Income Tax

Income TAX
Income Tax is 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.
Who Are Required To File Income Tax Returns
Individuals
Resident citizens receiving income from sources within or outside the Philippines
o employees deriving purely compensation income from 2 or more employers,
concurrently or successively at any time during the taxable year
o 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
o self-employed individuals receiving income from the conduct of trade or business
and/or practice of profession
o individuals deriving mixed income, i.e., compensation income and income from the
conduct of trade or business and/or practice of profession
o individuals deriving other non-business, non-professional related income in addition to
compensation income not otherwise subject to a final tax
o 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
o marginal income earners
Non-resident citizens receiving income from sources within the Philippines
Aliens, whether resident or not, receiving income from sources within the Philippines
Corporation shall include partnerships, no matter how created or organized.
Domestic corporations receiving income from sources within and outside the Philippines
Foreign corporations receiving income from sources within the Philippines
Estates and trusts engaged in trade or business
Annual Income Tax For Individuals Earning Purely Compensation Income (Including NonBusiness/Non-Profession Related Income) and For Marginal Income Earners
Tax Form
BIR Form 1700 - Annual Income Tax Return (For Individual Earning Purely Compensation Income
Including Non-Business/Non-Profession Related Income)
Documentary Requirements
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)
2. Waiver of the Husbands right to claim additional exemption, if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Proof of Foreign Tax Credits, if applicable
5. Income Tax Return previously filed and proof of payment, if filing an amended return for the same
taxable year
Procedures
1. Fill-up BIR Form 1700 in triplicate.
2. If there is payment:
Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are
registered and present the duly accomplished BIR Form 1700, together with the required attachments
and your payment.
In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City
or Municipal Treasurer located within the Revenue District Office where you are registered and present
the duly accomplished BIR Form 1700, together with the required attachments and your payment.
Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue
Collection Officer/duly Authorized City or Municipal Treasurer.
3. For "No Payment" Returns including refundable returns, and for tax returns qualified for second
installment:
Proceed to the Revenue District Office where you are registered or to any Tax Filing Center
established by the BIR and present the duly accomplished BIR Form 1700, together with the required
attachments.
Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center
representative.
Deadline
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 )
Tax Form
BIR Form 1701 - Annual Income Tax Return (For Self-Employed Individuals, Estates and Trusts Including
Those With Both Business and Compensation Income)
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if applicable
2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable
3. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
4. Waiver of the Husbands right to claim additional exemption, if applicable

7. Income Tax Return previously filed and proof of payment, if filing an amended return for the same
year
8. Account Information Form (AIF) or the Certificate of the independent CPA with Audited Financial
Statements if the gross quarterly sales, earnings, receipts or output exceed P 150,000.00
9. Proof of prior years excess tax credits, if applicable
Procedures
1. Fill-up BIR Form 1701 in triplicate copies.
and your payment.
the duly accomplished BIR Form 1701, together with the required attachments and your payment.
Collection Officer/duly Authorized City or Municipal Treasurer
3. For "No Payment" including refundable/ creditable returns, returns with excess tax credit carry over,
and returns qualified for second installment:
Proceed to the Revenue District Office where you are registered or to any established Tax Filing
Centers established by the BIR and present the duly accomplished BIR Form 1701, together with the
required attachments.
representative.
Deadline
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)
Tax Form
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 income-producing properties and the corresponding income
therefrom, and other relevant statements duly certified by an independent CPA.
None
Procedures
1. Accomplish BIR Form 1701 AIF in triplicate.
2. Attach the same to BIR Form 1701.
Deadline
Same deadline as BIR Form 1701 - On or before the 15th day of April of each year covering taxable
income for the preceding year
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)
Tax Form
BIR Form 1701Q - Quarterly Income Tax Return For Self-Employed Individuals, Estates and Trusts
(Including those with both Business and Compensation Income)
1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable
2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable
4. Previously filed return, if an amended return is filed for the same quarter
Procedures
1. Fill-up BIR Form 1701Q in triplicate.
Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you
registered and present the duly accomplished BIR Form 1701 Q, together with the required
attachments and your payment.
the duly accomplished BIR Form 1701Q, together with the required attachments and your payment.
3. For "No Payment" Returns including refundable/ creditable returns with excess tax credit carry over
and returns qualified for second installment:
established by the BIR and present the duly accomplished BIR Form 1701Q, together with the required
attachments.
representative.
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

Tax Form
BIR Form 1702 - Annual Income Tax Return (For Corporations and Partnerships)
1. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304), if applicable
2. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
5. Income tax return previously filed and proof of payment, if amended return is filed for the same
taxable year
6. Account Information Form (AIF) and/or the Certificate of the independent CPA with Audited
Financial Statements, if the gross quarterly sales, earnings, receipts or output exceed P150,000.00
7. Proof of prior years excess tax credits, if applicable
Procedures
and your payment.
the duly accomplished BIR Form 1702 with the required attachments and your payments.
3. For "No Payment" Returns including refundable/ creditable returns and returns with excess tax credit
carry over:
established by BIR and present the duly accomplished BIR Form 1702, together with the required
attachments.
representative
Deadline
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
Tax Form
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.
None
Procedures
1. Accomplish BIR Form 1702 AIF in triplicate.
2. Attach the same to BIR Form 1702.
Deadline
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
Tax Form
BIR Form 1702 Q - Quarterly Income Tax Return (For Corporations and Partnerships)
1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable
2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304), if applicable
4. Previously filed return, if an amended return is filed for the same quarter
Procedures
1. Fill-up BIR Form 1702 Q in triplicate.
registered and present the duly accomplished BIR Form 1702 Q, together with the required
attachments and your payment.
the duly accomplished BIR Form 1702 Q.
3. For Refundable Returns and for those returns with second installment:
Proceed to the Revenue District Office where you are registered and present the duly accomplished
BIR Form 1702 Q, together with the required attachments.
Receive your copy of the duly stamped and validated form from the RDO representative.
Deadline
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
Tax Form
BIR Form 1704 - Improperly Accumulated Earnings Tax Return (For Corporations)
1. Photocopy of Annual Income Tax Return (BIR Form 1702) with Audited Financial Statements and/or
Account Information Form of the covered taxable year duly received by the BIR; and
2. Sworn declaration as to dividends declared taken from the covered year's earnings and the
corresponding tax withheld, if any
Procedures
and your payment.
the duly accomplished BIR Form 1704
3. If there is no payment:
Proceed to the Revenue District Office where you are registered and present the duly accomplished
BIR Form 1704, together with the required attachments.
Receive your copy of the duly stamped and validated form from the RDO representative
Deadline
Within fifteen (15) days after the close of the taxable year
Tax Rate
A. For Individuals Earning Purely Compensation Income and Individuals Engaged in
Business and Practice of Profession
Amount of Net Taxable Income
Over
Rate
But Not Over

P10,000
5%
P10,000
P30,000
P500 + 10% of the Excess over P10,000
P30,000
P70,000
P2,500 + 15% of the Excess over P30,000
P70,000
P140,000
P140,000
P250,000
P250,000
P500,000
P500,000
P125,000 + 32% of the Excess over P500,000 in 2000 and onward
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 the return 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 the Revenue
District Office (RDO) where the taxpayer is registered.
Tax Rate
Taxable Base
1. Domestic Corporations:
a. In General
b. Minimum Corporate Income Tax*
30% (effective Jan. Net taxable income from all sources

1, 2009)
2%
Gross Income
c. Improperly Accumulated Earnings
10%
Improperly Accumulated Taxable

Income
2. Proprietary Educational Institution
10%
Net taxable income provided that the

gross income from unrelated trade,
business or other activity does not
exceed 50% of the total gross income
3. Non-stock, Non-profit Hospitals
10%
Net taxable income provided that the

gross income from unrelated trade,
business or other activity does not
exceed 50% of the total gross income
30%
Net taxable income from all sources
4. GOCC, Agencies & Instrumentalities

a. In General
2%
Gross Income
10%

Income
30%
5. National Gov't. & LGUs

a. In General
2%
Gross Income
10%

Income
30%
6. Taxable Partnerships
a. In General
2%
10%
Gross Income
Income
7. Exempt Corporation
a. On Exempt Activities
0%
b. On Taxable Activities
30%
8. General Professional Partnerships

9. Corporation covered by Special Laws
0%
Rate specified
under the
respective special
laws
10. International Carriers
2.5%
Gross Philippine Billings
11. Regional Operating Head
10%
Taxable Income
12. Offshore Banking Units (OBUs)
10%
Gross Taxable Income On Foreign

Currency Transaction
30%
On Taxable Income other than Foreign
13. Foreign Currency Deposit Units
(FCDU)
10%
Gross Taxable Income On Foreign

30%
On Taxable Income other than Foreign

*Beginning on the 4th year immediately following the year in which such corporation commenced its
business operations, when the minimum corporate 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
20%
2. Royalties (on books as well as literary & musical composition)
10%
- In general
20%
3. Prizes (P10,000 or less )
5%
- In excess of P10,000
20%
4. Winnings (except from PCSO and lotto)
20%
5. Interest Income of Foreign Currency Deposit
7.5%
6. Cash and Property Dividends

- To individuals from Domestic Corporations
10 %
- To Domestic Corporations from Another Domestic Corporations
0%
7. On capital gains presumed to have been realized from sale, exchange or other
disposition of real property (capital asset)
6%
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
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 long-term deposit based on the remaining
maturity thereof:
Holding Period
- Four (4) years to less than five (5) years
5%
10%
Exempt
5%
- Three (3) years to less than four (4) years
12%
- Less than three (3) years
20%
B. For Non-Resident Aliens Engaged in Trade or Business
1. Interest from currency deposits, trust funds and deposit substitutes
20%
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
Exempt
before the fifth year, there should be imposed on the entire 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
5%
-Three (3) years to less than four (4) years
12%
-Less than three (3) years
20%
3. On capital gains presumed to have been realized from the sale, exchange or
6%
other disposition of real property
4. On capital gains for shares of stock not traded in the Stock Exchange
- Not over P100,000
5%
10%
C) For Non-Resident Aliens Not Engaged in Trade or Business

1. On the gross amount of income derived from all sources within the Philippines
25%
2. On capital gains presumed to have been realized from the exchange or other
6%
disposition of real property located in the Phils.
3. On capital gains for shares of stock not traded in the Stock Exchange
- Not Over P100,000
5%
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 Professional Partnerships
F) Domestic Corporations
0%
1) a. In General on net taxable income
30%
b. Minimum Corporate Income Tax on gross income
2%
c. Improperly Accumulated Earnings on improperly accumulated taxable

10%
income
2) Proprietary Educational Institution and Non-profit Hospitals
- In general (on net taxable income)
10%
10%
- If the gross income from unrelated trade, business or other activity exceeds
30%
50% of the total gross income from all sources
4) GOCC, Agencies & Instrumentalities
a. In General - on net taxable income
30%
2%

10%
income
5) Taxable Partnerships
a. In General on net taxable income
30%
2%

10%
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
G) Resident Foreign Corporation

1) a. In General on net taxable income
30%
2%

10%
income
2) International Carriers on gross Philippine billings
2.50%
3) Regional Operating Headquarters on gross income
10%
4) Corporation Covered by Special Laws
Rate specified
under the
respective special
laws
5) Offshore Banking Units (OBUs) on gross income
10%
6) Foreign Currency Deposit Units (FCDU) on gross income
10%

Income Tax

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5. Duly approved Tax Debit Memo, if applicable

Annual Income Tax For Corporations And Partnerships

But Not Over

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

30% (effective Jan. Net taxable income from all sources

c. Improperly Accumulated Earnings

Improperly Accumulated Taxable

2. Proprietary Educational Institution

Net taxable income provided that the

3. Non-stock, Non-profit Hospitals

Net taxable income provided that the

Net taxable income from all sources

4. GOCC, Agencies & Instrumentalities

c. Improperly Accumulated Earnings

Improperly Accumulated Taxable

Net taxable income from all sources

5. National Gov't. & LGUs

c. Improperly Accumulated Earnings

Improperly Accumulated Taxable

Net taxable income from all sources

c. Improperly Accumulated Earnings

8. General Professional Partnerships

Net taxable income from all sources

10. International Carriers

Gross Philippine Billings

11. Regional Operating Head

12. Offshore Banking Units (OBUs)

Gross Taxable Income On Foreign

On Taxable Income other than Foreign

Gross Taxable Income On Foreign

On Taxable Income other than Foreign

2. Royalties (on books as well as literary & musical composition)

3. Prizes (P10,000 or less )

4. Winnings (except from PCSO and lotto)

5. Interest Income of Foreign Currency Deposit

6. Cash and Property Dividends

- To Domestic Corporations from Another Domestic Corporations

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

- Less than three (3) years

B. For Non-Resident Aliens Engaged in Trade or Business

1. Interest from currency deposits, trust funds and deposit substitutes

2. Interest Income from long-term deposit or investment in the form of savings,

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

-Less than three (3) years

- Any amount in excess of P100,000

C) For Non-Resident Aliens Not Engaged in Trade or Business

- Any amount in excess of P100,000

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

On the gross income in the Philippines of Aliens Employed by Regional

E) General Professional Partnerships

1) a. In General on net taxable income

b. Minimum Corporate Income Tax on gross income

c. Improperly Accumulated Earnings on improperly accumulated taxable

b. Minimum Corporate Income Tax on gross income

c. Improperly Accumulated Earnings on improperly accumulated taxable

b. Minimum Corporate Income Tax on gross income

c. Improperly Accumulated Earnings on improperly accumulated taxable

8) Corporation covered by Special Laws