Tax rates for business income

An individual, whether citizen or resident alien, who is self-employed or practices a profession, is also
subject to the graduated income tax rates above.

However, an individual who has gross sales/receipts and other non-operating income not exceeding the
value-added tax (VAT) threshold (which is currently pegged at PHP 3,000,000) may opt to be taxed
either at:

8% tax on gross sales/receipts and other non-operating income in excess of PHP 250,000 in lieu of the
graduated income tax rates and percentage tax (business tax), or

the graduated tax rates.

Business income subjected to graduated tax rates shall also be subject to business tax (i.e. 12% VAT or
3% percentage tax, as applicable).