TAXATION

ational Internal Revenue Co

Section 22 - 24

Section 22 - Definitions
The person referred are the one
subject to tax: individual, trust,
estate or corporation
(N) Taxpayer means ANY person
subject to tax includes not only
TAXPAYER (legal obligation to pay
the tax) but as well as any person
who has the duty to pay the tax.
cases: Tan vs. Del Rosario 237 SCRA
324
a.

b. The term CORPORATION

includes:
1. The Corporation as defined in

Sec. 2,

BP Bilang 68.

A corporation is an artificial

being created by operation

of law, having the right of
succession and the powers,
attributes and properties
expressly authorized by law
or incident to its existence.

2. Partnership registered or
unregistered defined under Art.
1767, NCC
By

the contract of partnership two or

more persons bind themselves to
contribute money, property, or
industry to a common fund, with the
intention of dividing the profits
among themselves. Two or more
persons may also form a partnership
for the exercise of a profession.

3. Joint-stock companies;
4. Joint accounts, associations;
5. Insurance companies;
6. Joint-ventures; BUT DOES NOT
INCLUDE:
General Professional Partnership
Joint ventures or consortium for the
purpose of:
a. undertaking constructions projects
or b. engaging petroleum, coal
geothermal and other energy
operation, pursuant to SERVICE
CONTRACT with the GOVERNMENT

Art. 484, NCC

There is co-ownership whenever the ownership of
an undivided thing or right belongs to different
persons. In default of contracts or special
provisions, co-ownership shall be governed by the
provisions of this title.
It is not a juridical person
Question: Is a co-ownership subject to corporate tax?
Cases: ONA vs. Commissioner 45 SCRA 74
Pascual vs. Commissioner 166 SCRA 560
Obillos vs. CIR 139 SCRA 436
Gatchalian vs. Collector 67 Phil 666
AFISCO vs. CIR GR#112675, January 25,1999
Evangelista vs. Collector 102 Phil 140
Reyes vs. CIR 24 SCRA 198

Definitions under paragraph: MEMORIZE

c, d, e, f, g, h, I , k, L, P, Q, R, S, T, U, V, W, X, Y, Z, AA, CC, FF

Section 23 Taxability based on the

GEOGRAPHICAL LOCATION as source of income
either the income is derived within or without
(OUTSIDE )of the Philippines
WITHIN
WITHOUT
Taxable
Taxable
Resident Citizen
-doNONE
Non-resident
Citizen
-doNONE
Resident Alien
-doNONE
Non-resident
Alien
OFW/International
Seaman

-do-

NONE

Domestic
-doTaxable
Corporation
TWO KINDS OF SOURCES:
NONE
Foreign
1. Geographical Source -do2. Activity Source (e.g. business, employment,
Corporation
winnings, prizes)

Section 24 Income Tax Rates

INDIVIDUALS
FOR CITIZENS
AND RESIDENT ALIEN

Schedular Rates
5% - 32%

TAX ON
PASSIVE INCOME

20%
for: interest from any
currency bank deposit,
deposit substitutes,
trust funds and similar
arrangement; royalties,
prizes, winnings

CAPITAL GAINS ON
SALE OF SHARES OF
STOCK NOT TRADED IN
THE STOCK EXCHANGE

5% or 10%

CAPITAL GAINS FROM

SALE OF REAL
PROPERTY

Basic rate 6%

Applicable to real
property which is a
CAPITAL ASSET
Tax base is TAXABLE
INCOME which is the
one multiplied by the
Tax Rate to arrived to
the income tax

Tax base is SP or
FMV whichever is
higher

FOR CITIZENS AND

RESIDENT ALIEN

TAX ON PASSIVE
INCOME

CAPITAL GAINS ON
SALE OF SHARES OF
STOCK NOT TRADED IN
THE STOCK EXCHANGE

Final tax

CAPITAL GAINS FROM

SALE OF REAL
PROPERTY

Taxable Income
means Gross
income less
deductions

10% if royalties is
from books, literary
works and musical
compositions

Final tax on the

Capital gain
presumed to be
realized

The schedular rates

are applicable any
sources of income
activity

Sec.24(a) rate if the

prize is PhP 10,000
or less

Applicable to
individuals and
estate trust

PCSO and lotto

winnings exempted

to any form of sale,

exchange or other
disposition including
pacto de retro sales

FOR CITIZENS AND

RESIDENT ALIEN

Minimum wage earner

are exempted on their
taxable income which
includes holiday pay,
overtime pay, night
shift differential pay
and hazard pay (R.A
9504 effective July
6,2008)

TAX ON PASSIVE
INCOME

7 % interest from
expanded foreign
currency expanded
system earned by a
NON-RESIDENT
INDIVIDUAL

Long term deposit 5

years or more
exempted
If preterminated:
4 yrs to less than 5 yrs
5%
3 to 4 yrs 12%
Less than 3 yrs 20%

CAPITAL GAINS ON
SALE OF SHARES OF
STOCK NOT TRADED IN
THE STOCK EXCHANGE

CAPITAL GAINS FROM

SALE OF REAL
PROPERTY

Optional Rate
(Sec.24(a), the
schedular rates) if:
1. Buyer is
government,
political,
subdivisions or
GOCCs
2. Tax base : Net
income or taxable
income

FOR CITIZENS AND

RESIDENT ALIEN

TAX ON PASSIVE
INCOME

CASH/ Property
Dividends
Final Tax 10%
beginning January 1,
2000

CAPITAL GAINS ON
SALE OF SHARES OF
STOCK NOT TRADED IN
THE STOCK EXCHANGE

CAPITAL GAINS FROM

SALE OF REAL
PROPERTY

Exemption from the 6%]

Capital Gain Tax:
1. If the property sold is
the principal
residence of a natural
person
2. The proceeds is fully
utilized in acquiring or
constructing a new
principal residence
within 18 months from
date of sale or
disposition
3. CIR is properly notified
of the intention within
30 days from date of
sale or disposition
4. That the unutilized
portion will be taxed
5. This exemption can be
availed of once every
10 years.

FOR CITIZENS AND

RESIDENT ALIEN

TAX ON PASSIVE
INCOME

CAPITAL GAINS ON
SALE OF SHARES OF
STOCK NOT TRADED IN
THE STOCK EXCHANGE

CAPITAL GAINS
FROM SALE OF REAL
PROPERTY

The Passive income

taxes are final taxes
meaning it is a tax on
gross income- No
deductions allowed

It is applicable to
income derived from
sources within the
Philippines and
outside the
Philippines
(blind sources)

The rates are only

applicable to the
specified type of
income mentioned by
par. (b) of Sec.24
(sources not blind)

This section applies

only to income derived
within the Philippines

Only on sale within the

Philippines

transaction is within
the Philippines