4 Income Tax tables final.pdf

8/10/2019 4 Income Tax tables final.pdf

1/8

San Beda College of Law

2012 CENTRALIZED BAR OPERATIONS

157

INCOME TAXATION

INCOME TAXPAYERTAXABLEINCOME

TAX RATESEXEMPTIONS ALLOWED

DEDUCTIONSALLOWED

OPTIONALSTANDARD

DEDUCTIONSPERSONAL ADDITIONAL

INDIVIDUAL

Resident Citizen (RC)All sources (within

and without thePhilippines)

Taxable compensation arisingfrom employer-employeerelationship- 5% - 32%

graduated rateYES YES

Rule: NOException:Premium Payments

on Health and/orHospitalization

Insurance

NO

Taxable income arising frombusiness and other income- 5% -

32% graduated rateYES

YES(NOTE:

Deductible firstfrom

compensationincome, the

excess from otherincome)

YES

YES

RATE: 40%of hisgross sales orgross receipts

Non-Resident Citizen (NRC)Income from

sources within thePhilippines



Rule: NOException:

Premium Paymentson Health and/orHospitalization

Insurance

NO


32% graduated rateYES YES YES YES

Resident Alien (RA)

Income from

sources within thePhilippines



Rule: NOException:

Premium Paymentson Health and/orHospitalization

Insurance

NO


32% graduated rateYES YES YES YES

Non-Resident Alien Engagedin Trade and Business

(NRA-ETB)

Income fromsources within the

Philippines


YEScondition:

reciprocity ruleNO

Rule: NOException:

Premium PaymentsNO


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DEDUCTIONSALLOWED

OPTIONALSTANDARD


graduated rate on Health and/orHospitalization

InsuranceTaxable income arising from

business and other income- 5% -32% graduated rate

YEScondition:

reciprocity ruleNO YES NO

Non-Resident Alien NotEngaged in Trade andBusiness (NRA-NETB)


Philippines

25% on gross income derivedfrom business

Gross Income derived frombusinessequivalent to gross

sales less returns, discounts, andallowances and cost of goods

sold.

NO NO NO NO

Special Classes of Individual

Employees (whether Filipinoor Alien) employed by:1) RegionalArea

Headquarters orRegional OperatingHeadquarters in thePhilippines

2) Offshore banking unitsestablished in thePhilippines;

3) Foreign serviceContractors orsubcontractor engagedin petroleum operations

in the Philippines


Philippines

15%on Gross incomereceivedas salaries, wages, annuities,

compensation, remuneration andother emoluments, such ashonoraria and allowances.

NOTE:For other sources withinthe Philippines, income shall besubject to pertinent income tax

(graduated tax rates, final tax onpassive income, capital gains

depending whether a citizen oran alien), as the case may be.

NO NO NO NO

Passive Income subject to final tax

RC, NRC, RA Interest Income

1) 20%- from any currencydeposit and yield or othermonetary benefit fromdeposit substitute and fromtrust funds and similararrangements.

N/A N/A N/A N/A


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159



DEDUCTIONSALLOWED

OPTIONALSTANDARD


2) 7.5%- From a depositorybank under the expandedforeign currency depositsystem (FCDS) and anoffshore banking unit (OBU)

(exception: NRC)3) From long-term deposit or

investmenta) Held for more than 5

years Exemptb) 4 yrs less than 5 yrs

5%c) 3 yrs less than 4 yrs.

12%d) Less than 3 yrs. 20%

NRA-ETB

1) 20%- From any currencydeposit and yield or othermonetary benefit fromdeposit substitute and from

trust funds and similararrangements.

2) EXEMPT - From adepository bank under theexpanded foreign currencydeposit system (FCDS) andan offshore banking unit(OBU)

3) From long-term deposit orinvestmenta) Held for more than 5

years Exemptb) 4 yrs less than 5 yrs

5%

c) 3 yrs

less than 4 yrs.12%

d) Less than 3 yrs. 20%

N/A N/A N/A N/A

NRA-NETB

1) 25%- from any currencydeposit and yield or othermonetary benefit fromdeposit substitute and from

N/A N/A N/A N/A


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DEDUCTIONSALLOWED

OPTIONALSTANDARD


trust funds and similararrangements.

2) EXEMPT - From adepository bank under theexpanded foreign currencydeposit system (FCDS) andan offshore banking unit(OBU)

3) 25% -From long-termdeposit or investment

RC, NRC, RA, NRA-ETB

Royalties

1) 20% - Royalties in General2) 10% - From books, literary

works and musicalcompositions

N/A N/A N/A N/A

NRA-NETB

1) 25% - Royalties in General2) 25% - From books, literary

works and musicalcompositions

N/A N/A N/A N/A

RC, NRC, RA, NRA-ETBPrizes and Winnings

20% onprizes exceedingP10,000 and winnings (not

subject to the P10,000 limit).

NOTE: Prizes less than P10,000subject to graduated rates

N/A N/A N/A N/A

NRA-NETB 25% on prizes N/A N/A N/A N/A

RC, NRC, RA

1) Cash / PropertyDividends fromDomesticCorporations

2) Share in the

distributable netincome after taxof a businesspartnership,

3) Share in the netincome after taxof anassociation, a

10% final tax N/A N/A N/A N/A

NRA-ETB 20% final tax N/A N/A N/A N/A


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161



DEDUCTIONSALLOWED

OPTIONALSTANDARD


NRA-NETB

joint account, ora joint ventureor consortiumtaxable as acorporation of

which he is amember or co-venturer.

25% final tax N/A N/A N/A N/A

RC Cash / PropertyDividend from

ForeignCorporations

5%-32% Graduated rates N/A N/A N/A N/A

NRC, RAI f considered as incom e within

5%-32%graduated ratesN/A N/A N/A N/A

RC, NRC, RA CinematographicFilm and Similar

Works

5%-32% Graduated rates N/A N/A N/A N/A

NRA-ETB, NRA-NETB 25% final tax N/A N/A N/A N/A

TAX ON CORPORATIONS

Domestic Corporations (DC)Income within and

without

1) NCIT- 30% (effectiveJanuary 1, 2009) on the

taxable income2) Capital Gains Tax3) Final tax on passive income

same rules as thoseimposed on individuals

4) MCIT2% Gross incomeEXCEPT income exemptfrom income tax and incomesubject to final withholdingtax

5) Effective January 1, 2000,the President through theSec. Finance may allow DCthe option to be taxed at

15%of gross income.6) IAET 10% on improperlyaccumulated taxable income(in addition to other taxes)

N/A N/A

YES, if taxed underNCIT otherwise,

NO

YES, if taxedunder NCIT

otherwise, NO

Special Domestic Corporat ions1) Proprietary Educational

Institutions and Non-profit Hospitals

Rule: 10% of the net incomeexcept those subject to capitalgains tax and passive income

N/A N/A NO NO


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TAXATION LAW

Income Taxation

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DEDUCTIONSALLOWED

OPTIONALSTANDARD


subject to final tax (stock, non-profit plus other requisites above

discussed)

Exceptions:a) 30% IF the gross income

from unrelated trade,business or other activityexceeds 50% of the totalgross income derived fromall sources;

b) Exempt if non stock non-profit PRIVATEeducational institutionandhospital

2) Depositary Banks(FCDS)

Rule: Exempt from all taxes,except net income from suchtransactions as may be specifiedby the Secretary of Finance,upon recommendation by theMonetary Board to be subject tothe regular income tax payableby banks.

Exceptions: Final tax of 10% oninterest income from foreigncurrency loans granted by suchdepository banks under saidexpanded system to residentsother than offshore units in thePhilippines or other depository

banks under the expandedsystem.

N/A N/A NO NO

Resident ForeignCorporationengaged intrade or business (RFC)

Income within only

1) NCIT- 30% (effectiveJanuary 1, 2009) on thetaxable income

2) Capital Gains Tax3) Final Tax on Passive income4) MCIT2% Gross income

N/A N/A

YES, if taxed underNCIT otherwise,

NO

.

YES, if taxedunder NCIT

otherwise, NO


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163



DEDUCTIONSALLOWED

OPTIONALSTANDARD


EXCEPT income exemptfrom income tax and incomesubject to final withholdingtax

5) Effective January 1, 2000,

the President through theSec. Finance may allowRFC the option to be taxedat 15% of gross income.

6) BRANCH PROFITREMITTANCE TAX15%of total profit applied orearmarked for remittancewithout any deduction for taxcomponent thereof

Special Resident Foreign Corporations

1) International Carriers 2.5%on Gross Philippine Billings

2) Off Shore Banking Unitsauthorized by BSP

Rule:Exempt

Exception: It is subject to finaltax of 10% on interest incomederived from foreign currencyloans granted to residents otherthan offshore banking units orlocal commercial banks,including local branches offoreign banks that may beauthorized by the BSP totransact business with offshorebanking units.

NO NO

3) Resident DepositaryBank (FCDU)

Rule:Exempt from all taxes,except net income from suchtransactions as may be specifiedby the Secretary of Finance,upon recommendation of theMonetary Board to be subject tothe regular income tax payableby banks.

Exception:It is subject to finaltax of 10% on interest incomefrom foreign currency loans

NO NO


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Income Taxation

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DEDUCTIONSALLOWED

OPTIONALSTANDARD


granted by such depositorybanks under said expanded

system to residents other thanoffshore units in the Philippinesor other depository banks underthe expanded system.

4) Regional or AreaHeadquarters

EXEMPT NO NO

5) Regional OperatingHeadquarters

10%of the taxable income fromsources within the Philippines

NO NO

Non-resident ForeignCorporation - not engagedin trade or business (NRFC)

Income within only

1) 30%final tax on grossincome

2) Capital Gains Tax exceptcapital gains tax on sale or

disposition of real properties.

N/A N/A NO NO

Special Non-resident Foreign Corporation

1) Non-residentCinematographic FilmOwners, Lessors orDistributors

25%on gross incomefromsources within the Philippines

N/A N/A NO NO

2) Non-resident Owner orLessor of VesselsChartered by PhilippineNationals

4.5%on Gross rentals, lease orcharter fees from leases or

charters to Filipino citizens orcorporations, as approved by the

Maritime Authority.

N/A N/A NO NO

3) Non-resident Owner orLessor of Aircraft andother Equipment

7.5% on gross rental or fee N/A N/A NO NO

Documents

4 Income Tax tables final.pdf