WHAT IS TAXATION? Taxation is a term for when a taxing authority, usually a government, levies or imposes a financial obligation on its citizens or residents. Paying taxes to governments or officials has been a mainstay of civilization since ancient times. CONCEPT OF TAXATION Taxation is the inherent power of the state to impose and demand contribution upon persons, properties, or rights for the purpose of generating revenues for public purposes. Taxes are enforced proportional contributions from persons and property levied by the lawmaking body of the state by virtue of its sovereignty for the support of the government and all public needs. ESSENTIAL CHARACTERISTICS OF TAX 1. It is an enforced contribution. 2. It is generally payable in money. 3. It is proportionate in character, usually based on the ability to pay. 4. It is levied on persons and property within the jurisdiction of the state. 5. It is levied pursuant to legislative authority, the power to tax can only be exercised by the law making body or congress. 6. It is levied for public purpose. 7. It is commonly required to be paid a regular intervals. TYPES OF TAXES IN THE PHILIPPINES National Taxes are those that we pay to the government through the Bureau of Internal Revenue. Local Taxes are taxes, fees or charges are imposed by the local government units, such as provinces, cities, municipalities, and barangays, who have been given the power to levy such taxes by the code. NATIONAL TAXES Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale. NATIONAL TAXES Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto. NATIONAL TAXES Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer. Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to testamentary disposition. NATIONAL TAXES Income Tax is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on a person’s income, emoluments, profits and the like. Self- employed individuals and corporate taxpayers pay quarterly income taxes from 1st quarter to 3rd quarter. NATIONAL TAXES Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties or services in the course of trade or business whose gross annual sales or receipts do not exceed the amount required to register as VAT-registered taxpayers. Value Added Tax is a business tax imposed and collected from the seller in the course of trade or business on every sale of properties (real or personal) lease of goods or properties (real or personal) or vendors of services. NATIONAL TAXES Excise Tax is a tax imposed on goods manufactured or produced in the Philippines for domestic sale or consumption or any other disposition. Expanded Withholding Tax is a kind of withholding tax which is prescribed only for certain payers and is creditable against the income tax due of the payee for the taxable quarter year. NATIONAL TAXES Final Withholding Tax is a kind of withholding tax which is prescribed only for certain payers and is not creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes the full and final payment of the Income Tax due from the payee on the said income. LOCAL TAXES Local taxes the local government taxation in the Philippines are based on Republic Act 7160 or otherwise known as the Local Government Code of 1991, as amended. These taxes, fees or charges are imposed by the local government units, such as provinces, cities, municipalities, and barangays, who have been given the power to levy such taxes by the code. LOCAL TAXES Tax on Transfer of Real Property Ownership – tax imposed on the sale, donation, barter, or on any other mode of transferring ownership or title of real property. Tax on Business of Printing and Publication – tax on the business of persons engaged in the printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature. LOCAL TAXES Franchise Tax – tax on businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction. LOCAL TAXES Tax on Sand, Gravel and Other Quarry Resources – tax imposed on ordinary stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction. LOCAL TAXES Professional Tax – an annual professional tax on each person engaged in the exercise or practice of his profession requiring government examination. Amusement Tax – tax collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement. LOCAL TAXES Tax on Business – taxes imposed by cities, municipalities on businesses before they will be issued a business license or permit to start operations based on the schedule of rates prescribed by the local government code, as amended. Fees for Sealing and Licensing of Weights and Measures – fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan of the municipality or city. LOCAL TAXES Fishery Rentals, Fees and Charges – rentals, fees or charges imposed by the municipality/city to grantees of fishery privileges in the municipal/city waters, e.g., fishery privileges to erect fish corrals, oysters, mussels or other aquatic beds or bangus fry areas and others as mentioned in the local government code, as amended. LOCAL TAXES Community Tax – tax levied by cities or municipalities to every inhabitant of the Philippines eighteen (18) years of age or over who has been regularly employed on a wage or salary basis for at least thirty (30) consecutive working days during any calendar year, or who is engaged in business or occupation, or who owns real property with an aggregate assessed value of One thousand pesos (P1,000.00) or more, or who is required by law to file an income tax return. LOCAL TAXES Taxes that may be levied by the barangays on stores or retailers with fixed business establishments with gross sales of receipts of the preceding calendar year of Fifty thousand pesos (P50,000.00) or less, in the case of cities and Thirty thousand pesos (P30,000.00) or less, in the case of municipalities, at a rate not exceeding one percent (1%) on such gross sales or receipts. LOCAL TAXES Service Fees or Charges – fees or charges that may be collected by the barangays for services rendered in connection with the regulations or the use of barangay-owned properties or service facilities, such as palay, copra, or tobacco dryers. Barangay Clearance – a reasonable fee collected by barangays upon issuance of barangay clearance – a document required for many government transactions, such as when applying for business permit with the city or municipality. REPRESENTED BY:
Sheila Anne L. Maningding
& Mac Escat
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