TAXATION

1ST TERM REVIEWER

Taxation is the LIFEBLOOD of the Country.

Two Types of Income Tax

1. Individual Tax (kapag may work ang isang tao)

- Employed: Compensation Tax
- Freelancer: Service Tax
2. Corporation or Manufacturing Tax Company (may business)
2.1. Individual (may sariling business)
- Business Tax

Retainer’s Fee is down payment on a professional's services to ensure you have priority.
(ito yung binabayad natin sa mga professionals like lawyers, consultants, etc. bago nila ibigay
yung service nila kaya nga tinawag na down payment kasi advance yung bayad)

How to acquire Compensation Tax

Payroll Register is tool that records wage payment information about each employee.
(dito nakalista yung mga employees tsaka kung ano yung classifications nila. ito rin yung
ginagamit para ma-audit yung kabuuan nilang sahod tsaka kung magkano na lang talaga yung
sasahurin nila)

Classification of Employees in Payroll Register

1. HF3 – Head of the Family of 3 (ikaw lang may work tapos meron kang dalawang senior
citizen na parents at isang kapatid na disable)
- Deduction: 75,000 tax + Waiver from BIR
2. M4 – Married with 4 dependents (kasal ka ng worker tapos may apat na anak kang
pinapalamon)
- Deduction: 100,000 + 25,000
3. S2 – Single and has working parents (single kang worker tapos hindi pa senior citizen ang
parents mo)
4. S – Solo
5. M – Married with no child/ren
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Example of Payroll Register

Basic Allowance ROT SHRD SHOT NSD Gross Tax

Pay Base
1.25 1.25+1.30 .30 (10am-
5pm)
36k 2k xxx xxx xxx xxx xxx xxx

Deduction Advances Net Pay

SSS PHIC HDMF Insurance Loan

ML HL
xxx xxx xxx xxx xxx xxx xxx xxx

Legend:

 Basic (bayad sa service mo)

 Allowance (additional/pocket money galing sa company)
 ROT- Overtime Rate
 SHRD- Special Holiday + Rest Day
 SHOT- Special Holiday + Over Time
 NSP- Night Shift Differential
 Gross Pay- Actual Gain (kabuuan na sweldo mo)
 Tax Base (mag-base kung anong classification mo sa payroll register)
 Deduction (eto na yung mababawas sa lahat ng kikitain mo)
1. SSS- Social Security System (kapag under private companies. GSIS kapag under ka
sa government)
2. PHIC- Philippine Health Insurance Corporation // PhilHealth
3. HDMF- Home Development Mutual Fund // Pag-IBIG
4. Insurance (ito yung nagbibigay ng financial protection once na nawalan ka)
5. Loan (mga utang mo)
5.1. ML- Multipurpose Loan
5.2. HL- Housing Loan
 Advances (parang yung tinatawag na bale kapag humingi ka advance payment kahit di
mo pa tapos yung service)
 Net Pay- Actual Earning (ito na lang yung makukuha mo kapag nabawas na lahat-lahat sa
actual gain mo)
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1ST TERM REVIEWER

How to acquire Business Tax?

1. Individual- BIR Form No. 1701 (kapag may sarili kang business)
2. Corporation // Manufacturing- BIR Form No. 1702 (mga corporation or manufacturing
businesses)
3. Mixed- BIR Form No. 1702mx (kapag mix na ang mga businesses na hinahawakan)

Types of Corporation Tax

1. Excise Tax- Tobacco, Alcohol, Petroleum

2. Tariff Tax- International Market
3. Property Tax- Residential, Agricultural, Commercial, Subdivision
3.1. Capital Gain Tax- 6% (nagbenta)
3.2. Transfer Gain Tax- Fair Market Value (nakabili)
3.3. Documentary Stamp Tax- The rate is 1.5%
4. Donor’s Tax- Inheritance (mas mababa yung tax pag mana)
- 15% (napupunta sa lawyer kapag natanggap na yung inheritance)
- 85% (napupunta sa family)
5. VAT- Value Added Tax (purchasing)
6. Withholding Tax- Tax Deduction // Tax Retention (ito yung binabawas ng employer sa
gross wage ng mga employees tapos napupunta directly sa government)

4 Books of Accounting

1. General Ledger (dito naka-audit yung mga utang at pinautang)

2. General Journal (dito naka-audit yung assets, liabilities, at mga adjusting entries)
3. Cash Receipts Journal (dito naka-audit yung mga pumapasok na pera)
4. Cash Disbursement Journal (dito naka-record mga expenses)

Additional:

1. Subsidiary Sale Journal (actually, di ako sure about dito HAHAHA pero about sales and
taxes daw siya)
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1ST TERM REVIEWER

Forms use in Taxation (Business)

1. Individual
1.1. Percentage Tax (2551)
1.2. Income Tax (1701Q // 1701)
2. Corporation
2.1. VAT (2550M // 2550Q)
2.2. Income Tax (1702Q // 1702)
2.3. Withholding Tax // Expanded Tax (ExxxQ // Exxx)
- with VAT
- Non-VAT
- 0 rated ( kapag member ng Board of Investments o kaya LGU, hindi na magbabayad
ng Tax)
2.4. Compensation Tax (CxxxM // CxxxQ // Cxxx)
2.5. Creditable w/ Tax at source (2307)
2.6. Final Tax for Payroll (2316)

Legend:

 M- Monthly
 Q- Quarterly
 A- Annum (kapag walang letter after ng mga number, matic na annually siya)
 E- Expanded (may number daw after ng letter na yan sa form)
 C- Compensation (may number daw after ng letter na yan sa form)

Deadline of Tax submission to BIR

1. Quaterly (25th day of every quarter)

2. Monthly (20th day of every month)

List of Percentage under Business Tax

1. Individual // Corporation Withholding Tax

1.1. VAT (12%)
1.2. Goods (1%)
1.3. Goods // Services (2%)
1.4. Rental (5%)
1.5. Professional (10%)
1.6. Donor’s Tax to Lawyer upon receival (15%)
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1ST TERM REVIEWER

2. Government
2.1.VAT (6%)
2.2. Withholding Tax (6%)

Example of Entry (Goods)

 Purchasing Goods- 30,000

Particulars Debit Credit

Purchasing Goods– VAT 26,400.00
VAT (12%) 3,600.00
Withholding Tax 264.00
(Goods- 1%)
Cashback 29,736.00
Total 30,000 30,000

Example of Entry (Professional)

 Professional Fee- 12,000.00

Particulars Debit Credit

Professional Fee – VAT 10,560.00
VAT (12%) 1,440.00
Withholding Tax 1,056.00
(Professional- 10%)
Cashback 10,944.00
Total 12,000.00 12,000.00

Example of Lease Contract (Rental)

 Contract for 3 years

Year Rental Amount VAT (12%) Withholding Tax Net Rest

(5%)
1 26,400.00 3,600.00 264.00 29,736.00
2 31,680.00 3,801.6 1,584.00 33,897.60
3 38,016.00 4,561.92 1,900.80 40,677.12

Currency Index
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1ST TERM REVIEWER

Notes:

 Nagkakaroon ng 20% increase per year

- Rental Amt x .20 = xxx + Rental Amt
 Add niyo muna Rental Amt tsaka VAT tapos i-subtract niyo yung WH Tax para makuha
Net Rest
- Rental Amt + VAT = xxx – Rental Amt = Net Rest
 Yung Rental Amt at VAT, napupunta sa Lessee (Individual: Percentage Tax). Yung WH
Tax, napupunta sa BIR. Yung Net Rest, napupunta sa Lessor (Corporation: Income Tax)
 Given lang yung sa Year 1 kaya di yon true pero nasa tamang format na yung Year 2 and
3. Solve niyo na lang kung di kayo sure.

Terms (Rental)

1. Lessor (nagpaparent)
2. Lessee (nagrerent)

Terms (Merchandise)

1. Purchaser (nagbebenta)
2. Purchasee (bumibili)