Updated March 2018

PERSONAL INCOME TAX

Starting January 1, 2018, compensation income earners, self-employed

and professional taxpayers (SEPs) whose annual taxable incomes are
P250,000 or less are exempt from the personal income tax (PIT).

The 13th month pay and other benefits amounting to P90,000 are
likewise tax-exempt.

Tax schedule effective January 1, 2018 until December 31, 2022 is as

follows:
AMOUNT RATES
Not Over P250,000 0%
Over P250,000 but not over P400,000 20% of the Excess Over P250,000
Over P400,000 but not over P800,000 P30,000 + 25% of the Excess over P400,000
Over P800,000 but not over P2,000,000 P130,000 +30% of the Excess over P800,000
Over P2,000,000 but not over P8,000,000 P490,000 + 32% of the Excess over P2,000,000
Over P8,000,000 P2,410,000 +35% of the Excess over P8,000,000

Tax schedule effective January 1, 2023 and onwards:

AMOUNT RATES
Not Over P250,000 0%
Over P250,000 but not over P400,000 15% of the Excess Over P250,000
Over P400,000 but not over P800,000 P22,500 + 20% of the Excess over P400,000
Over P800,000 but not over P2,000,000 P102,500 +25% of the Excess over P800,000
Over P2,000,000 but not over P8,000,000 P402,500 + 30% of the Excess over P2,000,000
Over P8,000,000 P2,202,500 +35% of the Excess over P8,000,000

SEPs who are also earning compensation income shall be subject to:
 On Compensation Income - graduated income tax (IT) schedule
 On Income from Business or Practice of Profession -
 If Gross Sales and/or Gross Receipts and other Non-Operating
Income do not exceed P3,000,000 - either 8% fixed tax or
graduated IT schedule.
 If Gross Sales and/or Gross Receipts and other Non-Operating
Income exceed P3,000,000 – graduated IT schedule.
 3
EXAMPLES:

1. For a CALL CENTER AGENT who receives a monthly salary of

P21,000 with mandatory annual deductions of P15,166.00 consisting
of SSS, Philhealth, and Pag-ibig contributions, the income tax is
computed as:
A. Annual Basic Salary P252,000.00
th
B. 13 Month Pay and Other Benefits 21,000.00

C. Mandatory Contributions 15,166.00

Computation of Income Tax
Annual Gross Income (A+B) P273,000.00
Deductions and Exemptions (B+C) 36,166.00
Net Taxable Income P236,834.00

Income Tax Rate:

Over 0 – P250,000 = 0%
TAX DUE P 0.00

2. For a public school TEACHER (SG14, Step1) who receives a monthly

salary of P26,494.00 with mandatory annual deductions of P34,185.00
consisting of GSIS, Philhealth, and Pag-ibig contributions, the income
tax is computed as:

A. Annual Basic Salary P317,928.00

th
B. 13 Month Pay and Other Benefits 26,494.00
C. Mandatory Contributions 34,185.00
Computation of Income Tax
Annual Gross Income (A+B) P344,422.00
Deductions and Exemptions (B+C) 60,679.00
Net Taxable Income P283,743.00

Income Tax Rate:

Over 0 – P250,000 = 0%
Over P250,000 – P400,000 = 20% of Excess over P250,000
TAX DUE : P250,000.00 = P 0.00
33,743.00 x 20% = P 6,748.60
4

TAX ON PASSIVE INCOME TAX

 Interest on FCDU deposits  15%

 Sale of Unlisted shares  15%
 Sale of Listed shares  0.6 of 1%
 Pre-terminated long-term time deposits  20%

FRINGE BENEFITS

A final tax of 35% is imposed on the grossed up monetary value of fringe

benefit granted to the employee (except rank and file employees) by the
employer, whether an individual or a corporation. Such tax is payable by the
employer.

OPTIONAL STANDARD DEDUCTION (OSD)

A general professional partnership and the partners comprising such part-

nership may avail of the OSD only once, either by the general professional
partnership or the partners.

FILING OF INCOME TAX RETURNS (ITR) AND

PAYMENT OF TAXES

 An individual whose taxable income does not exceed P250,000 is not

required to file an income tax return.
 The ITR shall be composed of a maximum of four (4) pages in paper
or electronic form.
 Substituted filing of ITR by employees receiving purely compensation
income by respective employers will be evidenced by the Certificate of
Withholding filed and duly stamped “received” by the BIR. It shall be
tantamount to the substituted filing of ITRs by the said employees.
 The rate of withholding of tax at source shall not be less than 1% but
not more than 15% of the income payment beginning January 1, 2019.
 5

ESTATE TAX

The rate of estate tax to be paid upon the transfer of the net estate of
decedent to his heir or beneficiary is fixed at 6% of the value of net estate.

 Deductions allowed to the estate of a Citizen or Resident -

 Standard deduction equivalent to P5,000,000;
 Claims against the estate;
 Claims of the deceased against insolvent persons where the value
of the decedent’s interest therein is included in the value of the
gross estate;
 Unpaid mortgages upon, or any indebtedness in respect to
property of the decedent;
 Property previously taxed;
 Transfers for public use;
 The Family home equivalent to current fair market value of the
decedent’s family home not exceeding P10,000,000; and
 Amount received by heirs under RA 4917.
 Deductions allowed to the estate of a Non-Resident Citizen-
 Standard deduction equivalent to P5,000,000;
 Proportion of the following deductions:
a) Claims against the estate;
b) Claims of the deceased against insolvent persons, and
c) Unpaid mortgages upon, or any indebtedness in which the
value of such part bears to the value of his entire gross
estate wherever situated;
 Property previously taxed;
 Transfers for public use;
 The family home equivalent to current fair market value of the
decedent’s family home not exceeding P10,000,000; and
 Amount received by heirs under RA 4917.

 The net share of the surviving spouse in the conjugal partnership

property diminished by the obligations properly chargeable to such
property is deducted from the net estate of the decedent.
 The estate tax returns showing a gross value exceeding P5,000,000
shall be supported with a statement duly certified to by a Certified
Public Accountant (CPA).
 The estate tax returns shall be filed within one (1) year from the dece-
dent's death.
6

 In case the available cash of the estate is insufficient to pay the total
estate tax due, payment by installment shall be allowed within two (2)
years from the statutory date for its payment without civil penalty and
interest.
 Withdrawals from the bank deposit account of the decedent are
allowed subject to a final withholding tax of six (6%) percent.

DONOR’S TAX

The tax payable by a donor for each calendar year shall be fixed at 6%
based on the total gifts in excess of P250,000.00.

 Any contribution in cash or in kind to any candidate, political party or

coalition of parties for campaign purposes shall be governed by the
Election Code as amended.
 Exemption of gifts made by a resident:
 Gifts made to or for the use of the National Government or any
entity created by any of its agencies which is not conducted for
profit, or to any political subdivision of the said Government.
 Gifts in favor of an educational and/or charitable, religious, cultural
or social welfare corporation, institution, accredited nongovern-
ment organization, trust or philanthropic organization or research
institution or organization: Provided, That not more than 30%
of said gifts shall be used by such donee for administration
purposes.

VAT:

 The threshold gross sales/receipts is Php 3 Million.

 A purely self-employed individual and/or professional who is VAT
registered but whose gross sales/receipts now fall below the new VAT
threshold may change his status to NON-VAT and avail of:
i. The graduated income tax rates under Sec. 24(A)(2)(a) of the
NIRC, as amended; or
ii. An 8% tax on gross sales/receipts and other non-operating
income in excess of P250,000 in lieu of the graduated
income tax rates and the percentage tax under Sec. 116 of the
NIRC, as amended.
 7

NOTE: Once the option is made, such is already irrevocable

for that particular taxable year.
 Coverage is expanded to include:
 Electric cooperatives;
 Domestic shipping importation;
 Power transmission;
 Low-cost housing (price more than Php 2 Million) and
socialized housing (price more than Php 450,000) until 2020;
 Lease of residential units (exceeding Php 15 thousand);
 Boy Scouts of the Philippines;
 Philippine Sports Commission;
 PTV Network;
 Philippine Postal Corporation;
 Bangko Sentral ng Plipinas;
 PhilHealth;
 GSIS; and
 SSS.

 Additional Exemptions include:

 Sale of medicines prescribed for diabetes, high cholesterol, and
hypertension beginning January 1, 2019;
 Sale of gold to the Bangko Sentral ng Pilipinas;
 Transfer of property under a de facto merger or consolidation;
and
 Condominium and homeowners association dues, membership
fees and other charges.

 Indirect Exporters are still VAT zero rated until the establishment and
implementation of an enhanced VAT refund system.

 Criteria of an enhanced VAT refund system:

 All applications filed from 1 January 2018 shall be processed and
must be decided within 90 days from the filing of the VAT refund
application (NOTE: Failure on the part of the BIR official, agent or
employee to act on the application within the 90 day period is
punishable under Sec. 269 of the NIRC, as amended); and
 All pending VAT refund claims as of December 31, 2017 shall be
fully paid in cash by December 31, 2019.
 Official Development Assistance (ODA) projects are not subject to the
final withholding VAT [Sec. 114(C)].
8

CIGARETTE EXCISE TAX

 The tax rates, per pack of 20s, on cigarettes packed by hand or by

machine are:

 January 1 2018 – June 30 2018  32.50

 July 1 2018 – December 31 2019  35.00

 January 1 2020 – December 31 2021  37.50

 January 1 2022 – December 31 2023  40.00

 January 1 2024 onwards  4% annual increase

PETROLEUM EXCISE TAX

 The tax rates are:

2020
Petroleum product Unit 2018 2019
onwards
Liter/
Lubricating oils & greases 8.00 9.00 10.00
kilogram
Processed gas Liter 8.00 9.00 10.00
Waxes & petrolatum Kilogram 8.00 9.00 10.00
Denatured alcohol Liter 8.00 9.00 10.00
Naphtha, regular gasoline,
Liter 7.00 9.00 10.00
pyrolysis gasoline
Unleaded premium gasoline Liter 7.00 9.00 10.00
Aviation turbo jet fuel Liter 4.00 4.00 4.00
Kerosene Liter 3.00 4.00 5.00
Diesel fuel oil Liter 2.50 4.50 6.00
Liquefied petroleum gas Kilogram 1.00 2.00 3.00
Asphalts Kilogram 8.00 9.00 10.00
Bunker fuel oil Liter 2.50 4.50 6.00
Petroleum coke Metric ton 2.50 4.50 6.00
 9

AUTOMOBILE EXCISE TAX

 The Tax Rates, imposed on the importer’s or manufacturer’s price, net

of the excise and value-added taxes are:

Rate (in percent)

Net Price (in Php)
Traditional Hybrid

Not more than 600,000 4 2

Over 600,000 to 1 Million 10 5

Over 1 Million to 4 Million 20 10

Over 4 Million 50 25

 A hybrid vehicle is a motor vehicle powered by electric energy in

combination with gasoline, diesel or any motive power, that can
propel itself from a stationary condition using solely electric motor.
 Additional tax-exempt vehicles include pick-up trucks & electric
vehicles.

EXCISE TAX ON COSMETIC PROCEDURES

 Tax rate and base: 5% of the gross receipts on invasive cosmetic

procedures, surgeries & body enhancements for aesthetic purposes.
 Exempt procedures include: 1) Procedures necessary to ameliorate a
deformity arising from a congenital or developmental defect or abnormality,
a personal injury resulting from an accident or trauma, or disfiguring
disease, tumor, virus or infection, 2) Cases or treatments covered by the
National Health Insurance Program.
10

SWEETENED BEVERAGE TAX

Type of Sweetened Beverage Rate (Php)

 sweetened beverages using purely caloric
 6.00
and purely non-caloric sweeteners, or a mix
per liter
of caloric and non-caloric sweetener
 sweetened beverages using purely high fruc-
 12.00
tose corn syrup (HFCS) in combination with
per liter
any caloric or non-caloric sweeteners
 Taxable non-alcoholic beverages include:
 Sweetened juice  Flavored water  Cereal & grain
drinks beverages
 Sweetened tea  Energy & sports  Other non-alcoholic
drinks beverages with sugar
added
 Carbonated  Other powdered drinks not classified as milk,
beverages juice, tea, & coffee

 The list of exempt beverages includes:

 All milk products  Meal replacement & medically indicated
beverages

 100% natural  Ground coffee, instant soluble coffee, &

fruit juices pre-packaged powdered coffee products
(3-in-1, etc.)

 100% natural
vegetable juices

EXCISE TAX ON MINERAL PRODUCTS

The tax rates are:

 Coal & coke, per metric ton:

Jan 1 2020
Jan 1 2018 Jan 1 2019
onwards

Php50 Php100 Php150

 11

 Metallic & non-metallic minerals & quarry resources: 4% of the actual

market value of the gross output at the time of removal or the BOC
valuation for determining tariff and customs duties, net of the excise
and value-added taxes

 Indigenous petroleum: 6% of the fair international market price

DOCUMENTARY STAMP TAX

The tax rates are:

Document/Transaction Rate & Base

Original issue of shares of stock Php2.00 per Php200 or fractional
part thereof, of the par value

Sales, agreements to sell, memoranda Php1.50 per Php200 or fractional

of sales, deliveries or transfer of part thereof, of the par value of the
shares or certificates of stock stock
Certificates of profits or interest in Php1.00 per Php200 or fractional
property or accumulations part thereof, of the face value

Bank checks, drafts, certificates of Php3.00 per check, draft or

deposit not bearing interest and other certificate
instruments
Debt instruments Php1.50 per Php200 or fractional
part thereof, of the issue value
Bills of exchange or drafts; Php0.60 per Php200 or fractional
Acceptance of bills of exchange & part thereof, of the face value
others; Foreign bills of exchange and
letters of credit
Amount of insurance
Life insurance policies Rate (Php)
(in Php)
Not more than 100,000

More than 100,000 up 20.00

to 300,000
More than 300,000 up 50.00
to 500,000
More than 500,000 up 100.00
to 750,000
More than 750,000 up 150.00
to 1,000,000
More than 1,000,000 200.00
12

Document/Transaction Rate & Base

Annuities Php1.00 per Php200 or fractional

part thereof, of the premium or
instalment payment

Pre-need plans Php0.40 per Php200 or fractional

part thereof, of the premium or
contribution

Certificates; Warehouse receipts; Php 30.00

Proxies
Jai-alai and horse race ticket, lotto or Php0.20 per Php1.00 or fractional
other authorized numbers games part thereof, of the cost of the ticket

Bills of lading or receipts Value of goods Rate (Php)

Php100 – 2.00
Php1,000
More than 20.00
Php1,000

Powers of attorney Php10.00

Leases and other hiring agreements

Value of Rate
agreement/lease (in Php)
First Php2,000 6.00
For every Php1,000 or
fractional part thereof,
2.00
in excess of the first
Php2,000

Mortgages, pledges and deeds of Amount secured Rate

trust (Php)
First Php5,000 40.00
For every Php5,000 or 20.00
fractional part thereof,
in excess of the first
Php5,000
 13

Leases and other hiring agreements

Value of Rate
agreement/lease (in
Php)
First Php2,000 6.00
For every Php1,000 or
fractional part thereof,
2.00
in excess of the first
Php2,000

Mortgages, pledges and deeds of Amount secured Rate

trust (Php)
First Php5,000 40.00
For every Php5,000 or 20.00
fractional part thereof,
in excess of the first
Php5,000

Deeds of sale, conveyances and Php15.00 per Php1,000 or fractional

donation of real property, except part thereof, of the consideration or
those exempt from the donor’s tax value

Charter parties and similar Registered Rate (Php)

instruments tonnage
Php1,000 on the
first 6 months, and
Not more
Php100 for each
than 1,000
month/fractional
tons
part in excess of 6
months
Php2,000 on the
first 6 months, and
1,000 tons
Php200 for each
– 10,000
month/fractional
tons
part in excess of 6
months
Php3,000 on the
first 6 months, and
More than Php300 for each
10,000 tons month/fractional
part in excess of 6
months
14

ADMINISTRATIVE MEASURES
 Mandatory marking of all fuel products and imposition of fines for related
offences.
 Use of appropriate counting or metering devices to determine volume of
fuel importation and production.
 Issuance of receipts or sales or commercial invoices on the sale and
transfer of merchandise or for services rendered valued at Php100 or
more.
 By 2023, those engaged in the export of goods and services, taxpayers
engaged in e-commerce and those belonging to the Large Taxpayers
Service are required (1) to issue electronic receipts or sales or commer-
cial invoices and (2) to electronically report their sales data to the Bureau
of Internal Revenue (BIR).
 Fine for attempt to evade or defeat tax is set at not less than Php500,000
but not more than Php10,000,000 and imprisonment of not less than 6
years but not more than 10 years.
 Fine for printing of (a) receipts without authority of the BIR, (b) double or
multiple sets, or (c) unnumbered receipts is set at not less than
Php500,000 but not more than Php10,000,000 and imprisonment of not
less than 6 years but not more than 10 years.
 Penalty for failure to transmit sales data to the BIR’s electronic sales
reporting system is 1/10 of 1% of the annual income or Php10,000, for
each day.
 Fine for the purchase/use/possession/sale-or-offer-to-sell/installation/
transfer/update/upgrade/maintenance of sales suppression devices is set
at not less than Php500,000 but not more than Php10,000,000 and
imprisonment of not less than 2 years but not more than 4 years.

EARMARKING OF INCREMENTAL REVENUES FROM THE

TRAIN

 Not more than 70% for infrastructure projects such as the Build, Build,
Build Program
 Not more than 30% for
 the sugarcane industry;
 social mitigating measures and investments in education, health,
social protection, employment and housing; and
 15

 social welfare and benefits program

 such as unconditional cash transfer of Php200 monthly on
the first year and Php300 monthly on the next 2 years;
 for fuel vouchers to qualified public utility jeepney
operators/drivers; and
 for minimum wage earners/unemployed/poor
 fare discounts,
 free TESDA skills training, and
 discounted purchase of NFA rice).

REPEALED PROVISIONS

INCOME TAX EXEMPTION

 PWD as dependent
 Foster Child as dependent
VAT EXEMPTION

AGRICULTURE

 High Value Crops Development Act  Organic Agriculture Act of 2010

of 1995  National Dairy Development Act of
 Philippine Fisheries Code of 1998 1995
 Seed Industry Development Act of
1992
HEALTH

 Rare Diseases of the Philippines  National Health Insurance of 1995

 Magna Carta for Persons with  Traditional and Alternate
Disabilities Medicine Act (TAMA) of 1997
ENVIRONMENT
 Ecological Solid Waste Management  Philippine Clean Water Act of 2004
Act of 2000
HOUSING

 Home Development Mutual fund  Urban Development Housing Act

 Balance Housing Development
Program
EDUCATION AND ARTS
 Aklan State College of Agriculture  Higher Education Modernization
 The Philippine State College of Act of 1997
Aeronautics  Aklan State Univeristy
16

 Batangas State University  An Act Establishing the Guimaras

 Sta. Rosa Science and Technology State College
High School  Mindanao University of Science
 UP Charter of 2008 and Technology
 Philippine Normal University  UP Franchise to Install Radio and
Modernization Act of 2009 Television Broadcasting Stations
 Science Act  Negros Occidental Agricultural
 Davao Oriental State College of College
Science and Technology  Philippine Sports Commission
 National Commission for Culture Act
and Arts  Manlilikha ng Bayan Act
 National Museum Act of 1998  Strengthening People's
 Eastern Visayas Science High Nationalism through Philippine
School History Act

ELECTRICITY
 National Grid Corp. of the Philippines Act

INDUSTRY
 Investors and Inventions Incentives  The New Central Bank Act
Act of the Phils.  Iron and Steel Industry Act
 Downstream Oil Industry  Philippine Green Jobs Act
Deregulation Act  Phil. Halal Export Development
 Jewelry Industry Development Act and Promotion Act of 2016
 Regional or Area Headquarters,  Civil Avian Authority Act of 2008
Regional Operating Headquarters
and Regional Warehouses of
Multinational Companies

OTHERS

 Postal Service Act  The Social Security Act

 GSIS Act of 1997  PDIC Charter
 Veterans Federation of the  Revised AFP Modernization
Philippines Program
 Charity Sweepstakes, Horses  Overseas Workers Welfare
Races and Lotteries Administration Act
 Boy Scout of the Philippines  Charter of the People's
Television Network Inc.


BOJNR