Corporate Tax in the Philippines

Overview by
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.

Tax Rate

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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