CRC-ACE REVIEW SCHOOL The Professional CPA Review School 735-9031 / 735-8901
TAXATION HERMOSILLA
RE
TAX RATES FOR INDIVIDUAL TAXPAYERS 1. Rates of Income Tax on Individual Citizen and Individual Resident Alien of the Philippines. SEC. 24. (A) The tax shall be computed on taxable income in accordance with and at the rates established in the following schedule: Over 10,000
But not over P 10,000 30,000
The tax shall be 5% P500
30,000
70,000
2,500
70,000
140,000
8,500
140,000
250,000
22,500
250,000
500,000
50,000
500,000
-
125,000
Plu s 10 % 15 % 20 % 25 % 30 % 32 %*
Of excess over P10,000 30,000 70,000 140,000 250,000 500,000
*32% in 1998; 33% in 1999; 32% starting January 1, 2000 2. Final Tax Rates on Certain Passive income from Philippine Sources. Rates of Tax Certain Passive Income (2) Sec. 25 (B)
(1) Interest, Royalties, Prizes and Other Winnings a) interest from any currency bank deposit b) yield or any other monetary benefit from deposit substitute c) yield or any other monetary benefit from trust funds and similar arrangements d) royalties in general e) royalties on books, as well as other literary works and musical compositions f) prizes (except prizes amounting to P10,000 or less which shall be subject to tax under Section 24 (A) g) other winnings (except Philippine Charity Sweepstakes and Lotto winnings) h) interest income received from a depository bank under expanded foreign currency deposit system i) interest income from long-term deposit
Sec. 24 (B)
Sec. 25 (A)
RES/CIT NRA-ETB
NRANETB
20% 20%
20% 20%
25% 25%
20%
20%
25%
20%
20%
25%
10%
10%
25%
20%
20%
25%
20%
20%
25%
7 1/2 %
Exempt
Exempt
CRC-ACE/TAX:
Tax Rates for Individual Taxpayers
or investment evidenced by certificates prescribed by BSP 1) If predetermined before fifth year, a final tax shall be imposed on remaining maturity: a) Four (4) years to less than five (5) years b)Three (3) years to less than (4) years c) Less than three (3) years 2) Cash and/or Property Dividends a) cash and/or property dividends actually or constructively received by an individual from a DOMESTIC CORPORATION or from a JOINT STOCK COMPANY, INSURANCE or MUTUAL FUND COMPANIES and REGIONAL OPERATING HEADQUARTES of multinationals: Beg. January 1, 1998 Beg. January 1, 1999 Beg. January 1, 2000 b. share of an individual in the distributable net income after tax of a partnership ( other than a general professional partnership) of which he is a partner: Beg. January 1, 1998 Beg. January 1, 1999 Beg. January 1, 2000 c. Share of an individual in the net income after tax of an association, a joint account, or a joint venture or consortium taxable as a corporation of which he is a member or co-venturer: Beg. January 1, 1998 Beg. January 1, 1999 Beg. January 1, 2000
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Exempt
Exempt
25%
5% 12% 20%
5% 12% 20%
25% 25% 25%
6% 8% 10%
20% 20% 20%
25% 25% 25%
6% 8% 10%
20% 20% 20%
25% 25% 25%
6% 8% 10%
20% 20% 20%
25% 25% 25%
Provided, however, that the tax on dividends shall apply only on income earned on or after January 1, 1998. Income forming part of retained earnings as of December 31, 1997 shall not, even if declared or distributed on or after January 1, 1998, be subject to this tax. 3. Sec 24 (C) Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange RES/CIT NRA-ETB NRA-NETB a. Tax base: Net capital b. Tax rates: Not over 5% 5% 5% P100,000 Amount in excess of 10% 10% 10% P100,000 4. Sec 24 (D) Capital Gains from Sale of Real Property Classified Asset (Located in the Phils) (1)In General RES/CIT
NRA-ETB
NRA-NETB
a) Tax base: Gross Selling price or current fair market value whichever is higher 2
CRC-ACE/TAX:
Tax Rates for Individual Taxpayers
b) Tax rate c) Real property is sold to the government or any political subdivisions or agencies or GOCC’s
6% 6% capital gains tax or Sec. 24 (A)
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6% 6% capital gains tax or Sec. 24 (A)
6%
(2) Exception Exempt proceeds
capital gains presumed to have been realized from the sale of disposition of their principal residence by natural persons, the proceeds of which is fully utilized in acquiring or constructing a new principal residence within eighteen (18) calendar months from the date of sale or disposition, shall be exempt from the capital gains tax Carry over of historical cost or the historical cost or adjusted basis of the adjusted basis real property sold or disposed shall be carried over to the new principal residence built or acquired Notification required Commissioner shall have been duly notified by the taxpayer within thirty (30) days from the date of sale or disposition through a prescribed return of his intention to avail of the tax exemption Notification required the Commissioner shall have been duly notified by the taxpayer within 30 days from the date of sale or disposition through a prescribed return of his intention to avail of the tax exemption. Exemption can be availed The tax exemption can only be availed of once in 10 years once every 10 years. Taxable portion if no full If there is no full utilization of the proceeds utilization of proceeds of sale or disposition, the portion of the gain presumed to have been realized from the sale or disposition shall be subject to capital gains tax. The taxable portion is computed as follows: Unutulized portion/GSP x Tax base 5. Sec. 25(A) Tax on Nonresident Alien Engaged in trade or Business Within the Philippines. (1) In General. – See Sec. 24 (A) (2) On certain passive income – See Sec. 24 (B) (C) (D) 6. Sec. 25 (B) Nonresident Alien Not Engaged in Trade or Business Within the Philippines.- (25%) of gross income within the Philippines 7. Sec. 25 (C) Alien Individual Employed by Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies. – 15% of gross income within the Philippines (same tax treatment to Filipinos employed and occupying managerial and technical positions similar to those occupied by aliens employed by these multinational companies)
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CRC-ACE/TAX:
Tax Rates for Individual Taxpayers
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8. Sec. 25 (D) Alien Individual Employed by Offshore Banking Units - 15% of gross income within the Philippines (same tax treatment of Filipinos employed and occupying managerial and technical positions similar to those occupied by aliens employed by these offshore banking units) 9. Sec. 26 (E) Alien Individual Employed by Petroleum Service Contractor and Subcontractor. - 15% of gross income within the Philippines (same tax treatment to Filipinos employed and occupying the same positions as those aliens who are permanent residents of foreign country but who are employed by petroleum service contractor and subcontractor in the Philippines. )
reh/cel
4
