Updated on: 2025/08/07 09:56 (UTC)
Overview
The Philippines, officially the Republic of the Philippines, is a country consisting of more than 7,000 islands that are located to the southeast of mainland Asia, with the South China Sea bordering the country to its west and the Philippine Sea bordering the country to its east. The Philippines has a presidential form of government with power evenly divided between executive, legal, and judicial branches. The Philippines has 17 administrative regions that set their own minimum wage requirements. The geographically closest country to the Philippines is Malaysia, which at its closest point to the Philippines is fewer than 100 kilometers away from the Philippines.
The 17 administrative regions of the Philippines include 14 numbered regions and three regions without an official number. The numbered regions are Region 1 (Ilocos Region), Region 2 (Cagayan Valley), Region 3 (Central Luzon), Region 4-A (Calabarzon), Region 4-B (MIMAROPA Region, also known as Southwestern Tagalog Region), Region 5 (Bicol Region), Region 6 (Western Visayas), Region 7 (Central Visayas), Region 8 (Eastern Visayas), Region 9 (Zamboanga Peninsula, also known as ZamPen Region), Region 10 (Northern Mindanao), Region 11 (Davao Region), Region 12 (Soccsksargen), and Region 13 (Caraga Region). The regions without an official number are the National Capital Region (NCR), Cordillera Administrative Region (CAR), and Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).
The primary written and spoken language used in the Philippines is the Filipino language, although the English language is widely used in the Philippines and is the predominant language used by the government and in business. Filipino and English are the country’s two official languages. Filipino is a standardized form of the Tagalog language, which while one of more than 100 indigenous languages used in the Philippines is one of the eight most prominent indigenous languages in use. The other seven are Bicol (Bikol), Cebuano, Hiligaynon (Ilonggo), Ilocano, Kapampangan (Pampango), Pangasinan, and Waray. The writing system for the Filipino language is an alphabetic writing system with Latin script that includes the 26 letters of the English alphabet plus two additional letters: ñ and ng, with the first of these additional letters the combination of the letter n and a tilde and the second of these additional letters a digraph formed from two other letters. The directionality that is used for written Filipino text, as is used for English writing, is progression along horizontal lines from left to right, with successive horizontal lines read from top to bottom.
The Philippines’ currency is the Philippine peso.
Employers in the Philippines are responsible for withholding income taxes and social taxes in addition to contributing to social security benefits for employees. Employers are also responsible for upholding national labor standards according to the Labor Code. There is no national minimum wage; the administrative regions set minimum wage requirements.
Foreign workers in the Philippines are subject to income tax on the same progressive scale as Philippine residents, but are only taxed on income accrued within the Philippines while nationals are taxed on global income. Foreign workers are also covered by the same labor code protections as Philippine citizens.
Philippine residents working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.
News articles regarding payroll in the Philippines are available in
CURRENCY DETAILS
The currency of the Philippines is the Philippine peso (₱), also known simply in the Philippines as the peso, which in the Philippines is alternatively spelled as piso. The internationally recognized three-letter currency code for the Philippine peso is PHP, which also is one of the currency symbols for the Philippine peso. The plural form of the word peso in English is pesos and the plural form of the word piso in the Filipino language, which is the most commonly used language in the Philippines, is the same as its singular form.
When an amount of Philippine pesos is written using the currency symbol , the variant Ph , the variant Ph, or the currency symbol P, the symbol precedes the numerical value with no space between the numerical value and symbol. Although the currency symbol P sometimes is used for the Philippine peso, it is predominantly used as the currency symbol for the Botswanan pula.
When an amount of Philippine pesos is written using the currency symbol Php or one of its variants (PhP, PHp, PHP, and php), the symbol precedes the numerical value with either a space or no space between the numerical value and symbol.
In the Philippines, amounts of Philippine pesos occasionally are written using a currency symbol that includes the general dollar currency symbol $, which is used for some, but not all peso currencies, and unlike some other peso currencies, amounts of Philippine pesos are not written using the general dollar currency symbol $ by itself. When an amount of Philippine pesos is written using the currency symbol P$ or one of its variants (P $, P.$, P. $, p$, p $, p.$, and p. $), the symbol precedes the numerical value with no space between the numerical value and symbol.
When an amount of Philippine pesos is written using the currency symbol Pts or one of its variants (PhPts, Pts., and PhPts.), the symbol precedes the numerical value with a space or no space between the numerical value and symbol.
One hundredth ( 1 ⁄ 100 ) of a Philippine peso is referred to as a centavo or sentimo, with the respective plural forms of centavos and sentimos.
TAXES
The national government of the Philippines enacts laws regarding income and social taxes. Employers are required to withhold income taxes from all employees and make monthly remittances. Additionally, employers are required to withhold social taxes from employees’ wages and pay employer portions of social taxes.
The tax year in the Philippines is the calendar year from Jan. 1 to Dec. 31.
Coronavirus (Covid-19) Guidance: The deadline for filing annual withholding returns was extended to Feb. 28, 2021, from Jan. 31, 2021.
The due dates for monthly income tax withholding returns and deposits were extended from April 10 and May 10, 2020 to June 9, 2020, for paper filers. The deadline for electronic filers was extended, depending on group designation, from April 11 and May 11 to June 10, 2020; April 12 and May 12 to June 11, 2020; April 13 and May 13 to June 12, 2020; April 14 and May 14 to June 13, 2020; and from April 15 and May 15 to June 14, 2020.
Effective Aug. 17, 2020, the Philippines updated the requirements for nonresident workers to trigger the country’s tax residency thresholds. The move is a way to address unintended tax situations caused when employees were stranded or quarantined in the Philippines because of Covid-19.
Tax residency is typically triggered in the Philippines when a nonresident has been present for more than 183 days (at least 90 days for U.S. residents and more than 120 days for residents of Poland) in a year.
Additional days spent in the Philippines beyond a nonresident worker’s planned departure date do not count toward the applicable residency threshold if:
• The employee will leave the country as soon as circumstances permit; and
• There are no changes in the employer’s circumstances.
The individual or employer may be required to provide proof of travel arrangements, including a sworn statement describing the situation; executed contracts; copies of flight bookings, itineraries, boarding passes, or airlines’ advisories of flight cancellations; or copies of the individual’s passport.
Income Taxes
Income taxes are administered by the Bureau of Internal Revenue in the Philippines. The National Internal Revenue Code (NIRC) regulates income tax procedures.
Coverage: Employers must cover all employees and remit their income taxes.
Employees: The term ‘employee’ refers to any individual who is the recipient of wages and includes an officer and an officer of a corporation. Any nonresident employee is defined as an “individual doing business in the Philippines” if their stay exceeds 180 days during any calendar year.
Rates and Thresholds: Income tax rates in the Philippines vary progressively from zero to 35% depending on an individual’s income.
Effective from Jan. 1, 2018, to Dec. 31, 2022, with regard to employment income, the Philippines’ personal income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:| Range of Annual Income (Philippine Pesos) | Income Tax Rate |
|---|---|
| Up to ₱250,000 | zero |
| More than ₱250,000 and up to ₱400,000 | 20% of the amount of salary exceeding ₱250,000 |
| More than ₱400,000 and up to ₱800,000 | ₱30,000 plus 25% of the amount of salary exceeding ₱400,000 |
| More than ₱800,000 and up to ₱2 million | ₱130,000 plus 30% of the amount of salary exceeding ₱800,000 |
| More than ₱2 million and up to ₱8 million | ₱490,000 plus 32% of the amount of salary exceeding ₱2 million |
| More than ₱8 million | ₱2,410,000 plus 35% of the amount of salary exceeding ₱8 million |
| Range of Annual Income (Philippine Pesos) | Income Tax Rate |
|---|---|
| Up to ₱250,000 | zero |
| More than ₱250,000 and up to ₱400,000 | 15% of the amount of salary exceeding ₱250,000 |
| More than ₱400,000 and up to ₱800,000 | ₱22,500 plus 20% of the amount of salary exceeding ₱400,000 |
| More than ₱800,000 and up to ₱2 million | ₱102,500 plus 25% of the amount of salary exceeding ₱800,000 |
| More than ₱2 million and up to ₱8 million | ₱402,500 plus 30% of the amount of salary exceeding ₱2 million |
| More than ₱8 million | ₱2,202,500 plus 35% of the amount of salary exceeding ₱8 million |
Registration: Registration is required within 10 days from the start date of an employment contract, on or before the commencement of business, before payment of any tax due, or upon filing a tax return, statement or declaration. An annual registration fee of 500 for every business is to be paid upon registration every year before Jan. 31.
After registration, each registered entity or individual will receive a Taxpayer Identification Number (TIN).
Taxable Amounts: Income that is subject to taxation includes compensation for services, fees, salaries, wages, commissions, annuities, prizes and winnings, pensions and gross income derived from the conduct of trade or business or the exercise of a profession.
Income exempt from taxation includes: social security contributions; the value of property acquired by gift; compensation for injuries or sickness; retirement benefits and pensions; prizes and awards; gains from the selling of bonds and gains from redemption of shares in mutual fund. Bonuses such as 13th-month pay are exempt on income up to ₱90,000.
Withholding Methods: Employers are required to withhold income taxes from their employee’s paychecks at the time the wages are paid. Withholding is not required when an employee’s compensation is not more than the minimum wage or more than ₱5,000 a month; whichever is higher.
Returns and Remittance: Employers that withhold taxes on employee compensation must file Bureau of Internal Revenue Form 1601-C, Monthly Remittance Return of Income Taxes Withheld on Compensation. Employers can electronically file Form 1601-C using the Bureau of Internal Revenue’s Electronic Filing and Payment System (eFPS).
Employers filing Form 1601-C electronically must file the form and remit the withheld taxes according to the schedule found in RR No. 26-2002, which identifies five groups of employers with varying filing and payment due dates and the types of employers in each group:
- • Group A: 15 days following the end of the month in which withholding occurred;
- • Group B: 14 days following the end of the month in which withholding occurred;
- • Group C: 13 days following the end of the month in which withholding occurred;
- • Group D: 12 days following the end of the month in which withholding occurred; and
- • Group E: 11 days following the end of the month in which withholding occurred.
Employers filing Form 1601-C via paper to report withholding that occurred during a month must file three copies of the form, with forms to report tax withholding that occurred in a month from January to November due by the 10th day of the month following the month when the withholding occurred and forms to report withholding that occurred in December due by Jan. 15 of the following year. When employers choose to report tax withholding data using paper copies of Form 1601-C, the due date for remitting taxes that needed to be withheld during a month is the due date for filing the paper copies of Form 1601-C for that month.
The tax return and payments must be made to the authorized agent bank of the BIR District Office with jurisdiction over the employer’s place of business. If there is no authorized agent bank, the tax return and payments must be made to the revenue collection officer of the district office with jurisdiction over the employer’s place of business. Annual information returns must be submitted by Jan. 31 using Form 1604-CF, Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes. Returns must be filed with the revenue collection officer or city/municipal treasurer of the revenue district office with jurisdiction over the employer’s place of business.
Employees are required to submit annual income tax returns by April 15 of each year. Filing is to be done with an authorized agent bank, Revenue District Officer, Collection Agent or authorized Treasurer of the city or municipality where the business takes place.
Employee Share Plans: Income and gains derived from stock option plans in the Philippines is treated as a fringe benefit and taxed as such under the National Internal Revenue Code. The taxable amount constitutes the difference between the book value or fair market value (whichever is higher) on the date the stock option is exercised and the price fixed on the grant date.
If an employee chooses to sell or exchange stock under a share plan, the gain derived is subject to tax. If the stocks sold or exchanged are in a domestic corporation not traded in the Stock Exchange, the gains are taxed as capital gains. If the stocks are traded through the Local Stock Exchange, the transactions are subject to a stock transaction tax. Gains from the selling or exchanging of stocks of foreign corporations are taxed as regular income.
Recordkeeping: Reports of income taxes withheld from employment income generally must be retained for at least 10 years from the day after the date when they were required to be submitted.
Penalties: General violations of the income tax code can be punished by fines totaling at least twice the amount of taxes, interests and surcharges owed.
Tax evasion is punishable by a fine totaling from ₱30,000 to ₱100,000, in addition to imprisonment of from two years to four years.
Failure to file a return, supply correct and accurate information, or withhold or remit taxes is punishable by a fine of at least 10,000 and imprisonment from one year to 10 years.
Violation of the withholding tax provision is punishable by a fine from ₱5,000 to ₱50,000 and imprisonment from at least six months and one day to two years.
Social Taxes
The Social Security Law in the Philippines is regulated by the Social Security Law of 1991, which has been amended since original publication. Social security contributions are administered by the Social Security System (SSS) of the Philippines. Contributions to the National Health Insurance Program (NHIP) are administered by the Philippine Health Insurance Corporation (PhilHealth). Employers are assessed contributions for the Home Development Mutual Fund (Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno; abbreviated as Pag-IBIG). Employers also are assessed contributions for the Employees’ Compensation program, which also is administered by the SSS and provides replacement compensation for employees who experienced an occupational accident or illness.
Coverage: All employees under 60 years of age are obligated to be covered by their employer under the Social Security System (SSS). Private coverage cannot be reduced or discontinued when an employee obtains compulsory coverage through an employer. Private plans, however, can be integrated with compulsory coverage. Social security taxes cover retirement, death, disability, injury, sickness and maternity benefits for employees.
Rates and Thresholds: Employers are assessed higher contribution rates than employees for social security, an employer and employee are assessed the same contribution rates as each other for the National Health Insurance Program, and employer and employee contributions to the Home Development Mutual Fund are derived from a mixture of these contribution models.
Social Security: The contributions that employers and employees are assessed for social security are based on a contributions table. The contributions table has a series of ranges of monthly employment income paid to an employee, with a monthly salary credit associated with each range of monthly income. For each employee, contribution rates are assessed upon the salary credit associated with the range of monthly income that includes the employee’s actual employment income for the month, with the salary credit treated as the employment income paid to the employee for that month. Effective starting Jan. 1, 2021, employees with a monthly salary of at least ₱20,250 are subject to additional employer and employee contributions to the Mandatory Provident Fund (MPF) only on the portion of the employee’s salary credit over ₱20,000, at the same contribution rates as standard Social Security contributions.
Effective from April 1, 2019, to Dec. 31, 2020, the employer social security contribution rate of 8% and the employee social security contribution rate of 4% are applied to an employee’s salary credit for a month to determine the employer’s and the employee’s social security contributions for the month, and salary credits range from ₱2,000 to ₱20,000.
Effective from Jan. 1, 2021, to Dec. 31, 2022, the employer contribution rate is 8.5%, the employee contribution rate is 4.5%, and salary credits range from ₱3,000 to ₱25,000. Effective from Jan. 1, 2023, to Dec. 31, 2024, the employer contribution rate is 9.5%, the employee contribution rate is 4.5%, and salary credits range from ₱4,000 to ₱30,000. Effective starting Jan. 1, 2025, the employer contribution rate is 10%, the employee contribution rate is 5%, and salary credits range from ₱5,000 to ₱35,000.
Effective until March 31, 2019, the employer social security contribution rate was 7.37%, the employee social security contribution rate was 3.63%, and salary credits ranged from ₱1,000 to ₱16,000.
Effective from Jan. 1, 2021, to Dec. 31, 2022, the Philippines’ social security contribution amounts per employee are as follows:| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Applicable Salary Credit Upon Which Contributions Assessed (Philippine Pesos) | Employer Social Security Contribution, Rate of 8.5% | Employee Social Security Contribution, Rate of 4.5% | Employer Contribution to Employees’ Compensation Program | Total Contribution |
|---|---|---|---|---|---|
| Less than ₱3,250 | ₱3,000 | ₱255 | ₱135 | ₱10 | ₱400 |
| At least ₱3,250 and up to ₱3,749.99 | ₱3,500 | ₱297.50 | ₱157.50 | ₱10 | ₱465 |
| At least ₱3,750 and up to ₱4,249.99 | ₱4,000 | ₱340 | ₱180 | ₱10 | ₱530 |
| At least ₱4,250 and up to ₱4,749.99 | ₱4,500 | ₱382.50 | ₱202.50 | ₱10 | ₱595 |
| At least ₱4,750 and up to ₱5,249.99 | ₱5,000 | ₱425 | ₱225 | ₱10 | ₱660 |
| At least ₱5,250 and up to ₱5,749.99 | ₱5,500 | ₱467.50 | ₱247.50 | ₱10 | ₱725 |
| At least ₱5,750 and up to ₱6,249.99 | ₱6,000 | ₱510 | ₱270 | ₱10 | ₱790 |
| At least ₱6,250 and up to ₱6,749.99 | ₱6,500 | ₱552.50 | ₱292.50 | ₱10 | ₱855 |
| At least ₱6,750 and up to ₱7,249.99 | ₱7,000 | ₱595 | ₱315 | ₱10 | ₱920 |
| At least ₱7,250 and up to ₱7,749.99 | ₱7,500 | ₱637.50 | ₱337.50 | ₱10 | ₱985 |
| At least ₱7,750 and up to ₱8,249.99 | ₱8,000 | ₱680 | ₱360 | ₱10 | ₱1,050 |
| At least ₱8,250 and up to ₱8,749.99 | ₱8,500 | ₱722.50 | ₱382.50 | ₱10 | ₱1,115 |
| At least ₱8,750 and up to ₱9,249.99 | ₱9,000 | ₱765 | ₱405 | ₱10 | ₱1,180 |
| At least ₱9,250 and up to ₱9,749.99 | ₱9,500 | ₱807.50 | ₱427.50 | ₱10 | ₱1,245 |
| At least ₱9,750 and up to ₱10,249.99 | ₱10,000 | ₱850 | ₱450 | ₱10 | ₱1,310 |
| At least ₱10,250 and up to ₱10,749.99 | ₱10,500 | ₱892.50 | ₱472.50 | ₱10 | ₱1,375 |
| At least ₱10,750 and up to ₱11,249.99 | ₱11,000 | ₱935 | ₱495 | ₱10 | ₱1,440 |
| At least ₱11,250 and up to ₱11,749.99 | ₱11,500 | ₱977.50 | ₱517.50 | ₱10 | ₱1,505 |
| At least ₱11,750 and up to ₱12,249.99 | ₱12,000 | ₱1,020 | ₱540 | ₱10 | ₱1,570 |
| At least ₱12,250 and up to ₱12,749.99 | ₱12,500 | ₱1,062.50 | ₱562.50 | ₱10 | ₱1,635 |
| At least ₱12,750 and up to ₱13,249.99 | ₱13,000 | ₱1,105 | ₱585 | ₱10 | ₱1,700 |
| At least ₱13,250 and up to ₱13,749.99 | ₱13,500 | ₱1,147.50 | ₱607.50 | ₱10 | ₱1,765 |
| At least ₱13,750 and up to ₱14,249.99 | ₱14,000 | ₱1,190 | ₱630 | ₱10 | ₱1,830 |
| At least ₱14,250 and up to ₱14,749.99 | ₱14,500 | ₱1,232.50 | ₱652.50 | ₱10 | ₱1,895 |
| At least ₱14,750 and up to ₱15,249.99 | ₱15,000 | ₱1,275 | ₱675 | ₱30 | ₱1,980 |
| At least ₱15,250 and up to ₱15,749.99 | ₱15,500 | ₱1,317.50 | ₱697.50 | ₱30 | ₱2,045 |
| At least ₱15,750 and up to ₱16,249.99 | ₱16,000 | ₱1,360 | ₱720 | ₱30 | ₱2,110 |
| At least ₱16,250 and up to ₱16,749.99 | ₱16,500 | ₱1,402.50 | ₱742.50 | ₱30 | ₱2,175 |
| At least ₱16,750 and up to ₱17,249.99 | ₱17,000 | ₱1,445 | ₱765 | ₱30 | ₱2,240 |
| At least ₱17,250 and up to ₱17,749.99 | ₱17,500 | ₱1,487.50 | ₱787.50 | ₱30 | ₱2,305 |
| At least ₱17,750 and up to ₱18,249.99 | ₱18,000 | ₱1,530 | ₱810 | ₱30 | ₱2,370 |
| At least ₱18,250 and up to ₱18,749.99 | ₱18,500 | ₱1,572.50 | ₱832.50 | ₱30 | ₱2,435 |
| At least ₱18,750 and up to ₱19,249.99 | ₱19,000 | ₱1,615 | ₱855 | ₱30 | ₱2,500 |
| At least ₱19,250 and up to ₱19,749.99 | ₱19,500 | ₱1,657.50 | ₱877.50 | ₱30 | ₱2,565 |
| At least ₱19,750 | ₱20,000 | ₱1,700 | ₱900 | ₱30 | ₱2,630 |
| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Applicable Salary Credit Upon Which MPF Contributions Assessed (Philippine Pesos) | Employer MPF Contribution, Rate of 8.5% | Employee MPF Contribution, Rate of 4.5% | Total Contribution |
|---|---|---|---|---|
| At least ₱20,250 and up to ₱20,749.99 | ₱500 | ₱42.50 | ₱22.50 | ₱65 |
| At least ₱20,750 and up to ₱21,249.99 | ₱1,000 | ₱85 | ₱45 | ₱130 |
| At least ₱21,250 and up to ₱21,749.99 | ₱1,500 | ₱127.50 | ₱67.50 | ₱195 |
| At least ₱21,750 and up to ₱22,249.99 | ₱2,000 | ₱170 | ₱90 | ₱260 |
| At least ₱22,250 and up to ₱22,749.99 | ₱2,500 | ₱212.50 | ₱112.50 | ₱325 |
| At least ₱22,750 and up to ₱23,249.99 | ₱3,000 | ₱255 | ₱135 | ₱390 |
| At least ₱23,250 and up to ₱23,749.99 | ₱3,500 | ₱297.50 | ₱157.50 | ₱455 |
| At least ₱23,750 and up to ₱24,249.99 | ₱4,000 | ₱340 | ₱180 | ₱520 |
| At least ₱24,250 and up to ₱24,749.99 | ₱4,500 | ₱382.50 | ₱202.50 | ₱585 |
| At least ₱24,750 | ₱5,000 | ₱425 | ₱225 | ₱650 |
| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Applicable Salary Credit Upon Which Contributions Assessed (Philippine Pesos) | Employer Social Security Contribution, Rate of 8% | Employee Social Security Contribution, Rate of 4% | Employer Contribution to Employees’ Compensation Program | Total Contribution |
|---|---|---|---|---|---|
| Less than ₱2,250 | ₱2,000 | ₱160 | ₱80 | ₱10 | ₱250 |
| At least ₱2,250 and up to ₱2,749.99 | ₱2,500 | ₱200 | ₱100 | ₱10 | ₱310 |
| At least ₱2,750 and up to ₱3,249.99 | ₱3,000 | ₱240 | ₱120 | ₱10 | ₱370 |
| At least ₱3,250 and up to ₱3,749.99 | ₱3,500 | ₱280 | ₱140 | ₱10 | ₱430 |
| At least ₱3,750 and up to ₱4,249.99 | ₱4,000 | ₱320 | ₱160 | ₱10 | ₱490 |
| At least ₱4,250 and up to ₱4,749.99 | ₱4,500 | ₱360 | ₱180 | ₱10 | ₱550 |
| At least ₱4,750 and up to ₱5,249.99 | ₱5,000 | ₱400 | ₱200 | ₱10 | ₱610 |
| At least ₱5,250 and up to ₱5,749.99 | ₱5,500 | ₱440 | ₱220 | ₱10 | ₱670 |
| At least ₱5,750 and up to ₱6,249.99 | ₱6,000 | ₱480 | ₱240 | ₱10 | ₱730 |
| At least ₱6,250 and up to ₱6,749.99 | ₱6,500 | ₱520 | ₱260 | ₱10 | ₱790 |
| At least ₱6,750 and up to ₱7,249.99 | ₱7,000 | ₱560 | ₱280 | ₱10 | ₱850 |
| At least ₱7,250 and up to ₱7,749.99 | ₱7,500 | ₱600 | ₱300 | ₱10 | ₱910 |
| At least ₱7,750 and up to ₱8,249.99 | ₱8,000 | ₱640 | ₱320 | ₱10 | ₱970 |
| At least ₱8,250 and up to ₱8,749.99 | ₱8,500 | ₱680 | ₱340 | ₱10 | ₱1,030 |
| At least ₱8,750 and up to ₱9,249.99 | ₱9,000 | ₱720 | ₱360 | ₱10 | ₱1,090 |
| At least ₱9,250 and up to ₱9,749.99 | ₱9,500 | ₱760 | ₱380 | ₱10 | ₱1,150 |
| At least ₱9,750 and up to ₱10,249.99 | ₱10,000 | ₱800 | ₱400 | ₱10 | ₱1,210 |
| At least ₱10,250 and up to ₱10,749.99 | ₱10,500 | ₱840 | ₱420 | ₱10 | ₱1,270 |
| At least ₱10,750 and up to ₱11,249.99 | ₱11,000 | ₱880 | ₱440 | ₱10 | ₱1,330 |
| At least ₱11,250 and up to ₱11,749.99 | ₱11,500 | ₱920 | ₱460 | ₱10 | ₱1,390 |
| At least ₱11,750 and up to ₱12,249.99 | ₱12,000 | ₱960 | ₱480 | ₱10 | ₱1,450 |
| At least ₱12,250 and up to ₱12,749.99 | ₱12,500 | ₱1,000 | ₱500 | ₱10 | ₱1,510 |
| At least ₱12,750 and up to ₱13,249.99 | ₱13,000 | ₱1,040 | ₱520 | ₱10 | ₱1,570 |
| At least ₱13,250 and up to ₱13,749.99 | ₱13,500 | ₱1,080 | ₱540 | ₱10 | ₱1,630 |
| At least ₱13,750 and up to ₱14,249.99 | ₱14,000 | ₱1,120 | ₱560 | ₱10 | ₱1,690 |
| At least ₱14,250 and up to ₱14,749.99 | ₱14,500 | ₱1,160 | ₱580 | ₱10 | ₱1,750 |
| At least ₱14,750 and up to ₱15,249.99 | ₱15,000 | ₱1,200 | ₱600 | ₱30 | ₱1,830 |
| At least ₱15,250 and up to ₱15,749.99 | ₱15,500 | ₱1,240 | ₱620 | ₱30 | ₱1,890 |
| At least ₱15,750 and up to ₱16,249.99 | ₱16,000 | ₱1,280 | ₱640 | ₱30 | ₱1,950 |
| At least ₱16,250 and up to ₱16,749.99 | ₱16,500 | ₱1,320 | ₱660 | ₱30 | ₱2,010 |
| At least ₱16,750 and up to ₱17,249.99 | ₱17,000 | ₱1,360 | ₱680 | ₱30 | ₱2,070 |
| At least ₱17,250 and up to ₱17,749.99 | ₱17,500 | ₱1,400 | ₱700 | ₱30 | ₱2,130 |
| At least ₱17,750 and up to ₱18,249.99 | ₱18,000 | ₱1,440 | ₱720 | ₱30 | ₱2,190 |
| At least ₱18,250 and up to ₱18,749.99 | ₱18,500 | ₱1,480 | ₱740 | ₱30 | ₱2,250 |
| At least ₱18,750 and up to ₱19,249.99 | ₱19,000 | ₱1,520 | ₱760 | ₱30 | ₱2,310 |
| At least ₱19,250 and up to ₱19,749.99 | ₱19,500 | ₱1,560 | ₱780 | ₱30 | ₱2,370 |
| At least ₱19,750 | ₱20,000 | ₱1,600 | ₱8,000 | ₱30 | ₱2,430 |
National Health Insurance Program (NHIP): Employers and employees are assessed health insurance contributions based on monthly employment income paid to employees. Employers and employees each pay half of the total monthly premium.
NHIP contributions are subject to a monthly income floor, also known as a minimum monthly tax base. If an employee’s compensation for a month was less than the minimum monthly income floor for NHIP contributions, the employee’s compensation for the month would be treated as having been the minimum monthly income floor for calculations of NHIP contributions. NHIP contributions also are subject to a monthly income ceiling, which is the maximum amount of employment income paid to an employee during a month upon which NHIP contributions may be assessed on the employee and employer.
The NHIP contribution rate is multiplied by the employment income paid to an employee during a month, subject to the monthly income floor and monthly income ceiling, to determine the sum of the employee and employer contributions due for the month. The employee is required to pay half of that sum, rounded down to the nearest hundredth, and the employer is required to pay the same amount.
Effective for 2020, the NHIP contribution rate is 3%; 2021, 3.5%; 2022, 4%; 2023, 4.5%; and starting with 2024, 5%. Effective until Dec. 31, 2019, the NHIP contribution rate is 2.75%.
The monthly income floor for NHIP contributions is ₱10,000.
Effective starting with 2020, the monthly income ceiling for NHIP contributions increases by ₱10,000 each Jan. 1 until it reaches ₱100,000 as of Jan. 1, 2024. Effective for 2019, the monthly income ceiling for NHIP contributions is ₱50,000.
Effective for 2021, the Philippines’ health insurance contribution amounts per employee are as follows:| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Total Contribution, Rate of 3.5% (Philippine Pesos) | Employer Contribution (Philippine Pesos) | Employee Contribution (Philippine Pesos) |
|---|---|---|---|
| Up to ₱10,000 | ₱350 | ₱175 | ₱175 |
| At least ₱10,000.01 and up to ₱69,999.99 | Ranges from ₱349.99 to ₱2,449.99 | Ranges from ₱174.99 to ₱1,224.99 | Ranges from ₱174.99 to ₱1,224.99 |
| At least ₱70,000 | ₱2,450 | ₱1,225 | ₱1,225 |
| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Total Contribution, Rate of 3% (Philippine Pesos) | Employer Contribution (Philippine Pesos) | Employee Contribution (Philippine Pesos) |
|---|---|---|---|
| Up to ₱10,000 | ₱300 | ₱150 | ₱150 |
| At least ₱10,000.01 and up to ₱59,999.99 | Ranges from ₱299.99 to ₱1,799.99 | Ranges from ₱149.99 to ₱899.99 | Ranges from ₱149.99 to ₱899.99 |
| At least ₱60,000 | ₱1,800 | ₱900 | ₱900 |
| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Total Contribution, Rate of 4% (Philippine Pesos) | Employer Contribution (Philippine Pesos) | Employee Contribution (Philippine Pesos) |
|---|---|---|---|
| Up to ₱10,000 | ₱400 | ₱200 | ₱200 |
| At least ₱10,000.01 and up to ₱79,999.99 | Ranges from ₱399.99 to ₱3,199.99 | Ranges from ₱199.99 to ₱1,599.99 | Ranges from ₱199.99 to ₱1,599.99 |
| At least ₱80,000 | ₱3,200 | ₱1,600 | ₱1,600 |
| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Total Contribution, Rate of 4.5% (Philippine Pesos) | Employer Contribution (Philippine Pesos) | Employee Contribution (Philippine Pesos) |
|---|---|---|---|
| Up to ₱10,000 | ₱450 | ₱225 | ₱225 |
| At least ₱10,000.01 and up to ₱89,999.99 | Ranges from ₱449.99 to ₱4,049.99 | Ranges from ₱224.99 to ₱2,024.99 | Ranges from ₱224.99 to ₱2,024.99 |
| At least ₱90,000 | ₱4,050 | ₱2,025 | ₱2,025 |
| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Total Contribution, Rate of 5% (Philippine Pesos) | Employer Contribution (Philippine Pesos) | Employee Contribution (Philippine Pesos) |
|---|---|---|---|
| Up to ₱10,000 | ₱500 | ₱250 | ₱250 |
| At least ₱10,000.01 and up to ₱99,999.99 | Ranges from ₱499.99 to 4,999.99 | Ranges from ₱249.99 to 2,499.99 | Ranges from ₱249.99 to ₱2,499.99 |
| At least ₱100,000 | ₱5,000 | ₱2,500 | ₱2,500 |
Home Development Mutual Fund: Employers and employees are assessed contributions for the Home Development Mutual Fund based on monthly wages paid to employees.
The Philippines’ Home Development Mutual Fund contribution rates are as follows:| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Employer Contribution Rate | Employee Contribution Rate |
|---|---|---|
| Up to ₱1,500 | 2% | 1% |
| More than ₱1,500 and up to ₱5,000 | 2% | 2% |
The total contribution assessed on wages of more than 5,000 in a month is 200, with 100 paid by the employer and 100 paid by the employee.
Effective starting with 2019, an exception to the aforementioned contribution rates is that nonresident employees are not assessed contributions for the Home Development Mutual Fund.
Employees’ Compensation (EC): The employer is required to remit monthly EC contributions on behalf of the employees, and employees are not assessed an EC contribution. The contribution is equal to 0.2% of the monthly salary credit applicable to the threshold range of monthly income actually paid.
The Philippines’ EC contribution amounts per employee are as follows:| Range of Monthly Income Actually Paid to Employee (Philippine Pesos) | Applicable Salary Credit Upon Which Contributions Assessed (Philippine Pesos) | Employer Contribution to Employees’ Compensation Program |
|---|---|---|
| Up to ₱14,749.99 | ₱5,000 | ₱10 |
| At least ₱14,750 | ₱15,000 | ₱30 |
Registration: Employers must register their employees with the Social Security System within 30 days of the commencement of employment contracts.
Taxable Amounts: All employment remuneration is subject to social taxes, including any cost-of-living allowance, any remuneration paid in any form other than cash, and taking into account applicable salary credits.
Withholding Amounts: Employers are required to deduct, at the end of each month, social tax contributions from their employee’s total remuneration.
Returns and Remittance: Social taxes must be remitted by employers to an SSS branch office, accredited bank, or authorized payment center with three copies of SSS Form R-5, Employer Contributions Payment Return, based on what the 10th digit of the 13-digit employer number is:
- • if the 10th digit is a 1 or 2, employers must remit payments by the 10th day of the month following the applicable month;
- • if the 10th digit is a 3 or 4, employers must remit payments by the 15th day of the month following the applicable month;
- • if the 10th digit is a 5 or 6, employers must remit payments by the 20th day of the month following the applicable month;
- • if the 10th digit is a 7 or 8, employers must remit payments by the 25th day of the month following the applicable month; and
- • if the 10th digit is a 9 or 0, employers must remit payments by the last day of the month following the applicable month.
After each set of three copies of Form R-5 is filed, the government returns one of the copies to the employer as a validated Form R-5. The validated copies of Form R-5 for each month of a quarter must be filed with the quarter’s Form R-3, Contribution Collection List by the 10th day of the month following the quarter.
Within 10 days after the deadline for remitting payments for a month, Form R-3 must be filed electronically with a validated copy of the month’s Form R-5, either on electronic media with the nearest SSS branch office or online using the government’s My.SSS portal.
Recordkeeping: Social tax reports generally must be retained for at least 10 years from the day after the date when they were required to be submitted.
Penalties: For employers that fail to deduct and remit social tax contributions, a fine of 3% per month of the contribution owed can be assessed until the contribution and corresponding fines are paid.
Other Taxes
Employers are required to pay tax on the assessed value of some fringe benefits provided to employees with supervisory or managerial positions, and this tax is known as the fringe benefit tax, abbreviated as FBT.
Coverage: All employers that pay nonexempt fringe benefits to managerial or supervisory employees are covered by the requirement to pay the FBT.
Rates and Thresholds: The FBT rate functions as a final withholding tax rate.
The applicable rate for fringe benefits paid to managerial or supervisory employees who are citizens or non-resident aliens of the Philippines generally is 35% of the grossed-up monetary value of fringe benefits provided to them.
The applicable rate for fringe benefits paid to nonresident alien managerial or supervisory employees not engaged in trade or business in the Philippines is 25% of the grossed-up monetary value of fringe benefits provided to them.
Registration: The registration requirements applicable for income tax in the Philippines also are applicable for the FBT.
Taxable Amounts: The grossed-up monetary value of applicable types of fringe benefits provided to supervisory and managerial employees is taxable. Fringe benefits, for the purpose of the FBT, include goods, services, or other benefits furnished or granted in cash or as benefits-in-kind by employers to managerial or supervisory employees, with the exceptions of employer contributions to employee retirement, insurance, or hospitalization benefit plans; and de minimis fringes. Fringe benefits that are provided to such employees because they are necessary for their work, or because they are for the convenience or advantage of the employer, are not taxable.
The grossed-up value of the fringe benefit is calculated by dividing the actual monetary value of a fringe benefit by the difference between 100% and the applicable rate of income tax.
The grossed-up monetary value of a fringe benefit paid to a:
- resident managerial or supervisory employee is determined by dividing the actual monetary value of the benefit by 0.65;
- nonresident alien managerial or supervisory employee not engaged in trade or business in the Philippines is determined by dividing the actual monetary value of the benefit by 0.75; and
Withholding Amounts: Employers pay the FBT on behalf of managerial and supervisory employees as form of final withholding tax on the grossed-up value of the fringe benefits provided to them. The FBT rate employers are assessed on the grossed-up value of a fringe benefit results in the gross-up amount being paid as FBT, and the actual monetary value of the fringe benefit not being subject to FBT.
Returns and Remittance: Data regarding payable FBT must be reported on a quarterly basis using BIR Form No. 1603, Quarterly Remittance Return of Final Income Taxes Withheld (On Fringe Benefits Paid to Employees Other than Rank and File). If a fringe benefit subject to FBT is provided during a quarter, the FBT on that benefit must be reported on the Form 1603 for that quarter. The form for a quarter is due by the 10th day of the month following that quarter if it is provided by paper to the Bureau of Internal Revenue, and is due by the 15th day of the month following that quarter if it is provided using the bureau’s eFiling and Payment System (abbreviated as eFPS).
FBT tax detailed on the Form 1603 for a quarter must be paid by the date that form must be filed.
Recordkeeping: FBT reports generally must be retained for at least 10 years from the day after the date when they were required to be submitted.
Penalties: A penalty of 25% of FBT due may be assessed if employers fail to timely file Form 1603 or pay FBT due, but the penalty can be increased to 50% if the Bureau of Internal Revenue determines these failures to have been willful. Filing a fraudulent return also can result in a penalty of 50% of the FBT required to be paid.
State/Jurisdiction Taxes
Taxes on employment income are not assessed by any of the Philippines’s administrative regions or local jurisdictions.
COMPENSATION AND BENEFITS
The Labor Code of the Philippines regulates overtime work and pay, regular hours of work, holidays, different types of leave, wage payment, termination pay and workers’ compensation.
Retirement benefits are covered under social taxes. Employees who have paid at least 120 monthly payments prior to retirement age of 60 years old, have ceased working or being self-employed, or have reached the age of 65 are entitled to a monthly retirement pension. Employees have the option of receiving the first 18 months of retirement pay in a lump sum discounted at a preferential rate of interest, determined by the SSS.
All labor code regulations are administered by the Department of Labor and Employment except for minimum wage requirements, which are regulated by each administrative region.
The Department of Labor and Employment regulates the Labor Code of the Philippines.
Coronavirus (Covid-19) guidance: Small businesses in various industries affected by coronavirus quarantines may apply for a wage-replacement program for employees for up to two months. Criteria include workers who have been employed since March 1, 2020, who are unable to work, and who must have not been paid for at least two weeks.
The government’s Small Business Wage Subsidy provides from ₱5,000 to ₱8,000 a month for each eligible employee to small businesses affected by the quarantine. Employers must apply for the relief by May 8, 2020. To qualify, businesses must not be listed on the Bureau of Internal Revenue’s Large Taxpayer Service list and must do business in certain sectors. Employers in areas under other quarantines imposed by local governments also may qualify.
Minimum WageIn the Philippines, administrative regions are permitted significant authority in establishing minimum wages, and there is no national minimum wage. Regions are administrative divisions of the country that primarily serve to organize the provinces of the country for administrative convenience. The tripartite wage and productivity boards of each of the 17 administrative regions in the Philippines set minimum wage requirements.
The National Capital Region, which includes the national capital city of Manila, generally has the highest daily minimum wages for nonagricultural workers and for agricultural workers among the regions.
Minimum wages applicable in the Philippines are broadly differentiated based on whether they are for nonagricultural or agricultural work. Each minimum wage rate consists of a basic wage rate and a cost of living allowance.
Non-agricultural daily minimum wages range from the lowest non-agricultural daily minimum wage of 256 in Region 1 (Ilocos Region) to the highest non-agricultural daily minimum wage of 537 in the National Capital Region (NCR). Agricultural daily minimum wages range from the lowest agricultural daily minimum wage of 256 in Region 1 (Ilocos Region) to the agricultural daily minimum wage of 500 in the National Capital Region (NCR).
The daily minimum wage rates currently in effect for the 17 regions of the Philippines are detailed in the below chart. Each rate indicated in the chart is the total of the applicable basic wage rate and cost of living allowance.
| Region | Non-Agricultural Daily Minimum Wage (Philippine Pesos) | Agricultural Daily Minimum Wage (Philippine Pesos) |
|---|---|---|
| National Capital Region (NCR) | ₱500 to ₱537 | ₱500 |
| Cordillera Administrative Region (CAR) | ₱340 to ₱350 | ₱340 to ₱350 |
| Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) | ₱300 to ₱325 | ₱290 to ₱300 |
| Region 1 (Ilocos Region) | ₱282 to ₱340 | ₱282 to ₱292 |
| Region 2 (Cagayan Valley) | ₱320 to ₱360 | ₱340 |
| Region 3 (Central Luzon) | ₱369 to ₱420 | ₱342 to ₱390 |
| Region 4-A (Calabarzon) | ₱317 to ₱400 | ₱303 to ₱372 |
| Region 4-B (MIMAROPA Region, also known as Southwestern Tagalog Region) | ₱294 to ₱320 | ₱294 to ₱320 |
| Region 5 (Bicol Region) | ₱310 | ₱310 |
| Region 6 (Western Visayas) | ₱310 to ₱395 | ₱315 |
| Region 7 (Central Visayas) | ₱351 to ₱404 | ₱351 to ₱394 |
| Region 8 (Eastern Visayas) | ₱325 | ₱295 |
| Region 9 (Zamboanga Peninsula, also known as ZamPen Region) | ₱316 | ₱303 |
| Region 10 (Northern Mindanao) | ₱343 to ₱365 | ₱331 to ₱353 |
| Region 11 (Davao Region) | ₱381 to ₱396 | ₱391 |
| Region 12 (Soccsksargen) | ₱336 | ₱315 |
| Region 13 (Caraga Region) | ₱320 | ₱320 |
Overtime
Any work performed during a day in excess of eight hours is considered overtime work. Overtime work is paid at 125% of normal remuneration. Overtime pay on a holiday, special day, or rest day is calculated by multiplying the increased regular pay for work on the designated type of day by 130%.
Hours of Work
The normal work day is eight hours. Employers are required to give employees one day off each week. Night work, defined as work done between 10 p.m. and 6 a.m., is to be remunerated by at least 110% of regular remuneration. Pay for night work on a holiday, special day, or rest day is calculated by multiplying the increased regular pay for work on the designated type of day by 110%.
Holidays
The Philippines recognizes various holidays that are categorized as either regular holidays or special (nonworking) days.
Employees covered under the Holiday Pay Rule are entitled to have regular holidays off with regular remuneration if they do not work and 200% of regular remuneration if they do work. If employees work on a holiday that falls on a rest day, they are entitled to receive 260% of regular pay.
Employees who do not work on special days are not entitled to receive any pay. However, if employees work on a special day, they are entitled to 30% extra pay if the day is a weekday and 50% extra pay if the special day falls on a rest day.
When two holidays fall on the same day, as occurred with Araw ng Kagitingan and Maundy Thursday on April 9, 2020, employees not working are entitled to receive 200% of their regular pay and employees working are entitled to receive 300% of their regular pay.
Regular holidays observed in the Philippines for which paid leave is required are:
- Jan. 1: New Year’s Day
- Maundy Thursday, which internationally is known as Holy Thursday: the Thursday immediately before Easter Sunday.
- Good Friday: the Friday immediately before Easter Sunday.
- Eid’l Fitr (Eidul Fitr), which internationally is known as Eid al-Fitr and also is known as the Festival of Breaking the Fast: the Philippines requires paid leave to be provided for Eid al-Fitr for one day, which is the principal day of this holiday. The principal day of Eid al-Fitr is internationally recognized as the 1st day of Shawwal, which is the 10th month of the Islamic Calendar and can fall in any month of the Gregorian Calendar.
- April 9: Day of Valor (Araw ng Kagitingan).
- May 1: Labor Day.
- June 12: Independence Day.
- Eid’l Adha (Eidul Adha, Qurbani), which internationally is known as Eid al-Adha and also is known as the Festival of Sacrifice: the Philippines requires paid leave to be provided for Eid al-Adha for one day, which is the principal day of this holiday. The principal day of Eid al-Adha is internationally recognized as the 10th day of Dhu al-Hijjah, which is the 12th month of the Islamic Calendar and can fall in any month of the Gregorian Calendar.
- National Heroes Day: the last Monday of August.
- Nov. 30: Bonifacio Day.
- Dec. 25: Christmas Day.
- Dec. 30: Rizal Day.
The special nonworking days that are recognized in the Philippines are:
- Chinese New Year: the Philippines recognizes the first day of each new year of the Chinese Calendar as a special nonworking day.
- Feb. 25: Anniversary of the EDSA People Power Revolution.
- Black Saturday, which internationally is known as Holy Saturday: the Saturday immediately before Easter Sunday.
- Aug. 21: Ninoy Aquino Day, a day of commemoration of the life of Senator Benigno (Ninoy) Aquino, Jr.
- Nov. 1: All Saints’ Day
- Nov. 2: All Souls’ Day
- Dec. 8: Feast of the Immaculate Conception of Mary
- Dec. 24: Christmas Eve
- Dec. 31: New Year’s Eve
Leave
Employees who have worked for an employer for at least a year are entitled to five days of paid leave, which is known as “service incentive leave.” This benefit does not apply to employees who receive vacation leave with pay of at least five days or employees in establishments with fewer than 10 total employees. Unused service incentive leave may be cashed in at the end of the year.
Maternity Leave: Female employees are entitled to a maternity leave benefit of 105 days in case of normal or caesarean delivery and 60 days paid leave for miscarriage or emergency termination of pregnancy, and an additional 15 days paid leave for single mothers, for a total of up to 120 days. Female employees have the option to extend their leave for another 30 days without pay, provided that the employer is given notice in writing. The notice must be received at least 45 days before the maternity leave period ends. Paid maternity leave can be taken before or after the birth of a child, as long as the total days do not exceed 105 days, 120 days, or 60 days, as the case may be. A minimum of 60 days must be taken as paid maternity leave. A female employee entitled to maternity leave benefits may allocate up to seven days of her benefits to the child’s father. Female employees receive benefits equivalent to 100% of their average daily salary.
Female employees must be a Social Security System (SSS) member and employed at the time of delivery or miscarriage to be entitled to benefits. Female employees also must give the required notification to the SSS through the employer and the employer must have paid at least three monthly contributions to the SSS within the 12 month period immediately before the date of the birth to receive benefits.
The maternity leave benefit is granted to employees in lieu of wages and may not be included in computing the employee’s 13 month pay for the calendar year.
Paternity Leave: Male employees are entitled to paternity leave for the first four deliveries of their wife if they live with their wife. The paternity leave is equal to seven calendar days with full pay. Male employees can use their paternity leave after the birth of the child.
Male employees can qualify for paternity leave if their wife has given birth or suffered a miscarriage and they meet the following requirements: if he is an employee at the time of the delivery of his child, if he is cohabiting with his spouse at the time that she gives birth or suffers a miscarriage and if he has applied for paternity leave with his employer within a reasonable period of time from the expected date of delivery.
Parental Leave for Single Parents: Employees can be entitled to a parental leave of seven work days each year with full pay. Employees qualify for this leave if they meet the following criteria: the employee has completed at least one year of service, whether continuous or broken; the employee has notified the employer that the leave needs to be used within a reasonable period of time; and the employee has presented to the employer a Solo Parent Identification Card, which may be obtained from a Department of Social Welfare and Development (DSWD) office.
Leave for Victims of Violence Against Women and Their Children: If an employee qualifies for this leave, she is entitled to up to 10 days off of work with full pay. The leave can be extended when the need arises.
Special Leave for Women: Female employees who have undergone a surgery in relation to a gynecological disorder are entitled to receive pay from an employer before or during the surgery.
Female employees are entitled to this special leave benefit of two months with full pay based on her gross monthly compensation.
Female employees can qualify for this leave if they have: rendered at least six months of continuous aggregate employment for the last 12 months prior to surgery, filed an application for special leave with an employer within a reasonable period of time from the expected date of surgery and have undergone surgery due to gynecological disorders as certified by a competent physician.
Wage Payment
Employers are required to pay employees at least once every two weeks or twice a month, as long as the interval between payments does not exceed 16 days.
Bonuses and Special Benefits
All employers are required to pay employees a 13 month bonus as long as an employee has worked at least one month during a calendar year. The 13 month pay is to be given to employees by Dec. 24 of every year. The 13 month pay cannot be less than one-twelfth of the total basic salary earned by an employee in a calendar year.
Termination Pay
Employees are entitled to receive termination pay equal to one-half a month’s pay for every year or six months of a year of service if termination occurs due to any of the following:
- retrenchment to prevent losses;
- closure or cessation of operation of an establishment not due to serious losses or financial reverses; or
- when the employee is suffering from a disease not curable within a period of six months.
Employees are entitled to receive termination pay equal to a full month’s pay for every year or six months of a year of service if termination occurs due to any of the following:
- installation of labor-saving devices by the employer;
- redundancy; or
- it is impossible reinstate the employee in his/her former position or to an equal position.
Employers may terminate an employee by submitting a written notice to the employee and to the Department of Labor and Employment at least one month in advance of the termination.
Workers’ Compensation
The Social Security System administers an Employees’ Compensation (EC) program, which assists workers who experience work-related sicknesses or injuries resulting in disability or death. The benefits under the EC program can be utilized in conjunction with the benefits under the social security program.
Workers with a qualifying work-related injury or illness are eligible for a temporary disability benefit equal to 90% of their average daily earnings, payable from the first day of their disability and for up to 120 days. The eligibility period may be increased by an additional 120 days if the worker requires additional treatment. If the worker is eligible for permanent disability benefits, the worker would receive 115% of the monthly social security benefit for which the worker would be eligible upon retirement.
Recordkeeping
Records of compensation and benefits provided to employees must be retained for at least 10 years.
FOREIGN WORKERS
Foreign workers are entitled to the same rights as the Philippines citizens and are generally covered by the same tax and workplace laws.
Visas: Employees must have a valid passport and obtain work visa 9(G), a non immigrant visa for pre-arranged employees, to work in the Philippines. A request letter from the employer is required for this visa in addition to a certified copy of the employee’s contract of employment stating exact salary to be received for the next year.
An Alien Employment Permit (AEP) must also be obtained from the Department of Labor and Employment (DOLE). Foreign nationals can apply for an AEP at a Philippine Embassy or Consulate. Local employers who wish to hire the services of a foreigner can apply on behalf of the foreign national at the nearest Regional Office of the DOLE. Foreign nationals who are already in the Philippines can apply for an AEP through their prospective employers with the nearest Regional Office of the DOLE. An AEP will be valid for a time period that depends on the nature of the position occupied by the foreign employee; whether elective, technical, advisory or supervisory.
Taxes: In general, a nonresident individual is taxed solely on income derived in the Philippines on the same progressive income tax scale as Philippine citizens. According to the law on Social Security, nonresident employees generally are subject to the same social tax provisions as resident employees unless protected by a totalization agreement between the Philippines and the foreign worker’s country of origin. However, effective starting with 2019, nonresidents are not required to contribute to the Home Development Mutual Fund.
Effective starting Oct. 8, 2021, nonresident employees that are employed by an offshore gaming licensee or its service provider are subject to an income tax rate of 25% on their employment income earned from the licensee or service provider. The minimum monthly tax that nonresident employees would pay must be at least ₱12,500 per month. Every nonresident employee of an offshore gaming licensee or its service provider must have a tax identification number.
Wages/Payments: There are no special requirements for payment of foreigners employed in the Philippines.
WORKING IN THE UNITED STATES
Foreign workers from the Philippines must meet general visa requirements and be certified to be employed in the U.S. General visa requirements for the U.S. are included in the separate
Philippine workers are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.
U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.
For tax purposes, Philippine citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes.
The Philippines has a tax treaty with the U.S.
State and local taxation of Philippine workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.
The U.S. labor laws apply to all workers employed and providing services in the country.
Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.
Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the
Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.
Income Taxes: Generally, nonresidents in the U.S. who are from the Philippines and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.
A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from the Philippines and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.
Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the
Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.
An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the
Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.
Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.
Tax treaties: The Philippines and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the ith the employer.
Students, trainees and teachers in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student, trainee or teacher is temporarily in the U.S. for purposes of studying or has accepted an invitation by the U.S. government (or by a political subdivision or local authority) for the purpose of teaching or engaging in research for a period not expected to exceed two years for teachers and five years for students by a university or other recognized educational institution in the U.S. It also must affirm that the individual will receive compensation for services performed in the U.S. The student exemption is not to exceed U.S. $7,500 per year; no limit is placed on the teacher compensation for Philippine residents.
Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.
Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.
Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.
Totalization Agreements: The Philippines and the U.S. have not entered into a totalization agreement.
Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.
There are no particular requirements that employees be paid in U.S. dollars.
TREATY ARRANGEMENTS
The Philippines has entered into more than 40 income tax treaties, including an income tax treaty with the United States . The Philippines does not have a totalization agreement with the United States for social tax purposes.
The countries with which the Philippines has a bilateral income tax treaty in effect are Australia, Austria, Bahrain, Bangladesh, Belgium, Brazil, Canada, China, the Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Kuwait, Malaysia, Mexico, the Netherlands, New Zealand, Nigeria, Norway, Pakistan, Poland, Qatar, Romania, Russia, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, United Kingdom, United States, and Vietnam.
The Philippines has totalization agreements with more than 10 countries. The countries with which the Philippines has agreements are Austria, Belgium, Canada, Denmark, France, Germany, Japan, Luxembourg, Netherlands, Portugal, Spain, Sweden, Switzerland, and United Kingdom. It also has an agreement with the Canadian province of Quebec.
RESOURCES
All resources are in English.
General
U.S. State Department:
- U.S. Relations With the Philippines
- International Travel Information: Philippines
U.S. Central Intelligence Agency:
- The World Factbook: Philippines
- The World Factbook: Languages
U.S. Library of Congress:
- Guide to Law Online: Philippines
- Global Legal Monitor: Philippines
U.S. Department of Commerce: Export.gov: Philippines - Business Travel
Currency Details
International Organization for Standardization: Currency Codes - ISO 4217
Unicode Consortium: Currency Symbols
United Nations: United Nations Terminology Database: Philippines
Taxes
Philippines Bureau of Internal Revenue
National Internal Revenue Code
Home Development Mutual Fund: Membership Guidelines
PhilHealth: Sample Computations of PhilHealth Premium
Revenue Memorandum Circular No. 88-2012
Republic of the Philippines Social Security System (SSS)
Philippines Social Security Act of 2018
Philippines Universal Health Care Act of 2019
Philippines Revenue Regulations No. 17-2013
Philippines Pag-IBIG Fund Circular No. 421
Act No. 11,590
Compensation and Benefits
Department of Labor and Employment:
- The Labor Code of the Philippines
- National Wages and Productivity Commission
- Republic of the Philippines Social Security System
- Workers’ Statutory Monetary Benefits Handbook
- Labor Advisory No. 13, Series of 2020
Presidential Decree No. 626
Act No. 11,210, 105-Day Expanded Maternity Leave Law
Philippines Revenue Regulations No. 17-2013
Foreign Workers
The Philippines Bureau of Immigration
Embassy of the Philippines in Washington, D.C.
Working in the United States
U.S. Department of Labor:
- Foreign Labor Certification
- Hiring Foreign Workers
U.S. Internal Revenue Service:
- IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
- IRS Publication 15, Circular E, Employer’s Tax Guide
- IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- IRS Publication 519, U.S. Tax Guide for Aliens
- IRS Publication 901, U.S. Tax Treaties