SELF-EMPLOYED

INDIVIDUALS

8% income tax on gross sales/receipts, subject to the following conditions:
• Gross sales/receipts and non-operating income is < or = P3M
• Non-VAT registered
• Taxpayer not subject to other percentage tax
• 8% tax is elected in the 1st quarter ITR or BIR registration

If not over the VAT threshold of P3M (but not VAT-registered)
1. Graduated Income Tax Rates
• 0% to 35% and 3% (percentage tax on gross sales/receipt)
• OSD 40% or Itemized Deductions
2. Fixed Income Tax Rates
• 8% (in excess of P250000) and 0% (percentage tax)
• No deductions
*If Compensation Income: Only Option 1
*If Business Income: Option 1 or 2

If over the VAT threshold of P3M (or those VAT-registered)
• Graduated income tax rate of 0-35% and VAT of 12%
• OSD 40% or Itemized Deductions
























 CITIZENS & RESIDENT ALIENS

Nature of Income Final Tax Rate
Royalties (xpn: books, literary, music) 20%
Royalties on books, literary, music 10%
Prizes (xpn: <P10000) 20%
Other winnings (xpn: <P10000 or from PSCO and Lotto winning) 20%
Interest from Currency bank deposit or monetary benefit (deposit substitutes and trust funds) 20%
Interest from Depositary Bank (under expanded foreign currency deposit system by a resident) 15%
Interest from Long-term deposit or investment (saving, trust funds, deposit substitutes, others Exempt
prescribed by BSP)
If pre-terminated based on entire income Final Tax Rate
4 to <5years 5%
3 to <4 years 12%
<3 years 20%

Cash and/or Property Dividends (received from domestic, joint stock, insurance or mutual fund 10%
companies)
Share in the Distributable Net Income (after tax of partnership) 10%
Share in the Net Income (after tax of an association, joint account or joint venture or consortium) 10%
Net Capital Gains (from sale, barter, exchange or disposition of shares in domestic corporation – 15%
not traded in stock exchange)
Capital Gains (realized from sale, exchange or disposition of realty as capital assets) 6%






















 NON-RESIDENT ALIEN ENGAGED IN TRADE OR BUSINESS (NRAETB)

Nature of Income Final Tax Rate
Royalties (xpn: books, literary, music) 20%
Royalties on books, literary, music 10%
Prizes (xpn: <P10000) 20%
Other winnings (xpn: <P10000 or from PSCO and Lotto winning) 20%
Interests 20%
Interest from Long-term deposit or investment (saving, trust funds, deposit substitutes, others Exempt
prescribed by BSP)

If pre-terminated based on entire income Final Tax Rate
4 to <5years 5%
3 to <4 years 12%
<3 years 20%

Cash and/or Property Dividends (received from domestic, joint stock, insurance or mutual fund 20%
companies)
Share in the Distributable Net Income (after tax of partnership) 20%
Share in the Net Income (after tax of an association, joint account or joint venture or consortium) 20%
Net Capital Gains (from sale, barter, exchange or disposition of shares in domestic corporation – 15%
not traded in stock exchange)
Capital Gains (realized from sale, exchange or disposition of realty as capital assets) 6%
Aliens Employed by Regional Headquarters (RHQ) or Regional Operating Headquarters (ROHQ) Regular
Aliens Employed by Offshore Banking Unit (OBU) Graduated Tax
Aliens Employed by Petroleum Service Contractor/Subcontractor Rates
Filipinos employed and occupying same position as aliens employed by multinational companies


















 NON-RESIDENT ALIEN NOT ENGAGED IN TRADE OR BUSINESS (NRANETB)

Nature of Income Final Tax Rate
Interest, cash and/or property dividends, rents, salaries, wages, premiums, annuities, 25%
compensations, other gains, profits and income and capital gains
Net Capital Gains (from sale, barter, exchange or disposition of shares in domestic corporation – 15%
not traded in stock exchange)
Capital Gains (realized from sale, exchange or disposition of realty as capital assets) 6%





































 DOMESTIC CORPORATIONS

Nature of Income Final Tax Rate
Interest from Currency bank deposit or monetary benefit (deposit substitutes and trust funds) 20%
Interest from Depositary Bank (under expanded foreign currency deposit system by a resident) 15%
Net Capital Gains (from sale, barter, exchange or disposition of shares in domestic corporation – 15%
not traded in stock exchange)
Capital Gains (realized from sale, exchange or disposition of realty as capital assets) 6%
Royalties 20%
Inter-corporate Dividends (from another domestic corporation) Exempt
Income derived by Depositary bank under the expanded Foreign Currency Deposit System
(FCDS)
From foreign currency transaction with nonresidents, OBUs in PH, local commercial banks and Exempt
other depository banks under FCDS
From foreign currency loans granted by depositary banks under FCDS to resident (other than OBUs 10%
and depository banks under expanded FCDS)
Non-Profit & Proprietary Educational Institutions and Hospitals 10%

Minimum Corporate Income Tax (MCIT) = 2% of Gross Income
• When Imposed?
o Beginning the 4th Taxable Year immediately following the year it
commenced its business operations
§ Year it commenced business = Year registered with BIR
o A corporation has Zero or Negative Taxable Income or
o Amount of MCIT > Normal Income Tax Due
o When MCIT>RCIT



















 RESIDENT FOREIGN CORPORATIONS (RFC)

International Carriers
• 2½% tax of its Gross Philippine Billings

Nature of Income Final Tax Rate
Interest from Currency bank deposit or monetary benefit (deposit substitutes and trust funds) 20%
Interest from Depositary Bank (under expanded foreign currency deposit system by a resident) 7½%
Royalties 20%
Inter-corporate Dividends (from another domestic corporation) Exempt
Income derived by Depositary bank under the expanded Foreign Currency Deposit System
(FCDS)
From foreign currency transaction with nonresidents, OBUs in PH, local commercial banks and Exempt
other depository banks under FCDS
From foreign currency loans granted by depositary banks under FCDS to resident (other than OBUs 10%
and depository banks under expanded FCDS)
Net Capital Gains (from sale, barter, exchange or disposition of shares in domestic corporation –
not traded in stock exchange)
Not over P100000 5%
In excess of P100000 10%

Capital Gains (realized from sale, exchange or disposition of realty as capital assets) 6%























 NON-RESIDENT FOREIGN CORPORATIONS (NRFC)

Nature of Income Final Tax Rate
Interest on Foreign Loans 20%
Inter-corporate Dividends (from another domestic corporation) 15%
• With condition that the country in which the NRFC is domiciled shall allow a credit against
the tax due from the NRFC taxes deemed to have been paid in PH equivalent to 1.5% (Tax
Sparing Credit)
Net Capital Gains (from sale, barter, exchange or disposition of shares in domestic corporation –
not traded in stock exchange)
Not over P100000 5%
In excess of P100000 10%

Cinematographic film owner, lessor or distributor – on its gross income within PH 25%
Non-resident owner or lessor of vessels – on gross rentals, lease or charter fees from leases or 4½%
charters to PH citizens as approved by Maritime Industry Authority
Rentals, charters and other fees derived by nonresident lessor of aircraft, machineries 7½ %