FINAL INCOME TAX

Nature of Final Income Tax

1. Withholding at Source

2. Final Tax (wala nang ibabawas pa)

3. No Income Tax Return (The income taxpayer need not file a tax return to report the income)

4. Applies only on certain passive income (List)

5. Applies on Certain Non-Residents’ Income whether active or passive (NRA-NETB and NRFC)

6. Territorial (earned within) (deduction on income is allowed only if the source of income is the Philippines)

Class of Active Income

1. Compensation

2. Business Income

3. Professional Income

List of Passive Income Subject to FIT:

1. Interest income from banks

2. Dividends

3. Royalties

4. Prizes

5. Winnings

6. Informer’s Reward

7. Fringe Benefit Tax

8. Other

General Rule for the tax rate of passive income of NRA-NETB and NRFC:

25%

FIT of Interest Income From Banks (ST & LT)

Local Currency:

	Individual	Corporation
Short-Term < 5 yrs
Long-Term ≥ 5 yrs

Local Currency:

	Individual	Corporation
Short-Term < 5 yrs	20%	20%
Long-Term ≥ 5 yrs	Exempt	20% (RIT for deposit substitute issued by non-banks)

Pre-termination of Long-term Deposit or Investment:

	Individual	Corporation
< 3 years held
< 4 years held
< 5 years held

	Individual	Corporation
< 3 years held	20%	20%
< 4 years held	12%	20%
< 5 years held	5%	20%

FIT of Interest Income From Banks (Foreign Currency)

Foreign Corporation:

	Individual	Corporation
Resident
Non-Resident

Foreign Corporation:

	Individual	Corporation
Resident	15%	15%
Non-Resident	Exempt	Exempt

FIT on Dividend Income:

	RC, NRC, & RA	NRA-ETB	NRA-NETB	DC & RFC	NRFC
From DC
From FC
From Business Partnership/Joint Venture

	RC, NRC, & RA	NRA-ETB	NRA-NETB	DC & RFC	NRFC
From DC	10%	20%	25%	Exempt	25%, but can be 15% if subjected by tax-sparring rule
From FC	RIT	RIT	25%	RIT (DC - exempt if qualified by predominance or the criteria)	25%
From Business Partnership/Joint Venture	10%	10%	25%	Regular Tax	25%

FIT on Royalty Income:

	Individual	Corporation
Book, Musical Composition, Literary Works
General (Others)

	Individual	Corporation
Book, Musical Composition, Literary Works	10%	20%
General (Others)	20%	20%

FIT on Prizes (w/ effort):

Awards (Nobel Peace Prize)

Sports: Philippine Sports Commission Accreditation

	Individual	Corporation
10K and Below
Above 10K

Awards (Nobel Peace Prize)	Exempt
Sports: Philippine Sports Commission Accreditation	Exempt

	Individual	Corporation
10K and Below	RIT	RIT
Above 10K	20%	RIT

FIT on Winnings (w/o effort; chance):

PCSO and Lotto Winning:

	Individual	Corporation
10K and Below
Above 10K

Others:

	Individual	Corporation
Regardless of amount

PCSO and Lotto Winning:

	Individual	Corporation
10K and Below	exempt	exempt
Above 10K	20%	20%

Others:

	Individual	Corporation
Regardless of amount	20%	RIT

Tax Informer’s Reward:

10% of the amount collected or 1M whichever is lower

FIT on Informer’s Reward

10% regardless of the taxpayer

BIR Form to be used and Deadline for Passive Income subject to FIT:

	Monthly	Quarterly	Annually
Form
Deadline

	Monthly	Quarterly	Annually
Form	0619 - F	1601 - FQ (Others) 1602 - Q (Interest) 1603 - Q - FBT	1604 - F
Deadline	10 days end of month	last day of month counted from the end of quarter	Before Jan 31 next year

Summary