INCOME TAXATION OF INDIVIDUALS: CITIZENS

RESIDENT
Definition

Tax Code Reference

Tax Base

CITIZENS
NON-RESIDENTS
Sec 22 (E)
1. A citizen of the Philippines who
establishes to the satisfaction of the
Commissioner that fact of his physical
presences abroad with definite
intention to reside therein.
2. A citizen of the Philippines who
leaves the Philippines during the
taxable year to reside abroad, either as
an immigrant or for employment on a
permanent basis.
3. A citizen of the Philippines who
works and derives income from abroad
and whose employment thereat
requires him to be physically present
abroad most of the time during the
taxable year.
4. A citizen who has been previously
considered as non-resident citizen who
arrives in the Philippines at any time
during the taxable year to reside
permanently in the Philippines shall
likewise be treated as a nonresident
citizen for the taxable year in which he
arrives in the Philippines with respect to
his income derived from sources
abroad until the date of his arrival in the
Philippines.

Sec 24

Sec 24 ( income w/in the Philippines)

Sec 23 ( income outside Philippines)

taxable income earned

from all sources within and
without the Philippines

taxable income from all sources

within the Philippines

INCOME TAXATION OF INDIVIDUALS: CITIZENS

RESIDENT
Tax Rates - In general

5% - 34 % in 1998
5% - 33% in 1999
5% - 32% in 2000
5% - 32% thereafter

Tax Rates - On Passive Incomes (subject to Final Taxes [FT])

Interest on any currency bank deposit
20% FT
and yield or any other monetary benefit
from deposit substitutes [Sec 22(Y)] and
from trust fund and similar arragements
Interest from a depository bank under the
expanded foreign currency deposit
system [RR 10-98]
Interest on long term deposit or
investment [Sec 22(FF)] in the form of
savings, common or individual trust
funds, deposit substitutes, investment
management accounts and other
investments evidenced by certificates in
such form prescribed by the BSP
Pre-terminated long term investment
(should actually based on expired term)

Other interest income derived within the

Philippines
Other interest income derived outside the
Philippines
Royalties - in general
Royalties on books, other literary works
and musical compositions
Prizes - more than P10,000
Prizes - P10,000 or less
Prizes - PCSO & Lotto winnings
Other prizes or winnings within the
Philippines

CITIZENS
NON-RESIDENTS
5% - 34% in 1998 (for income w/in the
Phils)
5% - 33% in 1999 (for income w/in the
Phils)
5%- 32% in 2000 (for income w/in the
Phils)
5% - 32% thereafter (for income w/in
the Phils)
EXEMPT (for income w/out the Phils)

20% FT

7.5% FT

EXEMPT [Sec 2.24 RR 10-98 ]

EXEMPT

EXEMPT

4 yrs to < 5 years -- 5%FT

3 years to < 4 years -12%FT
Less than 3 years -- 20%FT

4 yrs to < 5 years -- 5%FT

3 years to < 4 years -- 12%FT
Less than 3 years -- 20%FT

5% - 34%, 33%, 32%

5% - 34%, 33%, 32%

5% - 34%, 33%, 32%

EXEMPT

20% FT
10% FT

20% FT
10% FT

20% FT
5% - 34%, 33%, 32%
EXEMPT
20% FT

20% FT
5% - 34%, 33%, 32%
EXEMPT
20% FT

INCOME TAXATION OF INDIVIDUALS: CITIZENS

RESIDENT
Other prizes or winnings outside the
Philippines
Cash and/or Property Dividends from a
domestic corp or share in distributable
net income after tax of a partnership
(except general professional partnerhip),
association, joint account, or joint venture
or consortium taxable as corporation
Other Cash and/or Property Dividends
(e.g. from a foreign corp)
On domestic shares of stock not traded
through local stock exchange (based on
net capital gains)
On shares of stock traded through local
stock exchange (based on gross selling
price) [Sec 127(A) & (D)]
On real property (based on gross selling
price or FMV whichever is higher) - In
general
On real property sold to the government subj to option
On real property sold to acquire or
construct new principal residence

CITIZENS
NON-RESIDENTS

5% - 34%, 33%, 32%

EXEMPT

6% FT beginning Jan 1,
1998
8% FT beginning Jan 1,
1999
10% FT beginning Jan 1,
2000

6% FT beginning January 1, 1998

8% FT beginning January 1, 1999
10% FT beginning January 1, 2000

5% - 34%, 33%, 32%

5% - 34%, 33%, 32%

5% / 10% FT

5% / 10% FT

1/2 of 1% FT (Percentage
Tax)

1/2 of 1% FT (Percentage Tax)

6% FT

6% FT

6% FT or
5% - 34% 33%, 32%
EXEMPT subj to certain
conditions

6% FT or 5% - 34%, 33%, 32%

Atty. Marissa O. Cabreros (Ateneo School of Law)

EXEMPT subj to certain conditions