This Philippines tax guide covers the rules in force from 1 January 2026, for the 2026 tax year. Resident citizens are taxed on worldwide income, but foreigners living in the Philippines pay tax only on Philippine-source income, at 0%–35%. Companies pay 25% (20% for small firms), VAT is 12%, and estate and donor’s tax are a flat 6%. The SRRV retirement visa needs a deposit from US$15,000. CMEPA cut the stock transaction tax to 0.1% from 1 July 2025, and a ₱350,000 (~$5,600) tax-free threshold is before Congress.
Introduction
The Philippines is an archipelago of some 7,641 islands in Southeast Asia, between the South China Sea and the Philippine Sea, with about 112.7 million people (2024 census). It is a presidential republic and a founding member of ASEAN; President Ferdinand Marcos Jr. serves a single six-year term to 2028. Filipino and English are the official languages, and English runs through business, government and the courts. The legal system blends Spanish civil law with US-style common law. The climate is tropical, with a typhoon season from roughly June to November. The economy rests on services, outsourcing and remittances; growth was 5.7% in 2024 and 4.4% in 2025 before slowing sharply in 2026. For expatriates, the cost of living outside prime Manila districts is among the lowest in Asia.
This Philippines tax guide matters because the country quietly offers one of Asia’s most useful rules for mobile people: a foreigner who lives there is taxed only on Philippine-source income, so foreign pensions, dividends, interest and gains stay untaxed, with no remittance charge. Retirement residence is available through the SRRV. Recent reforms cut the incentive rate for registered enterprises to 20% under CREATE MORE (from 28 November 2024), unified the tax on interest at 20% and slashed the stock transaction tax to 0.1% under CMEPA (from 1 July 2025), and brought foreign digital services into 12% VAT (from 2 June 2025).
Direct Taxes
The Philippines taxes individuals by citizenship and residence. Resident citizens pay on worldwide income; non-resident citizens, including overseas Filipino workers, and all foreigners pay only on Philippine-source income. A resident alien is a foreigner who lives in the Philippines with no definite intention as to the length of stay and is not a mere transient. A non-resident alien present for more than 180 days in a calendar year is treated as engaged in trade or business and taxed at the graduated rates; below that, a flat 25% applies to gross Philippine income. Pay for work physically performed in the Philippines is Philippine-source wherever the employer is based. Companies are taxed by place of incorporation: domestic corporations on worldwide income, foreign corporations only on Philippine income. The key concept for investors is the Philippine-source rule for aliens — a foreigner resident in the Philippines owes nothing on foreign income.
Personal income tax (2026 bands)
| Taxable income (₱, USD) | Rate |
|---|---|
| 0 – 250,000 (~$0–$4,000) | 0% |
| 250,001 – 400,000 (~$4,000–$6,400) | 15% of the excess |
| 400,001 – 800,000 (~$6,400–$12,700) | ₱22,500 (~$360) + 20% of the excess |
| 800,001 – 2,000,000 (~$12,700–$31,900) | ₱102,500 (~$1,630) + 25% of the excess |
| 2,000,001 – 8,000,000 (~$31,900–$127,500) | ₱402,500 (~$6,410) + 30% of the excess |
| Over 8,000,000 (~$127,500) | ₱2,202,500 (~$35,100) + 35% of the excess |
These TRAIN-law bands have applied since 1 January 2023, when the middle brackets were cut from 20%–32% to 15%–30%; the 35% top rate was unchanged. On a ₱3,000,000 (~$47,800) salary the tax is ₱702,500 (~$11,200), an average 23.4%. The 13th-month pay and other bonuses are exempt up to ₱90,000 (~$1,430), and managers’ fringe benefits bear a 35% final tax paid by the employer. Self-employed people and professionals with gross receipts up to ₱3,000,000 (~$47,800) who are not VAT-registered may instead pay 8% of gross receipts above ₱250,000 (~$4,000). House Bill 10345 and Senate Bill 2338, backing a pledge in the July 2026 State of the Nation Address, would raise the zero band to ₱350,000 (~$5,600), the Senate version from 1 January 2027. The House Ways and Means Committee approved its bill on 10 August 2026, but neither is law yet.
Corporate income tax
| Item | Rate |
|---|---|
| Standard corporate income tax (from 1 July 2020) | 25% |
| Standard corporate income tax (to 30 June 2020) | 30% |
| Small domestic companies — net taxable income ≤ ₱5,000,000 (~$79,700) and assets ≤ ₱100,000,000 (~$1,590,000), excluding land | 20% |
| Minimum corporate income tax (from the 4th year of operations, if higher) | 2% of gross income |
| Registered business enterprises — income tax holiday | 0% for 4–7 years |
| Registered business enterprises — special corporate income tax, in lieu of national and local taxes | 5% of gross income earned |
| Registered business enterprises — enhanced deductions regime (from 28 November 2024) | 20% (25% before) |
| Branch profit remittance tax | 15% |
| Global minimum tax (Pillar Two) | Not yet legislated |
The 25% rate dates from CREATE (Republic Act 11534), which cut it from 30%. Dividends between domestic corporations are exempt, and foreign dividends received by a domestic company are exempt if it has held at least 20% for two years and reinvests them in the Philippines. Outbound withholding is 25% on dividends (15% where the parent’s country grants a tax-sparing credit), 20% on interest on foreign loans and 25% on royalties, reduced under about 40 tax treaties, including one with the United States. Losses carry forward for three years. CREATE MORE (Republic Act 12066) cut the enhanced-deductions rate for registered enterprises to 20% and allows incentives of up to 27 years for projects approved by the Fiscal Incentives Review Board. The Philippines has not yet legislated Pillar Two: the Department of Finance and the BIR began drafting a global minimum tax bill in 2026, aimed at groups with revenue of €750,000,000 (~$870,000,000) or more. The July 2026 SONA also proposed removing income tax for qualifying small enterprises — a proposal, not law.
Social security and health contributions
| Contribution | Employee | Employer | Self-employed |
|---|---|---|---|
| SSS (pension and social insurance) | 5% of monthly salary credit | 10% + employees’ compensation ₱10–₱30 (~$0.16–$0.48) a month | 15% |
| SSS monthly salary credit ceiling | ₱35,000 (~$560) | ₱35,000 (~$560) | ₱35,000 (~$560) |
| PhilHealth (national health insurance) | 2.5% | 2.5% | 5% |
| PhilHealth monthly income floor / ceiling | ₱10,000 / ₱100,000 (~$160 / ~$1,590) | ₱10,000 / ₱100,000 (~$160 / ~$1,590) | ₱10,000 / ₱100,000 (~$160 / ~$1,590) |
| Pag-IBIG (housing fund) | 2% of up to ₱10,000 (~$160): max ₱200 (~$3) a month | 2%: max ₱200 (~$3) a month | Both shares |
SSS contributions reached their final scheduled rate of 15% in January 2025 under the Social Security Act of 2018, and the PhilHealth premium has been 5% since 2024. With the caps, the most a foreign employee pays is ₱51,000 (~$810) a year: ₱1,750 (~$28) a month to SSS and ₱2,500 (~$40) to PhilHealth. The employer pays up to ₱3,500 (~$56) a month to SSS on top. Foreign employees are compulsory SSS members unless covered by a social security agreement, but they no longer have to join Pag-IBIG. For high earners the burden is negligible, and there is no separate health levy or payroll surtax.
Indirect Taxes
VAT under Title IV of the National Internal Revenue Code is the main indirect tax, charged at 12% on sales, imports and services by businesses with gross sales above ₱3,000,000 (~$47,800) a year. Smaller businesses pay a 3% percentage tax on gross sales instead.
Value-added tax (VAT)
| Rate | Applies to (examples) |
|---|---|
| 12% (standard) | Most goods and services, imports, digital services from non-resident providers (since 2 June 2025) |
| 0% (zero-rated) | Exports of goods and services, international transport, qualifying sales to export-oriented registered enterprises |
| Exempt | Unprocessed food, education, residential rent up to ₱15,000 (~$240) a month per unit, businesses below the ₱3,000,000 (~$47,800) threshold |
| 3% percentage tax | Non-VAT businesses with gross sales up to ₱3,000,000 (~$47,800) |
Under Republic Act 12023, non-resident digital service providers — streaming, cloud, apps and online advertising — have charged 12% VAT to Philippine consumers since 2 June 2025. Under Republic Act 12079, whose implementing rules were signed on 24 March 2025, foreign tourists can reclaim VAT on purchases of at least ₱3,000 (~$48) from accredited stores, taken out of the country within 60 days; the Supreme Court upheld the law in July 2026.
Excise and other indirect taxes
| Tax | Notes |
|---|---|
| Excise duties | Alcohol and tobacco, including vapes, at specific rates indexed yearly; sweetened drinks ₱6 (~$0.10) or ₱12 (~$0.19) a litre; cars 4% up to ₱600,000 (~$9,560), rising to 50% above ₱4,000,000 (~$63,700), half rates for hybrids, pure EVs exempt; gasoline ₱10 (~$0.16) and diesel ₱6 (~$0.10) a litre |
| Fuel excise suspension | Republic Act 12316 (25 March 2026) lets the President suspend or cut fuel excise when crude exceeds US$80 a barrel; LPG and kerosene excise was suspended for three months from April 2026 |
| Documentary stamp tax | 1.5% on property sales; 0.75% on original issues of shares (1% before 1 July 2025); 0.75% of par value on transfers of unlisted shares |
| Stock transaction tax | 0.1% of gross selling price of listed shares (0.6% before 1 July 2025) |
| Capital gains tax on real property | 6% of the higher of price, BIR zonal value or assessor’s value, normally paid by the seller |
| Local transfer tax | Up to 0.5% of value, 0.75% in Metro Manila |
For property buyers, the key point is ownership, not tax: foreigners cannot own land, may hold units only while foreign ownership of a condominium project stays within 40%, and since September 2025 can lease land for up to 99 years under Republic Act 12252. A resale typically costs about 8% in taxes combined — 6% capital gains tax and 1.5% DST, plus transfer tax — split by contract, though the seller customarily pays the capital gains tax.
Other Taxes Worth Knowing
| Tax | Philippines treatment |
|---|---|
| Capital gains tax | 6% on Philippine real property; 15% of net gains on unlisted shares (unlisted foreign shares of resident citizens included since 1 July 2025); 0.1% STT on listed shares. Resident aliens: 0% on foreign assets |
| Dividends (resident individual) | 10% final tax on dividends from domestic companies; foreign dividends untaxed for resident aliens, graduated rates for resident citizens |
| Interest (resident individual) | 20% final tax on Philippine peso and foreign-currency deposits and government securities, unified by CMEPA from 1 July 2025; the five-year deposit exemption is repealed for new deposits. Foreign interest untaxed for resident aliens |
| Rental income | Philippine rent taxed at 0%–35% on net income, or 8% of gross for small non-VAT landlords |
| Wealth / net worth tax | None |
| Inheritance / estate tax | 6% of net estate above a ₱5,000,000 (~$79,700) standard deduction, plus a family-home deduction up to ₱10,000,000 (~$159,000); worldwide for citizens and resident aliens; non-resident aliens only on Philippine assets, with a ₱500,000 (~$8,000) deduction |
| Gift tax | Donor’s tax of 6% on gifts above ₱250,000 (~$4,000) a year |
| Immovable property tax (annual) | Real property tax up to 1% of assessed value in provinces and up to 2% in Metro Manila, plus 1% for the Special Education Fund |
For a resident alien, the Philippine bill on a foreign portfolio is zero: foreign dividends, interest and gains are outside the net, and nothing is due when money is brought in. Local investments are taxed at source — 10% on Philippine dividends, 20% on bank interest, 0.1% on listed share sales — with no return to file. Real property tax falls on assessed value, a fraction of market value, so annual bills stay modest. The catch is death: citizens and resident aliens owe 6% estate tax on their worldwide estate, with a credit for foreign estate tax paid.
Disadvantages & Risks
The main risk is economic momentum. Growth slowed from 4.4% in 2025 to 2.8% in the first quarter and 2.3% in the second quarter of 2026, dragged by an oil price shock and a flood-control corruption scandal that stalled public spending; in June 2026 the government cut its 2026 target to 3.5%–4.5%. The peso weakened past ₱62 per dollar in September 2026. The islands are exposed to typhoons and earthquakes, South China Sea tensions with China persist, and politics are fractious ahead of the 2028 presidential election. Bureaucracy is heavy, BIR audits are frequent, and foreign ownership limits bar land ownership and cap foreign equity in a range of sectors under the Foreign Investment Negative List.
International standing has improved. The FATF removed the Philippines from its grey list in February 2025, and it is not on the list of jurisdictions under increased monitoring as at 19 June 2026; the European Commission moved to take it off the EU’s anti-money-laundering high-risk list in June 2025. The Philippines is not on Annex I of the EU list of non-cooperative tax jurisdictions (17 February 2026 update). Substance matters for incentives: CREATE MORE benefits depend on registration and performance commitments, and a future global minimum tax would lift large groups back to 15%. The Philippine-source rule is also narrower than it looks — remote work performed in the Philippines is Philippine-source income even when paid by a foreign employer, and the digital nomad visa created by Executive Order 86 in April 2025 had not opened to applicants by mid-2026.
Strategy & Ideal Profile
The cleanest structure is personal: become a resident alien and keep income-producing assets abroad, so foreign dividends, interest, gains and pensions go untaxed. The SRRV Classic grants indefinite residence to foreigners aged 40 or over for a deposit of US$15,000 (aged 50+ with a pension of at least US$800 a month) up to US$50,000 (aged 40–49 without a pension), plus a US$360 annual fee; the SIRV grants residence for a US$75,000 investment. For an operating business, a domestic corporation pays 25% and its dividends to resident individuals a further 10%, so ₱10,000,000 (~$159,000) of profit leaves ₱6,750,000 (~$107,600) with the owner — 32.5% overall, or 28% for qualifying small companies. Export businesses — IT, outsourcing, manufacturing — registered with PEZA or another investment promotion agency can get a 4–7-year income tax holiday, then 5% of gross income earned in lieu of all national and local taxes.
Several profiles fit. Retirees on foreign pensions and savings pay no Philippine income tax on them and can hold an SRRV from age 40. Investors and traders with foreign brokerage accounts pay nothing locally on dividends or gains, and only 0.1% on Philippine share sales. Dividend earners receive foreign dividends gross. Company owners in export services can pair CREATE MORE incentives with an English-speaking workforce and low costs. On residency, there is no day-count test for resident aliens: status follows intention and the nature of the stay, so an SRRV, a long lease and local ties support it. Either way only Philippine income is taxed, so the practical test is breaking tax residence at home.
The Philippines does not suit everyone. Remote workers on foreign payrolls cannot count on tax-free salaries — pay for work done in the Philippines is Philippine-source. Filipino citizens returning home are taxed on worldwide income, and US citizens remain taxable in the United States. Buyers who want freehold land cannot have it, and wealthy families face 6% estate tax on worldwide assets while resident. Domestic companies without incentives pay 20%–25% plus 10% on dividends, and a global minimum tax would erode the 5% regime for large groups.
FAQ
Is the Philippines a tax haven?
No. It levies 0%–35% income tax, 25% corporate tax and 12% VAT. It left the FATF grey list in February 2025, is not on the June 2026 list, and is not on Annex I of the EU list of non-cooperative jurisdictions (February 2026). Its appeal for foreigners is territorial: resident aliens are taxed only on Philippine-source income.
What is the corporate tax rate in the Philippines in 2026?
25% for domestic and resident foreign corporations, and 20% for domestic companies with net taxable income up to ₱5,000,000 (~$79,700) and assets up to ₱100,000,000 (~$1,590,000), excluding land. A 2% minimum tax on gross income applies from the fourth year. Registered export enterprises can pay 5% of gross income earned or 20% under the enhanced deductions regime.
How are resident aliens taxed on foreign income in the Philippines?
They are not. Resident aliens pay tax only on Philippine-source income — local salary, business profits, rent and investment income — at the graduated rates or final taxes. Foreign pensions, dividends, interest, rent and capital gains are untaxed, even when brought into the country. Salary for work done while physically in the Philippines is Philippine-source.
What is the 180-day rule in the Philippines?
A non-resident alien who stays more than 180 days in a calendar year is treated as engaged in trade or business and taxed at 0%–35% on Philippine income; at 180 days or fewer, a flat 25% applies to gross Philippine income. The rule does not decide residence: a resident alien is a foreigner living in the Philippines with no definite intention as to the length of stay.
Does the Philippines tax capital gains?
Yes, on Philippine assets. Real property is taxed at 6% of the higher of price or official values, and unlisted shares at 15% of net gains. Listed shares bear a 0.1% stock transaction tax since 1 July 2025, down from 0.6%. Resident aliens pay nothing on gains from foreign assets.
Is there inheritance or wealth tax in the Philippines?
There is no wealth tax. Estate tax is 6% of the net estate above ₱5,000,000 (~$79,700), with a family-home deduction up to ₱10,000,000 (~$159,000); it covers the worldwide estate of citizens and resident aliens but only Philippine assets of non-resident aliens. Donor’s tax is 6% on gifts above ₱250,000 (~$4,000) a year.
How are dividends taxed for a non-resident investor?
Dividends from Philippine companies bear a 25% final withholding tax for non-resident aliens not engaged in business (20% if engaged) and 25% for non-resident foreign corporations, cut to 15% where the home country grants a tax-sparing credit. Tax treaties can reduce these rates. Dividends from foreign companies are not taxed in the Philippines.
Sources
All figures should be checked against the primary government sources below.
- Bureau of Internal Revenue — income tax rates and the 8% option — bir.gov.ph
- Bureau of Internal Revenue — National Internal Revenue Code as amended (residence, source rules, corporate rates, withholding) — bir.gov.ph
- Bureau of Internal Revenue — Capital Markets Efficiency Promotion Act (Republic Act 12214) — bir.gov.ph
- Bureau of Internal Revenue — capital gains tax — bir.gov.ph
- Bureau of Internal Revenue — documentary stamp tax — bir.gov.ph
- Bureau of Internal Revenue — value-added tax — bir.gov.ph
- Bureau of Internal Revenue — excise tax — bir.gov.ph
- Bureau of Internal Revenue — estate tax — bir.gov.ph
- Bureau of Internal Revenue — donor’s tax — bir.gov.ph
- Bureau of Internal Revenue — double taxation agreements — bir.gov.ph
- Official Gazette — Republic Act 11534 (CREATE) — officialgazette.gov.ph
- Official Gazette — Republic Act 12066 (CREATE MORE) — officialgazette.gov.ph
- Official Gazette — Republic Act 12023 (VAT on digital services) — officialgazette.gov.ph
- Official Gazette — Republic Act 12316 (fuel excise suspension) — officialgazette.gov.ph
- Official Gazette — Executive Order 86, s. 2025 (digital nomad visa) — officialgazette.gov.ph
- Department of Finance — VAT refund for foreign tourists (Republic Act 12079) — dof.gov.ph
- Presidential Communications Office — Republic Act 12252, 99-year land leases — pco.gov.ph
- House of Representatives — ₱350,000 (~$5,600) tax-free income bill (House Bill 10345) — congress.gov.ph
- Social Security System — contribution table — sss.gov.ph
- PhilHealth — premium contribution for direct contributors, Advisory 2025-0002 — philhealth.gov.ph
- Department of Budget and Management — Pag-IBIG Fund Circular 460, maximum fund salary — dbm.gov.ph
- Philippine Retirement Authority — Special Resident Retiree’s Visa — pra.gov.ph
- Board of Investments — Special Investor’s Resident Visa — boi.gov.ph
- Philippine Statistics Authority — GDP, second quarter 2026 — psa.gov.ph
- Philippine Statistics Authority — revised national accounts 2024–2025 — psa.gov.ph
- Council of the European Union — EU list of non-cooperative jurisdictions, 17 February 2026 update — consilium.europa.eu
- FATF — jurisdictions under increased monitoring, 19 June 2026 — fatf-gafi.org
- Bangko Sentral ng Pilipinas — reference exchange rate bulletin — bsp.gov.ph
USD figures are indicative conversions at ~US$1 = ₱62.75 (peso closing rate, 18 September 2026) and ~€1 = US$1.16, and rounded. SRRV and SIRV amounts are set in US dollars.
Last verified: 19 September 2026.
This is general information, not personal tax or legal advice. Tax outcomes depend on your specific facts; consult a qualified Philippines tax adviser before acting.
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