Senior High School

Fundamentals of
Accountancy,
Business and
Management
2 Quarter 2 – Module
8.1:
Income and Business
Taxation

Writer:
 NESSA B. DIMALANTA
Teacher-II BACOLOR HIGH SCHOOL
Editors:
JANE P. VALENCIA, ED. D., EPS Mathematics
CHAIRMAN
BETHEL GRACE M. GUIAO- Teacher-III
VIENNAH MARIE M. BUSTOS Teacher-II

What I Need to Know

This module was designed and written with you in mind. It is here to help you master
the Income and Business Taxation. The scope of this module permits it to be used in
many different learning situations. The language used recognizes the diverse
vocabulary level of students. The lessons are arranged to follow the standard sequence
of the course. But the order in which you read them can be changed to correspond
with the textbook you are now using.
The module has one lesson, namely:
Lesson 1: Explain the principles and purposes of taxation and define income
taxation, business taxation, and its processes.
After going through this module, you are expected to:
1. explain the principles and purposes of taxation;
2. define income and business taxation and its principles and processes.

What I KnowRelax and take it

easy! Let us check
what you know.

Choose the letter of the best answer. Write the chosen letter on a separate sheet
of paper.
1. Taxation is the process by which our government raises income to pay its necessary
A. assets income
B. expenses D. taxes
C.
2. Its a kind of income received by employees working in different companies. It is
often in the form of salaries, bonuses, and allowances.
A. Compensation Income B. C. Passive Income D. Police
Gross Income power
3. The primary purpose of taxation is to provide the proper _________needed to run the
government.
A. assets C. expense D. funding
B. compensation
4. The government's power to take private property, upon payment of just
compensation, is to be used for a public purpose.
A. Administrative Feasibility B. C. People Power D. Police
Eminent Domain Power
5. The government's power to collect taxes which used to finance the different projects
needed by the people.
A. Administrative Feasibility B. C. People Power D. Police
Eminent Domain Power

1
6. The process by which our government, through our lawmakers, raises income to
pay its necessary expense.
A. Code of Ethics B. Tax C. Taxable D. Taxation
7. The burden of taxation should be proportionate to the ability of the taxpayer to pay
it. What principle is this?
A. Administrative Feasibility B. C. People Power
Fiscal Adequacy D. Theoretical Justice
8. this is the power of our government to make laws that will promote public health,
morals, safety, and welfare.
A. Administrative Feasibility B. C. People Power D. Police
Eminent Domain Power
9. He or she is a citizen of a foreign country but resides here in the Philippines during
the taxable year.
A. A non- resident citizen B. C. Resident alien D. Resident
Non- resident alien Citizen
10. A citizen of a foreign country and does not reside here in the Philippines.
A. A non- resident citizen B. C. Resident alien D. Resident
Non- resident alien Citizen
11. If an employed salary individual only resource is compensation. Which of the
following taxes is imposed on the employee?
A. Business and Income Tax C. Excise Tax D. Income tax
B. Business tax
12. Matris is self-employed and has a business that gained profit during the period.
Matris is subject to which of the following taxes?
A. Business and Income Tax B. C. Income tax
Business tax D. Value-added Tax
13. Bren is self-employed with a business suffered deficit during the period. Bren will
be required to pay which of the following taxes?
A. Business and Income Tax B. C. Income tax D. Percentage
Business tax Tax
14. Which of the following taxed on all income earned from sources within the
Philippines and without outside the Philippines?
A. Non-resident citizens C. Resident citizens
B. Non-resident citizen D. Resident alien
15. Which of the following not deemed to be tax purposes?
A. Regulating inflation
B. Making these people less well off
 C. Reduce the adverse effects of such activities
D. To have an equitable distribution of resources among the community

2
Lesso Explain the principles
n 1 and purposes of taxation
and define income
taxation, business
taxation, and its
processes.
This lesson explains the concepts of taxation of businesses and income taxation.
Taxation is a mechanism by which our government, by our policymakers, collects taxes
to fund the required expenses. Businesses are assumed to be sole proprietors in this
module, and it will discuss taxes for both compensation income and business income.
GUESS THAT PIC! I know you
are great in this activity. But do you
know where their funds came from?

What’s In
Identify the following pictures, and what government agencies involved? Write your
answers on a separate sheet of paper.
Identify the picture Involved Government Agency

1. ____________________

2. ____________________

3. ____________________

4. ____________________
 5. ____________________

Knowing that government agencies

are involved to improve our society,

where do you think they get the fund

for improvements? Next activity will
help you unravel what is the topic all
What’s New about. And it will improve your
language learning.

3
ARRANGE THE KEY TERMS TO KEEP IN MIND. Write your answers on a separate
sheet of paper.
1. ANIATTXO ______TAXATION__________________ 2. NCOMIE AXT
___________________________________ 3. PARLONES ETNMOEIXP
___________________________________ 4. AALELBOWL UDIODTNEC
___________________________________ 5. USIBSSNE XTA
___________________________________ 6. NEISRTDE NALIE
___________________________________

What is It
Have you ever ask, “why do we pay taxes? What's the point of
taxation? In this module, you will be able to answer this
question. Before we answer those questions, let us define first
“What is Tax?” and “What is Taxation?”
Tax, in simple words, is the compulsory contribution that people pay to the
government, which is used to pay for expenses. Below are Three Inherent Powers of
the Government, and one of those is TAXATION.
1. Eminent domain - the power of the government takes over privately
owned land, matters relating to the payment of just compensation being used
for public considerations.
2. Police power - the power of the government to make policies that
encourage the public ’s health, morality, protection, and the well-being of the
people.
3. Taxation - the ability of the government to collect taxes which is used to
fund the various projects needed by the people. The process by which our
government, through our lawmakers, raises income to pay its necessary
expenses.
“Why do we pay taxes? What is the point of taxation? We will be able to
answer these questions by explaining the principles and purposes of
taxation.
The Basic Principles of a Sound Tax System are:
a. Fiscal adequacy-revenues should be adequate to sustain government spending. b.
Theoretical justice – taxes are fair and reasonable to the capabilities of the taxpayer to
pay.
c. Administrative feasibility-tax legislation is enforced efficiently and effectively,
preventing future complications and uncertainty on the aspect of tax-paying citizens.
“Why do we pay for taxes? Because of these purposes:
4
a. provides funds to support the government to improve people's general welfare. b.
Managing inflation (e.g., government to lessen the impact of upcoming rising prices.) c.
Helping to reduce the negative impacts (e.g., tobacco is taxed to prohibit smoking,
imported goods are taxed to secure domestic manufacturers)
4. Reasonable distribution of income (for example, higher tax payments are imposed
towards those who generate much)
Now that we know the purpose of TAXATION! Have you question
yourself if the government imposed a tax on your parents, relatives,
friends? And what type of tax being charged on them? Let us widen
your knowledge. Do you know that there are different types of taxes
imposed on a different individual? You will be able to understand
various taxes in this module, which will be focused on the Income and
Business Tax,
which will be introduced.
First, let us define and state the process of Income Taxation.
What is Income Taxation?
INCOME TAXES is the imposition of taxes on the income of individuals
derived from compensation, business trade, self-employed, or practice of a
profession or from property less deductions authorized by the law. The term
"gross income" refers to the taxpayer's income for taxation purposes.

I am Mr. Ligaya. I’m working as a postman. I am

responsible for Income tax but not for business.
But if I have unpaid leave, I’m am not
accountable for income tax because I have not
received any income.

As discussed previously, Gross income refers to all income derived from

whatever source. What are those sources? Along with this topic, the different
sources of Gross income will be explained.
First, COMPENSATION INCOME, which your parents, relatives, or friends
received by being an employee working for different companies. Aside from
salaries and wages, gross compensation income may also be in the form of
any of the following:
 OTHER FORMS OF TAXABLE
COMPENSATION INCOME
Fixed or Variable • taxable(representation,cost of leaving
Allowances allowance) except for government employees
(PERA)
13th-month pay • More than P90,000
Christmas bonus • Non-performance based combine in
13th-month pay, more than P90,000
• if under collective bargaining agreement (CBA)
over P10,000
De Minimis Benefits (see table below)

5
Overtime pay All taxable (meal allowance used for OT, see
De Minimis Benefits)
Hazard pay All taxable
Commission All taxable
Fees All taxable
Paid Vacation and sick All taxable (unused leave see table for De
leaves Minimis Benefits)
Retirement pay Not taxable unless paid by SSS, GSIS, or United
States Veterans Administration. Funded by a
private employer approved by BIR. 10 years
employed by the same employer, at least 50 years
old, fist time to avail.
Separation pay If voluntarily, but if not, all causes beyond
the employee’s control are not taxable (e.g.,
death, sickness).
Compensation paid in kind Taxable based on their fair market value unless
it qualifies under De Minimis Benefits

De Minimis Benefits - The following considered "de minimis" benefits:

De Minimis Benefits Non-taxable Limit
a. Monetized unused vacation • 10 days
leaves (private employees)
 b. Monetized value of vacation • none
and sick leaves (government employees)
C. Medical cash allowance to dependents • P125.00 per month
d. Rice subsidy • P1,500 per month

e. Uniform and clothing • P5,000 per year

f. Actual medical benefits • P10,000 per year

g. Laundry allowance • P300 per month

h. Employee’s achievement award • P10,000

i. Gifts (Christmas d Anniversary) • P5,000 per year

j. Daily meal allowance for overtime work • 25%% of the basic minimum
wage
k. CBA and productivity incentive schemes • P10,000 per year

These are the steps in determining the tax on 13th-month pay and Other
Benefits: Step 1: Determine the excess of each "de minimis" benefit received by the
employee over the prescribed limits stated above.
Step 2: Add the excess "de minimis" benefits to the 13th-month pay and Other Benefits
received by the employee.
Step 3: Compare the amount determined in Step 2 with the P90,000 limit. If the
amount is less than P90,000, it is not taxable, and if it exceeds P90,000, the excess
taxable.

6
After citing all the different forms of Compensation Income, we will now
deduct contributions that should not be a part of the gross compensation
income. Shown below is the table of allowable deductions:
Social Security System (SSS) for private employees and self-employed
Government Service Insurance System (GSIS) for government employees
Philippine Health Insurance Corporation (PhilHealth),
Home Development Mutual Fund (HDMF) PAG-IBIG
Union dues
Compensation for Injuries or Sickness

Under the Republic Act (RA) No. 10963 or the Tax Reform Act for Acceleration and
Inclusion (TRAIN), eliminates the personal exemption of P50,000 and the
additional exemption of P25,000. Employers required to withhold taxes on
compensation for employees, which means that the salaries or wages the employee
receives as the "take-home pay" are already net of the associated income tax. Taxes can
withhold either monthly (every 30th for month's total compensation) or on a semi-monthly
basis (every 15th and 30th for the two-week compensation each of those
dates). What
I am Mr. Numero, an Accountant. I own a store and provides service
 to my clients. My earnings purely from my business. What type of
income do I have?
type of gross income does Mr Numero earn? The second type of gross
income, BUSINESS INCOME. It is an income generated by an
entrepreneur or by different professionals like lawyers, doctors, and
accountants (professional income). They do not work as employees of other
people; they were so-called self-employed individuals. Self-employed
Individuals who derived their income purely from business are charged
with tax, which is summarized for you below.
Summary Table for Gross Business Income (Self-employed/Professionals)
Gross Sales/Receipts TAX RATE
Not exceeding P3 Option 1. Graduated income tax (IT) schedule (either
million itemized deductions or Optional Standard Deduction)
Option 2. 8% income tax on gross sales or gross
receipts over P250,000
Above P3 million 1. Graduated income tax (IT) schedule

Gross business income is computed as follows:

Gross income from Add: Net purchase
Gross sales business
Less: Sales returns, Total Goods Available
allowances & discounts Less: Ending inventory
You
Net sales (a) "Cost of sa
Less: Cost of sales (a) Beginning inve Cost of Sale

come across deductions again! This time, it is for

Business Income. An individual taxpayer deriving business income is allowed to deduct
from his/her gross business income, either one of the following:
1. Itemized deductions
Expenses Losses

7
Interest Bad Debts Depletion of Oil and Gas Charitable
Wells and Mines Contributions and
Other Contributions-
Taxes Depreciation Pension Trusts Research and
Development

2. Optional standard deduction (OSD)

Instead of the itemized deductions, the taxpayer may choose to deduct the OSD, which
is calculated as forty percent (40%) of net sales, without deducting the cost of
sales. Under the computation of the Business Income Tax Rate, there is
another option. Suppose you do not opt to use the graduated income
tax rate and the percentage tax. This option is what we call “Optional
Eight percent (8%) Tax”. A tax of 8% charge on gross sales or gross receipts
and other non-operating income of more than two hundred and fifty thousand pesos
(P250,000)
I am Mr. Masipag, a bookkeeper. I own a laundry shop
and working at a private company. My earnings
composed of my salary and revenue from business. What
type of income do I have?
What type of gross income does Mr Masipag earn? The third type of gross
income, MIXED INCOME-. An individual taxpayer who receives both
compensation and business income. A summary table is provided for you,
showing how a mixed-income earner being taxed.
Summary Table for Mixed-Income Earners
Type of Income TAX RATE
Compensation Income 1. Graduated income tax (IT) schedule
Income from Business
or Practice of
Professions
Gross Sales/Receipts Option 1. Graduated income tax (IT) schedule
not exceeding P3 (either itemized deductions or Optional
million Standard Deduction)
Option 2. 8% income tax on gross sales or
gross receipts instead of income and
percentage tax
Gross Sales/Receipts 1. Graduated income tax (IT) schedule
above P3 million

I am Mr. Swerte. I won the lottery. What type of income do I

have?
What type of gross income does Mr Swerte receive? The fourth type of gross
income, PASSIVE INCOME. An income generated by different investments
made by an individual (such as interest income, royalty income prizes and
winnings, and cash or property dividend income). It will not be subjected to
the schedular rate anymore but to specific final tax rates that should be
remembered. A summary table is provided for you, showing how a passive
income being taxed.
SELECTED EXAMPLES OF PASSIVE INCOME FINAL TAX RATE (for
a resident citizen)
Interested income from bank deposits 20%
Interest income from foreign currency deposit 15%

8
Royalties, except on books, as well as other literary 10%
works, and musical compositions
Price and winnings above P10,000 20%
Note: a.) Prizes below P10,000 are included in
income subject to the tax table. b.) Winning from
PCSO and Lotto below P10,000 are exempt
Cash or property dividends received by an 10%
individual from a domestic corporation
 A partner’s share in the after-tax profit of a 10%
partnership (except a general professional
partnership)

The two most significant classifications of income taxpayers are individuals

and corporations. In this module, we will limit our discussion to Individual
taxpayers.
Let us classify Individual Income Taxpayer with their Source of Income
Individual CLASSIFICATION Source of
Income
With Outsi
in de
the the
Phil. Phil.
1. Resident citizen a Filipino citizen who lives or resides √ √
here in the Philippines
2. A non- citizen to a foreign country and does √ X
resident citizen not reside in the Philippines
3. Resident alien a citizen of another foreign country √ X
but resides in the Philippines
4. Non- resident (NRA-ETB) who stays in the √ X
alien Philippines for more than 180 days
during the calendar period
(NRA-NETB) stays less than180 days
in the Philippines

I’m back! Mr. Masipag, a bookkeeper. I own a laundry

shop and working at a private company. My earnings
composed of my salary and revenue from business.? Am I
liable to pay for business tax?
Mr Masipag, who engages in a business, is legally responsible for business
tax, whether or not she gained profit. If Mr Masipag did earn profits, Mr
Masipag should be accountable for both income tax and business tax. If Mr
Masipag does not earn business income, such as lost revenue, Mr Masipag
is still responsible for business tax but not for income tax. Business taxes
are imposed upon onerous transfers such as sale and barter or exchange. A
person not engaged in business can also be subjected to a business tax
such as the value-added tax on imported goods, not for business use. To
further explain Business tax, please read the information provided below.
The original receipt or invoice copy shall be provided to the purchaser at the
time of the transaction. Receipts or invoices shall be kept for three years from
the end of the year of the transaction.
Under the Tax Code, the three primary business internal revenue taxes are:
Under COMPUTATION OF TAX
the Tax
Code,
the three
primary
 9
Business
Tax
Value •12% of the gross selling price of the goods or services,
added which is called the output VAT.
taxes •VAT registered business is allowed to deduct any input VAT
Required computed as 12% of purchases
if: Example computation:
a.it is VAT
VAT
registere Sale price to customer (P10,000) Output (10,000x12%) 1,200
d; or Purchase price from supplier (P6,000) Input (6,000x 12%) (720)
b. Annual
total sales Net VAT to be remitted to the BIR 480
or
receipts
that
exceed
P3,000,00
0
Percenta • Non-VAT registered business required to pay a 3% of gross
ge taxes sales or receipts
• Effective January 1, 2019, self-employed/professionals’
annual gross sales or gross receipts not exceeding
P500,000 are exempt.
Excise Several schedules for excise tax, brief information will be provided
taxes only: The two kinds of excise tax, namely a.) Specific Tax
(imposed and based on weight or volume capacity) b.) Ad
Valorem Tax (imposed and based on selling price).

Mr. Masipag here! Now that I know what tax I should pay. The
questions is, what to do next?
The next thing to do is how to file your Income Tax Return. Taxpayers are required to
register income tax returns (ITR) with BIR when paying taxes, except where the
taxpayer is specifically exempt from such filing by law. First, you have to register for a
Tax Identification Number (TIN) Information to file your TIN, and ITR is presented on
a table. Please read the information provided below.
Registration for TIN is made as follows
Source of income BIR Form No. Date of registration
➢ Compensation ➢ 1902 ➢Within ten (10) days from
employment
➢ Business/Mixed ➢ 1901 ➢On or before the
commencement business
➢ Business ➢ 0605 ➢On or before January 31 of the
Annual current year
Registration fee

You may visit https://www.bir.gov.ph/index.php/bir-forms.html for the forms

Below is brief information on filing the ITR.
Compensation Income Business Income Mixed-Income
 Annual ITR BIR
1700 rev. 2018
2 pages
It is filed on or before
April 15 of each year
covering income for
the preceding taxable
year.
Annual ITR BIR 1701A Annual ITR BIR 1701
rev. 2018 rev. 2018
2 pages 4 pages
It is filed on or before It is filed on or
April 15 of each year before April 15 of
covering income for the each year
preceding taxable year. covering income for
the preceding
taxable year.

You may visit https://www.bir.gov.ph/index.php/bir-forms.html for the forms

10
ITR can be filed quarterly or annually. Married couples should file a single
return, indicating the partners' respective salary and tax dues. If income is not
accurately assigned to either spouse, it is equally distributed among the
spouses to determine their separate taxable income. Taxpayers with gross
annual sales or receipts exceeding P3,000,000 are required to have their accounts
audited annually by the Certified Public Accountant.
Every taxpayer must register once with the BIR and obtain one (1) Tax
Identification Number (TIN). A taxpayer acquiring more than one TIN for
himself/herself is punishable by law through monetary fines or
imprisonment. Tax evasion (tax dodging) is a taxpayer who avoids paying
taxes using illegal means (e.g., non-declaration of taxable income or
under-declaration). In contrast, Tax avoidance is a taxpayer minimizing their tax
exposure by legal means (e.g., careful tax planning). These are violations of tax law
which are punishable by monetary fines or imprisonment.

Notes to the Teacher

To simplify learning of taxation, we will limit the module discussions to gross business income
derived by a sole proprietor who is a resident citizen and engaged in trading or merchandising
business. There will be no discussion on the difference between financial accounting and tax
accounting for high school accounting purposes. Moreover, businesses are assumed to be a sole
proprietorship. Partnerships and corporation's taxation are not discussed here. This module's
scope is limited only to individual taxpayers (other types of taxpayers, like corporations, estates,
are outside the scope of this module). The topics excluded are discussed in higher learning of
taxation. This topic will be for collegiate accounting discussions.

After the discussion,

What’s More Activity 1
let have am activities to improve
your higher order
thinking skills.

Independent

Identify the following items. Write the correct answer on a separate sheet of paper. 1.
The burden of taxation should be proportionate to the ability of the taxpayer to pay it.
It should be noted that the proportionality does not necessarily mean equality in the
amount of taxes paid. People who earn different amounts of income should not be
forced to pay the same amount of income taxes.
2. The power of government to take private property, upon payment of just
compensation. To be used for a public purpose.
3. He or she is a citizen of a foreign country but resides here in the Philippines during
the taxable year.
4. It is a tax on the value added to the purchase price or cost in the sale or lease of
goods, property, or services during the trade or business. It is imposed on the value
added at each stage of distribution.
5. An income received by employees working for different companies. That is usually in
the form of salaries, bonuses, and allowances.
Independent Assessment 1
MULTIPLE CHOICE. Write the correct answer on a separate sheet of paper.
11
1. A resident Filipino citizen who became an Overseas Contract Worker is taxed as
follows:
A. Tax-exempt
B. On income derived abroad
C. On income derived within the Philippines only
D. On income derived inside and outside the Philippines
2. The following may be considered De Minimis Benefits, except:
A. Daily allowance meal C. Laundry Allowance D. Rice
B. Expenses for International subsidy
Travel
3. An income generated by entrepreneurs (business) or by different professionals like
lawyers, doctors, and accountants.
A. Administrative feasibility B. C. Compensation D. Passive
Business or Professional IncomeIncome
4. Tax on a person’s income derived from employment, business, trade, the practice of
a profession, or property after deductions allowed under the law.
A. Business C. Value-added
tax B. Income tax D. Withholding
tax tax
5. Tax on the production, sale, or consumption of goods and services, leasing of
property, or other business activities.
A. Business tax C. Value-added tax D.
B. Income tax Withholding tax
Independent Activity 2
Match Column A to Column B. Pick the correct letter and write your answer on a
separate sheet of paper.
COLUMN A COLUMN B
 ______1. Resident Citizen
______2. Non -resident citizen
______3. Resident Alien
______4. Non- Resident
Alien Engaged in Trade &
Business
a. Trina who was a Filipino and is a nurse
working in Canada
b. Linda, a Malaysian national working and
living in the Philippines since 1993
c. Christian, a Filipino resides and working in
Quezon City
d. Lady Gaga performed a 2-days concert in
Palawan
e. Marco is a Canadian national working for a
project in the Philippines from January 2019
to November 2019.

Independent Assessment 2
Draw a smiley face if the statement right and sad face if it is wrong. Write the correct
answer on a separate sheet of paper.
12
________1. Income taxes are imposed upon onerous transfers such as sale, barter, or
exchange.
________2. A non-resident alien individual is considered to be engaged in trade or
business if he goes here in the Philippines and stays there for more than 180 days
during the calendar year.
________3. OFWs are taxable only on their income arising from sources within the
Philippines.
________4. Business taxation is the imposition of taxes on the income of individuals or
corporations.
________5. The government's power to take private property, upon payment of just
compensation, to be used for a public purpose.
Independent Activity 3
TRUE OR FALSE: Write the word “True” if the statement is correct and “False” ii it is
incorrect. Write the correct answer on a separate sheet of paper.
1. Resident citizen is a citizen of a foreign country and does not reside here in the
Philippines
2. A resident alien is a citizen of a foreign country and does not live here in the
Philippines
3. Specific tax is an excise tax imposed and based on weight or volume capacity or any
other physical chapter of measurement.
4. Ad valorem tax is an excise tax imposed and based on selling price or additional
specified value of the goods
5. Value-added tax is a tax on the value added to the purchase price or costs in the
sale or lease of goods, property, or services in the course of the trade or business
Independent Assessment 3
Fill in the required form to be filed by a taxpayer. Write the correct answer on a
separate sheet of paper.
Taxpayer BIR FORM
1. Aka started a business which his only source of income 1901
and needs to register to pay his/her tax.
2. Baka provides accounting services
3. Caka is employed as an accountant
4. Dakota works at COLA Corp and has a hardware business
5. Eka works as an engineer on a construction firm. He needs
to register to pay tax.
6. Fata only source of income is his laundry business.

13
Great
Work! It is
time to
reflect.
What I Have Learned

Reflect on what you have learned after taking up the module by completing the chart
below (2-3 sentences). Write your answer on a separate sheet of paper I thought…
What were your thoughts
or ideas about the
importance of Taxation?

I learned…
What new or additional
ideas did you learn after
taking up this lesson?

Do
Good Job! You are nearly there! These is just a
piece of cake for you.

What I Can
Guided by the given module, tick (√) the column to which deductions below are
applicable. Write the correct answer on a separate sheet of paper.
DEDUCTIONS COMPENSATIO BUSINESS
N INCOME INCOME
1. SSS √ √
2. PAG-IBIG
3. UTILITIES EXPENSES
4. PHILHEALTH
5. DEPRECIATION
6. GSIS

Honesty is the Best

Policy. You are the one

both
Business
Resident citizens VAT
8% payable
Passive Compensation
12% 3%
Assessment either
Taxation neither
who makes your own destiny.

14
Fill in the blanks by choosing your answer in the scrambled word box. Write the
correct answer on a separate sheet of paper.
1. A VAT-registered business or a business with annual total sales or receipts that
exceed or expected to exceed P3,000,000 is required to pay _________ VAT. 2. _________
income is income derived from trade, business, or practice of the profession (i.e.,
income from self-employment).
3. A Non-VAT registered business is typically required to pay _________ percentage tax.
4. A business is allowed to deduct _________ the itemized deductions or the optional
Standard Deduction (40% of net sales) for purposes of computing the tax due. 5.
__________ is the process by which a government, through its lawmaking body,
imposes charges on its inhabitants to raise money for public use.
6. Optional _________ tax available to business income earner whose gross sales or
gross receipts and other non-operating income do not exceed the P3M VAT threshold.
7. _________ income is typically subject to final tax.
8. _________ is the excess of Output VAT (based on sales) over Input VAT (based on
purchases).
9. _________ are taxed on all income they derive from sources within and without
(outside) the Philippines.
10. _________ income is income typically derived from employment.
To enhance your
knowledge about
taxation. This
Activities
additional activity is provided for you.

Additional

MODIFIED TRUE OR FALSE. State “TRUE” if the statement is correct and “FALSE” if it
is incorrect, then changed it by giving the right answer. Write your answer on a
separate sheet of paper.
1. A taxpayer can obtain more than one tax identification number if he or she derives
income from more than one source.
2. The "take-home pay" of an employee is already net of tax.
3. Taxes on regular employees’ salaries are typically withheld either on a monthly or a
semi-monthly basis.
4. Aside from taxes, contributions to SSS/GSIS, PhilHealth, Pag- IBIG, and Union
dues, if any, also reduce the "take-home pay" of an employee.
5. A taxpayer obtaining more than one TIN for himself/herself is punishable by law
through monetary fines or imprisonment.

15

Answer Key Compensation

10.
TRUE
5.
dditional A
TRUE
4.
TRUE
3. present
TRUE rubrics were
2. assessment and
once teacher’s
is required only is up to the
FALSE/ answer varies. It

taxpayer 1. Students’ 1. Resident citizens 9.

payable VAT 8.
Activity Passive 7.
 8% 6. 4Ps Pantawid 5.DPWH -
Taxation 5. Bridge 4.
either 4. DOH – Vaccine 3.
3% 3. 1. D 2. C 3. C 4. A DOA - Farmers 2.
Business 2. 5. D DPWH – Roads 1.
12% 1. Activit NI ’s What
Assessment y3 Added
Tax 5. -
D 3. B 4. E 5. A 2. C 1. Alien 4.
Activit Value
5. 1902 y2
(6). 1901
3. 1700 Compensation Income
(4). Learned
170A Eminent Domain 3.
170A1 Have What I Resident 2. 1.
1. 1901 Theoretical Justice
(2). Activity 1
3
Assessment
False: 9 alien
2 Assessment Resident 6.
True:6,7,8,10 Business tax 5.
Deduction ’s More What
Allowable 4.
Exemption
√) Personal 3.
Income tax 2. 15. B
Taxation 1. 11. C 12. A 13. B
’s New What 14. C 10. B C 9.
1. C 2. C 8. D 7. D 6.
Assessment 1 A 3. D 4. B 5. A 1. B 2.
BOTH TICK ( 6. B 3. B 4. B 5. A ’s
BUSINESS 5. More What What I Know
√) BOTH TICK ( 4.
BUSINESS 3.
√) BOTH TICK ( 2.
√) BOTH TICK ( 1.
Can Do What I
DSWD -

16
References
By:
 • Curriculum Guide in Fundamentals of Accountancy, Business and Management 2
• Beticon, J. L, & Domingo, J. D, & Yabut, F. D. (2016). Fundamentals of Accountancy, Business,
and Management 2 Teacher’s Manual (2016). Quezon City: Vibal Group, Inc.
• Fundamentals of ABM 2: Senior high school SHS teaching guide. (2019, April 3). Retrieved from
https://www.teacherph.com/fundamentals-abm-2-senior-high-school-teaching-guide/
• Ferrer, R. C, & Millan, Z. B., (2018). Fundamentals of Accountancy, Business, and Management 2 (2nd
ed., Ser. 2018). Baguio: Bandolin Enterprise
• Perdiguez, V. (1970, January 01). Discover. Expand Your Visions. Retrieved June 19, 2020, from
https://www.cpadavao.com/2019/05/how-to-compute-the-income-tax-due-under-the-TRAIN-Law.html •
Taxpayers Service Programs & Monitoring Division 1. (n.d.). Retrieved from
https://www.bir.gov.ph/index.php/bir-forms.html
• A. P. (n.d.). Retrieved from https://www.bir.gov.ph/index.php/tax-information/income-tax.html

17
Development Team of the Module
Writers: Nessa B. Dimalanta
Editors: Jane P. Valencia, Ed. D., EPS - Mathematics
Reviewers: Bethel Grace M. Guiao/Viennah Marie M. Bustos
Illustrator: Nessa B. Dimalanta
Layout Artist: Nessa B. Dimalanta
Management Team:
ZENIA G. MOSTOLES, EdD, CESO V, Schools Division Superintendent
LEONARDO C. CANLAS, EdD, CESE. Asst. Schools Division
Superintendent ROWENA T. QUIAMBAO, CESE, Asst. Schools Division
Superintendent CELIA R. LACNALALE, PhD, CID Chief
JANE P. VALENCIA, EdD, Education Program Supervisor, Mathematics
JUNE E. CUNANAN, Education Program Supervisor/ Language Editor
RUBY M. JIMENEZ, PhD., Education Program Supervisor, LRMDS

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