Payroll Compliance Guide for Philippines 2025

Philippines payroll compliance involves three main statutory contributions: SSS (Social Security System), PhilHealth (Philippine Health Insurance Corporation), and Pag-IBIG (Home Development Mutual Fund), plus personal income tax obligations.

SSS (Social Security System) Contributions

SSS provides social security benefits including retirement, disability, death, and funeral benefits. Both employers and employees contribute monthly.

Contribution Rates

• Employee Contribution: 4.5% of monthly salary credit (up to maximum salary credit)
• Employer Contribution: 8.5% of monthly salary credit
• EC (Employee Compensation): Fixed amount paid by employer (varies by salary bracket)

Contributions are based on monthly salary credits ranging from PHP 1,000 to PHP 30,000. The maximum contribution is calculated on PHP 30,000.

PhilHealth (Philippine Health Insurance) Contributions

PhilHealth provides health insurance coverage. Both employers and employees contribute equally.

Contribution Rates

• Employee Contribution: 2% of monthly salary (capped at PHP 1,800 per month)
• Employer Contribution: 2% of monthly salary (capped at PHP 1,800 per month)

Contributions are calculated on monthly salaries up to PHP 90,000. Premiums are shared equally between employer and employee.

Pag-IBIG (Home Development Mutual Fund) Contributions

Pag-IBIG provides housing loans and savings benefits. Both employers and employees contribute, with employers contributing more.

Contribution Rates

• Employee Contribution: 1% or 2% of monthly salary (depending on salary level)
• Employer Contribution: 2% of monthly salary

For employees earning PHP 1,500 and below, both parties contribute 1% each. For salaries above PHP 1,500, employee contributes 2% and employer contributes 2%.

Personal Income Tax

Philippines uses a progressive tax system with rates from 0% to 35%. Employers must withhold tax monthly using the BIR (Bureau of Internal Revenue) withholding tax tables.

Tax Withholding

Employers must remit withheld taxes to the BIR by the 10th of the following month. Annual tax returns must be filed by April 15th of the following year.

Statutory Requirements

Payslip Requirements

Employers must provide payslips showing:

• Employee name and TIN (Tax Identification Number)
• Basic salary and allowances
• Overtime and other earnings
• SSS, PhilHealth, Pag-IBIG deductions
• Tax deductions
• Other deductions (loans, advances, etc.)
• Net pay

13th Month Pay

Employers must provide 13th month pay equivalent to one month's basic salary, payable by December 24th each year.

Annual Leave and Public Holidays

Employees are entitled to 5 days of service incentive leave after one year of service. Philippines has 12 regular public holidays plus special non-working days.

Key Changes for 2024

• Updates to SSS contribution rates and salary credit brackets
• Adjustments to PhilHealth contribution rates
• Changes to Pag-IBIG contribution thresholds
• Updates to personal income tax brackets

Compliance Best Practices

1. Register all employees with SSS, PhilHealth, and Pag-IBIG
2. Submit contributions by the 10th of each month
3. Remit tax deductions by the 10th of each month
4. Maintain accurate payroll records for at least 3 years
5. Provide itemized payslips to all employees
6. Ensure 13th month pay is calculated and paid correctly
7. Stay updated with regulatory changes from SSS, PhilHealth, Pag-IBIG, and BIR