NONRESIDENT CITIZEN

Definition:
Citizen of the Philippines who establishes the fact of his/her physical presence abroad with the definite
intention to reside therein and shall include Filipino who leaves the country as:
i) Immigrant (foreign visa has been secured)
ii) Permanent employee
iii) Contract Worker (contract of employment is renewed from time to time during the taxable year
as require presence abroad for an aggregate period of one hundred eighty (180) days or more.)

1. Taxable Income within the Philippines

Source of Income Tax Remarks
Compensation Income Taxable Compensation Gross Compensation less premium
Income (5%-32%) payments and/or hospitalization, personal
(P50,000.00) and additional exemptions
(P25,000.00 per child, max 4 child)
Business/Professional Taxable Business Income Gross Income less itemized deduction or
Income and/or Trade (5%-32%) optional standard deduction (40%) of
gross sales or gross receipts less personal
and additional exemption.
Passive Income
Royalties 20% final withholding tax on 10% final withholding tax on royalties on
gross amount books, literary works and musical
compositions
Prized and other taxable 20% final withholding tax on Except PCSO and Lotto winnings
winnings gross amount for those
prizes exceeding P10,000.00
Interest Income from 20% final income tax on the
Philippine currency gross amount
bank deposits and yield
or any other monetary
benefit from deposit
substitutes and from
trust funds and similar
arrangements
Interest Income from 4 yrs to less than 5 yrs -5%
long-term deposit 3 yrs to less than 4 yrs -12%
instruments pre- Less than 3 yrs -20%
terminated before the
5th year
Interest Income from Exempt
foreign currency bank
deposits
Cash and/or property 10% final withholding tax
dividends or
constructively received
and share of an
individual partner in the
net profits of a taxable
partnership
Sale or exchange of Real property- 6% final tax
capital assets on gross selling price or fair
value whichever is higher

Informers Reward
Other Sources of Income
Shares of stocks not listed or
trade in any local stock
exchange shall be taxes on
the net capital gains, as
follows:
Not over P100k -5%
In Excess of P100k -10%
10% final tax on the cash
reward received

2. Deductions from Business and/or Professional Income

The following payments incurred in connection with the taxpayers profession, trade or businesses are
deductive from gross income:
a. Ordinary and necessary trade, business or professional expenses paid or incurred during the taxable
year
b. Interest
c. Taxes
d. Losses not compensated by insurance or other forms of indemnity
e. Net Operating Loss Carry-over
f. Bad Debts
g. Depreciation
h. Depletion of Oil and Gas Wells and Mines
i. Charitable and Other Contributions
j. Research and Development
k. Pension Trusts
l. OSD (40%) of gross sales or receipts
m. Premium Payment on Health and/or Hospitalization Insurance
n. Free Legal services

3. Filing of Returns
Every Filipino citizen residing outside the Philippines, on income from sources within the Philippines

For Individuals Earning Purely Compensation Income and Individuals Engaged in

Business and Practice of Profession

Amount of Net Taxable Income Rate

Over But Not Over
P10,000 5%
P10,000 P30,000 P500 + 10% of the Excess over P10,000
P30,000 P70,000 P2,500 + 15% of the Excess over P30,000
P70,000 P140,000 P8,500 + 20% of the Excess over P70,000
P140,000 P250,000 P22,500 + 25% of the Excess over P140,000
P250,000 P500,000 P50,000 + 30% of the Excess over P250,000
P500,000 P125,000 + 32% of the Excess over P500,000 in 2000 and onward

Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal
installments, the first installment to be paid at the time the return is filed and the second
installment 15 of the same year at on or before July the Authorized Agent Bank (AAB)
within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is
registered.

Tax Rate Taxable Base

1. Domestic Corporations:
a. In General 30% (effective Jan. Net taxable income from all sources
1, 2009)
b. Minimum Corporate Income Tax* 2% Gross Income
c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income
2. Proprietary Educational Institution 10% Net taxable income provided that the
gross income from unrelated trade,
business or other activity does not
exceed 50% of the total gross income
3. Non-stock, Non-profit Hospitals 10% Net taxable income provided that the
gross income from unrelated trade,
business or other activity does not
exceed 50% of the total gross income
4. GOCC, Agencies & Instrumentalities
a. In General 30% Net taxable income from all sources
b. Minimum Corporate Income Tax* 2% Gross Income
c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income
5. National Gov't. & LGUs
a. In General 30% Net taxable income from all sources
b. Minimum Corporate Income Tax* 2% Gross Income
c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income
6. Taxable Partnerships
a. In General 30% Net taxable income from all sources
b. Minimum Corporate Income Tax* 2% Gross Income
c. Improperly Accumulated Earnings 10% Improperly Accumulated Taxable Income
7. Exempt Corporation
a. On Exempt Activities 0%
b. On Taxable Activities 30% Net taxable income from all sources
8. General Professional Partnerships 0%
9. Corporation covered by Special Laws Rate specified
under the
respective special
laws
10. International Carriers 2.5% Gross Philippine Billings
11. Regional Operating Head 10% Taxable Income
12. Offshore Banking Units (OBUs) 10% Gross Taxable Income On Foreign
Currency Transaction
30% On Taxable Income other than Foreign
Currency Transaction
13. Foreign Currency Deposit Units 10% Gross Taxable Income On Foreign
(FCDU) Currency Transaction
30% On Taxable Income other than Foreign
Currency Transaction

*Beginning on the 4th year immediately following the year in which such corporation
commenced its business operations, when the minimum corporate income tax is greater
than the tax computed using the normal income tax.

Passive Income
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical composition) 10%
- In general 20%
3. Prizes (P10,000 or less ) 5%
- In excess of P10,000 20%
4. Winnings (except from PCSO and lotto) 20%
5. Interest Income of Foreign Currency Deposit 7.5%
6. Cash and Property Dividends
- To individuals from Domestic Corporations 10 %
- To Domestic Corporations from Another Domestic Corporations 0%
7. On capital gains presumed to have been realized from sale, exchange or other
6%
disposition of real property (capital asset)
8. On capital gains for shares of stock not traded in the stock exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%
9. Interest Income from long-term deposit or investment in the form of savings, common
or individual trust funds, deposit substitutes, investment management accounts and
other investments evidenced by certificates
Upon pretermination before the fifth year , there should be imposed on the entire Exempt
income from the proceeds of the long-term deposit based on the remaining maturity
thereof:
Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%

B. For Non-Resident Aliens Engaged in Trade or Business

1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Interest Income from long-term deposit or investment in the form of savings, common
or individual trust funds, deposit substitutes, investment management accounts and
other investments evidenced by certificatesUpon pretermination before the fifth year, Exempt
there should be imposed on the entire income from the proceeds of the long-term
deposit based on the remaining maturity thereof:Holding Period:
-Four (4) years to less than five (5) years 5%
-Three (3) years to less than four (4) years 12%
-Less than three (3) years 20%
3. On capital gains presumed to have been realized from the sale, exchange or other
6%
disposition of real property
4. On capital gains for shares of stock not traded in the Stock Exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%

C) For Non-Resident Aliens Not Engaged in Trade or Business

1. On the gross amount of income derived from all sources within the Philippines 25%
2. On capital gains presumed to have been realized from the exchange or other
6%
disposition of real property located in the Phils.
3. On capital gains for shares of stock not traded in the Stock Exchange
- Not Over P100,000 5%
- Any amount in excess of P100,000 10%

D) On the gross income in the Philippines of Aliens Employed by Regional

Headquarters (RHQ) or Area Headquarters and Regional Operating Headquarters
(ROH), Offshore Banking Units (OBUs), Petroleum Service Contractor and
Subcontractor

On the gross income in the Philippines of Aliens Employed by Regional Headquarters 15%
(RHQ) or Area Headquarters and Regional Operating Headquarters (ROH), Offshore
Banking Units (OBUs), Petroleum Service Contractor and Subcontractor