Frequently Asked Questions

Income Tax
Are non-resident aliens and non-resident foreign corporations receiving income from sources within the Philippines required to register with the BIR?
Income means all wealth which flows into the taxpayer other than as a mere return of capital.
What is Taxable Income?
Taxable income means the pertinent items of gross income specified in the Tax Code as amended, less the deductions, if any, authorized for such types of income, by the Tax Code or other special laws.
What is Gross Income?
Gross income means all income derived from whatever source.
What comprises gross income?
Gross income includes, but is not limited to the following:
  • Compensation for services, in whatever form paid, including but not limited to fees, salaries, wages, commissions and similar items
  • Gross income derived from the conduct of trade or business or the exercise of profession
  • Gains derived from dealings in property
  • Interest
  • Rents
  • Royalties
  • Dividends
  • Annuities
  • Prizes and winnings
  • Pensions
  • Partner's distributive share from the net income of the general professional partnerships
What are some of the exclusions from gross income?
  • Life insurance
  • Amount received by insured as return of premium
  • Gifts, bequests and devises
  • Compensation for injuries or sickness
  • Income exempt under treaty
  • Retirement benefits, pensions, gratuities, etc.
  • Miscellaneous items
    • Income derived by foreign government
    • Income derived by the government or its political subdivision
    • Prizes and awards in sport competition
    • Prizes and awards which met the conditions set in the Tax Code
    • 13th month pay and other benefits not exceeding P90,000
    • GSIS, SSS, Medicare and other contributions
    • Gains from the sale of bonds, debentures or other certificate of indebtedness with a maturity of more than five (5) years
    • Gains from redemption of shares in mutual fund
What are the allowable deductions from gross income?
  1. *Optional Standard Deduction - an amount not exceeding 40% of the gross sales/receipts for individuals and gross income for corporations; or
  2. Itemized Deductions which include the following:
    • Expenses
    • Interest
    • Taxes
    • Losses
    • Bad Debts
    • Depreciation
    • Depletion of Oil and Gas Wells and Mines
    • Charitable Contributions and Other Contributions- Research and Development
    • Pension Trusts
* Not allowed to non-resident alien individual
* A General Professional Partnership (GPP) may avail of the OSD only once, either by the GPP or the partners comprising the partnership
How long can we amend our income tax return?
There is no prescription period for amending the return. When the taxpayer has been issued a Letter of Authority, he can no longer amend the return.