ACIDO, NESTOR JR., B.

LLB-IV

TAX BRACKET For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession Over P10,000 P30,000 P70,000 P140,000 P250,000 P500,000 But Not Over P10,000 P30,000 P70,000 P140,000 P250,000 P500,000 5% P500 + 10% of the Excess over P10,000 P2,500 + 15% of the Excess over P30,000 P8,500 + 20% of the Excess over P70,000 P22,500 + 25% of the Excess over P140,000 P50,000 + 30% of the Excess over P250,000 P125,000 + 34% of the Excess over P500,000 in 1998 Rate

Note: Effective January 1, 1999, the maximum rate shall be thirty-three percent (33%) and thirty-two percent (32%) on January 1, 2000. Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second installment on or before July 15 of the same year at the Authorized Agent Bank (AAB) within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. Tax Rate 1. Domestic Corporations: a. In General 32% Taxable income from all sources Gross Income Improperly Accumulated Taxable Income Taxable income from all sources Taxable income from all sources Taxable Base

b. Minimum Corporate Income 2% Tax* c. Improperly Accumulated Earnings 2. Proprietary Educational Institution 3. Non-stock, Non-profit Hospitals 4. GOCC, Agencies & Instrumentalities a. In General 32% 10% 10% 10%

Taxable income from all sources Gross Income Improperly Accumulated Taxable Income

b. Minimum Corporate Income 2% Tax* c. Improperly Accumulated Earnings 10%

5. National Govt. & LGUs a. In General 32% Taxable income from all sources Gross Income Improperly Accumulated Taxable Income Taxable income from all sources Gross Income Improperly Accumulated Taxable Income

b. Minimum Corporate Income 2% Tax* c. Improperly Accumulated Earnings 6. Taxable Partnerships a. In General 32% 10%

b. Minimum Corporate Income 2% Tax* c. Improperly Accumulated Earnings 7. Exempt Corporation a. On Exempt Activities b. On Taxable Activities 8. General Professional Partnerships 9. Corporation covered by Special Laws a. In General 0% 32% 0% Rate specified under the respective special laws 32% 10%

Taxable income from all sources

Taxable income from all sources Gross Income Improperly Accumulated Taxable Income

b. Minimum Corporate Income 2% Tax* c. Improperly Accumulated Earnings 10%

*Beginning on the 4th year immediately following the year in which such corporation commenced its business operations, when the minimum corporate income tax is greater than the tax computed using the normal income tax. Tax Rate 10. International Carriers 11. Regional Operating Head 2.5% 10% Taxable Income Gross Taxable Income On Foreign Currency Transaction On Taxable Income other than Foreign Currency Transaction Gross Taxable Income On Foreign Currency Transaction On Taxable Income other than Foreign Currency Transaction Taxable Base Gross Philippine Billings

12. Offshore Banking Units (OBUs) 10% 32% 13. Foreign Currency Deposit Units (FCDU) 10% 32% In General

Over

But Not Over P10,000 5% P500 + 10% of the Excess over P10,000 P2,500 + 15% of the Excess over P30,000 P8,500 + 20% of the Excess over P70,000 P22,500 + 25% of the Excess over P140,000 P50,000 + 30% of the Excess over P250,000 P125,000 + 34%* of the Excess over P500,000 in 1998. P30,000 P70,000 P140,000 P250,000 P500,000

P10,000 P30,000 P70,000 P140,000 P250,000 P500,000

Note: Effective January 1, 1999, the maximum rate shall be thirty-three percent (33%) and thirty-two percent (32%) on January 1, 2000. Passive Income 1. Interest on any peso bank deposit 2. Royalties (except on books as well as literary & musical composition - 10%) 3. Prizes (except prizes amounting to P10,000 or less -5%) 4. Winnings (except from PCSO and lotto) 5. Interest Income of Foreign Currency Deposit 6. Interest from long-term deposit Holding Period - Four (4) years to less than five (5) years - Three (3) years to less than four (4) years - Less than three (3) years 7. Cash and/or Property Dividends Beginning January 1, 1998 Beginning January 1, 1999 Beginning January 1, 2000 & thereafter 8. On capital gains presumed to have been realized from sale, exchange or other disposition of real property (capital asset) 9. On capital gains for shares of stock not traded in the stock exchange - Not over P100,000 - Any amount in excess of P100,000 5% 10% 6% 8% 10% 6% 5% 12% 20% 20% 20% 20% 20% 7.5%

B. For Non-Resident Aliens Engaged in Trade or Business 1. On Certain Passive Income* 2. Interest Income from long time deposits Holding Period 20%

-Four (4) years to less than five (5) years -Three (3) years to less than four (4) years -Less than three (3) years 3. On capital gains presumed to have been realized from the sale, exchange or other disposition of real property 4. On capital gains for shares of stock not traded in the Stock Exchange - Not over P100,000 - Any amount in excess of P100,000

5% 12% 20% 6%

5% 10%

*Cash and/or Property Dividends, Share in the distributable net income of the partnership, Interest on any bank deposits, Royalties (except on books as well as literary works and musical composition), Prizes (except prizes amounting to P10,000 or less), Winnings C) For Non-Resident Aliens Not Engaged in Trade or Business 1. On the gross amount of income derived from all sources within the Philippines 25%

2. On capital gains presumed to have been realized from the exchange or 6% other disposition of real property located in the Phils. D) Aliens Employed by Regional Headquarters (RHQ), Regional Operating (ROH), Offshore Banking Units (OBU), Petroleum Service Contractors and Subcontractors E) General Professional Partnerships F) Domestic Corporations 1) a. In General b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 2) Proprietary Educational Institution 3) Non-stock, Non-profit Hospitals 4) GOCC, Agencies & Instrumentalities a. In General b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 5) National Govt & LGUs a. In General b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 6) Taxable Partnerships a. In General b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 7) Exempt Corporation a. On Exempt Activities 0% 32% 2% 10% 32% 2% 10% 32% 2% 10% 32% 2% 10% 10% 10% 15% 0%

b. On Taxable Activities 8) Corporation covered by Special Laws

32% Rate specified under the respective special laws

G) Resident Foreign Corporation 1)a. In General b. Minimum Corporate Income Tax c. Improperly Accumulated Earnings 2) International Carriers 3) Regional Operating Headquarters 4) Corporation Covered by Special Laws 5) Offshore Banking Units (OBUs) 6) Foreign Currency Deposit Units (FCDU) 11) How is Income Tax computed? Gross Income P ___________ Less: Allowable Deductions ___________ Net Income P ___________ Less: Personal & Additional Exemptions ___________ Taxable Income P ___________ Multiply by Tax Rate (5 to 32%) Income Tax Due P ___________ 12) How is Income Tax paid?

32% 2% 10% 25% 10% Rate specified under the respective special laws 10% 10%

Through withholding
o o

Generally 10% 20% - Fees paid to directors who are not employees

Pay the balance as you file the tax return, computed as follows:

Income Tax Due P ___________ Less: 20% or 10% Withholding Tax ___________ Net Income Tax Due P ___________