Individual - Significant developments

Last reviewed - 02 July 2021

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

Social Security System (SSS)

Circular No. 2020-033 prescribes a new schedule of contributions effective 1 January 2020.

Under the new contribution table, the maximum employer and employee contributions will be increased to 2,155 (from 1,630) and 1,125 (from 800) Philippine pesos (PHP), respectively. Further, the graduated salary brackets will be changed to a minimum of PHP 3,000 and a maximum of PHP 25,000 (previously from PHP 2,000 to PHP 20,000).

Philippine Health Insurance Corporation (PHIC) or PhilHealth

Under Circular No. 2020-005, beginning 2021, the salary ceiling shall increase by PHP 10,000 (i.e. to PHP 70,000) and the rate by 0.50% (i.e. to 3.50%). Thereafter, there would be an annual increase of PHP 10,000 in the ceiling and 0.50% in the contribution rate until both reach PHP 100,000 and 5.00% by 2025.

Currently, there is a newly-signed law granting the President the power to suspend the scheduled increase for SSS contributions. However, unlike the PHIC which suspended the implementation of the contribution hike, the SSS proceeded with the implementation of its new rates and shall continue to do so until the President issues a formal suspension, upon the recommendation of the Social Security Commission.

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 and who is a non-VAT registered person shall pay a percentage tax equivalent to 1% of his gross sales or receipts (previously at 3%) for the period beginning July 1, 2020 until June 30, 2023.