2/6/2018

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

Adjustments in personal income taxation
Individual income Sec. 24 (A) (2) Personal income tax table for A. For compensation income earners
tax rates both compensation income earners, and self-
employed and/or professionals: Effective 1 January 2018

Not over
PHP10,000 5% Not over PHP250,000 0%
Over 10,000 but PHP500 + 10% of the excess Over 250,000 but not 20% of the excess over
not over 30,000 over 10,000 over 400,000 PHP250,000
Over 30,000 but 2,500 + 15% of the excess over
Over 400,000 but not 30,000 + 25% of the
not over 70,000 30,000
over 800,000 excess over 400,000
Over 70,000 but 8,500 + 20% of the excess over
not over 140,000 70,000 Over 800,000 but not 130,000 + 30% of the
Over 140,000 but 22,500 + 25% of the excess over over 2,000,000 excess over 800,000
not over 250,000 140,000 Over 2,000,000 but not 490,000 + 32% of the
Over 250,000 but 50,000 + 30% of the excess over over 8,000,000 excess over 2,000,000
not over 500,000 250,000
Over 8,000,000 2,410,000 + 35% of the
125,000 + 32% of the excess excess over 8,000,000
Over 500,000 over 500,000
2

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

Individual income Effective 1 January 2023
tax rates
Not over PHP250,000 0%
Over 250,000 but not 15% of the excess over
over 400,000 PHP250,000

Over 400,000 but not 22,500 + 20% of the

over 800,000 excess over 400,000
Over 800,000 but not 102,500 + 25% of the
over 2,000,000 excess over 800,000
Over 2,000,000 but not 402,500 + 30% of the
over 8,000,000 excess over 2,000,000
Over 8,000,000 2,202,500 + 35% of the
excess over 8,000,000

1
 2/6/2018

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

Individual income B. Purely self-employed and professionals
tax rates If gross sales/receipts and other non-operating
income do not exceed the PHP3m VAT
threshold, taxpayer may opt to be taxed at:
• 8% of gross sales/receipts and other non-
operating income in excess of PHP250,000 in
lieu of graduated rates and percentage tax; or
• Graduated rates in (A) above.

C. Mixed income earners shall be taxed as

follows:
On their compensation income – at graduated
rates On their income from the conduct of trade
or business or the practice of profession:
• If exceeding the VAT threshold – at graduated
rates
• If below the VAT threshold – either 8% of gross
sales/ receipts and other non-operating income
in excess of PHP250,000 in lieu of graduated
rates and percentage tax or graduated rates, at
the option of the taxpayer 4

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

Passive income from Sec. 24 (B) (1) Philippine Charity Sweepstakes Office PCSO and lotto winnings exceeding PHP10,000 would
interest, royalties, (“PCSO”) and lotto winnings are exempt from the be subject to the 20% final tax.
prizes and other 20% final tax.
winnings of Interest income from a depository bank under the
individual citizen and Interest income from a depository bank under the expanded foreign currency deposit system is subject
resident alien expanded foreign currency deposit system is subject to an increased final tax of 15%.
to a final tax of 7.5%.

Capital gains from Sec. 24 (C) Capital gains tax of 5% on the first Capital gains tax on sale of shares not traded in the
sale of shares of PHP100,000 and 10% in excess thereof is imposed local stock exchange is increased to a flat rate of 15%.
stock not traded in on sale of shares not traded in the local stock
the local stock exchange.
exchange of
individual citizen and
resident alien
Alien individuals and Sec. 25 (C), (D) and (E) A rate of 15% final Preferential tax treatment shall not apply for
qualified Filipinos withholding tax on the gross compensation income employees of ROHQ, RHQ, OBU, and Petroleum
employed by specific of alien individuals and qualified Filipinos employed service contractors and subcontractors which
employers by the following employers: • Regional or area registered with the Securities and Exchange
headquarters (“RHQ”) and regional operating Commission beginning 1 January 2018.
headquarters (“ROHQ”) of multinational companies; [ITEM VETOED] Present and future qualified
• Offshore banking units (“OBU”); and • Petroleum employees of existing ROHQ, RHQ, OBU, and
service contractors and subcontractors. Petroleum service contractors and subcontractors as
of 31 December 2017 shall enjoy preferential tax
treatment. 5

2
 2/6/2018

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

Adjustments in corporate income tax provisions
Government owned or Sec. 27 (C) The Government Service Insurance System, Corporate income tax exemption of PCSO was
controlled the Social Security System, the Philippine Health removed
corporations, agencies Insurance Corporation, the local water districts and the
or instrumentalities PCSO are exempt from corporate income
tax.
Passive income on Sec. 27 (D) (1) Interest income from a depository Interest income from a depository bank under the
interest from deposits bank under the expanded foreign currency deposit system is subject to
and yield or any other expanded foreign currency deposit system is subject an increased final tax of 15%.
monetary benefit from to a final tax of
deposit substitutes, 7.5%.
trust funds and
royalties
Capital gains from sale Sec. 27 (D) (2) Capital gains tax of 5% on the first Capital gains tax on sale, exchange or disposition of
of shares of stock not PHP100,000 and 10% in excess thereof is imposed shares not traded in the local stock exchange is
traded in the local on sale, exchange or disposition of shares not traded increased to a flat rate of 15%.
stock exchange of in the local stock exchange.
domestic corporations

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

Adjustments on provisions for exclusions and deductions
On exemption of 13th Sec. 32 (B) (7) (e) 13th month pay and other benefits
month pay and other amounting to PHP82,000 is excluded from the
benefits exemption computation of gross income. The President shall adjust
the amount of income tax exemption to its present
value using the Consumer Price Index (“CPI”) for other
benefits such as productivity incentives and Christmas
bonus every three years.
Fringe benefit tax Sec. 33 (A) Fringe benefits given to non-rank and file
given to non-rank and employees are subject to 32% final tax rate. The
file employees grossed-up monetary value is determined by dividing
the actual monetary value by 68%.
Optional standard Sec. 34 (L) In lieu of the itemized allowable
deduction (“OSD”) deductions, an individual subject to tax, other than a
nonresident alien, may elect an OSD of 40% of gross
sales or gross receipts.
Amount of exempt 13th month pay and other benefits
is increased to PHP90,000. The provision of power of
the President to make adjustments on the said amount
is removed.
Effective 1 January 2018, fringe benefits given to non-
rank and file employees are subject to 35% final tax
rate. The grossed-up monetary value is determined by
dividing the actual monetary value by 65%.
In case of a general professional partnership, the OSD
may be availed only once by either the general
professional partnership or the partners comprising
such partnership.

3
 2/6/2018

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

Deduction of Sec. 34 (M) Allowed deduction of PHP2,400 per year or Repealed
premium payments PHP200 per month worth of premium payments on
on health and/or health and/or hospitalization insurance of an individual
hospitalization provided that the family has a gross income not
insurance exceeding PHP250,000 for the taxable year.
On personal and Secs. 35 and 79 (D) Exemptions on the following: Repealed
additional • PHP50,000 worth of basic personal exemption
exemptions • PHP25,000 worth of additional exemption per
qualified dependent not exceeding four.
• Personal exemption allowable to nonresident alien
individual
Exemption allowed to Sec. 62 Exemption of PHP20,000 allowed from the Repealed
estate and trust income of the estate or trust.
Income tax collected Sec. 79 (F) Husband deemed head of the family and Repealed
at source – husband proper claimant of the additional exemption. Taxes to
and wife be withheld from the wages of the wife must be in
accordance with the table for zero exemption of the
withholding tax table.

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

Filing of tax returns
Individual Sec. 51 (A) (2) (a) An individual whose gross income
does not exceed his total personal and additional
exemptions for dependents are not required to file an
income tax return (“ITR”).
An individual whose taxable income does not exceed
PHP250,000 based on the tax schedule for
compensation income earners shall not be required to
file an ITR.

Additional Provisions:
The ITR shall consist of a maximum of four pages in
paper or electronic form containing only the following
information:

• Personal profile and information;

• Total gross sales, receipts or income from
compensation of services rendered, conduct of trade
or business or the exercise of a profession, except
income subject to final tax as provided under the Tax
Code;
• Allowable deductions under the Tax Code;
• Taxable income as defined in the Tax Code; and
• Income tax due and payable.

4

Tax Particulars National Internal Revenue Code of 1997
Individual
Corporate Sec. 52 (A) The return shall be filed by the president,
vice-president or other principal officer, and shall be
sworn to by such officer and by the treasurer or
assistant treasurer.
Tax Particulars National Internal Revenue Code of 1997
Payment and Sec. 56 (A) (2) When a tax due is in excess of PHP2,000,
assessment of income the taxpayer other than a corporation may elect to pay
tax for individuals and the tax due in two equal installments; the first
corporations installment paid at the time the return is filed and the
second installment on or before 15 July following the
close of the calendar year.
Withholding of Sec. 57 (B) The Secretary of Finance may require the
creditable tax at withholding of a tax on the items of income payable
source to natural or juridical persons, residing in the
Philippines by payor-corporations/persons at the rate
of 1% to 32% thereof, which shall be credited against
the income tax liability of the taxpayer for the taxable
year.
On return and Sec. 58 The return for final withholding tax shall be
payment of taxes filed and the payment made within 25 days from the
withheld at source close of each calendar quarter.
The return for creditable withholding taxes shall be
filed and payment made not later than the last day of
the month following the close of the quarter during
which the withholding taxes was made.
2/6/2018
R. A. No. 10963
Sec. 51-A An individual receiving purely compensation
income from one employer wherein the tax of which
has been correctly withheld shall not be required to
file an annual ITR.
The certificate of withholding, filed by the employer
and stamped “received” by the BIR, shall be
tantamount to the substituted filing of income tax
return of the employees.
The ITR shall consist of a maximum of four pages in
paper or electronic form containing only the following
information:
• Corporate profile and information;
• Gross sales, receipts or income from services
rendered, or conduct of trade or business, except
income subject to final tax as provided under the Tax
Code;
• Allowable deductions under the Tax Code;
• Taxable income as defined in the Tax Code; and
• Income tax due and payable.
The foregoing provisions shall not affect the
implementation of TIMTA.
10
R. A. No. 10963
The second installment of the tax due to be paid on or
before 15 October following the close of the calendar
year.
Beginning 1 January 2019, the rate of withholding shall
not be less than 1% but not more than 15% of the
income payment.
The return for both final and creditable withholding
taxes shall be filed and the payment made not later
than the last day of the month following the close of
the quarter during which the withholding was made.
The provision allowing the Commissioner of Internal
Revenue to adjust the withholding of tax at more
frequent intervals is removed.
11
5
 2/6/2018

Tax Particulars National Internal Revenue Code of 1997 R. A. No. 10963

The Commissioner, with the approval of the Secretary of

Finance, may require the withholding agents to pay or
deposit the taxes deducted or withheld at more
frequent intervals when necessary to protect the
interest of the government.
Declaration of income Sec. 74 (A) Every individual subject to income tax and Filing of declaration of estimated income shall be on or
tax for individuals is receiving self-employment income shall make and before 15 May of the same taxable year.
file a declaration of his estimated income for the
current taxable year on or before 15 April of the same
taxable year.
Return and payment Sec. 74 (B) The amount of estimated income shall be Payment of the fourth installment shall be paid on or
of estimated income paid in 4 installments with the fourth installment to before 15 May of the following calendar year.
tax be paid on or before 15 April of the following calendar
year.

12