Statutory Minimum Wages

Workers who receive the statutory minimum wage as their basic pay will remain MWEs and their receipt of
other income during the year does not disqualify them as MWEs. They remain MWEs entitled to exemption
as such, but the taxable income they may receive in excess of the statutory minimum wage may be
subject to appropriate taxes.

Compensation
Under the Tax Code, Every form of compensation for services, whether paid in cash or in kind, is
generally subject to income tax and consequently to withholding tax. The name designated to the
compensation income is immaterial. Thus, salaries, wages, emoluments, and honoraria, allowances,
commissions, fees (including director’s fees, if the director is, at the same time, an employee of the employer or
the corporation), bonuses, fringe benefits (except those subject to the fringe benefits tax under Section 33 of the
Tax Code), pensions, retirement pay, and other income of a similar nature, constitute compensation income that
are taxable and subject to withholding.

NRA- NRA –
RC NRC RA
ETB NETB
Within
Sources Of Income and Within Within Within Within
without
NATURE OF INCOME TAX RATE
INTEREST

1
On interest on currency bank deposits, yield or other monetary benefits from
deposit substitutes, trust funds & similar arrangements 20% 20% 20% 20% 25%

XPN:
If the depositor has an employee trust fund or accredited retirement plan, such
interest income, yield or other monetary benefit is exempt from final withholding
tax.

Interest income under the Expanded Foreign Currency Deposit System 7.5% Exempt 7.5% Exempt Exempt

NOTE: If the loan is granted by a foreign government, or an International or

regional financing institution established by governments, the interest income of
the lender shall not be subject to the final withholding tax.

Interest Income from long-term deposit or investment in the form of savings, Held for:
common or individual trust funds, deposit substitutes, investment management 5 years or more – exempt 25%
accounts and other investments evidenced by certificates in such form
4 years to less than 5 years – 5%
prescribed by the BSP (RR. 14-2012)
3 years to less than 4 years – 12%
Less than 3 years – 20%
DIVIDEND
Dividend from a DC or from a joint stock company, insurance or mutual fund 10% 10% 10% 20% 25%
company and regional operating headquarters of a multinational company; or on
the share of an individual in the distributable net income after tax of partnership
(except that of a GPP) of which he is a partner, or on the share of an individual in
the net income after tax of an association, a joint account or joint venture or
consortium taxable as a corporation of which he is a member of co- venturer

ROYALTY INCOME