Philippines (PH)
The Philippines is a Southeast Asian archipelago of 7,641 islands, the third-largest English-speaking country in the world, and one of the most welcoming destinations for expats.
Tax & Payslip Guide
Understanding your taxes in Philippines — tax year Calendar year (January 1 – December 31).
📊 Income Tax Brackets
| Income from | Income to | Rate | Notes |
|---|---|---|---|
| 0 | 250,000 | 0% | Tax-exempt. No personal income tax for annual income up to ₱250,000 (effective from 2023 under TRAIN Law). |
| 250,001 | 400,000 | 15% | 15% on the excess over ₱250,000. Maximum tax in bracket: ₱22,500. |
| 400,001 | 800,000 | 20% | ₱22,500 + 20% on the excess over ₱400,000. |
| 800,001 | 2,000,000 | 25% | ₱102,500 + 25% on the excess over ₱800,000. |
| 2,000,001 | 8,000,000 | 30% | ₱402,500 + 30% on the excess over ₱2,000,000. |
| 8,000,001 | ∞ | 35% | ₱2,202,500 + 35% on the excess over ₱8,000,000. |
🏛️ Social Contributions
Mandatory for all private sector employees. MSC ceiling: ₱35,000/month (2026). Total contribution rate: 15% (employer + employee). Rates increased from 4.5%/9.5% effective 2026 per the SSS contribution schedule. Provides retirement, sickness, maternity, disability, and death benefits. Foreigners with AEP are required to contribute.
Mandatory national health insurance. Premium rate: 5% of monthly salary. Income floor: ₱10,000/month; income ceiling: ₱100,000/month. Maximum monthly contribution: ₱5,000 (₱2,500 each). Covers inpatient hospital care, day surgeries, and selected outpatient services. Foreigners employed in the Philippines must contribute.
Mandatory provident fund for housing. Employee contribution: ₱100/month (on ₱5,000 cap, though actual wages usually result in higher contributions). Provides housing loan programs, calamity loans, and multi-purpose loans. Foreigners with AEP must contribute.
Employers withhold income tax from salaries monthly and remit to BIR. Annual income tax return (ITR) filed by April 15. Employees earning from single employer and fully withheld are not required to file ITR (substituted filing). Those with multiple income sources must file.
🛒 VAT Rates
VAT threshold: ₱3,000,000 annual gross sales. Below this: exempt from VAT registration (but may opt in). TRAIN Law eliminated the 5% MCIT exemption for some VAT-exempt persons. Key VAT-exempt items: primary agricultural products, educational services, books, medicines for diabetes/high-cholesterol/hypertension (TRAIN), prescription drugs (under Cheaper Medicine Act).
🧾 Sample Payslip Decoder
🌍 Special Expat Tax Rules
Tax resident foreigners (present in Philippines for 180+ days per year) are taxed on Philippines-sourced income only. Non-residents (under 180 days) taxed at 25% final withholding on Philippines-sourced income. SRRV holders: income earned outside Philippines is not taxable in the Philippines. Special Economic Zone (PEZA/BOI) employees may enjoy preferential 5% gross income tax instead of standard rates (being phased out under CREATE Law for new registrants after 2021). CREATE Law (2021) reduced corporate income tax: 20% for MSME (net taxable income ≤₱5M, assets ≤₱100M); 25% for others.
📋 Double Tax Treaties
Philippines has 46 active tax treaties as of 2026 — covering major expat source countries: USA, UK, Germany, Japan, Australia, Canada, Netherlands, Singapore, South Korea, UAE, China, France, Spain, Italy, and others. The BIR issues Tax Residency Certificates (TRC) to claim treaty benefits. Estate tax and gift tax are covered in some treaties.
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