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Annex B: Income Tax Tables: Table 1 Tax Rates For Individuals
Annex B: Income Tax Tables: Table 1 Tax Rates For Individuals
GENERAL CATEGORIES
PERIOD OF STAY
SOURCES OF INCOME
CITIZENS
RESIDENTS
NON-RESIDENTS
PERMANENTLY STAYED STAYED OUTSIDE THE
IN THE PHIL OR MAY PHIL. 183 DAYS
OR
HAVE STAYED OUTSIDE MORE
THE PHIL. LESS THAN 183
DAYS
RESIDENTS
STAYED WITHIN THE
PHIL. FOR MORE THAN
12 MONTHS FROM
DATE OF ARRIVAL
ALL SOURCES
NATURE OF INCOME
Taxable Income
5% - 34%(1998)
- 33%(1999)
- 32%(2000)
(Individual Tax Rate)
Gross income
(within) 25%
Gross income (within) 20% Final Withholding tax (FWT)
Page B-1
NRANETB
STAYED IN THE PHIL. 180
DAYS OR LESS
Compensation,
Business,
Trade,
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
ALIENS
NRAETB
STAYED
WITHIN
THE
PHIL. MORE THAN 180
DAYS
Any
income
from
transaction with depositary
banks under the expanded
FCDS
or
OBU
-Exempt
[Sec27(D)(3)]
[Sec.28(A)(4)]
Gross income(within)
7.5% FWT
GENERAL CATEGORIES
CITIZENS
RESIDENTS
NON-RESIDENTS
Interest on long term deposit
In case of Pretermination:
Remaining maturity of
4 yrs. to less than 5 yrs
3 yrs. to less than 4 yrs.
less than 3 yrs.
Gross income (within) FWT
6%
8%
10%
-
Page B-2
educational
institution/
Exempt
5%
12%
20%
NRANETB
Year
1998
1999
2000
Gross Income (within) 20%
FWT
ALIENS
NRAETB
RESIDENTS
N.A.
GENERAL CATEGORIES
Fringe Benefit except on the following:
CITIZENS
RESIDENTS
NON-RESIDENTS
A. Grossed up monetary value of fringe benefit furnished
or granted to the employee (except rank and file)
Tax Rate
Grossed Up Divisor
34% FWT
33% FWT
32% FWT
66%
67%
68%
Year
1998
1999
2000
Page B-3
ALIENS
RESIDENTS
NRAETB
NRANETB
In the case of aliens, the tax rates to be applied on fringe benefit shall be as follows:
1. NRANEBT 25%
2. Aliens employed by regional HO 15 %
3. Aliens employed by OBU 15%
4. Aliens employed by Petroleum Service
5. Contractors and Subcontractors
Gross up divisor is the difference between 100% and the applicable rates.
GENERAL CATEGORIES
CITIZENS
RESIDENTS
NON-RESIDENTS
whether granted under a collective bargaining
agreement or not; and
4. The De minimis benefits benefits which are relatively
small in value offered by the employer as a means of
promoting goodwill, contentment, efficiency of
Employees
D. 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.
Page B-4
RESIDENTS
ALIENS
NRAETB
NRANETB
TABLE 2
GENERAL
CATEGORIES
SOURCE OF INCOME
A.
15%
Final
Withholding Income
Tax (FWIT)
CITIZENS
RESIDENTS
ALL SOURCES
NON-RESIDENTS
WITHIN THE PHIL.
RESIDENTS
WITHIN THE PHIL.
ALIENS
NRAEBT
WITHIN THE PHIL.
A1. A tax rate is imposed on gross income (salaries, wages, annuition, compensation ,remuneration,
other emoluments such as honoraria and allowances)
a. Regional or area Headquarters
b. Regional Operating Headquarters
c. Offshore Banking Units (OBUs) established in the Phil.
d. Foreign petroleum service contractor or subcontractor engaged in Petroleum Operations in the Phil.
C. Foreign
Source
Compensation.
Income
is
not
subject to income
tax
Page B-5
NRANEBT
WITHIN THE PHIL.
NOT TAXABLE
TABLE 3
GENERAL CATEGOTIES
SOURCES OF INCOME
NATURE OF INCOME
In General
DOMESTIC CORPORATIONS
IN GENERAL, INCLUDING GOCCs, AGENCIES OR
INSTRUMENTALITIES (EXCEPT GSIS, SSS, PHIC, 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, ENGAGED IN TRADE OR PHIL.)
BUSINESS WITHIN THE PHIL.)
WITHIN THE PHIL.
WITHIN THE PHIL.
TAXABLE BASE/RATE
TAX INCOME
That effective January 1, 2009, the rate of income tax shall be
thirty percent 30%.
A. Transition Period
1. For Corp. Adopting fiscal year accounting period, income and
expenses shall be deemed to have been earned and spent
equally for each month of the period.
2. Taxable Income x No. of Mos. Covered x Tax Rate
12 Mos.
by the tax rate
B. Optional Corporate Tax Rate of 15% of Gross Income
1. The President upon recommendation of the Secretary of
Finance, may, effective January 1, 2000 allow corporations
the option to be taxed at 15% of the gross income subject to
certain conditions.
C. Government or its Political Subdivision.
1. Income derived from any public utility or from the exercise of
any essential government function accruing to the
Government of the Phil. Or to any political subdivision thereof
is excluded from gross income[Sec. 32(B)(7)(b)]
TAXABLE INCOME
Same as Normal Domestic Rate and with the
same option of 15% tax on gross income
effective Jan. 1,2000.
GROSS INCOME
Same as Normal Domestic Rate but without
option to pay the 15% tax on gross income.
1. Gross interest income derived by a domestic corporation and a resident foreign corporation from a depositary
bank 7.5% FWT.
2. Income derived by a depository bank from foreign currency transactions with local commercial banks including
branches of foreign banks, other depositary banks, and residents 10% Final Tax.
Dividends received by a domestic corporation from another
Dividends received from a domestic corporation
domestic corporation shall not be subject to tax.
not subject to tax.
GENERAL CATEGOTIES
DOMESTIC CORPORATIONS
IN GENERAL, INCLUDING GOCCs, AGENCIES OR
INSTRUMENTALITIES (EXCEPT GSIS, SSS, PHIC, PCSO AND
PAGCOR) ENGAGED IN A SIMILAR BUSINESS INDUSTRY OR
ACTIVITIES
FOREIGN CORPORATIONS
RESIDENT
FOREIGN
CORPORATIONS NON-RESIDENT CORPORATIONS (NOT
(EXISTING UNDER THE LAWS OF FOREIGN ENGAGED IN TRADE OR BUSINESS IN THE
COUNTRY, ENGAGED IN TRADE OR PHIL.)
BUSINESS WITHIN THE PHIL.)
the normal domestic rate
Net Capital Gain
Not over P100,000 5%
Excess of P100,000 10%
Page B-7
N.A.
GENERAL CATEGOTIES
DOMESTIC CORPORATIONS
FOREIGN CORPORATIONS
IN GENERAL, INCLUDING GOCCs, AGENCIES OR
RESIDENT
FOREIGN
CORPORATIONS NON-RESIDENT CORPORATIONS (NOT
INSTRUMENTALITIES (EXCEPT GSIS, SSS, PHIC, PCSO AND (EXISTING UNDER THE LAWS OF FOREIGN ENGAGED IN TRADE OR BUSINESS IN THE
PAGCOR) ENGAGED IN A SIMILAR BUSINESS INDUSTRY OR COUNTRY, ENGAGED IN TRADE OR PHIL.)
ACTIVITIES
BUSINESS WITHIN THE PHIL.)
service such as depreciation or rental of equipment used and cost of supplies.
2. In the case of banks, cost of service shall include interest expense
Improperly Accumulated
Taxable Income means
taxable income adjusted
by:
1. Income exempt from
tax
2. Income excluded
from gross income
3. Income subject to
final tax
4. The amount of net
operating loss carryover deducted.
And reduced by the sum
of:
1. Dividends actually or
constructively paid;
and
2. Income tax paid for
the taxable year
1. Improperly Accumulated Taxable Income 10% tax in addition to other income taxes
2. The improperly accumulated earnings tax shall not apply to:
a. Publicly held corporations
b. Banks and other non-banks Financial intermediaries
c. Insurance companies
Page B-8
3. 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. 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, by the clear preponderance of evidence, shall prove the contrary.
5. For corporations using the calendar basis the accumulated earnings tax shall not apply on improperly
accumulated income as of Dec. 31,1997. For fiscal year basis, the tax shall not apply to the 12 month period of
fiscal year 1997-1998. Improperly accumulated earnings as of the end of a calendar or fiscal year period on or
after Dec. 31, 1998 shall be subject to the 10% tax on such improperly accumulated earnings.
N.A.
Cafeteria/canteen
Dormitories
Bookstores
School Bus
Hospitals
Pharmacies or Drugstores and from banks deposits subject to
certain condition.
3.
4.
Page B-9
FOREIGN CORPORATIONS
RESIDENT FOREIGN CORPORATION
NON-RESIDENT FOREIGN CORP.
International Carrier (within) Gross Phil. Billings
N.A.
N.A.