What is included:
Cost: on request.
A company is considered local if it is registered in the Philippines or if it is registered outside the Philippines, but has a branch in the Philippines.
Local companies are taxed on income received both domestically and abroad. Foreign companies are taxed only on income from the Philippines.
A foreign company with a subsidiary in the Philippines is taxed on income of Filipino origin.
Corporate tax is levied on the profits of the company, which usually consists of income derived from the direct activities of the company.
Ordinary business expenses can be deducted in calculating taxable income.
Instead of a standard deduction of expenses, local companies can switch to the Optional standard of expenses’ deduction.
This standard allows you to deduct up to 40% of total gross income when calculating taxable income for a taxable period.
Decisions to switch to this deduction system cannot be revoked during the tax year for which the declaration is filed.
The standard corporate tax rate is 30%. An additional 10% income tax applies to incorrectly accumulated profits.
The minimum tax rate, equal to 2% of gross income, is charged both from local companies and from foreign ones.
However, this benefit is only possible starting from the fourth taxable year of activity. The minimum rate is applied in three cases:
1) the company has no income,
2) has negative taxable income,
3) when the amount of the minimum tax exceeds the usual corporate tax liability of the company.
Any minimum tax that exceeds the regular income tax can be carried forward to the next period and credited to the regular income tax account over the next three taxable years.
The employee is required to make monthly contributions to the social security system, depending on his salaries. The employer is also required to make contributions for employees.
VAT is levied on most sales of goods and services. Sale and import of certain goods and services is subject to 12% VAT. Some sales have a zero rate.
The obligation to register as a VAT payer arises after reaching a turnover of 3 million PHP.
A tax report can be filed either manually or through an electronic filing and payment system. Deadline: 20-25 day of the month following the reporting one.
Or the 25th day of the quarter following the reporting taxable quarter.
The accounting department of the company must compile quarterly, annual financial reports and provide declarations to the tax service. Contact us for more information.