LESSON 15: TAXATION
Taxation- means laying a tax through which the
government generates income to defray its
expenses
-way to raise funds for govt programs
and services that benefit Filipino citizens.
Note: Economic investments and businesses have
created several definitions of taxation enforced
by nat’l or local laws for income collection and
devp’t of the gov’t
Tax- enforced as a contribution but it is
proportionate to the citizens ability to pay
-levied on persons and property as well as on
business transactions, privileges, and benefits.
-imposition is done by law through bureau of
internal revenue
Type of Taxes
2 Typesnational and local
Natl-ones paid to the gov’t through the
BIR. The Natl Taxation System is based on the
National Internal Revenue Code of 1997 or the
RA No. 8424 otherwise known as the Tax
Reform Act of 1997
Types
1. Capital Gains Tax-tax imposed on
gains that may have been realized
by a seller from the sale, exchange or
other disposition of capital assets
inc. pacto de retro sales (with a
condition for repurchase) and other
forms of conditional sales
2. Documentary Stamp Tax- on docu,
instruments, loan agreements and
papers. Evident on bank promisory
notes, deed of sale, deed of
assignment on transfer of shares of
corporate stock ownership\
3. Donor’s Tax-on a donation or gift,
gratuitous transfer of property bet 2
or more persons. Based on graduated
schedule of tax rate
4. Estate Tax-right of deceased to
transmit his or her estate to lawful
heirs and beneficiaries. Not a tax on
property. Based also on GSoTR
5. Income Tax-on all annual profits
made from property ownership,
profession, trades or offices. Tax on
person’s income, emoluments, profits.
SELF EMPLOYED &
CORPORATE quarterly fr 1st-3rd
and file annual income tax return for
the taxable year. INDIV INCOME
TAXbased on GSoTR.
CORPORATE INCOME
TAXbased on a fixed rate
prescribed by the tax law or special
law
6. Percentage Tax-persons on entities
who sell or lease goods, properties or
services in the course of trade or
business whose gross annual sales or
receiptsw do not exceed the amt
required to register as VAT-
registered taxpayers. Based usually
on a fixed rate and paid monthly.
Some special industries and
transactions pay percentage tax on
quarterly basis.
7. Value-Added Tax-collected from
the seller in the course of trade or
business from every sale of
properties, lease of goods or
properties or vendors of services. An
indirect tax thus can be passed to
the buyer. Vat returns are filed and
paid monthly or quarterly Latest
law on taxation is RA 9337 signed
on May 24, 2005 by Arroyo is
known as the ‘expanded value-
added tax’ or the ‘e-vat’ law
8. Excise Tax- goods manufactured or
produced in the Philippines for
domestic sale or consumption or any
other disposition. Also imposed on
imported
9. Withholding Tax on Compensation-
withheld from individuals receiving
LESSON 15: TAXATION
purely compensation income arising
from an employer-employee
relationship. Withheld to
employees income and remit to the
govt through the BIR or authorized
accrediting agent.
10. Expanded Withholding Tax- only
for certain payors like for rental
income and professional income. It’s
creditable against the income tax
due of the payee for the taxable
quarter year
11. Final Withholding Tax- for certain
payors but not creditable against
the income tax due of the payee for
taxable year. Example is tax
withheld by banks on the interest
income earned on bank deposits
12. Withholding Tax on Govt Money
Payments- withheld by govt offices
including govt-owned or controlled
corp and lgu
LOCAL TAXES-based on local govt taxation in
the PH as stated in RA 7160 or the Local Govt
Code of 1991. Imposed by LGU (provinces,cities,
municipalities and brgys)
1. Tax on Transfer of Real Property
Ownership-on sale, donation, barter
or any other mode of transferring
ownership of real property
2. Tax on Business of Printing and
Publication-printing and pub
business
3. Franchise Tax-rate not exceeding
50% of 1% of gross annual receipts
4. Tax on sand,gravel and other quarry
resources-defined in National
Internal Revenue Code
5. Professional Tax- requires govt
exam or licensure; annual tax
6. Amusement Tax- from proprietors,
lessees or operators
7. Annual Fixed Tax for Every
Delivery Truck or Van of
Manufacturers or Producers,
Wholesalers of, Dealers, or Retailers
in, Certain Products- annual fixed
tax. Determined by the local
provincial councils through which
the truck or trucks pass through or
deliver their cargo
8. Tax on Business- cities or
municipalities on business before
issuing license permit. Pay tax if
they apply for Mayor’s Permit
9. Fees for Sealing and Licensing
Weights and Measures- imposed for
the sealing and licensing of weights
and measures
10. Fishery Rentals, Fees, and Charges-
imposed to grantees of fishery
privileges as specified in the Local
Government Code
11. Community Tax- 18 years of age
who have been regularly employed
on a wage or salary basis for at least
30 consecutive days who owns real
property of 1000 above . Thus,
required by law to file an income tax
return. Also imposed on every corp
12. Taxes levied by the barangays on
stores or retailers with fixed business
establishments –w/ gross sales of
receipts of the preceding calendar
yr amounting to 50k or less for city
brgys and 30k or less for municipal
brgys at a rate not exceeding 1% on
such gross sales or receipts.
13. Service Fees or Charges- fees
collected by brgy for services
rendered in connection with
regulation or the use of brgy owned
properties or service facilities, suvh
as palay, copra or tobacco dryers.
14. Barangay Clearance- fee upon
issuance if brgy clearance, a
document required for many govt
transactions
Special Notes: HOUSE BILL 5636
Tax Reform for Acceleration and
Inclusion by PRRD administration.