Corporate Taxes

Corporate Taxes
Tax Base For Resident and Foreign Companies

VAT is applied in the same way to residents and non residents. For additional
information, consult the Bureau of Internal Revenue.
Tax Rate
Income Tax
The rate is 30% on net income but there are

preferential rates and exemptions. Preferential r
from 2 to 20%. Regional headquarters are taxed
Capital Gains Tax
These are taxed like income, except those from

shares in companies (5-10% if not exchanged on
Exchange; half of 1% of the selling price otherw
those from selling real estate not used for busines
(6%).
Deductions on dividends
Deduction of 15% on dividends paid by the Ph

company if the non resident's country
allows 20% tax credit, otherwise there is a ded
35%.
Deductions on interest
Deduction of 20%
Deductions on royalties
Deduction of 20%
Deductions on transfers from subsidiaries
Deduction of 15% of profits after tax paid by the

to the head office.
Property Tax
Varies according to the location, and does not exc

the estimated value.
Social contributions
Vary according to wages, maximum 1 090
Stamp duties
Vary according to the type of document
Tax on transfers of property
From 2 to 15%.
Other
Tax Rate For Foreign Companies
Tax of 3 to 7% for certain activities such as b

insurance, finance and transport.
Foreign companies are subject to the same tax rates as resident companies.
Capital Gains Taxation
In the Philippines, capital gains are taxed between 5% (on the first PHP 100.000) and
10% thereafter (for unlisted companies securities). Besides, capital gains on property, as
for private individuals, is taxed at 6%.
Main Allowable Deductions and Tax Credits
The Omnibus Investment Code of 1987 and the Special Economic Zone Act of
1995 provide for fiscal incentives such as a suspension of income tax. For any additional
information access the PKF Tax guide on the Philippines.
Other Corporate Taxes
Tax of 3 to 7% on companies in certain sectors (banking, insurance, finance, transport).
Various duties apply at various rates depending on the type of document.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory
contributions.
Country Comparison For Corporate Taxation
Philippines
East Asia & Pacific
United States
Number of Payments
of Taxes per Year
47.0
25.0
11.0
9.
Time Taken For

Administrative
Formalities (Hours)
193.0
209.0
175.0
207
Total Share of Taxes

(% of Profit)
46.6
34.5
46.7
46
Source: Doing Business - 2014.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The
Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index,
the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the
Higher the Level of Investor Protection.
Accounting Rules
Accounting System
Germ
Accounting Standards
PAS (Philippine Accounting Standards)
Accounting Regulation Bodies
Board of Accountancy
Accounting Law
Philippine Accountancy Act of 2004
Difference Between National and International Standards (IAS/IFRS)
In 2005, PAS/PFRS standards were amended to conform completely with IFRS/IAS
standards.
Accounting News
Accounting Times
Journal of Accountancy
Accounting Practices
Tax Year
The fiscal year begins on 1 January and ends on 31 December of the same year.
Accounting Reports
The general balance sheet and/or the declaration written under oath of the non holding of
an annual meeting, and the financial statements.
Publication Requirements
Companies must publish an annual financial report and submit it to the Securities and
Exchange Commission (SEC).
Accountancy Profession
Accountants
The Accounting Standards Council (ASC)
Philippine Institute of Certified Public Accountants (PICPA)
Board of Accountancy
Philippine Securities and Exchange Commission (SEC).
Professional Accountancy Bodies
PICPA, Philippine Institute of Certified Public Accountants
Member of the International Federation of Accountants (IFAC)
Yes.
Member of Other Federation of Accountants
The Philippines are members of the ASEAN Federation of Accountants (AFA) and of
theConfederation of Asian and Pacific Accountants (CAPA).
Audit Bodies
The accounting framework was established by the Accounting Standards Council (ASC),
created by the PICPA in November 1981, in order to establish and improve the general
and analytical accounting standards.
The Institute of Internal Auditors Philippines is the primary association of internal
auditors in the Philippines.
Consumption Taxes
Nature of the Tax
VAT (Value Added Tax)
Standard Rate
12%
Reduced Tax Rate
Zero-rate for exports and several items.
Exclusion From Taxation
A zero rate applies to the export of goods and services related to processing,
manufacturing or repackaging goods for export (if paid in foreign currency accounted for
under the rules of the Bangko Sentral ng PilipinasBSP, the central bank). As such, zero
rating applies to sales of raw materials and services rendered by contractors and
subcontractors to export firms registered with the Board of Investments (BOI).
Method of Calculation, Declaration and Settlement
VAT is imposed on supply of goods and services manufactured / provided in the country
or imported to the Philippines. Registration is necessary for corporation turning over PHP
1.919.500 million. Payments are monthly.
Other Consumption Taxes
In addition to real estate taxes, local governments impose tax on nearly all businesses
operating within their jurisdictions. Rates vary but are usually a small percentage of gross
annual sales. Excise taxes are levied on wines and spirits, beer, cigarettes and tobacco
products, lubricating oils and grease (including similar preparations and additives),
processed gas, waxes, denatured alcohol, cinematographic films, saccharine, coal and
coke, cars, non-essential goods (jewellery, yachts and other pleasure vessels), mineral
products, naphtha and other similar products of distillation, asphalt, and petroleum and
other fuel products.
For additional information access the Department of Finance website.
Individual Taxes
Tax Base For Residents and Non-Residents

Resident citizens are taxed on all of their income, while foreign residents and non
residents are only taxed on their Filipino income.
Tax Rate
Income Tax
Rates vary between 0 and 32% (higher rate for rev

PHP 500 000) according to the income of natura
From PHP 0 to 10,000
5%
From PHP 10,000 to 30,000
10%
From PHP 30,000 to 70,000
15%
From PHP 70,000 to 140,000
20%
From PHP 140,000 to 250,000
25%
From PHP 250,000 to 500,000
30%
Over PHP 500,000
32%
Tax on capital income
Property Tax
Tax on inheritance and property
Social contributions
6% (real estate); 5% up to 100 000 PHP then 10%

from shares not exchanged on the Stock Exchang
the sale price (earnings from shares exchanged on
Exchange).
Varies according to the location, less than
Between 5 and 20%
Vary from 33.30 to 500 PHP, according to the
Allowable Deductions and Tax Credits

Taxpayers benefit in the Philippines from various deductions according to their status
(marriage, child).
Since 2011, Taxpayers benefit from an income tax credit of 5% for their contributions to
a Retirement Account.
Special Expatriate Tax Regime
There is no special tax regime for expatriates. nonresident foreigners not involved in
business are taxed at a preferential rate of 25% of their Philippine income.
Capital Tax Rate
On the sale of real estate, tax of 6%; on the sale of shares not exchanged on the Stock
Exchange, tax of 5% on net earnings up to 100 000 PHP and 10% on the remainder; on
shares exchanged on the Stock Exchange, tax of 1% of the sale price.
Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Bureau of Internal Revenue, Guide to Philippine Tax Law
Withholding Taxes
Dividends: 15-30%, Interest: 20%, Royalties: 20-30%
Bilateral Agreement
Spain and the Philippines signed a Double Taxation Treaty .
Sources of Fiscal Information

Tax Authorities
Bureau of Internal Revenue
Bureau of Customs
Department of Finance
Other Domestic Resources
Philippine Information Agency
Country Guides
Deloitte, International tax and business guide (en anglais)
2011 PKF Tax Guide

Corporate Taxes

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Corporate Taxes

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Corporate Taxes

Tax Base For Resident and Foreign Companies

The rate is 30% on net income but there are

Capital Gains Tax

These are taxed like income, except those from

Deduction of 15% on dividends paid by the Ph

Deductions on transfers from subsidiaries

Deduction of 15% of profits after tax paid by the

Varies according to the location, and does not exc

Vary according to wages, maximum 1 090

Vary according to the type of document

Tax on transfers of property

Tax Rate For Foreign Companies

Tax of 3 to 7% for certain activities such as b

East Asia & Pacific

Time Taken For

Total Share of Taxes

Source: Doing Business - 2014.

Tax Base For Residents and Non-Residents

Rates vary between 0 and 32% (higher rate for rev

From PHP 0 to 10,000

From PHP 10,000 to 30,000

From PHP 30,000 to 70,000

From PHP 70,000 to 140,000

From PHP 140,000 to 250,000

From PHP 250,000 to 500,000

Over PHP 500,000

Tax on capital income

6% (real estate); 5% up to 100 000 PHP then 10%

Vary from 33.30 to 500 PHP, according to the

Allowable Deductions and Tax Credits

Double Taxation Treaties

Sources of Fiscal Information

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