Income tax on rent, worked example, in Philippines
Notes
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 USD = 50.00 PHP
3 Estimated values. Income-generating expenses are deductible when calculating taxable income. Typical deductions are repairs and maintenance, depreciation, and taxes and licenses.
4 Rental income earned by nonresident individuals is taxed at progressive income tax rates.
INCOME TAX | |
TAXABLE INCOME, PHP (US$) | TAX RATE |
Up to 10,000 (US$200) | 5% |
10,000 – 30,000 (US$600) | 10% on band over US$200 |
30,000 – 70,000 (US$1,400) | 15% on band over US$600 |
70,000 – 140,000 (US$2,800) | 20% on band over US$1,400 |
140,000 – 250,000 (US$5,000) | 25% on band over US$2,800 |
250,000 – 500,000 (US$10,870) | 30% on band over US$5,000 |
Over 500,000 (US$10,000) | 32% on all income over US$10,000 |
Source: Global Property Guide |
5 A 12% Value Added Tax (VAT) is imposed on residential property leases that satisfy certain conditions. The VAT burden is generally shouldered by the tenants.
Properties with rental payments exceeding PHP12,800 (US$272) per month received by landlords whose gross annual rental income exceed PHP1,919,500 (US$40,840) are subject to 12% VAT.
Properties with rental payments exceeding PHP12,800 (US$272) per month received by landlords whose gross annual rental income does not exceed PHP1,919,500 (US$40,840) are not subject to 12% VAT. Instead, it will be liable for percentage tax at a flat rate of 3% levied on the gross rent.
Non-Resident Couple (Through a Local Corporation):
Notes
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 USD = 50.00 PHP
3 Rental income earned by nonresident individuals is taxed at a flat rate of 25%.