Computing Taxable Income
June 12th, 2009Question: I got a separation pay from my previous employer which includes the gratuity pay.
This gratuity pay was included in my 2008 Income Tax Return, therefore, they computed my withholding tax including the gratuity pay. But I read from the website of Philippine BIR, gratuity and separation pay is not taxable. Can you tell if my understanding is correct, that they should not include the gratuity pay in my 2008 ITR, instead they should only compute the tax base on my salary earned before I resigned?
Answer: Yes that's true that gratuity and separation pay are not taxable but your gratuity pay should be included in your income tax return because it is considered as your earnings.
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Computation of Capital Gain
When a nonresident enterprise transfers equity interest in a Chinese resident enterprise, the nonresident enterprise generally should be liable for China's corporate income tax at 10 percent of the gain, if any, derived from the transfer.
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