Who Is Required to Pay Income Tax in the Philippines?

“Who has to pay income tax?” is a different question from “how much?” or “what income counts?”. Before any rate or computation, the National Internal Revenue Code (NIRC) first decides who is a taxpayer at all: which persons it reaches, which it exempts outright, and who pays the tax even when someone else hands the money to the BIR. This guide answers that question by taxpayer class.

Quick answer

Every individual, estate, trust and corporation that earns income the NIRC reaches must pay Philippine income tax, unless the Code exempts it. Resident citizens pay on worldwide income; nonresident citizens, OFWs and aliens only on Philippine-source income. Minimum wage earners, general professional partnerships and qualifying exempt organizations do not pay.

Who counts as a taxpayer under the Tax Code?

Section 22(A) of the NIRC (RA 8424) defines a “person” as “an individual, a trust, estate or corporation.” Those four are the potential income taxpayers. Section 22(B) adds that “corporation” includes partnerships “no matter how created or organized,” but excludes general professional partnerships. So an ordinary business partnership is taxed like a corporation, while a partnership of professionals is not taxed as an entity at all (see below).

Which individuals are required to pay income tax?

Section 23 of the NIRC sets the general principles, and Sections 24 and 25 impose the tax on individuals. Your class depends on citizenship and residence, not on how much you earn. The table shows who is taxed and on what.

A nonresident alien who stays in the Philippines for more than 180 days in any calendar year is deemed to be doing business here under Section 25(A)(1), and moves from the 25% gross-income rule to the regular rules. A Filipino working abroad is a nonresident citizen only if Section 22(E) is met, which looks at physical presence abroad and the intention to reside there.

For a closer look at how each item of income is sorted, see what income is subject to Philippine income tax.

Which individuals are not required to pay?

Two groups of individuals owe no income tax even though they are taxpayers in principle.

• Minimum wage earners. Section 24(A)(2), as amended by RA 10963 (TRAIN), provides that minimum wage earners as defined in Section 22(HH) “shall be exempt from the payment of income tax” on their taxable income and that their holiday pay is likewise exempt. Section 22(HH), inserted by RA 9504, defines a minimum wage earner as a private-sector worker paid the statutory minimum wage, or a public-sector employee whose compensation is not more than the statutory minimum wage in the non-agricultural sector where he or she is assigned.
• Individuals within the zero bracket. Under the TRAIN schedule effective January 1, 2023 onward, the first ₱250,000 of annual taxable income is taxed at 0%. Someone whose taxable income does not exceed ₱250,000 owes no income tax at graduated rates. This is a zero rate, not an exemption from being a taxpayer, which matters for filing (see below).

A minimum wage earner who also earns other income, such as business income or compensation above the minimum wage from another source, is taxed on that other income. The exemption covers the minimum wage income and holiday pay only.

Do corporations, partnerships, estates and trusts pay income tax?

Yes, with two important exceptions. Section 23(E) taxes a domestic corporation on income from all sources, and Section 23(F) taxes a foreign corporation only on Philippine-source income. Foreign corporations are resident if engaged in trade or business in the Philippines and nonresident if not (Sections 22(H) and 22(I)). Corporate rates have been amended since 1997 and are not restated here.

The first exception is the general professional partnership. Section 26 provides that a general professional partnership “as such shall not be subject to the income tax,” and that the partners are liable “only in their separate and individual capacities.” In Tan v. Del Rosario, G.R. No. 109289 (October 3, 1994), the Supreme Court described such a partnership as “not itself an income taxpayer” but “a mere mechanism or a flow-through entity,” with the tax falling “on the partners themselves in their individual capacity.” Each partner reports his or her distributive share.

The second exception is the list of organizations in Section 30, which “shall not be taxed under this Title in respect to income received by them as such,” including labor, agricultural and horticultural organizations, mutual savings banks, and nonstock religious or charitable organizations, among others. The exemption covers income received “as such”; income from their profit-making activities remains taxable. Estates and trusts are “persons” under Section 22(A) and are taxpayers in their own right.

Is paying the tax the same as filing a return?

No, and mixing them up is the most common error. Liability to pay is about whether you owe tax. The duty to file is about whether you must submit a return. The two do not always line up.

• You can owe nothing and still have to file. Section 51(A)(2)(a), as amended by TRAIN, excuses an individual whose taxable income does not exceed ₱250,000 from filing, but its proviso says a citizen, and any alien engaged in business or practice of profession in the Philippines, “shall file an income tax return, regardless of the amount of gross income.”
• You can owe tax and not file yourself. Section 51-A, added by TRAIN, provides that individuals earning purely compensation income from only one employer in the Philippines for the calendar year, whose tax withheld equals the tax due, “shall not be required to file an annual income tax return.” The employer’s certificate of withholding filed with the BIR serves as the substituted filing.
• Two employers at once. Under Section 51(A)(2)(b), as amended by RA 9504, an individual “deriving compensation concurrently from two or more employers at any time during the taxable year shall file an income tax return.”

For the full list of who does not have to file an annual return, see how Philippine income tax works for individual taxpayers.

If my employer withholds the tax, who is the one paying?

You are. Withholding changes who hands the money to the government, not who owes the tax. Section 51(A)(2)(b) refers to compensation income “the income tax on which has been correctly withheld under the provisions of Section 79,” the Code’s rule on employer withholding from wages. The employer acts as the withholding agent: it deducts the tax from your pay and remits it. The tax is still yours, which is why you should check that the amounts on your payslips and year-end certificate match.

Where no one withholds, you pay directly. Section 56(A)(1), as amended by RA 11976 (Ease of Paying Taxes Act), requires the tax to be paid, electronically or manually, at the time the return is filed.

Worked example: who pays, and how much?

Hypothetical example for illustration only, using the TRAIN schedule for taxable years from January 1, 2023 onward. All income figures are assumed to be taxable income after exclusions.

Ana: employee with one employer

Ana is a resident citizen with taxable compensation of ₱360,000. The bracket over ₱250,000 but not over ₱400,000 is taxed at 15% of the excess over ₱250,000.

Tax = 15% × (₱360,000 − ₱250,000) = 15% × ₱110,000 = ₱16,500. No rounding is needed. Ana is liable to pay ₱16,500; her employer withholds it from her salary. If the withholding is correct and she has no other employer or income, substituted filing applies and she does not file her own return.

Ben: freelancer below the zero bracket

Ben is a resident citizen freelancer taxed at graduated rates, with taxable income of ₱230,000. Because ₱230,000 does not exceed ₱250,000, the rate is 0% and his tax is ₱0. He is still required to file an income tax return, because the proviso to Section 51(A)(2)(a) requires a citizen in business or practice of profession to file regardless of the amount of gross income.

Do you have to pay Philippine income tax?

Find the row that describes you; the sections above set out the conditions.

If no row fits, apply the default: a person with income the Code reaches pays tax unless a provision exempts it.

Your options and what to do next

If you are an employee

• Check your payslips: is tax being withheld, and does your pay exceed the statutory minimum wage in your region? If you are paid the minimum wage, no income tax should be withheld from it.
• At year end, ask HR or payroll for your certificate of compensation paid and tax withheld and compare it with your payslips.
• If you worked for two or more employers at the same time during the year, or earned freelance or business income on the side, plan to file your own annual return; substituted filing does not cover you.

If you are self-employed, a freelancer or a professional

• Register with the BIR before you earn. Registering on ORUS and getting your TIN walks through the online route, or go to the Revenue District Office (RDO) for your place of business.
• File your returns even in a year when the tax due is zero; the duty to file does not depend on owing tax.
• Keep invoices, bank records and platform payout reports so you can show what you earned and from whom.

If you are a partner, an organization or a foreign taxpayer

• Partners in a general professional partnership: get a statement of your distributive share each year and report it on your own return.
• Nonstock, nonprofit organizations: keep records separating income received as such from income of profit-making activities, which stays taxable.
• Foreign nationals: count your days in the Philippines in each calendar year; more than 180 days moves you to the regular rules under Section 25(A)(1).

Where to file and pay

Under Section 51(B), as amended by RA 11976, a return is filed with any authorized agent bank, a Revenue District Office through its Revenue Collection Officer, or an authorized tax software provider, unless the Commissioner permits otherwise. Tax is paid when the return is filed (Section 56(A)(1)). The annual deadline is set by Section 51(C)(1); confirm the date for your form on the BIR tax calendar or with your RDO, since this guide does not restate it.

First action: find your row in the decision table above, then check one payslip or one month of receipts against it.

Key takeaways

• The income tax reaches individuals, estates, trusts and corporations (NIRC Section 22(A)); partnerships other than general professional partnerships are taxed as corporations.
• Resident citizens and domestic corporations pay on worldwide income; nonresident citizens, OFWs, aliens and foreign corporations only on Philippine-source income (Section 23).
• Minimum wage earners, general professional partnerships as entities, and Section 30 organizations on income received as such do not pay.
• Owing no tax does not end the duty to file: citizens and aliens in business or a profession must file regardless of gross income.
• Employer withholding does not shift liability; the employee remains the taxpayer.

Frequently asked questions

Who is required to pay income tax in the Philippines?

Every individual, estate, trust and corporation with income the Tax Code reaches is liable, unless a provision exempts them. That covers resident citizens, nonresident citizens, OFWs, resident and nonresident aliens, domestic and foreign corporations, and partnerships other than general professional partnerships.

Do I pay income tax if I earn ₱250,000 or less a year?

Under the TRAIN schedule effective January 1, 2023 onward, taxable income of ₱250,000 or less is taxed at 0%. You owe no income tax, but if you are in business or practising a profession you must still file an income tax return.

Are minimum wage earners required to pay income tax?

No. Section 24(A)(2) of the NIRC, as amended by TRAIN, exempts minimum wage earners as defined in Section 22(HH) from income tax on their taxable income, together with their holiday pay.

Do OFWs pay Philippine income tax?

Only on income from Philippine sources, such as rent from property in the Philippines. An overseas contract worker is not taxed in the Philippines on pay for work done abroad, and an OFW earning solely from abroad is not required to file a return.

Does a general professional partnership pay income tax?

No. Section 26 of the NIRC says a general professional partnership as such is not subject to income tax. Its partners pay the tax on their distributive shares in their individual capacity.

Do foreigners working in the Philippines pay income tax?

Yes, on income from Philippine sources. A nonresident alien who stays in the Philippines for more than 180 days in a calendar year is deemed doing business here and is taxed like a citizen; one not engaged in business pays 25% of gross Philippine-source income.

If my employer withholds tax from my salary, who is the taxpayer?

You are. The employer only withholds and remits the tax on your behalf. If you earn purely compensation from one employer and the tax was correctly withheld, substituted filing applies and you need not file your own annual return.

Kailangan bang magbayad ng income tax ang freelancer na maliit ang kita?

Kung ang taxable income mo ay ₱250,000 pababa sa graduated rates, zero ang income tax mo. Pero dahil nasa negosyo o propesyon ka, kailangan mo pa ring mag-file ng income tax return, kahit walang babayaran.

May income tax ba ang minimum wage earner?

Wala. Exempted ang minimum wage earner sa income tax sa kanyang taxable income, pati sa holiday pay, ayon sa Section 24(A)(2) ng NIRC na inamyendahan ng TRAIN Law.

Ako ba o ang employer ko ang nagbabayad ng tax sa sahod ko?

Ikaw ang taxpayer, pero ang employer mo ang nagkakaltas at nagre-remit ng tax mula sa sahod mo. Kung isa lang ang employer mo at tama ang kinaltas, hindi mo na kailangang mag-file ng sarili mong annual return.

Sources

• National Internal Revenue Code of 1997 (RA 8424): Sections 22(A)–(I), 23, 25(A)–(B), 26 and 30.
• RA 10963 (TRAIN Law): amended Section 24(A)(2), including the January 1, 2023 onward rate schedule and the minimum wage earner exemption; Section 51(A)(2)(a) and new Section 51-A (substituted filing).
• RA 9504 (approved June 17, 2008): Section 22(HH) definition of minimum wage earner; Section 51(A)(2)(b) on concurrent employers.
• RA 11976 (Ease of Paying Taxes Act) (approved January 5, 2024): amended Sections 51(A)(2)(e), 51(B) and 56(A)(1).
• Supreme Court, Tan v. Del Rosario, G.R. No. 109289, October 3, 1994.

This guide is general information about Philippine tax law, not tax or legal advice for your situation. For your specific facts, consult a CPA, a tax lawyer or your BIR Revenue District Office.

By the TaxCode.ph Editorial Team. Sources checked as of: November 7, 2026.