INCOME TAXATION OF INDIVIDUALS: CITIZENS

RESIDENT
Definition

CITIZENS NON-RESIDENTS
Sec 22 (E) 1. A citizen of the Philippines who establishes to the satisfaction of the Commissioner that fact of his physical presences abroad with definite intention to reside therein. 2. A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis. 3. A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be physically present abroad most of the time during the taxable year. 4. A citizen who has been previously considered as non-resident citizen who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines shall likewise be treated as a nonresident citizen for the taxable year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival in the Philippines.

Tax Code Reference

Sec 24

Sec 24 ( income w/in the Philippines) Sec 23 ( income outside Philippines)

Tax Base

taxable income earned from all sources within and without the Philippines

taxable income from all sources within the Philippines

INCOME TAXATION OF INDIVIDUALS: CITIZENS

RESIDENT
Tax Rates - In general 5% - 34 % in 1998 5% - 33% in 1999 5% - 32% in 2000 5% - 32% thereafter

CITIZENS NON-RESIDENTS
5% - 34% in 1998 (for income w/in the Phils) 5% - 33% in 1999 (for income w/in the Phils) 5%- 32% in 2000 (for income w/in the Phils) 5% - 32% thereafter (for income w/in the Phils) EXEMPT (for income w/out the Phils)

Tax Rates - On Passive Incomes (subject to Final Taxes [FT]) Interest on any currency bank deposit 20% FT and yield or any other monetary benefit from deposit substitutes [Sec 22(Y)] and from trust fund and similar arragements Interest from a depository bank under the expanded foreign currency deposit system [RR 10-98] Interest on long term deposit or investment [Sec 22(FF)] in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments evidenced by certificates in such form prescribed by the BSP Pre-terminated long term investment (should actually based on expired term) 7.5% FT

20% FT

EXEMPT [Sec 2.24 RR 10-98 ]

EXEMPT

EXEMPT

4 yrs to < 5 years -- 5%FT 3 years to < 4 years -12%FT Less than 3 years -- 20%FT

4 yrs to < 5 years -- 5%FT 3 years to < 4 years -- 12%FT Less than 3 years -- 20%FT

Other interest income derived within the Philippines Other interest income derived outside the Philippines Royalties - in general Royalties on books, other literary works and musical compositions Prizes - more than P10,000 Prizes - P10,000 or less Prizes - PCSO & Lotto winnings Other prizes or winnings within the Philippines

5% - 34%, 33%, 32% 5% - 34%, 33%, 32% 20% FT 10% FT 20% FT 5% - 34%, 33%, 32% EXEMPT 20% FT

5% - 34%, 33%, 32% EXEMPT 20% FT 10% FT 20% FT 5% - 34%, 33%, 32% EXEMPT 20% FT

INCOME TAXATION OF INDIVIDUALS: CITIZENS

RESIDENT
Other prizes or winnings outside the Philippines Cash and/or Property Dividends from a domestic corp or share in distributable net income after tax of a partnership (except general professional partnerhip), association, joint account, or joint venture or consortium taxable as corporation Other Cash and/or Property Dividends (e.g. from a foreign corp) On domestic shares of stock not traded through local stock exchange (based on net capital gains) On shares of stock traded through local stock exchange (based on gross selling price) [Sec 127(A) & (D)] On real property (based on gross selling price or FMV whichever is higher) - In general On real property sold to the government subj to option On real property sold to acquire or construct new principal residence 5% - 34%, 33%, 32% 6% FT beginning Jan 1, 1998 8% FT beginning Jan 1, 1999 10% FT beginning Jan 1, 2000 5% - 34%, 33%, 32% 5% / 10% FT

CITIZENS NON-RESIDENTS
EXEMPT 6% FT beginning January 1, 1998 8% FT beginning January 1, 1999 10% FT beginning January 1, 2000

5% - 34%, 33%, 32% 5% / 10% FT

1/2 of 1% FT (Percentage Tax)

1/2 of 1% FT (Percentage Tax)

6% FT

6% FT

6% FT or 5% - 34% 33%, 32% EXEMPT subj to certain conditions

6% FT or 5% - 34%, 33%, 32% EXEMPT subj to certain conditions

Atty. Marissa O. Cabreros (Ateneo School of Law)