INCOME TAXATION

• Income Tax is a tax on a person's income, emoluments, profits arising from property, practice of profession, conduct of trade or business or on the pertinent items of gross income specified in the Tax Code of 1997 (TaxCode), as amended, less the deductions if any, authorized for such types of income, by the Tax Code, as

  amended, or other special laws.
• Types of Taxable Individuals

  1. Resident Citizen (RC)

  2. Non Resident Citizen (NRC)

  3. Resident Alien (RA)

  4. Non Resident Alien (NRA)

  5. Special Taxpayers
• Resident Citizen (RC) – A Filipino citizen who stayed permanently in the Philippines or stayed outside the

  Philippines for less than 183 days during the taxable years.

  They are taxed based on their GLOBAL INCOME. This means that wherever they are, working in abroad

  or not, the State imposes the same tax rates prescribed by the Code. They are taxed only on their NET

  INCOME. This means that the tax rates would apply only after the deductions and personal exemptions are

  already subtracted from their gross income.
• Non Resident Citizen (NRC)

  1. A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his

  physical presence abroad with a definite intention to reside therein.

  b. A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either

  as an immigrant or for employment on a permanent basis.

  c. A citizen of the Philippines who works and derives income from abroad and whose employment thereat

  requires him to be physically present abroad most of the time (183 days or more) during the taxable

  year.
• 3. Resident Alien (RA) – A person who is not a citizen of the Philippines but is residing within the Philippines,

  including foreign individuals who have stayed in the Philippines for more than one (1) year from date of

  arrival (Valencia & Roxas, 2016).

  1. An alien who is not a mere transient or sojourner.

  b. An alien who comes to the country for a definite purpose, which, by its nature, would require an

  extended stay making his home temporarily in the Philippines.

  c. An alien who comes to the country without a definite intention as to his stay.
• Non Resident Alien (NRA) – An individual whose residence is not within the Philippines and who is not a

  citizen thereof.

  1. Non-Resident Alien Engaged in Trade or Business (NRAETB) – An individual who shall come to the

  Philippines and stay therein for an aggregate period of more than 180 days

  b. Non-Resident Alien Not Engaged in Trade or Business (NRANETB) – An individual who is not a citizen

  nor a resident and his stay does not exceed 180 days during the calendar year, and has no business

  income derived within the Philippines.
• Special Taxpayers - An individual holding a managerial and/or technical positions employed by Regional

  or Area Headquarters (RHQs), Regional Operating Headquarters (ROHQs) of Multinational