Taxation 1

Liceo de Cagayan University Professor: Judge Gil Bollozos, CPA

Group Members:

April Rose F. Flores Menerva B. Calapan

Charisse T. Jacot Myra Mae M. Cahanap

Christy C. Bacoto Nasrodhen E. Yusop

Lhey Ainesyl F. Cantiveros Regine A. Lodonia

Ma. Denise Eve Q. Durias Rene M. Cabahug, Jr.

SEC. 23. GENERAL PRINCIPLES OF INCOME TAXATION IN THE PHILIPPINES

SOURCE OF INCOME

TAXPAYER
Without (Outside) the
Within the Philippines Philippines
Resident Citizen YES YES
Non-Resident Citizen and Overseas Contract
YES NO
Worker
Resident Alien YES NO
Non- Resident Alien

Engaged in Trade or Business within the

Phils.
YES NO
Not Engaged in Trade or Business within
the Phils.
Domestic Corporation YES YES

Foreign Corporation YES NO

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Taxation 1
Liceo de Cagayan University Professor: Judge Gil Bollozos, CPA

SEC. 24. INCOME TAX RATES

(A) Income Tax on Individual Citizen and Individual Resident Alien of the Philippines.
1. For Compensation Income Earners
*Tax Schedule Effective January 1, 2018 until December 31, 2022:

Taxable Income
Tax Rate
Over But not over

- 250,000.00 0%

250,000.00 400,000.00 20% of the excess over P250,000

400,000.00 800,000.00 P30,000 + 25% of the excess over P400,000

800,000.00 2,000,000.00 P130,000 + 30% of the excess over P800,000

2,000,000.00 8,000,000.00 P490,000 + 32% of the excess over P2,000,000

8,000,000.00 P2,410,000 + 35% of the excess over P8,000,000

*Tax Schedule Effective January 1, 2023 and onwards:

Taxable Income
Tax Rate
Over But not over

- 250,000.00 0%

250,000.00 400,000.00 15% of the excess over P250,000

400,000.00 800,000.00 P22,500 + 20% of the excess over P400,000

800,000.00 2,000,000.00 P102,500 + 25% of the excess over P800,000

2,000,000.00 8,000,000.00 P402,500 + 30% of the excess over P2,000,000

8,000,000.00 P2,202,500 + 35% of the excess over P8,000,000

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Taxation 1
Liceo de Cagayan University Professor: Judge Gil Bollozos, CPA

2. For Purely Self-Employed Individual and/or Professionals

Gross Sales/ Receipts & Other Non-Operating

Income Tax Rate

Option 1: 8% of gross sales/receipts & other

non-operating income in excess of P250,000
Not exceeding P3 million
Option 2: Graduated tax rates under Sec. 24A on
Compensation Income

3. For Mixed Income Earners

Type of Income Tax Rate

Graduated tax rates under Sec. 24A on

1. Compensation Income
Compensation Income

2. Income from business or practice of profession

a. If gross sales/receipts & other non-operating
Option 1: 8% of gross sales/receipts & other
income do not exceed P3 million
non-operating income
Option 2: Graduated tax rates under Sec. 24A on
Compensation Income

b. If gross sales/receipts & other non-operating Graduated tax rates under Sec. 24A on
income exceed P3 million Compensation Income

(B) Rate of Tax on Certain Passive Income derived from sources within the Philippines.

Passive Income Tax Rate

1. Cash and/or Property Dividends 10%

2. Interest or yield of bank deposits, deposit

20%
substitutes and from trust funds

3. Interest income received by a resident individual

taxpayer (except nonresident individual) under the 15%
expanded foreign currency deposit system

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Taxation 1
Liceo de Cagayan University Professor: Judge Gil Bollozos, CPA

4. Interest or yield from a long-term (at least 5 years)

tax exempt
deposit or investment

5. Interest or yield from a Pre-terminated long-term

deposit or investment:
*With a remaining maturity of 4 to less than 5 yrs 5%
*With a remaining maturity of 3 to less than 4 yrs 12%
*With a remaining maturity of less than 3 yrs 20%

6. Royalties, except from books, literary works and

20%
musical compositions

7. Royalties from books, literary works and musical

10%
compositions

8. Prizes up to P10,000 tax exempt under Sec 24 on graduated tax rates

9. Prizes exceeding P10,000 20%

10. Winnings other than Sweepstakes and Lotto

20%
winnings

11. Sweepstakes prizes and Lotto winning amounting

tax exempt
to P10,000 and less

12. Sweepstakes prizes and Lotto winning more than

20%
P10,000

(C) Capital Gains Tax

Capital Gains Final Tax Rate

Capital gains from sale, barter, exchange or other

disposition of shares of stocks in a domestic 15%
corporation not traded in the stock exchange

Capital gains from sale, exchange, or other disposition

6% based of gross selling price or current fair
of real property located in the Philippines and held as
market value, whichever is higher
a capital asset