Harold Prea BSGE-III

Kristine Claire Amante

Report: National Taxes
Basic Economics with Agrarian Reform and Taxation
Professor:Mrs. Virginia N. Gonzales
Friday 4:30pm- 7:30pm

NATIONAL TAXES
-are imposed by the national government through National Internal Revenue Code.
Kinds of National Taxes according to Section 21 of the Tax Reform Act of 1997 or the National Internal
Revenue Code.
1. Income Tax
2. Estate and Donors Taxes
3. Value-added Tax
4. Other percentage taxes as follows:
a. Hotels, motels and others
b. Caterers
c. Carries and keepers of garages
d. Dealers in securities and lending investors
e. Franchises
f. Overseas Communication
g. Banks and Non-bank Financial Intermediaries
h. Finance Companies
i. Insurance Companies
j. Amusements
k. Winnings
5. Excise taxes on certain goods
6. Documentary Stamp Taxes
7. Such other taxes that may be imposed by law and collected by the Bureau of Internal Revenue
The following are also considered as National Taxes imposed by special law;
1. Tariffs and Custom Duties (P.D. No. 1464)
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exist in the said Code, keep pace with the changing demands of trade and commerce as well as
strengthen the punitive force of the law against smuggling and other forms of customs fraud
taxes are levied by a government on goods exported from or imported into the country

2. Sugar Adjustment Taxes (C.A. No. 567)

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an act to adjust and stabilize the sugar industry and to raise revenue for the purpose by
increasing the tax on the manufacture of sugar and imposing a tax on the owners of sugar lands
held by others under lease or other contract granting the right to use said lands for consideration

3. Taxes on Narcotic Drugs (R.A. No. 953)

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an act to impose fixed and special taxes upon all persons who produce, import, manufacture,
compound, deal in, dispense, sell, distribute, or give away opium, marihuana, opium poppies, or
coca leaves, or any synthetic drugs used for other purposes in the Philippines

4. Travel Tax (P.D. No. 1183)

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it is the policy of Government to lessen the restriction on foreign travel

in order to provide adequate funds for the Government programs, simplify the collection of the
tax, and minimize tax avoidance, there is need to impose a Travel Tax in lieu of the taxes now
being imposed under Republic Act No. 1478
Some exempted from the payment of the travel tax imposed under Section 1 of this Decree are:
Officials and employees of the Philippine Government or any of its departments, bureaus
and instrumentalities traveling on official business
Officials, consultants, experts, and employees of the United Nations Organization and of
its agencies, and those exempted under existing laws, treaties and international
agreements
Bona-fide students whose studies abroad have been approved by the NEDA Scholarship
Committee
Infants who are two years old or less

5. Private Motor Vehicle Tax (Exec. Order No. 43)

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Taxes on private motor vehicles are based on the ability of the owners to pay thereof as indicated
by the type and age of their vehicles
Sec. 1. The owners of motor vehicles classified as "private" shall, upon every annual registration,
pay a private motor vehicle tax

6. Energy Taxes (P.D No. 844 and 845, and B.P. Blg. 36)

P.D. No. 844

- imposing an energy tax on aircraft not operated for hire to the general public

P.D. No. 845

- imposing an energy tax on motorized watercraft used for the general public

B.P. Blg. 36

- imposing an energy tax on electric power consumption

INCOME TAXATION
-is the key source of funds that the government uses to fund its activities and serve the
public. Income tax is imposed at progressive rates. There is one set of scheduled rates for
compensation or employment income, and for business, professional, and other types of noncompensation income

CLASSIFICATION OF INCOME AND RELATED CONCEPTS

1. Taxable Income
-refers to gross income less deduction of personal and additional exemptions.
2. Passive Income
-this applies to income from interest on banks, deposits, dividends, royalties, prizes and
other winnings
3. Gross Income
-refers to all income, regardless of kind or form, derived from any source. All kinds of
income are taxable taxable, even those derived from gambling.
INCLUSIONS FROM GROSS INCOME
1. Compensation for services including, but not limited to, fess, salaries, wages,commissions, and
similar terms.
2. Gross income derived from the conduct of trade or business or the exercise of a profession.
3. Gains derived from dealings in property.
4. Interest.
5. Rents.
6. Royalties
7. Dividends.
8. Annuities.
9. Prizes and Winnings.
10. Pensions.
11. Partners distributive share from the net income of the general.
Net Income
-is the gross income less allowable deductions.
EXLUSIONS FROM GROSS INCOME
1. Life Insurance.
2. Amount received by the insured as return of premium.
3. Gifts, requests, and devises.
4. Compensation for injuries or sickness.

5. Income exempts under treaty.

6. Retirement benefits, pensions, gratuities (for service, tips).
7. Miscellaneous items.
DEDUCTIONS FROM GROSS INCOME
1. Optional standard deduction is adeduction that an individual other than a non-resident alien,
may chain instead of an itemized deduction.
2. Itemized deduction.
3. Business expenses.
4. Interests.
5. Taxes.
6. Losses.
7. Bad Debts.
8. Depreciation of properties.
9. Depletion of properties.
10. Charitable and other contributions.
11. Trust.
TAXABLE INCOME
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refers to the gross income, less the deductions allowable by law and the personal and additional
exemptions
*Exemptions are
*For income to be TAXABLE there must be a gain or profit where the gain must either be received
or realized.

NONTAXABLE INCOME
PUROPOSE OF INCOME TAX
Income tax is considered as a privilege tax.
More important functions of income tax are the following:
1. To provide revenues
2. To offset regressive sales and consumption taxes; and
3. To mitigate the evils arising from the inequalities in the distribution of income and wealth which
are considered deterrents to social progress, by means of progressive taxation scheme
CLASSIFICATION OF TAXPAYERS
The Tax Code classifies taxpayers for purposes of income taxation. The classification of
taxpayers in the country is enumerated below:
A. Individuals

1. Citizens
a. Resident
b. Non-resident
2. Aliens
a. Resident Aliens
b. Non-resident aliens
i. Those engaged in trade or business within the Philippines
ii. Those who are not engaged in business or trade
B. Corporations
1. Domestic or those incorporated under Philippine laws
2. Foreign or those incorporated under the laws of their respective countries
a. Resident, corporations engaged in trade or business within the Philippines
b. Non-resident corporations which are not engaged in business
C. General partnerships
1. General professional partnerships are formed by persons for the primary purpose of exercising
their common professions. No part of the income of this kind partnership must come from engaging in any
trade or business. The partners are liable for income tax based on their respective shares in the profits of
the partnership.
2. General co-partnerships are formed for the sole purpose of engaging in trade or business. The
taxable income declared by the partnership for a taxable year is subject to corporate income tax.