Under the Phil Tax Code, the individuals subject to
Philippine taxation are:
a. Resident Citizens
b. Non-resident Citizens
c. Resident Aliens
d. Non-resident Aliens Taxation of
Resident Citizens
A Philippine citizen and resident is taxed on all income
derived from sources within and without the Philippines.
The income tax is imposed on his/her taxable
income (that is, gross income less allowable deductions
and/or personal exemptions) computed in accordance
with the following schedule:
Not over P10,000 5%
Over P10,000 P500+
Over P30,000 but not over P2,500+
P70,000
Over P70,000 but not over P8,500 +
P140,000
Over P140,000 but not over P22,500 +
P250,000
Over P250,000 but not over P50,000 +
P500,000
Over P500,000 P125,000 +
However, the following incomes shall be subject to a
final tax (on the gross amount) as follows:
a. Interests from any currency bank deposit and
yield or any other monetary benefit from deposit
substitutes and from trust funds and similar
arrangements - 20%.
However, interest income received (except if
received by a non-resident) from a depository
bank under the expanded foreign currency
deposit system shall be subject to final tax at 7
1/2% of such interest income.
Furthermore, interest income from long-term
deposit or investment in the form of savings,
common or individual trust funds, deposit
substitutes, investment management accounts
and other investments evidenced by certificates
in such form prescribed by the Bangko Sentral
ng Pilipinas shall be exempt, provided that
should the holder of the certificate pre-terminate
the deposit or investment before the 5th year, a
final tax shall be imposed on the entire income
and shall be deducted and withheld by the
depository bank from the proceeds of the long-
term deposit or investment certificate based on
the remaining maturity thereof: 4 years to less
than 5 years - 5%; 3 years to less than 4 years -
12%; and less than 3 years - 20%.
b. Royalties - 20%.
However, royalties on books, as well as other
literary works and musical compositions, which
shall be taxed at a reduced rate of ten percent
(10%).
c. Prizes and winnings from sources within the
Philippines - 20%.
However, prizes amounting to P10,000 or less
shall be declared as part of the income subject
to the schedular tax rates.
d. Cash/and/or property dividends from a domestic
corporation or joint stock company, or insurance
or mutual fund company and regional operating
headquarter of a multinational company, or
share in the distributable net income after tax of
a partnership (except a general professional
partnership), joint account, joint venture or
consortium - 10%.
e. Capital gains from sale of shares of stock not
traded in the stock exchange - Not over
10% P100,000
of the excess
- 5%, and,over
on any amount in excess of
P10,000
P100,000 - 10%.
f. Capital Gains from Sale of Real Property located
15% inof the
thePhilippines
excess over
and classified as a capital
P30,000
asset - 6% based on the gross selling price or
current fair market value as determined by the
20% Philippine
of the excess overwhichever is higher.
tax authority,
P70,000
Taxation
25% ofof Non-Resident
the excess over Citizens
P140,000
A non-resident citizen is taxed in the same manner as a
resident
30% of citizen
the butexcess
only for over
his/her income derived from
sources within the Philippines.
P250,000
A32%citizenof ofthe
the excess overwho works and derives
Philippines
P500,000
income from abroad and whose employment thereat
requires him to be physically present abroad most of the
time during the taxable year shall be considered a non-
resident citizen. An overseas contract worker as well as
a Filipino seaman who receives compensation for
services rendered abroad as a member of the
complement of a vessel engaged exclusively in
international trade, are considered non-resident citizens.
A citizen who has been previously considered as a
nonresident citizen and who arrives in the Philippines at
any time during the taxable year to reside permanently in
the Philippines shall likewise be treated as a nonresident
citizen for the taxable year in which he arrives in the
Philippines with respect to his income derived from
sources abroad until the date of his arrival in the
Philippines.
Taxation of Resident Aliens
An alien who resides in the Philippines is subject to
Philippine tax on his/her income derived from
sources within the Philippines and such income is taxed
in the same manner as the income of a Philippine
citizen.
Taxation of Nonresident Alien Individuals
A non-resident alien is taxed on income derived from
sources within the Philippines.
A non-resident alien is considered either as engaged in
trade or business within the Philippines or not engaged
in trade or business within the Philippines.
A nonresident alien individual who shall come to the
Philippines and stay therein for an aggregate period of
more than one hundred eighty (180) days during any
calendar year shall be deemed a nonresident alien
engaged in business in the Philippines.
A nonresident alien individual engaged in trade or
business in the Philippines shall be subject to income tax
in the same manner as a citizen and a resident alien,
on taxable income received from all sources within the
Philippines except on the following items of income
which shall be subject to final tax (on the gross amount):
a. Cash and/or property dividends from a domestic
corporation, joint stock company, insurance or
mutual fund company or regional operating
headquarter of a multinational company, or
share in the distributable set income of a
partnership (except a general professional
partnership), joint account, joint venture taxable
as a corporation or association of which he is a
member or co-venturer - 20%.
b. Interests - 20%.
However, interest income from long-term deposit
or investment in the form of savings, common or
individual trust funds, deposit substitutes,
investment management accounts and other
investments evidenced by certificates in such
form prescribed by the Bangko Sentral ng
Pilipinas shall be exempt, provided that should
the holder of the certificate pre-terminate the
deposit or investment before the 5th year, a final
tax shall be imposed on the entire income and
shall be deducted and withheld by the
depository bank from the proceeds of the long-
term deposit or investment certificate based on
the remaining maturity thereof: 4 years to less
than 5 years - 5%; 3 years to less than 4 years -
12%; and less than three (3) years - 20%.
c. Royalties - 20%.
However, royalties on books as well as other
literary works, and royalties on musical
compositions shall be subject to a final tax of
10%.
asset - 6% based on the gross selling price or
current fair market value as determined by the
Philippine tax authority, whichever is higher.
Taxation of Certain Alien Employees
Certain alien employees are subject to 15% tax on their
gross compensation income, as follows:
1. For alien individuals employed by regional or
area headquarters and regional operating
headquarters established in the Philippines by
multinational companies, their salaries, wages,
annuities, compensation, remuneration and
other emoluments, such as honoraria and
allowances, from such regional or area
headquarters and regional operating
headquarters shall be taxed at 15% of such
gross income.
2. For alien individuals employed by offshore
banking units established in the Philippines, their
salaries, wages, annuities, compensation,
remuneration and other emoluments, such as
honoraria and allowances, from such offshore
banking units, shall be taxed at 15% of such
gross income.
3. For alien individuals employed by a foreign
service contractor or by a foreign service
subcontractor engaged in petroleum operations
in the Philippines, their salaries, wages,
annuities, compensation, remuneration and
other emoluments, such as honoraria and
allowances, received from such contractor or
subcontractor shall be taxed at 15% of such
gross income.
Any other income earned from all sources within the
Philippines by the alien employees referred to above
shall be subject to the pertinent income tax, as the case
may be, imposed under the Phil Tax Code.

d. Prizes and Other Winnings — 20%.

However, prizes amounting to P10,000 or less

shall be subject to the schedular tax rates.

e. Capital gains from sale of shares of stock not

traded in the stock exchange - Not over
P100,000 - 5%, and, on any amount in excess of
P100,000 - 10%.
f. Capital Gains from Sale of Real Property located
in the Philippines and classified as a capital
asset - 6% based on the gross selling price or
current fair market value as determined by the
Philippine tax authority, whichever is higher.

A non-resident alien not engaged in trade or business

within the Philippines shall be subject to 25% tax on the
gross amount of incomes derived from the Philippines
except the following incomes which shall be subject to
final tax:

a. Capital gains from sale of shares of stock not

traded in the stock exchange - Not over
P100,000 - 5%, and, on any amount in excess of
P100,000 - 10%.
b. Capital Gains from Sale of Real Property located
in the Philippines and classified as a capital