TAX-MID

Individual Taxpayers

primarily classified under the National Internal Revenue Code (Tax Code) by their citizenship and residency status, which dictates whether they are taxed on global or purely local income.

Income Tax

tax imposed on yearly profits of a person’s taxable income earned from employment, business, profession, or a certain other sources and administered by the Bureau of Internal Revenue (BIR).

Classification of Individual Taxpayer

1. Citizens

2. Aliens

Residents Citizen

Filipino citizens residing in the Philippines

Non-Resident citizen

Filipino citizens who lived abroad most of the time

Resident Alien

Foreign nationals who live in the Philippines and have a definite intention regarding their stay or whose stay is not temporary.

Non-resident Alien

Foreign nationals and does not reside in the country.

NRA engaged in Trade or Business

aliens who stay in the country for an aggregate period of more than 180 days.

NRA nor engaged in Trade or Business

aliens who stay for 180 days or less and receive passive income from the Philippines without physically operating a business.

Taxable Income

the amount of income that is subject income tax after subtracting allowable deductions and exemptions, when applicable

Corporation

An artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

Corporate Income Tax

a tax imposed by the government on the taxable income earned by a corporation during a taxable year.

Allowable deductions

items or amounts which the law allows to be deducted from the gross income in order to arrive at the taxable income.

Net Income

arrived at after subtracting from the gross income the deductions of the taxpayer.

Gross Income

the entire or gross income from business without any deductions for either optional standard deduction or itemized deduction.

Withholding tax

the portion of an employee's wages that an employer deducts and sends directly to the government to cover income taxes, Social Security, and Medicare obligations.

Withholding Tax on Compensation

Tax deducted from an employee's taxable compensation.

Expanded Withholding Tax

Tax withheld from certain income payments, subject to applicable rules.

Withholding Tax on Payments

Withholding requirements applicable to certain government payments

Expanded Withholding Tax

generally applies to specific income payments, such as certain payments to professionals, consultants, contractors, and lessors, when the payer and transaction are covered by the withholding rules.

Final Withholding Tax

applies to specified types of income for which the law requires the withholding to serve as the final income tax on that income.

Expanded Withholding Tax

Advance tax payment. The recipient can use the withheld amount as a tax credit.

Final Withholding Tax

Final tax payment. The withheld amount generally settles the tax on the specified income