Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 1158-A)
Domestic corporations are taxed 25% on taxable net income up to P100,000 and 35% on income exceeding P100,000.
They pay a tax of 10% on their taxable net income from school operations, related activities, and passive investment income, excluding dividends from domestic or resident foreign corporations which are subject to inter-corporate dividends tax.
They are taxed 35% on gross income from sources within the Philippines, with certain exceptions such as 15% tax on interest on foreign loans and 15% tax on dividends from domestic corporations.
No, if they do not earn or derive income from the Philippines and act only as supervisory, communications, and coordinating centers for their affiliates, subsidiaries, or branches in the Asia-Pacific Region.
A corporate development tax equal to 5% of the taxable net income is imposed, regardless of the rate of return on net worth for closely-held corporations.
A surcharge of 50% of the tax or deficiency is added; additionally, fines and imprisonment can be imposed under specific provisions.
Proceeds from life insurance paid to beneficiaries, return of premiums, gifts, bequests, interest on government securities, compensation for injury or sickness, income exempt under treaties, certain retirement benefits, and income received by foreign governments or international institutions.
A 10% withholding tax is imposed at source on dividends received by individuals and domestic or resident foreign corporations and on royalties received from any person.
The tax rates vary based on packaging and retail price, ranging from 3 pesos to 80 pesos per thousand cigarettes, with increases for foreign brands and mechanical wrapping.
Filipino citizens and aliens residing in the Philippines with gross income over P1,800 must file returns; non-resident aliens engaged in trade or business must file regardless of amount; some individuals with income solely from salaries and within personal exemption limits are exempted.