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Prepared by: Maricel D. Arthur, CPA
Bureau of Internal Revenue is mandated by law to assess and collect all national internal revenue taxes, fees and charges, and to enforce all forfeitures, penalties and fines connected therewith, including the execution of judgements in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts (Sec. 2 of the National Internal Revenue Code of 1997).
Value-Added Tax. .2 Tax Authorities in the Philippines (Provinces. Others. Cities. Real Property Taxes. (Bureau of Internal Revenue/Bureau of Customs) Income Tax. Toll fees or charges. Percentage Tax. Barangays) Tax on business. Community Taxes and others. Franchise Tax. Excise Tax. Municipalities.
Sec 5: Power of the Commissioner to obtain Information. . Examine.5 & 6) Sec 4: Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. and Take Testimony of Persons Sec 6: Power of the Commissioner to Make Assessments & Prescribe Additional Requirements for Tax Administration & Enforcement. and to Summon.Powers of the Commissioner of internal revenue (sec 4.
HOW TO COMPUTE INCOME TAX DUE .
Income Tax rates-CORPORATIONS Regular Income Tax Rate of 30% based on taxable income Corporate Income Tax.2% Gross Income starting on the 4th year of operations. Minimum .
000 5% 10% 15% 20% 25% 30% 32% 10.500 250.000 500 30.0000 10.000 50.000 2.000 8.000 30.000 500.000 70.000 500.000 140.000 250.000 70.000 250.500 140.000 30.000 500.000 .000 125.Income Tax rates-Individuals over Not over tax is Plus Of the excess over 10.500 70.000 140.000 22.
000). .Personal & Additional Exemption An individual tax filer shall be allowed a basic personal exemption of Fifty Thousand Pesos (P50. In the case of married individuals where only one of the spouses is deriving income. not exceeding four (4). only such spouse shall be allowed the personal exemption.000 for each qualified dependent child. An individual shall be allowed an additional exemption of P25.
regardless of age. unmarried and not gainfully employed or if such dependent.“Qualified dependent Child” means a legitimate. illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age. is incapable of self-support because of mental or physical defect .
00 100.00 .000.00 ADDITIONAL NONE TOTAL 50.00 4 (four) qualified dependent children 50.000.000.00 75.000.00 125.00 1 (one) qualified dependent child 2 (two) qualified dependent children 3 (three) qualified dependent children 50.000.000.00 50.00 50.00 75.000.000.000.000.000.000.00 100.000.00 150.000.SUMMARY PERSONAL Single/ head of the family/Married with no dependent 50.00 25.00 50.
000.000.00 Net Income 300.000.00 *Additional Exemption 50.240.000.HOW TO COMPUTE THE INDIVIDUAL INCOME TAX (EXAMPLE) Gross Receipts/Sales 1.00 Less: Personal Exemption 50.590.00 .500.000.00) Gross Income 350.000.000.00 Add: Other Taxable Income 140.000.00 Total 490.000.00 Less: Cost of Sales/Services (1.000.00 Income Tax Due *if two qualified dependent children 37.00 Less: Allowable Deductions 190.000.00 100.00 Taxable Business Income 200.
000 140.500 250.000 500.000 250.000 8.000 10.000 250.000 500.000 30.0000 10.000 30.000 140.Income Tax ratesover Not tax is Individuals over Plus Of the excess over 10.500 140.000 22.000 500 30.000 125.000 5% 10% 15% 20% 25% 30% 32% .000 500.000 50.000 70.000 2.000 70.500 70.
THE AUDIT PROCESS & REMEDIES .
3. examinations are based on selection criteria that are set yearly by the Commissioner of Internal Revenue in an ANNUAL AUDIT PROGRAM. . 4. Top Priority Cases. and Revenue District Officer’s discretion.First Step: Selection of Tax Audit Target Tax 1. 2. Other Priority taxpayers. Taxpayers are classified into categories: Mandatory cases.
Commencement of Tax Audit Letter of Authority.authorizes a revenue officer of the BIR to conduct audit/investigation and examine the books of accounts and accounting records of a taxpayer for possible assessment of deficiency taxes and penalties.2nd Step. .
rules and regulations upon which the assessment was based.Issuance of Preliminary Assessment Notice The Assessment Division determines whether or not there exists a sufficient basis to assess the taxpayer for any deficiency tax. The PAN must state the facts. a preliminary assessment notice (PAN) will be issued. law.3rd Step. .
3. Error in computation evident on the face of the return Discrepancy in the amount of tax withheld and tax remitted Taxpayer who opted to claim a tax refund or tax credit was determined to have carried over and applied the amount against succeeding liabilities Excise taxes due have not been paid Articles (such as cars) purchased by taxexempt persons have been transferred to nonexempt persons. 4. 2. .When is the issuance of preliminary assessment notice not necessary? 1. 5.
all relevant supporting documents shall have been submitted. . It must state the facts. law. -administrative appeal within date of receipt (PROTEST) 30 days from the -within 60 days from filing of protest.Issuance of Formal Letter of Demand and Assessment Notice Final Assessment Notice.4th Step. otherwise it is void. rules and regulations on which the assessment is based.a written notice and demand made by the BIR on the taxpayer for the settlement of a tax liability that has been definitely determined.
EXECUTORY & DEMANDABLE) . Otherwise. or is not acted upon within 180 DAYS FROM SUBMISSION OF DOCUMENTS The taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within 30 days from the receipt of decision or from the lapse of the 180-day period. the decision shall become FINAL.In case of denial of protest in whole or in part.
and by LEVY upon real property and interest in or rights to real property. debt. (Either of these remedies or both simultaneously may be pursued in the discretion of authorities charged with the collection of such taxes) .Civil Remedies for collection of delinquent taxes a. including stocks and other securities. chattels or effects and other personal property of whatever character.) By DISTRAINT of goods. and b. credits.) By civil or criminal action. and interests in and rights to personal property. bank accounts.
. or charge imposed by the Tax Code. fee.Section 218: INJUNCTION NOT AVAILABLE TO RESTRAIN COLLECTION OF TAX No court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax.
the CIR may without written claim therefor. Recovery of Tax Erroneously or Illegally Collected No suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment.Sec 229. refund or credit any tax. where on the face of the return upon which payment was made. . such payment appears clearly to have been erroneously paid. But.
A TCC which shall remain unutilized after five(5) years from the date of issue.Forfeiture Forfeiture of Tax Refund.if remains unclaimed or uncashed within five (5) years from the date of such warrant or check was mailed or delivered shall be forfeited in favor of the government and the amount thereof shall revert to the general fund. shall be considered invalid. . Forfeiture of Tax Credit. unless revalidated .
In case of overpayment An excess of the total tax credits/payments over the actual income tax due computed in the final adjusted return may be refunded or issued with the Tax Credit Certificate to the taxpayer or credited against its estimated income tax liabilities for the quarters of the succeeding taxable years. .
Note: No suit or proceeding shall be begun after the expiration of the said two (2) years regardless of any supervening cause that may arise after payment. 3. 2. Show proof of payment. . It must be filed with the Commissioner within two (2) years after the payment of the tax or penalty. Claim must be in writing.REQUISITES OF TAX REFUND OR TAX CREDIT 1.
Tax avoidance vs tax evasion TAX AVOIDANCE TAX EVASION Validity Effect Legal and not subject Illegal and subject to criminal penalty to criminal penalty Minimization of taxes Almost always results in absence of tax payments INDICIA OF FRAUD IN TAX EVASION FAILURE TO DECLARE FOR TAXATION PURPOSES TRUE AND ACTUAL INCOME DERIVED FROM BUSINESS FOR 2 CONSECUTIVE YEARS (REPUBLIC VS GONZALES. L-17962) Substantial under-declaration of income tax returns of the taxpayer for 4 consecutive years coupled with intentional overstatement of deductions .