Theory

1.
A.) Resident citizen is a citizen of the philippines residing therein is taxable on all
income derived from sources within and without the philippines
B. A non resident citizen is taxable only on income derived from sources within the
Philippines. The term nom-resident means that a citizen of the Philippines who
establishes to the satisfaction of the commissioner of the fact of his physical
presence abroad with an intention to reside therein
C. Resident alien it is an individual whose residence is within the Philippines and who
is not a citizen thereof.
D. A non-resident is an individual whose residence is not within the Philippones and
who is not a citizen thereof. A non-resident alien engage in trade in the Philippines
shall be subject to an income tax in the same manner as an individual citizen and a
resident alien individual, on taxable income received from all sources within the
Philippines
E. A non-resident alien means an individual whose residence is not within the
philippines and who Is also not a citizen thereof. There shall be levied, collected and
paid for each taxable year upon the entire income received from all sources within
the philippines by every non-resident alien individual not engaged in trade or
business within the philippines.

2. Self- employed individuals or professionals shall have the option to avail of an 8%

tax on gross sales or gross receiptsand other nom-operating income in excess of
250,000. that is provided that an income from business and profession, sale/revenue
does not exceed the VAT threshold of 3,00,000, they shall have the option to avail an
8% tax on graduated tax scheme. Also, such tax liability is in lieu if the income tax
payable under the tax table.

3. A final withholding tax is an earnings that have been subjected to complete

withholding tax payment at source. It constiture full and final settlement of the
income tax due from the payee on the said income. The liabilty of payment of the tax
rest primarily on the payor as a withholding agent. While on the other hand,
creditable withholding tax provides an advance collection of taxes. The income from
which it is withheld is still required to be included in taxpayers gross income. In
creditable withholding tax, the income tax withhed is an aliquot portion only. The
one who remits the tax is the income payor for withholdinf and payee (time of filling
and payment)

4. The amount of the credit in respect to the tax paid or incurred to any country shal
not exceed the same proportion of the tax against which such credit is taken, which
the ttaxpayers taxable income from sources within the philippines.
Problem

A.). Gross compensation                                  P1,200,000

    13 month pay and other benefit              (120,000)      

    Taxable Compensation income                P1,080,000

   Tax Due under the graduated rates           P214,000*

*130,000+(1,080,000 - 800,000) x 30%= 214,000

Business Income

gross sales                                                 P3,500,000

non-operating income                                       100,000    

Taxable Income                                               P 3,600,000

Tax due under 8%                                                288,000

TOTAL TAX LIABILITY                                    P 502,000

B.) Total compensation Income                              P1,200,000

non-taxable                                                   (120,000)    

taxable comp. Income                                          P 1,080,000

Gross sales                                 P3,500,00

cost of sales                                1,000,000              

gross income                                 (600,000)    

Net income from operation           P 1,900,000

non operating income                          100,000     2,000,000

total taxable income                                           P3,080,000

TOTAL TAX LIABILITY                        P 835,600

490,000+(3,080,000-2,000,000)x32%