Philippines Payroll Guide 2026

Resident citizens are taxed on worldwide income and resident aliens on Philippine-sourced income, both on the graduated scale below. Non-resident aliens not engaged in trade or business are taxed at a flat 25% on gross Philippine-sourced income.

Taxable compensation is gross pay less mandatory SSS, PhilHealth and Pag-IBIG contributions. The 13th month pay together with other benefits is exempt up to PHP 90,000 per year, and de minimis benefits within the prescribed limits are exempt as well. Minimum wage earners are exempt from income tax on their basic wage, holiday pay, overtime, night shift differential and hazard pay.

• Withholding tax is remitted on BIR Form 1601-C by the 10th of the following month (15th for eFPS filers)
• The annual information return BIR Form 1604-C is filed by 31 January
• BIR Form 2316 certificates are issued to employees by 31 January
• Year-end annualisation adjusts over- or under-withheld tax in the December payroll

The Social Security System covers retirement, disability, sickness, maternity, unemployment, funeral and death benefits for private sector employees. The total contribution rate is 15% of the monthly salary credit, split 10% employer and 5% employee.

The monthly salary credit ranges from PHP 5,000 to PHP 35,000. Amounts above PHP 20,000 go into the mandatory provident fund (WISP), an individual retirement savings account. New employees are reported on the SSS R-1A within 30 days and contributions are remitted using the electronic payment facility.

Every employee must be a PhilHealth member. The premium is 5% of the monthly basic salary, shared equally by employer and employee, with a salary floor of PHP 10,000 and a ceiling of PHP 100,000 — so the monthly premium ranges from PHP 500 to PHP 5,000 in total. Premiums are remitted monthly through the electronic premium remittance system.

The Home Development Mutual Fund is the mandatory savings and housing loan scheme. Employer and employee each contribute 2% of monthly compensation, computed on a compensation ceiling of PHP 10,000, giving the standard maximum of PHP 200 per side per month. Employees may contribute more voluntarily, and many employers match part of it. Remittances are due monthly according to the employer's assigned schedule.

Minimum wages are set regionally by the Regional Tripartite Wages and Productivity Boards and are reviewed at least once a year, so rates differ across the country. Wages must be paid at least twice a month at intervals not exceeding sixteen days.

All rank-and-file employees who have worked at least one month in a calendar year are entitled to 13th month pay equal to one twelfth of the basic salary earned during the year. It must be paid on or before 24 December, and is tax-exempt together with other benefits up to PHP 90,000. Employers report payment to DOLE by 15 January.

• Salaries: at least twice a month, at intervals of no more than 16 days
• BIR Form 1601-C withholding tax: by the 10th of the following month (15th for eFPS)
• SSS contributions: by the last day of the month following the applicable month
• PhilHealth premiums: by the 11th to the 15th of the following month, based on employer group
• Pag-IBIG contributions: by the 10th to the last day of the following month, per assigned schedule
• 13th month pay: on or before 24 December, reported to DOLE by 15 January

At year end the employer annualises each employee's tax, adjusts the December payroll for over- or under-withholding, and files the annual returns with the BIR.

• Annualisation of withholding tax in the December or final payroll
• BIR Form 2316 issued to every employee by 31 January
• BIR Form 1604-C annual information return filed by 31 January with the alphalist
• Substituted filing for qualified employees with a single employer
• 13th month pay report submitted to DOLE by 15 January

The Labor Code requires employers to issue a payslip for every pay period and to keep payroll records for at least three years, available for DOLE inspection.

• Employee name, position and pay period covered
• Basic pay, overtime, night shift differential, holiday and premium pay
• Allowances, commissions and de minimis benefits
• SSS, PhilHealth and Pag-IBIG employee contributions
• Withholding tax and any authorised deductions such as loans
• Net amount paid and the payment date

• Foreign nationals need an Alien Employment Permit from DOLE plus the appropriate 9(g) or 47(a)(2) work visa
• A Tax Identification Number from the BIR is required before the first payroll
• Resident aliens are taxed on the graduated scale; non-resident aliens not engaged in trade or business pay a flat 25%
• Foreign employees on local contracts are generally covered by SSS, PhilHealth and Pag-IBIG
• Totalisation agreements can exempt posted workers from SSS where a home-country certificate applies
• Regional headquarters and ROHQ arrangements have specific registration and reporting rules

A local payroll provider keeps BIR withholding, government registrations, monthly remittances, 13th month pay and payslips correct as rules change, without you building an in-house payroll team. You get one monthly report, one invoice and full audit-ready documentation.