TAXATION 1
3. SPECIAL Are those alien individuals or Filipino citizens who are taxed with a fifteen
TAXPAYERS percent (15%) tax rate based on their gross compensation income, when the
following conditions are met:
1. They are employed occupying managerial and or technical positions with
regional area or requirements of multinational corporations, petroleum
service contractor and subcontractors or off shore banking units.
2. If the special taxpayer is an alien, all of his gross compensation income
received is subject to 15% final tax.
3. If the taxpayer is a Filipino citizen, he has the option to be taxed at 15%
final tax based on his gross compensation income received or at regular
income tax rate based on the net taxable income of his gross annual
taxable compensation is at least P975, 000 (whether or not actually
received)
3. Exercise:
1. A British computer expert was hired by a Philippine corporation to assist in its computer
system installation for which he had to stay in the Philippines for 6 months. Is he a
resident alien?
2. A British cultural performer was engaged to perform in the Philippines for two weeks
after which he returned to his country. Is he a resident alien?
3. An alien owns shares of stock in the Philippines. Is he engaged in business or trade in the
Philippines?
4. An alien temporarily serves as executive manager of an airline in Manila. Is he
considered engaged in trade or business in the Philippines?
5. A resident alien left the Philippines and abandoned his residency thereof without any
intention of returning. May he still be considered a resident alien?
6. A resident alien left the Philippines with a re-entry permit, Is he still a resident alien?
7. A nonresident citizen went to Manila under the Balikbayan Program. Does his return to
Manila interrupt his residence abroad?
Computation:
Gross Income (subject to normal tax)xx
Less: Basic Personal Exemption (xx)
Additional Exemption (xx) (xx)
Taxable Income xx
Multiply: Applicable Rate (Graduated Tax Table) %
Normal Tax Due xx
Less: Tax withheld xx
Normal Tax Payable xx
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Computation
Gross Income (subject to passive tax passive income) xx
Multiply: Applicable Rate __%
Passive Income Tax Due xx
*Income Tax Return (ITR) is a formal statement of the taxpayers taxable income and
deductions, reported in the BIR prescribed form, to be filed and paid quarterly.
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