The policy of 

taxation in the Philippines is governed chiefly by the Constitution of the

Philippines and three Republic Acts.

 Constitution: Article VI, Section 28 of the Constitution states that "the rule of

taxation shall be uniform and equitable" and that "Congress shall evolve
a progressive system of taxation".[1]
 national law: National Internal Revenue Code—enacted as Republic Act No.
8424 or the Tax Reform Act of 1997[2] and subsequent laws amending it; the law
was most recently amended by Republic Act No. 10963 or the Tax Reform for
Acceleration and Inclusion Law;[3] and,
 local laws: major sources of revenue for the local government units (LGUs) are
the taxes collected by virtue of Republic Act No. 7160 or the Local Government
Code of 1991,[4] and those sourced from the proceeds collected by virtue of a local
ordinance.
Taxes imposed at the national level are collected by the Bureau of Internal
Revenue (BIR), while those imposed at the local level
(i.e., provincial, city, municipal, barang)

National taxes

Income tax
Income tax for individuals
Citizens of the Philippines and resident aliens must pay taxes for all income they have
derived from various sources, which include, but are not limited to:
 compensation income  capital  royalties;  prizes
(e.g., salary and wages); gains;  dividends and
 income of self-employed  interests ; winnings;
individuals and/or profession ;  annuities;  pensions
als;  rents; ; and,
 partner's
share from
the profits of
partnership.
[2]

Compensation and self-employment income

Individuals, including nonresident aliens, earning compensation income are taxed based
only on the income tax schedule for individuals. On the other hand, self-employed
individuals and professionals are taxed based on the income tax schedule for
individuals, applicable percentage taxes, and value-added tax (VAT). However, if their
gross sales (or gross receipts plus other non-operating income) does not exceed the
VAT threshold, they have the option to be taxed either on the basis of the income tax
schedule for individuals and the applicable percentage taxes, or just with a flat tax rate
of 8% on their gross sales (or gross receipts plus other non-operating income)
Interests, royalties, prizes and other winnings
Interest income from bank deposits, deposit substitutes, trust funds, and other similar
products (except for its long-term variants) is taxed at the rate of 20%. [2]
Royalties, except on books, literary works and musical compositions, are taxed at the
rate of 10%.[2]
Prizes and winnings from Philippine Charity Sweepstakes Office (PCSO) Lotto in
excess of P10,000 (upon which individual prizes and winnings P10,000 or below are
taxed on the basis of the income tax schedule for individuals) are taxed at the rate of
20%.[3]
Interest income from a depository bank under the expanded foreign currency deposit
system is taxed at the rate of 15%.[3]
Income from long-term deposits and investments, when pre-terminated in less than
three years after making such deposit or investment, is taxed at the rate of 20%; less
than four years, 12%; and, less than five years, 5%.[2]
Dividends
Cash and property dividends are taxed at the rate of 10%.[2]
Capital gains
Capital gains from the sale of shares of stock not traded in stock exchange are taxed at
the rate of 15%.[3]
Capital gains from the sale of real property are taxed at the rate of 6%, except when
such proceeds would be used to construct a new principal residence within eighteen
months after the sale of a previous principal residence had occurred. [2]
Income tax for corporations
In general, the income tax rate for corporations is 30%. [2] However, for-profit educational
institutions and hospitals enjoy a much lower rate of 10%.
Estate tax
The transfer of the net estate is taxed at a flat rate of 6%. There is a standard deduction
amounting to P5,000,000.
Donor's tax
The total value of gifts made in a calendar year shall be taxed at a flat rate of 6%. There
is a standard deduction amounting to P250,000.
Value-added tax
The value-added tax (VAT) rate since 2006 is 12%
The new VAT threshold was changed from Php 1,919,500 to Php 3,000,000 as a result
of the passage of the Tax Reform for Inclusion and Acceleration (TRAIN) Law.
Exempt transactions
The following goods, services and transactions are exempted from the VAT:
 agricultural and marine food
products in their original state;
 fertilizers, seeds, seedlings,
fingerlings, and feeds and feed
ingredients;
 importation of personal and
household effects of persons
resettling in the Philippines;
 importation of professional
instruments, wearing apparel, and
domestic animals;
 services subject to percentage
tax;
 agricultural contract growers and
millers;
 health care services;
 educational services;
 agricultural cooperatives, and
cooperatives that are non-
agricultural and non-electric in
nature;
 residential lots worth at most
P1,500,000, or house and lots worth
at most P2,500,000
 monthly lease of residential units
at most P15,000;
 books and mass media
publications (e.g. newspaper and
magazine);
 transport services by non-
Philippine carriers;
 cargo vessels and aircraft;
 financial services;
 sales to senior citizens and
persons with disability;
 from 2019, drugs prescribed for
diabetes, high cholesterol and
hypertension; and,
 annual sales of any other goods
or services not e