List of Taxes & Rates in the Philippines

Capital Gains Tax

Documentary Stamp Tax

Donor's Tax

Estate Tax

Income Tax

Percentage Tax

Value Added Tax (VAT)

Withholding Tax on

Expanded Withholding Tax

Compensation

Final Withholding Tax

Withholding Tax on Government

Money Payments

Capital Gains Tax - Philippines

Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the
sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro
sales and other forms of conditional sale.
Documentary Stamp Tax - Philippines
Documentary Stamp Tax is a tax on documents, instruments, loan agreements, and papers evidencing
the acceptance, assignment, sale, or transfer of an obligation, rights, or property incident thereto.
Donor's Tax - Philipppines
Donor's Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property
between two or more persons who are living at the time of the transfer.
Estate Tax - Philippines
Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful
heirs and beneficiaries at the time of death and on certain transfers which are made by law as
equivalent to testamentary disposition.
Income Tax - Philippines
Income Tax is a tax on all yearly profits arising from property, profession, trades or offices, or as a tax
on a person's income, emoluments, profits, and the like.

Philippine Income Tax Rate for Foreign Companies

Foreign corporations are taxed only on their Philippine source income. Corporate income is taxed when
earned by the corporation and again when profits are received by shareholders. Inter-corporate
dividends between domestic corporations or received from a domestic corporation by a resident
foreign corporation are not subject to tax. Depending on the business activity involved, the starting
point for Philippine taxation is whether a foreign business has Philippine source income.
The Philippines also has several double taxation treaties with different countries, which relinquish
taxing rights over business profits to the state of residence if no permanent establishment "PE" exists
or should reduce the applicable rates of tax imposed on Philippine source income.
Generally, active business income earned by individuals is subject to graduated rates of tax between 5
to 32% in the Philippines. The active business income of Corporations, on the other hand, is subject to
a flat 30% tax rate. Passive income such as interest, royalties, and dividends are subject to final
withholding taxes which are withheld at source. The applicable rates of final withholding tax vary
depending on the type of income involved and the taxpayer in the Philippines.
A foreign-owned company considered "doing business" in the Philippines must be licensed by
the Securities and Exchange Commission (SEC) or it will be considered a non-resident foreign
corporation and subject to a final tax of 32% of its gross (rather than net) income.
Foreign and local businesses in the Philippines that qualify and are registered for tax incentives can
avail of income tax holidays and this may be followed by a special tax rate of 5% in lieu of any and all
taxes if the business is located in aPhilippine Special Economic Zone (PEZA).
Percentage Tax - Philippines
Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties, or
services in the course of trade or business whose gross annual sales or receipts do not exceed
P550,000 and are not VAT-registered.
Value Added Tax (VAT) - Philippines
Value Added Tax (VAT) is a business tax imposed and collected from the seller in the course of trade or
business on every sale of properties (real or personal), lease of goods or properties (real or personal),
or vendors of services. It is an indirect tax, thus, it can be passed on to the buyer.
Withholding Tax on Compensation - Philippines
Withholding Tax on Compensation is the tax withheld from individuals receiving purely compensation
income.
Expanded Withholding Tax - Philippines
Expanded Withholding Tax is a creditable tax prescribed for certain domestic (Philippine) payors and is
creditable against the income tax due of the payee for the taxable quarter year. The expanded
withholding tax normally covers services.

Final

Withholding

Tax -

Philippines

Final Withholding Tax is a withholding tax which is prescribed only for certain payors and is not
creditable against the income tax due of the payee for the taxable year. Income Tax withheld
constitutes the full and final payment of the Income Tax due from the payee on the said income.
Withholding

Tax

on

Government

Money

Payments -

Philippines

Withholding Tax on Government Money Payments is the withholding tax withheld by government
offices and instrumentalities, including government-owned or controlled corporations and local
government units, before making any payments to resident suppliers of goods and services.
The K&C tax lawyers and tax consultants provide tax consulting services for companies setting up and
doing business in the Philippines.