Individual Taxpayer.docx

INDIVIDUAL TAXPAYER A. Classification Individual taxpayers are classified into: 1. Citizens, who are divided into:  Resident citizens- those citizens whose residence is within the Philippines; and  Non-resident citizens- those citizens whose residence is not within the Philippines. 2. Aliens, who are divided into:  Resident aliens- those individuals whose residence is within the Philippines and citizens thereof; and  Non-resident aliens- those individuals whose residence are not within the Philippines but temporarily in the country and are not citizens thereof. They are: o Those engaged in trade or business within the Philippines; and o Those who are not so engaged. (See NIRC, Sections 23-25) B. Sources of Income and Tax Treatment Sec. 23. General Principles of Income Taxation in the Philippines. -

 Taxed derived from all sources worldwide: 1. Resident Citizens. 2. Domestic Corporations.

 The other kinds of taxpayers are subject to tax only on income derived from Philippine sources.

Citizenship & Residency Resident Citizen Non-resident Citizen Overseas Contract Worker Resident Alien Non-Resident Alien Domestic Corporation Foreign Corporation

Taxable Income

Taxable Income

Inside RPh

Outside RPh

Yes Yes

Yes No

Yes

No

Yes Yes

No No

Yes

Yes

Yes

No

Sec. 42. Income from Sources Within the Philippines.-

The following are treated as gross income from sources within the Philippines. (Sections 152-165, R.R. 2-1940): 1.

Interests- Including interests on bonds, notes and other interest bearing obligations: a. The loan was used here in the Philippines; b. The debtor is in the Philippines

2.

Dividendsa. From a domestic corporation; and b. A foreign corporation,