RESIDENT CITIZEN

Definition:
Citizen of the Philippines who has a permanent home or place of abode in the Philippines who which he/she
intends to return whenever he/she is absent for business or pleasure.

1. Taxable Income within and without the Philippines
Source of Income Tax Remarks
Compensation Income Taxable Compensation
Income (5%-32%)
Gross Compensation less premium
payments and/or hospitalization, personal
(P50,000.00) and additional exemptions
(P25,000.00 per child, max 4 child)
Business/Professional
Income and/or Trade
Taxable Business Income
(5%-32%)
Gross Income less itemized deduction or
optional standard deduction (40%) of
gross sales or gross receipts less personal
and additional exemption.
Passive Income
Royalties 20% final withholding tax on
gross amount
10% final withholding tax on royalties on
books, literary works and musical
compositions
Prized and other taxable
winnings
20% final withholding tax on
gross amount for those
prizes exceeding P10,000.00
Except PCSO and Lotto winnings
Interest Income from
Philippine currency
bank deposits and yield
or any other monetary
benefit from deposit
substitutes and from
trust funds and similar
arrangements
20% final income tax on the
gross amount

Interest Income from
long-term deposit
instruments pre-
terminated before the
5
th
year
4 yrs to less than 5 yrs -5%
3 yrs to less than 4 yrs -12%
Less than 3 yrs -20%




Interest Income from
foreign currency bank
deposits
7 % final tax on the gross
amount

Cash and/or property
dividends or
constructively received
and share of an
individual partner in the
net profits of a taxable
partnership
10% final withholding tax
Sale or exchange of
capital assets
Real property- 6% final tax
on gross selling price or fair
value whichever is higher

Shares of stocks not listed or
trade in any local stock
exchange shall be taxes on
the net capital gains, as

follows:
Not over P100k -5%
In Excess of P100k -10%
Informers Reward 10% final tax on the cash
reward received

Other Sources of Income

2. Deductions from Business and/or Professional Income
The following payments incurred in connection with the taxpayers profession, trade or businesses are
deductive from gross income:
a. Ordinary and necessary trade, business or professional expenses paid or incurred during the taxable
year
b. Interest
c. Taxes
d. Losses not compensated by insurance or other forms of indemnity
e. Net Operating Loss Carry-over
f. Bad Debts
g. Depreciation
h. Depletion of Oil and Gas Wells and Mines
i. Charitable and Other Contributions
j. Research and Development
k. Pension Trusts
l. OSD (40%) of gross sales or receipts
m. Premium Payment on Health and/or Hospitalization Insurance
n. Free Legal services

3. Filing of Returns
Every Filipino citizen residing in the Philippines (except persons not required to file income tax returns
and to those who are subject to substituted filing of income tax returns).