CAPITAL GAINS TAX  The historical cost or adjusted basis

of the real property sold or disposed

A. For Real Properties –Six percent (6%) will be carried over to the new
principal residence built or
B. For Shares of Stocks Not Traded in the acquired;
Stock Exchange:  The Commissioner of Internal
Revenue has been duly notified,
Effective January 1, 2018 to present through a prescribed return, within
(Republic Act No. 10963 or TRAIN Law) thirty (30) days from the date of sale
A.  For Individual -              15 %  or disposition of the person’s
B.  For Corporation: intention to avail of the tax
        B.1 Domestic -              15 % exemption;
        B.2 Foreign:  Exemption was availed only once
          every ten (10) years;
 B.2.1   Not Over P100,000 -   5.0 %  In case there is no full utilization of
 B.2.2   On any amount in excess of the proceeds of sale or disposition,
P100,000 -  10 % the portion of the gain presumed to
have been realized from the sale or
Effective January 1, 1998 to December 31, disposition will be subject to Capital
2017 (Republic Act No. 8424/NIRC) Gains Tax.
 Not over P 100,000 – Five percent  In case of sale/transfer of principal
(5%) residence, the Buyer/Transferee shall
On any amount in excess of P 100,000 – Ten withhold from the seller and shall
percent (10%) deduct from the agreed selling
price/consideration the 6% capital
EXEMPT: gains tax which shall be deposited in
 Dealer in securities, regularly cash or manager’s check in interest-
engaged in the buying and selling of bearing account with an Authorized
securities Agent Bank (AAB) under an Escrow
 An entity exempts from the Agreement between the concerned
payment of income tax under Revenue District Officer, the Seller
existing investment incentives and and the Transferee, and the AAB to
other special laws the effect that the amount so
 An individual or non-individual deposited, including its interest yield,
exchanging real property solely for shall only be released to such
shares of stocks resulting in Transferor upon certification by the
corporate control said RDO that the proceeds of the
 A GOCC selling real property sale/disposition thereof has, in fact,
 If the disposition of the real property been utilized in the acquisition or
is gratuitous in nature construction of the
 Where the disposition is pursuant to Seller/Transferor’s new principal
the CARP law residence within eighteen (18)
calendar months from date of the
Conditionally EXEMPT: said sale or disposition. The date of
sale or disposition of a property
Natural persons who dispose their principal refers to the date of notarization of
residence, provided that the following the document evidencing the transfer
criteria are met: of said property. In general, the term
“Escrow” means a scroll, writing or
 The proceeds of the sale of the deed, delivered by the grantor,
principal residence have been fully promisor or obligor into the hands of
utilized in acquiring or constructing a third person, to be held by the latter
new principal residence within until the happening of a contingency
eighteen (18) calendar months from or performance of a condition, and
the date of sale or disposition; then by him delivered to the grantee,
promise or obligee.
DONOR’S TAX the donor's tax shall be computed based on
the total net gifts during the year.
Tax Rates
2.    Donation made to a stranger is subject
(The rate applicable shall be based on the to 30% of the net gift. A stranger is a person
law prevailing at the time of donation) who is not a:

Effective January 1, 2018 and onwards ·  brother, sister (whether by whole or half-
(Republic Act (RA) No. 10963/TRAIN) blood), spouse, ancestor and lineal
descendants; or
Rate - The donor’s tax for each calendar ·  relative by consanguinity in the collateral
year shall be six percent (6%) computed on line within the fourth degree of relationship.
the basis of the total gifts in excess of Two
Hundred Fifty Thousand Pesos (P250,000) Effective July 28, 1992 to December 31,
exempt gift made during the calendar year. 1997 (RA No. 7499)

Net Gift But not The Of the

Notes: Over Over Tax Shall be
Plus
Excess Over
    
  exempt    
1.  When the gifts are made during the same 50,000.00
calendar year but on different dates, the        
1.50%        50,000.00
50,000.00 100,000.00
donor's tax shall be computed based on the
     
total net gifts during the year. 100,000.00 200,000.00
P     750.00 3%    100,000.00
     
    3,750.00 5%    200,000.00
2.  The relationship between the donor and 200,000.00 500,000.00
   1,000,000.
the donee(s) shall not be considered. 500,000.00 00
 18,750.00 8%    500,000.00
Republic Act No. 10963 (TRAIN Law) does 1,000,000. 3,000,000.
  58,750.00 10% 1,000,000.00
not distinguish donations made to relatives, 00 00
or donations made to strangers. 3,000,000. 5,000,000.
258,750.00 15% 3,000,000.00
00 00
5,000,000.
Effective January 1, 1998 to December 31, 00
and over 558,750.00 20% 5,000,000.00
2017 (RA No. 8424) Note:
1.    Donation made to a stranger is subject
Net Gift But not The Of the
Over Over Tax Shall be
Plus
Excess Over
to 10% of the net gift. A stranger is a person
     who is not a:
  exempt    
100,000.00 ·  brother, sister (whether by whole or half-
         
0 2%    100,000.00 blood), spouse, ancestor and lineal
100,000.00 200,000.00
descendants; or
         
200,000.00 500,000.00
P    2,000.00 4%     200,000.00 ·  relative by consanguinity in the collateral
  line within the fourth degree of relationship. 
    
1,000,000.      14,000.00 6%     500,000.00
500,000.00
00
   
1,000,000. 3,000,000.
     44,000.00 8%  1,000,000.00 Effective January 16, 1981 to July 27,
00 00 1992 (Presidential Decree No. 1773)
   
3,000,000. 5,000,000.
   204,000.00 10%  3,000,000.00
Net Gift But not The Of the
00 00 Plus
Over Over Tax Shall be Excess Over
 
10,000,000      
5,000,000.    404,000.00 12%   5,000,000.00   exempt    
.00 1,000.00
00
         
10,000,000
and over 1,004,000.00 15% 10,000,000.00                         
.00          1,000.00
1,000.00 50,000.00 1.50%
          2.50
P    735.00      50,000.00
50,000.00 75,000.00 %
       
   1,360.00 3%      75,000.00
75,000.00 100,000.00
Notes:
     
   2,110.00 6%    100,000.00
100,000.00 150,000.00
1.    When the gifts are made during the      
   5,110.00 9%    150,000.00
same calendar year but on different dates, 150,000.00 200,000.00
      
   9,610.00 12%    200,000.00 welfare corporation, institution, accredited
200,000.00 300,000.00
non-government organization, trust or
     
300,000.00 400,000.00
  21,610.00 15%    300,000.00 philanthropic organization or research
      institution or organization: Provided,
  36,610.00 18%    400,000.00
400,000.00 500,000.00 however, not more than 30% of said gifts
      will be used by such donee for
  54,610.00 21%    500,000.00
500,000.00 625,000.00
     
administration purposes. For the purpose of
  80,860.00 24%    625,000.00 this exemption, a ‘non-profit educational
625,000.00 750,000.00
     
110,860.00 28%    750,000.00
and/or charitable corporation, institution,
750,000.00 875,000.00 accredited nongovernment organization,
   1,000,000.
875,000.00 00
145,860.00 32%    875,000.00 trust or philanthropic organization and/or
1,000,000. 2,000,000. research institution or organization’ is a
185,860.00 36% 1,000,000.00
00 00 school, college or university and/or
2,000,000. 3,000,000.
 545,860.00  38%   2,000,000.00 charitable corporation, accredited
00 00 
3,000,000.  
nongovernment organization, trust or
   925,860.00  40%  philanthropic organization and/ or research
00 3,000,000.00 
institution or organization, incorporated as a
Note:     nonstock entity, paying no dividends,
governed by trustees who receive no
1.    Donation made to a stranger shall be compensation, and devoting all its income,
either the amount computed in accordance whether students’ fees or gifts, donation,
with the preceding schedule or twenty subsidies or other forms of philanthropy, to
percent (20%) of the net gifts, whichever is the accomplishment and promotion of the
higher. A stranger is a person who is not a: purposes enumerated in its Articles of
Incorporation.” (Sec. 17 of RR No. 12-2018)
·  brother, sister (whether by whole or half-
blood), spouse, ancestor and lineal B.  In the Case of Gifts Made by a
descendant; or Nonresident not a Citizen of the Philippines
·  relative by consanguinity in the collateral
line within the fourth degree of relationship. -Gifts made to or for the use of the National
Government or any entity created by any of
its agencies which is not conducted for
profit, or to any political subdivision of the
said Government.

EXEMPT: -Gifts in favor of an educational and/or

A.  “In the Case of Gifts made by a Resident charitable, religious, cultural or social
welfare corporation, institution, foundation,
· Gifts made to or for the use of the National trust or philanthropic organization or
Government or any entity created by any of research institution or organization:
its agencies which is not conducted for Provided, however, that not more than thirty
profit, or to any political subdivision of the percent (30%) of said gifts shall be used by
said Government; and such donee for administration purposes.  
(Sec. 101 (B) of NIRC, as amended)
· Gifts in favor of an educational and/or
charitable, religious, cultural or social

For purposes of Donor’s Tax, what does deducting from the fair market value of the
the term “Net Gift” mean? property the amount of mortgage assumed.
(Sec. 12 of RR No. 12-2018)
For purposes of the donor’s tax, “net gift”
shall mean the net economic benefit from 4. Under R.A. No.10963 (TRAIN Law), is
the transfer that accrues to the donee. any contribution in cash or in kind to any
Accordingly, if a mortgaged property is candidate or political party or coalition of
transferred as a gift, but imposing upon the parties for campaign purposes subject to
donee the obligation to pay the mortgage the payment of donor’s tax?
liability, then the net gift is measured by
Sec. 28 (B) of RA No. 10963 (TRAIN Law) 8. Is an onerous donation or donation in
states that any contribution in cash or in kind exchange for goods, services or use or
to any candidate, political party or coalition lease of properties to Homeowners’
of parties for campaign purposes shall be Association subject to Donor’s Tax?
governed by the Election Code, as
amended.” Pursuant to RMC No. 9-2013, associations
are subject to the corresponding internal
5. For purposes of Donor’s Tax, is a revenue taxes imposed under the Tax Code
legally adopted child considered of 1997 on their income of whatever kind
stranger? and character. In this regard, contributions to
associations in exchange for goods, services
A legally adopted child is entitled to all the and use of properties constitute as other
rights and obligations provided by law to assessments/charges from activity in
legitimate children, and therefore, donation exchange for the performance of a service,
to him shall not be considered as donation use of properties or delivery of an object. As
made to stranger. (Sec. 10, RR No. 2-2003). such, these fees are income on the part of the
However, with the passage of RA No. 10963 associations that are subject to income tax
(TRAIN Law), effective on January 1, 2018, under Section 27 of the Tax Code, as
the relationship between the donor and amended. (Section III, RMC No. 53-2013)
donee(s) is no longer considered in the
computation of donor’s tax. 9. What is the proper treatment for
transactions involving transfer of
6. For purposes of Donor’s Tax, are property other than real property
donations between businesses considered referred to in Section 24 (D) for less than
donations made between strangers? adequate and full consideration?

Donation made between business Where property, other than real property
organizations and those made between an referred to in Section 24(D) of the NIRC, as
individual and a business organization shall amended, is transferred for less than an
be considered as donation made to a adequate and full consideration in money or
stranger.  (sec. 10, RR No. 2-2003). money's worth, then the amount by which
However, with the passage of RA No. the fair market value of the property
10963 (TRAIN Law), effective on January exceeded the value of the consideration
1, 2018, the relationship between the donor shall, for the purpose of the tax imposed by
and donee(s) is no longer considered in in this Chapter (Donor’s Tax), be deemed a
the computation of donor’s tax. gift, and shall be included in computing the
amount of gifts made during the calendar
7. Are gratuitous donations to year: Provided, however, that a sale,
Homeowners’ Associations subject to exchange, or other transfer of property made
Donor’s Tax? in the ordinary course of business (a
transaction which is a bona fide, at arm’s
Gifts, donations, and other contributions length, and free from any donative intent)
received by the Homeowners’ Associations will be considered as made for an adequate
(Associations) are subject to the payment of and full consideration in money or money’s
donor’s tax pursuant to Section 98, and 99 of worth. (Sec. 16, RR No. 12-2018)
the NIRC, as amended by Sec. 28 of RA
10963 (TRAIN Law). Endowment or 10. What entities are considered
gifts received by such associations are not exempted from Donor’s Tax under
exempt from donor’s tax considering that special laws?
gifts to Associations are not qualified for
exemption under Section 101(A)(2) of the The list below consists of entities considered
TRAIN Law. (Section II, RMC No. 53- Donor’s Tax exempt under special laws
2013) including, but not limited to the following:

·  Rural Farm School (Sec. 14, R.A. No.

10618)
·  People’s Television Network,
Incorporated (Sec. 15, R.A. No. 10390) ·  Philippine Investors Commission (Sec. 9,
·  People’s Survival Fund (Sec. 13, R.A. No. R.A. No. 3850)
10174) ·  Ramon Magsaysay Award Foundation
·  Aurora Pacific Economic Zone and (Sec. 2, R.A. 3676)
Freeport Authority (Sec. 7, R.A. No. 10083) ·  Philippine-American Cultural Foundation
·  Girl Scouts of the Philippines (Sec. 11, (Sec. 4, P.D. 3062)
R.A. No. 10073) ·  International Rice Research Institute (Art.
·  Philippine Red Cross (Sec. 5, R.A. No. 5(2), PD 1620)
10072) ·  Task Force on Human Settlements (Sec.
·  Tubbataha Reefs Natural Park (Sec. 17, 3(b)(8), E.O. 419)
R.A. No. 10067) ·  National Social Action Council (Sec. 4,
·  National Commission for Culture and the P.D. 294)
Arts (Sec. 35, R.A. No. 10066) ·  Aquaculture Department of the Southeast
·  Philippine Normal University (Sec. 7, Asian Fisheries Development Center (Sec. 2,
R.A. No. 9647) P.D. 292)
·  University of the Philippines (Sec. 25, ·  Development Academy of the Philippines
R.A. No. 9500) (Sec. 12, PD 205)
·  National Water Quality Management Fund ·  Integrated Bar of the Philippines (Sec. 3,
(Sec. 9, R.A. No. 9275) PD 181)

    Income  Tax Rates 2. Income Tax Based on

the Graduated Income
I. For Individual Citizens and Resident Tax Rates
Aliens Earning Purely Compensation C. For Individuals Earning Both
Income and Individuals Engaged in Compensation Income and Income from
Business and Practice of Profession Business and/or Practice of Profession,
A. Graduated Income Tax Rates under their income taxes shall be:
Section 24(A)(2) of the Tax Code of 1. For Income from
1997, as amended by Republic Act No. Compensation: Based
10963  on Graduated Income
Tax Rates; and
Amount of Net Rate 2. For Income from
Taxable Income Business and/or
Over But Not   Practice of Profession:
Over a. If the total
- P250,00 0% Gross
0 Sales/Receipts
P250,0 P400,00 20% of the excess over Do Not Exceed
00 0 P250,000 VAT Threshold
of P3,000,000,
P400,0 P800,00 P30,000 + 25% of the
the Individual
00 0 excess over P400,000
Taxpayer May
P800,0 P2,000, P130,000 + 30% of the
Opt to Avail:
00 000 excess over P800,000
P2,000 P8,000, P490,000 + 32% of the
i. 8%
Income
,000 000 excess over P2,000,000
Tax on
P8,000   P2,410,000 + 35% of the
Gross
,000 excess over P8,000,000
Sales/R
eceipts
B. For Purely Self-Employed Individuals and
and/or Professionals Whose Gross Other
Sales/Receipts and Other Non- Non-
Operating Income Do Not Exceed the Operati
VAT Threshold of P3,000,000, the tax ng
shall be, at the taxpayer’s option: Income
1. 8% Income Tax on in Lieu
Gross Sales or Gross of the
Receipts in Excess of Graduat
P250,000 in Lieu of the ed
Graduated Income Tax Income
Rates and the Tax
Percentage Tax; Or Rates
and the
 Percent or other disposition of real property
age located in the Philippines, classified
Tax; Or as capital asset
ii. Income 9. Net Capital gains from sale of 15% 
Tax shares of stock not traded in the
Based stock exchange
on 10. Interest Income from long-term Exem
Graduat deposit or investment in the form of pt
ed savings, common or individual trust
Income funds, deposit substitutes,
Tax investment management accounts
Rates and other investments evidenced by
b. If the total certificates in such form prescribed
Gross by the Bangko Sentral ng Pilipinas
Sales/Receipts (BSP)
Exceed VAT Upon pre-termination before the
Threshold of fifth year, there should be imposed
P3,000,000 on the entire income from the
i. Income proceeds of the long-term deposit
Tax based on the remaining maturity
Based thereof:
on Holding Period
Graduat - Four (4) years to less than five (5) 5%
ed years
Income - Three (3) years to less than four (4) 12%
Tax years
Rates - Less than three (3) years 20%
D. On Certain Passive Income of
Individual Citizens and Resident II. For Non-Resident Aliens Not Engaged
Aliens in Trade or Business 

Passive Income Tax A. Tax Rate in General – on same

Rate taxable income from all sources manne
1. Interest from currency deposits, 20% within the Philippines r as
trust funds and deposit substitutes individ
2. Royalties (on books as well as 10% ual
literary & musical compositions) citizen
    - In general 20% and
3. Prizes (P10,000 or less ) Gradu reside
ated nt
Incom alien
e Tax individ
Rates ual
    - Over P10,000 20% B. Certain Passive Income Tax
4. Winnings (except from PCSO and 20% Rates
Lotto amounting to P10,000 or less ) 1. Interest from currency deposits, 20%
-   From PCSO and Lotto amounting exemp trust funds and deposit substitutes
to P10,000 or less t 2. Royalties (on books as well as 10%
5. Interest Income from a Depository 15% literary & musical compositions)
Bank under the Expanded Foreign     - In general 20%
Currency Deposit System 3. Prizes (P10,000 or less ) Gradu
6. Cash and/or Property Dividends  10% ated
received by an individual from a Incom
domestic corporation/ joint stock e Tax
company/ insurance or mutual fund Rates
companies/ Regional Operating     - Over P10,000 20%
Headquarter of multinational 4. Winnings (except from PCSO and 20%
companies Lotto)
7. Share of an individual in the 10%    -  From PCSO and Lotto exemp
distributable net income after tax of a t
partnership (except GPPs)/ 5. Cash and/or Property Dividends 20%
association, a joint account, a joint received from a domestic
venture or consortium taxable as corporation/ joint stock company/
corporation of which he is a member insurance/ mutual fund companies/
or co-venture Regional Operating Headquarter of
8. Capital gains from sale, exchange 6% multinational companies
6. Share of a non-resident alien 20% On the gross income consisting of Gradu
individual in the distributable net salaries, wages, annuities, ated
income after tax of a partnership compensation, remuneration and Incom
(except GPPs) of which he is a other emoluments, such as e Tax
partner or from an association, a honoraria and emoluments derived Rates
joint account, a joint venture or from the Philippines
consortium taxable as corporation of
which he is a member or co-venture
V. For General Professional Partnerships 
7. Interest Income from long-term Exemp
deposit or investment in the form of t
savings, common or individual trust Net Income of the Partnerships 0%
funds, deposit substitutes,
investment management accounts VI. For Domestic Corporations 
and other investments evidenced by
certificates in such form prescribed
by the Bangko Sentral ng Pilipinas Rates of Tax on Certain Passive Tax
(BSP) Income of Corporations Rate
Upon pre-termination before the 1. Interest from currency deposits, 20%
fifth year, there should be imposed trust funds, deposit substitutes and
on the entire income from the similar arrangements received by
proceeds of the long-term deposit domestic corporations
based on the remaining maturity 2. Royalties from sources within the 20%
thereof: Philippines
Holding Period 3. Interest Income from a Depository 15%
  - Four (4) years to less than five (5) 5% Bank under Expanded Foreign
years Currency Deposit System
  - Three (3) years to less than four 12% 4. Cash and Property Dividends 0%
(4) years received by a domestic corporation
  - Less than three (3) years 20% from another domestic corporation
8. Capital from the sale, exchange 6% 5. Capital gains from the sale, 6%
or other disposition of real property exchange or other disposition of
located in the Philippines classified lands and/or building
as capital asset 6. Net Capital gains from sale of 15% 
9. Net Capital gains from sale of   shares of stock not traded in the
shares of stock not traded in the stock exchange
Stock Exchange
   - Not over P100,000 5% VII. *Beginning on the 4th year immediately
   - Any amount in excess of 10% following the year in which such
P100,000 corporation commenced its business
operations, when the minimum
III. For Non-resident Aliens Not Engaged in corporate income tax is greater than the
Trade or Business  tax computed using the normal income
tax.
1. Gross amount of income derived from 2
VIII. For Resident Foreign Corporation 
all sources within the Philippines 5
%
2. Capital gains from the exchange or 6
other disposition of real property located %
in the Philippines
3. Net Capital gains from the sale of  
shares of stock not traded in the Stock
Exchange
- Not  Over  P100,000 5
%
- Any amount in excess of P100,000 1
0
%

IV. For Alien Individuals Employed by

Regional Headquarters (RHQ) or Area
Headquarters and Regional Operating
Headquarters (ROH) of Multinational
Companies, Offshore Banking Units
(OBUs), Petroleum Service Contractor
and Subcontractor  
1) a. In General – on taxable income derived from sources within the Philippines 30%
    b. Minimum Corporate Income Tax – on gross income 2%
    c. Improperly Accumulated Earnings – on improperly accumulated taxable 10%
income
2) International Carriers – on gross Philippine billings 2½%
3) Regional Operating Headquarters of Multinational Companies– on taxable 10%
income
4.) Regional or Area Headquarters of Multinational Companies exempt
5) Corporation Covered by Special Laws Rate specified
under the
respective special
laws
 6) Offshore Banking Units (OBUs) 10%
In general – Income derived by OBUs from foreign currency transactions with non- Exempt
residents, other OBUs, local commercial banks and branches of foreign banks
authorized by BSP
    On interest income derived from foreign currency loans granted to residents 10%
other than offshore banking units or local commercial banks, local branches of
foreign banks authorized by BSP to transact business with OBUs
7) Income derived under the Expanded Foreign Currency Deposit System  
   Interest income derived by a depository bank under the expanded foreign 7½%
currency deposit system.
   On Income derived by depository banks under the expanded foreign currency exempt
deposit systems from foreign currency transactions with non-residents, OBUs in
the Philippines, local commercial banks including branches of foreign banks that
may be authorized by BSP
    On interest income derived from foreign currency loans granted by depository 10%
banks under the expanded foreign currency deposit systems to residents other
than offshore banking units in the Philippines or other depository banks under the
expanded system
8.) Branch Profit Remittances – on total profits applied or earmarked for 15%
remittance without any deduction for the tax component thereof (except those
activities which are registered with the Philippines Economic Zone Authority)
9.) Interest from currency deposits, trust funds, deposit substitutes and similar 20%
arrangements
10. Royalties derived from sources within the Philippines 20%

 What comprises gross income? o Life insurance

Gross income includes, but is not limited to the o Amount received by insured as
following: return of premium

 Compensation for services, in whatever o Gifts, bequests and devises

form paid, including but not limited to
fees, salaries, wages, commissions and
o Compensation for injuries or
similar items
sickness

 Gross income derived from the conduct o Income exempt under treaty
of trade or business or the exercise of
profession
o Retirement benefits, pensions,
gratuities, etc.
 Gains derived from dealings in property
o Miscellaneous items
 Interest

 Income derived by foreign government

 Rents

 Income derived by the government or its

 Royalties political subdivision

 Dividends  Prizes and awards in sport competition

 Annuities  Prizes and awards which met the

conditions set in the Tax Code
 Prizes and winnings
 13th month pay and other benefits not
 Pensions exceeding P90,000

 Partner's distributive share from the net  GSIS, SSS, Medicare and other
income of the general professional contributions
partnerships
 Gains from the sale of bonds,
5) What are some of the exclusions from gross debentures or other certificate of
income?
 indebtedness with a maturity of more e. Those who are qualified under “substituted
than five (5) years filing”. However, substituted filing applies only if
all of the following requirements are present:
 Gains from redemption of shares in
mutual fund - the employee received purely
compensation income (regardless of
amount) during the taxable year;
6) What are the allowable deductions from gross
income?
- the employee received the income from
only one employer in the Philippines during
a)  *Optional Standard Deduction - an amount
the taxable year;
not exceeding 40% of the gross sales/receipts
for individuals and gross income for
corporations; or - the amount of tax due from the employee at
the end of the year equals the amount of tax
withheld by the employer;
b)  Itemized Deductions which include the
following:
- the employee’s spouse also complies with
all 3 conditions stated above;
- Expenses
- the employer files the annual information
- Interest return (BIR Form No. 1604-CF); and

- Taxes - the employer issues BIR Form No. 2316

(Oct 2002 ENCS version) to each employee.
- Losses
8.) Who are exempt from Income Tax?
- Bad Debts
a. Income from abroad of a non-resident citizen
- Depreciation who is:

- Depletion of Oil and Gas Wells and Mines i. A citizen of the Philippines who establishes to
the satisfaction of the Commissioner the fact of
- Charitable Contributions and Other his physical presence abroad with a definite
Contributions- Research and Development intention to reside therein

- Pension Trusts ii. A citizen of the Philippines who leaves the

Philippines during the taxable year to reside
* Not allowed to non-resident alien individual abroad, either as an immigrant or for
employment on a permanent basis
* A General Professional Partnership (GPP)
may avail of the OSD only once, either by the iii. A citizen of the Philippines who works and
GPP or the partners comprising the derives income from abroad and whose
partnership employment thereat requires him to be
physically present abroad most of the time
7) Who are not required to file Income Tax during the taxable year
returns?
iv. A citizen who has been previously considered
a. An individual earning purely compensation as a non-resident citizen and who arrives in the
income whose taxable income does not exceed Philippines at any time during the year to reside
P250,000.00 permanently in the Philippines will likewise be
treated as a non-resident citizen during the
taxable year in which he arrives in the
b. An individual whose income tax has been
Philippines, with respect to his income derived
withheld correctly by his employer, provided that
from sources abroad until the date of his arrival
such individual has only one employer for the
in the Philippines.
taxable year

b. Overseas Filipino Worker, including overseas

c. An individual whose sole income has been
seaman
subjected to final withholding tax or who is
exempt from income tax pursuant to the Tax
Code and other special laws. An individual citizen of the Philippines who is
working and deriving income from abroad as an
overseas Filipino worker is taxable only on
d. An individual who is a minimum wage earner
income from sources within the Philippines;
provided, that a seaman who is a citizen of the
Philippines and who receives compensation for
services rendered abroad as a member of the c. General Professional Partnership
complement of a vessel engaged exclusively in
international trade will be treated as an overseas d. Government Service Insurance System
Filipino worker. (GSIS)

NOTE: A Filipino employed as Philippine e. Social Security System (SSS)

Embassy/Consulate service personnel of the
Philippine Embassy/consulate is not treated as a f. Philippine Health Insurance Corporation
non-resident citizen; hence, his income is (PHIC)
taxable.
g. Local Water Districts (LWD)

COMPUTATION:
P
10) How is Income Tax payable of individuals Gross Taxable Income _______
(resident citizens and non-resident citizens) ____
computed?

A. Based on Graduated Income Tax Rate Less: Amount allowed as deduction     
under Sec. 24 (A)(2)(b) of NIRC, as 250,000.
amended 00

P
P _____
Gross Income ________ Net Taxable Income
______
___

               
Less: Allowable Deductions ________ Multiply by Tax Rate
   8%
(Itemized or Optional) ___

P
P
Income Tax Due _______
Net Taxable Income ________
____
___

_______
________ Tax Withheld (per BIR From 2307)
Multiply by Tax Rate (0% to 35%) _____
____

P _____
P Income Tax Payable
______
Income Tax Due ________
___
 ii. Mixed Income Earner
Less: Tax Withheld (per BIR From ________
2316) ____
On Compensation  
P______
Income Tax Payable
______ P
Total Compensation Income ________
B. Based on Preferential Tax Rate of 8% ___

i. Taxpayers source of income is purely from ________

self-employment Less: Non-taxable Income
____ 

          13th month pay and other        

P benefits (max) 90,000.00
Gross Sales/Receipts _______
____
P ----------
Taxable Compensation Income
------
_______
Add: Non-operating Income
_____
________
Multiply by Tax Rate (0% to 35%)
____ 
 P ______ professional income did not exceed %
Tax Due on Compensation P720,000.00
_____

If the gross annual business or 15

   
professional income is more than %
P720,000.00
On Business Income  
B. Pay the balance as you file the tax return,
computed as follows:
P
Gross Sales/Receipts ________
___
Income Tax Due P ___________
________
Add: Non-operating Income
____ Less: Withholding Tax ___________

P Net Income Tax Due* P ___________

Taxable Business Income ________
___
*Note: When the tax due exceeds P2,000.00,
the taxpayer may elect to pay in two equal
                 installments, the first installment to shall be paid
Multiply by Tax Rate
  8% at the time the return is filed and the second
installment on or before October 15 following the
close of the calendar year to the Authorized
P ______ Agent Bank (AAB) within the jurisdiction of
Tax Due on Business Income
_____ the Revenue District Office (RDO) where the
taxpayer is registered
   

P
Total Income Tax Due
________
(Compensation + Business)
___

Tax Withheld (per BIR From ________

2316/2307) ____

P ______
Income Tax Payable
_____

11) How is Income Tax Paid?

A. Through withholding 

a. Individual Payee: Rat

e

If the gross annual business or 5%

professional income did not exceed
P3,000,000.00

If the gross annual business or 10

professional income is more than %
P3,000,000.00

b. Non-individual Payee Rat

e

If the gross annual business or 10

ESTATE TAX
Over
Tax Rates
P
  Exempt    
200,000.00
(The rate applicable shall be based on the
law prevailing at the time of decedent’s P   P
  5%
death) 200,000.00 500,000.00 200,000.00

Effective January 1, 2018 to present    

 
2,000,000. P   15,000.00 8%      500,000.00
[Republic Act (RA) No. 10963] 500,000.00
00

There shall be an imposed rate of six percent  

 2,000,000.
(6%) based on the value of such NET 00
5,000,000.    135,000.00 12%   2,000,000.00
ESTATE determined as of the time of death 00
of decedent composed of all properties, real
 5,000,000. 10,000,000
or personal, tangible or intangible less 00 .00
   495,000.00 21%   5,000,000.00
allowable deductions.
10,000,000
  1,545,000.00 35% 10,000,000.00
Effective January 1, 1998 up to December .00
31, 2017 (RA No. 8424)

If the Net Estate is

Effective January 1, 1973 to July 27, 1992
(Section 85 of the NIRC, as amended
Over
But not The Tax
Plus
Of the (Presidential Decree No. 69)
Over Shall be Excess Over

If the Net Estate is

P
  Exempt    
200,000.00

P      P Of
0 5% But not The
200,000.00 500,000.00 200,000.00 Over Plus the Excess
Over Tax Shall be
Over

 
     P
2,000,000. P   15,000.00 8%      500,000.00   Exempt - -
500,000.00 10,000.00
00

    P     
3% - P   10,000.00
2,000,000. 5,000,000.    135,000.00 11%   2,000,000.00 10,000.00 50,000.00
00 00
         
P     1,200.00 4%      50,000.00
  50,000.00 75,000.00
10,000,000
5,000,000.    465,000.00 15%   5,000,000.00
.00
00        
       2,200.00 5%      75,000.00
75,000.00 100,000.00
10,000,000
  1,215,000.00 20% 10,000,000.00
.00      
       3,450.00 10%    100,000.00
100,000.00 150,000.00

     
       8,450.00 15%    150,000.00
150,000.00 200,000.00
Effective July 28, 1992 up to December
31, 1997 (Section 77 of the NIRC, as      
amended (RA No. 7499)      15,950.00 20%    200,000.00
200,000.00 300,000.00

If the Net Estate is      

     35,950.00 25%    300,000.00
300,000.00 400,000.00

     
Over But not The Plus Of      60,950.00 30%    400,000.00
400,000.00 500,000.00
Over Tax Shall be the Excess
           
     90,950.00 35%    500,000.00    134,700.00 40%    625,000.00
500,000.00 625,000.00 625,000.00 750,000.00
         1,000,000.
   184,700.00 45%    750,000.00    240,950.00 50%    875,000.00
750,000.00 875,000.00 875,000.00 00
1,000,000. 2,000,000.
   303,450.00 53% 1,000,000.00
00 00

2,000,000. 3,000,000.
   833,450.00 56% 2,000,000.00
00 00

3,000,000.
- 1,393,450.00 60% 3,000,000.00
00

Effective September 15, 1950 to

December 31, 1972 (Section 85 of the
NIRC, as amended (RA No. 579)

Estate and Inheritance Tax

If the Net Estate is

INHERITA
Over But not Over ESTATE
NCE

0        5,000.00 Exempt Exempt

       5,000.00      12,000.00 1.00% 2%

     12,000.00      30,000.00 2.00% 4%

     30,000.00      50,000.00 2.50% 6%

     50,000.00      70,000.00 3.00% 8%

     70,000.00    100,000.00 5.00% 12%

   100,000.00    150,000.00 7.00% 14%

   150,000.00    250,000.00 9.00% 16%

   250,000.00    500,000.00 11.00% 18%

   500,000.00 1,000,000.00 13% 20%

1,000,000.00   15% 22%

Effective July 1, 1939 to September 14,

1950 (Section 85 of the NIRC, as amended
(Commonwealth Act No. 466)

Estate and Inheritance Tax

If the Net Estate is

 Over But not Over ESTATE INHERITANCE

0 3000 Exempt
1.00%
       3,000.00      10,000.00 1.00%

     10,000.00      30,000.00 1.50% 2.00%

     30,000.00      50,000.00 2.00% 3.00%

     50,000.00      80,000.00 2.50% 4.00%

     80,000.00    110,000.00 3.00% 5.00%

   110,000.00    150,000.00 3.50% 6.00%

   150,000.00    190,000.00 4.00% 7.00%

   190,000.00    240,000.00 4.50% 8.00%

   240,000.00    290,000.00 5.00% 9.00%

   290,000.00    350,000.00 5.50% 10.00%

   350,000.00    420,000.00 6.00% 11.00%

   420,000.00    500,000.00 6.50% 12.00%

   500,000.00    600,000.00 7.00% 13.00%

   600,000.00    720,000.00 7.50% 14.00%

   720,000.00    850,000.00 8.00% 15.00%

   850,000.00 1,000,000.00 8.50% 16.00%

1,000,000.00 1,200,000.00 9.00% 17.00%

1,200,000.00 1,500,000.00 9.50% 17.00%

1,500,000.00   10.00% 17.00%

1. What are included in gross estate?  Real or immovable property located

in the Philippines
A. For resident alien decedents/citizens:
 Tangible personal property located in
 Real or immovable property, the Philippines
wherever located
 Intangible personal property - with a
 Tangible personal property, situs in the Philippines such as:
wherever located
 Franchise which must be exercised in
 Intangible personal property, the Philippines
wherever located
 Shares, obligations or bonds issued
B. For non-resident decedent/non-citizens: by corporations organized or
constituted in the Philippines
  Shares, obligations or bonds issued If the property is a real property, the
by a foreign corporation 85% of the appraised value thereof as of the time of
business of which is located in the death shall be, whichever is the higher of –
Philippines
1.  The fair market value as determined
 Shares, obligations or bonds issued by the Commissioner, or
by a foreign corporation if such
shares, obligations or bonds have 2.  The fair market value as shown in
acquired a business situs in the the schedule of values fixed by the
Philippines (i.e. they are used in the provincial and city assessors.
furtherance of its business in the
Philippines) In the case of shares of stocks, the fair
market value shall depend on whether the
 Shares, rights in any partnership, shares are listed or unlisted in the stock
business or industry established in exchanges. Unlisted common shares are
the Philippines valued based on their book value while
unlisted preferred shares are valued at par
2. What are excluded from gross estate? value. In determining the book value of
common shares, appraisal surplus shall not
 GSIS proceeds/ benefits be considered as well as the value assigned
to preferred shares, if there are any. On this
 Accruals from SSS note, the valuation of unlisted shares shall be
exempt from the provisions of RR No. 6-
2013, as amended.
 Proceeds of life insurance where the
beneficiary is irrevocably appointed
For shares which are listed in the stock
exchanges, the fair market value shall be the
 Proceeds of life insurance under a
arithmetic mean between the highest and
group insurance taken by employer
lowest quotation at a date nearest the date of
(not taken out upon his life)
death, if none is available on the date of
death itself.
 War damage payments
The fair market value of units of
 Transfer by way of bona fide sales participation in any association, recreation
or amusement club (such as golf, polo, or
 Transfer of property to the National similar clubs), shall be the bid price nearest
Government or to any of its political the date of death published in any newspaper
subdivisions or publication of general circulation.

 Separate property of the surviving To determine the value of the right to

spouse usufruct, use or habitation, as well as that of
annuity, there shall be taken into account the
 Merger of usufruct in the owner of probable life of the beneficiary in
the naked title accordance with the latest basic standard
mortality table, to be approved by the
 Properties held in trust by the Secretary of Finance, upon recommendation
decedent of the Insurance Commissioner.(Sec. 5, RR
No. 12-2018)
 Acquisition and/or transfer expressly
declared as not taxable 4. What are the allowable deductions for
Estate Tax Purposes?
3. What will be used as basis in the
valuation of property? (Please note that the allowable deductions
will vary depending on the law applicable at
The properties comprising the gross estate the time of the decedent’s death)
shall be valued based on their fair market
value as of the time of decedent’s death.
  For dates of deaths occurring “One hundred percent (100%) of the value,
January 1, 2018 to present (RA if the prior decedent died within one (1) year
No. 10963/TRAIN Law) prior to the death of the decedent, or if the
property was transferred to him by gift,
A. For a citizen or resident alien: within the same period prior to his death;

1. Standard Deduction — An amount “Eighty percent (80%) of the value, if the
equivalent to Five million pesos prior decedent died more than one (1) year
(₱5,000,000.00) but not more than two (2) years prior to the
death of the decedent, or if the property was
2. Claims against the estate - transferred to him by gift within the same
period prior to his death;
Requisites for Deductibility of Claims
against the Estate – “Sixty percent (60%) of the value, if the
prior decedent died more than two (2) years
 The liability represents a personal but not more than three (3) years prior to the
obligation of the deceased existing at death of the decedent, or if the property was
the time of death; transferred to him by gift within the same
period prior to his death;
 The liability was contracted in good
faith and for adequate and full “Forty percent (40%) of the value, if the
consideration in money’s worth; prior decedent died more than three (3) years
but not more than four (4) years prior to the
 The claim must be a debt or claim death of the decedent, or if the property was
which is valid in law and enforceable transferred to him by gift within the same
in court; and period prior to his death; and

 The indebtedness must not have been “Twenty percent (20%) of the value, if the
condoned by the creditor or the prior decedent died more than four (4) years
action to collect from the decedent but not more than five (5) years prior to the
must not have prescribed. death of the decedent, or if the property was
transferred to him by gift within the same
3. Claims of the deceased against insolvent period prior to his death.
persons where the value of the decedent’s
interest therein is included in the value of “These deductions shall be allowed only
the gross estate where a donor’s tax, or estate tax imposed
under Title III of NIRC was finally
4. Unpaid mortgages, taxes and casualty determined and paid by or on behalf of such
losses donor, or the estate of such prior decedent,
as the case may be, and only in the amount
5. Property previously taxed    -   An amount finally determined as the value of such
equal to the value specified below of any property in determining the value of the gift,
property forming part of the gross estate or the gross estate of such prior decedent,
situated in the Philippines of any person who and only to the extent that the value of such
died within five (5) years prior to the death property is included in the decedent’s gross
of the decedent, or transferred to the estate, and only if in determining the value
decedent by gift within five (5) years prior of the estate of the prior decedent, no
to his death, where such property can be deduction was allowable under this item in
identified as having been received by the respect of the property or properties given in
decedent from the donor by gift, or from exchange therefor. Where a deduction was
such prior decedent by gift, bequest, devise allowed of any mortgage or other lien in
or inheritance, or which can be identified as determining the donor’s tax, or the estate tax
having been acquired in exchange for of the prior decedent, which was paid in
property so received: whole or in part prior to the decedent’s
death, then the deduction allowable this item
shall be reduced by the amount so paid.
Such deduction allowable shall be reduced
by an amount which bears the same ratio to 5. Net share of the surviving spouse in the
the amounts allowed as deductions under conjugal partnership or community property
items (2), (3), (4), and (6) of this Subsection
as the amount otherwise deductible under  
this item bears to the value of the decedent’s
estate. Where the property referred to  For deaths occurring January 1,
consists of two or more items, the aggregate 1998 to December 31, 2017 (RA
value of such items shall be used for the No. 8424/NIRC of 1997)
purpose of computing the deduction.
A. For a citizen or resident alien:
6. Transfers for Public Use
1. Expenses, Losses, Indebtedness, and
7. The Family Home -  An amount Taxes:
equivalent to the current fair market value of
the decedent’s family 1. Actual funeral expenses (whether
home: Provided, however, that if the said paid or unpaid) up to the time of
current fair market value exceeds Ten interment, or an amount equal to five
million pesos (₱10,000,000.00), the excess percent (5%) of the gross estate,
shall be subject to estate tax whichever is lower, but in no case to
exceed P200,000.
If the family home is conjugal property and
does not exceed (₱10,000,000.00), the 2. Judicial expenses of the testamentary
allowable deduction is one-half (1/2) of the or intestate proceedings.
amount only.
3. Claims against the estate.
8. Amount Received by Heirs Under
Republic Act No. 4917 4. Claims of the deceased against
insolvent persons where the value of
Any amount received by the heirs from the the decedent’s interest therein is
decedent’s employer as a consequence of the included in the value of the gross
death of the decedent-employee in estate; and,
accordance with Republic Act No.
4917: Provided, that such amount is 5. Unpaid mortgages, taxes and
included in the gross estate of the decedent. casualty losses

9. Net share of the surviving spouse in the 2.  Property previously taxed (Vanishing
conjugal partnership or community property Deduction) (Section 86 (2) of the NIRC as
amended by RA No. 8424) - An amount
B. For a non-resident alien: equal to the value specified below of any
property forming a part of the gross estate
1. Standard Deduction – An amount situated in the Philippines of any person who
equivalent to Five hundred thousand pesos died within five (5) years prior to the death
(₱500,000)  of the decedent, or transferred to the
decedent by gift within five (5) years prior
2. Losses and indebtedness -  to his death, where such property can be
identified as having been received by the
2.1. Claims against the estate decedent from the donor by gift, or from
2.2. Claims of the deceased against insolvent such prior decedent by gift, bequest, devise
persons where the value of the decedent’s or inheritance, or which can be identified as
interest therein is included in the value of having been acquired in exchange for
the gross estate property so received:
2.3. Unpaid mortgages, taxes and casualty
losses One hundred percent (100%) of the value, if
the prior decedent died within one (1) year
3. Property previously taxed prior to the death of the decedent, or if the
property was transferred to him by gift
4. Transfers for Public Use within the same period prior to his death;
Eighty percent (80%) of the value, if the deemed constituted on the house and lot
prior decedent died more than one (1) year from the time it is actually occupied as a
but not more than two (2) years prior to the family residence and is considered as such
death of the decedent, or if the property was for as long as any of its beneficiaries
transferred to him by gift within the same actually resides therein. (Arts. 152 and 153,
period prior to his death; Family Code)

Sixty percent (60%) of the value, if the prior 5.  Standard deduction – A deduction in the
decedent died more than two (2) years but amount of One Million Pesos
not more than three (3) years prior to the (P1,000,000.00) shall be allowed as an
death of the decedent, or if the property was additional deduction without need of
transferred to him by gift within the same substantiation.
period prior to his death;
6. Medical expenses – All medical expenses
Forty percent (40%) of the value, if the prior (cost of medicines, hospital bills, doctor’s
decedent died more than three (3) years but fees, etc.) incurred (whether paid or unpaid)
not more than four (4) years prior to the within one (1) year before the death of the
death of the decedent, or if the property was decedent shall be allowed as a deduction
transferred to him by gift within the same provided that the same are duly
period prior to his death; and substantiated with official receipts. For
services rendered by the decedent’s
Twenty percent (20%) of the value, if the attending physicians, invoices, statements of
prior decedent died more than four (4) years account duly certified by the hospital, and
but not more than five (5) years prior to the such other documents in support thereof and
death of the decedent, or if the property was provided, further, that the total amount
transferred to him by gift within the same thereof, whether paid or unpaid, does not
period prior to his death; exceed Five Hundred Thousand Pesos
(P500,000).
These deductions shall be allowed only
where a donor’s tax or estate tax imposed 7. Amount received by heirs under RA No.
was finally determined and paid by or on 4917 - Any amount received by the heirs
behalf of such donor, or the estate of such from the decedent’s employer as a
prior decedent, as the case may be, and only consequence of the death of the decedent-
in the amount finally determined as the employee in accordance with Republic Act
value of such property in determining the No. 4917 is allowed as a deduction provided
value of the gift, or the gross estate of such that the amount of the separation benefit is
prior decedent, and only to the extent that included as part of the gross estate of the
the value of such property is included in the decedent.
decedent’s gross estate, and only if in
determining the value of the estate of the 8.  Net share of the surviving spouse in the
prior decedent, no Property Previously conjugal partnership or community property
Taxed or Vanishing Deduction was
allowable in respect of the property or B. For a non-resident alien:
properties given in exchange therefor.
(Section 6 & 7 of RR No. 2-2003) 1.  Expenses, losses, indebtedness and taxes

3.  Transfers for public use 2.  Property previously taxed

4.  The family home - fair market value but 3.  Transfers for public use
not to exceed P1,000,000.00
4.  Net share of the surviving spouse in the
The family home refers to the dwelling conjugal partnership or community property
house, including the land on which it is
situated, where the husband and wife, or a No deduction shall be allowed in the case of
head of the family, and members of their a non-resident decedent not a citizen of the
family reside, as certified to by the Barangay Philippines, unless the executor,
Captain of the locality. The family home is administrator, or anyone of the heirs, as the
case may be, includes in the return required 6.  What does the term "Judicial
to be filed in the Section 90 of the Code the Expenses" include?
value at the time of the decedent’s death of
that part of his gross estate not situated in Expenses allowed as deduction under this
the Philippines. category are those incurred in the inventory-
taking of assets comprising the gross estate,
5. What does the term "Funeral their administration, the payment of debts of
Expenses" include?   the estate, as well as the distribution of the
estate among the heirs. In short, these
The term "FUNERAL EXPENSES" is not deductible items are expenses incurred
confined to its ordinary or usual meaning. during the settlement of the estate but not
They include: beyond the last day prescribed by law, or the
extension thereof, for the filing of the estate
1. The mourning apparel of the tax return. Judicial expenses may include:
surviving spouse and unmarried
minor children of the deceased 1. Fees of executor or administrator;
bought and used on the occasion of
the burial; 2. Attorney’s fees;

2. Expenses for the deceased’s wake, 3. Court fees;

including food and drinks;
4. Accountant’s fees;
3. Publication charges for death
notices; 5. Appraiser’s fees;

4. Telecommunication expenses 6. Clerk hire;

incurred in informing relatives of the
deceased; 7. Costs of preserving and distributing
the estate;
5. Cost of burial plot, tombstones,
monument or mausoleum but not 8. Costs of storing or maintaining
their upkeep. In case the deceased property of the estate; and
owns a family estate or several burial
lots, only the value corresponding to 9. Brokerage fees for selling property
the plot where he is buried is of the estate.
deductible;
Any unpaid amount for the aforementioned
6. Interment and/or cremation fees and cost and expenses claimed under “Judicial
charges; and Expenses” should be supported by a sworn
statement of account issued and signed by
7. All other expenses incurred for the the creditor. (Sec 6 (A)(2) of RR 2-2003)
performance of the rites and
ceremonies incident to interment.

Expenses incurred after the interment, such

as for prayers, masses, entertainment, or the
like are not deductible. Any portion of the
funeral and burial expenses borne or
defrayed by relatives and friends of the
deceased are not deductible. Actual funeral
expenses shall mean those which are
actually incurred in connection with the
interment or burial of the deceased. The
expenses must be duly supported by official
receipts or invoices or other evidence to
show that they were actually incurred. (Sec
6 (A)(1) of RR 2-2003)
PERCENTAGE TAX i. The Philippine
Government or any of
Who are required to file? its political subdivisions
or instrumentalities;
Persons refer to individuals and non-
ii. Diplomatic services;
individuals, which include, but are not limited iii. Public international
to, estates, trusts, partnerships, and organizations or any of
corporations. their agencies based in
the Philippines enjoying
privileges, exemptions
1. Persons, who are not VAT-registered, and immunities which
who sell goods, properties or services, the Philippine
whose annual gross sales and/or Government is
receipts do not exceed three million committed to recognize
pesos (Php3,000,000.00) and are pursuant to international
exempt from value-added tax (VAT) agreement; and
under Section 109 (BB) of the National
Internal Revenue Code, as amended by
iv. News services for
messages which deal
Republic Act (RA) No. 10963.
exclusively with the
2. Persons who lease residential units collection of news items
where the monthly rental per unit for, or the dissemination
exceeds fifteen thousand pesos of news item through,
(Php15,000.00) but the aggregate of public press, radio or
such rentals of the lessor during the television broadcasting
year does not exceed three million or a newsticker service
pesos (Php3,000,000.00) furnishing a general
3. Persons engaged in the following news service similar to
industries/transactions: that of the public press.
a. Cars for rent or hire driven by e. Banks, non-bank financial
the lessee, transportation intermediaries performing quasi-
contractors, including persons banking functions
who transport passengers for f. Other non-bank financial
hire, and other domestic carriers intermediaries (including
by land for the transport of pawnshops as clarified under
passengers (except owners of Revenue Regulations [RR] No.
bancas and owners of animal- 10 – 2004)
drawn two-wheeled vehicle) and
keepers of garages
g. Person, company or corporation
(except purely cooperative
b. International air/shipping companies or associations)
carriers doing business in the doing life insurance business in
Philippines on their gross the Philippines
receipts derived from transport
of cargo from the Philippines to
h. Fire, marine or miscellaneous
agents of foreign insurance
another country
companies
c. Franchise grantees of – 
i. Proprietor, lessee or operator of
i. radio and/or television cockpits, cabarets, night or day
broadcasting clubs, boxing exhibitions,
companies whose professional basketball games,
annual gross receipts Jai-Alai and
for the preceding year racetracks, including videoke
do not exceed Php bars, karaoke bars, karaoke
10,000,000.00 and did televisions, karaoke boxes and
not opt to register as music lounges as clarified under
VAT taxpayers, and Revenue Memorandum Circular
ii. gas and water utilities. (RMC) No. 18 – 2010
d. Overseas dispatch, message or j. Winnings or 'dividends' in horse
conversation transmitted from race.
the Philippines by telephone,
telegraph, tele-writer exchange,
wireless and other
communication equipment
services, except those
transmitted by:
 4. Quarterly Percentage Tax Rates Table

Coverage Taxable Base Tax Rate

Non-VAT registered persons under Section 109 (BB) Gross sales or receipts 3%

Domestic carriers and keepers of garages Gross receipts 3%

International air/shipping carriers doing business in the Philippines Gross receipts on transport of cargo from the Philippines to a 3%
foreign country
2%
Franchise grantees:
3%
Gas and water utilities
Gross receipts
Radio and television broadcasting companies whose annual gross receipts of the
preceding year do not exceed Php10,000,000 and did not opt to register as VAT Gross receipts
taxpayer

Overseas dispatch, message or conversation originating from the Philippines Amount paid for the service 10%

Banks and non-bank financial intermediaries performing quasi-banking functions Interest, commissions and discounts from lending activities as well as income from
financial leasing, on the basis of remaining maturities of instruments from which
receipts are derived:

•  If maturity period is five years or less 5%

•  If maturity period is more than five years 1%

Dividends and equity shares and net income of subsidiaries 0%

Royalties, rentals of property, real or personal, profits from 7%

exchange and all other items treated as gross income under Sec.
32 of the Tax Code, as amended
 Net trading gains within the taxable year of foreign currency, debt 7%
securities, derivatives and other similar financial instruments

Other non-bank financial intermediaries Interest, commissions, discounts and all other items treated as 5%
gross income under the Tax Code, as amended

Interest, commissions, discounts  from lending activities, as well as income from

financial leasing on the basis of remaining maturities of instruments from which such
receipts are derived:

•  If maturity period is five years or less 5%

•  If maturity period is more than five years 1%

Life Insurance Company/Agent/Corporation (except purely cooperative companies Total premiums collected 2%
or associations)

Agents of foreign insurance companies (except reinsurance premium):

Insurance agents authorized under the Insurance Code to procure policies of Total premiums collected 4%
insurance for companies not authorized to transact business in the Philippines

Owners of property obtaining insurance directly with foreign insurance companies Total premiums paid 5%

Proprietor, lessee or operator of the following:

Cockpits Gross receipts 18%

Cabarets, Night or Day Clubs, videoke bars, karaoke bars, karaoke televisions, Gross receipts 18%
karaoke boxes and music lounges

Boxing exhibitions (except when the World or Oriental Championship is at stake in Gross receipts 10%
any division, provided further that at least one of the contenders for World
Championship is a citizen of the Philippines and said exhibitions are promoted by a
 citizen/s of the Philippines or by a corporation/ association at least 60% of the
capital of which is owned by said citizen/s)

Professional basketball games (in lieu of all other percentage taxes of whatever Gross receipts 15%
nature and description)

Jai-alai and race track Gross receipts 30%

Winnings on horse races        Winnings or 'dividends' 10%

       Winnings from double forecast/quinella and trifecta bets 4%

       Prizes of owners of winning race horses 10%

VALUE ADDED TAX  On importation of goods - twelve percent (12%) based on the total value
used by the Bureau of Customs in determining tariff and customs duties, plus
Who are Required to File VAT Returns? customs duties, excise taxes, if any, and other charges, such as tax to be
paid by the importer prior to the release of such goods from customs custody;
provided, that where the customs duties are determined on the basis of
 Any person or entity who, in the course of his trade or business, sells, quantity or volume of the goods, the VAT shall be based on the landed cost
barters, exchanges, leases goods or properties and renders services subject plus excise taxes, if any.
to VAT, if the aggregate amount of actual gross sales or receipts exceed  On export sales and other zero-rated sales - 0%
Three Million Pesos (Php3,000,000.00)
 A person required to register as VAT taxpayer but failed to register Who are liable to register as VAT taxpayers?
 Any person, whether or not made in the course of his trade or business, who
imports goods Any person who, in the course of trade or business, sells, barters or exchanges goods or
properties or engages in the sale or exchange of services shall be liable to register if:
Value-Added Tax Rates 
a. His gross sales or receipts for the past twelve (12) months, other than those that are
 On sale of goods and properties - twelve percent (12%) of the gross selling exempt under Section 109 (A) to (U), have exceeded Three Million Pesos
price or gross value in money of the goods or properties sold, bartered or (P3,000,000.00): or
exchanged b. There are reasonable grounds to believe that his gross sales or receipts for the next
 On sale of services and use or lease of properties - twelve percent (12%) of twelve (12) months, other than those that are exempt under Section 109 (A) to (U),
gross receipts derived from the sale or exchange of services, including the will exceed Three Million Pesos (P3,000,000.00).
use or lease of properties
When is a new VAT taxpayer required to apply for registration and pay the What are the instances when a VAT-registered person may cancel his VAT
registration fee? registration?

New VAT taxpayers shall apply for registration as VAT Taxpayers and pay the a. If he makes a written application and can demonstrate to the commissioner's
corresponding registration fee of five hundred pesos (P500.00) using BIR Form No. satisfaction that his gross sales or receipts for the following twelve (12)
0605 for every separate or distinct establishment or place of business before the start months, other than those that are exempt under Section 109 (A) to (U), will
of their business following existing issuances on registration. not exceed Three Million Pesos (P3,000,000.00); or
b. If he has ceased to carry on his trade or business, and does not expect to
Thereafter, taxpayers are required to pay the annual registration fee of five hundred recommence any trade or business within the next twelve (12) months.
pesos (P500.00) not later than January 31, every year.
When will the cancellation for registration be effective?
Who may opt to register as VAT and what will be his liability?
The cancellation for registration will be effective from the first day of the following
a. Any person who is VAT-exempt under Sec. 109 of the Tax Code, as month the cancellation was approved.
amended, may, in relation to Sec. 109 (2) of the same Code, elect to be VAT-
registered by registering with the RDO that has jurisdiction over the head What is the invoicing/receipt requirement of a VAT-registered person?
office of that person, and pay the annual registration fee of P500.00 for every
separate and distinct establishment.
A VAT registered person shall issue :
b. Any person who is VAT-registered but enters into transactions which are
exempt from VAT (mixed transactions) may opt that the VAT apply to his
transactions which would have been exempt under Section 109 of the Tax a. A VAT invoice for every sale, barter or exchange of goods or properties; and
Code, as amended. b. A VAT official receipt for every lease of goods or properties and for every sale,
c. Franchise grantees of radio and/or television broadcasting whose annual barter or exchange of services.
gross receipts of the preceding year do not exceed ten million pesos
(P10,000,000.00) derived from the business covered by the law granting the What is "output tax"?
franchise may opt for VAT registration. This option, once exercised, shall be
irrevocable. (Sec. 119, Tax Code). Output tax means the VAT due on the sale, lease or exchange of taxable goods or
d. Any person who elects to register under optional registration shall not be properties or services by any person registered or required to register under Section
allowed to cancel his registration for the next three (3) years. 236 of the Tax Code.

The above-stated taxpayers may apply for VAT registration not later than ten (10) What is "input tax"?
days before the beginning of the calendar quarter and shall pay the registration fee
unless they have already paid at the beginning of the year. In any case, the Input tax means the VAT due on or paid by a VAT-registered on importation of
Commissioner of Internal Revenue may, for administrative reason deny any goods or local purchase of goods, properties or services, including lease or use of
application for registration. Once registered as a VAT person, the taxpayer shall be property in the course of his trade or business. It shall also include the transitional
liable to output tax and be entitled to input tax credit beginning on the first day of the input tax determined in accordance with Section 111 of the Tax Code, presumptive
month following registration. input tax and deferred input tax from previous period.
What is a zero-rated sale? international sea carriers doing business in the Philippines derived from transport of
passengers and cargo from the Philippines to another country shall be exempt from
It is a sale, barter or exchange of goods, properties and/or services subject to 0% VAT VAT; however they are still liable to a percentage tax of three percent (3%) based on
pursuant to Sections 106 (A) (2) and 108 (B) of the Tax Code. It is a taxable transaction for their gross receipts derived from transport of cargo from the Philippines to another
VAT purposes, but shall not result in any output tax. However, the input tax on purchases of country as provided for in Sec. 118 of the Tax Code, as amended); and
goods, properties or services, related to such zero-rated sales, shall be available as tax credit g. Sale of power or fuel generated through renewable sources of energy such as, but not
or refund in accordance with existing regulations. limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy,
and other shipping sources using technologies such as fuel cells and hydrogen fuels;
What transactions are considered as zero-rated sales? Provided, however that zero-rating shall apply strictly to the sale of power or fuel
generated through renewable sources of energy, and shall not extend to the sale of
services related to the maintenance or operation of plants generating said power.
The following services performed in the Philippines by VAT-registered person shall be
subject to zero percent (0%) rate:
The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:
a. Processing, manufacturing or repacking goods for other persons doing business
outside the Philippines which goods are subsequently exported where the services a. Export sales
are paid for in acceptable foreign currency and accounted for in accordance with the 1. The sale and actual shipment of goods from the Philippines to a foreign
rules and regulations of the Bangko Sentral ng Pilipinas (BSP); country, irrespective of any shipping arrangement that may be agreed upon
b. Services other than processing, manufacturing or repacking rendered to a person which may influence or determine the transfer of ownership of the goods so
engaged in business conducted outside the Philippines or to a non-resident person exported, paid in acceptable foreign currency or its equivalent in goods or
engaged in business who is outside the Philippines when the services are performed, services, and accounted for in accordance with the rules and regulations of
the consideration for which is paid for in acceptable foreign currency and accounted the Bangko Sentral ng Pilipinas (BSP);
for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas 2. The sale of raw materials or packaging materials to a non-resident buyer for
(BSP); delivery to as a resident local export-oriented enterprise to be used in
c. Services rendered to persons or entities whose exemption under special laws or manufacturing, processing, packing or repacking in the Philippines of the
international agreements to which the Philippines is a signatory effectively subjects said buyer's goods, paid for in acceptable foreign currency, and accounted
the supply of such services to zero percent (0%) rate; for in accordance with the rules and regulations of the BSP;
d. Services rendered to persons engaged in international shipping or air transport 3. The sale of raw materials or packaging materials to an export-oriented
operations, including leases of property for use thereof; Provided, that these services enterprise whose export sales exceed seventy percent (70%) of total annual
shall be exclusively for international shipping or air transport operations.  (Thus, the production;
services referred to herein shall not pertain to those made to common carriers by air 4. Transactions considered export sales under Executive Order No. 226,
and sea relative to their transport of passengers, goods or cargoes from one place in otherwise known as the Omnibus Investments Code of 1987, and other
the Philippines to another place in the Philippines, the same being subject to twelve special laws; and
percent (12%) VAT under Sec. 108 of the Tax Code, as amended); 5. The sale of goods, supplies, equipment and fuel to persons engaged in
e. Services performed by subcontractors and/or contractors in processing, converting, international shipping or international air transport operations; Provided,
or manufacturing goods for an enterprise whose export sales exceeds seventy percent That the goods, supplies, equipment, and fuel shall be used exclusively for
(70%) of total annual production; international shipping or air transport operations; Provided, that the same is
f. Transport of passengers and cargo by domestic air or sea carriers from the limited to goods, supplies, equipment and fuel that shall be used in the
Philippines to a foreign country. (Gross receipts of international air carriers and transport of goods and passengers from a port in the Philippines directly to a
 foreign port, or vice-versa without docking or stopping at any other port in 5. Services performed by subcontractors and/or contractors in processing,
the Philippines unless the docking or stopping at any other Philippine port is converting, or manufacturing goods for an enterprise whose export sales
for the purpose of unloading passengers and/or cargoes that originated from exceeds seventy percent (70%) of total annual production.
abroad, or to load passengers and/or cargoes bound for abroad;Provided,
further, that if any portion of such fuel, goods or supplies is used for What is VAT-exempt sale?
purposes other than the mentioned in this paragraph, such portion of fuel,
goods and supplies shall be subject to twelve percent (12%) output VAT.
It is a sale of goods, properties or service and the use or lease of properties which is not
b. Sales to Persons or Entities Deemed Tax-exempt under Special Law or International
subject to output tax and whereby the buyer is not allowed any tax credit or input tax related
Agreement to such exempt sale.

Sale of goods or property to persons or entities who are tax-exempt under special laws or What are the VAT-exempt transactions?
international agreements to which the Philippines is a signatory, such as, Asian Development
Bank (ADB), International Rice Research Institute (IRRI), subject such sales to zero rate.
a. Sale or importation of agricultural and marine food products in their original state,
What are the transactions which are no longer subject to zero-percent (0%)? livestock and poultry of a kind generally used as, or yielding or producing foods for
human consumption; and breeding stock and genetic materials therefore;
b. Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn,
1. Sale of gold to BSP livestock and poultry feeds, including ingredients, whether locally produced or
2. Foreign-currency denominated sales imported, used in the manufacture of finished feeds (except specialty feeds for race
horses, fighting cocks, aquarium fish, zoo animals and other animals considered as
Upon the successful establishment and implementation of an enhanced VAT refund system by pets);
the Department of Finance (DOF), what are the transactions that will now be subject to twelve c. Importation of personal and household effects belonging to residents of the
percent (12%) and no longer be subject to zero percent (0%)? Philippines returning from abroad and non-resident citizens coming to resettle in the
Philippines; Provided, that such goods are exempt from custom duties under the
1. The sale of raw materials or packaging materials to a non-resident buyer for delivery Tariff and Customs Code of the Philippines;
to a resident local export-oriented enterprise to be used in manufacturing, processing, d. Importation of professional instruments and implements, tools of trade, occupation or
packing or repacking in the Philippines of the said buyer's goods, paid for in employment, wearing apparel, domestic animals, and personal and household effects
acceptable foreign currency, and accounted for in accordance with the rules and ( except vehicles, vessels, aircrafts machineries and other similar goods for use in
regulations of the BSP; manufacture which are subject to duties, taxes and other charges) belonging to
2. The sale of raw materials or packaging materials to an export-oriented enterprise persons coming to settle in the Philippines or Filipinos or their families and
whose export sales exceed seventy percent (70%) of total annual production; descendants who are now residents or citizens of other countries, such parties
3. Transactions considered export sales under Executive Order No. 226, otherwise hereinafter referred to as overseas Filipinos, in quantities and of the class suitable to
known as the Omnibus Investments Code of 1987, and other special laws the profession, rank or position of the persons importing said items, for their own use
and not barter or sale, accompanying such persons, or arriving within a reasonable
4. Processing, manufacturing or repacking goods for other persons doing business time; Provided, That the Bureau of Customs may, upon the production of
outside the Philippines which goods are subsequently exported where the services satisfactorily evidence that such persons are actually coming to settle in the
are paid for in acceptable foreign currency and accounted for in accordance with the Philippines and that the goods are brought from their place of residence, exempt such
rules and regulations of the Bangko Sentral ng Pilipinas (BSP); and goods from payment of duties and taxes.
e. Services subject to percentage tax under Title V of the Tax Code, as amended;
f. Services by agricultural contract growers and milling for others of palay into rice, wherein price ceiling per unit is Php 450,000.00 or as may from time to
corn into grits, and sugar cane into raw sugar; time be determined by the HUDCC and the NEDA and other related laws;
g. Medical, dental, hospital and veterinary services except those rendered by iv. Sale of residential lot valued at One Million Five Hundred Thousand Pesos
professionals; (P1,500,000.00) and below, or house and lot and other residential dwellings
h. Educational services rendered by private educational institutions duly accredited by valued at Two Million Five Hundred Thousand Pesos (P2,500,000.00) and
the Department of Education (DepED), the Commission on Higher Education below, as adjusted using latest Consumer Price Index values.   (If two or
(CHED) and the Technical Education and Skills Development Authority (TESDA) more adjacent lots are sold or disposed in favor of one buyer, for the
and those rendered by the government educational institutions; purpose of utilizing the lots as one residential lot, the sale shall be exempt
from VAT only if the aggregate value of the lots do not exceed One Million
i. Services rendered by individuals pursuant to an employer-employee relationship;
Five Hundred Thousand Pesos (P1,500,000.00).  Adjacent residential lots,
j. Services rendered by regional or area headquarters established in the Philippines by although covered by separate titles and/or separate tax declarations, when
multinational corporations which act as supervisory, communications and sold or disposed to one and the same buyer, whether covered by one or
coordinating centers for their affiliates, subsidiaries or branches in the Asia-Pacific separate Deed of Conveyance, shall be presumed as a sale of one residential
Region and do not earn or derive income from the Philippines; lot.)
k. Transactions which are exempt under international agreements to which the q. Lease of residential units with a monthly rental per unit not exceeding Fifteen
Philippines is a signatory or under special laws except those granted under P.D. No. Thousand Pesos (P15,000.00), regardless of the amount of aggregate rentals received
529 - Petroleum Exploration Concessionaires under the Petroleum Act of 1949; by the lessor during the year; Provided, that not later than January 31, 2009 and
l. Sales by agricultural cooperatives duly registered and in good standing with the every three (3) years thereafter, the amount of P10,000.00 shall be adjusted to its
Cooperative Development Authority (CDA) to their members, as well as of their present value using the Consumer Price Index, as published by the Philippine
produce, whether in its original state or processed form, to non-members, their Statistics Authority (Formerly known as NSO);
importation of direct farm inputs, machineries and equipment, including spare parts r. Sale, importation, printing or publication of books and any newspaper, magazine,
thereof, to be used directly and exclusively in the production and/or processing of review or bulletin which appears at regular intervals with fixed prices for
their produce; subscription and sale and which is not devoted principally to the publication of paid
m. Gross receipts from lending activities by credit or multi-purpose cooperatives duly advertisements;
registered and in good standing with the Cooperative Development Authority; s. Transport of passengers by international carriers;
n. Sales by non-agricultural, non-electric and non-credit cooperatives duly registered t. Sale, importation or lease of passenger or cargo vessels and aircraft, including engine
with and in good standing with CDA; Provided, that the share capital contribution of equipment and spare parts thereof for domestic or international transport perations;
each member does not exceed Fifteen Thousand Pesos (P15,000.00) and regardless Provided, that the exemption from VAT on the importation and local purchase of
of the aggregate capital and net surplus ratably distributed among the members; passenger and/or cargo vessels shall be subject to the requirements on restriction on
o. Export sales by persons who are not VAT-registered; vessel importation and mandatory vessel retirement program of Maritime Industry
p. The following sales of real properties: Authority (MARINA);
i. Sale of real properties not primarily held for sale to customers or held for u. Importation of fuel, goods and supplies by persons engaged in international shipping
lease in the ordinary course of trade or business. or air transport operations; Provided, that the said fuel, goods and supplies shall be
ii. Sale of real properties utilized for low-cost housing as defined by RA No. used exclusively or shall pertain to the transport of goods and/or passenger from a
7279, otherwise known as the "Urban Development and Housing Act of port in the Philippines directly to a foreign port, or vice-versa, without docking or
1992" and other related laws, such as RA No. 7835 and RA No. 8763; stopping at any other port in the Philippines unless the docking or stopping at any
other Philippine port is for the purpose of unloading passengers and/or cargoes that
iii. Sale of real properties utilized for specialized housing as defined under RA
originated form abroad, or to load passengers and/or cargoes bound for abroad;
No. 7279, and other related laws, such as RA No. 7835 and RA No. 8763,
Provided, further, that if any portion of such fuel, goods or supplies is used for
 purposes other that the mentioned in the paragraph, such portion of fuel, goods and “Low-cost housing” refers to housing projects intended for homeless low-income
supplies shall be subject to 12% VAT; family beneficiaries, undertaken by the Government or private developers, which
v. Services of banks, non-bank financial intermediaries performing quasi-banking may either be a subdivision or a condominium registered and licensed by the
functions, and other non-bank financial intermediaries, such as money changers and Housing and Land Use Regulatory Board/Housing (HLURB) under BP Blg. 220, PD
pawnshops, subject to percentage tax under Sections 121 and 122, respectively of the No. 957 or any other similar law, wherein the unit selling price is within the selling
Tax Code; and price per unit as set by the Housing and Urban Development Coordinating Council
w. Sale or lease of goods and services to senior citizens and persons with disabilities, as (HUDCC) pursuant to RA No. 7279 otherwise known as the “Urban Development
provided under Republic Act Nos. 9994 (Expanded Senior Citizens Act of 2010) and and Housing Act of 1992” and other laws.
10754 (An Act Expanding the Benefits and Privileges of Persons with Disability),
respectively; “Socialized housing” refers to housing programs and projects covering houses and
x. Transfer of property in merger or consolidation (pursuant to Section 40(C)(2) of the lots or home lots only undertaken by the Government or private sector for the
Tax Code, as amended); underprivileged and homeless citizens which shall include sites and services
development, long-term financing, liberated terms on interest payments, and such
y. Association dues, membership fees, and other assessments and charges collected on
other benefits in accordance with the provision or RA No. 7279, otherwise known as
a purely reimbursement basis by homeowners’ associations and condominium the “Urban Development and Housing Act of 1992” and RA No. 7835 and RA No.
established under Republic Act No. 9904 (Magna Carta for Homeowners and 8763.  It shall also refer to projects intended for the underprivileged and homeless
Homeowner’s Association) and Republic Act No. 4726 (The Condominium Act), wherein the housing package selling price is within the lowest interest rates under the
respectively; Unified Lending Program (UHLP) or any equivalent housing program of the
z. Sale of gold to the Banko Sentral ng Pilipinasn (BSP) (previously zero-rated Government, the private sector or non-government organizations.
transaction);
aa. Sale of drugs and medicines prescribed for diabetes, high cholesterol, and
hypertension (beginning on January 1, 2019 as determined by the Department of
Health); and
III.   What is the treatment for Withholding of VAT on Government Money
bb. Sale or lease of goods or properties or the performance of services other than the
Payments?
transactions mentioned in the preceding paragraphs, the gross annual sales and/or
receipts do not exceed the amount of Three Million Pesos (Php 3,000,000.00).  Note:
Self-employed individuals and professionals availing of the 8% on gross sales and/or The government or any of its political subdivisions, instrumentalities or agencies, including
receipts and other non-operating income, under Sections 24 (A)(2)(b) and 24 (A)(2) government-owned or controlled corporations (GOCCs) shall, before making payment on
(c)(2) of the NIRC shall also be exempt from the payment of twelve (12%) VAT. account of each purchase of goods and/or services taxed at twelve percent (12%) VAT
pursuant to Sections 106 and 108 of the Tax Code, deduct and withhold a Final VAT due at
the rate of five percent (5%) of the gross payment.
What is the difference between a low-cost and a socialized housing?
The five percent (5%) final VAT withholding rate shall represent the net VAT payable of the
seller. The remaining seven percent (7%) effectively accounts for the standard input VAT for
sales of goods or services to government or any of its political subdivisions, instrumentalities
or agencies including GOCCs in lieu of the actual input VAT directly attributable or ratably
apportioned to such sales. Should actual input VAT attributable to sales to government exceed
seven percent (7%) of gross payments, the excess may form part of the sellers' expense or
cost. On the other hand, if actual input VAT attributable to sale to government is less than
seven percent (7%) of gross payment, the difference must be closed to expense or cost.
The government or any of its political subdivisions, instrumentalities or agencies including Lease or use of properties or property rights owned by non-residents; and
GOCCs, as well as private corporation, individuals, estates and trusts, whether large or non-
large taxpayers, shall withhold twelve percent (12%) VAT with respect to the following Other services rendered in the Philippines by non-residents.
payments:

WITHHOLDING TAX due from the payee on the particular income subjected to final withholding
tax.
CLASSIFICATION OF WITHHOLDING TAXES

Creditable withholding tax   

a. Compensation - is the tax withheld from income payments to
individuals arising from an employer-employee relationship.
b. Expanded - is a kind of withholding tax which is prescribed on certain
income payments and is creditable against the income tax due of the WITHHOLDING TAX ON COMPENSATION
payee for the taxable quarter/year in which the particular income was
earned. Compensation or Wages - refers to all remuneration for services performed
c. Withholding Tax on GMP - Value Added Taxes (GVAT) - is the by an employee for his employer under an employee-employer relationship,
tax withheld by National Government Agencies (NGAs) and unless exempted by the NIRC and pertinent laws.
instrumentalities, including government-owned and controlled
corporations (GOCCs) and local government units (LGUs), before KINDS OF COMPENSATION
making any payments to VAT registered taxpayers/suppliers/payees on
account of their purchases of goods and services. Regular
d. Withholding Tax on Government Money Payments (GMP) - a. Basic Salary
Percentage Taxes - is the tax withheld by National Government b. Fixed allowances
Agencies (NGAs) and  instrumentalities, including government-owned
and controlled corporations (GOCCs) and local government units Supplmentary
(LGUs), before making any payments to non-VAT registered a. Commission
taxpayers/suppliers/payees b. Overtime pay
c. Fees, including directors fees
Final Withholding Tax is a kind of withholding tax which is prescribed on d. Profit sharing
certain income payments and is not creditable against the income tax due of e. Monetized vacation leave in excess of ten (10) days
the payee on other income subject to regular rates of tax for the taxable year. f. Sick leave
Income Tax withheld constitutes the full and final payment of the Income Tax g. Fringe benefits received by rank and file employees
 h. Hazard pay p. Fringe benefits given to employees other than rank and file and
i. Taxable 13th month pay and other benefits subjected to Fringe Benefit Tax (FBT);
j. Other remuneration received from an employee-employer relationships q. Personnel Economic Relief Allowance (PERA) given to government
employees; and Representation and transportation allowance (RATA
granted to public officers and employees under the General
EXEMPTIONS AND EXCLUSIONS FROM GROSS INCOME Appropriations Act.

a. Remuneration received as an incident of employment (RA 7641; those MINIMUM WAGE EARNERS
with approved reasonable private retirement plan; Social Security Act
of 1954, as amended; GSIS Act of 1937, as amended; and etc. No withholding tax shall be required on the Statutory Minimum Wage (SMW)
b. Remuneration paid for agricultural labor; of the Minimum Wage earner in the private/public sectors as defined in RR 2-
c. Remuneration for domestic services; 98, as amended by RR 11-2018, including:
d. Remuneration for casual labor not in the course of an employer's trade
or business;  Holiday pay
e. Compensation for services by a citizen or a resident of the Philippines  Overtime pay
for a foreign government or international organization;  Night shift differential
f. Damages (Actual, moral, exemplary and nominal);  Hazard pay
g. Life insurance;
h. Amounts received by the insured as a return of premium; of Minimum Wage earners in the private/public sectors as defined by these
i. Compensation for injuries or sickness; Regulations.
j. Income exempt under treaty
k. 13th Month pay and other benefits
l. GSIS, SSS, Medicare and other contributions (employee's share only)
m. Compensation income of minimum wage earners (MWEs) who work DE MINIMIS BENEFITS NOT SUBJECT TO WITHHOLDING TAX
in the private sector and being paid the Statutory Minimum Wage
(SMW), as fixed by the Regional Tripartite Wage and Productivity a. Monetized unused vacation leave credits to employees not exceeding
Board (RTWPB)/National Wages Productivity Commission (NWPC), ten (10) days during the year;
applicable to the place where he/she is assigned; b. Monetized value of vacation and sick leave credits paid to government
n.  Compensation income of employees in the public sector with officials and employees;
compensation income of not more the the SMW in the non-agricultural c. Medical cash allowance to dependents of employees, not exceeding
sector as fixed by the RTWPB?NWPC applicable to the place where P1,500 per employee per semester of P250 per month;
he/she is assigned. d. Rice subsidy of P2,000 or one sack of 50kg rice per month amounting
o. De Minimis benefits to not more than P2,000;
e. Uniform and clothing allowance not exceeding P6,000 per annum;
f. Actual medical assistance, e.g. medical allowance to cover medical
and healthcare needs, annual medical/executive check-up, maternity
assistance, and routine consultations, not exceeding P10,000.00 per
annum;
g. Laundry allowance not exceeding P300 per month;
h. Employees achievement awards, e.g. for length of service or safety
achievement, which in the form of a tangible personal property other
than cash or gift certificate, with an annual monetary value not
exceeding P10,000 received by the employee under an established
written plan which does not discriminate in favor of highly paid
employees;
i. Gifts given during Christmas and major anniversary celebrations not
exceeding P5,000 per employee per annum;
j. Daily meal allowance for overtime work not exceeding twenty five
percent (25%) of the basic minimum wage;
k. Benefits received by an employee by virtue of a collective bargaining
agreement (CBA) and productivity incentive schemes provided that
the total annual monetary value received from both CBA and
productivity incentive schemes combined do not exceed ten thousand
pesos (Php 10,000.00)per employee per taxable year;
Tax Rates

 TAX  TAX
 DESCRIPTION 
TYPE  RATE 
WE Professional fees (Lawyers, CPA's, Engineers, etc.)  
      - if the gross income for the current year did not exceed P3M  5%
      - if gross income is more than 3M or VAT registered regardlessof amount 10%
WE Professional fees (Lawyers, CPA's, Engineers, etc.)  
      - if gross income for the current year did not exceed P720,000 10%
      - if gross income exceeds P720,000 15%
Professional entertainer such as, but not limited to actors and actresses, singers, lyricist,
WE  
composers, emcees
      - if the gross income for the current year did not exceed P3M 5%
      - if gross income is more than 3M or VAT registered regardless of amount 10%
Professional entertainer such as, but not limited to actors and actresses, singers, lyricist,
WE  
composers, emcees
      - if gross income for the current year did not exceed P720,000 10%
      - if gross income exceeds P720,000 15%
WE Professional athletes including basketball players, pelotaris and jockeys  
      - if the gross income for the current year did not exceed P3M  5%
      - if gross income is more than 3M or VAT registered regardless of amount 10%
WE Professional athletes including basketball players, pelotaris and jockeys  
      - if gross income for the current year did not exceed P720,000 10%
      - if gross income exceeds P720,000 15%
WE All directors and producers involved in movies, stage, television and musical productions  
      - if the gross income for the current year did not exceed P3M 5%
      - if gross income is more than 3M or VAT registered regardless of amount 10%
WE All directors and producers involved in movies, stage, television and musical productions  
      - if gross income for the current year did not exceed P720,000 10%
      - if gross income exceeds P720,000 15%
WE Management and technical consultants  
      - if the gross income for the current year did not exceed P3M 5% 
      - if gross income is more than 3M or VAT registered regardless of amount 10% 
WE Management and technical consultants  
      - if gross income for the current year did not exceed P720,000 10%
      - if gross income exceeds P720,000 15%
WE Business and Bookkeeping agents and agencies  
       - if the gross income for the current year did not exceed P3M 5%
      - if gross income is more than 3M or VAT registered regardless of amount 10%
WE Business and Bookkeeping agents and agencies  
       - if gross income for the current year did not exceed P720,000 10%
      - if gross income exceeds P720,000 15%
WE Insurance agents and insurance adjusters  
       - if the gross income for the current year did not exceed P3M 5%
      - if gross income is more than 3M or VAT registered regardless of amount 10%
WE Insurance agents and insurance adjusters  
      - if gross income for the current year did not exceed P720,000 10%
      - if gross income exceeds P720,000 15%
WE Other Recipients of Talent Fees  
      - if the gross income for the current year did not exceed P3M 5%
      - if gross income is more than 3M or VAT registered regardless of amount 10%
WE Other Recipients of Talent Fees  
      - if gross income for the current year did not exceed P720,000 10%
      - if gross income exceeds P720,000 15%
WE Fees of Director who are not employees of the company  
      - if the gross income for the current year did not exceed P3M 5%
      - if gross income is more than 3M or VAT registered regardless of amount 10%
Rentals Oon gross rental or lease for the continued use or possession of personal property in
excess of P10,000 annually and real property used in business which the payor or obligor has
WE 5%
not taken title or is not taking title, or in which has no equity; poles, satellites, transmission
facilities and billboards
Cinemathographic film rentals and other payments to resident indivduals and corporate
WE 5%
cinematographic film owners, lessors and distributors
WE Income payments to certain contractors 2%
WE Income distribution to the beneficiaries of estate and trusts 15%
 Gross Commission of service fees of customs, insurance, stock, immigration and commercial
WE brokers, fees of agents of professional entertainers and real estate service practitioners  
(RESPs)(i.e. real estate consultants, real estate appraisers and real estate brokers
       - if the gross income for the current year did not exceed P3M 5%
       - if gross income is more than 3M or VAT registered regardless of amount 10%
Gross Commission of service fees of customs, insurance, stock, immigration and commercial
WE brokers, fees of agents of professional entertainers and real estate service practitioners  
(RESPs)(i.e. real estate consultants, real estate appraisers and real estate brokers
     - if gross income for the current year did not exceed P720,000 10%
     - if gross income exceeds P720,000 15%
Professional fees paid to medical practitioners (includes doctors of medicine, doctors of
WE veterinary science & dentist)  by hospitals & clinics or paid directly by HMO and/or other  
semilar establishments
     - if the gross income for the current year did not exceed P3M 5%
     - if gross income is more than 3M or VAT registered regardless of amount 10%
Professional fees paid to medical practitioners (includes doctors of medicine, doctors of
WE veterinary science & dentist)  by hospitals & clinics or paid directly by HMO and/or other  
semilar establishments
     - if gross income for the current year did not exceed P720,000 10%
    - if gross income exceeds P720,000 15%
WE Payment by the General Professional Partnership (GPPs) to its partners  
     - if gross income for the current year did not exceed P720,000 10%
    - if gross income exceeds P720,000 15%
1% OF 1/2
WE Income payments made by credit card companies of gross
amount
Additional Income Payments to govt personnel from importers, shipping and airline
WE 15%
companies or their agents for overtime services
Income Payment made by NGAs, LGU, & etc to its local/resident suppliers of goods other
WE 1%
than those covered by other rates of withholding tax
Income Payment made by NGAs, LGU, & etc to its local/resident suppliers of services other
WE  2%
than those covered by other rates of withholding tax
Income Payment made by top withholding agents to their local/resident suppliers of goods
WE 1%
other than those covered by other rates of withholding tax
Income Payment made by top withholding agents to their local/resident suppliers of services
WE 2%
other than those covered by other rates of withholding tax
Commissions, rebates, discounts and other similar considerations paid/granted to independent
WE and/or exclusive sales representatives and marketing agents and sub-agents of companies,  
including multi-level marketing companies
       - if the gross income for the current year did not exceed P3M 5%
      -  if the gross income is more than P3M or VAT registered regardless of amount 10%
WE Gross payments to embalmers by funeral parlors 1%
WE Payments made by pre-need companies to funeral parlors 1%
WE Tolling fees paid to refineries 5%
Income payments made to suppliers of agricultural supplier products in excess of cumulative
WE 1%
amount of P300,000 within the same taxable year
Income payments on purchases of minerals, mineral products and quarry resources, such as
WE but not limited to silver, gold, granite, gravel, sand, boulders and other mineral products 5%
except purchases by Bangko Sentral ng Pilipinas
Income payments on purchases of minerals, mineral products and quarry resources by
WE Bangko Sentral ng Pilipinas ((BSP) from gold miners/suppliers under PD 1899, as amended by 1%
RA No. 7076
On gross amount of refund given by MERALCO to customers with active contracts as
WE 15%
classified by MERALCO
On gross amount of refund given by MERALCO to customers with terminated contracts as
WE 15%
classified by MERALCO
On gross amount of interest on the refund of meter deposits whether paid directly to the
WE customers or applied against customer's billings of Residential and General Service customers 10%
whose monthly electricity consumption exceeds 200 kwh as classified by MERALCO
On gross amount of interest on the refund of meter deposits whether paid directly to the
WE customers or applied against customer's billings of Non-Residential customers whose monthly 10%
electricity consumption exceeds 200 kwh as classified by MERALCO
On gross amount of interest on the refund of meter deposits whether paid directly to the customers
or applied against customer's billings of Residential and General Service customers whose monthly
WE 10%
electricity consumption exceeds 200 kwh as classified by other  by other electric Distribution
Utilities (DU)
On gross amount of interest on the refund of meter deposits whether paid directly to the customers
WE or applied against customer's billings of Non-Residential customers whose monthly electricity 10%
consumption exceeds 200 kwh as classified by other electric Distribution Utilities (DU)
WE Income payments made by political parties and candidates of local and national elections on all their 5%
 purchases of goods and services relkated to campaign expenditures, and income payments made by
individuals or juridical persons for their purchases of goods and services intented to be given as
campaign contribution to political parties and candidates
WE Income payments received by Real Estate Investment Trust (REIT) 1%
Interest income denied from any other debt instruments not within the coverage of deposit
WE 15%
substitutes and Revenue Regulations 14-2012
WE Income payments on locally produced raw sugar 1%

FINAL WITHHOLDING TAX

          The amount of income tax withheld by the withholding agent is constituted as a full and
final payment of income tax due from the payee of the said income.

          The liability for payment of tax rests primari;y on the payor as a withholding agent. Failure
to withhold the tax or in case of under withholding, the deficiency tax shall be collected from
payor/withholding agent.

          The payee is not required to file an income tax return for the particular income.

 TAX  TAX
 DESCRIPTION
TYPE RATE
WF Interest on Foreign loans payable to Non-Resident Foreign Corporation (NRFCs)  20%
Interest and other income payments on foreign currency transactions/loans payable of Offshore Banking
WF 10% 
Units (OBUs)
Interest and other income payments on foreign currency transactions/loans payable of Foreign Currency
WF 10% 
Deposits Units (FCDUs)
 10%
WF Cash dividend payment by domestic corporation to citizens ans residents aliens/NRFCs
30%
10%
WF Property dividend payment by domestic corporation to citizens and resident aliens/NRFCs
30%
Cash dividend payment by domestic corporation to NFRCs whose countries allowed tax deemed paid
WF  15%
credit (subject to tax sparing rule)
Property dividend payment by domestic corporation to NFRCs whose countries allowed tax deemed
  15%
paid credit (subject to tax sparing rule)
Cash dividend payment by domestic corporation to non-resident alien engaged in Trade or Business
WF 20%
within the Philippines (NRAETB) 
WF Property dividend payment by domestic corporation to NRAETB 20% 
Share of NRAETB in the distributable net income after tax of a partnership (except GPPs) of which he
WF is a partner, or share in the net income after tax of an association, joint account or a joint venture taxable 20%
as a corporation of which he is a member or a co-venturer   
WF On other payments to NRFCs     30%
Distributive share of individual partners in a taxable partnership, association, joint account or joint
WF 10% 
venture or consortium
All kinds of royalty payments to citizens, resident aliens and NRAETB (other than WI380 and WI341),
WF 20% 
domestic and resident foreign corporations   
WF On prizes exceeding P10,000 and other winnings paid to individuals    20% 
WF Branch profit remittance by all corporations except PEZA/SBMA/CDA registered 15% 
WF On the gross rentals, lease and charter fees derived by non-resident owner or lessor of foreign vessels     4.5%
On gross rentals, charter and other fees derived by non-resident lessor or aircraft, machineries and
WF 7.5%
equipment
WF On payments to oil exploration service contractors/sub-contractors 8% 
Payments to non-resident alien not engage in trade or business within the Philippines (NRANETB)
WF 25%
except on sale of shares in domestic corporation and real property
On payments to non-residnet individual/foreign corporate cinematographic film owners, lessors or
WF 25%
distributors
WF Royalties paid to NRAETB on cinematographic films and similar works 25% 
Final tax on interest or other payments upon tax-free covenant bonds, mortgages, deeds of trust or other
WF 30%
obligations under Sec. 57C of the NIRC of 1997, as amended   
Royalties paid to citizens, resident aliens and nraetb on books, other literary works and musical
WF 10%
compositions
WF Informers cash reward to individuals/juridical persons 10% 
WF Cash on property dividend paid by a Real Estate Investment Trust   10%
WITHHOLDING TAX ON GOVERNMENT MONEY PAYMENTS (GMP) -
PERCENTAGE TAXES

Withholding Tax on Government Money Payments (GMP) - Percentage Taxes - is the tax
withheld by National Government Agencies (NGAs) and instrumentalities, including
government-owned and controlled corporations (GOCCs) and local government units (LGUs),
before making any payments to non-VAT registered taxpayers/suppliers/payees.

TAX
DESCRIPTION RATE ATC
TYPE
Applicable to Government Withholding Agent Only
WV VAT withholding on Purchase of Goods 5% WV010
WV VAT Withholding on Purchase of Services 5% WV020
Applicable to Both Government and Private Withholding Agents
WV VAT Withholding from non-residents (Government Withholding Agents) 12% WV040
WV VAT Withholding from non-residents (Private Withholding Agents) 12% WV050
WV VAT Withholding on Purchases of Goods (with waiver of privilege to claim tax credit) creditable 12% WV012
VAT Withholding on Purchases of Goods (with waiver of privilege to claim input tax credit)
WV 12% WV014
final
VAT Withholding on Purchases of Services (with waiver of privilege to claim input tax credit)
WV 12% WV022
creditable
VAT Withholding on Purchases of Services (with waiver of privilege to claim input tax credit)
WV 12% WV024
final
Applicable to Government Withholding Agent Only
WB Tax on Carriers and Keepers of Garages 3% WB030
WB  Franchise Tax on Gas and Utilities 2% WB040
Franchise tax on radio & TV broadcasting companies whose annual gross receipts do not exceed
WB  3% WB050
P10M & who are not-VAT registered taxpayer
WB  Tax on Life insurance premiums 2% WB070
WB  Tax on Overseas Dispatch, Message or Conversation from the Philippines 10% WB090
WB  Business tax on Agents of Foreign Insurance companies - Insurance Agents  4%  WB120 
WB  Business tax on Agents of Foreign Insurance companies - owner of the property 5% WB121
WB  Tax on international carriers 3% WB130
WB  Tax on Cockpits 18% WB140
Tax on amusement places, such as cabarets, night and day clubs, videoke bars, karaoke bars,
WB  18%  WB150 
karaoke televion, karaoke boxes, music lounges and other similar establishments
WB Taxes on Boxing exhibitions 10% WB160
WB Taxes on professional basketball games 15% WB170
WB Tax on jai-alai and race tracks 30% WB180
6/10 of
WB Tax on sale barter or exchange of stocks listed and traded through Local Stock Exchange WB200
1%
WB201
Tax on shares of stocks sold or exchanged through initial and secondary public offering       - Not 4% 2%
WB WB202
over 25%       - Over 25% but not exceeding 33 1/3%       - Over 33 1/3% 1%
WB203
WB Tax on Banks and Non-banks Financial Intermediaries Performing Quasi Banking Dunctions    
      A. On interest, commissions and discounts from lending activities as well as income from
  5%   WB301
  financial leasing on the basis of the remaining maturities of instruments from which receipts are
1% WB302
derived          - Maturity period is five years or less          - Maturity period is more than five years
        B. On dividends and equity shares and net income of subsidiaries 0% WB102
      C. On royalties, rentals of property, real or personal, profits from exchange and all other
  7% WB103
items treated as gross income under the Code
      D. On net trading gains within the taxable year on foreign currency, debt securities,
  7% WB104
derivatives and other similar financial instruments
WB Tax on Other Non-Banks Financial Intermediaries nor performing Quasi-Banking Functions    
      A. On interest, commissions and discounts from lending activities as well as income from
financial leasing on the basis of the remaining maturities of instruments from which such receipts   5% WB108
 
are derived           - Maturity period is five years or less           - Maturity period is more than five 1%   WB109
years
        B. On all  other items treated as gross income under the Code 5% WB110
APPLICABLE TO BOTH GOVERNMENT AND PRIVATE WITHHOLDING AGENTS
  Persons exempt from VAT under Sec. 108BB (creditable) Government Withholding Agent 3% WB080
  Persons exempt from VAT under Sec. 108BB (creditable) Private Withholding Agent 3% WB082
  Persons exempt from VAT under Section 109BB (Section 116 applies) 3% WB084

EXCISE TAX BASIC CONCEPT:

  Excise Tax is a tax on the RA 10963 [TRAIN Law))
production, sale or consumption of a d. Sweetened Beverages (Section 150-B)-
commodity in a country. (RA 10963 [TRAIN Law])

APPLICABILITY: 5. Mineral Products (Sections 151)

 On goods manufactured or produced PERSONS LIABLE TO EXCISE TAX:

in the Philippines for domestic sale
or consumption or for any other In General:
disposition; and
 On goods imported. a. On Domestic or Local Articles

TYPES OF EXCISE TAX:  Manufacturer

 Producer
 Specific Tax – refers to the excise  Owner or person having possession
tax imposed which is based on of articles removed from the place of
weight or volume capacity or any production without the payment of
other physical unit of measurement the tax
 Ad Valorem Tax – refers to the
excise tax which is based on selling b. On Imported Articles
price or other specified value of the
goods/articles  Importer
 Owner
MANNER OF COMPUTATION:   Person who is found in possession of
articles which are exempt from
 Specific Tax = No. of Units/other excise taxes other than those legally
measurements x Specific Tax Rate entitled to exemption
 Ad Valorem Tax = No. of
Units/other measurements x Selling Others:
Price of any specific value per unit x
Ad Valorem Tax Rate On Indigenous Petroleum

MAJOR CLASSIFICATION OF  Local Sale, Barter or Transfer

EXCISABLE ARTICLES AND
RELATED CODAL SECTION: o First buyer, purchaser or transferee

1. Alcohol Products (Sections 141-143)  Exportation

a. Distilled Spirits (Section 141) o Owner, lessee, concessionaire or

b. Wines (Section 142) operator of the mining claim
c. Fermented Liquors (Section 143)
TIME OF PAYMENT:
2. Tobacco Products (Sections 144-146)
In General
a. Tobacco Products (Section 144)
b. Cigars & Cigarettes (Section 145)  On domestic products
c. Inspection Fee (Section 146)
o Before removal from the place of
3. Petroleum Products (Section 148) production
 On imported products
4. Miscellaneous Articles (Section 149-
150) o Before release from the customs'
custody
a. Automobiles (Section 149)
b. Non-essential Goods (Section 150) 
c. Non-essential Service (Section 150-A) -
EXCISE TAX RATES:

A. ALCOHOL PRODUCTS

NEW TAX RATES based on Republic Act No. 10351 Remarks

PARTICULARS 2018
2013 2014 2015 2016 2017
A. DISTILLED SPIRITS, AD VALOREM & SPECIFIC TAX
1) AD VALOREM TAX RATE - Based on the Net Retail Price
(NRP) per proof (excluding the excise and value-added taxes); 15% 15% 20% 20% 20% 20%
and
Effective 1/1/2016, the specific tax rate
2) SPECIFIC TAX - Per proof liter Php20 Php20 Php20 Php20.80 Php21.63 shall be increased by 4% every year
thereafter
B. WINES, per liter of volume capacity
1) Sparkling wines/ champagnes, where the NRP (excluding the
excise and VAT) per bottle of 750ml volume capacity,          
regardless of proof is:
Php500.00 or less Php250 Php260 Php270.40 Php281.22 Php292.47 Effective 1/1/2014, the specific tax rate
More than Php500.00 Php700 Php728 Php757.12 Php787.40 Php818.90 shall be increased by 4% every year
2) Still wines and carbonated wines containing 14% of alcohol thereafter
Php30.00 Php31.20 Php32.45 Php33.75 Php35.10
by volume or less
3) Still wines and carbonated wines containing more than 14%
Php60.00 Php62.40 Php64.90 Php67.50 Php70.20
(of alcohol by volume) but not more 25% of alcohol by volume
4) Fortified wines containing more than 25% of alcohol by
Taxed as distilled spirits
volume
C. FERMENTED LIQUORS , per liter of volume capacity
1) If the NRP (excluding excise and VAT) per liter of volume
          Effective 1/1/2018, the specific tax rate
capacity is:
shall be increased by 4% every year
Php 50.60 and below Php15.00 Php17.00 Php19.00 Php21.00 Php23.50
thereafter
More than Php 50.60 Php20.00 Php21.00 Php22.00 Php23.00 Php23.50
Effective 1/1/2014, the specific tax rate
2) If brewed and sold at microbreweries or small establishments
Php28.00 Php29.12 Php30.28 Php31.50 Php32.76 shall be increased by 4% every year
such as pubs and restaurants, regardless of the NRP
thereafter
NOTE:
IN CASE OF FERMENTED LIQUORS AFFECTED BY THE "NO DOWNWARD RECLASSIFICATION " PROVISION, THE 4% INCREASE SHALL APPLY TO THEIR RESPECTIVE APPLICABLE TAX
RATES

 
B. TOBACCO PRODUCTS

NEW TAX RATES based on Republic Act No. 10351

PARTICULARS Remarks 2018 onwards
2013 2014 2015 2016 2017
A. TOBACCO PRODUCTS, per kilogram
1. Tobacco Products
(a) Tobacco twisted by hand or reduced into a condition to be consumed in any manner other than the Php2.0
Php1.75 Php1.82 Php1.89 Php1.97
ordinary mode of drying and curing; 5
Effective 1/1/2014, the specific tax rate
(b) Tobacco prepared or partially prepared with or without the use of any machine or instrument or without Php2.0
Php1.75 Php1.82 Php1.89 Php1.97 shall be increased by 4% every year
being pressed or sweetened; and 5
thereafter
Php2.0
(c) Fine-cut shorts and refuse, scraps, clippings, cuttings, stems, midribs and sweepings of tobacco; Php1.75 Php1.82 Php1.89 Php1.97
5
Php1.7
2. Chewing tobacco unsuitable for use in any other manner Php1.50 Php1.56 Php1.62 Php1.68  
5
B. CIGARS, per cigar
3. Cigars          
Effective 1/1/2014, the specific tax rate
(a) Based on the NRP per cigar (excluding the excise and value-added taxes), and 20% 20% 20% 20% 20%
shall be increased by 4% every year
Php5.8 thereafter
(b) Per cigar Php5.00 Php5.20 Php5.41 Php5.62
5
C. CIGARETTES , per pack
NEW TAX RATES based on RA No. 10963 (TRAIN Law)
January 1, July 1, 2018 January 1, January 1,
PARTICULARS 2018 until until 2020 until 2022 until
January 1, 2024 onwards
June 30, December December 31, December
2018 31, 2019 2021 31,2023
1. Cigarettes packed by hand Php32.50 Php35.00 Php37.50 Php40.00  
 
 
 
Effective 1/1/2024, the specific tax rate shall be
    increased by 4% every year thereafter
2. Cigarettes packed by machine       Php35.00  Php37.50  Php40.00   
Php32.50
 
 
 
 
 

INSPECTION FEE - There shall be collected inspection fees on leaf tobacco, scrap, cigars, Cigarettes and other manufactured tobacco and tobacco products as
follows:

PRODUCT TYPE INSPECTION FEE

(1) Cigars P 0.50 per thousand pieces or fraction thereof
(2) Cigarettes P 0.10 per thousand sticks or fraction thereof
(3) Leaf Tobacco P 0.02 per kilogram or fraction thereof
(4) Scrap and other manufactured tobacco P 0.03 per kilogram or fraction thereof

C. PETROLEUM PRODUCTS

  EFFECTIVITY (RA 10963-TRAIN Law)

PRODUCT TYPE
January 1, 2018 January 1, 2019 January 1, 2020
(a) Lubricating oils and greases, including but not limited to base stock for lube oils and greases, high vacuum   Php9.00 Php10.00
distillates, aromatic extracts and other similar preparations, and additives for lubricating oils and greases, whether such  
additives are petroleum based or not,per liter and kilogram respectively, of volume capacity or weight  
 
(a.1) Locally produced or imported oils previously taxed but are subsequently reprocessed, re-refined or recycled, per  
liter and kilogram of volume capacity or weight.  
(b)Processed gas, per liter of volume capacity  
Php8.00
(c)Waxes and petrolatum, per kilogram  
(d)Denatured alcohol to be used for motive power , per liter of volume capacity
(e)Asphalt, per kilogram
(f)Naphtha, regular gasoline, pyrolysis gasoline and other similar products of distillation, per liter of volume capacity    Php9.00   Php10.00 
 
(g)Unleaded premium gasoline, per liter of volume capacity Php7.00
 
(h)Kerosene, per liter of volume capacity  Php3.00  Php4.00  Php5.00
(i)Aviation turbo jet fuel,aviation gas, per liter of volume capacity Php4.00     Php4.00   Php4.00
(j)Kerosene when used as aviation fuel, per liter of volume capacity
(k)Diesel fuel oil, and on similar fuel oils having more or less the same generating power, per liter of volume capacity     Php4.50    Php6.00 
 
(l)Liquified petroleum gas used for motive power, per kilogram  
(m)Bunker fuel oil, and on similar oils having more or less the same generating power, per liter of volume capacity  
Php2.50
(n)Petroleum coke, per metric ton  
(o)Liquified petroleum gas, per kilogram Php1.00  Php2.00  Php3.00
(p)Naphtha and pyrolysis gasoline, when used as raw material in the production of petrochemical products or in the      Php0.00    Php0.00
refining of petroleum products, or as replacement fuel for natural-gas-fired-combined cycle power plant, in lieu of  
lacally-extracted natural gas during the non-availability thereof, per liter of volume capacity  
 
(q)Liquified petroleum gas, when used as raw material in the production of petrochemical products, per kilogram  Php0.00
(r)Petroleum coke when used as feedstock to any power generating facility, per metric ton  

D. MINERALS AND MINERAL PRODUCTS

PRODUCT TYPE TAX RATES (RA 10963-TRAIN Law)

 
Coal and coke (Domestic and Imported) January 1, 2018 - Php50.00
January 1, 2019 - Php100.00
January 1, 2020 - Php150.00
   and onwards
Nonmetallic Minerals and Quarry Reources (Locally extracted or produced)  Four percent (4%) based on the actual market value of the gross output thereof at the time of removal
Nonmetallic Minerals and Quarry Resources (Imported) Four percent (4%) based on the value used by the Bureau of Customs (BOC) in
determining tariff and customs duties, net of excise tax and value-added tax
Locally-extracted natural gas and liquefied natural gas Exempt
All Metallic Minerals (locally extracted or produced copper, gold, chromite and other metallic minerals) Four percent (4%) based on the actual market value of the gross output thereof at the time of removal
Imported copper, gold, chromite and other metallic minerals Four percent (4%) based on the value used by BOC in determining tariff and customs duties, net of excise
tax and value added tax
On indigenous petroleum Six percent (6%) of the fair international market price thereof, on the first taxable sale, barter, exchange or
such similar transaction, such tax to be paid by the buyer or purchaser before removal from the place of
production. The phrase “first taxable sales, barter, exchange or similar transaction’'  means the transfer of
 indigenous petroleum in its original, state to a first taxable transferee. The fair international market price shall
be determined in consultation with appropriate government agency.

          For the purpose of this Subsection, “indigenous petroleum” shall include locally-
extracted mineral oil, hydrocarbon gas, bitumen, crude asphalt. mineral gas and all
other similar or naturally associated substances with the exception of coal, peat,
bituminous shale and/or stratified mineral deposits."
NOTE:
In the case of mineral concentrates not traded in commodity exchanges in the Philippines or abroad, such as copper concentrate, the actual market value shall be the world price quotations of the refined mineral products
content thereof prevailing in the said commodity exchanges, after deducting the smelting, refining and other charges incurred in the process of converting the mineral concentrates into refined metal traded in those
commodity exchanges.
 
On minerals and mineral products sold or consigned abroad, the actual cost of ocean freight and insurance shall be deducted from the tax base.

E. AUTOMOBILES AND OTHER MOTOR VEHICLES

NET MANUFACTURER'S PRICE/IMPORTER'S SELLING PRICE TAX RATES (RA 10963 (TRAIN Law)
OVER UP TO RATE
0 Php600,000 4%
Php600,000 Php1,000,000 10%
Php1,100,000 Php4,000,000 20%
Php4,000,000 over 50%

F. NON-ESSENTIAL GOODS


 Twenty percent (20%) based on the wholesale price or the value of importation used by the Bureau of Customs in determining Tariff and Customs
Duties, net of Excise and Value-Added taxes

 
G. SWEETENED BEVERAGES (RA 10963-TRAIN Law) 

PRODUCT TAX RATE

Per Liter of Volume Capacity
Using purely caloric sweeteners, and purely non-caloric sweeteners, or a mix of caloric and non-caloric Php6.00
sweeteners
Using purely high fructose corn syrup or in combination with any caloric or non-caloric sweetener Php12.00
Using purely coconut sap sugar and purely steviol glycosides Exempt

H. INVASIVE COSMETIC PROCEDURES - (RA 10963-TRAIN Law)

SERVICE Tax Rate

Performance of Services on Invasive Cosmetic Procedures 5%