FINAL INCOME TAX RATES IN THE PHILIPPINES of the Year, and similar awards.
(prizes and winning in
recognition)
INTEREST INCOME OR YIELD (Local Currency Deposits) 2. Prizes from sports competitions that are sanctioned by their
respective national sport organizations.
*Individuals = RC, NRC, RA, NRA, NRA-ETB,
*Corporation = DC, RFC Requisites of Exemption
Local Currency Deposit Indiv Corp 1. The recipient was selected without any action on his part to
Short term interest or yield 20% enter the contest.
Long term interest or yield Exempt 20% 2. The recipient is not required to render substantial future
Pre-Termination of Long term services as a condition to receiving the price or reward.
- Less than 3yrs 20%
- 3 to less than 4yrs 12% TAXABLE PRIZES
- 4 to less than 5yrs 5%
- 5yrs or more 0 For individual taxpayers, taxable prizes are subject to either final tax
XPN: NRA - NETB, NRFC = 25% FT or regular tax depending on the amount of the prize.
There may be events or competitions where corporations earn
FOREIGN CURRENCY DEPOSIT WITH FOREIGN CURRENCY prizes. However, there is no final tax imposition on corporate prizes
DEPOSITARY BANKS under the NIRC. Hence, the same must be subject to regular
income tax.
TAXPAYERS Indiv Corp
Residents (RC,RA, DC, and RFC) 15% Amount of Taxable Price RECIPIENT
XPN: Non-residents (NRC, NRA, NRA- EXEMPT Indiv Corp
NETBs, and NRFCs) Prizes exceeding P10,000 20%
Prizes not exceeding P10,000 10%
XPN: NRA - NETB, NRFC = 25% FT
Joint Account on Forex Deposits NOTE!! Final taxation does not apply to foreign passive income;
hence, prizes from foreign sources are subject to regular income
- If the bank account is jointly in the name of a non-resident tax
and a resident taxpayer, 50% of the interest shall be
exempt while the other 50% shall be subject to the 15% WINNINGS
final tax.
- based on chances
ROYALTIES - eg. Lotto, raffle draw, bingo
Sources of Passive Royalties RECIPIENT Amount of Taxable Price RECIPIENT
Indiv Corp Indiv Corp
In general (other sources) 20% Other winnings, in general 20% RIT
Books, Literary Works, and Musical 10% PCSO and LOTTO winnings exceeding 20%
Compositions P10,000
Cinematographic films and similar 20% PCSO and LOTTO winnings not EXEMPT
works exceeding P10,000
XPN: NRAs (ETB & NETB), NRFC = 25% FT XPN: NRA - NETB, NRFC = 25% FT
NOTE!! The 10% preferential royalty final tax on books and NOTE!! PCSO winnings and LOTTO of NRA-NETBs and NRFCs,
literary works pertains to printed literature. Royalties on books sold regardless of amount, are subject to 25% final tax.
on e-copies of CDs such as e-books are subject to the 20% final
DIVIDENDS
tax.
Cash Dividend
Royalties on cinematographic films and similar works paid to NRA- Property Dividend TAXABLE
ETBs, NRA-NETBs, or NRFCs are subject to a final tax of 25%. Scrip Dividend
Liquidating Dividend EXEMPT
Royalties vs. Active Royalties
Stock Dividend
- Royalties of a passive nature such as royalties of claim
owners or land owners of mining properties, royalties of
DC RFC NRFC RECIPIENT
inventors from companies that manufacture and sell their
invention, and royalty from licensing agreements that 10% 20% RIT RC
transfer the use of trademarks of technology are subject to 10% RIT NRC, RA
a 20% final tax. 20% RIT NRA-ETB
- When royalties accrue from an undertaking where the 25% NRA-NETB
taxpayer has active involvement, it is an active income
RIT DC
subject to the regular income tax. EX RIT
- Royalties, active or passive, earned from sources abroad RFC
are subject to regular income tax. 15% 25% NRFC
Tax sparring
Taxable Partnership = 10%
PRIZES
Joint Ventures
- based on effort Taxable Co-ownership = 10%
- eg. Singing and dancing compe, PBB NOTE!! Div on Tax-free covenants Bonds is subject to a final
- have threshold based on the amount received withholding tax of 30% (only individuals). Dividends from Real
Estate Investment Trust = same sa dividend from DC.
Exempt Prizes and Winnings
1. Prizes received by a recipient without any effort on his part to
join a contest. Examples include prizes from such awards as
Nobel Prize, Most Outstanding Citizen, Most Benevolent Citizen
TAX INFORMER’S REWARD
A cash reward may be given to any person instrumental in the
discovery of violations of the National Internal Revenue Code or
discovery and seizure of smuggled goods. The tax informer’s regard
is subject to 10% final tax.
Amount of Cash Reward
Whichever is lesser:
1. 10% of revenue, surcharges of fees recovered, and or fine or
penalty imposed and collected.
2. P1,000,000
