TAX 1 – LUMBERA
INCOME TAX TABLES
TABLE 1. SEC. 42. SOURCES OF INCOME, WHEN TAXABLE AS TO TAXPAYERS
KINDS OF TAXPAYERS
1
2
3
4
5
RC
NRC
RA
NRAETB
NRANETB
Including ex-pats4
6
7
8
DC
RFC [ETB]
BRFC [NETB]
SOURCE OF INCOME [SEC. 42]
W/IN PH
W/O PH
Individuals
YES
YES
YES1
NO
2
YES
NO
YES3
NO
5
YES
NO
Corporations
YES
YES
YES
YES
NO
NO
TABLE 2. SEC. 42. SOURCES OF INCOME, WHEN CONSIDERED AS INCOME DERIVED W/IN PH
SOURCE OF
INCOME
INTEREST
EARNINGS
[BANK DEPOSITS,
ETC.]
INTEREST
[CONTRACTUAL
OBLIGATIONS]
WITHIN
CONDITION
Issued within Philippines
WITHOUT
CONDITION
Issued outside the
Philippines
CONTROLLING
CONDITION
NOTE
DEBTOR IS RESIDENT OF
PHILIPPINES
DEBTOR IS NOT A
RESIDENT OF
PHILIPPINES
RESIDENCY OF
DEBTOR
The reason
for this [that
it depends
on the
residency of
the debtor]
is because
the payment
was derived
from within
the
Philippines.
COMPENSATION
FOR SERVICES
Service is performed in PH
Service is not
performed in PH.
REAL PROPERTY
OR TANGIBLE
PERSONAL
PROPERTY
[SALES &
ROYALTIES &
RENTALS]
DIVIDENDS
If the property is inside PH
If the property is
outside PH
WHERE
SERVICE WAS
PERFORMED
LEX REI SITUS
Issued by
Domestic
Corporation
If the dividends are
issued by a foreign
corporation, the
dividends, but 3
years before the
declaration of
dividends, the
income of the
dividends in the
Philippines composes
only less than 50% of
Issued by
Foreign
Corporation
[GR]
This also
includes 0
income in
the
Philippines.
1
Sec. 23. B & 24. A. 1. b.
2 Sec. 23. C & 24.A.1.c
3 Sec. 25. A. 1.
4 Sec. 25 [C] [D] [E]
5 Sec. 25. B.
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The logic
here is akin
to a potluck.
A
stockholder’s
income is in
proportion
to the
amount of
the amount
of stocks
TAX 1 – LUMBERA
INCOME TAX TABLES
the total income, not
all is taxable.
Mixed Income.
produced inside, but sold
outside the Philippines.
Sale of Personal
Property PRODUCED
Sale of Personal
Property PURCHASED
purchased
without/outside the
Philippines, but sold
within the Philippines
“Subalit kung tatlong
taon bago binigay ng
dividend ang kinita
ng foreign coporation
suma total ay hindi
50%, hindi lahat
taxable.“
produced outside
but sold inside the
Philippines.
purchased within the
Philippines but sold
without/outside the
Philippines
held by him
with the
income of
the
corporation.
The location
where the
personal
property was
produced.
The location
where the sale
was
consummated.
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The
difference
from
purchase,
there was an
income layer
subject to
tax created
by the
purchase of
production
materials.
TAX 1 – LUMBERA
INCOME TAX TABLES
TABLE 3. FINAL WITHHOLDING TAX, PASSIVE INCOME
[B] PASSIVE INCOME – interest, royalties, prizes/winnings, dividends:
derived from W/IN
FINAL-WITHHOLDING TAX
INTEREST
EXEMPTED
IF PRE-TERMINATED
if period is 5 yrs.
LONG TIME
and was not pre- DEPOSIT/INVESTMENT:
terminated
4Y - <5Y
5%
3Y - <4Y
12%
<3Y
20%
ROYALTIES [EXCEPT BOOKS,
20%
LITERARY WORKS, MUSICAL
COMPOSITIONS]
ROYALTIES: BOOKS,
10%
LITERARY WORKS, MUSICAL
COMPOSITIONS
PRIZES [GAMES OF CHANCE;
20%
MORE THAN 10K]
EXPANDED FOREIGN
CURRENCY DEPOSIT
CASH AND/OR PROPERTY
DIVIDENDS
15%
10%
NRAETB - 10%
NRA-NETB - 25%
LEGEND IS LOCATED AT THE LAST PAGE. USE AT YOUR OWN RISK.
JCP
NOTES
If less than or equal to
P10K, it shall be
subjected to NIT under
Column A.
PCSO not more than
10K = Exempt
TAX 1 – LUMBERA
INCOME TAX TABLES
TABLE 4. TAX RATES AS TO TAXPAYERS - INDIVIDUALS
KINDS OF
TAXPAYERS
SOURCE OF
INCOME
[SEC. 42]
W/IN W/O
PH
PH
KINDS OF TAX AND RATES
[A] ALL INCOME
[B] PASSIVE
INCOME
[C] CG from
UNTRADED
SOS
[D] CG from sale of RP
FINAL
WITHHOLDING
TAX - 15%
FROM GAINS
FWT – CGT of 6% [FMV,
ZV, GSP, whichever is
highest]
INDIVIDUALS
1
RC
YES
YES
2
NRC
YES10
NO
[1] MIE
A. Compensation
Income6 – NIT
NO
B. Business
Income/Professional
Income
3
RA
YES 11
FINAL
WITHHOLDING
TAX
[REFER TO
TABLE 3]
a. does not exceed
3M - NIT or 8%7
b. exceed 3M – NIT
with VAT
[2] [SEI/SEP]
4
5
NRAETB
NRANETB
Including
expats16
YES13
YES17
NO
NO
A. GR/GS
a. does not exceed
3M – NIT or 8%8
b. exceed 3M – NIT;
with VAT
GROSS INCOME TAX – 25%
[FINAL TAX]
if traded
XPN: RESIDENTIAL
HOME9
through
FWT – CGT of 6% [FMV,
local PSE,
ZV, GSP, whichever is
0.6 of 1% of
highest]
the GSP
XPN: RESIDENTIAL
Percentage
12
HOME
for those not
Tax [Sec. 127]
prohibited from owning
RP
If SOS is an
FWT – CGT of 6% [FMV,
ordinary asset ZV, GSP, whichever is
highest]
NIT or 8%
e.g. persons
who buy and
sell stocks;
treated like
inventory
XPN:
RESIDENTIAL HOME14
of EX-PATS15
6 Compensation arising from employee-employer relationship.
7 Id., the Choice Rule will apply to both business income and professional individually and separately.
8 TRAIN LAW - If 8% is chosen, no VAT & Percentage Tax; 8% is in gross receipts or gross sales; NIT includes expenses.
9 Sec. 24 [D].
10 Sec. 23. B & 24. A. 1. b.
11 Sec. 23. C & 24.A.1.c
12 Sec. 24 [D].
13
Sec. 25. A. 1.
14 Sec. 24 [D].
15 Sec. 25 [C] [D] [E].
16 Id.
17 Sec. 25. B.
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JCP
TAX 1 – LUMBERA
INCOME TAX TABLES
TABLE 5. TAX RATES AS TO TAXPAYERS - CORPORATIONS
KINDS OF
TAXPAYERS
1
DC
SOURCE OF
INCOME
[SEC. 42]
W/IN W/O
PH
PH
YES
YES
RFC
[ETB]
YES
NO
3
NRFC
[NETB]
YES
NO
[A] ALL
INCOME
A. 25% [CIT]
NIT for
Corporations
[B]
PASSIVE
INCOME
[C] CG
from
UNTRADED
SOS
CORPORATIONS
FWT [SEC
FWT – 15%
27. D]
on GAINS
INTEREST –
exemption
still applies
[REFER TO
TABLE 3]
B. 20% [CIT]
IF: [1] NTI
not
exceeding
P5M &
ROYALTIES,
[2]
TOTAL DIVIDENDS
ASSETS not & PRIZES &
exceeding
WINNINGS
P100M
- does not
apply
25% [CIT]
NIT for
Corporations DIVIDENDS
18
– ICDC
applies
[D] CG from
sale of RP
ICDC
FWT – CGT
of 6%
[FMV, ZV,
GSP,
whichever
is highest]
DC to DC
EXEMPTED
NOT
DC to RFC
APPLICABLE EXEMPTED
Cannot own
RP
25% GROSS INCOME TAX
IEAT
DC to
NRFC
15% FWT
DC to DC = Exempt.
DC to RFC = Exempt.
DC to NRFC = subject to 15% final tax.
RFC to DC = Taxable under Column A. 25% NIT
RFC to FC = Exempt. This is not within.
RFC to NRFC = Exempt. All the more reason.
18 Sec. 28. A. 1
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MCIT [in
lieu of NIT]
1% of GI on
the 4th
taxable year
immediately
following
the year in
which such
corporation
commenced
its business
operations
REPEALED
2
KINDS OF TAX AND RATES
[basically 5
years after]
NOTE: Tax
payable is
either NIT or
MCIT,
whichever is
HIGHER
NOT
APPLICABLE
[1] NIT can
never be
higher than
GIT; [2] it is
also
immediately
withheld
TAX 1 – LUMBERA
INCOME TAX TABLES
LEGEND:
ICDC – INTERCOPORATED DIVIDENDS TAX
CIT – CORPORATION INCOME TAX
SOS – SHARES OF STOCKS
SEI/SEP – SELF-EMPLOYED INDIVIDUAL or SELF-EMPLOYED PROFESSIONAL
GR/GS – GROSS RECEIPT or GROSS SALES
MIE – MIXED-INCOME EARNER
SOS – SHARES OF STOCKS
FMV – FAIR MARKET VALUE
ZV – BIR ZONAL VALUE
GSP – GROSS SALE PRICE
NIT – NET INCOME TAX [SEC 24. A. 2.] or SCHEDULAR
IEAT – IMPROPERLY ACCUMULATED EARNINGS TAX [REPEALED]
MCIT – MINIMUM CORPORATE INCOME TAX
RC – RESIDENT CITIZEN
NRC – NON-RESIDENT CITIZEN
RA – RESIDENT ALIEN
NRAETB – NON-RESIDENT ALIEN ENGAGED IN TRADE/BUSINESS
NRANETB – NON-RESIDENT ALIEN NOT ENGAGED IN TRADE/BUSINESS
ETB – ENGAGED IN TRADE OR BUSINESS
NETB – NOT ENGAGED IN TRADE OR BUSINESS
DC – DOMESTIC CORPORATION
RFC – RESIDENT FOREIGN CORPORATION
NRFC – NON-RESIDENT FOREIGN CORPORATION
LEGEND IS LOCATED AT THE LAST PAGE. USE AT YOUR OWN RISK.
JCP
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