TAX SCHEDULE (GTR)

(a) (b,c)

not over 250,000 0%

251,000 - 400,000 15% of the excess over 250,000

401,000 - 800,000 22,500 + 20% of the excess over 400,000

800,000 - 2,000,000 102,500 + 25% of the excess over 800,000

2,000,000 - 8,000,000 402,500 + 30% of the excess over 2,000,000

over 8,000,000 2,202,500 + 35% of the excess over 8,000,000

TAX DUE = a + (b x c)

KIND OF INDIVIDUAL TYPE OF INCOME TAX RATE

RC, NRC, & RA Ordinary income

* income do not exceed 3,000,000 VAT threshold

RC - taxable income WITHIN and OUTSIDE Philippines

NRC - taxable income only WITHIN Philippines (ex:
seamen, OFW)

Purely compensation GTR

Business/Professional GTR or 8% income tax on

gross sales in excess of
250,000 (optional)

Mixed income *if do not exceed 3M:

a. 8%
b. GTR
*if exceeds: GTR

NRA-ETB Ordinary income SAME with RC, NRC, RA

NRA-NETB all income from PHILIPPINES 25% income tax on gross

ONLY - final tax sales - PHILIPPINES income
(final tax)

RA and NRA - foreigners; not acquired Filipino citizenship

- taxable only INCOME WITHIN Philippines
Minimum wage earners - TAX EXEMPT

KINDS OF CORPORATIONS TAX RATE

DC 25% or
20% - if net taxable income and total assets DO NOT
EXCEED:
● 5,000,000 - NTI
● 100,000,000 - TA

Proprietary educational and Hospitals 10%

GOVT owned - controlled corp, agencies SAME with DC

Non-stock, non-profit educational institutions EXEMPT

PASSIVE INCOME FOR RC, NRC, and RA - Final tax
Interest income (currency deposits, trust funds, deposit substitutes)

● short term 20%

● long term EXEMPT

● from non bank institutions

○ short and long term deposits RIT
○ short and long term substitutes 20%

Royalties

● books, literary, musical compositions in the Philippines 10%

● in general 20%

Prizes

● 10,000 or LESS GIT

● OVER 10,000 20%

Winnings

● 10,000 or LESS 20%

● from PCSO and LOTTO amounting 10,000 or LESS EXEMPT

Interest income (depository banks under expanded foreign currency deposit system) 15%
*NRC EXEMPT

Cash or Property Dividends RECEIVED from:

1. DC
2. Joint stock company 10%
3. Insurance companies
4. Regional operating headquarter

Pre terminated long term investments/deposits

● 4 yrs to LESS than 5 yrs 5%

● 3 yrs to LESS than 4 yrs 12%

● LESS than 3 yrs 20%

Share in net income of a business partnership, taxable associations, joint ventures, joint 10%
accounts or co-ownership

note: passive income should be WITHIN Philippines; OUTSIDE - gross taxable income subject to graduated tax rates
*includes NRA-ETB
note: dividends from RFC - subject to RIT; NRFC - only applicable to RC; COOPERATIVES - EXEMPTED

PASSIVE INCOME FOR NRA-ETB - Final tax

Interest income (depository banks under expanded foreign currency deposit system) EXEMPT

Cash or Property Dividends RECEIVED from:

1. DC
2. Joint stock company 20%
3. Insurance companies
4. Regional operating headquarter

Pre terminated long term investments/deposits

● 4 yrs to LESS than 5 yrs 5%

● 3 yrs to LESS than 4 yrs 12%

 ● LESS than 3 yrs 20%

Share in net income of a business partnership, taxable associations, joint ventures, joint accounts or 20%
co-ownership

PASSIVE INCOME FOR NRA-NETB - gross amount of income derived from all sources WITHIN Philippines (table
above) subject to 25% final tax; foreign currency deposit, dividends from NRFC and cooperatives - EXEMPTED

PASSIVE INCOME FOR DC

Interest income (currency deposits, trust funds, deposit substitutes) short term/long term 20%

● from non bank institutions RIT

○ short term deposit substitutes 20%

Royalties WITHIN Philippines 20%

Interest income (depository banks under expanded foreign currency deposit system) 15%

Cash or Property Dividends RECEIVED from

● DC EXEMPT

● RFC RIT

● NRFC RIT

Share in net income of a business partnership, taxable associations, joint ventures, joint RIT
accounts or co-ownership

Royalties 20%

Prizes RIT

Winnings

● PCSO and LOTTO amounting 10,000 or LESS EXEMPT

● PCSO and LOTTO amounting OVER 10,000 20%

● in general RIT

note: DC is taxable on all income WITHIN and OUTSIDE Philippines

RFC and NRFC - taxable only WITHIN Philippines
*includes RFC

PASSIVE INCOME FOR RFC - dividends from NRFC - EXEMPTED

PASSIVE INCOME FOR NRFC - gross amount of income derived from all sources WITHIN Philippines (table above)
subject to 25% final tax; foreign currency deposit, dividends from NRFC - EXEMPTED;
dividends from DC - 25/15%
NRFC-NETB - taxable 30% gross income from sources WITHIN Philippines

DE MINIMIS BENEFITS
● for PRIVATE employees ONLY (managerial and rank and file employees)
● NOT APPLICABLE to government employees
● NOT included in the basic salary
● NOT taxable compensation; NOT subject to income tax and withholding tax

NOT MORE THAN

Leave credits NOT MORE than 10 days (converted to cash)

Govt officials vacation and sick leave credits (converted to cash)

 Medical cash allowance to dependents 250 per month

Rice subsidy 2,000 per month

Uniform and clothing allowance 6,000 per year

Actual medical assistance/benefits 10,000 per year

Laundry allowance 300 per month

Employees achievement awards:

1. length
2. safety 10,000 per year
*must be under an established written plan monetary value
*not favoring highly paid employees
*must be tangible personal property (cash or gift certificate)

Gifts during christmas and major anniversary celebrations 5,000 per year
*must be tangible personal property

Daily meal allowance for overtime work 25% of regional

basic minimum
wage

Transportation allowance

*monetary limit: 90,000 per year

● if the total value of the benefits received DO NOT EXCEED 90,000 - NOT subject to income tax
*if the benefits EXCEEDS:
● rank and file employee - pay individual income tax
● managerial employee - fringe benefits tax

CAPITAL GAIN TAX (Individuals)

RC NRC RA NRA-ETB NRA-NETB

Capital gains from:

1. sale
2. exchange 6% 6% 6%
3. other disposition of real property
*must be located in the PHILIPPINES
*classified as CAPITAL ASSET

Net capital gains from sale of shares of stock 15%

*NOT traded in the stock exchange

● not over 100,000 5% 5%

● any amount in excess of 100,000 10% 10%

note: for corporations domestic and NRFC SAME in the table above under RC, NRC, RA
NRFC capital gains from the sale of shares of stock not traded in stock exchange - EXEMPTED
RFC capital gains from sale of real property NOT used in business - ORDINARY INCOME
*all should be WITHIN Philippines only
*if the sale is a PRINCIPAL RESIDENCE within Philippines - TAX EXEMPT; outside - gross taxable income

CORPORATE INCOME TAX - RFC

Income of INTERNATIONAL CARRIERS on their gross Philippine billings 2.5%

Regional operating headquarters of multinational corporations that do not earn or derive income from the EXEMPT
Philippines

Income of FCDUs of depository banks from foreign currency transactions with non-residents OBUs EXEMPT

CORPORATE INCOME TAX - NRFC

 Income tax in general 25%

Reinsurance premiums EXEMPT

Interest on foreign loans 20%

Dividends from DC if: 15%

*the country which the FC is domiciled does not impose income tax on dividends

Rentals and charter fees payable to NR OWNER OF VESSELS chartered by PHILIPPINE nationals 4.5%

Rentals, charters, and other fees derived to NR LESSORS OF AIRCRAFT, MACHINERY 7.5%

FRINGE BENEFIT TAX

● for MANAGERIAL and SUPERVISORY employees only; subject to 35% in general; 25% for NRA-NETB
● if the benefits is subjected to FBT it is no longer included in the employee’s taxable income

1. housing
2. expense account
3. vehicles of any kind
4. household personnel (e.g. maid, driver)
5. interest on a loan at LESS THAN MARKET RATE (constant 12%) to the extent of the difference between
the market rate and the actual rate granted
6. membership fees, dues, and other expenses borne by the EMPLOYER FOR THE EMPLOYEE
7. expenses for foreign travel
8. holiday and vacation expenses
9. educational assistance to the employee and dependants
10. premiums for life insurance, health, and other non-life insurance

*monetary value of benefits in HOUSING AND MOTOR VEHICLES used for both personal and business - 50% of the lease
payment/depreciation value (whichever is applicable)
*if housing unit is adjacent (within 50 meters) to the business premises - NOT TAXABLE
*motor vehicle used normally for business purposes - NOT TAXABLE

NOT TAXABLE FRINGE BENEFITS

1. employee contributions for the benefit of the employee to RETIREMENT, INSURANCE, HOSPITALISATION, and
BENEFIT PLANS.
2. benefits given to rank and file employees
3. DE MINIMIS

TAX BASE
GUMV = AV/GUMR
GUMR

1. RC NRC RA NRA-ETB 65%

2. NRA-NETB 75%

3. Alien employed in RHQ, OBU, service contractor in petroleum operations 85%

4. Filipino employee occupying the same position held by an alien

5. Employees in special economic zones:

a. Clark special economic zone
b. Subic special economic zone 68% 75% 85%
c. Free Trade zone as the case maybe

FBTR
FBT = GUMV x FBTR
FBTR

6. RC NRC RA NRA-ETB 35%

7. NRA-NETB 25%
 8. Alien employed in RHQ, OBU, service contractor in petroleum operations 15%
9. Filipino employee occupying the same position held by an alien

10. Employees in special economic zones:

a. Clark special economic zone
b. Subic special economic zone 35% 25% 15%
c. Free Trade zone as the case maybe

*if rank and file employee - fringe benefits will be included in gross taxable compensation

OPTIONAL STANDARD DEDUCTIONS - a deduction that the individual taxpayer may elect to use instead of using
itemized deduction.

GUIDELINES
1. Maximum allowable amount for INDIVIDUAL taxpayers is 40% of the NET SALES (accrual); 40% of GROSS
RECEIPTS (cash)
a. Net sales = sales less sales discounts; sales return and allowances
2. CORPORATE TAXPAYERS: total optional deductions SHALL NOT EXCEED 40% of their TOTAL GROSS
INCOME
a. Gross income = net sales less cost of sales; plus other income
3. If OSD is elected, apply GRADUATED TAX RATES in taxable income.
4. Taxpayers that are allowed to adopt OSD:
a. RC NRC RA
b. Taxable estate
c. Trusts
d. GPP
e. DC RFC
5. NRA and NRFC CANNOT adopt the OSD.
6. 40% OSD SHALL NOT BE ALLOWED for taxpayers earning compensation income from an employer-employee
relationship.

ITEMIZED DEDUCTIONS:
1. business expenses
2. interest
3. taxes
4. losses
5. bad debts
6. depreciation and depletion
7. charitable contributions
8. R&D
9. pension trust

note: GPP, DC, FC, estates and trusts engaged in business, and indiv. taxpayers-ETB except NRA - may use itemized
deductions