Philippines Corporate Tax - Guide for International Expansion

Are you planning to do business in the Philippines? Then it's essential to understand how corporate income tax works and what it means for your company.

In this guide, we'll break down everything you need to know about corporate taxes in the Philippines, from current rates to payment procedures and compliance requirements. Whether you're launching a new venture or expanding your business to this dynamic Southeast Asian market, understanding your tax obligations is key to running a successful operation. And if you're looking for smart ways to manage international payments and streamline your finances, we'll also show you how Wise Business can help simplify cross-border transactions and keep your operations running smoothly.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Philippines corporate tax rate in 2025

The standard corporate income tax rate in the Philippines is 25% for domestic corporations and resident foreign corporations. This rate applies to net taxable income derived from all sources within and outside the Philippines for resident corporations, and from Philippine sources for non-resident foreign corporations.¹

However, the Philippines offers significant tax incentives for qualifying businesses. Small corporations with net taxable income not exceeding PHP 5 million and total assets not exceeding PHP 100 million (excluding land) are subject to a reduced rate of 20%.¹

The country also provides various investment incentives through agencies like the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA), which can offer income tax holidays and reduced rates for qualifying projects and enterprises.²

Read more about Corporate Tax Planning best practices

How to pay corporate tax in Philippines

Corporate taxes in the Philippines are paid in Philippine pesos (PHP) to the Bureau of Internal Revenue (BIR). Companies must register with the BIR and obtain a Tax Identification Number (TIN) before commencing operations.³

The Philippines operates on a quarterly payment system for corporate income tax. Companies are required to file and pay quarterly income tax returns on or before the 60th day following the end of each quarter. The annual income tax return must be filed and any remaining balance paid on or before the 15th day of the fourth month following the close of the taxable year (typically April 15 for calendar year taxpayers).⁴

Payments can be made through various channels including authorised agent banks (AABs), BIR Revenue District Offices, or through the Electronic Filing and Payment System (eFPS) for registered users.⁴ The BIR has been actively promoting electronic filing and payment to streamline the process and improve compliance.

Late payment of taxes incurs penalties and interest charges. A 25% surcharge is imposed on the basic tax due for late payment, plus interest of 12% per annum from the due date until full payment. Additionally, a compromise penalty may be imposed for late filing of returns.⁵

Let's consider a practical example: if your company has an annual turnover of PHP 87.5 million (approximately £1.5 million at current exchange rates) and operates with a 10% profit margin, your taxable income would be PHP 8.75 million.

At the standard corporate tax rate of 25%, the tax owed would be:

PHP 8.75 million × 25% = PHP 2,187,500

If this company missed the annual filing deadline by 30 days, it would face:

• 25% surcharge: PHP 2,187,500 × 25% = PHP 546,875

• Interest (12% per annum for 30 days): PHP 2,187,500 × 12% × (30/365) = PHP 21,534

Total amount owed: PHP 2,187,500 + PHP 546,875 + PHP 21,534 = PHP 2,755,909

When expanding your business to the Philippines, having the right financial infrastructure is crucial. Using a platform like Wise Business makes it easy for international businesses to operate with local PHP account details. This enables you to pay corporate taxes, government fees, and operational expenses in local currency without incurring high foreign exchange fees, making your Philippine operations more cost-effective and efficient.

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Tax Compliance in the Philippines

To stay compliant with Philippine tax regulations, businesses should note the following:⁶

• Secure a Corporate Tax ID: Registration with the Bureau of Internal Revenue (BIR) is required before operations begin.
• Benefit from low rates: The Philippines offers one of Southeast Asia’s lowest corporate tax rates (25% for most companies).
• Plan a corporate tax budget: Allocate funds in advance to avoid missed deadlines.
• Ensure accurate corporate tax provision: Proper calculation and reporting prevent compliance issues.
• Request a corporate tax extension if needed: It is available under specific conditions.
• File and pay corporate income tax on time: Delays result in surcharges and interest penalties.

International Expansion to the Philippines

As one of Asia’s fastest-growing economies, the Philippines attracts global investors with its competitive costs and strong regional connectivity. Its economy has shown consistent resilience, recording 5.6% GDP growth in 2024, and is projected to grow by around 6% annually between 2025 and 2029. Over the long term, the country is expected to maintain an average growth rate of 5.2% per year, paving the way to achieve upper middle-income status by 2026.⁷

A strong consumer base drives this momentum. Home to over 110 million people,¹⁰ the Philippines represents a large and youthful market, with a median age of just 25.7 years. Around 70% of GDP comes from local consumption, offering business opportunities across sectors.⁷ On top of that, steady inflows of remittances from overseas Filipino workers keep liquidity in the economy and sustain consumer demand.

The Filipino workforce is another competitive edge. At 94.6%, the country has one of the highest literacy rates in Asia, and every year, approximately 350,000 graduates enter the job market.⁸ English proficiency is widespread, making it easier for global companies to integrate and scale operations. The Commission on Higher Education (CHED) reports that the Philippines produces more than 700,000 college graduates each year, covering fields such as business, engineering, IT, healthcare, and other specialised disciplines.⁹

Geography further strengthens the Philippines’ position as a regional hub. Located at the heart of East Asia, it is within four hours’ flying distance from major capitals such as Beijing, Tokyo, and Seoul. Businesses setting up in the Philippines gain access to the local market and the ASEAN Free Trade Area, which connects them to more than 500 million consumers. Integration with the wider ASEAN region extends reach to a trading bloc of over 672 million people, with GDP expected to surpass USD 4 trillion by 2025.¹⁰

Global investors also take confidence in the country’s stability. The Philippines has held an investment-grade rating from agencies such as S&P, Moody’s, and Fitch since 2013, and in 2024, its outlook was further upgraded.¹¹ Economic reforms have opened key industries, including renewable energy and infrastructure, to full foreign ownership. This creates further opportunities for companies planning to set foot in this region.

To establish a business in the Philippines, you have to:¹²

1. Identify a profitable business idea that fits local demand.
2. Create a solid business plan with clear goals and strategies.
3. Choose the proper business structure for your operations.
4. Select a suitable location for market reach.
5. Register with authorities such as the SEC, DTI, or CDA.
6. Complete tax registration with the Bureau of Internal Revenue (BIR).
7. Open a local bank account for smooth transactions.

It’s essential to cover all your bases when starting a business in any new location. So, if you do your homework and know all about how to start a business in the Philippines, there’s a good chance for you to reach your corporate targets.

Discover the top 5 best Corporate Tax softwares

Incorporation of Business in the Philippines

To set up a company in the Philippines, businesses must follow a structured process regulated by several government agencies. Registration is primarily done through the Securities and Exchange Commission (SEC) for corporations and partnerships, or the Department of Trade and Industry (DTI) for sole proprietorships. Cooperatives register with the Cooperative Development Authority (CDA).

Once incorporated, every business must register with the Bureau of Internal Revenue (BIR) to secure a Certificate of Registration and ensure timely compliance with corporate tax due obligations.

When incorporating a company, the following information is typically required:¹³

• Company name: must be unique and registered with the SEC or DTI.
• Business structure: the chosen entity type determines liability, tax responsibilities, and reporting requirements.
• Articles of Incorporation or Business Constitution: It outlines the company’s operating rules.
• Registered office: a local address for receiving official documents.
• Directors and shareholders: appointed individuals who manage and own the company.
• Authorised capital: the maximum share capital a company may issue.
• Corporate bank account: required for financial transactions and tax compliance.

Note: Amendments to the Foreign Investments Act and Public Service Act now allow up to 100% foreign ownership in key sectors like telecom, renewable energy, and transport, making the Philippines more accessible to global investors.

Business Entities in the Philippines

In the Philippines, corporations are regulated by the Revised Corporation Code (RA 11232),¹⁴ whereas partnerships fall under the provisions of the Philippine Civil Code.¹⁵ The entities you can choose from are:¹⁶

• Sole Proprietorship: Owned and managed by one individual, this is the simplest form of business but does not provide limited liability. It is registered with the DTI.
• Partnership: Formed by two or more individuals who share profits, losses, and responsibilities. Partnerships are registered with the SEC.
• Domestic Corporation: A separate legal entity incorporated under Philippine law. Shareholders enjoy limited liability. Corporations can be stock (profit-oriented) or non-stock (non-profit organizations such as associations or foundations).
• Branch Office: An extension of a foreign company that can operate and generate income in the Philippines but is not considered a separate legal entity.
• Representative Office: Suited for foreign companies not intending to earn income locally. These offices focus on liaison, promotion, or market research.
• **Regional Headquarters (RHQ) and Regional Operating Headquarters (ROHQ): These **are specialised structures where multinational companies coordinate or conduct specific operations in the Philippines.

International corporate tax best practices

Managing international corporate tax obligations requires a strategic approach to ensure compliance whilst optimising your tax position across multiple jurisdictions.

Stay compliant with local and international tax laws by completing proper registration in every country where your business operates. File all required tax returns on time to avoid penalties, and maintain up-to-date knowledge of local tax regulations. The Philippines, like many countries, has specific compliance requirements that must be met to avoid costly penalties and maintain good standing with tax authorities.

Understanding and leveraging double taxation agreements (DTAs) is essential for international businesses. The Philippines has comprehensive tax treaties with over 40 countries, including major trading partners like the United States, United Kingdom, Japan, and Singapore.¹⁷ These agreements help prevent double taxation of the same income and can significantly reduce your overall tax burden through reduced withholding tax rates and exemptions.

Maintain transparent and accurate financial records across all jurisdictions. This not only helps with tax compliance but also facilitates audits and reduces the risk of disputes with tax authorities. In the Philippines, proper documentation is particularly important given the BIR's focus on transfer pricing and related-party transactions for multinational companies.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to the Philippines efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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FAQs - Corporate tax in Philippines

Who is liable for corporate tax in the Philippines?

All domestic corporations (those created or organised in the Philippines) are liable for corporate income tax on their worldwide income. Resident foreign corporations (foreign corporations engaged in trade or business in the Philippines) are taxed on income from Philippine sources. Non-resident foreign corporations are subject to tax only on income from sources within the Philippines.

Are there any tax incentives for businesses in the Philippines?

Yes, the Philippines offers various tax incentives including reduced rates for small corporations (20% for qualifying small businesses), MSME rates (8% on gross income), and investment incentives through agencies like BOI and PEZA. These can include income tax holidays, reduced rates, and duty-free importation of equipment for qualifying projects.

What is the tax treatment of dividends in the Philippines?

Dividends received by domestic corporations from other domestic corporations are generally not subject to income tax. However, dividends paid to foreign corporations are subject to a 30% withholding tax, which may be reduced under applicable tax treaties.

What is the process for registering for corporate tax in the Philippines?

Companies must register with the Bureau of Internal Revenue (BIR) within 30 days from the date of incorporation or commencement of business. This involves obtaining a Tax Identification Number (TIN), registering books of accounts, and securing the necessary permits and certificates of registration.

What are the common pitfalls to avoid regarding corporate tax in the Philippines?

Common pitfalls include failing to register with the BIR promptly, missing quarterly filing deadlines, inadequate documentation for transfer pricing, not maintaining proper books of accounts, and failing to withhold taxes on payments to suppliers and employees. Additionally, many companies underestimate the complexity of VAT compliance and the importance of maintaining proper invoicing procedures.

Sources used in this article:

1. BIR: Revenue Regulation No. 7-2025 (PDF)
2. PEZA: Fiscal Incentives
3. BIR: Primary Registration
4. PwC Tax Summaries: Philippines Tax Administration
5. BIR: Penalties
6. Respicio & Co.: Corporate and Tax Compliance in the Philippines
7. Macquarie: Opportunity in the Philippines Economy
8. DFA: Why Invest in the Philippines
9. Tbelle: Philippines - A Hub for Talent
10. HSBC: Asian Economic Powerhouse
11. BSP: Philippines Economy Confirmed as Top Performer
12. Filepino: How to Start a Business in the Philippines
13. SEC: eSPARC User Guide (PDF)
14. Saklaw: Revised Corporation Code
15. NDV Law: How to Form a Partnership in the Philippines
16. Filepino: Types of Business Structures
17. PwC Tax Summaries: Philippines Withholding Taxes

Sources last checked 15/09/2025