INCOME TAXATION

MIDTERM PROJECT
BSBA-MM2B

GROUP 2

1. National Internal Revenue Code

The National Internal Revenue Code of 1997 (Tax Code) originated from Republic Act (RA) No.
8424, otherwise known as the Tax Reform Act of 1997, which was enacted on December 11, 1997. Since
the Act's effectivity on January 1, 1998, numerous laws have been passed to amend it.
The following are kinds of taxes and its corresponding tax rates that are implemented until today under
the NIRC:

A. Individual income tax

The tax shall be computed in accordance with and at the rates established in the following
schedule: 

B.  Capital Gains from Sale of Shares of Stock not Traded in the Stock Exchange.
 The provisions of Section 39(B) notwithstanding, a final tax hereby imposed upon the
net capital gains realized during the taxable year from the sale, barter, exchange or other
disposition of shares of stock in a domestic corporation, except shares sold, or disposed of
through the stock exchange.

  Capital Gains from Sale of Shares of Stock 15%

not Traded in the Stock Exchange.

C. Capital Gains from Sale of Real Property

Imposed upon capital gains presumed to have been realized from the sale, exchange, or
other disposition of real property located in the Philippines, classified as capital assets, including
pacto de retro sales and other forms of conditional sales, by individuals, including estates and
trusts.

Capital Gains from Sale of Real Property 6% (based on the gross selling price)

Source:
https://www.bir.gov.ph/index.php/tax-code.html
2. Tax Reform for Acceleration and Inclusion Law
The TRAIN Law or Republic Act No. 10693 (RA 10963) amends certain provisions of
Republic Act No. 8424 (RA 8424 or The National Internal Revenue Code of 1997, as amended).

A. Tabacco excise tax

tobacco or cigarette tax is a tax imposed on all tobacco products by various
levels of government, often with the alleged goal of reducing tobacco use or at
least generating revenues earmarked to fund related healthcare programs. The
terms "Tobacco Tax" and "Cigarette Tax" are used interchangeably. 

January to June 2018 from PHP 31.2 per pack in 2018 to P 32.5

July 2018 to December 2019 PHP 35 per pack

in 2020 and 2021 PHP 37.5
in 2022 and 2023 PHP 40 per pack

B. Stock transaction tax

Stock transaction tax is charged at a rate of three-fifths of 1% (or 0.6%) based on
the gross selling price, or gross value in money, of the shares sold.

Stock transaction tax Increased from 0.5 percent to 0.6 percent of

the transaction value.

C. Documentary stamp tax 

Documentary Stamp Tax is a tax on documents, instruments, loan agreements
and papers evidencing the acceptance, assignment, sale or transfer of an obligation,
right or property incident thereto.

Documentary stamp tax   50 to 100 percent increase except for

property, savings, and non-life insurance.
 Source:
https://taxreform.dof.gov.ph/tax-reform-packages/p1-train/

3. CREATE Act
Republic Act (RA) No. 11534, otherwise known as the Corporate Recovery and Tax
Incentives for Enterprises (CREATE) Act was created by the Philippine Congress in response to
the COVID-19 pandemic as a fiscal relief to domestic and foreign corporations doing business in
the Philippines.

The following are kinds of taxes and its corresponding tax rates that are implemented until today under
the CREATE Act:

a. Corporate Income Tax (CIT)

The corporate income tax (CIT) rates for domestic corporations and resident foreign corporations
(RFCs) under the CREATE Act will be reduced from the current 30% to 25%, retroactive to July 1,
2020. The CIT will be reduced further by 1% annually in the next six years. And shall eventually
reach 20% by 2027 onwards. 

Summary of CIT rates under CREATE Act

Current
Taxpayer
rate
Domestic Corporations 25%
Minimum Corporate Income Tax (MCIT) for Domestic Corporations 1%
Domestic Corporations with Net Taxable Income not exceeding ₱5M and total
20%
assets not exceeding ₱100M
Non-Profit Proprietary Educational Institutions and Hospitals 1%
Resident Foreign Corporations (RFCs) 25%
MCIT Resident Foreign Corporations 1%
Non-Resident Foreign Corporations (NRFCs) 25%
Regional Operating Headquarters (ROHQs) 25%
 b. Capital Gains Tax

Capital Gains Tax on capital gains derived by RFCs on sale of shares of stocks not traded
15%
in the stock exchange

c. Percentage Tax
 Percentage Tax is reduced from 3% to 1% effective July 1, 2020 to June 30, 2023

Sources:

https://carpolaw.com/everything-you-need-to-know-about-create-act-in-the-philippines/

https://www.bworldonline.com/tax-guide-on-create-law/

Group Members & Contributions

Research, Finalizing & making of documents:

 Gicelle T. Divinagracia (leader)

 John Erick Garcia
 Rosemarie Emit
 Mary Korine Lore Gain
 Racquel Sordilla
 Jhona Villaester

Drafting & pre-researching of data

 Rhenzel Alegata
 Girlie Bade
 Angelica Loriente
 Rebecca Moje
 Marifer Palasuelo
 Hazel Shane Pateno
 Ma. Jovita Segura