Beruflich Dokumente
Kultur Dokumente
ACADEMICS DEPARTMENT
http://www.facebook.com/atlas.ue
0915-1049090 & 0905-2101285
Sources: Income Taxation, Omar Erasmo G. Ampongan; Transfer and Business Taxation, Edwin Valencia:
Tax – it is an enforced contribution levied by the State by virtue of the sovereignty on persons and
property within its jurisdiction for the support of the government and all public needs.
Primary Purpose:
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).
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, non-
profit 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, Donor’s 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 Donor’s
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, Donor’s Tax and Estate Tax).
Toll Tax
Whose demand Demand of proprietorship Demand of sovereignty
Paid for what Paid for use of another Paid for the support of the
person’s property Government
Basis Amount is based on the cost Amount is based on the
of construction or necessities of the State
maintenance of the public
improvements used
Authority that imposes Imposes by the Government Imposed by Government
or by Private Entities only
Debt Tax
Basis Based on contract Based on law
Assignability Assignable Generally not assignable
Payment mode May be paid in kind Generally payable in money
Consequence for failure to No imprisonment for non- Imprisonment for non-
pay payment payment except poll tax
Prescriptive period Governed by ordinary Governed by special
prescriptive period prescriptive period
Interest Draws interest when Does not draw interest
stipulated or when there is except when default
default
Penalty Tax
Purpose Designed to regulate Aimed at raising revenue
conduct
Authority that imposes Imposed by Government or Imposed by Government
Private entities 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.
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.
Income – it means all wealth which flows into taxpayer other than the mere return of the capital. It
includes the forms of income specifically described as gains derived from the sale or other disposition of
capital.
Gross income – is the income reduced by exclusions. In other words, it is income from taxable sources.
Taxable income – means the pertinent items of income specified in the code, less the deductions and/or
personal and additional exemption, if any, authorized for such types of income by the code or other
special laws.
Income tax – is referred to as tax on all yearly profits arising from property, professions, trades or offices,
or as a tax on a person’s income, emolument, profits and the like.
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. Partner’s distributive share from the net income of the general profession partnership.
Receipt of dividends:
Refund of tax – is taxable if the tax was previously deducted as an expense in computing the tax during
the previous year.
Fringe Benefit
-is any good, service, or other benefit furnished or granted by an employer, in cash or in kind, in
addition to basic salaries.
-it is a tax on fringe benefits granted by the employer for the employee.
- paid by the employee within 30 days after the end of the month.
- is a final tax on the grossed-up monetary value of the fringe benefit being given to a managerial
or supervisory employee. It is considered a final income tax on the employee. Regardless of
whether the employer is an individual, partnership, or corporation, this tax applies.
1. Housing
2. Expense Account
3. Vehicle
4. Household Personnel
5. Interest on loan
6. Membership fees
7. Foreign travel
8. Holidays and Vacation expense
9. Educational Assistance
10. Life or Health Insurance
- It is a not taxable fringe benefit but taxable to the receiver in excess of the law requires.
a.) Rank and File - it does not require managerial decision (Clerk/Bookkeeper/Accountant).
- They are not subject to fringe benefit tax but they are subject to De Minimis
Benefit.
Housing
Lease
Monthly Rental xx
Multiply by Taxable Portion 50%
Monetary Value xx
Divide by 68%
Grossed-up Monetary Value xx
Multiply Rate of Tax 32%
Fringe Benefit Tax xx
Transfer of ownership
FMV of CIR and FMV Assessor
(whichever is higher, minus the
cost to the employee) xx
Divide by 68%
Grossed up monetary Value xx
Multiply by Rate of Tax 32%
Fringe Benefit Tax xx
Monetary Value xx
Divide by 68%
Grossed-up Monetary Value xx
Multiply Rate of Tax 32%
Fringe Benefit Tax xx
Rental
Value of the Benefit xx
Multiply by Taxable Portion 50%
Monetary Value xx
Divide by 68%
Grossed-up Monetary Value xx
Multiply Rate of Tax 32%
Fringe Benefit Tax xx
Exclusions - income or receipts which are excluded from gross income and are not subject to income tax.
They do not part from the gross income.
The following items that are not included in the gross income are:
1.) Retirement received under R.A. No.7641and those received by officials and
employees of private firms
The retiring officials or employee has been in the service of the same
employer for at least 10 years and is not less than 50 yrs of age at the time of
his retirement.
The benefits granted shall be availed of by an official or employee only once
3.) Social Security benefits, retirement gratuities, pensions and other similar benefits
received from foreign government agencies and other institutions, private or public.
The provisions of any law to the contrary notwithstanding, social security
benefits, retirement gratuities, pensions and other similar benefits received
from foreign government agencies and other institutions, private or public by
resident or non-resident citizen of the Philippines or aliens who come to
reside permanently in the Philippines are not included in the gross income.
4.) GSIS, SSS, Medicare, & Pag Ibig contribution, and union dues
GSIS, SSS, Medicare, & Pag Ibig contribution and union dues of individual
shall not be included in the gross income.
Classification of Individuals
a. Citizens –
1. Those who are citizens of the Philippines at the time of the adoption of the Constitution (on
February 2, 1987).
2. Those whose fathers or mothers are citizens of the Philippines
3. Those born before Jan. 17, 1973 of Filipino mothers who elect Philippine citizenship upon
reaching the age of majority.
4. Those who are naturalized in accordance with law.
Resident Citizen- a citizen of Philippines residing therein. A person who is born within the country
or state is called Resident Citizen.
Non-resident Citizen-
1. A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of
his physical presence abroad with a definite intention to reside therein;
2. A citizen of the Philippines who leaves the phil. During the taxable year to reside abroad,
either as an immigrant or for employment on a permanent basis;
3. A citizen of the Phil. Who works and derives income from abroad and whose employment
thereat requires him to be physically present abroad most of the time during the taxable year.
4. A citizen who has been previously considered as non-resident citizen and who arrives in the
Philippines at any time during the taxable year to reside permanently in the Philippines shall
likewise be treated as a non-resident citizen for the taxable year in which he arrives in the
phil. With respect to his income derived from sources abroad until the date of his arrival in the
Philippines;
5. The taxpayer shall submit proof to the Commisioner to show his intention of leaving the
Philippines to reside permanently abroad or to return to and reside in the Philippines as the
case may be.
b. Aliens- Individuals who are not Filipinos
1. Resident Alien
2. Non-resident alien doing business in the Philipines.
3. Non-resident alien not 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.
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.
2. Business or professional income- income earned by an individual from the sole proprietorship
business or from the practice of the profession.
Examples:
CPA’s
Doctors
3. Passive income- income earned which are subject to different final withholding tax rates.
a. The country of which the NRA is a subject or citizen has an income tax law.
b. His country grants personal exemptions to Filipinos who derive income in such country but
who are not residing therein (reciprocity).
c. He files a true and accurate statement of his income from an sources within the Philippines.
*The amount of exemption shall be equal to the exemptions allowed in the income tax law in the
country of which he is a citizen, to citizens of the Philippines not residing in such country, not to
exceed the amount fixed as exemption for citizens or residents of the Philippines.
b. 6% in capital gains presumed to have been ralized from the sale, exchange or other
disposition of real property located in the Philippines, classified as Capital assets, including
pacto de recto sales and other forms of conditional sales.
Tax base shall be whichever is higher between:
Gross selling price
The higher between the FMV as determined by the CIR and the FMV as determined by
the Provincial or City Assessors.
c. 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.