Income Tax

a tax on a person's income, emoluments, profits

arising from property, practice of profession, conduct
of trade or business or on the pertinent items of gross
income specified in the Tax Code of 1997 (Tax Code),
as amended, less the deductions and/or personal and
additional exemptions, if any, authorized for such
types of income, by the Tax Code, as amended,or
other special laws.

What is income?
Income means all wealth, which flows
into the taxpayer other than as a mere
return of capital.

What is Taxable Income?

Taxable income means the pertinent items
of gross income specified in the Tax Code
as amended, less the deductions and/or
personal and additional exemptions, if any,
authorized for such types of income, by the
Tax Code or other special laws.

What is Gross Income?

Gross

income means all income

derived from whatever source.

What comprises gross income?

Gross income includes, but is not limited to the following:
Compensation for services, in whatever form paid,
including but not limited to fees, salaries, wages,
commissions and similar item
Gross income derived from the conduct of trade or
business or the exercise of profession. Gains derived from
dealings in property
Interest

Rents
Royalties

What comprises gross income?

Dividends
Annuities
Prizes and winnings
Pensions

Partner's distributive share from the net income of the general

professional partnerships

What are some of the exclusions

from gross income?
Life insurance
Amount received by insured as return of

premium
Gifts, bequests and devises
Compensation for injuries or sickness
Income exempt under treaty
Retirement benefits, pensions, gratuities, etc.

What are some of the exclusions

from gross income?
Miscellaneous items
income derived by foreign government
income derived by the government or its political subdivision o
prizes and awards in sport competition
prizes and awards which met the conditions set in the Tax
Code o 13th month pay and other benefits

GSIS, SSS, Medicare and other contributions

Gain from the sale of bonds, debentures or other certificate of
indebtedness o

gain from redemption of shares in mutual fund

What are the allowable deductions

from gross income?
Except for taxpayers earning compensation income arising from
personal services rendered under an employer-employee relationships
where the only deduction provided that the gross family income does
not exceed P250,000 per family is the premium payment on health
and/or hospitalization insurance, a taxpayer may opt to avail any of
the following allowable deductions from gross income:
a)Optional Standard Deduction - an amount not exceeding 40% of the
net sales for individuals and gross income for corporations; or

b) Itemized Deductions

Itemized Deductions
b) Itemized Deductions which include the following:

Expenses
Interest
Taxes
Losses
Bad Debts
Depreciation
Depletion of Oil and Gas Wells and Mines
Charitable Contributions and Other Contributions
Research and Development
Pension Trusts

PERSONAL AND ADDITIONAL

EXEMPTION
In addition, individuals who are either earning
compensation income, engaged in business or
deriving income from the practice of profession
are entitled to personal and additional exemptions
as follows:

PERSONAL EXEMPTIONS:
For single individual or For each married individual P
50,000.00

Note: In case of married individuals where only one of the

spouses is deriving gross income, only such spouse will be
allowed to claim the personal exemption.

ADDITIONAL EXEMPTIONS:
For each qualified dependent, an P25,000 additional exemption can
be claimed but only up to 4 qualified dependents
N.B. The additional exemption can be claimed by the following:

The husband who is deemed the head of the family unless he

explicitly waives his right in favor of his wife

The spouse who has custody of the child or children in case of legally
separated spouses. Provided, that the total amount of additional
exemptions that may be claimed by both shall not exceed the
maximum additional exemptions allowed by the Tax Code.

Premium Payments on Health

and/or Hospitalization Insurance
The maximum amount of P 2,400 premium payments on health
and/or hospitalization insurance can be claimed if:

Family gross income yearly should not be more than P 250,000

For married individuals, the spouse claiming the additional
exemptions for the qualified dependents shall be entitled to
this deduction.
* 200 per month

Who are required to file

the Income Tax returns?

1. Resident citizens receiving income from sources within

or outside the Philippines
employees deriving purely compensation income from 2 or more employers, concurrently or
successively at anytime during the taxable year

employees deriving purely compensation income regardless of the amount, whether from a
single or several employers during the calendar year, the income tax of which has not been
withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or
refundable return

self-employed individuals receiving income from the conduct of trade or business and/or
practice of profession

individuals deriving mixed income, i.e., compensation income and income from the conduct
of trade or business and/or practice of profession

individuals deriving other non-business, non-professional related income in addition to

compensation income not otherwise subject to a final tax

individuals receiving purely compensation income from a single employer, although the
income of which has been correctly withheld, but whose spouse is not entitled to substituted
filing

marginal income earners

2. Non-resident citizens receiving income from sources

within the Philippines
3. Aliens, whether resident or not, receiving income from
sources within the Philippines

4. Corporations no matter how created

or organized including partnerships
Domestic corporations receiving income from sources within
and outside the Philippines
Foreign corporations receiving income from sources within the
Philippines

Taxable partnerships

5. Estates and trusts engaged in trade or business

MARGINAL INCOME EARNERS vs

MINIMUM WAGE EARNERS

There is a big difference in the taxation of

minimum wage earners and marginal
income earners. The former are exempt
from income tax while the latter are subject
to income tax.

MARGINAL INCOME
EARNERS
individuals whose business do not realize gross
sales or receipts exceeding PhP100,000.00 in
any 12-month period (Revenue Regulations No.
7-2012; Revenue Memorandum Circular No. 72014). One who is considered a marginal
income earner is subject to income tax and is
required to file an income tax return.

MINIMUM WAGE EARNERS

workers

in the private and public sector whose

compensation income does not exceed the statutory
minimum wage (Republic Act No. 9504). A minimum wage
earner in the agriculture sector who does not work and is
not considered paid on Saturdays and Sundays or rest days
is entitled to annual minimum wage of around
PhP111,186.00 (PhP426 x 261 days), exclusive of the
mandatory 13th month pay. A minimum wage earner is
exempt from income tax.

THINK OF THIS
The purpose for the enactment of Republic Act No. 9504 is
to ease the burden of taxation on minimum wage earners.
Aren't marginal income earners likewise entitled to tax
relief? In it's Revenue Regulations No. 7-2012, the BIR
recognized that activities of marginal income earners are
principally for subsistence and livelihood. So, is it just for
the government to subject to income tax such meager
earnings and marginalize the marginal income earners even
more?

Who are not required to file Income

Tax returns?
An individual who is a minimum wage earner
An individual whose gross income does not exceed his total
personal and additional exemptions

An individual whose compensation income derived from one

employer does not exceed P 60,000 and the income tax on which
has been correctly withheld

An individual whose income has been subjected to final

withholding tax (alien employee as well as Filipino employee
occupying the same position as that of the alien employee of
regional headquarters and regional operating headquarters of
multinational companies, petroleum service contractors and subcontractors and offshore-banking units, non-resident aliens not
engaged in trade or business)

Who are not required to file Income

Tax returns?
Those who are qualified under substituted filing. However, substituted
filing applies only if all of the following requirements are present :
the employee received purely compensation income (regardless of amount)
during the taxable year

the employee received the income from only one employer in the Philippines
during the taxable year

the amount of tax due from the employee at the end of the year equals the
amount of tax withheld by the employer

the employees spouse also complies with all 3 conditions stated above
the employer files the annual information return (BIR Form No. 1604-CF)
the employer issues BIR Form No. 2316 (Oct 2002 ENCS version ) to
each employee.

Who are exempt from

Income Tax?
(For Income Earned
Outside)

Non-resident citizen who is:

A citizen of the Philippines who establishes to the satisfaction of
the Commissioner the fact of his physical presence abroad with a
definite intention to reside therein
A citizen of the Philippines who leaves the Philippines during the
taxable year to reside abroad, either as an immigrant or for
employment on a permanent basis
A citizen of the Philippines who works and derives income from
abroad and whose employment thereat requires him to be
physically present abroad most of the time during the taxable
year
A citizen who has been previously considered as a non-resident
citizen and who arrives in the Philippines at any time during the
year to reside permanently in the Philippines will likewise be
treated as a non-resident citizen during the taxable year in which
he arrives in the Philippines, with respect to his income derived
from sources abroad until the date of his arrival in the

Overseas Filipino Worker, including

Seaman
An individual citizen of the Philippines who is
working and deriving income from abroad as an
overseas Filipino worker is taxable only on income
from sources within the Philippines; provided, that
a seaman who is a citizen of the Philippines and
who receives compensation for services rendered
abroad as a member of the complement of a vessel
engaged exclusively in international trade will be
treated as an overseas Filipino worker.
NOTE: A Filipino employed as Philippine
Embassy/Consulate service personnel of the
Philippine Embassy/consulate is not treated as a

What are the procedures in filing

Income Tax returns (ITRs)?
For with payment ITRs (BIR Form Nos. 1700 /
1701 / 1701Q / 1702 / 1702Q / 1704)
File the return in triplicate (two copies for the BIR and one copy for the
taxpayer) with the Authorized Agent Bank (AAB) of the place where
taxpayer is registered or required to be registered. In places where there
are no AABs, the return will be filed directly with the Revenue Collection
Officer or duly Authorized Treasurer of the city or municipality in which
such person has his legal residence or principal place of business in the
Philippines, or if there is none, filing of the return will be at the Office of
the Commissioner.

What are the procedures in filing

Income Tax returns (ITRs)?
For no payment ITRs -- refundable, break-even,
exempt and no operation/transaction, including
returns to be paid on 2nd installment and returns paid
through a Tax Debit Memo (TDM)
File the return with the concerned Revenue District Office (RDO) where
the taxpayer is registered. However, "no payment" returns filed late shall
be accepted by the RDO but instead shall be filed with an Authorized
Agent Bank (AAB) or Collection Officer/Deputized Municipal Treasurer
(in places where there are no AABs), for payment of necessary penalties.

How is Income Tax payable of individuals

(resident citizens and non-resident
citizens)computed?
Gross Income
Less: Allowable Deductions (Itemized or
Optional)
Net Income

P ___________

Less: Personal & Additional Exemptions

___________

Net Taxable Income

P ___________

Multiply by Tax Rate (5 to 32%)

____________

Income Tax Due: Tax withheld (per BIR

From 2316/2304)
Income tax payable

P ___________

___________

P ___________

P____________

How is Income Tax paid?

Through withholding
Generally 10%or 15% if the gross annual business or
professional income exceeds P720,000 per year

20% - Fees paid to directors who are not employees and 20%
of professional fees paid to non-individuals

Other withholding tax rates

Pay the balance as you file the tax return, computed as follows:

Income Tax Due

P ___________

Less: Withholding Tax

___________

Net Income Tax Due

P ___________

Is the Minimum Corporate Income Tax (MCIT)

an addition to the regular or normal income tax?
No, the MCIT is not an additional tax. An MCIT of 2% of the gross

income as of the end of taxable year (whether calendar or fiscal year,

depending on the accounting period employed) is
imposed on a
corporation taxable under Title II of the Tax Code, as amended,
beginning on the 4th taxable year immediately following the taxable
year in which such corporation commenced its business operations
when the MCIT is greater than the regular income tax. The MCIT is
compared with the regular income tax, which is due from a corporation.
If the regular income is higher than the MCIT, then the corporation does
not pay the MCIT but the amount of the regular income tax.

Minimum Corporate Income Tax

(MCIT)
Notwithstanding the above provision, however, the computation and the
payment of MCIT, shall likewise apply at the time of filing the quarterly
corporate income tax as prescribed under Section 75 and Section 77 of
the Tax Code, as amended. Thus, in the computation of the tax due for
the taxable quarter, if the computed quarterly MCIT is higher than that
quarterly normal income tax, the tax due to be paid for such taxable
quarter at the time of filing the quarterly income tax return shall be the
MCIT which is two percent (2%) of the gross income as of the end of the
taxable quarter. In the payment of said quarterly MCIT, excess MCIT
from the previous taxable year/s shall not be allowed to be credited.
Expanded withholding tax, quarterly corporate income tax payments
under the normal income tax, and the MCIT paid in the previous taxable
quarter/s are allowed to be applied against the quarterly MCIT due.

Who are covered by MCIT?

The MCIT covers domestic and resident foreign corporations
which are subject to the regular income tax. The term
regular income tax refers to the regular income tax rates
under the Tax Code. Thus, corporations which are subject to a
special corporate tax system do not fall within the coverage of
the MCIT.

For corporations whose operations or activities are partly

covered by the regular income tax and partly covered by the
preferential rate under special law, the MCIT shall apply on
operations by the regular income tax rate. Newly established
corporations or firms which are on their first 3 years of
operations are not covered by the MCIT.

When does a corporation start to be

covered by the MCIT?
A corporation starts to be covered by the MCIT on the 4th year
of its business operations. The period of reckoning which is the
start of its business operations is the year when the corporation
was registered with the BIR. This rule will apply regardless of
whether the corporation is using the calendar year or fiscal
year as its taxable year.

When is the MCIT reported and

paid? Is it quarterly?
The MCIT is paid on an annual basis and
quarterly basis. The rules are
Revenue Regulations No. 12-2007.

governed

by

How is MCIT computed?

The MCIT is 2% of the gross income of the corporation at the
end of the year.
Gross income means gross sales less sales returns, discounts
and cost of goods sold. Passive income, which have been
subject to a final tax at source do not form part of gross
income for purposes of the MCIT.
Cost of goods sold includes all business expenses directly
incurred to produce the merchandise to bring them to their
present location and use.

How is MCIT computed?

For trading or merchandising concern, cost of goods
sold means the invoice cost of goods sold, plus
import duties, freight in transporting the goods to
the place where the goods are actually sold,
including insurance while the goods are in transit.
For a manufacturing concern, cost of goods
manufactured and sold means all costs of production
of finished goods such as raw materials used, direct
labor and manufacturing overhead, freight cost,
insurance premiums and other costs incurred to
bring the raw materials to the factory or warehouse.

How is MCIT computed?

For sale of services, gross income means gross receipts less
sales returns, allowances, discounts and cost of services
which cover all direct costs and expenses necessarily incurred
to provide the services required by the customers and clients
including:

Salaries and employees benefits of personnel, consultants and

specialists directly rendering the service;
Cost of facilities directly utilized in providing the service such
as depreciation or rental of equipment used;
Cost of supplies
N.B. Interest Expense is not included as part of cost of
service, except in the case of banks and other financial
institutions.

How is MCIT computed?

Gross Receipts means amounts actually or
constructively received during the taxable year.
However, for taxpayers employing the accrual
basis of accounting, it means amounts earned as
gross income.

What is the carry forward provision

under the MCIT?
Any excess of the MCIT over the normal income
tax may be carried forward on an annual basis
and be credited against the normal income tax for
3 immediately succeeding taxable years.

How would the MCIT be recorded

for accounting purposes?
Any amount paid as excess minimum corporate
income tax should be recorded in the
corporations books as an asset under account
title Deferred charges-MCIT

How long can we amend our income

tax return?
There is no prescription period for amending the
return. When the taxpayer has been issued a
Letter of Authority, he can no longer amend the
return.

Can a benefactor of a senior citizen claim

him/her as additional dependent in addition to
his/her 3 qualified dependent children at P
25,000 each?

No, pursuant to Revenue Regulations

2-94, the benefactor of a senior citizen
cannot claim the additional exemption.

What is a tax treaty?

A tax treaty formally known as convention or agreement
for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income (and on
capital) could be defined in terms of its purpose. First, a
tax treaty is intended to promote international trade and
investment in several ways, the most important of which is
by allocating taxing jurisdiction between the Contracting
States so as to eliminate or mitigate double taxation of
income. Second, a tax treaty is intended to permit the
Contracting States to better enforce their domestic laws so
as to reduce tax evasion. These purposes are in fact

Annual Income Tax For Individuals

Earning Purely Compensation Income
(Including Non-Business/Non-Profession
Related Income) and For Marginal
Income Earners
BIR Form 1700 - Annual Income Tax Return (For
Individual Earning Purely Compensation Income
Including Non-Business/Non-Profession Related
Income)
On or before the 15th day of April of each year
covering taxable income for the preceding
taxable year

Annual Income Tax For Self-Employed Individuals, Estates And

Trusts (Including Those With Mixed Income,i.e., Compensation
Income and Income from Business and/or Practice of Profession

BIR Form 1701 - Annual Income Tax Return (For SelfEmployed Individuals, Estates and Trusts Including
Those With Both Business and Compensation Income)
Final Adjustment Return or Annual Income Tax
Return -On or before the 15th day of April of each
year covering income for the preceding year

Account Information Form For Self-Employed Individuals,

Estates And Trusts (Including Those With Mixed Income ,
I.E., Compensation Income and Income from Business
and/or Practice of Profession)

BIR Form 1701 AIF - Account Information Form For

Self-Employed Individuals, Estates and Trusts
(Including
those
with
Mixed
Income,
i.e.,
Compensation Income and Income from Business
and/or Practice of Profession) and Estates and Trusts
(Engaged in Trade or Business)

 NOTE: Pursuant to Revenue Memorandum Circular

No. 6 2001, corporations, companies or persons
whose gross quarterly sales, earnings, receipts or
output exceed P 150,000.00 may not accomplish
this form. In lieu thereof, they may file their annual
income tax returns accompanied by balance sheets,
profit and loss statement, schedules listing incomeproducing properties and the corresponding income
therefrom, and other relevant statements duly
certified by an independent CPA.
Same deadline as BIR Form 1701 - On or before the

Quarterly Income Tax For Self-Employed Individuals,

Estates And Trusts (Including Those With Mixed
Income, I.E., Compensation Income and Income from
Business and/or Practice of Profession)

BIR Form 1701Q - Quarterly Income Tax Return For

Self-Employed Individuals, Estates and Trusts
(Including
those
with
both
Business
and
Compensation Income)
Deadlines
April 15 for the first quarter
August 15 for the second quarter
November 15 for the third quarter

Annual Income Tax For

Corporations And Partnerships
BIR Form 1702 - Annual Income Tax Return (For
Corporations and Partnerships)
Final Adjustment Return or Annual Income Tax
Return-On or before the 15th day of the fourth month
following the close of the taxpayers taxable year

Account Information Form For

Corporations And Partnerships
BIR Form 1702 AIF - Account Information Form (For
Corporations and Partnerships)
NOTE: Pursuant to Revenue Memorandum Circular No. 6
2001, corporations, companies or persons whose gross
quarterly sales, earnings, receipts or output exceed P
150,000.00 may not accomplish this form. In lieu thereof,
they may file their annual income tax returns
accompanied by balance sheets, profit and loss statement,
schedules listing income-producing properties and the
corresponding income therefrom, and other relevant
statements duly certified by an independent CPA.

Cont
Same deadline as BIR Form 1702 - On or before the 15th
day of the fourth month following the close of the
taxpayers taxable year

Quarterly Income Tax For

Corporations And Partnerships
BIR Form 1702 Q - Quarterly Income Tax Return
(For Corporations and Partnerships)
Corporate Quarterly Declaration or Quarterly
Income Tax Return- On or before the 60th day
following the close of each of the quarters of the
taxable year

Improperly Accumulated
Earnings Tax For Corporations
BIR

Form 1704 - Improperly Accumulated

Earnings Tax Return (For Corporations)
Within fifteen (15) days after the close of the
taxable year

Annual Income Information Form for

General Professional Partnerships
Sec. 55. Returns of General Professional Partnership (Tax
Code of 1997, as amended)
Every general professional partnership shall file, in
duplicate, a return of its income, except income exempt
under Section 32 (B) of this Title, setting forth the items of
gross income andof deductions allowed by this Title, and
the
names,
Taxpayer
Identification
Numbers
(TIN),addresses and shares of each of the partners.

TAX RATE

A. For Individuals Earning Purely Compensation

Income and Individuals Engaged in Business and
Practice of Profession

Amount of Net Taxable Income

Over
But Not Over

P10,000
P10,000

P30,000

P30,000

P70,000

P70,000

P140,000

P140,000

P250,000

P250,000

P500,000

P500,000

Rate

5%
P500 + 10% of the Excess over
P10,000
P2,500 + 15% of the Excess
over P30,000
P8,500 + 20% of the Excess
over P70,000
P22,500 + 25% of the Excess
over P140,000
P50,000 + 30% of the Excess
over P250,000
P125,000 + 32% of the Excess
over P500,000 in 2000 and
onward

Cont
Note: When the tax due exceeds P2,000.00, the taxpayer
may elect to pay in two equal installments, the first
installment to be paid at the time thereturn is filed and
the second installment 15 of the same year at on or before
July the Authorized Agent Bank (AAB) within the
jurisdiction of theRevenue District Office (RDO) where
the taxpayer is registered.


1. Domestic Corporations:
a. In General
b. Minimum Corporate Income
Tax*
c. Improperly Accumulated
Earnings
2. Proprietary Educational
Institution

3. Non-stock, Non-profit
Hospitals

Tax Rate

30% (effective
Jan. 1, 2009)
2%
10%
10%

10%

Taxable Base

Net taxable income from all

sources
Gross Income
Improperly Accumulated
Taxable Income
Net taxable income provided
that the gross income from
unrelated trade, business or
other activity does not exceed
50% of the total gross income
Net taxable income provided
that the gross income from
unrelated trade, business or
other activity does not exceed
50% of the total gross income


GOCC, Agencies &
Instrumentalities
a. In General
b. Minimum Corporate
Income Tax*
c. Improperly Accumulated
Earnings
5. National Gov't. & LGUs
a. In General
b. Minimum Corporate
Income Tax*
c. Improperly Accumulated
Earnings
6. Taxable Partnerships
a. In General
b. Minimum Corporate
Income Tax*

TAX RATE
30%
2%
10%

30%
2%
10%

30%
2%

TAXABLE BASE
Net taxable income from all
sources
Gross Income
Improperly Accumulated
Taxable Income

Net taxable income from all

sources
Gross Income
Improperly Accumulated
Taxable Income

Net taxable income from all

sources
Gross Income

TAX RATE
Exempt Corporation
a.On Exempt Activities
b. On Taxable Activities
8. General Professional
Partnerships
9. Corporation covered by
Special Laws
10. International Carriers
11. Regional Operating Head
12. Offshore Banking Units
(OBUs)

0%
30%
0%
Rate specified under the
respective special laws
2.5%
10%
10%
30%

13. Foreign Currency

Deposit Units (FCDU)

10%
30%

TAXABLE BASE

Net taxable income from all

sources

Gross Philippine Billings

Taxable Income
Gross Taxable Income On
Foreign Currency
Transaction
On Taxable Income other
than Foreign Currency
Transaction
Gross Taxable Income On
Foreign Currency
Transaction
On Taxable Income other

MCIT
*Beginning on the 4th year immediately following
the year in which such corporation commenced its
business operations, when the minimumcorporate
income tax is greater than the tax computed using
the normal income tax.

PASSIVE INCOME
1. Interest from currency deposits,
trust funds and deposit substitutes
2. Royalties (on books as well as
literary & musical composition)
- In general
3. Prizes (P10,000 or less )
- In excess of P10,000
4. Winnings (except from PCSO and
lotto)
5. Interest Income of Foreign Currency
Deposit

20%
10%
20%
5%
20%
20%
7.5%

PASSIVE INCOME
6. Cash and Property Dividends
- To individuals from Domestic Corporations
- To Domestic Corporations from Another Domestic
Corporations
7. On capital gains presumed to have been realized
from sale, exchange or other disposition of real
property (capital asset)
8. On capital gains for shares of stock not traded in
the stock exchange
- Not over P100,000
- Any amount in excess of P100,000

10 %
0%
6%

5%
10%

PASSIVE INCOME
9. Interest Income from long-term deposit or investment in the
form of savings, common or individual trust funds, deposit
substitutes, investment management accounts and other
investments evidenced by certificates
Upon pretermination before the fifth year , there should be
imposed on the entire income from the proceeds of the longterm deposit based on the remaining maturity thereof:
Holding Period
- Four (4) years to less than five (5) years

Exempt

5%

- Three (3) years to less than four (4) years

12%

- Less than three (3) years

20%

B. For Non-Resident Aliens

1. Interest
from currency in
deposits,
trust funds
and
deposit
Engaged
Trade
or
Business
20%
substitutes
2. Interest Income from long-term deposit or investment in the
form of savings, common or individual trust funds, deposit
substitutes, investment management accounts and other
investments evidenced by certificatesUpon pretermination
before the fifth year, there should be imposed on the entire Exempt
income from the proceeds of the long-term deposit based on the
remaining maturity thereof:Holding Period:

-Four (4) years to less than five (5) years

-Three (3) years to less than four (4) years
-Less than three (3) years

5%
12%
20%

B. For Non-Resident Aliens Engaged in

Trade or Business
On capital gains presumed to have
been
realized
from
the
sale,
6%
exchange or other disposition of real
property
4. On capital gains for shares of stock

not traded in the Stock Exchange

- Not over P100,000
5%
- Any amount in excess of P100,000 10%

C) For Non-Resident Aliens Not Engaged in

Trade or Business
1. On the gross amount of income derived
25%
from all sources within the Philippines
2. On capital gains presumed to have been
realized from the exchange or other
disposition of real property located in the 6%
Phils.
3. On capital gains for shares of stock not

traded in the Stock Exchange

- NotOverP100,000

5%

- Any amount in excess of P100,000

10%

D) On the gross income in the Philippines of Aliens Employed by

Regional Headquarters (RHQ) or Area Headquarters and Regional
Operating Headquarters (ROH), Offshore Banking Units (OBUs),
Petroleum Service Contractor and Subcontractor

On the gross income in the Philippines

of Aliens Employed by Regional
Headquarters
(RHQ)
or
Area
Headquarters and Regional Operating
Headquarters (ROH), Offshore Banking
Units
(OBUs),
Petroleum
Service
Contractor and Subcontractor

15%

E) General Professional
Partnerships
General
Partnerships

Professional

0%

F) Domestic Corporations
1) a. In General on net taxable
30%
income
b. Minimum Corporate Income
2%
Tax on gross income
c. Improperly Accumulated
Earnings

on
improperly 10%
accumulated taxable income

2) Proprietary Educational Institution and

10%
Non-profit Hospitals
- In general (on net taxable income)
10%
- If the gross income from unrelated trade,
business or other activity exceeds 50% of the 30%
total gross income from all sources
4) GOCC, Agencies & Instrumentalities

a. In General - on net taxable income

30%
b. Minimum Corporate Income Tax on
2%
gross income
c. Improperly Accumulated Earnings on
10%
improperly accumulated taxable income

5) Taxable Partnerships

a. In General on net taxable income

30%
b. Minimum Corporate Income Tax on gross
2%
income
c. Improperly Accumulated Earnings on
10%
improperly accumulated taxable income
6) Exempt Corporation

a. On Exempt Activities
0%
b. On Taxable Activities
30%
8) Corporation covered by Special Laws
Rate
specified
under the
respective
special laws

Cont

G) Resident Foreign
Corporation

1) a. In General on net taxable

30%
income
b. Minimum Corporate Income
2%
Tax on gross income
c. Improperly Accumulated
Earnings

on
improperly 10%
accumulated taxable income
2) International Carriers on gross
2.50%
Philippine billings
3)
Regional
Operating
10%
Headquarters on gross income

4) Corporation Covered
by Special Laws Rate
Cont
specified
under
the
respectiv
e special
laws
5) Offshore Banking Units (OBUs) on
10%
gross income
6) Foreign Currency Deposit Units
10%
(FCDU)on gross income

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