Categories

Regions

Tax Figures

Corporate Income Tax

30%, calculated on taxable profit.

Income Tax Rate

  • Php 0 – 10,000: 5%
  • Php 10,000 – 30,000: 10%
  • Php 30,000 – 70,000: 15%
  • Php 70,000 – 140,000: 20%
  • Php140,000 – 250,000: 25%
  • Php 250,000 – 500,000: 30%
  • Php 500,000 and above: 32%

Payroll Tax

1.16% – 1.19% (per employee per month). The Payroll Tax is separated from employer social security. For more info please consult the Employment Section.

Sales Tax

VAT is equal to 12%.

Withholding Tax

Tax on Interest is equal to 20%.

Other Tax

  • Local Business Tax: 0.5%, calculated on the previous year turnover;
  • Real Property Tax: 2%, calculated on the assessed property value;
  • Community Tax Certificate: PHP 10,500 (Fixed Fee);
  • Environmental Tax: PHP 10,000 (Fixed Fee);
  • Tax on check transactions: PHP 1.15 per check.

Time to prepare and Pay Taxes

186 hours

Employers Social Security and statutory contributions

The employer Social Security contribution is PHP 1,208.7 per employee per month, calculated on gross salary.

Employees Social Security and statutory contributions

The employee Social Security contribution is 1.33% to 2.98%, calculated on gross salary (withheld).

Payroll

There are specific rules that apply to payroll and taxation in the Philippines. In 2014, the national government made paying taxes easier for companies by introducing an electronic filing and payment system for social security contributions.

Remote Payroll

A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in the Philippines. Under Philippine law, companies registered in other countries are allowed to obtain a license to do business and have employees in the Philippines. One option for a non-resident company to payroll its employees (local and foreign) in the Philippines is to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.

Local Payroll Administration

In some cases, a company will register their business in the Philippines under one of the forms available: branch office, representative office, regional headquarters (RHQ) or regional operating headquarters (ROHQ), but prefer to have another company administering its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to the Philippines may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage a Philippine payroll, and can fulfil all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Filipino employment laws.

Setting up payroll in Philippines

Social Security Registration

The SSS (Social Security System) contribution rate is equivalent to 10.4% of a worker’s monthly salary credit, which shared by;

  • Employer contribution is 7.07%
  • Employee contribution is 3.33%

Invoice / Payslips required

Monthly available on website, pdf or paper