Final tax on bank deposit interest, peso or foreign currency.
Net interest received
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Final tax
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Rate applied
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Why your bank interest arrives already taxed
Most taxes in the Philippines require you to file something. Interest on a bank deposit is the exception, because it is subject to a final withholding tax. The bank computes the tax, deducts it before the interest ever reaches your account, and remits it to the Bureau of Internal Revenue on your behalf. By the time the interest shows up on your passbook or statement, it is already net of tax, and you do not declare it again on your annual income tax return. That is what final means: the obligation is settled at source and closed.
This calculator shows the two pieces that the withholding splits your interest into. Enter the gross interest your deposit earned and pick whether it is a peso account or a foreign-currency deposit, and the tool returns the tax withheld and the net interest you actually keep. The rate the calculator applies is 20 percent on peso deposits and 15 percent on foreign-currency deposits held under the FCDU system, the rates this calculator applies for each.
Splitting PHP 20,000 of peso interest
Suppose a peso savings or time deposit earned PHP 20,000 in gross interest over the year. Using the rates this calculator applies, the 20 percent final tax on a peso deposit is PHP 4,000, withheld by the bank automatically. What lands in your account is the remaining PHP 16,000. There is nothing further to file, because the PHP 4,000 has already been paid to the BIR for you.
| Item | Peso deposit at 20 percent | Foreign-currency at 15 percent |
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The right-hand column shows why the deposit type matters. The same PHP 20,000 of interest in a foreign-currency FCDU account would be taxed at 15 percent, so the tax falls to PHP 3,000 and you keep PHP 17,000. The chart sets the two side by side, with the slice the BIR takes and the slice you keep, so the difference in net yield is easy to see.
The exemptions and edge cases worth knowing
The flat final tax is not the whole story for every deposit. A long-term deposit or investment certificate held for at least five years can be exempt from the tax on its interest, a deliberate incentive to encourage longer saving. If such a deposit is broken early, the interest is generally taxed at a graduated final rate that depends on how long it was actually held, with the bite shrinking the closer you got to five years. This tool models the standard peso and FCDU rates rather than those pre-termination tiers, so for a long-term instrument you are cashing out early, check the exact rate that applies to your holding period.
Who this tool is for
It suits anyone who wants to know the real return on a deposit after tax, compare a peso account against a dollar account on a like-for-like basis, or simply reconcile why the interest credited looks smaller than the rate on the marketing sheet. Because the rates here are stated as the calculator's assumption and have not been independently verified as the current figures, confirm the prevailing final tax rates and any exemption rules with the Bureau of Internal Revenue or your bank before relying on the numbers for a large deposit.
Questions savers ask
Do I still report this interest on my annual income tax return?
No. Because the tax is final and withheld at source, interest already taxed this way is excluded from the income you report on your annual return. That is one of the conveniences of the system. The exception is if you hold a qualifying long-term deposit that was exempt, in which case there is no tax to begin with, again with nothing to declare.
Is a higher headline rate on a dollar account always better after tax?
Not necessarily. A foreign-currency deposit enjoys the lower 15 percent rate, so more of its interest survives, but you also take on exchange-rate risk. If the peso strengthens against the dollar, the currency move can wipe out the tax advantage and more when you convert back. Weigh the after-tax yield this tool shows against the currency exposure before assuming the dollar account wins.
Does the tax apply to interest from a cooperative or a government bond?
The rules differ by instrument. Interest from certain cooperatives can be exempt for members, and some government securities have their own treatment, so they do not all follow the 20 percent deposit rate this tool uses. The calculator is built for ordinary bank deposits, so for cooperative dividends, bonds, or other instruments, confirm the specific tax treatment rather than assuming the deposit rate applies.