Philippines

Social taxes

Social taxes in the Philippines consist of contributions to the following government agencies:

• Social Security System (SSS)
• Philippine Health Insurance Corporation (PhilHealth), and
• Home Development Mutual Fund (HDMF) or Pag-IBIG Fund

SSS issued Circular 2024-06 on 19 December 19 2024 mandating a 1% increase in the contribution rate starting January 2025. This change increased the contribution rate from 14% to 15% in accordance with Republic Act No. 11199, also known as the Social Security Act of 2018. The new minimum Monthly Salary Credit (MSC) is set at PHP 5,000, while the maximum MSC is 35,000 Philippine Peso (PHP). With the increase in contribution, the minimum employee and employer share is PHP 250 and PHP 510 per month, respectively.  The employer’s share includes a PHP 10 Employees' Compensation (EC) contribution. Meanwhile, the maximum monthly employee contribution is PHP 1,750, and the employer’s share is PHP 3,530, which includes an EC contribution of PHP 30.

HDMF has issued Circular No. 460 on 15 January 2024 prescribing the increase in contribution effective February 2024. Based on the circular, the Maximum Fund Salary (MFS) increased from 5,000 to 10,000 Philippine pesos (PHP). The rate for MFS of PHP 1,500 and below shall be 1% for the employee and 2% for the employer. For MFS over PHP 5,000, the rate shall be 2% for both the employer and the employee. The maximum HDMF contribution for both employers and employees will be PHP 200.  

In addition, PhilHealth’s premium rate is retained at 5% and the income ceiling is PHP 100,000, which is in accordance with Section 10 of the Universal Health Care (UHC) Law, as implemented by PhilHealth Circular 2019-009.

 In line with this, the minimum and maximum PhilHealth contribution for both employers and employees will be PHP 500 and PHP 2,500, respectively, effective January 2024.

Tax filing and payment

Following the enactment of Republic Act No. 11976 (Ease of Payment Taxes or EOPT Act) on 5 January 2024, which took effect on 22 January 2024, the Commissioner of Internal Revenue (CIR) provided the file-and-pay anywhere mechanism. This mechanism was further clarified by the Implementing Rules and Regulations (IRR) of the Act, which took effect on 27 April 2024. Under the IRR, the filing of tax returns shall be done electronically in any of the available electronic platforms of the Bureau of Internal Revenue (BIR). However, in case of unavailability of the electronic platforms, manual filing may be allowed. 

Moreover, for tax payments, the same shall be made either electronically in any of the available electronic platforms or manually to any Authorised Agent Bank (AAB) and Revenue Collection Office (RCO). The RCO can accept check payments regardless of amounts but only up to a maximum amount of PHP 20,000 for cash payments. AABs and RCOs shall only accept payments after the taxpayers have already electronically filed their tax returns, unless an advisory is issued allowing manual filing.

Meanwhile, in case of filing of an income tax return by married individuals, the husband and the wife, whether citizens or aliens, who are both self-employed, either engaged in business or practice of profession, shall file their return jointly. However, if it is impracticable to file one return, each spouse shall file separate income tax returns.

Further, a Filipino citizen who is an Overseas Contract Worker (OCW) or an Overseas Filipino Worker (OFW) working and deriving income solely from abroad shall not be required to file an income tax return.

Business tax

Pursuant to Republic Act (RA) 11534, also known as the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), any person whose sales or receipts are exempt from the payment of value-added tax (VAT) and who is a non-VAT registered person shall pay a percentage tax equivalent to 1% of one's gross sales or receipts (previously 3%) for the period beginning 1 July 2020 until 30 June 2023. Starting 1 July 2023, the rate shall revert to 3%.