The Philippines taxes citizens (resident and, more narrowly, non-resident) on worldwide income and resident aliens/non-resident aliens on Philippines-source income only - a partially citizenship-influenced system distinct from most other worldwide-basis countries, since Philippine citizenship itself (not just residence) extends the worldwide tax net for resident citizens. The Philippines operates a self-assessment system, with the Bureau of Internal Revenue (BIR) conducting post-filing review and audit.
The Philippine tax year is generally the calendar year for individuals (companies may elect a fiscal year). The individual filing deadline is 15 April of the following year.
Philippines's headline corporate income tax (CIT) rate is 25%.
The headline personal income tax (PIT) rate is 35%.
The standard VAT/GST (or equivalent consumption tax) rate is 12%.
Under Section 23 of the National Internal Revenue Code, an individual is a Philippine tax resident if present for more than 183 days in a calendar year or if they intend to reside permanently in the Philippines. Residents are taxed on worldwide income; non-residents only on Philippine-source income. Aliens deriving foreign-source income are not permitted a Philippine tax credit for foreign income taxes paid.
A non-Philippine entity has a Philippines permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in the Philippines on the entity's behalf, following the OECD Model Treaty definition as applied under Philippine domestic law and any applicable tax treaty.
The Philippines has no Controlled Foreign Company regime.
The Philippines has no formal thin capitalization rules or regulations, though the tax authority (BIR) has identified thin capitalization and earnings stripping as tax-avoidance patterns it monitors. A separate "tax arbitrage rule" (or "interest arbitrage rule") reduces the allowable interest expense deduction by an amount equal to 20% of interest income that has already been subjected to final withholding tax, current since the CREATE Act (effective 2021), which lowered the reduction from an original 33% (in force 2009-2021) to match the corresponding reduction in the standard corporate tax rate. This limitation does not apply to domestic corporations qualifying for the lower 20% CIT rate, since there is then no rate differential between ordinary and final-tax income to arbitrage.
The Philippines does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. The Philippines does not have a comprehensive ATAD2-style anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
The Philippines does not have a Controlled Foreign Company regime (see CFC section above) and does not provide a broad participation exemption for foreign dividends in the European sense; foreign-source dividends received by a resident citizen or domestic corporation are generally includible in Philippine taxable income, with relief from double taxation available through the Philippines' foreign tax credit system.
The Philippines has a real foreign tax credit regime available to resident citizens and domestic corporations for foreign tax paid on foreign-source income also taxed in the Philippines, capped at the Philippine tax otherwise due on that income.
The Philippines has 43 double tax agreements in force, per two independent current sources (Forvis Mazars and Evershine CPA), with 10 additional treaties reported under active negotiation or in various stages of finalization as of mid-2026 (including a renegotiated treaty with Japan). Treaty relief is not automatic - taxpayers must file a Tax Treaty Relief Application (TTRA) or comply with BIR withholding-agent procedures (RMO 14-2021) before claiming reduced treaty rates.