Corporate Tax in the Philippines
- Tax Base For Resident and Foreign Companies
- VAT is applied in the same way to residents and non residents. For additional information, consult the Bureau of Internal Revenue.
|Income Tax||The rate is 30% on net income but there are some preferential rates and exemptions. Preferential rates vary from 2 to 20%. Regional headquarters are taxed at 10%.|
|Capital Gains Tax||These are taxed like income, except those from selling shares in companies (5-10% if not exchanged on the Stock Exchange; half of 1% of the selling price otherwise), and those from selling real estate not used for business purposes (6%).|
|Deductions on dividends||Deduction of 15% on dividends paid by the Philippine company if the non resident's country
allows 20% tax credit, otherwise there is a deduction of 35%.
|Deductions on interest||Deduction of 20%|
|Deductions on royalties||Deduction of 20%|
|Deductions on transfers from subsidiaries||Deduction of 15% of profits after tax paid by the subsidiary to the head office.|
|Property Tax||Varies according to the location, and does not exceed 3% of the estimated value.|
|Social contributions||Vary according to wages, maximum 1 090 PHP.|
|Stamp duties||Vary according to the type of document.|
|Tax on transfers of property||From 2 to 15%.|
|Other||Tax of 3 to 7% for certain activities such as banking, insurance, finance and transport.|
- Tax Rate For Foreign Companies
- Foreign companies are subject to the same tax rates as resident companies.
- Capital Gains Taxation
- In the Philippines, capital gains are taxed between 5% and 10% (for unlisted companies securities). Besides, capital gains on property, as for private individuals, is taxed at 6%.
- Main Allowable Deductions and Tax Credit
- The Omnibus Investment Code of 1987 and the Special Economic Zone Act of 1995 provide for fiscal incentives such as a suspension of income tax. For any additional information access the PKF Tax guide on the Philippines.
- Other Corporate Taxes
- Tax of 3 to 7% on companies in certain sectors (banking, insurance, finance, transport). Various duties apply at various rates depending on the type of document.
Country Comparison For Corporate Taxation
|Philippines||East Asia & Pacific||United States||Germany|
|Number of Payments of Taxes per Year||47.0||24.5||11.0||16.0|
|Time Taken For Administrative Formalities (Hours)||195.0||218.2||187.0||215.0|
|Total Share of Taxes (% of Profit)||45.8||35.4||46.8||48.2|
Source: Doing Business
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
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