EXCISE TAXES ON ALCOHOL PRODUCTS

1. DISTILLED SPIRITS
EXCISE TAX DUE= AD VALOREM TAX+
SPECIFIC TAX
DATE OF AD VALOREM SPECIFIC TAX
EFFECITIVITY TAX [Based on (per proof liter)
retail price per
proof (excluding
excise tax and
vat)]
Jan. 1, 2022 22% P 52.00
Jan. 1, 2023 22% P 59.00
Jan. 1, 2024 22% P 66.00
2025 onwards 22% Specific tax rate
shall be
increased by
6% and every
year thereafter.

2. FERMENTED LIQUORS
DATE OF EFFECTIVITY SPECIFIC TAX (per
liter)
Jan. 1, 2022 P 39.99
Jan. 1, 2023 P 41.00
Jan. 1, 2024 P 43.00
2025 onwards Specific tax rate shall be
increased by 6% and
every year thereafter.
SOURCE OF INCOME
TAXPAYER TAX BASE SOURCE OF
TAXABLE
INCOME
RC Net Income Within and
without
NRC, RA, NRA- Net Income Within Only
ETB
NRA-NETB Gross Income Within only

SUMMARY OF INCOMES AND APPLICABLE INCOME

TAXES

 Operating Income
 Non-operating or other income
ORDINARY BASIC TAX
INCOME
 Passive incomes abroad (GRADUATED)
 Other incomes not subject to
FWT and CGT.

 Interest Income
 Dividend Income
PASSIVE INCOME FWT
(Derived in the  Royalty
Philippines)  Prizes
 Winnings

 Sale of shares of Domestic

CAPITAL GAINS Corporation CGT
 Sale of real properties in the
Philippines.
GRADUATED TAX RATE BEGINNING 2023 TAXABLE
YEAR
INCOME TAX
Not over P 250,000 Exempt
Over P 250,000 but not 15% of excess over P
over P 400,000 250,000
Over P 400,000 but not P22,500 + 20% in excess
over P800,000 of P400,000
Over P800,000 but not over P102,500 + 25% in excess
P 2,000,000 of P800,000
Over P2,000,000 but not P402,500 + 30% in excess
over P8,000,000 of P2,000,000
Over P8,000,000 P2,202,500 + 35% in
excess of P8,000,000

GRADUATED TAX RATE FROM 2018 TO 2022

TAXABLE YEAR
INCOME TAX
Not over P 250,000 Exempt
Over P 250,000 but not 20% of excess over P
over P 400,000 250,000
Over P 400,000 but not P30,000 + 25% in excess
over P800,000 of P400,000
Over P800,000 but not over P130,000 + 30% in excess
P 2,000,000 of P800,000
Over P2,000,000 but not P490,000 + 32% in excess
over P8,000,000 of P2,000,000
Over P8,000,000 P2,410,000 + 35% in
excess of P8,000,000
SELF EMPLOYED AND PROFESSIONALS (SEP)

APPLICABLE TAXES OF BUSINESS INCOME AND

COMPENSATION INCOME

S.E.P (BUSINESS INCOME)

INCOME TAX BUSINESS TAX

GRADUATED RATE OR 8% 12% VAT or 3%

TAX (IF APPLICABLE) PERCENTAGE TAX

COMPENSATION INCOME

INCOME TAX BUSINESS TAX

GRADUATED RATE NOT SUBJECT TO

BUSINES TAX
 GRADUATED RATE AND 8% PREFERENTIAL TAX

INDIVIDUAL TAXPAYER

SELF EMPLOYED AND PURELY COMPENSATION INCOME

PROFESSIONALS (SEP) EARNER

PURELY SEP MIXED INCOME EARNER

BUSINESS INCOME
BUSINESS INCOME COMPENSATION INCOME

GROSS SALES/ GROSS SALES/ RECEIPTS

RECEIPTS >P3M <and equal to P3M
] GROSS SALES/ RECEIPTS
<and equal to P3M
GROSS SALES/
RECEIPTS >P3M

Subject to Graduated
Rate
GRADUATED OR 8%
PREFERENTIAL TAX

NOTES:
Computation of 8% Tax
 PURELY SEP: 8% of gross sales/ receipts and other non-operating
income in excess of (OR after deducting P250,000.
  MIXED INCOME EARNER: 8% of gross sales/ receipts and other
non-operating income.
 The 1st P250,000 of gross sales/ receipts and other non-operating
income is not deducted for mixed income earners because of the
assumption that such exemption was already applied in computing
the tax of income derived from employment, regardless of the actual
amount of compensation income.
 Business Income, in addition to income tax, is generally subject to
business tax such as value added tax or percentage tax.
 The Gross sales or Gross receipts shall include other income
and/ or non-operating income.

APPLICABLE TAXES OF PURELY SEP

A. With annual Gross Sales and/ or receipts (AGSR) of not more

than P3M.

PURELY SEP with AGSR < and

equal to P3M

INCOME TAX BUSINESS TAX

GRADUATED PRECENTAGE
RATE TAX
 Using the 8% tax, at the option of the taxpayer (if qualified)

PURELY SEP with AGSR < and

equal to P3M

INCOME TAX BUSINESS TAX

8% tax based on AGSR in None. The 8% tax is in lieu of graduated

excess of P250,000. tax rate and percentage tax.

B. With Annual Gross Sales and/or receipts of more than P3M.

PURELY SEP with AGSR > P3M

INCOME TAX BUSINESS TAX

Graduated Rate VAT

MIXED INCOME EARNER (arising from employer-employee
relationship)
A. With Annual Gross Sales and/ or Receipts (AGSR) from business
of not more than P3M.

TAX OBLIGATIONS OF MIXED INCOME EARNERS

** The P3M threshold
MIXED INCOME EARNER WITH
pertains only to business
AGSR < and equal to P3M**
income.

BUSINESS INCOME** COMPENSATION INCOME

Opted to use 8% tax?

YES NO
Graduated rate (ADD the
compensation and business
income)

Subject to 8% Tax, In Lieu of **The business income, in

graduated income tax and addition to income tax, shall
Percentage tax be subject to Percentage tax.

NOTE:
 Compensation income, regardless of amount is subject to
graduated income tax rate. Likewise, it is not subject to a
business tax.
 The 8% tax of a Mixed Income Earner shall be based on gross
sales/ receipts and other non-operating income. The 1st P250,000
 of gross sales/ receipts and other non-operating income is not
deducted to mixed income earners because of the assumption that
such exemption was already applied in computing the tax of income
derived from employment, regardless of the actual amount of
compensation income.
B. With Annual Gross Sales and/ or receipts from business of
MORE than P3M.
TAX OBLIGATIONS OF MIXED INCOME EARNERS

** The P3M threshold

MIXED INCOME EARNER WITH
pertains only to business
AGSR < and equal to P3M**
income.

BUSINESS INCOME** COMPENSATION INCOME

BUSINESS TAX INCOME TAX

Graduated rate (ADD the

compensation and business
income)
Value Added Tax (VAT)

**Compensation income is
not subject to business tax.
C.

NOTE:
 Compensation Income, regardless of amount is subject to
graduated income tax rate. Likewise, it is not subject to business
tax.

PERCENTAGE TAX (or OPT) is computed based on Annual Gross

Sales and/ or Receipts (AGSR):
 Prior to July 1, 2020 3% AGSR
From July 1, 2020 to June 30, 2023 1% AGSR
Beginning July 1, 2023 3% AGSR
PASSIVE INCOME SUBJECT TO FINAL WITHOLDING TAX
PASSIVE INCOMES DERIVED FROM PHILIPPINE SOURCES
SUBJECT TO FINAL WITHOLDING TAX
RECEIVED BY
CITIZENS NRA-ETB NRA-NETB
AND
RESIDENTS
(1)INTEREST
A. Interest from any currency 20% 20% 25%
bank deposit.
B. Yield or any other 20% 20% 25%
monetary benefit from
deposit substitutes
C. Yield or any other 20% 20% 25%
monetary benefit from trust
funds and similar
arrangements
D. Interest incomes received 15% Exempt Exempt
from a depositary bank
under expanded foreign NRC=
currency deposit system Exempt
(FCDU/ FCDS)

NOTE:
Only residents are subject to this
type of tax. Non-resident
taxpayers are exempt from tax.

TRAIN LAW- 7.5 %

 E. Interest income from long- Exempt Exempt Exempt
term deposit or investment

If pre-terminated before
fifth year, a final tax shall
be imposed based on
remaining maturity as
follows:
 4 years to less than 5 5% 5% 25%
years
 3 years to less than 4 12% 12% 25%
years
 Less than 3 years 20% 20% 25%

(2)ROYALTIES
A. Royalties, in general (other 20% 20% 25%
than royalties described in
letter “B”)
B. Royalties on books as well 10% 10% 25%
as other literary works and
musical compositions.

(3)PRIZES
Prizes exceeding P 10,000 20% 20% 25%

NOTE: Prizes < and equal to

P10,000 are subject to basic tax
except those received by NRAs
NETB which are subject to 25%
FWT.
(4)OTHER WINNINGS
Under CREATE ACT 20% 20% 25%

Other Winnings Regardless of

amount
PCSO Winnings
 Amount is < or equal to P Exempt Exempt 25%
10,000
 Amount is > or equal to P 20% 20% 25%
 10,000
(5)CASH AND/OR
PROPERTY DIVIDEND
A. Cash and/ or property 10% 20% 25%
dividends
actually/constructively
received from a domestic
corporation or from a joint
stock company, insurance
or mutual fund company
and ROHQ of multinational
companies.
B. Share of an individual in 10% 20% 25%
the distributable net
income after tax of a
Partnership [Other than a
General Professional
Partnership (GPP)]**
C. Share of an individual in 10% 20% 25%
the net income after tax of
an Association, a Joint
Account, or a Joint Venture
or Consortium taxable as a
corporation, which he is a
member or a co-venturer.

SUMMARY OF CAPITAL GAINS SUBJECT TO CAPITAL GAINS TAX

Citizens and NRA-ETB NRA-NETB
Residents
(1)Capital gain from sale 15% 15% 15%
of shares of stock of a
domestic corporation
not traded in the local
stock exchange.
(Beginning Jan. 1,
2018)
(2)Sale of real property 6% 6% 6%
 located in the
Philippines.

SUMMARY OF CAPITAL GAINS TAX TRANSACTIONS

Shares of
v Domestic Exempt
Corporation from
TRADED Income Tax
in the but subject
Stock to
Exchange Percentage
Shares of
SALE OF tax
Foreign
SHARES OF
Corporation
STOCK

NOT
Shares of Subject to
TRADED
Domestic Capital
in the
Corporation Gains Tax
Stock
Exchange

Shares of Subject to
Foreign Basic
Corporation Income Tax

Located in Capital
\ the
If the buyer is
Gains
the
Philippines Tax
government,
CAPITAL ASSET (CGT)
the individual
may choose to
be taxed at
Located either CGT or
SALE OF REAL Basic Tax
Abroad graduated
PROPERTY (Graduated)
rate.
CREDITABLE WITHOLDING TAX
Certain regular incomes not subject to final taxes on passive income and
capital gains tax are subject to “creditable” withholding taxes. The term
“creditable” means the taxes withheld are deductible from tax due as
shown below:
Gross Compensation Income Pxxx
Gross business/ professional income Xxx
Less: Allowable business/ professional (xxx)
expenses
=
Taxable net income Pxxx

Income Tax Due (Graduated Tax Rate) Pxxx

LESS:
Creditable Withholding Taxes
CWTx on compensation income P xx
CWTx withheld at source xx

Other Tax Credits:

Prior year’s excess credit xx
Tax payments for the previous xx
quarter(s)
Foreign income tax credit xx (xxx)
=
Income Tax Payable Pxxx

PURCHASE OF/ PAYMENT FOR: CWT %

Professional fees
  Individual payee
 If gross income for the current year < 5%
or equal to P3M
 If gross income for the current year > 10%
P3M
 Non-Individual payees
 If gross income for the current year < 10%
and equal to P720k
 If gross income for the current year > 15%
P720k
Rentals 5%
Goods 1%
Services 2%
Income Payments to beneficiaries of estates/ trusts 15%

Income payments to partners of GPPs

 If gross income for the current year < 10%
and equal to P720k
 If gross income for the current year 15%
>P720k

Certain income payments made by credit card 1%

companies

QUARTERLY TAX RETURNS

Quarterly Returns 1ST Quarter May 15
2nd Quarter Aug 15 (45 days after
end of the Quarter)
3rd Quarter Nov. 15 (45 days after
end of the Quarter)

Annual Return Final Adjusted Return April 15 of the

succeeding year

APPLICABLE TAXES OF MWEs

Taxpayer Income Tax Creditable
Withholding Tax
 1. Purely MWE Exempt Exempt
2. MWE with Still treated as MWE, Still treated as MWE,
additional hence, exempt hence, exempt
“benefits” from
the employer
exceeding tax-
exempt
thresholds
such as the
P90,000 limit.
3. MWE with Min. wage= exempt Min. wage= exempt
additional Bus. Income= Bus. Income=
“business” subject to basic tax subject to creditable
income. withholding tax

TAXATION OF ALIEN INDIVIDUALS EMPLOYED BY POGOs or OGLs

APPLICABLE INCOME TAX
TYPE OF INCOME
Gross income** from OGL
Income from all other sources
within the Philippines
INCOME TAX PER MONTH
25% FWT or P12,500 per month
whichever is higher
Subject to pertinent income tax

CHAPTER 3 FRINGE BENEFIT TAX

TAX TREATMENT OF FRINGE BENEFITS
Fringe Benefits Part of *Taxable Subject to Subject to FBT
given to: Compensation Basic Tax and
CWT on
compensation
 Rank and YES YES NO
File
 Supervisory/ NO** NO YES
Managerial

NOTE:
*Taxable compensation income in the table refers to all forms of
compensation income which are subject to graduated tax rate or basic
income tax.
**FBs given to supervisory and managerial employees are taxable,
nonetheless, it is subject to fringe benefit tax, a final withholding tax (FWT),
not the graduated tax rate for compensation income.

FBT RATES
FRINGE BENEFIT TAX BASE AND RATE
CLASSIFICATON OF CIT., RA, NRAET NRA-NETB
TAXPAYERS
Monetary Value Pxx Pxx
Divide by gross monetary value 65%* 75%*
factor
= =
Grossed up monetary Value Pxx Pxx
X FBT Rate 35%* 25%*
= =
Fringe Benefit Tax (FBT) Pxx Pxx

VACATION AND SICK LEAVE CREDITS

“USED” leave credits are

MONETIZED “UNUSED”
treated as compensation
LEAVE CREDITS
income subject to basic tax.

VACATION LEAVE SICK LEAVE

Received by a By a government employee Received by a

private employee (regardless of #days) private employee

In excess of Not exceeding

10 days 10 days De Minimis
(exempt)