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TAX RATES FOR INDIVIDUALS:
PERIOD OF STAY
SOURCES OF INCOME
NATURE OF INCOME
Profession (including casual gains,
profits, income, and capital gains, prizes
of P10,000 or less). Not included are
items of income subject to final tax and
or special tax treatment
Interest from any currency bank deposit
and yield or any other monetary benefit
from deposit substitute and from trust
funds and similar arrangements,
royalties, prizes (except amounting to
P10,000 or less) and other winnings
except PCSO and lotto winnings)
Royalties on books, as well as either
literary works and musical composition
PERMANENTLY STAYED STAYED OUTSIDE THE
IN THE PHIL OR MAY PHIL. 183 DAYS
HAVE STAYED OUTSIDE MORE
THE PHIL. LESS THAN 183
STAYED WITHIN THE
PHIL. FOR MORE THAN
12 MONTHS FROM
DATE OF ARRIVAL
WITHIN THE PHIL.
WITHIN THE PHIL.
PHIL. MORE THAN 180
STAYED IN THE PHIL. 180
DAYS OR LESS
WITHIN THE PHIL.
WITHIN THE PHIL.
TAXABLE BASE/ TAX RATE
5% - 34%(1998)
(Normal Tax Rate)
Gross income (within) 20% Final Withholding tax (FWT)
Gross income (within) 10% FWT
Capital gains from shares of stock not traded in the local stock exchange Capital gains from sale or other disposition of real property located in the Phils. or a joint venture or consortium taxable as a corporation.000 – 5% In excess of P100.(27)D(3)] [Sec. joint account. to less than 5 yrs 3 yrs. 1. (date of notarization) the capital gain is exempt from the capital gains tax subject to the following conditions. deposit substitute investment management accounts in denomination of P10.5% FWT (Exchange Rate to be used shall be the opening rate on remittance day) Any income from transaction with depositary banks under the expanded FCDS or OBU -Exempt [Sec27(D)(3)] [Sec. a. Cash and/or property dividends actually or constructively received from a domestic corp. If proceeds is from disposition of principal residence and is fully utilized in acquiring or constructing a new principal residence within 18 months from the date of disposition. to less than 4 yrs. Historical cost or adjusted basis of property sold is carried over to the new principal residence. Gross Selling Price or FMV whichever is higher 6% Final Tax 2. at the option of taxpayer. or on the share on the net income after tax of an association. Sec.000 or as prescribed by the BSP.000 – 10% 1. 3. common or individual trust funds. or on the share of an individual in the distributable net income after tax of a taxable partnership. . CITIZENS RESIDENTS NON-RESIDENTS Gross income (within) 7. Gross income (within) FWT 6% 8% 10% - ALIENS NRAEBT RESIDENTS - Exempt - 5% 12% 20% NRANEBT Any income from transactions with depository bank under the expanded FCDS or ODU – Exempt [Sec. 73(c) provides that dividends distributed are deemed made from most recently accumulated profits) Net capital gains (within) Not over P100. or from a joint stock company. 1998. 6% Final Tax or Normal Tax Rate. less than 3 yrs. insurance or mutual fund companies.28(A)(4)] Gross income(within) 7.5% FWT Interest on long term deposit In case of Pretermination: Remaining maturity of 4 yrs.GENERAL CATEGORIES Interest income from depository bank under the expanded foreign currency deposit system (FCDS) Interest income from long-term deposit or deposit in the form of savings.28(A)(4)] Gross income (within) 25% Year 1998 1999 2000 Gross Income (within) 20% FWT (Tax on dividends shall apply on income earned on or after Jan. If sold to the government or any of its political subdivision or agencies or to GOCC.
Expenses for foreign travel 8. if required or necessary to the business of employer 2. Fringe Benefit include. the tax rates to be applied on fringe benefit shall be as follows: 1. Household personnel. Contractors and Subcontractors Gross up divisor is the difference between 100% and the applicable rates. The tax on the unutilized portion shall be paid within 30 days after the expiration of the 18-month period. Unutilized portions of the proceeds is subject to capital gains tax to be computed proportionately. Fringe Benefit that is not taxable under Sec. Tax exemption can only be availed of once every 10 years. d. Cinematographic film and similar works Proprietary Hospital educational Individual Normal tax Rate shall apply institution/ Fringe Benefit except on the following: Individual Normal tax Rate shall apply A.A. Vehicle of any kind 4. Aliens employed by Petroleum Service 5. but not be limited to the following: 1. The commissioner is notified within 30 days from the date of disposition of the taxpayer’s intention to avail of the tax exemption. Not considered as gross income 1. Interest on loan at less than market rate to the extent of the difference between the market rate and actual rate granted. dues and other expenses borne by the employer for the employee in social and athletic clubs and similar organizations 7. c. Holiday and vacation expenses 9. Aliens employed by regional HO 15 % 3. . Aliens employed by OBU 15% 4. Expense Account 3. such as maid. if for the convenience or advantage of employer B. In the case of aliens. driver and others 5. Grossed up monetary value of fringe benefit furnished or granted to the employee (except rank and file) A. Membership fees. 6.GENERAL CATEGORIES CITIZENS ALIENS RESIDENTS NON-RESIDENTS RESIDENTS NRAEBT NRANEBT b. Educational assistance to the employee or his Gross Income (within) 25% Gross Income (within) 25% N. 32 (B) Exclusions from Gross Income Tax Rate Grossed Up Divisor 34% FWT 33% FWT 32% FWT 66% 67% 68% Year 1998 1999 2000 B. Housing 2. NRANEBT 25% 2.
whether granted under a collective bargaining agreement or not. 2. Benefits given to the Rank and File Employees. RESIDENTS ALIENS NRAEBT NRANEBT . and 10. The term “Rank and File Employees” shall mean all employees who are holding neither managerial nor supervisory position as defined in the Labor Code E. Life or health insurance and other non-lire insurance premiums or similar amounts on excess of what the law allows. In the case of rank and file employees. efficiency of Employees D.000 may be increased through rules and regulations issued by the Secretary of Finance considering the effect on the same of the inflation rate at the end of the taxable year. The following fringe benefits are not taxable under Sec. The De minimis benefits – benefits which are relatively small in value offered by the employer as a means of promoting goodwill. fringe benefits other than those excluded from gross income under the Tax Code and other special laws. 33 Fringe Benefit Tax: 1. are taxable under the individual normal tax rate. contentment.GENERAL CATEGORIES CITIZENS RESIDENTS NON-RESIDENTS dependents. The 13th month Pay and Other Benefits with the ceiling of P30. and 4. Contributions of the lawyer for the benefit of the employee to retirement. insurance and hospitalization benefit plans. 3. C. Fringe Benefits which are authorized and exempted under special laws.
wages. ALIENS NRAEBT WITHIN THE PHIL. annuition.PREFERENTIAL TAX TREATMENT ON CERTAIN INDIVIDUALS: GENERAL CATEGORIES SOURCE OF INCOME A.1.1. compensation . C. other emoluments such as honoraria and allowances) a. 3. a) Immigrant b) Foreign-based employee on a permanent basis c) Overseas Contract Worker. received by every Filipino employee occupying the same position as an alien employed by any of the following: a. Multinational company which is foreign firm or entity engaged in international trade with an established branch in the Phils. Partners in a general professional partnership B. the net income of the partnership is computed in the same manner as a corporation. foreign source (compensation income) is not taxable if received by any of the following non-resident citizen. NOT TAXABLE .remuneration. Offshore Banking Units c. A partner in a general professional partnership is liable to income tax only in his separate and individual capacity 2. Regional Operating Headquarters c.. including overseas seaman 2. 15% Final Withholding Income Tax (FWIT) CITIZENS RESIDENTS ALL SOURCES NON-RESIDENTS WITHIN THE PHIL. For purposes of computing the distributive share of the partners. wages. NRANEBT WITHIN THE PHIL. A1. i) Regional or Area Headquarters ii) Regional Operating Headquarters b. Embassy/consulate is not to be treated as a non-resident citizen. Each partner shall report as gross income his distributive share actually or constructively received in the net income of the partnership. Income is not subject to income tax C. his income is taxable. A1. as follows: RESIDENTS WITHIN THE PHIL. Regional or area Headquarters b. hence. A Filipino employed as a Philippine Embassy/Consultant service personnel of the Phil. Foreign Source Compensation. Foreign petroleum service contractor or sub-contractor B. Foreign petroleum service contractor or subcontractor engaged in Petroleum Operations in the Phil. A tax rate of 15% is imposed on gross income(salaries. A general professional partnership is not subject to income tax. Offshore Banking Units (OBUs) established in the Phil. A tax rate is imposed on gross income (salaries. Regardless of the period of stay in the Phil. etc. d.
Government or its Political Subdivision.TAX RATES FOR CORPORATIONS: GENERAL CATEGOTIES SOURCES OF INCOME NATURE OF INCOME In General Interest on currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements royalties DOMESTIC CORPORATIONS IN GENERAL. GROSS INCOME Same as Normal Domestic Rate but without option to pay the 15% tax on gross income. INCLUDING GOCCs. 1. Income derived from any public utility or from the exercise of any essential government function accruing to the Government of the Phil.) BUSINESS WITHIN THE PHIL. The President upon recommendation of the Secretary of Finance. Transition Period 1. Optional Corporate Tax Rate of 15% of Gross Income 1. Taxable Income x No. Covered x Tax Rate 12 Mos. TAXABLE BASE/RATE TAX INCOME 35%(Normal Domestic Rate) 34% . 2. by the tax rate B. PCSO AND PAGCOR) ENGAGED IN A SIMILAR BUSINESS INDUSTRY OR ACTIVITIES ALL SOURCES FOREIGN CORPORATIONS RESIDENT FOREIGN CORPORATIONS NON-RESIDENT CORPORATIONS (NOT (EXISTING UNDER THE LAWS OF FOREIGN ENGAGED IN TRADE OR BUSINESS IN THE COUNTRY. Adopting fiscal year accounting period. 1. For Corp. 32(B)(7)(b)] TAXABLE INCOME Same as Normal Domestic Rate and with the same option of 15% tax on gross income effective Jan. income and expenses shall be deemed to have been earned and spent equally for each month of the period. WITHIN THE PHIL. ENGAGED IN TRADE OR PHIL. 1. Or to any political subdivision thereof is excluded from gross income[Sec.1998 33% . effective January 1. C.2000 A. 2000 allow corporations the option to be taxed at 15% of the gross income subject to certain conditions. AGENCIES OR INSTRUMENTALITIES (EXCEPT GSIS. PHIC. of Mos. 1986(20%fwt) Gross Income ( within ) 20% FWT . may.) WITHIN THE PHIL.2000. SSS.1999 32% . Interest Income on foreign loans contracted on or after Aug.
A Gross Income = Gross Sales – Sales Returns. Force majeure C. AGENCIES OR RESIDENT FOREIGN CORPORATIONS NON-RESIDENT CORPORATIONS (NOT INSTRUMENTALITIES (EXCEPT GSIS.“Cost of Goods” and shall include all business expenses directly incurred to produce the merchandise to bring them to their present location and use. depository banks under FCDS shall be exempt 2. Any income from transaction with bank 7. other depositary banks. domestic corporation shall not be subject to tax.5% FWT. INCLUDING GOCCs. Provided foreign law allows taxpayer clause. not subject to tax. 27(A) for the (three(3) succeeding taxable years 3.000 – 10% Gross Selling Price or FMV whatever is higher 6% Final Tax 1.to be carried forward and provided against the normal income tax [as computed under Sec. and residents 10% Final Tax. Discounts. or 4. SSS. Gross interest income derived by a domestic corporation and a resident foreign corporation from a depositary 1. Import duties c.000 – 5% Excess of P100. “cost of goods sold” shall include – a. Assurance while goods are in transit N. Gross Income 2% MCIT beginning on the fourth taxable year immediately following the year in which such corporation commenced its business operation. Dividends received by a domestic corporation from another Dividends received from a domestic corporation Dividend received from a domestic corp. and allowances – Cost of Goods (Trading or Manufacturing Concern) . 2.For trading or merchandising . The Secretary of Finance is authorized to suspend MCIT on a corporation which suffers losses on account ofA. PHIC. Legitimate business reverses.A. . PCSO AND (EXISTING UNDER THE LAWS OF FOREIGN ENGAGED IN TRADE OR BUSINESS IN THE PAGCOR) ENGAGED IN A SIMILAR BUSINESS INDUSTRY OR COUNTRY. . 15% FWT.) 1. Invoice cost b. or B.) ACTIVITIES BUSINESS WITHIN THE PHIL. Carry Forward of Excess MCIT. ENGAGED IN TRADE OR PHIL. Freight d. otherwise it will be subject to the normal domestic rate Net Capital Gain Not over P100. Prolonged dispute. Capital Gains Realized from the Disposition of Land and/or Buildings Minimum Corporate Income Tax (MCIT) DOMESTIC CORPORATIONS FOREIGN CORPORATIONS IN GENERAL.GENERAL CATEGOTIES Income derived under the expanded FCDS Inter-corporate dividends and income from a taxable partnership Capital Gains from the sale of shares of stock’s not traded in the local stock exchange. Income derived by a depository bank from foreign currency transactions with local commercial banks including from income tax branches of foreign banks.
And reduced by the sum of: 1. Income subject to final tax 4. “ cost of service shall include interest expense “Improperly Accumulated Taxable Income” means taxable income adjusted by: 1. Income tax paid for the taxable year 1. and 2. Improperly Accumulated Taxable Income 10% tax in addition to other income taxes 2. Direct labor c. Income exempt from tax 2. 31.GENERAL CATEGOTIES DOMESTIC CORPORATIONS FOREIGN CORPORATIONS IN GENERAL. Salaries and employee benefits of personnel. The fact that the earnings or profits of a corporation are permitted to accumulate beyond the reasonable needs of the business shall be determinative of the purpose to avoid the tax upon its shareholders or members unless the corporation.1997. N. Dividends actually or constructively paid. 2. The fact that any corporation is a mere holding company or investment company shall be prima facie evidence of a purpose to avoid the tax upon its shareholders or members 4. PHIC. . Cost of service shall mean all direct cost and expenses necessarily incurred to provide the service including – a. AGENCIES OR RESIDENT FOREIGN CORPORATIONS NON-RESIDENT CORPORATIONS (NOT INSTRUMENTALITIES (EXCEPT GSIS. by the clear preponderance of evidence. other cost to bring the raw materials to the factory or warehouse B. allowances. For corporations using the calendar basis the accumulated earnings tax shall not apply on improperly accumulated income as of Dec. Insurance premium f. Banks and other non-banks Financial intermediaries c. Gross Income = Gross Receipt – Sales Return. SSS. For fiscal year basis. Freight cost e. Insurance companies 3. The improperly accumulated earnings tax shall not apply to: a. Publicly held corporations b. ENGAGED IN TRADE OR PHIL. 5. Manufacturing overhead d. Improperly accumulated earnings as of the end of a calendar or fiscal year period on or after Dec. 31.) ACTIVITIES BUSINESS WITHIN THE PHIL. Raw materials used b. 1998 shall be subject to the 10% tax on such improperly accumulated earnings. discount – cost of Service(Service) 1. Income excluded from gross income 3. PCSO AND (EXISTING UNDER THE LAWS OF FOREIGN ENGAGED IN TRADE OR BUSINESS IN THE PAGCOR) ENGAGED IN A SIMILAR BUSINESS INDUSTRY OR COUNTRY. consultants and specials directly utilized in providing the service such as depreciation or rental of equipment used and cost of supplies. INCLUDING GOCCs.A. the tax shall not apply to the 12 month period of fiscal year 1997-1998. The amount of net operating loss carryover deducted. shall prove the contrary. In the case of banks.) For manufacturing: “cost of goods manufactured and sold” shall include all cost of production of farmer goods such as a.
A. Educational Institution 2. d.PREFERENTIAL TAX TREATMENT ON CERTAIN CORPORATION: DOMESTIC CORPORATION 1. e. Non-Profit Educational Institution is exempt from Income Tax on its Revenue as educational institution and from the operation of ancillary activities located within the school premises a. c. Regional Operating Headquarters N. FOREIGN CORPORATIONS RESIDENT FOREIGN CORPORATION NON-RESIDENT FOREIGN CORP.FWT Non-resident owner or lessor of aircraft machinery and other equipment Gross Rental or fees 7. Proprietary/ profit – oriented educational institution b. Any profit remitted to the head office (total profit applied or earmarked for remittance without any deduction for the tax component thereof). including any interest income derived from foreign currency loans granted to residents. non-profit hospital 4. 15% . 2 and 3 a profit oriented hospital will be treated as an ordinary domestic corporation . including branches of foreign bank. International Carrier (within) Gross Phil. Non-stock. . Hospital 1. b. non-profit hospital 3. Regardless of the proportion explained in item No. 10% . Proprietary/ profit – oriented educational institution b. the Regular Domestic Rate will be imposed to the following: a. Non-stock.A. f. If gross income from unrelated trade business or other activity exceeds 50% of the total gross income derived from all sources. If gross income from unrelated trade business or other activity does not exceed 50% of the total gross income derived from all sources – 10% of the Taxable Income will be imposed on the following: a. 2. Billings Non-Resident Owner or Lessor of Sea Vessel Chartered by Philippine National Gross rental lease charter Offshore Banking Unit (OBU) – Income derived by OBU from foreign currency transaction with local commercial bankers.Final Tax Any income from transaction with OBU shall be exempt from income tax Branches (Except those registered with PEZA). Cafeteria/canteen Dormitories Bookstores School Bus Hospitals Pharmacies or Drugstores and from banks deposits subject to certain condition. hence subject to the Normal Domestic rate. A NON-STOCK.5% Regional or Area Headquarters not subject to Income Tax N.
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