Payroll in the Philippines

Payroll in the Philippines means calculating gross-to-net salary, withholding the employee’s SSS, PhilHealth and Pag-IBIG contributions, applying the graduated TRAIN-law income tax, paying the employer’s share on top, issuing payslips and remitting withholding tax to the Bureau of Internal Revenue each month. The key local issue is the split admin: three separate state agencies each take their own monthly remittance, on top of the BIR withholding, so one pay run turns into four obligations rather than one.

Total employer cost for a ₱ 50,000 monthly salary is about ₱ 54,980, around 10% on top of gross.

Our verdict: Fewer than 3 employees and no local entity in Philippines: use an EOR at $199 to $699 per employee per month. At 3 or more, opening a Inc. or Corp. (roughly $4,500 in setup costs and 8 to 16 weeks to complete) usually works out cheaper. Already running a local entity: standard payroll outsourcing is the cheaper route.

Pay is also typically run semi-monthly, and there is a mandatory 13th-month payment to budget for, which makes the Philippines a country where the calendar matters as much as the calculation.

Use this page if you already have, or plan to set up, a local entity in the Philippines and want to know what running payroll actually involves. If you want to hire in the Philippines without becoming the legal employer, an Employer of Record is the faster route.

No local entity yet? See our guide to EOR in the Philippines.

Payroll in the Philippines at a Glance

How Does Payroll Work in the Philippines?

Philippine payroll usually runs twice a month rather than once. You calculate each employee’s gross salary, strip out their mandatory contributions and income tax to reach net pay, add the employer’s own contributions on top, then remit and report to four separate bodies.

The tax body is the Bureau of Internal Revenue, the BIR. It is the Philippine equivalent of HMRC or the IRS: the agency that collects income tax withheld from salaries and audits employers when the numbers do not line up. The income tax you withhold each pay run is reported to the BIR on Form 1601-C.

Three further agencies each run their own scheme. SSS is the Social Security System, the state pension and benefits fund, into which the employee pays 5% of their monthly salary credit up to a ceiling. The employer pays a larger share into the same fund.

PhilHealth is the national health insurance scheme. The total premium is 5% of salary, split between the two sides, so the employee carries 2.5% and the employer the other half. It funds the worker’s access to public and accredited private healthcare.

Pag-IBIG, also called the HDMF or Home Development Mutual Fund, is the national housing and savings fund. The employee contribution is small and commonly capped near PHP 200 a month, with the employer matching. It gives workers access to housing loans and a provident savings balance.

Each of those three agencies needs its own monthly remittance, separate from the BIR withholding. Get any one of the four wrong and either the employee’s take-home pay is off or one agency’s records stop matching what you paid in.

One payment sits outside the monthly rhythm. The 13th-month pay is a legally required extra month of basic salary, paid by 24 December, and it is something you accrue for across the year rather than fund as a surprise in December.

What Payroll Taxes Apply in the Philippines?

Four charges sit on every Philippine salary: the employer’s combined contributions, the employee’s SSS, PhilHealth and Pag-IBIG deductions, and graduated income tax under the TRAIN law. They are calculated in a fixed order, and that order is what makes the gross-to-net result.

Employer Payroll Contributions in the Philippines

The employer pays into the same three funds as the employee, at a higher combined rate of around 14.5% of salary. This covers the employer’s share of SSS, including the small Employees’ Compensation (EC) levy, plus PhilHealth and Pag-IBIG.

This is a charge on top of gross salary, separate from anything you withhold from the employee, and it is the main statutory cost of employing someone in the Philippines. Because the SSS and PhilHealth contributions are capped, the percentage flattens out at higher salaries rather than rising without limit.

For budgeting, treat total employer cost as gross salary plus that contribution, then set the 13th-month pay aside separately so it does not land as an unplanned December cost.

The true cost of employing in Philippines

Statutory employer rates; items can apply to different wage bases or carry conditions, so lines do not always sum to the total.

A statutory 13th-month payment applies: 1/12 of total basic salary earned in the calendar year. Payment falls due on December 24.

Sources: taxsummaries.pwc.com (employer contributions), lawphil.net (bonuses).

Employee Payroll Deductions in the Philippines

You withhold three contributions from the employee before income tax: 5% SSS, 2.5% PhilHealth and 2% Pag-IBIG, for 9.5% in total. SSS is calculated on a banded monthly salary credit up to a ceiling, while Pag-IBIG is commonly capped near PHP 200 a month.

These are the employee’s contributions, but you are responsible for calculating, withholding and remitting them to each agency. If your provider miscalculates any one, the employee’s net pay is wrong and that agency’s records no longer reconcile against your remittance.

Income Tax on Salary in the Philippines

Income tax follows the graduated TRAIN-law table, applied to salary after the mandatory contributions are deducted. The first PHP 250,000 of annual taxable income is tax-free, after which the rate climbs in bands from 15% up to 35% on the highest earnings.

Tax is withheld each pay run rather than settled at year end, so the annual liability is spread across the semi-monthly payslips. The tax-free band is the figure that does most of the work in a gross-to-net calculation, which is why lower salaries can carry little or no income tax at all.

Payroll Tax Example: Gross Salary to Net Pay

Here is how the charges stack up for a representative salary. The figures come from the contribution and tax rates above, calculated in the statutory order.

Simplified illustration: Single employee on PHP 50,000 monthly basic pay, with the 2026 contribution schedule (unchanged from 2025) at its statutory caps (SSS MSC ceiling PHP 35,000, Pag-IBIG capped at PHP 200). Withholding tax is the annualised TRAIN liability divided by 12. The first PHP 250,000 of annual taxable income is tax-free under the TRAIN table.

Read the two bold rows together. A worker on PHP 50,000 gross takes home PHP 42,232, while your total cost as employer is PHP 54,980.

The employee gap is moderate because contributions are capped and the first slice of income is tax-free; the employer gap is the contribution loading. That is the Philippine payroll signature: budget on the PHP 54,980, and remember the 13th-month pay sits on top of that across the year.

What Payroll Filings Are Required in the Philippines?

The Philippines splits its reporting across the BIR and the three contribution agencies, so there is no single unified return. The filing that anchors the tax side is BIR Form 1601-C, and it is the centre of your compliance month.

What BIR Form 1601-C Reports

Form 1601-C is the monthly remittance return for income tax withheld from compensation, filed with the Bureau of Internal Revenue. In one return it reports the income tax you have taken out of salaries for the whole workforce and remits it to the BIR.

It is later reconciled at year end through Form 1604-C and the Alphalist, which list every employee and the tax withheld across the year. Alongside it, the monthly SSS, PhilHealth and Pag-IBIG contribution returns go to their own agencies, and all of them have to match your actual payroll run.

When BIR Form 1601-C Is Due

Form 1601-C is due on the 10th day of the month following the reporting month. For December withholdings the deadline moves to 15 January of the following year, and employers on the Electronic Filing and Payment System (eFPS) file on staggered dates from the 11th to the 15th.

The SSS, PhilHealth and Pag-IBIG remittances run on their own monthly deadlines, so your provider needs the run finalised with enough margin to settle all four obligations in the right window.

Who Files It

The legal obligation sits with the employer. In practice, your payroll provider or accounting firm prepares and submits 1601-C and the agency returns on your behalf, or your in-house team files them directly if you run your own Philippine entity.

Either way, confirm in writing who presses submit for each of the four filings every month. The liability for a late or wrong filing stays with you as employer regardless of who does the keying.

What Happens If Payroll Filings Are Wrong

The BIR charges a 25% surcharge on the tax due, 12% annual interest and a compromise penalty on late or wrong returns. The agencies add their own: SSS levies a 2% penalty per month, PhilHealth 2% interest per month, and Pag-IBIG a 0.1% penalty for each day of delay. Beyond the money, a return that does not reconcile invites scrutiny across all four bodies, which is why getting the contributions and tax right the first time matters more than any single headline penalty.

What Are the Payroll Deadlines in the Philippines?

Philippine payroll obligations cluster early in the following month, anchored to that 10th-of-the-month BIR filing date. The detail that catches foreign employers is that the three contribution agencies each run a separate monthly remittance alongside the BIR return.

Late filing: BIR: 25% surcharge on tax due, 12% annual interest, and a compromise penalty. SSS: 2% penalty per month. PhilHealth: 2% interest per month. Pag-IBIG: 0.1% penalty per day of delay.

Payroll Operations Risk in Philippines

Employers in Philippines file with 3 separate agencies.

Sources: dole.gov.ph (compliance), bsp.gov.ph (payments).

What Payslip and Employee Record Rules Apply in the Philippines?

The Philippines does not run a single national employee register the way some countries do. Instead, you register each new hire with three agencies and the tax office: SSS, PhilHealth and Pag-IBIG membership, plus a BIR Taxpayer Identification Number (TIN), all secured around the start date.

New-hire registration is due within 30 days of the start date, so it is one of the first tasks after an offer is accepted rather than something left to the first pay run. A TIN is needed before you can correctly withhold and report that employee’s income tax.

The payslip rule is the one not to overlook. Every employee must receive an itemised payslip showing gross pay, each deduction and net pay, issued for every pay run, which in the Philippines usually means twice a month.

Because the payslip and the agency returns are produced from the same calculation, a provider that runs the contributions cleanly usually produces compliant payslips automatically. When you assess a provider, confirm payslips show SSS, PhilHealth, Pag-IBIG and income tax separately, and that 13th-month pay is tracked and accrued through the year.

How Much Does Payroll Outsourcing Cost in the Philippines?

There are two separate numbers in Philippine payroll cost, and confusing them is the most common budgeting mistake. The first is your statutory employer cost, which is mainly the roughly 14.5% employer contributions plus the 13th-month pay accrued across the year.

9 of the 12 EOR providers we track publish Philippines fees; they range from $199 to $699 per employee per month.

Published list prices in USD: EOR fees are per employee per month, contractor fees per contractor per month. Providers that publish neither fee for Philippines are not shown.

According to Whichapp’s July 2026 analysis of EOR fees across 40 countries, providers charge $199 to $699 per employee per month in Philippines.

9 of the 12 providers we track publish Philippines EOR fees. The lowest published rate is $199 per employee per month and the highest is $699.

Contractor management fees in Philippines run from $6 to $49 per contractor per month.

The second is the fee you pay a provider to run the payroll for you. They are unrelated, and only the second is negotiable.

Managed Payroll Provider Fees

Managed payroll in the Philippines is normally priced per employee per month, and most providers quote rather than publish a rate. The price turns on headcount, on whether you also need accounting or HR support, and on complexity such as semi-monthly runs, the 13th-month calculation, and remitting to three agencies plus the BIR.

The fee buys the calculation, the BIR 1601-C filing, the SSS, PhilHealth and Pag-IBIG remittances, and payslip production. It does not include the contributions and tax themselves, which you fund on top, so gather two or three quotes before committing.

What Payroll Provider Fees Usually Include

A standard managed payroll fee in the Philippines should cover the semi-monthly gross-to-net calculation, withholding of SSS, PhilHealth and Pag-IBIG, the graduated income tax, BIR 1601-C remittance, the monthly agency returns, 13th-month accrual and itemised payslips. Ask for that list in writing. If any of it sits outside the headline fee, you want to know before the first run, not after.

Extra Payroll Costs to Ask About

The gaps tend to appear at the edges of the standard cycle. Ask specifically about year-end reporting and the 1604-C and Alphalist, the 13th-month run, final-pay and severance calculations, correction filings when something has to be restated, and onboarding setup fees for taking on your entity. These are the line items that turn a tidy per-head quote into a larger annual number.

When Payroll Outsourcing Becomes Cheaper Than EOR

The choice between running your own payroll and using an EOR is mostly about headcount and how long you plan to stay. An EOR carries a higher monthly fee per person because the provider is the legal employer and absorbs the entity, but it saves you setting one up.

Running your own payroll through a Philippine corporation is cheaper per head once you are past a handful of employees and committed to staying, because the entity and provider fee spread across more people. In our assessment, the more people you hire and the longer the horizon, the more the economics favour your own entity with outsourced payroll.

Payroll in the Philippines vs EOR in the Philippines

The line between the two routes is simple: standard payroll assumes you are the legal employer through a Philippine entity, while an EOR makes the provider the legal employer so you do not need one.

Use payroll outsourcing if you already have a local entity or are hiring enough people to justify one. Use an EOR if you need to hire before setting up an entity.

If that second case is you, our guide to EOR in the Philippines covers the providers, licensing and costs in full. EOR pricing and provider ranking live there, not on this page.

Best Payroll Providers for the Philippines

These providers all run payroll in the Philippines, but they are built for different situations. Below is where each one fits and the local point to check before you sign. We do not list EOR prices here; for unpriced managed payroll, treat the fee as by quote and confirm it during your shortlist calls.

7 providers in Whichapp’s independent index cover Philippines. The top 5 by composite score:

1. Deel (9.1/10). From $599/month. Best for scale, automation and contractor volume. Runs its own Philippines entity.
2. Multiplier (8.5/10). From $400/month. Best for APAC expansion and mid-market value. Runs its own Philippines entity.
3. Papaya Global (8.2/10). From $650/month. Best for multinational payroll consolidation. Serves Philippines through a partner.
4. Remote (8.0/10). From $599/month. Best for IP protection and owned-entity purity. Runs its own Philippines entity.
5. Pebl (7.2/10). Best for high-touch, service-heavy enterprise. Runs its own Philippines entity.

Rankings come straight from Whichapp’s provider index (coverage 30%, pricing transparency 25%, security and compliance 25%, integration depth 20%); see how we score.

Only 6 of 7 major EORs run their own Philippines entity; 1 more serves it via a partner.

Entity model as reported on provider websites, last checked 2026-06-06. An own entity means the provider is the direct legal employer; a partner model adds a third party to the chain.

Deel for Payroll in the Philippines

Deel is a strong fit if the Philippines sits alongside other Asia-Pacific hires you want on one platform, with a single dashboard and API across markets. Philippines watch-out: confirm it remits to SSS, PhilHealth and Pag-IBIG and files BIR 1601-C directly rather than handing it to a partner bureau, and that 13th-month pay is accrued in-platform. Read our Deel review.

Remote for Payroll in the Philippines

Remote runs much of its payroll through owned entities, which gives a cleaner compliance chain than a partner-network model. That suits employers who want a direct line of accountability for the BIR remittance and the three agency returns.

Philippines watch-out: confirm Philippine payroll is on Remote’s own entity rather than a local partner, and that the SSS, PhilHealth and Pag-IBIG remittances and 13th-month accrual are handled inside the platform. Read our Remote review.

Papaya Global for Payroll in the Philippines

Papaya Global is built for consolidating payroll across many countries with finance-grade reporting and audit trails, so it earns its place when the Philippines is one market in a larger stack. Its weakness is the opposite case: for a single Philippine entity with no multi-country reporting need, the platform is heavier than the job requires.

Philippines watch-out: Papaya leans on local partners in some markets, so confirm whether your Philippine payroll runs on its own engine or a third-party bureau, and how directly it owns the BIR 1601-C filing and the agency remittances. Read our Papaya Global review.

Rippling for Payroll in the Philippines

Rippling appeals when you want payroll wired into the same system as HR, IT and device management, with automated journal entries. Philippines watch-out: it is platform-first, so confirm the depth of its Philippine statutory handling, specifically SSS, PhilHealth and Pag-IBIG withholding, BIR 1601-C filing and 13th-month pay, against what a local payroll specialist would offer. Read our Rippling review.

Multiplier for Payroll in the Philippines

Multiplier is the value option for multi-country payroll where price predictability matters, which fits smaller Philippine teams. The trade-off for that price is depth: in tightly regulated areas it tends to carry less local specialist weight than a Philippines-focused bureau.

Philippines watch-out: confirm it remits to all three agencies and files BIR 1601-C directly rather than through a reseller, and that its gross-to-net engine models the TRAIN table, the contribution caps and the 13th-month accrual accurately before you anchor any salary offers on it. Read our Multiplier review.

Safeguard Global for Payroll in the Philippines

Safeguard Global is a payroll-led specialist rather than an HR platform with payroll bolted on, which appeals when running the payroll correctly is the whole point and you do not need a wider people stack. That focus is also its limit: if you want integrated HR, devices and onboarding in one tool, it does less than Rippling or Deel.

Philippines watch-out: confirm its Philippine coverage is run in-house rather than subcontracted, and that the service includes the SSS, PhilHealth and Pag-IBIG remittances and BIR correspondence, not just the semi-monthly calculation. Read our Safeguard Global review.

How to Choose a Payroll Provider in the Philippines

The questions below separate a provider that genuinely runs Philippine payroll from one that resells a local bureau without owning the detail. Ask them before you sign, not after the first run.

Can They Handle BIR Form 1601-C?

Confirm the provider prepares and remits Form 1601-C to the BIR each month and reconciles it against the actual payroll and bank payments, then files the 1604-C and Alphalist at year end. Ask who presses submit and by when.

Do They Manage SSS, PhilHealth and Pag-IBIG Registration?

Check that the provider registers each new hire with all three agencies and secures a BIR TIN, then files the three monthly remittances on time. A provider that treats the agency returns as an afterthought leaves you exposed to three separate sets of penalties on top of the BIR.

Can They Model Gross-to-Net Salary Accurately?

A capable provider models gross-to-net both ways, including the contribution caps, the TRAIN tax-free band and the 13th-month accrual, and helps you frame offers rather than just processing whatever number you hand over. Ask to see a sample semi-monthly payslip and a 13th-month calculation.

How Do They Update for Payroll Law Changes?

Philippine contribution rates and salary-credit ceilings are adjusted periodically, and the TRAIN tables can change. Ask how the provider tracks BIR and agency updates and how quickly they reach your payroll runs.

Who Is Liable for Payroll Errors?

The statutory liability stays with you as employer, but the contract should set out what the provider is accountable for if a miscalculation or late filing is their fault. Get the indemnity and correction process in writing.

Can They Support Multi-Country Reporting?

If the Philippines is one of several markets, confirm the provider can consolidate reporting across them in a single view, so your finance team is not stitching country files together by hand.

What Support Do They Offer During Terminations or Audits?

Terminations and BIR queries are where weak providers show their limits. Ask what support you get during a final-pay calculation or an audit, and whether a named contact handles it or you are routed through a ticket queue.

What Does Terminating an Employee Cost in Philippines?

Severance: Separation pay (Labor Code Arts.298-299): redundancy or installation of labour-saving devices = 1 month pay per year of service; retrenchment to prevent losses or closure (not due to serious losses) = 1/2 month pay per year. Minimum total of 1 month pay (whichever is higher); a fraction of a year of at least 6 months counts as a whole year.

Statutory leave: 5 days of paid annual leave plus 12 public holidays a year.

Sources: officialgazette.gov.ph (severance), dole.gov.ph (leave).

Philippines Payroll Checklist Before Hiring

• Confirm whether you need payroll or an EOR
• Check your local entity status
• Model gross-to-net salary for your offers
• Confirm employer contribution rate (employer contributions)
• Confirm employee deductions (SSS, PhilHealth, Pag-IBIG)
• Confirm income tax treatment
• Check who files BIR 1601-C and by when
• Confirm SSS/PhilHealth/Pag-IBIG registration is handled
• Confirm the payslip process
• Check leave, sick pay and termination workflows
• Ask who carries liability for calculation errors
• Confirm provider pricing and any extra fees

Work through this before your first hire. The agency registration at point eight is the one foreign employers underestimate most, because three separate bodies each need their own enrolment and monthly remittance on top of the BIR.

FAQs About Payroll in the Philippines

Methodology and Disclosure

The contribution rates, TRAIN-law income tax bands, filing deadlines and penalty figures on this page come from Whichapp’s Philippines statutory dataset, grounded in Bureau of Internal Revenue withholding rules and the published SSS, PhilHealth and Pag-IBIG contribution rates, and refreshed as rates change. The worked example is calculated from those rates and reconciles by construction.

Provider assessments reflect our independent editorial view of payroll fit for the Philippines; we do not sell payroll, EOR or contractor services. Some provider links may carry affiliate referrals, which never affects our editorial judgement or the figures above.

Already hiring contractors instead of employees? See contractor management in the Philippines, or start from the Philippines hiring hub for the full picture.

Primary sources

• Income tax and employee contributions: taxsummaries.pwc.com
• Employer contributions: sss.gov.ph
• Minimum wage: nwpc.dole.gov.ph
• Payroll filing deadlines: bir.gov.ph
• Notice periods and leave: dole.gov.ph
• Severance rules: officialgazette.gov.ph
• Entity setup benchmark: sec.gov.ph