In 2017, Jaime (resident citizen) is employed by an offshore banking unit holding managerial position.

His compensation income is subject to a preferential tax rate of 15%. Assume that Jaime likewise earned
interest income from a depository bank under the Expanded Foreign Currency Deposit System in the
Philippines, the applicable tax on such income shall be:

a. 7.5% FWT c. 20% FWT

b. 15% FWT d. graduated rate

Assuming the taxpayer is a Special Filipino Employee, the amount of income subject to a preferential tax
rate of 15% should be:

a. P0 c. P650,000

b. P600,000 d. P750,000

• Answer: A

• Since the total compensation composed of salaries, allowances/honoraria and one emoluments is not
at least P975,000. The SFE shall be subject to basic income tax under section 24(A) instead of 15%
preferential tax rate.

Using the assumption above, the SFE's total combined taxes on all income from the Philippines is:

a. P380,500 c. P595,000

b. P304,000 d. P410,500

• Answer: D

Bryan is a Filipino executive employed by a regional operating headquarters (ROHQ) in thePhilippines,

begins his employment on June 1, 2015. His employment contract stipulates that he shall receive an
annual compensation income of P975,000 inclusive of 13th month pay. At the end of the year, he
received P568,750 composed of P525,000 basic pay (P975,000/13 x 7months) and P43,750 as 13th
month pay. Based on the above data, can Bryan choose to be taxed at 15% preferential rate?

a. Yes, because his employment contract states that he shall receive an annual compensation income
that

meets the threshold, whether he actually receives this or not

b. Yes, because an employee of ROHQ is qualified to be taxed at 15% preferential rate.

c. No, because his total gross compensation income at the end of the year does not meet the threshold

amount.

d. No, Filipinos employed by ROHQs do not have the option to be taxed at 15% preferential tax rate,

• Answer: C.