Philippines Tax Rates 2026: Income Tax, Corporate Tax, VAT & Capital Gains

Philippines individual income tax rates

For taxable years beginning 1 January 2023 and onwards, resident citizens, non-resident citizens on Philippine-source income, resident aliens and qualifying non-resident aliens engaged in trade or business are generally subject to the following graduated income-tax schedule, subject to the specific source and residence rules of the National Internal Revenue Code.

Current schedule: The former 5%-32% brackets shown in older tax tables no longer apply. The current graduated rates above have applied from 1 January 2023.

Self-employed individuals and professionals

Qualified self-employed individuals and professionals whose gross sales or receipts and other non-operating income do not exceed the VAT threshold may, subject to the Tax Code and BIR requirements, elect the 8% income-tax option instead of the graduated income-tax rates and percentage tax. Taxpayers should check the current BIR registration and election requirements before using this option.

Philippines corporate income tax rates

Under the CREATE Act and the CREATE MORE amendments, the regular income-tax rate for domestic corporations is generally 25%. A reduced 20% rate applies to a domestic corporation whose net taxable income does not exceed ₱5 million and whose total assets do not exceed ₱100 million, excluding the land on which its office, plant and equipment are situated, provided the statutory requirements are met.

The former 10% improperly accumulated earnings tax is no longer part of the current corporate tax regime. Registered Business Enterprises may be subject to special incentive rules under CREATE MORE depending on their registration, elected incentive regime and registered activities.

Minimum Corporate Income Tax (MCIT)

A 2% MCIT on gross income generally applies to domestic corporations and resident foreign corporations beginning with the fourth taxable year immediately following the year in which business operations commenced. It applies when the MCIT exceeds the regular corporate income tax, subject to statutory exemptions and relief provisions.

Capital gains tax and stock transaction tax

Real property classified as a capital asset

A 6% final capital gains tax generally applies to the sale, exchange or other disposition by an individual of real property located in the Philippines and classified as a capital asset. The tax base is generally the higher of the gross selling price or the property's current fair market value as determined under the Tax Code. Separate rules apply to corporations and to transactions involving property held as an ordinary asset.

Shares not traded on a stock exchange

Net capital gains from the sale, exchange or other disposition of shares of stock in a domestic corporation that are not traded through a local or foreign stock exchange are generally subject to a 15% final capital gains tax.

Shares and securities traded through an exchange

Under the Capital Markets Efficiency Promotion Act and BIR Revenue Regulations No. 20-2025, sales, exchanges or other dispositions of covered shares and securities listed and traded through a local stock exchange are subject to a 0.1% stock transaction tax on the gross selling price or gross value in money, effective 1 July 2025. The same 0.1% rate applies to covered domestic shares and securities listed and traded through a foreign stock exchange, subject to the law and regulations.

Selected withholding rules for non-residents

Philippine withholding tax depends on the recipient, the type and source of income, applicable final-tax provisions and any tax treaty. A non-resident foreign corporation is generally subject to 25% tax on Philippine-source gross income unless a specific Tax Code provision or treaty provides otherwise.

Intercompany dividends paid by a Philippine domestic corporation to a non-resident foreign corporation may qualify for the 15% tax-sparing rate when the statutory conditions are satisfied. Treaty rates may also apply where the recipient establishes entitlement to treaty benefits.

Because interest, royalties, technical services and other payments can have different statutory or treaty treatment, a single flat withholding rate should not be applied without checking the relevant Tax Code provision, BIR issuance and treaty.

Branch profit remittance tax

Profits remitted by a Philippine branch to its foreign head office are generally subject to a 15% branch profit remittance tax, subject to the Tax Code, special exemptions and applicable tax treaties.

Philippines Value-Added Tax (VAT)

The standard Philippine VAT rate is 12%. VAT applies to taxable sales, barter or exchange of goods or properties, sales of services, use or lease of properties, and importations, unless the transaction is zero-rated or exempt under the National Internal Revenue Code and current regulations.

VAT registration and exemption treatment depend on the taxpayer's activity, gross sales and the statutory VAT threshold. The Ease of Paying Taxes Act also introduced taxpayer classifications and procedural reforms, so businesses should verify their current BIR registration and filing obligations.

Income-tax return filing and payment deadlines

Where an individual's income tax due exceeds ₱2,000, BIR instructions allow payment in two equal installments: the first upon filing and the second on or before 15 July of the same year. Electronic filing and payment requirements depend on whether the taxpayer is covered by eFPS, eBIRForms or other BIR electronic facilities.