Professional Documents
Culture Documents
Individual Income
Taxation
Gross Income
from whatever
source whether
legal or illegal
Exclusions
from Gross
Income
= GROSS INCOME
Gross Income
from whatever
source whether
legal or illegal
Exclusions
from Gross
Income
= GROSS INCOME
5. Returns of Capital
These are cash or non-cash
receipts representing
returns/reimbursements of the
taxpayers own money, funds,
property. Examples are cash
collections of the principal
account of loan receivable
excluding interest if there is any,
Gross Income
from whatever
source whether
legal or illegal
Exclusions
from Gross
Income
= GROSS INCOME
BUSIN
ESS
INCOM
E
COMPENSAT
ION INCOME
GROSS INCOME
PASSIVE
INCOME
BUSIN
ESS
INCOM
These are earnings resulting or
E from its main line of
derived
commercial business activity, such
as gross profit from sales of goods
services
This refers and
to the
income, profit or
gain earned and derived from the
conduct or pursuit of trade,
business or the exercise of a
profession
BUSIN
ESS
INCOM
E
COMPENSAT
ION INCOME
GROSS INCOME
PASSIVE
INCOME
COMPENSAT
ION INCOME
Refers to all kinds of items
of remunerations/
emoluments earned or
received in return for
services rendered
BUSIN
ESS
INCOM
E
COMPENSAT
ION INCOME
GROSS INCOME
PASSIVE
INCOME
PASSIVE
INCOME
xxxx
Allowable
Deduction
INTEREST EXPENSE
The amount of interest paid or
incurred within a taxable year on
indebtedness in connection with the
taxpayers profession, trade or
business shall be allowed as
deduction from gross income:
Provide, however that, the taxpayers
otherwise allowable deduction for
Allowable
Deduction
TAXES EXPENSE
Taxes whether local,
national or foreign, paid or
incurred within the taxable
year in connection with the
taxpayers profession,
trade or business, shall be
allowed as deduction form
Allowable
Deduction
LOSSES
Losses on property actually
sustained as a result of
natural calamities or human
intervention during the
taxable year and not
compensated for by
insurance or other forms of
Allowable
Deduction
Allowable
Deduction
DEPRECIATION EXPENSE
There shall be allowed as a
depreciation deduction a
reasonable allowance for
the exhaustion, wear and
tear (including reasonable
allowance for obsolescence)
of property used in the
Allowable
Deduction
DEPLETION EXPENSE
Allowable
Deduction
CHARITABLE
CONTRIBUTIONS
Donations or contributions made by
taxpayers shall be categorized
either as fully non-deductible, fully
deductible but subject to limitation.
Allowable
Deduction
RESEARCH AND DEVELOPMENT
COST/ EXPENSE
A taxpayer may treat research
or development expenditures
which are paid or incurred by
him during the taxable year in
connection with his trade,
business or profession as
ordinary and necessary
Allowable
Deduction
PENSION TRUST
CONTRIBUTION
An employer or maintaining a
pension trust to provide for
the payment reasonable
pensions to his employees.
Allowable
Deduction
OTHER BUSINESS EXPENSES
IN GENERAL
There shall be allowed as
deduction from gross income all
the ordinary and necessary
expenses paid or incurred during
the taxable year in carrying on or
which are directly attributable to,
the development, management,
operation and/or conduct of the
xxxx
xxxx
xxxx
NOT OVER
TAX DUE
IS:
PLUS
OF
EXCESS
OVER
1.
P0.00
P10,000
P0
5%
P0
2.
10,000
30,000
500
10%
10,000
3.
30,000
70,000
2,500
15%
30,000
4.
70,000
140,000
8,500
20%
70,000
5.
140,000
250,000
22,500
25%
140,000
6.
250,000
500,000
50,000
30%
250,000
7.
500,000
Without
Limit
125,000
32%
500,000
xxxx
Expanded
Withholding tax
at Source Table
Classifications
of Individual
Taxpayer
INDIVIDUAL TAXPAYER
CITIZEN
NonReside
residen
nt
t
Citizen
Citizen
Not engaged in
trade/business
Special
Aliens
ALIEN
Nonresiden
t Alien
Ordinary
Aliens
Reside
nt
Alien
engaged in
trade/business
Special
Aliens
Income Tax
Matrix
Taxpayers
Income
Deductions
Personal
Exemptions
Tax Rate
Individu
Individu
als
als
Compensa
Compensa
tion/Busin
tion/Busin
ess/
ess/
Profession
Profession
Itemized
Itemized
deduction
deduction
or
or 40%
40%
OSD
OSD based
based
in
in gross
gross
receipts
receipts
form
form
business
business
Basic
Basic
or
or
50,000
50,000
profession
profession
Additional
Additional
25,000
25,000
Tabular
Tabular
Tax
Tax on
on
individuals
individuals
Corporat
Corporat
ion
ion
Busines
Busines
ss
Income
Income
Itemized
Itemized
or
or 40%
40%
OSD
OSD based
based
on
on Gross
Gross
Income
Income
Partnershi
Partnershi Estates/Tr
Estates/Tr
p
p
ust
ust
Busine
Busine
Servic
Servic
Business
Business
ss
ss
ee
Income
Income
Incom
Incom
Incom
Incom
ee
ee
Itemiz
Itemiz
ed
ed or
or
40%
40%
OSD
OSD
based
based
on
on
Gross
Gross
Profit
Profit
Itemiz
Itemiz
ed
ed or
or
40%
40%
OSD
OSD
based
based
on
on
Gross
Gross
Receip
Receip
ts
ts
Itemized
Itemized or
or
40%
40% OSD
OSD
based
based on
on
Gross
Gross
Receipts
Receipts
Basic
Basic
20,000
20,000
30%
30%
Normal
Normal
Corporate
Corporate
income
income
Tax/2%
Tax/2%
MCIT
MCIT
30%
30%
Norma
Norma
ll
Corpor
Corpor
ate
ate
Incom
Incom
ee
Tax
Tax
Exemp
Exemp
tt
Tabular
Tabular Tax
Tax
on
on
Individuals
Individuals