8% Income Tax

Revenue Regulation 8-2018

Revenue Regulation 11-2018
Revenue Memorandum Circular 50-2018
Who are entitled to avail the 8% Income Tax
Rate?
• Non-VAT taxpayers whose gross sales/ receipts and other
non-operating income did not exceed P3,000,000 VAT
threshold for the year
Who are NOT entitled?
• Purely compensation income earner

• VAT-registered taxpayers, regardless of amount of gross sales/ receipts and other non-operating
income

• Non-VAT taxpayers whose gross sales/receipts and other non-operating income exceeded
P3,000,000 VAT threshold

• Partners of a General Professional Partnership (GPP), since their distributive share from the
GPP is already net of costs and expenses

• Individuals enjoying income tax exemption, such as those registered under Barangay Micro
Business Enterprise (BMBE)

• Taxpayers subject to Other Percentage Taxes under Title V of the Tax Code, as amended,
except those under Section 116 of the same title
 Other Percentage Tax – Title V of the Tax Code
Sec. 117 - Percentage tax (PT) on domestic carriers and keepers of garages
Sec. 118 - PT on international carriers
Sec. 119 - Tax on Franchises
Sec. 120 - Tax on overseas dispatch, message or conversation originating from the Philippines
Sec. 121 - Tax on banks and non-bank financial intermediaries performing quasi-banking functions
Sec. 122 - Tax on other non-bank financial intermediaries
Sec. 123 - Tax on life insurance premiums
Sec. 124 - Tax on agents of foreign insurance companies
Sec. 125 - Amusement taxes
Sec. 126 - Tax on winnings
Sec. 127 - Tax on sale, barter or exchange of shares of stock listed and traded through the local
stock exchange or through initial public offering
How to Avail the 8% Income Tax
• For new business registrants (individual)
A. BIR From 1901
B. Initial quarterly income tax or percentage tax return after the
commencement of business/ practice of profession

• For existing individual business taxpayers

A. BIR Form 1905
B. 1st Quarterly Income Tax Return and/or 1st Quarterly Percentage Tax
Return
Comparison of Graduated IT Rate and 8% IT Rate
Particulars Graduated IT Rates 8% IT Rates
Applicability In general, applicable to all individual taxpayers Maybe availed by those individuals
engaged in business/ practice of
profession whose gross sales/receipts
and other non-operating income did
not exceed P3,000,000

Basis of income Net taxable income Gross sales/receipts and other non-
tax operating income
Allowed Itemized or Optional Standard Deduction Allowed reduction of P250,000 from
deductions the gross, only for individual whose
income comes purely from business/
practice of profession
Business tax VAT or Percentage Tax If qualified, not subject to Percentage
Tax
Required Financial If Itemized Deduction: If qualified:
Statement Gross sales is less than P3M: FS No FS required
Gross sales is P3M and above: Audited FS

If Optional Standard Deduction: No FS required