INDIVIDUAL PRINCIPAL SOURCE INTER MINIMUM IMPROPERLY

KINDS OF OF INCOME KINDS OF TAX (S39) CORPORATE CORPORATE ACCUMULATED

TAXPAYER WITHIN WITHOUT A B C D DIVIDEND’S
TAX
INCOME
TAX
INCOME TAX

RESIDENT CITIZEN-RC / / NET FINAL WITH FINAL WITH FINAL WITH X X X

INCOME HOLDING HOLDING HOLDING
(COMPENSATION TAX-NIT OR TAX- FWT TAX- FWT TAX- FWT
INCOME 8%
EARNER-CIE) NON-RESIDENT CITIZEN- / X NET FINAL WITH FINAL WITH FINAL WITH X X X
(SELF EMPLOYED NRC INCOME HOLDING HOLDING HOLDING
TAX-NIT OR TAX- FWT TAX- FWT TAX- FWT
PROFESSIONAL/
8%
INDIVIDUAL- RESIDENT ALIEN-RA NET FINAL WITH FINAL WITH FINAL WITH
/ X X X X
SEP/SEI) INCOME HOLDING HOLDING HOLDING
(MIXED INCOME TAX-NIT OR TAX- FWT TAX- FWT TAX- FWT
EARNER-MIE) 8%
NON RESIDENT ALIEN / X NET FINAL WITH FINAL WITH FINAL WITH X X X
ENGAGED IN TRADE OR INCOME HOLDING HOLDING HOLDING
BUSINESS- NRAETB TAX-NIT OR TAX- FWT TAX- FWT TAX- FWT
8%
NON RESIDENT ALIEN / X GROSS INCOME TAX- FINAL WITH FINAL WITH X X X
NOT ENGAGED IN TRADE GIT 25% HOLDING HOLDING
OR BUSINESS- NRANETB TAX- FWT TAX- FWT

CORPORATION DOMESTIC / / NET INCOME FINAL WITH FINAL WITH FINAL WITH DC-DC 2% 10%
CORPORATION-DC TAX-NIT 30% HOLDING HOLDING HOLDING TAX EXEMPT
IN TRADE OR
BUSINESS TAX- FWT TAX- FWT TAX- FWT
RESIDENT FOREIGN / X NET INCOME FINAL WITH FINAL WITH X DC-RFC 2% X
CORPORATION- RFA TAX-NIT 30% HOLDING HOLDING TAX EXEMPT
TAX- FWT TAX- FWT
NON-RESIDENT FOREIGN / X GROSS INCOME TAX- GIT FINAL WITH X FINAL WITH X X
CORPORATION- NRFA HOLDING HOLDING TAX-
30%
TAX- FWT FWT 15%

A. ALL INCOME C. CAPITAL GAINS ON SHARES OF STOCKS

B. PASSIVE INCOME  IN DOMESTIC CORPORATION
a. INTEREST ON BANK DEPOSIT  CAPITAL IN CHARACTER
b. ROYALTIES  SOLD
c. PRIZES AND WINNINGS  UNTRATED TO STOCK EXCHANGE
d. DIVIDENDS D. REAL PROPERTY
 LOCATED IN THE PHILIPPINES
EXEMPTION FROM CAPITAL GAINS TAX 6%:  CAPITAL IN NATURE
 SELLING OF ACTUAL PRINCIPAL RESIDENCE  SOLD
 INFORM BIR WTHIN 30 DAYS FROM SALE WHEN ALIENS ALLOWED TO ACQUIRE PROPERTIES IN THE PHILIPPINES: INHERITANCE/
SUCESSION/ CONDOMINIUM UNITS
 INCOME VALUE PERCENTAGE DEDUCTION
INDIVIDUAL TAX PAYER SOURCE TAX ADDED TAX TAX
COMPENSATION NET X X ZERO
COMPENSATION INCOME EARNER INCOME
TAX
GROSS RECEIPT/GROSS NET X / OPTIONAL STANDARD
SELF EMPLOYED PROFESSIONAL/ SALES NOT EXCEEDING 3 INCOME DEDUCTION/
MILLION TAX ITEMIZED DEDUCTION
SELF EMPLOYED INDIVIDUAL 8% X X ZERO- IN EXCESS OF
250K
(TRADE OR BUSINESS/ EXERCISE OF GROSS RECEIPT/GROSS NET / X OPTIONAL STANDARD
PROFESSION) SALES EXCEEDING 3
MILLION
INCOME
TAX
DEDUCTION/
ITEMIZED DEDUCTION
COMPENSATION NET X X ZERO
MIXED INCOME EARNER INCOME
TAX

(COMPENSATION/ TRADE GROSS RECEIPT/GROSS

SALES NOT EXCEEDING 3
NET
INCOME
X / OPTIONAL STANDARD
DEDUCTION/
MILLION TAX ITEMIZED DEDUCTION
OR BUSINESS/ EXERCISE OF 8% X X ZERO- NO IN EXCESS
OF 250K

PROFESSION) GROSS RECEIPT/GROSS

SALES EXCEEDING 3
NET
INCOME
/ X OPTIONAL STANDARD
DEDUCTION/
MILLION TAX ITEMIZED DEDUCTION
GROSS RECEIPT/SALES NET / X
AND COMPENSATION INCOME
TOGETHER TAX
NOT MORE THAN 3 NET X / OPTIONAL STANDARD
CORPORATION ( TRADE MILLION INCOME
TAX
DEDUCTION/
ITEMIZED DEDUCTION
MORE THAN 3 MILLION NET / X OPTIONAL STANDARD
OR BUSINESS) INCOME
TAX
DEDUCTION/
ITEMIZED DEDUCTION
 ACTUALLY, DIRECTLY, AND EXCLUSIVELY FOR SUCH EXEMPT FROM REAL PROPERTY TAX
CHARITABLE INSTITUTION PURPOSE (ADE)

CHARITABLE INSTITUTION
EX. HOME FOR THE AGED
5. PROPERTY OF HOME 1. KITCHEN OF THE 2. HOME FOR THE
FOR THE AGED RENTED HOME FOR THE AGED MAIN 3. DONOR’S TAX/ ESTATE TAX
BY JOLLIBEE AGED BUILDING
5. PROPERTY OF HOME  EX. X DONATED TO THE HOME FOR THE AGED: 2,000,000.00
FOR THE AGED RENTED 3. OFFICE OF 4. PARKING LOT  IS IT INCOME? YES
BY MCDONALDS HOME FOR THE OF HOME FOR  IS IT FROM SOURCES WITHIN? YES
5. PROPERTY OF HOME AGED THE AGED  IS IT TAXABLE? NO (SEC. 32 [B] (3))
FOR THE AGED RENTED
BY KFC  DONORS TAX (SEC 101)/ ESTATE TAX (SEC. 87)
 THE 2,000,000.00 GIFT IS NOT SUBJECT TO DONOR’S
TAX/ESTATE TAX PROVIDED NOT MORE THAN 30% OF
1. REAL PROPERTY TAX THE GIFT IS USED BY THE CHARITABLE INSTITUTION
 TAX EXEMPT: 1,2,3,4 (HOME FOR THE AGED) FOR ADMINISTRATION
 NOT TAX EXEMPT: 5 (RENTED COMMERCIALLY) PURPOSES. (30% RESTRICTION)

4. DEDUCTABILITY OF THE DONATION FROM THE INCOME OF X

2. INCOME TAX (SEC. 34 (H))
 EX. CHRISTMAS CARDS: 1,000,000.00
 IS IT INCOME? YES  IF CIE: NOT DEDUCTIBLE
 IS IT FROM SOURCES WITHIN? YES
 IS IT TAXABLE? NO (IT IS CONSIDERED AS “INCOME AS  IF SEP/SEI/MIE: DEDUCTIBLE UP TO 10% OF THE TAXABLE
SUCH” – SEC. 30) INCOME PRIOR TO SAID GIFT/DEDUCTION
 EX. RENTALS: 500,000.00
 IS IT INCOME? YES
 IS IT FROM SOURCES WITHIN? YES  IF A CORPORATION: DEDUCTIBLE FOR 5%
 IS IT TAXABLE? YES (NIT 30%- SEC. 30 LAST PARAGRAPH)
 EX. INTEREST OF 1.5 M AS BANK DEPOSIT: 20,000.00
 IS IT INCOME? YES
 IS IT FROM SOURCES WITHIN? YES CHARITABLE HOSPITALS ARE ALSO GOVERNED BY THIS RULES
 IS IT TAXABLE? YES (IT IS AN ACTIVITY CONDUCTED FOR
PROFIT- PASSIVE INCOME: FWT 20%)
 ACTUALLY, DIRECTLY, AND EXCLUSIVELY FOR SUCH EXEMPT FROM REAL PROPERTY TAX
RELIGIOUS INSTITUTION PURPOSE (ADE)

RELIGIOUS INSTITUTION
EX. CHURCH
5. PROPERTY OF THE 1. MAIN BUILDING 2. KITCHEN OF THE 3. DONOR’S TAX/ ESTATE TAX
CHURCH RENTED BY OF THE CHURCH CHURCH
JOLLIBEE  EX. X DONATED TO THE CHURCH: 2,000,000.00
5. PROPERTY OF THE  IS IT INCOME? YES
CHURCH RENTED BY 3. OFFICE OF THE 4. PARKING LOT  IS IT FROM SOURCES WITHIN? YES
MCDONALDS CHURCH OF THE CHURCH  IS IT TAXABLE? NO (GIFTS. BEQUESTS, DEVICES ARE
5. PROPERTY OF THE ITEMS OF EXCLUSION FROM THE COMPUTATION OF
CHURCH RENTED BY KFC GROSS INCOME-SEC. 32 [B] (3))

 DONORS TAX (SEC 101)/ ESTATE TAX (SEC. 87)

 THE 2,000,000.00 GIFT IS NOT SUBJECT TO DONOR’S
1. REAL PROPERTY TAX TAX/ESTATE TAX PROVIDED NOT MORE THAN 30% OF
 TAX EXEMPT: 1,2,3,4 THE GIFT IS USED BY THE CHARITABLE INSTITUTION
 NOT TAX EXEMPT: 5 (RENTED COMMERCIALLY) (HOME FOR THE AGED) FOR ADMINISTRATION
PURPOSES. (30% RESTRICTION)

2. INCOME TAX 4. DEDUCTABILITY OF THE DONATION FROM THE INCOME OF X

 EX. MASS/WEDDING/ FUNERAL: 1,000,000.00 (SEC. 34 (H))
 IS IT INCOME? YES
 IS IT FROM SOURCES WITHIN? YES  IF CIE: NOT DEDUCTIBLE
 IS IT TAXABLE? NO (IT IS CONSIDERED AS “INCOME AS
SUCH” – SEC. 30)  IF SEP/SEI/MIE: DEDUCTIBLE UP TO 10% OF THE TAXABLE
 EX. RENTALS: 500,000.00 INCOME PRIOR TO SAID GIFT/DEDUCTION
 IS IT INCOME? YES
 IS IT FROM SOURCES WITHIN? YES
 IS IT TAXABLE? YES (NIT 30%- SEC. 30 LAST PARAGRAPH)  IF A CORPORATION: DEDUCTIBLE FOR 5%
 EX. INTEREST OF 1.5 M AS BANK DEPOSIT: 20,000.00
 IS IT INCOME? YES
 IS IT FROM SOURCES WITHIN? YES
 IS IT TAXABLE? YES (IT IS AN ACTIVITY CONDUCTED FOR
PROFIT- PASSIVE INCOME: FWT 20% UNDER COLUMN B)
 EDUCATIONAL INSTITUTION (NON-STOCK/NON- ACTUALLY, DIRECTLY, AND EXCLUSIVELY FOR SUCH EXEMPT FROM REAL PROPERTY TAX/ INTERNAL
PROFIT) ON THEIR REVENUES AND ASSETS (REAL PURPOSE (ADE) REVENUE TAX/ TARIFF AND CUSTOMS DUTIES
PROPERTY/ TANGIBLE PERSONAL PROPERTY/
INTANGIBLE PERSONAL PROPERTY

EDUCATIONAL INSTITUTION (NON-STOCK/ NON-PROFIT)

3. DONOR’S TAX/ ESTATE TAX

EX. DLSU 
EX. X DONATED TO THE CHURCH: 2,000,000.00
 IS IT INCOME? YES
5. PROPERTY OF DLSU 1. MAIN BUILDING 2. DORM OF DLSU  IS IT FROM SOURCES WITHIN? YES
RENTED BY JOLLIBEE OF DLSU  IS IT TAXABLE? NO (GIFTS. BEQUESTS, DEVICES ARE
5. PROPERTY OF DLSU ITEMS OF EXCLUSION FROM THE COMPUTATION OF
RENTED BY MCDONALDS 3. GYM OF DLSU 4. OFFICES OF GROSS INCOME-SEC. 32 [B] (3))
5. PROPERTY OF DLSU DLSU 
RENTED BY KFC  DONORS TAX (SEC 101)/ ESTATE TAX (SEC. 87)
 THE 2,000,000.00 GIFT IS NOT SUBJECT TO DONOR’S
TAX/ESTATE TAX PROVIDED NOT MORE THAN 30% OF
THE GIFT IS USED BY THE CHARITABLE INSTITUTION
 REAL PROPERTY TAX (HOME FOR THE AGED) FOR ADMINISTRATION
 TAX EXEMPT: 1,2,3,4 PURPOSES. (30% RESTRICTION)
 NOT TAX EXEMPT: 5 (RENTED COMMERCIALLY) 
 INCOME TAX 4. DEDUCTABILITY OF THE DONATION FROM THE INCOME OF X
 EX. TUITION FEE (ADE): 1,000,000.00 (SEC. 34 (H))
 IS IT INCOME? YES
 IS IT FROM SOURCES WITHIN? YES  IF CIE: NOT DEDUCTIBLE
 IS IT TAXABLE? NO (ACTUALLY, DIRECTLY, AND
EXCLUSIVELY USED FOR EDUCATIONAL PURPOSES-  IF SEP/SEI/MIE: DEDUCTIBLE UP TO 10% OF THE TAXABLE
CONSTITUTION) INCOME PRIOR TO SAID GIFT/DEDUCTION
 EX. RENTALS: 500,000.00
 IF A CORPORATION: DEDUCTIBLE FOR 5%
 IS IT INCOME? YES
 IS IT FROM SOURCES WITHIN? YES
 IS IT TAXABLE? NO (ACTUALLY, DIRECTLY, AND
EXCLUSIVELY USED FOR EDUCATIONAL PURPOSES-
DLSU VS CIR
CONSTITUTION)
 IN CASE OF NON-STOCK/NON-PROFIT INSTITUTION, APPLY THE CONSTITUTION AND
 EX. INTEREST OF 1.5 M AS BANK DEPOSIT: 20,000.00 DISREGARD SEC. 30 OF THE NIRC
 IS IT INCOME? YES  SUCH TAX EXEMPTION IS CONSTITUTIONALLY GUARANTEED
 IS IT FROM SOURCES WITHIN? YES  ANY TYPE OF INCOME/REVENUES OF A NON-STOCK/ NON PROFIT EDUCATIONAL
 IS IT TAXABLE? NO (ACTUALLY, DIRECTLY, AND INSTITUTION OF WHATEVER KIND, SHALL NOT BE SUBJECT TO INCOME TAX AS LONG
EXCLUSIVELY USED FOR EDUCATIONAL PURPOSES- AS THERE IS PROOF THAT IS IS ACTUALLT, DIRECTLY, AND EXCLUSIVELY USED FOR
CONSTITUTION) EDUCATIONAL PURPOSES
 ACTUALLY, DIRECTLY, AND EXCLUSIVELY FOR SUCH EXEMPT FROM REAL PROPERTY TAX
EDUCATIONAL INSTITUTION (PROPRIETARY) PURPOSE (ADE) (LOCAL GOVERNMENT CODE-SEC. 234)

EDUCATIONAL INSTITUTION (PROPRIETARY)

EX. AMA COMUTER UNIVERSITY
5. PROPERTY OF AMACU 1. MAIN BUILDING 3. DORM OF AMACU
RENTED BY JOLLIBEE OF AMACU 3. DONOR’S TAX/ ESTATE TAX
5. PROPERTY OF AMACU
RENTED BY MCDONALDS 2. GYM OF AMACU 4. OFFICES OF  EX. X DONATED TO THE CHURCH: 2,000,000.00
5. PROPERTY OF AMACU AMACU  IS IT INCOME? YES
RENTED BY KFC  IS IT FROM SOURCES WITHIN? YES
 IS IT TAXABLE? NO (GIFTS. BEQUESTS, DEVICES ARE
ITEMS OF EXCLUSION FROM THE COMPUTATION OF
GROSS INCOME-SEC. 32 [B] (3))
1. REAL PROPERTY TAX 
 TAX EXEMPT: 1,2,3,4  DONORS TAX (SEC 101)/ ESTATE TAX (SEC. 87)
 NOT TAX EXEMPT: 5 (RENTED COMMERCIALLY)  THE 2,000,000.00 GIFT IS NOT SUBJECT TO DONOR’S
2. INCOME TAX TAX/ESTATE TAX PROVIDED NOT MORE THAN 30% OF
 EX. TUITION FEE (ADE): 2,000,000.00 THE GIFT IS USED BY THE CHARITABLE INSTITUTION
 IS IT INCOME? YES (HOME FOR THE AGED) FOR ADMINISTRATION
 IS IT FROM SOURCES WITHIN? YES PURPOSES. (30% RESTRICTION)
 IS IT TAXABLE? YES (RELATED TRADE OR ACTIVITY-RTA)
 EX. RENTALS: 1,000,000.00 4. DEDUCTABILITY OF THE DONATION FROM THE INCOME OF X
 IS IT INCOME? YES (SEC. 34 (H))
 IS IT FROM SOURCES WITHIN? YES
 IS IT TAXABLE?  IF CIE: NOT DEDUCTIBLE
 IF RELATED TRADE OR ACTIVITY: NIT 30%
 IF UNRELATED TRADE OR ACTIVITY-UTA  IF SEP/SEI/MIE: DEDUCTIBLE UP TO 10% OF THE TAXABLE
(PROVIDED THE DOES NOT EXCEED 50% OF THE INCOME PRIOR TO SAID GIFT/DEDUCTION
TOTAL RTA & UTA): 10% PREFERENCIAL RATE
 EX. INTEREST OF 1.5 M AS BANK DEPOSIT: 20,000.00  IF A CORPORATION: DEDUCTIBLE FOR 5%
 IS IT INCOME? YES
 IS IT FROM SOURCES WITHIN? YES
 IS IT TAXABLE? YES (IT IS AN ACTIVITY CONDUCTED FOR PROPRIETARY HOSPITALS ARE ALSO GOVERNED BY THIS RULES
PROFIT- PASSIVE INCOME: FWT 20% UNDER COLUMN B)
 EDUCATIONAL INSTITUTION (GOVERNMENTAL) ACTUALLY, DIRECTLY, AND EXCLUSIVELY FOR SUCH EXEMPT FROM REAL PROPERTY TAX
PURPOSE (ADE) (LOCAL GOVERNMENT CODE-SEC. 234)

EDUCATIONAL INSTITUTION (GOVERNMENTAL)

3. DONOR’S TAX/ ESTATE TAX
EX. BUKSU  EX. X DONATED TO THE CHURCH: 2,000,000.00
 IS IT INCOME? YES
5. PROPERTY OF BUKSU 1. MAIN BUILDING 2. . DORM OF  IS IT FROM SOURCES WITHIN? YES
RENTED BY JOLLIBEE OF BUKSU BUKSU  IS IT TAXABLE? NO (GIFTS. BEQUESTS, DEVICES ARE
5. PROPERTY OF BUKSU ITEMS OF EXCLUSION FROM THE COMPUTATION OF
RENTED BY MCDONALDS 3. GYM OF BUKSU 4. OFFICES OF GROSS INCOME-SEC. 32 [B] (3))
5. PROPERTY OF BUKSU BUKSU  DONORS TAX (SEC 101)/ ESTATE TAX (SEC. 87)
RENTED BY KFC  THE 2,000,000.00 GIFT IS NOT SUBJECT TO DONOR’S
TAX/ESTATE TAX AS IT IS A TRANSFER FOR PUBLIC USE
(NO 30% RESTRICTION)

1. REAL PROPERTY TAX 4. DEDUCTABILITY OF THE DONATION FROM THE INCOME OF X

 TAX EXEMPT: 1,2,3,4 (SEC. 34 (H))
 NOT TAX EXEMPT: 5 (RENTED COMMERCIALLY)  IF CIE: NOT DEDUCTIBLE
2. INCOME TAX
 EX. TUITION FEE (ADE): 2,000,000.00  IF SEP/SEI/MIE: DEDUCTIBLE IN FULL PROVIDED IT IS
 IS IT INCOME? YES DECLARED AS A PRIORITY PROJECT OF THE
 IS IT FROM SOURCES WITHIN? YES GOVERNMENT. OTHERWISE, DEDUCTIBLE ONLY UP TO
 IS IT TAXABLE? NO (IT IS CONSIDERED AS “INCOME AS 10% OF THE TAXABLE INCOME PRIOR TO SAID
SUCH” – SEC. 30) GIFT/DEDUCTION
 EX. RENTALS: 1,000,000.00  IF A CORPORATION: DEDUCTIBLE IN FULL PROVIDED IT IS
 IS IT INCOME? YES DECLARED AS A PRIORITY PROJECT OF THE
 IS IT FROM SOURCES WITHIN? YES GOVERNMENT. OTHERWISE, DEDUCTIBLE FOR 5%
 IS IT TAXABLE? YES (NIT 30%- SEC. 30 LAST PARAGRAPH)
 EX. INTEREST OF 1.5 M AS BANK DEPOSIT: 20,000.00 GENERAL RULE: GOCCS ARE SUBJECT TO TAX
 IS IT INCOME? YES EXCEPTION: PHILHEALTH/PAG-IBIG/PCSO
 IS IT FROM SOURCES WITHIN? YES
 IS IT TAXABLE? YES (IT IS AN ACTIVITY CONDUCTED FOR GENERAL RULE: GOVERNMENT IS NOT TAXABLE.
PROFIT- PASSIVE INCOME: FWT 20% UNDER COLUMN B) EXCEPTION:
 IF BENEFICIAL USE OF REAL PROPERTY OF THE GOVERNMENT IS
EXERCISED BY A NON-EXEMPT ENTITY, TAXABLE.
 INCOME IN EXERCISE OF PROPRIETARY FUNCTION IS TAXABLE
(REGULAR CORPORATE INCOME TAX- 30%)
 ITEMS OF INCLUSIONS (SEC. 32 (A)) C/G2/D/I/R2/A/P3 (NOT EXCLUSIVE)
C: COMPENSATION FOR SERVICES RENDERED, FEES, I: INTEREST ON LOANS, OBLIGATIONS, DEBENTURES, P: PRIZES AND WINNINGS
COMMISSIONS AND OTHER SIMILAR ITEMS PROMISSORY NOTES, BANK DEPOSITS)
G: GROSS INCOME FOR THE EXERCISE OF PROFESSION OR R: RENTALS P: PENSIONS
TRADE OR BUSINESS
G: GAINS DERIVED FROM DEALINGS IN PROPERTY (CAPITAL R: ROYALTIES
GAINS ON SALE OF SHARES OF STOCK, REAL PROPERTY, OR P: PARTNER’S DISTRIBUTIVE SHARE IN A GENERAL
ORDINARY ASSET) PROFESSIONAL PARTNERSHIP
D: DIVIDENDS A: ANNUITIES

WORK OF THE OVERTIME PAY/

BASIC HOLIDAY PAY/
DE MINIMIS BENEFITS OTHER BENEFITS
TAXPAYER HAZARD PAY/ NIGHT BELOW THE LIMIT BEYOND THE LIMIT BELOW 90K BEYOND 90K

PAY SHIFT DEFERENTIAL (EXCESS OF DE MINIMIS BENEFITS

MAY BE ADDED HERE)

MANAGERIAL/ COMPENSATION- NIT X EXEMPT FIT (FRINGE BENEFIT EXEMPT FIT (FRINGE BENEFIT
SUPERVISORY TAX) / NIT TAX) / NIT
RANK AND FILE COMPENSATION- NIT NIT EXEMPT NIT EXEMPT NIT
MINIMUM WAGE STATUTORY MINIMUM EXEMPT EXEMPT NIT EXEMPT NIT
EARNER WAGE- TAX EXEMPT

ITEMS OF EXCLUSIONS (SEC. 32 (B))

1. PROCEEDS OF LIFE INSURANCE POLICY 2. GIFTS/ BEQUESTS/ DEVICES 3. COMPENSATION FOR INJURIES (ACTUAL DAMAGE)
4. RETURNS OF PREMIUM 5. INCOME EXEMPT UNDER A TREATY 6. RETIREMENT BENEFITS AND PENSION
7. MISCELLANEOUS ITEMS
 INCOME DERIVED BY FOREIGN GOVERNMENT FROM INVESTMENT IN THE PHILIPPINES
 INCOME DERIVED BY THE GOVERNMENT OR ITS POLITICAL SUBDIVISIONS FROM THE EXERCISE OF ANY GOVERNMENTAL FUNCTION
 PRIZES AND WINNINGS (RELIGIOUS/ CHARITABLE/ SCIENTIFIC/ ARTISTIC/ LITERARY/ AND CIVIC ACHIEVEMENT. PROVIDED THE WINNER DID NOT ACTIVELY PARTICIPATE OR
JOIN THE CONTEST AND THE WINNER IS NOT REQUIRED TO RENDER FUTURE SERVICE)
 PRIZES AND AWARDS IN SPORTS COMPETITION SANCTIONED BY THE NATIONAL SPORTS COMMISSION
 13TH MONTH PAY AND OTHER BENEFITS
 SSS/GSIS
 CONTRIBUTIONS TO LABOR UNIONS
 GOVERNMENT REMITTANCES

RETIREMENT BENEFITS AND PENSION

PRIVATE SECTOR GOVERNMENT SECTOR
WITH PRIVATE RETIREMENT PLAN WITHOUT PRIVATE RETIREMENT PLAN
REQUISITES FOR TAX EXEMPTION: REQUISITES FOR TAX EXEMPTION: RETIREMENT BENEFITS AND PENSIONS ARE NOT SUBJECT TO TAX
1. 50 YEARS OLD 1. 60 YEARS OLD
2. BIR APPROVED 2. IN THE SERVICE FOR 20 YEARS
3. IN THE SERVICE FOR 10 YEARS
4. SOLE BENEFIT OF THE EMPLOYEE
 TAX IMPLICATIONS DURING TERMINATION
RESIGNATION FINANCIAL ASSISTANCE TAXABLE
WITH CAUSE NOT TAXABLE

WITHOUT CAUSE REINSTATEMENT BACKWAGES/MORAL DAMAGES TAXABLE

DISMISSAL ATTY.’S FEE NOT TAXABLE (EXCEPT WHEN
THE AWARD IS MORE THAN
THE ACTUAL EXPENSE)
SEPARATION PAY NOT TAXABLE
INSTALLATION OF LABOR NOT TAXABLE
SAVING DEVICE

ITEMS OF DEDUCTION
WITH DEDUCTIONS WITHOUT DEDUCTIONS
NON RESIDENT ALIEN NOT ENGAGED IN TRADE OR BUSINESS

NET INCOME TAX NON RESIDENT FOREIGN CORPORATION

FINAL WITHHOLDING TAX
GROSS INCOME TAX
COMPENSATION INCOME EARNER

OPTIONAL STANDARD DEDUCTION ITEMIZED DEDUCTION (E/I/T/L/B/D2/C/P/R)

GROSS INCOME SHALL BE DEDUCTED 40% AS OPTIONAL STANDARD DEDUCTION (NO E- EXPENSES D- DEPRECIATION REQUISITES:
RECEIPTS NEEDED IN THIS KIND OF DEDUCTION) I- INTEREST D- DEPLETION 1. NECESSARY IN T/B
T- TAXES C- CHARITABLE CONTRIBUTION 2. REASONABLE IN
FORMULA: L- LOSSES P- PENSIONS AMOUNT
1. GROSS RECEIPT/GROSS SALES B- BAD DEBT R- RESEARCH AND DEVELOPMENT 3. ACTUALLY PAID
--- COST OF SALES FORMULA:
GROSS INCOME 1. GROSS RECEIPT/GROSS SALES
--- COST OF SALES
2. GROSS INCOME GROSS INCOME
--- 40% OSD (OPTIONAL STANDARD DEDUCTION)
TAXABLE NET INCOME (60% GROSS INCOME) 2. GROSS INCOME
--- AUTHORIZED DEDUCTIONS (SEC. 34- E/I/T/L/B/D2/C/P/R)
3. TAXABLE NET INCOME (60% GROSS INCOME) TAXABLE NET INCOME
X RATE 20-35% 30%
TAX DUE 3. TAXABLE NET INCOME
X RATE
TAX DUE
(LESS TAX CREDIT IF ANY)
 VALUE ADDED TAX
EX. TAPSILOGAN BUSINESS
X= EMPLOYER (TRADE OR BUSINESS) Y= EMPLOYEE (PLAIN CONSUMER)
REVENUE/EXPENSE COST VAT REVENUE/ EXPENSE COST VAT
SALE OF TAPSILOG 10,000,000.00 1,200,000.00 OUTPUT VAT SALARY 360,000.00 0 OUTPUT VAT
-- EXPENSE SIDE (COST OF SALE) 6,000,000.00 --- 720,000.00 INPUT VAT -- EXPENSE SIDE (NOT DEDUCTIBLE) 10,000.00 1,200.00 INPUT VAT
GROSS INCOME 4,000,000.00 GROSS INCOME 360,000.00
AUTHORIZED DEDUCTIONS: NOT AUTHORIZED DEDUCTION:
 UTILITIES 500,000.00 --- 60,000.00 INPUT VAT  FOOD 20,000.00 2,400.00 INPUT VAT
 RENTALS 300,000.00 --- 36,000.00 INPUT VAT  RENTALS 25,000.00 3,000.00 INPUT VAT
 GASUL EXPENSES 200,000.00 --- 24,000.00 INPUT VAT 6,600.00 (VAT PAYABLE
360,000.00 (VAT PAYABLE) INDIRECTLY BY THE EMPLOYEE)

 PLAIN CONSUMER NOT ALLOWED TO CLAIM INPUT AND OUTPUT IF YOU ARE TRANSACTIONS SUBJECT TO VALUE ADDED TAX:
NOT BIR REGISTERED  SALE OF GOODS (TRADE OR BUSINESS)
 NO ZERO RATED TRANSACTION IN IMPORTATION (ONLY IN EXPORT SALES)  SALE OF SERVICE (TRADE OR BUSINESS)
 RENTALS ON APARTMENT UNITS (15,000.00 THRESHOLD)  IMPORTATION OF GOODS
 EXEMPT TRANSACTION TO GROSS SALES (3,000,000.00 THRESHOLD)
 SALE OF REAL PROPERTY (3,000,000.00 THRESHOLD)
 EXCESS INPUT VAT CAN BE CREDITED/ REFUNDED

DISTINCTIONS
ZERO RATE EXEMPT TRANSACTION
NOT SUBJECT TO VAT AT ALL STAGES NOT SUBJECT TO VAT ONLY AT PARTICULAR STAGE
INPUT VAT IS ALLOWED TO BE CREDITED AGAINST OUTPUT TAX NOT ALLOWED
 DONOR’S TAX
CHARACTERISTICS: SUBJECT MATTER OF DONATION:
 INTER VIVOS  REAL PROPERTY
 GRATUITOUS IN NATURE  TANGIBLE PERSONAL PROPERTY
 NO CONSIDERATION AND VOLUNTARY  INTANGIBLE PERSONAL PROPERTY
 250,000.00- TOTAL GIFT FROM JANUARY TO DECEMBER THAT IS EXEMPT BASIS FOR VALUATION OF REAL PROPERTY (WHICHEVER IS HIGHER):
FROM TAX  FAIR MARKET VALUE (RECKONED AT THE TIME OF GIFT)
 6% FIXED RATE OF FAIR MARKET VALUE/ ASSESSED VALUE/ ZONAL  ASSESSED VALUE (RECKONED AT THE TIME OF GIFT)
VALUATION  ZONAL VALUE (RECKONED AT THE TIME OF GIFT)
 FOR PURPOSES OF DONOR’S TAX, THE TAXABILITY IS DEPENDENT ON THE
LOCATION OF THE PROPERTY (WITHIN OR WITHOUT)
 FORMULA:
 GROSS DONATION THE FOLLOWING ARE CONSIDERED TO HAVE SITUS IN THE PHILIPPINES OVER
-- AUTHORIZED DEDUCTION INTANGIBLE PERSONAL PROPERTY (SEC. 104):
TAXABLE NET GIFT (IN EXCESS OF 250,000.00)  FRANCHISE EXERCISED IN THE PHILIPPINES
 SHARES/OBLIGATIONS/BONDS ISSUED BY DOMESTIC CORPORATION
TAXABLE NET GIFT (IN EXCESS OF 250,000.00)  SHARES/OBLIGATIONS/BONDS ISSUED BY FOREIGN CORPORATION (85% OF
X 6% ITS BUSINESS IS LOCATED IN THE PHILIPPINES)
TAX DUE  SHARES/OBLIGATIONS/BONDS ISSUED IN PARTNERSHIP BUSINESS OR
INDUSTRY ESTABLISHED IN THE PHILIPPINES
KINDS OF DONOR W/IN W/OUT GOV’T. EXEMPT INSTITUTIONS  SHARES/OBLIGATIONS/BONDS ISSUED BY FOREIGN CORPORATION WHICH
RC / / ACQUIRED PHILIPPINE STATUS
NRC / / TAX TAX EXEMPT (30% IN DETERMINING THE SITUS OF THE TAX OF INTANGIBLE PERSONAL PROPERTY:
RA / / EXEMPT RESTRICTION) GENERAL RULE: MOBILIA SEQUUNTOR PERSONAM (DOMICILE OF THE OWNER)
NRA / X EXCEPTION: SEC. 104
EXCEPTION TO THE EXCEPTION: RECIPROCITY RULE

SEC. 100 (TRAIN LAW AMENDMENT) CORPORATION’S POLITICAL CAMPAIGN CONTRIBUTION IS NOW ALLOWED
 WHEN THE GOODS ARE FORMING PART OF THE ORDINARY COURSE OF PROVIDED:
TRADE OR BUSINESS, AND FOR SALE IN THE ORDINARY COURSE OF TRADE  DONATED WITHIN THE CAMPAIGN PERIOD
OR BUSINESS, AND YOU SELL THEM AT A LOSS, DONOR’S TAX IS NO LONGER  SUBJECT TP CREDITABLE WITHHOLDING TAX (5%)
IMPOSED  THE CANDIDATE SHOULD FILE HIS/HER STATEMENT OF CONTRIBUTIONS
AND EXPENDITURE
 FOR CAMPAIGN PURPOSES

IF NOT COMPLIED, EVERYTHING WILL BE SUBJECT TO DONOR’S TAX.

 ESTATE TAX
CHARACTERISTICS: PART OF GROSS ESTATE (D/T2/R/P3):
 MORTIS CAUSA  DECEDENT’S INTEREST 
PROPERTY PASSING THROUGH
 IN COMPUTING THE ESTATE TAX, THE VALUATION OF THE PROPERTY SHALL  TRANSFER FOR INSUFFICIENT GENERAL POWER OF
BE AT THE POINT OF DEATH CONSIDERATION ATTORNEY
 TAXABILITY IS DEPENDENT ON THE LOCATION OF THE PROPERTY  TRANSFER IN CONTEMPLATION  PROCEEDS OF LIFE INSURANCE
 IN ESTATE TAX, NO 250,000.00 OF DEATH POLICY
 IF YOU HAVE A DEGREE OF CONTROL/ INTEREST/ OWNERSHIP OVER A  PRIOR INTEREST
PARTICULAR PROPERTY, THAT PROPERTY WILL BE INCLUDED IN YOUR GROSS RULES FOR LIFE INSURANCE POLICY NOT TO BE SUBJECTED TO ESTATE TAX:
ESTATE  IF BENEFICIARY IS HIMSELF/ ESTATE/ EXECUTOR/ ADMINISTRATOR
 FORMULA: (REVOCABLE/IRREVOCABLE), INCLUDE IN THE GROSS ESTATE
 GROSS DONATION  IF OTHER THAN ABOVE, AND THE DESIGNATION IS REVOCABLE, INCLUDE IN
-- AUTHORIZED DEDUCTION THE GROSS ESTATE
TAXABLE NET ESTATE (NO IN EXCESS OF 250,000.00)  IF OTHER THAN ABOVE, AND THE DESIGNATION IS IRREVOCABLE, EXCLUDE
IN THE GROSS ESTATE
TAXABLE NET ESTATE(NO IN EXCESS OF 250,000.00)
X 6%
TAX DUE

AUTHORIZED DEDUCTIONS
(*PEPL- PROPORTION OF ESTATE LOCATED IN THE PHILIPPINES)
UM- UNPAID MORTGAGES CAIP- CLAIMS AGAINST INSOLVENT PERSON FH- FAMILY HOME
UT- UNPAID TAXES TPU- TRANSFER FOR PUBLIC USE VD- VANISHING DEDUCTIONS
CL- CASUALTY LOSS CSSS- CONJUGAL SHARE OF SURVIVING SPOUSE RB- RETIREMENT BENEFITS
CAE- CLAIMS AGAINST ESTATE SD- STANDARD DEDUCTION S- SECURITY
KIND OF LOCATION GROSS UM UT CL CAE CAIP TPU CSSS SD FH VD RB
DECEDENT WITHIN WITHOUT ESTATE
(SEC. 85)
RC / / / / / / / / / / 5M 10M / /
NRC / / / / / / / / / / 5M 10M / /
RA / / / / / / / / / / 5M 10M / /
NRA / X / PEPL PEPL PEPL PEPL PEPL / PEPL 500K X PEPL X
 REMEDIES (NIRC-TRAIN LAW)
ADMINISTRATION SIDE
TAXPAYER: BIR: TAX PAYER: BIR: TAX PAYER:
 RETURN  LETTER OF AUTHORITY  PROTEST 1. DENIED 1. SAD (MAY GO TO CTA)
 AMENDED RETURN  PRELIMINARY ASSESSMENT  MOTION FOR RECONSIDERATION 2. GRANTED 2. HAPPY (SHOULD NOT GO TO CTA)
 GOOD FAITH NOTICE  MOTION FOR REINVESTIGATION 3. PARTLY GRANTED/DENIED 3. HAPPY AND SAD (MAY GO TO CTA)
 FRAUD/ BAD FAITH  FINAL ASSESSMENT NOTICE (SUBMIT ADDITIONAL DOCUMENTS) 4. NO ACTION (180 DAYS) 4. MAY GO TO CTA
 NO RETURN

PERIODS OF RETURNS: PROTEST TO FINAL ASSESSMENT NOTICE SHOULD BE FILED WITHIN THE NON- EXTENDABLE PERIOD OF
 CIE: DUE DATE: EVERY APRIL 15 30 DAYS
(EMPLOYER’S DUE DATE ON SUBSTIUTED FILING: EVERY FEBRUARY 28
 THIS APPLIES ONLY IF AN EMPLOYEE (CIE) HAS ONLY 1 EMPLOYER DURING THE YEAR. FAILED TO FILE A MR WITHIN THE PERIOD, BIR DECISION WILL BE FINAL
 IT IS THE EMPLOYER WHO FILES THE RETURN FOR AND IN BEHALF OF THE TAXPAYER
EMPLOYEE AS A SUBSTITUTE FOR THE RETURN THAT HE/SHE SHOULD HAVE FILED. NO INJUNCTION RULE AGAINST TAX COLLECTION
 SEP/SEI/MIE (QUARTERLY) //CORPORATION (QUARTERLY) (MAY CHOOSE BETWEEN CALENDAR
YEAR OR FISCAL YEAR) // 8%// VAT REQUISITES OF A VALID FINAL ASSESSMENT NOTICE:
 1ST QUARTER: MAY 15  MUST BE IN WRITING
 2ND QUARTER: AUGUST 15  ADDRESSED TO THE TAX PAYER (INDICATED IN THE RETURN
 3RD QUARTER: NOVEMBER 15  BASIS IN FACT/LAW OF THE TAX DUE
 4TH (FINAL CONSOLIDATED RETURN) ON oR BEFORE APRIL 15  AMOUNT OF TAX DUE (BREAKDOWN)
 CAPITAL GAINS TAX: 30 DAYS FROM SALE  DEMAND TO PAY
 DONOR’S TAX: 30 DAYS FROM GIFT  DUE DATE
 ESTATE TAX: 1 YEAR FROM DEATH  SIGNED BY DU;Y AUTHORIZED BIR REPRESENTATIVE
RULES ON DUE DATE OF RETURN/AMENDED RETURN ON BIR ACTION:  VALIDLY SERVED TO TAXPAYER
 (GOOD FAITH) BEFORE DUE DATE- W/IN 3 YEARS FROM DUE DATE REQUISITES OF A VALID WAIVER:
 (GOOD FAITH) ON DUE DATE- W/IN 3 YEARS FROM DUE DATE  MUST BE IN WRITING
 (GOOD FAITH) AFTER DUE DATE- W/IN 3 YEARS FROM ACTUAL DATE OF FILING  THE SIGNATURE OF THE TAXPAYER MUST BE INDICATED ON THE FACE OF THE WAIVER
 (FRAUD/ BAD FAITH)- 10 YEARS FROM FILING OF FRAUDULENT/ BAD FAITH RETURN  DATE OF EXECUTION
 (NO RETURN)- 10 YEARS FROM DISCOVERY OF NO RETURN  SIGNATURE AND DATE OF ACCEPTANCE BY BIR OFFICER
EFFECT OF FILING RETURN BEYOND THE DEADLINE:  DULY NOTARIZED
 GOOD FAITH- 25% + 12% PER ANNUM COMPUTED ON DAILY BASIS WAIVER IS AN AGREEMENT ALLOWING THE BIR TO ISSUE FAN BEYOND THE PERIOD.
 BAD FAITH- 50% + 12% PER ANNUM COMPUTER ON DAILY BASIS
IF USING THE FISCAL YEAR- ON OR BEFORE THE 15TH DAY OF THE 4TH MONTH FOLLOWING THE CLOSE OF THE TAXPAYER IS ALLOWED TO AMEND THE RETURN W/IN 3 YEARS FROM THE DATE OF ORIGINAL FILING
FISCAL YEAR OF RETURN PROVIDED THAT NO NOTICE OF INVESTIGATION IS RECEIVED BY THE TAX PAYER.

JUDICIAL SIDE
CTA: TAX PAYER: BIR:
1.
2.
3.
GRANTED
DENIED
PARTLY GRANTED/DENIED
1. HAPPY

2. SAD
1.

2.
SAD
(MR/MNT)
HAPPY CTA EN SUPREME
COURT
(MR/MNT)
3. SAD 3. SAD

30 DAYS NON EXTENDABLE

(MR/MNT)

15 DAYS
(MR/MNT)
BANC 15 DAYS 15 DAYS
 COLLECTION PERIOD OF COLLECTION REFUND
ADMINISTRATIVE JUDICIAL ASSESSMENT COLLECTION ORDINARY CLAIM FOR REFUND REFUND OF EXCESS INPUT VAT IN ZERO RATED
GROUNDS: IA/IC/EA/EC TRANSACTION (REVIDED-TRAIN LAW)
LEVY/ CRIMINAL 3 YEARS OR 10 5 YEARS ADMINISTRATIVE JUDICIAL ADMINISTRATIVE JUDICIAL
DISTRAINT/ ACTION OR YEARS
COMPROMISE/ CIVIL ACTION NONE 10 YEARS 2 YEARS FROM SAME 2 YEAR 2 YEARS FROM CLOSE OF CTA- CTA EN BANC- SC
FORFEITURE/ (F/BF) PAYMENT PERIOD QUARTER WHEN THE ZERO
GARNISHMENT RATED OCCURRED
(BIR HAVE 90 DAYS TO
GRANT OR DENY)

HEIRARCHY OF COURTS
MTC (ORIGIN) RTC CTA EN BANC SC
RTC (ORIGIN) CTA CTA EN BANC SC

JURISDICTIONAL AMOUNT
OUTSIDE METRO MANILA INSIDE METRO MANILA CTA
LESS THAN 300K- MTC MORE THAN 300K- RTC LESS THAN 400K- MTC MORE THAN 400K- RTC 1M AND ABOVE (EXCLUSIVE OF
PENALTIES AND SURCHARGE)

EVEN THERE IS PROTEST, BIR CAN STILL COLLECT GROUNDS FOR ORDINARY CLAIM FOR REFUND:
 ILLEGALLY ASSESSED
IN PROTEST CASES, THE JURISDICTION OF CTA IS APPELLATE  ILLEGALLY COLLECTED
 ERRONEOUSLY ASSESSED
IF CTA IS EXERCISING ITS ORIGINAL JURISDICTION, IT CAN ENTERTAIN MOTION FOR  ERRONEOUSLY COLLECTED
NEW TRIAL
NO CLAIM FOR REFUND WILL BE ALLOWED UNLESS YOU GO TO THE STAGES OF
TWO KINDS OF CRIMINAL CASE: ADMIN CLAIM FOR REFUND AND SUBSEQUENTLY FILED FOR JUDICIAL CLAIM FOR
 ONE WHICH RESULTS TAX DEFICIENCY REFUND.
 ONE WHICH DOES NOT RESULT TAX DEFICIENCY
IN JUDICIAL CLAIM FOR REFUND, THE ADMIN AND JUDICIAL CLAIM MUST BE FILED
ON THE SAME 2 YEAR PERIOD.

120 DAY PERIOD OF NON ACTION IN THE CASE OF SEC. 112 (EXCESS INOUT VAT IN
ZERO RATED TRANSACTION) HAS BEEN REMOVED BY TRAIN LAW.