Geriel I.

Fajardo

1.) What are the three income taxation schemes? Differentiate each schemes.

 A regressive tax levies the same percentage on products or goods purchased regardless of the
buyer's income and is thought to be disproportionately difficult on low earners.
 A proportional tax applies the same tax rate to all individuals regardless of income.
 A progressive tax imposes a greater percentage of taxation on higher income levels, operating
on the theory that high-income earners can afford to pay more.

2.) What is the difference between passive income and active income?

 Passive income is the money earned on an investment or work completed in the past that
requires little work or no active involvement to generate ongoing revenue.
 Active income, on the other hand, is the hard-earned money that one earns in exchange for
performing a service. This includes wages, tips, salaries, commissions, and income from
freelance projects.

3.) Distinguish Final Withholding tax from Creditable Withholding Tax.

 Final Withholding Tax is a kind of withholding tax which is prescribed on certain income
payments and is not creditable against the income tax due of the payee on other income subject
to regular rates of tax for the taxable year.
 Creditable withholding tax is an advance income tax of the payee. This would mean that even
before filing the income tax return in the Philippines, the taxpayer had already remitted portion
of its income tax liability through the payor who withheld and remitted the same to the BIR.