BIR 33-00

BIR DA-056-05

RR 8-2018 Section 3 B
 Section 3 C

Section 3 D

RR 10-2012 Section 2

Section 3
RMC 3-2012

RA10378 Section 1

RR 15-2013 Section 1
Section 2

Section 3
 Section 4

DOF 137-1987

DOF 149-1995

RR 9-1998

RR 2-01
"(C) An individual citizen of the Philippines who is working and
deriving income from abroad as an overseas contract workers is taxable only on
income from sources within the Philippines. .

All your employees whose services are rendered abroad for

being seconded or assigned overseas for at least 183 days may fall under the first
category and are therefore exempt from payment of Philippine income tax. In

Non-resident = most of the time

OFW - time spent is not material for tax exemption purposes

whether or not the aggregate period of more than one

hundred eighty (180) days provided under Section 25(A)(1) of the Tax Code of 1997
is required in order that an alien individual may be considered as engaged in trade or
business in the Philippines, should be applied not on a yearly basis.

"any calendar
year" in the aforesaid Section of the Tax Code should be interpreted to mean that
when an expatriate stays in the Philippines for more than 180 days in any calendar
year, he would already be taxed at the graduated rates of 5% to 32% not only during
the year that he exceeds the 180-day period, but also during the other years of
assignment, even if such stay did not exceed 180 days.

PURE COMPENSATION INCOME

Taxable income for compensation earners is the gross compensation income less nontaxable
income/benefits such as but not limited to the Thirleenth (13th) month pay and
other benefits (subject to limitations, see Section 6(G)(e) of these Regulations), de
minimis benefits, and employee's share in the SSS, GSIS, PHIC, Pag-ibig contributions
and union dues.

Husband and wife shall compute their individual income tax separately based on their
respective taxable income; if any income cannot be definitely attributed to or identified
u. in"o*. exclusiveiy earned or realized by either of the spouses, the same shall be
divided equally
Minimum wage eamers shall be exempt from the payment of income tax based on their
statutory minimum wage rates. The hoiiday pay, overtime pay, night shift differential pay
and hazard pay received by such earner are likewise exempt.
SELF EMPLOYED OR PROFESSIONAL whose gross sales/receipts and other non-operating income does not exceed
the value-added tax (VAT) threshold
Code, as amended, shal1 have the option to avail of:
1. The graduated rates under Section 2a of the Tax Code, as
amended; OR
2. An eight percent (8%) tax on gross sales or receipts and other nonoperating
income in excess of fwo hundred fifty thousand pesos
(P250,000.00) in lieu of the graduated income tax rates under Section
24(A) and the percentage tax under Section 1 16 all under the Tax Code,
as amended.

In case of non-availment #1 is the applicable option

Taxable income for individuais earning income from self-employment/practice of

profession shall be the net income, iftaxpayer opted to be taxed at graduated rates or has
failed to signify the chosen option. However, if the option avaiied is the 8% income tax
rate, the taxable base is the gross sales/receipts and other non-operating income

IF BOTH COMPENSATION and SELF EMPLOYMENT

1. The compensation income shall be subject to the tax rates under Sec 24(A)(2)(a) of the Tax Code AND
2. The income from business or practice of profession shall be subject to the following:
a. lf the gross salesireceipts and other non-operating income do not exceed the
VAT threshold, the individual has the option to be taxed at:
a.1 Graduated income tax rates prescribed under Sec 24(A)(2)(a) of the
Tax Code, as amended; OR
a.2 Eight percent (8%) income tax rate based on gross sales/receipts and
other non-operating income in lieu of the graduated income tax rates and
percentage ia, und.. Section 116 of the Tax code, as amended,
b. If the gross sales/receipts and other non-operating income exceeds the VAT
threshold, the individual shall be subject to the graduated income tax rates
prescribed under Section2a@)Q)(a) of the Tax code, as amended'

the term ‘corporation’ shall include partnerships, no matter how created or organized, joint-stock companies, joint accounts (cu
professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or en
consortium agreement under a service contract with the Government.
The tax exemption of joint ventures formed for the purpose of construction projects was pursuant to Presidential Decree (PD) N
contractors by pooling their resources in undertaking big construction projects.

JOINT VENTURES NOT TAXABLE AS CORPORATIONS. A joint venture or consortium formed for the purpose of undertaking cons
should be:
(1) for the undertaking of a construction project; and
(2) should involve joining or pooling of resources by licensed local contracts; that is, licensed as general contractor by the Philip
(3) these local contractors are engaged in construction business; and
(4) the Joint Venture itself must likewise be duly licensed as such by the Philippine Contractors Accreditation Board (PCAB) of th
A general professional partnership shall not be subject to income tax.
However, persons engaging in business as partners in a general professional partnership shall be liable for income tax in their s

2.57.5 of RR2-98 provides that Withholding of CWT shall not apply to

1. Persons enjoying exemption from payment of income taxes pursuant to any law such as, but not limited to 4. General Profes

International – Carrier. — An international carrier doing business in the Philippines shall pay a tax of two and one-half percent

"(a) International Air Carrier. — ‘Gross Philippine Billings’ refers to the amount of gross revenue derived from carriage of perso
uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document: Pro
of the Gross Philippine Billings if the passenger boards a plane in a port or point in the Philippines: Provided, further, That for a
outside the Philippines on another airline, only the aliquot portion of the cost of the ticket corresponding to the leg flown from

"(b) International Shipping. — ‘Gross . Philippine Billings’ means gross revenue whether for passenger, cargo or mail originating
passage or freight documents.

"Provided, That international carriers doing business in the Philippines may avail of a preferential rate or exemption from the ta
baggage on the basis of an applicable tax treaty or international agreement to which the Philippines is a signatory or on the ba
exemption to Philippine carriers, shall likewise be exempt from the tax imposed under this provision.

"x x x."

international carriers may now avail of preferential rates or exemption from income tax on their gross revenues derived from th
tax treaty or international agreement to which the Philippines is a signatory. The law also provided for the exemption of interna
International Carriers) on their carriage of passengers. It limits the imposition of Common Carrier’s Tax (Percentage Tax on Inte

Philippine Air Carrier — refers to an airline corporation duly organized and existing under the laws of the Republic of the Philip
both.

Off-line flights or voyages — refer to flight or voyage operations carried out or maintained by an international carrier between
international carrier having flights or voyages originating from any port or point in the Philippines, irrespective of the place whe
one-half percent (2½ %) imposed under Section 28(A)(3)(a) and (b) of the NIRC, as amended, unless it is subject to a preferenti
Philippines is a signatory or on the basis of ‘reciprocity

The gross revenue for passengers whose tickets are sold in the Philippines shall be the actual amount derived for transportatio
continuous and uninterrupted flight from any port or point in the Philippines to its final destination in any port or point of a for
plane ticket. For this purpose, the Gross Philippine Billings shall be determined by computing the monthly average net fare of a
passage

For tickets sold outside the Philippines

determined using the locally available net fares applicable to such flight taking into consideration the seasonal fare rate establi

All revenues and assets of non-stock, non-profit educational institution used actually, directly and exclusively for educational p

NON-STOCK, NON-PROFIT EDUCATIONAL INSTITUTIONS ARE EXEMPT FROM TAXES ON ALL THEIR
REVENUES AND ASSETS USED ACTUALLY, DIRECTLY, AND EXCLUSIVELY FOR EDUCATIONAL PURPOSES. They
shall, however, be subject to internal revenue taxes on income from trade, business or other activity the
conduct of which is not related to the exercise or performance by such educational institution of its educational
purpose or function."

Proof of ADE
1. Certification from depository banks as to the amount of interest income earned from passive investments not subject to 20%
2. Certification of actual utilization of income
3. Board resolution by the school administration of proposed projects

Allow 4-year period for newly registered corporations where the MCIT should not be imposed