Philippines

An individual is a Philippine resident alien if they live in the Philippines with no definite intention as to the length of their stay and are not a mere transient. A non-resident alien who stays in the Philippines for more than 180 days in a calendar year is generally treated as engaged in trade or business there; one whose aggregate stay does not exceed 180 days may instead be treated as not engaged in trade or business.

The tax year runs from 1 January to 31 December, and returns are generally due by 15 April of the following year; a married couple must generally file one consolidated return, with the tax computed separately for each spouse. Qualifying employees who receive compensation from a single employer may instead rely on substituted filing through their employer's withholding certificate, an option not available to non-resident aliens engaged in trade or business.

Non-resident aliens engaged in trade or business in the Philippines are taxed on their compensation income under the same graduated schedule as residents. Non-resident aliens not engaged in trade or business are taxed at a flat 25% on income subject to final tax, and their fringe benefits carry a reduced 25% fringe benefits tax rate rather than the general 35% rate.

Employees who receive only salary or compensation income cannot claim deductions against it, other than the exclusion of mandatory social security contributions from gross income; ordinary personal expenses such as mortgage interest and medical costs are not deductible. Individuals taxed on business or professional income under the graduated rates may instead itemize ordinary and necessary business expenses, or elect an optional standard deduction of up to 40% of gross business or professional income.

Self-employed individuals and professionals with gross sales or receipts not exceeding the PHP 3 million VAT threshold may elect an 8% flat tax on gross sales or receipts and other non-operating income in excess of PHP 250,000, in lieu of both the graduated income tax rates and the percentage business tax, provided they are not VAT-registered.

VAT registration is required once a taxpayer's gross sales exceed PHP 3 million in the past 12 months, or are reasonably expected to in the next 12. Non-resident Digital Service Providers register under the same threshold, through the Bureau of Internal Revenue's Online Registration and Update System (ORUS).

Export sales by VAT-registered persons are zero-rated. Financial-intermediary services and educational services provided by accredited institutions are VAT-exempt; financial intermediaries instead pay percentage taxes on gross receipts.

For capital assets other than shares and real property, only 50% of a gain or loss is taken into account where the asset was held for more than 12 months, compared with the full amount for assets held 12 months or less.