Assignment in preparation for next meeting, April 21, 2020:

1. Read on:

Tax on Individuals

Section 24 Income Tax Rates

Income Tax Systems (Ingles, at 30)

(A) Rates of Income Tax on Individual Citizens and Individual Resident Alien of the
Philippines
(1) Income Tax
(a) Resident individual citizen
(b) Non-resident individual citizen
(c) Resident individual alien
(2) Rates of Tax on Taxable Income of Individuals
(a) Tax schedule effective January 1, 2018 until December 31, 2022
Tax schedule effective 2023 and onwards
Minimum Wage Earner

(b) Rate of Tax on Income of Purely Self-employed individuals and/or

professionals whose gross sales or gross receipts and other non-
operating income does not exceed the VAT threshold of 3M as provided
in Section 109 (BB) – 8% on gross sales or gross receipts in excess of
P250,000
(c) Rate of Tax for Mixed Income Earners
(1) All Income from Compensation
(2) All Income from Business or Practice of Profession
a. If TGS/TGR and ONOIDEVT does not exceed VAT
threshold of 3M as provided in Section 109 (BB) - Graduated
IT or 8% on gross sales or gross receipts in excess of P250,000
b. If TGS/TGR and ONOIDEVT exceed VAT Threshold of 3M
as provided in Section 109 (BB)

Ingles Supplement, at 3-8

See RR 8-2018, Sec 3 (A) to (D)
RMC 50-2018

(B) Rate of Tax on Certain Passive Income

(1) Interests, royalties, prizes, and other winnings – final tax
Ingles, at 62
RR 10-1998 Interest Rates on FCD

(2) Cash and/or property dividends (actual or constructively received) – final tax
Revenue Regulation 02 – 40, Sec. 50 Forgiveness of Debt
 (C) Capital Gains from Sale of Shares of Stock Not Traded in the Stock Exchange – final
tax of 15% on net capital gains; or SOSTSE 5% or 10%
RR 6-2008 – Sale, Barter, or Exchange of Shares of Stocks as Capital Asset
RrR 6-2013 FMV of Shares of Stocks NTSE

Cf Sec. 127 of NIRC as amended by Sec. 39 of RA 10963

RR 9-2018 – Stocks Traded through Stock Exchange (Stock Transaction Tax)
Ingles, at 65

(B) Capital Gains from Sale of Real Property

(1) In general - final tax of 6% on GSP or CFMV, whichever is higher
RR 7-2003
RR 8-1998
Ingles, at 64, 67
BIR Ruling No. DA 029-08

BIR Ruling No. 423-16, December 7, 2016

BIR Ruling No. 445-16, December 19, 2016
Supreme Transliner Inc. v. BPI Family Saving Bank Inc., GR No. 165617,
February 23, 2017
RR 4-99

(2) Exception – Principal Residence

RR 14-2000
Ingles, at 68-7

Section 25. Tax on Non-Resident Alien Individuals

(A) Non-resident Alien Individual engaged in Trade or Business within the Philippines

(1) In general – Sec. 24 (A) (2) (a), (b), and (c) Graduated IT or 8% as the case may be
(2) Cash and/or Property Dividends from a Domestic Corporation or Joint Stock
Company, or Insurance or Mutual Fund Company or ROHQ of Multi National
Company, or Share in the Distributable Net Income of Partnership (Except a
GPP), Joint Account, JV Taxable as a Corporation or Association, Interest,
Royalties, Prizes, and Other Winnings
Note: Tax consequences of Cash and/or property dividends from foreign
corporation (Ingles, at 76)

(3) Capital Gains – SOSNTSE final tax of 15; SOSTSE 5% or 10%; real properties 6%
final tax
RR No. 7-2003

(B) Non-resident Alien Individual not engaged in Trade or Business Within the
Philippines
(1) Income tax - 25% final tax on gross income from all sources within
(2) CGT - SOSNTSE final tax of 15; SOSTSE 5% or 10%; real properties 6% final tax
 (C) Alien Individual Employed by ROHG or RAHQ of Multinational Companies
- Graduated IT (RR 8-2018)

(D) Alien Individual Employed by Offshore Banking Units –

- Graduated IT (RR 8-2018)

(E) Alien Individual Employed by Petroleum Service Contractor and Subcontractor

- Graduated IT (RR 8-2018)

(F) Exception to Preferential tax in Sec 25 (C), (D), and (E) – Vetoed
- Graduated IT (RR 8-2018)

Section 26 Tax Liability of Members of General Professional Partnerships

Tan v. Del Rosario Jr., GR No. 109289, October 3, 1994

Non-Taxable GPP
RMC No. 3-2012
RR 8-2018
RMC 89-2012
RR 2-2010
Taxable Partnership
Cf. Sec. 73 of NIRC
Art. 1767 of the Civil Code
Ona v. CIR, GR No. L-19342, May 25, 1972
Obillos v. CIR, GR No. L-68118, October 29, 1985

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2. As a supplement, read PDF – Tax table on Individuals (Final – TRAIN). Sent the file to Ms.
Amoranto.
3. Read at least until the case of CIR v Isabela Cultural Corp 02-12-2007 (30th case following Atty.
Florin’s syllabus)
4. Prepare for a possible online quiz next meeting