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The policy of taxation inthe Philippines is governed
chiefly by the Constitution of the Philippines and
Republic Acts issued by Congress.
(NIRC) NATIONAL INTERNAL REVENUE CODE
Taxation - is a process or act of imposing a charge
by the government authority on property, individuals
or transactions to raise money for public purposes.
- It is also defined as the act of levying a tax, i.e. the
process or means by which the sovereign, through
its law-making body, raises income to defray the
necessary expenses of government. It is a method
of apportioning the cost of government among
those who, in some measure, are privileged to
enjoy its benefits and must therefore bear its
burdens.
Taxes - are the enforced proportional contributions
from persons and property levied by the law-making
body of the State by virtue of its sovereignty for the
support of the government and all public needs.
Essential elements of a tax
1. It is an enforced contribution.
2. It is generally payable in money.
3. It is proportionate in character.
4. It is levied on persons, property, or the
exercise of a right or privilege.
5. It is levied by the State which has
jurisdiction over the subject or object of
taxation.
6. It is levied by the law-making body of the
State.
7. It is levied for public purpose or purposes..
Sumptuary purpose of taxation - More popularly
known as the non-revenue or regulatory purpose of
taxation.
Primary purpose of taxation is to raise revenue
for the support of the government, taxation is often
employed as a devise for regulation by means of
which certain effects or conditions envisioned by the
government may be achieved.
Benefits received principle - principle serves as
the basis of taxation and is founded on the
reciprocal duties of protection and support between
the State and its inhabitants. Also called
‘’symbiotic relation’’.
The life blood theory - the theory of taxation,
which provides that the existence of government is
a necessity; that government cannot continue
without means to pay its expenses; and that for
these means it has a right to compel its citizens and
property within its limits to contribute..
Illustrations of lifeblood theory
1. Collection of taxes cannot be enjoined by
injunction.
2. Taxes could not be the subject of
compensation or set off.
3. A valid tax may result in destruction of the
taxpayer's property.
4. Taxation is an unlimited and plenary
power.
Customs duties - are taxes imposed on goods
exported from or imported into a country.
Book of rates - drawn usually in alphabetical order
containing the names of several kinds of
merchandise with the corresponding duties to be
paid for the same;
License fee is legal compensation or
reward of an officer for specific services
Regulatory fees - ex. Motor vehicle
registration fee.
Special Assessment - is an enforced proportional
contribution from owners of lands specially or
peculiarly benefited by public improvements.
Toll - sum of money for the use of something. Ex.
road, bridge, or the like, of a public nature.
Penalty - any sanction imposed as a punishment
for violation of law or for acts deemed injurious
Debt is generally based on contract; is
assignable;may be paid in kind; may be the subject
of set off or compensation; can be
imprisoned;governed by the ordinary periods of
prescription;draws interest
SURVEY OF PHILIPPINE TAXES
A.Internal revenue taxes imposed under the NIRC
1. Income tax
2. Transfer taxes.
a. Estate Tax
b. Donor's Tax
3. Business/Percentage taxes
a. Value Added Tax
b. Other Percentage Taxes
4. Excise taxes
5. Documentary stamp tax
6. Local/Municipal Taxes
7. Tariff and Customs Duties
8. Taxes/Tax incentives under special laws
CLASSIFICATION OF TAXES
As to subject matter or object
Personal,poll or capitation tax - tax of a
fixed amount imposed on persons residing
within a specified territory, whether citizens
or not, without regard to their property or
the occupation or business in which they
may be engaged, i.e. community tax.
Property tax - tax imposed on property,
real or personal, in proportion to its value
or in accordance with some other
reasonable method of apportionment.
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Excise tax - acharge imposed upon the
performance of an act, the enjoyment of a
privilege, or the engaging in an occupation.
As to purpose
General/fiscal/revenue tax - is that
imposed for the purpose of raising public
funds for the service of the government.
Special/regulatory tax - is imposed
primarily for the regulation of useful or
non-useful occupation or enterprises and
secondarily only for the purpose of raising
public funds.
As to who bears the burden
Direct tax - is demanded from the person
who also shoulders the burden of the tax.
It is a tax which the taxpayer is directly or
primarily liable and which he or she cannot
shift to another.
Indirect tax - is demanded from a person
in the expectation and intention that he or
she shall indemnify himself or herself at
the expense of another, falling finally upon
the ultimate purchaser or consumer. A tax
which the taxpayer can shift to another.
As to scope of the tax
National tax - is imposed by the national
government.
Local tax - is imposed by municipal
corporations or local government units
(LGUs).
As to the determination of amount
Specific tax - is a tax of a fixed amount
imposed by the head or number or by
some other standard of weight or
measurement. It requires no assessment
other than the listing or classification of the
objects to be taxed.
Ad valorem tax - is a tax of a fixed
proportion of the value of the property with
respect to which the tax is assessed It
requires the intervention of assessors or
appraisers to estimate the value of such
property before the amount due from each
taxpayer can be
Chief Justice Marshall declared that the power to
tax is also called the power to destroy.
Exceptions to the non-delegation rule
1.Delegation to the President
2.Delegation to local government units
3.Delegation to administrative agencies
Taxpayer's suit - a case where the act complained
of directly involves the illegal disbursement of public
funds derived from taxation.
Uniformity v. equity in taxation
Uniformity in taxation implies that all
taxable articles or properties of the same
class shall be taxed at the same rate.
Equity in taxation requires that the
apportionment of the tax burden be, more
or less, just in the light of the taxpayer's
ability to shoulder the tax burden and, if
warranted, on the basis of the benefits
received from the government.
Poll tax is a tax of fixed amount imposed on
residents within a specific territory regardless of
citizenship, business or profession. Example is
community tax.
Situs - where the income is derived.
Lex rei sitae - is a principle followed in
fixing the situs of taxation of a propert
Multiplicity of situs - the taxation of the
same income or intangible subject in
several taxing jurisdictions
MEANS OF AVOIDING OR MINIMIZING THE
BURDEN OF TAXATION
Six basic forms of escape from taxation
1. Shifting
2. Capitalization
3. Evasion
4. Exemption
5. Transformation
6. Avoidance
Shifting is the transfer of the burden of a tax by the
original payer or the one on whom the tax was
assessed or imposed to someone else.
Tax evasion is the use by the taxpayer of illegal or
fraudulent means to defeat or lessen the payment
of a tax. It is also known as "tax dodging." It is
punishable by law.
Tax exemption
It is the grant of immunity to particular persons or
corporations or to persons or corporations of a
particular class from a tax which persons and
corporations generally within the same state or
taxing district are obliged to pay.
Tax avoidance is the exploitation by the taxpayer of
legally permissible alternative tax rates or methods
of assessing taxable property or income in order to
avoid or reduce tax liability. It is politely called "tax
minimization" and is not punishable by law.
Tax treaty is one of the sources of our law on
taxation.
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1.National Taxes - taxes collected by BIR
● Income Tax - individual tax payer's
● Estate Tax
● Donor's Tax
● Value Added Tax
● Percentage Tax
● Documentary Tax -
Taxpayers - includes individuals and business such
as partnership and corporations.
Income Tax - is a tax on a person's income,
emoluments, profits arising from property comma
practice of profession , conduct of trade or business
or on the pertinent items of gross income specified
in the Tax Code of 1997, as amended, less the
deductions if any,authorize for such types of
income, by the Tax Code,as amended,or other
special laws.
The income tax return shall be filed in duplicate by
the following persons:
1. A resident citizen - on his income from all
sources;
2. A nonresident citizen - on his income
derived from sources within the
Philippines;
3. A resident alien - on his income derived
from sources within the Philippines; and
4. A nonresident alien engaged in trade or
business in the Philippines - on his income
derived from sources within the
Philippines.
0619E - every month
1601EQ - every quarter
WITHHOLDING TAX RATE
● Product 1%
● Service 2%
● Rent 5%
● Professional w/o VAT 5%
● Professional with 10%
2316 - Certificate of Compensation Payment /
Income Tax Withheld /
2307 Certificate of Creditable Withholding Tax
(katunayan ng nag withhold)
Alpha List - income you generate within the taxable
income
1604E - Alpha list ng expanded
1604CF - Alpha list ng exemption
Percentage tax - 25th day of the following taxable
quarter
Tax credit - kapag sobra yung binayaran Doon
mapupunta
1700 - Annual Income Tax For Individuals Earning
Purely Compensation Income (Including
Non-Business/Non-Profession Related Income)
Deadline: On or before the 15th day of April of
each year covering taxable income for
calendar year 2018 and thereafter
1701 - Annual Income Tax Return Individuals,
Estates and Trusts
Deadline: On or before the 15th day of April of each
year covering income for calendar year 2018 and
thereafter
1701 AIF-Account Intrmation Form for
Self-Employed Individuals, Estates and Trusts
(including those with Mixed Income, ie,
Compensation Income and Income
from Business and/or Practice of Profession) and
Estates and Trusts (Ergaged in Trade or Business)
BR Form 1701Q-Quarterly Income Tax Retum For
Individuals, Estates and Trusts
Deadlines for Fling of Quarterly Income Tax retums:
● May 15 of the current taxable year-for the
first quarter
● August 15 of the current taxable year-for
the second quarter
● November 15 of the current taxable
year-for the third quarter
Calendar Year - end in December 31
Fiscal year - accounting period of 12
months ending the last day of the month
other than December
CLASSIFICATION OF TAXPAYERS:
1. Special Individual taxpayers- Are
individual whose income from Philippines
are taxed at preferential or single rate,
hence are no longer required to file ITR.
2. Ordinary Individual taxpayer- Those
individuals whose income are subject to
income tax and required to file Income tax
return.