Philippines

Registrations and Establishing an Entity

To employ staff and process payroll in the Philippines, businesses must:

• Register with the Securities and Exchange Commission (SEC)
  
  
• Obtain a Community Tax Certificate, Barangay clearance, and mayor’s permit
  
  
• Register with the Bureau of Internal Revenue (BIR)
  
  
• Enrol with the Social Security System (SSS), PhilHealth, and Pag-IBIG Fund (HDMF)
  
  
• Obtain authority to print official receipts and maintain prescribed accounting books
  
  

Banking

If making payroll directly, an in-country bank account is mandatory. However, if outsourced, the payroll provider may pay on behalf of the client using their own account. Banks typically open from 09:00 to 16:00, Monday to Friday.

Working Week

The working week is Monday to Friday, with typical office hours of eight hours per day. Certain sectors may operate six-day or 48-hour work weeks.

Employment Law

Holiday Accrual
After one year of service, employees are entitled to five days of paid Service Incentive Leave (SIL). Additional holidays are determined by company policy.

Maternity Leave
105 days paid (120 days for single mothers); 60 days for miscarriage or emergency termination. An additional 30 unpaid days may be granted if requested in advance.

Paternity Leave
7 days for married male employees, applicable for the first to fourth child.

Sick Leave
No legal minimum; SIL can be used. Additional days may be granted by the employer. SSS provides up to 90% daily wage reimbursement for qualified members.

National Service
There is no compulsory national service in the Philippines.

Tax & Social Security

The tax year runs from 1 January to 31 December.

Income Tax (2025 rates)

• Up to ₱250,000: 0%
  
  
• ₱250,001 – ₱400,000: 20% of excess
  
  
• ₱400,001 – ₱800,000: ₱30,000 + 25%
  
  
• ₱800,001 – ₱2,000,000: ₱130,000 + 30%
  
  
• ₱2,000,001 – ₱8,000,000: ₱490,000 + 32%
  
  
• Over ₱8,000,000: ₱2,410,000 + 35%
  
  

Social Security Contributions

SSS and PhilHealth are mandatory, and employers must enrol staff within 30 days of employment.

Payroll

Online payslips are permitted and must show period worked, base rate, regular and overtime pay, deductions, and net amount. Payroll records must be maintained for five years.

Reports

Employers must file monthly tax returns (Form 1601-C), and social contributions with SSS, PhilHealth, and Pag-IBIG. Annual returns include Form 1604-CF and Form 2316 for employees.

Reporting

Payroll vendors may file on behalf of clients with appropriate authorisation. Statutory deadlines vary monthly.

New Employees

All employees must be registered with:

• Social Security System (SSS)
  
  
• PhilHealth
  
  
• Pag-IBIG (HDMF)
  
  
• Bureau of Internal Revenue (TIN)
  
  

Registration should be completed by or before the start date.

Leavers

Final payment is issued 10 days after exit clearance is completed. Employers must notify SSS, PhilHealth, and Pag-IBIG within 30 days of separation.

Employee Benefits

Employers commonly provide allowances for transport, meals, or housing, but these are taxable when paid regularly.

Expenses

Expenses may be integrated into payroll and are taxed unless irregular and supported by receipts. Companies set their own policies.

Work permits and visas require a valid Taxpayer Identification Number (TIN). A Provisional Work Permit (PWP) allows foreign nationals to start work while their visa is processed. Applications must include:

• Letter of employment offer
• Affidavit of support from employer
• Passport and relevant documents

Family visas cover spouses and dependent children only. Work visa holders must notify immigration before leaving the country and surrender documents.

Allowances included in monthly salary are subject to withholding. Non-substituted filing is required for individuals with multiple income sources. Dependents must be officially declared to benefit from tax exemptions. All statutory registrations and reporting platforms require accurate and timely employer-led processing.

Further Information

For more information, or assistance with Philippines Tax inquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.