Philippines

7 Chapter Tax Laws

• Chapter

  •  1 Chapter Basic knowledge

    1.1 Basic Knowledge about the Philippines

    1.2 Politics and History

    1.3 References

     2 Chapter Economic Environment

    2.1 Economic Environment

    2.2 References

     3 Chapter Establishment

    3.1 Doing Business in the Philippines

    3.2 References

     4 Chapter M&A

    4.1 Mergers and Acquisitions

    4.2 References

     5 Chapter Corporation Laws

    5.1 Corporation Code

    5.2 References

     6 Chapter Accounting

    6.1 Accounting

    6.2 References

     7 Chapter Tax Laws

    7.1 Tax Laws

    7.2 References

     8 Chapter Labor

    8.1 Working Environment

    8.2 References

• 7.1 Tax Laws

  • Donor Tax

     Donor's Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer.

  • Overview

     Tax law in the Philippines covers national and local taxes.  National taxes refer to national internal revenue taxes imposed and collected by the national government through the Bureau of Internal Revenue (BIR) and local taxes refer to those imposed and collected by the local government. The Tax Code of 1997, Revenue Issuances and BIR Rulings pertaining to national taxes are posted at the BIR website.
     

     

  • General Principles

     a.   Lifeblood Doctrine 

    This doctrine is the basis of the imposition of taxes. Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the other hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved.
     
    b.   Benefits Protection Theory 
    The basis of taxation is the reciprocal duty of protection between the state and its inhabitants. In return for the contributions, the taxpayer receives the general advantages and protection which the government affords the taxpayer and his property.
    a. It does not mean that only those who are able to pay and do pay taxes can enjoy the privileges and protection given to a citizen by the government.
    b. From the contributions received, the government renders no special or commensurate benefit to any particular property or person.
    c. The only benefit to which the taxpayer is entitled is that derived from his enjoyment of the privileges of living in an organized society established and safeguarded by the devotion of taxes to public purposes.
    d. A taxpayer cannot object to or resist the payment of taxes solely because no personal benefit to him can be pointed out as arising from the tax.
     
    c.   Necessity Theory 
    Taxes proceed upon the theory that the existence of the government is a necessity; that it cannot continue without the means to pay its expenses; and that for those means, it has the right to compel all citizens and properties within its limits to contribute. In a case, the Supreme Court held that: Taxation is a power emanating from necessity. It is a necessary burden to preserve the State’s sovereignty and a means to give the citizenry an army to resist aggression, a navy to defend its shores from invasion, a corps of civil servants to serve, public improvements designed for the enjoyment of the citizenry and those which come with the State’s territory and facilities, and protection which a government is supposed to provide.
     
    d.   Nature of the Power of Taxation 
    The power of taxation is comprehensive, unlimited, supreme and plenary, but subject to Constitutional and inherent limitations. By its nature, taxation is two-fold. It is both legislative and inherent in sovereignty.
     
    The legislative taxing power includes the authority:
    a.    to determine the nature, object, extent, coverage, and situs of the tax 
    imposition,
    b. to grant tax exemptions or condonations, and
    c. to specify or provide for the administrative, as well as judicial remedies that either the government or the taxpayers may avail themselves of in the proper implementation of the tax measure.
     

  • Tax on Individuals

     Generally, the imposition of taxes on individuals is based on the classification of taxpayers as provided below:

    a.   Resident Citizen

    A resident citizen is an individual who is a Filipino living in the Philippines
    b.   Non-Resident Citizen
    A non-resident citizen is anyone who is:
    (1) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein.
     
    (2) A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis.
     
    (3) A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be physically present abroad most of the time during the taxable year.
     
    (4) A citizen who has been previously considered as nonresident citizen and who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines shall likewise be treated as a nonresident citizen for the taxable year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival in the Philippines.
    (5) The taxpayer shall submit proof to the Commissioner to show his intention of leaving the Philippines to reside permanently abroad or to return to and reside in the Philippines as the case may be for purpose of this Section.
    c.   Resident Alien
    A resident alien is an individual whose residence is within the Philippines and who is not a citizen thereof.
    d.   Non-Resident Alien Engaged in Trade or Business
    A non-resident alien is an individual whose residence is not within the Philippines and who is not a citizen thereof. Notwithstanding this, a non-resident alien is deemed to be doing business in the Philippines if he shall come to the Philippines and stay therein for an aggregate period of more than one hundred eighty (180) days during any calendar year.
    The following are also considered Non-Resident Aliens Engaged in Trade or Business in the Philippines:
    1.    Alien Individual Employed by Regional or Area Headquarters and Regional   
    Operating Headquarters of Multinational Companies
     
    2. Alien Individual Employed by Offshore Banking Units
     
    2.    Alien Individual Employed by Petroleum Service Contractor and Subcontractor
     
    e.   Non-Resident Alien Not Engaged in Trade or Business
    A non-resident alien not engaged in trade or business is an individual who is not a resident of the Philippines and one who also does not fall under the classifications specified by the National Internal Revenue Code and whose aggregate stay in the Philippines during any calendar year does not exceed 180 days.
     
    Another factor to consider in determining whether the individual has to pay tax is whether or not the income was derived from sources within the Philippines. These factors must be taken into consideration.
     

     

    Taxpayer	Source of Income
    	Within the Philippines	Outside of the Philippines
    Resident Citizen	Taxable	Taxable
    Non-Resident Citizen	Taxable	Not taxable
    Resident Alien	Taxable	Not taxable
    Non-Resident Alien Engaged in Trade or Business	Taxable	Not taxable
    Non-Resident Alien Not Engaged in Trade or Business	Taxable	Not taxable

  • Tax on Corporation

     Corporation shall include the following:

    ·         Partnerships (no matter how created or organized)

    ·         Joint-stock companies
    ·         Joint accounts (cuentas en participacion)
    ·         Association, or insurance companies
     
    It does not include:
    ·         General professional partnerships
    -These are partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business.
     
    ·         Joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating consortium agreement under a service contract with the Government.
     
    Imposition of taxes on corporations is also based on the classification of taxpayers as provided below:
     
    1.   Domestic Corporation
    This is a corporation which is created or organized in the Philippines or under its laws.
    2.   Foreign Corporation
    a.   Resident Foreign Corporation
    This is a foreign corporation engaged in trade or business within the Philippines.
    b.   Non-resident Foreign Corporation
    This is a foreign corporation not engaged in trade or business within the Philippines
     

  • Tax on Income

     a.   Income Tax Rates

     

    This is the regular income tax rate table or schedule used for computing income tax due for Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession:

    If TAXABLE INCOME is:	TAX DUE is:
    Not over P 10,000	5%
    Over P 10,000 but not over P 30,000	P 500 + 10% of the excess over P 10,000
    Over P 30,000 but not over P 70,000	P 2,500 + 15% of the excess over P 30,000
    Over P 70,000 but not over P 140,000	P 8,500 + 20% of the excess over P 70,000
    Over P 140,000 but not over P 250,000	P 22,500 + 25% of the excess over P 140,000
    Over P 250,000 but not over P 500,000	P 50,000 + 30% of the excess over P 250,000
    Over P 500,000	P 125,000 + 32% of the excess over P 500,000

     

     

     

  • Business Taxes

      

    Business taxes in the Philippines are divided into two kinds, those which are collected on a national level and those which may be collected by local government units.

     
    a.   National Taxes
    i.             Value-Added Tax (VAT)
     
    VAT is a business tax imposed and collected from the seller in the course of trade or business on every sale of properties (real or personal) lease of goods or properties (real or personal) or vendors of services. It is an indirect tax, thus, it can be passed on to the buyer.
    Persons required to file VAT returns
    1.               Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases goods or properties and renders services subject to VAT, if the aggregate amount of actual gross sales or receipts exceed One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00).
    2. A person required to register as VAT taxpayer but failed to register
    3. Any person, whether or not made in the course of his trade or business, who imports goods
    Procedure
     
    Monthly VAT Declarations
    Tax Form
     
    BIR Form 2550M - Monthly Value-Added Tax Declaration (February 2007 ENCS)
     
    Documentary Requirements
     
    1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307), if applicable
     
    2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source (SAWT), if applicable
     
    3. Duly approved Tax Debit Memo, if applicable
     
    4. Duly approved Tax Credit Certificate, if applicable
     
    5. Authorization letter, if return is filed by authorized representative.
     
    Procedure
     
    1. Fill-up BIR Form No. 2550M in triplicate copies (two copies for the BIR and one copy for the taxpayer)
     
    2. If there is payment:
     
    -File the Monthly VAT declaration, together with the required attachments, and pay the VAT due thereon with any Authorized Agent Bank (AAB) under the jurisdiction of the Revenue District Office (RDO)/Large Taxpayers District Office (LTDO) where the taxpayer (head office of the business establishment) is registered or required to be registered.
     
    -The taxpayer must accomplish and submit BIR-prescribed deposit slip, which the bank teller shall machine validate as evidence that payment was received by the AAB. The AAB receiving the tax return shall stamp mark the word "Received" on the return and machine validate the return as proof of filing the return and payment of the tax.
     
    -In places where there are no duly accredited agent banks, file the Monthly VAT declaration, together with the required attachments and pay the VAT due with the Revenue Collection Officer (RCO) or duly authorized Treasurer of the Municipality where such taxpayer (head office of the business establishment) is registered or required to be registered.
     
    -The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt upon payment of the tax.
     
    3. If there is no payment:
     
    File the Monthly VAT Declaration, together with the required attachments with the RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly authorized Municipal/ City Treasurer of Municipality/City where the taxpayer (head office of the business establishment) is registered or required to be registered.
     
    Deadline
     
    Manual Filing
    Not later than the 20th day following the end of each month
     
    Through Electronic Filing and Payment System (eFPS):

    INDUSTRY	DEADLINE
    Group A -Insurance and Pension Funding                         -Activities Auxiliary to Financial Intermediation -Construction -Water Transport -Hotels and Restaurants -Land Transport	25 days following the end of the month
    Group B -Manufacture and Repair of Furniture -Manufacture of Basic Metals -Manufacture of Chemicals and Chemical Products -Manufacture of Coke, Refined Petroleum & Fuel Products -Manufacture of Electrical Machinery & Apparatus N.E.C. -Manufacture of Fabricated Metal Products -Manufacture of Food, Products & Beverages -Manufacture of Machinery & Equipment NEC -Manufacture of Medical, Precision, Optical Instruments -Manufacture of Motor Vehicles, Trailer & Semi-Trailers -Manufacture of Office, Accounting & Computing Machinery -Manufacture of Other Non-Metallic Mineral Products -Manufacture of Other Transport Equipment -Manufacture of Other Wearing Apparel -Manufacture of Paper and Paper Products -Manufacture of Radio, TV & Communication Equipment/ Apparatus -Manufacture of Rubber & Plastic Products -Manufacture of Textiles -Manufacture of Tobacco Products -Manufacture of Wood & Wood Products -Manufacturing N.E.C. -Metallic Ore Mining -Non-Metallic Mining & Quarrying	24 days following the end of the month
    Group C -Retail Sale -Wholesale Trade and Commission Trade -Sale, Maintenance, Repair of Motor Vehicle, Sale of Automotive Fuel -Collection, Purification and Distribution of Water -Computer and Related Activities Real Estate Activities	23 days following the end of the month
    Group D -Air Transport -Electricity, Gas, Steam & Hot Water Supply -Postal & Telecommunications -Publishing, Printing & Reproduction of Recorded Media -Recreational, Cultural & Sporting Activities -Recycling -Renting of Goods & Equipment -Supporting & Auxiliary Transport Services	22 days following the end of the month
    Group E -Activities of Membership Organizations, Inc. -Health and Social Work -Public Admin & Defense Compulsory Social Security -Research and Development -Agricultural, Hunting, and Forestry -Farming of Animals -Fishing -Other Service Activities -Miscellaneous Business Activities Unclassified	21 days following the end of the month

     
     
    Quarterly VAT Returns

    Tax Form

     

    BIR Form No. 2550Q - Quarterly Value-Added Tax Return (February 2007 ENCS)

     

    Attachments to the Return

     

    1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if applicable

     

    2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source (SAWT), if applicable

     

    3. Duly approved Tax Debit Memo, if applicable

     

    4. Duly approved Tax Credit Certificate, if applicable

     

    5. Previously filed return and proof of payment, for amended return

     

    6. Authorization letter, if return is filed by authorized representative

     

    Procedure

     

    1. Fill-up BIR Form 2550Q in triplicate copies (two copies for the BIR and one copy for the taxpayer)

     

    2. If there is payment:

     

    -       File the Quarterly VAT Return, together with the required attachments, and pay the VAT due thereon with any AAB under the jurisdiction of the RDO/LTDO where the taxpayer (head office of the business establishment) is registered or required to be registered.

     

    -       The taxpayer must accomplish and submit BIR- prescribed deposit slip, which the bank teller shall machine validate as evidence that payment was received by the AAB. The AAB receiving the tax return shall stamp mark the word "Received" on the return and machine validate that return as proof of filing the return and payment of the tax.

     

    -       In places where there are no duly accredited agent banks, file the Quarterly VAT Return, together with the required attachments and pay the VAT due with the Revenue Collection Officer (RCO) or duly authorized Treasurer of the Municipality where such taxpayer (head office of the business establishment) is registered or required to be registered.

     

    -       The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt upon payment of the tax.

     

    3. If there is no payment:

     

    File the Quarterly VAT Return, together with the required attachments with the RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly authorized Municipal/City Treasurer of Municipality/City where the taxpayer (head office of the business establishment) is registered or required to be registered.

     

    Reminders:

     

    1. Only one consolidated Monthly VAT Declaration/Quarterly VAT Return shall be filed covering the results of operation of the head office as well as the branches for all lines of business subject to VAT.

     

    2. The Quarterly List of Sales and Purchases shall be submitted in magnetic form using 3.5-inch floppy diskette following the format provided under Section 4.114-3(g) of RR No. 16-2005.

     

    3. The Quarterly List of Sales and Purchases shall be submitted through electronic filing facility for taxpayers under the jurisdiction of the Large Taxpayers Service (LTS) and those enrolled under the eFPS.

     

    Deadline

     

    Within twenty five (25) days following the close of taxable quarter.

     

    VAT Tax Rates

    TRANSACTION	TAX RATE
    Sale of goods and properties	Twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged
    Sale of services and use or lease of properties	Twelve percent (12%) of gross receipts derived from the sale or exchange of services, including the use or lease of properties
    Importation of goods	Twelve percent (12%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such as tax to be paid by the importer prior to the release of such goods from customs custody; provided, that where the customs duties are determined on the basis of quantity or volume of the goods, the VAT shall be based on the landed cost plus excise taxes, if any.
    Export sales and other zero-rated sales	Zero percent (0%)

     

     

    i.             Percentage Tax

    Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties or services in the course of trade or business whose gross annual sales or receipts do not exceed P550,000 and are not VAT-registered.

     

    Persons required to file Percentage Tax returns

     

    Required to file Monthly	Required to file Quarterly
    1. Who sell or lease goods, properties or services in the course of trade or business and are exempt from value-added tax (VAT) under Section 109 (w) of the National Internal Revenue Code, as amended, whose gross annual sales and/or receipts do not exceed      Php 1,919,500 and who are not VAT-registered;	1. Operator, manager or person in charge of: -       cockpits, -       cabarets, day or night clubs, videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music lounges -       boxing exhibitions -       professional basketball games -       Jai-alai and race tracks
    2. Engaged in the business of cars for rent or hire driven by the lessee, transportation contractors, including persons who transport passengers for hire, and other domestic carriers of passengers by land (except owners of animal-drawn two-wheeled vehicle) and keepers of garages	2. Telephone and communication companies on their overseas dispatch, message or conversation originating and transmitted from the Philippines
    3. Engaged in International air/shipping carriers doing business in the Philippines on their gross receipts derived from transport of cargo from the Philippines to another country
    4. Franchise grantees of – radio and/or television broadcasting whose gross annual receipts for the preceding year do not exceed Php 10,000,000.00 and did not opt to register as VAT taxpayers gas and water utilities
    5. Banks and non-bank financial intermediaries performing quasi-banking functions
    6. Other non-bank financial intermediaries (including pawnshops)
    7. Person, company or corporation (except purely cooperative companies or associations) doing life insurance business
    8. Fire, marine or miscellaneous agents of foreign insurance companies

    
    

    Procedure

                           Monthly Percentage Tax

    Tax Form

     

    BIR Form 2551M - Monthly Percentage Tax Return

     

    Documentary Requirements

     

    1.    Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

     

    2.    Duly approved Tax Debit Memo, if applicable

     

    3.    For amended return, proof of payment and the return previously filed

     

    4.    Authorization letter, if filed by an authorized representative

     

    Procedure

     

    1.    Fill-up BIR Form 2551M in triplicate copies

    2.    a. If there is payment:

     

    -       Proceed to any Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered and present the duly accomplished BIR Form 2551M, together with the required attachments and payment. The Percentage Tax shall be paid at the time the return is filed by the taxpayer.

    -       In places where there are no AABs, the duly accomplished BIR Form 2551M, together with the required attachments and payment, shall be filed/paid with the Revenue Collection Officer (RCO) or duly authorized Treasurer of the city or municipality where said business or principal place is located.

    -       Receive the taxpayer's copy of BIR Form 2551M duly validated/stamp-received by the AAB/RCO/authorized City or Municipal Treasurer.

     

     For eFPS filers, you may click this Job Aid in filling and payment thru said system.

     

     

    b. If there is no payment:

     

    -       Proceed to the RDO where the taxpayer is registered or with the concerned RCO and present the duly accomplished BIR Form 2551M, together with the required attachments.

    -       Receive the taxpayer's copy of BIR Form 2551M duly stamp-received by the RDO representative.

     

    Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall be paid at the concerned AAB.

     

    When to File/Pay

    a.    Manual Filing

    Within twenty (20) days following the end of each month

     

    b.    Electronic Filing

    For taxpayers enrolled with the Electronic Filing and Payment System (eFPS), in accordance with the schedule set forth in RR No. 26-2002 as follows:

     

    Group A : Twenty five (25) days following the end of the month

    Group B : Twenty four (24) days following the end of the month

    Group C : Twenty three (23) days following the end of the month

    Group D : Twenty two (22) days following end the of the month

    Group E : Twenty one (21) days following the end of the month

     

     

    Quarterly Percentage Tax

     

    Tax Form

     

    BIR Form 2551Q - Quarterly Percentage Tax Return

     

    Documentary Requirements

     

    1.    Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

    2.    Duly approved Tax Debit Memo, if applicable

    3.    For amended return, proof of payment and the return previously filed

    4.    Authorization letter, if filed by an authorized representative

     

     

     

    Procedure

     

    1.    Fill-up BIR Form 2551Q in triplicate copies.

    2.    a. If there is payment:

     

    -Proceed to any AAB located within the territorial jurisdiction of the RDO where the taxpayer is registered and present the duly accomplished BIR Form 2551Q, together with the required attachments and payment.  The Percentage Tax shall be paid at the time the return is filed by the taxpayer.

     

    -       In places where there are no AABs, the duly accomplished BIR Form 2551Q, together with the required attachments and payment, shall be filed/paid with the RCO or duly Authorized Treasurer of the city or municipality where said business or principal place of business is located.

     

    -       Receive the taxpayer's copy of BIR Form 2551Q duly validated/stamp-received by the AAB/RCO/authorized City or Municipal Treasurer.

     

       For eFPS filers, you may click this Job Aid in filing and payment thru said system

     

    b. If there is no payment:

    - Proceed to the Revenue District Office where the taxpayer is registered or with the concerned RCO and present the duly accomplished BIR Form 2551Q, together with the required attachments.

    -Receive the taxpayer's copy of BIR Form 2551Q duly stamp-received by the RDO representative.

     

    Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall be paid at the concerned AAB.

     

    When to File/Pay

     

    Manual Filing

    Within twenty (20) days after the end of each taxable quarter

     

    Electronic Filing

    Within twenty (20) days after the end of each taxable quarter

     

    Tax Rates

    Coverage	Basis	Tax Rate
    Persons exempt from VAT under Sec. 116	Gross Sales or Receipts	3%
    Domestic carriers and keepers of garages	Gross Receipts	3%
    International Carriers:
    International air/shipping carriers doing business in the Philippines	Gross Receipts	3%
    Franchise Grantees:
    Electric , gas and water utilities	Gross Receipts	2%
    Radio and television broadcasting companies whose annual gross receipts of the preceding year do not exceed P 10,000,000 and did not opt to register asVAT taxpayer	Gross Receipts	3%
    Banks and non-bank financing intermediaries	Interest, commissions and discounts from lending activities as well as income from leasing on the basis of remaining maturities of instruments:
    	•  Short term maturity (not over 2 years)	5%
    	•  Medium term maturity (over 2 years but not over 4 years)	3%
    	•  Long term maturity
    	ο  Over 4 years but not over 7 years	1%
    	ο  Over 7 years	0%
    	On Dividends	0%
    	On royalties, rentals of properties, real or personal, profits from exchange and all other items treated as gross income under Sec. 32 of the Code	5%
    Finance Companies	On interest, discounts and other items of gross income paid to finance companies and other financial intermediaries not performing quasi banking functions	5%
    	Interest, commissions and discounts paid from their loan transactions from finance companies as well as income from financial leasing shall be taxed based on the remaining maturities of instruments:
    	•  Short term maturity (not over 2 years)	5%
    	•  Medium term (over 2 years but not over 4 years)	3%
    	•  Long Term Maturity
    	ο  Over 4 years but not over 7 years	1%
    	ο  Over 7 years	0%
    Life Insurance Companies (except purely cooperative companies or associations)	Total premiums collected	5%
    Agents of foreign insurance companies: (except reinsurance premium)
    	Total premium collected	10%
    	Total premium collected	5%
    Proprietors, lessee or operator of the following:
    Cockpits	Gross receipts	18%
    Cabarets, Night or Day Clubs	Gross receipts	18%
    Boxing exhibitions	Gross receipts	10%
    Professional basketball games	Gross receipts	15%
    Jai-alai and race track (operators shall withheld tax on winnings)	Gross receipts	30%
    Every stock broker who effected a sale, barter, exchange or other disposition of shares of stock listed and traded through the Local Stock Exchange (LSE) other than the sale by a dealer in securities	Gross selling price or gross value in money of shares of stocks sold, bartered, exchanged or otherwise disposed	½ of 1%
    A corporate issuer/stock broker, whether domestic of foreign, engaged in the sale, barter, exchange or other disposition through Initial Public Offering (IPO)/secondary public offering of shares of stock in closely held corporations	Gross selling price or gross value of in money of shares of stocks sold, bartered, exchanged or otherwise disposed in accordance with  the proportion of stocks sold, bartered or exchanged or after listing in the stock exchange
    	•  Up to 25 %	4%
    	•  Over 25% but not over 33 1/3%	2%
    	•  Over 33 1/3 %	1%

    
    

    iii. Excise Tax

     

    Excise Tax is a tax on the production, sale or consumption of a commodity in a country.

    It is applicable to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and goods that are imported.

     

    Major Classification of Excisable Articles

     

    1. Alcohol Products

    a. Distilled Spirits

    b. Wines

    c. Fermented Liquors

     

    2. Tobacco Products

    a. Tobacco Products

    b. Cigars & Cigarettes   

    c. Inspection Fee

     

    3. Petroleum Products

    4. Miscellaneous Articles

    a. Automobiles

    b. Non-essential Goods

    5. Mineral Products

     

    iv. Other Taxes

    The following taxes may also be imposed depending on the nature of the business of the corporation:

     

    1.    Overseas communication tax

    2.    Documentary stamps on certain documents, instruments and related transactions such as: issuance of shares of stock, evidence of indebtedness, transfer of real property, lease contracts and insurance policies.

     

    a.   Local Taxes

     

    i.             Local Business Tax

    Persons required to file Local Business Tax returns

    1.    Manufacturers

    2.    Wholesalers

    3.    Distributors

    4.    Dealers

    5.    Contractors

    6.    Banks and other Financial Institutions

     

    Tax rates

     

    INDUSTRIES/TRANSACTIONS	TAX RATE
    Manufacturers, wholesalers, distributors, dealers, and contractors	graduated amounts or rates not exceeding 2% based on the gross sales/gross receipts of the prior calendar year depending on the place where business is conducted.   For essential commodities, rates are 50% lower   Retailers are subject to: a.  2% tax if their gross sales/ receipts are P400,000 or less b.  1% tax if in excess of P400,000
    Banks and other financial institutions	not exceeding 0.5% of their gross receipts depending on the locality of the business

     

     

     
     

     

  • Final Withholding Tax and Withholding VAT

     Final Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is not creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes the full and final payment of the Income Tax due from the payee on the said income. Withholding Tax on Government Money Payments (GMP) - Percentage Taxes - is the tax withheld by National Government Agencies (NGAs) and instrumentalities, including government-owned and controlled corporations (GOCCs) and local government units (LGUs), before making any payments to non-VAT registered taxpayers/suppliers/payees. This may be final or creditable against VAT liability of payee.
    
    

     

     

  • Withholding Tax on Compensation

     Withholding Tax on Compensation is a kind of creditable withholding tax which is withheld from individuals receiving purely compensation income.

     

     
     
    a.   Monthly Remittance of Taxes Withheld on Compensation
    Tax Form
    BIR Form 1601-C: Monthly Remittance Return of Income Taxes Withheld on Compensation
     
    Who Are Required to File
     
    Every registered withholding agent on compensation, which includes, but not limited to the following:
     
    1) Individuals engaged in business or practice of profession with employees subject to income tax
    2) All Juridical persons (e.g., Corporations, general partnerships, associations, etc.) whether or not engaged in business.
    3) Government Agencies and Instrumentalities (e.g. NGAs, GOCCs, etc.), including local government units (LGUs)
     
    Documentary Requirements/Attachments to the tax return:
     
    1) For amended return, proof of remittance and the return previously filed.
     
    2) For those with advance payments, BIR Form No. 0605
     
    3) For Private Sector, copy of the list of MWEs who received hazard pay submitted to the DOLE Regional/Provincial Offices-Operations Division/Unit, for the return period March, June, September and December, if applicable.
     
    4) For Public Sector, copy of Department of Budget and Management (DBM) circular/s or equivalent on MWEs allowed to receive hazard pay, for the return period March, June, September and December, if applicable.
     
    5) Electronic Tax Remittance Advice (eTRA) previously Tax Remittance Advice (TRA) for National Government Agencies (NGAs) as required under DOF-DBM Joint Circular No. 1-2000A and RR 1-2013.
     
    Procedures for Filing and Payment
     
    1. Read instructions indicated in the tax return.
    2. Accomplish correctly BIR Form No. 1601-C in triplicate copies.
    3. If there is tax required to be remitted:
    - Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office (RDO) where you are registered or withholding agent is registered and present the duly accomplished BIR Form No. 1601-C, together with the required attachments (if applicable) and your payment.
     
    - 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 or withholding agent is registered and present the duly accomplished BIR Form No. 1601- C, together with the required attachments (if applicable) and your payment.
    - Receive your copy of the duly stamped and validated form from the teller of the AAB's/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
     
    4. If there is no tax required to be remitted:
    - Proceed to the Revenue District Office where you are registered or where the withholding agent is registered and present the duly accomplished BIR Form No. 1601-C, together with the required attachments.
    - Receive your copy of the duly stamped and validated BIR Form from the RDO.
     
    Deadline
     
    Filing Via EFPS
    Group A - Fifteen (15) days following end of the month
    Group B - Fourteen (14) days following end of the month
    Group C - Thirteen (13) days following end of the month
    Group D - Twelve (12) days following end of the month
    Group E - Eleven (11) days following end of the month
     
    Note: The staggered manner of filing is only allowed to taxpayers using the Electronic Filing and Payment System (EFPS) based on the industry classification groupings per RR No. 26-2002.
     
    However, the staggered filing of returns allowed for withholding agents/taxpayers enrolled in the EFPS facility of the Bureau shall not apply in the case of the NGAs per RR 1-2013.
     
    Payment Via EFPS
     
    On or before the fifteenth (15th) day of the month following the month withholding was made, except for taxes withheld for the month of December which shall be paid on or before January 20 of the succeeding year.
     
    Provided however that, in the case of NGAs, all returns must be electronically filed (e-filed) and payment of the tax due must also be made on the same day the return is e-filed which shall be on or before the 10th day following the month in which withholding was made, except for taxes withheld for the month of December of each year, which shall be filed on or before January 15 of the succeeding year.
     
    Manual Filing and Payment
     
    On or before the tenth (10th) day of the month following the month the withholding was made, except for taxes withheld for the month of December which shall be filed and paid on or before January 15 of the succeeding year
     
    Tax Rates
    REVISED WITHHOLDING TAX TABLES
    Effective January 1, 2009

    DAILY		1	2	3	4	5	6	7	8
    Exemption		0.00	0.00	1.65	8.25	28.05	74.26	165.02	412.54
    Status	(‘000P)	+0% over	+5% over	+10% over	+15% over	+20% over	+25% over	+30% over	+32% over
    A. Table for employees without qualified dependent
    1. Z	0.0	1	0	33	99	231	462	825	1,650
    2. S/ME	50.0	1	165	198	264	396	627	990	1,815
    B. Table for single/married employee with qualified dependent child(ren)
    1. ME1 / S1	75.0	1	248	281	347	479	710	1,073	1,898
    2. ME2 / S2	100.0	1	330	363	429	561	792	1,155	1,980
    3. ME3 / S3	125.0	1	413	446	512	644	875	1,238	2,063
    4. ME4 / S4	150.0	1	495	528	594	726	957	1,320	2,145
    WEEKLY		1	2	3	4	5	6	7	8
    Exemption		0.00	0.00	9.62	48.08	163.46	432.69	961.54	2,403.85
    Status		+0% over	+5% over	+10% over	+15% over	+20% over	+25% over	+30% over	+32% over
    A. Table for employees without qualified dependent
    1. Z	0.0	1	0	192	577	1,346	2,692	4,808	9,615
    2. S/ME	50.0	1	962	1,154	1,538	2,308	3,654	5,769	10,577
    B. Table for single/married employee with qualified dependent child(ren)
    1. ME1 / S1	75.0	1	1,442	1,635	2,019	2,788	4,135	6,250	11,058
    2. ME2 / S2	100.0	1	1,923	2,115	2,500	3,269	4,615	6,731	11,538
    3. ME3 / S3	125.0	1	2,404	2,596	2,981	3,750	5,096	7,212	12,019
    4. ME4 / S4	150.0	1	2,885	3,077	3,462	4,231	5,577	7,692	12,500
    SEMI-MONTHLY		1	2	3	4	5	6	7	8
    Exemption		0.00	0.00	20.83	104.17	354.17	937.50	2,083.33	5,208.33
    Status		+0% over	+5% over	+10% over	+15% over	+20% over	+25% over	+30% over	+32% over
    A. Table for employees without qualified dependent
    1. Z	0.0	1	0	417	1,250	2,917	5,833	10,417	20,833
    2. S/ME	50.0	1	2,083	2,500	3,333	5,000	7,917	12,500	22,917
    B. Table for single/married employee with qualified dependent child(ren)
    1. ME1 / S1	75.0	1	3,125	3,542	4,375	6,042	8,958	13,542	23,958
    2. ME2 / S2	100.0	1	4,167	4,583	5,417	7,083	10,000	14,583	25,000
    3. ME3 / S3	125.0	1	5,208	5,625	6,458	8,125	11,042	15,625	26,042
    4. ME4 / S4	150.0	1	6,250	6,667	7,500	9,167	12,083	16,667	27,083
    MONTHLY		1	2	3	4	5	6	7	8
    Exemption		0.00	0.00	41.67	208.33	708.33	1,875.00	4,166.67	10,416.67
    Status		+0% over	+5% over	+10% over	+15% over	+20% over	+25% over	+30% over	+32% over
    A. Table for employees without qualified dependent
    1. Z	0.0	1	0	833	2,500	5,833	11,667	20,833	41,667
    2. S/ME	50.0	1	4,167	5,000	6,667	10,000	15,833	25,000	45,833
    B. Table for single/married employee with qualified dependent child(ren)
    1. ME1 / S1	75.0	1	6,250	7,083	8,750	12,083	17,917	27,083	47,917
    2. ME2 / S2	100.0	1	8,333	9,167	10,833	14,167	20,000	29,167	50,000
    3. ME3 / S3	125.0	1	10,417	11,250	12,917	16,250	22,083	31,250	52,083
    4. ME4 / S4	150.0	1	12,500	13,333	15,000	18,333	24,167	33,333	54,167

    
    

    Legend: Z-Zero exemption S-Single ME-Married Employee 1;2;3;4-Number of qualified dependent children

     

    S/ME = P50,000 EACH WORKING EMPLOYEE Qualified Dependent Child = P25,000 each but not exceeding four (4) children

     

    USE TABLE A FOR SINGLE/MARRIED EMPLOYEES WITH NO QUALIFIED DEPENDENT

     

    1. Married Employee (Husband or Wife) whose spouse is unemployed.

    2. Married Employee (Husband or Wife) whose spouse is a non-resident citizen receiving income from foreign sources

    3. Married Employee (Husband or Wife) whose spouse is engaged in business

    4. Single

    6. Zero Exemption for employees with multiple employers for their 2nd, 3^rd...employers (main employer claims personal & additional exemption

    7. Zero Exemption for those who failed to file Application for Registration

     

    USE TABLE B FOR THE FOLLOWING SINGLE/MARRIED EMPLOYEES WITH QUALIFIED DEPENDENT

     

    1. Employed husband and husband claims exemptions of children

    2. Employed wife whose husband is also employed or engaged in business; husband waived claim for dependent children in favor of the employed wife

    3. Single with qualified dependent children

  • Estate Tax

     Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to testamentary disposition.

     

  • Capital Gains Tax

     Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale.

  • Documentary Stamp Tax

     Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto.

    a.              Procedure

    1.               File BIR Form No. 2000 or BIR Form No. 2000-OT in triplicate (two copies for the BIR and one copy for the taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the seller or transferor is registered, for shares of stocks or where the property is located, for real property. In places where there are no AAB, the return will be filed directly with the Revenue Collection Officer or Authorized City or Municipal Treasurer.
     
    2.               One-Time Transaction (ONETT) taxpayers shall mandatorily use the eBIR Forms in filing all of their tax returns. They may opt to submit their tax returns manually using the eBIR Forms Offline Package in the RDO where the seller or transferor is registered, for shares of stocks or where the property is located, for real property or electronically through the use of the Online eBIR Forms System. (Sec. 3(2) RR No. 6-2014)
     
    3.               Submit all documentary requirements and proof of payment to the Revenue District Office having jurisdiction over the place of residence of the seller.
     
    Deadlines
    The Documentary Stamp Tax return (BIR Form 2000) shall be filed in triplicate (two copies for the BIR and one copy for the taxpayer) within five (5) days after the close of the month when the taxable document was made signed, issued, accepted or transferred; upon remittance by Collection Agents of collection from sale of loose stamps. The Documentary Stamp Tax shall be paid upon filing of the return.
     
    Tax Forms
     
    -       BIR Form 2000 (Documentary Stamp Tax Declaration Return);
    -       BIR Form 2000-OT Documentary Stamp Tax Declaration Return (ONE- TIME TRANSACTIONS)
     
    Documentary Requirements
     
    1) Photocopy of document(s) to which the documentary stamp shall be affixed, in case of constructive affixture of Documentary Stamp Tax
    2) Proof of exemption under special law, if applicable
    3) Duly approved Tax Debit Memo, if applicable
    4) Proof of payment of documentary stamp tax paid upon the original issue of the stock, if applicable.
     
    b.   Tax Rates
    Tax Code Section	Document	Taxable Unit	Tax Due Per Unit	% of Unit	Taxable Base
    174	Original Issue of Shares of Stock with par value   Original Issue of Shares of Stock without par value         Stock Dividend	P200.00 or fraction thereof     P200.00 or fraction thereof           P200.00 or fraction thereof	1.00      1.00           1.00	.5%      .5%            .5%	Par value of shares of stocks    Actual consideration for the issuance of shares of stocks   Actual value represented by each share
    175	Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Shares or   Certificates of Stock      Stock without par value	P200.00 or fraction thereof	.75	3.75%             25%	Par value of such stock           DST paid upon the original issuance of said stock.
    176	Bonds, Debentures, Certificate of Stock or Indebtedness issued in foreign Countries	P200.00 or fraction thereof	.75	3.75%	Par value of such bonds, debentures, Certificate of Stock or Indebtedness
    177	Certificate of Profits or Interest in Property or Accumulation	P200.00 or fraction thereof	.50	.25%	Face value of such certificate / memorandum
    178	Bank Checks, Drafts, Certificate of Deposit not bearing interest   and other Instruments	On each Document	1.50
    179	All Debt Instruments	P200.00 or fraction thereof	1.00	.5%	Issue price of any such instruments
    180	All Bills of Exchange or Drafts	P200.00 or fraction thereof	.30	.15%	Face value of any such bill of exchange or draft
    181	Acceptance of Bills of Exchange or   order for the payment of money purporting to be drawn in a   foreign country but payable in the Philippines	P200.00 or fraction thereof	.30	.15%	Face value of such bill of exchange or order or the Philippine   equivalent of such value, if expressed in foreign currency
    182	Foreign Bills of Exchange and Letters of Credit	P200.00 or fraction thereof	.30	.15%	Face value of such bill of exchange or letter of credit or the Philippine equivalent of such value, if expressed in foreign   currency
    183	Life Insurance Policies	If the amount of insurance does not exceed P100,000.00    If the amount of insurance exceeds P100,000.00 but does not exceed P300,000.00    If the amount of insurance exceeds P300,000.00 but does not exceed P500,000.00   If the amount of insurance exceeds P500,000.00 but does not exceed P750,000.00   If the amount of insurance exceeds P750,000.00 but does not exceed P1,000,000.00   If the amount of insurance exceeds P1,000,000.00	exempt            10.00              25.00             50.00              75.00              100.00		Amount of Insurance       Amount of Insurance         Amount of Insurance         Amount of Insurance         Amount of Insurance         Amount of Insurance
    184	Policies Of Insurance upon Property	P4.00 premium or fraction thereof	.50	12.5%	Premium charged
    185	Fidelity Bonds and other Insurance Policies	P4.00 premium or fraction thereof	.50	12.5%	Premium charged
    186	Policies of Annuities  or other instruments            Pre-Need Plans	P200.00 or fraction thereof         P200.00 or fraction thereof	.50           .20	.25%           .10%	Premium or installment payment or contract price collected    Premium or contribution   collected
    187	Indemnity Bonds	P4.00 or fraction thereof	.30	7.5%	Premium charged
    188	Certificates of Damage or otherwise and Certificate or document   issued by any customs officers, marine surveyor, notary public and   certificate required by law or by rules and regulations of a public office	Each Certificate	15.00
    189	Warehouse Receipts (except if value does not exceed P200.00)	Each Receipt	15.00
    190	Jai-alai, Horse Race Tickets, lotto or Other Authorized Number   Games	P1.00 cost of ticket     Additional P0.10 on every P1.00 or fraction thereof if cost of   ticket exceeds P1.00	.10	10%	Cost of the ticket   Cost of the ticket
    191	Bills of Lading or Receipts(except charter party)	If the value of such goods exceeds P100.00 and does not exceed P1,000.00   If the value exceeds P1,000.00   Freight tickets covering goods, merchandise or effects carried as accompanied baggage of passengers on land and water carriers primarily engaged in the transportation of passengers	1.00              10.00         Exempt		Value of such goods         Value of such goods
    192	Proxies(except proxies issued affecting the affairs of associations or   corporations, organized for religious, charitable or literary purposes)	Each proxy	15.00
    193	Powers of Attorney(except acts connected   with the collection of claims due from or accruing to the Government of the   Republic of the Philippines, or the government of any province, city or Municipality)	Each Document	5.00
    194	Lease and other Hiring agreements or memorandum or contract for   hire, use or rent of any land or tenements or portions thereof	First 2,000 or fractional part thereof   For every P1,000 or fractional part thereof in excess of the   first P2,000 for each year of the term of the said contract or   agreement	3.00       1.00	.15%       .1%
    195	Mortgages Pledges of lands, estate, or property and Deeds of   Trust	First 5,000     On each P5,000 or fractional part thereof in excess of 5,000	20.00     10.00	.4%     .2%	Amount Secured   Amount Secured
    196	Deed of Sale, instrument or writing and Conveyances of Real   Property (except grants, patents or original certificate of the government)	First 1,000                   For each additional P1,000 or fractional part thereof in excess   of P1,000	15.00                   15.00	1.5%                   1.5%	Consideration or Fair Market Value, whichever is higher (if   government is a party, basis shall be the consideration)   Consideration or Fair Market Value, whichever is higher (if   government is a party, basis shall be the consideration)
    197	Charter parties and Similar Instruments	1,000 tons and below                 1,001 to 10,000 tons                 Over 10,000 tons	P500.00 for the first 6 months Plus P50 each month or fraction thereof in excess of 6 months   P1,000 for the first 6 months Plus P100 each month or fraction thereof in excess of 6 months   P1,500 for the first 6 months Plus P150 each month or fraction thereof in excess of 6 months		Registered gross tonnage                 Registered gross tonnage                 Registered gross tonnage
    198	Stamp Tax on Assignments and Renewals or Continuance of Certain   Instruments		At the same rate as that imposed on the original instrument.

  • Remedies available to a Taxpayer

     a.   Remedies available to a Taxpayer before payment

    1.    Administrative Protest

    2.    Request for Reconsideration
    3.    Request for Reinvestigation
    4.    Judicial Protest
     
     
     
    b.   Remedies available to a Taxpayer after payment
    1.    Claim for Tax Refund
    2.    Claim for Tax Credit
     
    c.   Remedies in detail
     
    i.              Administrative Protest (Protest against Assessment)

    When to file	within 30 days from receipt of final assessment notice (FAN)
    Where to file	Bureau of Internal Revenue
    How to file	File a written protest, stating facts, applicable law, rules and regulations or jurisprudence o which his protest is based;    if only portions of FAN are disputed, must pay the deficiency tax on undisputed portion
    Procedure for Filing	1. Protest against pre-assessment notice (PAN) within 15 days from receipt 2. Protest against FAN within 30 days from receipt 3. Submit relevant documents within 60 days from filing of protest 4. Commissioner of Internal Revenue has 180 days to decide 5. In case of denial or lapse of 180-day period, taxpayer has 30 days to bring his protest to the Court of Tax Appeals en banc division
    When PAN not required	1. Finding for any deficiency tax is the result of mathematical error in computation of tax as appearing on face of return   2. A discrepancy has been determined between the tax withheld and the amount actually remitted   3. Taxpayer who opted to claim a refund or credit of excess creditable withholding tax for at taxable period was determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable quarter/s for the succeeding taxable year/s   4. Excise tax due on excisable articles have not been paid   5. Article locally purchased or imported by an exempt person

    
    

    i.              Request for Reconsideration

    This is a plea for re-evaluation of an assessment on the basis of existing records without need of additional evidence (question of law or fact or both)

     

    ii.             Request for Reinvestigation

    This is a plea for reinvestigation of an assessment on the basis of newly-discovered evidence that a taxpayer intends to present in the reinvestigation (question of law or fact or both). In either case, the request must be accompanied by a waiver of the statute of limitations in favor of the government.

     

    iii.            Judicial Protest

     

    Procedure

     

    1.        Within 30 days from denial of protest by CIR or from lapse of 180-day    

    period, appeal to CTA division.

    2.        If Court of Tax Appeals division denies, motion for reconsideration within

    15 days from receipt

    3.        Within 15 days from denial of motion, appeal to CTA en banc

    4.        Appeal to SC within 15 days by petition for review (Rule 45)

     

    v.      Refund/Credit

    This is based on the legal principle of quasi-contract or solutio indebiti and is in the   

     nature of an exemption, which cannot be allowed unless granted in the most explicit

     and categorical language

     

    The interest on taxes refunded may not be paid by the Government to the taxpayer, unless:

     (a) the CIR acted with patent arbitrariness (inexcusable or obstinate disregard for legal provision); and

    (b) in the case of income taxes withheld on the wages of employees, which must be refunded within 3 months from April 15

     

     

     

    Requisites for Recovery

    1.    There was an actual collection and receipt by the Government of the tax sought to be recovered (factual proof)

    2.    Legal basis for the granting of refund or credit, including verification of compliance with the statutory requirements relative to the filing of claims within the reglementary 2-yr period

    3.    in case of corporations, must signify whether to avail of tax refund or tax credit in the corporate income tax return.

     

  • Effect of Tax Treaty on tax rates

     If a non-resident has income source in the Philippines and is a resident in another country, it may be liable to pay tax in both countries under their tax laws. To avoid 'Double Taxation' (DT) in this situation, the Philippines has negotiated DT treaties with 39 countries.

     

     

    A non-resident in another country with which the Philippines has a DT treaty may be able to claim exemption or partial relief from the Philippines tax on certain types of income from Philippines sources. The precise conditions of exemption or relief can be found in the text of the relevant treaty.
     
     

    a.   Tax Treaty Relief Application
     
     

    i.             Persons who can apply for Tax Treaty Relief Application (TTRA)
     
     

    1.    Non-resident Individuals and
    2.    Non-resident Corporations or their duly authorized representative who are income recipients from the Philippines and whose country of residents has an effective tax treaty with the Philippines.
     
     

    ii.            Type of Philippine income maybe subject of preferential tax rate/and or tax exempt under the DT treaty
     
     

    Preferential tax rates:
     
     

    Dividends, Interest, Royalties and Shipping and Air Transport.
     
     

    Tax Exempt:
     
     

    Depending on the provisions of the DTA, you may claim the benefits of an exemption from the tax on income for personal services, teachers, researchers, artists, athletes, students, trainees, directors’ fees, pensions, government service, gains from the sales of shares/alienation of property and independent personal services not rendered more than 183 days.
     
     

    iii.           Where to apply TTRA
     
     

    All tax treaty relief application shall only be submitted to and received by the International Tax Affairs Division ("ITAD")
     
     

    iv.          Requirements for applying TTRA
     
     

    (1)  A non-resident individual or corporation must:
     
     

    1.    Secure Tax Identification Number for TTRA from Revenue District Office No. 39 before filing the TTRA in ITAD.
     
     

    2.    File a duly accomplished TTRA BIR Forms 0901 (back to back) with the attachments prescribed document under Revenue Memorandum Order No. 72-2010 or documents written at the back portion of the BIR Form No. 0901.
     
     

     
     

    (2)  TTRA Forms
     

    Form No.	Purpose
    BIR Form No. 0901 -P	For Business Profits
    BIR Form No. 0901-T	For Profits from Shipping and Air Transport
    BIR Form No. 0901 -D	For Dividend Income
    BIR Form No. 0901 -I	For Interest Income
    BIR Form No. 0901 -R	For Royalty Income
    BIR Form No. 0901 -C	For Capital Gains
    BIR Form No. 0901 -S	For Income from Services
    BIR Form No. 0901 -O	For Other Income Earnings

     

    (3)General Documentary Requirements

     

    The following documents are the general documentary requirements which shall be attached to all duly accomplished TTRAs (3 copies) which must be signed by applicant who may either be the income earner or the duly authorized representative of the income earner, pursuant to existing Philippine tax treaties, viz:

     

    1. Proof of Residency

     -Original copy of a consularized certification issued by the tax authority of the country of the income earner to the effect that such income earner is a resident of such country for purposes of the tax treaty being invoked in the tax year concerned. 

     

    2. Articles of Incorporation (For income earner other than an individual).

     

    -Photocopy of the Articles of Incorporation (AOI) (or equivalent Fact of Establishment/Creation/Organization) of the income earner with the original copy of a consularized certification from the issuing agency, office or authority that the copy of Articles of Incorporation (AOI) (or equivalent Fact of Establishment/Creation/Organization) is a faithful reproduction or photocopy.

     

    3. Special Power of Attorney

     

    a. If applicant/filer is the withholding agent of the income earner or the local representative in the Philippines of the income earner -

    i. Original copy of a consularized Special Power of Attorney (SPA) or a consularized written authorization duly executed by the income earner authorizing its withholding agent or local representative in the Philippines to file tax treaty relief application.  

          

    b. If applicant/filer is the local representative of the withholding agent of the income earner

    i. Original copy of a consularized Special Power of Attorney (SPA) or a consularized written authorization duly executed by the income earner authorizing its withholding agent or local representative in the Philippines to file tax treaty relief application; and

     

    ii. Original copy of Letter of Authorization from the withholding agent authorizing the local representative to file the tax treaty relief application.

     

    4. Certification of Business Presence in the Philippines

     

    a. For Corporation or Partnership Original copy of a certification from the Philippine Securities and Exchange Commission that the income earner is or is not registered to engage in business in the Philippines. 

     

    b. For an Individual Original copy of a certification from the Department of Trade and Industry that the income earner is or is not registered to engage in business in the Philippines.

     

    5. Certificate of No Pending Case

     

     -Original copy of a sworn statement providing information on whether the issue(s) or transaction involving directly or indirectly the same taxpayer(s) which is/are the subject of the request for ruling is/are under investigation; covered by an on-going audit, administrative protest, claim for refund or issuance of tax credit certificate, collection proceedings, or subject of a judicial appeal. (Annex “A”)

     

     

     

     

     

     
• 7.2 References

  • Websites

    [1] Bureau of Internal Revenue. 

    http://www.bir.gov.ph/index.php/international-tax-matters/taxation-of-non-residents.html Retrieved May 30, 2016

    [2] Bureau of Internal Revenue.
    

    http://www.bir.gov.ph/index.php/rulings-and-legal-matters/guide-to-philippines-tax-law-research.html Retrieved May 27, 2016

    [3] Bureau of Internal Revenue.
    

    http://www.bir.gov.ph/index.php/taxinformation/documentary-stamp-tax.html Retrieved May 30, 2016

    [4] Bureau of Internal Revenue.
    

    http://www.bir.gov.ph/index.php/taxinformation.html. Retrieved May 30, 2016

    [5] Bureau of Internal Revenue.
    

    http://www.bir.gov.ph/index.php/taxinformation/value-added-tax.html. Retrieved May 30, 2016

    [6] Bureau of Internal Revenue.
    

    http://www.bir.gov.ph/index.php/taxinformation/withholding-tax.html. Retrieved May 30, 2016

     

  • Babiliography

     

    [1] Commissioner of Internal Revenue vs. Algue G.R.No.L-28896 February 17, 1988

    [2] Gomez vs. Palomar G.R.No. L-23645. October 29,1968 

     

    [3] Lorenzo vs Posadas G.R.No. L-43082. June 18, 1937

     

     

    [4] National Internal Revenue Code    

     

         Sec.22(B),22(C),22(E),22(F),22(G),22(H),22(I),25(A)(1),25(C),25(D),25(E)

    [5]  Philippine Guaranty Co., Inc. vs Commissioner of Internal Revenue. G.R.No. L-22074. April 30, 1965

    [6] Philippine Petroleum Corporation vs. Municipality of Pililla Rizal. G.R.No.90776. June 3, 1991