the basic laws of taxation in the Philippines are the Internal Revenue Law of the State, the Tax Reform Act of 1997 (RAN1.8424) and the amendment of 9337 (RANo. 9337) which came into effect on October 1, 2115.

the main taxes are: corporate income tax, personal income tax, value-added tax, consumption tax and customs duties.

major taxes and tax rates

income tax domestic companies pay taxes on the basis of all net income people in the Philippines and abroad; Resident foreign companies (more than 181 days) pay taxes on net income obtained in the Philippines; Non-resident foreign companies pay taxes on total income in the Philippines. Current corporate income tax; It is 35% of the taxable amount, and the tax rate will be reduced to 31% from 1 October 2119. If the company's taxable income is zero or negative, or the minimum corporate income tax exceeds its ordinary corporate income tax, it can be levied at the minimum corporate income of 2% from the fourth year of the company. Franchise educational institutions and non-profit hospitals are levied at 11% of the net taxable income.

Residents, non-resident residents, resident foreigners and non-resident foreigners engaged in business and trade in the Philippines are subject to individual income tax at an excessive progressive rate of 5% to 32%. Foreigners who are not engaged in business and trade in the Philippines are all taxed at the rate of 25% (such as interest and investment income).

value-added tax according to amendment 9337, the value-added tax rate has been increased to 12% since February 1, 2116. Some transactions are exempt from VAT. The transactions exempted from VAT mainly include: agricultural products, aquatic products, seeds, seedlings, fry, feed, educational services provided by certified private educational institutions, services provided by individuals, sales of agricultural cooperatives registered with the Cooperative Development Agency to their members, imported machinery and equipment directly used for agricultural input, including spare parts, and sales, import or lease of cabins, cargo holds and airplanes, including engines, equipment and spare parts.

consumption tax consumption tax is mainly levied on specific commodities (such as cigarettes, alcohol, motor vehicles, etc.) produced and manufactured in the Philippines for domestic sales or consumption and other purposes. Consumption tax is also applicable to some imported goods subject to value-added tax and customs duties.

individuals and entities that are exempt from value-added tax, such as those engaged in domestic or international passenger transportation or entertainment, will be subject to proportional tax (business tax) based on their total income.

Stamp Duty The scope of stamp duty includes documents, contracts, securities and loan agreements, as well as certificates of acceptance, signing and sales transfer of responsibilities, rights or assets. The object of collection is the producer, signatory, receiver or transferor.

local taxes the local government law stipulates that local governments have the right to levy taxes on certain special acts or commercial acts within their jurisdiction, except those exempted by law. Local governments also have the right to tax real estate every year, such as land, buildings, machinery and other transformations, as well as the sale, donation, barter or any other form of transfer of real estate. However, local governments have no right to levy income tax, customs duty, stamp duty, property tax and gift tax.

◆ Customs policy

Customs management rules and regulations: The main law of import and export tariffs in the Philippines is the Philippine Tariff and Customs Act, and the import tariff rate is determined and announced by the Philippine Customs Commission, while the export tariff rate is determined by the General Administration of Customs and collected by the customs through the authorized Central Bank of the Philippines. The Philippines imposes ad valorem tariffs on most imported products, but imposes specific tariffs on alcoholic beverages, fireworks, tobacco products, watches, fossil fuels, cartoons, saccharin, poker and other products. According to the Tax Law, the customs collects import consumption tax on automobiles, tobacco, gasoline, alcohol and other non-essential commodities. Imported products should also pay 12% value-added tax to the Philippine customs authorities, and the taxation basis is the customs valuation plus the customs duties and consumption tax. The Philippines also imposes stamp duty on imported goods, which is generally used for bills of lading, receipts, bills of exchange, other transaction orders, insurance policies, mortgage deeds, power of attorney and other documents.

Import tariff: The Philippine Customs and Tariff Law classifies taxable imported goods into 21 categories, and the import tariff rate is generally 3% ~ 31%

. Such as live animals and their products, fresh vegetables, etc.

in 2111, the Philippines will realize zero tariff on all products of ASEAN members.

export tariffs: the Philippines imposes tariffs on the following export commodities, and the tariff rate is)%. Logs, timber, veneer and plywood, metal ore and its concentrate, gold, slag cement and portland cement; Marine fuel oil, petroleum asphalt, silver, unprocessed ABACA (a fiber-producing plant produced in the Philippines), bananas, coconuts and coconut products, pineapples and their finished products, sugar and sugar products, tobacco, shrimps and prawns.

Export tax rebate: According to the Philippine Customs and Tariff Law, no more than 99% of the collected customs duties can be refunded for the fuel oil of ship propellers used in foreign trade and coastal trade, and tax credits can be given; When products (including packaging, labels, etc.) produced or manufactured with imported raw materials are exported, the tariffs levied on the imported raw materials will be refunded or given tax credits; The Ministry of Finance may, on the recommendation of the General Administration of Customs, issue laws and regulations that allow partial tax refund for commodities specified in this Law. The tax refund will be paid by the General Administration of Customs within 61 days after receiving a set of correct and complete documents.

◆ Preferential investment tax policy

(1) Exemption from income tax: newly registered priority project enterprises will be exempted from income tax for six years, while traditional enterprises will be exempted from paying income tax for four years. The tax exemption period for expansion and upgrading projects is 3 years, and 6 years if the project is located in underdeveloped areas.

Newly registered enterprises will also enjoy 1-year tax-free bonus if they meet any of the following conditions:

① Local raw materials account for at least 51% of the total raw materials;

② The ratio of the value of imported and locally produced fixed equipment to workers shall not exceed USD 11,111 per person;

③ the annual foreign exchange deposit or income has reached more than USD 511,111 in the three years before business operation.

(2) Deduct labor costs from taxable income.

(3) Tax relief for raw materials used for manufacturing, processing or producing export commodities.

(4) Deduct necessary and major infrastructure expenses from taxable income.

(5) The related materials and parts of imported equipment shall be exempted from customs duties.

(6) reduce or exempt terminal fees and export duties.

(7) The local business tax shall be exempted for 4-6 years from the registration of the Investment Agency.

Non-financial preferential measures:

(1) Simplifying customs procedures;

(2) unrestricted use of consigned equipment: the equipment consigned to the Philippines is labeled as exportable;

(3) Enter the bonded factory system;

(4) Employment of foreign citizens: Foreign citizens can hold management, technical and consulting positions in registered enterprises for five years, and the period can be extended with the approval of the Investment Agency. The president, general manager, treasurer or equivalent positions can stay longer.

Industry encouragement policy: The Philippine Investment Agency formulates an "investment priority plan" table every year according to the Philippine Medium-term Development Plan 2114-2111, listing the projects encouraged by the Philippine government, and the projects listed in this table can enjoy financial and non-financial preferential measures.

The latest "Investment Priority Plan" was issued by President Arroyo in May 2119 with Memorandum No.299, which is characterized by highlighting the protection of employment, In addition to continuing the 14 investment-encouraging areas (including agriculture and fisheries, infrastructure construction, tourism, R&D activities, machinery and equipment and steel manufacturing, strategic investment, afforestation, mining, printing and publishing, petroleum, solid waste treatment, water purification projects, auxiliary facilities for the disabled and export promotion activities) clearly planned in 2118, a "contingency plan" was specially put forward. Tax and other preferential policies are provided to enterprises that are still able to maintain or expand investment and ensure employees' employment under the influence of the global financial crisis, as well as small and medium-sized enterprises that have launched new projects. However, there are also some excluded areas in the "emergency plan", including: banks and financial institutions, retail, service industry, small-scale mining, activities restricted due to safety, national defense, health and moral hazard, small and medium-sized enterprises with foreign participation, non-agricultural basic consumer goods, health care products and so on. In addition, the Muslim Autonomous Region of Mindanao provides a special list, and qualified enterprises can also enjoy preferential investment measures. It should be noted that some of these areas are areas where foreign investment is restricted or prohibited.

Special Economic Zone Encouragement Policy: The Philippine Economic Zone is mainly composed of 96 economic zones under the jurisdiction of PEZA and the independently operated Fiverdek Industrial Zone, subic, Kagayan, Sambo, Clark Freeport, etc. The preferential policies of these special economic zones include:

(1) Enterprises can get a four-year income tax exemption period, which can be extended to eight years at the longest. After the end of the income tax exemption period, you can choose to pay 5% of the "Gross Income Tax" to replace all national (central) and local taxes, of which 3% will be turned over to the central government and 2% to the local finance;

(2) Imported capital goods (equipment), spare parts, accessories, raw materials, breeding animals or genetic materials for reproduction are exempt from import duties and other taxes. If similar goods are purchased in the Philippines, they can enjoy tax credit, that is, they are required to pay taxes first, and then returned after the products are exported (including the conversion and collection of import duties);

(3) Upon approval, 31% of the products produced by the enterprise are allowed to be sold in the Philippines, but the tax shall be paid according to the domestic tax laws;

(4) Exemption from wharf taxes and export taxes;

(5) Give investors with an initial investment of more than USD 1.5 million and their spouses and minor children (under 21 years old) permanent residence status in the economic zone, and they can freely enter and leave the economic zone without applying to other departments;

(6) simplify import and export procedures;

(7) It is allowed to employ foreign employees and apply for two-year renewable work visas for foreign managers and technicians, but the number of foreign employees cannot exceed 5% of the total number of employees in the enterprise;

(8) Half of the expenses spent by enterprises on staff technical training and management improvement can be deducted from the 3% tax paid to the central government; In addition, whether to give other preferential treatment as stipulated in E.1.226 is at PEZA's discretion.

For more information about Philippine policies, Tuliu Xiaobian recommends the following articles for you to read:

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