Classification of Individuals

a. Citizens

1) Those who are citizens of the Philippines at the time of the adoption of the
2) Constitution (on February 2, 1987);
3) Those whose fathers or mothers are citizens of the Philippines;
4) Those born before January 17, 1973 of Filipino mothers who elect Philippine
5) citizenship upon reaching the age of majority;
6) Those who are naturalized in accordance with law.

Resident citizen - A citizen of the Philippines residing therein.

Non-resident citizen

 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 non-resident citizen and who arrives in the Philippines at any
time during the taxable year to reside permanently in the Philippines shall likewise be treated as a non-resident
citizen for 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 Philippines;
 The taxpayer shall submit proof to the Commissioner to show his intention of leaving the Philippines to reside
permanently abroad or to return to and reside in the Philippines as the case may be
 183 days

Individuals who are not Filipinos.

1) Resident alien;
2) Non-resident alien doing business in the Philippines;
3) Non-resident alien not doing business in the Philippines.

Resident alien

An individual whose residence is within the Philippines and who is not a citizen thereof.

a. An alien who lives in the Philippines with no definite intention as to his stay; 1 year or more than
b. One who comes to the Philippines for a definite purpose which in its nature would require an extended stay and
to that end makes his home temporarily in the Philippines, although it may be his intention at all times to return
to his domicile abroad;
c. An alien who has acquired residence in the Philippines retains his status as such until he abandons the same and
actually departs from the Philippines.

Non-resident alien

An individual whose residence is not within the Philippines and who is not a citizen thereon.

1) One who comes to the Philippines for a definite purpose which in its nature may be promptly
accomplished
2) A non-resident alien individual who shall come to the Philippines and stay therein for an aggregate
period of more than 180 days during any calendar year shall be deemed a "non-resident alien doing
business in the Philippines."
3) NRANETB LESS THAN 180
4) NRAETB MORE THAN 180 DAYS
Taxable income

Taxable income defined

The term 'taxable income’ means the pertinent items of gross income specified in the Tax Code, less deductions if any,
authorized for such types of income by the Tax Code or other special laws.

Taxpayers Tax Base

Resident Citizens Taxable income within and without
Non- Resident Citizens Taxable income within
Resident Aliens Taxable income within
Non- Resident Aliens engaged in Taxable income within
trade and business
Non- Resident Aliens not engaged in Gross income within
trade and business

INCOME TAX COMPUTATION

COMPENSATION EARNER

Net income

Less: Excess over

Total

X Tax rate

Total

Add: Tax shall be

Tax Due

*Granted 90,000 for non-taxable item if it is equal or more than 90,000. (LESS: To the net income)

SELF-EMPLOYED

Treatment
Not Exceed to 3M OPT 1: Tax Table
OPT 2: 8% (Gross Receipts – 250,000)
Exceed to 3M Tax table

MIXED EARNERS

Treatment
COMPENSATION EARNER Tax table
INCOME FROM BUSINESS OR
PROFESSION
Not Exceed to 3M OPT 1: Tax Table
OPT 2: 8% (Gross Receipts – 250,000)
Exceed to 3M Tax table

OSD

FINAL TAX

1. Tax on passive income

2. Philippine Source
3. Final income tax subject to FWT
4. EXCLUDE Gross Income to Regular Income Tax
5. NOT DEDUCTED as ITR tax credit
6. TAX BASE: ALWAYS ON GROSS INCOME

Subject to final tax

DIVIDENDS – ROYALTIES INTEREST PRIZE

Only
domestic
corporation
Book Curren Long Deposit Governme CFCD Prize Winni
s or cy Term Substitu nt Sector S ng
musi Bank Depos te
cs Deposi it
enee t
>10 <10
k k
Reside 10 20 10% 20% Exem 20% 20% 15% 20 RIT 20%
nt % % pt %
Citizen
s
Non- 10 20 10% 20% Exem 20% 20% - 20 RIT 20%
residen % % pt %
t
Citizen
s
Reside 10 20 10% 20% Exem 20% 20% 15% 20 RIT 20%
nt % % pt %
Alien
Non- 20 20 10% 20% Exem 20% 20% - 20 RIT 20%
residen % % pt %
t Alien
engage
d in
trade
and
busine
ss
Non- 25 25 25% 25% 25% 25% 25% - 25 25 25%
residen % % % %
t Alien
not
engage
d in
trade
and
busine
ss