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This guide has been prepared by an independent third-party firm

November 2023

PHILIPPINES – HOST TAX GUIDE ON SHORT-TERM ACCOMMODATIONS

As Airbnb Host providing short-term accommodation in the Philippines, there are tax

obligations which you will need to be mindful of to ensure that your business operations

remain tax compliant. This guide summarizes some of the relevant information on basic

tax requirements in connection with renting out real estate in the Philippines, particularly

on short-term lease.

penalties.

Generally, leasing out real estate in the Philippines will have income tax implications, as

well as value-added tax (VAT) or percentage tax implications. The applicable tax return

filings and the specific taxes due will depend on the nature of your registration as a

taxpayer and the amount of rental income that you generate per month and during the

taxable year.

In addition to your tax obligations with the BIR, there are also annual local taxes and

fees which you must take note of.

This guide is not comprehensive and does not constitute tax or legal advice; it only aims

to provide an overview of the tax compliance requirements to take into account when

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herein which may not have entered into effect at the time of writing.

INCOME TAX

Earnings derived from Philippine assets, such as rental properties located in the

Philippines, are considered Philippine-sourced income subject to Philippine income tax.

This attribution of the rental income as Philippine-sourced applies even if the income

recipient is a Philippine citizen or a foreigner.

Specifically, income from rental payments, including those from short-term

accommodations, have to be reported as part of your annual gross income for income

tax purposes. There are certain allowable expenses which can be deducted from your

gross income as the basis for the computation of your net income (or taxable income)

Airbnb Hosts), or (b) mixed income earners who also earn compensation income as

employees outside their business as Airbnb Hosts. The tax consequences are generally

the same, although there are slight differences in terms of tax compliance requirements,

specifically on the BIR Form to be accomplished.

Generally, self-employed individuals are subject to net income tax (after applying the

allowable deductions), with the following progressive income tax rates:

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If you are a self-employed individual and your gross receipts and other operating

income for the year does not exceed PhP 3 Million, you have an option to avail of an 8%

flat tax rate on your gross receipts in excess of PhP 250,000.00, in lieu of the graduated

income tax rates above. Otherwise, you can only avail of the progressive income tax

rates on your net income. Availment of the 8% flat tax rate will also exempt you from

the deduction of the amount of PhP 250,000.00.

For non-individual lessors (e.g., corporations and partnerships) leasing out property,

their net income (after deductions) is generally subject to the 25% regular corporate

income tax ("RCIT"). This can be reduced to 20% if your net income does not exceed

PhP 5,000,000.00 and your total assets (excluding land on which your office, plant, and

equipment are situated) do not exceed PhP 100,000,000.00.

There is a minimum corporate income tax ("MCIT") of 2% of the gross income which

should be paid if you have a zero or negative taxable income, or whenever this MCIT is

higher than the computed RCIT. The excess of the MCIT over the RCIT will be carried

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expenses directly attributable to leasing out the property. These deductible expenses

● Advertising expenses (e.g., Airbnb Service Fees);

● Cleaning and maintenance services;

● Utilities (e.g., water, electricity usage, Internet);

● Repairs; and

● Real property taxes on the rental property paid to the local government unit.

In order for you to claim these expenses as deductions from your gross earnings, the

expenses should be duly substantiated. This means that you should keep the

supporting official receipts and invoices for the expenses which you will claim as

deductions.

Alternatively, an optional standard deduction of up to 40% of the gross income is

deduction, you do not need to itemize and substantiate any expense.

filed on or before the following due dates:

a calendar year, the following deadlines apply:

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There is also an Annual Income Tax Return (BIR Form No. 1702-RT) which should be

filed on or before the 15

day of the 4

(e.g., 15 April for those adopting the calendar year).

You can apply a manual tax return filing and/or payment. In such case, the tax return

● eBIRForms: https://www.bir.gov.ph/index.php/eservices/ebirforms.html

● eFPS: https://efps.bir.gov.ph/

VALUE-ADDED TAX / PERCENTAGE TAX

The lease of real properties in the Philippines is considered a sale of services. As such,

this may be subject to VAT or Percentage Tax, depending on whether the applicable

thresholds are exceeded.

For VAT purposes, the BIR considers as a "residential unit" any apartment or house &

lot used for residential purposes, as well as units in buildings which are used solely as

dwelling places (e.g., dormitories, rooms and bed spaces).

your gross annual receipts from this unit does not exceed PhP 3 Million, your rentals will

still be VAT-exempt. Instead, your gross quarterly receipts from that unit will be subject

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to a 3% Percentage Tax provided you are not a VAT-registered taxpayer. Otherwise, if

However, if you have one unit or several units which generate monthly rentals of more

than PhP 15,000.00 for each unit and your aggregate annual gross receipts from these

rentals exceeds PhP 3 Million, you will already be subject to 12% VAT.

You should consider the difference between rentals which are subject to the 12% VAT

and those subject to the 3% Percentage Tax as this could affect your pricing. While you

can charge the 12% VAT to your tenants on top of the rentals, the 3% Percentage Tax

should be shouldered exclusively by the lessor and cannot be passed to the tenants.

Further, to compute for the VAT you are required to remit to the BIR, you need to deduct

your input VAT from your output VAT. Your output VAT refers to the 12% VAT you

charged to your tenants, while your input VAT refers to the 12% VAT you have paid for

of your business, which should be supported by valid official receipts and invoices.

receipts which must be compliant with the invoicing requirements under the Tax Code.

If you are registered and subject to VAT, you need to prepare and file a Quarterly VAT

Return (BIR Form No. 2550Q) not later than the 25

taxable quarter. If you are subject to Percentage Tax, you need to prepare and file a

Quarterly Percentage Tax Return (BIR Form No. 2551Q) not later than the 25

the end of each taxable quarter. To summarize the deadlines if you are adopting the

calendar year:

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registered. Alternatively, you may use the electronic filing and payment methods

LOCAL TAXES AND FEES

Aside from the income tax and VAT / Percentage Tax which you must remit to the BIR,

you should also be aware of possible annual tax obligations with your local government

unit (LGU).

As an Airbnb Host, you may be required to obtain an annual business permit from your

LGU. During the registration for this permit and in the subsequent renewal thereof at

the start of the year, the LGU will assess a local business tax (LBT), as prescribed

under the applicable local revenue code, based on your gross receipts from the

preceding calendar year. In addition, the LGU will assess other regulatory fees and

would typically fall on the last week of January.

determined by the provincial or city treasurer. The RPT is normally due on the first

You are highly encouraged to regularly monitor the deadlines for these local taxes and

fees in your LGU to avoid incurring interests and penalties for late payment.