Taxation is 70 items on Day 2 morning of the October 24-26, 2026 CPALE, and a large share of them turn on a number you either know or do not. This page collects those numbers in one place, current as of the October 2026 exam, with the governing law beside each one so you can tell which reviewer is out of date.
If you only have ten minutes, scroll to the table near the end headed the seven numbers most reviewers still get wrong. Those are where the cheap marks are.
Individual income tax
The graduated table below has been in force since 1 January 2023 under TRAIN. It is the second and final TRAIN table, not the 2018 one.
| Taxable income | Tax |
|---|---|
| Not over ₱250,000 | Nil |
| Over ₱250,000 to ₱400,000 | 15% of the excess over ₱250,000 |
| Over ₱400,000 to ₱800,000 | ₱22,500 + 20% of the excess over ₱400,000 |
| Over ₱800,000 to ₱2,000,000 | ₱102,500 + 25% of the excess over ₱800,000 |
| Over ₱2,000,000 to ₱8,000,000 | ₱402,500 + 30% of the excess over ₱2,000,000 |
| Over ₱8,000,000 | ₱2,202,500 + 35% of the excess over ₱8,000,000 |
The 8% option. A self-employed individual or professional whose gross sales and receipts do not exceed the ₱3,000,000 VAT threshold may elect a flat 8% on gross sales and receipts plus other non-operating income in excess of ₱250,000, in lieu of both the graduated rates and the percentage tax.
Exam trap: for a mixed income earner, the ₱250,000 deduction does not apply to the business portion. It is already absorbed by the graduated table applied to compensation. Applying it twice is the single most common error on 8% items.
Non-resident alien not engaged in trade or business: 25% final tax on Philippine-source gross income.
Corporate income tax
| Taxpayer | Rate | Note |
|---|---|---|
| Domestic corporation, regular | 25% | CREATE, retained by CREATE MORE |
| Domestic corporation, small | 20% | Net taxable income not over ₱5,000,000 and total assets not over ₱100,000,000 excluding the land the office or plant sits on |
| Resident foreign corporation | 25% | On Philippine-source taxable income |
| Non-resident foreign corporation | 25% | Final tax on gross income |
| Minimum corporate income tax | 2% of gross income | From the 4th taxable year; excess creditable against regular tax for 3 succeeding years |
| Proprietary educational institution and non-profit hospital | 10% | The 1% relief rate expired 30 June 2023 |
| Registered export enterprise, special rate | 5% of gross income earned | Export enterprises only. CREATE MORE lets it be elected immediately at the start of commercial operations, not only after the income tax holiday |
| Registered business enterprise under enhanced deductions | 20% | CREATE MORE reduced this from 25% |
Exam trap: the improperly accumulated earnings tax was repealed by CREATE. If an item asks you to compute a 10% tax on improperly accumulated earnings, the correct answer is that the tax no longer exists.
Passive income and capital gains
Interest rates in this table reflect CMEPA, effective 1 July 2025, which made the final tax on interest uniform.
| Income | Rate | Governing law |
|---|---|---|
| Interest on any currency bank deposit or deposit substitute | 20% final | CMEPA |
| Interest on foreign currency deposits, resident | 20% final | CMEPA raised this from 15% |
| Interest on foreign currency deposits, non-resident | Exempt | Applies to non-resident citizens and to non-resident aliens whether or not engaged in trade or business |
| Interest on long-term deposits of 5 years or more, individual | 20% final | CMEPA repealed the exemption |
| Royalties, general | 20% final | NIRC |
| Royalties on books, literary works and musical compositions | 10% final | NIRC |
| Prizes over ₱10,000 | 20% final | ₱10,000 or less is taxed at graduated rates |
| Winnings, general | 20% final | No peso floor. Every other winning is taxed whatever the amount |
| PCSO and lotto winnings | 20% final above ₱10,000 | ₱10,000 or less is exempt. The floor applies only to PCSO and lotto |
| Cash and property dividends from a domestic corporation, citizen or resident alien | 10% final | A non-resident alien engaged in trade or business is taxed at 20% |
| Intercorporate dividends, domestic to domestic | Exempt | NIRC |
| Sale of shares not traded on the exchange | 15% capital gains tax on net gain | CMEPA made this uniform for domestic and foreign shares |
| Sale of listed shares through the exchange | 0.1% of gross selling price | CMEPA cut this from 0.6% |
| Sale of real property held as a capital asset | 6% of gross selling price or fair market value, whichever is higher | NIRC |
| Fringe benefit tax | Two steps, in this order. Gross up first: monetary value ÷ 65% = grossed-up monetary value. Then tax it: 35% × grossed-up monetary value | TRAIN |
Exam trap: CMEPA does not re-tax instruments issued before 1 July 2025. A five-year time deposit placed in 2023 keeps its old exempt treatment for its remaining term. Read the placement date before you pick a rate.
Value-added tax and percentage tax
| Item | Value |
|---|---|
| VAT rate | 12% |
| VAT registration threshold | ₱3,000,000 gross sales or receipts |
| Percentage tax under Section 116 | 3% of gross sales or receipts |
| Residential lease, VAT-exempt if monthly rent does not exceed | ₱15,000 |
| Sale of house and lot and other residential dwellings, VAT-exempt if price does not exceed | ₱3,600,000 |
| Sale of a residential lot alone | No exemption. The lot-only exemption was phased out on 1 January 2021 |
| VAT return | Quarterly only, form 2550Q, within 25 days after the close of the quarter |
The percentage tax reverted to 3% on 1 July 2023 when the temporary 1% CREATE rate expired. The residential dwelling threshold rose to ₱3,600,000 on 1 January 2024, replacing ₱3,199,200, and is adjusted every three years against the consumer price index.
Exam trap: the old exemption for a residential lot sold on its own is gone. It was phased out on 1 January 2021, so a bare lot is now VATable whatever the price. If an item hands you a lot at ₱1,500,000 and offers VAT-exempt as a choice, the old ₱1,919,500 lot threshold is the distractor.
Under EOPT, output VAT on services accrues on billing, not on collection, and a single VAT invoice now covers both goods and services. The official receipt is no longer the controlling VAT document for services.
Exam trap: quarterly-only VAT filing came from TRAIN, effective 1 January 2023, not from EOPT. EOPT changed the base and the documentation, not the filing frequency.
Taxpayer classification under EOPT
| Classification | Gross sales |
|---|---|
| Micro | Less than ₱3,000,000 |
| Small | ₱3,000,000 to less than ₱20,000,000 |
| Medium | ₱20,000,000 to less than ₱1,000,000,000 |
| Large | ₱1,000,000,000 and above |
Micro and small taxpayers get a 10% surcharge instead of 25%, and a 50% reduction in deficiency and delinquency interest.
Keep up with the latest tax rules.
Practice Taxation questions covering current law, with AI explanations. Seven days free, no card.
Transfer taxes
| Item | Value |
|---|---|
| Estate tax rate | 6% of the net estate |
| Standard deduction, citizen or resident | ₱5,000,000 |
| Standard deduction, non-resident alien | ₱500,000 |
| Family home deduction, maximum | ₱10,000,000 |
| Estate tax return, deadline | Within 1 year from death |
| CPA certification required if gross estate exceeds | ₱5,000,000 |
| Donor's tax rate | 6% on total gifts in excess of ₱250,000 per calendar year |
| Donor's tax return, deadline | Within 30 days from the date of gift |
TRAIN removed funeral, judicial and medical expenses as deductions from the gross estate. A reviewer that still lists them predates 2018.
Documentary stamp tax on shares
| Transaction | Rate |
|---|---|
| Original issuance of shares of stock, general rule | 0.75% of par value, or ₱1.50 for every ₱200 |
| Original issuance, redemption or other disposition of shares in a mutual fund company | Exempt |
| Issuance of a certificate of participation in a mutual fund or a unit investment trust fund | Exempt |
CMEPA cut the original issuance rate from 1%, or ₱2.00 per ₱200.
Deductions and losses
| Item | Value |
|---|---|
| Optional standard deduction, individual | 40% of gross sales or receipts |
| Optional standard deduction, corporation | 40% of gross income |
| Net operating loss carry-over | 3 years |
| Interest expense, allowable deduction reduced by | 20% of interest income subjected to final tax |
Deadlines and prescriptive periods
These are pure recall and they appear every cycle in the tax remedies area, which carries 11.43% of the subject.
| Action | Period |
|---|---|
| Annual income tax return, individual | 15 April |
| Quarterly income tax return, individual | 15 May, 15 August, 15 November |
| Quarterly income tax return, corporation | Within 60 days after the close of the quarter |
| Annual income tax return, corporation | 15th day of the 4th month after the close of the taxable year |
| Ordinary assessment | 3 years from the last day for filing, or from actual filing if later |
| Assessment for a false or fraudulent return, or failure to file | 10 years from discovery |
| Collection after assessment | 5 years |
| Protest a final assessment notice | 30 days from receipt |
| Submit supporting documents after a request for reinvestigation | 60 days |
| Commissioner to decide a protest | 180 days |
| Appeal to the Court of Tax Appeals | 30 days from the decision or from the lapse of the 180 days |
| Refund of an erroneously or illegally paid tax, Section 229 | 2 years from payment |
| Refund of input VAT, Section 112 | 2 years from the close of the taxable quarter when the sales were made, not from payment |
| Commissioner to decide a VAT refund claim | 90 days |
| Penalty | Rate |
|---|---|
| Surcharge, ordinary | 25% |
| Surcharge, wilful neglect or fraud | 50% |
| Deficiency and delinquency interest | 12% per year, double the 6% legal rate |
The seven numbers most reviewers still get wrong
If your reviewer was printed before 2025, check these first. Each one was correct once, which is exactly what makes it dangerous.
| Item | The outdated answer | The current answer | Changed by |
|---|---|---|---|
| Interest on foreign currency deposits | 15% | 20% | CMEPA, 1 July 2025 |
| Interest on long-term deposits, 5 years or more | Exempt | 20% | CMEPA, 1 July 2025 |
| Stock transaction tax | 0.6% | 0.1% | CMEPA, 1 July 2025 |
| Documentary stamp tax on original issuance | 1% | 0.75% | CMEPA, 1 July 2025 |
| Minimum corporate income tax | 1% | 2% | Relief expired 30 June 2023 |
| Percentage tax under Section 116 | 1% | 3% | Relief expired 30 June 2023 |
| VAT exemption for residential dwellings | ₱3,199,200 | ₱3,600,000 | RR 1-2024, 1 January 2024 |
Two more worth a line each. The initial public offering tax no longer exists, repealed by Bayanihan II in 2020, and CMEPA is not the reason. The improperly accumulated earnings tax no longer exists, repealed by CREATE.
How to drill this in the final weeks
Reading a rate table does not put it in recall. Three passes work better than three readings.
- Cover the right column and recite. Work down each table naming the number before you look. Anything you miss twice goes on a single index card.
- Practise the traps as computations, not as facts. The mixed income earner and the pre-CMEPA time deposit are both computation items. Knowing the rule is not the same as executing it under a clock.
- Sort by law, not by topic, once. The Taxation subject asks "which law changed this" often enough that a single pass organised by TRAIN, CREATE MORE, EOPT and CMEPA pays for itself. Our guides on CMEPA, EOPT and CREATE MORE are organised that way.
For how these tables map onto the official blueprint, see our Taxation coverage and Table of Specifications guide. For the question of which laws are examinable at all on this sitting, see what is examinable in the October 2026 CPALE.
Practise against current rates
A rate you memorised is only proven when a question forces you to choose it over the rate you used to know. The 6,100+ questions on cpareview.ph are maintained against current law, and the AI tutor will show you the working when a passive income item turns on a placement date. Start your free 7-day trial.
Key takeaway
Taxation rewards recall more than any other subject on the CPALE, and the recall is worth the most where the law changed recently. Get the seven numbers in the table above right, keep the pre-CMEPA and post-CMEPA treatments separate, and know your prescriptive periods cold. That is a meaningful share of 70 items secured before you compute anything.
Sources
- Republic Act No. 10963 (TRAIN) — individual and transfer tax rates
- Republic Act No. 11976 (Ease of Paying Taxes Act) — taxpayer classification and VAT mechanics
- Republic Act No. 12066 (CREATE MORE) — corporate rates and incentives
- Republic Act No. 12214 (CMEPA) — passive income, stock transaction tax and documentary stamp tax
- BIR — Capital Markets Efficiency Promotion Act resource page
- Grant Thornton Philippines — VAT-exempt threshold for residential dwellings increased to ₱3.6M — Revenue Regulations No. 1-2024
- BIR — Revenue Regulations — current issuances
Last updated: September 2026, for the October 24-26, 2026 CPALE. Rates reflect TRAIN, CREATE MORE, EOPT and CMEPA and their implementing regulations. Confirm any BIR issuance released after this date before the exam.