Philippines: On taxes

Taxes in the Philippines

Individuals (resident and non-resident citizen; resident and non-resident aliens), corporations (Domestic and Foreign), estate under judicial settlement, and trusts irrevocable both as to the trust property and as to the income, pay taxes in the Philippines.

The only difference between foreign companies and domestic companies when it comes to taxes is that foreign corporations are taxed only on their Philippine source income. Aside from that, they are both taxable in the same manner – 12% VAT, 30% corporate income tax, and other applicable taxes. Corporate income is taxed when earned by the corporation and when profits are received by shareholders.

Taxes during business registration

Before a business starts operating, the company must be registered with the SEC (Securities and Exchange Commission) and receive the pre-registered Taxpayer Identification Number (TIN). The company must then register the TIN with the Bureau of Internal Revenue (BIR) in order to identify applicable tax pays, pay an annual registration fee, obtain and stamp sales invoices, receipts and the books of accounts. The company pays an annual community tax too, which is based on the company’s legal form and the assessed value of real property that the company owns in the Philippines.

The company may also avail the tax incentives under the Board of Investments (BOI), the Philippine Economic Zone Authority (PEZA), the Clark Development Corporation, or the Subic Bay Metropolitan Authority. These incentives are optional upon business registration.

For additional information on the proper business taxes in the country, it would be best to consult a CPA or a practicing tax lawyer. The British Chamber of Commerce Philippines has a wide range of member network working on business services including taxes and other financial matters.

Countries: Philippines and United Kingdom
Topics: Business Development, Finance, and Getting Started
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