These entities are not allowed to generate income from Philippine sources nor solicit or market goods and services on behalf of their head office or affiliates. Regional or area headquarters of multinational companies – exempt.Regional operating headquarters of multinational companies – 10% of taxable income.Offshore banking – 10% on onshore interest income.Expanded foreign currency deposit units of banks – 10% on onshore interest income.Exemption applies on condition of reciprocity Lower rates are available under tax treaties. International carriers doing business in the Philippines – 2.5% of gross billings from carriage originating from the Philippines.Exemptions apply pursuant to tax treaty provisions.Ĭertain types of income and corporations are subject to special tax rates and are as follows: The tax is calculated on gross income instead of net income. The 30% rate also applies to non-resident foreign corporations. The excess MCIT paid over the RCIT is allowed as a tax credit against the RCIT payable in the succeeding three years. Allowable expenses in computing the gross income subject to MCIT for certain business activities have been enumerated. There is a minimum corporate income tax (MCIT) equivalent to 2% of gross income, which applies beginning on the fourth year of commercial operation. The regular corporate income tax (RCIT) is 30% on net taxable income. Only Philippine-sourced income is subject to Philippine taxes for the latter group.Ĭorporations incorporated under Philippine laws and resident citizens are subject to income tax on their worldwide income. There is a territorial system of taxation for foreign corporations and individuals, as well as non-resident citizens.
At the local level, governments have some autonomy to impose taxes on business and ownership of real property. There are four main types of national internal revenue taxes: income, indirect (value-added and percentage taxes), excise and documentary stamp taxes, all of which are administered by the Bureau of Internal Revenue (BIR). At the national level, taxes are imposed and collected pursuant to the National Internal Revenue Code, the Tariff and Customs Code, and several special laws.
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