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Published:
June 16, 2026
Last updated:
June 11, 2026
A summary of the new income tax tables to be followed by the Bureau of Internal Revenue (BIR).
The higher-income bracket will be negatively impacted while low-to-middle income will largely benefit from the change in income tax rates.
1. Changes in the top rate for expanded withholding tax (EWT) and the
2. Filing deadline for the final withholding tax (FWT) and EWT returns.
As of 1, 2019, the EWT rates will range from 1% to 15%. Prior to this, the top rate was at 32%. While the said change is not yet in effect, the Bureau of Internal Revenue (BIR) has advised the reduction of the EWT rates for the following income payments to 8% from 10% or 15%:
(a) Professional fees, talent fees, commissions, etc. for services rendered by individuals
(b) Income distribution to beneficiaries of estates and trusts
(c) Income payment to certain brokers and agents
(d) Income payments to partners of general professional partnerships
(e) Professional fees paid to medical practitioners
(f) Commission of independent and/or exclusive sales representatives, and marketing agents of companies
Previous EWT rates for the said income payments were based on Revenue Regulations (RR). Normally, an RR is amended by the issuance of another RR. To reiterate, the advice on the reduction of the above EWT rates are processed via Revenue Memorandum Circulars (RMC).
Assuming that this was not done properly, and a taxpayer would be subjected to a deficiency tax assessment. Due to an erroneous written official advice of a revenue officer, there appears to be basis to argue for the abatement or cancellation of penalties and/or interest on the deficiency tax assessment.
Filing frequency of FWT and EWT returns has been changed from a monthly to quarterly basis. The current stipulated deadline is on the last day of the month following the close of the quarter during which the withholding was made.
For example, for the first quarter (i.e. January to March), the filing deadline would be 30th of April. This eases the compliance burden of taxpayers by reducing the number of FWT and EWT returns to be filed from 12 monthly returns to 4 quarterly returns.
However, in the absence of the implementing RR (IRR), the following are some of the practical compliance issues taxpayers are faced with:
(a) Whether or not the BIR will issue new quarterly FWT and EWT returns
(b) Whether or not alphalists of payees will still be required
(c) Whether or not the new FWT and EWT returns will be available on or before the filing deadline
(d) Whether or not taxpayers will be provided enough time to adapt to the said returns
The Bureau of Internal Revenue (BIR) is the Philippine government agency responsible for the collection of national internal revenue taxes, including income taxes, value-added tax (VAT), and documentary stamp taxes. For employers, the BIR administers payroll withholding tax obligations — employers must register, withhold the correct income tax from employee salaries each pay period, remit withheld amounts monthly, and file annual tax returns (BIR Form 1604-C). For a broader picture of Philippine employment obligations, see our guide to employment laws and regulations in the Philippines.
The Tax Reform for Acceleration and Inclusion (TRAIN) Act, effective from 2018, revised income tax brackets for individual taxpayers. The law exempted employees earning PHP 250,000 or below annually from income tax. Above this threshold, progressive rates apply up to 35% for income exceeding PHP 8 million. From 2023 onwards, the rates were further reduced at the higher brackets. Employers should verify current BIR-published tax tables annually, as brackets and thresholds are periodically adjusted.
Philippine employers calculate withholding tax using the BIR's published withholding tax tables or the tax computation method. Tax is withheld each payroll period (semi-monthly in the Philippines) and remitted monthly to the BIR using BIR Form 1601-C by the 10th–15th of the following month. At year-end, employers must file BIR Form 1604-C (Annual Information Return) and issue BIR Form 2316 to each employee. Payroll errors in withholding computation are audited by the BIR and can result in deficiency assessments.
Fringe benefits granted by employers to managerial or supervisory employees — including housing, vehicle, educational assistance, and company-paid club memberships — are subject to a 35% fringe benefit tax (FBT) paid by the employer (not deducted from the employee). The FBT is calculated on the grossed-up monetary value of the benefit and remitted quarterly using BIR Form 1603. Rank-and-file employee benefits are generally not subject to FBT but may be taxable as compensation income depending on the nature of the benefit.
Employer BIR compliance includes: registering the business and obtaining a BIR Certificate of Registration, enrolling in eBIR (electronic filing), withholding and remitting payroll taxes monthly (Form 1601-C), filing quarterly income tax returns, paying fringe benefit tax quarterly (Form 1603), filing the annual alphalist of employees (Form 1604-C), and issuing Certificate of Compensation Payment/Tax Withheld (Form 2316) to all employees by 31 January each year. For the full picture of what it costs to employ staff there, see our guide on the cost of hiring a full-time employee in the Philippines.
An EOR in the Philippines is registered with the BIR and has the full employer compliance infrastructure in place: tax identification numbers, eBIR enrollment, payroll tax withholding calculations, and annual return filing. Foreign companies hiring Philippine employees through an EOR have all BIR obligations handled by the EOR as the legal employer. The client company receives consolidated payroll reporting without needing to manage BIR registrations or tax filings directly — reducing the risk of deficiency assessments from incorrect withholding.
