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GROUP PROJECT

in
TAXATION 1

by

BARRY GIBB ZORILLA y TALAGTAG


SN 2016-0588

REGINE AMOLATO y BERONGOY


SN 2017-0219

VIRGINIA GALAGALA y GUTIERREZ


SN 2015-0275

CHARLIEMAYNE GOMEZ y ZULUETA


SN 2014-0012

JANNIE RIVERA y PINEDA


SN 2017-0269

FELISSA SAMANIEGO y CATLI


SN 2017-0259

Submitted to:

ATTY. VICENTE VILLA CANONEO


PROFESSOR
”When you decide to do something, do your best”
TABLE OF CONTENTS
Page
I. Preliminary Notes
This research guide summarizes the sources of Philippine tax law……………..… 1
 National Tax Law
o 1987 Constitution …………………………………………………………… 1
o Laws………………………………………………………………………………… 2
o Treaties…………………………………………………………………………… 2
o Administrative Material………………………………………………… 3
o Case Law…………………………………………………………………………. 4
o Treatises and other books…………………………………………….. 4
o Periodicals……………………………………………………………………… 4
o Local Government Tax Law…………………………………………… 4
o National Tax Research Center (NTRC)…………………………. 6

II. Concepts of Income and Income Taxation


Nature, scope, classification and essential characteristic of income…..…. 6
 Income
o Legal definitions…………………………………………………………..… 6
o Distinguished from Capital……………………………………………. 7
o According to tax rates……………………………….……………………. 7
o Subject to final tax………………………………………………………….. 7
o Subject to scheduler rate……………………………………………….. 7
o Subject to the reduced rate or MCIT……………………………… 7
o Taxable Income………………………………………………………………. 7
o Conceptual definition of income for income purposes.. 8
o Material gain…………………………………………………………………… 8
o Tax treatment of cancellation or
Forgiveness of indebtedness……………………………………….. 9
o Tax treatment of payment for
services in promissory notes…………………………………….…… 9
 Gross Income
o In General……………………………………………………………..……..… 9
o For Philippine income taxation
statutory definition………………………………………………….……. 9
o Presumed to include all income…………………………………… 9
o Withheld taxes part of gross income unless
Specifically allowed to be deductible…………………………… 9
o Tax treatment for option………………………………………………. 9
o Income from whatever source derived……………….………… 9
o Tax treatment of sale by farmer of machinery,
farm equipment, or other capital assets………………………. 10
o Tax treatment where a corporation leases its
property in consideration of dividends or
interest in lieu of rentals……………………………………….…… 10
o Income subject to tax under the NIRC…………………….…. 10
o Concept of Income Taxation…………………………………….…. 11

III. Classification of Taxpayers and Taxation of their income…………………..……. 12


 Inidividual Income Tax…………………………………………………..…. 12
o Persons subjects to the individual tax…………..……. 12
o Income subject to tax………………………………………...… 13
o Determination of Taxable Income…………………….. 13
o Exclusion from gross income……………………..……….. 14
o Deduction from gross income……………………….….… 15
o Passive Income………………………………………………….…. 19
o Tax Rates…………………………………………………………….… 21
o Tax treatment of income sources of
individual tax payer………………………………………….…. 22
o Summary of Tax Base and Tax Rates on
Compensation and business income of
Individual taxpayers……………………………………………. 23
o Passive Income rates…………………………………………… 24
o Summary Table Subject to withholding tax
for the individual incomes tax rates……………..…… 27
o Filing of returns…………………………………………………... 31
o Persons not required to file income
tax returns ……………………………………………………….….. 32
o Subtitute filing of income tax returns……………….. 32
o Electronic filing and payment system EFPS………. 33
o Basic forms used un filing an income
tax return ……………………………………………………………. 33
o Place of Filing……………………………………………………... 34
o Time of filing………………………………………………………. 34
o Payment of Tax…………………………………………………... 34
o Penalties……………………………………………………………... 35

 Corporate Income Tax

o Corporations subject to tax……………………………… 36


o Determination of Taxable Income……………………. 36
o Deduction from gross income……………………….….. 36
o Exemptions……………………………………………………… 37
o Tax Base and Tax Rates …………………………………... 38
o Tax on income derived under the
Expanded Foreign Currency Deposit System….. 39
o Summary of Tax sources of
Corporate Taxpayers………………………………………….. 40
o Summary of Tax base and Tax rates of
Corporate Taxpayers…………………………………………… 43
o Passive and other sources of income…………………. 43
o Minimum Corporate Income tax (MCIT)…………… 44
o Improperly Accumulated Earnings Tax……………… 45
o Withholding Tax at source…………………………………. 45
o Summary of withholding tax rates…………………….. 46
o Filing of returns and payment of tax………………….. 51
o Place of filing……………………………………………………….. 51
o Time of Filing………………………………………………………… 51
o Payment of tax………………………………………………………. 51
o Electronic filing and payment system…………………. 52

0 Fringe benefits…………….…………………………………………………… 53

o Non-Taxable fringe benefits………………………………… 53


o Valuation of Fringe benefits………………………………… 54
o Filing of Returns and Payment of Tax……………..….. 54
o BIR Form………………………………………………………..…….. 54
o Place of Filing…………………………………………………..….. 54
o Time of filing…………………………………………………..…… 55
o Payment of Tax……………………………………………..…….. 55
o EFPS………………………………………………………………..……. 55
o Penalties………………………………………………………….….. 55