INCOME AND

TAXATION
MATHEMATICS OF INVESTMENT
Presented by: GROUP 3
PRESENTATION OUTLINE

PERSONAL INCOME TAX

INCOME & TAXATION

NON-INDIVIDUAL INCOME
TRAIN LAW
TAX
 LEARNING
OBJECTIVES:
• COMPUTE INCOME TAX ON VARIOUS TYPES
OF INCOME,
• Compute income tax based on real data
 THE MEMBERS:

Jephthah Palic Janine Bacamante

Hannah Guillermo Stephanie Eugenio

Jedah Ladesma
 THE MEMBERS:

Anna Torrenueva Justin Cantilan

Chriszel Sorrosa Kevin Batosin-in

Freziel Ann Darong

ACTIVITY

“CHOOSE ME!"
CHOOSE ME
 TOPIC #1
WHAT IS INCOME
AND TAXATION?
 INCOME
• refers to the monetary value of an
entity's consumption and saving
opportunities during a certain time
period.
• It is the renumeration that
individuals and organizations
receive in exchanges for labor ,
producing a product or service, or
investing capital.
TAXATION
• refers to the act of levying or imposing a
tax by a taxing authority.
• Taxes includes income, capital gains, or
estate.
• A tax is a governmental organization's
mandatory financial charge or other sort
of levy placed on a taxpayer to fund
government spending and related public
expenses.
In our country the taxation of incomes based on the
Tax Reform for Acceleration and Inclusion Law
(TRAIN LAW), also known as Republic Act No. 10963,
was signed into law on December 19, 2017, as the first
package of President Rodrigo Duterte's
Comprehensive Tax Reform Program (CTRP).
 WHO ARE REQUIRED TO FILE
INCOME TAX RETURNS ?
Individuals
• Resident citizens receiving income from
sources within or outside the Philippines
• Non-resident citizens receiving income from
sources within the Philippines
• Aliens, whether resident or not, receiving
income from sources within the Philippines
 WHO ARE REQUIRED TO FILE
INCOME TAX RETURNS ?
Non-Individuals
• Corporations including partnerships, no matter how created or
organized.
• Domestic corporations receiving income from sources within and
outside the Philippines
• Foreign corporations receiving income from sources within the
Philippines
• Estate and trust engaged in trade or business
 TOPIC NO. 2
PERSONAL
(INDVIDUAL) INCOME
TAX
 PERSONAL (INDVIDUAL) INCOME TAX
• Personal income tax is a type of income that is levied on an
individual's wages, salaries, and other types of income.
• The Philippines taxes its resident citizens on their worldwide
income .
• Non-resident in the Philippines, are taxed only on income from
sources within the Philippines.
IN ACCORDANCE TO THE TRAIN LAW
• Starting January 1, 2018, compensation income earners,
self-employed and professional taxpayers (SEPs) whose
annual taxable incomes are PHP 250,000 or less exempt
from the personal income tax (PIT).
• The 13th month pay and other benefits amounting to
PHP 90,000 are likewise tax-exempt.
TAX SCHEDULE EFFECTIVE JANUARY 1, 2018 UNTIL
DECEMBER 31, 2022 IS AS FOLLOW:
TAX SCHEDULE EFFECTIVE JANUARY 1, 2023 AND ONWARDS IS AS FOLLOW:
SEPs who are also earning compensation income shall be
subject to:
• On Compensation Income - graduated income tax
(IT) schedule
• On Income from Business or Practice of Profession -
• If Gross Sales and/or Gross Receipts and other Non-
operating Income do not exceed P3,000,000 - either 8%
fixed tax or graduated IT schedule.
• If Gross Sales and/or Gross Receipts and other Non-
operating Income exceed P3,000,000 - graduated IT
schedule.
-
 EXAMPLES:
• Personal income of employed Resident-Citizens of Philippines within the
country - practice of profession.
These type of individuals have a monetary income within the country only.

Situation 1: For BPO AGENT who receives a

monthly salary of P21,000 with mandatory annual
deductions of P15,166.00 consisting of SSS,
Philhealth, and Pag-ibig contributions, the income
tax is computed as:
 Income Tax Rate:
Over 0 - P250,000=0%
TAX DUE P0%
 PERSONAL INCOME OF FILIPINO RESIDENT
• Citizens who earn money both inside and outside of the country.

Situation 2.
Within the Philippines, a resident citizen's
compensation income is P 1,230,000 and outside the
Philippines is P 250,000. Calculate the amount of tax
that needs to be paid.
TAX DUE :
P800,000.00 to P2,000,000= P130,000.00 + 30%
P1,480,000 - P800,000.00 = 680,000.00
680,000.00 x 30% = 204, 000.00 + 130,000.00 = P
334,000.00
 TRY IT!
For a public school Teacher (SG14, Step 1 ) who receives a monthly salary
of P26.494.00 with mandatory annual deductions of P34,185.00
consisting of GSIS, Philhealth, and Pag-ibig contributions the income
tax is computed as:
 PERSONAL INCOME- PURELY SELF-EMPLOYED
(RESIDENT OR ALIEN)

Situation 3.
Mr. Jose operates a convenience store while he offers laundry shop to
her clients. In 2019, his gross sales amounted to P 700,000 in addition to his
receipts from laundry shop of 300,000. He already signified his intention to
be taxed at 8% income tax rate in his first quarter. Compute the income tax
due.
TAX
DUE:
P 1,000,000.00 – P 250,000.00 = 750,000.00
750,000.00 x 8% = P 60,000.00
TOPIC #3
NON-INDIVIDUAL
INCOME TAX
 Non- Individual Income Tax
These are taxpayers that are corporate or owned more than one person such
as: Corporations and partnership, regardless of how they were formed or
structured; Domestic corporations receive income from both domestic and
international sources; Foreign corporations that receive revenue from the
Philippines. Estates and trusts that are involved in commerce or trade.

CORPORATE- TAXES ON CORPORATE INCOME

• A domestic corporation is subject to tax on its worldwide
income. On the other hand, a foreign corporation is subject to tax
only on income from Philippines sources.
 DOMESTIC
CORPORATIONS
THE FOLLOWING CORPORATE INCOME TAX (CIT) RATES APPLY
TO DOMESTIC CORPORATIONS:
 EXAMPLE!
SITUATION 4: A COMPANY'S NET INCOME IN THE PHILIPPINES IS P2,950,000 AND
P300,000 ABROAD. CALCULATE THE INCOME TAX DUE ASSUMING THE BUSINESS IS A
DOMESTIC ONE.

Given:
Net income in the Philippines-P2,950,000
Abroad - P800,000
Total - P3,750,000

Tax Due:
CIT 25% (P3,750,000 x 0.25) - P937,950
RESIDENT FOREIGN
CORPORATIONS
• Resident foreign corporations (i.e. foreign
corporations engaged in trade or business in the
Philippines through a branch office) are taxed in
the same manner as domestic corporations
(except on capital gains on the sale of buildings
not used in business, which are taxable an
ordinary income), but only on Philippine source
income.
 EXAMPLE!
Situation 5: A resident-foreign company's net income in the Philippines is
P5,000,000 pesos and P800,000 income from foreign currency loans.
Calculate the income tax due
Given:
Net income in the Philippines P5,000,000
Income from foreign currency loans P800,000
Total - P5, 800,000

TAX DUE :
P5,000,000 x 0.25 = P1,250,000.00
P800,000 x 0.1 = P80,000 + P1,250,000.00 = P1,330,000.00
 TRY IT!
PHILIPPINE AIR, A DOMESTIC CORPORATION ENGAGED IN LOCAL AND
INTERNATIONAL OPERATIONS HAS THE NET INCOME 9,000,000 IN LOCAL AND
12,500,000 IN INTERNATIONAL.CALCULATE THE INCOME TAX DUE FROM THE
CORPORATION.
 NON-RESIDENT FOREIGN CORPORATIONS

The following corporate tax rates apply to non-resident foreign corporations with respect
to gross income derived from sources within the Philippines.
 EXAMPLE!
Situation 6: ABCD, a non-resident foreign corporation has the following data on its
income and expenses for 2022.

Gross Income, Philippines P5,000,000.00

Gross income, USA P3,000,000.00
Business expenses, Phil P2,000,000.00
Business expenses, USA P1,000,000.00

TAX DUE: Tax rate - 25%

5,000,000.00 × 0.025 = P1,250,000.00

Since the taxpayer is a Non-resident foreign Corporation. It is only

taxable only to its income within the Philippines but is not allowed to
deduct business expenses.
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