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COUNTRY TRADING PROFILES
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Taxes - Accounting
Tax Rates |
Accounting Rules
Tax Rates
Consumption taxes
- Nature of the tax
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VAT (Value Added Tax)
- Tax rate
- 12%
- Reduced tax rate
- Zero-rate for exports and several items.
- Other consumption taxes
- In addition to real estate taxes, local governments impose tax on nearly all businesses operating within their jurisdictions. Rates vary but are usually a small percentage of gross annual sales. Excise taxes are levied on wines and spirits, beer, cigarettes and tobacco products, lubricating oils and grease (including similar preparations and additives), processed gas, waxes, denatured alcohol, cinematographic films, saccharine, coal and coke, cars, non-essential goods (jewellery, yachts and other pleasure vessels), mineral products, naphtha and other similar products of distillation, asphalt, and petroleum and other fuel products.
For additional information access the Ministry of Finance website.
Corporate taxes
Tax rate
| Income Tax |
The rate is 30% on net income but there are some preferential rates and exemptions. Preferential rates vary from 2 to 20%. Regional headquarters are taxed at 10%. |
| Capital Gains Tax |
These are taxed like income, except those from selling shares in companies (5-10% if not exchanged on the Stock Exchange; half of 1% of the selling price otherwise), and those from selling real estate not used for business purposes (6%). |
| Deductions on dividends |
Deduction of 15% on dividends paid by the Philippine company if the non resident's country
allows 20% tax credit, otherwise there is a deduction of 35%. |
| Deductions on interest |
Deduction of 20% |
| Deductions on royalties |
Deduction of 20% |
| Deductions on transfers from subsidiaries |
Deduction of 15% of profits after tax paid by the subsidiary to the head office. |
| Property Tax |
Varies according to the location, and does not exceed 3% of the estimated value. |
| Social contributions |
Vary according to wages, maximum 1 090 PHP. |
| Stamp duties |
Vary according to the type of document. |
| Tax on transfers of property |
From 2 to 15%. |
| Other |
Tax of 3 to 7% for certain activities such as banking, insurance, finance and transport. |
- Tax rate for foreign companies
- VAT is applied in the same way to residents and non residents. For additional information, consult the Bureau of Internal Revenue.
- Capital gains taxation
- In the Philippines, capital gains are taxed between 5% and 10% (for unlisted companies securities). Besides, capital gains on property, as for private individuals, is taxed at 6%.
- Main allowable deductions and tax credit
- The Omnibus Investment Code of 1987 and the Special Economic Zone Act of 1995 provide for fiscal incentives such as a suspension of income tax. For any additional information access the PKF Tax guide on the Philippines.
- Other corporate taxes
- Tax of 3 to 7% on companies in certain sectors (banking, insurance, finance, transport). Various duties apply at various rates depending on the type of document.
Individual taxes
Tax rate
| Income Tax |
Rates vary between 0 and 32% (higher rate for revenues over PHP 500 000) according to the income of natural persons. |
| From PHP 0 to 10,000 |
5% |
| From PHP 10,000 to 30,000 |
10% |
| From PHP 30,000 to 70,000 |
15% |
| From PHP 70,000 to 140,000 |
20% |
| From PHP 140,000 to 250,000 |
25% |
| From PHP 250,000 to 500,000 |
30% |
| Over PHP 500,000 |
32% |
| Tax on capital income |
6% (real estate); 5% up to 100 000 PHP then 10% (earnings from shares not exchanged on the Stock Exchange); 1% of the sale price (earnings from shares exchanged on the Stock Exchange). |
| Property Tax |
Varies according to the location, less than 3% |
| Tax on inheritance and property |
Between 5 and 20% |
| Social contributions |
Vary from 33.30 to 500 PHP, according to the salary |
- Allowable deductions and tax credit
- Taxpayers benefit in the Philippines from various deductions according to their status (marriage, child).
Since 2011, Taxpayers benefit from an income tax credit of 5% for their contributions to a Retirement Account.
- Special expatriate tax regime
- There is no special tax regime for expatriates. Non resident foreigners not involved in business are taxed at a preferential rate of 25% of their Philippine income.
Double taxation treaties
- Countries with whom a double taxation treaty have been signed
- Bureau of Internal Revenue
- Withholding taxes
- Dividends: 15-30%, Interest: 20%, Royalties: 20-30%
- Bilateral agreement
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 We can indicate you which local taxes are applied to your product.
Accounting Rules
- Tax year
- The fiscal year begins on 1 January and ends on 31 December of the same year.
- Accounting standards
- PAS (Philippine Accounting Standards)
- Accounting regulation bodies
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Board of Accountancy
- Accounting reports
- The general balance sheet and/or the declaration written under oath of the non holding of an annual meeting, and the financial statements.
- Publication requirements
- Companies must publish an annual financial report and submit it to the Securities and Exchange Commission (SEC).
- Professional accountancy bodies
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PICPA
- Certification and auditing
- The accounting framework was established by the Accounting Standards Council (ASC), created by the PICPA in November 1981, in order to establish and improve the general and analytical accounting standards.
The Institute of Internal Auditors – Philippines is the primary association of internal auditors in the Philippines.
- Accounting news
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Accounting Times
Accountants Journal
© Export Entreprises SA, all rights reserved.
Last updates: May 2012
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