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SPIT: RATES - Coggle Diagram

- - - - EXEMPT:
        INVESTMENTS CERTIFIED
        BSP-PRESCRIBED :bank:
        
        LONG TERM DEPOSIT
        
        SAVINGS
        
        TRUST FUNDS
        -COMMON/INDIVIDUAL
        
        DEPO-SUB
        
        IMA
        Provided, further, That 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 in such form prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be exempt from the tax imposed under this Subsection:
        
        PRE-TERMINATE?
        
        5% - 4 to :arrow_down:5
        
        12% - 3 TO :arrow_down:4
        
        20% :arrow_down:3
        
        Provided, finally, That should the holder of the certificate pre-terminate the deposit or investment before the fifth (5th) year, a final tax shall be imposed on the entire income and shall be deducted and withheld by the depository bank from the proceeds of the long-term deposit or investment certificate based on the remaining maturity thereof:
        Four (4) years to less than five (5) years - 5%;
        Three (3) years to less than (4) years - 12%; and
        Less than three (3) years - 20%
        
        SIR: CORPORATION CANNOT
        CLAIM EXEMPTION
        ○ Corporations are NOT eligible to claim this exemption from common trust funds, individual trust funds, deposit substitutes, and the like.
        
        So it's 20% FOR CORPORATIONS?
    - - EXCEPT GPP
      - DEPENDING ON TAXPAYER
        
        10% INDIVIDUALS
        
        25% NRA-NETB
        
        EXEMPT IF:
        a. DC
        b. RFC
        
        30% NRFC
        -15% IF TAX-SPARING
  - - - (6) Retirement Benefits, Pensions, Gratuities, etc.-
        (a) Retirement benefits received under Republic Act No. 7641 and those received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer:
        Provided, That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of his retirement:
        Provided, further, That the benefits granted under this subparagraph shall be availed of by an official or employee only once.
        For purposes of this Subsection, the term 'reasonable private benefit plan' means a pension, gratuity, stock bonus or profit-sharing plan maintained by an employer
        for the benefit of some or all of his officials or employees, wherein contributions are made by such employer for the officials or employees, or both,
        for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and
        wherein its is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said officials and employees.
        (b) Any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer because of death sickness or other physical disability or for any cause beyond the control of the said official or employee.
        (c) The provisions of any existing law to the contrary notwithstanding, social security benefits, retirement gratuities, pensions and other similar benefits received by resident or nonresident citizens of the Philippines or aliens who come to reside permanently in the Philippines from foreign government agencies and other institutions, private or public.
        (d) Payments of benefits due or to become due to any person residing in the Philippines under the laws of the United States administered by the United States Veterans Administration.
        (e) Benefits received from or enjoyed under the Social Security System in accordance with the provisions of Republic Act No. 8282.
        (f) Benefits received from the GSIS under Republic Act No. 8291, including retirement gratuity received by government officials and employees.
        
        (7) Miscellaneous Items. –
        (a) Income Derived by Foreign Government. - Income derived from investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on deposits in banks in the Philippines by
        (i) foreign governments,
        (ii) financing institutions owned, controlled, or enjoying refinancing from foreign governments, and
        (iii) international or regional financial institutions established by foreign governments.
        (b) Income Derived by the Government or its Political Subdivisions. - Income derived from any public utility or from the exercise of any essential governmental function accruing to the Government of the Philippines or to any political subdivision thereof.
        (c) Prizes and Awards. - Prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement but only if:
        (i) The recipient was selected without any action on his part to enter the contest or proceeding; and
        (ii) The recipient is not required to render substantial future services as a condition to receiving the prize or award.
        (d) Prizes and Awards in sports Competition. - All prizes and awards granted to athletes in local and international sports competitions and tournaments whether held in the Philippines or abroad and sanctioned by their national sports associations.
        (e) 13th Month Pay and Other Benefits. - Gross benefits received by officials and employees of public and private entities:
        Provided, however, That the total exclusion under this subparagraph shall not exceed Ninety thousand pesos (P90,000) [41] which shall cover: [4]
        (i) Benefits received by officials and employees of the national and local government pursuant to Republic Act No. 6686;
        (ii) Benefits received by employees pursuant to Presidential Decree No. 851, as amended by Memorandum Order No. 28, dated August 13, 1986;
        (iii) Benefits received by officials and employees not covered by Presidential Decree No. 851, as amended by Memorandum Order No. 28, dated August 13, 1986; and
        (iv) Other benefits such as productivity incentives and Christmas bonus.
        (f) GSIS, SSS, Medicare and Other Contributions. - GSIS, SSS, Medicare and Pag-Ibig contributions, and union dues of individuals.
        (g) Gains from the Sale of Bonds, Debentures or other Certificate of Indebtedness. - Gains realized from the same or exchange or retirement of bonds, debentures or other certificate of indebtedness with a maturity of more than five (5) years.
        (h) Gains from Redemption of Shares in Mutual Fund. - Gains realized by the investor upon redemption of shares of stock in a mutual fund company as defined in Section 22 (BB) of this Code.
        (i) Income Derived from the Sale of Gold Pursuant to Republic Act No. 7076. – Income derived from the following transactions pursuant to Republic Act No. 7076, otherwise known as the “People’s Small-scale Mining Act of 1991”:
        (1) The sale of gold to the Bangko Sentral ng Pilipinas by registered small-scale miners, as defined under Republic Act. No. 7076, and accredited traders; and
        (2) The sale of gold by registered small-scale miners to accredited traders for eventual sale to the Bangko Sentral ng Pilipinas.
    - - CHAPTER VII
        ALLOWABLE DEDUCTIONS
        SEC. 34. Deductions from Gross Income. [45 - Except for taxpayers earning compensation income arising from personal services rendered under an employer-employee relationship where no deductions shall be allowed under this Section, in computing taxable income subject to income tax under Sections 24(A); 25(A); 26; 27(A), (B), and (C); and 28(A)(1), there shall be allowed the following deductions from gross income: [45]
        
        (A) Expenses. -
        
        (1) Ordinary and Necessary Trade, Business or Professional Expenses.-
        
        BUSINESS EXPENSES
        (a) In General. - There shall be allowed as deduction from gross income all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on or which are directly attributable to, the development, management, operation and/or conduct of the trade, business or exercise of a profession, including:
        
        WAGES
        -PERSONAL SERVICES
        -ACTUALLY RENDERED
        (i) A reasonable allowance for salaries, wages, and other forms of compensation for personal services actually rendered, including the grossed-up monetary value of fringe benefit furnished or granted by the employer to the employee:
        Provided, That the final tax imposed under Section 33 hereof has been paid;
        
        TRAVEL EXPENSES
        (ii) A reasonable allowance for travel expenses, here and abroad, while away from home in the pursuit of trade, business or profession;
        
        RENTAL OF PROPERTY
        -NON-TITLE
        -LESSEE/POSSESSOR ONLY
        (iii) A reasonable allowance for rentals and/or other payments which are required as a condition for the continued use or possession, for purposes of the trade, business or profession, of property to which the taxpayer has not taken or is not taking title or in which he has no equity other than that of a lessee, user or possessor;
        
        ENTERTAINMENT & RECREATION
        -CEILING SOF
        -NOT CONTRARY TO LAW
        (iv) A reasonable allowance for entertainment, amusement and recreation expenses during the taxable year, that are directly connected to the development, management and operation of the trade, business or profession of the taxpayer, or that are directly related to or in furtherance of the conduct of his or its trade, business or exercise of a profession
        
        not to exceed such ceilings as the Secretary of Finance may, by rules and regulations prescribe, upon recommendation of the Commissioner, taking into account the needs as well as the special circumstances, nature and character of the industry, trade, business, or profession of the taxpayer:
        Provided, That any expense incurred for entertainment, amusement or recreation that is contrary to law, morals public policy or public order shall in no case be allowed as a deduction.
        
        1/2 OF VALUE OF LABOR TRAINING EXPENSES FOR
        a. SKILLS DEV'T
        b. ENTERPRISE-BASED TRAINEES
        c. ENROLLED IN PUBLIC SHOOLS
        d. APPRENTICESHIP AGREEMENT
        e. DEPED/TESDA/CHED CERTIFICATION
        
        10% DIRECT LABOR WAGE MAX
        (v) ) An additional deduction from taxable income of one-half of the value of labor training expenses
        incurred for
        skills development of enterprise-based trainees
        enrolled in
        public senior high schools, public higher education institutions, or public technical and vocational institutions and
        duly covered by an apprenticeship agreement under Presidential Decree No. 442, Series of 1974, or the “Labor Code of the Philippines”, as amended, shall be granted to enterprises:
        Provided, further, That for the additional deduction for enterprise-based training of students from public educational institutions, the enterprise shall secure proper certification from the DepEd, TESDA, or CHED:
        Provided, finally, That such deduction shall not exceed ten percent (10%) of direct labor wage. [46]
        
        SUBSTANTIATION REQS
        (b) Substantiation Requirements. -
        No deduction from gross income shall be allowed under Subsection (A) hereof unless the taxpayer shall substantiate with sufficient evidence, such as official receipts or other adequate records:
        
        AMOUNT
        (i) the amount of the expense being deducted, and
        
        T/B
        (ii) the direct connection or relation of the expense being deducted to the development, management, operation and/or conduct of the trade, business or profession of the taxpayer.
        
        NON-DEDUCTIBLE
        BRIBE/KICKBACK
        (c) Bribes, Kickbacks and Other Similar Payments. - No deduction from gross income shall be allowed under Subsection (A) hereof for any payment made, directly or indirectly,
        to an official or employee of the national government, or
        to an official or employee of any local government unit, or
        to an official or employee of a government-owned or -controlled corporation, or
        to an official or employee or representative of a foreign government, or
        to a private corporation, general professional partnership, or a similar entity, if the payment constitutes a bribe or kickback.
        
        (2) Expenses Allowable to Private Educational Institutions. -
        In addition to the expenses allowable as deductions under this Chapter, a private educational institution, referred to under Section 27 (B) of this Code, may at its option elect either:
        CAPITAL OUTLAYS OF DEPRECIABLE ASSETS FOR EXPANSION OF SCHOOL/FACILITIES
        (a) to deduct expenditures otherwise considered as capital outlays of depreciable assets incurred during the taxable year for the expansion of school facilities or
        DEPRECIATION
        (b) to deduct allowance for depreciation thereof under Subsection (F) hereof.
        
        (B) Interest. -
        
        INTEREST
        
        T/B
        (1) In General. - The amount of interest paid or incurred within a taxable year on indebtedness in connection with the taxpayer's profession, trade or business shall be allowed as deduction from gross income:
        
        20% REDUCTION
        Provided, however, That the taxpayer's otherwise allowable deduction for interest expense shall be reduced by twenty percent (20%) of the interest income subjected to final tax:
        
        NON-DEDUCTIBLE
        INTEREST
        (2) Exceptions. - No deduction shall be allowed in respect of interest under the succeeding subparagraphs:
        
        INTEREST TO ACQUIRE PROPERTY
        
        DEDUCTION; OR
        
        CAPEX
        (3) Optional Treatment of Interest Expense. - At the option of the taxpayer, interest incurred to acquire property used in trade business or exercise of a profession may be allowed as a deduction or treated as a capital expenditure.
        
        ADVANCE INT PAYMENT
        (a) If within the taxable year an individual taxpayer reporting income on the cash basis incurs an indebtedness on which an interest is paid in advance through discount or otherwise:
        
        RELATED PARTIES
        (b) If both the taxpayer and the person to whom the payment has been made or is to be made are persons specified under Section 36 (B); or
        
        FINANCE PETROLEUM EXPLORATION DEBT
        (c) If the indebtedness is incurred to finance petroleum exploration.
        
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        Provided, finally, That
        if the interest income tax is adjusted in the future, the interest expense reduction rate shall be adjusted accordingly based on the prescribed standard formula as defined in the rules and regulations to be promulgated by the Secretary of Finance, upon the recommendation of the Commissioner of Internal Revenue. [45]
        
        (C) Taxes.-
        
        DEDUCTIBLE TAXES:
        T/B
        (1) In General. - Taxes paid or incurred within the taxable year in connection with the taxpayer's profession, trade or business, shall be allowed as deduction, except:
        
        NRA & RFC:
        DEDUCTIONS CONNTECTED
        WITH INCOME HERE
        (2) Limitations on Deductions. - In the case of a nonresident alien individual engaged in trade or business in the Philippines and a resident foreign corporation, the deductions for taxes provided in paragraph (1) of this Subsection (C) shall be allowed only if and to the extent that they are connected with income from sources within the Philippines.
        
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        INCOME TAX
        (a) The income tax provided for under this Title;
        
        FOREIGN INCOME TAX
        (b) Income taxes imposed by authority of any foreign country;
        but this deduction shall be allowed in the case of a taxpayer who does not signify in his return his desire to have to any extent the benefits of paragraph (3) of this subsection (relating to credits for taxes of foreign countries);
        
        ESTATE & DONOR'S TAXES
        (c) Estate and donor's taxes; and
        
        LOCAL BENEFITS INCRS VAL OF PROP
        (d) Taxes assessed against local benefits of a kind tending to increase the value of the property assessed.
        
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        TAXES DEDUCTIBLE ONLY TO LEGAL TAXPAYER, NOT WITHHOLDING AGENT
        Taxes deductible only by the person upon whom they are imposed. Rev. Regs. No. 2 ● Thus, the tenant cannot deduct RPT payable by the landlord.
        
        D. LOSSES
        
        (D) Losses. -
        (1) In General. - Losses actually sustained during the taxable year and not compensated for by insurance or other forms of indemnity shall be allowed as deductions:
        (a) If incurred in trade, profession or business;
        (b) Of property connected with the trade, business or profession, if the loss arises from fires, storms, shipwreck, or other casualties, or from robbery, theft or embezzlement.
        
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        E. BAD DEBTS
        
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      - NON-DEDUCTIBLE
        
        NON-DEDUCTIBLE
        ITEMS
        SEC. 36. Items not Deductible. -
        (A) General Rule. - In computing net income, no deduction shall in any case be allowed in respect to -
        
        PERSONAL/LIVING/FAMILY
        (1) Personal, living or family expenses;
        
        USEFUL EXPENSES (CAPITAL)
        (2) Any amount paid out for new buildings or for permanent improvements, or betterments made to increase the value of any property or estate;
        
        NECESSARY EXPENSES
        (3) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made; or
        
        LIFE INSURANCE PREMIUMS
        (4) Premiums paid on any life insurance policy covering the life of
        any officer or employee, or of
        any person financially interested in
        any trade or business carried on by the taxpayer,
        individual or corporate,
        when the taxpayer is directly or indirectly a beneficiary under such policy.
        
        (BRIBE/KICKBACK)
        
        NON-DEDUCTIBLE
        EXCHANGES
        (B) Losses from Sales or Exchanges of Property. -In computing net income, no deductions shall in any case be allowed in respect of losses from sales or exchanges of property directly or indirectly –
        
        FAMILY
        a. SIBLINGS
        b. SPOUSE
        c. UP & DOWN
        (1) Between members of a family. For purposes of this paragraph, the family of an individual shall include only his brothers and sisters (whether by the whole or half-blood), spouse, ancestors, and lineal descendants; or
        
        CONTROLLER INDIV x CONTROLLED
        (2) Except in the case of distributions in liquidation, between an individual and corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for such individual; or
        
        2 CONTROLLED CORPOS BY SAME INDIV:
        -PERSONAL HOLDING/; OR
        -FOREIGN PERSONALHOLDING
        (3) Except in the case of distributions in liquidation, between two corporations more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for the same individual
        
        if either one of such corporations, with respect to the taxable year of the corporation preceding the date of the sale of exchange was under the law applicable to such taxable year,
        a personal holding company or a foreign personal holding company;
        
        GRANTOR x FIDUCIARY
        (4) Between the grantor and a fiduciary of any trust; or
        
        FIDUCIARY x FIDUCIARY
        (5) Between the fiduciary of and the fiduciary of a trust and the fiduciary of another trust if the same person is a grantor with respect to each trust; or
        
        FIDUCIARY x BENEFICIARY
        (6) Between a fiduciary of a trust and beneficiary of such trust.
        
        DEDUCTIBLE:
        PETROLEUM OPERATIONS
        
        INTANGIBLE DRILLING COST
        
        DEV'T COSTS
        This Subsection shall not apply to intangible drilling and development costs incurred in petroleum operations which are deductible under Subsection (G) (1) of Section 34 of this Code.
        
        USEFUL EXPENSES
        EXTEND
        CAN BE DEPRECIATED
        BUT WAIT UNTIL CA BECOMES INCOME PRODUCING
        (Probably since mababa yung amount declared in intervals)
        
        PAY BIR
        
        (K) Additional Requirements for Deductibility of Certain Payments. - Any amount paid or payable which is otherwise deductible from, or taken into account in computing gross income or for which depreciation or amortization may be allowed under this Section, shall be allowed as a deduction only if it is shown that the tax required to be deducted and withheld therefrom has been paid to the Bureau of Internal Revenue in accordance with this Section 58 and 81 of this Code.
        
        37(L) Optional Standard Deduction (OSD). -
        INDIVIDUAL MAY ELECT OSD:
        GROSS SALES/RECEIPTS
        In lieu of the deductions allowed under the preceding Subsections, an individual subject to tax under Section 24, other than a nonresident alien, may elect a standard deduction in an amount not exceeding forty percent (40%) of his gross sales or gross receipts, as the case maybe.
        
        CORPO MAY ELECT OSD:
        GROSS INCOME
        In the case of a corporation subject to tax under Sections 27(A) and 28 (A)(1), it may elect a standard deduction in an amount not exceeding forty percent (40%) of its gross income as defined in Section 32 of this Code.
        
        NO ELECTION -> ITEMIZED
        Unless the taxpayer signifies in his return his intention to elect the optional standard deduction, he shall be considered as having availed himself of the deductions allowed in the preceding Subsections.
        
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- - - - (C) The term 'domestic, when applied to a corporation, means created or organized in the Philippines or under its laws.
        
        (D) The term 'foreign’, when applied to a corporation, means a corporation which is not domestic
        
        (E) The term 'nonresident citizen' means;
        
        ACT + INTENT
        (1) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein.
        
        IMMIGRANT/PERMA-EE
        (2) A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis.
        
        INCOME + REQUIRES PHYSICAL P
        -183 DAYS
        (Section 2(c), RR No. 1-79)
        (3) A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be physically present abroad most of the time during the taxable year.
        
        (F) The term 'resident alien' means an individual whose residence is within the Philippines and who is not a citizen thereof.
        
        (G) The term 'nonresident alien' means an individual whose residence is not within the Philippines and who is not a citizen thereof.
        
        (H) The term 'resident foreign corporation' applies to a foreign corporation engaged in trade or business within the Philippines.
        
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        FOREIGN SOURCE RETAINED ON RETURN
        (4) A citizen who has been previously considered as nonresident citizen and who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines shall likewise be treated as a nonresident citizen for the taxable year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival in the Philippines.
        
        (5) The taxpayer shall submit proof to the Commissioner to show his intention of leaving the Philippines to reside permanently abroad or to return to and reside in the Philippines as the case may be for purpose of this Section.
    - - GRAD %
        ON NET INCOME
        NRA-ETB
        (1) In General. - A nonresident alien individual engaged in trade or business in the Philippines shall be subject to an income tax in the same manner as an individual citizen and a resident alien individual, on taxable income received from all sources within the Philippines.
        
        PASSIVE INCOME
        (2) Cash and/or Property Dividends from a Domestic Corporation or Joint Stock Company, or Insurance or Mutual Fund Company or Regional Operating Headquarter or Multinational Company, or Share in the Distributable Net Income of a Partnership (Except a General Professional Partnership), Joint Account, Joint Venture Taxable as a Corporation or Association, Interests, Royalties, Prizes, and Other Winnings. -
        Cash and/or property dividends from a domestic corporation,
        or
        from a joint stock company,
        or
        from an insurance or mutual fund company
        or
        from a regional operating headquarter of multinational company,
        or
        the share of a nonresident alien individual in the distributable net income after tax of a partnership (except a general professional partnership) of which he is a partner,
        or
        the share of a nonresident alien individual in the net income after tax of an association, a joint account, or
        a joint venture taxable as a corporation of which he is a member or a co-venturer; interests; royalties (in any form);
        and
        prizes (except prizes amounting to Ten thousand pesos (P10,000.00) or less which shall be subject to tax under Subsection (B)(1) of Section 24)
        and
        other winnings (except winnings amounting to Ten thousand pesos (P10,000.00) or less from [17] Philippine Charity Sweepstakes Office (PCSO) games which shall be exempt [17]);
        shall be subject to an income tax of twenty percent (20%) on the total amount thereof:
        
        (3) Capital Gains. - Capital gains realized from sale, barter or exchange of shares of stock in domestic corporations not traded through the local stock exchange, and real properties shall be subject to the tax prescribed under Subsections (C) and (D) of Section 24.
        
        Provided, however, That royalties on books as well as other literary works, and royalties on musical compositions shall be subject to a final tax of ten percent (10%) on the total amount thereof:
        
        Provided, further, That cinematographic films and similar works shall be subject to the tax provided under Section 28 of this Code:
        
        Provided, furthermore, That 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 in such form prescribed by the Bangko Sentral ng Pilipinas (BSP) shall be exempt from the tax imposed under this Subsection:
        
        Provided, finally, That should the holder of the certificate pre-terminate the deposit or investment before the fifth (5th) year, a final tax shall be imposed on the entire income and shall be deducted and withheld by the depository bank from the proceeds of the long-term deposit or investment certificate based on the remaining maturity thereof: [45]
        Four (4) years to less than five (5) years - 5%;
        Three (3) years to less than four (4) years - 12%; and
        Less than three (3) years - 20%.
        
        ^180 DAYS = NRA-ETB
        A nonresident alien individual who shall come to the Philippines and stay therein for an aggregate period of more than one hundred eighty (180) days during any calendar year shall be deemed a 'nonresident alien doing business in the Philippines'. Section 22 (G) of this Code notwithstanding.
        
        BUSINESS ACTIVITIES = NRA-ETB
        CAN BE ETB IN LESS THAN 180 DAYS
        Without staying for more than 180 days, the NRA can be engaged in trade or business here.
      - 25% GROSS INCOME
        NRA-NETB
        (B) Nonresident Alien Individual Not Engaged in Trade or Business Within the Philippines.-
        There shall be levied, collected and paid for each taxable year
        upon the entire income received from all sources within the Philippines by every nonresident alien individual
        not engaged in trade or business within the Philippines as interest, cash
        and/or
        property dividends, rents, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable annual or periodic or casual gains, profits, and income, and capital gains, a tax equal to twenty-five percent (25%) of such income.
        
        15% GROSS INCOME
        ALIENS & PINOY EEs
        RAHQ/ROHQ
        (C) Alien Individual Employed by Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies. -
        There shall be levied, collected and paid for each taxable year upon the
        gross income
        received by every alien individual
        employed by regional or area headquarters and regional operating headquarters established in the Philippines by multinational companies
        as salaries, wages, annuities, compensation, remuneration and other emoluments, such as honoraria and allowances, from such regional or area headquarters and regional operating headquarters, a tax equal to fifteen percent (15%) of such gross income:
        
        15% GROSS INCOME
        ALIEN & PINOY EEs
        OBU
        (D) Alien Individual Employed by Offshore Banking Units. - There shall be levied, collected and paid for each taxable year upon the gross income received by every alien individual employed by offshore banking units established in the Philippines
        as salaries, wages, annuities, compensation, remuneration and other emoluments, such as honoraria and allowances, from such off-shore banking units, a tax equal to fifteen percent (15%) of such gross income:
        
        15% COMP INCOME
        ALIEN & PINOY EEs
        FOREIGN SERVICE SUB/CONTRACTOR
        PETROLEUM OPERATIONS
        (E) Alien Individual Employed by Petroleum Service Contractor and Subcontractor. [10] -
        An Alien individual who is a permanent resident of a foreign country but who is
        employed and assigned in the Philippines
        by a foreign service contractor or
        by a foreign service subcontractor
        engaged in petroleum operations in the Philippines shall be liable to a tax of fifteen percent (15%) of the salaries, wages, annuities, compensation, remuneration and other emoluments, such as honoraria and allowances, received from such contractor or subcontractor:
        
        (F) The preferential tax treatment provided in Subsections (C), (D), and (E) of this Section shall not be applicable to regional headquarters (RHQs), regional operating headquarters (ROHQs), offshore banking units (OBUs) or petroleum service contractors and subcontractors registering with the Securities and Exchange Commission (SEC) after January 1, 2018: [18] VETOED by the President [19]
        
        25% FWT ON GROSS INCOME
        (G) Alien Individuals Employed by an Offshore Gaming Licensee and Service Providers. –
        Alien individuals
        regardless of residency
        and
        who are employed and assigned in the Philippines, regardless of the term and class of working or employment permit or visa,
        by ban offshore gaming licensee or its service provider
        as defined in Section 22(II) and Section 27(G) of this Code,
        shall pay a final withholding tax of twenty-five percent (25%) on their gross income as computed in the succeeding paragraph:
        
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        (NOTE: The amendments introduced by the TRAIN Law on Section 6(F) was vetoed by the President. The veto message reads:
        “I am constrained to veto the provision under Section 6(F) of the enrolled bill that effectively maintains the special tax rate of 15% of gross income for the aforementioned employees, to wit:
        ‘Provided, However, That Existing RHQs/ROHQs, OBUs or Petroleum Service Contractors and Subcontractors Presently Availing of Preferential Tax Rates For Qualified Employees Shall Continue To Be Entitled To Avail Of The Preferential Tax Rate For Present And Future Qualified Employees.’
        While I understand the laudable objective of the proposal, the provision is violative of the Equal Protection Clause under Section 1, Article III of the 1987 Constitution, as well as the rule of equity and uniformity in the application of the burden of taxation:
        Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.
        In line with this, the overriding consideration is the promotion of fairness of the tax system for individuals performing similar work. Given the significant reduction in the personal income tax, the employees of these forms should follow the regular tax rates applicable to other individual taxpayers.)
        
        Provided, however, That the same tax treatment shall apply to a Filipino employed and occupying the same position as an alien employed by petroleum service contractor and subcontractor.
        
        Any income earned from all other sources within the Philippines by the alien employees referred to under Subsections (C), (D) and (E) hereof shall be subject to the pertinent income tax, as the case may be, imposed under this Code.
        
        Provided, however, That the same tax treatment shall apply to Filipinos employed and occupying the same positions as those of aliens employed by these offshore banking units.
        
        Provided, however, That the same tax treatment shall apply to Filipinos employed and occupying the same position as those of aliens employed by these multinational companies.
        
        For purposes of this Chapter, the term 'multinational company' means a foreign firm or entity engaged in international trade with affiliates or subsidiaries or branch offices in the Asia-Pacific Region and other foreign markets.
        
        SAME CG
        Capital gains realized by a nonresident alien individual not engaged in trade or business in the Philippines from the sale of shares of stock in any domestic corporation and real property shall be subject to the income tax prescribed under Subsections (C) and (D) of Section 24.
  - - - 2.5% GPB
        INTERNATIONAL CARRIER
        (3) International Carrier. — An international carrier doing business in the Philippines shall pay a tax of two and one-half percent (2 [&] 1/2 %) on its ‘Gross Philippine Billings’ as defined hereunder:
        
        15% BPRT
        BRANCH PROFIT REMITTANCES
        (4) Tax on Branch Profits Remittances. -
        Any profit remitted by a branch to its head office shall be subject to a tax of fifteen (15%) which shall be based on the total profits applied or earmarked for remittance without any deduction for the tax component thereof (except those activities which are registered with the Philippine Economic Zone Authority).
        The tax shall be collected and paid in the same manner as provided in Sections 57 and 58 of this Code: Provided, that interests, dividends, rents, royalties, including remuneration for technical services, salaries, wages premiums, annuities,
        
        GPB = INCOME DERIVED FROM:
        ORIG FROM PH:
        
        CARRIAGE OF PERSONS
        
        EXCESS BAGGAGE
        
        CARGO
        
        MAIL
        (a) International Air Carrier. —
        ‘Gross Philippine Billings’ refers to the amount of gross revenue derived from carriage of persons, excess baggage, cargo, and mail originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document:
        
        GPB:
        GROSS REVENUE WHETHER FOR
        ORIGINATING FROM PHILIPPINES
        
        PASSENGER
        
        CARGO
        
        MAIL
        (b) International Shipping. —
        ‘Gross Philippine Billings’ means gross revenue whether for passenger, cargo or mail originating from the Philippines up to final destination, regardless of the place of sale or payments of the passage or freight documents.
        
        Provided, That international carriers doing business in the Philippines may avail of a
        preferential rate
        or
        exemption from the tax herein
        imposed on their gross revenue derived from the carriage of persons and their excess baggage
        on the basis of
        an applicable tax treaty
        or
        international agreement
        to which the Philippines is a signatory
        or
        on the basis of reciprocity such that an international carrier, whose home country grants income tax exemption to Philippine carriers, shall likewise be exempt from the tax imposed under this provision. [32]
        
        GPB BASE INCLUDES TICKETS:
        
        REVALIDATED
        
        EXCHANGED
        
        INDORSED TO ANOTHER IA
        Provided, That tickets revalidated, exchanged and/or indorsed to another international airline form part of the Gross Philippine Billings if the passenger boards a plane in a port or point in the Philippines:
        
        MULTI-FLIGHT:
        PH LEG ONLY
        Provided, further, That for a flight which originates from the Philippines, but transshipment of passenger takes place at any part outside the Philippines on another airline, only the aliquot portion of the cost of the ticket corresponding to the leg flown from the Philippines to the point of transshipment shall form part of Gross Philippine Billings.
  - - - REVOCABLE TRUST =
        GRANTOR'S TAXABLE INCOME
        SEC. 63. Revocable trusts. -
        Where at any time the power to revest in the grantor title to any part of the corpus of the trust is vested
        
        REVOCATION IN
        a. GRANTOR
        b. PERSONS WITH NO SUB-ADV-INT
        c. BOTH IN CONJUNCTION
        (1) in the grantor either alone or in conjunction with any person not having a substantial adverse interest in the disposition of such part of the corpus or the income therefrom,
        (2) in any person not having a substantial adverse interest in the disposition of such part of the corpus or the income therefrom,
        
        the income of such part of the trust shall be included in computing the taxable income of the grantor.
        
        BENEFIT OF GRANTOR
        IN THE DISCRETION OF GRANTOR/PWNSAI:
        SEC. 64. Income for Benefit of Grantor.-
        (A) Where any part of the income of a trust
        
        ACCUMULATED FOR FUTURE DISTRIBUTION TO GRANTOR
        (1) is, or in the discretion of the grantor or of any person not having a substantial adverse interest in the disposition of such part of the income may be held or accumulated for future distribution to the grantor,
        or
        
        DISTRIBUTED TO GRANTOR
        (2) may, or in the discretion of the grantor or of any person not having a substantial adverse interest in the disposition of such part of the income, be distributed to the grantor,
        or
        
        PAYABLE AS PREMIUMS ON GRANTOR'S LIFE INSURANCE
        (3) is, or in the discretion of the grantor or of any person not having a substantial adverse interest in the disposition of such part of the income
        may be applied to the payment of premiums upon policies of insurance on the life of the grantor,
        
        such part of the income of the trust shall be included in computing the taxable income of the grantor. `
        
        FIDUCIARY FILES RETURN IF:
        20K/OVER GROSS INCOME IN TY
        SEC. 65. Fiduciary Returns. -
        Guardians, trustees, executors, administrators, receivers, conservators and all persons or corporations,
        acting in any fiduciary capacity,
        shall render, in duplicate,
        a return of the income of the person, trust or estate for whom or which they act,
        and
        be subject to all the provisions of this Title,
        which apply to individuals
        in case such person, estate or trust has a gross income of Twenty thousand pesos (P20,000) [64] or over during the taxable year.
        
        INDEMNITY & CREDIT
        SEC. 66. Fiduciaries Indemnified Against Claims for Taxes Paid. -
        Trustees, executors, administrators and other fiduciaries are
        indemnified
        against the claims or demands of
        every beneficiary
        for all payments of taxes which they shall be required to make under the provisions of this Title,
        AND
        they shall have
        credit
        for the amount of such payments against the beneficiary or principal in any accounting which they make as such trustees or other fiduciaries.
        
        OATH
        Such fiduciary or person filing the return for him or it, shall take oath that he has sufficient knowledge of the affairs of such person, trust or estate to enable him to make such return and that the same is, to the best of his knowledge and belief, true and correct, and be subject to all the provisions of this Title which apply to individuals:
        
        SUBSTANTIAL COMPLAINCE:
        RETURN FILED IN PROVINCE
        Provided, That a return made by or for one or two or more joint fiduciaries filed in the province where such fiduciaries reside;
        under such rules and regulations as the Secretary of Finance, upon recommendation of the Commissioner, shall prescribe, shall be a sufficient compliance with the requirements of this Section.
        
        DISCRETION:
        PART! SUFFICES
        (B) As used in this Section, the term
        'in the discretion of the grantor'
        means in the discretion of
        the grantor,
        either alone or in conjunction with any person not having a substantial adverse interest in the disposition
        of the part of the income in question.
      - FIDUCIARY/GUARDIAN
        
        DEDUCTION TO ESTATE
        
        TAXABLE TO BENEs
        -DISTRIBUTED OR NOT!
        (A) There shall be allowed as a deduction in computing the taxable income of the estate or trust
        
        the amount of the income of the estate or trust for the taxable year which is to be distributed currently by the fiduciary to the beneficiaries,
        and
        the amount of the income collected by a guardian of an infant which is to be held or distributed as the court may direct,
        but the amount so allowed as a deduction shall be included in computing the taxable income of the beneficiaries, whether distributed to them or not.
        
        DECEDENT/DIS.FIDUCIARY
        
        DEDUCTION TO ESTATE
        
        TAXABLE TO HEIR/BENE
        
        (B) In the case of income received by estates of deceased persons during the period of administration or settlement of the estate,
        and
        in the case of income which,
        in the discretion of the fiduciary,
        may be either distributed to the beneficiary or accumulated,
        there shall be allowed as an additional deduction in computing the taxable income of the estate or trust the amount of the income of the estate or trust for its taxable year,
        which is properly paid or credited during such year to any legatee, heir or beneficiary
        but the amount so allowed as a deduction shall be included in computing the taxable income of the legatee, heir or beneficiary.
        
        FOREIGN TRUST:
        
        NO DEDUCTION TO TRUST
        
        NO INCOME TO BENE
        (C) In the case of a trust administered in a foreign country, the deductions mentioned in Subsections (A) and (B) of this Section shall not be allowed:
        Provided, That the amount of any income included in the return of said trust shall not be included in computing the income of the beneficiaries.
        
        NOT ALLOWED TO
        DECEDENT/DISCRETIONARY FIDUCIARY'S ESTATE IN SAME TY
        Any amount allowed as a deduction under this Subsection shall not be allowed as a deduction under Subsection (B) of this Section in the same or any succeeding taxable year.
      - DONATION:
        CASH/PROP TO IRREVOCABLE TRUST
        Transfer of cash or property to an irrevocable trust subject to donor’s tax since the grantor relinquishes ownership and the right to revoke or recover title to the property transferred.
        The transfer of property or cash to an irrevocable trust takes the nature of a gift. Thus, each time the grantor transfers property to the irrevocable trust, he has to pay a donor’s tax, since the grantor relinquishes ownership, and the right to recover title to the property or cash transferred.
      - EXEMPT FROM
        
        20% FINAL
        
        15% CGT OF SOS
        
        6% CGT OF RP
    - - NOT TAXABLE:
        EMPLOYEE'S TRUST
        
        TRUST PART OF
        -ER'S P/SB/PSP
        -EE'S BENEFIT
        
        CONTRIBUTIONS
        a. BY ER/EE/BOTH
        b. FOR DISTRIBUTION UNDER PLAN
        
        EXCLUSIVE BENEFIT OF EEs
        -NOT DIVERTED TO OTHER PURPOSE
        (B) Exception. - The tax imposed by this Title shall not apply to employee's trust which forms part of a pension, stock bonus or profit-sharing plan of an employer for the benefit of some or all of his employees
        (1) if contributions are made to the trust by such employer, or employees, or both for the purpose of distributing to such employees the earnings and principal of the fund accumulated by the trust in accordance with such plan,
        AND
        (2) if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees under the trust, for any part of the corpus or income to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of his employees:
        
        FIDUCIARY PAYS
        NET INCOME
        (C) Computation and Payment. -
        (1) In General. - The tax shall be computed upon the taxable income of the estate or trust and shall be paid by the fiduciary,
        
        CONSOLIDATE + COLLECT
        FROM TRUSTEES PRO RATA IF
        
        SAME CREATOR
        
        SAME BENEFICIARY
        (2) Consolidation of Income of Two or More Trusts. - Where, in the case of two or more trusts,
        the creator of the trust in each instance is the same person,
        and
        the beneficiary in each instance is the same, the taxable income of all the trusts shall be consolidated and the tax provided in this Section computed on such consolidated income, and
        
        such proportion of said tax shall be assessed and collected from each trustee which the taxable income of the trust administered by him bears to the consolidated income of the several trusts.
        
        REVOCABLE/BENEFIT TO GRANTOR
        GRANTOR PAYS
        NET INCOME
        except as provided in Section 63 (relating to revocable trusts) and Section 64 (relating to income for the benefit of the grantor).
        
        GAIN:
        EXCESS OVER CONTRIBUTION
        Provided, That any amount actually distributed to any employee or distributee shall be taxable to him in the year in which so distributed
        to the extent that it exceeds the amount contributed by such employee or distributee.
      - INCOME ACCUMULATED
        
        TRUST FOR BENEFIT OF:
        a. UNBORN
        b. UNASCERTAINED PERSON
        c. PERSONS w/CONTINGENT INTERESTS
        d. FUTURE DISTRIBUTION:
        -UNDER WILL//TRUST
        (1) Income accumulated in trust for the benefit of unborn or unascertained person
        or
        persons with contingent interests,
        and
        income accumulated or held for future distribution under the terms of the will or trust;
        
        FIDUCIARY -> BENEFICIARIES
        GUARDIAN-INFANT
        (2) Income which is to be distributed currently by the fiduciary to the beneficiaries, and
        income collected by a guardian of an infant which is to be held or distributed as the court may direct;
        
        DECEASED
        (3) Income received by estates of deceased persons during the period of administration or settlement of the estate; and
        
        FIDUCIARY'S DISCRETION
        a. DISTRIBUTE
        b. ACCUMULATE
        (4) Income which, in the discretion of the fiduciary, may be either distributed to the beneficiaries or accumulated.