Group 5 - Interactive Group Work 1 September 12, 2021

BA106 - Philippine Taxation with Business and Transfer Taxes

Belderol, Peter Joseph

Cruz, JohnRev
Pacion, John Matthew
Pareja, Paolo
Pichay, Durickson
Ramos, Janjac
San Buenaventura, Vince

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A. Classification of Individual Taxpayers
I. Resident Citizens - A citizen of the Philippines who has a permanent home or place of residence in
the Philippines to which they intend to return to.

II. Non-resident Citizen - A citizen of the Philippines who leaves the Philippines during the taxable year
to reside abroad, either as an immigrant or for employment on a permanent basis.

III. Resident Alien - An alien who has acquired a residence in the Philippines and retains his status
as such until he abandons the same and actually departs from the Philippines.

IV. Non Resident Alien (Engaged in Trade or Business) - An alien who comes to the Philippines for a
definite purpose but stayed in the Philippines more than 180 days.

V. Non Resident Alien (Not Engaged in Trade or Business) - An alien who comes to the Philippines for a
definite purposes but stayed in the Philippines for 180 days or less
 Concept Map for Different Taxpayers

B. Classifications of Passive Income Subject to final tax and their tax rates.
Final Income are tax withheld at source.
I. Interest from any currency bank deposits 20% tax rate
II. Yield or other monetary benefit from deposit substitutes 20% tax rate
III. Yield from trust funds and similar arrangements 20% tax rate
IV. Interest from a depository bank under the expanded foreign currency bank deposit
system 15% tax rate
V. Royalties aside from books, literary works & musical composition 20% tax rate
VI. Interest on foreign currency 15% tax rate
VII. Royalties on books, literary works, musical composition 10% tax rate
VIII. Cash or Property Dividends 10% tax rate
IX. Prizes exceeding 10% tax rate
X. Winnings except for PCSO winnings of P10,000 or less 20% tax rate
Passive Income Final Tax on National Internal Revenue Code of the Philippines vs Tax Reform
for Acceleration and Inclusion Law (TRAIN Law)
PASSIVE INCOME ON: NIRC VS TRAIN Law
1. Interest from deposits and
yields or any other monetary 7.5% final tax rate 15% final tax rate
benefits from monetary
substitute, trust fund and
other royalties.

Interest income from

depository bank under the 7.5% final tax rate 15% final tax rate
expanded foreign currency
deposit system.

2. Interests, royalties, prizes,

and other winning of 20% final tax rate (except 20% final tax rate (includes
individual citizen and resident PCSO and lotto winnings) PCSO and lotto winnings above
alien. P10,000)
Interest income from
depository bank under the 7.5% final tax rate 7.5% final tax rate
expanded foreign currency
deposit system.

C. Classification of Capital Gains, their tax base and tax rate.

Capital Gains are tax levied on profit from the sale of property or an investment classified as
Capital Assets.
I. Capital Gain Tax on Real Property (Net Capital Gain Tax Base) 6% final tax rate (per trans. )
- Real Property should be located in the Philippines

- Land, Buildings, Monuments, etc.

II. Capital Gain Tax on shares of stock (Net Capital Gain Tax Base) 15% final tax rate
- Net Capital Gain Tax Base is the tax base

- There is no Capital Gain Tax if sale results in a “Net Capital Loss”

Realized Capital Gain - Is the gain from the final sale of an asset or investment.

Unrealized Capital Gain - Arises when the current price of an asset or investment exceeds its purchase
price but is still unsold.