Taxation during

Commonwealth Period
Taxation during
Commonwealth Period
 New measures and legislation
 Income tax rates were increased in 1936
 Surtax rate on individual net income in
excess of 10,000 pesos
 Income tax rates of corporation were also
increased
 Cedula tax was abolished
 Residence tax was imposed on every
citizen aged 18 years old and on every
corporation.
In 1939, the Commonwealth government
drafted National Internal Revenue Code.

1. Normal tax of 3 percent and the surtax on income

was replaced by a single tax at a progressive
rate.
2. Personal exemptions were introduced.
3. Corporation income tax was slightly increased by
introducing taxes on inherited estates or gifts
donated in the name of dead persons.
4. The cumulative sales tax was replaced by a single
turnover tax of 10% on luxuries.
5. Taxes on liquors, cigarettes, forestry products,
and mining were increased.
6. Dividends were made taxable.
World War II

 Japanese military administration

continued the system of tax
collection
 Foreign trade fell
Fiscal Policy from 1946
to Present
 The United States advised the
adoption of direct taxation, but the
administration of President Manuel
Roxas declined the proposal because
it did not want to alienate its allies in
Congress.
President Elpido Quirino

 Implementationof import and

exchange controls
 It reduced economic dependence on
imports
 New tax measures were passed
 Tax revenues increased twofold
 The succeeding presidencies of
Magsaysay, Garcia, and Macapagal
promised to study the tax structure and
policy in our country. (Through the
creation of tax commission by means of
Rep Act No. 2211)
 Congress did not pass any tax legislation
 Indirect taxation
 Omnibus Tax Law
 Rise in corruption
President Marcos

 Tax system was still dependent on

indirect taxes
 Taxes remained regressive and
unresponsive
 Taxes grew at an average annual
rate of 15% and generated a low tax
yield
 Tax effort was at a low 10.7%
President Corazon Aquino

 Major reform in the tax system was

the introduction of value added tax
(VAT)
 Restructuring of Department of
Finance and its agency, BIR through
executive order 127
 Computerization was introduced
 Corruption was relatively reduced
 Both tax and revenue effort rose,
increasing from 10.7% to 15.4% in
With the following features

1. Uniform rate of 10% on sale of domestic and

imported goods and services and zero percent on
exports and foreign-currency denominated sales
2. 10% in lieu of varied rates applicable to fixed
taxes, advance sales tax, tax on original sale,
subsequent sales tax, compensation tax, miller’s
tax, contractor’s tax, broker’s tax, film lessors
and distributor’s tax, excise tax on solvents and
matches, and excise tax on processed videotapes
3. 2% tax on entities with annual sales or receipts of
less than 5,200,000
4. Adoption of tax credit method of calculating tax
5. Exemption of the sale of basic
commodities such as agriculture and
marine food products in their
original state, price-regulated
petroleum products and fertilizers
6. Additional 20% tax on non-essential
articles.
President Fidel Ramos

 The VAT base was also broadened in

1997 to include services, through
Rep Act 7716.
 Comprehensive Tax Reform Program
was implemented
The features of the improved
VAT law were as follows:
 Restored the VAT exemptions for all
cooperatives provided that the share
capital of each member does not exceed
515,000 php
 Expanded the coverage of the term
“simple processes” by including broiling
and roasting, effectively narrowing the
tax base for food products.
 Expanded the coverage of the term
“original state” by including molasses.
Exempted from the VAT are
the following:
 Importation of meat
 Sale or importation of coal and natural gas in whatever
form or state
 Educational services rendered by private educational
institutions duly accredited by CHED
 House and lot and other residential dwellings valued at
51 million and below, subject to adjustment using the
Consumer Price Index
 Lease of residential units with monthly rental per unit
of not more than 58,000 subject to adjustment using
CPI
 Sale, importation, printing, or publication of books and
any newspaper.
President Gloria Macapagal-
Arroyo
 Expanded Value-Added Tax (E-VAT)
was signed into law as Rep Act 9337
Subject to:
▪ VAT energy products such as coal and
petroleum products and electricity
generation, transmission, and distribution.
▪ Professional services were also taxed
▪ VAT tax rate was also increased from 10% to
12%
President Benigno Aquino III

 Promised that no new taxes would be

imposed
 Adjustment of excise tax on liquor
and cigarettes or Sin Tax Reform
 Increase of Department of Health Budget
 Increased of free health insurance for
the poor people enrolled in PhilHealth
President Rodrigo Duterte

 Promised tax reform

 Lower tax rates shouldered by working
Filipinos
 Limit VAT exemptions and increase
excise taxes on petroleum products and
automobiles.