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Saint John School: Learning Kit 1 - Fundamentals of Accountancy, Business and Management 2
Saint John School: Learning Kit 1 - Fundamentals of Accountancy, Business and Management 2
Things to Learn
At the end of this learning kit, you will be able to:
1. Define income and business taxation and its principles and processes.
Think about it
Ask someone that is already working, if he /she is aware how much of their income is going through his/her tax? Why?
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Tackle it Out
Taxation
The process by which our government through our lawmakers, raises income to pay its necessary expenses.
Income Tax it is defined as the tax on the net income or the entire income realized in one taxable year. Both corporations
and individuals are required to pay their income tax.
Who are required to pay income tax in the Philippines? According to Section 23 of the National Internal Revenue
Code (NIRC) of 1997, the following are required to pay income tax:
1. A citizen of the Philippines residing therein is taxable on all income derived from sources within and without
the Philippines;
2. A non-resident citizen is taxable only on income derived from sources within the Philippines;
3. An individual citizen who is working and deriving income abroad as an overseas Filipino Worker (OFW) is
taxable only on income from sources within the Philippines. Provide, that the OFW, who is a citizen of the
Philippines and who receives compensation for services rendered abroad as a member of the complement of a
vessel engaged exclusively in international trade shall be treated as an OFW;
4. An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from
sources within the Philippines;
5. A domestic corporation is taxable on all income derived from sources within and without the Philippines; and
6. A foreign corporation whether engaged or not in trade or business in the Philippines is taxable only on the
income derived from sources within the Philippines.
Format of Computation
Note that for the purpose of compliance with the requirements of the BIR, an individual has to file quarterly and
annual income tax returns.
Cite for an illustration of income tax calculation. Rewrite or attached in space provided.
Things to Ponder
Test Yourself
Things to Learn
At the end of this learning kit, you will be able to:
1. Explain the procedure in the computation of gross taxable income and tax due.
Think about it
As a student, do you think you are already paying tax? Why?
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Tackle it Out
Philippine individual income tax is progressive. The tax rate increases with the tax base. It is based on the
principle that tax payers with more capacity to pay should pay more taxes. The table of income tax rate is given below:
2. If the taxable net income of a self-employed individual from his sari-sari store business is ₱ 500,000 for the entire
year, the income tax due is computed as follows:
Tasks to Do
Cite for example income of a public politician and prepare the computation of his/her income tax due.
Things to Ponder
Test Yourself
Compute the following.
1. Compute for the total income tax due if taxable income is ₱ 70,000. Show the two methods (if any) for
computing the tax due.
Things to Learn
At the end of this learning kit, you will be able to:
1. Explain the principles and purposes of taxation.
Think about it
Tackle it Out
Taxation
The process by which our government through our lawmakers, raises income to pay its necessary expenses.
Purposes of Taxation
These can be classified into primary and secondary purposes:
1. The primary purpose of taxation is to provide the proper funding needed to run the government.
2. There various secondary purposes of taxation:
By imposing high customs duties or taxes on imported goods, local products made in the Philippines
would remain competitive.
By imposing progressive taxes, it will reduce the inequalities between the wealth and income of our
people.
By increasing taxes, the government may mitigate the effect of an impending inflation.
2. Police Power – this is the power of our government to make laws that will promote public health, morals,
safety and welfare of the people.
3. Taxation – the power of the government to collect taxes that will be used to finance the different projects
needed by the people.
Tasks to Do
Define the following:
1. Fiscal Adequacy
2. Income Tax
3. Taxation
4. Theoretical Justice
5. Administrative Feasibility
Things to Ponder
Test Yourself
Attached at least two receipt and determine what should be paid with and without tax.