PROBLEM 1

2005
Monthly income 13 months income
97,000.00
1,164,000.00
45,000.00
540,000.00

MR. ABC
MRS. ABC

Other Bonuses
310,400.00
54,000.00

Gross Income
1,474,400.00
594,000.00

2006
1,570,236.00
622,215.00

6.5% & 4.75% Annual Increase

2007
2008
2009
1,672,301.34
1,781,000.93
1,896,765.99
651,770.21
682,729.30
715,158.94

2010
2,020,055.78
(50,000.00)
(30,000.00)

2011
2,151,359.40
(50,000.00)
(30,000.00)

2012
2,291,197.76
(50,000.00)
(30,000.00)

2013
2,440,125.62
(50,000.00)
(30,000.00)

2014
2,598,733.78
(50,000.00)
(30,000.00)

(25,000.00)
(25,000.00)
(25,000.00)
1,865,055.78

(25,000.00)
(25,000.00)
(25,000.00)
1,996,359.40

(25,000.00)
(25,000.00)
2,161,197.76

(25,000.00)
(25,000.00)
2,310,125.62

(25,000.00)
2,493,733.78

125,000
436,818
561,818

125,000
478,835
603,835

125,000
531,583
656,583

125,000
579,240
704,240

125,000
637,995
762,995

749,128.99
(50,000.00)

784,712.62
(50,000.00)

821,986.47
(50,000.00)

861,030.82
(50,000.00)

901,929.79
(50,000.00)

(30,000.00)
669,128.99

(30,000.00)
704,712.62

(30,000.00)
741,986.47

(30,000.00)
781,030.82

(30,000.00)
821,929.79

125,000
54,121
179,121

125,000
65,508
190,508

125,000
77,436
202,436

125,000
89,930
214,930

125,000
103,018
228,018

740,939

794,343

859,019

919,170

991,012

MR. ABC
GROSS INCOME
Basic Exemption
Bonuses Exclusion
DEF & PQR
GHI 20 on 08
JKL 20 on 10
MNO 20 on 12
Net Taxable Income
Tax Due:
1st 500k
32% on excess of 500k

N
Y
Y
Y

MRS. ABC
GROSS INCOME
Basic Exemption
Bonuses Exclusion
Net Taxable Income
Tax Due:
1st 500k
32% on excess of 500k

TOTAL TAX DUE:

PROBLEM 2

PEDROs INCOME TAX COMPUTATION

CASHFLOW:

DATA

SOURCE

TREATMENT

Uzbekistan 5 mos income

750000 Oshore compensation

Taxable

Retention money from parents

300000 Onshore gift

Sickness/Injury compensation

AMOUNT
3,750,000

Exclusion

300,000

1500000 Oshore injury benefit

Exclusion

1,500,000

PNR 7 months + 13th month

30000 Onshore compensation

Taxable

240,000

Private Employer 7mos +13th

30000 Onshore compensation

Taxable

240,000
6,030,000

EXCLUSIONS:
Retention money from parents
Sickness/Injury compensation
13th Month & Other Bonuses

Exclusion

300,000

1500000 Oshore injury benefit

Exclusion

1,500,000

300000 Onshore gift

30000 Max exclusion

Exclusion

30,000
1,830,000

COMPUTATION:
i. Gross Income = Total cashflow - Exclusions
ii. Taxable Income = Gross income - Deducdtions
iii. Graduated Tax Rate (GRT) = 125,000 + 32% X amount in excess of 500k

i. Gross Income

4,200,000 = 6,030,000 - 1,830,000

ii. Taxable Income

4,100,000 = 4,200,000 - 100,000

iii. Tax Due

1,277,000 = 125,000 + 32% (4,100,000 - 500,000)

PROBLEM 3
A.
Onshore 500k taxable
Oshore $5k exempt
Exclusion: Bonuses
Basic Exemption
Additional Exemption
Taxable Income
Tax Due:
1st 500k
32% on excess of 500k
TOTAL TAX DUE:

B.
Onshore 500k taxable
Oshore $5k taxable

500,000

Husband
6,000,000

(30,000)
(50,000)
5,920,000

C.
Onshore 500k taxable
Oshore $5k taxable
Exclusion: Bonuses
Basic Exemption
Additional Exemption
13th & Others Exclusion
Taxable Income
Tax Due:
1st 500k
32% on excess of 500k
TOTAL TAX DUE:

(30,000) The 30k exclusion is a privilege granted to all even

(50,000) to expats as it is a beneficial exempting/exclusion provision
under the tax code, to which the expats should be entitled to
520,000

1,990,800

125,000
1,734,400
1,859,400

125,000
6,400
131,400

500,000
210,000

6,000,000
2,520,000

600,000

(30,000)
(50,000)

(30,000)
(50,000)

Exclusion: Bonuses
Basic Exemption
Additional Exemption
Taxable Income
Tax Due:
1st 500k
32% on excess of 500k
TOTAL TAX DUE:

Foreign nationals or expats cannot take advantage of

the Phil law on 13th month pay because their contract
are negotiated at their home country where such law
may not exist. Moreover, expat compensation are usually
Wife
negotiated packages wherein bonuses and perquisites are
600,000 provided for and tucked into their monthly compensation

8,440,000

2,797,200

520,000

125,000
2,540,800
2,665,800

125,000
6,400
131,400

Husband
Wife
500,000
6,500,000
210,000
2,520,000

650,000

(30,000)
(50,000)
-

2,954,000

(30,000)
(50,000)
-

(30,000)
8,910,000

(30,000)
540,000

125,000
2,691,200
2,816,200

125,000
12,800
137,800

3,113,184.23