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An Overview On Philippine Income Tax Laws-Kath
An Overview On Philippine Income Tax Laws-Kath
Philippine Income
Tax Laws
LAWS GOVERNING INCOME
TAX IN THE PHILIPPINES
• The basic source of Philippine tax law is the National Internal
Revenue Law, which codifies all tax provisions, the latest of
which is embodied in Republic Act No. 8424 (“The Tax Reform
Act of 1997”). It amended previous national internal revenue
codes, which was approved on December 11, 1997. A copy of
the Tax Reform Act of 1997, which took effect on January 1,
1998.
INCOME TAX
• Income Tax is a tax on a person's income, emoluments,
profits arising from property, practice of profession, conduct
of trade or business or on the pertinent items of gross
income specified in the Tax Code of 1997 (Tax Code), as
amended, less the deductions if any, authorized for such types
of income, by the Tax Code, as amended, or other special
laws.
WHO ARE LIABLE FOR INCOME TAXES?
Section 23. General Principles of Income Taxation in the Philippines. - Except
when otherwise provided in this Code:
(C) An individual citizen of the Philippines who is working and deriving income
from abroad as an overseas contract worker is taxable only on income derived
from sources within the Philippines: Provided, That a seaman who is a citizen
of the Philippines and who receives compensation for services rendered
abroad as a member of the complement of a vessel engaged exclusively in
international trade shall be treated as an overseas contract worker;
(D) An alien individual, whether a resident or not of the
Philippines, is taxable only on income derived from sources
within the Philippines;
1. Resident Citizens
2. Domestic Corporations
All the other kinds of taxpayers are subject to tax only on income
derived from Philippine Sources.
GROSS INCOME FROM TAXES WITHIN THE PHILIPPINES
(Sec. 42,NIRC)
1. Interests
2. Dividends
3. Services
4. Rentals and Royalties
5. Sale of Real Property
6. Sale of Personal Property
SALE OF REAL PROPERTY
(par. 5, Sec.42, NIRC Code)
• The gains, profits and income from sale of real property located in
the Philippines.
(1) Capital Assets. - the term 'capital assets' means property held by the taxpayer
(whether or not connected with his trade or business), but does not include stock in
trade of the taxpayer or other property of a kind which would properly be included in
the inventory of the taxpayer if on hand at the close of the taxable year, or property
held by the taxpayer primarily for sale to customers in the ordinary course of his
trade or business, or property used in the trade or business, of a character which is
subject to the allowance for depreciation provided in Subsection (F) of Section 34; or
real property used in trade or business of the taxpayer.
• (2) Net Capital Gain. - The term 'net capital gain' means the excess of the gains
from sales or exchanges of capital assets over the losses from such sales or
exchanges.
• (3) Net Capital Loss. - The term 'net capital loss' means the excess of the losses
from sales or exchanges of capital assets over the gains from such sales or
exchanges.
xxxxx
• Net capital gain is the excess of the gains from such sales or
exchanges of capital assets over the losses from the sales or
exchanges.