OLD NEW
Purely Self-Employed 8% x (Income – 250k)
(Gross Receipts + Other Non-Operating Income) < VAT
Threshold 3Million
Professionals 8% x (Income – 250k)
(Gross Receipts + Other Non-Operating Income) < VAT
Threshold 3Million
Mixed Income Earner
a. Compensation Income ➢ Graduated Rate
b. (Business Inc. + Other Inc.) < 3,000,000 ➢ 8% x Gross
Income
c. (Business Inc. + Other Inc.) > 3,000,000 ➢ Graduated Rate
Interest Income
a. Currency Bank Deposit (Financial Companies)
▫ Resident Citizen, NRC, RA, NRAETB 20% Final Tax (FT) 20% Final Tax (FT)
▫ Special Alien 20% Final Tax (FT) 20% Final Tax (FT)
▫ Domestic & Resident Corp. ? 20% Final Tax (FT)
▫ Int. on Foreign Loans-NonRes. Corp. ? 20% Final Tax (FT)
b. Expanded Foreign Currency Deposit (EFCD) 7.5% FT 15% FT
▫ RC, RA, SA, DC & R-Corp.
c. OFW w/ Co-Depositor ½ of 7.5% ?
d. Not BSP prescribed form investments
20% FT 20% FT
▫ Less than 3 yrs
12% FT 12% FT
▫ 3 yrs to Less than 4 yrs
5% FT 5% FT
▫ 4 yrs to Less than 5 yrs
▫
e. Cooperatives, EFCD-Nonresident, Long-term Exempt Exempt
Deposit evidenced by certificates, Tenant-
Purchaser Agreement , CARP
Graduate Rate Graduated Rate
f. Lending as Principal Business Activity
Royalty Income
a. Natural Resources (Coal, Gas, Oil, etc.) 20% FT 20% FT
b. Intellectual Creation 10% FT 10% FT
Dividend Income
a. Domestic -> Domestic Corp. Exempt Exempt
b. Domestic -> Resident Foreign Corp. Exempt Exempt
c. Domestic -> NRF Corp. (Tax Sparing Rule) 15% FT 15% FT
d. From Cooperative Exempt Exempt
e. Pure Stock Dividend Exempt Exempt
f. Pure liquidating Div. (return of capital) Exempt Exempt
10% FT 10% FT
g. Domestic -> RC, NRC, RA
20% FT 20% FT
h. Domestic -> NRAETB
25% FT 25% x Gross Income
i. Domestic -> NRANETB ? 5-32% Net Inc. Tax
j. Foreign -> RC, NRC, NRAETB ? 25% x Gross Income
k. Foreign -> NRANETB
Prizes
▫ Generally... (More than 10k) 20% FT 20% FT
▫ Recognition of Performance (C-A-R-C-
E-L-S) Exclusion (Exempt) Exclusion (Exempt)
▫ Less than 10,000 (Part of Txbl. Inc.) Subj. To Normal Tax Subj. To Normal Tax
Winnings 20% FT (regardless of
amount)
▫ Up to 10,000 (from PCSO and PH
Lotto) Exclusion
▫ More than 10,000
▫ PAGCOR, Races, Cockpits 20% FT
▫ Illegal Gambling 20% FT
Part of Txbl. Inc.
Fringe Benefit Tax (Managerial & Supervisory
Employees)
Resident Citizen & Resident Alien
▫ Benefit of Employee (Ee) 32% x GUMV 35% x GUMV
▫ Gross-Up Monetary Value (GUMV) = Actual MV/68% = Actual MV/65%
▫ Benefit of Employer (Er) Exempt Exempt
▫ De Minimis Exempt Exempt
NRAETB 25% x GUMV 25% x GUMV
▫ Gross-Up Monetary Value (GUMV) = Actual MV/75% = Actual MV/75%
15% x GUMV 15% x GUMV
Aliens employed by Regional HO & Special A. = Actual MV/85% = Actual MV/85%
▫ Gross-Up Monetary Value (GUMV)
Fringe Benefit Tax (Rank & File Employees)
▫ Fringe Benefits Subj. To Normal Tax Subj. To WTW
▫ De Minimis Exempt Exempt
▫ Benefit of the Employer Exempt Exempt
Capital Gains (individual)
● Holding Period (personal prop.)
1. Individual Taxpayer
-> 12 months or less: Reportable Gain 100% 6%x(SP or ZV, 6%x(SP or ZV, higher!)
-> more than 12 months: Reportable Gain higher!)
50%
2. Corporate Taxpayer – holding period N/A
-> net CG: part of Txbl. Inc.
-> net CL: not deductible; w/o NOLCO
6%x(SP or ZV, higher!)
● Sale of Real Prop. NOT Used in Business 6%x(SP or ZV,
higher!)
● Disposition of Principal Residence
Exempt
-> General Rule..
-> Except.. Exempt
✗ Proceeds from Disposition are Fully
Utilized in Acquiring/Constructing a
New Principal Residence w/in 18mos.
From disposition 6% [(UnP/SP)x(SP or
✗ Unutilized Portion -> taxable!! FMV higher!)]
6% [(UnP/SP)x(SP or
UnP = Unutilized Proceeds ZV, higher!)]
SP = Gross Selling Price
● Sale of Real Prop. To Government 6% CGT or
Gain -> Part of Txbl.
-> Options of Individual Taxpayer: 6% FT or Inc.
Gain -> Normal Tax
(subj. To 6% CWT)
Capital Gains (corporation)
● Sale of Personal Property – no holding period
-> CG or CL x 100%
6%x(SP or ZV, higher!)
● Sale of Real Property
6%x(SP or ZV,
higher!)
Shares of Stock (Sale by an Individual)
● Traded/Listed on Stock Exchange
.50 of 1% x SP 0.60 of 1% x SP
-> subject to Stock Transaction Tax
● Not Traded
-> subject to Capital Gains Tax CG x 15%
1st 100,000 5%
Excess over 100,000 10%
Shares of Stock (Sale by a Corporation) - same w/
Individual
● In case of Loss:
a. w/o Wash Sale – deductible
b. W/ Wash Sale – not deductible; wash sale is
part of Acquisition Cost
Proceeds of Life Insurance
● If paid to the HEIRS or BENEFICIARIES (upon
death of insured) Nontaxable Nontaxable
● If paid to the INSURED PERSON Excess of Premium Excess of Premium
Paid (Txbl. Inc.) Paid (Txbl. Inc.)
● If the Insured can no longer pay the premium:
-> Options
a. Cancel the Contract (will receive CSV)
b. Apply CSV to future insurance
premium
Gifts, Bequests and Devises Subj. To Donor’s Tax Subj. To Donor’s Tax
Damages
a. Personal(physical) injuries or sickness Nontaxable Nontaxable
b. Exemplary & moral damages (out-of-court
settlements)
c. Breach of promise to marry Nontaxable Nontaxable
d. Any amt. Received as return of capital or Nontaxable Nontaxable
reimbursement of expenses
Nontaxable Nontaxable
e. Actual damages for loss of anticipated profit
Part of Txbl Inc Part of Txbl Inc
f. Exemplary & moral damages (awarded as a
result of breach of contract) Part of Txbl Inc Part of Txbl Inc
g. Any damages as compensation for unrealized
income Part of Txbl Inc Part of Txbl Inc
Retirement Pay
INCOME TAX RATES
(OLD TAX LAW)
Not over 10,000 5%
Over 10,000 but not over 30,000 500 + 10%x(excess over 10,000)
Over 30,000 but not over 70,000 2500 + 15%x(excess over 30,000)
Over 70,000 but not over 140,000 8500 + 20%x(excess over 70,000)
Over 140,000 but not over 250,000 22,500 + 25%x(excess over
140,000)
Over 250,000 but not over 500,000 50,000 + 30%x(excess over
250,000)
Over 500,000 125,000 + 32%x(excess over 500,000)
(TRAIN LAW)
Not over 250,000 0%
Over 250,000 but not over 400,000 20%x(excess over 250,000)
Over 400,000 but not over 800,000 30,000 + 25%x(excess over 400,000)
Over 800,000 but not over 2,000,000 130,000 + 30%x(excess over 800,000)
Over 2,000,000 but not over 8,000,000 490,000 + 32%x(excess over
2,000,000)
Over 8,000,000 2,410,000 + 35%x(excess over
8Million)
De Minimis Benefits (Exempt from FBT) OLD De Minimis Benefits (Exempt from FBT) TRAIN
LAW LAW
✗ Monetized Unused Vacation Leave ✗ Monetized Unused Vacation Leave
-> Private Employees: 10days below -> Private Employees: 10days below
✗ Monetized Value of Leave Credits PAID ✗ Monetized Value of Leave Credits PAID
-> Gov’t Officials & Employees -> Gov’t Officials & Employees
✗ Medical Cash Allowance ✗ Medical Cash Allowance
-> Dependent of Ee: -> Dependent of Ee:
Php750/Ee/Semester or Php750/Ee/Semester or
Php125/Ee/Month Php250/Ee/Month
✗ Rice Subsidy: Php1,500 or 50kg./mo. ✗ Rice Subsidy: Php2,000 or 50kg./month
amounting not more than Php1,500
✗ Uniform & Clothing Allow. < Php5000/yr ✗ Uniform & Clothing Allow. < Php6000/yr
✗ Actual Yearly Medical Benefits < ✗ Actual Yearly Medical Benefits <
Php10,000/yr Php10,000/yr
✗ Laundry Allow. < Php300/month ✗ Laundry Allow. < Php300/month
✗ Ee Achievement Award < Php10,000 ✗ Ee Achievement Award < Php10,000
✗ Meal Allowance < 25% of Daily Min. ✗ Meal Allowance < 25% of Daily Min.
Wage Wage
✗ Customary Gifts < Php5,000 ✗ Customary Gifts < Php5,000
✗ Productivity Bonus < 10,000 (CBA!!) ✗ Productivity Bonus < 10,000 (CBA!!)
-> provided there is Collective Bargaining -> provided there is Collective Bargaining
Agreement (CBA) Agreement (CBA)
✗ Travel Abroad
-> Economy & Business Class
!!except First Class ticket (30% txbl)!!
-> Hotel Accom. US $300/day
!!excess of $300: txbl)!!
-> Inland travel
Kinds of Benefit & Respective Tax Bases Kinds of Benefit & Respective Tax Bases
Cash Cash
= Cash Value Given = Cash Value Given
Property Property
▫ Ownership transferred = (FMV or ZV or Assessed Value)
HIGHER!
= FMV
▫ Ownership not transferred Usufruct
= Depreciated Value = Depreciation Value/2
*Movable Prop.: Depreciated over UL of
Housing Privilege 5yrs
▫ Lease *Immovable Prop.: Dprctd. Over UL of
20yrs
= Rental Payments x 50%
Housing Privilege
▫ Assignment of Residential Prop. For use ▫ Lease
of Ee
= Rental Payments x 50%
= 5% x (FMV or ZV, HIGHER!) x 50%
▫ Assignment of Residential Prop. For use
▫ Purchase of Residential Prop. on
Installment of Ee
= 5% x Acquisition Cost x 50% = 5% x (FMV or ZV, HIGHER!) x 50%
▫ Purchase of Res. Prop. & Ownership is ▫ Purchase of Residential Prop. on
transferred Installment
= (FMV or ZV) HIGHER! = 5% x Acquisition Cost x 50%
Motor Vehicle ▫ Purchase of Res. Prop. & Ownership is
▫ Purchase of Motor (Name of Ee) transferred
= Acquisition Cost = (FMV or ZV) HIGHER!
▫ Cash is given for Purchase of Motor Motor Vehicle
(Name of Employee) ▫ Purchase of Motor (Name of Ee)
= Cash received = Acquisition Cost
*if cash give in subj. To WTW, it shall not
be subj. To. FBT ▫ Cash is given for Purchase of Motor
(Name of Employee)
▫ Purchase of Car on Installment (Owner-
>Ee) = Cash received
*if cash give in subj. To WTW, it shall not
= Acquisition Cost/5 be subj. To. FBT
*AC, exclusive of interest
▫ Purchase of Car on Installment (Owner-
▫ Portion of Purchase Price -> Er, >Ee)
Ownership-> Ee
= Acquisition Cost/5
= Amount shouldered by the Er *AC, exclusive of interest
▫ Employers owns Fleet of Motor (for ▫ Portion of Purchase Price -> Er,
business use) Ownership-> Ee
= Rental Payments x 50% = Amount shouldered by the Er
▫ Employers leases Fleet of Motor (for ▫ Employers owns Fleet of Motor (for
business use) business use)
= (AC/5) x 50% = Rental Payments x 50%
▫ Employers leases Fleet of Motor (for
Yacht business use)
= AC/20yrs -> Tax Base or Monetary Value
= (AC/5) x 50%
Expense Account – incurred by Ee but paid by
Er; paid by Ee but reimbursed by Er Yacht
= AC/20yrs -> Tax Base or Monetary Value
Household Expenses – salary of household
help, personal driver, etc. Expense Account – incurred by Ee but paid by
Er; paid by Ee but reimbursed by Er
Interest - Ee borrowed money from Er
= Forgone Int. Rate Household Expenses – salary of household
-> 12% less %charged by Er help, personal driver, etc.
Membership Fees Interest
= entire expenditure = Forgone Int. Rate
-> 12% less %charged by Er
Expenses for Foreign Travel
▫ Excess of US $300/day (Hotel Accom.) Membership Fees
▫ 30% of the Cost of First Class ticket = entire expenditure
-> No Documentary Evidence: Entire Cost Expenses for Foreign Travel
▫ Excess of US $300/day (Hotel Accom.)
Holiday & Vacation Expenses ▫ 30% of the Cost of First Class ticket
= Amt. Expenses Incurred by Er (as to
Managerial & Supervisory Employees) -> No Documentary Evidence: Entire Cost
Educational Assistance (EA) - as gen. rule Holiday & Vacation Expenses
▫ Employee: Cost of EA = Amt. Expenses Incurred by Er (as to
▫ Dependent of Employee: Cost of EA Managerial & Supervisory Employees)
Educational Assistance (EA) - as gen. rule
Insurance Benefits ▫ Employee: Cost of EA
-> borne by Er for his Ee ▫ Dependent of Employee: Cost of EA
-> except (nontaxable) if under SSS or GSIS,
and if cost of premium is for group of
Employees Insurance Benefits
-> borne by Er for his Ee
-> except (nontaxable) if under SSS or GSIS,
and if cost of premium is for group of
Nontaxable Benefits (Not Subj. To FBT) Employees
▪ If Necessary to the Business, trade or
profession
▪ For the Benefit/Convenience of the Er Nontaxable Benefits (Not Subj. To FBT)
▪ 13th Month Pay & Other Benefits: ▪ If Necessary to the Business, trade or
Php82,000 profession
▪ Insurance Benefits – SSS or GSIS; Group ▪ For the Benefit/Convenience of the Er
of Ee (for retirement, insurance, & ▪ 13th Month Pay & Other Benefits:
hospitalization) Php90,000
▪ Benefits given to Rank-and-File ▪ Insurance Benefits – SSS or GSIS; Group
▪ De Minimis Benefits of Ee (for retirement, insurance, &
▪ Housing Privilege of the AFP Officials hospitalization)
▪ Housing Unit inside/adjacent to Factory ▪ Benefits given to Rank-and-File
▪ Temporary Housing (stay: 3months or ▪ De Minimis Benefits
less) ▪ Housing Privilege of the AFP Officials
▪ Representation & Transpo. Allow. (subj. ▪ Housing Unit inside/adjacent to Factory
To Withholding Tax on Wages or WTW) ▪ Temporary Housing (stay: 3months or
▪ Educational Assistance to Ee is exempt less)
bec. it is for the benefit of the Er ▪ Representation & Transpo. Allow. (subj.
To Withholding Tax on Wages or WTW)
-> study involved is directly connected w/ ▪ Educational Assistance to Ee is exempt
the Employer’s business/profession bec. it is for the benefit of the Er
-> written contract: employee is required
to render future service over a period -> study involved is directly connected w/
mutually agreed upon the Employer’s business/profession
▪ Educational Assistance to Dependent of -> written contract: employee is required
Ee to render future service over a period
mutually agreed upon
-> EA was provided through a ▪ Educational Assistance to Dependent of
competitive scheme Ee
▪ Use of Aircraft owned & maintained by
the Er -> EA was provided through a
competitive scheme
▪ Aircraft ?