Taxation: Paula R. Morota BS Midwifery I

TAXATION
PAULA R. MOROTA
BS Midwifery I
TAXATION
 Taxation means laying a tax through which the government generates

income to defray its expenses. It is a way to raise funds for government
programs and services that benefit Filipino citizens. Economic
investments and businesses in the Philippines have created several
definitions of taxation enforced by national or local laws for income
collection and development of the government.
TAXATION
 A tax is enforced as a contribution but it is proportionate to the citizen's

ability to pay. It is levied on persons (who actually pay with money) and
property as well as on business transactions, privileges, and benefits. The
imposition of taxes is done by law through the Bureau of Internal Revenue.
TYPES OF TAXES
1. National Taxes
2. Local taxes
NATIONAL TAXES
National taxes are the ones paid to the government through the
Bureau of Internal Revenue. The national taxation system is based on the
National Internal Revenue Code of 1997 or the Republic Act No. 8424
otherwise known as the Tax Reform Act of 1997, as amended.
TYPES OF NATIONAL TAXES
1. Capital Gains Tax
 It is a tax imposed on gains that may have been realized by a seller

from the sale, exchange, or other disposition of capital assets located in
the Philippines, including pacto de retro sales (a sale with a condition
for repurchase) and other forms of conditional sale.
2. 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. Documentary stamp taxes are evident
on documents like bank promissory notes, deed of sale, and deed of
assignment on transfer of shares of corporate stock ownership.
3. Donor's Tax
 It is a tax on a donation or gift. It is also a tax imposed on the

gratuitous transfer of property between two or more persons who are
living at the time of the transfer. It shall apply whether the transfer is
in trust or otherwise, whether the gift is direct or indirect, and whether
the property is real or personal, tangible or intangible. A donor's tax is
based on a graduated schedule of tax rate.
4. Estate Tax
 It is a tax on the right of the deceased person to transmit his/her

estate to lawful heirs and beneficiaries at the time of death and on
certain transfers which are made by law as equivalent
testamentary disposition. It is not a tax on property. It is a tax
imposed on the privilege of transmitting property upon the death
of the owner.
 The estate tax is based on the laws in force at the time of
death notwithstanding the postponement of the actual

possession or enjoyment of the estate by the beneficiary. Estate
tax is also based on a graduated schedule of tax rate.
5. Income Tax
 It is a tax on all annual profits made from property ownership,

profession, trades or offices. It is also a tax on a person's
income, emoluments, profits and the like. Self-employed
individuals and corporate taxpayers pay quarterly income taxes
from the first quarter to the third quarter.
 And instead of filing quarterly income tax on the fourth
quarter, they file and pay their annual income tax return for the
taxable year. Individual income tax is based on graduated
schedule of tax rate, while corporate income tax in based on a
fixed rate prescribed by the tax law or special law.
6. Percentage Tax
 It 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 sales or receipts do not exceed the amount required to register as
VAT-registered taxpayers. Percentage taxes are usually based on a fixed
rate. They are usually monthly by businesses or professionals. However,
special industries and transactions pay percentage tax on a quarterly basis.
7. Value-Added Tax
 It 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. It is an indirect tax; thus, it can be passed on to the buyer,
causing the increase of prices of most goods and services bought and
paid by consumers.
 VAT returns are usually filed and paid monthly and quarterly.
The latest law on Taxation is RA 9337 signed on May 24, 2005
by President Gloria Arroyo is known as the "expanded value-
added tax" or the "E-VAT" law.
8. Excise Tax
 It is a tax imposed on goods manufactured or produced in the

Philippines for domestic sale or consumption or any other
disposition. It is also imposed on things that are imported.
9. Withholding Tax on Compensation
It is the tax withheld from individuals receiving purely

compensation income arising from an employer-employee
relationship. This tax is what employers withheld in their
employees' compensation income and remit to the government
through the BIR or authorized accrediting agent.
10. Expanded Withholding Tax
 It is prescribed only for certain payors like those withheld on

rental income and professional income. It is creditable against
the income tax due of the payee for the taxable quarter year.
11. Final Withholding Tax
 It is a kind of withholding tax which is prescribed only for certain

payors and is not creditable against the income tax due of the payee for
the taxable year. An example of final withholding tax is the tax withheld
by banks on the interest income earned on bank deposits.
12. Withholding Tax on Government Money Payments
 It is the withholding tax withheld by government offices including

government-owned or controlled corporations and local government
units, before making any payments to private individuals, corporations,
partnerships and/or associations.
LOCAL TAXES
Local taxes is based on the local government taxation in the
Philippines as stated in Republic Act 7160 or 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.
TYPES OF LOCAL TAXES
1. Tax on Transfer of Real Property Ownership
 It is imposed on the sale, donation, barter, or on any other
mode of transferring ownership of real property.

2. Tax on Business of Printing and Publication
 It is imposed on printing and publication businesses like that of books,

cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and
others of similar nature.
3. Franchise Tax
 It is a tax on franchised businesses, at the rate not exceeding fifty percent

(50%) of one percent (1%) of the gross annual receipts of the preceding
calendar year based on the incoming receipt (the annual earning) within
the territorial jurisdiction where the franchise is selling in.
4. Tax on Sand, Gravel, and Other Quarry Resources
 is imposed on ordinary stones, sand, gravel, earth, and other quarry
resources, as defined under the National Internal Revenue Code, as

amended. This refers to the above materials that are extracted from
public lands of from the beds of seas, lakes, rivers, streams, creeks,
a other public waters within its territorial jurisdiction.
5. Professional Tax
 It is an annual tax on each person engaged in the exercise or

practice of his or her profession that requires government
examination, like licensure examinations.
6. Amusement Tax
 It is a tax collected from the proprietors, lessees, or operators

of theaters, cinemas, concert halls, circuses, boxing stadia, and
other places of amusement.
7. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or
Producers, Wholesalers of, Dealers, or Retailers in, Certain Products
 It is an annual fixed tax for every truck, van or any vehicle used by manufacturers,
producers, wholesalers, dealers, or retailers in the delivery or distribution of
distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other
products to sales outlets, or consumers, whether directly or indirectly, within the
province. This type of tax is usually imposed as determined by the local provincial
councils through which the truck or trucks pass through or deliver their cargo.
8. Tax on Business
 It is imposed by cities or 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.
Businessmen pay this tax if they apply for a Mayor's Permit to conduct
their business in the local government unit. Rates of these taxes vary
among cities and municipalities.
9. Fees for Sealing and Licensing of Weights and Measures
 Are imposed for the sealing and licensing of weights and

measures. This is to impose regulations with regards to such
weights and measures prescribed by the city, provincial or
municipal council.
10. Fishery Rentals, Fees, and Charges
 Are imposed by the municipality/city to grantees of fishery privileges

in the municipal/city waters especially the privilege to build fish corrals,
oysters, mussels, or other aquatic beds or bangus fry areas and others as
specified in the Local Government Code.
11. Community Tax
 It is the tax levied by cities or municipalities to every Filipino or alien living in 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.
 Community tax is also imposed on every corporation
no matter how created or organized, whether domestic
or resident foreign, engaged in or doing business in the
Philippines.
12. Taxes levied by the barangays on stores or retailers with fixed
business establishments with gross sales
 A receipts of the preceding calendar year amounting to fifty thousand

pesos (P50,000.00) or less, (for city barangays) and thirty thousand
pesos (P30,000.00) or less, (for municipal barangays), at a rate not
exceeding one percent (1 % ) on such gross sales or receipts.
13. Service Fees or Charges
 Are fees or charges collected by the barangays for services

rendered in connection with the regulation or the use of
barangay-owned properties or service facilities, such as palay,
copra, or tobacco dryers.
14. Barangay Clearance
 It is a fee collected by barangays upon issuance of barangay clearance,

a document required for many government transactions, such as when
getting a business permit from a city or municipal government or
applying for a job in a government office or a private company.
Thank you! 

Taxation: Paula R. Morota BS Midwifery I

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TAXATION

 Taxation means laying a tax through which the government generates

 A tax is enforced as a contribution but it is proportionate to the citizen's

 It is a tax imposed on gains that may have been realized by a seller

 Tax is a tax on documents, instruments, loan agreements, and papers

 It is a tax on a donation or gift. It is also a tax imposed on the

 It is a tax on the right of the deceased person to transmit his/her

death notwithstanding the postponement of the actual

 It is a tax on all annual profits made from property ownership,

 It is a business tax imposed and collected from the seller in the

 It is a tax imposed on goods manufactured or produced in the

It is the tax withheld from individuals receiving purely

 It is prescribed only for certain payors like those withheld on

 It is a kind of withholding tax which is prescribed only for certain

 It is the withholding tax withheld by government offices including

 It is imposed on the sale, donation, barter, or on any other

mode of transferring ownership of real property.

 It is imposed on printing and publication businesses like that of books,

 It is a tax on franchised businesses, at the rate not exceeding fifty percent

 is imposed on ordinary stones, sand, gravel, earth, and other quarry

resources, as defined under the National Internal Revenue Code, as

 It is an annual tax on each person engaged in the exercise or

 It is a tax collected from the proprietors, lessees, or operators

 It is imposed by cities or municipalities on businesses before they will

 Are imposed for the sealing and licensing of weights and

 Are imposed by the municipality/city to grantees of fishery privileges

 A receipts of the preceding calendar year amounting to fifty thousand

 Are fees or charges collected by the barangays for services

 It is a fee collected by barangays upon issuance of barangay clearance,

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