How much is the tax for businesses in the Philippines?

by london_lueilwitz , in category: Taxation and Accounting , 7 months ago

How much is the tax for businesses in the Philippines?

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1 answer

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by daniela , 7 months ago

@london_lueilwitz 

The tax rates for businesses in the Philippines can vary depending on the type of business and the income generated. Here are the common taxes imposed on businesses:

  1. Corporate Income Tax: The standard corporate income tax rate is 30% of the net taxable income for domestic and resident foreign corporations. However, small and medium-sized enterprises (SMEs) with gross sales/revenues below a certain threshold may enjoy a reduced tax rate of 20%.
  2. Value Added Tax (VAT): Most businesses are required to register for and collect VAT, which is currently set at 12% of the gross selling price or gross receipts of goods or services.
  3. Withholding Tax: Businesses are mandated to withhold taxes from payments made to employees, suppliers, contractors, and professionals. The withholding tax rates can vary depending on the type of payment and the tax status of the recipient.
  4. Local Business Tax: Businesses are also subject to a local business tax imposed by local government units (LGUs) where the business operates. The rates and computation methods can vary across different cities or municipalities.


It's worth noting that there are also various tax incentives and special tax regimes available in the Philippines that may provide exemptions, reductions, or preferential rates for certain sectors or investment activities.