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Taxes - Accounting

Philippines

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Tax Rates | Accounting Rules

Tax Rates

Consumption taxes

Nature of the tax

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: thePhilippines and Tunisia are bound by a double taxation treaty: no

Signed	Ratified	Enforced

Pour aller plus loin dans vos recherches nous vous proposons de connaître les taxes locales connaître les taxes locales qui s'appliquent à votre produit.

Sources of fiscal information

Tax Authorities: Bureau of Internal Revenue; Bureau of Customs
Other domestic resources: Philippine Information Agency

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

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

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

Accounting Times
Accountants Journal