Taxation in the Philippines

Updated on Thursday 07th December 2017

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Foreign enterprisers interested in starting a business in an Asian country usually on the legislation favoring foreign investments which grants various tax exemptions, however the regular taxation system is also important. This is also the case of the Philippines which has an attractive taxation system doubled by the types of companies which can be set up by overseas entrepreneurs.

Below, our company formation consultants in the Philippines will explain how the taxation system in this country works.
 

Legislation related to taxation in the Philippines

The Philippines taxation system is made up of direct and indirect taxes. These are regulated by several laws, among which:

-          the National Internal Revenue Code, which was enabled in 1997 and it is the most important law regulating taxation here;
-          the Income Tax Law;
-          the Value Added Tax Code;
-          the Excise Taxes Code.

There are also other regulations providing for the taxation of individuals and companies in the Philippines.

We also remind you that our Philippines company registration specialists can help you register a company in this country.
 

What are the taxes to be paid in the Philippines?

As mentioned above there are two types of taxes levied in the Philippines: the direct and indirect ones.

Direct taxes apply to the citizens and residents of the Philippines, individuals and companies and are levied directly on the incomes generated by them. These are the personal income and the corporate tax. With respect to indirect taxes, the value added tax (VAT) or the goods and services tax (GST) is the most important one.

It should be noted that Filipino taxpayers are classified into:

-          individuals;
-          corporations;
-          fiduciaries.

Our local agents can offer more information on this classification.
 

Tax rates in the Philippines

The following tax rates apply to individuals and companies in the Philippines:

-          the personal income tax, which is levied at rates between 5% and 32%;
-          the corporate tax which is levied at a 30% rate;
-          the VAT which has a standard rate of 12%.

It should be noted that the Philippines offers various incentives for foreign investors, among them being tax exemptions and deductions.

If you want to open a company in the Philippines and need information on the taxes you will pay, please contact our local company registration consultants.
 

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