SUMMARY OF FINAL TAX UNDER THE NIRC, AS AMENDED

INDIVIDUAL
CITIZEN ALIEN
RC NRC RA
INTEREST INCOME
Local Curreny Deposit
Short term interest or yield 20% 20% 20%
Long term interest or yield (maturity: 5 years or exempt exempt exempt
Pre-termination interest rate
- Less than 3 years 20% 20% 20%
- 3 to less than 4 years 12% 12% 12%
-4 years to less than 5 years 5% 5% 5%
Foreign Currency Deposit
Interest income from FCDUs/OBU
depository bank 15% exempt 15%
Interest income of EFCDU/OBU banks 10% exempt 10%
Interest income on foreign loans N/A N/A N/A
Tax-free covenant bonds 30% 30% 30%
DIVIDEND INCOME
From domestic corporations, in general
- Jan. 1, 1998 earnings 6% 6% 6%
- Jan. 1, 1999 earnings 8% 8% 8%
- Jan. 1, 2000 earnings thereafter 10% 10% 10%

From Real Estate Investment Trust (REIT) 10% exempt^ 10%

FROM FOREIGN CORPORATIONS REGULAR INCOME TAX RULE APPLIE

SHARE IN NET INCOME of taxable

partnership, joint venture and co-ownership 10% 10% 10%

ROYALTIES
Passive royalties, in general 20% 20% 20%
Passive royalties from cinematographic
films and similar works 20% 20% 20%
Passive royalties from books, literary
works and musical compositions 10% 10% 10%
Active royalties REGULAR INCOME TAX RULE APPLIES

TAXABLE PRIZES, amounting to

P10,000 and below REGULAR INCOME TAX RULE APPLIES
Above P10,000 20% 20% 20%

WINNINGS
In general 20% 20% 20%
 PCSO and lotto winnings exceeding P10,000 20% 20% 20%
PCSO and lotto winnings not exceeding P10,000 exempt

INFORMER'S TAX REWARD 10% 10% 10%

Note:
1. ^For OFW, exempt up to 7 years from Aug. 12, 2011 up to Aug. 12, 2018.
2. ^^Subject to preferential tax rate under applicable tax treaty
3. *Subject to tax sparing ruel, otherwise 30%
4. Item of income that may arise sources marked as "N/A" shall be subject to regular income tax

EXPANDED WITHHOLDING TAX

INDIVIDUAL CORP.
NATURE OF INCOME PAYMENT
A. Pofessional fees, talent fees, etc for services INDIVIDUAL - GROSS INCOME FOR YEAR IS 2,000,000
rendered
1. If gross income for the current year does not
exceed P3,000,000 (individual)/P720,000 (corp.) 5% 10%
2. If gross income for the current year
exceeds P3,000,000 (individual)/P720,000 (corp.) 10% 15%

NOTE:
This includes the following:
1. Individuals engaged in the practice of profession or callings such as lawyers, CPAs, doctors of medicine, architects, engineers, doctors of veterinary science, dentists, p
connoissuers of tobacco, actuaries, interior decorators, desingers, real estate service practitioners requiring government licensure examination
2. Professional entertainers
3. Professional athletes
4. All directors and producers involved in movies, stage, radio, television and musical productions.
5. Insurance agents and insurance adjusters
6. Management and technical consultants
7. Bookkeeping agents and agencies
8. Fees of directors who are not employees of the company
10. Income payment to certain brokers and agents such such as commissions of customs, insurance, stock, immigration and commerical brokers, fees of agents of profess
service practitioners who failed or did not take up the licensure examination given by and not registered with the Real Estate Service under PRC.
11. Commissions of independent and/or exclusive sales representatives,and marketing agents of companies

B. Rentals of real or personal properties

On gross rental income 5% 5%

Note:
1. Rental of real property is subject to 5% expanded withholding tax
2. Rental of personal properties in excess of P10,000 is subject to 5% EWT except that the accumulated gross rental within the year exceeds or is expeceted to exceed P1
3. Includes rental of the following:
 A. Poles, satellites and transmission facilities
B. Billboards
C. Cinematographic film rentals and other payments

C. Income payments to certain contractors 2% 2%

Note: Includes the following:

1. General engineering contractors such as:
A. Reclamation works G. Bridges, overpasses, underpasses and other similar works
B. Railroads H. Piplelines and other systems for transmission of petroleum and other
C. Highways, streets and roads liquid or gaseous substances
D. Tunnels I. Land leveling
E. Airports and Airways J. Excavating
F. Waste reduction plants K. Trenching

2. General Building Contractors

3. Specialty Contractors
4. Other contractors such as:
A. Filing, demolition and salvage work contractors and
operators of mine drilling apparatus
B. Operators of dockyards
C. Persons engaged in the installation of water system, and gas or electric light
heat or power
D. Operators or stevedoring, warehousing or forwarding establishments
E. Transportation contractors which include common carriers for the carriage
of goods and merchandise of whatever kind by land, air or water, where the gross payments
by the payor to the same payee amounts to at least two thousand pesos (P2,000) per month,
regardless of the number of shipments during the month
F. Printers, bookbinders, lithographers and publishers except those principally
engaged in the publication or printing of any newspaper, magazine, review or bulletin which
appears on a regular intervals, with fixed prices for subscription and sale
G. Messengerial, janitorial, private detectvie and/or security agencies, credit
and/or collection agencies and other business agencies.
H. Advertising agencies, exclusive of gross payments to media
I. Independent producers of jingles

D. Income distribution to the beneficiaries of the estate and trust 15%

E. Income payments to partners of general professional partnerships

If gross income for the current year does not exceed P720,000 10%
If gross income for the current year exceeds P720,000 15%

F. Gross selling price or total amount of consideration or its equivalent

paid to the seller/owner for the sale, exchange or transfer of real
property classified as ordinary asset
1. Where the seller/transferor is exempt from the creditable
withholding tax in accordance with Sec. 2.57.5 of these regulations exempt exempt
2. Selling price of P500,000 or less 1.50% 1.50%
3. Selling price exceeds P500,000 to P2,000,000 3.00% 3.00%
4. Selling Price is more than P2,000,000 5.00% 5.00%
5. Where the seller/transferor is not habitually engaged
in the real estate business 6% 6%

Note: Expanded withholding tax is based on selling price or FMV, whichever is higher

G. Additional income payments to government personnel from importers,

shipping or airline companies for overtime work as authorized
by law 15%

H. Certain income payments made by credit card companies 1%

Note: Basis of withholding tax is 1/2 of gross amounts paid

I. Income payment made by top withholding agents, either 1% 1%

private corporations or individuals, to their local/resident 2% 2%
supplier of goods or services

Note: Top withholding agents shall include the following:

1. Classified and duly notified by the Commissiner as either any of the following:
A. A large taxpayer under Revenue Regulations No. 1-98
B. Top 20,000 private corporations under Revenue Regulations No. 6-2009
C. Top 5,000 individuals under RR No. 6-2009.
D. Taxpayers identified and included as Medium Taxpayers, and
those under Taxpayer Account Management Program (TAMP)

J. Income payments made by a governemtn office, national or local, including barangays, or their
attached agencies or bodies, and government-owned or controlled corporations to its local/resident
supplier of goods or services, other than those covered by other rates 1% 1%
of withholding tax 2% 2%

K. Tolling fees paid to refineries of sugar 5% 5%

L. Payments made by pre-need companies to funeral parlors 1%

M. Payments made to embalmers 1%

N. Income payments made to suppliers of agricultural products 1% 1%

Note (letter N)
1. Tax basis of withholding tax is payments exceeding P300,000.00
2. Agricultural suppliers shall refer to agricultural, forest and marine food and non-food products, livestock and poultry of a kind generally
used as, or yielding or producing of goods for human consumption; and breeding stock and genetic materials therefor.

O. Income payments on purchases of minerals, mineral products 5% 5%

and quarry resources

Note: BSP is required to withhold 1% of gross payments

P. Meralco payments
1. On gross amount of refund given by MERALCO to customers 15% 15%
2. On interest income on the refund of meter deposits
A. Residential and General service customers 10% 10%
B. Non-residential customers 15% 15%

Q. Interest income on the refund paid either through direct

payment or application against customer's billings by other
electric distribution utilities
1. Residential and General Service customers whose monthly
electricity consumption exceeds 200 kwh 10% 10%
B. Non-residential customers 15% 15%

R. Income payments made by a political parties and

candidates of local and national elections on all their purchases of goods
or services related to campaign expenditures, and income payments
made by individuals or juridical persons for their purchases of
goods and services intended to be given as campaign
contributions 5% 5%

S. Interest income derived from any other debt instruments not

within the coverage of "deposit substitutes" 15% 15%

T. Income payments of real estate investment trusts 1%

PERSONS REQUIRED TO DEDUCT AND WITHHOLD

1. Payor (buyer) of income except if the the total payment to an INDIVIDUAL SELLER does not exceed P250,000
and that the seller has only one payor during the taxable year. In this case, the concerned individual shall
execute an Income Payee's Sworn Declaration of Gross Receipts on or before the initial payment or Jan. 15,
whichever is applicable.
2. In the event that the individual payee's cumulative gross receipts in a year exceed P250,000, the income payor (withholding agent)
shall withhold the prescribed withholding tax based on the amount in excess of P250,000.
3. In the case where there are two applicable rates, the higher rate shall apply if:
A. The payee failed to provide the income payor the required declaration or
B. The income payment exceeds P3,000,000
4. In the case where there are two applicable rates, the higher rate shall apply if:
A. The payee failed to provide the income payor the required declaration or
B. The income payment exceeds P720,000
Rule #4 holds true for non-individual payees.

EXEMPTION FROM WITHHOLDING TAX

Payment to the following shall be exempted from expanded withholding tax
1. Persons enjoying exemption from payment of income tax such as:
A. Sale of real property not subject to income tax
B. Corporations not subject to income tax:
1. GSIS 3. PHIC
2. SSS 4. LWD
However, income payments arising from any activity which is conducted
for profit or income derived from real or personal property shall be subject to
withholding tax

2. Joint ventures or consortium formed for the purpose of undertaking

construction projects or engaging in petroleum, coal, geothermal and other
energy operations pursuant to an operating or consortium agreement under the service
contract with the government. - exempted from income tax

3. Individuals who earn P250,000 and below from lone income payor

WTIHHOLDING TAX ON COMPENSATION

Every employer must withhold from compensation paid an amount computed in accordance with these
Regulations, whether the employee is a citizen or an alien, except non-resident alien not engaged in trade or business.
No withholding tax shall be required on the statutory minimum wage, including holiday pay, overtime pay, night shift
differential and hazard pay of MWEs in the private or public sectors.
WITHHOLDING INCOME TAX TABLE ON COMPENSATION: FROM JAN. 1, 2018 TO DEC. 31, 2022
DAILY 1 2 3
Compensation Level (CL) 685 and below 685.00 1,096.00
Prescribed minimum withholding tax - 0+20% over CL 82.19+25% over CL

WEEKLY
Compensation Level (CL) 4,808 and below 4,808.00 7,692.00
Prescribed minimum withholding tax - 0+20% over CL 576.92+25% over CL

SEMI MONTHLY
Compensation Level (CL) 10,417 and below 10,417.00 16,667.00
Prescribed minimum withholding tax - 0+20% over CL 1,250.00+25% over CL
MONTHLY
Compensation Level (CL) 20,833 and below 20,833.00 33,333.00
Prescribed minimum withholding tax - 0+20% over CL 2,500.00+25% over CL

Illustration:
Ms. Haidee, an employee of ABC Corp. is receiving WEEKLY compensation in the amount of P9,500, net of exclusions from gross compensation income.
Required: Compute for the withholding tax
Total taxable compensation 9,500.00
Less: Coompensation Level 7,692.00
Excess over compensation level 1,808.00
Multiply: Tax Rate 25%
Tax on excess over compensation level 452.00
Add: Tax on compensation level 576.92
Withholding tax on compensation 1,028.92

Ms. Haidee, an employee of ABC Corp. is receiving monthly compensation in the amount of P60,500, net of exclusions from gross compensation income.
Required: Compute for the withholding tax

Total taxable compensation 60,500.00

Less: Coompensation Level 33,333.00
Excess over compensation level 27,167.00
Multiply: Tax Rate 25%
Tax on excess over compensation level 6,791.75
Add: Tax on compensation level 2,500.00
Withholding tax on compensation 9,291.75

At the end of the year, the employer shall make the necessary adjustment to make the annual income tax due
equal to income tax withheld

In case of termination of employer-employee relation ship before the end of the year, the under withholding of tax on compensation
shall be deducted from the last salary of the employee. If there is over withholding of tax on compensation, the employer shall refund the said
over withholding of income tax to the employee and shall be deducted from the amount to be remitted to the BIR in the month the refund was made.

If there is over withholding of income tax on compensation of the employee, the employer shall refund the said over withholding on or before Jan. 25 of the following year. (s

MANNER OF PAYMENT
Final Withholding Tax DEADLINE
Form 1603 - final withholding tax on fringe benefits not later than the last day of the month following the close of the quarter during w
Form 1602 - final withholding tax on interest on bank deposits not later than the last day of the month following the close of the quarter during w
Form 1601FQ - other passive incomes subject to final withholding tax not later than the last day of the month following the close of the quarter during w

Expanded Withholding Tax

 Form 1601EQ not later than the last day of the month following the close of the quarter during w

Note: for the 1st 2 months of the quarter, the expanded and final withholding tax shall be remitted to the Bureau of Internal Revenue not later than the 10th day following th

For sale of real property held as ordinary asset:

Form 1606 10th day following the month of the transaction

For withholding tax on compensation

Form 1601C 10th day following the close of the month except for the month of Dec.
deadline for the month of Dec. is Jan. 15 of the following year.

Evidence of withholding tax:

For final withholding tax Form 2306
For creditable withholding tax (ewt and gmp) Form 2307
Creditable withholding tax (compensation) Form 2316
 INDIVIDUAL
ALIEN CORPORATION
NRAETBP NRANETBP DC RFC NRFC

20% 25% 20% 20% 25%

exempt 25% 20% 20% 25%

20% 25% 20% 20% 25%

12% 25% 20% 20% 25%
5% 25% 20% 20% 25%

exempt exempt 15% 15% 25%

exempt exempt 10% 10% 25%
N/A N/A N/A N/A 20%
30% 30% N/A N/A N/A

20% 25% exempt exempt 15%*

20% 25% exempt exempt 15%*
20% 25% exempt exempt 15%*

10%^^ 10%^^ exempt exempt 10%^^

REGULAR INCOME TAX RULE APPLIES

20% 25% 10% 10% 25%

20% 25% 20% 20% 25%

25% 25% 20% 20%

10% 25% 20% 20% 25%

COME TAX RULE APPLIES 25% REGULAR INCOME TAX RULE APPLIES 25%

COME TAX RULE APPLIES 25% REGULAR INCOME TAX RULE APPLIES 25%
20% 25% REGULAR INCOME TAX RULE APPLIES 25%

20% 25% REGULAR INCOME TAX RULE APPLIES 25%

 20% 25% 20% 20% 25%
exempt 25% exempt 25%

10% 25% 10% 10% 25%

INDIVIDUAL - GROSS INCOME FOR YEAR IS 2,000,000

PAYMENT 50000
MULTIPLY: WITHHOLDING TAX RATE 5%
EXPANDEDWITHHOLDING TAX 2500

edicine, architects, engineers, doctors of veterinary science, dentists, professional appraisers,

quiring government licensure examination

e, stock, immigration and commerical brokers, fees of agents of professionala entertainers and real estate
ed with the Real Estate Service under PRC.

8,000
ated gross rental within the year exceeds or is expeceted to exceed P10,000, such threshold shall not apply.
 L. Paving
n of petroleum and other M. Surfacing work

K. Labor recruiting agencies and/or "labor only" contractors

L. Persons engaged in the installation of elevators, central
air conditioing units, computer mahcines and other equipment
and machineries and the maintenance services thereon.
M. Persons engaged in the sale of computer services, computer
programmers, software/program developer/designer, internet
service providers, web page designing, compter date processing,
conversion or base services and other computer related activities.
N. Persons engaged in landscaping services
O. Persons engaged in the collection and disposal of garbage
P. TV and radio station operators on sale of TV and radio airtime
Q. TV and radio blocktimers on sale of TV and radio commercial spots
(supplier of goods
supplier of services

(supplier of goods
supplier of services
estock and poultry of a kind generally
materials therefor.

(for corporation general service customers

(for individuals engaged in business)

(for corporation general service customers

(for individuals engaged in business)

income payor (withholding agent)

trade or business.
pay, night shift

4 5 6
2,192.00 5,479.00 21,918.00
356.16+30% over CL 1,342.47+32% over CL 6,602.74+35% over CL

15,385.00 38,462.00 153,846.00

2,500+30% over CL 9,423.08+32% over CL 46,346.15+35% over CL

33,333.00 83,333.00 333,333.00

5,416.67+30% over CL 20,416.67+32% over CL 100,416.67+35% over CL
 66,667.00 166,667.00 666,667.00
10,833.33+30% over CL 40,833.33+32% over CL 200,833.33+35% over CL

,500, net of exclusions from gross compensation income.

,500, net of exclusions from gross compensation income.

88,000.00
66,667.00
21,333.00
30%
6,399.90
10,833.33
17,233.23

holding of tax on compensation

sation, the employer shall refund the said
d to the BIR in the month the refund was made.

d the said over withholding on or before Jan. 25 of the following year. (still employed as of Dec. 31)

han the last day of the month following the close of the quarter during which the withholding was made.
han the last day of the month following the close of the quarter during which the withholding was made.
han the last day of the month following the close of the quarter during which the withholding was made.
han the last day of the month following the close of the quarter during which the withholding was made.

the Bureau of Internal Revenue not later than the 10th day following the close of the month using Forms 0619E & 0619F

following the month of the transaction

following the close of the month except for the month of Dec.
for the month of Dec. is Jan. 15 of the following year.
FOREIGN INCOME TAX CREDIT

TAX DEDUCTIONS VS TAX CREDIT

Tax deductions are deductions from gross income
Tax credits are deductions from Income tax due

WHO ARE ENTITLED TO DEDUCT FOREIGN INCOME TAX CREDIT?

1. Resident Citizens
2. Domestic Corportions
3. Members of General professional Partnerships
4. Beneficiaries of Estates and Trusts

WHO ARE NOT ENTITLED TO DEDUCT FOREIGN INCOME TAX CREDIT?

1. Non-resident citizens
2. Aliens
3. Foreign corporations

Income tax due xxx

Less: Creditable withholding tax xxx
Quarterly Income tax Paid xxx
Foreign income tax credit xxx xxx
Income tax payable xxx
Note: If the taxpayer is a domestic corporation, deferred charges-MCIT, if deductible, is a deduction from income ta

Steps:
1. Compute for income tax due
2. Determine the limitation
3. Determine the foreign income tax credit
4. Compute for income tax due
Philippines Malaysia
Taxable Income 10,000,000.00 5,000,000.00
Income tax paid in Malaysia 500,000.00
Creditable withholding tax (Philippines) 350,000.00
Quarterly Income Tax Paid 1,750,000.00

Compute for the income tax payable if the taxpayer is a domestic corporation for taxable year 2021

Taxable Income (Philippines) 10,000,000.00 Limitation

Add: Taxable Income (Malaysia) 5,000,000.00 1,250,000.00
Taxable Income (Total) 15,000,000.00
Multiply: tax rate 25%
Income tax due 3,750,000.00
Less: creditable withholding tax 350,000.00
Quarterly Income Tax Paid 1,750,000.00
Foreign Income tax credit 500,000.00
Income tax payable 1,150,000.00

Philippines Malaysia
Taxable Income 10,000,000.00 5,000,000.00
Income tax paid in Malaysia 1,300,000.00
Creditable withholding tax (Philippines) 350,000.00
Quarterly Income Tax Paid 1,750,000.00

Compute for the income tax payable if the taxpayer is a domestic corporation for taxable year 2021

Taxable Income (Philippines) 10,000,000.00 Limitation

Add: Taxable Income (Malaysia) 5,000,000.00 1,250,000.00
Taxable Income (Total) 15,000,000.00
Multiply: tax rate 25%
Income tax due 3,750,000.00
Less: creditable withholding tax 350,000.00
Quarterly Income Tax Paid 1,750,000.00
Foreign Income tax credit 1,250,000.00
Income tax payable 400,000.00

Philippines Malaysia Thailand

Taxable Income 10,000,000.00 5,000,000.00 3,000,000.00
Income tax paid in Malaysia 500,000.00
Income tax paid in Thailand 800,000.00
Creditable withholding tax (Philippines) 350,000.00
Quarterly Income Tax Paid 1,750,000.00

Compute for the income tax payable if the taxpayer is a domestic corporation for taxable year 2021

Taxable Income (Philippines) 10,000,000.00 Limitation 1:

Add: Taxable Income (Malaysia) 5,000,000.00 Malaysia
Taxable Income (Thailand) 3,000,000.00 Thailand
Taxable Income (Total) 18,000,000.00 Limitation 1
Multiply: tax rate 25%
Income tax due 4,500,000.00 Limitation 2:
Less: creditable withholding tax 350,000.00 Malaysia and
Quarterly Income Tax Paid 1,750,000.00 Thailand
Foreign Income tax credit 1,250,000.00
Income tax payable 1,150,000.00
e, is a deduction from income tax due

able year 2021

 Allowed
1,250,000.00 500,000.00
750,000.00 750,000.00
1,250,000.00

2,000,000.00 1,300,000.00