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Understand which business expenses are deductible under philippine tax law including rules on documentation, limits, and bir audit requirements. In doing the computation, we should be careful. In computing your income tax, you need to determine your deductible costs and expenses to arrive at your net taxable income.
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Section 34(a)(1)(a) of the national internal revenue code of 1997, as amended (tax code), provides that ordinary and necessary expenses paid or incurred during the taxable year which. By deducting eligible costs, a business pays tax only on its net income (gross income minus allowable expenses), which can significantly reduce the overall tax due. The remainder, if any, shall be included in full as taxable income from sources within the philippines.
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3, 2025, reiterating the criteria and guidelines on the deductibility. They are technically termed as “allowable deductions from gross income”. Can a taxpayer deduct business expenses related to passive income?
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Under the tax code, for the purpose of determining the taxable income subject to tax, there shall be allowed as deduction from gross income all the ordinary and necessary. In computing for the income tax in the philippines, certain deductible expenses are subtracted from gross income. Under the bir’s latest issuance, taxpayers need to identify and segregate their expenses more carefully.
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