Income Tax in The Philippines 2012

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Philippine Personal  Tax Rates..

For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession.


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Taxable Income  Php                                          Tax Rate
———0 – 10,000:       5% of ALL Income
10,000 – 30,000:     Php 500 + 10% of the Excess over P 10,000
30,000 – 70,000:     PhP 2,500 peso + 15%  of the Excess over P 30,000
70,000 – 140,000:     PhP 8,500 peso + 20%  of the Excess over P 70,000
140,000 – 250,000:     PhP 22,500 peso + 25%  of the Excess over P 140,000
250,000 – 500,000:     PhP 50,000 peso + 30%  of the Excess over P 250,000
Over 500,000:          PhP 125,000 peso + 32%  of the Excess over P 500,000

Source: Bureau of Internal Revenue Republic of the Philippines

Tax Calculation Examples in the year 2012:

Example ONE:

At 400 pesos per day for 6 days per week, with 52 weeks payments received:


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400 x 6 days = 2,400 per week
2,400 per week x 52 weeks = 124,800 per year.
Tax on this is therefore in the 70,000 to 140,000 band: 8,500 peso + 20%  of the Excess over 70,000
Tax on the first 70,000 is therefore: 8,500
Tax on the balance of 54,800 is at 20% = 10,960
Total tax is therefore: 8,500 + 10,960 = 19,460

Calculating this on a fortnightly basis would give the following results:

4,800 Wage for 2 weeks
__750 Tax for 2 weeks
4,050 Net Received after tax, but before any other deductions

Example TWO:

At 1,000 pesos per day for 6 days per week, with 52 weeks payments received:

1,000 x 6 days = 6,000 per week

6,000 per week x 52 weeks = 312,000 per year.
Tax on this is therefore in the 250,000 – 500,000:     PhP 50,000 peso + 30%  of the Excess over P 250,000
Tax on the first 250,000 is therefore: 50,000
Tax on the balance of 62,000 (312,000 less 250,000) is at 30% = 12,400
Total tax is therefore: 50,000 + 12,400 = 62,400

Calculating this on a fortnightly basis would give the following results:

12,000 Wage for 2 weeks
_2,400 Tax for 2 weeks
9,600 Net Received after tax, but before any other deductions

Deadline for Completion of Tax returns in the Philippines

Returns must be lodged on or before the 15th day of April of each year covering income for the preceding taxable year.

Corporation Tax..

The general rate of Corporation Tax in the Philippines is 32% of Net profits.
However, after FOUR years the Tax is calculated in two ways, and the higher value is charged.

Normal rate: 32% of Profit
Alternate Rate: 2% of Gross Income (after Four Years)

Any corporation not making profits after four years may as well close down, as it will be paying tax on Gross Income, no matter how little profit it makes.


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