Taxation

1. In order to register with the POEA, the seaman needs to present a valid Overseas Employment
Certificate (OEC) and a seaman book issued by the Maritime Industry Authority. Overseas
Filipino workers are exempted from paying travel tax when they enter or leave the
Philippines in a span of a year
According to Revenue Regulations No. 1-2011, the wage or income of an OFW that is
earned out of the country is exempted from income tax. However, the earnings of an OFW
from a business venture or any other property in the Philippines is subject to tax obligations.
What Is The Seafarer Tax Exemption. The fee imposed by taxing travel is one of the most
reliable sources of income for any country. Originally imposed to reduce and conserve foreign
exchange, today, the sole purpose of these travel taxes is to generate funds for tourism-
related programs and projects
What income is non-taxable?
Nontaxable income won't be taxed, whether or not you enter it on your tax return. The following
items are deemed nontaxable by the IRS: Inheritances, gifts and bequests. Cash rebates on
items you purchase from a retailer, manufacturer or dealer
Excise Tax
Excise tax collection in Republic of the Philippines is collected from goods that are harmful to
people's health such as alcohol beverage, tobacco, or luxury goods (decorations, jewel, and
perfumes) including goods that destroy environment or businesses that have concession such
as automobile, oil, mineral, and
Excise Tax is a tax on the production, sale or consumption of a commodity in a country.
An excise tax is an indirect tax charged by the government on the sale of a particular good or
service.
Divide the total market revenue bythe total number of excise goods sold during the
period – this will give you the average tax base of the goods. Multiply the figure at step 4 by the
appropriate tax rate to calculate the notional excise tax on the price.
OVER UP TO RATE
0 Php600,000 4%
Php600,000 Php1,000,000 10%
Php1,100,000 Php4,000,000 20%

2. Train Law
R.A. No. 10963 (Philippine Train Law) aimed to make the Philippine Tax System simpler, fairer,
and more efficient to promote investments, create jobs and reduce poverty and to raise
revenues that will fund the President's (Duterte) Build, Build, Build Project
It allows more individuals to be exempted from tax. More individuals benefited from this tax
system, including those who are employed at the same time having mixed incomes. Train law
also provides uniform tax rates for the estate tax and donor's tax, which made it easier to
compute the tax dues.
Under TRAIN, those with annual taxable income below PHP 250,000 are now exempt from
paying personal income tax, while the rest of taxpayers, except the richest, will see lower tax
rates ranging from 15 percent to 30 percent by 2023.
Value-Added Tax
Value-Added Tax (VAT) is a consumption tax placed on sellers engaged in trade or business in
the Philippines. VAT applies to the seller’s products and services during the manufacturing or
retail process. According to the Bureau of Internal Revenue (BIR), VAT may be shifted or passed
on to the buyer, transferee or lessee of goods, properties or services.
The government applies VAT to products and services at a rate of 0% to 12% to the prices of goods
or services sold, depending on the businesses’ transactions. BIR also levies imported goods from
abroad with VAT.
Current VAT Rates
As of this writing, the BIR imposed tax rates for the following items subject to VAT in the
Philippines:
 Sale of Goods and Properties
o 12% VAT for the gross selling price or gross value in money of goods and
properties sold, bartered or exchanged.
 Sale of Services and Use or Lease of Properties
o 12% VAT of gross receipts acquired from the sale or exchange of services,
including properties used or leased by individuals.
 Export Sales and Other Zero-Rated Sales
o Sale of Goods and Services are subject to 0% VAT for PEZA-registered entities
enjoying fiscal incentives.

3. interests, royalties, prizes and other winnings
Interest income from bank deposits, deposit substitutes, trust funds, and other similar products
(except for its long-term variants) is taxed at the rate of 20%.
Royalties, except on books, literary works and musical compositions, are taxed at the rate of 10%.
Prizes and winnings from Philippine Charity Sweepstakes Office (PCSO) Lotto in excess of P10,000
(upon which individual prizes and winnings P10,000 or below are taxed on the basis of the income
tax schedule for individuals) are taxed at the rate of 20%.
Interest income from a depository bank under the expanded foreign currency deposit system is
taxed at the rate of 15%.
Income from long-term deposits and investments, when pre-terminated in less than three years after
making such deposit or investment, is taxed at the rate of 20%; less than four years, 12%; and, less
than five years, 5%.
Dividends
Cash and property dividends are taxed at the rate of 10%.
Capital gains
Capital gains from the sale of shares of stock not traded in stock exchange are taxed at the rate of
15%.
Capital gains from the sale of real property are taxed at the rate of 6%, except when such proceeds
would be used to construct a new principal residence within eighteen months after the sale of a
previous principal residence had occurred.[2]
Income tax for corporations
In general, the income tax rate for corporations is 30%. However, for-profit educational institutions
and hospitals enjoy a much lower rate of 10%.
Estate tax
Estate – means all the money and property owned by a particular person, especially at death.
Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her
lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by
law as equivalent to testamentary disposition.
The transfer of the net estate is taxed at a flat rate of 6%. There is a standard deduction amounting
to P5,000,000.
Donor's tax
Donor's Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of
property between two or more persons who are living at the time of the transfer.
The total value of gifts made in a calendar year shall be taxed at a flat rate of 6%. There is a
standard deduction amounting to P250,000.

4. The following goods, services and transactions are exempted from the VAT:
 agricultural and marine food products in their original state;
 fertilizers, seeds, seedlings, fingerlings, and feeds and feed
ingredients;
 importation of personal and household effects of persons
resettling in the Philippines;
 importation of professional instruments, wearing apparel, and
domestic animals;
 services subject to percentage tax;
 agricultural contract growers and millers;
 health care services;
 educational services;
 agricultural cooperatives, and cooperatives that are non-
agricultural and non-electric in nature;

 residential lots worth at most P1,500,000, or house and lots
worth at most P2,500,000
 monthly lease of residential units at most P15,000;
 books and mass media publications (e.g. newspaper and
magazine);
 transport services by non-Philippine carriers;
 cargo vessels and aircraft;
 financial services;
 sales to senior citizens and persons with disability;
 from 2019, drugs prescribed for diabetes, high cholesterol and
hypertension
 .