RC/NRC/RA

NRA-ETB NRA-NETB
INCOME (Sec.24-A: general)
(Sec. 25-A) (Sec. 25-B)
(Sec.24-B: passive)
A. INTEREST INCOME ->DERIVED FROM: (RR 14-2012)

1. GOV'T Debt Instuments & Securities FWT 20% FWT 25%

1. EXEMPT FROM INCOME TAX if conditions are present.

2. Absent any of the condi: FWT 20%

2. LONG-TERM Deposit or Investment Certificates FWT 25%
3. If retired before 5th year: (based on holding period)
a. 4 years to less than 5 years - 5%
b. 3 years to less than 4 years - 12%
c. Less than 3 years - 20%

3. Currency Bank Deposit and Yield or any other Monetary

Benefit from Deposit Substitutes and from Trust Funds FWT 20% FWT 25%
and Similar Arrangements
4. Depository Bank under the Expanded Foreign Currency
1. FWT 7.5%
Deposit System EXEMPT FROM
2. EXEMPT if NRC
-- 24(B)(1), 27(D)(1), 27(D)(3), 28(A)(7)(a), and 28(A)(7) INCOME TAX
3. 50% - exempt, 50% - FWT 7.5% (N3)
(b)
RC/RA - INCOME TAX
5. from Offshore Banking Units - Section 28(A)(4) EXEMPT FROM INCOME TAX
NRC - EXEMPT FROM INCOME TAX

6. All Other Instruments NOT within the coverage of

CWT 20%
"deposit substitutes"

7. Other Interest Income INCOME TAX (5%-32%) FT 20% FT 25%

B. CAPITAL GAINS
1. REAL PROPERTY
from the sale, exchange, or other disposition of real
property located in the Philippines:
--Sec. 24(D)(1) or 25(A)(3)
--Sec. 24(A)(1)(c) or 25 (A)(1)
--Sec. 25(B), in relation to Sec. 24(D)(1)
--Sec. 6(E)
from the sale, exchange, or other disposition of REAL
PROPERTY located OUTSIDE the Philippines:
--Sec. 23(B), (D) and (F)
1. classified as capital assets:
a. CGT 6% -- BASIS: GSP or current FMV
b. OPTION: CGT 6% OR IT 5%-32% -- if BUYER is gov't, poitical subd,
agencies & instrumentalities, GOCCs CGT 6% -- BASIS: GSP or
current FMV
2. classified as ORDINARY assets: AND
a. expanded CWT : BASIS: GSP or current FMV
b. ordinary income tax --BASIS: Taxable NET Income
--RC: INCOME TAX -- 30%
EXEMPT EXEMPT
--NRC, RA -- EXEMPT
 RC/NRC/RA
NRA-ETB NRA-NETB
INCOME (Sec.24-A: general)
(Sec. 25-A) (Sec. 25-B)
(Sec.24-B: passive)
2. SHARES OF STOCK

2A. sale, barter, exchange or other disposition of Shares

stock transaction tax : 1/2 of 1 %
of Stock Listed and Traded through the Local Stock
Exchange other than the sale by a dealer of securities
BASE: Gross selling price or gross value in money assumed and paid by the seller or transferor through the
remittance of the stock transaction tax by the seller or transferors broker
--includes sale SUBSEQUENT to IPO

2B. sale, barter, exchange or other disposition through Proportion of Disposed Shares to Outstanding Shares - Tax Rate
IPO of shares of stock in closely held corporations: Up to 25% ..4%
in accordance with the PROPORTION of : Over 25% but not over 33 1/3% ....2%
shares of stock sold, bartered, exchanged or disposed : Over 33 1/3% ......1%
TO THE total outstanding shares of stock after the listing
in the Local Stock Exchange BASE: Gross selling price or gross value in money

Amount of Capital Gain: Tax Rate

2C. sale, barter or exchange of shares of stock not traded Not over Php 100,000.. 5%
through the Local Stock Exchange pursuant to Secs. On any amount in excess of Php 100,000 10%
24(C), 25(A)(3), 25(B), 27(D)(2), 28(A)(7)(c) , 28(b)(5)( c)
BASE: NET capital gains realized during the taxable year
2D. TAX-FREE exchanges
2E. Shares of stock Becoming Wothless
2F. Losses from Wash Sale of Shares of Stock
2G. Surrender of Shares Upon dissolution of corporation
INCOME TAX (5%-32%)
AND Liquidation of its assets and liabilities
2H. Shares redeemed for cancellation or retirement 1. Preferred SOS: Capital Gain (Loss) Applies BUT subject to INCOME TAX RATES
2. Treasury SOS: Capital Gain (Loss) Applies subj to:
a. Stock Transaction Tax traded in LSE - 1/2 or 1%
b. Capital Gains Tax Not traded in LSE - 5%-10%
2I. SOS of Foreign Corp EXEMPT
 RC/NRC/RA
NRA-ETB NRA-NETB
INCOME (Sec.24-A: general)
(Sec. 25-A) (Sec. 25-B)
(Sec.24-B: passive)
C. DIVIDEND INCOME FT 25%

1. From DC, joint stock company, insurance or mutual

fund companies and regional operating headquarters of
multinational companies, or on the share of an individual
in the distributable net income after tax of a partnership
FWT 10% FT 20%
(except GPP) of which he is a partner, or on the share of
an individual in the net income after tax of an association,
a joint account, or a joint venture or consortium taxable as
a corporation of which he is a member or co-venturer:

2. From Foreign Corp EXEMPT

D. ROYALTIES
1. Books, Literary works and Musical Composition FWT 10%
FT 25%
2. Other Royalties i.e. franchise, patent FWT 20%

E. PRIZES - result of an effort

1. Amount UP TO 10K INCOME TAX (5%-32%)
2. EXCEEDING 10K FWT 20%

F. WINNINGS - result of a transaction where outcome

depends upon chance
1. Other Winnings FWT 20%
2. PCS and Lotto Winnings EXEMPT

G. GROSS INCOME FT 25%

1. Cinematographic Films & Similar Works FT 25%

H. TAXABLE NET INCOME INCOME TAX (5%-32%)

1. Compensation Income RC - w/in & w/o
2. Business/Professional Income NRC, RA, NRA - w/in ONLY
3. Sale/Exchange of Prop not subject to CGT
4. Incidental Sources i.e. interest/stock dividend
--personal exemption BASED on
--subject to personal exemption of 50K --no personal exemptions
RECIPROCITY
 NOTES

-Original issuance subj to DST

-mere issuance is DEEEMED "Deposit Substitutes"

provided the ff. conditions are present:

1. Depositor or investor is RC, NRC, RA or NRA-ETB in the
Philippines;
2. LTDI certificates be under the name of the individual and not OF
the corporation or the bank or the trust department/unit of the bank;
3. LTDI be in the form of savings, common or individual trust funds,
deposit substitutes, investment management accounts and other
investments evidenced by certificates
4. LTDI be issued by banks only and not by other financial
institutions;
5. LTDI have a maturity period of not less than 5years;
6. LTDI be in denominations of P10K and other denominations as
may be prescribed by the BSP;
7. LTDI NOT be terminated by the investor before 5th year (if
before 5th year: 5%, 12%, 20%)
8. except those specifically exempted by law or regulations, any
other income such as gains from trading, foreign exchange gain
shall not be covered by income tax exemption.

3. If a bank account is jointly in the name of NRC (i.e. OCW or

Filipino seaman) and PH resident spouse/dependent

unless otherwise provided by law or regulations

(Sections 2.57.3, 2.57.4 and 2.58 of Revenue Regulations No. 2-
98)
Example: Interest from A/R
** include estate and trust
current FMV: HIGHER
1) FMV of RP located in each zone or area by CIR after
consultation with competent appraisers both from the private &
public sectors;
2) the fair market value as shown in the schedule of values of the
Provincial and City Assessors
3) FMV as determined by Independent Appraiser
 NOTES

PERSONS NOT LIABLE TO THE TAX. The taxes imposed

herein shall not apply to the following:
A. Dealers in securities;
B. Investor in shares of stock in a mutual fund company, as
defined in Section 22 (BB) of the Tax Code, as amended, and
Sec. 2(s) of these Regulations, in connection with the gains
realized by said investor upon redemption of said shares of stock
in a mutual fund company ; and
C. All other persons, whether natural or juridical, who are
specifically exempt from national internal revenue taxes under
existing investment incentives and other special laws.

Determination Of The Persons Liable To Pay The Tax.

Primary Offering: paid by the issuer corporation with respect to
the Shares of Stock corresponding to the Primary Offering.
Secondary Offering: paid by the selling shareholder w/ respect to
the Shares of Stock corresponding to the Secondary Offering.

see Notes re determination of net capital gains

NOTES
 DC RFC NRFC
INCOME
(Sec.27) (Sec.28-A) (Sec.28-B)
A. INTEREST INCOME ->DERIVED FROM: (RR 14-2012)

1. GOV'T Debt Instuments & Securities FWT 20% FWT 30%

1. CORPORATE INCOME TAX 30%

2. Absent any of the condi: FWT 20%
2. LONG-TERM Deposit or Investment Certificates -- if interest on deposits and yield or any other FWT 30%
monetary benefits from deposit substitutes, trust
funds and similar arrangement and royalties

3. Currency Bank Deposit and Yield or any other Monetary

1. FWT 30%
Benefit from Deposit Substitutes and from Trust Funds and FWT 20%
2. FWT 20% if from foreign loans
Similar Arrangements from sources w/in PH
 1. FWT 7.5%
4. Depository Bank under the Expanded Foreign Currency
2. FT 10% if from foreign currency loan granted to
Deposit System -- 24(B)(1), 27(D)(1), 27(D)(3), 28(A)(7)(a), EXEMPT FROM INCOME TAX
residents other than OBU in the PH OR other
and 28(A)(7)(b)
depository banks under EFCDS

EXEMPT FROM INCOME TAX

5. from Offshore Banking Units Section 28(A)(4) EXEMPT: Income derived by offshore
banking units authorized by BSP, from
foreign currency transactions

6. All Other Instruments not within the coverage of "deposit

CWT 20% CWT 20% CWT 20%
substitutes"
7. Other Interest Income INCOME TAX (30%)
 DC RFC NRFC
INCOME
(Sec.27) (Sec.28-A) (Sec.28-B)
B. CAPITAL GAINS
1. REAL PROPERTY

1. Land & bldgs classified

as capital assets:
a. CGT 6%
from the sale, exchange, or other disposition of REAL
-- BASIS: GSP or current
PROPERTY located in the Philippines:
FMV
--Sec. 27(D)(5)
--Sec. 2.57.2(J) of Rev. Regs. No. 2-98 1. expanded CWT
2. OTHER REAL PROP
--Sec. 27(A) and
classified as capital assets:
--Sec. 27(E) 2. NCIT/MCIT
expanded CWT AND FWT 30%
--Sec. 6(E)
NCIT/MCIT
--BASIS: Taxable
--BASIS: Taxable NET
--Sec. 28(A)(1) NET Income
Income
--Sec. 28(A)(2)
3. classified as ORDINARY
--Sec. 28(B)(1)
assets: expanded CWT
AND NCIT/MCIT
--BASIS: TNI

from the sale, exchange, or other disposition of REAL

PROPERTY located OUTSIDE the Philippines: INCOME TAX -- 30% EXEMPT EXEMPT
--Sec. 23(B), (D) and (F)

2. SHARES OF STOCK
 stock transaction tax : 1/2 of 1 %
2A. sale, barter, exchange or other disposition of Shares of
Stock Listed and Traded through the Local Stock Exchange
BASE: Gross selling price or gross value in money assumed and paid by the seller or transferor
other than the sale by a dealer of securities
through the remittance of the stock transaction tax by the seller or transferors broker

2B. sale, barter, exchange or other disposition through Proportion of Disposed Shares to Outstanding Shares - Tax Rate
initial public offering (IPO) of shares of stock in closely held Up to 25% ..4%
corporations: in accordance with the proportion of shares of Over 25% but not over 33 1/3% ....2%
stock sold, bartered, exchanged or otherwise disposed to Over 33 1/3% ......1%
the total outstanding shares of stock after the listing in the
Local Stock Exchange BASE: Gross selling price or gross value in money

2C. sale, barter or exchange of shares of stock not traded Amount of Capital Gain: Tax Rate
through the Local Stock Exchange held as CA pursuant to Not over Php 100,000.. 5%
Secs. 24(C), 25(A)(3), 25(B), 27(D)(2), 28(A)(7)(c) , 28(b) On any amount in excess of Php 100,000 10%
(5)( c) BASE: NET capital gains realized during the taxable year

2D. SOS of Foreign Corp EXEMPT EXEMPT EXEMPT

C. DIVIDEND INCOME
1. from DC (intercompany dividend) EXEMPT EXEMPT FT 15% if w/ Creditable Tax Reciprocity

D. ROYALTIES
1. Other Royalties i.e. franchise FWT 20%

E. TAXABLE INCOME
1. WITHIN the PH NCIT 30% OR MCIT 2% NT 30% or MCIT 2% FT 30% on GROSS INCOME
2. OUTSIDE the PH (4th Year of Operations)
 NOTES

-Original issuance subj to DST

-mere issuance is DEEEMED "Deposit Substitutes"

provided the ff. conditions are present:

1. Depositor or investor is RC, NRC, RA or NRA-ETB in the Philippines;
2. LTDI certificates be under the name of the individual and not OF the
corporation or the bank or the trust department/unit of the bank;
3. LTDI be in the form of savings, common or individual trust funds, deposit
substitutes, investment management accounts and other investments evidenced
by certificates
4. LTDI be issued by banks only and not by other financial institutions;
5. LTDI have a maturity period of not less than 5years;
6. LTDI be in denominations of P10K and other denominations as may be
prescribed by the BSP;
7. LTDI NOT be terminated by the investor before 5th year (if before 5th year:
5%, 12%, 20%)
8. except those specifically exempted by law or regulations, any other income
such as gains from trading, foreign exchange gain shall not be covered by
income tax exemption.
1.EXEMPT FROM ALL TAXES: income derived BY A DEPOSITORY BANK
under EFCDS from foreign currency transactions with NRs, offshore banking
units in the Philippines, local commercial banks including branches of foreign
banks that may be authorized by the Bangko Sentral ng Pilipinas (BSP) to
transact business with foreign currency deposit system units and other depository
banks under the expanded foreign currency deposit system shall be exempt from
all taxes
--except:
a. net income from such transactions specified by the Secretary of Finance, upon
recommendation by the Monetary Board to be subject to the regular income
tax
b. Interest income from foreign currency loans granted under said expanded
system to residents other than offshore banking units in the Philippines or other
depository banks under the expanded system or local commercial banks,
including local branches of foreign banks that may be authorized by the BSP to
transact business with offshore banking unitsshall be subject to a final tax at
10%

Income derived by offshore banking units authorized by BSP, from foreign

currency transactions with NRs, other OBUs, local commercial banks, including
branches of Foreign banks that may be authorized by BSP to transact business
with OBU shall be exempt from all taxes except net income from such
transactions as may be specified by the Secretary of Finance, upon
recommendation of the Monetary Board which shall be subject to the regular
income tax payable by banks;

unless otherwise provided by law or regulations

(Sections 2.57.3, 2.57.4 and 2.58 of Revenue Regulations No. 2-98)
Example: Income from Accounts Receivable
NOTES
PERSONS NOT LIABLE TO THE TAX. The taxes imposed herein shall not
apply to the following:
A. Dealers in securities;
B. Investor in shares of stock in a mutual fund company, as defined in
Section 22 (BB) of the Tax Code, as amended, and Sec. 2(s) of these
Regulations, in connection with the gains realized by said investor upon
redemption of said shares of stock in a mutual fund company ; and
C. All other persons, whether natural or juridical, who are specifically exempt
from national internal revenue taxes under existing investment incentives and
other special laws.

Determination Of The Persons Liable To Pay The Tax.

Primary Offering: paid by the issuer corporation with respect to the Shares of
Stock corresponding to the Primary Offering.
Secondary Offering: paid by the selling shareholder(s) with respect to the Shares
of Stock corresponding to the Secondary Offering.

2E. Shares of stock Becoming Wothless

2F. Losses from Wash Sale of Shares of Stock
2G. Surrender of Shares Upon dissolution of corporation AND
Liquidation of its assets and liabilities
2H. Shares redeemed for cancellation or retirement
2I. TAX-FREE exchanges
 TAXPAYER TAX BASE TAX RATE
A. DC - no MCIT
1. Proprietary Educational Institution
Taxable Income from ALL sources 10%
and Non-Profit Hospital

2. Proprietary Educational Institution

and Non-Profit Hospital
Taxable Income from ALL sources 30%
-- 50% of TOTAL GI-ALL sources
= unrelated T/B/activity

3. GOCCs, Agencies &

PH Taxable Net Income 30%
Instrumentalities

B. RFC

1. Resident International Carrier Gross Philippine Billings 2.5%

General Rule:
GR: EXEMPT
2. Offshore Banking Units
Interest Income from Foreign Currency Loans Others: FT 10%
granted to NR

Total Profit applied or earmarked for remittance

3. Branch Remittance to Head Office w/o any deduction for the tax component 15%
EXCEPT those activities registerd w/ PEZA

4. Regional Operating Headquarters of

PH Taxable Net Income 10%
Multinational Corporation

5. Regional Headquarters of
PH Taxable Net Income EXEMPT
Multinational Corporation

C. NRFC
1. NR Cinematographic Film Owner,
Gross Income from PH 25%
Lessor or Distributor

2. NR Owner or Lessor of VESSEL Gross Rentals, Lease and Charter Fees FROM
4.5%
chartered by PH nationals PH

3. NR Lessor of AIRCRAFT, Gross Rentals, Charges & Other Fees From PH

7.5%
MACHINERY & OTHER EQUIPMENT sources
 NOTES

* if stock corp - 10%

* if NON-stock corp - EXEMPT

* PREDOMINANCE TEST:

EXCEPT: GSIS, SSS, PHIC, LWD, PCSO

** Tax Rate depends on tax of corp/assoc of the
similar business, industry or activity

* International Air Carrier

* International Shipping

-- a branch established inPH by multinat'l

companies
-- engaged in any of the ff. services:
general administration and planning;
business planning and coordination;
sourcing and procurement of raw materials and
components;
corporate finance advisory services;
marketing control and sales promotion;
training and personnel management;
logistic services;
research and development services and
product development;
technical support and maintenance;
data processing and communications;
business development

* No income from PH
* Acts as supervisory, communications and
coordinationg center for it affiliates, subsidiaries
or branches on the Asia-Pacific Region and
other foreign markets

* only from charter/lease of vessels TO

FILIPINO ciizens/corp approved by MARINA
 FRINGE BENEFITS QUALIFICATIONS TAXABLE - FBT

1. HOUSING

2. EXPENSE ACCOUNT

3. VEHICLE OF ANY KIND

4. HOUSEHOLD PERSONNEL
--less than market rate
5. INTEREST ON LOAN --EXTENT: difference bet. mkt rate
and actual rate granted
--borne by YER for YEE
6.MEMBERSHIP FEES, DUES
--in social & athletic clubs or other
& OTHER EXPENSES
similar organizations

7. EXPENSES FOR FOREIGN

TRAVEL
8. HOLIDAY AND VACATION
EXPENSES
9. EDUCATIONAL
--to YEE or dependents
ASSISTANCE
10. LIFE OR HEALTH & OTHER
NON-LIFE INSURANCE
--in excess of what the law allows
PREMIUM OR SIMILAR
AMOUNTS

NOTES:
1. RATIONALE: FB given to YEEs is a form of incentive to encourage YEEs' productivity & loyalty to YER
2. FBT is a FT on YEE's income to be withheld by YER
3 .TAX BASE: Grossed-Up Monetary Value of FB furnished to YEEs, EXCEPT RANK & FILE YEEs
4. TAX RATE: Residents 32%
NRA-NETB 25%
OBUs 15%

5. Grosssed-Up Monetary Value of the FB is the FRINGE BENEFITS EXPENSE of YER

FB Expense 100%
Cash (or other approp account)
WTax Payable-FBT

6. Valuation:
a. if FB is granted in money or
Amount Granted/Paid For
directly paid to YER
b. if FB is granted by YER in FMV of property
property other than money & 1. Provincial or City Assessor
ownership is transferred to YEE 2. BIR Zonal Value
c. if FB is granted by YER in
property other than money &
Depreciated Value of Property
ownership is NOT transferred to
YEE
 NON-TAXABLE YEE
(1) Fringe benefits which are
authorized and exempted from tax R&F
under special laws;
(2) Contributions of the employer for
the benefit of the employee to Supervisory &
retirement, insurance and Managerial
hospitalization benefit plans;
(3) Benefits given to the rank and file
employees, WON granted under a
collective bargaining agreement
(4) De minimis benefits EXEMPT

(5) FB granted to Rank & File YEEs subject to Compensation Income

(6) Benefits privided for the

convenience of the YER

(7) Allowances in FIXED AMOUNTS &

REGULARLY RECEIVED by YEE as subject to Compensation Income
part of compensation income

loyalty to YER

68%
75%
25%

68%
32%
 FB Compensation

WTAX-Compensation WTAX-Compensation

FBTax WTAX-Compensation
BENEFITS QUALIFICATIONS
LIMIT
 GROSS INCOME INCLUSION EXCLUSION / EXEMPTION
INCOME
1. COMPENSATION
2. BUSINESS or PROFESSIONAL
3. GAINS DERIVED FROM
DEALINGS IN PROPERTY
4. INTEREST INCOME
5. RENT INCOME
6. ROYALTIES INCOME
7. DIVIDEND INCOME
8. ANNUITIES
9. PRIZES & WINNINGS
10. PENSION
11. PARTNER'S DISTRRIBUTIVE
SHARE FROM NET INCOME
OF GPP
12. OTHER SOURCES
13. EXCLUSIONS
A. LIFE INSURANCE
B. PREMIUM RETURNED
C. GIFTS, BEQUESTS
and DEVISES
D. COMPENSATION FOR
INJURIES / SICKNESS
E. INCOME EXEMPT
UNDER TREATY
F. MISCELLANEOUS ITEMS
EXCLUSION / EXEMPTION
SUBJECT TAX RATIONALE