Classification of Individual Income Taxpayers Less: Allowable Deductions xx

Taxable Net Income xx

Taxpayers Tax Base Tax Rates Taxable
Source Taxable Income xx

Resident Citizen Net Income Graduated w/in and Ex.

w/o PH Total Compensation 885,000
Less: Allowable deduction 200,000
Non-resident Citizen Net Income Graduated w/in only Net Taxable Income 685,000
Tax Due
Resident Alien Net Income Graduated w/in only 400,000 22,500
Excess 285,000 * 20% 51,000
Non-resident Alien - Net Income Graduated w/in only Tax Payable 73,500
ETB

Non-resident Alien - Gross Income Final Tax w/in only

NETB (25%) Passive Income - Final Tax
Passive income — Final Tax — Remit
non-resident alien engaged in trade or business | |
- stays for more than 180 days during any calendar year in the Payee — Withholding agent — BIR
Philippines. [Is Your Relative Playing With Dota & Strike?] (w/in PH)
non-resident alien not engaged in trade or business RC / RA / NRC NRA - ETB NRA - NETB
- aggregate stay in the Philippines during any calendar year Interest
covered by the assignment period does not exceed 180 days. Less than 3yrs Active or
passive
Individual Exempt from Income Tax Yield’s
1. Non-resident citizen Royalties
2. Overseas contract workers, including overseas seamans 20% 20%
3. Barangay micro business enterprises (BMBE) “should NOT be Prizes 25%
more than 3M” Winnings
4. Personal equity and retirement account (PERA)
5. Philippine nationals and alien individuals employed by foreign Dividends 10% 20%
governments, embassies, diplomatic missions, and international Share in net income Final Tax
organizations situated in PH
6. Minimum wage earners – on their statutory minimum wage rates, *Share in NI - Partnership, Association, Joint Account, Joint Venture.
holiday pay, overtime pay, night shift, differential pay and hazard Prizes (P10,000 or less ) - Graduated Income Tax Rates
pay if any, are also exempt Over P10,000 - 20%
7. Senior Citizens – if minimum wage earners. Not income tax but Winnings (except PCSO and Lotto amounting to P10,000 or less ) - 20%
VAT From PCSO and Lotto amounting to P10,000 or less - Exempt
Categories of Income
Interest Income or Yield
Compensation Income Income Tax
Local currency deposits on Interest Recipient Interest on Debt
Business Income Income Tax Income Individual Instruments

Short - term deposits/ certificates 20% 20%

Mixed Income Income Tax
Long - term deposits/ certificates Exempt Exempt
Passive Income Final Tax
From non - bank institutions
Capital Gains from sales of share of stocks, Capital Gains Tax
not traded thru local stock exchange Short - term deposits/ certificates RIT2 20%
Capital Gains from sales of real properties Capital Gains Tax Long - term deposits/ certificates RIT2 20%
Fringe Benefit Fringe Benefit Tax Pre - termination of long term deposits or investment of individuals
* FBT 35% but for NRA - NETB FBT is 25%. Holding Period Pre - termination Tax
Regular Income Tax for Individuals Less than 3 years 20%
Graduated Tax Table Year 2023 and onwards 3 years to less than 4 years 12%
Taxable Income Tax Due
4 years to less than 5 years 5%
250,000 Below None 0%
5 years or more 0%
250,000 400,000 None 15%
FCDs (Foreign Currency Deposits System)
400,000 800,000 22,500 20% NRC / NRA
800,000 2,000,000 102,500 25% - Exempt in interest tax
2,000,000 8,000,000 402,500 30% RC / RA
- 15% tax rate
8,000,000 Above 2,202,500 35%
Value Added Tax (VAT)
However, an individual (RC / RA / NRC) who has gross sales/receipts - 12%
and other non-operating income not exceeding the VAT threshold (which Capital Gains Tax
is currently pegged at PHP 3 million) may opt to be taxed either at:
● 8% tax on gross sales/receipts and other non-operating income Capital from the sale, exchange or other disposition of 6%
in excess of PHP 250,000 in lieu of the graduated income tax real property located in the Philippines classified as
capital asset
rates and percentage tax (business tax), or
● the graduated tax rates. Net Capital gains from the sale of shares of stock not
Business income subjected to graduated tax rates shall also be subject traded in the Stock Exchange (NRA - NETB
to business tax (i.e. 12% VAT or 1%* percentage tax, as applicable).
* The 1% percentage tax shall only be applied from 1 July 2020 until 30 - Not Over P100,000 5%
June 2023. Starting 1 July 2023, the rate shall revert to 3%.
- Any amount in excess of P100,000 10%
Regular Income Tax Model
Gross Income - inclusions xx Net Capital gains from sale of shares of stock not traded 15%
Less: Allowable Deductions xx in the stock exchange (RC / RA / NRC)
Taxable Income xx
Through Withholding
Taxable Income Pure Compensation Income Earner
Gross compensation Income xx Individual Payee Rate
Less: Non-taxable compensation xx
Taxable compensation income xx If the gross annual business or professional income did 5%
not exceed P3,000,000.00
Taxable Income of Pure business or professional income earner
Gross income from business/profession xx If the gross annual business or professional income is 10%
Add: Non-operating income xx more than P3,000,000.00
Total Gross income xx
Non-individual Payee
Less: Allowable deductions xx
Taxable net income xx
If the gross annual business or professional income did 10%
not exceed P720,000.00
Taxable Income of Both Compensation and Business (MIXED
Income earner) If the gross annual business or professional income is 15%
Compensation Income xx more than P720,000.00
Less: Non-taxable compensation xx
Taxable compensation Income xx
Gross Business Income xx
Add: Gross other Income xx
Gross Income xx