• First 90,000 of 13th-month pay and other

Individual benefits.
Shifting • De Minimis Fringe Benefit
• Employee’s Share – SSS, GSIS, Philhealth, and
➢ Transfer of the burden of a tax by the original PAG-IBIG
payer to someone else. o Hindi exempted, nile-less lang sa Gross
➢ Only indirect taxes may be shifted. Income
• Union Dues
Formula:
3. Graduated Rates
Value Added Tax = Output VAT – Input VAT
➢ Non-Resident Citizen
Categories of Individual Taxpayers
1. Within the Philippines
➢ Resident Citizen
2. Taxable Net Income or Gross Sales
o Filipino at nakatira sa Pilipinas.
➢ Non-Resident Citizen Formula of Taxable Net Income:
o Filipino na hindi nakatira sa Pilipinas.
o 183 days or more during the year which Sales/Receipts, net of returns, allowances, & discount
is physically present abroad. (Cost of sales/Cost of services)
o Example: OFW Gross Income from Operation
➢ Resident Alien (Itemized Deductions or OSD)
o Hindi Filipino pero nakatira sa Pilipinas. Net Income from Operation
o Example: Foreigner Add: Non-Operating Income
➢ Non-Resident Alien Share in GPP net income
o Hindi Filipino at hindi rin nakatira sa Taxable Net Income
Pilipinas. 3. Graduated Rates or 8% (IF their income is derived in
2 types of Non-Resident Alien: the Philippines)

o NRA Engage in Trade or Business ➢ Resident Alien

▪ Stays in the Philippines for more
than 180 days during the year.
▪ With a business that regulates
income in the Philippines
regardless of when he arrived in
the said country.
o NRA Not Engage in Trade or Business
▪ Stayed in the Philippines for less
than 180 days.
Importance of Classification of Taxpayer
1 – Source of Taxable Income
2 – Tax Base
3 – Tax Rate
➢ Resident Alien
1. Within and without the Philippines.
2. Taxable Compensation
Formula:
Taxable Compensation =
Gross Compensation Income – Non-Taxable Income
Notes for Non-Taxable Income:
• Holiday (Statutory Minimum Wage), Hazard Pay
(Minimum Wage Earner), and Overtime Pay.
1. Within the Philippines
2. Taxable Net Income or Gross Sales
3. 8%
Notes for 8%:
➢ Available when…
o Self-Employed or Mixed Earner
o 250,000 is the standard deduction.
▪ Not allowed for Mixed Earners
o In lieu of Graduated Rates and OPT
➢ Not available when…
o VAT Registered
▪ Computed from Gross Sales
▪ 12%
o If the income is 3,000,000 (threshold),
automatic VAT, ayaw man o hindi.
o OPT or Other Percentage Tax
▪ 3%
▪ Kapag hindi VAT Registered
o GPP
o Individuals enjoying Tax Exemption
(BMBEs)
➢ Bago mag-1st quarter, i-signify na ang BIR na 8%.
If hindi, Graduated Rates na.
 ➢ Non-Resident Alien Engage in Trade or Business Notes:
1. Within the Philippines. ➢ Pag in-add ang previous sales, ima-minus ang
2. Same with Resident Alien previous tax due.
3. Same with Resident Alien ➢ If VAT registered, Graduated Rates will be used.
➢ For 1st, 2nd, and 3rd Quarters, if nag-avail ng 8%
➢ Non-Resident Alien Not Engage in Trade or and self-employed, ima-minus muna and 250k sa
Business sales then tsaka ia-apply ang 8%.
1. Within the Philippines ➢ For Annual ITR
2. Gross Income o From 1st Quarter, add all sales, minus all
3. 25% Final Tax cost of sales, minus all opex, apply
graduated rates (if hindi nag-avail ng
Graduated Rates – effective January 1, 2023, onwards 8%), and less all the previous tax due.
Range of Annual Taxable Income o Dito lang included and Cost of Goods
Tax Due
Sold.
Not over 250k Exempted
250,001-400k 15% of the excess over PASSIVE INCOME
250k
400,001-800k 22.5k + 20% of the excess ➢ Subject to Final Withholding Tax
over 400k Taxation of Passive Income
800,001-2m 102.5k + 25% of the excess
over 800k Passive Citizen & NRAETB NRANETB
2,000,001-8m 402.5k + 30% of the Income Resident
excess over 2m Alien
8,000,001 and above 2,202,500 + 35% of the Prizes (more 20% 20% 25%
excess over 8m than 10k)
Except Included in Included in
prizes of 10k ITR ITR
Notes for Total Tax Due: or less
➢ In TOTAL TAX DUE, magkahiwalay na ico- Winnings 20% 20% 25%
compute ang Income Tax at Business Tax tapos Phil. Charity Exempt if Exempt
tsaka pa lang ia-add. Sweepstakes 10k or less
➢ In BUSINESS TAX, OPT ang gagamitin kapag and Lotto
hindi nag-avail ng 8% at hindi VAT since hindi Winnings
lumagpas ng 3m. Long-term Deposit of Investment Certificate
➢ In INCOME TAX, Graduated Rates ang gagamitin ➢ 5 years issued by bank.
if hindi nag-avail ng 8% at VAT registered. ➢ Interest Income is exempted if 5 years or more.
➢ If may NET LOSS, hindi na magbabayad ng ➢ NRANETB is not exempted.
Income Tax pero magbabayad pa rin ng
Business Tax. Pretermination of Investment

Rules for Filing the 3 Quarterly ITRs & Annual ITR of ➢ Less than 3 years – 20%
Individual Taxpayer ➢ 3 years to less than 4 years – 12%
➢ 4 years to less than 5 years – 5%
1. Cumulative Filing – pagsasama-samahin ang 1st, 2nd,
and 3rd Quarter.
2. Compensation Income is included only in the Annual
CAPITAL GAINS TAX
ITR while Business Income is included in all ITRs.
3. 1st Quarter – May 15 A. Share of Stock in Domestic Corporation not Traded
in Stock Exchange
2nd Quarter – August 15
➢ 15% Final Tax in Sale/Adjusted Basis
3rd Quarter – November 15
B. Shares of Stock Listed and Traded thru Local Stock
Annual ITR – April 15 next year
Exchange
➢ 6/10 of 1% of gross selling price or value
Wash Sales ➢ Historical Cost = pinaka-unang binili.
➢ Ginagawa thru selling shares nang palugi to get Formulas:
loss para bumaba ang taxable income at tax
due. Adjusted Basis = Historical Cost + Inabono
➢ BIR imposed 61-day rule of repurchase period. Adjusted Historical Cost = Utilized / GSP = Answers x
➢ 30 days before and after ng pagbenta. Historical Cost
Formula for Non-Deductible Loss: Final Tax on Informer’s Reward
Non-Deductible Loss = Repurchase / 1st Sold = Asnwer x ➢ Informer should no be anak ng pinsan ay
(1st purchase price – 1st sold price) nagtatrabaho sa BIR.
Formula for Tax Basis of Re-Acquired Shares: Formula:
nd
New Tax Basis = 2 Purchase Price + Non-Deductible 1. Lower of 10% of revenues or 1 million per case.
Loss
2. After that, 10% Final Tax.
Note: Total of Deductible and Non-Deductible is equal
to Loss.
Formula for Gain on Sale:
Gain on Sale = 2nd Selling Price – Cost
On the Sale of Real Property classified as Capital Asset
➢ 6% of the gross selling price.
➢ BIR Assessment vs. CP Assessment (whichever
is higher)
➢ Individual Seller has holding period:
o Short-term or less than 1 year = 100%
o Long-term or more than 1 year = 50%
o Corporation = 100%
➢ Capital Loss is deducted to Capital Gain only.
o If negative ang sagot, 0, since hanggang
net capital gain lang.
Sale of Real Property to Government
➢ Pwedeng 6% CGT or Graduated Rates
Sale of Principal residence
➢ Highest principal residence para mataas ang tax
due.
➢ Need ma-utilize within 18 months or 1 year a
half.
➢ Pag nabenta within 30 days, notify si
commissioner.
➢ Tax Exemption = 10 years
Proceeds of Sale not Fully Utilized
➢ Compare the sold principal residence to new
purchase principal residence.
Formula:
New Purchase – 1st Sold / Gross Selling Price = Answer x
Higher between GSP or FMV = Taxable Portion