TAXATION

Taxation
The system of
compulsory
contributions levied by a An inherent power of the
government or other state to raise income
qualified body on and to demand enforced
people, corporations contributions for public
and property in order to purposes.
fund public
expenditures.
 Purposes of
Taxation
An instrument of
fiscal policy
influences the
to raise revenues The government direction and
for public needs so increase taxes in structure of money
that persons can order to stabilize supply, investments,
live in a civilized prices and stimulate credits, production,
society greater production. interest rate,
inflation, prices and
in general, of the
national economy
Characteristics of a sound Tax
system

Clarity and
Fairness
Certainty

Convenience Efficiency
Effects of Taxation
Personal • which is presumed to fall entirely on the
legal taxpayers influences decisions to
Income work, save, and invest. These decisions
affect other people.
Tax

• Tax may simply result to lower corporate

profits and dividends. It may reduce
Corporat their income of all owners of property
and businesses. The company may
e Income move toward raising the prices of their
products
 Taxation in the
Philippines
The legislative branch enacts
laws to continually revitalize the
taxation policy of the country
BIR (Bureau of Internal Revenue)
Mandated to comprehend the assessment and
collection of all national internal revenue taxes,
fees and charges so as to promote a
sustainable economic growth
Taxation in the
Philippines
• Tax Payer: any person
subject to tax whose
sources of income is
derived from within the
Philippines
• TIN (Taxpayer Identification
Number) is required for any
individual taxpayer

Republic Act No.

8424
(Comprehensive Tax
Reform Act of 1997)
 Taxation in the
Philippines
• Lower income tax rates to enhance the
competitiveness of the Philippines in the
region
Tax • Removal of areas which provide avenues
for tax avoidance and abuse
Reforms • Exemption of OFWs from payment of tax
for income earned outside the Philippines
: • Simplification of the tax system which
encourages payments from tax payers
including those from the underground
economy
 Taxation in the
Philippines
• Taxes are collected within a
particular period of time know as
taxable year
• This is the calendar year or the fiscal
year that covers an accounting period
of 12 months ending on the last day
of any month other that December.
• Expanded Value- • Tax Reform for
Added tax Law Acceleration and
(E-Vat) Inclusion (TRAIN
• Authored by Law)
Ralph Recto • Authored by Koko
Pimentel
RA
RA 9337
10963
National taxes- imposed
Local Taxes- imposed
by the government
by the Local
under the National
Government Code of
Internal Revenue Code
1991
of 1997

Taxes on: Real Property

Capital Gains Tax; Documentary
Stamp Tax; Donor’s tax; Estate
Tax; Income Tax; Percentage Tax;
Value Added-Tax; Excise Tax;
Withholding Tax
Ownership; Business of Printing
and Publication; Franchise; Sand,
Gravel and Other Quarry
Resources; Professional;
Amusement; Business; Fees for
Sealing and Licensing of Weights
and Measures; Community Tax;
barangay Clearance;
 Kinds of taxes
Income • Tax on all yearly profits arising form property,
possessions, trades or offices

Tax
• Tax on a person’s income, emoluments and
profits

Donor’s • Tax imposed on donations inter-vivos or those

made between living persons to take effect
Tax during the lifetime of the donor.

Estate • Tax on the right of the deceased person to

transmit property at death
Tax
 Kinds of taxes
Value- • Tax imposed and collected on every sale,

added barter, exchange or transaction deemed

sale of taxable goods, properties, lease of
goods, services or properties in the course
Tax of trade as they pass along the production
and distribution chain
(VAT)
Capital • Tax imposed on the gains presumed to
have been realized by the seller for the
Gains sale, exchange or other disposition of real
property located in the Philippines,
Tax classified as capital assets
 Kinds of taxes
• Tax applicable to specified goods manufactured
in the Philippines for domestic sale or
consumption
• Specific tax: imposed on certain goods based

Excis
on weight or volume capacity or any other
physical unit of measurement (Specific tax =
volume x tax rate)
• Alcohol products, petroleum products,

e Tax tobacco products

• Ad valorem tax: imposed on certain goods
based on selling price or other specified value
of the goods
• (Ad valorem tax = selling price x tax rate)
• Mineral products, automobiles
 Kinds of taxes
• Tax on documents, instruments, loan
agreements and papers, agreements
Documentar evidencing the acceptance,
y Tax assignments, sale or transfer of an
obligation, rights or property incident
thereto

• Imposed by the local government before

Business they could issue a business permit
Tax • Depends on the rate of the area
 Withholding tax
• A system of collecting taxes whereby the taxes withheld
Expanded on certain income payments are intended to equal or at
least approximate the tax due of the payer on said
withholding tax: income.

• A system of collecting taxes whereby the amount of

Final income tax withheld by the withholding agent is
constituted as a full payment of the income tax due form
withholding tax: the payer on the said income. The payer is not required
to file an income tax return for the particular income.

Withholding tax • Commonly referred to as pay as you go or pay as you

for earn.
• A method of collecting the income tax at source upon
compensation receipt of the income.

income:
 Shifting the
incidence of taxation
– Shifting taxation is the process of
passing the burden of the tax to others.
– A tax can be shifted when the taxpayer
is able to obtain a higher price for
something he sells or when he pays a
lower price for a commodity he
purchases.
 Tax Evasion
• When there is fraud through pretension
and the use of other illegal devices to
lessen one’s taxes, there is tax evasion
– Under-declaration of income
– Non-declaration of income and other items
subject to tax
– Under-appraisal of goods subject to tariff
– Over-declaration of deductions
 Assignment
Go to your barangay office and request for
the ff:
1. Community tax certificate
2. Barangay clearance (for additional pts)