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Philippines
Overview
Last reviewed - 01 July 2023The Philippines is strategically located off the southeastern coast of mainland Asia, with a flying time of four hours or less to most major Asian countries. Its strategic location allowed it to bridge Eastern and Western cultures, producing a rich history of Asian, European, and American influences. The Philippines has been counted as the third-largest English-speaking country in the world. The capital of the Philippines is Manila, and the currency is the Philippine peso (PHP).
The Philippines adheres to the principles of a democratic republican state with a presidential form of government. For 2022, the country’s strategic investment priority plan listed the priority investment areas under three tiers. Tier I includes all activities in the 2020 Investment Priorities Plan, unless listed under Tier II or III. Tier II includes, but is not limited to, green ecosystems, health-related activities, defense-related activities, industrial value-chain gaps, and food security related activities. Tier III includes, but is not limited to, research and development and activities adopting advanced digital production technologies of the fourth industrial revolution, highly technical manufacturing and production of innovative products and services, and establishment of innovation support facilities. The government continues to give tax incentives to investors that do business in the Philippines in these priority areas. 100% foreign ownership remains permissible in many areas of investment, although certain industries are subject to foreign ownership limitation.
The Philippine gross domestic product (GDP) posted a growth rate of 7.2 percent in the fourth quarter of 2022, resulting in 7.6% full-year growth in 2022. The main contributors to the fourth quarter 2022 growth were wholesale and retail trade, repair of motor vehicles and motorcycles, financial and insurance activities, and manufacturing. For annual 2022, the industries that contributed the most to the annual growth were wholesale and retail trade, repair of motor vehicles and motorcycles, manufacturing, and construction
PwC in the Philippines (Isla Lipana & Co.) supports clients with the local knowledge and skills of its people and with access to a broad range of other professionals across the PwC global network of firms. Isla Lipana & Co. has provided professional services in the Philippines for over 100 years. It currently has 43 partners and principals, and more than 1,600 people who are committed to delivering quality assurance, tax, and advisory services through its main office in Makati City and branch offices in Cebu City, Iloilo City, and Davao City.
Quick rates and dates
| Corporate income tax (CIT) rates | |
|---|---|
| Headline CIT rate (%) |
25 |
| Corporate income tax (CIT) due dates | |
|---|---|
| CIT return due date |
Quarterly return: Within 60 days from the close of each of the first three quarters. Annual return: On or before the 15th day of the fourth month following the close of the taxable year. |
| CIT final payment due date |
On the 15th day of the fourth month following the close of the taxable year. |
| CIT estimated payment due dates |
Quarterly instalments paid within 60 days after each quarter. |
| Personal income tax (PIT) rates | |
|---|---|
| Headline PIT rate (%) |
35 |
| Personal income tax (PIT) due dates | |
|---|---|
| PIT return due date |
15 April |
| PIT final payment due date |
15 April |
| PIT estimated payment due dates |
For employees, the Philippines follows the PAYE system, which is carried out by the local employer through the WHT mechanism. Under this system, it is the responsibility of the employer (local company) to withhold and remit taxes on the compensation of its employees on a monthly basis. Further, our tax regulations require an annualisation of income and WHTs to be performed at year end (December). |
| Value-added tax (VAT) rates | |
|---|---|
| Standard VAT rate (%) |
12 |
| Withholding tax (WHT) rates | |
|---|---|
| WHT rates (%) (Dividends/Interest/Royalties) |
Resident: 0 / 10, 15, or 20 / 20; Non-resident: 15 or 25 / 20 / 25 |
| Capital gains tax (CGT) rates | |
|---|---|
| Headline corporate capital gains tax rate (%) |
See the Philippines corporate tax summary for capital gain rates. |
| Headline individual capital gains tax rate (%) |
See the Philippines individual tax summary for capital gain rates. |
| Net wealth/worth tax rates | |
|---|---|
| Headline net wealth/worth tax rate (%) |
NA |
| Inheritance and gift tax rates | |
|---|---|
| Headline inheritance tax rate (%) |
There is no inheritance tax in the Philippines. However, an estate tax of 6% is imposed on the assets of the decedent taxpayer. |
| Headline gift tax rate (%) |
6 |
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