INDIVIDUAL TAXPAYER

A. Classification

Individual taxpayers are classified into:

1. Citizens, who are divided into:

 Resident citizens- those citizens whose residence is
within the Philippines; and
 Non-resident citizens- those citizens whose residence is
not within the Philippines.

2. Aliens, who are divided into:

 Resident aliens- those individuals whose residence is
within the Philippines and citizens thereof; and
 Non-resident aliens- those individuals whose residence
are not within the Philippines but temporarily in the
country and are not citizens thereof. They are:
o Those engaged in trade or business within the
Philippines; and
o Those who are not so engaged. (See NIRC,
Sections 23-25)

B. Sources of Income and Tax Treatment

Sec. 23. General Principles of Income Taxation in the

Philippines. -

 Taxed derived from all sources worldwide:

1. Resident Citizens.
2. Domestic Corporations.
  The other kinds of taxpayers are subject to tax only on income
derived from Philippine sources.

Taxable Income Taxable Income

Citizenship &
Inside RPh Outside RPh
Residency
Resident Citizen Yes Yes
Non-resident Citizen Yes No
Overseas Contract
Yes No
Worker
Resident Alien Yes No
Non-Resident Alien Yes No
Domestic
Yes Yes
Corporation
Foreign Corporation Yes No

Sec. 42. Income from Sources Within the Philippines.-

The following are treated as gross income from sources within the
Philippines. (Sections 152-165, R.R. 2-1940):

1. Interests- Including interests on bonds, notes and other interest

bearing obligations:
a. The loan was used here in the Philippines;
b. The debtor is in the Philippines

2. Dividends-
a. From a domestic corporation; and
b. A foreign corporation,