Philippines taxes are mainly divided into: income tax, value-added tax, consumption tax, customs tax, proportional tax , etc. Let’s talk about corporate income tax:
The object of corporate income tax collection for Philippine companies:
1. Domestic Philippine companies: tax based on all net income at home and abroad;
2. Permanent foreign companies: tax based on net income obtained in the Philippines. Permanent usually refers to more than 180 days. The international practice is like this
3. Non-resident foreign companies: tax based on the total income obtained in the Philippines.
Corporate income tax rate for Philippine companies: 2%~25%
1. The current corporate income tax rate is 25% of taxable income;
2. Enterprises whose assets do not exceed 100 million peso (excluding land), and whose net taxable income does not exceed 5 million peso 5 million is 20%;
3. If a company's taxable income is zero or negative, or the minimum corporate income tax exceeds its ordinary company's income tax, it can be levied at 2% from the fourth year of the company;
4. Specialized educational institutions and non-profit hospitals are levied at 10% of the net taxable income.
It should be noted that:
From January 1, 2022, the corporate income tax rate applicable to regional operation headquarters (ROHQ) has increased from 10% to 25%. The tax rate for capital gains obtained by foreign companies through the sale of stocks not listed on the Philippine Stock Exchange rose from 5-10% to 15%. The income obtained from the offshore banking unit (OBU) in foreign currency transactions with non-residents, as well as the interest income obtained from foreign currency loans to residents increased from the original tax exemption and 10% to 25%.
The taxes in the Philippines are relatively simple. No matter whether they are simple or not, everyone will handle financial accounting work. Therefore, if you do tax declarations in the Philippines, if you do not hire financial personnel locally, it is best to entrust professional accountants to do it when making accounting declarations. This benefit is that you can fully enjoy the Philippines' tax preferential policies, and also prevent companies from falling into financial risks due to lack of understanding of local taxes.
