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SYLLABUS- INDIVIDUAL INCOME TAXATION-TAX I

Atty. Ma. Victoria A. Villaluz

I. INTRODUCTION

1. General Principles
2. Basic Concepts: Definitions

a. Taxation
b. Taxes
c. Income Tax

3. Short History of Income Tax Law

4. Sources of Law on Income Taxation

a. Philippine Constitution, Statutes, Regulations,


Administrative Rulings, Court Decisions
b. Features of the Philippine Income Tax Law
c. Basis or criteria for the imposition of income tax
d. Administration of Income Tax Law

i. Powers of the Bureau of Internal Revenue


ii. Powers of the Commissioner of Internal
Revenue
iii. Role of Secretary of Finance
iv. Rules of Construction

II. THE CONCEPT OF INCOME

1. Income defined
2. Income distinguished from capital
3. Gross Income – Section 32 (A), Tax Code
4. Exclusions from Gross Income- Section 32 (B), Tax Code

III. DEFINITION OF A CORPORATION FOR TAX PURPOSES

Section 22(B), Tax Code

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IV. TYPES OF CORPORATIONS

a. Domestic Corporation
b. Resident Foreign Corporation
c. Nonresident Foreign Corporation
d. Entities Treated as a “corporation” for income tax purposes

V. TAX BASE

a. Domestic corporation – worldwide income


b. Foreign corporations- resident or nonresident- Philippine-
sourced income

VI. TAX RATES

Regular Corporate Income Tax Rate


Minimum Corporate Income Tax (MCIT)
Branch Profit Remittance Tax (BPRT)

VII. NOT TAXABLE AS A CORPORATION

 General Professional Partnerships

 Joint Venture or Consortium for Construction Projects

Rev. Regs. No. 10-2012

 Joint venture or consortium for engaging in petroleum,


coal, geothermal and other energy operations under a
service contract with the Philippine Government

VIII. INCOME; SOURCES OF INCOME

Section 42- A-F

IX. DEDUCTIONS

A. Itemized Deductions:- Section 34

1. Ordinary and Necessary Trade, Business or Professional expenses

a. Requirements for deductibility

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b. When is expense considered as ordinary and necessary

c. Entertainment, Amusement, and Representation Expenses

Requirements for deductibility


Rev. Regs. No. 10-2002

2. Interest Expense

Requirements for deductibility


Rev. Regs. No.13-2000- Limitations

3. Taxes

Deductible Taxes
Tax Credits
Foreign Tax Credits

4. Losses

Requirements for deductibility


Casualty Losses- RMC31-2009; Rev. Regs. No. 12-77
NOLCO- Rev. Regs. No. 14-2001

5. Bad Debts

Requirements for deductibility


Rev. Regs. No. 25-2002
Rev. Regs No. 5-99

6. Depreciation

Definition
Requirements for deductibility
RMC No. 70-2010

7. Depletion

Rev. Regs. No. 1-81


Cost Depletion
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8. Charitable and other contributions

Limitations
Rev. Regs. No. 13-98

9. Research and Development

Capitalized R&D expenditures

10. Pension Trust

Past Service Cost


Private Retirement Benefit Plan- Rev. Regs. No. 1-68

B. Additional Requirement For Deductibility

C. Special Deductions

Special Laws:
RR No. 7-10 Implementing the Tax Privileges Provisions of RA No.
9994
R.A. No. 9999 An Act Providing a Mechanism for Free Legal
Assistance and for Other Purposes
R.A. No. 8525 An Act Establishing an “Adopt-a-School Program,"
Providing Incentives Therefor, and for Other Purposes
R.A. No. 7600 An Act Providing Incentives to all Government and
Private Health Institutions with Rooming-in and Breast-feeding
Practices and for Other Purpose

D. Optional Standard Deduction (OSD)

Rev. Regs. No. 16-08

X. REPORTING OF INCOME AND EXPENSES

A. Accounting periods
B. Method of Accounting

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1. Cash Method
2. Accrual Method

XI. MINIMUM CORPORATE INCOME TAX

a. Who are liable


b. When the MCIT commences
c. Exemption from MCIT

XII. IMPROPERLY ACCUMULATED EARNINGS TAX

Rev. Regs. No. 02-01


RMC No. 35-11

XIII. BRANCH PROFIT REMITTAMCE TAX (BPRT)

RMC55-80

XIV. PREFERENTIALLY TAXED CORPORATIONS

a. Proprietary Educational Institutions and Hospitals


b. International Air Carriers
c. International Shipping Lines
d. Offshore Banking Units
e. Petroleum Subcontractors under P.D. 1354
f. Regional Operating Headquarters

XV. TAXATION OF CERTAIN PASSIVE INCOMES; CERTAIN


TRANSACTIONS

XVI. TAX-EXEMPT CORPORATIONS

RMC No.35-2012
RMC No. 65-2012
RMC No. 4-2013
RMC No. 9-2013
RMO No. 20-2013

XVII. FILING OF TAX RETURN AND PAYMENT OF TAXES

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