Jurisdiction overviewTax in Philippines
Last reviewed: · by TaxProsRated editorial
Key points
The Bureau of Internal Revenue administers Philippine taxes alongside the Bureau of Customs. Personal income tax runs 0-35 percent under the post-TRAIN brackets after the 1 January 2023 second-stage rate cut, corporate tax sits at 25 percent (20 percent for small domestic corporations) after CREATE Act 2021, and VAT remains 12 percent. Crypto and digital-asset rules are still developed via BIR rulings rather than statute.
Who is the tax authority?
The Bureau of Internal Revenue (BIR), an attached bureau of the Department of Finance, administers all internal revenue taxes: income tax, VAT, percentage tax, withholding taxes, donor's tax, and estate tax.
The Bureau of Customs handles import duties and tariff-related VAT. Local government units administer real-property tax (RPT) and local business tax (LBT) under the Local Government Code (RA 7160).
Filing channels split by taxpayer size. Large taxpayers use eFPS (Electronic Filing and Payment System). Smaller filers use eBIRForms. The BIR Large Taxpayers Service (LTS) serves enterprises above prescribed gross-receipts thresholds; medium and small taxpayers file at District Offices (RDOs).
The credentialed profession is CPA (Certified Public Accountant), regulated by the Professional Regulation Commission Board of Accountancy. The Philippine Institute of Certified Public Accountants (PICPA) is the principal accreditation body.
Tax disputes proceed: BIR administrative review (LOA response, PAN protest, FAN protest) then the Court of Tax Appeals (CTA) (original and appellate jurisdiction by amount and stage), then the Supreme Court on questions of law.
Tax year and filing deadlines
The individual tax year is the calendar year (1 January to 31 December). Annual income tax returns are due 15 April of the year following the taxable year. Corporate fiscal years may be elected; corporate annual returns are due on the 15th day of the fourth month after fiscal year-end.
Quarterly individual returns (1701Q) are due 15 May / 15 August / 15 November. Quarterly corporate returns (1702Q) are due on the 60th day after each quarter. VAT returns under EOPT Act 2024 are now quarterly only (BIR Form 2550Q), due 25 days after the close of the taxable quarter — the legacy monthly 2550M was abolished. Annual Information Return of Income Taxes Withheld on Compensation (BIR Form 1604CF) is due 31 January for the prior calendar year.
Residency and the OFW rule
The NIRC of 1997 (RA 8424) distinguishes four taxpayer categories:
| Category | Tax base |
|---|---|
| Resident Citizen | Worldwide income |
| Non-Resident Citizen (including OFW) | Philippine-source income only |
| Resident Alien | Philippine-source income only |
| Non-Resident Alien engaged in trade/business (NRAETB) | Philippine-source at graduated rates |
| Non-Resident Alien not engaged in trade/business (NRANETB) | Philippine-source at flat 25% |
A Filipino citizen working abroad qualifies as a non-resident citizen if physically present abroad most of the year showing intent to reside permanently, OR leaves as an immigrant or for permanent employment abroad, OR works and derives income from abroad with employment requiring presence abroad most of the time. OFW status grants full exemption on foreign employment earnings — the most significant tax benefit in the Philippine system for mobile workers.
Alien residency turns on intent and length of stay. A 180-day operational threshold is used by BIR examiners. Non-resident aliens not engaged in trade or business face a flat 25% rate on gross Philippine-source income — significantly more punitive than graduated rates available to NRAETB classification.
Treaty residency tie-breakers under the DTA network apply where two jurisdictions both claim a person as resident. The Tax Treaty Relief Application (TTRA) framework under RMO 14-2021 provides the operational mechanism for treaty-relief claims.
Personal income tax rates
Following the 1 January 2023 second-stage TRAIN cut, the brackets are:
| Annual taxable income (PHP) | Rate |
|---|---|
| Up to 250,000 | 0% |
| 250,001 to 400,000 | 20% |
| 400,001 to 800,000 | 25% |
| 800,001 to 2,000,000 | 30% |
| 2,000,001 to 8,000,000 | 32% |
| Above 8,000,000 | 35% |
The 8% gross income tax option is available to self-employed individuals and professionals with annual gross sales/receipts below the PHP 3M VAT threshold, in lieu of graduated rates plus percentage tax. The 8% option is computed on gross sales/receipts in excess of PHP 250,000.
Key final taxes: 20% on most interest income; 10% cash/property dividends from domestic corporations (resident citizens and resident aliens); 15% net capital gains from sale of unlisted shares; 6% on capital gains from sale of real property classified as capital asset (whichever is higher of gross selling price or FMV); 0.6% stock transaction tax on PSE-listed share trades.
The 13th-month pay and other benefits exemption ceiling is PHP 90,000 under TRAIN.
Corporate income tax
The CREATE Act (RA 11534, 2021) cut the regular CIT rate from 30% to 25% and introduced a 20% rate for qualifying small domestic corporations.
Domestic + resident-foreign corporations. Applies to all companies exceeding the small-corp thresholds. Effective retroactively from 1 July 2020 per CREATE implementing rules.
Net taxable income not exceeding PHP 5M AND total assets not exceeding PHP 100M (excluding land). Both thresholds must be met. Reverts to 25% the year either threshold is breached.
Minimum CIT of 2% of gross income applies when it exceeds the 25% rate on net income. Rate was temporarily cut to 1% from 1 July 2020 through 30 June 2023, then reverted to 2%.
Branch profits remittance tax remains at 15% on remitted profits to head office (excluding PEZA-registered branch profits). Improperly accumulated earnings tax (IAET) was repealed under CREATE.
The PEZA, BOI, TIEZA, and other Registered Business Enterprise (RBE) regimes provide income-tax holidays of 4-7 years followed by either a 5% gross-income-earned (GIE) regime for export-oriented ecozone enterprises, or enhanced deductions (15% additional for power costs, 50% additional for labour expense, 100% additional for R&D), restructured under CREATE's incentive harmonisation. The Fiscal Incentives Review Board (FIRB) has elevated review authority over grants above PHP 1 billion.
The CREATE MORE Act (RA 12066, November 2024) further refined the incentive framework, expanding RBE flexibility and clarifying registered-activity definitions.
Tax loss carryforward: 3 years (extended to 5 years for losses during 2020 and 2021 under CREATE Section 311). No carryback. Transfer pricing under Revenue Regulations 2-2013 follows OECD principles; CbCR applies for groups above PHP 35 billion consolidated revenue.
Pillar Two: the Philippines has signalled alignment intent but specific GloBE QDMTT/IIR/UTPR legislation has not been enacted as of mid-2026. In-scope MNE groups should monitor for legislative developments.
VAT and percentage tax
VAT applies at 12% on sale of goods, services, and lease of property. The registration threshold is PHP 3 million annual gross sales/receipts.
| Rate | Applies to |
|---|---|
| 12% | Standard rate — most goods, services, lease of property |
| 0% | Exports; direct + indirect exports meeting CREATE direct-and-exclusive-use test; certain RBE sales |
| Exempt | Accredited educational services; medical / dental / hospital services; agricultural and marine food products in original state; residential lots not exceeding PHP 1.5M; residential dwellings not exceeding PHP 2.5M; sale of books and journals |
| 12% | Non-resident digital-services suppliers (streaming, SaaS, e-commerce platforms) with PHP 3M+ Philippine-customer turnover — RA 12023 (Digital Services Tax Law), effective 18 October 2024 |
| 3% | Percentage tax — businesses below the PHP 3M VAT threshold (Section 116 NIRC) |
The 5% final withholding VAT on government payments was retained — government agencies withhold 5% of VAT-able payments to suppliers. E-invoicing via the EIS (Electronic Invoicing/Receipting and Sales Reporting System) launched July 2022 is progressively expanding; large taxpayers, exporters, and e-commerce operators were mandated first. Documentary Stamp Tax (DST) under Title VII NIRC applies on documents (loan agreements, share-issuance certificates, leases, mortgages) at varying rates.
Cryptoassets
Philippines: crypto gains taxed by analogy under existing income-tax rules
BIR has not issued a comprehensive crypto-tax regulation. Revenue Memorandum Circular 60-2020 referenced crypto income as taxable under existing income-tax rules. Cryptocurrency held as a capital asset by individuals is subject to the regular income-tax framework as ordinary income at graduated rates 0-35%. Mining and staking income is treated as ordinary income. Registered Virtual Asset Service Providers (VASPs) licensed under BSP Circular 1108 (March 2021) are subject to standard CIT at 25% or 20% for small domestic corps. BSP and SEC issue separate regulatory frameworks for VASPs and digital-asset offerings. Practitioners follow case-by-case BIR rulings — no general-application regulation is in force as of mid-2026.
Treaty network
The Philippines has approximately 43 active double tax treaties. Treaty relief is obtained via the TTRA (Tax Treaty Relief Application) under Revenue Memorandum Order 14-2021, which moved to a confirmatory post-payment regime — withholding agents may apply treaty rates at source upon receipt of the non-resident's Tax Residency Certificate (TRC) and TTRA application, with subsequent BIR ITAD confirmation. The strict ex-ante regime of RMO 1-2000 was replaced.
The Philippines signed the OECD MLI on 7 June 2017 and ratified it; MLI modifications including the Principal Purpose Test under Article 7 apply to covered DTCs from 2024 onward. The Philippines acceded to CRS in 2023 with first exchanges in 2024.
Currency
The Philippine Peso (PHP) is a floating currency managed by the Bangko Sentral ng Pilipinas (BSP). The recent exchange-rate range has been approximately 56-58 PHP to 1 USD (mid-2026 reference). All PIT brackets, the PHP 3M VAT registration threshold, the PHP 5M / PHP 100M small-corp thresholds, and the PHP 35B CbCR consolidation threshold are denominated in PHP. No annual indexation applies to tax thresholds — they are fixed in the NIRC unless amended by Republic Act. OFW remittances are a major macroeconomic factor; the BSP reports approximately USD 33-37 billion in annual remittance inflows, creating substantial cross-border income flows that interact with residency and source-of-income rules.
ASEAN tax cohort
The Philippines anchors the global-income + progressive PIT position in the ASEAN cohort. Five distinct archetypes split the region:
Common pitfalls
Foreign individuals, OFW households, and inbound investors in the Philippines encounter ten recurring traps:
The Resident Citizen / Non-Resident Citizen / Resident Alien / Non-Resident Alien (NRAETB/NRANETB) split is more granular than most peer jurisdictions. Wrong classification at registration creates assessment-year withholding and payroll exposure that compounds across multiple tax years before detection.
Non-resident aliens not engaged in trade or business (NRANETB) face a flat 25% rate on gross Philippine-source income — no deductions, no zero bracket. This is significantly more punitive than the graduated rates available to NRAETB classification. Classification at engagement-start is material.
The TTRA post-payment confirmatory regime still requires Tax Residency Certificate, beneficial-ownership confirmation, and specific-treaty-article citation. Non-resident recipients without complete TTRA risk full domestic-rate withholding (10-25% depending on income type) with no retroactive recovery beyond the 2-year refund-claim window.
MCIT at 2% of gross income (reverted from 1% as of 1 July 2023) creates a floor that catches loss-making or low-margin businesses with significant gross receipts. Loss carryforward applies against MCIT but the interaction is technical and frequently mis-provisioned by new market entrants.
The CREATE Act's direct-and-exclusive-use test for VAT zero-rating means RBE suppliers can no longer rely on automatic zero-rating of all sales. Sales with mixed registered and non-registered use create VAT audit risk — a common trap for shared-services and support-function suppliers to PEZA-registered entities.
Non-resident digital-services suppliers (streaming, SaaS, e-commerce platforms) with more than PHP 3M in annual Philippine-customer turnover must register with BIR and remit 12% VAT. The rapid rollout from 18 October 2024 caught many overseas providers unprepared. Registration and compliance are ongoing obligations, not one-time events.
The Ease of Paying Taxes Act (RA 11976, January 2024) unified VAT filing to quarterly only (BIR Form 2550Q) and abolished the legacy monthly 2550M. Taxpayers continuing to file under the prior schedule create administrative complications and risk late-filing surcharges. Check current BIR issuances before each filing period.
The 15% branch profits remittance tax on profits remitted to head office is a withholding-style tax often overlooked by foreign branches operating in the Philippines. It is distinct from CIT — both apply at separate stages. PEZA-registered branches are excluded, creating structuring considerations for foreign groups expanding into the Philippines.
Unexplained capital build-up is a powerful BIR examination tool. High-net-worth foreign nationals with substantial Philippine-asset accumulation versus modest declared Philippine-source income face presumption-based assessment. CRS automatic reporting from 2024 and BIR's RELIEF programme cross-referencing payer-payee records amplify this risk.
Philippine estate tax under TRAIN is a flat 6% on net taxable estate (applied to worldwide estate of Resident Citizens; Philippine-located estate for non-residents). Donor's tax is also a flat 6%. Real-property tax rates vary by local government unit under the Local Government Code — a factor for property-holding structures, particularly between Manila / Makati and provincial LGUs.
When to engage a Philippine tax professional
Situations requiring a licensed CPA or Philippine tax specialist:
The four-tier taxpayer classification (Resident Citizen, Non-Resident Citizen, Resident Alien, Non-Resident Alien) has material rate consequences. Classification at engagement-start avoids year-end exposure.
RBE registration, income-tax-holiday elections, GIE regime compliance, or enhanced-deduction documentation under CREATE requires specialist guidance from the outset to avoid post-ITH period misclassification.
OECD-aligned TP documentation under RR 2-2013 and CbCR obligations for groups above PHP 35B consolidated revenue require dedicated documentation packages separate from annual ITR filings.
BIR Letter of Authority (LOA) response, Preliminary Assessment Notice (PAN) protest, Final Assessment Notice (FAN) protest, and Court of Tax Appeals proceedings all require qualified CPA representation under BIR procedural rules.
Verified firms
TaxPros Rated lists 14 verified firms serving Philippines-based taxpayers. Firms hold CPA credentials issued by the PRC Board of Accountancy and are registered with BIR. Coverage spans the Big Four Philippines offices (Isla Lipana/PwC, R.G. Manabat/KPMG, SGV/EY, Navarro Amper/Deloitte), mid-market firms (Punongbayan and Araullo/Grant Thornton, BDO Philippines, RSM Philippines, Forvis Mazars Philippines), and regional specialist CPA practices.
Firm profiles include stated specialisms (individual ITR, corporate RCIT, VAT compliance, PEZA/BOI incentive, transfer pricing, TTRA treaty relief, BIR audit representation), BIR accreditation status, eFPS enrollment, and language capability (English and Filipino). Use the filters above to narrow by location, specialism, and verified credential tier.
Sources
- Bureau of Internal Revenue (Philippines) — Tax Information: https://www.bir.gov.ph/index.php/tax-information.html
- RA 8424 — National Internal Revenue Code of 1997, as amended by RA 10963 (TRAIN), RA 11534 (CREATE), RA 11976 (EOPT), RA 12023 (Digital Services Tax), and RA 12066 (CREATE MORE)
- BIR Revenue Regulations 2-2013 — Transfer Pricing Guidelines
- BIR International Tax Affairs Division — DTA list: https://www.bir.gov.ph/index.php/international-tax-matters.html
- BSP Circular 1108 (2021) — Virtual Asset Service Providers
- PwC Worldwide Tax Summaries — Philippines: https://taxsummaries.pwc.com/philippines
- OECD MLI Deposit — Philippines ratification
This page is general information about the Philippines's tax framework. It is not personal guidance for your specific situation. Tax rules change. Always verify current figures on the BIR website or with a licensed Philippine CPA before filing.
Frequently asked
Who is the Philippine tax authority?
The Bureau of Internal Revenue (BIR), an attached bureau of the Department of Finance, administers internal revenue taxes including income tax, VAT, percentage tax, withholding taxes and donor's/estate tax. Customs duties and tariff-VAT are administered by the Bureau of Customs. Local government units administer real-property tax and local business tax under the Local Government Code. CPA is the principal credentialed profession, regulated by the PRC Board of Accountancy.
When is the Philippine annual return due?
Individual annual returns (BIR Form 1700/1701/1701A) for the calendar tax year are due 15 April of the following year. Corporate annual returns are due on the 15th day of the fourth month after fiscal year-end. Quarterly individual returns are due 15 May/15 August/15 November. VAT returns under EOPT 2024 are quarterly only (BIR Form 2550Q) due 25 days after quarter-end.
Who is a Philippine tax resident?
Resident citizens are taxed on worldwide income; non-resident citizens (including OFWs), resident aliens and non-resident aliens are taxed on Philippine-source income only. Residency for aliens turns on intent and length of stay; a 180-day threshold is used as an operational benchmark. NRAETB taxed at graduated rates; NRANETB at flat 25% on gross. OFW status grants full exemption on foreign employment earnings.
What are the Philippine personal income tax rates?
After the 1 January 2023 second-stage TRAIN cut, the brackets are 0% up to PHP 250,000; 20% on 250,001-400,000; 25% on 400,001-800,000; 30% on 800,001-2,000,000; 32% on 2,000,001-8,000,000; and 35% above PHP 8,000,000. Self-employed below the PHP 3M VAT threshold may elect 8% gross in lieu of graduated rates plus percentage tax.
How does the Philippine corporate tax work?
Regular corporate income tax (RCIT) is 25% for domestic and resident-foreign corporations after CREATE Act 2021, reduced to 20% for small domestic corporations with net taxable income not exceeding PHP 5M and assets not exceeding PHP 100M. MCIT is 2% of gross income (reverted from 1% as of 1 July 2023). CREATE MORE Act (RA 12066, November 2024) further refined the incentive framework. Pillar Two not yet enacted.
What is the Philippine VAT rate and threshold?
VAT is 12% on most goods, services, and lease of property. The registration threshold is PHP 3M annual gross sales/receipts; below this, businesses pay 3% percentage tax. Export sales and qualifying RBE-related sales are zero-rated under the CREATE direct-and-exclusive-use test. Non-resident digital-services suppliers with PHP 3M+ Philippine-customer turnover subject to 12% VAT under RA 12023 (effective 18 October 2024).
How does the Philippines tax cryptoassets?
BIR has not issued comprehensive crypto regulations; treatment follows existing analogies. Revenue Memorandum Circular 60-2020 established that crypto income is taxable under existing rules. Crypto held as a capital asset is subject to the regular income-tax framework as ordinary income at graduated rates 0-35%; mining and staking income is ordinary income. VASPs licensed under BSP Circular 1108. Practitioners follow case-by-case BIR rulings — no general-application regulation is in force as of mid-2026.
How many tax treaties does the Philippines have?
Approximately 43 double tax treaties are in force. Treaty relief follows RMO 14-2021's confirmatory post-payment regime via the Tax Treaty Relief Application (TTRA). The Philippines signed the OECD MLI on 7 June 2017 and ratified it; PPT applies to covered DTCs from 2024 onward. CRS adopter from 2023 with first exchanges in 2024.
Major tax firms in Philippines
Verified directory of the largest accounting + tax practices operating in Philippines. Listings are entity-level reference cards — claim flow is open to firm representatives.
- Big 4
Deloitte Philippines
- Big 4
Deloitte Philippines (Navarro Amper & Co.)
- Big 4
EY Philippines
- Big 4
EY Philippines (SGV & Co.)
- Big 4
KPMG Philippines
- Big 4
KPMG Philippines (R.G. Manabat & Co.)
- Big 4
PwC Philippines
- Big 4
PwC Philippines (Isla Lipana & Co.)
- National
BDO Philippines
- National
Forvis Mazars Philippines
- National
Grant Thornton Philippines
- National
RSM Philippines
- Regional
Punongbayan & Araullo (P&A Grant Thornton)
- Regional
Ramon F. Garcia & Company CPAs
Find a tax pro in Philippines
Browse credentialed pros serving Philippines — filter by specialty, language, and credential type.
Browse the Philippines directorySources
The figures, dates, and rules on this page are sourced from the documents listed below. Where two sources disagree, both are listed.
- Bureau of Internal Revenue (Philippines) · accessed
- Official Gazette of the Republic of the Philippines · accessed
- Bureau of Internal Revenue (Philippines) · accessed
- Bangko Sentral ng Pilipinas · accessed
- Bureau of Internal Revenue (Philippines) · accessed
- PwC Worldwide Tax Summaries · accessed
- Official Gazette of the Republic of the Philippines · accessed
Important disclaimer
Informational only — not tax advice. This page summarises publicly available information about tax in Philippines as of July 2026. Tax laws change, individual circumstances vary, and the application of any rule depends on your specific facts.
TaxProsRated does not provide tax, legal, accounting, or financial advice. Before acting on anything you read here, consult a qualified tax professional licensed in your jurisdiction (in the US: CPA, Enrolled Agent, or attorney; in the UK: CIOT- or ATT-qualified adviser; in Australia: TPB-registered tax agent; elsewhere: a locally-licensed equivalent). TaxProsRated, its operators, and its contributors disclaim all liability for action taken in reliance on this page.