FOR INDIVIDUALS

Kinds of Tax Payer Tax

Individuals earning purely compensation income Taxed under graduated rates

Self-employed individuals earning income purely
from self-employment or practice of profession
whose gross sales/receipts do not exceed P3M
Mixed Income Earners
Choices:
a) Under the graduated rates; OR
b) 8% income tax rate on gross
sales/receipts the first 250,000 is not
subject to tax; the tax payer must signify
his intention to use this, otherwise,
deemed to have chosen the graduated
rate
For compensation income—use graduated rates

For income from business or practice of

profession—
a) If it exceeds P3M—use graduated rates
b) If it does not exceed P3M, tax payer has a
choice to use either:
1) Graduated rates; OR
2) 8% income tax rate on gross
sales/receipts

Final Income Tax of Individuals

Final Tax
Passive Income (derived within Resident Non-Resident Resident Non-Resident
the PH) Citizen Citizen Alien Alien
Interest under expanded foreign 15% Exempt 15% Exempt
currency deposit (FCD) system
Royalties from books, literary 10% 10% 10% 10%
works, and musical compositions
Royalties other than above 20% 20% 20% 20%
Gross income from 25%
cinematographic films and similar
works
Prizes exceeding P10,000 20% 20% 20% 20%
Winnings (except PCSO and Lotto 20% 20% 20% 20%
winnings amounting to P10,000
or less shall be exempt)
Dividends from a domestic 10% 10% 10% 20%
 corporation, regional operating
headquarters of multinational
company, or share in the
distributive net income after tax
of a partnership (except GPP)
Interest on long-term deposit or Exempt Exempt Exempt Exempt
investment in bank (with
maturity of 5 years or more)
Interest income is preterminated 5%--if 4 years 5%--if 4 years
to less than 5 to less than 5
years years

12%--if 3 12%--if 3
years to less years to less
than 4 years than 4 years

20%--if less 20%--if less

than 3 years than 3 years

Gains from sale or trade of long- Exempt Exempt

term bond
Gains from sale or trade of short- Graduated Graduated
term bond rates rates

Capital Gains Tax

Type of Income Capital Gains Tax

Resident Non-Resident Resident Non-Resident
Citizen Citizen Alien Alien
On sale of shares of stock of 15% of the 15% of the net 15% of the 15% of the net
domestic corporation not traded net capital capital gains net capital capital gains
through a local stock exchange gains gains
held as capital asset
On sale of shares of stock of 6/10 of 1% or 6/10 of 1% or 6/10 of 1% or
domestic corporation traded (.005%) of (.005%) of the (.005%) of
through a local stock exchange the gross gross selling the gross
selling price price selling price
Sale of RP held as capital asset 6% of gross 6% of gross 6% of gross 6% of gross
selling price, selling price, selling price, selling price,
or the current or the current or the or the current
market value market value current market value
 at the time of at the time of market value at the time of
sale, sale, at the time of sale,
whichever is whichever is sale, whichever is
HIGHER HIGHER whichever is HIGHER
HIGHER

FOR GENERAL PROFESSIONAL PARTNERSHIPS

 In computing a GPP’s distributable taxable income, the GPP may avail of the following
deductions:
a) Itemized expenses; OR
b) The 40% OSD
 The partners cannot avail of the 8% income tax rate

FOR CORPORATIONS AND PARTNERSHIPS (other than GPP)

Resident Domestic Corporation Resident Foreign Corporation Non-Resident Foreign

Corporation
30% of taxable income 30% of taxable income within 30% on the gross income within
worldwide the PH the PH

2% of gross income if MCIT 2% of gross income if MCIT

applies applies

15% of gross income (has not 15% of gross income (has not
yet been implemented) yet been implemented)

Special Rule on Proprietary Educational Institutions and Hospitals (Non-Profit)

a) 10% of their taxable income, except passive income

b) 30% of their entire taxable income if the gross income from unrelated trade, business or other
activity exceeds 50% of the total gross income of the institution

Special Rule on GOCCs, Agencies or Instrumentalities

 Shall pay the same rate upon their taxable income upon corporations or associations engaged in
similar business, industry or activity
 EXCEPT (exempt GOCCs):
a) GSIS
b) SSS
c) PHIC
d) PCSO
Passive Income

Type of Income (derived within the PH) Final Tax

Domestic Resident Non-Resident
Corporation Foreign Foreign
Corporation Corporation
Interest under the expanded foreign currency 15% 7.5% 20%
deposit system
Royalty of all types 20% 20%
Interest of any current bank deposits 20% 20%
Dividends from domestic corporations Exempt Exempt 15%
(intercorporate dividends)
Income derived by a depositary bank from foreign Exempt
currency transactions with non-residents, OBUs,
etc
Interest income from foreign currency loans 10%
granted by a bank to residents other than OBUs

Capital Gains

Type of Income Capital Gains Tax

Domestic Resident Non-Resident
Corporation Foreign Foreign
Corporation Corporation
On sale of shares of stock of domestic corporation 15% of the Capital gains Capital gains not
not traded through a local stock exchange held as net capital not over over P100,000
capital asset gains P100,000— —5% of net
5% of net capital gains
capital gains
Capital gains in
Capital gains excess of
in excess of P100,000—10%
P100,000— of net capital
10% of net gains
capital gains
On sale of shares of stock of domestic corporation 6/10 of 1%
traded through a local stock exchange or (.005%) of
the gross
selling price
Sale of RP held as capital asset 6% of gross 30% of gross 6% of gross
 selling price, income selling price, or
or the the current
current market value at
market value the time of sale,
at the time whichever is
of sale, HIGHER
whichever is
HIGHER

Special Rules

International Carriers 2.5% on Gross Philippine Billing (GPB)

*may avail of a preferential tax rate or exemption

if:
a) There’s a tax treaty or international
agreement; OR
b) Reciprocity
Offshore Banking Units 10% final tax
Branch Profit Remittance Tax (BPRT) 15% of the total profits applied or earmarked for
remittance
Regional Area Headquarters Exempt
Regional Operating Headquarters 10% on taxable income

Special Non-Resident Foreign Corporation

Non-Resident owner of lessor of vessel
Non-Resident cinematographic film owner,
lessor or distributor
Non-Resident lessor of aircraft, machinery and
other equipment
4.5% Gross rentals, lease and charter fees from
the PH
7.5% Gross income from the PH
7.5% Gross rentals, lease and charter fees from
the PH

Summary of Tax Rates of Special Corporation

Non-Resident owner of lessor of vessel
Non-Resident cinematographic film owner,
lessor or distributor
Non-Resident lessor of aircraft, machinery and
other equipment
4.5% Gross rentals, lease and charter fees
from the PH
7.5% Gross income from the PH
7.5% Gross rentals, lease and charter fees
from the PH
 Proprietary educational institution and non- 10% of taxable income from all sources
profit hospitals
Resident international carrier 2.5 % of Gross Philippine Billings
Regional operating headquarters of 10% of Philippine taxable income
multinational company
*There’s no MCIT for special corporations

Improperly Accumulated Earnings Tax (IAET)

 10% of the IAET