Académique Documents
Professionnel Documents
Culture Documents
ACADEMICS DEPARTMENT
http://www.facebook.com/atlas.ue
0915-1049090 & 0905-2101285
Scope:
Unlimited
Comprehensive
Plenary
Supreme
Fiscal Adequacy revenue must be sufficient to meet the demands of public expenditures.
Equality or Theoretical Justice based on ability to pay.
Administrative Feasibility capable of convenient, just and effective administration.
It is an enforced contribution;
It is levied pursuant to legislative authority;
It is proportionate in character;
It is payable in money
It is levied on persons and property within the jurisdiction of the State;
It is levied and collected for the purpose of raising revenue to be used for public purpose;
It is commonly required to be paid at regular intervals (not all taxes).
ATLAS 2012-2013
TAXATION
Constitutional Limitations
Due process of law
Equal protection of the laws
Non-impairment of obligation of contracts
Non-imprisonment for non-payment of poll tax
Rule of Taxation should be uniform and equitable
Exemption from Real Property Tax of charitable institutions, churches, parsonages or
convents, mosques and non-profit cemeteries, and all lands, buildings and improvements
actually, directly and exclusively used for religious or charitable purposes.
Exemption from Income Taxes, Real Estate Taxes and Custom Duties of non-stock, nonprofit educational institutions used actually, directly, and exclusively used for educational
purposes.
Inherent Limitations
Levied for public purpose
Exemption from taxation of government entities
Non-delegation of legislative power to tax
Territorial
Classification of Taxes:
1) As to scope
National imposed by National government (ex. Income Tax, Estate Tax, Donors Tax,
Value Added Tax, Other Percentage Taxes, and Documentary Stamp Tax).
Local or Municipal imposed by municipal corporations (ex. Real Estate Tax and
Community Tax).
2) As to who bears the burden
Direct tax which is demanded from the person who also shoulders the burden of tax or
tax which the taxpayer cannot shift to another (ex. Income Tax, Estate Tax and Donors
Tax).
Indirect tax which is demanded from one in the expectation and intention that he shall
indemnify himself at the expense of another or tax which can be shifted to another person
(ex. Value Added Tax and Other Percentage Taxes).
3) As to the determination of the amount
Specific tax of fixed amount imposed by the head or number, or by some standard of
weight or measurement. It requires no assessment other than a listing or classification of
the subjects to be taxed (ex. Excise Tax on cigarettes and liquors).
Ad Valorem Tax of fixed proportion of the value of the property with respect to which the
tax is assessed. It requires the intervention of assessors or appraisers to estimate the
value of such property before the amount due from each taxpayer can be determined (ex.
Value Added Tax, Income Tax, Donors Tax and Estate Tax).
4) As to purpose
General/Fiscal tax imposed solely for the general purpose of the government, to raise
revenue for government expenditures (ex. Income Tax, Donors Tax and Estate Tax).
ATLAS 2012-2013
TAXATION
Toll
Tax
Whose demand
Demand of proprietorship
Demand of sovereignty
Basis
Imposes
by
the
Government or by Private
Entities
Imposed by Government
only
ATLAS 2012-2013
TAXATION
Special Assessment
Tax
Levied on what
On land only
On persons, property, or
the exercise of privilege
Basis
Application
Exceptional both as to
time and place
License Fee
Tax
For regulation
For revenue
Involves an exercise of
police power
Involves exercise
taxing power
Amount of imposition
ATLAS 2012-2013
TAXATION
of
Subject of imposition
Imposed on persons,
property and the right to
exercise a privilege
Purpose
Legal compensation or
reward of an officer for
specific services
Enforced
contribution
assessed by sovereign
authority to defray public
expenses
Makes
the
act
business illegal
or
Debt
Tax
Basis
Based on contract
Based on law
Assignability
Assignable
Generally not
assignable
Payment mode
Generally payable
in money
Consequence for
failure to pay
No imprisonment
for non-payment
Imprisonment for
non-payment
except poll tax
Prescriptive period
Governed by
ordinary
prescriptive period
Governed by
special prescriptive
period
ATLAS 2012-2013
TAXATION
Interest
Draws interest
when stipulated or
when there is
default
Penalty
Tax
Purpose
Designed to regulate
conduct
Aimed at raising
revenue
Authority that
imposes
Imposed by
Government or
Private entities
Imposed by
Government only
The Constitution
Statutory Enactments
Administrative Rulings and Regulations
Judicial Decisions
Tax Situs:
Business, Occupation or Transaction place where the business is conducted, place where the
occupation is practiced, or the place where the transaction took place.
Real and Tangible Personal Property location of property.
Income place where the same is earned, or citizenship or domicile of the owner.
Gratuitous transfer of Property residence or citizenship of the taxpayer, or location of property.
ATLAS 2012-2013
TAXATION
Customs Duties (or simply Duties) are taxes imposed on goods exported to or imported from a
country. Custom duties are really taxes but the latter is broader.
Tariff may be used in following three senses:
A book of rates drawn usually in alphabetical order containing the names of several kinds
of merchandise with the corresponding duties to be paid for the same.
The duties payable on goods imported or exported.
The system or principles of imposing duties on the importation or exportation of goods.
Tax Avoidance also known as Tax minimization. It is the use by the taxpayer or legally
permissible methods in order to reduce tax liability.
Tax Evasion also known as Tax dodging. It is the use by the taxpayer of illegal means to defeat
or lessen the payment of tax.
Shifting transfer of burden of tax by the original payor to another or someone else.
Capitalization reduction in the price of the taxed object equal to the capitalized value of future
taxes which the purchaser expect to be called upon to pay.
Transformation the manufacturer or producer upon whom the tax has been imposed, fearing the
loss of his market if he should add the tax to the price, pays the tax and endeavors to recoup
himself by improving his process of production thereby turning out his units of production at a
lower cost.
National tax
An Excise tax
Direct tax
General tax
ATLAS 2012-2013
TAXATION
1. Compensation for services in whatever form paid, including, but not limited to fees, salaries,
wages, commissions and similar items.
2. Gross income derived from conduct if trade or business or the exercise of a profession.
3. Gains derived from dealings in property.
4. Interests
5. Rents
6. Royalties
7. Dividends
8. Annuities
9. Prizes and winnings
10. Pension
11. Partners distributive share from the net income of the general profession partnership.
Receipt of dividends:
1. Cash dividends it is a form of dividend which is paid in cash to shareholder.
2. Stock dividend it is a distribution by a corporation to its shareholder of the corporations own
stock.
3. Property dividend it is a dividend paid in shares of stock of another corporation or other property
of the corporation.
Refund of tax is taxable if the tax was previously deducted as an expense in computing the tax during
the previous year.
Housing
Expense Account
Vehicle
Household Personnel
Interest on loan
Membership fees
Foreign travel
Holidays and Vacation expense
Educational Assistance
Life or Health Insurance
ATLAS 2012-2013
TAXATION
De Minimis Benefit
Medical Cash Allowance..P750 per semester or P125 per month
Rice Subsidy..P1500 per month or 50kg per month
Uniform AllowanceP4000 per annum
Laundry Allowance...P300 per month
Gift...P5000 per annum
ATLAS 2012-2013
xx
50%
xx
68%
xx
32%
xx
xx
5%
xx
50%
TAXATION
Monetary Value
Divide by
Grossed-up Monetary Value
Multiply Rate of Tax
Fringe Benefit Tax
Transfer of ownership
FMV of CIR and FMV Assessor
(whichever is higher, minus the
cost to the employee)
Divide by
Grossed up monetary Value
Multiply by Rate of Tax
Fringe Benefit Tax
xx
68%
xx
32%
xx
xx
68%
xx
32%
xx
Vehicle
Purchase or Cash paid
Monetary Value
Divide by
Grossed-up Monetary Value
Multiply Rate of Tax
Fringe Benefit Tax
Installment
Value of the Benefit
Divide by
Monetary Value
Divide by
Grossed-up Monetary Value
Multiply Rate of Tax
Fringe Benefit Tax
Own
Value of the Benefit
Divide by
Value of the Benefit
xx
68%
xx
32%
xx
xx
5 yrs.
xx
68%
xx
32%
xx
xx
5 yrs.
xx
50%
Monetary Value
Divide by
Grossed-up Monetary Value
Multiply Rate of Tax
Fringe Benefit Tax
xx
68%
xx
32%
xx
xx
50%
xx
68%
xx
32%
Rental
ATLAS 2012-2013
TAXATION
xx
ATLAS 2012-2013
TAXATION
the actual value such consideration and the amount of the premiums and the
sums subsequently paid by the transferee are exempt from the taxation.
4.) Participating dividend
Participating dividends are not income to be insured, they are treated as return of
capital.
ATLAS 2012-2013
TAXATION
ATLAS 2012-2013
TAXATION
ATLAS 2012-2013
TAXATION
ATLAS 2012-2013
TAXATION
Non-resident Alien- an individual whose residence is not within the Philippines and who is not a
citizen thereon.
1. One who comes to the Philippines for a definite purpose which in its nature may be promptly
accomplished.
2. A non-resident alien individual who shall come to the Philippines and stay therein for an
aggregate period of more than 180 days during any calendar year shall be deemed a nonresident alien doing business in the Philippines.
Personal Exemptions
Personal Exemptions- are arbitrary amount allowed in the nature of a deduction from
gross or net income for personal, living or family expenses of the taxpayer. These have been
calculated to be roughly equivalent to the minimum of subsistence.
Basic Personal Exemption
a. Taxpayers allowed to claim basic personal exemption:
1. Resident Citizens;
2. Non-resident Citizens;
3. Resident Aliens;
4. Non-resident aliens doing business in the Philippines (subject to reciprocity);
5. Estates and trusts.
b. Amount of basic personal exemption
1.Single(including married but legally separated ,widow or widower), estates and trusts.
Old- 20,000php
New-50,000php
2.Head of family
Old-25,000php
New-50,000php
3.Married (for each working spouse).
Old-32,000php
New- 50,000php
c. Amount of personal exemption allowed to non-resident alien doing business in the Philippines
(non-resident alien engaged in trade or business.)
Conditions for allowance:
1. The foreign country of which the NRA-ETB is a subject or citizen has an income tax law;
2. The income tax law of the NRA-ETBs country allows personal exemptions to citizens of
the Philippines not residing therein.
3. The NRA-ETB files a true and accurate return of his income from all sources within the
Philippines.
Amount allowed: the lower between what is allowed in the NRA-ETBs country and what
is alowed in the Philippines.
Additional Exemptions
a. Taxpayers allowed additional exemptions.
1. Resident Citizens;
2. Non-resident Citizens;
3. Resident Aliens;
4. NRA-ETB (subject to reciprocity)
5.
b. Amount of additional exemption
-25,000 (old 8,000) per dependent child.
c. Maximum number of dependent children
- four (4) dependent children.
d. Dependents for additional exemption.
1.Legitimate child;
2. illegitimate child;
ATLAS 2012-2013
TAXATION
3. Adopted child.
e. Requisites or qualifications of a dependent child.
1. Chiefly dependent upon the taxpayer;
2. Living with the taxpayer;
3. Not more than 21 years old;
4. unmarried;
5. Not gainfully employed.
f. Proper claimant of additional exemption
- the additional exemption for dependents shall be claimed by only one of the spouses in the
case of married individuals. The HUSBAND is the proper claimant.
g. Instances when the wife can claim the
additional exemption.
1. When the husband explicitly waives his right to the additional exemption in favor of his
wife; (both must be employed)
2. When the husband is unemployed;
3. When the husband is a non-resident citizen deriving income from foreign sources.
h. Claimant of additional exemption in case of
legally separated spouses.
1. The additional exemption may be claimed only by the spouse who has custody of the
Child or children;
2. The total amount of additional exemption that may be claimed by both shall not exceed the
maximum additional exemption allowed.
i.Computation of married individuals income tax
1. For married individuals, the husband and wife, shall compute separately their individual
income tax based on their respective total taxable income.
2.If any income cannot be definitely attributed to or identified as income exclusively earned or
realized by either of the spouses for the purpose of determining their respective taxable
income.
Situs of Taxable income and allow. Of personal exemptions to individual taxpayers (Table
1)
Individual
taxpayer
Incom
e
within
Incom
e
withou
t
Basic
personal
exemption
Additional
exemptio
n
1.Resident
Citizen
Taxable
Taxable
Allowed
Allowed
ATLAS 2012-2013
TAXATION
2.Resident
Alien
Taxable
Not
Taxable
Allowed
Allowed
3.Nonresident alien
Taxable
Not
Taxable
Allowed
Allowed
4.Nonresiden
t alien (ETB)
Taxable
Not
Taxable
Allowed
(reciprocity
)
Not
allowed
5.Nonresiden
t
alien
(NETB)
Taxable
Not
Taxable
Not
allowed
Not
allowed
Not over
Tax
Plus
Of excess
over
10,000
5%
10,000
30,000
500
10%
10,000
30,000
70,000
2,500
15%
30,000
70,000
140,000
8,500
20%
70,000
140,000
250,000
22,500
25%
140,000
250,000
500,000
50,000
30%
250,000
500,000
125,000
32%
500,000
2. Business or professional income- income earned by an individual from the sole proprietorship
business or from the practice of the profession.
Examples:
CPAs
Doctors
3. Passive income- income earned which are subject to different final withholding tax rates.
ATLAS 2012-2013
TAXATION
In case of dispositions of real property classified as capital assets to government or any of its
political subdivisions or agencies or to government-owned or controlled corporations, the tax
to be imposed shall be determined in either of the following, at the option of the taxpayer:
In accordance with the rates established in Table 2.
6% final tax based on the gross selling price or FMV, whichever is higher.
ATLAS 2012-2013
TAXATION