Corporate Income Tax (CIT) – Foreign corporations engaged in trade or business in the Philippines through a branch office are taxed in the same manner as domestic corporations, but only on Philippine-source income. The framework of the standard taxation rates levied on foreign companies is presented in the table below:
It is important to note, however, that the Philippines has the highest standard CIT rate among the seven major economies of ASEAN. A comparative view of the prevailing CIT rates across these seven economies, as shown in the chart below, speaks to the fact that the Philippines levies a considerably higher tax rate on corporations as opposed to some of its regional peers. However, in an effort to boost the Philippines’ competitiveness, the Filipino government is working to push through a bill that would slash CIT rates in the country from 30% to 20% by the year 2029. Further, it is believed that the legislation, once passed into law, will create more than a million jobs and add 1.1% to GDP growth in its first year of implementation.
To learn more about the Philippines’ taxation structure, follow the link below:
https://taxsummaries.pwc.com/philippines/corporate/taxes-on-corporate-income
To read about the proposed tax cuts in the Philippines, click the link below:
Personal Income Tax (PIT) – The current PIT structure in the Philippines is scheduled to be reformed from 1st January 2023. Table 1 below provides the existing PIT structure whereas table 2 showcases the reformed structure that is to be implemented in the future.
*Converted to US$ from PHP
To learn more about taxes on personal income in the Philippines, follow the link below:
https://taxsummaries.pwc.com/philippines/individual/taxes-on-personal-income
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