Gross Benefits (received from private or public) shall not exceed PHP 90K

under employer-employee relationship EXCLUSIONS FROM GROSS INCOME

*their must be a meeting whose employer is going to make the ITR

Formula (working for 1 Employer)
employee may have 1 or 2 more employers
Employee Formula (working for 2 Employers)
must be filed if working for 2 employers reflecting your income (both taxable and
Form 2316 non-taxable) and tax withheld
Minimum Wage Earners
classification of employees for income tax purposes
Gross Compensation
Exclude: Non-Taxable Benefits
Less: Mandatory Contributions
Taxable Compensation Income
X Tax rate
Tax Due
Less: Withholding Tax
Tax Payable or Refundable
Gross Compensation (from all employers)
Exclude: Non-Taxable Benefits
Less: Mandatory Contributions
Taxable Compensation Income
X Tax Rate
Tax Due
Less: Withholding Tax
Tax Payable or Refundable
paid with statutory minimum wage (SMW) rates
exempted from income tax
10 days Monetized Vacation Leave
(private employees)
10 days Monetized Vacation/Sick Leave
(Gov't employees)
Medical Cash Allowance
(to the dependent of the employees) not exceeding PHP 1,500 per employee per semester or PHP 250 per month
Rice Subsidy PHP 2K per month
Uniform and Clothing Allowance not exceeding PHP 6K per year
DE MINIMIS BENEFITS
Laundry Allowance not exceeding PHP 300 per month
Actual Medical Assitance not exceeding PHP 10K per year
Employee Achievement Awards
(in the form of a personal tangible property) not exceednig PHP 10K
basic pay Benefits received by
holiday pay an employee by Virtue of CBA not exceeding PHP 10K per year
overtime pay
night differential pay
hazard pay

Rank and File Employees

Supervisor, Manager, and Up Government Service Insurance System (GSIS)

Gross Compensation Income Social Security System (SSS)
Less: Non-taxable Income/Benefits
Taxable Income of Employees Mandatory Contributions Mandatory Contributions: Philippine Health Insurance Corporation (Phil-Health)
DEDUCTIONS FROM COM PENSATION INCOME
Pag-Ibig Contributions

purely in business or practice of profession ? Uniion Dues

VAT TP Gross Sales/Receipts is over PHP 3M per 12-month

classification of self-employed for business tax purposes
NON-VAT TP Gross SAles/Receipts PHP 3M and below per 12-month

CLASSIFICATION OF TAXPAYERS
(for income tax purposes)
Gorss Sales/Receipts
Less: PHP 250K
Net Amount Taxable
X 8%
Tax Due employee receives purely compensation during the year
Less: Creditable Withholding Tax
8% income tax on gross sales or gross receipts in excess of 250K in lieu of the Balance-Payable of Refundable employee receives the income only from one employer in the PH during the taxable
graduated income tax rates and percentage tax under SEC116 year
No DEDUCTIONS APPLICABLE
tax due amount from the employee at the end of the year, equals to the total tax
Gross Sales/Receipts withheld by the employer
Less:Cost of Sales/Service CONDITIONS TO QUALIFY FOR SUBSTITUTED FILING (SF)
Gross Income employee's spouse also complies with all 3 afore-stated consitions
Less: Allowable Deductions
PHP 3M and below Gross Sales/Receipts taxpayer's option: Net Taxable Income employer files the annual information return
X (graduated rate)
employer issues BIR FORM NO. 2316 (Certificate of Compensation Payment/Tax
Income Tax Due
Less: Creditable Withholding Tax
Withheld) to employee
Self-Employed Balance-Payable or Refundable
income tax based on the graduated income tax rates for individuals under SEC 24
(A)(2)(a) 40% of Gross Sales/Receipts
OSD
Itemized Deduction or OSD applicable not required t submit with the tax return such as FS

classification of self-employed for income tax purposes Itemized Deduction non-election of OSD means you are use Itemized Deduction

Gross Sales/Receipts
Less:Cost of Sales/Service
Gross Income
Less: Allowable Deductions
Net Taxable Income
X (graduated rate)
Income Tax Due
Less: Creditable Withholding Tax
With Sales or Gross Receipts of Over PHP Formula: Balance-Payable or Refundable

sales of goods and sale of services is subject to the appropriate Creditable

Withholding Tax (for prefessionals 5% or 10% as the case may be)

receives Certificate of Creditable Tax Withheld at Sources (Form 2307) from W-Tax
rules to remember: Agent

files FORM 1701Q during the 1st three quarters and final ITR FORM 1701 for the
entire year

Part-Time Employee

Part-Time Self-Employed

Gross Sales/Receipts
Less: Cost of Sales/Services
Gross Income
Less: Deductions
Add: Compensation Income
Net Taxable Income
x (graduated tax rate)
Income Tax Due
Less: W-Tax on Compensation/Creditable W-Tax
Graduated Income Tax Rates shall apply to the compensation income; and Balance - Payable of Refundable

Gross Compensation
Mixed Income Earner Exclude: NOn-taxable Benefits
Less: Mandatory Contributions
X (graduated tax rates)
Tax Due Compensation (1)
Compensation Income + Gross Sales/Receipts PHP 3M and below
Taxable Gross Sales/Receipts
X 8%
Tax Due Business Income (2)

Tax Due 1 + Tax Due 2 = Total Tax Due

8% Income Tax Rate on gross Receipts in lieu of graduated income tax rates and Less: Creditable Income Taxes
percentage of tax Net Amount Payable/Excess Tax Credit

Gross Sales/Receipts
classification of mixed income taxpayers Less: Cost of Sales/Service
Gross Profit
Less: Deductions
Net Income from Business
Add: Compensation Income
Net Taxable Income
X (graduated tax rate)
Income Tax Due
Less: W-tax on Compensation and Creditable W-Tax
Compensation Income + Gross Sales/Receipts Over PHP 3M Balance - Payable or Refundable
 1st installment at the time the annual ITR is filed

2nd installment paid on or before Oct. 15

in excess of PHP 2K
Continuation INSTALLMENT PAYMENT OF INCOME TAX *if any installment is not paid on or before Oct. 15, the whole amount of the unpaid
tax becomes due and payable, together with the delinquency penalties to be
reckoned on the original date when the tax is required to be paid

both shall compute their individual income tax separately based on their respective
taxable income

RULE ON HUSBAND AND WIFE unidentifiable income shall be divided equally between the spouses for the purpose of
determining their respective (?income taxes)

ENGAGED IN TRADE OR BUSINESS Graduated Income Tax Rates

NON-RESIDENT ALIEN NOT ENGAGED IN TRADE OR BUSINESS 25% Final Withholding Tax
taxable income within Business Income
ALIEN INDIVIDUALS
Professional Income

Rental or Properties

Compensation Income

Commission
Global Tax System
Transportation Allowance

Representation Allowance
20% interests from any currency bank deposit
Director's Fee
15% interest income received by an individual taxpayer from a depository bank
All income subject to Creditable Withholding tax under the expended foreign currency deposit system

All income not subject to CWT snd FWT proceeds of pre-terminated long-term deposit or investment in the form of savings,
trust funds, deposit substitutes, investment management accounts and other 4 years but less than 5 years = 5%
INCOME TAX SYSTEM IN PH Interest Income investments as prescribed by the BSP - final tax shall be based on the remaining
maturity: 3 yaers but less than 4 years = 12%
Sale of Shares of Stocks
less than 3 years = 20%
Sale of real properties
subject to FWT
TAX ON PASSIVE INCOME (PIDRO) 20% royalties (except on books and other literacy works and musical composition
Dividend Income
? royalties on books and other literacy works and musical compositions
Royalties
Schedular Tax System 20% winnings (except Philippine Charity Sweepstakes and Lotto Winning Amounting
Prizes to PHP 10K OR LESS)
Winnings 10% Cash and Property Dividends
Pensions 15% Capital Gains from Sale of Shares of Stocks not Traded in the Stock Exchange
Fringe Benefits 6% Capital Gains on Real Property located in the PH
All income subject to FWT

if gross income for the current year is PHP 3M OR LESS = 5%

Individual payee:
any fringe benefits tax is increased to 35% from 32% if gross income is more than PHP 3M = 10%

FRINGE BENEFITS grossed-up monetary value of the fringe benefit shall be determined by dividing the if gross income for the current year PHP 720K OR LESS = 10%
actual monetary value of the fringe benefit by 65% (new), (68%, old) Non-individual payee:
if gross income is MORE THAN PHP 720K = 15%
CREDITABLE W-TAX on Wages/Income Payment
if gross incoe for the year is PHP 720K OR LESS = 10%
Payment to partners of General Professional Partnership
if gross income is MORE THAN PHP 720K = 15%
INCOME TAX
if gross income for the current year is PHP 3M OR LESS = 5%
Payment to brokers and agents & sales rep/marketing agents
if gross income is MORE THAN PHP 3M = 10%

WITHHOLDING TAXES FWT on Fringe Benefit/Passive Income