Income Tax is a tax on a person's income, emoluments, profits arising from property,

practice of profession, conduct of trade or business or on the pertinent items of gross

income specified in the Tax Code of 1997 (Tax Code), as amended, less the deductions if any,
authorized for such types of income, by the Tax Code, as amended, or other special laws.

WHO ARE REQUIRED TO FILE INCOME TAX RETURNS?

Individuals

 Resident citizens receiving income from sources within or outside the Philippines
 Employees deriving purely compensation income from two or more employers,
concurrently or successively at any time during the taxable year
 Employees deriving purely compensation income regardless of the amount, whether from
a single or several employers during the calendar year, the income tax of which has not
been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to
collectible or refundable return
 Self-employed individuals receiving income from the conduct of trade or business and/or
practice of profession
 Individuals deriving mixed income, i.e., compensation income and income from the
conduct of trade or business and/or practice of profession
 Individuals deriving other non-business, non-professional related income in addition to
compensation income not otherwise subject to a final tax
 Individuals receiving purely compensation income from a single employer, although the
income of which has been correctly withheld, but whose spouse is not entitled to
substituted filing
 Non-resident citizens receiving income from sources within the Philippines
 Aliens, whether resident or not, receiving income from sources within the Philippines

Non-Individuals

 Corporations including partnerships, no matter how created or organized.

 Domestic corporations receiving income from sources within and outside the Philippines
 Foreign corporations receiving income from sources within the Philippines
 Estates and trusts engaged in trade or business

ANNUAL INCOME TAX FOR INDIVIDUALS EARNING PURELY COMPENSATION

INCOME (INCLUDING NON-BUSINESS/NON-PROFESSION RELATED INCOME)

BIR Form No. 1700 - Annual Income Tax For Individuals Earning Purely Compensation Income
(Including Non-Business/Non-Profession Related Income)
Documentary Requirements

1. Certificate of Income Tax Withheld on Compensation (BIR Form No. 2316)

2. Duly approved Tax Debit Memo, if applicable
3. Proofs of Foreign Tax Credits, if applicable
4. Income Tax Return previously filed and proof of payment, if filing an amended return for
the same taxable year.

Procedures

1. For Electronic Filing and Payment System (eFPS) Filer

2. Fill-up applicable fields in the BIR Form No. 1700
3. Pay electronically by clicking the "Proceed to Payment" button and fill-up the required
fields in the "eFPS Payment Form" click "Submit" button.
4. Receive payment confirmation from eFPS-AABs for successful e-filing and e-payment.
5. For Non-eFPS Filer
6. Fill-up applicable fields in the BIR Form No. 1700 in the downloaded Electronic Bureau
of Internal Revenue Form (eBIRForm) Package
7. Print the duly accomplished BIR Form No. 1700
8. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the
Revenue District Office where you are registered and present the duly accomplished BIR
Form 1700, together with the required attachments and your payment.
9. In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where
you are registered and present the duly accomplished BIR Form 1700, together with the
required attachments and your payment.
10. Receive your copy of the duly stamped and validated form from the teller of the
AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
11. For Manual Filer
12. Fill-up the BIR Form No. 1700 in triplicate copies
13. Proceed to the Revenue District Office where you are registered or to any Tax Filing
Center established by the BIR and present the duly accomplished BIR Form No. 1700,
together with the required attachments.
14. Receive your copy of the duly stamped and validated form from the RDO/Tax Filing
Center representative

Deadline

On or before the 15th day of April of each year covering taxable income for calendar year 2018
and thereafter.

ANNUAL INCOME TAX FOR INDIVIDUALS, ESTATES, AND TRUSTS

BIR Form No. 1701 - Annual Income Tax Return Individuals, Estates and Trusts
Documentary Requirements

1. Certificate of Income Tax Withheld on Compensation (BIR Form No. 2316), if

applicable
2. Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form No. 2304),
if applicable
3. Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307), if applicable
4. Duly approved Tax Debit Memo, if applicable
5. Proof of Foreign Tax Credits, if applicable
6. Income Tax Return previously filed and proof of payment, if filing an amended return for
the same year
7. Account Information Form (AIF) or the Certificate of the independent Certified Public
Accountant (CPA) with Audited Financial Statements if the gross annual sales, earnings,
receipts or output exceed three million pesos (P3,000,000.00)
8. Account Information Form or Financial Statements not necessarily audited by an
independent CPA if the gross annual sales, earnings, receipts or output do not exceed
P3,000,000.00 and is subject to graduated income tax rates under Section 24(A)(2)(a)
9. Proof of prior year’s excess tax credits, if applicable

Procedures

1. For eFPS Filer

2. Fill-up applicable fields in the BIR Form No. 1701
3. Pay electronically by clicking the “Proceed to Payment” button and fill-up the required
fields in the “eFPS Payment Form” then click “Submit” button.
4. Receive payment confirmation from eFPS-AABs for successful e-filing and e-payment.
5. For Non-eFPS Filer
6. Fill-up fields in the BIR Form No. 1701 in the downloaded Electronic Bureau of Internal
Revenue Form (eBIRForm) Package
7. Print the duly accomplished BIR Form No. 1701
8. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the
Revenue District Office where you are registered and present the duly accomplished BIR
Form No. 1701, together with the required attachments and your payment.
9. n places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where
you are registered and present the duly accomplished BIR Form 1701, together with the
required attachments and your payment.
10. Receive your copy of the duly stamped and validated form from the teller of the
AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
11. For Manual Filer
12. Fill-up the BIR Form No. 1701 in triplicate copies.
13. Proceed to the Revenue District Office where you are registered or to any Tax Filing
Center established by the BIR and present the duly accomplished BIR Form No. 1701,
together with the required attachments.
 14. Receive your copy of the duly stamped and validated form from the RDO/Tax Filing
Center representative.

Deadline

Final Adjustment Return or Ann

ual Income Tax Return - On or before the 15th day of April of each year covering income for
calendar year 2018 and thereafter.

ANNUAL INCOME TAX FOR CORPORATIONS AND PARTNERSHIPS

BIR Form No. 1702 - Annual Income Tax Return (For Corporations and Partnerships)

Documentary Requirements

1. Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form No. 2304),
if applicable
2. Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Proof of Foreign Tax Credits, if applicable
5. Income tax return previously filed and proof of payment, if amended return is filed for
the same taxable year
6. Account Information Form (AIF) or the Certificate of the independent CPA with Audited
Financial Statements, if the gross annual sales, earnings, receipts or output exceed
P3,000,000.
7. Proof of prior year’s excess tax credits, if applicable

Procedures

1. For eFPS Filer

2. Fill-up applicable fields in the BIR Form No. 1702
3. Pay electronically by clicking the “Proceed to Payment” button and fill-up the required
fields in the “eFPS Payment Form” then click “Submit” button.
4. Receive payment confirmation from eFPS-AABs for successful e-filing and e-payment.
5. For Non-eFPS Filer
6. Fill-up fields in the BIR Form No. 1702 in the downloaded Electronic Bureau of Internal
Revenue Form (eBIRForm) Package
7. Print the duly accomplished BIR Form No. 1702
8. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the
Revenue District Office where you are registered and present the duly accomplished BIR
Form 1702, together with the required attachments and your payment.
9. In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where
you are registered and present the duly accomplished BIR Form 1702, together with the
required attachments and your payment.
 10. Receive your copy of the duly stamped and validated form from the teller of
the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
11. For Manual Filer
12. Fill-up the BIR Form No. 1702 in triplicate copies.
13. Proceed to the Revenue District Office where you are registered or to any Tax Filing
Center established by the BIR and present the duly accomplished BIR Form 1702,
together with the required attachments.
14. Receive your copy of the duly stamped and validated form from the RDO/Tax Filing
Center representative.

Deadline

Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of the fourth
month following the close of the taxpayer’s taxable year

INCOME TAX RATES

1. For Individual Citizens and Resident Aliens Earning Purely Compensation Income and
Individuals Engaged in Business and Practice of Profession
2. Graduated Income Tax Rates under Section 24(A)(2) of the Tax Code of 1997, as
amended by Republic Act No. 10963Amount of Net Taxable

Amount of Net Taxable Income Rate

Over But Not Over
- P250,000 0%
P250,000 P400,000 20% of the excess over P250,000
P400,000 P800,000 P30,000 + 25% of the excess over P400,000
P800,000 P2,000,000 P130,000 + 30% of the excess over P800,000
P2,000,000 P8,000,000 P490,000 + 32% of the excess over P2,000,000
P8,000,000 P2,410,000 + 35% of the excess over P8,000,000

1. For Purely Self-Employed Individuals and/or Professionals Whose Gross Sales/Receipts

and Other Non-Operating Income Do Not Exceed the VAT Threshold of P3,000,000, the
tax shall be, at the taxpayer’s option:
2. 8% Income Tax on Gross Sales or Gross Receipts in Excess of P250,000 in Lieu of the
Graduated Income Tax Rates and the Percentage Tax; Or
3. Income Tax Based on the Graduated Income Tax Rates
4. For Individuals Earning Both Compensation Income and Income from Business and/or
Practice of Profession, their income taxes shall be:
5. For Income from Compensation: Based on Graduated Income Tax Rates; and
6. For Income from Business and/or Practice of Profession:
7. If the total Gross Sales/Receipts Do Not Exceed VAT Threshold of P3,000,000, the
Individual Taxpayer May Opt to Avail:
8. 8% Income Tax on Gross Sales/Receipts and Other Non-Operating Income in Lieu of the
Graduated Income Tax Rates and the Percentage Tax; Or
9. Income Tax Based on Graduated Income Tax Rates
 10. If the total Gross Sales/Receipts Exceed VAT Threshold of P3,000,000
11. Income Tax Based on Graduated Income Tax Rates
12. On Certain Passive Income of Individual Citizens and Resident Aliens

Passive Income Tax Rate

1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical compositions) 10%
- In general 20%
3. Prizes (P10,000 or less ) Graduated
Income Tax Rates
- Over P10,000 20%
4. Winnings (except from PCSO and Lotto amounting to P10,000 or less ) 20%
- From PCSO and Lotto amounting to P10,000 or less exempt
5. Interest Income from a Depository Bank under the Expanded Foreign 15%
Currency Deposit System
6. Cash and/or Property Dividends received by an individual from a domestic 10%
corporation/ joint stock company/ insurance or mutual fund companies/
Regional Operating Headquarter of multinational companies
7. Share of an individual in the distributable net income after tax of a 10%
partnership (except GPPs)/ association, a joint account, a joint venture or
consortium taxable as corporation of which he is a member or co-venture
8. Capital gains from sale, exchange or other disposition of real property 6%
located in the Philippines, classified as capital asset
9. Net Capital gains from sale of shares of stock not traded in the stock 15%
exchange
10. Interest Income from long-term deposit or investment in the form of Exempt
savings, common or individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced by certificates in such
form prescribed by the Bangko Sentral ng Pilipinas (BSP)

Upon pre-termination before the fifth year, there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:

Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%

1. For Non-Resident Aliens Not Engaged in Trade or Business

A. Tax Rate in General – on taxable income from all sources within the same manner as
Philippines individual
citizen and
 resident alien
individual
B. Certain Passive Income Tax Rates
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical compositions) 10%
- In general 20%
3. Prizes (P10,000 or less ) Graduated
Income Tax Rates
- Over P10,000 20%
4. Winnings (except from PCSO and Lotto) 20%
- From PCSO and Lotto exempt
5. Cash and/or Property Dividends received from a domestic corporation/ 20%
joint stock company/ insurance/ mutual fund companies/ Regional Operating
Headquarter of multinational companies
6. Share of a non-resident alien individual in the distributable net income after 20%
tax of a partnership (except GPPs) of which he is a partner or from an
association, a joint account, a joint venture or consortium taxable as
corporation of which he is a member or co-venture
7. Interest Income from long-term deposit or investment in the form of Exempt
savings, common or individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced by certificates in such
form prescribed by the Bangko Sentral ng Pilipinas (BSP)

Upon pre-termination before the fifth year, there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:

Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%
8. Capital from the sale, exchange or other disposition of real property located 6%
in the Philippines classified as capital asset
9. Net Capital gains from sale of shares of stock not traded in the Stock
Exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%

1. For Non-resident Aliens Not Engaged in Trade or Business

1. Gross amount of income derived from all sources within the Philippines 25%
2. Capital gains from the exchange or other disposition of real property located 6%
in the Philippines
 3. Net Capital gains from the sale of shares of stock not traded in the Stock
Exchange
- Not Over P100,000 5%
- Any amount in excess of P100,000 10%

2. For Alien Individuals Employed by Regional Headquarters (RHQ) or Area Headquarters

and Regional Operating Headquarters (ROH) of Multinational Companies, Offshore
Banking Units (OBUs), Petroleum Service Contractor and Subcontractor

On the gross income consisting of salaries, wages, annuities, Graduated

compensation, remuneration and other emoluments, such as honoraria Income Tax Rates
and emoluments derived from the Philippines

3. For General Professional Partnerships

Net Income of the Partnerships 0%

4. For Domestic Corporations

Rates of Tax on Certain Passive Income of Corporations Tax Rate

1. Interest from currency deposits, trust funds, deposit substitutes and 20%
similar arrangements received by domestic corporations
2. Royalties from sources within the Philippines 20%
3. Interest Income from a Depository Bank under Expanded Foreign 15%
Currency Deposit System
4. Cash and Property Dividends received by a domestic corporation 0%
from another domestic corporation
5. Capital gains from the sale, exchange or other disposition of lands 6%
and/or building
6. Net Capital gains from sale of shares of stock not traded in the stock 15%
exchange

5. *Beginning on the 4th year immediately following the year in which such corporation
commenced its business operations, when the minimum corporate income tax is greater
than the tax computed using the normal income tax.
6. For Resident Foreign Corporation

1) a. In General – on taxable income derived from sources within the 30%

Philippines
b. Minimum Corporate Income Tax – on gross income 2%
c. Improperly Accumulated Earnings – on improperly accumulated 10%
taxable income
2) International Carriers – on gross Philippine billings 2½%
3) Regional Operating Headquarters of Multinational Companies– on 10%
taxable income
4.) Regional or Area Headquarters of Multinational Companies exempt
5) Corporation Covered by Special Laws Rate specified
under the
respective special
laws
6) Offshore Banking Units (OBUs) 10%
In general – Income derived by OBUs from foreign currency Exempt
transactions with non-residents, other OBUs, local commercial banks
and branches of foreign banks authorized by BSP
On interest income derived from foreign currency loans granted to 10%
residents other than offshore banking units or local commercial banks,
local branches of foreign banks authorized by BSP to transact business
with OBUs
7) Income derived under the Expanded Foreign Currency Deposit
System
Interest income derived by a depository bank under the expanded 7½%
foreign currency deposit system.
On Income derived by depository banks under the expanded foreign exempt
currency deposit systems from foreign currency transactions with non-
residents, OBUs in the Philippines, local commercial banks including
branches of foreign banks that may be authorized by BSP
On interest income derived from foreign currency loans granted by 10%
depository banks under the expanded foreign currency deposit systems
to residents other than offshore banking units in the Philippines or
other depository banks under the expanded system
8.) Branch Profit Remittances – on total profits applied or earmarked 15%
for remittance without any deduction for the tax component thereof
(except those activities which are registered with the Philippines
Economic Zone Authority)
9.) Interest from currency deposits, trust funds, deposit substitutes and 20%
similar arrangements
10. Royalties derived from sources within the Philippines 20%