TAXATION History of Taxation importance of taxation ‘to the taxpayers) and to the government +Kinds and Characteristics of Taxes *Taxation System in the Philippines_ History He During the reign of Egyptian Pharaohs + Scribes as tax collectors / + In Greece’ : * A tax referred to as Eisphora was imposed only in times of war + In Athens + A monthly tax ‘called Metoikon was ¢ollected to foreigners. + Ancient Greek Taxation + Taxation was used as an emergency power. Additional resources gained from War were used to refund tax previously Collected from the people+ (Earliest taxes in Rome + Taxes Kiiown as Portoria weré customs duties on imports and exports + Augustus Caesarintroduc¢eg the inheritance tax to provide retirement funds for the military. The tax was five percenton all inheritances except gifts to.children and spouses" * In England + Taxes were firstlused as an emergency measure _ * Taxes on income or capital were a recent development as a * result of increasing government intervention in the economy + In the Philippines + The-pre-colonial society, being communitarian, did not have faxes a»« In}Modern Industrial Nations * The government designates a tax base (such as income, property holdings, or a given commodity) +A Tax Lawis a body of rules passed by the legislature by which the government acquires a claim on tax payers to convey, transfer and pay to > the public authorityTaxation .:* The system of compulsory s contributions levied by a government or other qualified body on people, corporations and property in order to fund public expenditures. * An inherent power. of the state to raise income and to demand enforced contributions for publié'purposes.Purposes Taxation to raiserevenues for public needs so that persons can live ina/civilized society The government increase taxes in order to stabilize prices and stimulate greater production. An instrument of fiscal policy influences the direction and structure of money supply, investments, credits, production; interest rate, inflation, prices and in general, of the nationaleconomyCharacteristics of a sound Tax system * Fairness * Clarity.and Certainty * Convenience _ ° EfficiencyEffects of Taxation ».* Personal Income Tax.which is presumed to fall entirely: on the legal taxpayers influences decisions to work, save, and invest. These decisions affect other people. * Corporate Income Tax may simply result to lower corporate profits and dividends. It may reduce their income of all owners of property and businesses. The company: may move toward raising the prices of their productsTaxation in the Philippines .:* The legislative branch enacts laws to continually revitalize the taxation policy of the country + BIR (Bureau of Internal Revenue) — Mandated toscomprehend the assessment and collection of all national-internal revenue taxes, fees and charges so as.to promote a sustainable economic growthTaxation in the Philippines + Republic Act No, 8424 (Comprehensive Tax Reform Act of 1997) —Tax Payer: any person subject to tax whose sources of income is derived from within the Philippines —TIN (Taxpayer Identification Number) is required for any individual taxpayerTaxation in the Philippines .* Tax Reforms: — Lower. income tax rates to enhance the competitiveness of the Philippines in the region — Removal of areas which provide avenues for tax avoidance and ‘abuse —-Exemption of OFWs from payment of tax for income earned outside the.Philippines — Simplification of the tax system:which encourages payments from tax payers including those from the underground economy .Taxation in the Philippines .:* Taxes are collected within a particular period: of time know as taxable year * This is the calendar year or the fiscal year that covers an accounting period® of 12 months ending.on the last day of any month other that December.Kinds of taxes Income. Tax — Tax on all yearly profits arising form property, possessions, trades or offices — Tax on.a person's income, emoluments and)profits + Donor’s Tax — Tax imposed on donations inter-vivos or those made. between living/persons to take effect during the a ; 9 e What is TRAIN? aT etibhaceihimintiahetenitienaietsintimnn ll ste the ies bnes be carta ep ibe non he enna oss oe = a“"« TRAIN will lower personal income tax (PIT) forall taxpayers except the richest. Those with taxable income below P250,000 will be exempt from paying PIT, while thé*rest of taxpayers; except the richest, will see lower tax Ngres ranging from 15% to 25% by 1 ve The personal income tax systenmof TRAIN will exemp' some 83% of current taxpayers.” £.Lowering the personalincome tax'(PIT) Annual taxable income Tax rate 0 - 250,000 Over 250,000 - 400,000 Over 400,000 - 800,000 Over 800,000 - 2,000,000 Over 2,000,000 - 5,000,000 Over 5,000,000 Tax rate 0% 20% of the excess over 250,000 30,000 + 25% of the excess over 400,000 130,000 + 30% of the excess over 800,000 : 490,000 + 32% of the excess over 2,000,000 1,450,000 + 35% of the excess over 5,000,000Lowering the personal income tax (PIT) Annual taxable income Tax rate 0 - 250,000 Over 250,000 - 400,000 Over 400,000 - 800,000 Over 800,000 - 2,000,000 Over 2,000,000 - 5,000,000 Over 5,000,000 Tax rate 0% 15% of the excess over 250,000 22,500 + 20% of the excess over 400,000 102,500 + 25% of the excess over 800,000 3 402,500 + 30% of the excess over 2,000,000 1,302,500 + 35% of the excess over 5,000,000110000000 12090000 12090000 10,900.00 4090000 Sos sezse7 sa0476 araeo31 780933 nego rae 7aze931 sce93 use9 1 mse91 sosaanat Sos sso0227 1.90578 raza 85599 si7s599. sassso7 45,38599 raass99 ra95599 9575599 9255599 9929599. 10415599. 1005599 sao128 sgztazs 2ssrass 303007 sa0s007 495599 sa7ss99 easss99 735599 7aass99 eass599 775599 9455599 sorass9 7a30496 20486 920806 10620885 1230886 Lowering the pérsonaincomtetax (PIT) aos s970158 104702583 ieLowering the personalincome.tax'(PIT ‘ REVISED WITHHOLDING TAX TABLE a coments) ee ae | we | an | wm | aun pce faa ee eek | ee ee iteléng sOmoverCL +26RoverCL FOTHOVErCL FECA ONE CL sIEROverCL - ‘ota camperiontent(ay “803 gop gna 8S aa Presta oo) tes nents snes sus Withholding Tax 000 sz0moverCL 425% OVE CL FOTRaVErCL 427RoWFCL 38K oC. < / EE we ‘ > cogernaniatoy OE ee ee eager eanowce +2homrch ssw eeowrel ashe. ee, Po! cxngeraiontvtta) 82% sy ask stereo war es “ pestetcinen ———gqy 0 aioe) ae ah amy nese ‘bilan crow. sthonch sShow et etowel askew ee SSS SSSjimplifying the estate’and donor's tax In the currentsystem, the tax rates can reach up to 20% of the net estate value andupto 15% on net dot s. TRAIN seeks to simplify this. Estate and donor'stax will be sssed away, donateda property, or it hhere is to make the lExpanding the Value-Added Tax (VAT) base The Philippines.has one of the highest VAT rates but also the highest number of exemptions in the Southeast Asia region. These tax exemptions have created much confusion, ~ complexity, and discretion in our tax system resulting in leakages aid, opening doors for negotiation, corruption, and tax evasion. TRAIN aims to clean up the VAT system to make it fairer and simpler and lower the cost of compliance for both the taxpayers and tax administrators. This is achieved by dimiting VAT. exemptions to necessities .“_» such as raw agriculture food, education,and health. This does not mean that the benefits the poor rightly deserve will be removed. The TRAIN will direct the way to protect the poor and vulnerable: compared to the fax exemptions and blind subsidies that are inefficient and largely beneficial to the rich since they:have higher purchasing, power.Expanding the Value-Added Tax (VAT) base TRAIN repeals 54 out of 61 special laws with non-essential VAT exemptions, thereby making the system fairer. Purchases of:senior citizens and persons with disabilities, however, will:continue to be éxempt from VAT. Housing that cost below P2 million will be exempt frofh VAT beginning 2021 Medicines for diabetes, high cholesterol, and hypertension. will be exempt beginning 2019. The reform also aims to limit the VAT zero-rating to direct & ters who actually export goods out of the country. This will be implemented together with an enhanced VAT refund system that will provide timely cash refunds to exporters.Expanding the Value-Added Tax (VAT) base se f Thé VATethreshold is increased. from P1.9 million to j P3 million to protect the poor and low-income Filipinos and small and micro businesses and for manageabléyr= administration. This*effectively exempts the sale of goods and services of marginal establishments from VAT. Under TRAIN, VAT exempt taxpayers will have the following options: e PIT schedule with}40% OSD on gross receipts or gross sales plus 3% percentage tax ‘ PlT schedule with itemized deductions. plus 3% percentage tax, or . e Flat tax of 8% on gross.sales or gross:revenues in lieu of percentage tax and personal income tax.Increasing fuel/excise tax TRAIN proposes to increase the excise of petroleum products, which has not been adjusted since 1997, An excise tax is an indirect tax onf'selected goods to _— discourage too much¢onsumption of scarce resources and limit the bad effects of some/products, such as pollution and congestion. It is a progressive form of taxation since those who consume more will pay more. The government proposes to stagger the increase in the to P3 immediately after implementation, P2 the year after, and P1’in: the third year. / Afterwards, the excise shall be increased annually based on the inflation rate. In the event that Dubai crude oil exceeds $100 per barrel, the increase in the excise will be temporarily frozen.so.as to not unduly affect the public._. Increasing fuel excise tax pom. re Excise Tax on Fuels oa} 00.0 tax pre Php250 per tern 2018 ‘on Diesel ‘Phip4.50 pee liter in 2019 ‘Phip6.00 per liter in 2020 0 Unleaded and premium For gasoline ‘gasoline is taxed at hip 7.00 per iter in 2018 Php4.35 per Iter hip 9.00 per iter in 2089 Pap 10.00 per liter in 2020Increasing Automobile Excise Tax © ARAIN simplifies the excise tax on automobiles, but lower-priced-cars continue to be taxed at lower rates while more expepshie cars are taxed at higher__ rates. When we Consider the TRAIN.as a package, the increase in take home pay from the personal income tax reduction will be more than enough to offset the increase in prices resulting from adjustments in excise taxes. ¢ Fora typical buyer, the additional take home pay from. the-PIT reform will more than fully offset the increase in amortization.FS oe Increasing Automobile Excise Tax, _ fe Old rates Pred - oi 600,00 and below 600.000 to 1000000 3 ’ £ Over timiion | 122000. 4am in 10000000 to awe 021 milion | excess of 11 milion 4,000,000 a! over21miion | S200u sec 20% ‘excess of 21 millon 4,000,000 and abate: yun EET we 109Introducing a Sugar-Sweetened Beverages (SSB) Excise Tax »: Why impose.a tax on SSBs? © Most of the sugar-sweetenéd beverage, with some notable exceptions provide Unnecessary or empty calories with little or no nutrition, SSBs are not a substitute for healthy foods such as fruits and rice. e SSBs are relatively»affordable especially to children and the poor who are the most vulnerable to its negative . effects on health.” e SSB products are easily accessible and can be found. in almost any store, unlike other sweetened products. Most often,:the poor and the children are not aware of their ;consequences. iThe SSB excise ‘tax will help promote a healthier Philippines. ; ay? Trea kane LBS :) Ce oa um Lt ‘SSB EXCISE TAX ‘Sweetened juice drinks = g ‘Sweetened tea GB other beverages: ‘AN caterted beverages wn ale sug, ~ ‘cng tose wit clo and nora > s Pe eee Fre wate ~~ Beare Erony os 7 Sots fs pene ne ct) ther powdered inks not clssied sik, ere! and ther gain beverages Cotter nonacanoe beverages hat ora aed sugar eVERETONG Yen mk WORE Gren