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TAXATIO

N

TAXATION Mode of raising revenue for public purpose
TAXATION
Mode of raising revenue for
public purpose
TAX The enforced proportional contribution from persons and property, levied by the State, by virtue of
TAX
The enforced proportional
contribution from persons
and property, levied by the
State, by virtue of its
sovereignty, for the support
of government and for all
public needs

UNDERLYING PRINCIPLES

BEHIND THE POWER TO TAX

  • PRINCIPLE OF NECESSITY The existence of

the government is a necessity; the main source of

revenue of the government is taxes. The government will not be able to survive and continue to perform its functions without taxes

  • BENEFITS RECEIVED PRINCIPLE In return for the enforced contribution of the citizens, the latter receive general protection and enjoyment of benefits in an organized society. The power of

taxation is therefore founded on the reciprocal duties of protection and support between the state and its inhabitants.

PURPOSE OF TAXATION

  • Primary to provide funds or property with which the government discharges its appropriate functions for the protection and general welfare of its citizens

  • Non-revenue objectives

    • To strengthen anemic enterprise by grant of tax exemptions

    • To protect local industries against foreign competition by increasing import taxes

    • As a bargaining tool in trade negotiations

    • To counter effects of inflation or depression

    • To reduce inequalities in the distribution of wealth

    • To promote science and invention, finance educational activities, and other similar objectives in the promotion of the general welfare

1.Fiscal adequacy The sources of revenue should be sufficient and elastic to meet the demands of
1.Fiscal adequacy
The sources of revenue
should be sufficient and elastic
to meet the demands of
governmental expenditure.
2. Equality or Theoretical Justice The tax burden should be in proportion to the taxpayer’s ability
2. Equality or Theoretical
Justice
The tax burden should be in
proportion to the taxpayer’s
ability to pay
3.Administrative Feasibility Tax laws must be capable of convenient, just, and effective administration on the part
3.Administrative
Feasibility
Tax laws must be capable of
convenient, just, and effective
administration on the part of
both the government and the

taxpayer

CLASSIFICATION OF TAXES AS TO

SCOPE OR AUTHORITY IMPOSING

THE TAX

  • 1. NATIONAL imposed by the national government

    • a) taxes under the National Internal Revenue Code /R.A. 8424 administered by the Bureau of Internal Revenue

    • b) taxes/fees/charges under the Tariff and Customs Code administered by the Bureau of Customs

    • c) taxes under special laws such as the Community Tax Law, Narcotics Drug Law, Special Education Fund Law, Sugar Adjustment Act, Peace and Order Fund Law

 Under the supervision and control of the Department of Finance. Its powers and duties comprise:
Under the supervision and
control of the Department
of Finance.
Its powers and duties
comprise:
1.The assessment and collection of all national internal revenue taxes, fees, and charges
1.The assessment and
collection of all national
internal revenue taxes,
fees, and charges
2. The enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of judgments
2. The enforcement of all
forfeitures, penalties, and fines
connected therewith, including
the execution of judgments in
all cases decided in its favor by
the Court of Tax Appeals and
the ordinary courts.
It is levied upon corporate and individual incomes in excess of specified amounts and less certain
It is levied upon corporate
and individual incomes in
excess of specified
amounts and less certain
deductions and/or
specified exemptions in

cases permitted by law

 It is a tax on consumption levied on the sale, barter, exchange or lease of
It is a tax on consumption
levied on the sale, barter,
exchange or lease of
goods or properties and
services in the Philippines
and on importation of

goods into the Philippines.

Value Added Tax Lola Lita’s, Stall Number 30 2008 Year-end Sales Gross Sales Price VAT Rate
Value Added Tax
Lola Lita’s, Stall Number 30
2008 Year-end Sales
Gross Sales Price
VAT Rate
P 500,000
12%
Output Tax (VAT on sales)
P 60,000
Less Input VAT (VAT on purchases)
Purchase Price of raw mat
200,000
VAT Rate
12%
24,000
VAT due and payable
P36,000
 Is a business tax imposed on persons or entities who sell or lease goods, properties
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 P1,500,000 and are not VAT-

Persons Exempt From VAT Domestic Carriers and Keepers of Garages international carriers
Persons Exempt From VAT
Domestic Carriers and Keepers of Garages
international carriers
franchises (franchises on radio and TV broadcasting companies with annual gross receipts not exceeding P10,000,000 Overseas
franchises
(franchises on radio and TV broadcasting
companies with annual gross receipts not
exceeding P10,000,000
Overseas Dispatch, Message or Conversation
Originating from the Philippines
Banks and non-bank financial intermediaries Finance Companies Life Insurance Premiums Amusement Winnings Stock Transactions
Banks and non-bank financial intermediaries
Finance Companies
Life Insurance Premiums
Amusement
Winnings
Stock Transactions
A tax imposed on goods manufactured or produced in the Philippines for domestic sale, consumption or
A tax imposed on goods
manufactured or produced
in the Philippines for
domestic sale, consumption
or any other disposition, and
on things that are imported
1. Alcohol Products - Sec. 141 to 143 – distilled spirits, wines, fermented liquors 2. Automobiles
1. Alcohol Products - Sec. 141 to 143
– distilled spirits, wines, fermented
liquors
2. Automobiles
-1600 cc engine displacement and
above
3. Non-essential Products - jewelry and pearls (precious or semi-precious, real or imitation) - perfumes and
3.
Non-essential Products
- jewelry and pearls (precious or
semi-precious, real or imitation)
- perfumes and toilet waters
- yachts and other vessels for
pleasure or sports
4. Mineral Products Sec. 151
-metallic, non-metallic minerals
and quarry resources
5. Indigenous Petroleum Sec. 148 - lubricating oil and greases, processed gas, waxes and petrolatum, denatured
5. Indigenous Petroleum Sec. 148
- lubricating oil and greases,
processed gas, waxes and
petrolatum, denatured alcohol to be
used for motive power, naptha,
gasoline, kerosene, diesel fuel oil,
thinners, liquefied petroleum gas,
aviation turbo fuel, bunker fuel oil
and asphalts
6. Tobacco Products Secs. 144 to 147 - scraps, cigars, cigarettes, smoking tobacco, chewing tobacco, tobacco
6. Tobacco Products Secs. 144 to 147
- scraps, cigars, cigarettes, smoking
tobacco, chewing tobacco, tobacco
inspection fees  uses both ad
valorem and specific
is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or
is a tax on documents,
instruments, loan agreements
and papers evidencing the
acceptance, assignment, sale
or transfer of an obligation,
right or property incident
thereto.
•Original Issue of Shares of Stock with par value •Bank Checks, Drafts, Certificate of Deposit not
•Original Issue of Shares of
Stock with par value
•Bank Checks, Drafts,
Certificate of Deposit not
bearing interest and other
Instruments
•Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Due-bills, Certificate of Obligation, or
•Sales, Agreements to
Sell, Memoranda of Sales,
Deliveries or Transfer of
Due-bills, Certificate of
Obligation, or Shares or
Certificates of Stock
Capital Gains Tax - a tax imposed on the gains presumed to have been realized by
Capital Gains Tax - 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
Transfer taxes are those imposed upon the gratuitous disposition of private property. Under our law, they
Transfer taxes are those
imposed upon the gratuitous
disposition of private property.
Under our law, they are taxes
levied on the transmission of
property from a decedent to his
heirs or from donor to donee.
Types
1.Donor’s Tax
2.Estate Tax
 Under the supervision and control of the Department of Finance. Its powers and duties include:
Under the supervision
and control of the
Department of Finance.
Its powers and duties
include:
1. Assessment and collection of lawful revenues/taxes from imported articles and all other dues, fees, charges,
1. Assessment and collection of
lawful revenues/taxes from
imported articles and all other
dues, fees, charges, fines and
penalties accruing under the
Tariff and Customs Code of the
Philippines (TCCP);
2. Enforce the TCCP and all other laws, rules and regulations relating to tariff and customs
2. Enforce the TCCP and all other
laws, rules and regulations
relating to tariff and customs
administration;
3. Exercise exclusive jurisdiction
over seizure and forfeiture cases
under the Tariff and Customs
laws.
Power to Create Sources of Revenue. Each local government unit shall exercise its power to create
Power to Create Sources of
Revenue.
Each local government unit shall
exercise its power to create its own
sources of revenue and to levy
taxes, fees, and charges subject to
the provisions herein, consistent
with the basic policy of local
autonomy. Such taxes, fees, and
charges shall accrue exclusively to
the local government units.” – Local
Government Code

EXAMPLES OF TAXES IMPOSED

BY THE LOCAL GOVERNMENT

Real property taxes (amellar)

Transfer tax

Professional tax

Amusement tax

Business permit

Mayor’s permit