National Taxes in the Philippines

Capital Gains Tax – is a tax imposed on the gains presumed to have been realized by the seller from the
sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro
sales and other forms of conditional sale.
Documentary Stamp Tax – is a tax on documents, instruments, loan agreements and papers evidencing
the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto. Examples
of documentary stamp tax are those that are charged on bank promissory notes, deed of sale, and deed of
assignment on transfer of shares of corporate stock ownership.
Donor’s Tax – is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between
two or more persons who are living at the time of the transfer. Donor’s tax is based on a graduated
schedule of tax rate.
Estate Tax - is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs
and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to
testamentary disposition. Estate tax is also based on a graduated schedule of tax rate.
Income Tax - is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on a
person’s income, emoluments, profits and the like. Self-employed individuals and corporate taxpayers pay
quarterly income taxes from 1st quarter to 3rd quarter. And instead of filing quarterly income tax on the
fourth quarter, they file and pay their annual income tax return for the taxable year. Individual income tax
is based on graduated schedule of tax rate, while corporate income tax in based on a fixed rate prescribe
by the tax law or special law.
Percentage Tax – is a business tax imposed on persons or entities who sell or lease goods, properties or
services in the course of trade or business whose gross annual sales or receipts do not exceed the amount
required to register as VAT-registered taxpayers. Percentage taxes are usually based on a fixed rate. They
are usually paid monthly by businesses or professionals. However, some special industries and transactions
pay percentage tax on a quarterly basis.
Value Added Tax - is a business tax imposed and collected from the seller in the course of trade or
business on every sale of properties (real or personal) lease of goods or properties (real or personal) or
vendors of services. It is an indirect tax, thus, it can be passed on to the buyer, causing this to increase the
prices of most goods and services bought and paid by consumers. VAT returns are usually filed and paid
monthly and quarterly.
Excise Tax – is a tax imposed on goods manufactured or produced in the Philippines for domestic sale or
consumption or any other disposition. It is also imposed on things that are imported.
Withholding Tax on Compensation – is the tax withheld from individuals receiving purely compensation
income. This tax is what employers withheld in their employees’ compensation income and remit to the
government through the BIR or authorized accrediting agent.
Expanded Withholding Tax – is a kind of withholding tax which is prescribed only for certain payors and is
creditable against the income tax due of the payee for the taxable quarter year. Examples of the expanded
withholding taxes are those that are withheld on rental income and professional income.
Final Withholding Tax – is a kind of withholding tax which is prescribed only for certain payors and is not
creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes
the full and final payment of the Income Tax due from the payee on the said income. An example of final
withholding tax is the tax withheld by banks on the interest income earned on bank deposits.
Withholding Tax on Government Money Payments – is the withholding tax withheld by government
offices and instrumentalities, including government-owned or -controlled corporations and local
government units, before making any payments to private individuals, corporations, partnerships and/or
associations.