LA PATRIA COLLEGE

Santiago City

INSTRUCTIONAL MODULE in AEC 004

Income Taxation

TOPIC/S: PART III: SPECIAL INCOME TAXATION

A. Final Income Taxation
 Features of final income taxation
 The final withholding system
 Taxpayer subject to final income tax
 Items of passive income subject to final tax
 Final tax to individuals and corporations
 Final tax on dividends
 Final tax on royalties
 Final tax on prizes
 Final tax on winnings
 Final tax on informer’s reward
 Final tax on ‘tax free” covenant bonds
 Exemptions to the final taxation of certain taxpayers
 The tax sparing rule and final tax exempt entities
 Other applications of the final income tax
 Final withholding tax return
 Final tax on interest from banks

WEEK: 7
Time Allotment: 3 Hours Consultation Hours: TTh 10:30-12:00

OBJECTIVES/ LEARNING OUTCOMES

At the end of the topic, the students shall be able to:
1. Recall all the features and scope of final tax and those certain passive income subject to final tax
and their corresponding final rates;
2. Remember correctly the general final tax rates on certain non-residents and their exceptions;
3. Use properly the other applications of the final income tax scheme; and
4. Compute accurately the correct amount of final tax payable of the taxpayers.
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DISCUSSION
SPECIAL INCOME TAXATION
Final Income Taxation
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REFERENCE:
Rex Banggawan, CPA, MBA (2019), Business and Transfer Taxation-Laws, principles and Applications.
Real Excellence Publishing. Pasay City, Philippines.
 WORKSHEET
WEEK 7 (OCTOBER 5-9, 2020)
General Guidelines:
a. Write your answers on a clean sheet of bond paper with your name, course and year level, week
number course number, and course description. Use black ball pen in writing your answers.
Example: RUMAUAC, AIZA P. BSA 2 WEEK 7
AEC 004 INCOME TAXATION
b. After writing your answers, install the CamScanner application on your smartphone and use to
capture image/s of your answer sheet/s.
c. Send your answers to the personal Microsoft Teams accounts of your instructor Ms. Aiza P. Rumauac
and to Vice President for Academic Affairs Ms. Lily Mae M. Kimayoung thru Microsoft Teams.
d. Your answer sheet must be send in PDF form and name your file with is format: Course number-
Week number- Activity number/Quiz number (all in capitalized letter).
Example: ACC0102-WEEK1- SEATWORK 1
e. Deadline of activity: OCTOBER 13, 2020
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SEATWORK 1
IDENTIFICATION: Identify whether the following are subject to final tax or not. Write YES if subject to
final tax and its final tax rate and N/A if income is not subject to final tax. Taxpayer is RESIDENT
CITIZEN unless otherwise stated.
Income Final tax? Rate
1. Interest from US dollar bank deposit, BPI-Makati
2. Interest from Japanese yen bank deposit, Sumitomo Bank, Japan
3. Interest from USA dollar bank deposit, First USA Bank, New York
4. Interest from money market placement, PCIB Investment House
5. Interest from overdue accounts receivable, Philippines
6. Royalties, in general, Manila
7. Royalties, books published in Manila
8. Prize amounting to P30,000, Philippines
9. Prize amounting to P10,000, Philippines
10.Prize amounting to P40,000, USA
11.Winnings amounting to P30,000, Philippines
12.Winnings amounting to P10,000, Philippines
13.USA Sweepstakes winnings
14.Philippine Lotto winnings
15.Interest received from depository bank under expanded foreign currency
deposit system
16.Interest income from long-term deposit or investment evidenced by
certificates issued by BSP
17.Dividend from a domestic corporation received on April 15, 2018
18.Share in distributive net income of local business partnership received on
May 15, 2018
19.Share in net income after tax of an association, a joint account, or a joint
venture or consortium received on August 15, 2018
20.Share in the net income of a general professional partnership
21.Dividend from a foreign corporation
22.Interest income received by NONRESIDENT ALIEN individual from a
depository bank under expanded foreign currency deposit system
23.Interest income received by a NON-RESIDENT CITIZEN individual from a
depository bank under expanded foreign currency deposit system
24.Dividend received by a NONRESIDENT ALIEN not engaged in business in the
Philippines from
a domestic corporation.
25.Dividend received by a NONRESIDENT ALIEN engaged in trade in the
Philippines from a domestic corporation

Prepared by: Reviewed/Approved:

AIZA P. RUMAUAC, CPA LILY MAE M. KIMAYONG, MBA

Instructor Vice President for Academic Affairs