In Section 5. B. of Revenue Regulations (RR) No. 2-2014, stated that Individual taxpayers who are not entitles to avail of the Optional Standard Deductions (OSD) and thus use only the itemized deduction method are as follows:
1. Those exempt under the Tax Code, as amended, and other special laws with no other taxable income [e.g. Barangay Micro Business Enterprise (BMBE)];
2. Those income subject to special/preferential tax rates ; and
3. Those with income subject to income tax rate under Section 24 of the Tax Code, as amended, and also with income subject to special/preferential tax rates.
Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/82202RR%20No%20%202-2014.pdf of the full text of RR No. 2-2014 and http://www.bir.gov.ph/index.php/tax-code.html#outline of the Tax Code.
