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$) | TAX RATE |
Up to 250,000 (US$ 5,000 ) | 0% |
250,000 - 400,000 (US$ 8,000 ) | 20% on band over US$ 5,000 |
400,000 - 800,000 (US$ 16,000 ) | 25% on band over US$ 8,000 |
800,000 - 2,000,000 (US$ 40,000 ) | 30% on band over US$ 16,000 |
8,000,000 - 8,000,000 (US$ 160,000 ) | 32% on band over US$ 40,000 |
Over 8,000,000 (US$ 160,000 ) | 35% on all income over US$ 160,000 |
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%.