TAXATION : the act of laying tax Purpose of Taxation : 1. Revenue purposes 2. Regulatory purposes 3. Compensatory purposes
Taxes : are the
enforced
proportional
contributions from persons and
property levied by the law making
body of the state by virtue of its
sovereignty for the support of the
government and public needs
Inherent power of sovereignty
Essentially legislative in function
For public purposes
The strongest of all the inherent powers of the government Territorial in operation Subject to constitutional and inherent limitation It is inherent in sovereignty It is legislative in character It is subject to Constitutional
and Inherent limitation
NATURE OF THE POWER OF TAXATION
1. FISCAL ADEQUACY
2. EQUALITY OR THEORITICAL JUSTICE : based
on ability to pay principle
It is an enforced contribution It is generally payable in money It is proportionate in character It is levied on persons or property
It is levied by the state which has a jurisdiction over the person
or property
It is levied by the law making body of the state It is levied for public purposes
Strengthen anemic enterprise Protect local industries
Bargaining tool Halt inflation
Reduce inequalities in wealth Promote science
RELIGIOUS PURPOSES
RELIGIOUS,CHARITABLE, AND EDUCATIONAL ENTITIES, NON PROFIT
CEMETERIES AND CHURCES
NON-STOCK, NON-PROFIT EDUCATION INSTITUTION THOSE WHICH HAD BEEN VETO BY THE PRESIDENT GOVERNMENT ENTITIES
Business league, chamber of commerce or board of trade not organized for
profit
General professional partnership
Labor. Agricultural, or horticular organization not organized principally for
profit
Gifts made in account of marriage by parents to each of their legitimate.
Recognized natural or adopted children
Gifts for use of the national government
Gifts made in favor of educational institution, social welfare corporation,
research organization
Benefit payment to member made by the GSIS and SSS
Benefits from the US government through US veterans administration Prize receive by winners in charity horse race
The annual senior citizen income of not more than P60,000 per annum NON TERRITORIAL JURISDICTION
Due Process of Law
Equal Protection of the Law
Rule of uniformity and equity in taxation
No imprisonment for non payment of poll tax Non-impairment of the obligations of contracts Non-infringement of religious freedom
No appropriation for religious purposes
Exemption of religious, charitable, and educational entities, non-profit
cemeteries, and churches from property taxation
Exemption of non-stock, non-profit educational institutions from
taxation
Concurrence by a majority of all members of the Congress for the
passage of a law granting tax exemption
Power of the President to veto any particular item or itens in a revenue
or tariff bill
Requirement that levy must be for a public
purpose
Non-delegation of the legislative power to
tax
Exemption from taxation of government
entities
International Comity Territorial Jurisdiction
Prohibition against infringement of religious
freedom
Prohibition against
appropriation for religious purposes
Basis : “ No Law shall
be made respecting an establishment of
religion, or prohibiting the free exercise
thereof. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed xxx (Sec. 5, Art. III)
Basis : No public money or property shall be
appropriated, applied, paid or employed, directly or
indirectly for use, benefit or support or any sect, church, denomination, sectarian or institution or system of
religion or of any priest, preacher, minister or other religious teacher or
dignitary as such, except when such, except when such priest, preacher, minister or dignitary, is assigned to the armed forces, or any penal
institutions, or government orphanage or leprosarium. (Sec. 29, Art. VI)
Prohibition against taxation of religious, charitable,
educational entities
Prohibition against taxation of
non-stock, non-profit educational institution
Basis : Charitable
institutions, churches and parsonages or
convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings and
improvements actually, directly, and exclusively used for religious,
charitable or educational purposes shall be
exempt from taxation (Sec. 28, Art VI)
Basis : All revenues and assets of stock, non-profit educational
institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties xxx (Sec. 4, Art. XIV) Subject to conditions
prescribed by law, all grants, endowments,
donations or contributions used actually, directly and exclusively for educational purposes shall be exempt from tax (Sec.4, Art. XIV)
“ No law granting any tax exemption shall be
passed without the concurrence of a majority of all members of the Congress” (Sec. 28 (4) Art. VI)
For purposes of practicality and expediency,
our Constitution expressly allows Congress “ to authorize the President to fix within
specified limits, and subject to such
limitations and restrictions as it may impose, tariff rates, import or export quotas, tonnage and wharfage dues and other duties or
Requirement of
Uniformity and Equity
Prohibition against
imprisonment for non-payment of poll tax
Basis : “The rule of
taxation shall be
uniform and equitable” (Sec.28, Art. VI)
Basis : “ No person
shall be imprisoned for debt or non payment of a poll tax (Sec.20, Art.III)
1. Levy – determination of certain amount or of
certain percentage to be imposed on persons, property or acts
2. Assessment : computation of the sum due,
giving of notice, making of the demand
3. Collection : taking or getting by proper
1. As to subject matter or object : a. Personal, poll or capitation b. Property
c. Excise
2. As to who bears the burden : a. direct b. indirect 3. As to determination of amount a. specific b. ad valorem 4. As to purpose :
a. general, fiscal or revenue b. special or regulatory 5. As to scope a. National b. Municipal 6. As to graduation or rate a. proportional b. progressive c. regressive
1. Income Tax
2. Estate and Donor Tax 3. Value Added Tax
4. Other percentage taxes :
on small business
enterprise, on carriers, on franchise holders, on
persons paying for
overseas communications, on banks and non-bank financial intermediaries, on life insurance, on
proprietors, lessees or operators of amusement, on winners of prizes in horse races and jai-alai, on sale, barter or exchange of stocks 5. Excise tax on certain goods 6. Documentary stamp tax 7. Other taxes :
custom duties, sugar adjustment tax,
narcotic drugs, travel tax, private motor
vehicle tax, energy tax, special
Income tax : tax on the net income or the
entire income realized in one taxable year
Transfer taxes:
Estate tax :tax on the right of the deceased person to transmit his estate to his lawful
heirs or beneficiaries Inheritance tax : tax on
the right of the heirs or beneficiaries to receive the estate of the
deceased person
Gift taxes :
1. Donors tax : tax levied on the act of giving
2. Donee’s tax :
Value Added tax :
uniform tax imposed on each sale, barter or exchange or lease of goods, properties or services
A uniform tax (0% or
10%) imposed on each sale, barter, exchange or lease of goods,
properties or services in the course of trade or business as they pass
along the production and distribution chain, the
tax being limited only to the value added to such goods, properties, or services by seller,
transferor or lessor
It is levied on every
It is a privilege tax It is a percentage tax It is an indirect tax
1. On sale of goods or properties : tax is
equivalent to 10% of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged
2. On imported goods : tax is equivalent to 10%
based in total value used by the Bureau of Customs
3. On sale of services and use or lease of
properties : tax is equivalent to 10% of gross receipts derived by any person engaged in the sale or exchange of services for a fee or
consideration including the use or lease of properties whether real or personal
Gross
sales/rptsx 1/11
= Output Tax
Less :purchase
of goods x 1/11 = Input Tax Output Tax –
Sales (domestic) P660,000 Brokerage 330,000 Total 990, 000 Output Tax (1/11) P90,000 Importation P220,000 Local purchases: Raw Materials 66,000 Supplies 44,000 Capital Equipment 165,000 Services 55,000 330,000 Total 550,000 Less : Input Tax 50,000
Persons or enterprise Liable for percentage
taxes
Small business enterprise (<P500,000: 3%) Domestic carriers (3%)
International carriers (3%) Franchise grantees (3%)
Overseas Communications (10%) Banks and Financial Intermediaries Finance Companies (5%)
Amusement
a. Proporietors or lessees or operators of amusement places (cockpits, cabaret (18%), boxing exhibition (10%), professional
basketbal games (15%), race tracks and jai alai (30%)
`b. Winners in horse races (10% of the dividend)
Goods subject to excise taxes
Excise Tax :
1. Specific tax : weight
or volume
2. Ad valorem : value
Goods manufactured or
produced in the
Philippines for domestic sale or consumption
Imported items Alcohol products
:distilled spirits, wines and fermented liquor
Tobacco products : scrap
cuttings, tobacco, cigars and cigarettes
Petroleum products Misc.goods
Volume Length Weight Number
DOCUMENTARY STAMP
TAX EFFECTS OF FAILURE TO STAMP TAXABLE INSTRUMENTS
Tax on documents, instruments, and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights or property incident
The document can not be
recorded in the
government registry
Such document,
instrument or paper or any record or transfer of the same shall not be admitted or used in evidence in any court
No notary public or other
officer authorized to administer oaths shall add his jurat
Subject to penalty
Classification
Special Custom Duties Regular : ad valorem,
specific, alternate, compound
Special
Dumping duty : imposed on a specific
kind or class of foreign article which is being imported into, or sold for
exportation to the Philippines at a price less than the fair value
Countervailing duty : imposed on
articles, upon the production,
manufacture or export of which any bounty or subsidy is directly or
indirectly granted in the country of origin and/ or exportation
Marking duty : on articles and
containers which have not been properly marked in any official language in the Philippines
Retaliatory or discriminatory duty :
imposed upon articles of a foreign country which discriminates against Philippine commerce
Purpose Persons liable
To stabilize the sugar
industry
To obtain readjustment
benefits derived from sugar industry
To limit the production
of sugar to areas more economically suited for the production
To afford labor employed
in the industry a living wage and to improved their working condition
Proprietors or
operators of mills in centrifugal sugar
Owners or persons in
Fixed or Annual
Occupation Taxes
Specific Tax
A. Citizens of the Philippines;
B. Permanent resident aliens whose immigration status maybe any of the following:
Sec. 13 Quota or Preference Immigrant Visa
Sec. 13 A Visa issued to an Alien Spouse of Philippine Citizen Sec. 13 B Child born outside the Philippines by a 13A Mother Sec. 13 C Child born in the Philippines by a 13A Mother
Sec. 13 D Loss of Citizenship by a Filipino Woman by her Marriage to an Alien
Sec. 13 E Returning Resident
Sec. 13 G Former Natural-born Citizen of the Philippines who was Naturalized by a Foreign Country
TRV Temporary Residence Visa
RA 7919 Alien Social Integration Act of 1995 RC /RFC Recognition as Filipino Citizen
C. Non-resident aliens who have stayed in the Philippines for more than one(1)
year.
Note: Non-immigrant aliens who have not stayed in the Philippines for more than a year are not covered by the travel tax. However, PTA F356 need to be prepared by the ticketing officer for passengers with the following immigration status
except for FGO & their dependents (Sec. 9E) who have stayed for more than a year, they have to secure Travel Tax Exemption Certificate.
EO 408 / E0 Tourist without visa - EO 21 Stay valid for 21 days - 11 Days Stay valid for 11 days - 7 Days Stay valid for 7 days BB Balikbayan
Sec. 9A Temporary Visitor coming for business or for pleasure or for reasons of health
Sec. 9B Transit Passengers Sec. 9C Foreign Seamen
Sec. 9D Treaty Trader / Investor
Sec. 9E Foreign Government Officials Sec. 9F Foreign Students
Sec. 9G Pre-arranged Employee
47 A2/PEZA Special Non-immigrant Visa 47B Refugees
PD 1034 Executives of Multinational Companies
EO 63 / EO 226 / RA 8756 Omnibus Investment Act of 1987 - SIRV - Special Investor Resident Visa
RA 7227 Bases Conversion and Development Act of 1992
- SSIV - Subic Special Investor's Visa - SSRV - Subic Special Retiree Visa - SSRV - Subic Special Retiree Visa - SSWV - Subic Special Working Visa - SCWV - Special Clark Working Visa
EO 1037 / SRRV Special Resident Retiree Visa
EO 191 Granting No-Visa Entry for Initial Stay of 7 Days for Chinese Nationals who are holders of Macao - Portuguese Passport
LOI 911 / LOI Granting No-Visa Entry for Initial Stay of 7 Days for holders of HK-British-HK-SAR Passport
As mandated by the law, the taxes are divided among the
Philippine Tourism Authority (PTA), the National Parks
Development Committee (NPDC), the National Commission for Culture and the Arts (NCCA), Commission for Higher Education (CHED), and the General Fund of the National Government for use in government programs.
First Class
Passage Economy Class Passage
Full rate PHP 2700 PHP 1620 Standard reduced
rate PHP 1350 PHP 810 Privileged reduced
rate for Overseas Contract Workers' (OCWs) dependents PHP 400 PHP 300
Foreign diplomatic representatives Employees of the United Nations (UN) Organization or its agencies
United States (US) Military Personnel including dependents and other US nationals with fares paid for by the US Government or on US
Government-owned/chartered transport facilities.
Filipino Overseas Contract Worker International carrier crew
Filipino permanent residents abroad whose stay in the Philippines is less than one (1) year.
Philippine Foreign Service personnel assigned abroad and their dependents
Philippine government (excluding government-owned and controlled
corporations) employees on official travel Grantees of foreign government-funded trips
Students with approved scholarships by appropriate government agency
Infants (2 years & below)
Personnel (and their dependents) of Philippine offices of multinational companies not engaged in business in the Philippines
B. RA 6768 provides for the exemption of the following from payment of the travel tax:
Balikbayans whose stay in the Philippines is less than one (1) year Family members of former Filipinos accompanying the latter
C. Section 2-A of PD 1183, as amended, states that the following are entitled to a standard reduced travel tax rate:
Minors from 2 to 12 years
D. Section 2-B of PD 1183, as amended, states that the following are entitled to a privileged reduced travel tax rate:
Legitimate spouse of overseas contract worker (OCW)
Legitimate unmarried children of OCW below 21 years old
PRIVATE MOTO VEHICLE TAX EO 43 (RA 4136) Land Transportation and Traffic Code Purpose : Nationalization Discourage the uneconomic consumption of fuel Revenue SCHEDULE (L,M,H:Age)
RRA 776 (Civil Aeronautics Act of the Philippines) Purpose: Fuel Conservation Revenue Conserving energy ((BP Blg.36)
It shall be paid to and withheld by electric
utilities from their respective residential
customers along with their monthly electric billings. The owner or proprietor, operator, or any person in charge of the public utility
shall, within 20 calendar days after the end of each calendar month in which the tax is
collected file a true and correct return with the Commissioner of Internal Revenue and remit within the same period the total
1. Shifting : the transfer
of the burden of a tax by the original payer or the one whom the tax is asses or imposed to another or someone else
FORWARD : burden of tax
is transferred from a factor of production through factors of distribution until it settles finally on the consumer
BACKWARD : burden of
the tax is transferred by consumer through
factors of distribution to the factors of production
Onward Shifting : tax is
shifted two or three
times either forward or backward
P (t) =100(90+10) ; 110 P—R(110)= (110+10)120(10%)1 32=132 P—R—B B—R-P B132(120)—120R---P(100)— BRP P—R----B P--RxB
2. TAX CAPITALIZATION : reduction of the price of the taxed object
equal to the capitalized value of future taxes which the purchaser expects to be called upon to pay
3. 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 or production thereby turning his units of
100sqm. : 1M: P800,000+200,000= P1M P700,000/800,000 Capital tax : S, Bread, drinks P10,000 ; P10,000, P10,00 1,000; 1,000; 1,000 P11,000,/10, 11,000/10, 11,000/ 10 Per plate P110/30 , P110, P110 3spnful 10combo meal 30+30+30 = 90
4. TAX EVASION : the use of the tax payer of illegal and fraud
5. TAX AVOIDANCE : use of the tax payer of legally
permissible
alternative tax rates or methods inorder to avoid or reduce tax liability
100M : 10 M BB : 10M
GK: 10 M SSI : 5M En: 15 M
Total charitable and socio projects :40M 100M-40M = 60 M ; 6M (4M)
1. The end to be achieved
2. An accompanying state of mind which is
described as evil
Bureau of Internal Revenue Bureau of Customs Court of Tax Appeals Ordinary Court Supreme Court
ADMINISTRATIVE
Distraint of personal
property
Levy of real property
Enforcement of forfeiture Enforcement of tax lien Entering into
compromise of tax cases
Requiring the filing of
bonds
Requiring proof of filing
income tax returns
Giving of rewards to
informers
Imposition if surcharge
and interest
Making arrest, search or
seizure
Deportation of aliens Inspection of books of
accounts
Use of national tax
register
Obtaining information on
ADMINISTRATIVE ADMINISTRATIVE Inventory taking of
stock in trade and making surveillance
Prescribing gross sales
and receipts
Termination of tax
period
Prescribing real
property value
Inquiring into bank
deposit account
Requiring registration
JUDICIAL
300,000-250,000= 50,000 x .30 = 15,000 (
30% of the excess of 250,000
Tax due : 50,000 + 15,000 Tax due : 65,000/12= 5.400
Income base of tax rate : the amount of
income upon which the tax rate prescribed by law is applied to get the amount of income
tax payable
Net Income : pertinent items of gross income
specified in the tax code less deductions, if any, including personal and additional
exemption
Non Exempt Income : all incomes of the tax
payer which are subject to tax or which are not exempted from taxation
Compensation for services
Gross income derived from conduct of trade or
business
Gains derived from dealings in property Interests
Rents
Royalties Dividends Annuities
Prize and winnings Pensions
1. There must be gain or profit
2. The gain must be received and realized
3. The gain must be excluded by law or treaty
EXCLUSIONS : are
incomes that are exempt from tax. They are not
considered in
determining gross income
DEDUCTIONS : are
items or amounts which the law
allows to be
deducted under certain conditions from the gross
income of taxpayer in order to arrive at the taxable income
30,000/ mo x 12 = 360,000 SSS: 1,500x 12= 18,000
PhilH= 100x12= 1,200
PG = 500x 12 = 6,000/ total 25, 200 Single, but has :child 5yrs
Head of the family / dependent 16,500
(37,500+16,500=54,000
360,000-25,200-54,000 =280,800 (taxable
income)
Tax due :( 50,000+30%% of the excess of
250,000
280,800-250,000 =30,800x.3 =9,240 Tax due : 50,000 + 9,240 = 59,240
