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Primary Contact

316 Mile Long Building

Amorsolo Street

Legaspi Village

Makati City

1200 Philippines

Telephone: (632) 8941441

TeleFax: (632) 8124296



Office Hours

9:30AM to 5:30PM PH Time

Monday - Friday







Corporate Income Tax Rates


Domestic/Resident Foreign Corporation

Non-resident Foreign Corporation

Taxable income not subject to special tax rates



Interest from deposits and yield from deposit substitutes/trust funds and royalties



Interest on foreign loans



Interest income derived by a domestic corporation from a depository bank under the expanded foreign currency deposit system



Dividends from domestic corporations


15% / 35%

Gains on sales of shares of stock not traded in the Stock Exchange

5% / 10%

5% / 10%


The rates of tax applicable for corporations entitled to special tax privileges are set out below:

  1. The corporate tax rate was increased from 32% to 35% with effect from 1 July 2005 but will be reduced to 30% effective 1 January 2009. 
  2. The rate is reduced to 7.5% for interest income derived by a domestic corporation from a depository bak under the expanded foreign currency deposit system. 
  3. The rate of 15% applies if the host country exempts the dividend from tax or permits a 20% or greater credit for underlying corporation tax paid by the company paying the dividend. 
  4. The 5% rate applies to the first P100,000 of gains annually, with the 10% rate applying to the excess.  Stocks of shares in listed companies are subject to a 0.5% tax on the sale proceeds. 




Proprietary educational institutions and non-profit hospitals


Taxable income 

Certain enterprises registered with the Philippine Economic Zone Authority


Gross income

Non-resident owner or lessor of aircraft, machinery and other equipment


Gross Philippine rentals, lease, charter fees

Non-resident owners of vessels chartered by Philippine nationals and approved by the Maritime Industry Authority


Gross Philippine rentals, lease, charter fees

Non-resident cinematographic film owners, lessors or distributors


Gross Philippine source income

Foreign international carriers (air and sea)


Gross Philippine billings

Offshore banking units (OBUs) and foreign currency deposit units (FCDUs) authorized by the Bangko Sentral ng Pilipinas


Income from foreign currency transactions with residents

Regional operating headquarters


Taxable income

Income Tax Rates as Passive Income of Domestic/Resident Corporation

Dividends received from domestic corporations

Not subject to tax

Interest on any currency bank deposit and yield or other monetary benefit from deposit substitutes and from trust fund and similar arrangements

20% of final tax

Interest from foreign currency deposits with foreign currency deposit units (FCDUs)

7 1/2% of final tax

gains from sale or exchange of shares of stock not listed and traded in the local stock exchange

5% capital gains tax (CGT) on net gains not exceeding P 100,00 and 10% on the excess.

Gains from sale or exchange of land or buildings not actually used in business and treated as capital issue

6% CGT on gross selling price or fair market value, whichever is higher


20% final tax


New Taxes for Corporation Under the Tax Reform Act of 1997

Minimum Corporate Income Tax (MCIT) - A 2% MCIT on gross income on an annual basis is imposed on corporations whose regular corporate income tax liability is less than the MCIT beginning the fourth taxable year following the year they commenced business operation. Any excess of the MCIT over the normal tax shall be carried forward and credited against the normal tax for the three (3) immediately succeeding taxable years.

Fringe Benefits Tax - Fringe benefits granted to supervisory and managerial employees are subject to 32% tax on the grossed-up monetary value of the fringe benefit. Fringe benefits given by OBUs regional operating headquarters of multinational companies, petroleum contractors and subcontractors to qualified alien employees and in certain cases, to Filipino employees, are taxed at 15% of the grossed-up monetary value of the fringed benefit.

Improperly Accumulated Earnings Tax - a 10% tax is imposed on the improperly accumulated earnings of a corporation, except in the case of publicly held corporations, banks, and other non-bank financial intermediaries and insurance companies. When a corporation allows its earnings or profits to accumulate beyond its reasonable needs, it shall be assumed that the purpose is to avoid tax on stockholders, unless proven to the contrary.


Individual Taxation


Non-resident aliens not engage in trade and business flat income tax rate


Resident citizens/aliens (gainfully employed) Graduated income tax rates


Who Shall File:


1.  An individual whose gross compensation income does not exceed his total personal and additional exemptions;

2.  An individual whose compensation derived from one year employer does not exceed P60,000 and the income tax on which has been correctly withheld;

3.  An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional or area headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors, and offshore banking units, non-resident alien not engaged in trade or business), and

4. An individual who is exempt from income tax.

Married individuals shall file single return for the taxable year to include the income of both spouses, separately computing their individual income tax based on their respective taxable income. Where it is impracticable for the spouses to file one return, each spouse may file a separate return.



Tax Table for individuals earning purely compensation income and individuals engaged in business and practice of profession

If Taxable Income is:

Tax Due is:

If Taxable Income is:

Tax Due is:

Not over P10,000




Over P10,000 but not over P30,000

P500+10% of the excess over P10,000

Over P140,000 but not over P250,000

P22,500+25% of the excess over P140,000

Over P30,000 but not over P70,000

P2,500+15% of the excess over P30,000

Over P250,000 but not over P500,000

P50,000+30% of the excess over P250,000

Over P70,000 but not over P140,000

P8,500+20% of the excess over P70,000

Over 500,000

P125,000+34% of the excess over P500,000

Note: Effective January 1, 1999, the maximum rate shall be thirty-three percent (33%) and thirty-two percent 32% on January 1, 2000.

Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second installment on or before July 15 of the same year at the Authorized Agent Bank (AAB) within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered.


Value Added Tax (VAT)

Sale of goods, other properties, and services in the Philippines, as well as importation of goods to the Philippines, are subject to the 12% VAT. VAT is imposed on the gross selling price (in case of sale of goods) and gross receipts (in case of sale of services).

1.7 Stock Transaction Tax

1/2 of 1% of gross selling price is imposed on the sale, barter, exchange or other disposition of shares through the facilities of stock exchange.



Contact Us



You're invited to call us to discuss your company's legal concerns. We shall be glad to talk with you over the telephone, or in our office or yours, whichever is easiest for you. You can also e-mail us at and we shall get back to you immediately.



Mile Long Building 316

Legaspi Village

Amorsolo Street

Makati City

Telephone: 8941441

TeleFax: 8124296













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Guzman Taņedo & Acain Law Offices
316 Mile Long Building, Amorsolo Street, Makati City, Philippines - Telephone: 894.14.41; Telefax: 812.42.96

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