Professional Documents
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Compensation income refers to all remuneration for services performed by an employee for his
employer under an employer-employee relationship. It includes salaries, wages emoluments and
honoraria, allowances, commissions (e.g., transportation, representation, entertainment and the
like), fees including director’s fees, if the director is all the same time an employee of the
employer/corporation; taxable bonuses and fringe benefits (except fringe benefits subject to the
fringe benefits tax and allowable “de minimis” benefits), taxable pensions and retirement pay.
A MWE is a worker in the private sector who is paid with the statutory minimum wage, or to an
employee in a public sector with compensation income of not more than the statutory minimum
wage rate in the non-agricultural sector where the worker-employee is assigned. Such statutory
minimum wage rate is exempted from income tax. Likewise, the exemption covers the holiday
pay, night shift differential pay, and hazard pay.
(a) In interest in any currency bank deposit and yield or other monetary benefits
from deposit substitutes and from trust funds and similar arrangements 20%
(b) Royalties (except enumerated in item C) 15%
(c) Royalties on books and other literary works and musical compositions 10%
(d) Interest derived from depository bank under expanded foreign currency
deposit system 15%
(e) Prizes (except prizes amounting to P10,000 or less) 20%
(f) Winnings (except Philippine Charity Sweepstakes winnings amounting
P10,000 or less) 20%
(g) Cash and property dividend 10%
(h) Capital gain from sale of shares of stock of a domestic corporation not
traded in the stock market – on the gain 15%
(i) Capital gains from sale of real property located in the Philippines – on the
selling price 6%
(j) Proceeds of pre-terminated long-term depositor investment in the form of
savings, common or individual trust fund, deposit substitute, investment
management accounts and other investment evidenced by certificates in
such form as prescribed by the BSP – the final tax shall be based on the
remaining maturity of the investment:
Four years but less than five years 5%
Three years but less than four years
12% Less than three years
20%
Tax on Income from Self-Employment or Profession
Gross Sales means the total sales transactions net of value-added tax, if applicable, reported
during the period without any deduction. However, gross sales subject to 8% income tax rate
option shall be net of sales returns and allowances and discounts.
Gross receipts refer to the total amount of money or is equivalent representing the contract price,
compensation, service fee, rental or royalty, including the amount charged for materials supplied
with the services, and deposits and advance payments actually or constructively received during
the taxable period for the services performed for another person, except returnable security
deposits. In case of a VAT taxpayer, this shall exclude the value-added tax component.