Payroll taxes
in the Philippines.

SALARY PAYMENT IN Philippine Peso (₱)

CONTRACT LANGUAGES Tagalog / English

PAYROLL TAX ≈17%

PAYROLL CYCLE Monthly

TIME TO HIRE 12 hours
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Philippines

Payroll taxes in the Philippines cover compulsory employer contributions to various programs on behalf of employees. Read on to find out the different elements of payroll tax (otherwise known as employment taxes) in the Philippines and how it is calculated.

What is the average employer tax rate in the Philippines?

The average employer tax rate in the Philippines is 17%. This rate includes contributions for social security, health insurance, and other government mandated benefits, but does not include employee income tax withholding (which varies significantly by employee).

What is the average employee tax rate in the Philippines?

The average employee income tax rate in the Philippines is progressive, meaning it depends on the individual’s income level. Here are the tax rates for individuals in the Philippines for 2024:

Philippines – Individual Income Tax

Taxable Income (PHP)	Tax rate 2024
Income up to PHP 250,000	0%
Income over PHP 250,000 – PHP 400,000	20%
Income over PHP 400,000 – PHP 800,000	25%
Income over PHP 800,000 – PHP 2,000,000	30%
Income over PHP 2,000,000 – PHP 8,000,000	32%
Income over PHP 8,000,000	35%

Employer contributions in the Philippines

Employer contributions in the Philippines typically include the following:

Social Security System (SSS) Contributions: Employers are required to contribute to the Social Security System, which provides social insurance for employees in case of disability, sickness, maternity, retirement, and death. Employers contribute 13% of the monthly salary credit of their employees to the SSS, up to a maximum salary credit established by the SSS. This contribution provides benefits for retirement, maternity, sickness, disability, and death.
PhilHealth Contributions: Employers also need to make contributions to the Philippine Health Insurance Corporation (PhilHealth), a government agency that provides health insurance benefits to employees and their dependents. Employers contribute an amount equal to 2% of the employee’s monthly basic salary for health insurance, with the total contribution (employer and employee) being 4% of the monthly salary, subject to income brackets and the maximum salary basis for calculation is PHP 60,000.
Home Development Mutual Fund (Pag-IBIG Fund) Contributions: Employers are required to contribute to the Pag-IBIG Fund, which is a housing savings program that helps employees avail housing loans and other benefits. Employers are required to contribute 2% of the employee’s monthly compensation to the Pag-IBIG Fund for employees earning more than PHP 1,500 per month. For employees earning PHP 1,500 or less, the contribution rate is 1%.
Employees’ Compensation Program (ECP) Contributions: Employers are also required to contribute to the Employees’ Compensation Program, which provides compensation and benefits to employees who suffer work-related illnesses, injuries, or death.

Employee contributions in the Philippines

Employees contribute into the same government programs as does the employer.

SSS Contributions: Employees contribute 4.5% of their monthly salary credit to the SSS, up to a maximum salary credit.
PhilHealth Contributions: Employees also contribute 2% of their monthly basic salary for health insurance, making the total contribution 4% together with the employer’s share.
Pag-IBIG Contributions: Employees contribute 2% of their monthly compensation to the Pag-IBIG Fund, matching the employer’s contribution.

Video: The benefits of employee contributions to Pag-IBIG

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FAQs

What is the tax bureau of the Philippines called?

The tax bureau of the Philippines is called the “Bureau of Internal Revenue” (BIR). The BIR is under the Department of Finance and plays a crucial role in collecting revenue for the government through various taxes, such as income tax, value-added tax (VAT), excise taxes, and other taxes mandated by law.

Is there an employer payroll tax contribution in the Philippines?

Yes, there is an employer payroll tax contribution in the Philippines. In the Philippines, businesses pay taxes at a rate of around 17%. This rate includes contributions for social security, health insurance, and other government-mandated benefits.

How does the payroll tax system of the Philippines work?

The payroll tax payment system of the Philippines is calculated by each employees’ salary each month. For example, the employer must commit to paying 17% of each employees’ salary every month to the Philippine Bureau of Internal Revenue (BIR).

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