PURELY COMPENSATION INCOME EARNER

GROSS COMPENSATION 900,000.00

(NON TAXABLE COMPENSATION) 70,000.00
TAXABLE COMPESATION 830,000.00
Less: Lower Bracket 800,000.00
30,000.00
Multiplied by Tax rate 30%
9,000.00
Add: Tax Base 130,000.00
Tax Due 139,000.00

NON-TAXABLE COMPENSATION
1. Mandatory Contributions
SSS, Philhealth, HDMF and Union Dues
2. 13th Month Pay and Other Benefits not exceeding 90,000
3. De Minimis Fringe Benefits
4. If MWE, HONHa is non taxable
Holiday Pay
Overtime Pay
Night Differential
Hazard Pay
 LOWER UPPER
- 250,000.00
250,000.00 400,000.00
400,000.00 800,000.00
800,000.00 2,000,000.00
2,000,000.00 8,000,000.00
8,000,000.00 ABOVE

Mr. A has an income from employment amounting to 900,000

including 60,000 13th month pay and other benefits and 10,000
contributions.
 TAX
-
20% TIMES EXCESS OVER 250, 000
(25% TIMES EXCESS OVER 400,000) + 30,000
(30% TIMES EXCESS OVER 800,000) + 130,000
(32% TIMES EXCESS OVER 2,000,000) + 490,000
(35% TIMES EXCESS OVER 8,000,000) + 2,410,000

nt amounting to 900,000
other benefits and 10,000
SELF EMPLOYED / PROFESSIONAL
-Regular Income Tax
-8% Income Tax, in lieu of Percentage Tax

Regular Income Tax

Gross Sales/ Receipt 2,000,000.00

Less: Cost of Goods Sold/ Service - 750,000.00
Gross Profit 1,250,000.00
Less: Operating Expenses - 500,000.00
Add: Other Income 200,000.00
Taxable Income 950,000.00
Less: Lower Bracket - 800,000.00
150,000.00
Multiplied by Tax rate 30%
45,000.00
Add: Tax Base 130,000.00
Tax Due 175,000.00

8% Income Tax

Gross Sales/ Receipt 2,000,000.00

Add: Other Income 200,000.00
Less: 250,000 - 250,000.00
Taxable Income 1,950,000.00
Times: 8% 8%
Tax Due 156,000.00

If you are not the Following: PMOVEF

-Partner in General Professional Partnership
-More than 3,000,000 Gross Receipt or Sales
-Other Percentage Tax other than Sec 116 of NIRC
-VAT Registered
-Exempt from Income Tax
-Fail to signify your intention to avail the 8% income tax
 LOWER UPPER
- 250,000.00
250,000.00 400,000.00
400,000.00 800,000.00
800,000.00 2,000,000.00
2,000,000.00 8,000,000.00
2,000,000.00 8,000,000.00 ABOVE
- 1,200,000.00
800,000.00
- 500,000.00 Mr. A is a Certified Public Accountant, He received 2,0
200,000.00 His total cost of Service Amounted to 750,000 and Op
500,000.00 500,000 for taxable year 2019. He also earned 200,00
- 400,000.00
100,000.00 a. Assumes he avail the 8% Option.
25%
25,000.00 b. Mr. A failed to signify his intention to avail the 8% inc
30,000.00 175,000
55,000.00
c. Mr. A failed to signify his intention to avail the 8% inc
his cost of service amounted to 1,200,000
55,000

How to signify your Intention

-Signify your intention by submitting BIR Form 1905
-Signify thru filing your Percentage Tax
-Signify your intention directly upon filing your 1st qu
 TAX
-
20% TIMES EXCESS OVER 250, 000
(25% TIMES EXCESS OVER 400,000) + 30,000
(30% TIMES EXCESS OVER 800,000) + 130,000
(32% TIMES EXCESS OVER 2,000,000) + 490,000
(35% TIMES EXCESS OVER 8,000,000) + 2,410,000

ccountant, He received 2,000,000 from practice of profession.

ounted to 750,000 and Operating expenses amounted to
19. He also earned 200,000 from other activities.

156000

tention to avail the 8% income tax option.

tention to avail the 8% income tax option and

d to 1,200,000

ubmitting BIR Form 1905

centage Tax
ctly upon filing your 1st quarter Income tax Return
KINDS OF COMPENSATION
Regular
a. Basic Salary
b. Fixed allowances

Supplementary
a. Commission
b. Overtime pay
c. Fees, including directors fees
d. Profit sharing
e. Monetized vacation leave in excess of ten (10) days
f. Sick leave
g. Fringe benefits received by rank and file employees
h. Hazard pay
i. Taxable 13th month pay and other benefits
j. Other remuneration received from an employee-employer relationships

DE MINIMIS BENEFITS
a. Monetized unused vacation leave credits to employees not exceeding ten (10) days during th
b. Monetized value of vacation and sick leave credits paid to government officials and employe
c. Medical cash allowance to dependents of employees, not exceeding P1,500 per employee pe
d. Rice subsidy of P2,000 or one sack of 50kg rice per month amounting to not more than P2,00
e. Uniform and clothing allowance not exceeding P6,000 per annum;
f. Actual medical assistance, e.g. medical allowance to cover medical and healthcare needs, ann
maternity assistance, and routine consultations, not exceeding P10,000.00 per annum;
g. Laundry allowance not exceeding P300 per month;
h. Employees achievement awards, e.g. for length of service or safety achievement, which in th
or gift certificate, with an annual monetary value not exceeding P10,000 received by the em
which does not discriminate in favor of highly paid employees;
i. Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per em
j. Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic
k. Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and p
that the total annual monetary value received from both CBA and productivity incentive sc
ten thousand pesos (Php 10,000.00)per employee per taxable year;
 Mr. A has basic salary from employment amounting to 900,000
including 60,000 13th month and 10,000 contributions. Aside from 900,000 salary, he also received
the following:
Monetized vacation leaved for 12 days amounting to P1000 per day
Rice Subsidy amounting to 2,500 per month
Uniform allowance worth 10,000 for the year
Christmas bonus and gifts amounting to 25,000
Commission of 30,000
Medical Assistance of 50,000
GROSS COMPENSATION
cont 10,000.00 (NON TAXABLE COMPENSATION)
13th and OB 90,000.00 TAXABLE COMPESATION
DMB 55,000.00 Less: Lower Bracket
155,000.00
Multiplied by Tax rate

Add: Tax Base

g ten (10) days during the year; Tax Due
nt officials and employees;
P1,500 per employee per semester of P250 per month;
to not more than P2,000;

d healthcare needs, annual medical/executive check-up,

000.00 per annum;

chievement, which in the form of a tangible personal property other than cash
0,000 received by the employee under an established written plan

xceeding P5,000 per employee per annum;

rcent (25%) of the basic minimum wage;
agreement (CBA) and productivity incentive schemes provided
roductivity incentive schemes combined do not exceed
alary, he also received DMB OB Taxable
900,000.00 900,000.00
12,000.00 10,000.00 2,000.00
30,000.00 24,000.00 6,000.00
10,000.00 6,000.00 4,000.00
25,000.00 5,000.00 18,000.00 2,000.00
30,000.00 30,000.00
50,000.00 10,000.00 40,000.00
1,057,000.00 55,000.00 30,000.00 972,000.00
NSATION) 155,000.00
902,000.00
800,000.00
102,000.00
30%
30,600.00
130,000.00
160,600.00
MIXED INCOME EARNER
BUSINESS OR PRACTICE OF PROFESSION
COMPENSATION

A. FAILED TO SIGNIFY INTENTION TO AVAIL 8% INCOME TAX B. SIGNIFY INTENTION TO AVAIL 8% I

Gross Sales/ Receipt 2,000,000.00 For Business and/or Practice of Pro

Less: Cost of Goods Sold/ Service - 750,000.00
Gross Profit 1,250,000.00 Gross Sales/ Receipt
Less: Operating Expenses - 500,000.00 Add: Other Income
Operating Income 750,000.00 Taxable Income
Other Income 200,000.00 Times: 8%
Taxable Compensation 830,000.00 Tax Due from Business
Total Taxable Income 1,780,000.00
Less: Lower Bracket - 800,000.00 For Compensation
980,000.00
Multiplied by Tax rate 30% GROSS COMPENSATION
294,000.00 (NON TAXABLE COMPENSATION)
Add: Tax Base 130,000.00 TAXABLE COMPESATION
Tax Due 424,000.00 Less: Lower Bracket

Multiplied by Tax rate

OR
Add: Tax Base
Taxable Income from Business 750,000.00 Tax Due from employment
Other Income 200,000.00
Taxable Income from Employment 830,000.00
Total Taxable Income 1,780,000.00 Tax Due from Business
Less: Lower Bracket - 800,000.00 Tax Due from Employment
980,000.00 Total Tax Due
Multiplied by Tax rate 30%
294,000.00
Add: Tax Base 130,000.00
Tax Due 424,000.00
INTENTION TO AVAIL 8% INCOME TAX
Mr. A has an income from employment amounting to 900,000
ess and/or Practice of Profession including 60,000 13th month pay and other benefits and 10,000
contributions. He received 2,000,000 from practice of profession.
es/ Receipt 2,000,000.00 His total cost of Service amounting to 750,000 and Operating expenses
200,000.00 500,000 for taxable year 2019. He also earned 200,000 from other activ
2,200,000.00
8%
rom Business 176,000.00
Gross Compensation 900,000.00
Non Taxable 70,000.00
Taxable Compensation 830,000.00
OMPENSATION 900,000.00
XABLE COMPENSATION) 70,000.00
COMPESATION 830,000.00
er Bracket - 800,000.00
30,000.00
d by Tax rate 30%
9,000.00
130,000.00
rom employment 139,000.00

rom Business 176,000.00

rom Employment 139,000.00
315,000.00
 ounting to 900,000
benefits and 10,000
practice of profession.
000 and Operating expenses amounting to
ned 200,000 from other activities.