Evolution of Philippine Taxation

HISTORICAL PERIOD TAXATION POLICIES IMPLEMENTED IMPLICATIONS

 Buwis or Handug  To gain protection and labor services to the Datu
Pre-Hispanic Period  Tributos
nonpayment taxes are already punishable.
900-1521  Manila-Acapulco Galleon Trade  The government system during this period, the upper
(621 years)  Government were called “Barangays” class are exempted in paying taxes.
 No national government
There was no “datu” strong enough to unite the  To generate resources to finance the maintenance of
archipelago into one nation. the islands, such as salaries of government officials and
 The chieftain’s family members were enjoying expenses of the clergy.
exemption from paying taxes.
 The Alipins didn’t pay their taxes. They don’t want to
make money under them.

 The Spaniards could make sure that the European

 “New Income – Generating means”
SPANISH PERIOD Manila – Acapulco Galleon Trade (1565 – 1815)
1521-1898 Polo Y Servicio (Forced Labor)
(377 years)  Bandala
 Cedula personal
 In 1884 the payment of tribut
- e was put to stop and was replaced a poll tax
collected to a certificate of identification.
presence would be sustained. Tax collection was still
very poor and subsidy from the Spain would be needed
through the situate real delivered from the Mexican
treasury to the Philippines through the galleons.
 This is required from every resident and must be
carried while travelling. Its payment is by person not by
family. Because of this revenue collection greatly
increased and became the main source of government
income.
 These taxes were universal and affected all kinds of
activity of economic activity except agriculture, which
was exempt to encourage growth.

2 direct taxes  It is created to further raise revenue and In 19 th century

 - Urbana (1878) economic growth increase exponentially.
- A tax on the rental value of an urban real
estate.  Made the colony a surplus income that made it self-
sufficient without the need for the situado real and
- Industrial (1878)
even contributed to the Treasury of Spain.
- Is a tax on salaries, dividends, and profits.
Indirect taxes
- Such as customs duties were imposed on
exports and imports to further raise revenue.
 Monopolies (1781- halted in 1882)
- such as the sale of stamped papers sale
liquor, cockpits and opium and the biggest
monopolies tobacco.
 Tribute “Buwis”

• LAND TAX
AMERCAN PERIOD - Urbana (annual rental value of an urban real
1898-1946 state) was changed into Land Tax that charge
both urban and rural state
(48 years)
•COMMONWEALTH ACT NO. 465
- The imposition of a base residence tax of fifty
centavos and additional one peso based on
income and real state belongings
 CEDULA
Residence Certificate
- Legal identity in the Philippines
- Nov. 15, 1937: Abolition of Cedula Tax
- January 1,1940: Imposing of residence tax
- persons who are not able to pay for the residence
tax may be issued a certificate for 20 centavos


Paying of taxes was improved during American period.
The Americans made a more formal system in paying
taxes by forming an agency which only focuses on
paying taxes.
 The problem with the land tax was that land tilting in
the rural area was very disorderly: the appraising of
land value was influenced by political and familial
factors and the introduction of a taxation system on
agricultural land faced objections from the landed elite.
Tax evasion was prevalent especially among the elites
 •REORGANIZATION ACT NO. 1189
- Bureau of Internal Revenue was created dated
July 2,1904
- mandated for assessment and collection of
National Internal Revenue taxes, fees and charges
- August 1,1904
- BIR was formally organized and made operations
•UNDERWOOD-SIMMONS TARRIF ACT
- October 3,1913
- reduces levies on manufactured and semi-
manufactured goods and to remove duties on
most raw materials
New sources of tax were introduced:
-(1914) Income Tax
-(1919) Inheritance Tax
-(1932) National Lottery

•1904 INTERNAL REVENUE LAW

 -Licensed and excise taxes on banks, doc. Stamp
taxes, Cedula, takes on insurance company,
forest products, mining concessions, taxes on
business, and occupational licenses

 LIQUOR, TOBACO & GASOLINE TAXES  The taxes benefited the people.
JAPANESE PERIOD  Consumers who purchase alcoholic drinks should
 Because of the war during the Japanese period,
(1941, 1942, 1945) pay for the national liquor tax
Economic Activities in the Philippines were limited.
 WAR TAX Commerce, Trade and Industry were at a standstill.
 July 23, 1943
 Jews will be forced to surrender Fifty percent of
 Even the agriculture suffered and as well as the work
their holdings and others are obliged to pay a tax
animals were decreased. Buy-and-Sell was the type of
equivalent to one-third value of all their
business people were engaged to.
possessions
 INCOME TAX
- Also known as "resident tax"
- Paid annually and calculated based on the net
income of an individual
>NON RESIDENT- a person who lived in Japan for
 Philippines peso rate was also at its lowest because of
the sever inflation during the Japanese era.
 The system was consistent.

less than one year

>NON PERMANENT- a person who lived in japan

for less than five years

>PERMANENT RESIDENT- a person who lived in

Japan for at least five years or

has intention of staying in
japan permanently.

 CONSUMPTION TAX
- tax to be payed by consumers who purchase
goods and services
 VEHICLE RELATED TAXES
- People who owns a car, truck, bus or any vehicle
are obliged to pay this tax
 PROPERTY TAX
- Individuals who own land, housing and types of
depreciable assets pays for this municipal tax
annually
 ENTERPRISE TAX
- People who are self-employed and are engaged
in business activities are paying for this
prefectural tax every year

1945
 - The Japanese issued a 1,000 Pesos note which
became known in the Philippines as “Mickey
Mouse Money” because of its very low value
thaw was caused by severe inflation.

Article 3 Section 11: (1) Special fund

- Money that is collected on any tax levied for a
special purpose. The balance of the special fund
shall be transferred to the general funds of the
government if the purpose for that particular
fund was fulfilled or abandoned
- No money shall be paid out of the Treasury except
in pursuance of an appropriation made by law.
- No public money or property shall be used for the
benefit of religion, or for religious identity.
- People assigned to the armed forces or to any
penal institution and orphanage were the only
exception.

Article 3 Section 12:

(1) The rule of taxation shall be uniform.
(2) President may impose, to fix, within
specified limits, tariff rates, import or export
quotas, and tonnage and wharf age duties.
(3)All lands, buildings and improvements
used exclusively for religious, charitable or
educational purposes shall be exempt from
taxation.
 Withholding Tax Unit  If all income earners will pay the right amount of tax,
Period of the  National Tax Law the government can collect more money to support its
objectives such as building roads, schools, and better
  National Internal Revenue Code of 1977
Philippine Republic Revenue Information Systems Services
Inc. (RISSI) was abolished.
 Value-added tax (VAT) is deducted at a
rate of 12% in the Philippines.
 De Minimis Benefits are the only benefits
that are allowed to be provided to employees’ tax
free.
 Starting January 1, 2018, compensation
income earners, self-employed and
professional taxpayers (SEPs) whose
annual taxable incomes are P250,000 or less
are exempt from the personal
income tax (PIT). The 13th month pay and
other benefits amounting to P90,000 are
likewise tax-exempt
 Republic Act (RA) No. 9504 exempted
minimum wage earners (MWEs) from the
payment of income tax on their
compensation income, including holiday
pay, overtime pay, night shift differential pay
and hazard pay.
- The president has the authority to specify the
limits and the restrictions that is imposed to tariff
rate, import and export quotas within the national
development program of the government.
- Blue Master Program was adopted to control the
abuses of tax payers and BIR personnel
- Voluntary Tax Compliance Program was designed
government salaries and improve government services.
 The laws attracted more investors and jobs in
the Philippines.
 However, employees in the Philippines also have a
general tax exemption for “13th month and other
benefits”
 Government agencies are exempted from taxes.
 If you fail to pay your tax in full, you'll be penalized with
a 20% interest per year on the unpaid tax amount from
the time it's supposed to be paid until it's
completely paid.
 Improved taxpayer service, the Bureau also established
a BIR Contact Center in the National Office and
eLounges in Regional Offices.
 The rule of taxation shall be uniform and equitable. 
The Congress shall evolve a progressive system of
taxation. 
 The TRAIN Law affects with its first package are
"Growth in the Economy", "Employment Generation",
and "Effect on Inflation". The lower personal income
taxes will mean higher consumer spending and private
investments. 
 to present the true income and to pay the right
amount of taxes of the professionals from the
private and government sectors.
- Tax Account Number identification of taxpayers
and also resulted to faster verification of tax
records.
- Operation: Walang Lagay was established to
promote for the efficient and honest collection of
tax.
- Economic Recovery Assistance Program immunity
granted from the audit and investigation to the
tax payers who have paid 20% more than the tax
compliance of the 1997 tax income.
 Local Government Tax Law is based on the
constitutional grant of the power to tax to the local
governments.

 The Tax Reform for Acceleration and

Inclusion (TRAIN) Act

B. Write a one sentence conclusion based on the data reflected in the matrix.

An inherent power of the state to raise income and to demand enforced contribution for public purposes, the government increases taxes in
order to stabilize prices and stimulate greater production to raise revenues for public needs so that person can live in a civilized society and one of
the purposes of taxation is fund public expenditures yet, we noticed that since Pre-Hispanic period, the Upper classes are not paying taxes and until
today, the Rich Filipinos inherited their actions, they are not paying their fair share of taxes and because of Principle of Taxation, the system became
slowly progressive and this levies more taxes to people who can afford to pay more by making the rich pay for a larger fraction of their income than
the poor, so, in order for the government to run, it needs money and the government gets its money by taxing its citizens and taxes pay for all sorts
of government jobs and services, yet heretofore, corruption is still a big problem in the Philippines.
Jurmae R. Niverba
Shiera Shane Madraso
Madeleine Mejilano

BSBA Marketing Management 1

Group 11

Sources:
https://www.scribd.com/document/289579370/History-of-Taxation-in-the-Philippines

https://www.philstar.com/business/2011/08/16/716782/tax-implications-mwes-cola-and-voluntary-sss-gsis-phic-and-pag-ibig-
contributions#GRTCsVzLA8jUGMA5.99

https://www.bir.gov.ph/index.php/rulings-and-legal-matters/guide-to-philippines-tax-law-research.html

https://www.scribd.com/document/289579370/History-of-Taxation-in-the-Philippines

Candelaria, J. L. P., & Alphora, V. C. (2018). Readings in the Phlippine History. 856 Nicanor Reyes Sr. St.,
Sampaloc, manila: Rex Publishing Inc.