Philippines

Corporate Taxes in the Philippines

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By Dezan Shira & Associates
Editor: Vasundhara Rastogi

In the Philippines, all companies – domestic or foreign – are liable to pay corporate income tax (CIT). The tax liability for a corporation is determined by its residency status and is based on the net income it obtains while carrying out its business activity, normally during one business year.

Residency status of a company

A company is regarded as a resident if it is incorporated under the tax laws of the Philippines or as a foreign resident corporation that is duly licensed by the Philippine Securities and Exchange Commission (SEC) to engage in trade or business in the Philippines.

While a domestic company is taxed on its worldwide net taxable income, a foreign company – resident or non-resident -, is taxed only on income that is received in the Philippines, or that arises or is deemed to accrue in the country. Non-resident foreign corporations, however, are taxed on gross income derived from the Philippines.

Income tax does not include dividends received from domestic corporations; interest on Philippine currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements; and other passive income previously subject to final taxes.

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IP Protection in the Philippines’ Food and Beverage Industry

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By: South-East Asia IPR SME Helpdesk

The Philippines’ rapidly growing food and beverage (F&B) industry is one of the biggest contributors to the nation’s economy making up about half of its manufacturing sector and contributing about 23-24 percent of the country’s GDP. The Philippines is one of Asia’s largest producers of food, with the value of its food processing sector exceeding EUR 24 billion (US$28.75 billion). Given the Philippine government’s commitment to further developing the country’s F&B industry as one of the priority industries and opening it up further to foreign investments, the Philippines’ F&B industry has become even more attractive for European SMEs.

Propelled by increasing disposable income among its upper and middle classes and the proliferation of retail and shopping centers as well as a highly urbanized population, the Philippine’s domestic food and beverages market looks quite promising for European SMEs. The Philippines’ consumers appreciate the high quality and healthy nature of European food and beverage products. As a general trend, the Philippines’ young and fast-growing consumer base is gradually becoming more health-conscious and is increasingly willing to try out new products. As the spending power of the upper-middle and middle class is increasing, there is also greater demand for imported premium products, which offers many business opportunities for European SMEs. 

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Philippines Under Duterte: Opportunities and Risks

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By Evonne Chiu and Benedict Alibasa at Grapevine Asia Partners

ASEAN Briefing- Philippines Opportunities and Risks Under Duterte

Economic Growth Under Duterte

In spite of President Rodrigo Duterte’s controversial ‘war on drugs’ and his acerbic language towards his critics, the Philippine economy continues to register robust growth. Latest economic data show that the Philippines’ gross domestic product (GDP) grew by 6.7% in 2017, marking the seventh straight year of GDP growth of more than 6%. Although the 2017 GDP growth was slightly below the 6.9% growth recorded in 2016, the Philippines remains one of Asia’s fastest-growing economies, only trailing behind China’s 6.9% and Vietnam’s 6.8%.

The 6.7% growth of last year was partly anchored by the government’s increased public spending. Data from the Philippine Statistics Authority (PSA) show that public construction posted a 12.6% growth in the third quarter of 2017. A primary driver of growth in public spending is Duterte’s ‘Build, Build, Build’ program. Improved public spending was also driven by higher utilization of cash allocation by government agencies.

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French FDI in ASEAN Part II: Thailand, Philippines and Indonesia

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By: Linh Tran Huy

Editor: Thibaut Minot

_French-FDI-in-ASEAN (002) Resized

In the first part of this two-part article, we discussed France’s investments in Singapore, Malaysia and Vietnam. Reiterating the continued importance of the Association of Southeast Asian Nations (ASEAN) as a FDI destination for European investors, we look at French FDI in Thailand, Philippines and Indonesia in this concluding part.

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Philippine Labor Contracts: What You Need to Know

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By Dezan Shira & Associates
Editor: Vasundhara Rastogi

The Labor Code of the Philippines is the general labor law that regulates the relationship between the employee and the employer, and all employment-related matters in the country. The law applies to all Philippines’ enterprises and joint ventures, as well as to all employment relationships between Filipino nationals and foreign enterprises in the country.

There are several other special laws specifying statutory minimum employment benefits and standards that an employer must legally comply with. These include the Social Security Law, the National Health Insurance Act, the Sexual Harassment Law, and the Comprehensive Dangerous Drugs Act among others.

The Philippines’ Department of Labor and Employment (DOLE) is the principal government agency responsible for enforcing employment laws in the country. DOLE monitors and administers companies’ compliance with labor standards, and addresses labor-related issues through the office of the secretary of labor and employment, or through its regional offices.

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The Philippines’ Investment Outlook for 2018

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By: Vasundhara Rastogi

The Philippines is now among the fastest growing economies in Asia. Driven by a broad-based expansion in domestic demand, its economy has continued to perform strongly in 2017. The country’s gross domestic product (GDP) grew by 6.7 percent in the first three quarters of 2017, in comparison to the projected 6.6 percent. The Philippines has grown at an average of 6.3 percent over the past five years in what economists expect will be a sustained trend in the next few years for the country.

The sustainability of economic growth and the economy’s limited exposure to uncertainty in global markets makes the Philippines an attractive investment destination in Asia for overseas investors. Duterte’ ascension to the presidency in 2016 has further strengthened the economy’s growth prospects. Known as a pro-reform, pro-infrastructure and anti-corruption president, Duterte has already introduced several big infrastructure projects that have the ability to make the country grow stronger in the coming years.

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The Philippines’ New Tax Reform Package Approved

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By Dezan Shira & Associates
Editor: Vasundhara Rastogi

On December 19, 2017, the Philippines’ much awaited tax reform package or Tax Reform for Acceleration and Inclusion (TRAIN) was signed into law, paving the way for a simpler and fairer tax regime in the country. The revised law provides for personal income tax cuts and revises several other decade-old tax provisions that will have important implications for taxpayers and businesses in the Philippines.

In this article, we highlight the key changes introduced in the new Act.

Tax exemptions
  • Personal Income Tax exemption for lowest earners

TRAIN exempts those earning an annual income of up to ₱250,000 (US$4,975) from Personal Income Tax (PIT), and raises the tax exemption for 13th-month pay and other bonuses to ₱90,000 (US$1,791). In addition, it lowers income tax rates for those earning up to ₱8 million (US$159,200).  After 2022, the income tax rates will further be reduced for all taxpayers, except those earning an annual income above ₱8 million. 

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China SOEs Bid On Philippines Clark International Airport Development

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By Dezan Shira & Associates

clark-airport-inquirer (003)

Four of the seven bidders on the design and development contract for the Clark Airforce base in the Philippines are Chinese State Owned Enterprises, according to the Philippines Bases Conversion and Development Authority (BCDA).  The China State Construction Engineering Corp Ltd, China Harbour Engineering Co Ltd and Sinohydro Corp Ltd have all submitted tenders. 

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Investing in Manila

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By Vasundhara Rastogi

ASB- Investing in Manila (002)

The Philippines has shown strong economic growth in the last one year, and is expected to grow at the rate of 6.5-7 percent annually in the coming years. Given its strong economic prospects, it’s the best time for foreign businesses to explore business opportunities in the country.

Manila, the capital and main city of the Philippines, offers a variety of business possibilities in industries ranging from manufacturing to information technology (IT), and financial services. In this article, we provide a brief overview of the city’s investment climate.

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IP Protection in the Philippines Pharmaceutical Industry

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By: South-East Asia IPR SME Helpdesk

The pharmaceutical industry in the Philippines

The Philippines is a major EU trade partner in South-East Asia. In this bilateral relationship, pharmaceuticals will play a growing role as a high-growth sector. In coming years, increasing population affluence and government healthcare initiatives will bolster pharmaceutical consumption in a population which already spends 46% of its out-of-pocket medical expenses[1]. Over the period 2010-2015, some predictions put Philippine out-of-pocket pharmaceutical expenditures as having risen from US$ 664 million to US$ 3.46 billion. Overall healthcare expenditures are predicted to grow at 11.2% annually and reach US$ 38.6 billion by 2023. Many of these sales will take place in retail chain pharmacies—the current dominant drug sales venue—and hospitals which are to be revamped under new government healthcare initiatives. The Philippines is unique in that its largest market players are local firms which maintain their market share through aggressive marketing and generics production.

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