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Corporate Tax in the Philippines

Corporate Tax in the Philippines

The Philippines government welcomes foreign investors who open companies here through various incentives. While some of them refer to special economic zones or special laws related to foreign direct investments, others relate to tax deductions or exemptions. However, all incomes generated by individuals and Philippines companies are subject to taxation.

One of the most important taxes imposed in the Philippines is the corporate tax which is levied on companies. Our Philippines company registration consultants can offer information on how companies are taxed in this country.

Corporate tax rates in the Philippines

The Philippines is a very attractive country to do business in from a taxation point of view. Not because of the standard corporate tax rate, but because of the deductions which can be obtained by companies. The standard corporate tax rate in the Philippines is 30%, however there is also a minimum rate of 2% applicable to local companies every fourth year since they started operating. Non-resident foreign companies with operations in the Philippines will be taxed at the same 30% rate. However, these can benefit from tax deductions under the Philippines’ double tax treaties.
It should be noted that the 30% rate applies on the net income obtained by Philippines companies, while the 2% rate is levied on the gross income.

Our company formation specialists in the Philippines can assist foreign investors who want to open companies here.

Special tax rates for companies in the Philippines

The main laws governing the taxation of companies in the Philippines are the National Internal Revenue Law, the Company Law and the Tariff and Customs Law. These apply to both resident and non-resident companies in the Philippines and also provide for certain special rates related to the corporate tax.

The following special tax rates and exemptions from the corporate tax are applicable in the Philippines:

–          a 10% rate applies to regional Filipino operating headquarters of international companies on their taxable profits;
–          offshore banking activities are subject to a 10% corporate tax rate on the income generated by interests;
–          oil and gas companies are subject to an 8% corporate tax rate of the gross income.

Foreign investors who want to know more about the corporate tax applicable in the Philippines are welcome to contact our local consultants. You can also rely on us if you are interested in starting a business in the Philippines.