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 TAXATION : the act of  Taxes : are the

laying tax enforced


proportional
Purpose of Taxation : contributions from
persons and
1. Revenue purposes
property levied by
2. Regulatory purposes the law making
3. Compensatory purposes body of the state by
virtue of its
sovereignty for the
support of the
government and
public needs
NATURE OF THE POWER
OF TAXATION

Inherent power of  It is inherent in sovereignty


sovereignty  It is legislative in character
Essentially legislative  It is subject to Constitutional
in function and Inherent limitation
For public purposes
The strongest of all the
inherent powers of the
government
Territorial in operation
Subject to
constitutional and
inherent limitation
1. FISCAL ADEQUACY
2. EQUALITY OR THEORITICAL JUSTICE : based
on ability to pay principle
3. ADMINISTRATIVE FEASIBILITY
ESSENTIAL CHARACTERISTIC OF TAX

 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
 Implement police power
 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
 Non-impairment of jurisdiction of the Supreme Court in tax cases
 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 Prohibition against
infringement of religious appropriation for religious
freedom purposes

Basis : No public money or


 Basis : “ No Law shall 
property shall be
be made respecting an appropriated, applied, paid
establishment of or employed, directly or
indirectly for use, benefit or
religion, or prohibiting support or any sect, church,
the free exercise denomination, sectarian or
thereof. The free institution or system of
religion or of any priest,
exercise and preacher, minister or other
enjoyment of religious religious teacher or
profession and dignitary as such, except
when such, except when
worship, without such priest, preacher,
discrimination or minister or dignitary, is
preference, shall assigned to the armed
forces, or any penal
forever be allowed xxx institutions, or government
(Sec. 5, Art. III) orphanage or leprosarium.
(Sec. 29, Art. VI)
Prohibition against taxation of Prohibition against taxation of non-
religious, charitable, stock, non-profit educational institution
educational entities

 Basis : Charitable  Basis : All revenues and


institutions, churches assets of non-stock, non-
profit educational
and parsonages or institutions used actually,
convents appurtenant directly, and exclusively for
thereto, mosques, non- educational purposes shall
profit cemeteries, and all be exempt from taxes and
lands, buildings and duties xxx (Sec. 4, Art. XIV)
improvements actually,  Subject to conditions
directly, and exclusively prescribed by law, all
used for religious, grants, endowments,
charitable or educational donations or contributions
purposes shall be used actually, directly and
exclusively for educational
exempt from taxation purposes shall be exempt
(Sec. 28, Art VI) 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
imposts.xxx(Sec.28, Art.VI)
Requirement of
Uniformity and Equity

 Basis : “ No person
 Basis : “The rule of shall beagainst
Prohibition imprisoned for
taxation shall be debt or non
imprisonment payment
for non-
uniform and equitable” payment of poll
of a poll taxtax(Sec.20,
(Sec.28, Art. VI) 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
governmental agencies if taxes imposed
 On or before April 15 of the current year
1. As to subject matter or object : 5. As to scope
a. Personal, poll or capitation
b. Property a. National
c. Excise b. Municipal
2. As to who bears the burden :
a. direct 6. As to graduation or
b. indirect rate
3. As to determination of amount
a. specific a. proportional
b. ad valorem b. progressive
4. As to purpose :
a. general, fiscal or revenue c. regressive
b. special or regulatory
1. Income Tax 5. Excise tax on
2. Estate and Donor Tax certain goods
3. Value Added Tax 6. Documentary stamp
Other percentage taxes :
4.
on small business tax
enterprise, on carriers, on 7. Other taxes :
franchise holders, on
persons paying for custom duties, sugar
overseas communications, adjustment tax,
on banks and non-bank
financial intermediaries, narcotic drugs, travel
on life insurance, on tax, private motor
proprietors, lessees or
operators of amusement, vehicle tax, energy
on winners of prizes in tax, special
horse races and jai-alai,
on sale, barter or education fund tax
exchange of stocks
 Income tax : tax on the  Gift taxes :
net income or the
entire income realized 1. Donors tax : tax
in one taxable year levied on the act of
giving
 Transfer taxes:
2. Donee’s tax :
 Estate tax :tax on the
right of the deceased
person to transmit his  Value Added tax :
estate to his lawful uniform tax imposed
heirs or beneficiaries on each sale, barter or
 Inheritance tax : tax on exchange or lease of
the right of the heirs or goods, properties or
beneficiaries to receive services
the estate of the
deceased person
 A uniform tax (0% or  It is levied on every
10%) imposed on each importation of goods
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 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 = Output Tax
sales/rptsx
1/11

Less :purchase = Input Tax


of goods x 1/11

Output Tax – = VAT payable


Input Tac
Sales P660,000
(domestic)
Brokerage 330,000
Total 990, 000
Output Tax P90,000
(1/11)
Importation P220,000
Local
purchases:
Raw 66,000
Materials
Supplies 44,000
Capital 165,000

Equipment
Services 55,000 330,000
Total 550,000
Less : Input 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%)
 Life Insurance companies (5% of the premium)
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)
 Excise Tax :  Goods manufactured or
produced in the
1. Specific tax : weight Philippines for domestic
or volume sale or consumption
2. Ad valorem : value  Imported items
 Alcohol products
:distilled spirits, wines
and fermented liquor
 Tobacco products : scrap
cuttings, tobacco, cigars
and cigarettes
 Petroleum products
 Misc.goods
 Mineral products
Goods subject to excise
taxes
 Volume
 Length
 Weight
 Number
DOCUMENTARY STAMP EFFECTS OF FAILURE TO STAMP
TAX TAXABLE INSTRUMENTS

 Tax on documents,  The document can not be


instruments, and recorded in the
papers evidencing government registry
the acceptance,  Such document,
assignment, sale or instrument or paper or
transfer of an any record or transfer of
obligation, rights or the same shall not be
property incident 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
violation
 Regular : ad valorem, Special Custom Duties
specific, alternate,
Dumping duty : imposed on a specific
compound

kind or class of foreign article which is
being imported into, or sold for
 Special 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
Classification  Retaliatory or discriminatory duty :
imposed upon articles of a foreign
country which discriminates against
Philippine commerce
 To stabilize the sugar  Proprietors or
industry
 To obtain readjustment
operators of mills in
benefits derived from centrifugal sugar
sugar industry  Owners or persons in
 To limit the production control of sugar lands
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

Purpose Persons liable


 Fixed or Annual
Occupation Taxes
 Specific Tax
 Transfer 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
RA 7837 Permanent Resident
 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
amount of tax collected.
1. Shifting : the transfer  FORWARD : burden of tax
of the burden of a tax is transferred from a
by the original payer or factor of production
the one whom the tax through factors of
is asses or imposed to distribution until it
another or someone settles finally on the
consumer
else
 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) ;  B132(120)—120R--
110 -P(100)—
 P—R(110)=  BRP
(110+10)120(10%)1
32=132  P—R----B
 P—R—B  P--RxB
 B—R-P
2. TAX CAPITALIZATION : 3. TRANSFORMATION :
reduction of the price the manufacturer or
of the taxed object producer upon whom
equal to the capitalized the tax has been
value of future taxes imposed, fearing the
which the purchaser loss of his market if he
expects to be called should add the tax to
upon to pay the price, pays the tax
and endeavors to
recoup himself by
improving his process
or production thereby
turning his units of
product at a lower cost
 100sqm. : 1M:  S, Bread, drinks
P800,000+200,000=
 P10,000 ; P10,000, P10,00
P1M
 1,000; 1,000; 1,000
 P700,000/800,000
 P11,000,/10, 11,000/10,
 Capital tax :
11,000/ 10
 Per plate P110/30
 , P110, P110

 3spnful
 10combo meal
 30+30+30 = 90
4. TAX EVASION : 5. TAX AVOIDANCE :
the use of the tax use of the tax payer
payer of illegal and of legally
fraud 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
3. A course of action which is unlawful
 Bureau of Internal
Revenue
 Bureau of Customs
 Court of Tax
Appeals
 Ordinary Court
 Supreme Court
ADMINISTRATIVE

 Distraint of personal  Giving of rewards to


property informers
 Levy of real property  Imposition if surcharge
 Enforcement of forfeiture and interest
 Enforcement of tax lien  Making arrest, search or
 Entering into seizure
compromise of tax cases  Deportation of aliens
 Inspection of books of
 Requiring the filing of accounts
bonds  Use of national tax
 Requiring proof of filing register
income tax returns  Obtaining information on
tax liability of any person
 Inventory taking of  Prescribing real
stock in trade and property value
making surveillance  Inquiring into bank
 Prescribing gross sales deposit account
and receipts  Requiring registration
 Termination of tax of taxpayers
period

ADMINISTRATIVE ADMINISTRATIVE
JUDICIAL

 Ordinary civil action  Criminal action


 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
 Partner’s distributive share from the net income
 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
from taxation
 EXCLUSIONS : are  DEDUCTIONS : are
incomes that are items or amounts
exempt from tax. which the law
They are not allows to be
considered in deducted under
determining gross certain conditions
income 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