How to compute 13th Month Pay: DOLE Philippines

We are already on the month of October and after a few months, Christmas season is here again. For employees, that season sounds delightful. Aside from the enjoyable Christmas party and the series of vacations, the long awaiting 13th Month pay will finally land in our hands. For employers, this extra month pay is an additional mandated expense given to employees once or twice (installment) a year. However, some good business owners and employers see the giving of this added remuneration to employees as an appreciation and gratitude for their valuable contribution to their companies.

An employer must know how to compute the lawful amount of 13th month pays to be distributed to his employees. On the other hand, it is clever for an employee to know the computation of his thirteenth month paycheck to ensure that he is receiving it in the right amount of money. So to know what must be known, the following guidelines are presented below. Read more

How to compute income tax for Domestic Corporations and business partnerships?

This article is guest posted by Garry S. Pagaspas, CPA

In this post let us tackle the manner of computing income taxes for domestic corporations in the Philippines. I included ordinary partnerships because under the law, they are taxed similarly as corporations, regardless of their creation, except general professional partnerships and certain joint ventures and consortiums. In this post, I will simply refer them both as corporate taxpayers or corporations.

As we all know, taxable income as to nature of income may be classified as an ordinary income that is subject to the normal corporate income tax of 30% starting January 1, 2009, or a final income subject to final withholding taxes of varying rates which are not required to be declared in the income tax returns (ITR) as the corresponding tax is being withheld upon their payment of such income. Examples of income subject to final taxes are interest income on Philippine bank deposits, dividends from domestic corporations, winnings and prizes, except PCSO and LOTTO winnings, and prizes not exceeding P10,000, royalties, and others. In this post, we will discuss ORDINARY income computations so you will be guided comes the ITR deadlines. Read more

How to Compute Annual Income Tax for Self-employed Taxpayers in the Philippines

The 15th day of April is an annual great event for both the taxpayers and the Bureau of Internal Revenue (BIR) in the Philippines. This is the day that we, taxpayers should remit a portion of our income to the bureau. This portion or burden is what we called the “income tax”. This is our penalty for doing-well in business. I mean, this is our obligation to share to the government a portion of the earnings we’ve got in doing great in business.

As the deadline is near approaching, I’m also trying to compute my income tax due for the year 2008 as a self employed professional. And as an accountant and a blogger, I make this post to aid readers how to compute tax for individual taxpayers. So let us start now before the deadline comes! First let us secure an Annual Income Tax Return (BIR Form 1701) for self-employed taxpayers (including those with both business and compensation income. Click here to download a pdf file of BIR form 1701. Read more