CLASSIFICATION OF INDIVIDUAL TAXPAYERS SOURCE OF TAXABLE INCOME

1. Resident Citizen (RC) TYPE OF INDIVIDUAL SOURCE

2. Special Filipino Employee (SFE)
3. Non-Resident Citizen (NRC)
Income Tax On Individuals 4. Resident Alien (RA)
RC/SFE World

5. Non-Resident Alien (NRA) NRC Within only

a) Engaged in trade or business (ETB)
b) Not engaged in trade or business (NETB) RA
c) Special Alien Employee (SAE)
NRA-ETB

NRA-NETB

SAE
TYPES OF INCOME TAX
GENERAL PRINCIPLES
1. FINAL WITHHOLDING TAX (FWT) ON PASSIVE INCOME
2. CAPITAL GAINS TAX (CGT) Applicable only to passive income from
3. FRINGE BENEFIT TAX (FBT) sources within the Philippines.
4. BASIC TAX FINAL withholding (FWT) tax on It is constituted as the full and final payment of
the income tax due.
passive income The liability for the payment of the tax is
primarily on the payor as the withholding
agent.
The payee is not required to file an income tax
return for the particular income subjected to
final withholding tax (FWT).

PROFORMA COMPUTATION
KINDS OF PASSIVE INCOME INTEREST INCOME
1. Interest Income
2. Royalties TP RATE
PASSIVE INCOME PXXX 3. Dividends
RATE X% 4. Prizes Interest income from: RC 20%
FWT PXXX 5. Other Winnings Bank deposit NRC
Deposit substitute RA
Trust funds NRA-ETB
INTEREST INCOME ROYALTIES
INTEREST INCOME TP RATE TP RATE
TP RATE Interest income from long-term RC 0%
Interest from a depositary bank RC 7.5% deposit or investment (at least 5 NRC Royalties from: RC 10%
under FCDU RA years maturity) RA Books
NRC 0% NRA-ETB Literary works NRC
NRA-ETB In case of pre-termination of the RC Musical compositions
NRA-NETB above, depending on the holding RA
period: NRC
NRA-ETB
5 years or more 0%
RA Other Royalties 20%
4 years to less than 5 years 5%
3 years to less than 4 years NRA-ETB 12%
Less than 3 years 20%
 DIVIDEND INCOME PRIZES WINNINGS
TP RATE
TP RATE TP RATE
Dividend income from: RC 10%
Domestic Corporation NRC Amount is more than P10,000. RC 20% Philippine Charity Sweepstakes RC 0%
Joint Stock Company RA
Insurance or mutual fund companies NRC Lotto NRC
Share in the distributable net
income after tax of a partnership NRA-ETB 20% NOTE: If the amount of the prize RA RA
Other Winnings 20%
(except GPP) does not exceed P10,000, the
same is subject to BASIC TAX. NRA-ETB NRA-ETB
Share in the net income after tax of:
Association
Joint Account
Taxable Joint Venture or Consortium

KINDS OF CGT CGT ON SHARES

1. CGT on sale of shares of stock not traded in the Selling Price PXXX
stock exchange Cost (XX)
CAPITAL GAINS TAX (CGT) 2. CGT on sale of real property classified as capital Selling Expense (XX)
asset. Net Gain PXX
First 100T 5%
NOTE: This is applicable to all INDIVIDUAL taxpayers.
In Excess (Net Gain 100T) 10%

CGT ON REAL PROPERTY SALE TO PRIVATE VS. GOVT EXEMPTION FROM CGT
Requisites:
Tax Base PXXX Buyer APPLICABLE TAX
Rate 6% 1. Sale of principal residence;
Capital Gains Tax PXX 2. Proceeds is utilized in acquiring or constructing
Private Person CGT
a new principal residence;
GSP Government Option 1 CGT 3. Utilization must be made within 18 calendar
Tax Base = HIGHEST Option 2 Basic Tax months;
AMOUNT Note: Preference is 4. Notify the BIR within 30 days from sale;
P
FMV
with the Seller 5. Can be availed only once every 10 years.
VvV
ZV
P

AMOUNT OF TAX (RC,NRC,RA & NRA-ETB) ALLOWABLE DEDUCTION

1. Business expenses & losses/Optional Standard

Deduction (OSD)
Basic TAX Gross Income PXXX 2. Personal exemptions
Allowable Deductions (XX) 3. Premium payments on health and
Taxable Income PXX hospitalization insurance
Graduated Rate (5% to 32%)
 BUSINESS EXPENSES ETC. PERSONAL EXEMPTIONS OF NRA-ETB QUALIFIED DEPENDENTS
PERSONAL EXEMPTIONS
This deduction cannot be claimed by taxpayers earning Requisites:
purely compensation income. 1. BASIC PERSONAL EXEMPTION - 50,000 for each 1. Legitimate, illegitimate or legally adopted
individual child;
2. ADDITIONAL PERSONAL EXEMPTION 2. Dependent upon chief support from the
a) 25,000 for each dependent taxpayer;
b) Maximum number of dependents is 4 3. Living with the taxpayer
4. Unmarried
5. Not gainfully employed
6. Not more than 21 years of age (regardless of
age if incapable of self support because of
mental or physical defect)

PERSONAL EXEMPTIONS OF NRA-ETB PREMIUM PAYMENTS ON HEALTH ETC. INCOME TAX APPLICABLE TO NRA-NETB

Requisites: Gross Income, Phils. PXXX

Personal Personal 1. Not to exceed P2,400 per annum; Rate 25%
Exemptio vs Exemption 2. Gross income of the family does not exceed FWT PXXX
ns in PH
. s in FC P250,000;
3. For married taxpayers, only the spouse claiming
APE shall be entitled.

LOWER

INCOME TAX APPLICABLE TO SAE INCOME TAX APPLICABLE TO SFE

Compensation Income, Phils. PXXX Compensation Income, Phils. PXXX

Rate 15% Rate 15%
FWT PXXX FWT PXXX
Other Income, Phils. PXXX THE END
Rate 25% Other Income PXXX T H A N K Y O U ! ! !
FWT PXXX

SAME W/
RC