General Principles

Purpose of Taxation
1 Primary: to raise revenues
2 Secondary
a Regulatory
b Compensatory

Inherent Powers of the State

a Taxation
b Eminent domain
c Police power

Theory and Basis of Taxation

a Lifeblood theory
b Necessity theory
c Benefits-Protection theory

Aspects of Taxation
1 Levying or Imposition
2 Assessment and Collection
c Subject to inherent and Constitutional limitations

Principles of Sound Tax System

a Fiscal adequacy
b Theoretical justice (Equality)
c Administrative feasibility

Characteristics of Tax
a Forced contribution
b Generally payable in money
c Levied for public purpose
d Exclusively levied by legislature
e Levied within territorial and legal jurisdiction of the state
f Proportionate in character

Classification of Taxes
As to subject matter
a Personal, poll or capitation tax
b Property tax
 c Excise tax

As to burden
a Direct tax
b Indirect tax

As to taxing authority/jurisdiction
a National tax
b Local tax

As to determination of amount
a Specific tax
b Ad valorem tax

As to graduation or rate
a Proportional
b Progressive
c Regressive

Impositions other than taxes

a Toll
b Penalty
c Special assessment
d License fee
e Customs duty/tariff
f Debt
g Subsidy

Inherent Limitations
1 Public purpose
2 Non-delegability of the taxing power
3 Exemption of the government
4 International comity
5 Situs of taxation (Territoriality)

Subject Matter Situs

Persons Residence of the taxpayer
Real property Location
Tangible personal property Location
Intangible personal property Domicile of the owner
Income Residence, citizenship, source of income
 Business Place of business

Constitutional Limitations
1 Due process of law
2 Equal protection of law
3 Uniformity in taxation
4 Progressive system
5 Non-imprisonment for non-payment of poll tax
6 Non-impairment of obligations and contracts
7 Free worship clause
8 Exemption of religious, charitable, non-profit cemeteries and churches and mosque from prope
9 Exemptions from taxes of the revenues and assets of non-profit, non-stock educational institu
10 Non-appropriation of public funds or property for the benefit of any church, sect, religion
11 No money shall be paid out of Treasury except in pursuance of an appropriation
12 Concurrence of majority of all the members of the Congress for the passage of law granting ta
13 Non-diversification of tax collections
14 Non-impairment of the jurisdiction of the Supreme Court to review tax cases
15 Appropriation, revenue, tariff bills must originate from House of Representatives but the Senate
16 The President shall have the power to veto any particular item(s) in an appropriation, revenue or
17 LGUs can create its own sources of revenues (delegation of taxing power to LGUs)

Escape from Taxation

a Tax evasion or Dodging
b Tax minimization or Avoidance
c Shifting
d Capitalization
e Transformation
f Exemption

Sources of Tax Laws

a Constitution
b Tax Code
c Presidential Decrees/Statutes/Executive Orders (EOs)
d Tax treaties
f Court decisions
g BIR rulings
h Revenue issuances
1 Revenue regulations (RRs)
2 Revenue memorandum orders (RMOs)
3 Revenue memorandum circulars (RMCs)
i Local tax ordinances
Powers of the Commissioner
1 To interpret the provisions of the NIRC, subject to review by the Secretary of Finance
2 To decide tax cases, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals
3 To obtain information and to summon, examine and take testimony of persons to effect tax coll
4 To make assessment and prescribe additional requirement for tax administration and enforcemen
5 To examine tax returns and determine tax due thereon
6 To conduct inventory taking or surveillance
7 To prescribe presumptive gross sales and receipts for a taxpayer when:
a The taxpayer failed to issue receipts
b The CIR believes that the books or other records of the taxpayer do not correctly reflect th
8 To terminate tax period when the taxpayer is
a Retiring from business
b Intending to leave the Philippines
c Intending to remove, hide, or conceal his property
d Intending to perform any act tending to obstruct the proceedings for the collection of the ta

9 To prescribe real property values

10 To compromise tax liabilities of taxpayers
11 To inquire into bank deposits, only under the following instances:
a Determination of the gross estate of a decedent
b To substantiate the taxpayer's claim of financial incapacity to pay tax in an application for t

12 To accredit and register tax agents

13 To refund or credit internal revenue taxes
14 To abate or cancel tax liabilities in certain cases
15 To prescribe additional procedures or documentary requirements
16 To delegate his powers to any subordinate officer with a rank equivalent to a division chief of an
urches and mosque from property taxes
non-stock educational institutions
church, sect, religion
n appropriation
r the passage of law granting tax exemption

Representatives but the Senate may propose or concur with amendments

) in an appropriation, revenue or tariff
ng power to LGUs)
 Secretary of Finance
n of the Court of Tax Appeals
ony of persons to effect tax collection
x administration and enforcement

ayer do not correctly reflect the declaration in the return

dings for the collection of the tax or render the same ineffective

to pay tax in an application for tax compromise

valent to a division chief of an office

Individuals

CLASSIFICATION OF INDIVIDUAL TAXPAYERS

a Resident Citizen (RC)
b Nonresident Citizen (NRC)
1. A citizen of the Philippines who establishes to the satisfaction of the Commissioner of the fact
2. A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad
3. A citizen of the Philippines who works and derives income from abroad and whose employme
4. A citizen who has been previously considered as nonresident citizen who arrives in the Philip
shall be considered a nonresident citizen for the taxable year in which he arrives in the Philippin

c. Resident Alien (RA)

1. An alien actually present in the Philippines who is not a mere transient or sojourner. A perso
2. An alien, who comes to the Philippines for a definite purpose, which, by its nature, would req
3. An alien who shall come to the Philippines with no definite intention as to his stay.

d. Non-Resident Alien (NRA)

Engaged in trade or business (ETB)
1. An alien individual actually engaged in trade or business in the Philippines.
2. An alien who comes in the Philippines for an aggregate period of more than 180 days during

Not engaged in trade or busines (NETB)

SITUS OF TAXATION
Subject Matter Situs
Persons Residence of the taxpayer
Real property Location
Tangible personal proLocation
Intangible personal p Domicile (residence) of the owner Examples: bank deposits, insurance pol
Business Place of business
Service Place of performance
Shares of stocks Nationality of the issuing corporation

TAX CODE https://www.bir.gov.ph/index.php/tax-code

1) BASIC INCOME TAX - GRADUATED INCOME TAX TABLE (Sec

Effective January 1, 2018 until December 31, 2022 (Note: Follow this table for May 2023 LECP
Net Taxable Income Rate
over but not over
 1 - P250,000 0%
2 P250,000 P400,000 20% of the excess over P250,000
3 P400,000 P800,000 P30,000 + 25% of the excess over P400,000
4 P800,000 P2,000,000 P130,000 + 30% of the excess over P800,000
5 P2,000,000 P8,000,000 P490,000 + 32% of the excess over P2,000,000
6 P8,000,000 - P2,410,000 + 35% of the excess over P8,000,000

Effective January 1, 2023 onwards (Note: Follow this table for October 2023 LECPA or if the q

Net Taxable Income Rate

over but not over
1 - P250,000 0%
2 P250,000 P400,000 15% of the excess over P250,000
3 P400,000 P800,000 P22,500 + 20% of the excess over P400,000
4 P800,000 P2,000,000 P102,500 + 25% of the excess over P800,000
5 P2,000,000 P8,000,000 P402,500 + 30% of the excess over P2,000,000
6 P8,000,000 - P2,202,500 + 35% of the excess over P8,000,000

TAX CODE https://www.bir.gov.ph/index.php/tax-code

SEC. 116. Tax on Persons Exempt from Value-Added Tax (VAT). - Any person whose sales or re
VAT-registered person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or
imposed: Provided, further, That effective July 1, 2020 until June 30, 2023, the rate shall be one

SEC. 117. Percentage Tax on Domestic Carriers and Keepers of Garages

SEC. 118 Percentage Tax on International Carriers
SEC. 119. Tax on Franchises
SEC. 120. Tax on Overseas Dispatch, Message or Conversation Originating from the Philippines
SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi- Banking Functio
SEC. 122. Tax on Other Non-Bank Financial Intermediaries
SEC. 123. Tax on Life Insurance Premiums
SEC. 124. Tax on Agents of Foreign Insurance Companies
SEC. 125. Amusement Taxes
SEC. 126. Tax on Winnings (horse race)
SEC. 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through the Local

2) FINAL WITHHOLDIN

a Interest
Interest on Philippine currency bank deposit, yield or other monetary benefit from deposit substi
Interest on foreign currency deposit under the expanded foreign currency deposit system (FCDS)
 Proceeds of pre-terminated long-term deposit or investments, with holding period of:

More than 5 years

4 years to less than 5 years
3 years to less than 4 years
Less than 3 years

b Royalties
Royalties from books, literary works and musical compositions
Royalties (others)

c Prizes
Prizes of P10,000 or less
Prizes over P10,000

d Winnings
PCSO and Lotto winnings of P10,000 or less
PCSO and Lotto winnings over P10,000
Winnings (others)

e Dividends - refer to "Dividends" sheet

f Share in net income

Share in the distributable net income after tax of a partnership (except GPPs), associations, joint

Creditable Withholding Tax (CWT)

a) Withholding Tax on Compensation

Withholding tax table

https://www.bir.gov.ph/index.php/tax-information/withholding-tax.html
https://www.bir.gov.ph/index.php/revenue-issuances/revenue-memorandum-circulars/2017-reven

Withholding tax calculator

https://birtaxcalculator.com/calculator.php
https://taxcalculatorphilippines.com/

b) Expanded Withholding Tax (EWT)

List of items subject to EWT (21 items)

https://taxacctgcenter.ph/items-subject-expanded-withholding-tax-train-ra-10963-philippines/
1. Withholding tax on professional fees, talent fees, etc for services rendered

Individuals
Annual income not exceeding Php3M
Annual income exceeding Php3M

Corporations
Annual income not exceeding P720k
Annual income exceeding P720k

2. Withholding tax on rentals of real and personal properties: 5% of gross rentals

3. Withholding tax on income payments to certain contractors: 2% of gross payments

General engineering constructions, general building contractors, specialty contractors, other contractors

4. Withholding tax on income payments to beneficiaries of estates: 15% of income distribution

5. Withholding tax on income payments to partners of general professional partnership (GPP)

Annual income not exceeding P720k 10%

Annual income exceeding P720k 15%

6. Income distribution to the beneficiaries of estate and trusts: 15% on the income distributed

3) CAPITAL GAINS TAX

a On sale of shares of stock of a domestic corporation not listed and traded, held as capital asset (n

b On sale of real property in the Philippines held as capital asset (higher of SP, FMV)

Notes on Minimum Wage Earners

Daily minimum wage rates

https://nwpc.dole.gov.ph/
https://nwpc.dole.gov.ph/stats/current-real-minimum-wage-rates/

Revenue Regulations (RR) No. 11-2018 provides that for minimum wage earners, their statutory minim
hazard pay shall be exempt from income tax and withholding tax.
Additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the mand
other taxable income earned by a minimum wage earner shall, however, be subject to withholding tax u

In other words, the income tax exemption of minimum wage earners covers only their basic
pay, hazard pay, and the non-taxable benefits up to a maximum amount of Php90,000. Any additional co
shall therefore be subject to tax.
ction of the Commissioner of the fact of his physical presence abroad with a definite intention to reside therein.
ring the taxable year to reside abroad, either an immigrant or for employment on a permanent basis.
e from abroad and whose employment thereat requires him to be physically present abroad most of the time during the tax
ident citizen who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines
ear in which he arrives in the Philippines with respect to income derived from sources abroad until the date of his arrival in th

mere transient or sojourner. A person who comes to the Philippines for a definite purpose which in its nature may be promp
pose, which, by its nature, would require an extended stay making his home temporarily in the Philippines.
te intention as to his stay.

in the Philippines.
period of more than 180 days during the calendar year.

amples: bank deposits, insurance policies, franchises, copyrights, receivables

de

: Follow this table for May 2023 LECPA or if the question is year 2018 to 2022)
ate
250,000
ess over P400,000
cess over P800,000
cess over P2,000,000
excess over P8,000,000

e for October 2023 LECPA or if the question is year 2023 onwards)

ate

250,000
ess over P400,000
cess over P800,000
cess over P2,000,000
excess over P8,000,000

VAT). - Any person whose sales or receipts are exempt under Section 109(CC) of this Code from the payment of value-added t
nt (3%) of his gross quarterly sales or receipts: Provided, That cooperatives, shall be exempt from the three percent (3%) gross
une 30, 2023, the rate shall be one percent (1%).

n Originating from the Philippines

s Performing Quasi- Banking Functions

Listed and Traded through the Local Stock Exchange or through Initial Public Offering

RC NRC RA NRA-ETB

er monetary benefit from deposit substitute, trust fund and similar

20%arrangement20% 20% 20%
foreign currency deposit system (FCDS) 15% Exempt 15% Exempt
ments, with holding period of: Exempt Exempt Exempt Exempt

Exempt Exempt Exempt Exempt

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

10% 10% 10% 10%

20% 20% 20% 20%

tax table tax table tax table tax table

20% 20% 20% 20%

Exempt Exempt Exempt Exempt

20% 20% 20% 20%
20% 20% 20% 20%

ership (except GPPs), associations, joint accounts, taxable joint ventures

10% and consortiums
10% 10% 20%

tax.html
ue-memorandum-circulars/2017-revenue-memorandum-circulars.html

ax-train-ra-10963-philippines/
 ces rendered

5%
10%

10%
15%

% of gross rentals

2% of gross payments

specialty contractors, other contractors

es: 15% of income distribution

rofessional partnership (GPP)

5% on the income distributed

isted and traded, held as capital asset (net capital gains) 15% 15% 15% 15%

asset (higher of SP, FMV) 6% 6% 6% 6%

um wage earners, their statutory minimum wage, holiday pay, overtime pay, night shift differential pay, and
benefits, benefits in excess of the mandatory non-taxable amount of Php90,000, taxable allowances, and
owever, be subject to withholding tax using the revised withholding tax table under the TRAIN Law.

age earners covers only their basic pay (statutory minimum wage), overtime pay, holiday pay, night shift differential
amount of Php90,000. Any additional compensation and benefits are not covered by the exemption and
eside therein.

of the time during the taxable year.

y in the Philippines
e date of his arrival in the Philippines.

n its nature may be promptly accomplished is a transient.

payment of value-added tax and who is not a
e three percent (3%) gross receipts tax herein

NRA-NETB

25%
Exempt
25%

25%
25%
25%
25%

25%
25%

25%
25%

25%
25%
25%

25%
15%

6%
ht shift differential
Corporations

Classification
1 Domestic Corporation (DC)
2 Resident Foreign Corporation (RFC)
3 Non-resident Foreign Corporation (NRFC)

1) BASIC INCOME TAX

Domestic (DC)
a Regular Corporate Income Tax (RCIT)
Rate 25%
Base Taxable incom
Effectivity date July 1, 2020

Exception: DCs with Net Taxable Income of P5M and below AND 20%
Total Assets (excluding land) of P100M and below Taxable income

b Minimum Corporate Income Tax (MCIT)

Rate 1%
Base Gross income

2) FINAL WITHHOLDING TAX (FWT)

a Interest on Philippine currency bank deposit, yield or other monetary 20%

benefit from deposit substitute, trust fund and similar arrangement

b Interest on foreign currency deposit under the expanded 15%

foreign currency deposit system (FCDS)

c Royalties from sources within the Philippines 20%

d Dividends - refer to "Dividends" sheet

3) CAPITAL GAINS TAX (CGT)

a On sale of shares of stock of a domestic corporation 15%

not listed and traded, held as capital asset (net capital gains)

b On sale of real property in the Philippines held as 6%

capital asset (higher of SP or FMV)
SPECIAL CORPORATIONS

a Proprietary educational institutions and non-profit hospitals, on net income if gross income from unre
trade, business, and other activities does not exceed 50% of the total gross income from all sources.

b Non-stock, non-profit educational institutions (all assets and revenues used actually, directly,
and exclusively for educational purposes) and other non-profit organizations.

c Income of international carriers on their gross Philippine billings

d Nonresident cinematographic film owner, lessor or distributor on gross income

e Rentals, charters, and other fees derived by non-resident lessors of aircraft, machinery, and other equi

f Rentals and charter fees payable to non-resident owners of vessels chartered by Philippine nationals

g Regional operating headquarters (ROHQs) earning income from the Philippines

h Regional or area headquarters of multinational corporations that do not earn or derive income from th
and that act as supervisory, communications, and coordinating centres for their affiliates, subsidiaries, o

i Income of OBUs and foreign currency deposit units (FCDUs) of depository banks

j Branch Profit Remittances on total profits applied or earmarked for remittance without any deduction
for the tax component

EXEMPT GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS (GOCCs)

a Government Service and Insurance System (GSIS)

b Social Security System (SSS)
c Home Development Mutual Fund (HDMF) / PAG-IBIG
d Philippine Health Insurance Corporation (Philhealth)
e Local water districts

EXEMPT CORPORATIONS - Sec. 30

1 Labor, agricultural or horticultural organization not organized principally for profit

2 Mutual savings bank not having a capital stock represented by shares, and cooperative bank without ca

3 A beneficiary society, order or association, operating for the exclusive benefit of the members such as

4 Cemetery company owned and operated exclusively for the benefit of its members

5 Nonstock corporation or association organized and operated exclusively for religious, charitable, scienti
no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, offic

6 Business league, chamber of commerce, or board of trade, not organized for profit and no part of the n

7 Civic league or organization not organized for profit but operated exclusively for the promotion of socia

8 A nonstock and nonprofit educational institutions

9 Government educational institution

10 Farmers' or other mutual typhoon or fire insurance company, mutual ditch or origation company, mutu
character, the income of which consists solely of assessments, dues, and fees collected from the memb

11 Farmers', fruit growers', or like association organized and operated as a sales agent for the purpose of m
proceeds of sales, less the necessary selling expenses on the basis of the quantity o
 Resident Non-resident
Foreign (RFC) Foreign (NRFC)

25% 25% FWT

Taxable income Gross income
July 1, 2020 ###

N/A N/A
xable income

1% N/A from July 1, 2020 to June 30, 2023

Gross income (back to 2% starting July 1, 2023)

20% 25%

15% Exempt

20% 25%

15% 15%

N/A N/A
 Classification
ncome if gross income from unrelated 1% Domestic from July 1, 2020 to June 30, 2023 (back to 10% starting July 1, 202
gross income from all sources.

s used actually, directly, Exempt Domestic Update: as per RR No. 3-2022, non-stock, non-profit
educational institutions shall be subject to the same rate as
proprietary educational institution (1% from July 1, 2020 to
June 30, 2023 and then back to 10% starting July 1, 2023).
Follow this for the October 2023 LECPA.

2.5% RFC

25% NRFC

craft, machinery, and other equipment

7.5% NRFC

artered by Philippine nationals 4.5% NRFC

10% RFC subject to 25% RCIT starting January 1, 2022 (taxable as regular RF

ot earn or derive income from the Philippines,

Exempt RFC
for their affiliates, subsidiaries, or branches

RFC now subject to 25% RCIT and 1% MCIT (taxable as regular RFC)

mittance without any deduction 15% RFC

and cooperative bank without capital stock organized and operated for mutual purposes and without profit

benefit of the members such as a fraternal organiation operating under the lodge system, or a mutal aid association or a nonstock corpor

its members

ly for religious, charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans,
t of any member, organizer, officer or any specific person

ed for profit and no part of the net income of which inures to the benefit of any private stockholder or individual

usively for the promotion of social welfare

itch or origation company, mutual or cooperative telephone company, or like organization of a purely local
nd fees collected from the members for the sole purpose of meeting its expenses

a sales agent for the purpose of marketing the products of its members and turning back to them the
the basis of the quantity of produce finished by them
023 (back to 10% starting July 1, 2023)

non-stock, non-profit
subject to the same rate as
ution (1% from July 1, 2020 to
10% starting July 1, 2023).
023 LECPA.

nuary 1, 2022 (taxable as regular RFC)

% MCIT (taxable as regular RFC)

tal aid association or a nonstock corporation organized by employees providing for the paymetn of life, sickness, accident, or other benefi

er or individual
ss, accident, or other benefits exclusively to the members of such society, order, association, or nonstock corporation or their dependents
oration or their dependents
Dividends
Summary

TO
FROM RC NRC RA NRA-ETB
DC 10% 10% 10% 20%
RFC tax table tax table* tax table* tax table*
NRFC tax table N/A** N/A** N/A**

*assuming it passed the predominance test (earned inside the Philippines)

If the ratio of Philippine gross income over the world gross income in the 3-year period preceding the year of
a At least 50%, the entire dividend corresponding to the Philippine gross income ratio is earned
b Less than 50%, the entire dividend received is earned OUTSIDE the Philippines; hence not ta

**assuming it did not pass the predominance test (earned outside the Philippines)

*** requisites for exemption:

1 Funds from such dividends actually received or remitted into the Philippines are reinv
2 Reinvestment should be made within the next taxable year from the time foreign-so
3 Reinvestment is limited to funding the working capital requirements, capital expenditu
4 The DC holds directly at least 20% of the outstanding shares of the foreign corporatio
5 It has held the shareholdings for a minimum of 2 years at the time of dividend distrib

****15% if with tax sparing; 25% if without tax sparing

 TO
NRA-NETB DC RFC NRFC
25% exempt exempt 15% or 25%****
25%* exempt (or ordinary income)*** ordinary income* 25%*
N/A** exempt (or ordinary income)*** N/A** N/A**

r period preceding the year of declaration is:

e gross income ratio is earned INSIDE the Philippines; hence, taxable in the Philippines
the Philippines; hence not taxable in the Philippines

to the Philippines are reinvested in the business operations of the domestic corporation in the Philippines.
ar from the time foreign-sourced dividends where received.
uirements, capital expenditures, dividend payments, investment in domestic subsidiaries and infrastructure project.
res of the foreign corporation.
t the time of dividend distribution.
he Philippines.

infrastructure project.
Partnership, Co-Ownership, Joint Venture, Estate, Trust

PARTNERSHIP
General rule: Patnerships are taxable as corporation.

Types
1 Ordinary Partnership
2 General Professional Partnership (GPP)
a The partners have a common profession
b Formed for the sole purpose of exercising their common profession
c No part of income is derived from engaging in any trade or business

CO-OWNERSHIP
General rule: Co-ownerships are not subject to income tax.

Exception:
a Co-owners appoint an administrator who manages the affairs of the co-ownership by making inv
b The co-owners used the common properties and/or income derived therefrom as a common fund
c When the property remained undivided for more than ten (10) years and no attempt was ever
d In all other instances when the co-ownership activities are already beyond mere preservation o

JOINT VENTURE
General rule: Joint ventures are taxable as corporation.

Exempt JVs - joint ventures or consortiums formed for the purpose of undertaking:
1 Construction projects

Requirements:
a The joint venture was formed for the purpose of undertaking a construction project
b Should involve joining or pooling of resources by licensed local contracts; that is, licensed as gen
Philippine Contractors Accreditation Board (PCAB) of the DTI
c The local contractors are engaged in construction business
d The JV itself must likewise be duly licensed as such by the PCAB

Foreign contractors
a The member foreign contractor is covered by a special license as contractor by the PCAB
b The construction project is certified by the appropriate Tendering Agency (government office
and that international bidding is allowed under the Bilateral Agreement entered into by and betwe

2 Engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating
he co-ownership by making investments therein from which profits are realized.
ed therefrom as a common fund with intent to make profits.
years and no attempt was ever made to divide the same among the co-heirs, nor was the property under administration procee
y beyond mere preservation of the co-owned property.

ndertaking:

onstruction project
ontracts; that is, licensed as general contractor by the

as contractor by the PCAB

ng Agency (government office) that the project is a foreign financed/internationally-funded project
ment entered into by and between the Philippine government and the foreign/international financing institution

ations pursuant to an operating or consortium agreement under a service contract with the government.
nder administration proceedings nor held in trust.
Gross Income

INCLUSIONS

1 Compensation for services in whatever form paid, including, but not limited to fees, salar
2 Gross income derived from the conduct of trade or business or the exercsie of a profes
3 Gains derived from dealings in property
4 Interests
5 Rents
6 Royalties
7 Dividends
8 Annuities
9 Prizes and winnings*
10 Pensions
11 Partner's distributive share from the net income of the general professional partnership

*Prizes and winnings

Within Without
Prizes
P10,000 and below tax table tax table
More than P10,000 20% tax table

Winnings
PCSO and lotto not exceeding P exempt N/A
PCSO and lotto exceeding P10, 20% N/A
Other winnings 20% tax table

EXCLUSIONS

1 Life insurance - the proceeds of life insurance policies paid to the heirs or beneficiaries
by the insurer under an agreement to pay interest thereon, the interest payments shall b

2 Amount received by insured as return of premium - the amount received by the insured,
either during the term or at maturity of the term mentioned in the contract or upon surre

3 Gifts, bequests, and devises - the value of property acquired by gift, bequest, devise, o
descent of income from any property in cases of transfers of divided interest, shall be in

4 Compensation for injuries or sickness - amounts received, through Accident or Health

sickness, plus the amounts of any damages received, whether by suit or agreement, on a
5 Income exempt under Treaty

6 Retirement benefits, pensions, gratuities

a Retirement benefits received under RA 7641
b Any amount received by an official or employer or by his heirs from the employer as a
because of death, sickness or other physical disability or for any cause beyond th
c Social security benefits, retirement grautities, pensions and other similar benefits rec
permanently in the Philippines from foreign government agencies and other institution
d Payments of benefits due or to become due to any person residing in the Philippines
e Benefits received from or enjoyed under the Social Security System in accordance w
f Benefits received from the GSIS under RA 8291

7 Miscellaneous items
a Income derived by foreign government
b Income derived by the government or its political subdivisions (local)
c Prizes and awards - prizes, awards made primarily in recognition fo religious, charita
d Prizes and awards in sports competition - all prizes and awards granted to athletes
Philippines or abroad and sanctioned by their national sports assocations
e 13th month pay and other benefits - the total exclusion shall not exceed P90,000
f GSIS, SSS, Medicare and other contributions
g Gains from the sale of bonds,debentures or other certificate of indebtedness with a m
h Gains from redemption of shares in mutual fund
i Income derived from the sale of gold pursuan tto RA 7076 (People's Small-Scale M

8 Tax exempt income under RA 11494 (Bayanihan Act II)

a Retirement benefits received by officials and employees of private firms, whether ind
b COVID-19 Special Risk Allowance given to public and private health workers
c Actual Hazard Duty Pay given to Human Resources for Health (serving in the front li
d Compensation paid to private and public health workers who have contracted COVI
P1million in case of death
P100,000 in case of severe or critical sickness
P15,000 in case of mild or moderate sickness

Benefits received by government officials and employees are also not subject to inco
a Fringe benefits which are subject to fringe benefits tax under Section 33 of the Tax C
b Representation and Transportation Allowance or RATA granted to public officers and
c Personnel Economic Relief Allowance or PERA granted to government personnel
d The monetized value of leave credits paid to government officials and employees
e Mandatory/compulsory GSIS, Medicare and Pag-IBIG contributions
f Union of individual employees
g Compensation income of employees in the public sector with compensation income o
h Holiday pay, overtime pay, night shift differential pay, and hazard pay received by Min
i Benefits received from GSIS Act of 1937, as amended, and the retirement gratuity/be
t not limited to fees, salaries, wages, commissions, and similar items
the exercsie of a profession

rofessional partnership (GPP)

he heirs or beneficiaries upon the death of the insured, whether in a single sum or otherwise, but if such amounts are held
nterest payments shall be included in gross income

t received by the insured, as a return of premiums paid by him under life insurance, endowment, or annuity contracts,
he contract or upon surrender of the contract

y gift, bequest, devise, or descent: Provided, however, that income from such property, as well as gift, bequest, devise or
ivided interest, shall be included in gross income

rough Accident or Health Insurance or under Workmen's Compensation Acts, as compensation for personal injuries or
y suit or agreement, on account of such injuries or sickness
 s from the employer as a consequence of separation of such official or employees from the service of the employer
for any cause beyond the control of the said official or employee
other similar benefits received by resident or nonresident citizens of the Philippines or aliens who come to reside
ncies and other institutions, private or public
siding in the Philippines under the laws of the United States administered by the United States Veterans Administration
System in accordance with the provisions of RA 8282

ition fo religious, charitable, scientific, educational, artistic, literary or civic achievement

wards granted to athletes in local and international sports competitions and tournaments whether held in the
assocations
hall not exceed P90,000

of indebtedness with a maturity of more than 5 years

People's Small-Scale Mining Act of 1991)

private firms, whether individual or corporate, from June 5, 2020 to December 31, 2020
ate health workers
alth (serving in the front line)
o have contracted COVID-19 in the line of duty or dies while fighting COVID-19:

also not subject to income tax and withholding tax on compensation

er Section 33 of the Tax Code
ted to public officers and employees under the General Appropriations Act
overnment personnel
ficials and employees
 compensation income of not more than the Statutory Minimum Wage in the non-agricultural sector applicable to the place wh
zard pay received by Minimum Wage Earners
he retirement gratuity/benefits received by government officials and employees under pertinent retirement laws
such amounts are held

nnuity contracts,

t, bequest, devise or

ersonal injuries or
of the employer

ho come to reside

rans Administration
applicable to the place where he/she is assigned
Deductions

General Principles
a Ordinary and necessary
b Paid or incurred within the taxable year
c Connected with trade, business or practice of profession
d Substantiated with official receipts or other adequate records
e Not against the law, morals, public policy or public order
f If subject to withholding taxes, proof of payment to BIR

ITEMIZED DEDUCTIONS

1 Losses
Requisites:
a Actually sustained during the taxable year
b Connected with the trade, business or profession
c Evidenced by a close and completed transaction
d Not compensated for by insurance or other form of indemnity
e Not claimed as a deduction for the estate tax purposes
f Notice of loss must be filed with the BIR within 45 days from the date of discovery of loss

Net Operating Loss Carry Over (NOLCO)

Requisites:
a At the time of incurring net loss, the taxpayer must not be exempt from income tax
b There is no substantial change in the ownership of the business or enterprise in that:
i) Not less than 75% in nominal value of outstanding issued shares, if the business is in the name of
ii) Not less than 75% of the paid-up capital of the corporation, if the business is in the name of the c

Applies to:
a Individuals (including estates and trusts) engaged in trade, business, or exercise of profession
b Domestic corporations
c Resident foreign corporations
d Corporations subject to preferential tax rates (proprietary educational institutions, hospitals,etc)

Under Bayanihan Act II

Under RA 11494, or Bayanihan Act II, the NOLCO of the business or enterprise for taxable years
for the next five (5) consecutive taxable years following the year of loss.

2 Charitable and Other Contributions

Requisites:
a The contribution or gift must be actually paid
b It must be given to the organizations specified in the Code
c The net income of the institution must not inure to the benefit of any private stockholder or individ
d The donee must be a domestic institution
e The donee must issue a Certificate of Donation (BIR Form 2322)

FULLY DEDUCTIBLE
1 Donations to the Philippine government, any of its agencies or political subdivisions or any fully-own

Priority activities in:

a Education
b Health
c Youth and sports development
d Human settlements
e Science and culture
f Economic development

2 Donation to foreign institution or international organization in pursuance of, or in compliance with

3 Donations to accredited domestic non-government organizations (NGOs)

Requisites:
1) The NGO must be an accredited donee institution with certifications issued by the following accre
a Department of Social Welfare and Development (DSWD) - for charitable or social welfare orga
b Department of Science and Technology (DOST) - for research and other scientific activities
c Philippine Sports Commission (PSC) - for sports development
d National Council for Culture and Arts (NCCA) - for cultural activities
e Commission on Higher Education (CHED) - for educational activities

2) The NGO must be organized and operated exclusively for the above purposes, and no income inu

3) The NGO makes utilization of the contribution not later than the 15th day of the third month afte

4) The administrative expenses of the NGO do not exceed 30% of its actual expenses

5) The members of the Board of Trustees must not receive remunerations

6) In the event of liquidation, the asset of the NGO will be distributed to another nonprofit domesti

Special Laws (deductible in full)

1 Integrated Bar of the Philippines
2 International Rice Research Institute
 3 Development Academy of the Philippines
4 University of the Philippines and other state colleges
5 Cultural Center of the Philippines
6 Artesian Well Fund
7 Ramon Magsaysay Award Foundation
8 Task Force on Human Settlement
9 Donations to the National Museum, Library and Archives
10 National Commission on Culture
11 Humanitarian Science Foundation
12 National Social Action Council

SUBJECT TO LIMIT (10% for individuals, 5% for corporations)

1 Donations to the Philippine government or political subdivisions exclusively for public purposes NO

2 Donations to non-accredited non-government organizations (NGOs) or to domestic corporations or

a Religious
b Charitable
c Scientific
d Youth and sports development
e Cultural
f Educational
g Rehabilitation of veterans
h Social welfare

3 Pension
Requisites:
a The employer must have established a pension or retirement plan to provide for the payment of re
b The actuarial assumptions used by the fund must be sound and reasonable
c It must be funded by the employer
d The fund assets must be independent from and not subject to the control or disposal of the employ
e Contribution for current service cost is deductible in full
f Contribution for past service cost is amortized over a period of 10 years

4 Research and Development

Requisites:
a Paid or incurred during the taxable year
b Ordinary and necesary expenses in connection with trade and business or exercise of profession

5 Taxes
NON-deductible
a Philippine income tax
 b Income tax paid to a foreign country if claimed as credit
c Estate tax
d Donor's tax
e Special assessment
f VAT
g Stock transaction tax
h Interest, surcharges, penalties on delinquent taxes
i Final taxes

Deductible (not exhaustive)

a Foreign income tax claimed as deduction (not claimed as credit)
b Percentage tax
c Excise tax
d Documentary stamp tax
e Fringe benefits tax
f Local taxes
g Community tax
h Municipal tax

6 Interest
Requisites:
a There must be indebtedness
b The interest expense must have been paid or incurred during the taxable year
c The indebtedness must be that of the taxpayer
d The indebtedness must be connected with the taxpayer's trade, business or exercise of profession
e There must be legal liability to pay interest

7 Bad Debts
Requisites:
a Existing indebtedness due to the taxpayer which must be valid and legally demandable
b Connected with the taxpayer's trade, business or practice of profession
c Must not be sustained in a transaction entered into between related parties
d Actually ascertained to be worthless and uncollectible as of the end of the taxable year
e Actually charged off in the books of accounts of hte taxpayer as of the end of the taxable year

8 Depreciation/amortization/depletion
Requisites:
a The allowance for depreciation/amortization must be reasonable
b The property subject to depreciation is used in the trade, business or practice of profession
c The allowance must be charged off within the taxable year
d Schedule on the allowance must be attached to the return
 9 Entertainment, amusement and recreation expenses (EAR)
Requisites:
a It must be paid or incurred during the taxable year
b It must be directly connected to the development, management and operation of the trade, busine
c It must not be contrary to law, morals, good customs, public policy or public order
d It must have been duly substantiated with adequate proof

10 Discount to senior citizens and PWDs

11 Labor training expenses (under CREATE law)

Upon effectivity of CREATE law, an additional deduction from taxable income of one-half (1/2) of
trainees enrolled in public senior high schools, public higher educational institutions, or public tech
Labor Code of the Philippines. The enterprise shall secure proper certification from the DepEd

Requisites
a The labor training expenses shall not be more than ten percent (10%) of the Direct Labor W
b The labor training expenses are incurred for skills development of enterprise-based trainee
c The enterprise-based trainees are enrolled in public senior high school, public higher educa
d The training is covered by an apprenticeship agreement under Presidential Decree (PD) N
e The company claiming the additional deduction is granted an authority to offer a training pro

NON-DEDUCTIBLE EXPENSES

1 Personal, living or family expenses

2 Any amount paid out for new buildings or for permanent improvements, or betterments made to increase

3 Any amount expended in restoring property or in making good the exhaustion thereof for which an allow

4 Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person fi
individual or corporate, when the taxpayer is directly or indirectly a beneficiary under such policy

5 Interest, losses and bad debts between related taxpayers

a Between members of the family
b Except in the case of distributions in liquidation:
Between an individual and a corporation more than 50% in value of the outstanding stock of which
Between two corporations more than 50% in value of the outstanding stock of each of which is own
Between the grantor and a fiduciary of any trust
c Between the fiduciary of a trust and the fiduciary of another trust if the same person is a grantor w
d Between a fiduciary of a trust and a beneficiary of such trust
6 Bribes, kickbacks and other similar payments
of discovery of loss

m income tax
erprise in that:
he business is in the name of a corporation, is held by or on behalf of the same persons
usiness is in the name of the corporation, is held by or on behalf of the same persons

exercise of profession

institutions, hospitals,etc)

nterprise for taxable years 2020 and 2021 shall be carried over as a deduction from gross income
private stockholder or individual

l subdivisions or any fully-owned government corporation to be used exclusively in undertaking:

nce of, or in compliance with agreements, treaties or special laws

issued by the following accrediting agencies

ritable or social welfare organizations, foundations and associations
other scientific activities

purposes, and no income inures to the benefit of any private individuals

h day of the third month after the close of its taxable year

ctual expenses

o another nonprofit domestic corporation orgnanized for similar purpose

 ively for public purposes NOT in accordance with priority activities

to domestic corporations organized exclusively for the following purposes:

provide for the payment of reasonable pensions to his employees

trol or disposal of the employer

s or exercise of profession
ess or exercise of profession

ally demandable

the taxable year

end of the taxable year

ractice of profession
peration of the trade, business or profession

ncome of one-half (1/2) of the value of labor training expenses incurred for skills development of enterprise-based
al institutions, or public technical vocational institutions and duly covered by an apprenticeship agreement under the
ification from the DepEd, TESDA or CHED. Such deduction shall not exceed ten percent (10%) of direct labor wage.

10%) of the Direct Labor Wage

of enterprise-based trainees
school, public higher education institutions, or public technical and vocational institutions for the taxable year in which the labor
Presidential Decree (PD) No. 442 or the Labor Code of the Philippines
hority to offer a training program for skills development as certified by the Department of Education (DepED), Technical Educa

betterments made to increase the value of any property or estate

on thereof for which an allowance is or has been made

employee, or of any person financially interested in any trade or busienss carried on by the taxpayer,
ary under such policy

e outstanding stock of which is owned, directly or indirectly, by or for such individual

stock of each of which is owned, directly or indirectly, by or for the same individual

e same person is a grantor with respect to each trust

enterprise-based
ement under the
of direct labor wage.

le year in which the labor training expenses are claimed

DepED), Technical Education and Skills Development Authority (TESDA), or the Commission on Higher Education (CHED), as
er Education (CHED), as applicable.
Capital Assets

ORDINARY ASSETS
a Stock in trade of the taxpayer, or other property of a kind which would properly be included in the inve

b Property held by the taxpayer primarily for sale to customers in the ordinary course of trade or busines

c Property used in trade or business of a character which is subject to allowance for depreciation

d Real property used in trade or business of the taxpayer

Examples of Ordinary Assets

Inventory - RM, WIP, FG (a)
Land for sale by a real estate dealer or developer (b)
Office equipment (c)
Machinery (c)
Building used in business (d)
Land used in business (d)

Examples of Capital Assets (not included in the 4 categories of ordinary assets)

Cash
Accounts receivable
Shares of stocks and bonds held as investment (FVPL, FVOCI)
Prepaid expenses
Residential house
Car for personal use
Jewelry for personal use
Personal art collection

Principal Residence (exemption from CGT)

1 The capital asset sold was a principal residence

2 The taxpayer is a citizen of the Philippines or resident alien (RC, RA)

3 The proceeds of the sale was invested in acquiring a new principal residence

4 Notice to make such utilization was given to the BIR within 30 days from the date of sale

5 The reacquisition of the new residence must be within 18 months from date of sale
 6 A cash deposit is made with an accredited bank under an Escrow Agreement for an amount equal to th
and answerable for the capital gains tax if the conditions for the exemption be not satisfied

7 The exemption must be availed of once only every 10 years

RULES ON CAPITAL GAINS

Corporation
Holding period always at 100%

Deductible capital losses only to the extent of capital gains

Net capital loss carry-over not available

BASIS FOR DETERMINING GAIN OR LOSS OF PROPERTY

Manner of Acquisition Basis

1 Purchase Cost

2 Inheritance FMV at the time of inheritance

3 Donation Same as it would be in the hands of the donor or the last preceding ow
Exception: FMV at the time of donation if lower than the amount abov

4 If acquired by less than full Amount paid by the transferee

or adequate consideration

TRANSACTIONS DEEMED EXCHANGE

a Retirement of bonds, debentures, notes or certificates and other evidence of indebtedness
b Short sale of properties
c Failure to exercise a privilege or option to buy or sell property that is a capital asset
d Security becoming worthless
e Receipt of a liquidating dividends
f Redemption of shares for cancellation or retirement
g Voluntary buy-back of shares
 a kind which would properly be included in the inventory of the taxpayer

customers in the ordinary course of trade or business

hich is subject to allowance for depreciation

es of ordinary assets)

Sec 24D

ent alien (RC, RA)

a new principal residence

R within 30 days from the date of sale

thin 18 months from date of sale

der an Escrow Agreement for an amount equal to the capital gains tax,
onditions for the exemption be not satisfied

Individual
100% if held for not more than 12 months (short-term capital gain or loss)
50% if more than 12 months (long-term capital gain or loss)

only to the extent of capital gains

available Limit 1: Net income (taxable income) on Year 1

Limit 2: Net capital gains on Year 2

inheritance

e in the hands of the donor or the last preceding owner by whom it was not acquired by gift
the time of donation if lower than the amount above, for the purpose of determining the loss

he transferee

ates and other evidence of indebtedness

ll property that is a capital asset

Fringe Benefits Tax

Examples of fringe benefits

1 Housing
2 Expense account
3 Vehicle of any kind
4 Housing personnel, such as maid, driver and others
5 Interest on loan at less than market rate to the extent of the difference between the market rate and t
6 Membership fees, dues and other expenses borne by the employer for the employee in social athletic c
7 Expenses for foreign travel
8 Holiday and vacation expenses
9 Educational assistance to the employee or his dependents
10 Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the

Rate 35% of the grossed-up monetary value

MONETARY VALUE
Monetary value
1 Housing privilege
Employer leases residential property
a for the use of the employee
b Employer owns residential property for the use of the employee
Employer purchases residential property in installment
c for the use of the employee
Employer purchases a residential property and transfers
d the ownership in the name of the employee
Employer purchases a residential property and transfers ownership
e to the employee on a lesser amount

2 MotorEmployer
Vehicles owns and maintains a fleet of motor vehicles for the
a use of the business and employees
Employer leases and maintains a fleet of motor vehicles for the
b use of the business and the employees
c Employer purchases the motor vehicle in the name of the employee
Employer provides the employee with cash for the purchase of a
d motor vehicle in the name of the employee
Employer shoulders a portion of the amount of the purchase price of a
e motor vehicle in the name of the employee
f Employer purchases the car on installment in the name of the employee
g Use of yacht, whether owned and maintained or leased by employer

3 Others
a Expense account
b Household personnel, such as maid, driver and others
Interest on loan at less than market rate to the extent of the
c difference between the market rate and actual rate granted (12% benchmark rate)
Membership fees, dues and other expenses borne by the employer
d for the employee in social and athletic clubs and similar organizations
e Expenses for foreign travel
f Holiday and vacation expenses
 g Educational
Life or healthassistance
insuranceto theother
and employee or insurance
non-life his dependents
premiums or
h similar amounts in excess of what the law allows.

EXEMPT (not subject to FBT)

a Housing privilege 1) Housing privilege of military officials of AFP consisting of officia
2) Housing unit which is situated inside or adjacent to the premise
3) Temporary housing for an employee who stays in a housing uni

b Vehicle of any kind Use of aircraft and helicopters owned and maintained by the em

c Expense account When receipted in the name of the employer and do not partake
a) Expenses incurred by employees but paid by employer
b) Expenses by employees reimbursed by employer

d Expenses for foreign travel 1) Expenses in connection with attending business meeting or con
considered reasonable expenses and shall not be subject to fringe
2) The cost of economy and business class airplane ticket shall no
3) 70% of the cost of first class airplane ticket shall not be subject

e Educational assistance When the study is directly connected with the employer’s trade, b
and employer that the former is under obligation to remain in the
When given to employee’s dependents through a competitive sch

f Life or health insurance and other Contributions under SSS law

non-life insurance premiums Contributions under GSIS law
or similar amounts in excess of Similar contributions under existing laws
what the law allows Premiums for group insurance of employees

g Benefits given to rank and file employees

h De minimis benefits within the limits

i Fringe benefits which are authorized and exempted from tax under the Tax Code or special laws

j Benefits required by the nature of, or necessary to the trade, business or profession of the employer

k Benefits given for the convenience or advantage of the employer

l Contributions of the employer for the benefit of the employee to retirement, insurance and hospitaliza

DE MINIMIS BENEFITS
a Monetized unused vacation leave credits of private employees not exceeding ten (10) days during the
b Monetized value of vacation and sick leave credits paid to government official and employees
c Medical cash allowance to dependents of employees, not exceeding P1,500 per employee per semeste
d Rice subsidy of P2,000 or one (1) sack of 50-kg rice per month amounting to not more than P2,000
e Uniform and clothing allowance not exceeding P6,000 per annum
f Actual yearly medical benefits not exceeding P10,000 per annum
g Laundry allowance not exceeding P300 per month
h Employees achievement awards with an annual monetary value not exceeding P10,000
i Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee pe
j Daily meal allowance for overtime work and night/graveyard shift not exceeding 25% of the basic minim
k Benefits received by an employee by virtue of a collective bargaining agreement (CBA) and productivit
received from the two (2) items combined, do not exceed P10,000 per employee per taxable year
between the market rate and the actual rate granted
he employee in social athletic clubs or other similar organizations

r amounts in excess of what the law allows

Monetary value
of the benefit
Rental paid x 50%
Higher of FMV or Zonal Value x 5% x 50% https://www.bir.gov.ph/index.php/zonal-values.html
Acquisition cost exclusive of interest x 5% x 50%
Higher of acquisition cost or zonal value (100%)
FMV or zonal value, whichever is higher, less payment by employee (100%)

Acquisition cost of all motor vehicles not normally

used for of
Amount business divided byfor
rental payments 5 years
motorx 50%
vehicle
not normally used for business purposes x 50%
Acquisition cost (100%)
Amount of cash received by the employee (100%)
Amount shouldered by the employer (100%)
Acquisition cost exclusive of interest divided
by 5 years (100%)
Depreciation of a yacht at an estimated
useful life of 20 years

Amount paid or given by the employer (100%)

cials of AFP consisting of officials of Philippine Army, Philippine Navy and Philippine Air Force
nside or adjacent to the premises of a business or factory (within the maximum of 50 meters from the perimeter of the business premises
oyee who stays in a housing unit for 3 months or less.

ned and maintained by the employer (treated as business expense)

e employer and do not partake the nature of personal expense attributable to employee:
s but paid by employer
rsed by employer

ending business meeting or convention (except lodging cost in a hotel) at an average of $300 per day are
nd shall not be subject to fringe benefit tax (with documentary evidence)
ess class airplane ticket shall not be subject to fringe benefit tax
plane ticket shall not be subject to fringe benefit tax

ted with the employer’s trade, business or profession and there is a written contract between the employee
nder obligation to remain in the employer for a period of time;
dents through a competitive scheme under scholarship program of the company.

Tax Code or special laws

r profession of the employer

ment, insurance and hospitalization benefit plans

 eding ten (10) days during the year
official and employees
500 per employee per semester or P250 per month
ng to not more than P2,000

eeding P10,000
eeding P5,000 per employee per annum
xceeding 25% of the basic minimum wage
reement (CBA) and productivity incentive schemes, provided that the total annual monetary value
mployee per taxable year
ter of the business premises);
Installment Reporting

The gross profit or gain from the sale may be reported on the installment method, if such sale is by:

a One who is a dealer in personal property regularly selling on installments

b One who makes a casual sale or disposition of personal property (other than inventory) for a selling pr
and with initial payments not exceeding 25% of the selling price; or

c One who makes a sale of real property, with initial payments not exceeding 25% of the selling price.

GUIDELINES

Without Mortgage

IP= DP + Payments received this year

IP ÷ SP = 25% or less (allowed for Installment Reporting)

GP ÷ CP x total collections = Income Realized

IP= Initial payments, payments of the buyer to seller,

whatever form (cash, properties, cancellation of indebtedness, etc.)
which is received during the year. It is not similar to down payment.

In this case, the selling price is the contract price.

DP= Downpayment
SP= Selling price
GP= Gross Profit
CP= Contract Price
ent method, if such sale is by:

y (other than inventory) for a selling price in excess of one thousand pesos (P1,000.00)

t exceeding 25% of the selling price.

With Mortgage but no Excess over the Cost

IP= DP + Payments received this year

IP ÷ SP = 25% or less (allowed for Installment Reporting

GP ÷ CP x total collections = Income Realized

btedness, etc.)
own payment.

In this case, the contract price is equal to selling price

minus mortgage assumed by the buyer.
ousand pesos (P1,000.00)

With Mortgage in excess over the Cost

IP= DP + Payments received this year

plus Excess of Mortgage over the Cost
IP ÷ SP = 25% or less (allowed for IR)

GP ÷ CP x total collections = Income Realized

In this case, the contract price is equal to the selling price

minus mortgage assumed by the buyer plus excess of
mortgage over cost.
Donor's Tax

The tax for each calendar year shall be 6% computed on the basis of the total gifts in excess of P250,000 exem

Requisites of a Taxable Donation

1 Capacity of the donor to transfer property
2 Donative intent
3 Delivery of the gift
4 Acceptance by the donee

Property Movable (Personal) Immovable (Real)

Amount P5,000 or less > P5,000 Any amount
Form Oral or writing Writing Public document

Gross Gift
1 Direct Gift (donor to donee)
2 Gift through creation of irrevocable trust
3 Condonation of debt
4 Transfer for insufficient consideration of any property other than real property subject to CGT
5 Specific renunciation of inheritance
6 Renunciation by the surviving spouse of his/her share in the conjugal partnership or absolute co

Exemptions
Under the Tax Code
a Gifts made to or for the use of the National Government or any entity created by any of its agen
or to any political subdivision of the said Government.
b Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporatio
or philantropic organization or research institution or organization: Provided, however, that no m

Under Special Laws

a Archives of the National Historical Institute
b Development Academy of the Philippines
c Integrated Bar of the Philippines
d International Rice Research Institute
e Intramuros Administration
f Musuem of Philippine Costumes
g National Library
h National Museum
i National Commission for Culture and the Arts
j Philippine Red Cross
k Philippine Normal University
 l Ramon Magsaysay Foundation
m University of the Philippines

Political Contributions (Omnibus Election Code (OEC) and Repulic Act No. 7166)
As a rule, any contributions given to candidates, political parties or coalition of parties are not subject to dono
1 The contribution is for campaign purposes; and
2 The donation is duly reported to the Commission on Election (COMELEC)

The campaign contribution is subject to donor’s tax on the part of the donor, if such contributions are not rep

Void Donations
a Donations between spouses, except minor gifts
b Donations between persons who were guilty of adultery or concubinage at the time of donation
c Donations between persons found guilty of the same criminal offense, in consideration thereof
d Donations to a public officer or his wife, descendants or ascendants by reason of his office
e Donations to incapacitated persons
f Donations of future property

Valuation Methods
a Real properties are valued at the assessed, appraised or zonal value, whichever is higher
b Personal properties are valued at current market price or fair market value
c Shares of stocks are valued at:
i. If traded – average of high and low price
ii. If not traded – using the BV method under RR No. 20-2020 (previously adjusted net asset me

Rules to observe
a As a rule, the value of the property/right donated shall be the fair market value existing when th
b The time to value is the moment when the donation has been completed and perfected (delive
c When the donation is subject to a suspensive condition, the value of the gift is to be determined
al gifts in excess of P250,000 exempt gift made during the calendar year.

han real property subject to CGT

onjugal partnership or absolute community after the dissolution of the marriage in favor of the heirs of the deceased spouse or any other

y entity created by any of its agencies which is not conducted for profit,

ltural or social welfare corporation, institution, accredited nongovernment organization, trust

tion: Provided, however, that no more than 30% of said gifts shall be used by such donee for administration purposes.
of parties are not subject to donor’s tax as long as the following conditions are met:

r, if such contributions are not reported to the COMELEC.

ncubinage at the time of donation

offense, in consideration thereof
dants by reason of his office

value, whichever is higher

market value

(previously adjusted net asset method)

fair market value existing when the gift was made (as of the time of donation).
completed and perfected (delivered and accepted).
lue of the gift is to be determined only at the time when the stipulated condition is fulfilled, subject to the time of delivery and acceptan
ceased spouse or any other person/s
me of delivery and acceptance of the gift.
Estate Tax

INCLUSIONS FROM GROSS ESTATE

a Real property
b Tangible and intangible personal property
Intangible
i Franchise which must be exercised in the Philippines
ii Shares, obligations or bonds issued by a domestic corporation
iii Shares, obligations or bonds issued by a foreign corporation 85% of the business of which is located in
iv Shares, obligations or bonds issued by a foreign corporation, if such have acquired a business situs in
v Shares or rights in any partnership, business or industry in the Philippines
c Transfer in contemplation of death
d Revocable transfer
e Transfer under general power of appointment
f Transfer for insufficient consideration
g Proceeds of life insurance
Except:
i Proceeds of life insurance and benefits received by members of the GSIS (RA 728)
ii Benefits received by members from SSS by reason of death (RA 1792)
iii Retirement benefits of officials or employees of a private firm (RA 4917), provided they are included
iv Payments from the Philippines and US governments to the legal heirs of deceased of World War II Ve
v Amounts received from Philippine and United States governments for war damages
vi Amounts received from United States Veterans Administration
h Claim against insolvent person

EXCLUSIONS AND EXEMPTIONS

Under the Tax Code
a Merger of usufruct in the owner of the naked title
b Transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicomissary
c Transmission from the first heir, legatee or donee in favor of another beneficiary, in accordance with the w
d All bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions no p
any individual: Provided, that no more than thirty percent (30%) of which will be used by such institutions f

DEDUCTIONS
Ordinary (Losses, Indebtedness, Taxes or LIT)
a Losses
Requisites
i Arising from fire, storm, shipwreck or other casualty, robbery, theft or embezzlement
ii Not compensated by insurance
ii Not claimed as deductions from income tax of the estate
iv Occurred during the settlement of the estate
 iv Occurred not later than the last day for the payment of estate tax
b Indebtedness or claims against the estate
c Claims against insolvent person
d Unpaid mortgage or indebtedness
e Unpaid taxes
Except:
i Any income tax upon income received after death
ii Property taxes not accrued before death
iii Estate tax from the transmission of his estate
f Transfer for public use
g Vanishing deduction

Special
a Family home
Requisites
i The descedent is married or head of the family
ii The family home must be the actual residential home of the decedent and his family at the t
iii Certified by the barangay captain of the locality the family home is situated
iv Located in the Philippines
v The value of the family home is included in the gross estate

b Standard deduction
c Amount received by heirs under RA 4917

Share of the surviving spouse in the joint property

VANISHING DEDUCTIONS
Requisites
a The present decedent died within 5 years from receipt of the property from a prior decedent or donor
b The property must be part of the taxable estate of the prior decedent, or of the taxable gift of the donor
c The estate tax on the prior succession or the donor's tax on the gift had been finally determined and paid
d The property on which vanishing deduction is claimed can be identified as the one received from a prior de
e No vanishing deduction on the property was allowable to the estate of the prior decedent

Steps
1 Determine the Initial Value/Basis (the value of the property in the hands of the prior decedent versus the v
2 Determine the New Initial Value (reduce initial value with any mortgage payment made by present deceden
3 Determine the Final Value/Basis
4 Determine the Value (%) of Vanishing Deductions
More than Not more than Percentage
- 1 year 100%
 1 year 2 years 80%
2 years 3 years 60%
3 years 4 years 40%
4 years 5 years 20%

PROPERTY RELATIONS BETWEEN SPOUSES

a Complete Separation of Property (CSP)
b Conjugal Partnership of Gains (CPG)
c Absolute Community of Property (ACP)

I. Property acquired BEFORE Marriage

a. Gratuitous
b. Onerous
c. Where the spouse has a legitimate descendant from a previous marriage

II. Property acquired DURING marriage

a. Gratuitous title
b. Onerous title
c. In exchange of exclusive property
d. In exchange of conjugal/community property
e. Fruits or income from exclusive property
f. Fruits or income from conjugal/ community property

III. Property for personal and exclusive use of either spouse

Valuation Methods (at the time of death)

a Real properties - higher between fair market value and zonal value
b Personal properties - fair market value
c Shares of stocks are valued at:
i. If traded – average of high and low price
ii. If not traded – using the Book Value method
% of the business of which is located in the Philippines
uch have acquired a business situs in the Philippines

the GSIS (RA 728)

RA 4917), provided they are included in the gross estate.

heirs of deceased of World War II Veterans and deceased civilian for supplies or services furnished to the US and Philippine Army (RA 136
nts for war damages

eir or legatee to the fideicomissary

beneficiary, in accordance with the will of the predecessor
ural and charitable institutions no part of the net income of which inures to the benefit of
hich will be used by such institutions for administrative purposes

ry, theft or embezzlement

 he decedent and his family at the time of his death
y home is situated

from a prior decedent or donor

, or of the taxable gift of the donor
d been finally determined and paid
d as the one received from a prior decedent, or from the donor, or something acquired in exchange for it
f the prior decedent

nds of the prior decedent versus the value in the hands of the present decedent whichever is lower)
ge payment made by present decedent)
 CPG ACP

Exclusive Community
Exclusive Community
Exclusive Exclusive

Exclusive Exclusive
Conjugal Community
Exclusive Exclusive
Conjugal Community
Conjugal Exclusive
Conjugal Community

Exclusive Exclusive (if jewelry, community under ACP; N/A to CPG)

and Philippine Army (RA 136)
VALUE-ADDED TAX (VAT)

SOURCES OF OUTPUT VAT

a Sale of goods

b Sale of services

c Sale of properties

d Deemed sale transactions

i. Transfer, use or consumption, not in the ordinary course of business of goods or properties ordinarily in
ii. Distribution or transfer of inventory to shareholders for their shares in the profits
iii. Distribution or transfer of inventory to creditors in payment of debt
iv. Consignment of goods if actual sale is not made within sixty (60) days following the date such goods w
v. Retirement from or cessation of business with respect to ending inventories

e Zero-rated sales / services

i. The sale and actual shipment of goods from the Philippines to a foreign country paid for in acceptable f
ii. Services other than processing, manufacturing or repacking goods for other persons engaged in busines
the consideration for which is paid for in acceptable foreign currency and accounted for in accordance
iii. Sale of goods, supplies, equipment and fuel to persons engaged in international shipping or internatio
shall be exclusively used for international transport
iv. Services rendered to persons engaged in international shipping or air transport operations
v. Transport of passengers and cargo by domestic air or sea carriers from the Philppines to a foreign coun
vi. Sale of power or fuel generated through renewable sources of energy

Effectively zero-rated sales (under International Agreements or Special Laws)

i. Sale to Asian Development Bank (ADB)
ii. Sale to International Rice Research Institute (IRRI)
iii. Sale to duly registered and accredited enterprises with Subic Bay Metropolitan Authority (SBMA)
iv. Sale to duly registered and accredited enterprises with Philippine Economic Zone Authority (PEZA)

SOURCES OF INPUT VAT

a Purchase of goods
i. For sale
ii. For conversion into or intended to form part of finished goods
iii. For supplies

Purchase of services
 b Importation

c Purchase of capital goods

d Presumptive Input VAT

e Transitional Input VAT

f Standard Input VAT

VAT EXEMPT TRANSACTIONS (Sec. 109)

a Sale or importation of agricultural and marine food product in their original state (original state even if th
such as freezing, drying, salting, broiling, roasting, smoking or stripping)

b Sale or importation of fertilizers, seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds

c Importation of personal and household effects belonging to residents of the Philippies returning from abr

d Importation of professional instruments and implements, wearing apparel, domestic animals, and person
for their own use and not for barter or sale

e Services subject to other percentage tax (OPT)

f Services of agricultural contract growers and milling for others of palay into rice, corn into grits and sugar

g Medical, dental, veterinary services except those rendered by professionals

h Educational services rendered by private educational institutions duly accredited by DepEd, CHED and TES

i Services rendered pursuant to employee-employer relationship

j Services rendered by regional or area headquarters established in the Philippines by multinational corpor

k Transactions which are exempt under international agreements to which the Philippines is a signatory or

l Sale by agricultural cooperatives duly registered with the Cooperative Development Authority to their me

m Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with the CD

n Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with the CDA duly regis
does not exceed P15,000
 o Export sales by non-VAT registered individuals

p Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of
as defined by RA 7279 (Urban Development Act of 1992) . Sale of residential lot valued at P1,500,000 and

(beginning Jan. 1, 2021, the VAT exemption shall only apply to sale of real properties not prim
sale of real property utilized for socialized housing and sale of house and lot and other residential dwellin
Provided, further, that every three (3) years thereafter, the amount herein stated shall be adjusted to its p

q Lease of residential unit with monthly rental not exceeding P15,000

CREATE r Sale, importation, printing or publication of books, and any newspaper, magazine, journal, review bulleti
United Nations Educational, Scientific and Cultural Organization (UNESCO) Agreement on the importatio
the digital or electronic format thereof. Provided, that the materials enumerated herein are not devoted
that the materials enumerated herein are compliant with the requirements set forth by the Nationa

s Transport of passengers by international carriers

t Sale or importation or lease of passenger or cargo vessels and aircrafts, including engine, equipment and

u Importations of fuel, goods and supplies by person engaged in international shipping or air transportatio
for international transport operations

v Service of banks, non-bank, financial intermediaries performing quasi-banking functions (money changers

w Sale of goods or lease of goods to senior citizens and persons with disability (PWDs)

x Transfer of property pursuant to Section 40 (C) (2) (Sale of exchange of assets in a newly organized or inco

y Association dues, membership fees, and other assessments and charges collected by homeowners associ

z Sale of gold to BSP

CREATE aa Sale or importation of prescription drugs and medicines for: (i) diabetes, high cholesterol, and hypertensi
tuberculosis, and kidney diseases beginning January 1, 2021

CREATE bb Sale or importation of the following beginning January 1, 2021 to December 31, 2023:
i. Capital equipment, its spare parts and raw materials, necessary for the production of person
n-95 mask, scrub suits, goggles and face shield, double or surgical gloves, dedicated shoes, and
ii. All drugs, vaccines and medical devices specifically prescribed and directly used for the trea
iii. Drugs for the treatment of COVID-19 approved by the Food and Drug Administration (FDA) f
 for the production of such drugs

cc Sale or lease of goods or properties or the performance of service other than the transactions mentioned
and/or receipts do not exceed the amount of P3,000,000.

INVOICING REQUIREMENTS
A VAT-registered person shall issue:
a A VAT-invoice for every sale, barter or exchange of goods or properties
b A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of serv

Information contained in the VAT invoice or OR

1 Statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (T

2 The total amount which the purchaser pays or is obligated to pay the seller with the indication that such a
a. The amount of the tax shown as a separate item in the invoice or receipt
b. If the sale is exempt from VAT, the term 'VAT-exempt sale' shall be written or printed prominently on t
c. If the sale is subject to zero percent (0%) VAT, the term 'zero-rated sale' shall be written or printed prom
d. If the sale involves goods, properties or services some of which are subject to and some of which are VA
shall clearly indicate the breakdown of the sale price between its taxable, exempt and zero-rated compon
of the sale shall be shown on the invoice or receipt

3 The date of transaction, quantity, unit cost and description of the goods or properties or nature of the ser

4 In the case of sales in the amount of P1,000 or more where the sale or transfer is made to a VAT registere

ACCOUNTING REQUIREMENTS
All persons subject to VAT, in addition to the regular accounting records required, maintain a subsidiary sales jou
 ness of goods or properties ordinarily intended for sale
hares in the profits

0) days following the date such goods were consigned

g inventories

foreign country paid for in acceptable foreign currency and accounted for by the BSP (export sales)
ods for other persons engaged in business who is outside the Philippines when the services are performed,
rency and accounted for in accordance with the rules and regulations of the BSP
d in international shipping or international air transport operations, provided such goods, supplies and equipment

g or air transport operations

rs from the Philppines to a foreign country

ay Metropolitan Authority (SBMA)

ne Economic Zone Authority (PEZA)
eir original state (original state even if they have undergone the simple process of preparation or preservation for the market

fish, prawn, livestock and poultry feeds

ents of the Philippies returning from abroad and non-resident coming to resettle in the Philippines

g apparel, domestic animals, and personal and household effects belonging to persons coming to settle in the Philippines

palay into rice, corn into grits and sugar cane to raw sugar

duly accredited by DepEd, CHED and TESDA and those rendered by government educational institutions

n the Philippines by multinational corporations which act as a supervisory, communication and coordinating centers

o which the Philippines is a signatory or under special laws

ative Development Authority to their members as well as sale of their produce to non-members

ooperatives duly registered with the CDA

s duly registered with the CDA duly registered with the CDA, provided that the share capital contribution of each member
 held for lease in the ordinary course of trade or business, or real property utilized for low-cost and socialized housing
residential lot valued at P1,500,000 and below, house and lot and other residential dwellings valued at P2,500,000 and below

y to sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or busine
use and lot and other residential dwellings with threshold reduced to P2,000,000)
nt herein stated shall be adjusted to its present value using the Consumer Price Index (CPI), as published by the Philippine Statistics Author

paper, magazine, journal, review bulletin, or any such educational reading material covered by the
(UNESCO) Agreement on the importation of educational, scientific and cultural materials, including
als enumerated herein are not devoted principally to the publication of paid advertisemetns. Provided further,
requirements set forth by the National Book Developmetn Board

crafts, including engine, equipment and spare parts for domestic or international operations

ernational shipping or air transportation, provided, such fuel, goods and supplies are exclusively used

uasi-banking functions (money changers, pawnshops)

h disability (PWDs)

ge of assets in a newly organized or incorporated corporation, merger and consolidation)

harges collected by homeowners associations and condominium corporations

abetes, high cholesterol, and hypertension beginning January 1, 2020; and (ii) cancer, mental illness,

21 to December 31, 2023:

essary for the production of personal protective equipment (PPE) components such as coveralls, gown, surgical cap, surgic
urgical gloves, dedicated shoes, and shoe covers, for COVID-19 prevention
scribed and directly used for the treatment of COVID-19
ood and Drug Administration (FDA) for used in clinical trials, including raw materials directly necessary
other than the transactions mentioned in the preceding paragraphs, the gross annual sales

or every sale, barter or exchange of services

his Taxpayer's Identification Number (TIN)

the seller with the indication that such amount includes the VAT

ll be written or printed prominently on the invoice or receipt

ted sale' shall be written or printed prominently on the invoice or receipt
are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt
taxable, exempt and zero-rated componenents, and the calculation of the VAT on each portion

goods or properties or nature of the service

le or transfer is made to a VAT registered person, the name, business style, if any, address and TIN of the purchaser, customer or client.

required, maintain a subsidiary sales journal and subsidiary purchase journal on which daily sales and purchases are recorded.
n for the market

e Philippines
0,000 and below

y course of trade or business,

e Philippine Statistics Authority (PSA)

gown, surgical cap, surgical mask,

chaser, customer or client.

ses are recorded.

Other Percentage Tax (OPT)

OTHER PERCENTAGE TAX (OPT)

COVERAGE
CREATE 1 Persons exempt from VAT (Sec. 116)

2 Domestic carriers and keepers of garages (Sec. 117)

Minimum quarterly gross receipts

Jeepney for hire
Manila and other cities 2,400
Provincial 1,200

Public utility bus

Not exceeding 30 passenger 3,600
Over 30 but not 50 6,000
Over 50 passengers 7,200

Taxis
Manila and other cities 3,600
Provincial 2,400

Car for hire

With chauffeur 3,000
Without chauffeur 1,800

3 International air and shipping carriers doing business in the Philippines (Sec. 118)
Franchise grantees (Sec. 119)

a Gas and water utilities

b Radio and television broadcasting companies

5 Overseas dispatch, message or conversation originating from the Philippines (Sec. 120) Amount paid for th
Exempt
a Diplomatic services
b International organizations
c News agencies or services
d Government
 6 Banks and non-bank financial intermediaries performing quasi-banking functions (Sec. 121)

a Interest, commissions, and discounts from lending activities and financial leasing
• If the maturity period is five (5) years or less
• If the maturity period is more than five (5) years

b Dividends and equity shares and net income of subsidiaries

c Royalties, rentals of property, real or personal, profits from the exchange and all other items
treated as gross income under Sec. 32 of the Tax Code

d Net trading gains within the taxable year of foreign currency, debt securities, derivatives,
and other similar financial instruments

7 Other non-bank financial intermediaries (Sec. 122)

a Interest, commissions, discounts and all other items treated as gross income under the Tax Code

b Interest, commissions, discounts from lending activities and financial leasing

• If the maturity period is five (5) years or less
• If the maturity period is more than five (5) years

8 Life insurance premiums (Sec. 123)

Exempt
a Premiums refund within six (6) months after payment on account of rejection of risk or
returned for other reasons
b Reinsurance premiums
c Premiums from life insurance of non-residents received from abroad by branches of
domestic corporation, firm or association doing business outside the Philippines
d Excess of premiums on variable contracts in excess of the amounts necessary
to insure the lives of the variable contract owners
e Premium collected by a purely cooperative company or association

9 Agents of foreign insurance companies (fire/marine or miscellaneous insurance) (Sec. 124)

a Agents of non-resident foreign corporations engaged in insurance business

b Owners of property obtaining insurance directly with foreign insurance companies

10 Amusement (Sec. 125)

 Liable: proprietor, lessee or operator of the following:
a Place for boxing exhibitions*

b Place for professional basketball games

c Cockpits, cabarets, night or day clubs

d Jai-alai and racetracks

*Requisites for exemption of boxing exhibitions

a) World or oriental championship is at stake
b) One of the contenders is a citizen of the Philippines
c) Promoted by citizens of the Philippines or by a corporation or association at least 60%
of the capital of which is owned by such citizen

11 Winnings (Sec. 126)

a Owner of the winning horse

b Bettor in a horse race or jai-alai

Ordinary
Special (double, forecast, quinella, trifecta)

12 Sale. barter or exchange of shares of stock listed and traded through the local stock exchange
or through initial public offering (IPO) (Sec. 127)

a Shares of stock listed and traded

b Shares of stock sold through IPO

Ratio of shares sold/outstanding shares after the listing
Up to 25%
Over 25% to 33 1/3%
Over 33 1/3%
 Tax Base Tax Rate
Gross sales or receipts 1% July 1, 2020 to June 30, 2023
3% July 1, 2023 onwards
Gross receipts 3%

Gross receipts 3%

Gross receipts 2%

Gross receipts 3%

Amount paid for the service 10%

 Gross receipts or income

5%
1%

0%

e and all other items 7%

ties, derivatives, 7%

Gross receipts or income

ome under the Tax Code 5%

5%
1%

Total premiums collected 2%

ection of risk or

e Philippines

e) (Sec. 124)

Total premiums collected 4%

Total premiums paid 5%

 Gross receipts 10%

Gross receipts 15%

Gross receipts 18%

Gross receipts 30%

on at least 60%

Gross winnings 10%

Net winnings 10%

Net winnings 4%

stock exchange

Gross selling price 6/10 of 1%

Gross selling price

4%
2%
1%
Excsie Tax

EXCISE TAX
SPECIFIC TAX
1 Alcohol products
a. Distilled spirits (including proof spirits) - whisky, brandy, rum, gin, and vodka, fortified wines
b. Wines - sparkling wines, champagne, still wines
c. Fermented liquor - beer, lager beer, ale, porter and other fermented liquors, excep tuba, pasi, tapuy

2 Tobacco products
a. Tobacco products (except stemmed leaf tobacco or tobacco by-products which are to be exported or used
b. Cigars
c. Cigarettes

3 Petroleum Products
a. Lubricating oils and greases
b. Processed gas
c. Waxes and petrolatum
d. Denatured alcohol to be used for motive power
e. Naphtha, regular gasoline, and other similar products of distillation
f. Leaded and unleaded premium gasoline
g. Aviation turbo jet fuel
h. Asphalts
i. Kerosene
j. Diesel fuel oil
k. Liquified petroleum gas (LPG)
l. Bunker fuel oil

4 Mineral Products
a. Coal and coke

5 Sweetened Beverages - imposes a tax per liter of volume capacity on sweetened beverages
Excluding the following:
a. All milk products
b. 100% natural fruit juices
c. 100% natural vegetable juices
d. Meal replacement and medically indicated beverages
e. Coffee - ground coffee, instant soluble coffee, and pre-packaged powdered coffee products

AD VALOREM TAX
1 Distilled spirits

2 Cigars

3 Automobiles excluding
a. Buses, trucks
b. Cargo vans
c. Jeepneys/jeepney substitutes
d. Single cab chassis
e. Special-purpose vehicles
f. Automobiles used exclusively within the Freeport zones

Purely electric vehicles and pick-ups are exempt from excise tax
Hybrid vehicles shall be taxed at 50% of the applicable excise tax rates

4 Non-essential goods
a. Jewelry, whether real or imitation; pearls; precious and semi-precious stones and imitations
b. Goods made of or ornamented, mounted or fitted with precious metals or imitations thereof of ivory;
Except: surgical and dental instruments, silver-plated wares, frames, or mountings for spectacles or eyeglass
c. Opera glasses and lorgnettes
d. Perfumes and toilet waters
e. Yachts and other vessels intended for pleasure or sports

5 Mineral products
a. Non-metallic minerals and quarry resources such as marble, granite, volcanic cinders, basalt, tuff and rock
b. Metallic minerals - copper and other metallic minerals; gold and chromite
c. Indigenous petroleum including locally-extracted mineral oil, hydrocargon gas, bitumen, crude asphalt, mi

6 Non-essential services - 5% tax on gross receipts on the performance of invasive cosmetic surgeries, proced
ortified wines

cep tuba, pasi, tapuy

are to be exported or used in the manufacture of cigars and cigarettes); includes tobacco specially prepared for chewing

ee products
nd imitations
ations thereof of ivory;
s for spectacles or eyeglasses and dental god or gold alloys and other precious metals used in filling, mounting or fitting the teeth

nders, basalt, tuff and rock phosphate

bitumen, crude asphalt, mineral gas (except locally-extracted natural gas and liquefied natural gas)

cosmetic surgeries, procedures and body enhancements for aesthetic/cosmetic purposes

or fitting the teeth
Documentary Stamp Tax (DST)

DOCUMENTARY STAMP TAX (DST)

DST is an excise tax levied on documents, instruments, loan agreements and papers evidencing the acceptan

Liable: person making, signing, issuing, accepting or transferring documents

Subject to DST
a Shares of stock
Original issuance
with par P2.00/P200 of par value
no par P2.00/P200 based on the actual conside
Subsequent issuance
with par P1.50/P200 of par value
no par 50% of DST paid on the original issuance
b Bonds, debentures, certificates of stock, certificates of indebtedness issued in foreign countries
c Sales, agreements to sell, memoranda of sales; deliveries or transfer of shares or certificates of stock
d Certificates of profits or interest in property or accumulations
e Bank checks, drafts, certificates of deposit not bearing interest, and other instruments
f Debt instruments P1.50/P200
g Bills of exchange or drafts
h Acceptance of bills of exchange
i Foreign bills of exchange and letters of credit
j Life insurance policies
k Insurance upon property
l Fidelity bonds and other insurance policies
m Policies of annuities and pre-need plans
n Indemnity bonds
o Warehouse receipts
p Jai-alai, horse race tickets, lotto, or other authorized numbers games
q Bills of lading or receipts
r Proxies
s Power of attorney
t Leases and other hiring agreements
u Mortgages, pledges, and deeds of trust
v Deeds of sale and conveyances of real property P15/P1,000
w Charter parties and similar instruments
x Assignments and renewals of certain instruments
y Certificates
Not Subject to DST
a Policies of insurance or annuities made by a fraternal or beneficiary society operated on the lodge syste
b Certificates of oaths administered to any government official in his official capacity
c Papers filed in court by or for the national, provincial, or municipal governments
d Affidavits to prove poverty
e Statements and other compulsory information required of persons exclusively for statistical purposes a
f Certificates of the assessed value of lands <= P200
g Borrowing and lending of securiteis executed under the Securities Borrowing and Lending Program (SBL
h Loan agreements <= P250,000 executed by an individual for the purchase of a house and lot, motor veh
i Sale, barter, or exchange of shares listed and traded through the local stock exchange
j Assignment or transfer of mortgages, lease or insurance policy if there is no change in the maturity ate
k Fixed income and other securities traded in the secondary market or through an exchange
l Derivatives
m Interbranch or interdepartmental advances within the same legal entity
n Forebearances arising from sales or service contracts
o Bank deposit accounts without a fixed term
p Contracts, deeds, documents and transactions related to the conduct of business of the BSP
q Transfer of property pursuan to tax-free exchanges
r Interbranch call loans with maturity <= 7 days to cover deficiency in reserves including those between o
s and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto

00/P200 of par value

00/P200 based on the actual consideration

50/P200 of par value

% of DST paid on the original issuance
ess issued in foreign countries
fer of shares or certificates of stock

d other instruments
ry society operated on the lodge system of local cooperation plan
s official capacity
l governments

s exclusively for statistical purposes and for the use of the government

Borrowing and Lending Program (SBL) of a registered exchange

urchase of a house and lot, motor vehicle, appliance, or furniture for personal use
ocal stock exchange
here is no change in the maturity ate
or through an exchange

uct of business of the BSP

in reserves including those between or among banks and quasi-banks

Local Taxes

Local Government Code of the Philippine https://tinyurl.com/LocalGovernmentCode

Read sections 128 to 303 https://www.officialgazette.gov.ph/downloads/1991/10oct/19

Fundamental Principles
1 Taxation shall be uniform in each local government unit

2 Taxes, fees, charges and other impositions shall:

(a) be equitable and based as far as practicable on the taxpayer's ability to pay
(b) be levied and collected only for public purposes
(c) not be adjust, excessive, oppressive, or confiscatory
(d) not be contrary to law, public policy, national economic policy, or in restraint of trade

3 The collection of local taxes, fees, charges and other impositions shall in no case be let to any private perso

4 The revenue collected pursuant to the provisions of this Code shall inure solely to the benefit of, and be su
levying the tax, fee, charge or other imposition unless otherwise specifically provided herein

5 Each local government unit shall, as far as practicable, evolve a progressive system of taxation

REAL PROPERTY TAX

Fundamental Principles
a Real property shall be appraised at its current and fair market value
b Real property shall be classified for assessment purposes on the basis of actual use
c Real property shall be assessed on the basis of uniform classification within each LGU
d The appraisal, assessment, levy and collection of real property tax shall not be delegated to any private per
e The appraisal and assessment of real property shall be equitable

Assessment Levels
a Lands
Class Assessment Levels
Residential 20%
Agricultural 40%
Commercial 50%
Industrial 50%
Mineral 50%
Timberland 20%

b Buildings and Other Structures

1. Residential
Fair Market Value Assessment Levels
Over Not Over
0 175,000 0%
175,000 300,000 10%
300,000 500,000 20%
500,000 750,000 25%
750,000 1,000,000 30%
1,000,000 2,000,000 35%
2,000,000 5,000,000 40%
5,000,000 10,000,000 50%
10,000,000 60%

2. Agricultural
Fair Market Value Assessment Levels
Over Not Over
0 300,000 25%
300,000 500,000 30%
500,000 750,000 35%
750,000 1,000,000 40%
1,000,000 2,000,000 45%
2,000,000 50%

3. Commercial/Industrial
Fair Market Value Assessment Levels
Over Not Over
0 300,000 30%
300,000 500,000 35%
500,000 750,000 40%
750,000 1,000,000 50%
1,000,000 2,000,000 60%
2,000,000 5,000,000 70%
5,000,000 10,000,000 75%
10,000,000 80%

4. Timberland
Fair Market Value Assessment Levels
Over Not Over
0 300,000 45%
300,000 500,000 50%
500,000 750,000 55%
 750,000 1,000,000 60%
1,000,000 2,000,000 65%
2,000,000 70%

c Machineries
Class Assessment Levels
Agricultural 40%
Residential 50%
Commercial 80%
Industrial 80%

d Special Classes (assessment levels for all buildings, machineries and other improvements)
Class Assessment Levels
Cultural 15%
Scientific 15%
Hospital 15%
Local water districts 10%
GOCC engaged in the supply and distribut 10%
of water and/or generation
and transmission of electric power

Exempt from Real Property Tax

a Government owned real property
b Real property exclusively used for religious, charitable or educational purposes
c Real property of registered cooperatives
d Machineries and equipment actually, directly and exclusively used by local water districts and GOC
supply and distribution of water and/or generation and transmission of electric power
e Machineries and equipment used for pollution control and environmental protection

LOCAL BUSINESS TAXES

Provinces Municipalities
a Real property transfer Yes No
b Printing and publication Yes No
c Franchise tax Yes No
d Sand, gravel and other quarry resourc Yes No
e Professional tax Yes No
f Amusement tax Yes No
g Delivery vans and trucks Yes No
h Community tax No Yes

SAMPLE FEES AND CHARGES

 Building permit
Bus terminals
Cockpits
Court fees
Electrical permit
Fire certification
Firearms permit
Garbage collections
Mayor's permit
Parking fees
Sanitary permit
Terminal fees
Tax clearance
Towing charges
Toll fees and charges

Situs of Business Tax

Scenario Situs
a If there is a sales outlet or branch LGU where outlet is situated
b If there is no sales outlet or branch LGU where principal office is situated
c Manufacturer's office same as factory outlet or plant LGU where the manufacturer principal office
d Manufacturer's office different from factory outlet or plant 30% by the LGU where the principal office is lo
70% by the LGU where the project office or pla

COMMUNITY TAX
Required to be presented every time an individual:
a Acknowledges any document before a notary public
b Takes the oath of office upon election or appointment to any position in the government service
c Receives any license, certificate, or permit from any public authority
d Receives any money from any public fund

Individuals
Every inhabitant of the Philippines who is at least 18 years old are required to pay community tax when:
a Someone who has been regularly employed on a wage or salary basis for at least 30 consecutive working d
b Someone who is engaged in business or an occupation
c Someone who owns real property with an aggregate assessed value of P1,000 or more
d Someone who is required by law to file an income tax return

Corporations
Every corporation no matter how created or organized, whether domestic or resident foreign, engaged in o
Exempt from the community tax
a Diplomatic and consular representatives
b Transient visitors when their stay in the Philippines does not exceed three (3) months
 ocalGovernmentCode
gazette.gov.ph/downloads/1991/10oct/19911010-RA-7160-CCA.pdf

r's ability to pay

cy, or in restraint of trade

ns shall in no case be let to any private person

hall inure solely to the benefit of, and be subject to disposition by, the local government unit
erwise specifically provided herein

progressive system of taxation

e basis of actual use

cation within each LGU
tax shall not be delegated to any private person
 and other improvements)

ational purposes

ely used by local water districts and GOCCs engaged in the

ission of electric power
ironmental protection

Cities Barangays Rates

may levy taxes same as No 50% of 1% of the total consideration or FMV, whichever is higher
provinces and municipalities No 50% of 1% of the gross annual receipts
No 50% of 1% of the gross annual receipts
Sharing 10% of fair market value in the locality per cubic meter
No amount and reasonable classification as the Sangguniang Panlalawigan may
No 10% of the gross receipts from admission fees.
No not exceeding P500
Yes Yes
 Situs
U where outlet is situated
U where principal office is situated
U where the manufacturer principal office
% by the LGU where the principal office is located
% by the LGU where the project office or plant is located

osition in the government service

quired to pay community tax when:

y basis for at least 30 consecutive working days during any calendar year

value of P1,000 or more

r domestic or resident foreign, engaged in or doing business in the Philippines.

ceed three (3) months
hever is higher

guniang Panlalawigan may determine but shall in no case exceed P300.00

Preferential Taxation

SENIOR CITIZENS
Expanded Senior Citizens Act of 2010 (RA 9994)
https://www.officialgazette.gov.ph/2010/02/15/republic-act-no-9994/

Benefits of Senior Citizens

a 20% discount and exemption from Value Added Tax on certain goods and services for their own use:
1 Medicines, essential medical supplies, accessories and equipment, dental services, diagnostic and labor
2 Professional fees of their physicians and healthcare workers
3 Fare for land (jeepney, buses, taxis, shuttle services, MRT, LRT, and PNR), sea shipping vessels, and dom
4 Restaurants, hotels, lodging establishments, and recreation centers
5 Theaters, cinema houses, and concert halls, circuses, leisure, and amusement
6 Funeral and burial services

b A minimum of 5% discount on water and utility bills up to 100 kilowatt hours of electricity and 30 cubic mete

c If the senior citizen is a minimum wage earner (MWE), he or she is exempted from individual income taxes

d Mandatory PhilHealth coverage

e GSIS, SSS, PAG-IBIG benefits and privileges

f Express lanes or priority status in almost all establishments in both commerce government and commercial e

g Employment assistance from the government for elderlies who are able and willing to work

h Educational assistance through scholarships, grants, or subsidy should the senior citizen wish to continue or t
or short-term courses in public and private educational or training institutions

i Training fees exemptions for programs organized by private and government for socioeconomic assistance a

j Social safety nets, such as food, medicine, and financial assistance for home repairs during economic shocks

k Centenarians privilege under Republic Act No. 10868 (Centenarians Act of 2016): ₱100,000 cash gift and a lett

l City/municipality-specific benefits. Each city or municipality in the country has their own set of perks for the

n Indigent senior citizens will be entitled to the following:

Free vaccine for influenza virus and pneumococcal diseases vaccine
P500 free grocery allowance but released every semester
o Groceries worth up to P1,300 per week enjoy 5% off the retail prices of at least four kinds of basic necessitie

Basic necessities Prime commodities

Rice, corn, bread Flour, canned pork, beef, poultry meat
Fish, fresh pork, beef, poultry meat Onions, garlic, vinegar, patis, soy sauce
Eggs, milk, fruits, vegetables Soap, fertilizer, pesticides
Noodles, coffee, creamer Paper, school supplies
Sugar, cooking oil, salt Cement, hollow blocks, plywood
Laundry soap, detergent Batteries, electrical supplies
LPG, kerosene Light bulbs, steel wires

p Death benefit assistance of a minimum of P2,000 given to the nearest surviving relative

PERSONS WITH DISABILITIES (PWDs)

Magna Carta for Persons with Disabilities (PWDs) - RA 7277, RA 10754
https://www.officialgazette.gov.ph/1992/03/24/republic-act-no-7277/
https://www.ncda.gov.ph/disability-laws/republic-acts/republic-act-no-10754-an-act-expanding-the-benefits-and

The Department of Health (DOH) considers the following types of disabilities as eligible for a PWD ID
a Psychosocial disability – includes bipolar disorder, depression, ADHD, schizophrenia, epilepsy, and other long
b Disability resulting from a chronic illness – includes orthopedic disability due to cancer, blindness due to diab
c Learning disability – includes processing problems that hinder learning math, reading, writing, and other basi
d Visual disability – the visual impairment cannot be corrected
e Orthopedic (Musculoskeletal) disability – Includes people with dwarfism and amputated hands or feet. Indivi
f Mental/Intellectual disability
g Hearing disability
h Speech impairment
i Multiple disabilities

Benefits of PWDs
a 20% discount and Value Added Tax (VAT) exemption when buying certain products and services nationwide,
1 Room accommodations in lodging establishments, including dormitories for students
2 Restaurants
3 Cinemas, theaters, and other recreational centers
4 Medicines and food for special medical purposes
5 Medical and dental services, including professional fees, diagnostic, and laboratory fees
6 Fares for domestic air and sea travel
7 Fares for land transportation, including jeeps, buses, taxis, trains, and TNVS/ride-hailing services
8 Funeral and burial services for the death of a PWD
b 5% discount on basic necessities and prime commodities

c Mandatory coverage under SSS/GSIS, PhilHealth, and Pag-IBIG

d Educational assistance

e Express lanes for PWDs

f City-specific PWD benefits

BARANGAY MICRO BUSINESS ENTERPRISE (BMBE)

Barangay Micro Business Enterprises (BMBEs) Act of 2002 (RA 9178)
https://www.officialgazette.gov.ph/2002/11/13/republic-act-no-9178/

Incentive and Benefits

a Income tax exemption from income arising from the operations of the enterprise

b Exemption from the coverage of the Minimum Wage Law (BMBE employees will still receive the same social

c Priority to a special credit window set up specifically for the financing of BMBEs, set up by:
1 Land Bank of the Philippines (LBP)
2 Development Bank of the Philippines (DBP)
3 Small Business Guarantee and Finance Corporation (SBGFC)
4 People's Credit and Finance Corporation (PCFC)

d Technology transfer, production and management training, and marketing assistance programs for BMBE be

e LGUs may also reduce the amount of local taxes, fees, and charges imposed or exempt the BMBEs from local

Revocation of Income Tax Exemption

a Transfer of place of business
b Value of its total assets exceeds P3M
c Voluntary surrender of the Certificate of Authority
d Death of the registered individual owner of the BMBE; violation or noncompliance with the provisions of R.A.
e Merger or consolidation with an entity which is not eligible to be a BMBE
f Sale or transfer of the BMBE, if it is a sole proprietorship without prejudice to the transferee applying for regi
g Submission of fake or falsified documents
h Retirement from business, or cessation/suspension of operations for one (1) year
i Making false or omitting required declarations or statements

DOUBLE TAXATION AGREEMENTS (DTA)

https://www.bir.gov.ph/index.php/international-tax-matters/international-tax-agreements.html
https://www.bir.gov.ph/index.php/international-tax-matters/taxation-of-non-residents.html

Preferential rates
a Dividends
b Interests
c Royalties
d Profits of shipping and air transport in international traffic
e Remitted branch profits

Exemption
a Business profits
b Capital gains
c Income from employment
d Income from independent professional services
e Income of athletes and performers supported by public funds
f Income from government service
g Pensions
h Income of visiting teachers and researchers
i Allowances and remuneration of visiting students and trainees
j Other income

Philippine Economic Zone Authority (PEZA)

Special Economic Zone Act of 1995 (RA 7916)
http://www.peza.gov.ph/index.php/about-peza/special-economic-zone-act
http://www.peza.gov.ph/index.php/economic-zones/list-of-economic-zones

The following are the activities eligible for PEZA registration

a Export manufacturing
b IT Service export
c Tourism
d Medical tourism
e Agro-industrial export manufacturing
f Agro-industrial bio-fuel manufacturing
g Logistics and warehousing services
h Ecozone development/operation
i Facilities providers
j Utilities

Categories of ecozones
a Manufacturing economic zone
 b IT parks/centers
c Agro-industrial economic zone
d Tourism economic zone
e Medical tourism parks/centers

Benefits of PEZA Registered Companies

Fiscal Incentives http://www.peza.gov.ph/index.php/pezadownloads/27-downloads/enterprise
a Income Tax Holiday (ITH) – 100% exemption from corporate income tax:
6 years ITH for pioneer Project, may be extended up to 8 years (applicable to Manufacturing and IT acti
4 years ITH for non-pioneer Project (applicable to Manufacturing, IT, Tourism, Medical Tourism, and Ag
3 years for expansion/modernization projects
Upon expiry of the Income Tax Holiday, 5% Special Tax on Gross Income and exemption from all nation
b Tax and duty free importation of raw materials, capital equipment, machineries, and spare parts.
c Exemption from wharfage dues and export tax, impost or fees.
d VAT zero-rating on local purchases of goods and services, subject to compliance with BIR and PEZA requirem
e Exemption from payment of any and all local government imposts, fees, licenses, or taxes.
f Exemption from expanded withholding tax.

Non-Fiscal Incentives
a Simplified Import-Export procedures
b Non-resident foreign nationals may be employed by PEZA-registered Economic Zone Enterprises in superviso
c Special Non-Immigrant Visa with Multiple Entry Privileges for non-resident foreign nationals in a PEZA-regist

Incentives and Benefits of BOI Registration in the Philippines

Omnibus Investments Code of 1987 (Executive Order 226)
https://boi.gov.ph/wp-content/uploads/2018/02/EO-226-omnibus-investments-code.pdf

Investment Priorities Plan (IPP) https://boi.gov.ph/wp-content/uploads/2020/12/20201118-MO-50-R

Priority areas
a Preferrred activities
1 Manufacturing
Motor vehicle
Shipbuilding including parts and components
Aerospace parts and components
Chemicals
Virgin paper pulp
Copper wires and copper wire rods

2 Agribusiness and Fishery

Production of animal and aqua feeds
Production of fertilizers and pesticides
 Modernization of sugar mills
Mechanized agriculture support services, e.g. harvesting, plowing, and spraying/dusting
Agriculture support infrastructures, e.g. facilities for drying, cold chain storage, blast freezing, b

3 Services
Integrated Circuit Design
Creative Industries/ Knowledge-Based Services
Ship repair
Charging stations for electric vehicles
Maintenance, Repair and Overhaul (MRO) of aircraft
Industrial waste treatment

4 Economic and Low-cost Housing

5 Hospitals

6 Energy
Exploration and development of energy sources
Power generation plants

7 Public Infrastructure and Logistics

Airports and seaports (includes RO-RO ports) for cargo and passenger
Air, land and water transport (limited to brand new ships, aircraft, seaplanes, RO-RO; buses, bo
LNG Storage and Regasification Facility
Bulk water treatment and supply

8 PPP Projects

b Export Activities
1 Production and Manufacture of Export Products - covers the production/manufacture of non-tra
requirement of at least 50% of its output, if Filipino-owned or at least 70%, if foreign-owned
2 Services Exports - covers service activities rendered to clients abroad and paid for in foreign cu
at least 50% of its revenue, if Filipino-owned or at least 70%, if foreign-owned

c Special Laws

d Autonomous Region of Muslim Mindanao (ARMM)

Fiscal Incentives
a Income tax holidays (ITH)
six (6) years for projects with pioneer status and for projects located in a Less Developed Area (LDA)
 four (4) years for new projects with non-pioneer status
three (3) years for expansion/modernization projects
b Duty exemption on imported capital equipment, spare parts, and accessories
c Exemption from wharfage dues and export tax, duty, impost, and fees
d Tax exemption on breeding stocks and genetic materials
e Tax credits on imported raw materials
f Tax and duty-free importation of consigned equipment
g Additional deduction for labor expense (ADLE)

Non-Fiscal Incentives
a Employment of foreign nationals
b Simplification of customs procedures for imported products
c Importation of consigned equipment
d Privilege to operate a bonded manufacturing/trading warehouse (subject to custom rules and regulations)
 nd services for their own use:
, dental services, diagnostic and laboratory fees in private hospitals, clinics, and etc

d PNR), sea shipping vessels, and domestic transport services

hours of electricity and 30 cubic meters of water, registered under their name

mpted from individual income taxes

mmerce government and commercial establishments

e and willing to work

he senior citizen wish to continue or take a secondary and/or higher education, vocational and technical training,
training institutions

ment for socioeconomic assistance and development

ome repairs during economic shocks and calamities

of 2016): ₱100,000 cash gift and a letter of felicitation signed by the Philippine president

ntry has their own set of perks for their seniors aside from those established by law
 f at least four kinds of basic necessities and prime commodities:

rk, beef, poultry meat

negar, patis, soy sauce

locks, plywood

urviving relative

s as eligible for a PWD ID

hizophrenia, epilepsy, and other long-term and recurring mental or behavioral issues
y due to cancer, blindness due to diabetes, and other disabilities due to a chronic disease
math, reading, writing, and other basic skills

m and amputated hands or feet. Individuals with scoliosis may also apply for an ID.

ain products and services nationwide, which include the following categories:
mitories for students

tic, and laboratory fees

and TNVS/ride-hailing services

oyees will still receive the same social security and health care benefits as other employees)

f BMBEs, set up by:

ting assistance programs for BMBE beneficiaries.

osed or exempt the BMBEs from local taxes, fees, and charges.

ompliance with the provisions of R.A. 9178

ice to the transferee applying for registration

ax-agreements.html
n-residents.html
ds/27-downloads/enterprise

pplicable to Manufacturing and IT activities only)

IT, Tourism, Medical Tourism, and Agro-industrial Activities)

ncome and exemption from all national and local taxes, except real property taxes
chineries, and spare parts.

mpliance with BIR and PEZA requirements.

s, licenses, or taxes.

onomic Zone Enterprises in supervisory, technical, or advisory positions.

dent foreign nationals in a PEZA-registered Economic Zone Enterprise

nts-code.pdf

ploads/2020/12/20201118-MO-50-RRD-2.pdf
owing, and spraying/dusting
old chain storage, blast freezing, bulk handling and storage

craft, seaplanes, RO-RO; buses, boats, mass rail)

production/manufacture of non-traditional export products and with export

east 70%, if foreign-owned
ts abroad and paid for in foreign currency with export requirement of
reign-owned

ted in a Less Developed Areahttps://boi.gov.ph/sdm_downloads/m-c-2018-07-amendment-of-the-list-of-less-developed-areas-ldas-under-

(LDA)
ct to custom rules and regulations)
eveloped-areas-ldas-under-the-2017-investment-priorities-plan/
Tax Remedies

Constructive Distraint may be availed of in the following cases

a The taxpayer is retiring from any business subject to tax
b He intends to leave the Philippines
c He removes his property therefrom
d He performs any act tending to obstruct the proceeding for collecting the tax due or which may be due f

Preliminary Assessment Notice (PAN) is NOT required in the following cases:

a When the finding for any deficiency tax is the result of mathematical error in the computation of the tax
b When a discrepancy has been determined between the tax withheld and the amount actually remitted b
c When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a tax
automatically applied the same amount claimed against the estimated tax liabilities for the taxable quar
d When the excise tax due on excisable articles has not been paid
e When an article locally purchased or imported by an exempt person has been sold, traded or transferred

Suspension of Assessment Prescription Period

a When the taxpayer's request for reinvestigation was granted
b When the taxpayer cannot be located in the address given in the return
c When no property of the taxpayer can be located
d When the taxpayer is out of the country

CIVIL PENALTIES

Surcharge
25%
1 Failure to file any return and pay the tax due on time
2 Filing a return with an internal revenue officer other than those with whom the return is required to be fi
3 Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment
4 Failure to pay the full or part of the amount of tax shown on any return, or the full amount of tax due fo

50%
1 Willful neglect to file the return on time
2 In case a false or fraudulent return is willfully made
 ting the tax due or which may be due from him

cal error in the computation of the tax as appearing on the face of the return
eld and the amount actually remitted by the withholding agent
ess creditable withholding tax for a taxable period was determined to have carried over and
mated tax liabilities for the taxable quarter or quarters in the succeeding taxable year

on has been sold, traded or transferred to non-exempt persons

with whom the return is required to be filed, unless authorized by the CIR (wrong venue)
payment in the notice of assessment
return, or the full amount of tax due for which no return is required to be filed
Tax Filing

FILING

Individuals Required to File Income Tax Return

a Every Filipino citizen residing in the Philippines (RC)
b Every Filipino citizen residing outside the Philippines on his income from sources within the Philippines
c Every alien residing in the Philippines on income derived from sources within the Philippines (RA)
d Every non-resident alien engaged in the trade or business or in the exercise of profession in the Philippi

Individuals Not Required to File Income Tax Return

a An individual whose taxable income does not exceed P250,000
b An individual receiving purely compensation income, regardless of amount, from only one employer in
the income tax of which has been withheld correctly by the said employer (substituted filing)
c An individual whose sole income has been subjected to final withholding tax
d A minimum wage earner (MWE)

Where to File Return

a An authorized agent bank (AAB)
b Revenue District Officer, Collection Agent, or duly authorized Treasurer of the city or municipality in w
in the Philippines, or if there be no legal residence or place of business in the Philippines, with the Offic

BIR FORMS
https://www.bir.gov.ph/index.php/bir-forms.html

Title
a Quarterly Income Tax Return For Individuals, Estates and Trusts

b Annual Income Tax Return For Individuals (including MIXED Income Earner), Estates and Trusts

c Certificate of Compensation Payment / Tax Withheld For Compensation Payment

With or Without Tax Withheld

d Annual Income Tax Return for Corporation, Partnership and Other Non-Individual Taxpayer
Subject Only to REGULAR Income Tax Rate

e Estate Tax Return

f Monthly Value-Added Tax Declaration

 g Quarterly Value-Added Tax Return

GIVEN

1 INDIVIDUAL - Mixed Income Earners

BIR Form 1701Q (Quarterly Income Tax Return For Individuals, Estates and Trusts)
BIR Form 2316 (Certificate of Compensation Payment / Tax Withheld For Compensation Payment With o

Employment
Compensation income 1,200,000
13th month pay and other benefi 130,000
CWT on compensation income 262,000

Business
Sales 2,500,000
Cost of sales 1,500,000
Business expenses 700,000

Income from employment

Gross compensation income 1,330,000
Exempt 90,000
Taxable compensation income 1,240,000
Tax table:
1st P800,000 130,000
30% in excess of P800,000 132,000
Tax due 262,000

Income from business

Gross sales 2,500,000
8% income tax rate option 8%
Tax due 200,000

Total basic income tax 462,000

Tax withheld 262,000
Tax payable/still due 200,000

2 CORPORATION
BIR Form 1702 (Annual Income Tax Return for Corporation, Partnership and Other Non-Individual Taxpa

Sales
 Gross sales 10,000,000
Cost of sales 6,000,000

Expenses
Salaries and wages 1,200,000
Rentals 500,000
Depreciation 200,000
Bad debts 50,000
Interest 50,000
Total 2,000,000

RCIT
Gross sales 10,000,000
Cost of sales 6,000,000
Gross income 4,000,000
Allowable deductions 2,000,000
Taxable income 2,000,000
Tax rate 25%
RCIT 500,000

MCIT 80,000 (2% or 1%)

Tax due: RCIT (higher) 500,000

3 ESTATE TAX
BIR Form 1801 (Estate Tax Return)

Given Exclusive Conjugal

Real properties 15,000,000 20,000,000
Personal properties 4,000,000 6,000,000
Ordinary deductions 1,000,000 3,000,000

Computation Exclusive Conjugal Total

Gross estate
Real properties 15,000,000 20,000,000 35,000,000
Personal properties 4,000,000 6,000,000 10,000,000
Total 19,000,000 26,000,000 45,000,000
Ordinary deductions 1,000,000 3,000,000 4,000,000
Gross estate after ordinary deduc 18,000,000 23,000,000 41,000,000

Special deductions:
 Standard deduction 5,000,000
Family home 10,000,000
Share of surviving spouse 11,500,000
Total 26,500,000

Taxable estate 14,500,000

Tax rate 6%
Estate tax due 870,000

4 VAT
BIR Form 2550Q (Quarterly Value-Added Tax Return)

Sales Q1 Totals
Vatable sales to private entities 1,000,000
Exempt sales 500,000
Sales to the government 300,000
Export sales 200,000
Total 2,000,000

Purchases of goods from VAT s

Sales to private entities 500,000
Exempt sales 150,000
Sales to the government 100,000
Export sales 50,000
Total 800,000

Purchase of depreciable capital goods 3,000,000 7-year life

Excess input tax credit from previous quarter 10,000

Monthly VAT payments - previous 2 months 30,000
 rom sources within the Philippines (NRC)
es within the Philippines (RA)
exercise of profession in the Philippines (NRA-ETB)

amount, from only one employer in the Philippines for the calendar year,
ployer (substituted filing)

urer of the city or municipality in which such person has his legal residence or principal place of business
ess in the Philippines, with the Office of the Commissioner.

Form Filing Date

1701Q On or before May 15 of the current taxable year
On or before August 15 of the current taxable year
On or before November 15 of the current taxable year

e Earner), Estates and Trusts 1701 On or before April 15 of each year covering income for the preceding taxable year.

ation Payment 2316 On or before January 31 of the succeeding year

Non-Individual Taxpayer 1702 On or before 15th day of the 4th month following close of the taxpayer's taxable year.

1801 Within one (1) year from the decedent's death

2550M Not later than the 20th day following the close of the month
 2550Q Not later than the 25th day following the close of each taxable quarter

es and Trusts)
d For Compensation Payment With or Without Tax Withheld)

hip and Other Non-Individual Taxpayer Subject Only to REGULAR Income Tax Rate)
18000
ding taxable year.

payer's taxable year.

CREATE vs. TRAIN
Summary
(including provisions from Bayanihan Act)
The CREATE law is officially effective on April 11, 2021

GENERAL PRINCIPLES

INDIVIDUALS
1 Final Withholding Tax on PCSO Winnings for N

2 Other Percentage Taxes (OPT)

CORPORATIONS
1 RCIT
DC
RFC
NRFC

2 MCIT

3 IAET

4 Interest on foreign currency deposit under FCDS

RFC

5 CGT on sale of unlisted shares

RFC and NRFC

6 Dividends received by DC from FC

7 Proprietary educational institutions and nonpr

8 ROHQ

9 OBU

PARTNERSHIP, CO-OWNERSHIP, JOINT VENTURE

For taxable partnerships, co-ownership, JV
1 RCIT
 2 MCIT

ESTATE AND TRUST

GROSS INCOME

DEDUCTIONS
1 Nondeductible interest expense

2 NOLCO incurred during taxable years 2020 and

3 Labor training expenses

CAPITAL ASSETS

INSTALLMENT REPORTING

FRINGE BENEFITS

DONOR'S TAX

ESTATE TAX

VALUE-ADDED TAX (VAT)

1 Exemption on sale of

2 Exemption on drugs and medicines

3 Expanded exemption for COVID-19

OTHER PECENTAGE TAXES (OPT)

 1 Other Percentage Taxes (OPT) unde Sec. 116

2 Shares of stock sold through IPO

EXCISE TAX

DST

LOCAL TAXES

PREFERENTIAL TAXES

REMEDIES

FILING
 TRAIN CREATE
same same

Exempt 20%

3% 1% from July 1, 2020 to June 30, 2023

30% 25% / 20% starting July 1, 2020

30% 25% starting July 1, 2020
30% FWT 25% FWT starting Jan. 1, 2021

2% 1% from July 1, 2020 to June 30, 2023

10% on IA income repealed

sit under FCDS

7.5% 15%

5% on first P100,000 15%

10% on excess

ordinary income exempt if requirements under Sec. 27D are met

10% 1% from July 1, 2020 to June 30, 2023

10% 25% starting Jan. 1, 2022

Exempt / 10% 25%

T VENTURE

30% 25%
 2% 1%

same same

Tax exempt income under RA 11494 (Bayanihan Act II)

33% of interest income 20% of interest income except MSMEs

carried over for 3 years carried over for 5 years

none additional deduction of one-half (1/2) of the value of labor

same same

same same

same same

same same

same same

a. Books a. Books
b. Newspaper b. Newspaper
c. Magazine review or bulletin c. Magazine
d. Journal
e. Review bulletin, or
f. Any such educational reading material covered by the UNESCO

Exemption only applies to the sale of physical co Exemption includes the digital or electronic format

Diabetes, high cholesterol and hypertension Diabetes, high cholesterol, hyptertension, cancer, mental illness, t

no provision Capital equipment, its spare parts and raw materials, necessary fo
All drugs, vaccines and medical devices specifically prescribed an
Drugs for the treatment of COVID- 19 approved by the food and d
 3% 1% from July 1, 2020 to June 30, 2023

4%, 2%, 1% Repealed under Bayanihan Act II effective September 15, 2020

same same

same same

same same

same same

same same

same same
 to June 30, 2023

to June 30, 2023

nder Sec. 27D are met

to June 30, 2023

ayanihan Act II)

2) of the value of labor training expenses (limit: 10% of direct labor cost)

covered by the UNESCO agreement on the importation of educational, scientific, and cultural materials

n, cancer, mental illness, tuberculosis, kidney diseases

w materials, necessary for the production of personal protective equipment components

specifically prescribed and directly, used for the treatment of COVID-19
proved by the food and drug administration (FDA) for use in clinical trials
to June 30, 2023

ive September 15, 2020