INCOME TAXATION (WITH CREATE BILL APPLICATION) √ Other income:

a. Gains from dealings in properties

COM-EX REVIEWER
b. Not subject to final tax
General rules in income taxation:
General tax rules for NRA-NETB and NRFC:
Kinds of taxpayers Taxable on income earned
Types of sources: NRA-NETB NRFC
Individual taxpayers: within without
General FIT 25% 30%
1. Resident citizen √ √
Exceptions:
2. Non-resident citizen √
1. Cap. Gains on sale of domestic 15% CGT 15%CGT
3. Resident alien √ stocks directly to buyer.
4. Non-resident Alien √ 2. Rentals on cinematographic
Corporate Taxpayers: within without 25% FIT 25% FIT
films and similar works
1. Domestic corporation √ √ 3. Rental of vessels 25% 4.5%
2. Resident foreign corporation √ 4. Rentals of aircrafts,
3. Non-resident foreign corporation √ machineries, and other 25% 7.5%
equipment
5. Interest income under the
The following are applicable taxes from the gross income: Exempt Exempt
FCDS
A. FINAL INCOME TAX: (withheld taxes) 6. Interest on foreign loans N/A 20%
√ Passive income 7. Dividend income 15% sparing
25%
rule
a. Interest yield from bank deposits or deposits substitutes
8. Tax on corporate bonds 30% 30%
b. Domestic dividends in general
c. Dividend income from real estate investment trust
d. Share in the net income of a business partnership, FINAL INCOME TAX
taxable associations, joint ventures, or co-ownership
Types of Passive income:
e. Royalties, in general
f. Prizes  BIR FORM 0619-F (monthly remittance return of final income
g. Winnings taxes withheld)
h. Informer’s tax reward
i. Interest Income on tax-free corporate covenant bonds A. Interest income or yield
B. CAPITAL INCOME TAX: (disposition of certain capital assets) 1. From local currency bank deposits
√ Not used in business
√ Domestic stocks Source of Interest income Indv. tax corpo
rates* tax rate
√ Real property
a. short term deposits 20% 20%
C. REGULAR INCOME TAX: (IF NOT FIT AND CIT) b. long term deposits/ investment Exepmt** 20%
√ Active income certificates
*are those (RC; NRC; RA; NRA)
**except for NRA-NEITB CASE: Joint accounts on FOREX deposits
 A non-resident (exempt) and resident taxpayer.
In a calculation for an individual who had several deposits with  Tax Treatment: only half or 50% of the interest is taxable by
various time frames, compute individually the final tax on each 15% tax rate.
interest income received, while in a corporation, simply add up all
B. Dividends
interest income earned regardless of time period. The total will
serve as the basis for the final levy.  Cash Dividends
CASE: Individuals’ pre-termination of long-term deposits  Property dividends
 Scrip dividends
Holding period Final Tax
 Stock dividends
Less than 3 years 20%
3 years to less than 4 years 12%  Liquidating Dividends
4 years to less than 5 years 5%  Stock dividends
5 years and more 0  Inter-corporate dividends
 Dividends from cooperatives
This applies to the following: Source of dividends: Indv. Corp.
√ Deposit substitute a. Domestic corp. 10%* Exempt**
√ Government securities: b. Foreign corp. RIT RIT
a. Treasury bonds *those (RC and NRA-ETB 20%)
b. Treasury bills Examples:
c. Treasury notes  Real estate investment trusts
√ Money markets placements  Business partnerships
√ Trust funds  Taxable associations
 Taxable joint ventures, joint accounts or consortia
√ Other investments evidenced by certificates prescribed
 Taxable co-ownership
by the Bangko Sentral ng Pilipinas (BSP)
**NRFC (30%) is not exempt but 15% can be applied thru tax sparing
 Savings or time deposits with COOPERATIVES
rule.
2. Foreign currency deposit with foreign currency depository banks
(No short term and long term) Historical changes
Date FIT rate
Taxpayers Indv. Corp. Before Jan. 1,1998 Exempt
a. Residents* 15% 15% From 1998 6%
b. Non-residents** exempt exempt From 1999 8%
*those (RC; RA; DCorp.; RFCorp.) From 2000 and thereafter 10%
**those (NRC; NRA; NRFCorp)
***exemption includes (NRA-NETB; NRFS)
C. Royalties (received from Philippines)
Sources of passive royalties Indv. Corp.
Books*, Lit works, and musical 10% 20%
compo
Other sources 20% 20%
*if sold thru e-copies (20%); 10% applies only to printed books
**if paid to NRA-ETBs, NRA-NETBs, or NRFC this is subject to
(25%) TOPIC: CAPTIAL GAIN TAX
 For individual:
D. Prizes (20%) a) Personal asset
 Prized from Nobel and the like b) Capital asset in Business (Financial assets and
 Not exceeding 10,000 or else subject to RIT including corpo Intangible assets)
No FIT for Foreign passive income; its subject to RIT  For corporation:
 Nature of taxpayer’s business and its usage by the business
E. Winnings
Gains on dealings in capital assets: Tax rates:
Types of winnings Indv. Corp. 1. Gain on the sale, exchange, and other 15%* capital
PCS0 not exceeding 10,000 exempt Exempt disposition of domestic stocks directly to buyer gains tax
PCSO exceed 10,000 20% 20% 2. Sales, exchange, and other disposition of real 6% capital gains
Other winnings, in general 20% RIT property in the Philippines tax
*gen. tax rates for NRA-NETBs AND NRFC regardless of amount. Gains from other capital assets RIT
*Effective January 1, 2018
1. Gain on the sale, exchange, and other disposition of domestic stocks
F. Tax informers reward (10%)
directly to buyer
 Amount of cash reward is lower of:
a) Universal tax (within)
a. 10% of imposed and collected or
b) Annual tax (net gain on sale directly to buyer)
b. 1,000,000
 The chosen amount will be subjected to 10% FIT Selling Price xx
Less:
G. Tax-free corporate covenant bonds Basis of stock disposed (xx)
Selling expenses (xx)
Bond Investor Indv Corp Documentary stamp tax on the sale (xx) (xx)
Tax on interest income on tax- Net capital gains XX
30% RIT
free corporate covenant bonds
  Issuance of stock by a corporation
 Exchange of stock for services
 Redemption of shares in mutual fund
 Worthlessness of stocks
 Redemption of stocks for cancellation by issuing corporation
 Gratuitous transfer of stock
Tax on sale of domestic stocks through PSE (stock transaction tax)
or percentage tax
A non-dealer in stock Total selling price subject to 6%
Dealer in stock RIT (since dealer siya, both loss and
gain are subject to RIT)
*The net capital gain is exempt from capital gains tax or to RIT