSO and lotto exceeding P10,000 20% N/A

Other winnings 20% tax table

EXCLUSION
S

Life insurance - the proceeds of life

insurance policies paid to the heirs or
beneficiaries upon the death of the
insured, whether in a single sum or
1 otherwise, but if such amounts are held
by the insurer under an agreement to pay
interest thereon, the interest payments
shall be included in gross income

2 Amount received by insured as return

of premium - the amount received by
 the insured, as a return of premiums paid
by him under life insurance, endowment,
or annuity contracts,
either during the term or at maturity of
the term mentioned in the contract or
upon surrender of the contract

Gifts, bequests, and devises - the value

of property acquired by gift, bequest,
devise, or descent: Provided, however,
that income from such property, as well
3 as gift, bequest, devise or
descent of income from any property
in cases of transfers of divided interest,
shall be included in gross income

Compensation for injuries or sickness

- amounts received, through Accident or
Health Insurance or under Workmen's
Compensation Acts, as compensation
4 for personal injuries or
sickness, plus the amounts of any
damages received, whether by suit or
agreement, on account of such injuries
or sickness

5 Income exempt under Treaty

Retirement benefits, pensions,

6 gratuities
Retirement benefits received under RA
a 7641
 Any amount received by an official or
employer or by his heirs from the
employer as a consequence of
separation of such official or employees
b from the service of the employer
because of death, sickness or other
physical disability or for any cause
beyond the control of the said official
or employee
Social security benefits, retirement
grautities, pensions and other similar
benefits received by resident or
nonresident citizens of the Philippines
c or aliens who come to reside
permanently in the Philippines from
foreign government agencies and
other institutions, private or public
Payments of benefits due or to become
due to any person residing in the
Philippines under the laws of the United
States administered by the United
d States Veterans Administration
Benefits received from or enjoyed under
the Social Security System in
accordance with the provisions of RA
e 8282
Benefits received from the GSIS under
f RA 8291

7 Miscellaneous items

a Income derived by foreign government

Income derived by the government or its
b political subdivisions (local)
 Prizes and awards - prizes, awards made
primarily in recognition fo religious,
charitable, scientific, educational,
c artistic, literary or civic achievement
Prizes and awards in sports competition
- all prizes and awards granted to
athletes in local and international
sports competitions and tournaments
d whether held in the
Philippines or abroad and sanctioned by
their national sports assocations
13th month pay and other benefits -
the total exclusion shall not exceed
e P90,000
GSIS, SSS, Medicare and other
f contributions
Gains from the sale of bonds,debentures
or other certificate of indebtedness with
g a maturity of more than 5 years
Gains from redemption of shares in
h mutual fund
Income derived from the sale of gold
i pursuant to RA 7076

Creditable Withholding Tax (CWT)

a) Withholding Tax on Compensation

Withholding tax table

https://www.bir.gov.ph/index.php/tax-information/withholding-tax.html
Withholding tax calculator

https://www.bir.gov.ph/images/tax_calculator/wt_calculator.html

b) Expanded Withholding Tax (EWT)

List of items subject to EWT (21 items)

https://taxacctgcenter.ph/items-subject-expanded-withholding-tax-train-ra-10963-philippines/

1. Withholding tax on professional fees, talent fees, etc for services rendered

Individuals

Annual income not exceeding Php3M 5%

Annual income exceeding Php3M 10%

Corporations

Annual income not exceeding P720k 10%

Annual income exceeding P720k 15%

2. Withholding tax on rentals of real and personal properties: 5% of gross rentals

3. Withholding tax on income payments to certain contractors: 2% of gross payments

General engineering constructions, general building contractors, specialty contractors, other

contractors

4. Withholding tax on income payments to beneficiaries of estates: 15% of income distribution

5. Withholding tax on income payments to partners of general professional partnership (GPP)

Annual income not exceeding P720k 10%

Annual income exceeding P720k 15%

6. Income distribution to the beneficiaries of estate and trusts: 15% on the income distributed