What are

What are the

the different
different BIR
BIR Regulations
Regulations and
and their
their definitions?
definitions?

1. Revenue
1. Revenue Regulations
Regulations (RRs) (RRs) -- are are issuances
issuances signedsigned by by the the Secretary
Secretary of of Finance,
Finance, upon upon
recommendation of
recommendation of the
the Commissioner
Commissioner of of Internal
Internal Revenue,
Revenue, thatthat specify,
specify, prescribe
prescribe oror define
define rules
rules and
and
regulations for
regulations for the
the effective
effective enforcement
enforcement of of the
the provisions
provisions of of the
the National
National Internal
Internal Revenue
Revenue Code Code
(NIRC) and
(NIRC) and related
related statutes.
statutes.
2.
2. Revenue
Revenue Memorandum
Memorandum Orders Orders (RMOs)
(RMOs) -- are are issuances
issuances that that provide
provide directives
directives or or instructions;
instructions;
prescribe guidelines;
prescribe guidelines; and and outline
outline processes,
processes, operations,
operations, activities,
activities, workflows,
workflows, methods
methods and and
procedures necessary
procedures necessary in in the
the implementation
implementation of of stated
stated policies,
policies, goals,
goals, objectives,
objectives, plans
plans andand programs
programs
of the
of the Bureau
Bureau in in all
all areas
areas ofof operations,
operations, except
except auditing.
auditing.
3. Revenue
3. Revenue Memorandum
Memorandum Circulars Circulars (RMCs)
(RMCs) -- are are issuances
issuances that that publish
publish pertinent
pertinent andand applicable
applicable
portions, as
portions, as well
well asas amplifications,
amplifications, of of laws,
laws, rules,
rules, regulations
regulations and and precedents
precedents issued
issued by by the
the BIR
BIR and
and
other
other agencies/offices.
agencies/offices.
4. Revenue
4. Revenue Administrative
Administrative Orders Orders (RAOs)
(RAOs) -- areare issuances
issuances thatthat cover
cover subject
subject matters
matters dealing
dealing strictly
strictly
with the
with the permanent administrative
permanent administrative set-upset-up of of the
the Bureau,
Bureau, more more specifically,
specifically, the
the organizational
organizational
structure,
structure, statements
statements of of functions
functions and/or
and/or responsibilities
responsibilities of of BIR
BIR offices,
offices, definitions
definitions and
and delegations
delegations of of
authority, staffing and personnel requirements and standards of performance.
authority, staffing and personnel requirements and standards of performance.
5. Revenue
5. Revenue Delegation
Delegation of of Authority
Authority Orders
Orders (RDAOs)
(RDAOs) -- refer refer to to functions
functions delegated
delegated by by thethe
Commissioner to revenue officials in accordance with law.
Commissioner to revenue officials in accordance with law.

About
About BIR:
BIR:

MISSION -- We
MISSION We collect
collect taxes
taxes through
through just enforcement of
just enforcement of tax
tax laws
laws for
for nation-building
nation-building and
and the
the
upliftment of
upliftment of the
the lives
lives of
of Filipinos
Filipinos

VISION -- The
VISION Bureau of
The Bureau of Internal
Internal Revenue
Revenue is
is an
an institution
institution of
of service
service excellence
excellence and
and integrity.
integrity.

GUIDING PRINCIPLE
GUIDING PRINCIPLE -- "Service
"Service Excellence
Excellence with
with Integrity
Integrity and
and Professionalism"
Professionalism"

CORE VALUES:
CORE VALUES:

God-fearing
God-fearing
Accountability
Accountability
Innovativeness
Innovativeness
Integrity
Integrity
Competency
Competency
Transparency
Transparency
Patriotism
Patriotism

Management
Management Committee:
Committee:

Romeo
Romeo D.
D. Lumagui,
Lumagui, Jr
Jr -- Commissioner
Commissioner of
of Internal
Internal Revenue
Revenue

Maridur
Maridur V.
V. Rosario
Rosario -- OIC-Deputy
OlC-Deputy Commissioner
Commissioner Operations
Operations Group
Group

Marissa
Marissa O.
O. Cabreros
Cabreros -- Deputy
Deputy Commissioner
Commissioner Legal
Legal Group
Group

Ma.
Ma. Rosario
Rosario Charo
Charo G.
G. Enriquez-Curiba
Enriquez-Curiba -- Deputy
Deputy Commissioner
Commissioner Information
Information Systems
Systems Group
Group

Teresita M.
Teresita M. Angeles
Angeles -- Deputy
Deputy Commissioner
Commissioner Resource
Resource Management
Management Group
Group
SEC. 3.
SEC. 3. Chief
Chief Officials
Officials of
of the
the Bureau
Bureau of
of Internal
Internal Revenue.
Revenue. -- The
The Bureau
Bureau of
of Internal
Internal Revenue
Revenue shall
shall have
have aa
chief
chief to
to be
be known
known as as Commissioner
Commissioner ofof Internal
Internal Revenue,
Revenue, hereinafter
hereinafter referred
referred to
to as
as the
the Commissioner,
Commissioner,
and
and four
four (4)
(4) assistant
assistant chiefs
chiefs to
to be
be known
known as as Deputy
Deputy Commissioners.
Commissioners.

SEC. 4.
SEC. 4. Power
Power of
of the
the Commissioner
Commissioner to
to Interpret
Interpret Tax
Tax Laws
Laws and
and to Decide
to Decide Tax
Tax Cases. -- The
Cases. The power
power toto
interpret the provisions of this Code and other tax laws shall
interpret the provisions of this Code and other tax laws shall be under the
be under the exclusive and original
exclusive and original
jurisdiction of
jurisdiction the Commissioner,
of the Commissioner, subject
subject to
to review
review by
by the
the Secretary
Secretary of
of Finance.
Finance.

SEC. 7.
SEC. 7. Authority
Authority ofof the
the Commissioner
Commissioner to to Delegate
Delegate Power.
Power. -- The
The Commissioner
Commissioner may may delegate
delegate thethe
powers vested
powers vested in
in him
him under
under thethe pertinent
pertinent provisions
provisions ofof this
this Code
Code toto any
any or
or such
such subordinate
subordinate officials
officials
with the
with the rank
rank equivalent
equivalent to to aa division
division chief
chief or
or higher,
higher, subject
subject to
to such
such limitations
limitations and
and restrictions
restrictions as as
may be
may be imposed
imposed under
under rules
rules and
and regulations
regulations to to be
be promulgated
promulgated by by the
the Secretary
Secretary ofof Finance,
Finance, upon
upon
recommendation of
recommendation of the
the Commissioner:
Commissioner: Provided,
Provided, however,
however, That
That thethe following
following powers
powers of of the
the
Commissioner shall
Commissioner shall not
not be
be delegated:
delegated:

(a) The
(a) power to
The power to recommend
recommend the
the promulgation
promulgation of
of rules
rules and
and regulations
regulations by
by the
the Secretary
Secretary of
of Finance;
Finance;

(b) The
(b) power to
The power to issue
issue rulings
rulings of
of first
first impression
impression or
or to
to reverse,
reverse, revoke
revoke or
or modify
modify any
any existing
existing ruling
ruling
of the
of the Bureau;
Bureau;

(c) The
(c) power to
The power to compromise
compromise or or abate,
abate, under
under Sec.
Sec. 204
204 (A)(A) and
and (B)
(B) of
of this
this Code,
Code, anyany tax
tax liability:
liability:
Provided, however,
Provided, however, That assessments issued
That assessments issued byby the
the regional
regional offices
offices involving
involving basic
basic deficiency
deficiency taxes
taxes
of Five
of Five hundred
hundred thousand
thousand pesospesos (P500,000)
(P500,000) or or less,
less, and
and minor
minor criminal
criminal violations,
violations, as as may
may be be
determined by
determined by rules
rules andand regulations
regulations to to bebe promulgated
promulgated by by the
the Secretary
Secretary of of finance,
finance, upon upon
recommendation of
recommendation of the
the Commissioner,
Commissioner, discovered
discovered by by regional
regional and and district
district officials,
officials, maymay be be
COMPROMISED by
COMPROMISED by a a regional
regional evaluation
evaluation board
board which
which shall
shall be be composed
composed of of the
the Regional
Regional Director
Director as as
Chairman,
Chairman, thethe Assistant
Assistant Regional
Regional Director,
Director, thethe heads
heads of of thethe Legal,
Legal, Assessment
Assessment and and Collection
Collection
Divisions and
Divisions and the
the Revenue
Revenue District
District Officer
Officer having
having jurisdiction
jurisdiction over over the
the taxpayer,
taxpayer, as as members;
members; and and

(d) The
(d) power to
The power assign or
to assign or reassign
reassign internal
internal revenue
revenue officers
officers to
to establishments
establishments where
where articles
articles
subject to
subject excise tax
to excise tax are
are produced
produced or
or kept.
kept.

SEC. 21.
SEC. 21. Sources
Sources of
of Revenue.
Revenue. -- The
The following
following taxes,
taxes, fees
fees and
and charges
charges are
are deemed
deemed to
to be
be national
national
internal revenue taxes:
internal revenue taxes:

(a) Income
(a) Income tax;
tax;
(b) Estate and
(b) Estate and donor's
donor's taxes;
taxes;
(c) Value-added
(c) Value-added tax;tax;
(d) Other
(d) Other percentage
percentage taxes;
taxes;
(e) Excise
(e) Excise taxes;
taxes;
(f) Documentary
(f) Documentary stampstamp taxes;
taxes; and
and
(g) Such
(g) Such other
other taxes
taxes as
as are
are or
or hereafter
hereafter may
may be
be imposed
imposed and
and collected
collected by
by the Bureau of
the Bureau of Internal
Internal
Revenue.
Revenue.

PRINCIPLES OF
PRINCIPLES OF TAXATIONS
TAXATIONS

Taxation Defined -- The

Taxation Defined The exercise
exercise of
of the
the sovereign
sovereign power
power to
to raise
raise revenues
revenues for
for the
the expenses
expenses of
of the
the
government.
government.

Stages
Stages or
or Coverage
Coverage of Taxation
of Taxation

Taxation covers three

Taxation covers three (3)
(3) separate
separate areas
areas or
or aspects
aspects of
of government
government activity,
activity, namely:
namely:

1. Levying
1. Levying or
or imposition
imposition of
of the
the tax.
tax. This
This involves
involves the
the passage
passage ofof tax
tax laws
laws which
which is
is generally
generally aa legislative
legislative
act. In the Philippines, the taxing power is exercised by Congress.
act. In the Philippines, the taxing power is exercised by Congress.
2. Assessment.
2. Assessment. The process of
The process of determining
determining the the correct
correct amount
amount of of tax
tax due.*
due.*
3. Collection
3. Collection and
and payment
payment —– the
the act
act of
of compliance
compliance with
with the
the tax
tax law
law by
by the
the taxpayer.*
taxpayer.*
*Executive or
*Executive or administrative
administrative in in nature.
nature. Done
Done byby the
the Bureau
Bureau of
of Internal
Internal Revenue
Revenue (“BIR”)
(“BIR”)

33 Inherent
Inherent Powers
Powers of
of a
a State:
State:

1) Power
1) Power to
to Tax
Tax
2) Police
2) Police Power
3)
3) Power
Power of
of Eminent
Eminent Domain
Domain

The Power
The Power to
to Tax
Tax

Subject to
Subject to inherent
inherent and
and constitutional
constitutional limitations,
limitations, the
the power
power of of taxation
taxation isis regarded
regarded as as supreme,
supreme,
1
plenary, unlimited,
plenary, unlimited, andand comprehensive.
comprehensive.’ As long as
As long as the
the legislature,
legislature, inin imposing
imposing aa tax,
tax, does
does not
not
violate applicable
violate applicable constitutional
constitutional limitations
limitations oror restrictions,
restrictions, the
the courts
courts have
have no
no concern
concern with
with the
the
wisdom
wisdom or or policy
policy of
of the
the exaction,
exaction, the
the political
political or
or other
other collateral
collateral motives
motives behind
behind it,
it, the
the amount
amount toto be
be
2
raised, or the persons, property, or other privileges to be taxed.”
raised, or the persons, property, or other privileges to be taxed.

Police
Police Power
Power

Police power
Police power isis the
the inherent
inherent power
power of of aa sovereign
sovereign state
state to
to legislate
legislate for
for the
the protection
protection of
of the
the health,
health,
general welfare,
general welfare, safety,
safety, and
and morals
morals ofof the
the public.
public. It
It involves
involves the
the power
power toto regulate
regulate both
both liberty
liberty and
and
property for
property for the
the promotion
promotion ofof the
the public
public good.
good.

Note: The
Note: police power
The police power of
of the
the State
State may
may bebe exercised
exercised through
through taxation
taxation because
because taxes
taxes may
may be
be
levied for
levied for the
the promotion
promotion of
of the
the welfare
welfare ofof the public.?3
the public.

Power of
Power of Eminent
Eminent Domain
Domain

The power of
The power of eminent
eminent domain
domain isis the
the inherent
inherent power
power of of aa sovereign
sovereign state
state to
to take
take private
private
property for
property for aa public
public purpose.
purpose. The
The Constitution
Constitution limits
limits the
the exercise
exercise of
of this
this power
power byby providing
providing
4
that: “Private
that: “Private property
property shall
shall not
not bebe taken
taken for
for public
public use
use without
without just compensation.”4
just compensation.”

Distinctions Among
Distinctions Among the
the Three
Three Inherent
Inherent Powers
Powers

PURPOSE:
PURPOSE:
Taxation
Taxation To raise
To raise revenues for the
revenues for the expenses
expenses of
of the
the State.
State.
Police Power
Police Power To promote the general welfare thru regulations.
To promote the general welfare thru regulations.
Eminent Domain
Eminent Domain | To
To facilitate
facilitate the
the State’s
State’s need
need of
of property
property for public use.
for public use.

AMOUNT OF
AMOUNT OF EXACTION
EXACTION
Taxation
Taxation No limit.
No limit.
Police Power
Police Power Limited to
Limited to the
the cost
cost of
of regulation,
regulation, issuance
issuance of
of the
the license,
license, and/or
and/or
surveillance.
surveillance.
Eminent Domain
Eminent Domain | No exaction but
No exaction but private property is
private property is taken
taken for
for public
public use
use

BENEFITS RECEIVED
BENEFITS RECEIVED
Taxation
Taxation No special or
No special or direct
direct benefit
benefit is
is received
received by
by an
an individual
individual taxpayer.
taxpayer. The
The
public receives
public receives the
the general
general benefit
benefit of
of protection
protection of
of person,
person, property
property and
and
the promotion of the general welfare.
the promotion of the general welfare.
Police
Police No direct benefit
No direct is received
benefit is received by by an
an individual.
individual. AA healthy
healthy economic
economic

1 To
1
say that
To say that “the
“the power
power to
to tax
tax is
is the
the power
power to
to destroy”
destroy” isis to
to describe
describe not
not the
the purpose
purpose for
for which
which the
the taxing
taxing power
power
may be
may be used
used but
but the
the degree
degree ofof vigor
vigor with
with which
which the
the taxing
taxing power
power may
may be
be employed
employed inin order
order to
to raise
raise revenue
revenue (1
(1
Cooley 179-181).
Cooley 179-181).
2 51 Am. Jur. 77-78.
251 Am. Jur. 77-78.
3 Lutz v. Araneta, 98 PHIL. 148.
3 Lutz v. Araneta, 98 PHIL. 148.
4 Art. III, Sec. 9, 1987 Philippine Constitution.
4 Art. Ill, Sec. 9, 1987 Philippine Constitution.
Power
Power standard of
standard of society
society is
is attained.
attained.
Eminent
Eminent A direct
A direct benefit results in
benefit results in the
the form
form of
of just compensation to
just compensation to the
the property
property
Domain
Domain owner.
owner.

NON-IMPAIRMENT OF
NON-IMPAIRMENT OF CONTRACTS
CONTRACTS
Taxation | Obligations
Taxation Obligations in
in contracts
contracts may
may not
not be
be impaired
impaired byby the
the state
state where
where tax
tax
exemptions are
exemptions are bilaterally agreed upon
bilaterally agreed upon by
by the
the state
state and
and the
the taxpayer.
taxpayer. Tax
Tax
exemptions bilaterally
exemptions agreed upon
bilaterally agreed upon between
between thethe government
government and and the
the
taxpayer cannot
taxpayer cannot be
be withdrawn
withdrawn
Police
Police Obligations in
Obligations in contracts
contracts may
may be
be impaired
impaired byby the
the government.
government.
Power
Power
Eminent
Eminent Obligations in
Obligations in contracts
contracts may
may be impaired by
be impaired by the
the government.
government.
Domain
Domain

TRANSFER OF PROPERTY
TRANSFER OF PROPERTY RIGHTS
RIGHTS

Taxation
Taxation Taxes paid
Taxes paid become
become part of public
part of public funds.
funds.
Police Power
Police Power No transfer, but
No transfer, only restraint
but only restraint in
in the
the exercise
exercise of
of property rights.
property rights.
Eminent Domain
Eminent Domain | Transfer is
Transfer is effected
effected in
in favour
favour ofof the
the State.
State.

SCOPE
SCOPE
Taxation
Taxation All persons,
All persons, property, rights, and
property, rights, and privileges.
privileges.
Police Power
Police Power All persons,
All persons, property, rights, privileges,
property, rights, privileges, and
and liberties
liberties
Eminent Domain
Eminent Domain | Only upon
Only specific property.
upon specific property.

AUTHORITY WHICH
AUTHORITY WHICH EXERCISES
EXERCISES THE
THE POWER
POWER
Taxation
Taxation Exercised by
Exercised the government
by the government or or its
its political
political subdivisions
subdivisions
Police Power
Police Power Exercised by
Exercised the government
by the government or or its
its political
political subdivisions
subdivisions
Eminent Domain
Eminent Domain | May be
May exercised by
be exercised by public service corporations
public service corporations or or private
private
entities operating
entities operating public
public utilities
utilities if
if granted
granted by
by law
law

WHOM DIRECTED
WHOM DIRECTED
Taxation
Taxation To the
To the public
public
Police Power
Police Power To the public
To the public
Eminent Domain
Eminent Domain | To aa particular
To person or
particular person or property
property

NATURE OF
NATURE OF COMPENSATION
COMPENSATION
Taxation
Taxation Presumes protection
Presumes or benefits.
protection or benefits.
Police Power
Police Power Provides better social & economic
Provides better social & economic
standards.
standards.
Eminent Domain
Eminent Domain | Requires
Requires payment
payment ofof just compensation.
just compensation.

WHY PROPERTY
WHY PROPERTY WAS
WAS TAKEN
TAKEN

Taxation
Taxation To support
To support the
the government
government
Police Power
Police Power For public
For welfare
public welfare
Eminent Domain
Eminent Domain | For public
For public use
use
IN RELATION
IN RELATION TO
TO THE
THE CONSTITUTION
CONSTITUTION
Taxation
Taxation Subject to
Subject to certain
certain constitutional
constitutional limitations
limitations including
including the
the non-
non-
impairment of
impairment of the
the obligations
obligations and
and contracts
contracts
Police
Police Relatively free
Relatively free from
from constitutional
constitutional limitations
limitations andand is
is superior
superior to
to the
the
Power
Power impairment provisions.
impairment provisions.
Eminent
Eminent Inferior to
Inferior to the
the impairment
impairment clause.
clause. The
The government
government cannot
cannot expropriate
expropriate
Domain
Domain property which is
property which is previously bound by
previously bound by contract
contract to
to purchase
purchase from
from other
other
contracting party.
contracting party.

Limitations on
Limitations on the
the Power
Power to
to Tax
Tax

(1) Constitutional
(1) Constitutional limitations.
limitations.

(a) No
(a) No person
person shall
shall bebe deprived
deprived of of life,
life, liberty,
liberty, oror property
property without
without due
due process
process of
of law,
law, nor
nor shall
shall any
any
5
person be
person be denied
denied the the equal
equal protection
protection of of the
the laws.
laws.°
(b) The
(b) rule of
The rule of taxation
taxation shall
shall be
be uniform
uniform and and equitable.
equitable. The Congress shall
The Congress shall evolve
evolve aa progressive
progressive system
system
of taxation.
of taxation.® 6

Uniformity —– persons
Uniformity persons or
or properties
properties falling
falling under
under the
the same
same class
class should
should be
be taxed
taxed the
the same
same kind
kind and
and
rate of
rate of tax.
tax.

Equality —– the
Equality the same
same means
means and
and methods
methods be
be applied
applied impartially
impartially to
to all
all the
the members
members of
of each
each class
class

Equal protection
Equal protection of of the
the law
law —– means
means equality
equality before
before the
the law.
law. However,
However, such
such equality
equality doesdoes not
not deny
deny
to the state the power to recognize factual differences between individuals and classes. It recognizes
to the state the power to recognize factual differences between individuals and classes. It recognizes
that inherent
that inherent in in the
the right
right to
to legislate
legislate is
is the
the right
right to
to classify,
classify, provided
provided thatthat it
it is
is aa valid
valid and
and reasonable
reasonable
classification. If
classification. If the
the groupings
groupings are are characterized
characterized by by substantial
substantial distinctions
distinctions that
that make
make real
real differences,
differences,
7
one class
one class may
may be be treated
treated andand regulated
regulated differently
differently from
from another.
another.’
8
(c) No
(c) No person
person shall
shall be be imprisoned
imprisoned for for debt
debt oror non-payment
non-payment of of a a poll
poll tax.
tax.®
(d) Charitable
(d) Charitable institutions,
institutions, churches,
churches, and and parsonages,
parsonages, or or convents
convents appurtenant
appurtenant thereto,
thereto, mosques,
mosques,
non-profit
non-profit cemeteries,
cemeteries, and and all
all lands,
lands, buildings,
buildings, and
and improvements,
improvements, actually,
actually, directly,
directly, and
and exclusively
exclusively
9
used for
used for religious,
religious, charitable,
charitable, or or educational
educational purposes
purposes shall
shall be
be exempt
exempt fromfrom taxation.
taxation.?

Note: The
Note: exemption referred
The exemption referred toto here
here isis exemption
exemption fromfrom the
the real
real property
property tax
tax which
which is
is
aa local
local tax
tax levied
levied by
by aa province
province or or city
city (not
(not byby the
the National
National Government).
Government).
(e) No
(e) No law
law granting
granting any
any tax
tax exemption
exemption shall shall be
be passed
passed without
without the
the concurrence
concurrence of
of aa
majority of
majority of all
all the
the members
members of of Congress.
Congress.*°10
11
(f) No
(f) No law
law impairing
impairing the
the obligation
obligation of of contracts
contracts shall
shall be
be passed.
passed.**

i)i) When
When the
the tax
tax exemption
exemption is is bilaterally
bilaterally agreed
agreed upon
upon between
between the the government
government and and
the taxpayer, the exemption cannot be withdrawn without violating the
the taxpayer, the exemption cannot be withdrawn without violating the nonimpairment
nonimpairment clause.clause.
ii) However,
ii) However, when
when the the tax
tax exemption
exemption is is unilaterally
unilaterally granted
granted by by law,
law, the
the same
same maymay be be
withdrawn by
withdrawn by virtue
virtue ofof another
another law law without
without violating
violating the
the non-impairment
non-impairment clause. clause.
Ex. When
Ex. When the
the tax
tax exemption
exemption is is granted
granted under
under aa franchise
franchise embodied
embodied in in aa law,
law, the
the
same may
same may bebe withdrawn
withdrawn at at any
any time.
time.
(g) No
(g) No law
law shall
shall bebe made
made respecting
respecting an an establishment
establishment of of aa religion
religion oror prohibiting
prohibiting thethe free
free
exercise thereof.
exercise thereof.”12

5
5 Art.
Art. III,
Ill, Sec.
Sec. 1.
1.
6 Art.
6
Art. VI,
VI, Sec.
Sec. 28(1).
28(1).
7 Tiu v.
7 Tiu v. CA,
CA, G.R.
G.R. No.
No. 127410.
127410.
8
8 Art.
Art. III,
Ill, Sec.
Sec. 20.
20.
9 Art.
9
Art. VI,
VI, Sec.
Sec. 10.
10. Exempt
Exempt from
from real
real property
property taxation.
taxation.
10 Art.
10
Art. VI,
VI, Sec
Sec 28(4).
28(4).
11
11 Art.
Art. III,
Ill, Sec.
Sec. 10.
10.
No public
No public money
money or or property
property shall
shall be
be appropriated,
appropriated, applied,
applied, paid,
paid, or
or employed,
employed, directly
directly
or
or indirectly
indirectly for
for the
the use,
use, benefit,
benefit, oror support
support of of any
any sect,
sect, church,
church, denomination,
denomination, sectarian
sectarian
institution, or
institution, or system
system ofof religion,
religion, or
or of
of any
any priest,
priest, preacher,
preacher, minister,
minister, or
or other
other religious
religious
teacher or
teacher or dignitary
dignitary asas such
such except
except when
when such
such priest,
priest, preacher,
preacher, minister
minister or
or dignitary
dignitary isis
assigned to
assigned to the
the armed
armed forces
forces oror to
to any
any penal
penal institution,
institution, or or government
government orphanage
orphanage or or
leprosarium.??13
leprosarium.

(h) All
(h) All appropriation,
appropriation, revenue revenue or or tariff
tariff bills
bills xxxxxxx
xxxxxxx shall
shall originate
originate exclusively
exclusively in in the
the House
House of of
14
Representatives, but the Senate may propose or concur with amendments.14
Representatives, but the Senate may propose or concur with amendments.
(i) The
(i) The Congress
Congress may, may, by by law,
law, authorize
authorize the the President
President toto fix
fix within
within specified
specified limits,
limits, andand subject
subject toto such
such
limitations
limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and
and restrictions as it may impose, tariff rates, import and export quotas, tonnage and
wharfage dues,
wharfage dues, and and other
other duties
duties or or imposts
imposts within
within the
the framework
framework of of the
the national
national development
development
program of
program of the
the Government.
Government.?°15
(j) The
(j) Supreme Court
The Supreme Court shall
shall have
have the the power
power to to review,
review, revise,
revise, reverse,
reverse, modify,
modify, or or affirm
affirm on on appeal
appeal or or
certiorari as
certiorari as the
the lawlaw oror the
the Rules
Rules of of Court
Court may may provide,
provide, final
final judgments
judgments and and orders
orders of of lower
lower courts
courts in in
xxxx all
xxxx all cases
cases involving
involving the the legality
legality of of any
any tax,
tax, impost,
impost, assessment,
assessment, or or toll,
toll, oror any
any penalty
penalty imposed
imposed in in
relation thereto.
relation thereto.*®16
(k)
(k) All
All revenues
revenues and and assets
assets of of non-stock,
non-stock, non-profit
non-profit educational
educational institutions
institutions used used actually,
actually, directly,
directly,
17
and exclusively
and exclusively for for educational
educational purposespurposes shall shall bebe exempt
exempt from
from taxes
taxes andand duties.
duties.””
(Il) The
(l) President shall
The President shall have
have the the power
power to to veto
veto any
any particular
particular item item or or items
items in in an
an appropriation,
appropriation,
18
revenue,
revenue, or or tariff
tariff bill,
bill, but
but the
the veto
veto shall
shall not
not affect
affect the
the item
item or or items
items toto which
which he he does
does not not object.
object.1®
(m) All
(m) All money
money collected
collected or or any
any tax tax levied
levied forfor aa special
special purpose
purpose shallshall bebe treated
treated as as aa special
special fund
fund andand
paid out
paid out for
for such
such purpose
purpose only. only. If If the
the purpose
purpose for for which
which aa special
special fund
fund was was created
created has has been
been fulfilled
fulfilled
19
or
or abandoned,
abandoned, the the balance,
balance, if if any,
any, shall
shall be
be transferred
transferred to to the
the general
general funds
funds of of the
the Government.
Government.?9

(2) Inherent
(2) Inherent limitations.
limitations. These
These are
are restrictions
restrictions arising
arising from
from the
the very
very nature
nature of
of the
the power
power to
to tax
tax itself.
itself.
They are:
They are:

(a) The
(a) levy must
The levy must apply
apply within
within territorial
territorial limits
limits for
for the
the exercise
exercise ofof effective
effective tax
tax jurisdiction.
jurisdiction.
(b) The tax must be for a public purpose.
(b) The tax must be for a public purpose.
(c) Exemption
(c) Exemption from from taxation
taxation of of the
the government,
government, any any political
political subdivision
subdivision thereof,
thereof, or or agencies
agencies
performing purely
performing purely governmental
governmental functions.
functions. Ex.Ex. City
City government
government of of Makati.
Makati. However,
However, when
when a a local
local
government unit
government unit (LGU),
(LGU), government
government agency,agency, or or government
government owned owned and and controlled
controlled corporation
corporation
engages in
engages in activities
activities which
which areare proprietary
proprietary in in character
character (i.e.
(i.e. engaging
engaging in in businesses
businesses andand activities
activities
similar to
similar to those
those performed
performed by by other
other taxable
taxable corporations),
corporations), such such LGU,
LGU, government
government agency,
agency, or or GOCC
GOCC
shall be
shall be subject
subject to to both
both income
income and and business
business taxes
taxes as as other
other private
private corporations.
corporations. Exs.
Exs. Land
Land Bank
Bank ofof
the Philippines;
the Philippines; PAGCOR.
PAGCOR.

EXC: The
EXC: Government Service
The Government Service Insurance
Insurance System
System (GSIS),
(GSIS), the
the Social
Social Security
Security System
System (SSS),
(SSS), Home
Home
Development Mutual
Development Mutual Fund Fund (Pag-Ibig),
(Pag-lbig), thethe Philippine
Philippine Health
Health Insurance
Insurance Corporation
Corporation (PHIC
(PHIC oror
Philhealth), and
Philhealth), and local
local water
water districts
districts (LWDs);
(LWDs); areare exempt
exempt from
from the
the income
income tax
tax imposed
imposed under
under Section
Section
27 of
27 of the
the National
National Internal
Internal Revenue
Revenue CodeCode (“NIRC”).
(“NIRC”).
(d) As
(d) As aa general
general rule,
rule, the
the taxing
taxing power
power ofof the
the legislature
legislature may
may not
not bebe delegated.
delegated.

12
12 Art.
Art. III,
Ill, Sec.
Sec. 5.
5.
13 Art.
13
Art. VI,
VI, Sec.
Sec. 29
29 (2).
(2).
14
14 Art.
Art. VI,
VI, Sec.
Sec. 24.
24.
45 Art.
15
Art. VI,
VI, Sec.
Sec. 28
28 (2).
(2).
16 Art.
16
Art. VIII,
VIIL, Sec.
Sec. (5)
(5) (2)
(2) (b).
(b).
17 Real properties of non-stock, non-profit educational institutions are exempt from real property taxes which are
17 Real properties of non-stock, non-profit educational institutions are exempt from real property taxes which are

imposed by
imposed by the
the local
local government.
government. Provided
Provided such
such properties
properties are
are actually,
actually, directly,
directly, and
and exclusively
exclusively used
used for
for
educational purposes.
educational purposes.
Moreover, income
Moreover, income of of aa non-stock,
non-stock, non-profit
non-profit educational
educational institution
institution derived
derived from
from any
any activity
activity or
or property
property shall
shall
be exempt
be exempt from from income
income taxation
taxation as
as long
long as
as such
such income
income isis used
used actually,
actually, directly,
directly, and
and exclusively
exclusively for
for educational
educational
purposes
purposes (CIR
(CIR vs.
vs. De
De La
La Salle,
Salle, Inc.,
Inc., Supreme
Supreme Court
Court G.R.
G.R. No.
No. 196596,
196596, November
November 2,
2, 2016).
2016).
18Art. VI, Sec. 27 (2).
18Art. VI, Sec. 27 (2).

19 Art. VI, Sec. 29

19 Art. VI, Sec. 29 (3).
Exceptions to
Exceptions to this
this non-delegability
non-delegability rule rule are:
are:
i)i) The authority of
The authority of the
the President
President to to fix
fix tariff
tariff rates,
rates, import
import and and export
export quotas,
quotas, tonnage
tonnage and and wharfage
wharfage
dues, and
dues, and other
other duties
duties andand imposts
imposts (Art.(Art. VI,
VI, Sec.
Sec. 28
28 (2),
(2), 1987
1987 Constitution).
Constitution).
ii) Each
ii) Each local
local government
government unit unit shall
shall have
have thethe power
power to to create
create itsits own
own sources
sources of of revenues
revenues and and toto levy
levy
taxes, fees,
taxes, fees, andand charges
charges subject
subject to to such
such guidelines
guidelines and and limitations
limitations as as the
the Congress
Congress may may provide,
provide,
consistent with
consistent with the the basic
basic policy
policy of of local
local autonomy.
autonomy. Such Such taxes,
taxes, fees,
fees, andand charges
charges shall
shall accrue
accrue
exclusively to the local governments (Art. X, Sec. 5, 1987 Constitution). Ex. Real property taxes.
exclusively to the local governments (Art. X, Sec. 5, 1987 Constitution). Ex. Real property taxes.
iii) Delegation
iii) Delegation to to administrative
administrative agencies
agencies for for implementation
implementation of of the
the tax
tax laws,
laws, and
and collection
collection of of the
the tax
tax
to the
to the BIR. BIR.
(e) International
(e) International comity.
comity. This
This principle
principle limits
limits the
the authority
authority of of the
the government
government to to effectively
effectively impose
impose
taxes on a sovereign state and its instrumentalities, as well as on its property held and
taxes on a sovereign state and its instrumentalities, as well as on its property held and activities
activities
undertaken in
undertaken in that
that capacity.
capacity. As As aa rule,
rule, the
the Philippine
Philippine government
government cannot cannot tax tax foreign
foreign ambassadors
ambassadors nor nor
impose real
impose real property
property taxes
taxes upon
upon foreign
foreign embassies.
embassies.
(f) Double
(f) Double Taxation.
Taxation. Two Two types
types of of double
double taxation
taxation areare direct
direct double
double and and indirect
indirect double
double taxation.
taxation.

Direct double
Direct double taxation
taxation —– Where:
Where:
(1) the
(1) the same
same subject
subject is
is taxed
taxed twice;
twice;
(2) by
(2) by the
the same
same taxing
taxing authority;
authority;
(3) within
(3) within the
the same
same jurisdiction;
jurisdiction;
(4) during
(4) during the
the same
same taxing
taxing period;
period; and
and
(5) covering
(5) covering the
the same
same kind
kind or
or character
character of
of tax
tax (Villanueva
(Villanueva v.
v. City
City of
of Iloilo,
lloilo, L-26521).
L-26521).

There is no
There is no constitutional
constitutional prohibition
prohibition against
against double
double taxation
taxation in
in the
the Philippines
Philippines (Villanueva
(Villanueva v.
v. City
City of
of
Iloilo,
lloilo, L-26521,
L-26521, December
December 28,
28, 1968),
1968), though
though it
it is
is not
not favoured.
favoured.

Indirect
Indirect double
double taxation,
taxation, which
which lacks
lacks one
one or
or more
more of
of the
the elements
elements of
of direct
direct double
double taxation,
taxation, is
is also
also
permissible.
permissible.

Basic Principles
Basic Principles of
of a
a Sound
Sound Tax
Tax System
System

1. Fiscal
1. Fiscal Adequacy
Adequacy —– which which means
means that
that the
the sources
sources ofof revenue
revenue should
should be
be sufficient
sufficient to
to meet
meet the
the
demands of
demands of public
public expenditures;
expenditures;
2. Equality
2. Equality oror Theoretical
Theoretical Justice
Justice —– which
which means
means that
that the
the tax
tax imposed
imposed should
should be
be proportionate
proportionate toto the
the
taxpayer’s ability
taxpayer’s ability to
to pay;
pay; and
and
3. Administrative
3. Administrative Feasibility
Feasibility —– which
which means
means that
that the
the tax
tax laws
laws should
should be
be capable
capable ofof convenient,
convenient, just,
just,
and effective
and effective administration
administration

Theory or Basis
Theory or Basis of
of Taxation
Taxation

1) Life-blood
1) Life-blood Theory.
Theory.
-- Taxes are the
Taxes are the lifeblood
lifeblood of
of the
the government.
government. Without
Without taxes,
taxes, no
no government
government can
can function.
function.

2) Benefits
2) Benefits Protection
Protection Theory
Theory (Symbiotic
(Symbiotic Relationship)
Relationship)
-- Taxes are what
Taxes are what wewe pay
pay for
for aa civilized
civilized or
or organized
organized society.
society. Without
Without taxes,
taxes, the
the government
government would
would be
be
paralyzed for lack of the motive power to activate and operate it (Commissioner v. Algue, 158 SCRA 9).
paralyzed for lack of the motive power to activate and operate it (Commissioner v. Algue, 158 SCRA 9).

3) Necessity
3) Necessity Theory
Theory
-The power to tax
-The power to tax isis an
an attribute
attribute of
of sovereignty
sovereignty emanating
emanating from from necessity.
necessity. It
It is
is aa necessary
necessary burden
burden to to
preserve
preserve the State's sovereignty and a means to give the citizenry an army to resist an aggression, a
the State's sovereignty and a means to give the citizenry an army to resist an aggression, a
navy to
navy to defend
defend itsits shores
shores from
from invasion,
invasion, aa corps
corps ofof civil
civil servants
servants toto serve,
serve, public
public improvements
improvements
designed for
designed for the
the enjoyment
enjoyment of of the
the citizenry
citizenry and
and those
those which
which comecome within
within the
the State's
State's territory,
territory, and
and
facilities and
facilities and protection
protection which
which aa government
government is is supposed
supposed to to provide.(Phil.
provide.(Phil. Guaranty
Guaranty Co., Co., Inc.
Inc. v.
v. CIR)
CIR)

Essential
Essential Elements
Elements oror Characteristics
Characteristics of
of a
a Tax
Tax
1.
1. Enforced
Enforced contribution
contribution
2. Exacted
2. Exacted pursuant
pursuant toto legislative
legislative authority
3. For
3. For raising
raising revenue
revenue for
for public
public needs
needs
4. Proportionate
4. Proportionate in in character
character oror uniform
uniform
5. Payable
5. Payable inin money
money
6. Imposed
6. Imposed within
within the
the state’s
state’s jurisdiction
jurisdiction
7. Personal
7. Personal to to the
the taxpayer
taxpayer

Classification
Classification of
of Taxes
Taxes

a) According to scope or exercising authority

National tax Municipal or local tax

Imposed by the National Government - Imposed by local government units
Exs. Income tax, Estate tax, Donor’s tax, Exs. Occupation tax, Real property tax (RPT)
VAT, OPT, Excise Tax, DST

b) According to subject matter or object

Personal, capitation, or poll tax Property tax Excise tax

- Fixed amount imposed upon persons | - Imposed on] - Imposed upon the performance of an act;
of a certain class without regard to property the exercise of a right; or the engaging in
business or profession

property, trade, business, or

occupation
Ex. Community tax Ex. RPT Exs. VAT, Donor’s tax, Estate tax, Income tax,
Occupation tax, Excise tax

c) According to who bears the burden of the tax

Direct tax Indirect tax

- The liability for the tax (impact), and the burden - The liability or impact for the tax falls on the
thereof (incidence) fall on the same taxpayer original taxpayer, but the burden or incidence
thereof is shifted to another.
Ex. Income tax Ex. VAT, excise tax, custom duties

d) According to purpose

General or Revenue tax Special tax

Levied without a specific or pre-determined purpose Levied for a special purpose
Ex. Income tax, VAT, etc. Ex. Protective tariffs; special
assessments

e) According to the rate applied

Proportional Progressive Regressive

Based on a fixed percentage of the | The tax rate increases as the tax | The tax rate decreases as the
tax base base increases tax base increases
Exs. RPT, VAT, Donor’s tax, Ex. Income tax on individuals | Ex. None
Estate tax. under the graduated rates
 f) According to measurement of the amount due

Specific Ad Valorem
Measured by number, or based on weight | Based on the value of the property and may require the
or physical measurement intervention of assessors and appraisers
Exs. Excise tax on lubricating oils, waxes, | Exs. RPT; excise tax on liquors, cigarettes packed by
petroleum, etc. machine, and automobiles

Nature
Nature or
or Construction
Construction of
of Tax
Tax Laws
Laws

Tax laws are

Tax laws are prospective,
prospective, generally,
generally, but
but can
can have
have retrospective
retrospective application.
application.

The constitutional prohibition

The constitutional prohibition against
against the
the passage
passage ofof laws
laws having
having retrospective
retrospective application
application (all
(all called
called
ex post
ex post facto
facto legislation)
legislation) is
is limited
limited toto penal
penal oror criminal
criminal statutes.
statutes. Tax
Tax laws
laws are
are not
not penal
penal in
in character.
character.
Being civil
Being civil in
in nature,
nature, the
the constitutional
constitutional prohibition
prohibition against
against exex post
post facto
facto legislation
legislation does
does not
not apply
apply toto
tax laws. They can therefore be given retrospective application if expressly declared by the tax law.
tax laws. They can therefore be given retrospective application if expressly declared by the tax law.
However, tax
However, tax laws,
laws, like
like other
other statutes,
statutes, are
are to
to be
be construed
construed as as having
having only
only aa prospective
prospective operation
operation
unless the purpose and intention of the legislature to give retrospective effect is expressly
unless the purpose and intention of the legislature to give retrospective effect is expressly declared
declared or or
is necessarily
is necessarily implied
implied from
from the
the language
language used.
used.

A tax
A tax creates
creates aa civil
civil obligation
obligation or or liability
liability onon the
the part
part ofof the
the taxpayer,
taxpayer, although
although the
the nonpayment
nonpayment
thereof creates
thereof creates aa criminal
criminal liability,
liability, which
which could
could be be the
the subject
subject of
of criminal
criminal prosecution
prosecution under
under existing
existing
laws. In
laws. In short,
short, in
in taxation,
taxation, it
it is
is one’s
one’s civil
civil liability
liability to
to pay
pay taxes
taxes that
that gives
gives rise
rise to
to criminal
criminal liability.
liability.

A statute
A statute will
will not
not be
be construed
construed as
as imposing
imposing a
a tax
tax unless
unless it
it does
does so
so clearly,
clearly, and
and unambiguously.
unambiguously.

A tax
A tax cannot
cannot be be imposed
imposed without
without clear
clear and
and express
express words
words for for that
that purpose.
purpose. Accordingly,
Accordingly, thethe
provisions of
provisions of aa taxing
taxing act
act are
are not
not to
to be
be extended
extended byby implication.
implication. InIn case
case ofof doubt,
doubt, statutes
statutes imposing
imposing aa
tax are
tax are construed
construed mostmost strongly
strongly against
against the
the Government,
Government, and and liberally
liberally inin favor
favor of
of the
the citizen
citizen because
because
burdens are
burdens are not
not toto be
be imposed
imposed beyond
beyond what
what the
the statutes
statutes expressly
expressly cancan clearly
clearly import.
import.

Tax exemptions are

Tax exemptions are to
to be
be construed
construed strictly
strictly against
against the
the taxpayer.
taxpayer.

Legal provisions
Legal provisions providing
providing for
for tax
tax exemptions
exemptions are
are to
to be
be construed
construed strictly
strictly against
against the
the grant
grant and
and
liberally in favor of the taxing power.
liberally in favor of the taxing power.

Exemption
Exemption from
from taxation
taxation is
is construed
construed strictissimi juris, i.e.
strictissimi juris, i.e. strictly
strictly against
against exemption.
exemption. Hence,
Hence,
exemption must be anchored firmly on an express provision of law. He who claims exemption
exemption must be anchored firmly on an express provision of law. He who claims exemption must
must
be able
be able to
to justify his claims
justify his claims by
by the
the clearest
clearest grant
grant of
of organic
organic and
and statute
statute law.
law.

Revenue laws
Revenue laws are
are not
not political
political in
in nature.
nature.

Our internal
Our internal revenue
revenue laws
laws are
are not
not political
political in
in nature
nature and
and as
as such
such were
were continued
continued in
in force
force during
during the
the
period of
period of enemy
enemy occupation
occupation and
and in
in effect
effect were
were actually
actually enforced
enforced by
by the
the occupation
occupation government.
government.

Legislative intention
Legislative intention must
must be
be considered.
considered.

Tax statutes are

Tax statutes are to
to receive
receive aa reasonable
reasonable construction
construction with
with aa view
view to
to carrying
carrying out
out their
their purpose
purpose and
and
intent.
intent.

Tax laws are

Tax laws are special
special laws,
laws, and
and prevail
prevail over
over general
general laws.
Sources of
Sources of Tax Laws
Tax Laws
1. The 1987
1. The 1987 Constitution;
Constitution;
2. Tax statutes
2. Tax statutes such
such asas the
the National
National Internal
Internal Revenue
Revenue CodeCode (“NIRC”),
(“NIRC”), the
the Tariff
Tariff and
and Customs
Customs Code,
Code, the
the
VAT Law,
VAT Law, the
the Revised
Revised Documentary
Documentary StampStamp TaxTax Law,
Law, the
the Amended
Amended Excise
Excise Tax
Tax Law,
Law, and
and portions
portions of
of the
the
Local Government
Local Government Code; Code;
3.
3. Executive
Executive orders
orders onon taxation,
taxation, and
and local
local tax
tax ordinances;
ordinances;
4. Tax treaties
4. Tax treaties and
and conventions
conventions with
with foreign
foreign countries;
countries;
5. Judicial
5. decisions;
Judicial decisions;
6. Rules
6. Rules andand regulations
regulations promulgated
promulgated by by the
the Department
Department of of Finance,
Finance, thethe Bureau
Bureau ofof Internal
Internal
Regulations (“BIR”), Bureau of Customs, etc.
Regulations (“BIR”), Bureau of Customs, etc.
7. Administrative
7. Administrative interpretations
interpretations and and opinions
opinions of of tax
tax officials
officials particularly
particularly those
those ofof the
the Commissioner
Commissioner
of Internal Revenue.
of Internal Revenue.

Forms of
Forms of Escape
Escape from
from Taxation
Taxation
1. Shifting
1. Shifting thethe burden
burden of of the
the tax.
tax.
2. Capitalization.
2. Capitalization.
By not
By not selling
selling property
property which
which hashas increased
increased in in value,
value, thethe owner
owner avoids
avoids the
the income
income taxtax toto bebe paid
paid on
on
the gain
the gain ifif the
the same
same isis sold.
sold. An
An increase
increase in
in the
the value
value of of an
an asset
asset isis merely
merely anan unrealized
unrealized increase
increase (gain)
(gain)
in capital.
in capital.
3. Transformation.
3. Transformation.
The manufacturer or
The manufacturer or producer
producer uponupon whom
whom thethe taxtax has
has been
been imposed,
imposed, fearing
fearing the
the loss
loss ofof his
his market
market if if
he should
he should add add the
the tax
tax to
to the
the price,
price, pays
pays the
the tax.
tax. HeHe then
then endeavors
endeavors to to recoup
recoup the
the tax
tax paid
paid by by making
making
his production
his production more more efficient
efficient and
and lowering
lowering his
his cost
cost ofof production.
production.
4. Tax
4. exemption. Exemption
Tax exemption. Exemption fromfrom taxation
taxation isis the
the freedom
freedom fromfrom thethe burden
burden of of paying
paying tax.
tax.
5. Tax
5. avoidance. Tax
Tax avoidance. Tax avoidance
avoidance occurs
occurs when
when the the means
means usedused to to minimize
minimize taxes
taxes are
are legal
legal and
and not
not
prohibited by
prohibited by law.
law.
6. Tax
6. evasion. Tax
Tax evasion. Tax evasion
evasion connotes
connotes fraud
fraud through
through the the use
use ofof pretenses
pretenses andand forbidden
forbidden devicesdevices to to
lessen or defeat taxes.
lessen or defeat taxes.

Tax and Licence Distinguished

Tax License
Purpose To raise revenue To regulate action, businesses,
industries, professions
Limitations on taxation Subject to constitutional and inherent | Not subject to the limitations on
limitations on the power to tax taxation
Amount Unlimited Limited to the cost of regulation
(licensing, inspection, surveillance)
Effect of non-payment Does not make the business illegal Makes the business illegal

Tax Special Assessment

Imposed on all property (real or personal) in a | Imposed only on property which benefit from
prescribed area the improvement

“Special Assessment”
“Special Assessment” Defined
Defined

A special
A special assessment
assessment is is in
in the
the nature
nature of of aa tax
tax upon
upon property
property levied
levied according
according to to benefits
benefits conferred
conferred on
on
the property.
the property. The whole theory
The whole theory of of aa special
special assessment
assessment isis based
based on on the
the doctrine
doctrine that
that the
the property
property
against which
against which it
it is
is levied
levied derives
derives some
some special
special benefit
benefit from
from the
the improvement
improvement xxxxxxx
xxxxxxx their
their property
property
being increased
being increased inin value
value byby the
the expenditure
expenditure to to an
an amount
amount atat least
least equal
equal toto the
the sum
sum they
they are
are required
required
to pay
to
Characteristics of
Characteristics of Special
Special Assessment
Assessment
1. A
1. A special
special assessment
assessment cancan bebe levied
levied only
only onon land;
land;
2. A
2. A special
special assessment
assessment cannot
cannot (at(at least
least inin most
most states)
states) be
be made
made aa personal
personal liability
liability of
of the
the
person assessed;
person assessed;
3. A
3. A special
special assessment
assessment is is based
based wholly
wholly onon benefits;
benefits; and
and
4. A
4. A special
special assessment
assessment is is exceptional
exceptional both
both as as to
to time
time and
and locality.
locality.

Tax and Debt Distinguished

Tax Debt
Source of obligations Law Contract
Obligee Due to the government in | Due to obligee under a contract; May be due to
its sovereign capacity the government in its corporate capacity
Form of payment Money Money, property, or services
Interest No interest except in cases | If stipulated or if the payment is in delay
of delinquency
Assignability Not assignable Generally assignable
Compensation/Set-off No Yes
Incarceration for non- Yes, except for non- | No person can be imprisoned for non-payment
payment payment of poll tax of debts (Constitution).

Tax and Toll Distinguished

Tax Toll
Demand for sovereignty Demand of ownership or proprietorship
Imposed by the government May be imposed by private persons or entities
May be based on income or on the value | Largely based on the cost of the property used, or on
of the property the cost of the improvement used
Forced contribution Compensation charged by the owner for the
voluntary use of the property/improvements

Tax Administration
Tax Administration

It
It is
is a
a system
system involving
involving assessment,
assessment, collection,
collection, and
and enforcement
enforcement of
of taxes,
taxes, including
including the
the execution
execution of
of
judgment in all
judgment in all tax
tax cases
cases decided
decided in
in favor
favor of
of the
the Bureau
Bureau of
of Internal
Internal Revenue
Revenue by
by the
the courts.
courts.

Powers and
Powers and Duties
Duties ofof the
the Bureau
Bureau ofof Internal
Internal Revenue
Revenue (“BIR”)
(“BIR”)
1. The assessment
1. The assessment and and collection
collection ofof all
all national
national internal
internal revenue
revenue taxes,
taxes, fees,
fees, and
and charges;
charges;
2. The enforcement
2. The enforcement of of all
all forfeitures,
forfeitures, penalties,
penalties, and
and fines
fines connected
connected therewith;
therewith;
3. The
3. execution of
The execution of judgments
judgments in in all
all cases
cases decided
decided in in its
its favor
favor by
by the
the Court
Court of
of Tax
Tax Appeals,
Appeals, and
and the
the
ordinary courts;
ordinary courts;
4. The
4. giving effect
The giving effect toto and
and the
the administering
administering of of the
the supervisory
supervisory and
and police
police power
power conferred
conferred to
to it
it by
by
the Tax Code or other laws.
the Tax Code or other laws.

Powers of
Powers of the
the Commissioner
Commissioner of of Internal
Internal Revenue
Revenue (“CIR”)
(“CIR”)
1. Power
1. Power to to interpret
interpret tax
tax laws
laws subject
subject toto review
review by by the
the Secretary
Secretary of of Finance;
Finance;
2.
2. Power
Power to to decide
decide disputed
disputed assessments,
assessments, refunds
refunds of of internal
internal revenue
revenue taxes,
taxes, fees
fees and
and other
other charges,
charges,
penalties imposed
penalties imposed in in relation
relation thereto,
thereto, other
other matters
matters arising
arising under
under thethe National
National Internal
Internal Revenue
Revenue CodeCode
(“NIRC”) or
(“NIRC”) or other
other laws
laws or or portions
portions thereof
thereof administered
administered by by the
the Bureau
Bureau of of Internal
Internal Revenue
Revenue (“BIR”),
(“BIR”),
subject to
subject to the
the exclusive
exclusive appellate
appellate jurisdiction
jurisdiction of of the
the Court
Court ofof Tax
Tax Appeals
Appeals (“CTA”);
(“CTA”);
3. Power
3. Power to to examine
examine any any book,
book, paper,
paper, record,
record, or or other
other data
data which
which may may be be relevant
relevant or or material
material to to aa
tax
tax inquiry;
inquiry;
4. Power
4. Power to to obtain
obtain information
information from from anyany person
person other other than
than thethe person
person whosewhose internal
internal revenue
revenue tax tax
liability is
liability is subject
subject toto audit
audit oror investigation
investigation or or from
from any any office
office or or officer
officer ofof the
the national
national oror local
local
governments,
governments, government
government agencies
agencies andand instrumentalities;
instrumentalities;
5. Power
5. Power to to summon
summon the the person
person liable
liable for
for tax
tax oror required
required to to file
file aa return,
return, or or any
any officer
officer or
or employee
employee
of such
of such person,
person, or or any
any person
person having
having possession,
possession, custody,
custody, or or care
care ofof the
the books
books of of accounts
accounts andand other
accounting records;
accounting records;
6. Power
6. Power to to take
take such
such testimony
testimony of of the
the person
person concerned,
concerned, under under oath,
oath, asas may
may be be relevant
relevant or
or material
material
to such
to such inquiry;
inquiry;
7. Power
7. Power to to make
make assessments.
assessments.
8. Power
8. Power to to prescribe
prescribe real real property
property values
values by by dividing
dividing thethe country
country into into different
different zones
zones andand
determining the
determining the FMV
FMV of of real
real properties
properties located
located in in each
each zone;
zone;
9. The
9. Commissioner is
The Commissioner is authorized
authorized to to inquire
inquire into
into thethe bank
bank deposits
deposits and and other
other related
related information
information
held by
held by financial
financial institutions
institutions of: of:
(a) A
(a) A decedent
decedent to to determine
determine his his gross
gross estate;
estate;
(b) A taxpayer who has filed an application
(b) A taxpayer who has filed an application for for compromise
compromise of of his
his tax
tax liability
liability byby reason
reason ofof financial
financial
incapacity to pay his tax liability; and
incapacity to pay his tax liability; and
(c) A
(c) A taxpayer
taxpayer who who is is subject
subject of of aa request
request forfor thethe supply
supply ofof tax
tax information
information from from aa foreign
foreign taxtax
authority
authority pursuant
pursuant to to an
an international
international agreement
agreement or or treaty.
treaty.
10. The
10. Commissioner has
The Commissioner has the
the authority
authority to to accredit
accredit and and register
register individuals
individuals and and general
general professional
professional
partnerships (GPPs)
partnerships (GPPs) andand their
their representatives
representatives who who prepare
prepare and
and file
file tax
tax returns,
returns, statements,
statements, reports
reports
and other
and other papers,
papers, or or who
who appear
appear before
before thethe BIR,
BIR, for
for taxpayers.
taxpayers.
11. Power
11. Power to to prescribe
prescribe additional
additional procedural
procedural or or documentary
documentary requirements
requirements in in connection
connection with
with the
the
submission or
submission or preparation
preparation of of financial
financial statements
statements accompanying
accompanying the the tax
tax returns.
returns.

Definition
Definition of
of Situs
Situs of
of Taxation
Taxation

It literally
It literally means
means place
place ofof taxation.
taxation. The
The basic
basic rule
rule is
is that
that the
the state
state where
where the
the subject
subject property
property oror
where the
where the owner
owner ofof the
the property
property to
to be
be taxed
taxed is
is situated
situated oror may
may be
be found
found has
has aa situs,
situs, may
may rightfully
rightfully
levy and
levy and collect
collect the
the tax.
tax.

The situs is
The situs is necessarily
necessarily in
in the
the state
state which
which has
has jurisdiction or which
jurisdiction or which exercises
exercises dominion
dominion over
over the
the
subject in
subject in question.
question. Thus, the person
Thus, the person may
may be
be subject
subject to
to taxation
taxation in
in several
several taxing
taxing jurisdictions
jurisdictions

Situs or
Situs or Subjects
Subjects of
of Taxation
Taxation

•e Persons
Persons
•¢ Real
Real property
property
•¢ Personal
Personal Property
Property
oo Tangible personal property
Tangible personal property
oo Intangible
Intangible personal
personal property
property
•e Income
Income
•e Business,
Business, occupation
occupation andand transaction
transaction
•¢ Gratuitous
Gratuitous transfer
transfer of
of property
property

Definition
Definition of
of Double
Double Taxation
Taxation

In its
In its strict
strict sense,
sense, it
it means
means being
being taxed
taxed twice
twice by
by the
the same
same taxing
taxing authority
authority within
within the
the same
same jurisdiction
jurisdiction
or taxing
or taxing district
district for
for the
the same
same purpose
purpose in
in the
the same
same year
year or
or taxing
taxing period
period some
some of
of the
the property
property in
in the
the
territory.
territory.

In its
In its broad
broad sense,
sense, double
double taxation
taxation is
is sometimes
sometimes known
known as
as “duplicate
“duplicate taxation.”Duplicate
taxation.”Duplicate taxation
taxation
may be direct or indirect.
may be direct or indirect.

Meaning of
Meaning of Exemption
Exemption from
from Taxation
Taxation

This is aa grant
This is grant of
of immunity,
immunity, express
express or
or implied,
implied, to to particular
particular persons
persons or
or corporations
corporations (or(or to
to persons
persons oror
corporations of
corporations of aa particular
particular class)
class) from
from aa tax
tax which
which persons
persons and
and corporations
corporations generally
generally within
within the
the
same state
same state or
or taxing
taxing district,
district, are
are obliged
obliged to
to pay.
pay. It
It is
is an
an immunity
immunity oror aa privilege;
privilege; aa freedom
freedom from
from aa
financial charge
financial charge oror burden
burden to to which
which others
others are
are subjected.
Ground for
Ground for Grant
Grant of
of Exemptions
Exemptions

•¢ Contract
Contract —– the
the public
public represented
represented by by the
the government
government is is supposed
supposed to to receive
receive the
the full
full equivalent;
equivalent; the
the
provisions of
provisions of the
the contract
contract of of exemption
exemption fromfrom taxation
taxation are
are contained
contained in in the
the charter
charter ofof the
the corporation.
corporation.
•¢ Public
Public policy
policy —– toto encourage
encourage new new and
and necessary
necessary industries;
industries; foster
foster charitable
charitable and and other
other benevolent
benevolent
institutions or
institutions or atat least
least make
make the
the public
public at
at large
large interested
interested in in the
the class
class or
or interest
interest inin whose
whose behalf
behalf the
the
exemption is
exemption is made.
made.
•¢ Treaty on grounds
Treaty on grounds of of reciprocity
reciprocity —– to
to lessen
lessen the
the rigors
rigors of
of international
international double
double or or multiple
multiple taxation
taxation of
of
income and intangible personal property.
income and intangible personal property.

Nature of
Nature of Tax Exemption
Tax Exemption

•e An
An exemption
exemption from
from taxation
taxation isis aa mere
mere personal
personal privilege
privilege of
of the
the grantee.
grantee.
•e Tax exemption is
Tax exemption is generally
generally revocable
revocable by by the
the government.
government.
•¢ Tax
Tax exemption
exemption implies
implies a a waiver.
waiver.
•¢ Tax exemption is
Tax exemption is not
not necessarily
necessarily discriminatory
discriminatory

Kinds
Kinds of Tax Exemption
of Tax Exemption

As to
As to manner
manner of of creation
creation
•e Express
Express or
or affirmative
affirmative —– when
when certain
certain persons,
persons, property,
property, or or transactions
transactions are,
are, by
by express
express provisions,
provisions,
exempted from
exempted from all
all or
or certain
certain taxes,
taxes, either
either entirely
entirely or
or in
in part.
part.
•¢ Implied
Implied exemption
exemption or or exemption
exemption by by omission
omission —– when
when a a tax
tax is
is levied
levied on
on certain
certain classes
classes of
of persons,
persons,
properties, or
properties, or transaction
transaction without
without mentioning
mentioning thethe other
other classes.
classes.

As
As toto scope
scope or
or extent
extent
•¢ Total exemption —– when
Total exemption when certain
certain persons,
persons, property
property oror transactions
transactions are
are exempted,
exempted, expressly
expressly or
or
implied, from all taxes.
implied, from all taxes.
•e Partial
Partial exemption
exemption —– when
when certain
certain persons,
persons, property,
property, or
or transactions
transactions are
are exempted,
exempted, expressly
expressly or
or
implied, from certain taxes, either entirely or in part.
implied, from certain taxes, either entirely or in part.

As to
As to object
object
•¢ Personal
Personal —– those
those granted
granted directly
directly in
in favor
favor of
of such
such persons
persons are
are within
within the
the contemplation
contemplation of
of the
the law
law
granting
granting thethe exemption.
exemption.
•¢ Impersonal
Impersonal —– those
those granted
granted directly
directly in
in favor
favor of
of aa certain
certain class
class of
of property.
property.

Construction
Construction of
of Tax
Tax Exemption
Exemption Statutes
Statutes

Tax exemptions are

Tax exemptions are liberally
liberally construed
construed when: when:
•e the
the lawlaw itself
itself expressly
expressly provides
provides for for aa liberal
liberal construction
construction then then inin case
case of of doubt,
doubt, it it shall
shall bebe resolved
resolved
in favor
in favor of of the
the exemption.
exemption.
•e the
the exemption
exemption is is in
in favor
favor of of the
the government
government itself itself or
or its
its agencies,
agencies, or or ofof charitable,
charitable, religious,
religious, and
and
educational institutions
educational institutions because
because the the general
general rule
rule is
is that
that they
they are
are exempted
exempted from from tax.tax.
•e there
there is is an
an express
express mention
mention or or the
the taxpayer
taxpayer falls
falls within
within the the purview
purview of of the
the exemption
exemption by by clear
clear
legislative intent.
legislative intent.
•e Exemptions
Exemptions from from taxation
taxation are are highly
highly disfavored
disfavored in in law,
law, and
and hehe who
who claims
claims an an exemption
exemption must must bebe
able to justify his claim by the clearest grant of organic or statutory law.
able to justify his claim by the clearest grant of organic or statutory law.
•¢ He
He whowho claims
claims anan exemption
exemption from from his his share
share of of common
common burden burden in in taxation
taxation must must justify his claim
justify his claim by
by
showing that the legislative intended to exempt him by words too plain to be mistaken.
showing that the legislative intended to exempt him by words too plain to be mistaken.
•¢ It
It is
is aa well-settled
well-settled rule rule that
that hehe whowho claims
claims exemption
exemption shouldshould prove
prove that
that hehe is is exempted
exempted
•¢ Tax exemptions must
Tax exemptions must bebe strictly
strictly construed
construed such such that
that the
the exemption
exemption will will not
not be be held
held toto be
be conferred
conferred
unless the
unless the terms
terms under
under which
which it it is
is granted
granted clearly
clearly and
and show
show distinctly
distinctly that
that such
such was was the
the intention
intention of of
the parties.
the parties.
•¢ Constitutional
Constitutional grant grant ofof tax-exemptions
tax-exemptions are are self-executing.
self-executing. The The reason
reason for for this
this isis that
that aa constitutional
constitutional
provision declaring
provision declaring certain
certain properties
properties as as tax-exempt
tax-exempt does does notnot need
need aa legislative
legislative enactment
enactment to to put
put itit
into effect
into
Income Tax Description
Income Tax Description

SEC. 31.
SEC. 31. Taxable Income Defined.
Taxable Income Defined. -The
-The term
term ‘taxable
‘taxable income’
income’ means
means the
the pertinent
pertinent items
items ofof gross
gross
income specified
income specified in
in this
this Code,
Code, less
less the
the deductions,
deductions, if
if any,
any, authorized
authorized for
for such
such types
types of
of income
income byby
this Code
this Code oror other
other special
special laws.
laws.

Income Tax
Income Tax is
is aa tax
tax on
on aa person's
person's income,
income, emoluments,
emoluments, profits
profits arising
arising from
from property,
property, practice
practice ofof
profession, conduct of trade or business or on the pertinent items of gross income specified in
profession, conduct of trade or business or on the pertinent items of gross income specified in the
the Tax
Tax
Code of
Code of 1997
1997 (Tax
(Tax Code),
Code), asas amended,
amended, less
less the
the deductions
deductions if
if any,
any, authorized
authorized for
for such
such types
types of
of income,
income,
by the Tax Code, as amended, or other special
by the Tax Code, as amended, or other special laws. laws.

Who are
Who are Required
Required to
to File
File Income
Income Tax
Tax Returns?
Returns?

Individuals
Individuals

⚫
@ Resident citizens
Resident citizens receiving
receiving income
income from
from sources
sources within
within oror outside
outside the
the Philippines
Philippines
◼
mM Employees deriving
Employees deriving purely
purely compensation
compensation income income from from twotwo or or more
more employers,
employers,
concurrently or
concurrently or successively
successively at at any
any time
time during
during the
the taxable
taxable year
year
◼
m@ Employees deriving
Employees deriving purely
purely compensation
compensation income income regardless
regardless of of the
the amount,
amount, whether
whether from
from aa
single or
single or several
several employers
employers during
during thethe calendar
calendar year,
year, the
the income
income tax tax of
of which
which has has not
not been
been
withheld correctly
withheld correctly (i.e.
(i.e. tax
tax due
due isis not
not equal
equal toto the
the tax
tax withheld)
withheld) resulting
resulting to to collectible
collectible or
or
refundable return
refundable return
◼
m= Self-employed individuals
Self-employed individuals receiving
receiving income
income fromfrom thethe conduct
conduct of of trade
trade oror business
business and/or
and/or
practice of
practice of profession
profession
◼
M Individuals
Individuals deriving
deriving mixed
mixed income,
income, i.e.,
i.e., compensation
compensation income income andand income
income fromfrom the
the conduct
conduct
of trade
of trade oror business
business and/or
and/or practice
practice of of profession
profession
◼
M Individuals deriving
Individuals deriving other
other non-business,
non-business, non-professional
non-professional relatedrelated income
income in in addition
addition to to
compensation income not otherwise subject to a final tax
compensation income not otherwise subject to a final tax
◼
M Individuals receiving
Individuals receiving purely
purely compensation
compensation income income from from aa single
single employer,
employer, although
although thethe
income of which has been correctly withheld, but whose spouse is not entitled
income of which has been correctly withheld, but whose spouse is not entitled to to
substituted filing
substituted filing
◼HM Non-resident citizens
Non-resident citizens receiving
receiving income
income from from sources
sources within
within the
the Philippines
Philippines
◼
m= = Aliens,
Aliens, whether
whether resident
resident or or not,
not, receiving
receiving income
income fromfrom sources
sources within
within thethe Philippines
Philippines

Annual Income
Annual Income Tax For Individuals
Tax For Individuals Earning
Earning Purely
Purely Compensation
Compensation Income
Income (Including
(Including Non-
Non-
Business/Non-Profession Related
Business/Non-Profession Related Income)
Income)

BIR Form
BIR Form 1700
1700 -- Annual
Annual Income
Income Tax For Individuals
Tax For Individuals Earning
Earning Purely
Purely Compensation
Compensation Income
Income (Including
(Including
Non-Business/Non-Profession
Non-Business/Non-Profession Related
Related Income)
Income)

Description
Description

This return shall

This return shall be
be filed
filed by
by every
every resident
resident citizen
citizen deriving
deriving compensation
compensation income
income from
from all
all sources,
sources, or
or
resident alien
resident alien and
and non-resident
non-resident citizen
citizen with
with respect
respect to
to compensation
compensation income
income from
from within
within the
the
Philippines, except
Philippines, except the
the following:
following:

1.
1. An
An individual
individual whose
whose taxable
taxable income
income does
does not
not exceed
exceed P
P 250,000.00;
250,000.00;

2. An
2. An individual
individual with
with respect
respect to to pure
pure compensation
compensation income,
income, asas defined
defined inin Section
Section 32(A)(1)
32(A)(1) derived
derived
from sources
from sources within
within the
the Philippines,
Philippines, the
the income
income tax
tax on
on which
which has
has been
been correctly
correctly withheld
withheld (tax
(tax due
due
equals tax
equals tax withheld)
withheld) under
under thethe provisions
provisions of
of Section
Section 79
79 of
of the
the Code:
Code: Provided,
Provided, that
that an
an individual
individual
deriving compensation
deriving compensation concurrently
concurrently from
from two
two or
or more
more employers
employers at at any
any time
time during
during the
the taxable
taxable year
year
shall
shall file
file an
an income
income tax
tax return;
return;

3. An
3. An individual
individual whose
whose sole
sole income
income has
has been
been subjected
subjected to
to final
final withholding
withholding tax
tax pursuant
pursuant to
to Section
Section
57(A) of
57(A) of the
the Tax Code; and
Tax Code;
4. A
4. A minimum
minimum wage
wage earner
earner as
as defined
defined in
in Section
Section 22(HH)
22(HH) ofof the
the Tax
Tax Code
Code oror an
an individual
individual who
who is is
exempt from
exempt from income
income tax
tax pursuant
pursuant to
to the
the provisions
provisions of
of the
the Tax
Tax Code
Code and
and other
other laws,
laws, general
general or
or special.
special.

Filing Date
Filing Date

This return is
This return is filed
filed on
on or
or before
before April
April 15
15 of
of each
each year
year covering
covering income
income for
for the
the preceding
preceding taxable
taxable year.
year.

Documentary
Documentary Requirements
Requirements

1.
1. Certificate
Certificate of
of Income
Income Tax
Tax Withheld
Withheld on
on Compensation
Compensation (BIR
(BIR Form
Form 2316)
2316)

Description
Description

A Certificate
A Certificate toto be
be accomplished
accomplished and and issued
issued to
to each
each employee
employee receiving
receiving salaries,
salaries, wages
wages and
and other
other
forms or
forms or remuneration
remuneration by by each
each employer
employer indicating
indicating therein
therein the
the total
total amount
amount paidpaid and
and the
the taxes
taxes
withheld therefrom
withheld therefrom during
during thethe calendar
calendar year.This
year.This Certificate
Certificate in
in turn
turn should
should be
be attached
attached to to the
the Annual
Annual
Income
Income TaxTax Return
Return (BIR
(BIR Form
Form 1700
1700 -- for
for individuals
individuals receiving
receiving purely
purely compensation
compensation income,
income, or or BIR
BIR
Form 1701
Form 1701 for
for individuals
individuals with
with mixed
mixed income).
income).

Filing Date
Filing Date

To be issued
To be issued toto payee
payee onon or
or before
before January
January 31
31 of
of the
the succeeding
succeeding year
year in
in which
which the
the compensation
compensation was
was
paid, or
paid, or in
in cases
cases where
where there
there is
is termination
termination of
of employment,
employment, itit is
is issued
issued on
on the
the same
same day
day the
the last
last
payment of
payment of wages
wages isis made.
made.

2. Duly
2. Duly approved
approved Tax
Tax Debit
Debit Memo,
Memo, if if applicable
applicable
3. Proofs of Foreign Tax Credits, if applicable
3. Proofs of Foreign Tax Credits, if applicable
4. Income
4. Income Tax Return previously
Tax Return previously filed
filed and
and proof
proof of
of payment,
payment, if
if filing
filing an
an amended
amended return
return for
for the
the same
same
taxable year.
taxable year.

Procedures
Procedures

For Electronic
For Electronic Filing
Filing and
and Payment
Payment System
System (eFPS)
(eFPS) Filer
Filer

1. Fill-up
1. Fill-up applicable
applicable fields
fields in
in the
the BIR
BIR Form
Form No.
No. 1700
1700
2. Pay
2. Pay electronically
electronically by
by clicking
clicking the
the "Proceed
"Proceed to to Payment"
Payment" button
button and
and fill-up
fill-up the
the required
required fields
fields in
in the
the
"eFPS Payment
"eFPS Payment Form"
Form" click
click "Submit"
"Submit" button.
button.
3. Receive
3. Receive payment
payment confirmation
confirmation from from eFPS-AABs
eFPS-AABs for for successful
successful e-filing
e-filing and
and e-payment.
e-payment.

For
For Non-eFPS
Non-eFPS Filer
Filer

1. Fill-up
1. Fill-up applicable
applicable fields
fields in
in the
the BIR
BIR Form
Form No.
No. 1700
1700 in
in the
the downloaded
downloaded Electronic
Electronic Bureau
Bureau of
of Internal
Internal
Revenue Form
Revenue Form (eBIRForm)
(eBIRForm) Package
Package
2. Print
2. Print the
the duly
duly accomplished
accomplished BIR BIR Form
Form No.
No. 1700
1700
3. Proceed to the nearest Authorized Agent Bank
3. Proceed to the nearest Authorized Agent Bank (AAB)
(AAB) under
under the
the jurisdiction of the
jurisdiction of the Revenue
Revenue District
District
Office where you are registered and present the duly accomplished BIR Form 1700, together with
Office where you are registered and present the duly accomplished BIR Form 1700, together with the
the
required attachments
required attachments andand your
your payment.
payment.

In places
In places where
where there
there are
are no
no AABs,
AABs, proceed
proceed toto the
the Revenue
Revenue Collection
Collection Officer
Officer or
or duly
duly Authorized
Authorized City
City
or Municipal
or Municipal Treasurer
Treasurer located
located within
within the
the Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered and
and
present the
present the duly
duly accomplished
accomplished BIR BIR Form
Form 1700,
1700, together
together with
with the
the required
required attachments
attachments andand your
your
payment.
payment.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped andand validated
validated form
form from
from the
the teller
teller of
of the
the AABs/Revenue
AABs/Revenue
Collection Officer/duly
Collection Officer/duly Authorized
Authorized City
City or
or Municipal
Municipal Treasurer.
For
For Manual
Manual Filer
Filer

1. Fill-up
1. Fill-up the
the BIR
BIR Form
Form No.
No. 1700
1700 inin triplicate
triplicate copies.
copies.
2. Proceed
2. Proceed to to thethe Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered oror toto any
any Tax
Tax Filing
Filing Center
Center
established by
established by the
the BIR
BIR and
and present
present the
the duly
duly accomplished
accomplished BIRBIR Form
Form 1700,
1700, together
together with
with the
the required
required
attachments.
attachments.
3. Receive
3. Receive your
your copycopy ofof the
the duly
duly stamped
stamped and and validated
validated form
form from
from thethe RDO/Tax
RDO/Tax Filing
Filing Center
Center
representative.
representative.

Annual
Annual Income
Income Tax
Tax For
For Individuals,
Individuals, Estates,
Estates, and
and Trusts
Trusts

BIR
BIR Form
Form 1701
1701 -- Annual
Annual Income Tax Return
Income Tax Return Individuals,
Individuals, Estates
Estates and
and Trusts
Trusts

BIR Form
BIR Form No.
No. 1701
1701 shall
shall be
be filed
filed by
by individuals
individuals whowho areare engaged
engaged inin trade/business
trade/business or or the
the practice
practice of
of
profession including
profession including those
those with
with mixed
mixed income
income (i.e.,
(i.e., those
those engaged
engaged in in the
the trade/business
trade/business or or profession
profession
who are
who are also
also earning
earning compensation
compensation income)
income) inin accordance
accordance withwith Sec.
Sec. 5151 of
of the
the Code,
Code, asas amended.
amended. TheThe
annual income
annual income tax
tax return
return summarizes
summarizes all all the
the transactions
transactions covering
covering the
the calendar
calendar year
year of
of the
the taxpayer.
taxpayer.

This return shall

This return shall be
be filed
filed by
by the
the following
following individuals
individuals regardless
regardless of
of amount
amount of
of gross
gross income:
income:

1. A
1. A resident
resident citizen
citizen engaged
engaged in
in trade,
trade, business,
business, or
or practice
practice of
of profession
profession within
within and
and without
without the
the
Philippines.
Philippines.

2.
2. A resident alien,
Aresident alien, non-resident
non-resident citizen
citizen or
or non-resident
non-resident alien
alien individual
individual engaged
engaged in
in trade,
trade, business
business or
or
practice of
practice of profession
profession within
within the
the Philippines.
Philippines.

3.
3. A
A trustee
trustee of
of aa trust,
trust, guardian
guardian of
of a
a minor,
minor, executor/administrator
executor/administrator ofof an
an estate,
estate, or
or any
any person
person acting
acting
in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in
in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade
trade
or
or business.
business.

4. An
4. An individual
individual engaged
engaged inin trade
trade or
or business
business or
or in
in the
the exercise
exercise of
of their
their profession
profession and
and receiving
receiving
compensation income
compensation income as
as well.
well.

Filing Date
Filing Date

This return is
This return is filed
filed on
on or
or before
before April
April 15
15 of
of each
each year
year covering
covering income
income for
for the
the preceding
preceding taxable
taxable year.
year.

Account Information
Account Information Form
Form For
For Self-Employed
Self-Employed Individuals,
Individuals, Estates
Estates And
And Trusts (Including Those
Trusts (Including Those With
With
Mixed
Mixed Income,
Income, i.e.,
i.e., Compensation
Compensation Income
Income and
and Income
Income from
from Business
Business and/or
and/or Practice
Practice of
of Profession)
Profession)

BIR Form
BIR Form 1701
1701 AIF
AIF -- Account
Account Information
Information Form
Form for
for Self-Employed
Self-Employed Individuals,
Individuals, Estates
Estates and
and Trusts
Trusts
(Including those
(Including those with
with Mixed
Mixed Income,
Income, i.e.,
i.e., Compensation
Compensation Income
Income and
and Income
Income from
from Business
Business and/or
and/or
Practice of
Practice of Profession)
Profession) and
and Estates
Estates and
and Trusts
Trusts (Engaged
(Engaged in
in Trade
Trade or
or Business)
Business)

NOTE:
NOTE: Pursuant
Pursuant to to Sec.
Sec. 71
71 of
of RA
RA 10963,
10963, otherwise
otherwise known
known as as Tax
Tax Reform
Reform Acceleration
Acceleration andand Inclusion
Inclusion
Act,
Act, amending Sec. 232 of the Tax Code, as amended, in relation to Revenue Memorandum Circular
amending Sec. 232 of the Tax Code, as amended, in relation to Revenue Memorandum Circular
No.
No. 66 —– 2001,
2001, corporations,
corporations, companies
companies or or persons
persons whose
whose gross
gross annual
annual sales,
sales, earnings,
earnings, receipts
receipts or or
output exceed
output exceed P3,000,000
P3,000,000 maymay notnot accomplish
accomplish thisthis form.
form. InIn lieu
lieu thereof,
thereof, they
they may
may file
file their
their annual
annual
income tax
income tax returns
returns accompanied
accompanied by by balance
balance sheets,
sheets, profit
profit and
and loss
loss statement,
statement, schedules
schedules listing
listing
income-producing properties
income-producing properties andand thethe corresponding
corresponding incomeincome therefrom,
therefrom, andand other
other relevant
relevant
statements duly
statements duly certified
certified by
by an
an independent
independent CPA. CPA.

Documentary
Documentary Requirements
Requirements

None
Procedures
Procedures

Accomplish BIR
Accomplish BIR Form
Form 1701
1701 AIF
AIF in
in triplicate.
triplicate.

Attach the
Attach the same
same to
to BIR
BIR Form
Form 1701.
1701.

Deadline
Deadline

Same deadline
Same deadline as
as BIR
BIR Form
Form 1701
1701 -- On
On or
or before
before the
the 15th
15th day
day of
of April
April of
of each
each year
year covering
covering taxable
taxable
income for calendar year 2018 and thereafter
income for calendar year 2018 and thereafter

BIR
BIR Form
Form No.
No. 1701A
1701A -- Annual
Annual Income Tax Return
Income Tax Return for
for Individuals
Individuals Earning
Earning Income
Income PURELY
PURELY from
from
Business/Profession (Those
Business/Profession (Those under
under the
the graduated
graduated income
income tax tax rates
rates with
with OSD
OSD as
as mode
mode of
of deduction
deduction
OR those
OR those who
who opted
opted to
to avail
avail of
of the
the 8%
8% flat
flat income
income tax
tax rate)
rate)

Description
Description

The return shall

The return shall be
be filed
filed by
by individuals
individuals earning
earning income
income PURELY
PURELY from
from trade/business
trade/business or
or from
from the
the
practice of
practice of profession,
profession, to to wit:
wit:
1. A
1. A resident
resident citizen
citizen (within
(within and
and without
without the
the Philippines);
Philippines);
2. A
2. A resident
resident alien,
alien, non-resident
non-resident citizen
citizen or
or non-resident
non-resident alien
alien (within
(within the
the Philippines).
Philippines).

The return shall

The return shall only
only be
be used
used by
by said
said individuals
individuals as
as follows:
follows:
A. Those
A. subject to
Those subject to graduated
graduated income
income tax
tax rates
rates and
and availed
availed of
of the
the optional
optional standard
standard deduction
deduction as
as
method of
method of deduction,
deduction, regardless
regardless ofof the
the amount
amount of of sales/receipts
sales/receipts and
and other
other non-operating
non-operating income;
income;
OR
OR
B. Those
B. who availed
Those who availed of
of the
the 8%
8% flat
flat income
income taxtax rate
rate whose
whose sales/receipts
sales/receipts and
and other
other non-operating
non-operating
income do not exceed P3M
income do not exceed P3M

Filing Date
Filing Date

This return is
This return is filed
filed on
on or
or before
before April
April 15
15 of
of each
each year
year covering
covering income
income for
for the
the preceding
preceding taxable
taxable year.
year.

Documentary
Documentary Requirements
Requirements

1. Certificate
1. Certificate of
of Income
Income Tax
Tax Withheld
Withheld on
on Compensation
Compensation (BIR
(BIR Form
Form 2316),
2316), if
if applicable
applicable
2. Certificate
2. Certificate of
of Income
Income Payments
Payments Not
Not Subjected
Subjected to
to Withholding
Withholding Tax
Tax (BIR
(BIR Form
Form 2304),
2304), if
if applicable
applicable

Certificate of
Certificate of Income
Income Payment
Payment Not
Not Subject
Subject to
to Withholding
Withholding Tax
Tax (Excluding
(Excluding Compensation
Compensation Income)
Income)

Description
Description

A Certificate
A Certificate toto bebe accomplished
accomplished and and issued
issued byby aa Payor
Payor to
to recipients
recipients of
of income
income not
not subject
subject to
to
withholding tax. This Certificate should be attached to the Annual Income Tax Return - BIR Form 1701
withholding tax. This Certificate should be attached to the Annual Income Tax Return - BIR Form 1701
for
for individuals,
individuals, oror BIR
BIR Form
Form 1702
1702 for
for non-individuals.
non-individuals.

Filing Date
Filing Date

Payor must
Payor must furnish
furnish the
the payee
payee on
on or
or before
before January
January 31
31 of
of the
the year
year following
following the
the year
year in
in which
which the
the
income payment
income payment was
was made.
made.

3. Certificate
3. Certificate of
of Creditable
Creditable Tax
Tax Withheld
Withheld at
at Source
Source (BIR
(BIR Form
Form 2307),
2307), if
if applicable
applicable

Certificate
Certificate of
of Creditable
Creditable Tax
Tax Withheld
Withheld at
at Source
Description
Description

A Certificate
A Certificate to
to be
be accomplished
accomplished and
and issued
issued to
to recipients
recipients of
of income
income subject
subject to
to expanded
expanded withholding
withholding
tax paid
tax paid byby aa Payor/Withholding
Payor/Withholding Agent
Agent including
including government
government moneymoney payments
payments made
made byby aa
government office
government office showing
showing therein
therein the
the monthly
monthly breakdown
breakdown of of the
the total
total income
income payments
payments made
made and
and
the total
the total taxes
taxes withheld
withheld and
and remitted
remitted during
during the
the quarter/period.
quarter/period.

For
For EWT
EWT -- This
This Certificate
Certificate inin turn
turn should
should be
be attached
attached to to the
the Quarterly/Annual
Quarterly/Annual Income
Income TaxTax Return
Return -- BIR
BIR
Forms
Forms 1701Q/ 1701 for individuals, or BIR Form 1702Q/ 1702 for non-individuals, in which case,
1701Q / 1701 for individuals, or BIR Form 1702Q/ 1702 for non-individuals, in which case, the
the
amount of
amount of withholding
withholding taxtax shall
shall be
be allowed
allowed asas aa tax
tax credit
credit against
against the
the income
income taxtax liability
liability of
of the
the
income recipient in the taxable quarter or year in which the income was earned or received.
income recipient in the taxable quarter or year in which the income was earned or received.

For Percentage
For Percentage Taxes
Taxes on
on Government
Government Money
Money Payments
Payments -- This
This Certificate
Certificate is
is to
to be
be attached
attached to
to the
the
Quarterly Percentage
Quarterly Percentage Tax
Tax return
return (BIR
(BIR Form
Form No.
No. 2551M
2551M and
and 2551Q).
2551Q).

For
For VAT
VAT Withholding
Withholding -- This
This Certificate
Certificate is
is to
to be
be attached
attached to
to the
the Monthly
Monthly VAT
VAT Declaration
Declaration (BIR
(BIR Form
Form No.
No.
2550M)
2550M) and
and Quarterly
Quarterly VAT
VAT Return
Return (BIR
(BIR Form
Form No.
No. 2550Q).
2550Q).

Filing Date
Filing Date

For EWT
For EWT -- To be issued
To be issued to
to payee
payee onon or
or before
before the
the 20th
20th day
day of
of the
the month
month following
following the
the close
close of
of the
the
taxable quarter.
taxable quarter. Upon
Upon request
request ofof the
the payee,
payee, however,
however, the
the payor
payor must
must furnish
furnish such
such statement
statement to
to the
the
payee simultaneously
payee simultaneously with
with the
the income
income payment.
payment.

For Percentage
For Percentage Tax
Tax On
On Government
Government Money
Money Payments
Payments -- To
To be
be issued
issued to
to the
the payee
payee on
on or
or before
before the
the
10th day
10th day of
of the
the month
month following
following the
the month
month inin which
which withholding
withholding was was made.
made. Upon
Upon request
request of of the
the
payee, however, the payor must furnish such statement to the payee simultaneously with the income
payee, however, the payor must furnish such statement to the payee simultaneously with the income
payment.
payment.

For VAT
For VAT Withholding
Withholding -- To
To be
be issued
issued to
to the
the payee
payee on
on or
or before
before the
the 10th
10th day
day of
of the
the month
month following
following the
the
month in
month in which
which withholding
withholding was
was made.
made. Upon
Upon request
request of
of the
the payee,
payee, however,
however, the
the payor
payor must
must furnish
furnish
such statement
such statement to
to the
the payee
payee simultaneously
simultaneously with
with the
the income
income payment.
payment.

4. Duly
4. Duly approved
approved Tax Tax Debit
Debit Memo,
Memo, if if applicable
applicable
5. Proof
5. Proof of
of Foreign
Foreign Tax
Tax Credits,
Credits, ifif applicable
applicable
6. Income
6. Income Tax Return previously
Tax Return previously filed
filed and
and proof
proof ofof payment,
payment, if if filing
filing an
an amended
amended return
return for
for the
the same
same
year
year
7. Account
7. Account Information
Information FormForm (AIF)
(AIF) or or the
the Certificate
Certificate ofof the
the independent
independent Certified
Certified Public
Public Accountant
Accountant
(CPA) with
(CPA) with Audited
Audited Financial
Financial Statements
Statements if if the
the gross
gross annual
annual sales,
sales, earnings,
earnings, receipts
receipts or
or output
output exceed
exceed
three million
three million pesos
pesos (P3,000,000.00)
(P3,000,000.00)
8. Account
8. Account Information
Information Form Form oror Financial
Financial Statements
Statements not not necessarily
necessarily audited
audited byby an
an independent
independent CPA CPA
ifif the
the gross
gross annual
annual sales,
sales, earnings,
earnings, receipts
receipts or or output
output do do not
not exceed
exceed P3,000,000.00
P3,000,000.00 andand isis subject
subject to
to
graduated income
graduated income tax tax rates
rates under
under Section
Section 24(A)(2)(a)
24(A)(2)(a)
9. Proof
9. Proof of
of prior
prior year’s
year’s excess
excess tax
tax credits,
credits, ifif applicable
applicable

Procedures
Procedures

For eFPS
For eFPS Filer
Filer

1. Fill-up
1. Fill-up applicable
applicable fields
fields in
in the
the BIR
BIR Form
Form No.
No. 1701
1701
2. Pay
2. Pay electronically
electronically by
by clicking
clicking the
the “Proceed
“Proceed toto Payment”
Payment” button
button and
and fill-up
fill-up the
the required
required fields
fields in
in the
the
“eFPS Payment
“eFPS Payment Form”
Form” then
then click
click “Submit”
“Submit” button.
button.
3. Receive
3. Receive payment
payment confirmation
confirmation from from eFPS-AABs
eFPS-AABs forfor successful
successful e-filing
e-filing and
and e-payment.
e-payment.

For
For Non-eFPS
Non-eFPS Filer
1. Fill-up
1. Fill-up fields
fields inin the
the BIR
BIR Form
Form No.
No. 1701
1701 inin the
the downloaded
downloaded Electronic
Electronic Bureau
Bureau ofof Internal
Internal Revenue
Revenue
Form (eBIRForm)
Form (eBIRForm) Package
Package
2. Print
2. Print the
the duly
duly accomplished
accomplished BIRBIR Form
Form No.
No. 1701
1701
3. Proceed
3. Proceed to to the
the nearest
nearest Authorized
Authorized Agent
Agent Bank
Bank (AAB)
(AAB) under
under the
the jurisdiction of the
jurisdiction of the Revenue
Revenue District
District
Office where
Office where youyou are
are registered
registered and
and present
present thethe duly
duly accomplished
accomplished BIR
BIR Form
Form 1701,
1701, together
together with
with the
the
required attachments
required attachments and and your
your payment.
payment.

In places
In places where
where there
there are
are no
no AABs,
AABs, proceed
proceed to
to the
the Revenue
Revenue Collection
Collection Officer
Officer or
or duly
duly Authorized
Authorized City
City
or Municipal Treasurer located within the Revenue District Office where you are registered
or Municipal Treasurer located within the Revenue District Office where you are registered and
and
present the
present the duly
duly accomplished
accomplished BIRBIR Form
Form 1701,
1701, together
together with
with the
the required
required attachments
attachments andand your
your
payment.
payment.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped andand validated
validated form
form from
from the
the teller
teller of
of the
the AABs/Revenue
AABs/Revenue
Collection Officer/duly
Collection Officer/duly Authorized
Authorized City
City or
or Municipal
Municipal Treasurer.
Treasurer.

For
For Manual
Manual Filer
Filer

1. Fill-up
1. Fill-up the
the BIR
BIR Form
Form No.
No. 1701
1701 inin triplicate
triplicate copies.
copies.
2. Proceed
2. Proceed to to thethe Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered oror toto any
any Tax
Tax Filing
Filing Center
Center
established by
established by the
the BIR
BIR and
and present
present the
the duly
duly accomplished
accomplished BIRBIR Form
Form 1701,
1701, together
together with
with the
the required
required
attachments.
attachments.
3. Receive
3. Receive your
your copycopy of
of the
the duly
duly stamped
stamped and and validated
validated form
form from
from thethe RDO/Tax
RDO/Tax Filing
Filing Center
Center
representative.
representative.

Deadline
Deadline

Final Adjustment
Final Adjustment Return
Return or
or Annual
Annual Income
Income Tax
Tax Return
Return -- On
On or
or before
before the
the 15th
15th day
day of
of April
April of
of each
each
year covering income for calendar year 2018 and thereafter
year covering income for calendar year 2018 and thereafter

Quarterly
Quarterly Income
Income Tax
Tax For
For Individuals,
Individuals, Estates
Estates And
And Trusts
Trusts Including
Including Those
Those With
With Mixed
Mixed Income,
Income, i.e.,
i.e.,
Compensation Income and Income from Business and/or Practice of Profession
Compensation Income and Income from Business and/or Practice of Profession

BIR
BIR Form
Form 1701Q
1701Q -- Quarterly
Quarterly Income Tax Return
Income Tax Return For
For Individuals,
Individuals, Estates
Estates and
and Trusts
Trusts

This return shall

This return shall be
be filed
filed in
in triplicate
triplicate by
by the
the following
following individuals
individuals regardless
regardless of
of amount
amount of
of gross
gross income:
income:

1) A
1) A resident
resident citizen
citizen engaged
engaged in
in trade,
trade, business,
business, or
or practice
practice of
of profession
profession within
within and
and without
without the
the
Philippines.
Philippines.

2) A
2) Aresident alien, non-resident
resident alien, non-resident citizen
citizen or
or non-resident
non-resident alien
alien individual
individual engaged
engaged in
in trade,
trade, business
business or
or
practice of
practice of profession
profession within
within the
the Philippines.
Philippines.

3) A
3) A trustee
trustee of
of aa trust,
trust, guardian
guardian of
of aa minor,
minor, executor/administrator
executor/administrator of of an
an estate,
estate, or
or any
any person
person acting
acting
in any
in any fiduciary
fiduciary capacity
capacity for
for any
any person,
person, where
where such
such trust,
trust, estate,
estate, minor,
minor, or
or person
person is
is engaged
engaged in
in trade
trade
or business.
or business.

Filing Date

1 gtr On or before May 15 of the current taxable year

24 gtr On or before August 15 of the current taxable year

gid qtr On or before November 15 of the current taxable year

Documentary
Documentary Requirements
Requirements

Certificate of
Certificate of Creditable
Creditable Tax
Tax Withheld
Withheld at
at Source
Source (BIR
(BIR Form
Form 2307),
2307), if
if applicable
applicable

Duly approved
Duly approved Tax
Tax Debit
Debit Memo,
Memo, if
if applicable
applicable

Proof of
Proof of other
other payment/s
payment/s made,
made, if
if applicable
applicable

Summary Alphalist
Summary Alphalist of
of Withholding
Withholding Agents
Agents of
of Income
Income Payments
Payments Subjected
Subjected to
to Withholding
Withholding Tax
Tax at
at
Source (SAWT), if applicable
Source (SAWT), if applicable

Procedures
Procedures

For eFPS
For eFPS Filer
Filer

Fill-up applicable
Fill-up applicable fields
fields in
in the
the BIR
BIR Form
Form No.
No. 1701Q
1701Q

Pay electronically
Pay electronically by
by clicking
clicking the
the “Proceed
“Proceed to
to Payment”
Payment” button
button and
and fill-up
fill-up the
the required
required fields
fields in
in the
the
“eFPS Payment
“eFPS Payment Form”
Form” then
then click
click “Submit”
“Submit” button.
button.

Receive payment
Receive payment confirmation
confirmation from
from eFPS-AABs
eFPS-AABs for
for successful
successful e-filing
e-filing and
and e-payment.
e-payment.

For Non-eFPS
For Non-eFPS Filer
Filer

Fill-up applicable
Fill-up applicable fields
fields in
in the
the BIR
BIR Form
Form No.
No. 1701Q
1701Q in
in the
the downloaded
downloaded Electronic
Electronic Bureau
Bureau of
of Internal
Internal
Revenue Form
Revenue Form (eBIRForm)
(eBIRForm) Package
Package

Print the
Print the duly
duly accomplished
accomplished BIR
BIR Form
Form No.
No. 1701Q
1701Q

Proceed to
Proceed to the
the nearest
nearest Authorized
Authorized Agent
Agent Bank
Bank (AAB)
(AAB) under
under the
the jurisdiction of the
jurisdiction of the Revenue
Revenue District
District
Office where you are registered and present the duly accomplished BIR Form 1701Q, together
Office where you are registered and present the duly accomplished BIR Form 1701Q, together with
with
the required
the required attachments
attachments and
and your
your payment.
payment.

In places
In places where
where there
there are
are no
no AABs,
AABs, proceed
proceed to
to the
the Revenue
Revenue Collection
Collection Officer
Officer or
or duly
duly Authorized
Authorized City
City
or Municipal
or Municipal Treasurer
Treasurer located
located within
within the
the Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered and
and
present the
present the duly
duly accomplished
accomplished BIRBIR Form
Form 1701Q,
1701Q, together
together with
with the
the required
required attachments
attachments and
and your
your
payment.
payment.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped and
and validated
validated tax
tax return
return and
and BIR
BIR prescribed
prescribed deposit
deposit slip
slip from
from
the teller
the teller ofof the
the AABs
AABs or or Electronic
Electronic Revenue
Revenue Official
Official Receipt
Receipt (eROR)
(eROR) from
from the
the Revenue
Revenue Collection
Collection
Officer/duly Authorized
Officer/duly Authorized City
City or
or Municipal
Municipal Treasurer.
Treasurer.

For
For Manual
Manual Filer
Filer

Fill-up the
Fill-up the BIR
BIR Form
Form No.
No. 1701Q
1701Q in
in triplicate
triplicate copies
copies (Compensation
(Compensation Income
Income need
need not
not be
be reported
reported in
in the
the
Quarterly Income Tax Return and is to be declared only on the Annual Income Tax Return).
Quarterly Income Tax Return and is to be declared only on the Annual Income Tax Return).

Proceed to
Proceed to the
the Revenue
Revenue District
District Office
Office where you
where you are
are registered
registered or
or to
to any
any Tax Filing Center
Tax Filing Center
established by the BIR and present
established by the BIR and present the
the duly accomplished BIR Form 1701Q, together with
duly accomplished BIR Form 1701Q, together with the
the
required attachments.
required attachments.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped and
and validated
validated form
form from
from the
the RDO.
RDO.

Deadlines
Deadlines

May 15
May 15 of
of the
the current
current taxable
taxable year–
year-— for
for the
the first
first quarter
quarter
August 15
August 15 of
of the
the current
current taxable
taxable year
year —– for
for the
the second
second quarter
November 15
November 15 of
of the
the current
current taxable
taxable year
year —– for
for the
the third
third quarter
quarter

Non-Individuals
Non-Individuals

⚫ Corporations including
Corporations including partnerships,
partnerships, no no matter
matter how
how created
created oror organized.
organized.
⚫ Domestic corporations
Domestic corporations receiving
receiving income
income from
from sources
sources within
within and
and outside
outside the
the Philippines
Philippines
⚫ Foreign
Foreign corporations
corporations receiving
receiving income
income from
from sources
sources within
within the
the Philippines
Philippines
⚫ Estates and
Estates and trusts
trusts engaged
engaged in in trade
trade or
or business
business

Annual Income
Annual Income Tax
Tax For
For Corporations
Corporations And
And Partnerships
Partnerships

BIR Form
BIR Form 1702
1702 -- Annual
Annual Income
Income Tax Return (For
Tax Return (For Corporations
Corporations and
and Partnerships)
Partnerships)

BIR Form
BIR Form No.
No. 1702-EX
1702-EX -- Annual
Annual Income
Income Tax Return For
Tax Return For Corporation,
Corporation, Partnership
Partnership and
and Other
Other Non-
Non-
Individual Taxpayer EXEMPT
Individual Taxpayer EXEMPT Under
Under the
the Tax
Tax Code,
Code, as
as Amended,
Amended, {Sec.
{Sec. 30
30 and
and those
those exempted
exempted in
in Sec.
Sec.
27(C)} and
27(C)} and Other
Other Special
Special Laws,
Laws, with
with NO
NO Other
Other Taxable
Taxable Income
Income

Description
Description

This return shall

This return shall be
be filed
filed by
by aa Corporation,
Corporation, Partnership
Partnership and
and Other
Other Non-Individual
Non-Individual Taxpayer
Taxpayer EXEMPT
EXEMPT
under the
under the Tax Code, as
Tax Code, as amended
amended [Sec.
[Sec. 30
30 and
and those
those exempted
exempted in
in Sec.
Sec. 27(C)]
27(C)] and
and other
other Special
Special Laws
Laws
WITH
WITH NO NO OTHER
OTHER TAXABLE
TAXABLE INCOME
INCOME such
such as
as but
but not
not limited
limited to
to foundations,
foundations, cooperatives,
cooperatives, charitable
charitable
institutions, non-stock
institutions, non-stock and
and non-profit
non-profit educational
educational institutions,
institutions, General
General Professional
Professional Partnership
Partnership (GPP)
(GPP)
etc.
etc.

Filing Date
Filing Date

This return is
This return is filed
filed on
on or
or before
before the
the 15th
15th day
day of
of the
the 4th
4th month
month following
following the
the close
close of
of the
the taxpayer's
taxpayer's
taxable year.
taxable year.

BIR
BIR Form
Form No.
No. 1700
1700
Download
Download

(PDF)
(PDF)

Annual Income
Annual Income Tax
Tax Return
Return For
For Individuals
Individuals Earning
Earning Purely
Purely Compensation
Compensation Income
Income (Including
(Including Non-
Non-
Business/Non-Profession
Business/Non-Profession Related
Related Income)
Income)

Description
Description

This return shall

This return shall be
be filed
filed by
by every
every resident
resident citizen
citizen deriving
deriving compensation
compensation income
income from
from all
all sources,
sources, or
or
resident alien
resident alien and
and non-resident
non-resident citizen
citizen with
with respect
respect to
to compensation
compensation income
income from
from within
within the
the
Philippines, except
Philippines, except the
the following:
following:

1.
1. An
An individual
individual whose
whose taxable
taxable income
income does
does not
not exceed
exceed P
P 250,000.00;
250,000.00;

2. An
2. An individual
individual with
with respect
respect toto pure
pure compensation
compensation income,
income, as
as defined
defined inin Section
Section 32(A)(1)
32(A)(1) derived
derived
from sources within the Philippines, the income tax on which has been correctly withheld (tax
from sources within the Philippines, the income tax on which has been correctly withheld (tax due
due
equals tax
equals tax withheld)
withheld) under
under the
the provisions
provisions of
of Section
Section 79
79 of
of the
the Code:
Code: Provided,
Provided, that
that an
an individual
individual
deriving compensation
deriving compensation concurrently
concurrently from
from two
two or
or more
more employers
employers atat any
any time
time during
during the
the taxable
taxable year
year
shall
shall file
file an
an income
income tax
tax return;
return;

3. An
3. An individual
individual whose
whose sole
sole income
income has
has been
been subjected
subjected to
to final
final withholding
withholding tax
tax pursuant
pursuant to
to Section
Section
57(A) of
57(A) of the
the Tax Code; and
Tax Code;
4. A
4. A minimum
minimum wage
wage earner
earner as
as defined
defined in
in Section
Section 22(HH)
22(HH) ofof the
the Tax
Tax Code
Code oror an
an individual
individual who
who is is
exempt from
exempt from income
income tax
tax pursuant
pursuant to
to the
the provisions
provisions of
of the
the Tax
Tax Code
Code and
and other
other laws,
laws, general
general or
or special.
special.

Filing Date
Filing Date

This return is
This return is filed
filed on
on or
or before
before April
April 15
15 of
of each
each year
year covering
covering income
income for
for the
the preceding
preceding taxable
taxable year.
year.

BIR
BIR Form
Form No.
No. 1701
1701
Download
Download

(PDF) || (Consolidated)
(PDF) (Consolidated) || (Attachment)
(Attachment)

Annual Income
Annual Income Tax
Tax Return
Return For
For Individuals
Individuals (including
(including MIXED
MIXED Income
Income Earner),
Earner), Estates
Estates and
and Trusts
Trusts

Description
Description

BIR Form
BIR Form No.
No. 1701
1701 shall
shall be
be filed
filed by
by individuals
individuals whowho areare engaged
engaged inin trade/business
trade/business or or the
the practice
practice of
of
profession including
profession including those
those with
with mixed
mixed income
income (i.e.,
(i.e., those
those engaged
engaged in in the
the trade/business
trade/business or or profession
profession
who are
who are also
also earning
earning compensation
compensation income)
income) inin accordance
accordance withwith Sec.
Sec. 5151 of
of the
the Code,
Code, asas amended.
amended. TheThe
annual income
annual income tax
tax return
return summarizes
summarizes all all the
the transactions
transactions covering
covering the
the calendar
calendar year
year of
of the
the taxpayer.
taxpayer.

This return shall

This return shall be
be filed
filed by
by the
the following
following individuals
individuals regardless
regardless of
of amount
amount of
of gross
gross income:
income:

1. A
1. A resident
resident citizen
citizen engaged
engaged in
in trade,
trade, business,
business, or
or practice
practice of
of profession
profession within
within and
and without
without the
the
Philippines.
Philippines.

2.
2. A resident alien,
Aresident alien, non-resident
non-resident citizen
citizen or
or non-resident
non-resident alien
alien individual
individual engaged
engaged in
in trade,
trade, business
business or
or
practice of profession within the Philippines.
practice of profession within the Philippines.

3.
3. A
A trustee
trustee of
of aa trust,
trust, guardian
guardian of
of a
a minor,
minor, executor/administrator
executor/administrator ofof an
an estate,
estate, or
or any
any person
person acting
acting
in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in
in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade
trade
or
or business.
business.

4. An
4. An individual
individual engaged
engaged inin trade
trade or
or business
business or
or in
in the
the exercise
exercise of
of their
their profession
profession and
and receiving
receiving
compensation income
compensation income as
as well.
well.

Filing Date
Filing Date

This return is
This return is filed
filed on
on or
or before
before April
April 15
15 of
of each
each year
year covering
covering income
income for
for the
the preceding
preceding taxable
taxable year.
year.

BIR
BIR Form
Form No.
No. 1701A
1701A

Download
Download

(PDF)
(PDF)

Annual Income
Annual Income Tax
Tax Return
Return for
for Individuals
Individuals Earning
Earning Income
Income PURELY
PURELY from
from Business/Profession
Business/Profession (Those
(Those
under the graduated income tax rates with OSD as mode of deduction OR those who
under the graduated income tax rates with OSD as mode of deduction OR those who opted
opted to
to avail
avail of
of
the 8%
the 8% flat
flat income
income tax
tax rate)
rate)

Description
Description

The return shall

The return shall be
be filed
filed by
by individuals
individuals earning
earning income
income PURELY
PURELY from
from trade/business
trade/business or
or from
from the
the
practice of
practice of profession,
profession, to
to wit:
wit:
1. A
1. A resident
resident citizen
citizen (within
(within and
and without
without the
the Philippines);
2. A
2. Aresident alien, non-resident
resident alien, non-resident citizen
citizen or
or non-resident
non-resident alien
alien (within
(within the
the Philippines).
Philippines).

The return
The return shall
shall only
only be
be used
used by
by said
said individuals
individuals as
as follows:
follows:
A. Those
A. subject to
Those subject to graduated
graduated income
income tax tax rates
rates and
and availed
availed of
of the
the optional
optional standard
standard deduction
deduction as
as
method of
method of deduction,
deduction, regardless
regardless of
of the
the amount
amount of of sales/receipts
sales/receipts and
and other
other non-operating
non-operating income;
income; OR
OR
B. Those
B. Those whowho availed
availed of
of the
the 8%
8% flat
flat income
income tax
tax rate
rate whose
whose sales/receipts
sales/receipts andand other
other non-operating
non-operating
income do
income do not
not exceed
exceed P3M
P3M

Filing Date
Filing Date

This return is
This return is filed
filed on
on or
or before
before April
April 15
15 of
of each
each year
year covering
covering income
income for
for the
the preceding
preceding taxable
taxable year.
year.

BIR
BIR Form
Form No.
No. 1701Q
1701Q
Download
Download

(PDF) || (Guidelines)
(PDF) (Guidelines)

Quarterly
Quarterly Income Tax Return
Income Tax Return for
for Individuals,
Individuals, Estates
Estates and
and Trusts
Trusts
Description
Description

This return shall

This return shall be
be filed
filed in
in triplicate
triplicate by
by the
the following
following individuals
individuals regardless
regardless of
of amount
amount of
of gross
gross income:
income:

1) A
1) A resident
resident citizen
citizen engaged
engaged in
in trade,
trade, business,
business, or
or practice
practice of
of profession
profession within
within and
and without
without the
the
Philippines.
Philippines.

2) A
2) Aresident alien, non-resident
resident alien, non-resident citizen
citizen or
or non-resident
non-resident alien
alien individual
individual engaged
engaged in
in trade,
trade, business
business or
or
practice of
practice of profession
profession within
within the
the Philippines.
Philippines.

3) A
3) A trustee
trustee of
of aa trust,
trust, guardian
guardian of
of aa minor,
minor, executor/administrator
executor/administrator ofof an
an estate,
estate, or
or any
any person
person acting
acting
in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in
in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade
trade
or business.
or business.

Filing Date
Filing Date

1st qtr
1st qtr OnOn or
or before
before May
May 15
15 of
of the
the current
current taxable
taxable year
year
2nd qtr
2nd qtr On
On or
or before
before August
August 15
15 of
of the
the current
current taxable
taxable year
year
3rd qtr
3rd qtr On
On or
or before
before November
November 15 15 of
of the
the current
current taxable
taxable year
year
BIR Form
BIR Form No.
No. 1702-EX
1702-EX
Download
Download

(PDF)
(PDF)

Annual Income
Annual Income Tax
Tax Return
Return For
For Corporation,
Corporation, Partnership
Partnership and
and Other
Other Non-Individual
Non-Individual Taxpayer
Taxpayer EXEMPT
EXEMPT
Under
Under the Tax Code,
the Tax Code, as
as Amended,
Amended, {Sec.
{Sec. 30
30 and
and those
those exempted
exempted in
in Sec.
Sec. 27(C)}
27(C)} and
and Other
Other Special
Special Laws,
Laws,
with NO
with NO Other
Other Taxable
Taxable Income
Income

Description
Description

This return shall

This return shall be
be filed
filed by
by aa Corporation,
Corporation, Partnership
Partnership and
and Other
Other Non-Individual
Non-Individual Taxpayer
Taxpayer EXEMPT
EXEMPT
under the Tax Code, as amended [Sec. 30 and those exempted in Sec. 27(C)] and other Special
under the Tax Code, as amended [Sec. 30 and those exempted in Sec. 27(C)] and other Special Laws
Laws
WITH
WITH NO NO OTHER
OTHER TAXABLE
TAXABLE INCOME
INCOME such
such as
as but
but not
not limited
limited to
to foundations,
foundations, cooperatives,
cooperatives, charitable
charitable
institutions, non-stock
institutions, non-stock and
and non-profit
non-profit educational
educational institutions,
institutions, General
General Professional
Professional Partnership
Partnership (GPP)
(GPP)
etc.
etc.

Filing Date
Filing
This return
This return is is filed
filed on
on or
or before
before the
the 15th
15th day
day of
of the
the 4th
4th month
month following
following the
the close
close of
of the
the taxpayer's
taxpayer's
taxable year.
taxable year.

BIR Form
BIR Form No.
No. 1702-MX
1702-MX -- Annual
Annual Income
Income Tax Return for
Tax Return for Corporation,
Corporation, Partnership
Partnership and
and Other
Other Non-
Non-
Individual with
Individual with MIXED
MIXED Income
Income Subject
Subject to
to Multiple
Multiple Income
Income Tax Rates or
Tax Rates or with
with Income
Income Subject
Subject toto
SPECIAL/PREFERENTIAL
SPECIAL/PREFERENTIAL RATE
RATE

Description
Description

This return shall

This return shall be
be filed
filed by
by every
every Corporation,
Corporation, Partnership
Partnership and Other
and Other Non-Individual
Non-Individual Taxpayer
Taxpayer with
with
MIXED
MIXED Income
Income subject to MULTIPLE
subject to MULTIPLE INCOME
INCOME TAX
TAX RATES
RATES or with
or with income
income subject to
subject to
SPECIAL/PREFERENTIAL
SPECIAL/PREFERENTIAL RATE.
RATE.

Filing Date
Filing Date

This return
This return is
is filed,
filed, with
with or
or without
without payment,
payment, on
on or
or before
before the
the 15th
15th day
day of
of the
the 4th
4th month
month following
following
the close
the close of
of the
the taxpayer's
taxpayer's taxable
taxable year.
year.

BIR Form
BIR Form No.
No. 1702-RT
1702-RT -- Annual
Annual Income
Income Tax Return For
Tax Return For Corporation,
Corporation, Partnership
Partnership and
and Other
Other Non-
Non-
Individual Taxpayer
Individual Subject Only
Taxpayer Subject Only to
to REGULAR
REGULAR Income
Income Tax
Tax Rate
Rate

Description
Description

This return shall

This return shall be
be filed
filed by
by Corporation,
Corporation, Partnership
Partnership and
and other
other Non-Individual
Non-Individual Taxpayer
Taxpayer Subject
Subject Only
Only
to REGULAR
to REGULAR Income
Income Tax
Tax Rate
Rate of
of 25%
25% or
or 20%
20% (For
(For corporations
corporations with
with net
net taxable
taxable income
income not
not exceeding
exceeding
Five
Five Million
Million Pesos
Pesos (P
(P 5,000,000)
5,000,000) AND
AND total
total assets
assets not
not exceeding
exceeding One
One Hundred
Hundred Million
Million (100,000,000),
(100,000,000),
excluding the
excluding the land
land on
on which
which the
the particular
particular business
business entity’s
entity’s office,
office, plant
plant and
and equipment
equipment are
are situated).
situated).

Every corporation,
Every corporation, partnership
partnership no no matter
matter howhow created
created oror organized,
organized, joint stock companies,
joint stock companies, joint
joint
accounts, associations (except foreign corporation not engaged in trade or business in the Philippines
accounts, associations (except foreign corporation not engaged in trade or business in the Philippines
and joint
and venture or
joint venture or consortium
consortium formed
formed forfor the
the purpose
purpose ofof undertaking
undertaking construction
construction projects
projects oror
engaging in
engaging in petroleum,
petroleum, coal,
coal, geothermal
geothermal and and other
other energy
energy operations),
operations), government-owned
government-owned or or
controlled corporations,
controlled corporations, agencies
agencies and
and instrumentalities
instrumentalities shall
shall render
render aa true
true and
and accurate
accurate income
income taxtax
return in
return in accordance
accordance with
with the
the provisions
provisions of
of the
the Tax
Tax Code.
Code.

Filing Date
Filing Date

This return is
This return is filed,
filed, with
with or
or without
without payment,
payment, on
on or
or before
before the
the 15th
15th day
day of
of the
the 4th
4th month
month following
following
close of
close of the
the taxpayer's
taxpayer's taxable
taxable year.
year.

BIR Form
BIR Form No.
No. 1702Q
1702Q -- Quarterly
Quarterly Income
Income Tax
Tax Return
Return for
for Corporations,
Corporations, Partnerships
Partnerships and
and Other
Other Non-
Non-
Individual Taxpayers
Individual Taxpayers

Description
Description

This return is
This return is filed
filed quarterly
quarterly by
by every
every corporation,
corporation, partnership,
partnership, joint stock companies,
joint stock companies, joint accounts,
joint accounts,
associations (except foreign corporation not engaged in trade or business in the Philippines and
associations (except foreign corporation not engaged in trade or business in the Philippines and joint
joint
venture or consortium formed for the purpose of undertaking construction projects or engaging in
venture or consortium formed for the purpose of undertaking construction projects or engaging in
petroleum, coal,
petroleum, coal, geothermal
geothermal and
and other
other energy
energy operations),
operations), government-owned
government-owned or or controlled
controlled
corporations,
corporations, agencies
agencies and
and instrumentalities.
instrumentalities.

Filing Date
Filing Date

The corporate quarterly

The corporate quarterly income
income tax
tax return
return shall
shall be
be filed
filed with
with or
or without
without payment
payment within
within sixty
sixty (60)
(60)
days following
days following the
the close
close of
of each
each of
of the
the first
first three
three (3)
(3) quarters
quarters of
of the
the taxable
taxable year
year whether
whether calendar
calendar oror
fiscal year.
fiscal
BIR
BIR Form
Form No.
No. 1704
1704 -- Improperly
Improperly Accumulated
Accumulated Earnings
Earnings Tax
Tax Return
Return For
For Corporations
Corporations

This form is
This form is to
to be
be filed
filed by
by every
every domestic
domestic corporation
corporation classified
classified as
as closely-held
closely-held corporation
corporation except
except
banks and
banks and other
other non-bank
non-bank financial
financial intermediaries,
intermediaries, insurance
insurance companies,
companies, taxable
taxable partnerships,
partnerships,
general professional
general professional partnerships,
partnerships, non-
non- taxable
taxable joint ventures and
joint ventures and enterprises
enterprises duly
duly registered
registered with
with
the Philippine Economic Zone Authority (PEZA) under R.A. 7916, and enterprises registered pursuant
the Philippine Economic Zone Authority (PEZA) under R.A. 7916, and enterprises registered pursuant
to the
to the Bases
Bases Conversion
Conversion and
and Development
Development Act Act of
of 1992
1992 (R.A.
(R.A. 7227),
7227), and
and other
other similar
similar laws,
laws, shall
shall
render a true and accurate tax return in accordance with the provision of the Tax code.
render a true and accurate tax return in accordance with the provision of the Tax code.

Filing Date
Filing Date

The return shall

The return shall be
be filed
filed within
within 15
15 days
days after
after the
the close
close of
of the
the year
year immediately
immediately succeeding
succeeding taxpayer's
taxpayer's
covered taxable
covered taxable year.
year.

Documentary
Documentary Requirements
Requirements

Certificate of
Certificate of Income
Income Payments
Payments Not
Not Subjected
Subjected to
to Withholding
Withholding Tax
Tax (BIR
(BIR Form
Form 2304),
2304), if
if applicable
applicable

Certificate of
Certificate of Creditable
Creditable Tax
Tax Withheld
Withheld at
at Source
Source (BIR
(BIR Form
Form 2307),
2307), if
if applicable
applicable

Duly approved
Duly approved Tax
Tax Debit
Debit Memo,
Memo, if
if applicable
applicable

Proof of
Proof of Foreign
Foreign Tax
Tax Credits,
Credits, if
if applicable
applicable

Income tax
Income tax return
return previously
previously filed
filed and
and proof
proof of
of payment,
payment, if
if amended
amended return
return is
is filed
filed for
for the
the same
same
taxable year
taxable year

Account Information
Account Information Form
Form (AIF)
(AIF) or
or the
the Certificate
Certificate of
of the
the independent
independent CPA
CPA with
with Audited
Audited Financial
Financial
Statements,
Statements, if
if the
the gross
gross annual
annual sales,
sales, earnings,
earnings, receipts
receipts or
or output
output exceed
exceed P3,000,000.
P3,000,000.

Proof of
Proof of prior
prior year’s
year’s excess
excess tax
tax credits,
credits, if
if applicable
applicable

Procedures
Procedures

For eFPS
For eFPS Filer
Filer

Fill-up applicable
Fill-up applicable fields
fields in
in the
the BIR
BIR Form
Form No.
No. 1702
1702

Pay electronically
Pay electronically by
by clicking
clicking the
the “Proceed
“Proceed to
to Payment”
Payment” button
button and
and fill-up
fill-up the
the required
required fields
fields in
in the
the
“eFPS Payment
“eFPS Payment Form”
Form” then
then click
click “Submit”
“Submit” button.
button.

Receive payment
Receive payment confirmation
confirmation from
from eFPS-AABs
eFPS-AABs for
for successful
successful e-filing
e-filing and
and e-payment.
e-payment.

For Non-eFPS
For Non-eFPS Filer
Filer

Fill-up fields
Fill-up fields in
in the
the BIR
BIR Form
Form No.
No. 1702
1702 in
in the
the downloaded
downloaded Electronic
Electronic Bureau
Bureau of
of Internal
Internal Revenue
Revenue Form
Form
(eBIRForm) Package
(eBIRForm) Package

Print the
Print the duly
duly accomplished
accomplished BIR
BIR Form
Form No.
No. 1702
1702

Proceed to
Proceed to the
the nearest
nearest Authorized
Authorized Agent
Agent Bank
Bank (AAB)
(AAB) under
under the
the jurisdiction of the
jurisdiction of the Revenue
Revenue District
District
Office where
Office where you
you are
are registered
registered and
and present
present the
the duly
duly accomplished
accomplished BIR
BIR Form
Form 1702,
1702, together
together with
with the
the
required attachments
required attachments andand your
your payment.
In places
In places where
where there
there are
are no
no AABs,
AABs, proceed
proceed toto the
the Revenue
Revenue Collection
Collection Officer
Officer or
or duly
duly Authorized
Authorized City
City
or Municipal
or Municipal Treasurer
Treasurer located
located within
within the
the Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered and
and
present the
present the duly
duly accomplished
accomplished BIR BIR Form
Form 1702,
1702, together
together with
with the
the required
required attachments
attachments and
and your
your
payment.
payment.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped andand validated
validated form
form from
from the
the teller
teller of
of the
the AABs/Revenue
AABs/Revenue
Collection Officer/duly
Collection Officer/duly Authorized
Authorized City
City or
or Municipal
Municipal Treasurer.
Treasurer.

For
For Manual
Manual Filer
Filer

Fill-up
Fill-up the
the BIR
BIR Form
Form No.
No. 1702
1702 in
in triplicate
triplicate copies.
copies.

Proceed to
Proceed to the
the Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered oror to
to any
any Tax
Tax Filing
Filing Center
Center
established by
established by the
the BIR
BIR and
and present
present the
the duly
duly accomplished
accomplished BIR
BIR Form
Form 1702,
1702, together
together with
with the
the required
required
attachments.
attachments.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped and
and validated
validated form
form from
from the
the RDO/Tax
RDO/Tax Filing
Filing Center
Center
representative.
representative.

Deadline
Deadline

Final Adjustment
Final Adjustment Return
Return oror Annual
Annual Income
Income Tax
Tax Return
Return -- On
On or
or before
before the
the 15th
15th day
day of
of the
the fourth
fourth
month following
month following the
the close
close of
of the
the taxpayer’s
taxpayer’s taxable
taxable year
year

[return
[return to
to index]
index]

Account Information
Account Information Form
Form For
For Corporations
Corporations And
And Partnerships
Partnerships

BIR
BIR Form
Form 1702
1702 AIF
AIF -- Account
Account Information
Information Form
Form (For
(For Corporations
Corporations and
and Partnerships)
Partnerships)

NOTE:
NOTE: Pursuant
Pursuant to to Sec.
Sec. 71
71 of
of RA
RA 10963,
10963, otherwise
otherwise knownknown as as Tax
Tax Reform
Reform Acceleration
Acceleration andand Inclusion
Inclusion
Act,
Act, amending
amending Sec. Sec. 232
232 of
of the
the Tax
Tax Code,
Code, asas amended,
amended, in in relation
relation toRevenue
toRevenue Memorandum
Memorandum CircularCircular
No.
No. 66 —– 2001,
2001, corporations,
corporations, companies
companies or or persons
persons whose
whose gross
gross annual
annual sales,
sales, earnings,
earnings, receipts
receipts or or
output exceed
output exceed P3,000,000
P3,000,000 may may notnot accomplish
accomplish this this form.
form. InIn lieu
lieu thereof,
thereof, they
they may
may file
file their
their annual
annual
income tax
income tax returns
returns accompanied
accompanied by by balance
balance sheets,
sheets, profit
profit and
and loss
loss statement,
statement, schedules
schedules listing
listing
income-producing properties
income-producing properties andand thethe corresponding
corresponding income income therefrom,
therefrom, andand other
other relevant
relevant
statements duly
statements duly certified
certified by
by an
an independent
independent CPA. CPA.

Documentary
Documentary Requirements
Requirements

None
None

Procedures
Procedures

Accomplish BIR
Accomplish BIR Form
Form 1702
1702 AIF
AIF in
in triplicate.
triplicate.

Attach the
Attach the same
same to
to BIR
BIR Form
Form 1702.
1702.

Deadline
Deadline

Same deadline
Same deadline as
as BIR
BIR Form
Form 1702
1702 -- On
On or
or before
before the
the 15th
15th day
day of
of the
the fourth
fourth month
month following
following the
the close
close
of the
of the taxpayer’s
taxpayer’s taxable
taxable year
year

[return
[return to
to index]
index]

Quarterly Income
Quarterly Income Tax For Corporations
Tax For Corporations And
And Partnerships
BIR Form
BIR Form 1702Q
1702Q -- Quarterly
Quarterly Income
Income Tax Return (For
Tax Return (For Corporations
Corporations and
and Partnerships)
Partnerships)

Documentary
Documentary Requirements
Requirements

Certificate of
Certificate of Creditable
Creditable Tax
Tax Withheld
Withheld at
at Source
Source (BIR
(BIR Form
Form 2307),
2307), if
if applicable
applicable

Duly approved
Duly approved Tax
Tax Debit
Debit Memo,
Memo, if
if applicable
applicable

Previously filed
Previously filed return,
return, if
if an
an amended
amended return
return is
is filed
filed for
for the
the same
same quarter
quarter

Procedures
Procedures

For eFPS
For eFPS Filer
Filer

Fill-up applicable
Fill-up applicable fields
fields in
in the
the BIR
BIR Form
Form No.
No. 1702Q
1702Q

Pay electronically
Pay electronically by
by clicking
clicking the
the “Proceed
“Proceed to
to Payment”
Payment” button
button and
and fill-up
fill-up the
the required
required fields
fields in
in the
the
“eFPS Payment
“eFPS Payment Form”
Form” then
then click
click “Submit”
“Submit” button.
button.

Receive payment
Receive payment confirmation
confirmation from
from eFPS-AABs
eFPS-AABs for
for successful
successful e-filing
e-filing and
and e-payment.
e-payment.

For Non-eFPS
For Non-eFPS Filer
Filer

Fill-up applicable
Fill-up applicable fields
fields in
in the
the BIR
BIR Form
Form No.
No. 1702Q
1702Q in
in the
the downloaded
downloaded Electronic
Electronic Bureau
Bureau of
of Internal
Internal
Revenue Form
Revenue Form (eBIRForm)
(eBIRForm) Package
Package

Print the
Print the duly
duly accomplished
accomplished BIR
BIR Form
Form No.
No. 1702Q
1702Q

Proceed to
Proceed to the
the nearest
nearest Authorized
Authorized Agent
Agent Bank
Bank (AAB)
(AAB) under
under the
the jurisdiction of the
jurisdiction of the Revenue
Revenue District
District
Office where you are registered and present the duly accomplished BIR Form 1702Q, together
Office where you are registered and present the duly accomplished BIR Form 1702Q, together with
with
the required
the required attachments
attachments and
and your
your payment.
payment.

In places
In places where
where there
there are
are no
no AABs,
AABs, proceed
proceed to
to the
the Revenue
Revenue Collection
Collection Officer
Officer or
or duly
duly Authorized
Authorized City
City
or Municipal
or Municipal Treasurer
Treasurer located
located within
within the
the Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered and
and
present the
present the duly
duly accomplished
accomplished BIRBIR Form
Form 1702Q,
1702Q, together
together with
with the
the required
required attachments
attachments and
and your
your
payment.
payment.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped and
and validated
validated tax
tax return
return and
and BIR
BIR prescribed
prescribed deposit
deposit slip
slip from
from
the teller
the teller ofof the
the AABs
AABs or or Electronic
Electronic Revenue
Revenue Official
Official Receipt
Receipt (eROR)
(eROR) from
from the
the Revenue
Revenue Collection
Collection
Officer/duly Authorized
Officer/duly Authorized City
City or
or Municipal
Municipal Treasurer.
Treasurer.

For Manual
For Manual Filer
Filer

Fill-up the
Fill-up the BIR
BIR Form
Form No.
No. 1702Q
1702Q in
in triplicate
triplicate copies.
copies.

Proceed to
Proceed to the
the Revenue
Revenue District
District Office
Office where you
where you are
are registered
registered or
or to
to any
any Tax
Tax Filing
Filing Center
Center
established by the BIR and present
established by the BIR and present the
the duly accomplished BIR Form 1702Q, together with
duly accomplished BIR Form 1702Q, together with the
the
required attachments.
required attachments.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped and
and validated
validated form
form from
from the
the RDO.
RDO.

Deadline
Deadline

Corporate Quarterly
Corporate Quarterly Declaration
Declaration or or Quarterly
Quarterly Income
Income Tax
Tax Return
Return -- On
On or
or before
before the
the 60th
60th day
day
following the
following the close
close of
of each
each ofof the
the quarters
quarters of
of the
the taxable
taxable year
year

[return to
[return to index]
Improperly
Improperly Accumulated
Accumulated Earnings
Earnings Tax
Tax For
For Corporations
Corporations

BIR Form
BIR Form 1704
1704 -- Improperly
Improperly Accumulated
Accumulated Earnings
Earnings Tax
Tax Return
Return (For
(For Corporations)
Corporations)

Documentary
Documentary Requirements
Requirements

Photocopy of
Photocopy of Annual
Annual Income
Income Tax
Tax Return
Return (BIR
(BIR Form
Form 1702)
1702) with
with Audited
Audited Financial
Financial Statements
Statements and/or
and/or
Account Information Form of the covered taxable year duly received by the BIR; and
Account Information Form of the covered taxable year duly received by the BIR; and

Sworn declaration
Sworn declaration asas to
to dividends
dividends declared
declared taken
taken from
from the
the covered
covered year's
year's earnings
earnings and
and the
the
corresponding tax withheld, if any.
corresponding tax withheld, if any.

Procedures
Procedures

Fill-up BIR
Fill-up BIR Form
Form 1704
1704 in
in triplicate.
triplicate.

IfIf there
there is
is payment:
payment:

Proceed to
Proceed to the
the nearest
nearest Authorized
Authorized Agent
Agent Bank
Bank (AAB)
(AAB) of
of the
the Revenue
Revenue District
District Office
Office where
where you
you are
are
registered and
registered and present
present the
the duly
duly accomplished
accomplished BIR
BIR Form
Form 1704,
1704, together
together with
with the
the required
required attachments
attachments
and your
and your payment.
payment.

In places
In places where
where there
there are
are no
no AABs,
AABs, proceed
proceed to
to the
the Revenue
Revenue Collection
Collection Officer
Officer or
or duly
duly Authorized
Authorized City
City
or Municipal
or Municipal Treasurer located within
Treasurer located within the
the Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered and
and
present the
present the duly
duly accomplished
accomplished BIR
BIR Form
Form 1704.
1704.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped and
and validated
validated form
form from
from the
the teller
teller of
of the
the AABs/Revenue
AABs/Revenue
Collection Officer/duly Authorized City or Municipal Treasurer.
Collection Officer/duly Authorized City or Municipal Treasurer.

IfIf there
there is
is no
no payment:
payment:

Proceed to
Proceed to the
the Revenue
Revenue District
District Office
Office where
where you
you are
are registered
registered and
and present
present the
the duly
duly accomplished
accomplished
BIR Form
BIR Form 1704,
1704, together
together with
with the
the required
required attachments.
attachments.

Receive your
Receive your copy
copy of
of the
the duly
duly stamped
stamped and
and validated
validated form
form from
from the
the RDO
RDO representative
representative

Deadline
Deadline

Within fifteen
Within fifteen (15)
(15) days
days after
after the
the close
close of
of the
the taxable
taxable year
year

[return
[return to
to index]
index]

Annual Income
Annual Income Information
Information Form
Form for
for General
General Professional
Professional Partnerships
Partnerships

Sec. 55.
Sec. 55. Returns
Returns of
of General
General Professional
Professional Partnership
Partnership (Tax
(Tax Code
Code of
of 1997,
1997, as
as amended)
amended)

Every general
Every general professional
professional partnership
partnership shall
shall file,
file, in
in duplicate,
duplicate, aa return
return of
of its
its income,
income, except
except income
income
exempt under Section 32 (B) of this Title, setting forth the items of gross income and of
exempt under Section 32 (B) of this Title, setting forth the items of gross income and of deductions
deductions
allowed by
allowed by this
this Title,
Title, and
and the
the names,
names, Taxpayer
Taxpayer Identification
Identification Numbers
Numbers (TIN),
(TIN), addresses
addresses and
and shares
shares of
of
each of
each of the
the partners.
partners.

RATES:
RATES:

I.|. For
For Individual
Individual Citizens
Citizens and
and Resident
Resident Aliens
Aliens Earning
Earning Purely
Purely Compensation
Compensation Income
Income and
and Individuals
Individuals
Engaged in
Engaged in Business
Business and
and Practice
Practice of
of Profession
A. Graduated
A. Graduated Income
Income Tax Rates under
Tax Rates under Section
Section 24(A)(2)
24(A)(2) of
of the
the Tax
Tax Code
Code of
of 1997,
1997, as
as amended
amended by
by
Republic
Republic Act
Act No.
No. 10963
10963

+
+
+

B. For
B. For Purely
Purely Self-Employed
Self-Employed Individuals
Individuals and/or
and/or Professionals
Professionals Whose
Whose Gross
Gross Sales/Receipts
Sales/Receipts andand Other
Other
Non-Operating
Non-Operating Income
Income DoDo Not
Not Exceed
Exceed the
the VAT
VAT Threshold
Threshold of of P3,000,000,
P3,000,000, the
the tax
tax shall
shall be,
be, at
at the
the
taxpayer’s option
taxpayer’s option
a)
a) 8% Income
8% Income Tax on Gross
Tax on Gross Sales
Sales oror Gross
Gross Receipts
Receipts inin Excess
Excess of
of P250,000
P250,000 inin Lieu
Lieu of
of the
the
Graduated Income Tax Rates and the Percentage
Graduated Income Tax Rates and the Percentage Tax; Or Tax; Or
b)
b) Income Tax
Income Based on
Tax Based on the
the Graduated
Graduated Income
Income Tax
Tax Rates
Rates

C. For
C. For Individuals
Individuals Earning
Earning Both
Both Compensation
Compensation Income
Income and
and Income
Income from
from Business
Business and/or
and/or Practice
Practice of
of
Profession,
Profession, their
their income
income taxes
taxes shall
shall be:
be:

1. For
1. For Income
Income from from Compensation:
Compensation: Based
Based onon Graduated
Graduated Income
Income Tax
Tax Rates;
Rates; and
and
2.
2. For
For Income
Income from from Business
Business and/or
and/or Practice
Practice ofof Profession:
Profession:
a)
a) IfIf the
the total
total Gross
Gross Sales/Receipts
Sales/Receipts Do Do Not
Not Exceed
Exceed VAT
VAT Threshold
Threshold of of P3,000,000,
P3,000,000, the
the
Individual Taxpayer
Individual Taxpayer May May Opt
Opt to
to Avail:
Avail:
i.i. 8% Income
8% Income Tax on Gross
Tax on Gross Sales/Receipts
Sales/Receipts and and Other
Other Non-Operating
Non-Operating Income
Income
in
in Lieu
Lieu of
of thethe Graduated
Graduated Income
Income Tax
Tax Rates
Rates and
and the
the Percentage
Percentage Tax;
Tax; Or
Or
ii.
ii. Income Tax
Income Based on
Tax Based on Graduated
Graduated IncomeIncome Tax
Tax Rates
Rates
b)
b) IfIf the
the total
total Gross
Gross Sales/Receipts
Sales/Receipts Exceed
Exceed VAT VAT Threshold
Threshold of
of P3,000,000
P3,000,000
i.i. Income Tax
Income Based on
Tax Based on Graduated
Graduated IncomeIncome Tax
Tax Rates
Rates

D.
D. On
On Certain
Certain Passive
Passive Income
Income of
of Individual
Individual Citizens
Citizens and
and Resident
Resident Aliens
 Passive Income Tax Rate
1. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical compositions) 10%
- In general 20%
3. Prizes (P10,000 or less ) Graduated
Income Tax
Rates
- Over P10,000 20%
4. Winnings (except from PCSO and Lotto amounting to P10,000 or less ) 20%
- From PCSO and Lotto amounting to P10,000 or less exempt
5. Interest Income from a Depository Bank under the Expanded Foreign 15%
Currency Deposit System
6. Cash and/or Property Dividends received by an individual from a domestic 10%
corporation/ joint stock company/ insurance or mutual fund companies/ Regional
Operating Headquarter of multinational companies
7. Share of an individual in the distributable net income after tax of a partnership | 10%
(except GPPs)/ association, a joint account, a joint venture or consortium
taxable as corporation of which he is a member or co-venture
8. Capital gains from sale, exchange or other disposition of real property located | 6%
in the Philippines, classified as capital asset
9. Net Capital gains from sale of shares of stock not traded in the stock 15%
exchange
10. Interest Income from long-term deposit or investment in the form of savings, | Exempt
common or individual trust funds, deposit substitutes, investment management
accounts and other investments evidenced by certificates in such form
prescribed by the Bangko Sentral ng Pilipinas (BSP)
Upon pre-termination before the fifth year, there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:
Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%

Il. For
II. For Non-Resident
Non-Resident Aliens
Aliens Not
Not Engaged
Engaged in
in Trade
Trade or
or Business
 A. Tax Rate in General — on taxable income from all sources within the Mir lili e
Philippines Eta lalelivieltr||
citizen and
resident alien
individual
B. Certain Passive Income Tax Rates
. Interest from currency deposits, trust funds and deposit substitutes 20%
2. Royalties (on books as well as literary & musical compositions) 10%
- In general 20%
3. Prizes (P10,000 or less ) Graduated
Income Tax
Rates
- Over P10,000 20%
4. Winnings (except from PCSO and Lotto) 20%
- From PCSO and Lotto exempt
5. Cash and/or Property Dividends received from a domestic corporation/ joint | 20%
stock company/ insurance/ mutual fund companies/ Regional Operating
Headquarter of multinational companies
6. Share ofa non-resident alien individual in the distributable net income after | 20%
tax of a partnership (except GPPs) of which he is a partner or from an
association, a joint account, a joint venture or consortium taxable as
corporation of which he is a member or co-venture
7. Interest Income from long-term deposit or investment in the form of | Exempt
savings, common or individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced by certificates in
such form prescribed by the Bangko Sentral ng Pilipinas (BSP)
Upon pre-termination before the fifth year, there should be imposed on the
entire income from the proceeds of the long-term deposit based on the
remaining maturity thereof:
Holding Period
- Four (4) years to less than five (5) years 5%
- Three (3) years to less than four (4) years 12%
- Less than three (3) years 20%
8. Capital from the sale, exchange or other disposition of real property located | 6%
in the Philippines classified as capital asset
9. Net Capital gains from sale of shares of stock not traded in the Stock
Exchange
- Not over P100,000 5%
- Any amount in excess of P100,000 10%

Ill. For
III. For Non-resident
Non-resident Aliens
Aliens Not
Not Engaged
Engaged in
in Trade
Trade or
or Business
Business
1. Gross amount of income derived from all sources within the Philippines 25%
2. Capital gains from the exchange or other disposition of real property located in the 6%
Philippines
3. Net Capital gains from the sale of shares of stock not traded in the Stock Exchange
- Not Over P100,000 5%
- Any amount in excess of P100,000 10%

IV. For
IV. For Alien
Alien Individuals
Individuals Employed
Employed byby Regional
Regional Headquarters
Headquarters (RHQ)
(RHQ) or
or Area
Area Headquarters
Headquarters and
and
Regional Operating
Regional Operating Headquarters
Headquarters (ROH)
(ROH) of
of Multinational
Multinational Companies,
Companies, Offshore
Offshore Banking
Banking Units
Units (OBUs),
(OBUs),
Petroleum Service
Petroleum Service Contractor
Contractor and
and Subcontractor
Subcontractor
On the gross income consisting of salaries, wages, annuities, compensation, Graduated
remuneration and other emoluments, such as honoraria and emoluments Income Tax
derived from the Philippines Rates

V. For
V. For General
General Professional
Professional Partnerships
Partnerships
| Net Income of the Partnerships | 0% |

VI.
VI. For
For Domestic
Domestic Corporations
 Rates of Tax on Certain Passive Income of Corporations Tax Rate

1. Interest from currency deposits, trust funds, deposit substitutes and similar 20%
arrangements received by domestic corporations
2. Royalties from sources within the Philippines 20%
3. Interest Income from a Depository Bank under Expanded Foreign Currency 15%
Deposit System
4. Cash and Property Dividends received by a domestic corporation from 0%
another domestic corporation
5. Capital gains from the sale, exchange or other disposition of lands and/or 6%
building
6. Net Capital gains from sale of shares of stock not traded in the stock 15%
exchange

VII.
VII. For
For Resident
Resident Foreign
Foreign Corporation
Corporation

1) a. In General — on taxable income derived from sources within the 30%

Philippines
b. Minimum Corporate Income Tax — on gross income 2%
c. Improperly Accumulated Earnings — on improperly accumulated taxable 10%
income
2) International Carriers — on gross Philippine billings 2%%
3) Regional Operating Headquarters of Multinational Companies— on taxable 10%
income
4.) Regional or Area Headquarters of Multinational Companies exempt
5) Corporation Covered by Special Laws Rate specified
under the
respective
special laws
6) Offshore Banking Units (OBUs) 10%
In general — Income derived by OBUs from foreign currency transactions with | Exempt
non-residents, other OBUs, local commercial banks and branches of foreign
banks authorized by BSP
On interest income derived from foreign currency loans granted to 10%
residents other than offshore banking units or local commercial banks, local
branches of foreign banks authorized by BSP to transact business with OBUs
7) Income derived under the Expanded Foreign Currency Deposit System
Interest income derived by a depository bank under the expanded foreign TA
currency deposit system.
On Income derived by depository banks under the expanded foreign exempt
currency deposit systems from foreign currency transactions with non-
residents, OBUs in the Philippines, local commercial banks including
branches of foreign banks that may be authorized by BSP
On interest income derived from foreign currency loans granted by 10%
depository banks under the expanded foreign currency deposit systems to
residents other than offshore banking units in the Philippines or other
depository banks under the expanded system
8.) Branch Profit Remittances — on total profits applied or earmarked for 15%
remittance without any deduction for the tax component thereof (except those
activities which are registered with the Philippines Economic Zone Authority)
9.) Interest from currency deposits, trust funds, deposit substitutes and similar | 20%
arrangements
10. Royalties derived from sources within the Philippines 20%

1) What
1) What is
is income?
income?

Income means
Income means all
all wealth
wealth which
which flows
flows into
into the
the taxpayer
taxpayer other
other than
than as
as a
a mere
mere return
return of
of capital.
capital.

2) What
2) What is
is Taxable Income?
Taxable Income?

Taxable income means

Taxable income means the
the pertinent
pertinent items
items ofof gross
gross income
income specified
specified in
in the
the Tax
Tax Code
Code as
as amended,
amended,
less the
less the deductions,
deductions, if
if any,
any, authorized
authorized for
for such
such types
types of
of income,
income, by
by the
the Tax Code or
Tax Code or other
other special
special laws.
laws.

3) What
3) What is
is Gross
Gross Income?
Income?

Gross
Gross income
income means
means all
all income
income derived
derived from
from whatever
whatever source.
source.

4) What
4) What comprises
comprises gross
gross income?
 Gross
Gross income
income includes,
includes, but
but is
is not
not limited
limited to
to the
the following:
following:

1.
1. Compensation
Compensation for for services,
services, inin whatever
whatever form
form paid,
paid, including
including but
but not
not limited
limited to
to fees,
fees, salaries,
salaries, wages,
wages,
commissions
commissions and and similar
similar items
items
2. Gross
2. Gross income
income derived
derived from
from thethe conduct
conduct ofof trade
trade oror business
business oror the
the exercise
exercise of
of profession
profession
Gains derived
Gains derived from
from dealings
dealings inin property
property
3.. Interest
Interest
DAU HW

4.. Rents
Rents
WOON

5.. Royalties
Royalties
6.. Dividends
Dividends
7.. Annuities
Annuities
8.. Prizes
Prizes and
and winnings
winnings
9.. Pensions
Pensions
10. Partner's
10. Partner's distributive
distributive share
share from
from the
the net
net income
income ofof the
the general
general professional
professional partnerships
partnerships

5) What
5) What are
are some
some of
of the
the exclusions
exclusions from
from gross
gross income?
income?

1.. Life
Life insurance
insurance
PP

2.. Amount
Amount received
received by by insured
insured as as return
return ofof premium
premium
ADU KRWN
WOON

3.. Gifts,
Gifts, bequests
bequests and and devises
devises
4.. Compensation
Compensation for for injuries
injuries or or sickness
sickness
5.. Income
Income exempt
exempt underunder treaty
treaty
6.. Retirement
Retirement benefits,
benefits, pensions,
pensions, gratuities,
gratuities, etc.
etc.
7.. Miscellaneous
Miscellaneous items items
8.. Income
Income derived
derived by by foreign
foreign government
government
9.. Income
Income derived
derived by by the
the government
government or or its
its political
political subdivision
subdivision
10. Prizes and awards in sport competition
10. Prizes and awards in sport competition
11. Prizes
11. Prizes and
and awards
awards which
which met met the
the conditions
conditions set set in
in the
the Tax
Tax Code
Code
12. 13th month pay and other benefits not exceeding P90,000
12. 13th month pay and other benefits not exceeding P90,000
13.
13. GSIS,
GSIS, SSS,
SSS, Medicare
Medicare and and other
other contributions
contributions
14.
14. Gains
Gains from
from thethe sale
sale ofof bonds,
bonds, debentures
debentures or or other
other certificate
certificate of
of indebtedness
indebtedness with
with a
a maturity
maturity of
of
more than
more than five
five (5)
(5) years
years
15. Gains
15. Gains from
from redemption
redemption of of shares
shares inin mutual
mutual fund fund

6) What
6) What are
are the
the allowable
allowable deductions
deductions from
from gross
gross income?
income?

a) *Optional
a) *Optional Standard
Standard Deduction
Deduction -- an
an amount
amount not
not exceeding
exceeding 40%
40% of
of the
the gross
gross sales/receipts
sales/receipts for
for
individuals and
individuals and gross
gross income
income for
for corporations;
corporations; or
or

b) Itemized
b) Itemized Deductions
Deductions which
which include
include the
the following:
following:

-- Expenses
Expenses
-- Limit
Limit on
on Representation
Representation Expenses:
Expenses:

Representation
Representation and
and Entertainment
Entertainment Expense
Expense

Representation and
Representation and entertainment
entertainment expense
expense areare those
those incurred
incurred by
by the
the company
company in in the
the course
course of
of
business relative to entertaining or meeting with guests at a dining place, place of amusement,
business relative to entertaining or meeting with guests at a dining place, place of amusement,
sporting events
sporting events and
and similar
similar events
events or
or places
places as
as contemplated
contemplated under
under RR
RR No.
No. 10-2002.
10-2002.

These are allowed

These are allowed as as deduction
deduction because
because it
it develops
develops aa friendlier
friendlier atmosphere
atmosphere between
between thethe taxpayers
taxpayers
and potential
and potential clients,
clients, guests
guests or
or employees
employees inin order
order to
to develop
develop aa better
better business
business resulting
resulting to
to aa higher
higher
income and
income and eventually
eventually more
more taxes.
taxes.

However, such
However, such expenses
expenses are
are subject
subject to
to the
the following
following limitations
limitations on
on its
its deductibility:
Sellers of
Sellers of Goods-
Goods- 0.5%
0.5% of
of net
net sales
sales (net
(net of
of sales
sales returns,
returns, discounts
discounts and
and allowances).
allowances).
Sellers of
Sellers of Services-
Services- 1%
1% of
of gross
gross receipts.
receipts.
Note:
Note:

For taxpayer
For taxpayer engaged
engaged inin the
the sale
sale of
of both
both goods
goods and
and services,
services, specific
specific identification
identification or
or segregation
segregation has
has
to be
to be made.
made. Sellers
Sellers of
of service
service enjoy
enjoy aa higher
higher rate
rate because
because they
they are
are more
more prone
prone to
to spending
spending
representation and
representation and entertainment
entertainment in in dealings
dealings with
with its
its guests,
guests, clients,
clients, or
or customers.
customers.

-- Interest
Interest (RR
(RR No.
No. 13-2000
13-2000 -- mplements
mplements the the provisions
provisions of
of Section
Section 34(B)
34(B) of
of the
the Tax
Tax Code
Code of
of 1997
1997
relative to the requirements for the deductability of interest expense from the gross income of
relative to the requirements for the deductability of interest expense from the gross income of aa
corporation or an individual engaged in trade, business or in the practice of profession)
corporation or an individual engaged in trade, business or in the practice of profession)
-- Taxes
Taxes
-- Losses
Losses
-- Bad
Bad Debts
Debts
-- Depreciation
Depreciation
-- Depletion
Depletion of of Oil
Oil and
and Gas
Gas Wells
Wells and
and Mines
Mines
-- Charitable
Charitable Contributions
Contributions and
and Other
Other Contributions-
Contributions- Research
Research and
and Development
Development --

Except for
Except for employees
employees oror those
those earning
earning compensation
compensation income,
income, individual
individual and
and corporate
corporate taxpayers
taxpayers
have allowable
have allowable deductions
deductions from
from gross
gross income.
income. These
These include
include but
but are
are not
not limited
limited to
to ordinary
ordinary and
and
necessary business
necessary business expenses
expenses as
as provided
provided under
under Section
Section 34
34 of
of the
the tax
tax code.
code.

Charitable and
Charitable and other
other contributions
contributions or
or donations
donations may
may also
also be
be claimed
claimed as
as deductible
deductible expenses
expenses in
in full
full or
or
subject to
subject to limitations.
limitations.

IfIf I| make
make a
a donation
donation to
to the
the government,
government, is
is it
it deductible
deductible in
in full?
full?

Yes, provided
Yes, provided the
the donation
donation to
to the
the government
government will will bebe exclusively
exclusively used
used to
to undertake
undertake priority
priority activities
activities
in
in education, health, youth and sports development, human settlements, science and culture,
education, health, youth and sports development, human settlements, science and culture, and
and
economic development,
economic development, according
according toto the
the National
National Priority
Priority Plan
Plan determined
determined by by the
the National
National Economic
Economic
and Development
and Development Authority.
Authority. Otherwise,
Otherwise, itit will
will be be subject
subject toto limitations
limitations asas prescribed
prescribed in in Section
Section
34(H)(1).
34(H)(1).

When is
When is aa donation
donation to
to aa charitable
charitable organization
organization deductible
deductible in
in full?
full? If
If not,
not, how
how much
much can
can I| claim
claim as
as aa
deductible expense?
deductible expense?

Donations to
Donations to accredited
accredited non-governmental
non-governmental organizations
organizations are
are deductible
deductible in
in full.
full. As
As provided
provided under
under
Section 34(H)(2)(c),
Section 34(H)(2)(c), an
an NGO
NGO refers
refers to
to aa non-profit
non-profit domestic
domestic corporation:
corporation:

1. Organized
1. Organized and
and operated
operated exclusively
exclusively for
for scientific,
scientific, research,
research, educational,
educational, character-building
character-building and
and
youth and
youth and sports
sports development,
development, health,
health, social
social welfare,
welfare, cultural
cultural oror charitable
charitable purposes,
purposes, or
or aa
combination thereof,
combination thereof, no
no part
part of
of the
the net
net income
income of of which
which benefits
benefits any
any private
private individual;
individual;

2. Which,
2. Which, not
not later
later than
than the
the 15th
15th day
day of
of the
the third
third month
month after
after the
the close
close of
of the
the accredited
accredited NGO’s
NGO’s
taxable year
taxable year in
in which
which contributions
contributions are
are received,
received, uses
uses the
the donation
donation for
for activities
activities constituting
constituting the
the
purpose for which it is operated, unless an extended period is granted by the secretary of finance,
purpose for which it is operated, unless an extended period is granted by the secretary of finance,
upon recommendation
upon recommendation of of the
the commissioner;
commissioner;

3. The level
3. The level of
of administrative
administrative expense
expense ofof which
which shall,
shall, on
on an
an annual
annual basis,
basis, conform
conform with
with the
the rules
rules and
and
regulations to be prescribed by the secretary of finance, upon recommendation of the commissioner,
regulations to be prescribed by the secretary of finance, upon recommendation of the commissioner,
but in
but in no
no case
case toto exceed
exceed 30%
30% ofof the
the total
total expenses;
expenses; andand

4. The assets
4. The assets ofof which,
which, inin the
the event
event of of dissolution,
dissolution, would
would be be distributed
distributed toto another
another non-profit
non-profit
domestic corporation
domestic corporation organized
organized forfor aa similar
similar purpose,
purpose, or
or to
to the
the state
state for
for public
public purpose,
purpose, or
or would
would bebe
distributed by
distributed by aa court
court to
to another
another organization
organization to to be
be used
used for
for the
the purpose
purpose for
for which
which the
the dissolved
dissolved
organization
organization was
was organized.
Donations made
Donations made to
to entities
entities other
other than
than the
the government
government and
and accredited
accredited NGOs
NGOs asas provided
provided under
under
Section
Section 34(H)(2)
34(H)(2) are
are subject
subject to
to limitations.
limitations. Allowable
Allowable deductions
deductions must
must not
not exceed
exceed the
the limit
limit based
based on
on
taxable income
taxable income before
before claiming
claiming donations:
donations:

For individuals
For individuals —– not
not in
in excess
excess ofof 10%
10%
For
For corporations
corporations —– not
not in
in excess
excess ofof 5%
5%

Whether I| claim
Whether claim my
my donations
donations inin full
full or
or not
not as
as deductible
deductible expense,
expense, will
will I| be
be subject
subject to
to donor’s
donor’s tax?
tax?
How much do | need to pay to claim it as an allowable deduction?
How much do I need to pay to claim it as an allowable deduction?

Under the
Under the Tax Reform for
Tax Reform for Acceleration
Acceleration and
and Inclusion
Inclusion (TRAIN)
(TRAIN) law,
law, ifif your
your donations
donations do
do not
not exceed
exceed
P250,000 per year, you are exempted from donor’s tax regardless of the recipient or donee status.
P250,000 per year, you are exempted from donor’s tax regardless of the recipient or donee status.
Moreover, under
Moreover, under Section
Section 101(A),
101(A), the
the following
following gifts
gifts or
or donations
donations shall
shall be
be exempt
exempt from
from donor’s
donor’s tax:
tax:

1. Gifts
1. Gifts made
made to
to or
or for
for the
the use
use of
of the
the national
national government
government or or any
any entity
entity created
created by
by any
any of
of its
its agencies
agencies
which is
which is not
not conducted
conducted for
for profit,
profit, or
or to
to any
any political
political subdivision
subdivision of
of the
the government;
government; and
and

2.
2. Gifts
Gifts inin favor
favor of of an
an educational,
educational, charitable,
charitable, religious,
religious, cultural
cultural oror social
social welfare
welfare corporation,
corporation,
institution, accredited
institution, accredited NGO,NGO, trust
trust oror philanthropic
philanthropic organization,
organization, or or research
research institution
institution or
or organization,
organization,
provided that
provided that notnot more
more than
than 30%
30% of of the
the gifts
gifts shall
shall be
be used
used byby such
such donee
donee for for administration
administration purposes.
purposes.
The recipient is
The recipient is defined
defined asas aa non-stock
non-stock entity,
entity, paying
paying nono dividends,
dividends, governed
governed by by trustees
trustees who
who receive
receive
no
no compensation,
compensation, and and devoting
devoting allall its
its income,
income, whether
whether students’
students’ fees
fees or
or gifts,
gifts, donation,
donation, subsidies,
subsidies, or
or
other forms
other forms of of philanthropy,
philanthropy, to to the
the accomplishment
accomplishment and and promotion
promotion of of the
the purposes
purposes enumerated
enumerated in in
its articles
its articles ofof incorporation.
incorporation.

IfIf aa gift
gift or
or donation
donation exceeds
exceeds P250,000
P250,000 or or it
it is
is not
not included
included in
in the
the exception
exception under
under Section
Section 101(A),
101(A), itit
shall be
shall be subject
subject toto fixed
fixed 6%
6% donor’s
donor’s tax
tax asas amended
amended underunder the
the TRAIN
TRAIN lawlaw effective
effective January
January 1,1, 2018.
2018.
Donors must
Donors must pay
pay the
the donor’s
donor’s tax
tax within
within 3030 days
days after
after the
the date
date the
the gift
gift is
is made.
made. InIn the
the case
case of
of the
the cash
cash
and non-cash gifts given to Olympic gold medalist Hidilyn Diaz and other athletes, donors must pay
and non-cash gifts given to Olympic gold medalist Hidilyn Diaz and other athletes, donors must pay
the donor’s
the donor’s tax
tax before
before they
they can
can claim
claim it
it as
as aa deductible
deductible expense.
expense.
(https://www.rappler.com/business/ask-the-tax-whiz-donation-allowable-deduction/)
(https://www.rappler.com/business/ask-the-tax-whiz-donation-allowable-deduction/)

-- Pension Trusts
Pension Trusts
** Not
Not allowed
allowed toto non-resident
non-resident alien
alien individual
individual
** AA General
General Professional
Professional Partnership
Partnership (GPP)
(GPP) may
may avail
avail of
of the
the OSD
OSD only
only once,
once, either
either by
by the
the GPP
GPP or
or the
the
partners comprising
partners comprising the
the partnership
partnership

7) Who
7) Who are
are not
not required
required to
to file
file Income
Income Tax
Tax returns?
returns?

a. An
a. An individual
individual earning
earning purely
purely compensation
compensation income
income whose
whose taxable
taxable income
income does
does not
not exceed
exceed
P250,000.00
P250,000.00

b. An
b. An individual
individual whose
whose income
income tax
tax has
has been
been withheld
withheld correctly
correctly by
by his
his employer,
employer, provided
provided that
that such
such
individual has
individual has only
only one
one employer
employer for
for the
the taxable
taxable year
year

c. An
c. An individual
individual whose
whose sole
sole income
income has
has been
been subjected
subjected toto final
final withholding
withholding tax
tax or
or who
who is
is exempt
exempt from
from
income tax pursuant to the Tax Code and other special laws.
income tax pursuant to the Tax Code and other special laws.

d. An
d. An individual
individual who
who is
is aa minimum
minimum wage
wage earner
earner

e. Those
e. who are
Those who are qualified
qualified under
under “substituted
“substituted filing”.
filing”. However,
However, substituted
substituted filing
filing applies
applies only
only if
if all
all of
of
the following
the following requirements
requirements are
are present:
present:

-- the
the employee
employee received
received purely
purely compensation
compensation income
income (regardless
(regardless of
of amount)
amount) during
during the
the taxable
taxable year;
year;
-- the
the employee
employee received
received the
the income
income from
from only
only one
one employer
employer inin the
the Philippines
Philippines during
during the
the taxable
taxable
year;
-- the
the amount
amount ofof tax
tax due
due from
from the
the employee
employee at at the
the end
end of
of the
the year
year equals
equals the
the amount
amount of
of tax
tax withheld
withheld
by the
by the employer;
employer;
-- the
the employee’s
employee’s spouse
spouse also
also complies
complies with
with all
all 33 conditions
conditions stated
stated above;
above;
-- the
the employer
employer files
files the
the annual
annual information
information return
return (BIR
(BIR Form
Form No.No. 1604-CF);
1604-CF); and
and
-- the
the employer
employer issues
issues BIR
BIR Form
Form No.
No. 2316
2316 (Oct
(Oct 2002
2002 ENCS
ENCS version)
version) toto each
each employee.
employee.

8.) Who
8.) Who are
are exempt
exempt from
from Income
Income Tax?
Tax?

a. Income
a. Income from
from abroad
abroad of
of aa non-resident
non-resident citizen
citizen who
who is:
is:

i.i. A
A citizen
citizen of
of the
the Philippines
Philippines who
who establishes
establishes to
to the
the satisfaction
satisfaction of
of the
the Commissioner
Commissioner the
the fact
fact of
of his
his
physical presence abroad with a definite intention to reside therein
physical presence abroad with a definite intention to reside therein

ii. A
ii. A citizen
citizen of
of the
the Philippines
Philippines who
who leaves
leaves the
the Philippines
Philippines during
during the
the taxable
taxable year
year to
to reside
reside abroad,
abroad,
either as
either as an
an immigrant
immigrant or
or for
for employment
employment onon aa permanent
permanent basis
basis

iii. A
iii. A citizen
citizen of
of the
the Philippines
Philippines who
who works
works and
and derives
derives income
income from
from abroad
abroad and
and whose
whose employment
employment
thereat requires
thereat requires him
him to
to be
be physically
physically present
present abroad
abroad most
most of
of the
the time
time during
during the
the taxable
taxable year
year

iv. A
iv. A citizen
citizen whowho has
has been
been previously
previously considered
considered as as aa non-resident
non-resident citizen
citizen and
and whowho arrives
arrives in
in the
the
Philippines at
Philippines at any
any time
time during
during the
the year
year to
to reside
reside permanently
permanently in in the
the Philippines
Philippines willwill likewise
likewise be
be
treated as
treated as aa non-resident
non-resident citizen
citizen during
during the
the taxable
taxable year
year inin which
which hehe arrives
arrives in in the
the Philippines,
Philippines, with
with
respect to
respect to his
his income
income derived
derived from
from sources
sources abroad
abroad until
until the
the date
date of
of his
his arrival
arrival in
in the
the Philippines.
Philippines.

b. Overseas
b. Overseas Filipino
Filipino Worker,
Worker, including
including overseas
overseas seaman
seaman

An individual
An individual citizen
citizen of of the
the Philippines
Philippines who
who isis working
working and
and deriving
deriving income
income from
from abroad
abroad asas anan
overseas Filipino worker is taxable only on income from sources within the Philippines; provided, that
overseas Filipino worker is taxable only on income from sources within the Philippines; provided, that
aa seaman
seaman whowho is is aa citizen
citizen ofof the
the Philippines
Philippines and
and who
who receives
receives compensation
compensation for for services
services rendered
rendered
abroad as a member of the complement of a vessel engaged exclusively in international trade
abroad as a member of the complement of a vessel engaged exclusively in international trade will
will be
be
treated as an overseas Filipino worker.
treated as an overseas Filipino worker.

NOTE: A
NOTE: A Filipino
Filipino employed
employed as as Philippine
Philippine Embassy/Consulate
Embassy/Consulate service
service personnel
personnel of of the
the Philippine
Philippine
Embassy/consulate
Embassy/consulate isis not
not treated
treated as
as a
a non-resident
non-resident citizen;
citizen; hence,
hence, his
his income
income is
is taxable.
taxable.

c. General
c. General Professional
Professional Partnership
Partnership

d. Government
d. Government Service
Service Insurance
Insurance System
System (GSIS)
(GSIS)

e. Social
e. Social Security
Security System
System (SSS)
(SSS)

f. Philippine
f. Philippine Health
Health Insurance
Insurance Corporation
Corporation (PHIC)
(PHIC)

g. Local
g. Local Water
Water Districts
Districts (LWD)
(LWD)

9) What
9) What are
are the
the procedures
procedures in
in filing
filing Income
Income Tax
Tax returns
returns (ITRs)?
(ITRs)?

a. For
a. For “with
“with payment”
payment” ITRs
ITRs (BIR
(BIR Form
Form Nos.
Nos. 1700
1700// 1701
1701 // 1701Q
1701Q// 1702
1702 // 1702Q// 1704)
1704)

File the
File the return
return inin triplicate
triplicate (two
(two copies
copies for
for the
the BIR
BIR and
and one
one copy
copy for
for the
the taxpayer)
taxpayer) with
with the
the Authorized
Authorized
Agent Bank
Agent Bank (AAB)
(AAB) ofof the
the place
place where
where taxpayer
taxpayer isis registered
registered or or required
required to to be
be registered.
registered. In In places
places
where there
where there areare nono AABs,
AABs, file
file the
the return
return directly
directly withwith the
the Revenue
Revenue Collection
Collection Officer
Officer or or duly
duly
Authorized Treasurer
Authorized Treasurer of of the
the city
city or
or municipality
municipality in in which
which such
such person
person has has his
his legal
legal residence
residence or or
principal place
principal place ofof business
business in in the
the Philippines,
Philippines, oror if
if there
there is
is none,
none, filing
filing of
of the
the return
return will
will be
be atat the
the
Office of
Office of the
the Commissioner.
b.
b. For
For “no
“no payment”
payment” ITRs
ITRs --
-- refundable,
refundable, break-even,
break-even, exempt
exempt andand no
no operation/transaction,
operation/transaction,
including returns
including returns to
to be
be paid
paid on
on 2nd
2nd installment
installment and
and returns
returns paid
paid through
through a
a Tax
Tax Debit
Debit Memo(TDM)
Memo(TDM)

File the
File the return
return with
with the
the concerned
concerned Revenue
Revenue District
District Office
Office (RDO)
(RDO) where
where the
the taxpayer
taxpayer isis registered.
registered.
However, "no
However, "no payment"
payment" returns
returns filed
filed late
late shall
shall not
not be
be accepted
accepted byby the
the RDO
RDO but
but instead,
instead, they
they shall
shall be
be
filed with
filed with anan Authorized
Authorized Agent
Agent Bank
Bank (AAB)
(AAB) oror Collection
Collection Officer/Deputized
Officer/Deputized Municipal
Municipal Treasurer
Treasurer (in(in
places where
places where there
there are
are no
no AABs),
AABs), for
for collection
collection ofof necessary
necessary penalties.
penalties.

10) How
10) How is
is Income
Income Tax payable of
Tax payable of individuals
individuals (resident
(resident citizens
citizens and
and non-resident
non-resident citizens)
citizens) computed?
computed?

A. Based on Graduated Income Tax Rate

Gross Income P
Less: Allowable Deductions (Itemized or Optional)
Net Taxable Income P
Multiply by Tax Rate (0% to 35%)
Income Tax Due P
Less: Tax Withheld (per BIR From 2316)
Income Tax Payable P

B. Based on Preferential Tax Rate of 8%

i. Taxpayers source of income is purely from self-employment

Gross Sales/Receipts P
Add: Non-operating Income
Gross Taxable Income P
ness: Amount allowed as deduction under Sec. 24 (A)(2)(b) of NIRC, as 250,000.00

Net Taxable Income P

Multiply by Tax Rate 8%
Income Tax Due P
Tax Withheld (per BIR From 2307)
Income Tax Payable P

i . Mixed Income Earner

Total Compensation Income

Less: Non-taxable Income

13" month pay and other benefits (max)

Taxable Compensation Income
Multiply by Tax Rate (0% to 35%)
Tax Due on Compensation

Gross Sales/Receipts
Add: Non-operating Income
Taxable Business Income
Multiply by Tax Rate
Tax Due on Business Income

Total Income Tax Due (Compensation + Business)

Tax Withheld (per BIR From 2316/2307)
Income Tax Payable

11) How
11) How is
is Income
Income Tax
Tax Paid?
 A. Through withholding

PMC eyo eC
If the gross annual business or professional income did not exceed 5%
P3,000,000.00
If the gross annual business or professional income is more than 10%
P3,000,000.00
eM Crm at hots Pec)
lf the gross annual business or professional income did not exceed 10%
P720,000.00
If the gross annual business or professional income is more than 15%
P720,000.00

B. Pay the balance as you file the tax return, computed as follows:

Income Tax Due P

Less: Withholding Tax
Net Income Tax Due* P

*Note: When
*Note: When thethe tax
tax due
due exceeds
exceeds P2,000.00,
P2,000.00, the the taxpayer
taxpayer may
may elect
elect to
to pay
pay in
in two
two equal
equal installments,
installments,
the first
the first installment
installment to to shall
shall be
be paid
paid atat the
the time
time the
the return
return is
is filed
filed and
and the
the second
second installment
installment on
on or
or
before October
before October 15 15 following
following the
the close
close ofof the
the calendar
calendar year
year to
to the
the Authorized
Authorized Agent
Agent Bank
Bank (AAB)
(AAB) within
within
the jurisdiction
the jurisdiction ofof the
the Revenue
Revenue District
District Office
Office (RDO)
(RDO) where
where the
the taxpayer
taxpayer isis registered
registered

12) Is
12) Is the
the Minimum
Minimum Corporate
Corporate Income
Income Tax
Tax (MCIT)
(MCIT) an
an addition
addition to
to the
the regular
regular or
or normal
normal income
income tax?
tax?

No, the
No, the MCIT
MCIT isis not
not an
an additional
additional tax.tax. An
An MCIT
MCIT of of 2%
2% ofof the
the gross
gross income
income as as of
of the
the end
end ofof taxable
taxable year
year
(whether calendar or fiscal year, depending on the accounting period employed) is imposed on
(whether calendar or fiscal year, depending on the accounting period employed) is imposed on aa
corporation taxable
corporation taxable under
under Title
Title IIIl of
of the
the Tax
Tax Code,
Code, as as amended,
amended, beginning
beginning on on the
the 4th
4th taxable
taxable year
year
immediately following the taxable year in which such corporation commenced its business operations
immediately following the taxable year in which such corporation commenced its business operations
when the
when the MCIT
MCIT is is greater
greater than
than the
the regular
regular income
income tax.
tax. The MCIT is
The MCIT is compared
compared withwith the
the regular
regular income
income
tax, which
tax, which is is due
due from
from aa corporation.
corporation. If If the
the regular
regular income
income is is higher
higher than
than thethe MCIT,
MCIT, then
then the
the
corporation does
corporation does notnot pay
pay the
the MCIT
MCIT but but the
the amount
amount ofof thethe regular
regular income
income tax.
tax.

13) Who
13) Who are
are covered
covered by
by MCIT?
MCIT?

The MCIT covers

The MCIT covers domestic
domestic andand resident
resident foreign
foreign corporations
corporations which
which are
are subject
subject to
to the
the regular
regular income
income
tax. The
tax. term “regular
The term “regular income
income tax”
tax” refers
refers to
to the
the regular
regular income
income tax
tax rates
rates under
under the
the Tax
Tax Code.
Code. Thus,
Thus,
corporations which
corporations which are
are subject
subject to
to aa special
special corporate
corporate tax
tax or
or to
to preferential
preferential rates
rates under
under special
special laws
laws
do not
do not fall
fall within
within the
the coverage
coverage of
of the
the MCIT.
MCIT.

For corporations
For corporations whose
whose operations
operations oror activities
activities areare partly
partly covered
covered by by the
the regular
regular income
income tax
tax and
and
partly covered
partly covered by by the
the preferential
preferential rate
rate under
under special
special law,
law, the
the MCIT
MCIT shall
shall apply
apply the
the regular
regular income
income tax
tax
rate on
rate on its
its operations
operations not not covered
covered byby the
the tax
tax incentives.
incentives. Newly
Newly established
established corporations
corporations or
or firms
firms
which are
which are onon their
their first
first 3
3 years
years of
of operations
operations are
are not
not covered
covered by by the
the MCIT.
MCIT.

14) When
14) When does
does aa corporation
corporation start
start to
to be
be covered
covered by
by the
the MCIT?
MCIT?

A corporation
A corporation starts
starts to to be
be covered
covered by by the
the MCIT
MCIT on on the
the 4th
4th year
year following
following the the year
year of of the
the
commencement of its business operations. The period of reckoning which is the start of its business
commencement of its business operations. The period of reckoning which is the start of its business
operations is
operations is the
the year
year when
when the
the corporation
corporation waswas registered
registered with
with the
the BIR.
BIR. This
This rule
rule will
will apply
apply
regardless of
regardless of whether
whether the the corporation
corporation is
is using
using the
the calendar
calendar year
year or
or fiscal
fiscal year
year asas its
its taxable
taxable year.
year.

15) When
15) When is
is the
the MCIT
MCIT reported
reported and
and paid?
paid? Is
Is it
it quarterly?
quarterly?

The MCIT is
The MCIT is paid
paid on
on anan annual
annual basis
basis and
and quarterly
quarterly basis.
basis. The
The rules
rules are
are governed
governed by
by Revenue
Revenue
Regulations No.
Regulations No. 12-2007.
12-2007.

16) How
16) How is
is MCIT
MCIT computed?
computed?

The MCIT is
The MCIT is 2%
2% of
of the
the gross
gross income
income of
of the
the corporation
corporation at
at the
the end
end of
of the
the taxable
taxable year.
The computation
The computation and and the
the payment
payment of of MCIT,
MCIT, shall
shall likewise
likewise apply
apply atat the
the time
time ofof filing
filing the
the quarterly
quarterly
corporate
corporate income
income taxtax as
as prescribed
prescribed under
under Section
Section 75 75 and
and Section
Section 77 77 ofof the Tax Code,
the Tax Code, as as amended.
amended.
Thus, in
Thus, in the
the computation
computation of of the
the tax
tax due
due for
for the
the taxable
taxable quarter,
quarter, ifif the
the computed
computed quarterly
quarterly MCIT
MCIT is is
higher than
higher than the
the quarterly
quarterly normal
normal income
income tax,tax, the
the tax
tax due
due to
to be
be paid
paid forfor such
such taxable
taxable quarter
quarter at at the
the
time of
time of filing
filing the
the quarterly
quarterly income
income tax
tax return
return shall
shall bebe the
the MCIT
MCIT which
which is is two
two percent
percent (2%)
(2%) ofof the
the gross
gross
income as
income as of
of the
the end
end of
of the
the taxable
taxable quarter.
quarter.

“Gross income”
“Gross income” means
means gross
gross sales
sales less
less sales
sales returns,
returns, discounts
discounts and
and cost
cost of
of goods
goods sold.
sold. Passive
Passive income,
income,
which have been subject to a final tax at source do not form part of gross income for purposes
which have been subject to a final tax at source do not form part of gross income for purposes ofof
computing the
computing the MCIT.
MCIT.

Cost of
Cost of goods
goods sold
sold includes
includes all
all business
business expenses
expenses directly
directly incurred
incurred to
to produce
produce the
the merchandise
merchandise to
to
bring them
bring them to
to their
their present
present location
location and
and use.
use.

For trading
For trading oror merchandising
merchandising concern,
concern, cost
cost ofof goods
goods sold
sold means
means the
the invoice
invoice cost
cost of
of goods
goods sold,
sold, plus
plus
import duties,
import duties, freight
freight in
in transporting
transporting thethe goods
goods toto the
the place
place where
where the
the goods
goods are
are actually
actually sold,
sold,
including insurance
including insurance while
while the
the goods
goods are
are in
in transit.
transit.

For aa manufacturing
For manufacturing concern,
concern, cost
cost of
of goods
goods manufactured
manufactured and and sold
sold means
means all
all costs
costs of
of production
production of of
finished
finished goods
goods such
such as
as raw
raw materials
materials used,
used, direct
direct labor
labor and
and manufacturing
manufacturing overhead,
overhead, freight
freight cost,
cost,
insurance premiums
insurance premiums and
and other
other costs
costs incurred
incurred to
to bring
bring the
the raw
raw materials
materials to
to the
the factory
factory or
or warehouse.
warehouse.

For sale
For sale of
of services,
services, gross
gross income
income means
means gross
gross receipts
receipts less
less discounts
discounts and
and cost
cost of
of services
services which
which cover
cover
all direct
all direct costs
costs and
and expenses
expenses necessarily
necessarily incurred
incurred toto provide
provide the
the services
services required
required by
by the
the customers
customers
and clients
and clients including:
including:

Salaries and
Salaries and employees
employees benefits
benefits ofof personnel,
personnel, consultants
consultants andand specialists
specialists directly
directly rendering
rendering the
the
service;
service;
Cost of
Cost of facilities
facilities directly
directly utilized
utilized in
in providing
providing the
the service
service such
such as
as depreciation
depreciation or or rental
rental of
of equipment
equipment
used;
used;
Cost of
Cost of supplies
supplies
Interest Expense
Interest Expense is is not
not included
included as as part
part of
of cost
cost of
of service,
service, except
except in
in the
the case
case ofof banks
banks and
and other
other
financial institutions.
financial institutions.

“Gross Receipts”
“Gross Receipts” means
means amounts
amounts actually
actually or
or constructively
constructively received
received during
during the
the taxable
taxable year.
year. However,
However,
for taxpayers
for taxpayers employing
employing the
the accrual
accrual basis
basis of
of accounting,
accounting, itit means
means amounts
amounts earned
earned as
as gross
gross income.
income.

17) What
17) What is
is the
the carry
carry forward
forward provision
provision under
under the
the MCIT?
MCIT?

Any excess
Any excess of
of the
the MCIT
MCIT over
over the
the normal
normal income
income tax
tax may
may be
be carried
carried forward
forward and
and credited
credited against
against the
the
normal income
normal income tax
tax for
for the
the three
three (3)
(3) immediately
immediately succeeding
succeeding taxable
taxable years.
years.

18) How
18) How would
would the
the MCIT
MCIT be
be recorded
recorded for
for accounting
accounting purposes?
purposes?

Any amount
Any amount paid
paid as
as excess
excess minimum
minimum corporate
corporate income
income tax
tax should
should be
be recorded
recorded in
in the
the corporation’s
corporation’s
books as an asset under account title “Deferred charges-MCIT”
books as an asset under account title “Deferred charges-MCIT”

19) How
19) How long
long can
can we
we amend
amend our
our income
income tax
tax return?
return?

There is no
There is no prescription
prescription period
period for
for amending
amending the
the return.
return. When
When the
the taxpayer
taxpayer has
has been
been issued
issued aa Letter
Letter
of Authority,
of Authority, he
he can
can no
no longer
longer amend
amend the
the return.
return.

20) Can
20) Can aa benefactor
benefactor of
of aa senior
senior citizen
citizen claim
claim him/her
him/her as
as additional
additional dependent
dependent in
in addition
addition to
to his/her
his/her 3
3
qualified dependent
qualified dependent children
children atat Php25,000
Php25,000 each?
No, pursuant
No, pursuant to to Revenue
Revenue Regulations
Regulations 2-94,
2-94, the
the benefactor
benefactor of of aa senior
senior citizen
citizen cannot
cannot claim
claim the
the
additional exemption.
additional exemption. Further,
Further, additional
additional exemptions
exemptions ofof individual
individual taxpayers
taxpayers are
are removed
removed under
under RA
RA
10963 (Tax
10963 (Tax Reform
Reform for
for Acceleration
Acceleration and
and Inclusion).
Inclusion).

INCOME TAX
INCOME RATES FOR
TAX RATES FOR INDIVIDUAL
INDIVIDUAL

(a) Tax Schedule Effective January 1,2018 until December 31, 2022 [4].

Not over P250,000..0...

eee cecsseeesssssesneeeessnsseses 0%

Over P250,000 but not over P400,000.........0..u.u. 20% Of the excess over P250,000

Over P400,000 but not over P800,000.........0...ucuu. P30,000 + 25% of the excess over P400,000

Over P800,000 but not over P2,000,000......................... P130,000 + 30% of the excess over P800,000

Over P2,000,000 but not over P8,000,000.................... P490,000 + 32% of the excess over P2,000,000

Over P8,000,000 occ P2,410,000 + 35% of the excess over P8,000,000

Tax Schedule Effective January 1, 2023 and onwards:

Not Over P250,000.0..o

ccc cecccccccccsseessesesse see ssssscssceneess 0%

Over P250,000 but not over P400,000............... sussssueee 19% Of the excess over P250,000

Over P400,000 but not over P800,000............. sssessseeeeee P22,500 + 20% of the excess over P400,000

Over P800,000 but not over P2,000,000.......... P102,500 + 25% of the excess over P800,000

Over P2,000,000 but not over P8,000,000......... . P402,500 + 30% of the excess over P2,000,000

Over P8,000,000 oo. cecceccsccsceseeseeeceeseeseseeee ww... P2,202,500 + 35% of the excess over P8,000,000

NOTE:
NOTE:
Taxpayer
Taxpayer Taxable
Taxable Sources
Sources
RC
RC Within and
Within and without
without the
the Philippines
Philippines
NRC, RA,
NRC, RA, OCW,
OCW, NRA-ETB,
NRA-ETB, NRA-NETB
NRA-NETB Within the
Within the Philippines
Philippines only
only

Section
Section 25,
25, (A)(1),
(A)(1), A A nonresident
nonresident alien
alien individual
individual engaged
engaged in in trade
trade oror business
business inin the
the Philippines
Philippines
shall be
shall be subject
subject to to an
an income
income tax
tax in
in the
the same
same manner
manner as as an
an individual
individual citizen
citizen and
and a a resident
resident alien
alien
individual,
individual, on on taxable
taxable income
income received
received from
from allall sources
sources within
within thethe Philippines.
Philippines. A A nonresident
nonresident alien
alien
individual who
individual who shall
shall come
come toto the
the Philippines
Philippines and and stay
stay therein
therein forfor an
an aggregate
aggregate period
period ofof more
more than
than
one
one hundred
hundred eighty
eighty (180)
(180) days
days during
during anyany calendar
calendar year
year shall
shall be
be deemed
deemed a a 'nonresident
‘nonresident alien
alien doing
doing
business
business in in the
the Philippines'.
Philippines'. Section
Section 2222 (G)
(G) of
of this
this Code
Code notwithstanding.
notwithstanding.

PASSIVE INCOME:
PASSIVE INCOME:

Legal Basis
Legal Basis (Section
(Section Provision
Provision RC,
RC, NRC,
NRC, NRANETB
NRANETB
of the
of the NIRC
NIRC of
of RA | NRAET
RA NRAET Section
Section
1997, as
1997, as amended
amended 25(B)
25(B)
24(B)(1)
24(B)(1) Interests -- nterest
Interests nterest from
from anyany currency
currency bank
bank | 20%
20% | 20%
20% 25%
25%
deposit and
deposit and yield
yield or
or any
any other
other monetary
monetary benefit
benefit
from deposit
from deposit substitutes***
substitutes*** and and from
from trust
trust
 funds and
funds and similar
similar arrangements
arrangements
***Deposit Substitute
***Deposit Substitute -- alternative
alternative form form of of
obtaining funds
obtaining funds from from the the PUBLIC
PUBLIC otherother than
than
deposits, through
deposits, through dept dept instruments
instruments for for the
the
borrower’s own
borrower’s own account
account (RR (RR No.No. 14-2012)
14-2012)
Public
Public -- borrowing
borrowing from from 2020 or or moremore individuals
individuals
or corporate lenders at any one time
or corporate lenders at any one time
24(B)(1)
24(B)(1) Interest from
Interest from depositary bank
depositary bank underunder the the | 15% | Exempt
15% Exempt | Exempt
Exempt
expanded
expanded foreign currency
foreign currency deposit deposit system
system
(FCDS)
(FCDS) beginning January
beginning January 1, 1, 2018
2018 (Note:
(Note:
Applicable only
Applicable only toto Resident
Resident Taxpayers)
Taxpayers)
24(B)(1)
24(B)(1) Long-term bank
Long-term bank deposit
deposit or or bank
bank investment
investment (at (at | Ex
Ex Ex
Ex 25%
25%
least 5-year
least 5-year maturity
maturity (NOTE:(NOTE: Exemption
Exemption does does
not apply
not apply to to NRA-NETB)
NRA-NETB)
24(B)(1)
24(B)(1) Pre-termination of
Pre-termination of long-term
long-term deposit
deposit
55 years
years or or over
over Ex
Ex Ex
Ex 25%
25%
Four (4)
Four (4) years
years to to less
less than
than five
five (5)
(5) years
years 5%
5% 5%
5% 25%
25%
Three (3)
Three (3) years
years to to less
less than
than (4)(4) years
years 12% |
12% 12%
12% 25%
25%
Less than
Less than three
three (3) (3) years
years 20% |
20% 20%
20% 25%
25%
Legal
Legal Basis
Basis (Section
(Section Provision
Provision RC,
RC, NRAET
NRAET | NRANETB
NRANETB
of
of the
the NIRC
NIRC of
of RA,
RA, Section
Section
1997, as
1997, as amended
amended NRC
NRC 25(B)
25(B)

24(B)(1)
24(B)(1) Royalties --
Royalties
Literary works
Literary works 10% |
10% 10%
10% 25%
25%
Books
Books 10% |
10% 10%
10% 25%
25%
Musical Compositions
Musical Compositions 10% |
10% 10%
10% 25%
25%
Royaltied in
Royaltied in general
general or or others
others 20% |
20% 20%
20% 25%
25%
24(B)(1)
24(B)(1) Prizes
Prizes 20% |
20% 20%
20% 25%
25%
(except
(except prizes
prizes amounting
amounting to to Ten
Ten thousand
thousand pesos pesos | BTax
BTax | BTax
BTax 25%
25%
(P10,000) or
(P10,000) or less
less which
which shall
shall bebe subject
subject to to tax
tax
under Subsection
under Subsection (A) (A) of
of Section
Section 24 24
and other
and other winnings
winnings 20% | 20%
20% 20% 25%
25%
(except winning
(except winning amounting
amounting to to Ten
Ten thousand
thousand
pesos (P10,000)
pesos (P10,000) or or less
less [13]
[13] from
from Philippine
Philippine
Charity
Charity Sweepstakes
Sweepstakes and and Lotto
Lotto which
which shall
shall bebe
exempt
exempt [13]),
[13]), derived
derived fromfrom sources
sources within
within thethe
Philippines:
Philippines:
PCSO
PCSO Winnings
Winnings (CREATE
(CREATE Law Law Beg.
Beg. April
April 11,11,
2021):
2021):
Not
Not more
more than
than P10,000.00
P10,000.00 Ex
Ex Ex
Ex 25%
25%
More
More than
than P10,000.00
P10,000.00 20%
20% | 20%
20% 25%
25%
PCSO Winnings
PCSO Winnings (TRAIN
(TRAIN LawLaw Prior
Prior April
April 11,
11, 2021):
2021):
Not
Not more
more than
than P10,000.00
P10,000.00 Ex
Ex Ex
Ex 25%
25%
More
More than
than P10,000.00
P10,000.00 20% Ex
20% | Ex 25%
25%

24(B)(2)
24(B)(2) Cash and/or
Cash and/or Property
Property Dividends
Dividends -- 10% | 20%
10% 20% 25%
25%
actually or
actually or constructively
constructively received
received by an
by an Sec.
Sec. Sec. 25(B)
Sec. 25(B)
individual from
individual from aa domestic
domestic corporation
corporation or or from
from 25(A)(2)
25(A)(2)

aa joint stock company,

joint stock company, insurance
insurance or or mutual
mutual fund
fund
companies and
companies and regional
regional operating
operating headquarters
headquarters
of multinational
of multinational companies,
companies, or or on
on the
the share
share of of
an individual
an individual in in the
the distributable
distributable net net income
income
after tax
after tax ofof aa partnership
partnership (except
(except aa general
general
professional partnership)
professional partnership) of of which
which he he is is aa
partner, or
partner, or onon the
the share
share ofof an
an individual
individual in in the
the
 net
net income
income after
after tax
tax ofof anan association,
association, a joint
a joint
account,
account, or or a joint venture
a joint venture or or consortium
consortium
taxable as
taxable as aa corporation
corporation of of which
which he he isis aa
member or
member or co-venturer:
co-venturer:
24(C ))
24(C Capital Gains
Capital Gains from
from SaleSale ofof Shares
Shares of of Stock
Stock notnot | 15% |
15% 15%
15% 15%
15%
Traded in the Stock Exchange.
Traded in the Stock Exchange. 24(C) |
24 (C )
25(A)(3)
25(A)(3)
25(8)
25(B)

24(D)
24(D) Capital Gains
Capital Gains from
from Sale
Sale ofof Real
Real Property
Property 6%
6% 6%
6% 6%
6%
24 (D)
24 (D) 25(A)(3)
25(A)(3) 25(B)
25(B)

Type of
Type of Shares
Shares Sold
Sold Corporation
Corporation Applicable Tax
Applicable Tax Rate
Rate
Closely held
Closely held corporation
corporation (Not
(Not | Domestic Corporation
Domestic Corporation 15%
15%
Listed
Listed in the
in the Local
Local Stocks |
Stocks Foreign Corporation
Foreign Corporation Basic Tax
Basic Tax
Exchange)
Exchange)
Listed
Listed in the
in the Local
Local Stocks |
Stocks Domestic
Domestic &
& Foreign | Exempt
Foreign Exempt from
from Income
Income Tax;Tax; but
but
Exchange
Exchange Corporation
Corporation Subject to Business Tax or
Subject to Business Tax or Stock
Stock
Transaction Tax
Transaction Tax ofof 6/10
6/10 of of 1%
1%
of Gross
of Gross Selling
Selling Price
Price

REMEMBER:
REMEMBER:

NRA-NETB
NRA-NETB
1.
1. 25%
25% FWT
FWT on on ALL:
ALL:
a)
a) Ordinary Income
Ordinary Income
b)
b) Passive income
Passive income derived
derived from
from sources
sources within
within the
the Philippines
Philippines including
including interest
interest income
income from
from
long-term bank
long-term bank deposit
deposit or
or investment
investment andand PCSO
PCSO winnings,
winnings, except
except interest
interest income
income onon bank
bank
deposit under
deposit under FCDU
FCDU
2. CGT
2. CGT onon sales
sales of
of shares
shares of
of stocks
stocks of
of aa domestic
domestic corporation
corporation directly
directly to
to buyer
buyer (closely-held
(closely-held DC)
DC)
3. CGT
3. CGT onon sale
sale of
of aareal property classified
real property classified as
as capital
capital asset
asset located
located in
in the
the Philippines
Philippines

SEC. 31.
SEC. 31. Taxable Income Defined.
Taxable Income Defined. -The
-The term
term ‘taxable
‘taxable income’
income’ means
means the
the pertinent
pertinent items
items of
of gross
gross
income specified in this Code, less the deductions, if any, authorized for such types of income by
income specified in this Code, less the deductions, if any, authorized for such types of income by this
this
Code or
Code or other
other special
special laws.
laws.

SEC.
SEC. 32.
32. Gross
Gross Income.
Income. --

(A) General
(A) General Definition.
Definition. -- Except
Except when
when otherwise
otherwise provided
provided inin this
this Title,
Title, gross
gross income
income means
means all
all income
income
derived from
derived from whatever
whatever source,
source, including
including (but
(but not
not limited
limited to)
to) the
the following
following items:
items:

(1) Compensation
(1) Compensation for
for services
services inin whatever
whatever form
form paid,
paid, including,
including, but
but not
not limited
limited to
to fees,
fees, salaries,
salaries,
wages,
wages, commissions,
commissions, and
and similar
similar items;
items;

(2) Gross
(2) Gross income
income derived
derived from
from the
the conduct
conduct of
of trade
trade or
or business
business or
or the
the exercise
exercise of
of aa profession;
profession;

(3) Gains
(3) Gains derived
derived from
from dealings
dealings in
in property;
property;

(4) Interests;
(4) Interests;

(5) Rents;
(5) Rents;

(6) Royalties;
(6) Royalties;

(7) Dividends;
(7) Dividends;

(8) Annuities;
(8) Annuities;

(9) Prizes
(9) Prizes and
and winnings;
winnings;
(10) Pensions;
(10) Pensions; and
and

(11) Partner's
(11) Partner's distributive
distributive share
share from
from the
the net
net income
income of
of the
the general
general professional
professional partnership.
partnership.

(B) Exclusions
(B) Exclusions from
from Gross
Gross Income.
Income. -- The
The following
following items
items shall
shall not
not be
be included
included in
in gross
gross income
income and
and
shall be
shall be exempt
exempt from
from taxation
taxation under
under this
this Title:
Title:

(1) Life
(1) Life Insurance.
Insurance. -- The
The proceeds
proceeds ofof life
life insurance
insurance policies
policies paid
paid to
to the
the heirs
heirs or
or beneficiaries
beneficiaries upon
upon the
the
death of the insured, whether in a single sum or otherwise, but if such amounts
death of the insured, whether in a single sum or otherwise, but if such amounts are held by the are held by the
insurer under
insurer under anan agreement
agreement to
to pay
pay interest
interest thereon,
thereon, the
the interest
interest payments
payments shall
shall be
be included
included inin gross
gross
income.
income.

(2) Amount
(2) Amount Received
Received by
by Insured
Insured asas Return
Return of of Premium.
Premium. -- The
The amount
amount received
received byby the
the insured,
insured, asas aa
return of
return of premiums
premiums paid
paid by
by him
him under
under life
life insurance,
insurance, endowment,
endowment, or or annuity
annuity contracts,
contracts, either
either during
during
the term
the term or
or at
at the
the maturity
maturity of
of the
the term
term mentioned
mentioned in in the
the contract
contract or
or upon
upon surrender
surrender ofof the
the contract.
contract.

(3) Gifts,
(3) Gifts, Bequests,
Bequests, and
and Devises.
Devises. -- The
The value
value of
of property
property acquired
acquired by by gift,
gift, bequest,
bequest, devise,
devise, oror descent:
descent:
Provided,
Provided, however,
however, That
That income
income from
from such
such property,
property, as
as well
well asas gift,
gift, bequest,
bequest, devise
devise oror descent
descent of
of
income from
income from any
any property,
property, in
in cases
cases of
of transfers
transfers of
of divided
divided interest,
interest, shall
shall bebe included
included in
in gross
gross income.
income.

(4) Compensation
(4) Compensation for
for Injuries
Injuries or
or Sickness.
Sickness. -- amounts
amounts received,
received, through
through Accident
Accident oror Health
Health Insurance
Insurance
or under
or under Workmen's
Workmen's Compensation
Compensation Acts,Acts, as
as compensation
compensation forfor personal
personal injuries
injuries or
or sickness,
sickness, plus
plus the
the
amounts of
amounts of any
any damages
damages received,
received, whether
whether byby suit
suit or
or agreement,
agreement, on on account
account ofof such
such injuries
injuries or
or
sickness.
sickness.

(5) Income
(5) Income Exempt
Exempt under
under Treaty.
Treaty. -- Income
Income ofof any
any kind,
kind, to
to the
the extent
extent required
required by
by any
any treaty
treaty obligation
obligation
binding upon
binding upon the
the Government
Government of of the
the Philippines.
Philippines.

(6)
(6) Retirement
Retirement Benefits,
Benefits, Pensions,
Pensions, Gratuities,
Gratuities, etc.-
etc.-

(a) Retirement
(a) Retirement benefits benefits received
received underunder Republic
Republic Act Act No.No. 7641
7641 and and those
those received
received by by officials
officials and
and
employees of
employees of private
private firms,
firms, whether
whether individual
individual or or corporate,
corporate, in in accordance
accordance with with aa reasonable
reasonable private
private
benefit plan
benefit plan maintained
maintained by by the
the employer:
employer: Provided,
Provided, ThatThat thethe retiring
retiring official
official or or employee
employee has has been
been in in
the service
the service ofof thethe same
same employer
employer for for at
at least
least ten
ten (10)
(10) years
years andand is is not
not less
less than
than fifty
fifty (50)
(50) years
years ofof age
age
at the
at the time
time ofof his his retirement:
retirement: Provided,
Provided, further,
further, That
That thethe benefits
benefits granted
granted under under this this subparagraph
subparagraph
shall be
shall be availed
availed of of by
by anan official
official oror employee
employee only only once.
once. For For purposes
purposes of of this
this Subsection,
Subsection, the the term
term
‘reasonable private
'reasonable private benefit
benefit plan'plan' means
means aa pension,
pension, gratuity,
gratuity, stockstock bonusbonus or or profit-sharing
profit-sharing plan plan
maintained by
maintained by an an employer
employer for for the
the benefit
benefit of of some
some or or all
all of
of hishis officials
officials or or employees,
employees, whereinwherein
contributions are
contributions are mademade by by such
such employer
employer for for the
the officials
officials oror employees,
employees, or or both,
both, for for the
the purpose
purpose of of
distributing to
distributing to such
such officials
officials andand employees
employees the the earnings
earnings and and principal
principal of of the
the fund
fund thusthus accumulated,
accumulated,
and wherein
and wherein its its isis provided
provided in in said
said plan
plan that
that at
at nono time
time shall
shall any
any partpart ofof the
the corpus
corpus or or income
income of of the
the
fund be
fund be used
used for, for, oror bebe diverted
diverted to, to, any
any purpose
purpose otherother thanthan forfor thethe exclusive
exclusive benefitbenefit of of the
the said
said
officials and
officials and employees.
employees.

(b) Any
(b) Any amount
amount received
received byby an
an official
official or
or employee
employee oror by
by his
his heirs
heirs from
from thethe employer
employer as as aa
consequence of separation of such official or employee from the service of the employer because of
consequence of separation of such official or employee from the service of the employer because of
death sickness
death sickness or
or other
other physical
physical disability
disability or
or for
for any
any cause
cause beyond
beyond the
the control
control of
of the
the said
said official
official or
or
employee.
employee.

(c) The
(c) provisions of
The provisions of any
any existing
existing law
law to
to the
the contrary
contrary notwithstanding,
notwithstanding, social
social security
security benefits,
benefits,
retirement gratuities,
retirement gratuities, pensions
pensions andand other
other similar
similar benefits
benefits received
received by
by resident
resident or
or nonresident
nonresident citizens
citizens
of the
of the Philippines
Philippines or or aliens
aliens who
who come
come to to reside
reside permanently
permanently in in the
the Philippines
Philippines from
from foreign
foreign
government agencies
government agencies and
and other
other institutions,
institutions, private
private or
or public.
public.

(d) Payments
(d) Payments ofof benefits
benefits due
due or
or to
to become
become due
due to
to any
any person
person residing
residing in
in the
the Philippines
Philippines under
under the
the
laws of
laws of the
the United
United States
States administered
administered by
by the
the United
United States
States Veterans
Veterans Administration.
(e) Benefits
(e) Benefits received
received from
from oror enjoyed
enjoyed under
under the
the Social
Social Security
Security System
System in
in accordance
accordance with
with the
the
provisions of
provisions of Republic
Republic Act
Act No.
No. 8282.
8282.

(f) Benefits
(f) Benefits received
received from
from thethe GSIS
GSIS under
under Republic
Republic Act
Act No.
No. 8291,
8291, including
including retirement
retirement gratuity
gratuity
received by
received by government
government officials
officials and
and employees.
employees.

(7) Miscellaneous
(7) Miscellaneous Items.
Items. —–

(a) Income
(a) Income Derived
Derived by by Foreign
Foreign Government.
Government. -- Income
Income derived
derived from
from investments
investments inin the
the Philippines
Philippines inin
loans,
loans, stocks, bonds or other domestic securities, or from interest on deposits in banks in
stocks, bonds or other domestic securities, or from interest on deposits in banks in the
the
Philippines by
Philippines by (i)
(i) foreign
foreign governments,
governments, (ii)
(ii) financing
financing institutions
institutions owned,
owned, controlled,
controlled, oror enjoying
enjoying
refinancing from foreign governments, and (iii) international or regional financial institutions
refinancing from foreign governments, and (iii) international or regional financial institutions
established by
established by foreign
foreign governments.
governments.

(b) Income
(b) Income Derived
Derived by by the
the Government
Government or or its
its Political
Political Subdivisions.
Subdivisions. -- Income
Income derived
derived from
from any
any public
public
utility or
utility or from
from the
the exercise
exercise ofof any
any essential
essential governmental
governmental function
function accruing
accruing to
to the
the Government
Government of
of the
the
Philippines or
Philippines or to
to any
any political
political subdivision
subdivision thereof.
thereof.

(c) Prizes
(c) Prizes and
and Awards.
Awards. -- Prizes
Prizes and
and awards
awards made
made primarily
primarily in
in recognition
recognition of
of religious,
religious, charitable,
charitable,
scientific,
scientific, educational,
educational, artistic,
artistic, literary,
literary, or
or civic
civic achievement
achievement but
but only
only if:
if:

(i) The
(i) recipient was
The recipient was selected
selected without
without any
any action
action on
on his
his part
part to
to enter
enter the
the contest
contest or
or proceeding;
proceeding; and
and

(ii) The
(ii) recipient is
The recipient is not
not required
required to
to render
render substantial
substantial future
future services
services as
as aa condition
condition to
to receiving
receiving the
the
prize or
prize or award.
award.

(d) Prizes
(d) Prizes and
and Awards
Awards in in sports
sports Competition.
Competition. -- All
All prizes
prizes and
and awards
awards granted
granted to
to athletes
athletes in
in local
local and
and
international sports competitions and tournaments whether held in the Philippines or abroad and
international sports competitions and tournaments whether held in the Philippines or abroad and
sanctioned by
sanctioned by their
their national
national sports
sports associations.
associations.

(e) 13th
(e) 13th Month
Month PayPay and
and Other
Other Benefits.
Benefits. -- Gross
Gross benefits
benefits received
received by by officials
officials and
and employees
employees of
of public
public
and private
and private entities:
entities: Provided,
Provided, however,
however, That
That the
the total
total exclusion
exclusion under
under this
this subparagraph
subparagraph shall
shall not
not
exceed Ninety
exceed Ninety thousand
thousand pesos
pesos (P90,000)
(P90,000) [41]
[41] which
which shall
shall cover:
cover: [4]
[4]

(i) Benefits
(i) Benefits received
received byby officials
officials and
and employees
employees of
of the
the national
national and
and local
local government
government pursuant
pursuant to
to
Republic Act
Republic Act No.
No. 6686;
6686;

(ii) Benefits
(ii) Benefits received
received by
by employees
employees pursuant
pursuant toto Presidential
Presidential Decree
Decree No.
No. 851,
851, as
as amended
amended by
by
Memorandum
Memorandum OrderOrder No.
No. 28,
28, dated
dated August
August 13,
13, 1986;
1986;

(iii) Benefits
(iii) Benefits received
received by
by officials
officials and
and employees
employees not
not covered
covered byby Presidential
Presidential Decree
Decree No.
No. 851,
851, as
as
amended
amended by by Memorandum
Memorandum Order
Order No.
No. 28,
28, dated
dated August
August 13,
13, 1986;
1986; and
and

(iv) Other
(iv) Other benefits
benefits such
such as
as productivity
productivity incentives
incentives and
and Christmas
Christmas bonus.
bonus.

(f)
(f) GSIS,
GSIS, SSS,
SSS, Medicare
Medicare and
and Other
Other Contributions.
Contributions. -- GSIS,
GSIS, SSS,
SSS, Medicare
Medicare and
and Pag-Ibig
Pag-Ibig contributions,
contributions, and
and
union dues of individuals.
union dues of individuals.

(g) Gains
(g) Gains from
from the
the Sale
Sale of
of Bonds,
Bonds, Debentures
Debentures oror other
other Certificate
Certificate of
of Indebtedness.
Indebtedness. -- Gains
Gains realized
realized
from the same or exchange or retirement of bonds, debentures or other certificate of indebtedness
from the same or exchange or retirement of bonds, debentures or other certificate of indebtedness
with aa maturity
with maturity of
of more
more than
than five
five (5)
(5) years.
years.

(h) Gains
(h) Gains from
from Redemption
Redemption of of Shares
Shares in
in Mutual
Mutual Fund.
Fund. -- Gains
Gains realized
realized by
by the
the investor
investor upon
upon
redemption of
redemption of shares
shares of
of stock
stock in
in aa mutual
mutual fund
fund company
company asas defined
defined in
in Section
Section 22
22 (BB)
(BB) of
of this
this Code.
(i) Income
(i) Income Derived
Derived from
from the
the Sale
Sale of
of Gold
Gold Pursuant
Pursuant to
to Republic
Republic Act
Act No.
No. 7076.
7076. —– Income
Income derived
derived from
from
the following
the following transactions
transactions pursuant
pursuant to
to Republic
Republic Act
Act No.
No. 7076,
7076, otherwise
otherwise known
known asas the
the “People’s
“People’s
Small-scale Mining
Small-scale Mining Act
Act of
of 1991”:
1991”:

(1) The
(1) sale of
The sale of gold
gold to
to the
the Bangko
Bangko Sentral
Sentral ng
ng Pilipinas
Pilipinas byby registered
registered small-scale
small-scale miners,
miners, as
as defined
defined
under
under Republic
Republic Act.
Act. No.
No. 7076,
7076, and
and accredited
accredited traders;
traders; and
and

(2) The
(2) The sale
sale of
of gold
gold by
by registered
registered small-scale
small-scale miners
miners to
to accredited
accredited traders
traders for
for eventual
eventual sale
sale to
to the
the
Bangko Sentral ng Pilipinas.
Bangko Sentral ng Pilipinas.

SEC. 33.
SEC. 33. Special
Special Treatment
Treatment of
of Fringe
Fringe Benefit.
Benefit. --

(A) Imposition
(A) Imposition of of Tax.
Tax. —– Effective
Effective January
January 1, 1, 2018
2018 andand onwards,
onwards, aa final final tax
tax ofof thirty-five
thirty-five percent
percent (35%)
(35%
[43] is
[43] is hereby
hereby imposed
imposed on on the
the grossed-up
grossed-up monetary monetary value value of of fringe
fringe benefit
benefit furnished
furnished or or granted
granted to to
the employee
the employee (except (except rankrank andand file file employees
employees defined defined herein) herein) by by the
the employer,
employer, whether
whether an an
individual or
individual or aa corporation
corporation (unless
(unless the the fringe
fringe benefit
benefit is is required
required by by the
the nature
nature of, of, or
or necessary
necessary to to the
the
trade, business
trade, business or or profession
profession of of the
the employer,
employer, or or when
when the the fringe
fringe benefit
benefit is is for
for the
the convenience
convenience or or
advantage of
advantage of the
the employer).
employer). The The taxtax herein
herein imposed
imposed is is payable
payable by by the
the employer
employer which which taxtax shall
shall be
be
paid in
paid in the
the same
same manner
manner as as provided
provided for for under
under Section
Section 57 57 (A)
(A) ofof this
this Code.
Code. TheThe grossed-up
grossed-up monetary
monetary
value of
value of the
the fringe
fringe benefit
benefit shall
shall be be determined
determined by by dividing
dividing the the actual
actual monetary
monetary value value ofof the
the fringe
fringe
benefit by
benefit by sixty-five
sixty-five percent
percent (65%)
(65%) effective
effective January
January 1, 1, 2018
2018 and and onwards:
onwards: [44] [44] Provided,
Provided, however,
however,
That fringe benefit
That fringe benefit furnished
furnished to to employees
employees and and taxable
taxable under under Subsections
Subsections (B), (B), (C),
(C), (D)
(D) and
and (E)(E) of
of
Section 25
Section 25 shall
shall bebe taxed
taxed atat the
the applicable
applicable rates rates imposed
imposed thereat:
thereat: Provided,
Provided, further,
further, That
That the
the grossed
grossed
-up monetary
-up monetary value value of of the
the fringe
fringe benefit
benefit shall shall bebe determined
determined by by dividing
dividing thethe actual
actual monetary
monetary value value ofof
the fringe
the fringe benefit
benefit by by the
the difference
difference between
between one one hundred
hundred percentpercent (100%)
(100%) and and the the applicable
applicable ratesrates ofof
income tax
income tax under
under Subsections
Subsections (B), (B), (C),
(C), (D),
(D), and
and (E)
(E) of
of Section
Section 25. 25.

(B) Fringe
(B) Fringe Benefit
Benefit Defined.
Defined. -- For
For purposes
purposes of
of this
this Section,
Section, the
the term
term 'fringe
‘fringe benefit'
benefit' means
means anyany good,
good,
service or other benefit furnished or granted in cash or in kind by an employer to an individual
service or other benefit furnished or granted in cash or in kind by an employer to an individual
employee (except
employee (except rank
rank and
and file
file employees
employees as
as defined
defined herein)
herein) such
such as,
as, but
but not
not limited
limited to,
to, the
the following:
following:

(1) Housing;
(1) Housing;

(2) Expense
(2) Expense account;
account;

(3) Vehicle
(3) Vehicle of
of any
any kind;
kind;

(4) Household
(4) Household personnel,
personnel, such
such as
as maid,
maid, driver
driver and
and others;
others;

(5) Interest
(5) Interest on
on loan
loan at
at less
less than
than market
market rate
rate to
to the
the extent
extent of
of the
the difference
difference between
between the
the market
market rate
rate
and actual
and actual rate
rate granted;
granted;

(6) Membership
(6) Membership fees,
fees, dues
dues and
and other
other expenses
expenses borne
borne by
by the
the employer
employer for
for the
the employee
employee in
in social
social and
and
athletic clubs
athletic clubs or
or other
other similar
similar organizations;
organizations;

(7) Expenses
(7) Expenses for
for foreign
foreign travel;
travel;

(8) Holiday
(8) Holiday and
and vacation
vacation expenses;
expenses;

(9) Educational
(9) Educational assistance
assistance to
to the
the employee
employee or
or his
his dependents;
dependents; and
and

(10) Life
(10) Life or
or health
health insurance
insurance and
and other
other non-life
non-life insurance
insurance premiums
premiums or
or similar
similar amounts
amounts in
in excess
excess of
of
what the
what the law
law allows.
allows.

(C) Fringe
(C) Fringe Benefits
Benefits Not
Not Taxable.
Taxable. -- The
The following
following fringe
fringe benefits
benefits are
are not
not taxable
taxable under
under this
this Section:
(1) Fringe
(1) Fringe benefits
benefits which
which are
are authorized
authorized and
and exempted
exempted from
from tax
tax under
under special
special laws;
laws;

(2) Contributions
(2) Contributions ofof the
the employer
employer for
for the
the benefit
benefit of
of the
the employee
employee to
to retirement,
retirement, insurance
insurance and
and
hospitalization
hospitalization benefit
benefit plans;
plans;

(3) Benefits
(3) Benefits given
given to
to the
the rank
rank and
and file
file employees,
employees, whether
whether granted
granted under
under aa collective
collective bargaining
bargaining
agreement
agreement oror not;
not; and
and

(4) De
(4) De minimis
minimis benefits
benefits as
as defined
defined in
in the
the rules
rules and
and regulations
regulations to
to be
be promulgated
promulgated by
by the
the Secretary
Secretary of
of

Finance, upon
Finance, upon recommendation
recommendation of
of the
the Commissioner.
Commissioner.

The Secretary of
The Secretary of Finance
Finance is is hereby
hereby authorized
authorized toto promulgate,
promulgate, upon
upon recommendation
recommendation of of the
the
Commissioner, such
Commissioner, such rules
rules and
and regulations
regulations asas are
are necessary
necessary to to carry
carry out
out efficiently
efficiently and
and fairly
fairly the
the
provisions of
provisions of this
this Section,
Section, taking
taking into
into account
account the
the peculiar
peculiar nature
nature and
and special
special need
need of
of the
the trade,
trade,
business or
business or profession
profession of of the
the employer.
employer.

EMPLOYEE
EMPLOYEE
RC,
RC, NRC,
NRC, RA,
RA, NRA-ETB
NRA-ETB NRA-NETB
NRA-NETB
Monetary Value
Monetary Value Pxx
Pxx Pxx
Pxx
Divided
Divided by
by Grossed-up | 65%
Grossed-up 65% 75%
75%
Monetary Value
Monetary Value
Grossed-up Monetary
Grossed-up Monetary Value
Value Pxx
Pxx Pxx
Pxx
XX Fringe
Fringe Benefit
Benefit Tax Rate
Tax Rate 35%
35% 25%
25%
Fringe Benefit
Fringe Benefit Tax
Tax Pxx
Pxx Pxx
Pxx

MONETARY
MONETARY VALUE:
VALUE: In
In general,
general, the
the valuation
valuation of
of FBT
FBT shall
shall be
be as
as follows:
follows:

Benefit
Benefit Monetary Value
Monetary Value
Money
Money Amount of
Amount of money
money
Non-cash property
Non-cash property with
with transfer
transfer of of ownership
ownership Whichever is
Whichever is higher
higher ofof FMV
FMV vs.
vs. ZV,
ZV, if
if applicable
applicable
Non-cash property,
Non-cash property, ownership
ownership is is not
not transferred
transferred Depreciation value
Depreciation value
Employer lends
Employer lends money
money free free ofof interest
interest Principal xx 12%
Principal 12%
Employer lends
Employer lends money
money at at aa rate
rate lower
lower than
than 12%
12% Principal x (12% less
Principal x (12% less Actual
Actual rate
rate granted)
granted)
Monetary Value
Monetary Value of
of Housing
Housing and and Motor
Motor Vehicle:
Vehicle:
Housing Benefit
Housing Benefit Valuation
Valuation
Employer leases
Employer leases aa residential
residential property
property for for the
the use
use Rental paid
Rental paid xx 50%
50%
of the
of the employee
employee
Employer owns
Employer owns aa residential
residential property
property for for the
the use
use FMV or
FMV or ZV,
ZV, whichever
whichever is
is higher
higher xx 5%
5% xx 50%
50%
of the
of the employee
employee
Employer
Employer purchases residential
purchases residential property
property in
in Acquisition Cost,
Acquisition Cost, exclusive
exclusive of
of interest
interest xx 5%
5% xx 50%
50%
installment for use of employee
installment for use of employee
Employer purchases
Employer purchases residential
residential property
property and and Acquisition Cost
Acquisition Cost or
or ZV
ZV whichever
whichever is
is higher
higher
transfers ownership
transfers ownership to to the
the employee
employee
Employer purchases
Employer purchases residential
residential property
property and and FMV ZV
FMV ZV less
less cost
cost to
to the
the employee
employee whichever
whichever is
is
transfers ownership
transfers ownership to to the
the employee
employee on on a a lesser
lesser higher
higher
amount
amount
Motor
Motor Vehicle:
Vehicle:
Employer owns
Employer owns and
and maintains
maintains aa fleet fleet ofof motor
motor Acquisition Cost
Acquisition Cost of
of vehicles
vehicles not
not normally
normally used
used to
to
vehicles for the use of the business and
vehicles for the use of the business and business divided by 5 years X 50%
business divided by 5 years X 50%
employees
employees
Employer leases/maintains
Employer leases/maintains aa fleet fleet of of motor
motor Amount of
Amount of rental
rental not
not normally
normally used
used for
for business
business
vehicles for
vehicles for the
the use use of of thethe business
business and and purposes
purposes XX 50%
50%
employees
employees
Employer purchases
Employer purchases aa vehicle
vehicle in in the
the name
name of of the
the Acquisition
Acquisition Cost
Cost
employee
employee
Employer provides
Employer provides employee
employee with with cash
cash for
for the
the | Cash received
Cash received
purchase of
purchase of the
the vehicle,
vehicle, andand ownership
ownership is is placed
placed
in the
in the name
name of of the
the employee
employee
Employer purchases aa vehicle
Employer purchases vehicle in in installment
installment andand | Acquisition Cost
Acquisition Cost exclusive
exclusive of
of interest
interest divided
divided by
by 5
5
ownership is placed in the name of the
ownership is placed in the name of the employee
employee | years
years
Employer shoulders
Employer shoulders aa portion
portion of of the
the amount
amount of of | Amount shouldered
Amount shouldered by
by the
the employer
employer
the purchase
the purchase priceprice of
of the
the vehicle,
vehicle, and
and ownership
ownership
is placed
is placed in
in the
the name
name of of the
the employee
employee

De
De minimis
minimis benefits
benefits ((RR
RR No.
No. 1-2015,
1-2015, RR
RR 8-2012,
8-2012, RR
RR 5-2011,
5-2011, RR5-2008
RR5-2008

Description
Description Limit
Limit
Monetized unused
Monetized unused vacation
vacation leave
leave credits
credits ofof private
private | Not exceeding
Not exceeding 10
10 days
days
employees not exceeding ten (10) days during the year
employees not exceeding ten (10) days during the year
Monetized value
Monetized value ofof vacation
vacation andand sick
sick leave
leave leave
leave credits
credits
paid to
paid to government
government officials
officials and
and employees
employees
Yearly
Yearly medical
medical cash
cash allowance
allowance P1,500.00
P1,500.00 per
per semester
semester
Rice subsidy
Rice subsidy P2,000.00
P2,000.00
Clothing or
Clothing or uniform
uniform P6,000.00 (RR
P6,000.00 (RR 11-2018,
11-2018, TRAIN
TRAIN LAW)
LAW)
Yearly
Yearly Actual Medical
Actual Medical assistance
assistance P10,000.00
P10,000.00
Yearly Provision
Yearly Provision for
for laundry
laundry P300 per
P300 per month
month
Employees achievement
Employees achievement awards awards (OTHER
(OTHER THAN
THAN CASH
CASH OR OR | P10,000.00
P10,000.00
GIFT
GIFT CERTIFICATE)
CERTIFICATE)
Gifts during
Gifts during Christmas
Christmas and and major
major anniversary
anniversary celebrations
celebrations | P5,000.00
P5,000.00
Daily
Daily meal
meal allowance
allowance for
for overtime
overtime work
work and |
and 25% ofof the
25% the Basic
Basic Minimum
Minimum Wage
Wage
night/graveyard shift
night/graveyard shift
CBA/CAN
CBA/CAN P10,000.00
P10,000.00

TH
EXCESS OF
EXCESS OF DE
DE MINIMIS
MINIMIS OVER
OVER THE
THE CEILINGS
CEILINGS & & 13
13" MONTH
MONTH PAYPAY
De minimis
De minimis benefits
benefits conforming
conforming | Tax
Tax exempt,
exempt, excluded
excluded in in determining
determining thethe P90,000.00
P90,000.00 ceiling
ceiling of
of
to the
to the ceiling
ceiling other benefits
other benefits subject
subject to
to Basic
Basic Income
Income Tax
Tax
Excess
Excess Included in
Included in determining
determining the the P90,000.00
P90,000.00 ceiling
ceiling of
of other
other benefits;
benefits;
excess
excess subject
subject to
to Basic
Basic Income
Income TaxTax

TAX ON CORPORATIONS
TAX ON CORPORATIONS

Taxpayer
Taxpayer Taxable Sources
Taxable Sources
DC
DC Within and
Within and without
without the
the Philippines
Philippines
RFC, NRFC
RFC, NRFC Within the
Within the Philippines
Philippines only
only

Legal
Legal Basis
Basis (Section
(Section Provision
Provision DC
DC RFC
RFC NRFC
NRFC
of the
of the NIRC
NIRC of
of
1997,
1997, as
as amended
amended
27(A)
27(A) Rates of
Rates of Income
Income tax on Domestic
tax on Domestic Corporations-
Corporations- | 25% 25% | 25%
25% 25%
25%
Taxable income
Taxable income derived
derived during
during each
each taxable
taxable 28(A)(1)
28(A)(1) 28(B)(1)
28(B)(1)

year from
year from allall sources
sources within
within and
and without
without the the
Philippines by
Philippines by every
every corporation,
corporation, asas defined
defined in in
Section 22(B)
Section 22(B) ofof this
this Code
Code and
and taxable
taxable under
under
this Title
this as aa corporation,
Title as corporation, organized
organized in, in, oror
existing under
existing under the
the laws
laws of
of the
the Philippines.
Philippines. (July
(July
1, 2020)
1, 2020)
 Corporations with
Corporations with net net taxable
taxable incomeincome not not 20%
20% N/A
N/A N/A
N/A
exceeding Five
exceeding Five million
million pesos
pesos (P5,000,000.00)
(P5,000,000.00)
and with
and with totaltotal assets
assets not not exceeding
exceeding One One
hundred
hundred million
million pesos
pesos (P100,000,000.00),
(P100,000,000.00),
excluding land
excluding land on on which
which thethe particular
particular business
business
entity's office, plant, and equipment are
entity's office, plant, and equipment are
situated during
situated during the the taxable
taxable year
year forfor which
which thethe
tax is
tax is imposed.
imposed. (July (July 1, 1, 2020)
2020)
27(B)
27(B) Proprietary
Proprietary Educational
Educational Institutions
Institutions and
and 10%
10% N/A
N/A N/A
N/A
Hospitals.—
Hospitals.–
July
July 1, 1, 2020
2020 until
until June
June 30, 30, 2023
2023 1%
1%
ifif the
the gross
gross income
income from from 'unrelated
‘unrelated trade,trade, 25%
25%
business or
business or other
other activity'***
activity'*** exceeds
exceeds fiftyfifty or
or
percent (50%)
percent (50%) of of the total gross
the total gross income
income 20%
20%
derived by
derived by suchsuch educational
educational institutions
institutions or or
hospitals
hospitals from from all all sources,
sources, the the taxtax prescribed
prescribed
in Subsection
in Subsection (A) (A) hereof
hereof shall
shall be be imposed
imposed on on
the entire taxable income.
the entire taxable income.
***unrelated
***unrelated trade, trade, business
business or or other
other activity'
activity’
means
means any any trade,
trade, business
business or or other
other activity,
activity, the
the
conduct of
conduct of which
which is is not
not substantially
substantially related
related to to
the
the exercise
exercise or
or performance
performance by
by such
such
educational institution
educational institution or or hospital
hospital of of its its
primary
primary purposepurpose or or function.
function.

****'Droprietary' means
****'Proprietary' means aa private
private hospital
hospital [21][21]
or
or any.
any private
private school
school maintained
maintained and
and
administered by
administered by private
private individuals
individuals or or groups
groups
with an
with an issued
issued permit
permit to to operate
operate fromfrom the the
Department of
Department of Education
Education (DepEd),
(DepEd), [21]
[21] oror the
the
Commission on
Commission on Higher
Higher Education
Education (CHED),
(CHED), or or the
the
Technical Education
Technical Education and and Skills
Skills Development
Development
Authority (TESDA),
Authority (TESDA), as as the
the case
case may
may be, be, in in
accordance with existing laws and regulations.
accordance with existing laws and regulations.
27(C)
27(C) Government-owned
Government-owned or
or —Controlled
–Controlled 25%
25%
Corporations,
Corporations, Agencies
Agencies or or Instrumentalities
Instrumentalities or
or
20%
20%
EXCEPT:
EXCEPT:
1. Government
1. Government ServiceService Insurance
Insurance System
System (GSIS)
(GSIS)
2. Social
2. Social Security
Security System
System (SSS)(SSS)
3. Home
3. Home Development
Development Mutual Mutual FundFund (HDMF)
(HDMF)
4. Philippine
4. Philippine Health
Health Insurance
Insurance Corporation
Corporation
(PHIC)
(PHIC)
5. local
5. local water
water districts
districts
27(D)(1)
27(D)(1) Interests -- interest
Interests interest from from any any currency
currency bank
bank 20%
20% 20%
20% 20%
20%
deposit and
deposit and yield
yield oror any
any other
other monetary
monetary benefit
benefit 28(A)(6)(a)
28(A)(6)(a) 28(B)(5)(a)
28(B)(5)(a)

from deposit
from deposit substitutes***
substitutes*** and and from
from trust
trust
funds and similar arrangements
funds and similar arrangements
***Deposit Substitute
***Deposit Substitute -- alternative
alternative form
form of of
obtaining funds from the PUBLIC other than
obtaining funds from the PUBLIC other than
deposits, through
deposits, through dept dept instruments
instruments for for the
the
borrower’s own
borrower’s own account
account (RR (RR No.
No. 14-2012)
14-2012)
Public -- borrowing
Public borrowing from from 20 20 or
or more
more individuals
individuals
or corporate
or corporate lenders
lenders at at any
any one
one time
time
27(D)(1)
27(D)(1) Interest from
Interest from depositary bank
depositary bank under
under the the 15%
15% 15%
15% Exempt
Exempt
expanded
expanded foreign currency
foreign currency deposit
deposit system
system 28(A)(6)(a)
28(A)(6)(a)
 (FCDS)
(FCDS) beginning January
beginning January 1, 1, 2018
2018 (Note:
(Note:
Applicable only
Applicable only to
to Resident
Resident Taxpayers)
Taxpayers)
27(D)(2)
27(D)(2) Capital Gains
Capital Gains from
from thethe Sale
Sale of
of Shares
Shares of
of Stock
Stock 15%
15% 15%
15% 15%
15%

Not Traded in the Stock Exchange.

Not Traded in the Stock Exchange. 28(A)(6)(c)
28(A)(6)(c) 28(B)(5)(c)
28(B)(5)(c)

27(D)(3)
27(D)(3) Tax on
Tax on Income
Income Derived
Derived under
under the
the Expanded
Expanded 10%
10% 10%
10% Exempt
Exempt
Foreign
Foreign Currency
Currency Deposit
Deposit System.
System. 28(A)(6)(b)
28(A)(6)(b)

Income derived
Income derived by by aa depository
depository bank bank under
under thethe
expanded foreign
expanded foreign currency
currency depositdeposit systemsystem
from
from foreign
foreign currency
currency transactions
transactions with
with
nonresidents,
nonresidents, offshoreoffshore bankingbanking units units in in the
the
Philippines, local
Philippines, local commercial
commercial banks banks including
including
branches
branches of foreign
of foreign banks banks that that may may be be
authorized by
authorized by the
the Bangko
Bangko Sentral
Sentral ng ng Pilipinas
Pilipinas
(BSP) to
(BSP) to transact
transact business
business with with foreign
foreign currency
currency
deposit system
deposit system shall shall bebe exempt
exempt from from allall taxes,
taxes,
except net
except net income
income from from such such transactions
transactions as as
may be
may be specified
specified by by the
the Secretary
Secretary of of Finance,
Finance,
upon recommendation
upon recommendation by by the Monetary Board
the Monetary Board
to be subject to the regular income tax payable
to be subject to the regular income tax payable
by
by banks:
banks: Provided,
Provided, however,
however, That That interest
interest
income from foreign currency loans granted
income from foreign currency loans granted by by
such depository
such depository banks banks underunder said said expanded
expanded
system to
system to residents
residents other other than than offshore
offshore
banking units
banking units in in the
the Philippines
Philippines or or other
other
depository banks
depository banks underunder the the expanded
expanded system,system,
shall be
shall be subject
subject to to aa final
final tax
tax atat the
the rate
rate ofof ten
ten
percent (10%).
percent (10%). [20]
[20]

Any
Any income’
income of _ nonresidents,
of nonresidents, whether
whether
individuals or
individuals or corporations,
corporations, from
from transactions
transactions
with depository
with depository banks
banks under
under the
the expanded
expanded
system shall
system shall be
be exempt
exempt from
from income
income tax.
tax.
27(D)(4)
27(D)(4) Intercorporate Dividends.
Intercorporate Dividends. EX
EX EX
EX 15%
15%
Dividends received
Dividends received byby aa domestic
domestic corporation
corporation 28(A)(6)(d)
28(A)(6)(d) 28(B)(5)(b)
28(B)(5)(b)

shall not
shall not be
be subject
subject to
to tax
tax under
under this
this Title
Title

Foreign
Foreign Source:
Source:

The funds
The funds from
from such such dividends
dividends actually
actually received
received
or remitted
or remitted intointo the the Philippines
Philippines are are reinvested
reinvested
in the
in the business
business operations
operations of of the
the domestic
domestic
corporation in
corporation in thethe Philippines
Philippines within
within thethe next
next
taxable
taxable year
year from
from the the time
time thethe foreign-sourced
foreign-sourced
dividends were
dividends were received
received and and shall
shall bebe limited
limited to to
funding
funding the the working
working capital
capital requirements,
requirements,
capital
capital expenditures,
expenditures, dividend
dividend payments,
payments,
investment
investment in
in domestic
domestic subsidiaries,
subsidiaries, and
and
infrastructure
infrastructure project:
project: Provided,
Provided, further, That
further, That
the domestic
the domestic corporation
corporation holds holds directly
directly atat least
least
twenty percent
twenty percent (20%) (20%) of of the
the outstanding
outstanding sharesshares
of the
of the foreign
foreign corporation
corporation and and hashas held
held thethe
shareholdings for
shareholdings for a a minimum
minimum of of two
two (2)(2) years
years
at the
at the time
time ofof the
the dividend
dividend distribution.
distribution.

27(D)(5)
27(D)(5) Capital Gains
Capital Gains Realized
Realized from
from the
the Sale,
Sale, Exchange
Exchange 6%
6% 6%
6% 6%
6%
27
27 25(A)(3)
25(A)(3) 25(B)
25(B)
 or Disposition
or Disposition of of Lands
Lands and/or
and/or Buildings.
Buildings. (D)(5)
(D)(5)

27(E)
27(E) Minimum Corporate
Minimum Corporate Income
Income Tax Tax on on Domestic
Domestic
Corporations. —–
Corporations.
27(E)(1)
27(E)(1) Imposition of
Imposition of Tax based on
Tax based on the
the gross
gross income
income 2%
2% 2%
2%
beginning
beginning on
on the
the fourth
fourth taxable
taxable year
year 28(A)(2)
28(A)(2)

immediately following
immediately following the the year
year inin which
which such
such
corporation commenced
corporation commenced its its business
business operations,
operations,
when
when thethe minimum
minimum incomeincome tax tax is
is greater
greater than
than
the tax
the tax computed
computed under under Subsection
Subsection (A) (A) of
of this
this
Section for
Section for the
the taxable
taxable year.
year.
That
That effective July 1,
effective July 1, 2020
2020 until
until June
June 30,30, 2023
2023 1%
1% 1%
1%
28(A)(2)
28(A)(2)
27(E)(2)
27(E)(2) Carry
Carry Froward
Froward of of Excess
Excess Minimum
Minimum Tax. Tax.
Any excess of the minimum corporate
Any excess of the minimum corporate income
income
tax over
tax over the
the normal
normal income
income tax tax as
as computed
computed
under Subsection
under Subsection (A) (A) ofof this
this Section
Section shall
shall bebe
carried forward
carried forward and and credited
credited against
against thethe
normal
normal income
income tax
tax for for the
the three
three (3)
(3)
immediately succeeding
immediately succeeding taxable years
taxable years
27(E)(3)
27(E)(3) Relief from
Relief from thethe Minimum
Minimum Corporate
Corporate Income
Income
Tax Under
Tax Under Certain
Certain Conditions
Conditions

The Secretary
The Secretary of
of Finance
Finance isis hereby
hereby authorized
authorized to to
suspend
suspend the imposition
the imposition of the
of the minimum
minimum
corporate income
corporate income taxtax on
on any
any corporation
corporation which
which
suffers losses
suffers losses onon account
account of of prolonged
prolonged labor
labor
dispute,
dispute, or
or because
because of
of force
force majeure,
majeure, or
or
because of legitimate business reverses.
because of legitimate business reverses.

27(E)(4)
27(E)(4) Gross
Gross Income
Income Defined.
Defined.

Sale
Sale of
of Goods:
Goods:

gross income'
gross income' shall
shall mean
mean gross
gross sales
sales less
less sales
sales
returns,
returns, discounts
discounts and and allowances
allowances and and cost
cost ofof
goods sold.
goods sold. ‘Cost
‘Cost ofof goods
goods sold'
sold’ shall
shall include
include all
all
business expenses
business expenses directly
directly incurred
incurred to to produce
produce
the merchandise
the merchandise to to bring
bring them
them to to their
their present
present
location and
location and use.
use.

For aa trading
For trading oror merchandising
merchandising concern,
concern, 'cost
'cost of
of
goods sold'
goods sold' shall
shall include
include the
the invoice
invoice cost
cost of
of the
the
goods sold,
goods sold, plus
plus import
import duties,
duties, freight
freight in in
transporting the goods to the place where the
transporting the goods to the place where the
goods are
goods are actually
actually sold
sold including
including insurance
insurance while
while
the goods are in transit.
the goods are in transit.

For aa manufacturing
For manufacturing concern,
concern, ‘cost
‘cost of of goods
goods
manufactured and
manufactured and sold'
sold' shall
shall include
include all
all costs
costs of
of
production of
production of finished
finished goods,
goods, suchsuch as as raw
raw
materials used,
materials used, direct
direct labor
labor and
and manufacturing
manufacturing
overhead, freight
overhead, freight cost,
cost, insurance
insurance premiums
premiums and and
other costs
other costs incurred
incurred to to bring
bring the
the raw
raw materials
materials
to the
to the factory
factory or or warehouse.
warehouse.

Sale
Sale of
of Services:
Services:
 ‘gross income'
'gross income’ means
means gross
gross receipts
receipts less
less sales
sales
returns,
returns, allowances,
allowances, discounts
discounts andand cost
cost of of
services
services

Cost of
Cost of services'
services’ shall
shall mean
mean all all direct
direct costs
costs andand
expenses necessarily incurred to provide the
expenses necessarily incurred to provide the
services required
services required by by the
the customers
customers and and clients
clients
including (A)
including (A) salaries
salaries and
and employee
employee benefits
benefits of of
personnel, consultants and specialists directly
personnel, consultants and specialists directly
rendering the
rendering the service
service andand (B)(B) cost
cost ofof facilities
facilities
directly utilized
directly utilized in
in providing
providing the the service
service such
such as as
depreciation or
depreciation or rental
rental of of equipment
equipment used used and and
cost of
cost of supplies:
supplies: Provided,
Provided, however,
however, That That in in the
the
case
case of of banks,
banks, 'cost
'cost ofof services'
services' shallshall include
include
interest
interest expense.
expense.

27 (F)
27 (F) Offshore Gaming
Offshore Gaming Licensees
Licensees -- 25%
25%

The provisions
The provisions ofof existing
existing special
special or or general
general laws
laws
to contrary
to contrary notwithstanding,
notwithstanding, the the non-gaming
non-gaming
revenues of
revenues of Philippine-based
Philippine-based offshore
offshore gaming
gaming
licensees as
licensees as duly
duly licensed
licensed by by thethe Philippine
Philippine
Amusement
Amusement and and Gaming
Gaming Corporation
Corporation or or any
any
special economic zone authority or tourism
special economic zone authority or tourism
zone authority
zone authority or or freeport
freeport authority
authority shallshall bebe
subject to an income tax equivalent to twenty-
subject to an income tax equivalent to twenty-
five percent
five percent (25%)
(25%) ofof the
the taxable
taxable income
income derived
derived
during each
during each taxable
taxable yearyear from
from all
all sources
sources within
within
and without
and without the
the Philippines.
Philippines.
27(G)
27(G) Accredited
Accredited Service
Service Providers
Providers to
to Offshore
Offshore 25%
25%
Gaming
Gaming Licensees
Licensees

Accredited service
Accredited service providers***
providers*** to to offshore
offshore
gaming licensees
gaming licensees shall
shall not
not bebe subject
subject toto the
the
gaming tax
gaming tax imposed
imposed by by Section
Section 125-A
125-A but
but shall
shall
pay such
pay such rate
rate ofof tax
tax as
as imposed
imposed in in Section
Section 27(A)
27(A)
of this
of this Code,
Code, andand shall
shall be
be subject
subject to to all
all other
other
applicable local
applicable local and
and national
national taxes.
taxes.

***chall be
***shall be aa juridical person that
juridical person that is is duly
duly
created or organized within or outside the
created or organized within or outside the
Philippines or
Philippines or aa natural
natural person,
person, regardless
regardless of of
citizenship
citizenship or
or residence,
residence, which
which provides
provides
ancillary services
ancillary services to to an
an offshore
offshore gaming
gaming licensee
licensee
as defined
as defined by by Section
Section 22 22 (II)
(Il) of
of this
this Code
Code or or to
to
any gaming
any gaming licensee
licensee or or operator
operator with with licenses
licenses
from other
from other jurisdictions.
jurisdictions. Such Such ancillary
ancillary services
services
may
may include,
include, but but shall
shall not not be be limited
limited to, to,
customer and
customer and technical
technical relations
relations and and support,
support,
information technology,
information technology, gaming gaming software,
software, data data
provision, payment
provision, payment solutions
solutions and and live
live studio
studio
streaming
streaming services.
services.
28(A)(3)
28(A)(3) International
International Carrier.
Carrier. 221/2%
1/2 %
An international
An international carriercarrier doing
doing business
business in in the
the
Philippines shall
Philippines shall pay pay aa tax
tax ofof two
two andand one-half
one-half
percent (2
percent (2 1/21/2 %) %) on on itsits ‘Gross
‘Gross Philippine
Philippine
 Billings’ as
Billings’ as defined
defined hereunder:
hereunder:
28(A)(3)(a)
28(A)(3)(a) International Air
International Air Carrier.
Carrier. — — ‘Gross
‘Gross Philippine
Philippine
Billings’ refers
Billings’ refers to to the
the amount
amount of of gross
gross revenue
revenue
derived
derived from
from carriage
carriage of
of persons,
persons, excess
excess
baggage, cargo, and mail originating from the
baggage, cargo, and mail originating from the
Philippines in
Philippines in aa continuous
continuous and and uninterrupted
uninterrupted
flight, irrespective
flight, irrespective of of the
the place
place of of sale
sale oror issue
issue
and the
and the place
place of of payment
payment of of thethe ticket
ticket or or
passage
passage document:
document: Provided,
Provided, That tickets
That tickets
revalidated,
revalidated, exchanged
exchanged and/or
and/or indorsed
indorsed to
to
another international
another international airline airline form form part part ofof thethe
Gross Philippine
Gross Philippine Billings
Billings ifif the
the passenger
passenger boards boards
aa plane
plane in in aa port
port or or point
point in in the
the Philippines:
Philippines:
Provided,
Provided, further,
further, That
That for for a a flight
flight which
which
originates
originates from
from the
the Philippines,
Philippines, but
but
transshipment of
transshipment of passenger
passenger takes takes placeplace at at any
any
part outside
part outside the the Philippines
Philippines on on another
another airline,
airline,
only the
only the aliquot
aliquot portion
portion of of the
the cost
cost of of the
the ticket
ticket
corresponding to
corresponding to thethe leg leg flown
flown from from the the
Philippines to
Philippines to the
the point
point of of transshipment
transshipment shall shall
form part
form part ofof Gross
Gross Philippine
Philippine Billings.
Billings.
28(A)(3)(b)
28(A)(3)(b) Gross Philippine Billings’ means gross
Gross Philippine Billings’ means gross revenue
revenue
whether for passenger, cargo or mail originating
whether for passenger, cargo or mail originating
from the
from the Philippines
Philippines up up to to final
final destination,
destination,
regardless of
regardless of the
the place
place of of sale
sale or or payments
payments of of
the passage
the passage or or freight
freight documents.
documents.

28(A)(4)
28(A)(4) Tax
Tax on
on Branch
Branch Profits
Profits Remittances.
Remittances. 15%
15%
28(A)(5)
28(A)(5) Regional or
Regional or Area
Area Headquarters
Headquarters and and Regional
Regional
Operating
Operating Headquarters
Headquarters of
of Multinational
Multinational
Companies
Companies
28(A)(5)(a)
28(A)(5)(a) Regional or
Regional or area
area headquarters
headquarters as as defined
defined in in EX
EX
Section 22(DD) shall not be subject to
Section 22(DD) shall not be subject to income
income
tax.
tax.
28(A)(5)(b)
28(A)(5)(b) Regional operating
Regional operating headquarters
headquarters as as defined
defined in in 10%
10%
Section 22(EE)
Section 22(EE) shallshall pay pay aa tax tax of of ten
ten percent
percent
(10%) of
(10%) of their
their taxable
taxable income:
income: Provided,Provided, That That
effective January
effective January 1, 1, 2022,
2022, regional
regional operating
operating
headquarters shall
headquarters shall be be subject
subject to to thethe regular
regular
corporate income
corporate income tax. tax.
28(A)(7)
28(A)(7) Offshore Gaming
Offshore Gaming Licensees
Licensees 25%
25%
28(B)(2)
28(B)(2) Nonresident
Nonresident Cinematographic
Cinematographic Film
Film Owner,
Owner, 25%
25%
Lessor or Distributor base on
Lessor or Distributor base on its gross income its gross income
from all
from all sources
sources within
within the the Philippines.
Philippines.
28(B)(3)
28(B)(3) Nonresident
Nonresident Owner
Owner or Lessor
or Lessor of of Vessels
Vessels 441/2%
1/2%
Chartered by
Chartered by Philippine
Philippine Nationals
Nationals based based on on ross
ross
rentals,
rentals, lease
lease or or charter
charter fees fees from from leasesleases or or
charters
charters to to Filipino
Filipino citizens
citizens or or corporations,
corporations, as as
approved by
approved by the
the Maritime
Maritime Industry
Industry Authority.
Authority.
28(B)(4)
28(B)(4) Nonresident
Nonresident Owner
Owner or
or Lessor
Lessor of
of Aircraft,
Aircraft, 77 1/2%
1/2%
Machineries and
Machineries and OtherOther Equipment.
Equipment. -- Rentals, Rentals,
charters
charters and
and other
other fees
fees derived
derived by
by aa
nonresident
nonresident lessor lessor of of aircraft,
aircraft, machineries
machineries and and
other equipment
other equipment based based on on gross
gross rentals
rentals or or fees.
fees.
SEC. 30.
SEC. 30. Exemptions
Exemptions from
from Tax
Tax on
on Corporations.
Corporations. -- The
The following
following organizations
organizations shall
shall not
not be
be taxed
taxed under
under
this Title
this in respect
Title in respect to
to income
income received
received by
by them
them as
as such:
such:

(A) Labor,
(A) Labor, agricultural
agricultural or
or horticultural
horticultural organization
organization not
not organized
organized principally
principally for
for profit;
profit;

(B) Mutual
(B) Mutual savings
savings bank
bank not
not having
having aa capital
capital stock
stock represented
represented by
by shares,
shares, and
and cooperative
cooperative bank
bank
without capital
without capital stock
stock organized
organized and
and operated
operated for
for mutual
mutual purposes
purposes and
and without
without profit;
profit;

(C) A
(C) A beneficiary
beneficiary society,
society, order
order or
or association,
association, operating
operating for
for the
the exclusive
exclusive benefit
benefit ofof the
the members
members
such as a fraternal organization operating under the lodge system, or mutual aid association or
such as a fraternal organization operating under the lodge system, or mutual aid association or aa
nonstock corporation organized by employees providing for the payment of life, sickness, accident, or
nonstock corporation organized by employees providing for the payment of life, sickness, accident, or
other
other benefits
benefits exclusively
exclusively to
to the
the members
members of of such
such society,
society, order,
order, or
or association,
association, oror nonstock
nonstock
corporation or
corporation or their
their dependents;
dependents;

(D) Cemetery
(D) Cemetery company
company owned
owned and
and operated
operated exclusively
exclusively for
for the
the benefit
benefit of
of its
its members;
members;

(E) Nonstock
(E) Nonstock corporation
corporation or or association
association organized
organized andand operated
operated exclusively
exclusively for
for religious,
religious, charitable,
charitable,
scientific, athletic,
scientific, athletic, or
or cultural
cultural purposes,
purposes, or
or for
for the
the rehabilitation
rehabilitation of
of veterans,
veterans, nono part
part of
of its
its net
net income
income
or asset
or asset shall
shall belong
belong to
to or
or inure
inure to
to the
the benefit
benefit ofof any
any member,
member, organizer,
organizer, officer
officer or
or any
any specific
specific
person;
person;

(F) Business
(F) Business league
league chamber
chamber ofof commerce,
commerce, or or board
board ofof trade,
trade, not
not organized
organized for
for profit
profit and
and no
no part
part of
of
the
the net
net income
income of
of which
which inures
inures to
to the
the benefit
benefit of
of any
any private
private stock-holder,
stock-holder, or
or individual;
individual;

(G) Civic
(G) Civic league
league or
or organization
organization not
not organized
organized for
for profit
profit but
but operated
operated exclusively
exclusively for
for the
the promotion
promotion of
of
social
social welfare;
welfare;

(H) A
(H) A nonstock
nonstock and
and nonprofit
nonprofit educational
educational institution;
institution;

(1) Government
(I) Government educational
educational institution;
institution;

(J) Farmers'
(J) Farmers' oror other
other mutual
mutual typhoon
typhoon or
or fire
fire insurance
insurance company,
company, mutual
mutual ditch
ditch or
or irrigation
irrigation company,
company,
mutual or
mutual or cooperative
cooperative telephone
telephone company,
company, or or like
like organization
organization of
of aa purely
purely local
local character,
character, the
the income
income
of which
of which consists
consists solely
solely of
of assessments,
assessments, dues,
dues, and
and fees
fees collected
collected from
from members
members for for the
the sole
sole purpose
purpose
of meeting
of meeting its
its expenses;
expenses; and
and

(K) Farmers',
(K) Farmers’, fruit
fruit growers',
growers’, or or like
like association
association organized
organized and
and operated
operated as
as aa sales
sales agent
agent for
for the
the
purpose of
purpose of marketing
marketing the the products
products ofof its
its members
members andand turning
turning back
back to
to them
them the the proceeds
proceeds ofof sales,
sales,
less the
less the necessary
necessary selling
selling expenses
expenses on on the
the basis
basis of
of the
the quantity
quantity of
of produce
produce finished
finished by
by them;
them;

Notwithstanding the
Notwithstanding the provisions
provisions in
in the
the preceding
preceding paragraphs,
paragraphs, the
the income
income ofof whatever
whatever kind
kind and
and
character of
character of the
the foregoing
foregoing organizations
organizations from
from any
any of
of their
their properties,
properties, real
real or
or personal,
personal, or
or from
from any
any of
of
their activities
their activities conducted
conducted for
for profit
profit regardless
regardless of
of the
the disposition
disposition made
made ofof such
such income,
income, shall
shall be
be
subject to
subject to tax
tax imposed
imposed under
under this
this Code.
Code.

Allowable
Allowable Deductions
Deductions

Legal
Legal Basis
Basis Provisions
Provisions Important
Important to
to remember
remember
Section 34
Section 34 (A)(1)
(A)(1) Ordinary and
Ordinary and Necessary
Necessary Trade,
Trade,
Business
Business or
or Professional
Professional
Expenses.
Expenses.
Section 34
Section 34 (A)(1)(b)
(A)(1)(b) Substantiation Requirements
Substantiation Requirements
No
No deduction
deduction from — gross
from gross
income shall
income shall be
be allowed
allowed under
under
Subsection (A)
Subsection (A) hereof
hereof unless
unless
the taxpayer
the taxpayer shall
shall substantiate
substantiate
with
with sufficient
sufficient evidence,
evidence, such
such asas
 official
official receipts
receipts or
or other
other
adequate
adequate records:
records: (i)
(i) the
the
amount of
amount of the
the expense
expense being being
deducted,
deducted, and and (ii)
(ii) the
the direct
direct
connection or
connection or relation
relation of of the
the
expense being deducted to the
expense being deducted to the
development,
development, management,
management,
operation
operation and/or
and/or conduct
conduct of of
the
the trade,
trade, business
business or
or
profession of
profession of the
the taxpayer.
taxpayer.
Section
Section 34
34 (A)(1)(c)
(A)(1)(c) Bribes,
Bribes, Kickbacks
Kickbacks and
and Other
Other Not
Not allowed
allowed as
as deductions
deductions
Similar Payments
Similar Payments
Section
Section 34
34 (B)
(B) Interest
Interest Tax
Tax Arbitrage
Arbitrage -- That
That the
the
taxpayer's otherwise
taxpayer's otherwise allowable
allowable
deduction for
deduction for interest
interest expense
expense
shall be
shall be reduced
reduced by by twenty
twenty
percent (20%)
percent (20%) ofof the
the interest
interest
income subjected
income subjected toto final
final tax
tax
Section 34
Section 34 (C)
(C) Taxes -- Taxes
Taxes Taxes paid
paid oror incurred
incurred Except:
Except:
within
within the taxable
the taxable year in
year in
connection with
connection with the
the taxpayer's
taxpayer's (a) The
(a) The income
income tax tax provided
provided for
for
profession,
profession, trade
trade oror business,
business, under this Title;
under this Title;
shall be
shall be allowed
allowed asas deduction
deduction
(b) Income
(b) Income taxestaxes imposed
imposed by by
authority
authority of
of any _ foreign
any foreign
country;
country; but
but this
this deduction
deduction
shall be
shall be allowed
allowed in in the
the case
case of
of aa
taxpayer who
taxpayer who doesdoes not not signify
signify
in his
in his return
return hishis desire
desire toto have
have
to any
to any extent
extent the the benefits
benefits of of
paragraph (3)
paragraph (3) ofof this
this subsection
subsection
(relating to
(relating to credits
credits for for taxes
taxes ofof
foreign countries);
foreign countries);

(c) Estate
(c) Estate and
and donor's
donor's taxes;
taxes;
and
and

(d) Taxes
(d) Taxes assessed
assessed against
against local
local
benefits of a kind tending
benefits of a kind tending to to
increase
increase the
the value
value of the
of the
property assessed.
property assessed.

Provided,
Provided, That That taxestaxes allowed
allowed
under
under thisthis Subsection,
Subsection, when
when
refunded
refunded or or credited,
credited, shallshall bebe
included
included as part
as part of gross
of gross
income in
income in the
the year
year of of receipt
receipt toto
the extent
the extent of of the
the income
income tax tax
benefit of
benefit of said
said deduction.
deduction.
Section 34
Section 34 (D)
(D) NOLCO
NOLCO carried over
carried over as as aa deduction
deduction
from gross
from gross income
income for for the
the next
next
three (3)
three (3) consecutive
consecutive taxable taxable
years immediately
years immediately following
following thethe
year of such loss:
year of such loss:
Capital Loss
Capital Loss Loss from
Loss from sales
sales or or Exchanges
Exchanges of of
capital assets
capital assets shallshall be be allowed
allowed
 only to
only to the
the extent
extent provided
provided in
in
Section 39***.
Section 39***.

***In the
***In the case
case ofof aa taxpayer,
taxpayer,
other than
other than aa corporation,
corporation, only
only
the
the following
following percentages
percentages of of
the gain or loss recognized
the gain or loss recognized
upon the
upon the sale
sale or
or exchange
exchange of of aa
capital asset shall be taken into
capital asset shall be taken into
account
account in
in computing
computing net
net
capital gain,
capital gain, netnet capital
capital loss,
loss,
and net
and net income.
income.

(1)
(1) One
One hundred
hundred percent
percent
(100%) if
(100%) if the
the capital
capital asset
asset has
has
been held
been held for
for not
not more
more than
than
twelve (12)
twelve (12) months;
months; andand

(2) Fifty
(2) Fifty percent
percent (50%)
(50%) ifif the
the
capital asset
capital asset has
has been
been held
held for
for
more than
more than twelve
twelve (12)
(12) months;
months;

Losses from
Losses from sales
sales oror exchange
exchange
capital assets
capital assets shall
shall bebe allowed
allowed
only to the extent of the gains
only to the extent of the gains
from such
from such sales
sales oror exchanges.
exchanges.
Section 34
Section 34 (E)
(E) Bad
Bad debts
debts debts due
debts due to to thethe taxpayer
taxpayer
actually
actually ascertained
ascertained to
to be
be
worthless
worthless and _ charged
and charged off
off
within the
within the taxable
taxable yearyear except
except
those
those not
not connected
connected with
with
profession,
profession, tradetrade or or business
business
and
and those
those sustained
sustained in aa
in
transaction
transaction entered
entered into
into
between
between parties
parties mentioned
mentioned
under Section
under Section 36 36 (B)(B) ofof this
this
Code:
Code:
Section 34
Section 34 (F)
(F) Depreciation
Depreciation (a) The
(a) The straight-line
straight-line method;
method;

(b) Declining-balance
(b) Declining-balance method,method,
using
using a a rate
rate not
not exceeding
exceeding twice
twice
the rate
the rate which
which would
would have
have been
been
used had
used had the
the annual
annual allowance
allowance
been
been computed
computed under
under the
the
method described
method described in in Subsection
Subsection
(F) (1);
(F) (1);
(c) The
(c) The sum-of-the-years-digit
sum-of-the-years-digit
method;
method; and
and

(d) Any
(d) Any other
other method
method whichwhich
may
may be prescribed
be prescribed by the
by the
Secretary
Secretary of
of Finance
Finance upon
upon
recommendation
recommendation of
of the
the
Commissioner.
Commissioner.
Section 34
Section 34 (H)
(H) Charitable
Charitable and
and Other
Other In
In the
the amount
amount notnot in
in excess
excess ofof
 Contributions.
Contributions. ten percent
ten percent (10%)
(10%) in in the
the case
case of of
an individual,
an individual, and and five
five percent
percent
(5%)
(5%) in
in the
the case
case of
of aa
corporation,
corporation, of of the
the taxpayer's
taxpayer's
taxable income
taxable income derived
derived from from
trade, business or profession as
trade, business or profession as
computed without
computed without the the benefit
benefit
of this
of this deduction.
deduction.
Section
Section 34
34 (L)
(L) Optional Standard
Optional Standard Deduction
Deduction In the
In the casecase of of aa corporation
corporation
(OSD).
(OSD). subject to
subject to tax
tax under
under Sections
Sections
27(A) and
27(A) and 28 28 (A)(1),
(A)(1), itit may
may electelect
aa standard
standard deduction
deduction in in an an
amount not
amount not exceeding
exceeding forty forty
percent (40%)
percent (40%) of of its its gross
gross
income as
income as defined
defined in in Section
Section 32 32
of this Code
of this Code
2.0 Tax Remedies
2.0 Tax Remedies

2.1 Tax remedies

2.1 Tax remedies of
of the
the government
government —– provided
provided by
by or
or allowed
allowed in
in the
the law
law to
to implement
implement the
the tax
tax or
or enforce
enforce
tax collection.
tax collection.

A. Tax Deadlines:
A. Tax Deadlines: (Please
(Please go
go over
over the
the NIRC
NIRC of
of 1997,
1997, as
as amended)
amended)

SCHEDULE
SCHEDULE OF
OF TAX
TAX PAYMENTS
PAYMENTS
Deadlines
Deadlines
Tax
Tax Type
Type Frequency
Frequency BIR Forms
BIR Forms Period Covered
Period Covered Individual | Corporations
Individual Corporations
1701Q/1702Q
1701Q/1702Q 1st Quarter
1st Quarter (Jan-March)
(Jan-March) May-15
May-15 May-30
May-30
(Calendar
(Calendar 2nd Quarter (April-June)
2nd Quarter (April-June) Aug-15
Aug-15 Aug-29
Aug-29
Quarterly
Quarterly Year)
Year) 3rd Quarter
3rd Quarter (July-September
(July-September | Nov-15
Nov-15 Nov-29
Nov-29
Apr-15/ 15
Apr-15/ 15" of
th
of the
the 44"th
Consolidated 1st-4th
Consolidated 1st-4th month following
month following the the
Income Tax (IT)
Income Tax (IT) Annual
Annual 1701/1702
1701/1702 Quarters
Quarters close of the fiscal
close of the fiscal year year
Monthly
Monthly 2550M
2550M Current Month
Current Month 20th following
20th following monthmonth
1st
1st Quarter
Quarter (Jan-March)
(Jan-March) Apr-25
Apr-25
2nd Quarter
2nd Quarter (April-June)
(April-June) Jul-25
Jul-25
3rd Quarter
3rd Quarter (July-September
(July-September Oct-25
Oct-25
Value-Added
Value-Added 4th
4th Quarter
Quarter (October-
(October-
Tax (VAT)
Tax (VAT) Quarterly
Quarterly 2550Q
2550Q December)
December) Jan-25
Jan-25
1st
1st Quarter
Quarter (Jan-March)
(Jan-March)
2nd Quarter
2nd Quarter (April-June)
(April-June)
3rd
3rd Quarter
Quarter (July-September
(July-September 25th
25th ofof the
the month
month
4th Quarter
4th Quarter (October-
(October- following the
following the end
end ofof
Percentage Tax
Percentage Tax | Quarterly
Quarterly 2551Q
2551Q December)
December) quarter
quarter
Non-EFPS
Non-EFPS
Filers
Filers EFPS Filers
EFPS Filers
10th
10th 15th
15th
0619-E/0619-
0619-E/0619- following
following following
following
Monthly
Monthly FF Current Month
Current Month month
month month
month
1st Quarter (Jan-March)
1st Quarter (Jan-March)
2nd Quarter
2nd Quarter (April-June)
(April-June)
3rd Quarter
3rd Quarter (July-September
(July-September Last Day
Last Day ofof the
the month
month
1601-
1601- 4th Quarter (October-
4th Quarter (October- following the end of
following the end of
Quarterly | EQ/1601-FQ
Quarterly EQ/1601-FQ December)
December) quarter
quarter
January 31
January 31 of
of the
the
Withholding
Withholding Annual
Annual 1604-CF
1604-CF Current Year
Current Year following Year
following Year
Taxes
Taxes March 1 1 of
March of the
the following
following
Expanded/Final
Expanded/Final Annual
Annual 1604-E
1604-E Current Year
Current Year Year
Year
Registration
Registration January 31
January 31 of
of the
the current
current
Fee
Fee Annual
Annual 0605
0605 Current
Current Year
Year Year
Year
Registration of
Registration of
Books of
Books of Books
Books December 31
December 31 of
of the
the
Accounts
Accounts Annual
Annual (Columnar)
(Columnar) For the
For the following
following Year
Year current Year
current Year
B.
B. ASSESSMENT
ASSESSMENT PROCESS:
PROCESS:

Regulations: (PLEASE
Regulations: (PLEASE READ)
READ)

1. Revenue
1. Revenue Regulations
Regulations 12-1999
12-1999 (Due
(Due Process
Process Requirements)
Requirements)
2. Revenue
2. Revenue Regulations
Regulations 18-2013(Due
18-2013(Due Process
Process Requirements)
Requirements)
3. Revenue
3. Revenue Regulations
Regulations 22,
22, 2022
2022 (Notice
(Notice of
of Discrepancy/NOD)
Discrepancy/NOD)

Prescriptive
Prescriptive Period:
Period:

SEC. 203.
SEC. 203. Period
Period of of Limitation
Limitation Upon
Upon Assessment
Assessment and and Collection.
Collection. -- Except
Except as as provided
provided in in Section
Section 222,222,
internal revenue
internal revenue taxestaxes shall
shall be
be assessed
assessed within
within three
three (3)
(3) years
years after
after the
the last
last day
day prescribed
prescribed by by law
law forfor
the filing
the filing of
of the
the return,
return, andand no
no proceeding
proceeding in in court
court without
without assessment
assessment for for the
the collection
collection of of such
such taxes
taxes
shall be
shall be begun
begun after
after the
the expiration
expiration ofof such
such period:
period: Provided,
Provided, ThatThat inin a
a case
case where
where aa return
return is is filed
filed
beyond the
beyond the period
period prescribed
prescribed by by law,
law, thethe three
three (3)-year
(3)-year period
period shall
shall be
be counted
counted from
from the the day
day thethe
return was
return was filed.
filed. For
For purposes
purposes ofof this
this Section,
Section, aa return
return filed
filed before
before the
the last
last day
day prescribed
prescribed by by law
law for
for
the filing
the filing thereof
thereof shallshall be
be considered
considered as as filed
filed on
on such
such last
last day.
day.

SEC. 222.
SEC. 222. Exceptions
Exceptions as
as to
to Period
Period of
of Limitation
Limitation of
of Assessment
Assessment and
and Collection
Collection of
of Taxes.-
Taxes.-

(a)
(a) In
In the
the case
case of
of aa false
false oror fraudulent
fraudulent return
return with
with intent
intent to
to evade
evade tax tax or
or of
of failure
failure to
to file
file aa return,
return, the
the tax
tax
may be
may be assessed,
assessed, or or aa proceeding
proceeding in in court
court for
for the
the collection
collection ofof such
such taxtax may
may bebe filed
filed without
without assessment,
assessment,
at
at any
any time
time within
within ten ten (10)
(10) years
years after
after the
the discovery
discovery of of the
the falsity,
falsity, fraud
fraud oror omission:
omission: Provided,
Provided, That
That inin
aa fraud
fraud assessment
assessment which which has has become
become final
final and
and executory,
executory, thethe fact
fact ofof fraud
fraud shall
shall bebe judicially taken
judicially taken
cognizance of
cognizance of in
in the
the civil
civil or
or criminal
criminal action
action for
for the
the collection
collection thereof.
thereof.

(b) If
(b) If before
before the
the expiration
expiration of
of the
the time
time prescribed
prescribed in in Section
Section 203
203 for
for the
the assessment
assessment ofof the
the tax,
tax, both
both the
the
Commissioner
Commissioner and and the
the taxpayer
taxpayer have
have agreed
agreed inin writing
writing to
to its
its assessment
assessment after
after such
such time,
time, the
the tax
tax may
may
be assessed
be assessed within
within the
the period
period agreed
agreed upon.
upon. The
The period
period so
so agreed
agreed upon
upon may
may be
be extended
extended byby subsequent
subsequent
written agreement
written agreement made
made before
before the
the expiration
expiration ofof the
the period
period previously
previously agreed
agreed upon.
upon.

(c) Any
(c) Any internal
internal revenue
revenue tax
tax which
which has
has been
been assessed
assessed within
within the
the period
period of
of limitation
limitation as
as prescribed
prescribed inin
paragraph (a)
paragraph (a) hereof
hereof may
may be
be collected
collected byby distraint
distraint or
or levy
levy or
or by
by a
a proceeding
proceeding inin court
court within
within five
five (5)
(5)
years following
years following the
the assessment
assessment of
of the
the tax.
tax.

(d) Any
(d) Any internal
internal revenue
revenue tax,
tax, which
which has
has been
been assessed
assessed within
within the
the period
period agreed
agreed upon
upon as as provided
provided inin
paragraph (b)
paragraph (b) hereinabove,
hereinabove, maymay be
be collected
collected byby distraint
distraint or
or levy
levy oror by
by aa proceeding
proceeding in in court
court within
within the
the
period agreed
period agreed upon
upon in
in writing
writing before
before the
the expiration
expiration of
of the
the five
five (5)
(5) -year
-year period.
period. The
The period
period soso agreed
agreed
upon may
upon may bebe extended
extended byby subsequent
subsequent written
written agreements
agreements made made before
before the
the expiration
expiration of of the
the period
period
previously agreed upon.
previously agreed upon.

(e) Provided,
(e) Provided, however,
however, That
That nothing
nothing in
in the
the immediately
immediately preceding
preceding and
and paragraph
paragraph (a)
(a) hereof
hereof shall
shall be
be
construed
construed toto authorize
authorize the
the examination
examination and and investigation
investigation oror inquiry
inquiry into
into any
any tax
tax return
return filed
filed in
in
accordance
accordance with
with the
the provisions
provisions of
of any
any tax
tax amnesty
amnesty law
law or
or decree.
decree.
SEC.
SEC. 223.
223. Suspension
Suspension of of Running
Running of of Statute
Statute of of Limitations.
Limitations. -- The The running
running ofof the
the Statute
Statute of of Limitations
Limitations
provided
provided in in Sections
Sections 203203 and
and 222 222 on on the
the making
making of of assessment
assessment and and the
the beginning
beginning of of distraint
distraint oror levy
levy aa
proceeding
proceeding in in court
court for
for collection,
collection, in in respect
respect ofof any
any deficiency,
deficiency, shall
shall be
be suspended
suspended for for the
the period
period during
during
which the
which the Commissioner
Commissioner is is prohibited
prohibited from from making
making the the assessment
assessment or or beginning
beginning distraint
distraint or or levy
levy or
or aa
proceeding
proceeding in in court
court and
and for
for sixty
sixty (60)
(60) days
days thereafter;
thereafter; whenwhen thethe taxpayer
taxpayer requests
requests for for aa reinvestigation
reinvestigation
which
which is granted by the Commissioner; when the taxpayer cannot be located in the address given
is granted by the Commissioner; when the taxpayer cannot be located in the address given byby him
him
in the return filed upon which a tax is being assessed or collected: Provided, that,
in the return filed upon which a tax is being assessed or collected: Provided, that, if the taxpayer informs if the taxpayer informs
the Commissioner
the Commissioner of of any
any change
change in in address,
address, thethe running
running of of the
the Statute
Statute ofof Limitations
Limitations will will not
not bebe
suspended; when
suspended; when the
the warrant
warrant of of distraint
distraint or or levy
levy isis duly
duly served
served upon
upon the
the taxpayer,
taxpayer, his his authorized
authorized
representative,
representative, or or aa member
member of of his
his household
household with with sufficient
sufficient discretion,
discretion, and
and no no property
property couldcould bebe
located; and
located; and when
when thethe taxpayer
taxpayer is is out
out of of the
the Philippines.
Philippines.

Tax Audit
Tax Audit or
or Investigation:
Investigation:

Through the issuance

Through the issuance of
of aa Letter
Letter of
of Authority
Authority (LOA)
(LOA)

SEC. 13.
SEC. 13. Authority
Authority of of aa Revenue
Revenue Officer.
Officer. -- Subject
Subject to
to the
the rules
rules and
and regulations
regulations toto be
be prescribed
prescribed byby the
the
Secretary of
Secretary of Finance,
Finance, upon upon recommendation
recommendation of of the
the Commissioner,
Commissioner, aa Revenue
Revenue Officer
Officer assigned
assigned toto
perform assessment
perform assessment functions
functions in in any
any district
district may,
may, pursuant
pursuant to to aa Letter
Letter of
of Authority issued by
Authority issued by the
the
Revenue Regional Director, examine taxpayers within the jurisdiction of the district in order to collect the
Revenue Regional Director, examine taxpayers within the jurisdiction of the district in order to collect the
correct amount
correct amount of of tax,
tax, or
or to
to recommend
recommend the the assessment
assessment of of any
any deficiency
deficiency tax
tax due
due inin the
the same
same manner
manner
that the
that the said
said acts
acts could
could have
have been
been performed
performed by by the
the Revenue
Revenue Regional
Regional Director
Director himself.
himself.

-- without
without it
it the
the assessment
assessment or
or examination
examination is
is aa nullity
nullity (CIR
(CIR vs.
vs. Sony
Sony Phils.,
Phils., Inc.
Inc. 635
635 SCRA
SCRA 234)
234)

-- any
any tax
tax assessment
assessment issued
issued without
without aa LOA
LOA isis aa violation
violation of
of the
the taxpayer’s
taxpayer’s right
right to
to due
due process
process and
and is
is
therefore “inescapably
therefore “inescapably void”
void” (Medicard
(Medicard vs.
vs. CIR,
CIR, G.RG.R No.
No. 222743
222743 dated
dated April
April 5,
5, 2017)
2017)

TAXPAYER
TAXPAYER PERSON AUTHORIZED
PERSON AUTHORIZED TO TO ISSUE
ISSUE LOA
LOA
Under the
Under the jurisdiction of the
jurisdiction of the National
National Office
Office Commissioner of
Commissioner of Internal
Internal Revenue
Revenue
Under the
Under the jurisdiction of the
jurisdiction of the Regional
Regional Office
Office Regional Director
Regional Director

Effect of
Effect of LOA
LOA issuance:
issuance: Taxpayer
Taxpayer are
are not
not allowed
allowed to
to make
make amendments
amendments

LOA
LOA vs
vs LNs:
LNs:

Letter Notices
Letter Notices to
to be
be valid
valid must
must be
be issued
issued with
with LOA
LOA

Issuance of
Issuance of Notice
Notice of
of Discrepancy:
Discrepancy:

-- Five Days
Five Days to
to explain
explain
-- Submission
Submission of documents
of documents not
not exceeding
exceeding 30
30 days
days

Issuance
Issuance of
of Preliminary
Preliminary Assessment
Assessment Notice
Notice
-- Show
Show inin detail
detail the
the facts
facts and
and the
the laws,
laws, rules
rules and
and regulations,
regulations, or jurisprudence on
or jurisprudence on which
which the
the proposed
proposed
assessment
assessment is is based
based
-- 15
15 days
days toto reply
reply contesting
contesting the
the PAN
PAN

Issuance
Issuance of
of Formal
Formal Letter
Letter of
of Demand/Final
Demand/Final Assessment
Assessment Notice
Notice

-- Show
Show inin detail
detail the
the facts
facts and
and the
the laws,
laws, rules
rules and
and regulations,
regulations, or jurisprudence on
or jurisprudence on which
which the
the proposed
proposed
assessment is
assessment is basedbased
-- 30 days
30 days toto protest
protest the
the FLD/FAN
FLD/FAN

Type of Protest:
Type of Protest:

Request for
Request for reconsideration
reconsideration —– re-evaluation
re-evaluation based
based on
on existing
existing records
records without
without need
need of
of additional
additional
evidence
evidence

Request for
Request for reinvestigation
reinvestigation —– newly
newly discovered
discovered evidence
evidence or
or additional
additional evidence
evidence (NOTE:
(NOTE: submit
submit all
all the
the
necessary supporting
necessary supporting documentation
documentation within
within 60
60 days
days from
from filing
filing of
of protest.
protest.

Issuance of
Issuance of Final
Final Decision
Decision on
on Disputed
Disputed Assessment
Assessment

-- The taxpayer
The taxpayer has
has the
the right
right to
to elevate
elevate the
the case
case to
to the
the Court
Court of
of Tax
Tax Appeals
Appeals
-- Within 30
Within 30 days
days

Collection
Collection

-- The BIR
The BIR may
may avail
avail of
of the
the remedy
remedy of
of collection
collection when
when the
the assessment
assessment becomes
becomes final,
final, executory
executory and
and
demandable
demandable

Methods
Methods of
of Collection:
Collection:

1. Distraint
1. Distraint -– seizure
seizure by by the
the government
government of of personal
personal property,
property, tangible
tangible or or intangible
intangible to
to enforce
enforce the
the
payment of
payment of taxes
taxes
a. Actual
a. Actual Distraint
Distraint
b. Garnishment
b. Garnishment —– distraint
distraint of of bank
bank deposits
deposits
c. Constructive Distraint — sign a receipt, that
c. Constructive Distraint – sign a receipt, that the
the taxpayer
taxpayer will
will preserve
preserve the
the property
property and
and
will not dispose of the property without the express authority of the BIR
will not dispose of the property without the express authority of the BIR
i.i. Taxpayer
Taxpayer is is retiring
retiring from
from any
any business
business subject
subject to
to tax
tax
ii. He
ii. He intends
intends toto leave
leave the
the Philippines
Philippines
iii. Removes
iii. Removes his his property
property therefrom
therefrom
iv. Performs
iv. Performs any any act
act tending
tending to to obstruct
obstruct the
the proceeding
proceeding forfor collecting
collecting the
the tax
tax due
due

Amount
Amount involve
involve Person
Person authorized
authorized
More
More than
than P1Million
P1Million CIR
CIR
P1Million
P1Million or
or below
below RDO
RDO
 Right of
Right of pre-emption
pre-emption —– anytimeanytime prior
prior toto the
the consummation
consummation of of the
the sale,
sale, all
all the
the
proper
proper charges
charges (Taxes,
(Taxes, interest
interest and
and penalties)
penalties) are are paid
paid to
to the
the officer
officer conducting
conducting
the
the sale,
sale, thethe goods
goods or or effects
effects distrained
distrained shall
shall be
be restored
restored to to the
the owner
owner
2.
2. Levy – seizure by
Levy —seizure by the
the government
government of of real
real properties
properties andand interest
interest in in or
or rights
rights to
to such
such properties
properties in in
order
order toto enforce
enforce the the payment
payment of of taxes
taxes
a.
a. Right
Right of redemption — for a
of redemption – for a period
period ofof one
one year
year from
from thethe date
date of
of sale,
sale, the
the property
property maymay
be redeemed by the taxpayer.
be redeemed by the taxpayer.
b.
b. Within
Within the the period
period of of ofof redemption,
redemption, the the taxpayer
taxpayer shall shall not
not bebe deprived
deprived of of of
of the
the
possession
possession
3. Judicial
3. proceedings:
Judicial proceedings:
a. Filing
a. Filing of of civil
civil case
case forfor the
the collection
collection
i.i. Civil
Civil Penalties
Penalties
1.
1. Surcharge
Surcharge
25%
25% SEC.
SEC. 248.
248. Civil
Civil Penalties.
Penalties. --

(A) There
(A) There shall
shall be
be imposed,
imposed, in
in addition
addition to
to the
the tax
tax required
required
to be
to be paid,
paid, aa penalty
penalty equivalent
equivalent toto twenty-five
twenty-five percent
percent
(25%)
(25%) of
of the
the amount
amount due,
due, in
in the
the following
following cases:
cases:

(1) Failure
(1) Failure to
to file
file any
any return
return and
and pay
pay the
the tax
tax due
due thereon
thereon
as required
as required under
under the
the provisions
provisions of
of this
this Code
Code or
or rules
rules and
and
regulations on the date prescribed; or
regulations on the date prescribed; or

(2)
(2) Unless
Unless otherwise
otherwise authorized
authorized by by the
the Commissioner,
Commissioner,
filing a return with an internal revenue officer other
filing a return with an internal revenue officer other than
than
those
those with
with whom
whom the
the return
return is
is required
required to
to be
be filed;
filed; or
or

(3) Failure
(3) Failure toto pay
pay the
the deficiency
deficiency tax
tax within
within the
the time
time
prescribed for
prescribed for its
its payment
payment in
in the
the notice
notice of
of assessment;
assessment; or
or

(4) Failure
(4) Failure to to pay
pay thethe full
full oror part
part of of the
the amount
amount of of tax
tax shown
shown on on
any return
any return required
required to to bebe filed
filed under
under the the provisions
provisions of of this
this Code
Code
or
or rules
rules and and regulations,
regulations, or or the
the full
full amount
amount of of tax
tax due
due for
for which
which
no return
no return is is required
required to to be be filed,
filed, on on oror before
before the
the date
date prescribed
prescribed
for its
for its payment.
payment.
50%
50% (B) In
(B) In case
case of of willful
willful neglect
neglect to to file
file the
the return
return within
within the the period
period
prescribed by
prescribed by this
this Code
Code or or byby rules
rules and and regulations,
regulations, or or in
in case
case aa
false or
false or fraudulent
fraudulent return return is is willfully
willfully made,made, the the penalty
penalty to to bebe
imposed shall
imposed shall be be fifty
fifty percent
percent (50%) (50%) of of the
the tax
tax or
or ofof the
the deficiency
deficiency
tax, in
tax, in case,
case, any any payment
payment has has beenbeen made made on on thethe basis
basis ofof such
such
return before
return before the the discovery
discovery of of the
the falsity
falsity oror fraud:
fraud: Provided,
Provided, That That
aa substantial
substantial under-declaration
under-declaration of of taxable
taxable sales,
sales, receipts
receipts or or
income,
income, or or a a substantial
substantial overstatement
overstatement of of deductions,
deductions, as as
determined
determined by by thethe Commissioner
Commissioner pursuant pursuant to to the
the rules
rules andand
regulations
regulations to to bebe promulgated
promulgated by by thethe Secretary
Secretary of of Finance,
Finance, shallshall
constitute prima
constitute prima facie facie evidence
evidence of of aa false
false oror fraudulent
fraudulent return:
return:
 Provided,
Provided, further,
further, That
That failure
failure to
to report
report sales,
sales, receipts
receipts or
or income
income
in
in an
an amount
amount exceeding
exceeding thirty
thirty percent
percent (30%)
(30%) of of that
that declared
declared perper
return, and
return, and aa claim
claim of
of deductions
deductions in in an
an amount
amount exceeding
exceeding (30%)
(30%)
of actual
of actual deductions,
deductions, shallshall render
render thethe taxpayer
taxpayer liable
liable for
for
substantial
substantial under-declaration
under-declaration of of sales,
sales, receipts
receipts or or income
income or or for
for
overstatement
overstatement of of deductions,
deductions, as as mentioned
mentioned herein.
herein.

2. Interest
Interest

20%
20% Prior
Prior to
to TRAIN
TRAIN Law
Law (took
(took effect January 1,
effect January 1, 2018
2018
12%
12% SEC.
SEC. 249.
249. Interest.
Interest. --

(A) In
(A) In General.
General. -- There
There shall
shall bebe assessed
assessed and and collected
collected on on
any unpaid
any unpaid amount
amount of of tax,
tax, interest
interest at
at the
the rate
rate ofof double
double
the legal
the legal interest
interest for
for loans
loans or or forbearance
forbearance of of any
any money
money
in the
in the absence
absence of of anan express
express stipulation
stipulation as as set
set byby the
the
Banko Sentral
Banko Sentral ng
ng Pilipinas[212]
Pilipinas[212] from from date
date prescribed
prescribed for for
payment until the amount is fully paid: Provided, That in
payment until the amount is fully paid: Provided, That in
no case
no case shall
shall the
the deficiency
deficiency and and delinquency
delinquency interest
interest
prescribed
prescribed under
under Sections
Sections (B) (B) and
and (C)
(C) hereof,
hereof, bebe imposed
imposed
simultaneously.[213]
simultaneously.[213]

(B) Deficiency
(B) Deficiency Interest.
Interest. -- Any
Any deficiency
deficiency in in the
the tax
tax due,
due, asas
the
the term
term isis defined
defined in in this
this Code,
Code, shall
shall be be subject
subject toto the
the
interest
interest prescribed
prescribed in in Subsection
Subsection (A) (A) hereof,
hereof, which
which
interest shall
interest shall bebe assessed
assessed and and collected
collected fromfrom thethe date
date
prescribed for
prescribed for its
its payment
payment until
until the
the full
full payment
payment thereof,
thereof,
or upon
or upon issuance
issuance of of aa notice
notice andand demand
demand by by the
the
Commissioner of Internal Revenue,
Commissioner of Internal Revenue, whichever comes whichever comes
earlier.[213]
earlier.[213]

(C) Delinquency
(C) Delinquency Interest.
Interest. -- In
In case
case of
of failure
failure to
to pay:
pay:

(1)
(1) The
The amount
amount of
of the
the tax
tax due
due on
on any
any return
return to
to be
be filed,
filed,
or
or

(2) The
(2) The amount
amount of
of the
the tax
tax due
due for
for which
which no
no return
return is
is
required,
required, or
or

(3) A
(3) A deficiency
deficiency tax,tax, or
or any
any surcharge
surcharge or or interest
interest thereon
thereon on on the
the
due date
due date appearing
appearing in in the
the notice
notice andand demand
demand of of the
the
Commissioner,
Commissioner, there there shall
shall be be assessed
assessed andand collected
collected onon the
the
unpaid amount, interest at the rate prescribed in Subsection (A)
unpaid amount, interest at the rate prescribed in Subsection (A)
hereof until
hereof until the
the amount
amount is is fully
fully paid,
paid, which
which interest
interest shall
shall form
form
part of
part of the
the tax.2
tax.2
 3.
3. Tax
Tax deficiency
deficiency vs.
vs. Tax
Tax delinquency
delinquency

Tax
Tax Deficiency
Deficiency Tax
Tax Delinquency
Delinquency
The
The amount
amount _ still
still due
due and
and | Failure
Failure of
of the
the taxpayer
taxpayer to to pay
pay the
the
collectible from the taxpayer upon
collectible from the taxpayer upon | tax
tax due on the date fixed by law or
due on the date fixed by law or
audit
audit or
or investigation
investigation indicated
indicated inin the
the Final
Final Assessment
Assessment
Notice
Notice or
or Formal
Formal Letter
Letter ofof Demand
Demand

b. Filing
b. Filing of of criminal
criminal case
case (Tax
(Tax Evasion)
Evasion)
i.i. Under
Under Sections
Sections 254 254 and
and 255
255 of of the
the NIRC,
NIRC, the
the government
government can can file
file aa criminal
criminal case
case
for
for tax
tax evasion
evasion against
against anyany taxpayer
taxpayer who who willfully
willfully attempts
attempts in in any
any manner
manner to to
evade or
evade or defeat
defeat any any tax
tax imposed
imposed in in the
the tax
tax code
code oror the
the payment
payment thereof.
thereof. TheThe
crime of tax evasion is committed by the mere fact that the taxpayer knowingly
crime of tax evasion is committed by the mere fact that the taxpayer knowingly
and willfully
and willfully filed
filed aa fraudulent
fraudulent return
return with
with intent
intent to
to evade
evade and
and defeat
defeat aa part
part oror
all of
all of the
the tax.
tax. ItIt is
is therefore
therefore not not required
required thatthat aa tax
tax deficiency
deficiency assessment
assessment mustmust
first be
first be issued
issued forfor aa criminal
criminal prosecution
prosecution for for tax
tax evasion
evasion toto prosper.[51]
prosper.[51]
[51]
[51] Ungab
Ungab v. Judge Cusi,
v. Judge Jr., 186
Cusi, Jr., 186 Phil.
Phil. 604,
604, 610-611
610-611 (1980).
(1980).

2.2 Remedies
2.2 Remedies ofof the
the taxpayer
taxpayer —– legal
legal actions
actions which
which aa taxpayer
taxpayer can
can avail
avail of
of to
to seek
seek relief
relief from
from the
the undue
undue
burden or
burden or oppressive
oppressive effect
effect of
of tax
tax laws,
laws, or
or as
as aa means
means to
to check
check possible
possible excesses
excesses by
by revenue
revenue officers
officers in
in
the performance
the performance of of their
their duties.
duties.

ASSESSMENT PROCESS:
ASSESSMENT PROCESS:

Letter of
1. Letter of Authority
Authority —– Only Only accept
accept authority
authority to to audit
audit when
when it it is
is supported
supported with with aa LOA
LOA
Issuance of
2. Issuance of Notice
Notice of of Discrepancy
Discrepancy —– Can Can have
have 55 days
days from
from receipt
receipt to to explain;
explain; submission
submission of of
documents within 30 days from receipt of the NOD
documents within 30 days from receipt of the NOD
3. Issuance of
3. Issuance of Preliminary
Preliminary Assessment
Assessment Notice Notice —– within
within 15 15 days
days fromfrom receipt
receipt to to response/protest
response/protest
4. Issuance
4. Issuance of of Formal
Formal Letter Letter of
of Demand/Final
Demand/Final Assessment
Assessment Notice Notice —– within
within 30 30 days
days from
from receipt
receipt of of
the FLD/FAN
the FLD/FAN
a. Request
a. Request for for reconsideration
reconsideration —– re-evaluation
re-evaluation based based on on existing
existing records
records without
without needneed ofof
additional evidence
additional evidence
b. Request
b. Request for for reinvestigation
reinvestigation —– newly newly discovered
discovered evidence
evidence or or additional
additional evidence
evidence (NOTE:
(NOTE:
submit all
submit all the
the necessary
necessary supporting
supporting documentation
documentation within within 6060 days
days from
from filing
filing of
of protest.
protest.
5. Issuance of Final Decision on Disputed Assessment
5. Issuance of Final Decision on Disputed Assessment
a. The
a. The taxpayer
taxpayer has has the
the right
right toto elevate
elevate thethe case
case toto the
the Court
Court ofof Tax Appeals within
Tax Appeals within 30 30 days
days
6. Court
6. Court ofof Tax Appeals up
Tax Appeals up to
to the
the Supreme
Supreme Court Court to to question
question the the Assessments
Assessments
7. Compromise:
7. Compromise: (RR (RR No.30-2002)
No.30-2002)
a. A
a. A reasonable
reasonable doubt doubt as as to
to the
the validity
validity ofof the
the claim
claim against
against the the taxpayer
taxpayer exists;
exists; or
or
b. The
b. The financial
financial positionposition of of the
the taxpayer
taxpayer demonstrates
demonstrates aa clear clear inability
inability toto pay
pay the
the assessed
assessed
tax
tax
i.i. Cannot
Cannot be be compromised:
compromised: (1) (1) Already
Already filed
filed inin court;
court; oror (2)
(2) Involving
Involving Fraud
Fraud
ii. Minimum
ii. Minimum Requirements:
 Financial Incapacity
1. Financial Incapacity —– 10% 10% of of the
the basic
basic assessed
assessed taxestaxes
2. Other
Other cases
cases —– 40%40% of of the
the basic
basic assessed
assessed taxes
taxes
Where the
Where the basic
basic tax
tax exceeds
exceeds National Evaluation
National Evaluation Board:
Board:
P1,000,000.00 or settlement
P1,000,000.00 or settlement 1. CIR
1. CIR
offered is
offered is less
less than
than thethe prescribed
prescribed 2. 4
2. 4 Deputy
Deputy Commissioner
Commissioner
minimum
minimum rates rates
(c) The
(c) The power
power to to compromise
compromise or or abate,
abate, under
under Sec.Sec. 204
204 (A)(A) and
and (B)
(B) ofof this
this
Code,
Code, any
any tax
tax liability:
liability: Provided,
Provided, however,
however, That That assessments
assessments issuedissued by by
the regional
the regional offices
offices involving
involving basicbasic deficiency
deficiency taxestaxes ofof Five
Five hundred
hundred
thousand pesos
thousand pesos (P500,000)
(P500,000) or or less,
less, and
and minor
minor criminal
criminal violations,
violations, as as
may be
may be determined
determined by by rules
rules and
and regulations
regulations to to bebe promulgated
promulgated by by the
the
Secretary of finance, upon recommendation
Secretary of finance, upon recommendation of the Commissioner, of the Commissioner,
discovered by
discovered by regional
regional and and district
district officials,
officials, may
may be be compromised
compromised by by aa
regional evaluation
regional evaluation board board which
which shall
shall bebe composed
composed of of the
the Regional
Regional
Director
Director as as Chairman,
Chairman, the the Assistant
Assistant Regional
Regional Director,
Director, thethe heads
heads of of the
the
Legal,
Legal, Assessment
Assessment and and Collection
Collection Divisions
Divisions andand thethe Revenue
Revenue District
District
Officer having
Officer having jurisdiction
jurisdiction over over thethe taxpayer,
taxpayer, as as members;
members;

8.
8. Abatement
Abatement oror Cancellation
Cancellation of of Tax
Tax Liability
Liability (RR(RR No.
No. 13-2001)
13-2001)
a. Unjustly or excessively assessed
a. Unjustly or excessively assessed
b. Administration
b. Administration and and collection
collection costs
costs involved
involved do do not
not justify the collection
justify the collection of of the
the amount
amount
due
due
9. Refund
9. Refund of
of Taxes:
Taxes:
a.
a. Requisites:
Requisites:
i.i. AA tax
tax was
was erroneously
erroneously or or illegally
illegally collected
collected byby the
the BIR
BIR
ii. The
ii. The taxpayer
taxpayer should
should file
file aa written
written claim
claim for
for refund
refund or or tax
tax credit
credit with
with the
the CIR
CIR
within two years from the date of payment of the tax or penalty; and
within two years from the date of payment of the tax or penalty; and
iii. If the
iii. If the claim
claim or
or refund
refund is is denied
denied by by the
the CIR,
CIR, file
file aa petition
petition for
for refund
refund with
with the
the CTA:
CTA:
1. Within
1. Within 3030 days
days from
from receipt
receipt ofof the
the denial;
denial; ANDAND
2. Within
2. Within the
the two
two years
years from
from the
the date
date ofof payment
payment of of the
the tax
tax or
or penalty
penalty

SEC. 229.
SEC. 229. Recovery
Recovery of of Tax
Tax Erroneously
Erroneously or or Illegally
Illegally Collected.-
Collected.- no no suit
suit or
or proceeding
proceeding shallshall bebe maintained
maintained in in
any court
any court for
for the
the recovery
recovery of of any
any national
national internal
internal revenue
revenue taxtax hereafter
hereafter alleged
alleged toto have
have been
been
erroneously or
erroneously or illegally
illegally assessed
assessed or or collected,
collected, or or of
of any
any penalty
penalty claimed
claimed toto have
have been
been collected
collected without
without
authority, of
authority, of any
any sum sum alleged
alleged toto have
have been
been excessively
excessively or or in
in any
any manner
manner wrongfully
wrongfully collected
collected without
without
authority, or
authority, or of
of any
any sum
sum alleged
alleged toto have
have been
been excessively
excessively or or in
in any
any manner
manner wrongfully
wrongfully collected,
collected, until
until aa
claim for
claim for refund
refund or or credit
credit has
has been
been duly
duly filed
filed with
with thethe Commissioner;
Commissioner; but but such
such suit
suit or
or proceeding
proceeding maymay be be
maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.

In any
In any case,
case, no
no such
such suit
suit or
or proceeding
proceeding shall
shall be
be filed
filed after
after the
the expiration
expiration of
of two
two (2)
(2) years
years from
from the
the date
date of
of
payment of
payment of the
the tax
tax or
or penalty
penalty regardless
regardless ofof any
any supervening
supervening cause
cause that
that may
may arise
arise after
after payment:
payment:
Provided,
Provided, however,
however, That
That the
the Commissioner
Commissioner may, may, even
even without
without a a written
written claim
claim therefor,
therefor, refund
refund or
or credit
credit
any tax, where on the face of the return upon which payment was made, such payment
any tax, where on the face of the return upon which payment was made, such payment appears clearly appears clearly
to
to have
have been
been erroneously
erroneously paid.
Supreme
Supreme Court
Court Decisions:
Decisions:

1.
1. There
There must
must be
be aa written
written claim
claim filed
filed by
by the
the taxpayer
taxpayer with
with the
the CIR;
CIR;
2. The
The claim must also categorically demand for reimbursement; and
claim must also categorically demand for reimbursement; and
3. The taxpayer must show proof of payment of
The taxpayer must show proof of payment of the tax. the tax.
b. Refund
b. Refund of
of Input
Input VAT
VAT on
on Zero
Zero Rated
Rated Sale
Sale

SEC.
SEC. 112.
112. Refunds
Refunds or Tax Credits
or Tax Credits of of Input
Input Tax.Tax. --
(A) Zero-rated
(A) Zero-rated or or Effectively
Effectively Zero-rated
Zero-rated Sales. Sales. -- AnyAny VAT-registered
VAT-registered person, person, whose whose sales sales
are zero-rated
are zero-rated or or effectively
effectively zero-rated
zero-rated may, may, within
within two two (2) (2) years
years afterafter thethe close
close of of the
the
taxable quarter when the sales were made, apply for the issuance of a tax credit
taxable quarter when the sales were made, apply for the issuance of a tax credit
certificate or
certificate or refund
refund of of creditable
creditable input input tax tax due
due or or paid
paid attributable
attributable to to such
such sales,
sales, except
except
transitional input
transitional input tax,tax, toto the
the extent
extent that that such
such input
input tax tax hashas notnot been
been applied
applied against
against
output
output tax:tax: Provided,
Provided, however,
however, That That in in the
the case
case of of zero-rated
zero-rated sales sales underunder Section
Section
106(A)(2)(a)(1), (2)
106(A)(2)(a)(1), (2) and
and (b) (b) and
and Section
Section 108 108 (B)(1)
(B)(1) and and (2),(2), thethe acceptable
acceptable foreign foreign
currency exchange
currency exchange proceeds
proceeds thereof thereof had had beenbeen duly duly accounted
accounted for for inin accordance
accordance with with
the rules
the rules andand regulations
regulations of of the
the Bangko
Bangko Sentral
Sentral ng ng Pilipinas
Pilipinas (BSP):(BSP): Provided,
Provided, further,further, That That
where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in
where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in
taxable or
taxable or exempt
exempt sale sale of of goods
goods of of properties
properties or or services,
services, and and the the amount
amount of of creditable
creditable
input tax
input tax due
due or or paid
paid cannot
cannot be be directly
directly and and entirely
entirely attributed
attributed to to any
any oneone of of the
the
transactions, it
transactions, it shall
shall be be allocated
allocated proportionately
proportionately on on thethe basis
basis of of the
the volume
volume of of sales.
sales.
Provided, finally,
Provided, finally, That
That for for aa person
person making making sales sales thatthat areare zero-rated
zero-rated under under Section
Section 108(B) 108(B)
(6), the
(6), the input
input taxes
taxes shall
shall be be allocated
allocated ratablyratably between
between his his zero-rated
zero-rated and and non-zero-rated
non-zero-rated
sales.
sales.
(B) Cancellation
(B) Cancellation of of VAT
VAT Registration.
Registration. -- A A person
person whose whose registration
registration has has been
been cancelled
cancelled
due
due to retirement from or cessation of business, or due to changes in or cessation of
to retirement from or cessation of business, or due to changes in or cessation of
status
status under
under Section
Section 106(C)106(C) of of this
this Code
Code may, may, within
within two two (2) (2) years
years fromfrom the the date
date of of
cancellation, apply
cancellation, apply forfor thethe issuance
issuance of of aa tax
tax credit
credit certificate
certificate for for any
any unused
unused input input tax tax
which may
which may be be used
used in in payment
payment of of his
his other
other internal
internal revenuerevenue taxes. taxes.
(C) Period
(C) Period within
within which
which RefundRefund or or Tax
Tax Credit
Credit of of Input
Input Taxes
Taxes shall shall be be Made.
Made. -- In In proper
proper
cases, the
cases, the Commissioner
Commissioner shall shall grant
grant aa refund
refund for for creditable
creditable input input taxes
taxes within
within ninetyninety (90) (90)
days [109]
days [109] from
from the the datedate of of submission
submission of of the
the official
official receipts
receipts or or invoices
invoices and and other
other
documents [110] in support of the application filed in accordance with Subsections (A)
documents [110] in support of the application filed in accordance with Subsections (A)
and (B)
and (B) [111]
[111] hereof:
hereof: Provided,
Provided, That That should
should the the Commissioner
Commissioner find find that
that the
the grant
grant of of
refund is
refund is not
not proper,
proper, the the Commissioner
Commissioner must must state
state in in writing
writing the the legal
legal andand factual
factual basis basis
for the
for the denial.
denial.
In case
In case of of full
full oror partial
partial denial
denial of of thethe claim
claim for for tax
tax refund,
refund, the the taxpayer
taxpayer affected
affected may, may,
within thirty
within thirty (30)(30) days
days from from the the receipt
receipt of of the
the decision
decision denyingdenying the the claim,
claim, appeal
appeal the the
decision with
decision with the the Court
Court of of Tax Appeals: Provided,
Tax Appeals: Provided, however,
however, That That failure
failure on on the
the partpart of of
any official, agent, or employee of the BIR to act on the application within ninety (90)
any official, agent, or employee of the BIR to act on the application within ninety (90)
days period
days period shallshall bebe punishable
punishable under under Section
Section 269 269 of of this
this Code.
Code. [111]
 (D) Manner
(D) Manner ofof Giving
Giving Refund.
Refund. -- Refunds
Refunds shall
shall be
be made
made upon
upon warrants
warrants drawn
drawn by by the
the
Commissioner
Commissioner or or by
by his
his duly
duly authorized
authorized representative
representative without
without the
the necessity
necessity ofof being
being
countersigned
countersigned byby the
the Chairman,
Chairman, Commission
Commission on on audit,
audit, the
the provisions
provisions of
of the
the
Administrative
Administrative Code
Code of
of 1987
1987 to
to the
the contrary
contrary notwithstanding:
notwithstanding: Provided,
Provided, That
That refunds
refunds
under
under this
this paragraph
paragraph shall
shall be
be subject
subject to
to post
post audit
audit by
by the
the Commission
Commission on on Audit.
Audit.

SERVICE OF LETTER OF AUTHORITY NOTICE OF DISCREPANCY

WITH CHECKLIST OF PRESENTATION OF (RR No. 22-2020)
THE REQUIREMENTS FOR AUDIT
(RMO No. 45-2010)
PAYMENT OF
TAX DEFICIENCY Ff RECONSIDERATION
REINVESTIGATION
{SUBMIT DOCUMENTS WITHIN (CIR TO DECIDE IN 180
PLE eho iae alone te] a Bt
DISCUSSION OF DAYS FROM DATE OF
DAYS FROM SUBMISSION OF
aN DISCREPANCY/SUBMISSION OF FILING OF PROTEST)
REQUIRED DOCUMENTS)
NOTICE ADDITIONAL DOCUMENTS

IF TAXPAYER FAILS TO STATE THE FACTS,

FORMAL LETTER OF APPLICABLE LAW, RULES, AND REGULATIONS OR
REQUEST FOR ISSUANCE OF SDT
UE yah LUN ele) a) lelce mem ea eli
ASSESSMENT THE ASSESMENT SHALL BE FINAL, EXECUTORY
FEELS NOTICE (FLD/FAN)* AND DEMANDABLE
ASSESSMENT NOTICE
)} *Exceptions to
ISSUANCE OF SDT prior notice of
Preliminary
Assessment COLLECTION LETTER SHALL BE ISSUED TO THE
Notice (Section 3.1.2 TAXPAYER CALLING FOR PAYMENT OF THE
of RR No. 18-2013)
SERVICE OF SDT pastels MVC MIO ea en

FAILURE TO FILE A VALID PROTEST AGAINST THE

FINAL CRIMINAL CASE RR No. 12-1999, as FLD/FAN WITHIN 30 DAYS FROM RECEIPT OF
AGAINST TAXPAYER\
amended by RR No. 18- Oye ae SSAa eee aes
y 2013; 7-2018; & RR No. 22- alee 2200 EeL APR UE cla
2020
ame e |
CONDUCT INVESTIGATION
teed
ete BUA Ee.)
 Para) lol Nera tal rata)
180 DAYS
Within 30 days
from receipt of the Denial
REINVESTIGATION [1aee) 47-10)
(SUBMIT DOCUMENTS WITHIN (CIR TO DECIDE IN 180 ~~,
OP Veer erode)a Bt) ramen ee
AAO E cco i eae
Tae aon eee Uae) ba ecole ot 9) FOR RECONSIDERATION
TO THE CIR (NOTE)

Tae NST Ua 01 NOTE: shall not toll the

SHALL BE ACTED UPON thirty (30)-day period to
appeal to
the CTA.
*Exceptions to prior notice of Preliminary
AWAIT FINAL DECISION Assessment Notice (Section 3.1.2 of RR No. 18-
2013)
daa (i) When the finding for any deficiency tax is the
CANCELLED/REDUCED/SUSTAINED result of mathematical error in the computation
of the tax appearing on the face of the tax
return filed by the taxpayer; or
(ii) When @ discrepancy has been determined
Within 30 days between the tax withheld and the amount
from receipt of the FDDA

refund or tax credit of excess creditable

withholding tax for a taxable period was
determined to have carried over and
PAYMENT OF APPEAL THRU MOTION NOTE: shall not toll the automatically applied the same amount claimed
DEFICIENCY/NO APPEAL FOR RECONSIDERATION TO thirty (20)-day period to against the estimated tax liabilities for the
WITHIN 30 DAYS FROM CIR (NOTE) appeal to taxable quarter or quarters of the succeeding
the CTA. taxable year; or
i130 ee) BY (iv)When the excise tax due on excisable articles
has not been paid; or
(v) When an article locally purchased or
imported by an exempt person, such as, but not
Judicial Appeal limited to, vehicles, capital equipment,
——_ machineries and spare parts, has been sold,
traded or transferred to non-exempt persons
In the above-cited cases, a FLD/FAN shall be
issued outright.

aT lar)) (Petition Granted) Case

Appeal to the
Appeal Dismissed and Cancellation
foes)
SSS ls
Appeal to the CTA Division under Rule 42 of the Revised Rules of Court:
+ If due to inaction:
1. Did not wait the decision — within 30 days from the lapse of the 180-day period;
2. Waited for the decision of CIR or duly authorized representative and decision is
adverse — within 30 days from receipt of the adverse decision
+ If due to denial:
1. By duly authorized representative — within 30 days from receipt of the decision
2. By CIR in case of protest or administrative appeal — within 30 days from receipt of
the decision denying protest or administrative appeal.
+ Effect of failure to appeal to the CTA in due time:
1. Decision or assessment becomes final, executory and demandable:
2. Taxpayer is barred, in an action for collection, from invoking any defense that will Motion for Reconsideration
re-open the question of his liability on the merits or Motion for New Trial
3. Assessment is considered correct and may be enforced by summary remedies or within the same CTA Division
by judicial action;
4. Taxpayer may raise only questions of jurisdiction, collusion between the parties, Within 15 days from the decision of the
or fraud in the party offering the record with respect to the proceedings; CTA Division;
5.
The assessment which has become final and executory cannot be superseded by Under Revised Rules of the Court of Tax
a new assessment. Appeals (AM No. 05-11-07-CTA) and RA
Pleadings required: 9282;
1. One (1) original (properly marked) and two (2) copies with annexes (A.M. No. 11-9-4- Indispensable and mandatory.
SC);
2. Attorney's entry of appearance (In case of failure to submit entry of appearance,
submission of address to the clerk of court to be followed the submission of such entry
of appearance within 48 hours); and
3. Proof of payment of docket fees.

Appeal to the CTA En Ba

 Appeal to the CTA En Banc Motion for Reconsideration
ewer
Under Rule 43 Revised Rules of Court:
* Within 15 days from the notice of the Dispensable;
judgment, final order or resolution of the 2. The motion for reconsideration or for new trial filed
before the Court shall be deemed abandoned if, during
CTA, Division;
+ Motion for Reconsideration before a its pendency, the movant shall appeal to the supreme
Pleadings required: Court.
1. One (1) Original (properly marked) and
eight (8) copies with annexes (A.M. No.
11-9-4-SC);
. A clearly legible duplicate original or
certified true copy of the decision
appealed from; and
3. Proof of payment of the docket fees.
Appeal to the Supreme Court

File petition for review under Rule 45 of the Rules of Court with the Supreme Court
* The Supreme Court may require or allow the filling of pleadings, briefs, memoranda or
documents as it may deem necessary within such periods and under such conditions as it may
consider appropriate;
* Within 15 days from the notice of the judgment, final order or resolution of the CTA, En Banc.
Pleadings required
+ One (1) original (properly marked) and four (4) copies, unless the case is referred to the
Court En Banc, in which event, the parties shall file ten additional copies (A.M. No. 11-9-4-
SC);
Clearly legible duplicate original, or a certified true copy of the judgment or final order or
resolution certified by the clerk of court of the court a quo;
Pleadings, briefs, memoranda or documents as it may deem necessary within such periods
.

and under such conditions as it may consider appropriate; and

Proof of service of copy for payment of docket fees to the lower court concerned and
.

adverse party.
 INCOME
INCOME TAXATION
TAXATION CONTINUATION
CONTINUATION

3.10
3.10 Specific
Specific provisions
provisions of
of other
other special
special laws
laws relating
relating to
to income
income taxation.
taxation.

3.10.1
3.10.1 Senior
Senior Citizen's
Citizen's Law
Law (RA
(RA 7432)
7432) &
& 3.10.2.
3.10.2. Magna
Magna Carta
Carta for
for Disabled
Disabled Persons
Persons (RA
(RA 7277)
7277)

Declaration
Declaration of
of Policies
Policies and
and Objectives:
Objectives:

v Promote
✓ Promote a just and
a just and dynamic
dynamic social
social order
order that
that will
will ensure
ensure prosperity
prosperity and and independence
independence of of the
the
nation
nation
✓
v Article II,
Article Il, Sections
Sections 1010 & & 11
11 of
of the
the Philippine
Philippine Constitution
Constitution provide,
provide, the the state
state shall
shall provide
provide social
social
justice in
justice in all
all phases
phases of of national
national development
development and and that
that the
the State
State values
values thethe dignity
dignity ofof every
every
human person
human person andand guarantees
guarantees fullfull respect
respect for
for human
human rights
rights
✓ Article
Article XIII,
XIIl, Section
Section 11 11 Philippine
Philippine Constitution,
Constitution, among
among othersothers provides
provides that,
that, prior
prior toto the
the
underprivileged,
underprivileged, sick, sick, elderly,
elderly, disabled,
disabled, women
women andand children
children
✓ Article
Article XV,
XV, Section
Section 4 4 Philippine
Philippine Constitution
Constitution declares
declares that
that itit is
is the
the duty
duty ofof the
the family
family toto take
take care
care
of
of its
its elderly
elderly members
members whilewhile the
the State
State may
may design
design programs
programs of of social
social security
security for
for them
them

Important Definitions
Important Definitions

✓v Senior
Senior Citizen
Citizen
oo Resident
Resident Filipino
Filipino Citizen
Citizen
oo Sixty
Sixty (60)
(60) years
years old
old or
or above
above
oo May
May applyapply also
also toto with
with dual
dual citizenship
citizenship status
status provided
provided they
they prove
prove their
their Filipino
Filipino
Citizenship and
Citizenship and have
have at at least
least six
six (6)
(6) months
months residency
residency in
in the
the Philippines
Philippines
v✓ Person
Person With
With Disability
Disability (PWD)
(PWD)
oo Long-term physical, mental,
Long-term physical, mental, intellectual,
intellectual, or
or sensory
sensory impairments
impairments which
which interaction
interaction with
with
various barriers may hinder their full and effective participation in society
various barriers may hinder their full and effective participation in society on an equal on an equal
basis
basis with
with others
others (Revenue
(Revenue Regulations
Regulations No.
No. 5-2017)
5-2017)

Income
Income Taxation
Taxation of
of Senior
Senior Citizens
Citizens and
and PWDs
PWDs

v If
✓ If qualified
qualified deriving
deriving returnable
returnable income
income during
during the
the taxable
taxable year,
year, whether
whether compensation
compensation or or
otherwise,
otherwise, they they shall
shall be be required
required to to file
file their
their respective
respective income
income taxtax returns
returns andand pay
pay the
the tax
tax as
as
they file
they file the
the return
return (meaning
(meaning follow
follow thethe normal
normal discussion
discussion on on Individual
Individual Taxation
Taxation filing
filing (either
(either
BIR Form 1701, 1700,1700A, or considered substituted
BIR Form 1701, 1700,1700A, or considered substituted filing with BIR Form 2316)filing with BIR Form 2316)
✓ IfIf in
in the
the nature
nature ofof compensation
compensation income income but but qualifies
qualifies asas aa minimum
minimum wage wage earner
earner under
under RA RA 9504,
9504,
he shall
he shall be be exempt
exempt from from income
income taxtax on
on the
the said
said income
income subject
subject toto the
the rules
rules provided
provided underunder
Revenue
Revenue Regulations
Regulations No. No. 10-2008,
10-2008, asas amended
amended applicable
applicable to to minimum
minimum wage wage earners
earners
o
o Republic
Republic Act Act No.No. 9504
9504 states
states that
that minimum
minimum wage wage workers
workers are are exempted
exempted from from income
income
and
and withholding
withholding taxes. taxes. Employers
Employers have have the
the duty
duty to to determine
determine if if any
any ofof their
their employees
employees
falls
falls under
under this
this category.
category.
o
o Determining
Determining Tax Exemption
Tax
 ▪= Determine
Determine the the statutory
statutory minimum
minimum daily
daily wage
wage (National
(National Capital
Capital Region
Region wage
wage
board/Regional Tripartite
board/Regional Tripartite Wages
Wages and
and Productivity
Productivity Board)
Board)
▪= The
The employee’s
employee’s rate rate isis the
the sum
sum of
of his
his daily
daily basic
basic wage,
wage, plus
plus the
the following:
following:
•e Holiday
Holiday pay pay
•e Hazard
Hazard pay pay
•e Overtime
Overtime pay pay
•e Night
=6Night differential
differential
▪= If more
If more than
than the the statutory
statutory minimum
minimum wage,
wage, then
then subject
subject toto income
income taxtax
▪= If
|f the
the employee
employee is is paid
paid monthly,
monthly, you
you need
need toto determine
determine if if his
his corresponding
corresponding
daily
daily income
income is is equivalent
equivalent to to the
the statutory
statutory daily
daily minimum
minimum wage.wage.

Note:
Note:
Failure
Failure to
to Withhold
Withhold Taxes
Taxes

It
It is
is important
important to to accurately
accurately determine
determine if if an
an employee
employee isis tax-exempt
tax-exempt or
or not.
not. IfIf
BIR authorities
BIR authorities assess
assess that
that you
you failed
failed to
to withhold
withhold the
the necessary
necessary income
income taxes,
taxes,
you
you maymay bebe charged
charged with
with tax
tax deficiency
deficiency andand required
required toto pay
pay the
the taxes
taxes that
that
should
should have been withheld plus penalties. Your expense for the salaries in
have been withheld plus penalties. Your expense for the salaries in
question may also be disallowed
question may also be disallowed

Special Privileges
Special Privileges

✓
v Exemption
Exemption from
from VAT
VAT on
on their
their certain
certain purchases
purchases
ooO SEC.
SEC. 109.
109. Exempt
Exempt Transactions.
Transactions. – — (W)
(W) Sale
Sale or
or lease
lease of
of goods
goods and
and services
services to
to senior
senior
citizens
citizens and
and persons
persons with
with disability,
disability, as
as provided
provided under
under Republic
Republic Act
Act Nos.
Nos. 9994
9994 (Expanded
(Expanded
Senior
Senior Citizens
Citizens Act
Act of
of 2010)
2010) and
and 10754
10754 (An
(An Act
Act Expanding
Expanding the
the Benefits
Benefits and
and Privileges
Privileges of
of
Persons With Disability), respectively;
Persons With Disability), respectively;

Example:
Example:
Under the
Under the Expanded
Expanded Senior
Senior Citizens
Citizens ActAct ofof 2010,
2010, elderly
elderly Filipinos
Filipinos get
get to
to enjoy
enjoy these
these
privileges
privileges in in the
the Philippines:
Philippines:
Income
Income taxtax exemption
exemption for for minimum
minimum wage wage earners
earners
Training
Training fee
fee exemption
exemption on on socio-economic
socio-economic programs
programs
Free
Free medical and dental services in government facilities
medical and dental services in government facilities
Free flu and pneumococcal vaccinations for indigent senior
Free flu and pneumococcal vaccinations for indigent senior citizens
citizens
Scholarships
Scholarships and financial assistance for seniors' education in public
and financial assistance for seniors' education in public and
and private
private schools
schools
Retirement
Retirement benefits
benefits from
from SSS,
SSS, GSIS,
GSIS, and
and Pag-IBIG
Pag-IBIG
Discounts
Discounts in in special
special programs
programs forfor senior
senior citizens
citizens
Express
Express lanes
lanes for
for senior
senior citizens
citizens in in all
all government
government offices
offices and
and commercial
commercial
establishments
establishments

Medical
Medical Benefits
Benefits for
for Senior
Senior Citizens
R.A. 9994
R.A. 9994 was
was instrumental
instrumental inin giving
giving PhilHealth
PhilHealth benefits
benefits to to senior
senior citizens.
citizens. Moreover,
Moreover,
Republic
Republic Act
Act No.
No. 10645
10645 was
was enacted
enacted in in 2014
2014 toto provide
provide mandatory
mandatory PhilHealth
PhilHealth coverage
coverage
for
for anyone
anyone above
above 60 60 years
years old.
old. This
This coverage
coverage is provided in
is provided in addition
addition to to the
the 20%
20%
discount
discount and
and VAT
VAT exemption
exemption every senior citizen
every senior citizen is
is entitled
entitled to.
to.

So
So how
how much
much is
is the
the PhilHealth
PhilHealth discount
discount for
for senior
senior citizens?
citizens?

For
For example,
example, ifif your
your elderly
elderly loved
loved one
one requires
requires confinement
confinement in in a
a private
private hospital,
hospital, the
the
20% discount
20% discount and
and VATVAT exemption
exemption are
are deducted
deducted first
first from
from the
the medical
medical bill
bill before
before the
the
PhilHealth benefit
PhilHealth benefit isis deducted.
deducted.

The No
The No Balance
Balance Billing
Billing Policy
Policy applies
applies inin public
public hospitals,
hospitals, meaning
meaning senior
senior patients
patients no
no
longer need to pay for their hospital bills.
longer need to pay for their hospital bills.

Even
Even without
without the
the Member
Member DataData Record
Record (MDR),
(MDR), elderly
elderly patients
patients can
can avail
avail of
of treatments
treatments
through
through their
their senior
senior citizen
citizen ID
ID or
or any
any government
government ID.ID. However,
However, it’s
it’s better
better to
to register
register as
as a
a
senior citizen
senior citizen PhilHealth
PhilHealth member
member to to receive
receive the
the benefits
benefits more
more seamlessly.
seamlessly.

Senior citizens
Senior citizens in
in the
the Philippines
Philippines also
also get
get cash
cash benefits
benefits from
from the
the government.
government. Under
Under
Republic
Republic Act No. 10868, also known as the Centenarians Act of 2016, senior citizens who
Act No. 10868, also known as the Centenarians Act of 2016, senior citizens who
reach 100 years old get to receive a cash incentive of ₱100,000.
reach 100 years old get to receive a cash incentive of ®100,000.

Indigent
Indigent senior
senior citizens
citizens or
or elderly
elderly people
people below
below the
the poverty
poverty line
line can
can also
also receive
receive a a
monthly
monthly allowance
allowance of of ₱500.
#500. This
This is
is aa subsidy
subsidy program
program by by the
the Department
Department of of Social
Social
Welfare and
Welfare and Development
Development (DSWD)(DSWD) to to help
help fund
fund the
the medical
medical and
and daily
daily needs
needs of
of senior
senior
citizens
citizens with
with little
little to
to no
no stable
stable source
source ofof income.
income.

What
What are
are the
the Senior
Senior Citizen
Citizen Discounts
Discounts in
in the
the Philippines?
Philippines?

Under R.A.
Under R.A. 9994,
9994, elderly
elderly Filipinos
Filipinos aged
aged 6060 and
and above
above are
are entitled
entitled to
to aa 20%
20% discount
discount and
and
exempted
exempted fromfrom the
the value-added
value-added tax tax (VAT)
(VAT) on
on applicable
applicable goods
goods and
and services
services for
for their
their
exclusive use.
exclusive use. These
These privileges
privileges apply
apply to
to both
both cash
cash and
and credit
credit card
card payments.
payments.

Medicines:
Medicines: Generic
Generic andand branded
branded medicines,
medicines, vitamins,
vitamins, andand mineral
mineral supplements
supplements (with
(with
doctor’s prescription)
doctor’s prescription)
Medical
Medical supplies
supplies and and equipment:
equipment: Hearing
Hearing aids,aids, eyeglasses,
eyeglasses, wheelchairs,
wheelchairs, crutches,
crutches,
dentures,
dentures, etc.
etc.
Medical
Medical and
and dental
dental services
services in
in private
private facilities:
facilities: Lab
Lab tests
tests such
such as
as blood
blood tests,
tests, x-rays,
x-rays, etc.
etc.
Professional
Professional fees
fees of
of attending
attending physicians
physicians andand licensed
licensed health
health workers
workers
Domestic air
Domestic air and
and sea
sea travel
travel fares
 Public
Public land
land transportation
transportation fares:
fares: Jeepneys,
Jeepneys, buses,
buses, taxis,
taxis, shuttle
shuttle services,
services, MRT,
MRT, LRT,
LRT, PNR,
PNR,
etc.
etc.
Hotels:
Hotels: Accommodation
Accommodation and and amenities
amenities inin hotels,
hotels, beach
beach resorts,
resorts, mountain
mountain resorts,
resorts, etc.
etc.
Restaurants:
Restaurants: Food,
Food, beverages,
beverages, dessert,
dessert, andand other
other consumables
consumables for for dine-in,
dine-in, take-out,
take-out,
drive-thru,
drive-thru, and
and delivery
delivery orders
orders
Recreation
Recreation centers: Rental and
centers: Rental and other
other fees
fees for
for sports
sports facilities
facilities such
such as as gyms,
gyms, badminton
badminton
courts, tennis courts, ballroom dancing studios, bowling
courts, tennis courts, ballroom dancing studios, bowling lanes, etc. lanes, etc.
Places
Places of
of leisure:
leisure: Cinemas,
Cinemas, museums,
museums, parks,
parks, theaters,
theaters, concert
concert halls,
halls, etc.
etc.
Funeral
Funeral and
and burial
burial services
services forfor deceased
deceased senior
senior citizens:
citizens: hospital
hospital morgue,
morgue, embalming,
embalming,
casket or
casket or urn,
urn, cremation,
cremation, etc.
etc.

How
How toto Compute
Compute thethe Senior
Senior Citizen
Citizen Discount
Discount in
in the
the Philippines
Philippines
Senior citizens
Senior citizens in
in the
the Philippines
Philippines are
are exempted
exempted fromfrom paying
paying Value
Value Added
Added Tax
Tax (VAT).
(VAT). To
To
get your VAT computation, divide the selling price by the VAT
get your VAT computation, divide the selling price by the VAT rate. rate.

Below
Below is
is a
a sample
sample computation:
computation:

Product price:
Product price: ₱500
®500

VAT
VAT rate:
rate: 12%
12%

Formula:
Formula: Selling
Selling Price
Price ÷
+ VAT
VAT Rate
Rate =
= VAT
VAT Exempt
Exempt Sales
Sales

Total:
Total: ₱500
#500 ÷
+ 1.12
1.12 =
= ₱446.43
8446.43

Formula: VAT
Formula: VAT Exempt
Exempt Sales
Sales xx 20%
20% =
= Senior
Senior Citizen
Citizen Discount
Discount

Total: ₱446.43
Total: ®446.43 xx 0.20
0.20 == ₱89.29
#89.29

Formula:
Formula: VAT
VAT Exempt
Exempt Sales
Sales —– Senior
Senior Citizen
Citizen Discount
Discount =
= Billable
Billable Amount
Amount

Total:
Total: ₱446.43
®446.43 – — ₱89.29
®89.29 == ₱357.14
8357.14
ooO PWDs:
PWDs:
▪= RA
RA 10754
10754 (An (An Act
Act Expanding
Expanding the
the Benefits
Benefits and
and Privileges
Privileges of
of Persons
Persons With
With
Disability) - NOTE PLEASE READ THE REST FOR LECPA Purposes
Disability) - NOTE PLEASE READ THE REST FOR LECPA Purposes

Section 6,
Section 6, Twenty
Twenty Percent
Percent (20%)
(20%) Discount
Discount and
and Value
Value Added
Added Tax (VAT) Exemption
Tax (VAT) Exemption
—– Persons
Persons with
with disability
disability shall
shall be
be entitled
entitled to
to the
the grant
grant of
of 20%
20% discount
discount and
and VAT-
VAT-
exemption on
exemption on the
the purchase
purchase of of certain
certain goods
goods and and services
services from
from all
all
establishments for their exclusive use, enjoyment or
establishments for their exclusive use, enjoyment or availment; Provided,availment; Provided,
however, that
however, that the
the purchase
purchase of of such
such goods
goods andand services
services from
from sellers
sellers that
that are
are not
 subject
subject to
to Value
Value Added
Added Tax
Tax (VAT)
(VAT) shall
shall be
be subject
subject to
to the
the applicable
applicable percentage
percentage
tax.
tax.

For
For this
this purpose,
purpose, subsequent
subsequent purchases
purchases byby persons
persons with
with disability
disability on
on the
the same
same
day
day from
from the
the same
same establishments
establishments shall
shall still
still be
be subjected
subjected to
to 20%
20% discount
discount and
and
VAT-exemption.
VAT-exemption.

All establishments
All establishments shall
shall place
place signages
signages in in conspicuous
conspicuous areas
areas within
within their
their
premises to
premises to inform
inform persons
persons with
with disabilities
disabilities that
that they
they are
are entitled
entitled to
to the
the 20%
20%
discount
discount and
and VAT-exemption.
VAT-exemption.

The Department
The Department of of Finance
Finance thru
thru the
the Bureau
Bureau ofof Internal
Internal Revenue
Revenue shall
shall issue
issue the
the
corresponding
corresponding Revenue
Revenue Regulations
Regulations and/or
and/or Revenue
Revenue Memorandum
Memorandum Circulars
Circulars
related to
related to the
the grant
grant of
of the
the 20%
20% discount
discount and
and VAT-exemption
VAT-exemption forfor persons
persons with
with
disability.
disability.

The Department
The Department of of the
the Interior
Interior and
and Local
Local Government
Government shall
shall also
also ensure
ensure that
that all
all
local
local government
government units
units are
are informed
informed about
about the
the law
law for
for the
the smooth
smooth
implementation of
implementation of the
the 20%
20% discount
discount andand VAT-exemption
VAT-exemption forfor persons
persons with
with
disability in their areas of jurisdiction.
disability in their areas of jurisdiction.

✓v IfIf aggregate
aggregate gross
gross income
income does
does notnot exceed
exceed P250,000.00
P250,000.00 per per TRAIN
TRAIN Law,
Law, then
then exempt
exempt from
from
income
income tax tax and
and shall
shall not
not be
be required
required toto file
file income
income tax
tax return
return
v✓ REMEMBER:
REMEMBER: Senior Senior Citizens
Citizens & & PWDs,
PWDs, likelike any
any other
other ordinary
ordinary individual
individual taxpayer,
taxpayer, can
can still
still be
be
liable for other taxes such as:
liable for other taxes such as:
ooO 20%
20% FWT
FWT on on interest
interest income
income from
from any any currency
currency bank
bank deposits
deposits
ooO 15%
15% FWTFWT on on interest
interest income
income fromfrom aa depositary
depositary bank bank under
under the
the expanded
expanded foreign
foreign
currency deposit
currency deposit system
system (Sec.
(Sec. 24
24 (B)(1),
(B)(1), NIRC,
NIRC, as
as amended
amended
ooO Etc…

Additional
Additional Benefits
Benefits for
for private
private entities:
entities:

1. Employing
1. Employing senior
senior citizens
citizens —– additional
additional deductions
deductions from from their
their gross
gross income,
income, equivalent
equivalent toto 15%
15% of
of
the total amount paid as salaries and wages to senior citizens, subject to the following
the total amount paid as salaries and wages to senior citizens, subject to the following
conditions:
conditions:
a. Employment shall
a. Employment shall continue
continue for for aa period
period of of at
at least
least six
six months;
months; AND AND
b.
b. Annual
Annual income
income of of the
the senior
senior citizens
citizens DOES
DOES NOT NOT exceed
exceed the the latest
latest poverty
poverty threshold
threshold asas
determined
determined by by the
the National
National Statistical
Statistical Coordination
Coordination Board Board (NSCB)
(NSCB) of of the
the National
National
Economic and
Economic and Development
Development Authority
Authority (NEDA)
(NEDA) for for THAT
THAT YEAR.
YEAR.
2. Employing
Employing PWDsPWDs —– who
who meet
meet thethe required
required skills
skills or
or qualifications,
qualifications, eithereither as
as regular
regular employees,
employees,
apprentices or learners, shall be entitled to an additional deduction from their gross income
apprentices or learners, shall be entitled to an additional deduction from their gross income
equivalent to 25% of the total amount paid as salaries and wages to disabled persons.
equivalent to 25% of the total amount paid as salaries and wages to disabled persons.
Treatment
Treatment of
of INPUT
INPUT VAT
VAT attributable
attributable to
to sale
sale to
to Senior
Senior Citizens
Citizens and
and PWDs
PWDs

v The
✓ The Input
Input VAT
VAT attributable
attributable to
to the
the VAT
VAT Exempt
Exempt sale
sale is
is considered
considered as
as cost
cost or
or an
an expense
expense account
account by
by
the business establishments and shall not be allowed as input tax credit
the business establishments and shall not be allowed as input tax credit

3.10.3.
3.10.3. Barangay
Barangay Micro
Micro Business
Business Enterprises
Enterprises (BMBEs)
(BMBEs) Act
Act (RA
(RA 9178)
9178)

✓
v a. “Barangay
a. “Barangay Micro Micro Business
Business Enterprise,”
Enterprise,” hereinafter
hereinafter referred
referred to to as
as BMBE,
BMBE, refers
refers toto any
any business
business
entity
entity or or enterprise
enterprise engaged
engaged in in the
the production,
production, processing
processing or or manufacturing
manufacturing of of products
products or or
commodities, including
commodities, including agro-processing,
agro-processing, trading
trading andand services,
services, whosewhose total
total assets
assets including
including those
those
arising from
arising from loans
loans but
but exclusive
exclusive of of the
the land
land onon which
which the the particular
particular business
business entity’s
entity’s office,
office, plant
plant
and
and equipment
equipment are are situated,
situated, shall
shall not
not bebe more
more than than Three
Three Million
Million Pesos
Pesos (P3,000,000.00).
(P3,000,000.00). The The
above definition shall be subject to review and upward adjustment by the SMED Council, as
above definition shall be subject to review and upward adjustment by the SMED Council, as
mandated under Republic Act No. 6977, as amended by Republic Act No. 8289.
mandated under Republic Act No. 6977, as amended by Republic Act No. 8289.
✓ “services”
“services” shallshall exclude
exclude those
those rendered
rendered by by any
any one,
one, who
who is is duly
duly licensed
licensed by by the
the government
government after after
having passed
having passed aa government
government licensure
licensure examination,
examination, in in connection
connection with with the
the exercise
exercise of of one’s
one’s
profession.
profession. (e.g.CPAs/Accountants,
(e.g.CPAs/Accountants, Lawyers,Lawyers, Doctors,
Doctors, Engineers,
Engineers, etc.) etc.)
✓ DOF
DOF Department
Department Order Order NO.NO. 17-04
17-04 provides
provides that,
that, anan enterprise
enterprise can can only
only qualify
qualify for
for registration
registration if if
it
it is
is NOT
NOT a a branch,
branch, subsidiary,
subsidiary, division,
division, or or office
office of of aa large-scale
large-scale enterprise
enterprise and and itsits policies
policies and
and
and business modus operandi are not determined by a large-scale
and business modus operandi are not determined by a large-scale enterprise or by persons who enterprise or by persons who
are not
are not owners
owners or or employees
employees of of an
an enterprise.
enterprise.

Barangay-based
Barangay-based means:
means:

1. Majority
1. Majority of of its
its employees
employees areare residents
residents ofof the
the municipality
municipality where
where its
its principal
principal place
place of
of business
business
is
is located;
located;
Its principal
2. Its principal activity
activity consists
consists inin the
the application/use
application/use of of skill
skill peculiar
peculiar toto the
the locality
locality or
or of
of raw
raw
materials
materials predominantly
predominantly sourced
sourced fromfrom the
the area
area
Its business operations are confined within the
3. Its business operations are confined within the territorial
territorial jurisdiction
jurisdiction ofof the
the municipality
municipality or or LGU
LGU
in which its principal place of business is located
in which its principal place of business is located

Micro-Enterprise
Micro-Enterprise in
in Nature
Nature and
and Scope
Scope means:
means:

1. Its
1. Its principal
principal activity
activity isis primarily
primarily for
for livelihood,
livelihood, determined
determined by by the
the MSMED
MSMED Council
Council oror DTI
DTI as
as a
a
priority area
priority area for
for development
development or or government
government assistance;
assistance;
2. The
The enterprise
enterprise is is not
not a a branch,
branch, subsidiary,
subsidiary, division
division or
or office
office of
of a
a large
large scale
scale enterprise;
enterprise; and
and
3. Its
Its policies
policies and
and business
business modus
modus operandi
operandi are are not
not determined
determined by by aa large
large enterprise
enterprise oror by
by persons
persons
who are
who are not
not owners
owners or or employees
employees of of the
the enterprise.
enterprise.

Under
Under the
the Go
Go Negosyo
Negosyo Act
Act or
or RA
RA No.
No. 10644
10644

Functions
Functions of
of the
the Negosyo
Negosyo Centers:
Centers:

1. Enforcement
1. Enforcement ofof BMBE
BMBE Provisions
Provisions
2. Business Registration
2. Business Registration Assistance
 3. Business
Business Advisory
Advisory Services
Services
Fw
4. Business
Business Information
Information andand advocacy
advocacy
5. Monitoring and
Monitoring and evaluation
evaluation
au

6. Perform
Perform such
such other
other functions
functions that
that may
may be
be assigned
assigned by
by the
the Micro,
Micro, Small
Small and
and Medium
Medium Enterprise
Enterprise
Development (MSMED)
Development (MSMED) Council
Council as
as germane
germane to
to RA
RA 10644
10644 and
and other
other related
related laws.
laws.

Who are
Who are eligible
eligible to
to Register
Register as
as BMBE?
BMBE?

✓
v_ Any
Any person,
person, natural
natural or juridical, or
or juridical, or cooperative,
cooperative, or
or association,
association, having
having the
the qualifications
qualifications provided
provided
under the
under the law
law may
may apply
apply for
for registration
registration as
as BMBE
BMBE

Incentives
Incentives of
of BMEs
BMEs

1. Income
1. Income Tax Exemptions from
Tax Exemptions from income
income arisingarising from
from thethe operations
operations of of the
the enterprise
enterprise
a.
a. BUT
BUT mustmust secure
secure a a Certificate
Certificate of of Authority
Authority to to operate
operate and and registered
registered as as aa BMBE
BMBE fromfrom
the office
the office of of the
the treasurer
treasurer of of the
the city
city or
or municipality
municipality that that has
has jurisdiction
jurisdiction
b.
b. Submit
Submit the the Certificate
Certificate of of Authority
Authority to to the
the BIRBIR andand apply
apply for for a a Certificate
Certificate of of Tax
Tax
Exemption
Exemption
Returns to
2. Returns to be
be filed
filed with
with BIR
BIR —– inin general,
general, the the income
income of of BMBE
BMBE fromfrom their
their operations
operations is is exempt,
exempt,
hence,
hence, excluded
excluded from from gross
gross income
income subjectsubject to to regular
regular income
income tax.tax. Only
Only those
those income
income fromfrom
related
related activities
activities are are exempted.
exempted. In In lieu
lieu of of Income
Income Tax Tax Returns,
Returns, BMBEBMBE filesfiles Annual
Annual Information
Information
Return (AIR).
Return (AIR).
a. For
a. For Self-employed
Self-employed individuals:
individuals: BIR BIR Form
Form 1701
1701 —– (AIF)
(AIF)
b. For
b. For corporations
corporations and and partnerships,
partnerships, as as well
well asas cooperatives,
cooperatives, use use BIR
BIR Form
Form 1702
1702 -(AIF)
–(AIF)
*Account Information
*Account Information Form Form
3. BMBES
BMBES however is
however is usually
usually subject
subject to to business
business taxestaxes (3% (3% percentage
percentage tax tax oror vat,
vat, as
as the
the case
case
maybe) and
maybe) and other
other internal
internal revenue
revenue taxes taxes suchsuch asas DST
DST and
and Registration
Registration Fee.Fee.

Revocation
Revocation of
of BMBE Tax exemptions:
BMBE Tax exemptions:

1. Change
Change of of business
business address
address
FWN PR

2. Value of
Value of assets
assets exceeds
exceeds P3Million
P3Million
3. Voluntary surrender
Voluntary surrender of of Certificate
Certificate of
of Authority
Authority
4. Death of the Sole Proprietor
Death of the Sole Proprietor
5. Merger or
Merger or consolidation
consolidation with
with an
an entity
entity not
not registered
registered asas BMBE
BMBE
OU

6. Sale
Sale or
or transfer
transfer ofof the
the BMBE
BMBE enterprise
enterprise
7. Falsification of
Falsification of documents
documents
wo ON

8. Retirement
Retirement from from business,
business, oror cessation/suspension
cessation/suspension of of operation
operation for
for one
one year
year
9. Death of
Death of aa partner
partner

✓ Exemption
Exemption from
from the
the coverage
coverage of
of the
the Minimum
Minimum WageWage LawLaw —– BMBE
BMBE employees
employees will
will still
still receive
receive the
the
<M

same social security and health care benefits as other employees

same social security and health care benefits as other employees
✓ Priority
Priority to
to a
a special
special credit
credit window
window —–set
set up
up specifically
specifically for
for the
the financing
financing requirements
requirements of of BMBEs
BMBEs
o
o Funding
Funding Agencies
Agencies designated
designated to
to set-up
set-up special
special credit
credit windows
windows for
for BMBEs
 ▪= LBP LBP
▪= DBP DBP
▪= Small
Small Business
Business Guarantee
Guarantee and and Finance
Finance Corporation
Corporation
▪= People’s
People’s Credit
Credit and
and Finance
Finance Corporation
Corporation
▪=" ~~ Quedan
Quedan and and Rural
Rural Credit
Credit Guarantee
Guarantee Corporation
Corporation
▪= GSISGSIS and SSS (members ONLY)
and SSS (members ONLY)
✓
Y Training & Technological assistance
Training & Technological assistance among
among others
others
o DTI
DT
o DOST
DOST
00

o University
University of of the
the Philippines
Philippines Institute
Institute for
for Small
Small Scale
Scale Industries
Industries (UP-ISSI)
(UP-ISSI)
o CDA
CDA
OO

o TESDA
TESDA
oO

o Technology
Technology and and Livelihood
Livelihood Resource
Resource Center
Center (TLRC)
(TLRC)
✓
¥ LGUS
LGUS are also encouraged to either reduce the amount of
are also encouraged to either reduce the amount of local
local taxes,
taxes, fees,
fees, and
and charges
charges imposed
imposed
or
or exempt
exempt the
the BMBEs
BMBEs from
from local
local taxes,
taxes, fees,
fees, and
and charges.
charges.

TRANSFER
TRANSFER TAXES
TAXES

ESTATE
ESTATE TAX:
TAX:

Tax
Tax Code
Code Provisions:
Provisions: Section
Section 84-97
84-97 of
of the
the NIRC
NIRC of
of 1997,
1997, as
as amended.
amended.

DONOR’S
DONOR’S TAX
TAX

Tax
Tax Code
Code Provisions:
Provisions: Section
Section 98-104
98-104 of
of the
the NIRC
NIRC of
of 1997,
1997, as
as amended.
amended.

Definition of
Definition of Terms
Terms

Personal
Personal

Property includes
Property includes right
right or
or equity
equity of
of the
the decedent
decedent inin movable
movable property
property like
like money,
money, credit,
credit, share
share of
of stock,
stock,
bond, security, jewelry, automobile and all things which can be transported from one place to another
bond, security, jewelry, automobile and all things which can be transported from one place to another

Communal
Communal

Property that
Property that property
property brought
brought into
into marriage
marriage and
and property
property acquired
acquired during
during the
the marriage
marriage byby both
both
husband
husband and
and wife
wife whose
whose marriage
marriage was
was solemnized
solemnized on
on or
or after
after August
August 33 1988
1988 the
the effectivity
effectivity of
of the
the New
New
Family
Family Code,
Code, inin the
the absence
absence of
of pre-nuptial
pre-nuptial agreement
agreement

Conjugal
Conjugal

Property that
Property that property
property which
which is
is acquired
acquired by
by both
both husband
husband and
and wife
wife during
during marriage
marriage solemnized
solemnized before
before
August 3 1988 as revised by the New Family Code, including fruits
August 3 1988 as revised by the New Family Code, including fruits thereof
Exclusive
Exclusive

Property that
Property that property
property owned
owned solely
solely by
by each
each spouse
spouse and
and acquired
acquired by
by gratuitous
gratuitous title
title and
and other
other
acquisition using exclusive money of the husband and or wife
acquisition using exclusive money of the husband and or wife

Fair
Fair Market
Market Value
Value

The amount
The amount of
of money
money which
which aa purchaser
purchaser is
is willing
willing but
but not
not obliged
obliged to
to pay
pay to
to an
an owner,
owner, who
who isis willing
willing but
but
not
not obliged
obliged to
to sell
sell it
it However,
However, under
under the
the NIRC,
NIRC, Fair
Fair Market
Market Value
Value (( is
is whichever
whichever is is higher
higher of
of the
the FMV
FMV asas
determined by
determined by the
the CIR
CIR or
or the
the FMV
FMV asas shown
shown in in the
the scheduled
scheduled of of values
values ofof the
the Provincial
Provincial and
and City
City
Assessors
Assessors

Family Home
Family Home

The
The dwelling
dwelling house,
house, including
including the
the land
land where
where it
it is
is situated,
situated, where
where the
the husband
husband and
and wife
wife or
or an
an unmarried
unmarried
person, who is the head of the family and member/s of their family reside, as certified by the Barangay
person, who is the head of the family and member/s of their family reside, as certified by the Barangay
Captain of
Captain of the
the locality.
locality.

Real Property
Real Property

Includes
Includes land,
land, building,
building, improvement,
improvement, trees,
trees, machineries
machineries andand construction
construction of
of all
all kinds
kinds adhered
adhered to to the
the
soil, etc
soil, etc and
and real
real rights
rights or
or equity
equity in
in immovable
immovable property,
property, left
left by
by the
the deceased
deceased as
as of
of the
the time
time ofof death
death

Tangible Personal
Tangible Personal Property
Property

Includes jewelry, car

Includes jewelry, car and
and appliances,
appliances, paintings
paintings and
and other
other movable
movable property
property which
which can
can be
be perceived
perceived by
by
the human senses and which can be transported from one place to another
the human senses and which can be transported from one place to another

Intangible
Intangible Personal
Personal Property
Property

Includes deposits
Includes deposits in
in banks,
banks, shares
shares of
of stock,
stock, trademark,
trademark, patented
patented copyright,
copyright, and
and the
the like
like which
which do
do not
not
have
have physical
physical form,
form, hence,
hence, cannot
cannot be
be perceived
perceived by
by the
the human
human senses
senses

Zonal
Zonal Value
Value

The value
The value of of the
the real
real property
property located
located inin each
each zone
zone or
or area
area as
as determined
determined by
by the
the Commissioner
Commissioner of of
Internal Revenue pursuant to Sec 6 (of the NIRC, upon consultation with competent
Internal Revenue pursuant to Sec 6 (of the NIRC, upon consultation with competent real estate real estate
appraisers, both
appraisers, both from
from the
the private
private and
and public
public sectors,
sectors, adopted
adopted for
for purposes
purposes of
of computing
computing any
any internal
internal
revenue
revenue taxtax

Vanishing Deduction
Vanishing Deduction (REMEMBER
(REMEMBER THIS)
THIS)

This
This deduction
deduction shall
shall bebe allowed
allowed only
only where
where thethe tax,
tax, estate
estate or
or donor,
donor, waswas finally
finally determined
determined as as paid
paid by
by or
or
on behalf
on behalf of
of such
such prior
prior decedent
decedent or or such
such donor,
donor, and
and only
only to
to the
the extent
extent that
that the
the value
value of
of such
such property
property isis
included
included inin the
the decedent’s
decedent’s gross
gross estate,
estate, the
the amount
amount deductible
deductible on on the
the property
property previously
previously taxed,
taxed,
depends
depends upon
upon the
the length
length of
of time
time intervening
intervening between
between thethe first
first transmission
transmission and and that
that ofof the
the second
second
transmission, which does not exceed
transmission, which does not exceed five 5 five 5 years
 Estate
Estate Tax
Tax

Estate Tax
Estate Tax isis aa tax
tax on
on the
the right
right of
of the
the deceased
deceased person
person toto transmit
transmit hishis estate
estate to
to his
his lawful
lawful heirs
heirs and
and
beneficiaries.
beneficiaries. It is not a tax on property. Estate tax is held to be an excise tax imposed on the privilege of
It is not a tax on property. Estate tax is held to be an excise tax imposed on the privilege of
transmitting property upon the death of the owner. The estate tax is generated by the laws in force at
transmitting property upon the death of the owner. The estate tax is generated by the laws in force at
the
the time
time ofof death
death notwithstanding
notwithstanding the the postponement
postponement of of the
the actual
actual possession
possession oror enjoyment
enjoyment of of the
the
estate by
estate by the
the beneficiary.
beneficiary.

The
The transfer
transfer of
of the
the net
net estate
estate of
of every
every decedent,
decedent, whether
whether resident
resident or
or nonresidents
nonresidents ofof the
the Philippines,
Philippines, as
as
determined in
determined in accordance
accordance with
with the
the NIRC,
NIRC, shall
shall be
be subject
subject to
to an
an estate
estate tax
tax at
at the
the rate
rate of
of six
six percent
percent (6%)
(6%)
(PLEASE
(PLEASE READ
READ ININ FULL
FULL [Sec.
[Sec. 22 of
of RR
RR 12-2018])
12-2018])

Composition
Composition of
of Gross
Gross Estate(Section
Estate(Section 85
85 of
of NIRC)
NIRC)

SEC.
SEC. 85.
85. Gross
Gross Estate.
Estate. -- the
the value
value ofof the
the gross
gross estate
estate of
of the
the decedent
decedent shall
shall be
be determined
determined by by including
including
the value
the value at
at the
the time
time ofof his
his death
death of of all
all property,
property, real
real or
or personal,
personal, tangible
tangible or
or intangible,
intangible, wherever
wherever
situated:
situated: Provided,
Provided, however,
however, that that in
in the
the case
case of
of aa nonresident
nonresident decedent
decedent who
who atat the
the time
time ofof his
his death
death
was not a citizen of the Philippines, only that part of the entire gross estate which is situated in the
was not a citizen of the Philippines, only that part of the entire gross estate which is situated in the
Philippines shall
Philippines shall be
be included
included in in his
his taxable
taxable estate.
estate.

As
As to
to Resident
Resident or
or Non-Resident
Non-Resident Citizen/Resident
Citizen/Resident Alien
Alien

a.
a. Real
Real or
or Immovable
Immovable Property
Property -- wherever
wherever situated.
situated.

b.
b. Tangible
Tangible Personal
Personal Property
Property -- wherever
wherever situated.
situated.

c. Intangible
c. Intangible Personal
Personal Property
Property -- wherever
wherever situated.
situated.

As to
As to Non-resident
Non-resident Alien
Alien

a.
a. Real
Real or
or Immovable
Immovable Property
Property -- within
within the
the Philippines.
Philippines.

b. Tangible
b. Tangible Personal
Personal Property
Property -- within
within the
the Philippines.
Philippines.

c.
c. Intangible
Intangible Personal
Personal Property
Property -- within
within the
the Philippines
Philippines (unless
(unless exempted
exempted under
under reciprocity
reciprocity clause)
clause)

Intangible Personal
Intangible Personal Property
Property

BASIS: Section
BASIS: Section 104
104 of
of NIRC
NIRC

✓
¥ Franchise
Franchise which
which must
must be be exercised
exercised in in the
the Philippines;
Philippines;
✓
v Shares,
Shares, obligations
obligations or or bonds
bonds issued
issued by by corporations
corporations organized
organized or or constituted
constituted in in the
the Philippines;
Philippines;
✓
v Shares,
Shares, obligations
obligations or or bonds
bonds issued
issued by by a a foreign
foreign corporation,
corporation, eighty-five
eighty-five percent
percent (85%)
(85%) ofof the
the
business of
business of which
which isis located
located inin the
the Philippines;
Philippines;
✓
v Shares,
Shares, obligations
obligations or or bonds
bonds issued
issued by by a a foreign
foreign corporation
corporation if if such
such shares,
shares, obligations
obligations or
or bonds
bonds
have
have acquired
acquired a a business
business situs
situs inin the
the Philippines;
Philippines; and and
✓
v¥_ Shares or rights in any partnership, business or industry established
Shares or rights in any partnership, business or industry established in in the
the Philippines.
 Exclusions
Exclusions from
from Gross
Gross Estate
Estate

1. GSIS proceeds
GSIS proceeds // benefits
benefits
PWN PR

2. Accrual from
Accrual from SSS SSS
3. Proceeds of
Proceeds of life
life insurance
insurance where where thethe beneficiary
beneficiary is is irrevocably
irrevocably appointed
appointed
4. Proceeds of
Proceeds of life
life insurance
insurance under under aa group
group insurance
insurance taken
taken by by employer
employer (not(not taken
taken byby the
the
decedent by
decedent by his
his own
own life)
life)
5. WAR damage
WAR damage payments
payments
w

6. USVA
USVA -- RA
RA 360360 (REPUBLIC
(REPUBLIC ACT ACT NO.NO. 360
360 -- AN
AN ACT
ACT EXEMPTING
EXEMPTING FROM FROM ASSIGNMENT,
ASSIGNMENT, TAXATION,
TAXATION,
CLAIMS
CLAIMS OF OF CREDITORS,
CREDITORS, ATTACHMENT,
ATTACHMENT, LEVY LEVY OR OR SEIZURE,
SEIZURE, BENEFITS
BENEFITS DERIVED
DERIVED BY BY BENEFICIARIES
BENEFICIARIES
RESIDING
RESIDING IN THE PHILIPPINES UNDER LAWS OF THE UNITED STATES ADMINISTERED BY
IN THE PHILIPPINES UNDER LAWS OF THE UNITED STATES ADMINISTERED BY THE
THE
UNITED STATES VETERANS
UNITED STATES VETERANS ADMINISTRATION) ADMINISTRATION)
7.
7. Properties held
Properties held in in trust
trust by by decedent
decedent
8.
8. Transfer
Transfer by
by way
way of of bonafide
bonafide salessales
9.
9. Transfer of
Transfer of property
property to to the
the National
National Government
Government or or toto any
any of
of its
its political
political subdivisions
subdivisions
10.
10. Acquisitions
Acquisitions and and // oror transfer
transfer expressly
expressly declared
declared as as not
not taxable
taxable (Section
(Section 87
87 of
of NIRC)
NIRC)
11.
11. Exclusive
Exclusive property
property of of the
the surviving
surviving spouse
spouse (capital
(capital oror paraphernal)
paraphernal)

Valuation
Valuation of
of Gross
Gross Estate
Estate or
or Donation
Donation

Valuation
Valuation Date
Date -- at
at the
the time
time of
of Death
Death or
or Donation
Donation

BASIS:
BASIS: ARTICLE
ARTICLE 777
777 ofof the
the New
New Civil
Civil Code
Code of
of the
the Philippines.
Philippines. The
The rights
rights to
to the
the succession
succession are
are transmitted
transmitted
from the
from the moment
moment ofof the
the death
death of
of the
the decedent.
decedent.

Basis
Basis of
of Valuation
Valuation

a.
a. Real
Real Properties
Properties --

> Zonal
➢ Zonal Value
Value oror Fair
Fair Market
Market Value,
Value, whichever
whichever is is higher,
higher, as
as determined
determined byby the
the Commissioner
Commissioner (zonal
(zonal
value) or the FMV, as shown in the schedule of values fixed by the Provincial
value) or the FMV, as shown in the schedule of values fixed by the Provincial or City Assessor. or City Assessor.
> If there
➢ If there is is no
no zonal
zonal value,
value, the the taxable
taxable base
base isis the
the FMV
FMV that
that appears
appears in
in the
the tax
tax declaration
declaration at
at the
the
time of
time of death
death
➢ Real
Real Properties:
Properties:
ooO Prior
Prior toto August
August 31, 31, 1969
1969 Comm.
Comm. Act Act No.No. 466
466
ooO Sept.
Sept. 1, 1, 1969
1969 to to Aug.
Aug. 13,
13, 1974
1974 RARA 6110
6110
ooO Aug.
Aug. 14,14, 1974
1974 toto Nov.
Nov. 24,
24, 1974
1974 PDPD 539
539
ooO Nov.
Nov. 25,
25, 1974
1974 to to Dec.
Dec. 31,
31, 1985
1985 PDPD 1054
1054
o
o Jan. 1, 1986 to 1994
Jan. 1, 1986 to 1994 PD 1994 PD 1994
➢ Improvements:
Improvements:
o JuneJune 10,10, 1986
1986 to to Feb.
Feb. 4,4, 1988
1988 RAMO
RAMO 2-87/3-86A/3-87
2-87/3-86A/3-87
o Feb. Feb. 5,
5, 1988
1988 to to Feb.
Feb. 18,
18, 1991
1991 RAMO
RAMO 1-88 1-88
O

o Feb. Feb. 19,

19, 1991
1991 to to present
present RAMO
RAMO 2-912-91
oO

o MarchMarch 17, 17, 2000

2000 RAMORAMO 1-2000
1-2000
oO
 o
o Feb.
Feb. 15,15, 2001
2001 RAMO
RAMO 1-2001
1-2001
> Shares
➢ Shares of
of stocks,
stocks, obligations,
obligations, or or bonds
bonds
o
o Unlisted
Unlisted in in the
the stock
stock exchanges
exchanges
▪= Common
Common shares shares are
are valued
valued based
based on on their
their book
book value
value
▪=" Preferred
Preferred shares
shares are
are valued
valued atat par
par
o
o Listed in the stock exchange:
Listed in the stock exchange:
▪= FMV FMV shall
shall be
be the
the arithmetic
arithmetic mean
mean between
between the the highest
highest and
and lowest
lowest quotation
quotation at at
aa date
date nearest
nearest the
the date
date of
of death
death ifif none
none isis available
available on
on the
the date
date of
of death
death itself.
itself.

Unit of
Unit of participation
participation in
in any
any association,
association, recreation
recreation or
or amusement
amusement club
club (such
(such as
as golf,
golf, polo,
polo, or
or
similar clubs): FMV shall be the bid price nearest the date of death published in any
similar clubs): FMV shall be the bid price nearest the date of death published in any newspaper newspaper
or
or publication
publication ofof general
general circulation.
circulation.

➢ Usufruct
Usufruct ,, annuities,
annuities, use
use or
or habitation
habitation -- there
there shall
shall be
be taken
taken into
into account
account the
the probable
probable life
life of
of the
the
beneficiary in
beneficiary in accordance
accordance withwith thethe latest
latest basics
basics standard
standard mortality
mortality table,
table, to
to be
be approved
approved by by the
the
Secretary of Finance, upon recommendation of the Insurance Commissioner.
Secretary of Finance, upon recommendation of the Insurance Commissioner.
➢
> Foreign
Foreign currency
currency and
and cash
cash inin bank
bank -- Peso
Peso value
value at at exchange
exchange rate
rate at
at time
time of
of death
death and
and balance
balance at at
time of
time of death,
death, respectively
respectively
➢
> Other
Other Personal
Personal Properties
Properties -- Fair
Fair market
market value
value atat the
the time
time of
of death
death

Deductions
Deductions Allowed
Allowed to
to the
the Estate
Estate of
of a
a Citizen
Citizen or
or a
a Resident
Resident

BASIS: Section
BASIS: Section 86(A)
86(A) of
of NIRC],
NIRC], as
as amended
amended by
by RA
RA No.
No. 10963
10963

1. Standard
1. Standard Deduction
Deduction -- ₱5,000,000
#5,000,000 (86 (86 (A)
(A) Deductions
Deductions Allowed
Allowed to to the
the Estate
Estate of of Citizen
Citizen oror aa
Resident)
Resident)
Standard
Standard Deduction
Deduction -- ₱500,000.00
#500,000.00 (86(B)(86(B) nonresident
nonresident not not a a citizen
citizen ofof the
the Philippines)
Philippines)
2. For
For claims
claims against
against the
the estate:
estate: Provided,
Provided,
a. That at the time the indebtedness was
a. That at the time the indebtedness was incurred
incurred the the debt
debt instrument
instrument was was duly
duly notarized
notarized
and,
and,
b. If
b. If the
the loan
loan was
was contracted
contracted within
within three
three (3)
(3) years
years before
before thethe death
death of of the
the decedent,
decedent, the the
administrator or
administrator or executor
executor shall
shall submit
submit aa statement
statement showingshowing the the disposition
disposition of of the
the
proceeds
proceeds of of the
the loan.
loan.
For claims
3. For claims against
against insolvent
insolvent persons
persons where
where the the value
value of of decedent’s
decedent’s interest
interest therein
therein is is included
included in in
the value
the value of of the
the gross
gross estate.
estate.
4. For
For unpaid
unpaid mortgages
mortgages upon,upon, or or any
any indebtedness
indebtedness in in respect
respect to,to, property
property where
where the the value
value of of
decedent’s interest therein, undiminished by such mortgage or indebtedness, is included in the
decedent’s interest therein, undiminished by such mortgage or indebtedness, is included in the
value
value ofof the
the gross
gross estate,
estate, butbut not
not including
including any any income
income tax tax upon
upon income
income received
received after
after the
the death
death
of
of the
the decedent,
decedent, or or property
property taxestaxes not
not accrued
accrued before
before his his death,
death, or or any
any estate
estate tax.
tax.

The
The deduction
deduction herein
herein allowed
allowed in
in the
the case
case of
of claims
claims against
against the
the estate,
estate, unpaid
unpaid mortgages
mortgages or
or any
any
indebtedness shall,
indebtedness shall, when
when founded
founded upon
upon aa promise
promise or
or agreement,
agreement, bebe limited
limited to
to the
the extent
extent that
 they
they were
were contracted
contracted bona
bona fide
fide and
and for
for an
an adequate
adequate and
and full
full consideration
consideration in
in money
money or
or money’s
money’s
worth.
worth.

There
There shall
shall also
also bebe deducted
deducted losses
losses incurred
incurred during
during the
the settlement
settlement of of the
the estate
estate arising
arising from
from
fires,
fires, storms,
storms, shipwreck,
shipwreck, or or other
other casualties,
casualties, oror from
from robbery,
robbery, theft
theft or
or embezzlement,
embezzlement, when when such
such
losses
losses are not compensated for by insurance or otherwise, and if at the time of the filing of the
are not compensated for by insurance or otherwise, and if at the time of the filing of the
return such losses have not been claimed as a deduction for the income tax purposes in an
return such losses have not been claimed as a deduction for the income tax purposes in an
income
income tax tax return,
return, and
and provided
provided that
that such
such losses
losses were
were incurred
incurred not not later
later than
than the
the last
last day
day for
for
the payment
the payment of of the
the estate
estate tax
tax as
as prescribed
prescribed in in Subsection
Subsection (A)(A) of
of Section
Section 9191

5. Property
Property Previously
Previously Taxed.
Taxed. -- AnAn amount
amount equal
equal to to the
the value
value specified
specified below
below of of any
any property
property
forming part
forming part of
of the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines of
of any
any person
person who
who died
died within
within five
five (5)
(5)
years prior
years prior to
to the
the death
death ofof the
the decedent,
decedent, oror transferred
transferred toto the
the decedent
decedent by by gift
gift within
within five
five (5)
(5)
years prior to his death, where such property can be identified as having been
years prior to his death, where such property can be identified as having been received by the received by the
decedent from
decedent from the
the donor
donor by by gift,
gift, or
or from
from suchsuch prior
prior decedent
decedent by by gift,
gift, bequest,
bequest, devise
devise or or
inheritance,
inheritance, or or which
which can
can bebe identified
identified as
as having
having been
been acquired
acquired in in exchange
exchange for for property
property so so
received:
received:

Amount to be paid
100% of the value
80% of the value
60% of the value
40% of the value
20% of the value
When the death of prior decedent or transfer of property as gift
happened
Within one year prior the death of the decedent
more than one (1) year but not more than two (2) years prior the
death of the decedent
more than two (2) years but not more than three (3) years prior
the death of the decedent
more than three (3) years but not more than four (4) years prior
the death of the decedent
more than four (4) years but not more than five (5) years prior

af
the death of the decedent

These deductions
These deductions shall
shall be
be allowed
allowed only
only where
where a
a donor’s
donor’s tax,
tax, or
or estate
estate tax
tax imposed
imposed under
under this Title was
this Title was
finally determined
finally determined and and paid
paid by
by or
or on
on behalf
behalf of
of such
such donor,
donor, or
or the
the estate
estate ofof such
such prior
prior decedent,
decedent, as as the
the
case may be, and only in the amount finally determined as the value of such property in determining the
case may be, and only in the amount finally determined as the value of such property in determining the
value of the gift, or the gross estate of such prior decedent, and only to the extent that the value of such
value of the gift, or the gross estate of such prior decedent, and only to the extent that the value of such
property is
property is included
included in in the
the decedent’s
decedent’s gross
gross estate,
estate, and
and only
only if
if in
in determining
determining the the value
value of of the
the estate
estate of
of
the
the prior
prior decedent,
decedent, no no deduction
deduction waswas allowable
allowable under
under paragraph
paragraph (5) (5) in
in respect
respect ofof the
the property
property oror
properties given
properties given inin exchange
exchange therefor.
therefor.

Where
Where a a deduction
deduction waswas allowed
allowed ofof any
any mortgage
mortgage or or other
other lien
lien in
in determining
determining thethe donor’s
donor’s tax,
tax, or
or the
the
estate tax
estate tax of
of the
the prior
prior decedent,
decedent, which
which was
was paid
paid in
in whole
whole oror in
in part
part prior
prior to
to the
the decedent’s
decedent’s death,
death, then
then
the deduction
the deduction allowable
allowable under
under said
said Subsection
Subsection shall
shall be
be reduced
reduced by by the
the amount
amount soso paid.
paid.
Such
Such deduction
deduction allowable
allowable shall
shall be
be reduced
reduced by by anan amount
amount which
which bears
bears the
the same
same ratio
ratio to
to the
the amounts
amounts
allowed
allowed as
as deductions
deductions under
under paragraphs
paragraphs (2),
(2), (3),
(3), (4),
(4), and
and (6)
(6) of
of this
this Subsection
Subsection asas the
the amount
amount otherwise
otherwise
deductible
deductible under
under said
said paragraph
paragraph (5)(5) bears
bears to
to the
the value
value ofof the
the decedent’s
decedent’s estate.
estate.

Where the
Where the property
property referred
referred to
to consists
consists of
of two
two or
or more
more items,
items, the
the aggregate
aggregate value
value of
of such
such items
items shall
shall be
be
used
used for
for the
the purpose
purpose of
of computing
computing the
the deduction.
deduction.

6.
6. Transfers
Transfers for
for Public
Public Use
Use -- The
The amount
amount of of all
all bequests,
bequests, legacies,
legacies, devises
devises or or transfers
transfers toto or
or for
for the
the
use
use of the Government of the Republic of the Philippines, or any political subdivision thereof for
of the Government of the Republic of the Philippines, or any political subdivision thereof for
exclusively public
exclusively public purposes.
purposes.
7. The
7. The Family
Family Home.
Home. -- An An amount
amount equivalent
equivalent to to the
the current
current fair
fair market
market value
value ofof the
the decedent’s
decedent’s
family
family home:
home: Provided,
Provided, however,
however, ThatThat ifif the
the said
said current
current fair
fair market
market value
value exceeds
exceeds Ten Ten million
million
pesos
pesos (₱10,000,000),
(®10,000,000), the the excess
excess shall
shall be
be subject
subject to to estate
estate tax.
tax.
8. Amount
8. Amount Received
Received byby Heirs
Heirs Under
Under Republic
Republic ActAct No.
No. 4917
4917 -- Any
Any amount
amount received
received by by the
the heirs
heirs from
from
the decedent’s
the decedent’s employee
employee as as aa consequence
consequence of of the
the death
death of of the
the decedent-employee
decedent-employee in in
accordance with Republic Act No. 4917: Provided, That such amount is included in the gross
accordance with Republic Act No. 4917: Provided, That such amount is included in the gross
estate
estate of
of the
the decedent
decedent (See (See applicable
applicable deductions
deductions from from 1917
1917 toto 2017:
2017: PDF PDF 2023_11.15_Class
2023_11.15 Class
Discussion_Annex C
Discussion_Annex C -- RMC
RMC 103-2019)
103-2019)

Deductions
Deductions Allowed
Allowed to to the
the Estate
Estate of of Non-resident
Non-resident Decedent,
Decedent, Not Not a a Citizen
Citizen ofof the
the Philippines
Philippines
[Section
[Section 86 86 (B)
(B) of
of NIRC]
NIRC]
1. Standard
Standard Deduction
Deduction -- AnAn amount
amount equivalent
equivalent to to ₱500,000
®500,000
2. That
That proportion of the deductions specified in paragraphs
proportion of the deductions specified in paragraphs (2),(2), (3),
(3), and
and (4)
(4) of
of Subsection
Subsection (A)(A) ofof
this Section which the value of such part bears to the value of his entire gross estate wherever
this Section which the value of such part bears to the value of his entire gross estate wherever
situated;
situated;
a. claims
a. claims against
against the
the estate
estate
b.
b. claims
claims of
of the
the deceased
deceased against
against insolvent
insolvent persons,
persons,
c.
c. unpaid
unpaid mortgages
mortgages upon,upon, or or any
any indebtedness
indebtedness
3.
3. Property Previously
Property Previously Taxed
Taxed -- xx xx xx (SAME)
(SAME)
4. Transfers
Transfers for Public Use - The amount of
for Public Use - The amount of all
all bequests,
bequests, legacies,
legacies, devises
devises oror transfers
transfers toto or
or for
for the
the
use of the Government of the Republic of the Philippines or any political subdivision thereof, for
use of the Government of the Republic of the Philippines or any political subdivision thereof, for
exclusively public
exclusively public purposes
purposes

Sec.
Sec. 84
84 of
of the TRAIN Law
the TRAIN Law provides
provides that
that ”…there
”...there shall
shall be
be levied,
levied, assessed,
assessed, collected
collected and
and paid
paid upon
upon the
the
transfer
transfer ofof the
the net
net estate
estate as
as determined
determined in in accordance
accordance with
with Sections
Sections 85
85 and
and 8686 of
of every
every decedent,
decedent,
whether
whether resident
resident or
or nonresident
nonresident ofof the
the Philippines,
Philippines, a a tax
tax at
at the
the rate
rate of
of six
six percent
percent (6%)
(6%) based
based onon the
the
value of such net
value of such net estate.”
 Basis
Basis and
and Rate
Rate of
of Tax
Tax

The estate tax is computed on the basis of the net estate subject to tax.

> Decedent is a single person:

Gross estate (all properties are exclusive) XXX

Less: Deduction (all deductions are exclusive) XXX

Net estate subject to tax XXX

Decedent is a married person:

Conjugal/community properties P xxx
Exclusive properties of decedent XXX
Gross estate P xxx
Less: Deductions:
(a) Conjugal/community deductions P xxx
(b) Exclusive deductions XXX, XXX
Net Estate P xxx
Less:
(a) Net share of surviving spouse in conjugal/
community properties:
Conjugal/community properties P xxx
Less: Conjugal/community deduction XXX
Net conjugal/community properties P xxx
Less: Share of surviving spouse (1/2 x net)
conjugal/community properties) P xxx XXX
(b) Family home deduction XXX
Net estate subject to tax P Xxx
 ONETT COMPUTATION
SHEET
CAPITAL GAINS TAX (CGT) and DOCUMENTARY STAMP TAX (DST)
ONEROUS TRANSFER OF SHARES OF STOCK NOT TRADED THROUGH THE LOCAL STOCK EXCHANGE
Reverse District Otfice No.
TIN:
TIN:

See RMO 15-2003 pp. 16-17 for a copy of

the ONETT Computation Sheet \

TOTAL AMOUNT
STILL OUE ON CGT

egal bowie: Section

178 (CTR) Nee
x P'1.50 for every P200.00 or @ faction thereof

2D
Illustrative
Illustrative Examples
Examples

- Decedent is unmarried, the family home more than P10,000,000

- Decedent is married, the family home is a conjugal property, more than P10,000,000

- Decedent is married, the family home is an exclusive property, more than P10,000,000

- Decedent is unmarried, the family home is below P10,000,000

- Decedent is married, the family home is a conjugal property and is below 10,000,000

- Decedent is married, the family home is an exclusive property and below P10,000,000
 Illustration
Illustration No.
No. 1
1

Decedent is
Decedent is unmarried,
unmarried, family
family home
home has
has aa FMV
FMV of
of P30M.
P30M. In
In addition
addition he
he has
has other
other real
real and
and personal
personal
properties
properties amounting to P14M. Decedent has an unpaid mortgage/unpaid taxes amounting to
amounting to P14M. Decedent has an unpaid mortgage/unpaid taxes amounting to P2M
P2M

Compute
Compute the
the taxable
taxable estate.
estate.

Solution No. 1

Real and personal properties P 14,000,000

Family Home 30,000,000
Gross Estate P44,000,000
Less: Deductions
Ordinary Deductions 2,000,000
Special Deduction
Family Home 10,000,000
Standard Deduction 5,000,000
Total Deductions (17,000,000)
NET TAXABLE ESTATE P27,000,000
 Illustration
Illustration No.
No. 2
2

Decedent is
Decedent is married,
married, family
family home
home which
which is
is conjugal
conjugal has
has aa FMV
FMV of
of P30M,
P30M, other
other conjugal
conjugal properties
properties are
are
real and personal properties amounting to P14M. In addition, he has an exclusive properties
real and personal properties amounting to P14M. In addition, he has an exclusive properties amountingamounting
to P5M.
to PSM. Decedent
Decedent hashas an
an unpaid
unpaid mortgage/unpaid
mortgage/unpaid taxes
taxes amounting
amounting toto P2M.
P2M.

Compute
Compute the
the taxable
taxable estate.
estate.

Solution No. 2
Exclusive Conjugal Total
Conjugal Properties:
Family Home P30,000,000 P30,000,000
Real and personal properties 14,000,000 14,000,000
Exclusive Properties: 5,000,000 5,000,000
Gross Estate 5,000,000 44,000,000 P49,000,000
Less:
Ordinary Deductions
Conjugal Ordinary Deductions (2,000,000) (2,000,000)
Net Conjugal Estate 42,000,000
Special Deductions
Family Home (10,000,000)
Standard Deduction (5,000,000)
Total Deductions (17,000,000)
Net Estate 32,000,000
Less: % Share of Surviving Spouse (21,000,000)
Conjugal Property P44,000,000
Conjugal Deductions _ (2,000,000)
Net Conjugal Estate P42,000,000
(P42,000,000/2)
NET TAXABLE ESTATE P11,000,000
 Illustration
Illustration No.
No. 3
3

Decedent is
Decedent is married,
married, the
the estate
estate includes
includes conjugal
conjugal real
real and
and personal
personal properties
properties amounting
amounting to
to P14M
P14M and
andaa
family home with FMV of P30M, which is exclusive. Decedent has an unpaid mortgage/unpaid
family home with FMV of P30M, which is exclusive. Decedent has an unpaid mortgage/unpaid tax tax
amounting
amounting toto P2M
P2M

Compute
Compute the
the taxable
taxable estate.
estate.
——

Solution No. 3
Exclusive Conjugal Total
Conjugal Properties
Real and personal properties 14,000,000 14,000,000
Exclusive properties
Family Home 30,000,000 30,000,000
Gross Estate 30,000,000 14,000,000 44,000,000
Less:
Ordinary Deductions
Conjugal Ordinary Deductions (2,000,000) (2,000,000)
Net Conjugal Estate 12,000,000
Special Deductions
Family Home (10,000,000)
Standard Deduction (5,000,000)
Total Deductions (17,000,000)

Net Estate 27,000,000

Less: 1/2 Share of Surviving Spouse (6,000,000)
Conjugal Property P14,000,000
Conjugal Deductions (2.000.000)
Net Conjugal Estate 12,000,000
(P12,000,000/2)
NET TAXABLE ESTATE P21,000,000
 Illustration
Illustration No.
No. 4
4

Decedent is
Decedent is unmarried,
unmarried, family
family home
home is
is P9M.
P9M. In
In addition
addition he
he has
has other
other real
real and
and personal
personal properties
properties
amounting to P14M. Decedent has an unpaid mortgage/unpaid taxes amounting
amounting to P14M. Decedent has an unpaid mortgage/unpaid taxes amounting to P2M to P2M

Compute the
Compute the taxable
taxable estate.
estate.

Solution No. 4
Real and personal P14,000,000
properties
Family Home 9,000,000
Gross Estate P23,000,000
Less: Deductions
Ordinary Deductions 2,000,000
Special Deductions 14,000,000
Family Home 9,000,000
Standard Deduction 5,000,000
Total Deductions 16,000,000
NET TAXABLE ESTATE P7,000,000
 Illustration
Illustration No.
No. 5
5

Decedent is
Decedent is married,
married, family
family home
home which
which is
is conjugal
conjugal has
has aa FMV
FMV of
of P9M,
P9M, other
other conjugal
conjugal properties
properties are
are real
real
and personal properties amounting to P14M. In addition, he has exclusive properties amounting to
and personal properties amounting to P14M. In addition, he has exclusive properties amounting to P5M. P5M.
Decedent has
Decedent has an
an unpaid
unpaid mortgage/unpaid
mortgage/unpaid taxes
taxes amounting
amounting to to P2M
P2M

Compute
Compute the
the taxable
taxable estate
estate
em

Solution No. 5
Exclusive Conjugal Total
Conjugal Properties
Family Home 9,000,000 9,000,000
Real and personal properties 14,000,000 14,000,000
Exclusive Properties 5,000,000 5,000,000
Gross Estate 5,000,000 23,000,000 28,000,000
Less:
Ordinary Deductions
Conjugal Ordinary Deductions (2,000,000) (2,000,000)
Net Conjugal Estate 21,000,000
Special Deductions
Family Home (4,500,000)
Standard Deduction (5,000,000)
Total Deductions 11,500,000
Net Estate 16,500,000
Less: 1/2 Share of Surviving Spouse (10,500,000)
Conjugal Property P23,000,000
Conjugal Deductions (2,000,000)
Net Conjugal Estate 21,000,000
(P21,000,000/2)
NET TAXABLE ESTATE P6,000,000
 Illustration
Illustration No.
No. 6
6

Decedent is
Decedent is married,
married, the
the estate
estate includes
includes conjugal
conjugal real
real and
and personal
personal properties
properties amounting
amounting to
to P14M
P14M and
andaa
family home with a FMV of P9M, which is exclusive. Decedent has an unpaid mortgage/unpaid
family home with a FMV of P9M, which is exclusive. Decedent has an unpaid mortgage/unpaid taxes taxes
amounting
amounting toto P2M.
P2M.

Compute
Compute the
the taxable
taxable estate.
estate.

Exclusive Conjugal Total

Conjugal Properties
Real and personal properties 14,000,000 14,000,000
Exclusive Properties
Family Home 9,000,000 9,000,000
Gross Estate 9,000,000 14,000,000 23,000,000
Less:
Ordinary Deductions
Conjugal Ordinary Deductions (2,000,000) (2,000,000)
Net Conjugal Estate 12,000,000
Special Deductions
Family Home (9,000,000)
Standard Deduction (5,000,000)
Total Deductions (16,000,000)
Net Estate 7,000,000
Conjugal Property P14,000,000
Conjugal Deductions (2,000,000)
Net Conjugal Estate 12,000,000
(P12,000,000/2)
NET TAXABLE ESTATE 1,000,000
 DONOR's
DONOR’sTAX
TAX

Donor’s Tax :: Nature

Donor’s Tax Nature and
and Concept
Concept

•e Donation is
Donation is an
an act
act ofof liberality
liberality whereby
whereby aa personperson (( disposes
disposes of,
of, gratuitously
gratuitously aa thing
thing or
or right
right inin
favor of
favor of another
another donee
donee who who accepts
accepts it
it It
It is
is aa voluntary
voluntary transfer
transfer ofof property
property from
from one
one person
person to to
another
another without
without anyany compensation
compensation or or consideration
consideration thereof
thereof
•e Donor’s tax
Donor’s tax or
or gift
gift tax
tax isis aa tax
tax imposed
imposed on on thethe right
right or
or privilege
privilege of
of the
the donor
donor to
to make
make a a gift
gift It
It is
is aa
tax
tax on
on a
a donation
donation or or gift,
gift, hence
hence anan excise
excise taxtax

Requisites
Requisites of
of a
a Valid
Valid Donation
Donation

•e Capacity
Capacity ofof the
the Donor
Donor
o
o Donative intent
Donative intent (except
(except gifts
gifts under
under Sec
Sec 100
100 NIRC)
NIRC)
o
o Acceptance
Acceptance by by the
the Donee
Donee
o
o Delivery
Delivery ofof the
the gift
gift to
to the
the donee
donee either
either actually
actually oror constructively
constructively
•e Adonor
A subject to
donor subject to tax
tax may
may bebe aa natural
natural oror juridical person
juridical person
•e Properties
Properties whether
whether real real oror personal,
personal, tangible
tangible oror intangible,
intangible, including
including alienable
alienable rights,
rights, may
may be
be the
the
object
object of
of donation
donation The The discussion
discussion on on estate
estate taxation
taxation regarding
regarding the
the valuation
valuation of
of estates
estates are
are also
also
applicable to
applicable to donor’s
donor’s taxation
taxation

Classification of
Classification of Donors
Donors

A. Citizens/resident
A. Citizens/resident Donor
Donor

1. Real
1. Real Property
Property wherever
wherever located
located

2.
2. Tangible
Tangible Personal
Personal Property
Property wherever
wherever located;
located; Intangible
Intangible Personal
Personal Property
Property wherever
wherever located
located

B. Non-resident
B. Non-resident alien
alien Donor
Donor

1.
1. Real
Real Property
Property located
located in
in the
the Philippines
Philippines

2. Tangible
2. Tangible Personal
Personal Property
Property located
located in
in the
the Philippines
Philippines

3.
3. Intangible
Intangible Personal
Personal Property
Property located
located in
in the
the Philippines
Philippines unless
unless exempted
exempted under
under the
the principle
principle of
of
reciprocity.
reciprocity.

Valuation
Valuation of
of Gross
Gross Gift
Gift

IfIf aa donation
donation is is made
made in
in property,
property, the
the Fair
Fair Market
Market Value
Value thereof
thereof at
at the
the time
time of
of the
the donation
donation shall
shall be
be
considered
considered the the amount
amount of
of the
the gift
gift In
In case
case ofof real
real property,
property, the
the FMV
FMV as
as determined
determined byby the
the CIR
CIR or
or the
the FMV
FMV
as
as shown
shown in
in the
the schedule
schedule ofof values
values fixed
fixed byby the
the Provincial/City
Provincial/City Assessors,
Assessors, whichever
whichever isis higher,
higher, shall
shall be
be
considered
considered the the amount
amount of
of the
the gift
Deductions from
Deductions from Gross
Gross Gift
Gift (including
(including tax
tax exempt
exempt donations)
donations)

•e = Gifts
Gifts to
to the
the National
National Government
Government or or of
of its
its agencies
agencies
•e Gifts
Gifts made
made in in favor
favor ofof an
an educational
educational and/orand/or charitable,
charitable, religious,
religious, cultural
cultural oror social
social welfare,
welfare,
corporation,
corporation, foundation,
foundation, thrust
thrust or or philanthropic
philanthropic organization
organization or or research
research institution
institution oror
organization, provided that not more than thirty percent 30 of said gifts shall be used for
organization, provided that not more than thirty percent 30 of said gifts shall be used for
administration
administration purposes
purposes
•e Encumbrance
Encumbrance on the
on the property
property donated
donated if if assumed
assumed by by the
the done
done inin the
the deed
deed of of donation
donation
•e Those
Those specifically provided by the donor as a condition of the donation that will
specifically provided by the donor as a condition of the donation that will diminish
diminish the
the
value of
value of the
the property
property received
received byby the
the done
done
•e Exempt
Exempt donation
donation under
under special
special laws
laws

Basis
Basis and
and Rate
Rate of Tax
of Tax

•e There shall
There shall bebe imposed
imposed aa tax tax rate
rate of
of six
six percent
percent 66 onon the
the basis
basis of
of the
the total
total gifts
gifts in
in excess
excess of
of Two
Two
Hundred
Hundred Fifty Fifty Thousand
Thousand PesosPesos (P
(P 250
250 000
000 exempt
exempt gift
gift made
made during
during the
the calendar
calendar year
year
•e IfIf there
there is is only
only one
one 11 gift
gift given
given during
during the
the calendar
calendar year,
year, the
the tax
tax due
due shall
shall be
be based
based on on the
the value
value
of
of thethe gift
gift donated
donated less
less allowable
allowable deductions
deductions However,
However, if if there
there are
are several
several gifts
gifts made,
made, the
the tax
tax
due
due shall
shall bebe computed
computed based
based onon the
the total
total net
net gifts
gifts made
made during
during thethe calendar
calendar year
year

The Law
The Law that
that Governs
Governs the
the Imposition
Imposition of
of Donor’s
Donor’s Tax
Tax

•e The donor’s
The donor’s taxtax is is not
not aa property
property tax,tax, but
but isis aa tax
tax imposed
imposed on on the
the transfer
transfer of of property
property by by way
way ofof
gift inter vivos Lladoc vs Commissioner of Internal Revenue, L 19201
gift inter vivos Lladoc vs Commissioner of Internal Revenue, L 19201 June 16 1965 14 SCRA, 292 June 16 1965 14 SCRA, 292
•e The
The donor’s
donor’s taxtax shall
shall not
not apply
apply unless
unless andand until
until there
there is
is a
a completed
completed gift gift The
The transfer
transfer ofof property
property
by gift
by gift is
is perfected
perfected from from thethe moment
moment the the donor
donor knowsknows ofof the
the acceptance
acceptance by by the
the donee
donee it it is
is
completed
completed by by the
the delivery,
delivery, either
either actually
actually or or constructively,
constructively, ofof the
the donated
donated property
property to to the
the done
done
•e Thus,
Thus, thethe law
law in in force
force at
at the
the time
time of of the
the perfection/completion
perfection/completion of of the
the donation
donation shall
shall govern
govern the
the
imposition
imposition of of the
the donor’s
donor’s taxtax [Sec.
[Sec. 1212 of
of RR
RR 12 12 2018]
2018]

Donor’s Tax Credit

Donor’s Tax Credit

•e For
For foreign
foreign donor’s
donor’s tax
tax paid
paid on
on a
a donation/s,
donation/s, acredit
acredit against
against the
the Philippine
Philippine donor’s
donor’s tax
tax may
may be
be
taken
taken subject
subject to
to limitations
limitations

Administrative
Administrative Requirements
Requirements on
on Donor’s
Donor’s Tax
Tax

•e The Donor’s
The Donor’s Tax
Tax Return
Return (BIR
(BIR Form
Form 18001800 isis filed
filed by
by the
the person
person who
who transfers
transfers gift
gift intervivos
intervivos unless
unless
the transfer is exempt from donor’s tax under Sec
the transfer is exempt from donor’s tax under Sec 101 of the NIRC 101 of the NIRC
•e A
A separate
separate return
return shall
shall be
be filed
filed for
for each
each gift
gift made
made on on different
different dates
dates during
during thethe year
year However
However
only one return shall be filed for several gifts made by the donor to different donees on
only one return shall be filed for several gifts made by the donor to different donees on the
the
same date If the gift involves conjugal community property, each spouse
same date If the gift involves conjugal community property, each spouse shall file separate shall file separate
return
return corresponding
corresponding to to his
his or
or her
her respective
respective share
share in
in the
the conjugal
conjugal community
community property
Transfer for
Transfer for Less
Less Than
Than Adequate
Adequate and
and Full
Full Consideration
Consideration

•e Where property,
Where property, other
other than
than real
real property
property referred
referred toto inin Section
Section 2424 (( is
is transferred
transferred for for less
less than
than
an
an adequate
adequate and and full
full consideration
consideration in in money
money or or money’s
money’s worth,worth, then
then thethe amount
amount by by which
which the
the
fair market value of the property exceeded the value of the consideration shall, for the purpose
fair market value of the property exceeded the value of the consideration shall, for the purpose
of
of the
the tax
tax imposed
imposed by by this
this Chapter,
Chapter, be be deemed
deemed a a gift,
gift, and
and shall
shall be
be included
included in in computing
computing the the
amount
amount of of gifts
gifts made
made during
during thethe calendar
calendar year year
•e Provided, however,
Provided, however, thatthat aa sale,
sale, exchange,
exchange, or or other
other transfer
transfer of of property
property made made in in the
the ordinary
ordinary
course of
course of business
business (transaction
(transaction whichwhich is is aa bona
bona fide,
fide, at
at arm’s
arm’s length,
length, and
and free
free from
from anyany donative
donative
intent)
intent) will
will be
be considered
considered as as made
made for
for an an adequate
adequate and and full
full consideration
consideration in in money
money or or money’s
money’s
worth
worth (Sec.
(Sec. 16,
16, RR
RR 12
12 2018)
2018)

Donor’s
Donor’s Tax
Tax Return
Return [Sec.
[Sec. 90
90 of
of NIRC
NIRC —– BIR
BIR Form
Form No.
No. 1800
1800

Documentary
Documentary Requirements
Requirements —– The
The list
list of
of documentary
documentary requirements
requirements for
for the
the filing
filing of
of donor’s
donor’s tax
tax return
return is
is
provided for under RMO 35 2018. This portion shows the mandatory documents as well as those
provided for under RMO 35 2018. This portion shows the mandatory documents as well as those
required
required for
for real
real properties
properties

Procedures
Procedures

•e RMO
RMO 49 49 2018
2018 amending
amending policies policies pertaining
pertaining to to ONETTs
ONETTs payment
payment in in line
line with
with the
the passage
passage of of RARA
11032 otherwise
11032 otherwise known known as as the
the “Ease
“Ease of of Doing
Doing Business
Business Efficient
Efficient Government
Government Service Service Delivery
Delivery
Act of
Act of 2018
2018 such such as as
•e RCOs
RCOs assigned
assigned in in each
each RDOsRDOs who who areare already
already authorized
authorized to to accept
accept tax tax payments
payments duringduring tax tax
deadlines
deadlines shall,shall, in in addition
addition to to such,
such, bebe allowed
allowed to to accept
accept taxtax payments,
payments, relativerelative toto ONETTs
ONETTs such such
as payment of capital gains tax, stamp tax, donor’s tax, estate
as payment of capital gains tax, stamp tax, donor’s tax, estate tax and other ONETT related taxes tax and other ONETT related taxes
Provided,
Provided, however,
however, that that forfor ONETT
ONETT related
related taxes
taxes above
above twenty
twenty thousand
thousand pesos pesos (P(P 2020 000000 thethe
RCO shall
RCO shall only
only accept
accept “Manager’s
“Manager’s or or Cashier’s
Cashier’s Check”
Check” as as payment
payment
•e Concerned
Concerned RCO RCO shall shall on on a a daily
daily basis,
basis, havehave the the collection
collection deposited
deposited with with the
the concerned
concerned
Authorized Government
Authorized Government Depository Depository bank bank (( by by separating
separating the the cash
cash and and check
check deposit
deposit slips
slips for
for all
all
ONETTs
ONETTs from from the the other
other taxtax types
types
•e Once deposited,
Once deposited, the the concerned
concerned RCO RCO shallshall provide
provide the the ONETT
ONETT processing
processing officer
officer withwith thethe
photocopies of
photocopies of the
the eROReROR and and deposit
deposit slipslip duly
duly stamped
stamped ““ by by the
the AGDB
AGDB with with the
the corresponding
corresponding
details of
details of ONETTs
ONETTs
•e File
File the
the return
return in in triplicate
triplicate (two (two copies
copies for for the
the BIRBIR and
and oneone copy
copy for for thethe taxpayer)
taxpayer) with
with any any AAB
AAB
of the
of the RDORDO having
having jurisdiction
jurisdiction over over thethe place
place of of the
the domicile
domicile of of thethe donor
donor at at the
the time
time of of the
the
transfer In places where there are no AABs, the return will
transfer In places where there are no AABs, the return will be filed directly with the Revenue be filed directly with the Revenue
Collection
Collection Officer,
Officer, or or if
if there
there is is no
no legal
legal residence
residence in in the
the Philippines,
Philippines, with with Revenue
Revenue District
District No No 3939
South Quezon
South Quezon City City
•e In the
In the case
case of of gifts
gifts made
made by by aa nonnon resident
resident alien,
alien, thethe return
return maymay be be filed
filed with
with Revenue
Revenue District
District
No 39
No 39 South
South QuezonQuezon City, City, oror with
with thethe Philippine
Philippine EmbassyEmbassy or or Consulate
Consulate in in the
the country
country where where
donor is
donor is domiciled
domiciled at at the
the time
time of of the
the transfer
 •e Submit
Submit all
all documentary
documentary requirements
requirements and
and proof
proof of
of payment
payment to
to the
the RDO
RDO having jurisdiction over
having jurisdiction over
the place
the place of
of residence
residence of
of the
the donor
donor

Deadline
Deadline

•e Within thirty
Within thirty 3030 days
days after
after the
the date
date the
the gift
gift (( is
is made
made A A separate
separate return
return shall
shall bebe filed
filed for
for each
each gift
gift
(( made
made on on the
the different
different dates
dates during
during the
the year
year reflecting
reflecting therein
therein any
any previous
previous net net gifts
gifts made
made
during the
during the same
same calendar
calendar yearyear
•e IfIf the
the gift
gift (( involves
involves conjugal/community
conjugal/community property,property, eacheach spouse
spouse will
will file
file separate
separate returns
returns
corresponding
corresponding to to his/
his/ her
her respective
respective shares
shares in in the
the conjugal/community
conjugal/community property This rule
property This rule will
will
also apply
also apply inin the
the case
case of
of co
co ownership
ownership over
over the
the property
property

Exemptions
Exemptions from
from Donor’s Tax under
Donor’s Tax under Special
Special Laws
Laws

1. Donation to
Donation to the
the International
International Rice
Rice Research
Research Institute
Institute
Ww ~MPNOAnPFWN HP

2. Donation
Donation to
to the
the Philippine
Philippine American
American Cultural
Cultural Foundation
Foundation
3. Donation to
Donation to the
the Ramon
Ramon Magsaysay
Magsaysay Foundation
Foundation
4. Donation
Donation to
to the
the Philippine
Philippine Inventor’s
Inventor’s Commission
Commission
5. Donation to
Donation to the
the Integrated
Integrated BarBar of
of the
the Philippines
Philippines
6. Donation to
Donation to the
the Development
Development Academy
Academy of of the
the Philippines
Philippines
7. Donation
Donation to the Aquaculture Department of the Southeast
to the Aquaculture Department of the Southeast Asian
Asian Fisheries
Fisheries
8. Development Center of the Philippines
Development Center of the Philippines
9. Donation
Donation to
to the
the National
National Social
Social Action
Action Council
Council and
and
10.
10. Donation of
Donation of equipment,
equipment, materials
materials andand services
services toto the
the Task Force on
Task Force on Human
Human Settlement
Settlement

Exemption
Exemption of
of Certain
Certain Gifts
Gifts

Gifts
Gifts Made
Made by
by a
a Resident
Resident or
or by
by a
a Non
Non resident,
resident, not
not a
a citizen
citizen of
of the
the Philippines
Philippines

•e Gifts made
Gifts made to to oror for
for the
the use
use of
of the
the National
National Government
Government or or any
any entity
entity created
created byby any
any of
of its
its
agencies which
agencies which is is not
not conducted
conducted for for profit,
profit, or
or toto any
any political
political subdivision
subdivision of of the
the said
said
Government;
Government; and and
•e Gifts
Gifts in
in favor
favor ofof an
an educational
educational and/or
and/or charitable,
charitable, religious,
religious, cultural
cultural oror social
social welfare
welfare corporation,
corporation,
institution,
institution, accredited
accredited non non government
government organization,
organization, trust
trust oror philanthropic
philanthropic organization
organization or or
research institution
research institution or or organization
organization (Sec.
(Sec. 17,
17, RR
RR 12-2018)
 Illustration

Ms. MRU made the following donation on:

January 30, 2018 - P2,000,000

March 30,2018 - 1,000,000
August 15, 2018 - 500,000

Compute the donor's tax due

Solution

Date of donation Amount Donor’s Tax

January 30, 2018 P2,000,000

January 30, 2018 donation 2,000,000

Less: Exempt Gift (250,000)
Net Gift 1,750,000
Rate 6%

Tax Due / Payable on January Donation P105,000

 Solution
Date of donation Amount Donor’s Tax
March 30, 2018 P1,000,000

March 30, 2018 donation 1,000,000

Add: January 2018 donation 2,000,000
Total donation as of March 30, 2018 3,000,000
Less: Exempt Gift (250,000)
Total 2,750,000
Tax Rate 6%

Tax Due Thereon 165,000

Less: Tax due/paid on January donation 105,000
Tax Due/Payable on the March donation P60,000

Solution
Date of donation Amount Donor’s Tax
August 15,2018 P500,000

August 15, 2018 donation 500,000

Add: January 2018 donation 2,000,000
March 2018 donation 1,000,000
Less: Exempt Gift (250,000)
Total 3,250,000
Tax Rate 6%

Tax Due Thereon 195,000

Less: Tax due/paid on Jan/March donation 165,000
Tax Due/Payable on the August donation P30,000
 VALUE
VALUE ADDED
ADDED TAX
TAX

Background
Background of
of Value-Added
Value-Added Tax
Tax

•e Value-Added
Value-Added Tax Tax (VAT)
(VAT) is
is a
a business
business tax
tax levied
levied on
on the
the sale,
sale, barter,
barter, exchange,
exchange, lease
lease of
of goods,
goods,
properties and
properties and services
services and
and onon importation
importation ofof goods;
goods;
•e VAT
VAT is
is an
an indirect
indirect tax;
tax;
•e VAT
VAT has
has various
various major
major and
and most
most controversial
controversial amendments;
anendments;

Effectivity
Effectivity

EO.273-
EO.273- VAT
VAT Law
Law (1988)
(1988) Jan.
Jan. 1,
1, 1988
1988

RA
RA 7716-
7716- Expanded
Expanded Value
Value Added
Added Tax
Tax ((E-VAT)
((E-VAT) | Jan.
Jan. 1,
1, 1996
1996
Implemented by RR 7-95)
Implemented by RR 7-95)

RA8241-Improved
RA8241-Improved Value-Added
Value-Added Tax
Tax ((I-VAT)
((I-VAT) | Jan.
Jan. 1,1997
1,1997
Implemented by
Implemented by RR
RR 6-97)
6-97)

RA
RA 8424-
8424- Tax
Tax Reform
Reform Act
Act as
as of
of 1997,
1997, as
as amended
amended | Jan.
Jan. 1,1998
1,1998
by
by TRAIN
TRAIN LAW
LAW and
and CREATE
CREATE LAW
LAW

RA 9337
RA 9337

•e known
known as as the
the New
New Expanded
Expanded VAT
VAT Law
Law
•e signed into law on May 24, 2005
signed into law on May 24, 2005
•e implementation
implementation withheld
withheld due
due to Temporary Restraining
to Temporary Restraining Order
Order (TRO)
(TRO)
•e TRO lifted by the Supreme Court on Oct.
TRO lifted by the Supreme Court on Oct. 18, 200518, 2005
•e became
became effective
effective Nov.
Nov. 1,
1, 2005
2005
•e Implementing Rules and Regulation RR
Implementing Rules and Regulation RR 14-2005
14-2005 was
was superseded
superseded byby RR
RR 16-2005
16-2005

RA 10963
RA 10963

•e known
known asas the
the Tax
Tax Reform
Reform for
for Acceleration
Acceleration and
and Inclusion
Inclusion (TRAIN)
(TRAIN) Law
Law
•e signed
signed into
into law
law on
on December
December 19,19, 2017
2017
•e became
became effective Jan. 1,
effective Jan. 1, 2018
2018
•e Amended portions
Amended portions ofof the
the provisions
provisions of
of RA
RA 9337
9337 on
on VAT
VAT and
and Percentage
Percentage Tax
Tax
•e Implementing
Implementing Rules
Rules and
and Regulation
Regulation RR
RR 13-2018
13-2018

RA 11467
RA 11467
 •e signed
signed into
into law
law on
on January
January 22,22, 2020
2020
•e became
became effective January 27,
effective January 27, 2020
2020
•e amended portion of the provision of
amended portion of the provision of RA
RA 9337
9337 && 10963
10963 on on VAT,
VAT, where
where sale
sale or
or importation
importation of of
prescription
prescription drugs
drugs and
and medicines
medicines forfor diabetes,
diabetes, high
high cholesterol,
cholesterol, and
and hypertension
hypertension is
is classified
classified as
as
VAT
VAT exempt
exempt implementing
implementing Rules
Rules and
and Regulation
Regulation RR
RR 18-2020
18-2020

RA
RA 11467
11467

•e signed into
signed into law
law on
on January
January 22,22, 2020
2020
•e became effective
became effective January 27, 2020
January 27, 2020
•e amended
amended portion
portion ofof the
the provision
provision of of RA
RA 9337
9337 && 10963
10963 on on VAT,
VAT, where
where sale
sale or
or importation
importation of of
prescription drugs
prescription drugs and
and medicines
medicines forfor diabetes,
diabetes, high
high cholesterol,
cholesterol, and
and hypertension
hypertension is
is classified
classified as
as
VAT
VAT exempt
exempt implementing
implementing Rules
Rules and
and Regulation
Regulation RR
RR 18-2020
18-2020

Objectives
Objectives of
of Value-Added
Value-Added Tax
Tax

•e Broaden
BroadenTaxTax Base
Base
•e Provide
Provideananaudit
audittrail
trail
•e Simplify
Simplify business
business taxation
taxation

> Sellers of Goods' or

Properties Where Gross Sales
> Sellers of Services and/or $3 000,000.00 in arn,
Use or Lease of Properties 42-month period
> Importers

10% (up to January 31, 2006);

12% (effective February 1, 2006);

and

O%

Basis
Basis of
of VAT
VAT

•e Sale of
Sale of goods/Properties
goods/Properties >> Gross
Gross Sales
Sales
•e Gross
Gross selling
selling price
price means
means the
the total
total amount
amount of
of money
money or
or its
its equivalent
equivalent which
which the
the purchaser
purchaser pays
pays
or is
or is obligated
obligated toto pay
pay to
to the
the seller
seller in
in consideration
consideration of
of the
the sale,
sale, barter
barter or
or exchange
exchange of
of the
the goods
 or
or properties,
properties, excluding
excluding VAT.
VAT. The
The excise
excise tax,
tax, if
if any,
any, on
on such
such goods
goods or
or properties
properties shall
shall form
form part
part of
of
the gross
the gross selling
selling price
price

Importation
Importation

•e Total value
Total value used
used by
by the
the Bureau
Bureau of of Customs
Customs in in determining
determining tariff
tariff and
and custom
custom duties,
duties, plus
plus
custom
custom duties,
duties, excise
excise taxes,
taxes, if
if any,
any, and
and other
other charges
charges paid
paid by
by the
the importer
importer prior
prior to
to the
the
release of
release of such
such goods
goods from
from customs
customs custody.
custody.

Sale
Sale of
of Service/Lease
Service/Lease of
of Properties
Properties >
> Gross
Gross Receipt
Receipt

•e Gross
Gross Receipts
Receipts refers
refers to
to the
the total
total amount
amount of of money
money or or its
its equivalent
equivalent representing
representing thethe
contract
contract price, compensation, service fee, rental or royalty, including the amount charged for
price, compensation, service fee, rental or royalty, including the amount charged for
materials supplied
materials supplied with
with the
the services
services and
and deposits
deposits applied
applied asas payments
payments forfor services
services rendered
rendered
and
and advance
advance payments
payments actually
actually oror constructively
constructively received
received during
during the
the taxable
taxable period
period forfor the
the
services performed
services performed or or to
to bebe performed
performed forfor another
another person,
person, excluding
excluding VAT
VAT (RR
(RR 16-2005)
16-2005)

Transactions Covered
Transactions Covered by
by VAT
VAT

•e Sale or
Sale or Exchange
Exchange of
of Goods
Goods oror Properties
Properties
•e Importation
Importation
•e Sale
Sale or
or Exchange
Exchange of
of Services
Services
•e Transactions Deemed
Transactions Deemed Sales
Sales

SALES OF
SALES OF GOODS
GOODS AND
AND SERVICES
SERVICES

Sale
Sale or
or Exchange
Exchange of
of Goods
Goods or
or Properties
Properties

The term
The term “Goods
“Goods oror Properties”
Properties” -- shall
shall mean
mean all
all tangible
tangible and
and intangible
intangible objects
objects which
which are
are capable
capable of
of
pecuniary
pecuniary estimation
estimation and
and shall
shall include:
include:

•e Real properties
Real properties held
held primarily
primarily forfor sale
sale to
to customers
customers or or held
held for
for lease
lease in
in the
the ordinary
ordinary course
course of of
trade
trade or
or business;
business;
•e The
The right
right or
or the
the privilege
privilege toto use
use patent,
patent, copyright,
copyright, design
design or or model,
model, plan,
plan, secret
secret formula
formula or or
process, goodwill,
process, goodwill, trademark,
trademark, trade
trade brand
brand oror other
other like
like properties
properties or or rights;
rights;
•e The
The right
right oror the
the privilege
privilege toto use
use inin the
the Philippines
Philippines of of any
any industrial,
industrial, commercial
commercial or or scientific
scientific
equipment;
equipment;
•e = The
The right
right or
or the
the privilege
privilege to
to use
use motion
motion picture
picture films,
films, films,
films, tapes
tapes andand discs;
discs; and
and
•e Radio,
Radio, television,
television, satellite
satellite transmission
transmission and and cable
cable television
television time.
time.

Sale or
Sale or exchange
exchange of
of services
services means
means the
the performance
performance of of all
all kinds
kinds of
of services
services in
in the
the Philippines
Philippines for
for others
others
for aa fee,
for fee, remuneration
remuneration oror consideration.
consideration. It
It includes
includes those
those performed
performed oror rendered
rendered byby the
the following:
• Construction
Construction and and service
service contractors;
contractors;
• Stock,
Stock, real
real estate,
estate, commercial,
commercial, customs customs and and immigration
immigration brokers;brokers;
• Lessors of property, whether personal or real;
Lessors of property, whether personal or real;
• Persons
Persons engaged
engaged in in warehousing
warehousing services; services;
• Lessors
Lessors or distributors of cinematographic films;
or distributors of cinematographic films;
• Persons engaged in milling, processing, manufacturing or
Persons engaged in milling, processing, manufacturing or repacking
repacking goodsgoods for for others;
others;
• Proprietors,
Proprietors, operators, or keepers of hotels, motels, rest houses,pension houses, inns,
operators, or keepers of hotels, motels, rest houses,pension houses, inns, resorts,
resorts,
theaters
theaters and and moviemovie houses;
houses;
• Proprietors or
Proprietors or operators
operators of of restaurants,
restaurants, refreshment
refreshment parlors, parlors, cafes
cafes and and other
other eatingeating places,
places,
including clubs
including clubs and and caterers;
caterers;
• Dealers
Dealers in in securities;
securities;
• Lending
Lending investors;
investors;
• Transportation contractors
Transportation contractors on on their
their transport
transport of of goods
goods or or cargoes,
cargoes, including
including persons persons who who
transport
transport goodsgoods or or cargoes
cargoes for for hire
hire andother
andother domestic
domestic commoncommon carriers
carriers by by land
land relative
relative to to their
their
transport of
transport of goods
goods or or cargoes.
cargoes.
• Common carriers
Common carriers by by airair and
and sea sea relative
relative to to their
their transport
transport of of passengers,
passengers, goods goods or or cargoes
cargoes fromfrom
one
one place
place in in the
the Philippines
Philippines to to another
another place place in in the
the Philippines;
Philippines;
• Sales of
Sales of electricity
electricity by by generation
generation companies,companies, transmission
transmission by by any
any entity,
entity, and/or
and/or distribution
distribution
companies, including
companies, including electricelectric
• cooperatives;
cooperatives;
• Franchise grantees
Franchise grantees of of electric
electric utilities,
utilities, telephone
telephone and and telegraph,
telegraph, radio radio and/or
and/or television
television
broadcasting companies whose annual gross receipt of the preceding year exceeds Ten Million
broadcasting companies whose annual gross receipt of the preceding year exceeds Ten Million
Pesos (P10,000,000.00) and franchise grantees
Pesos (P10,000,000.00) and franchise grantees of gas and water utilities; of gas and water utilities;
• Non-life
Non-life insurance
insurance companiescompanies (except (except theirtheir crop
crop insurances),
insurances), including
including surety,
surety, fidelity,
fidelity, indemnity
indemnity
and bonding
and bonding companies;
companies; and and
• Similar
Similar services
services regardless
regardless of of whether
whether or or not
not thethe performance
performance thereof thereof calls calls for
for thethe exercise
exercise or or
use of
use of the
the physical
physical or or mental
mental faculties.
faculties.
• The lease
The lease or or thethe use use of, of, or
or the
the right
right or or privilege
privilege to to use
use any
any copyright,
copyright, patent,
patent, design
design or or model,
model,
plan,
plan, secret
secret formula
formula or or process,
process, goodwill,
goodwill, trademark,
trademark, trade trade brand
brand or or other
other like like property
property or or right;
right;
• The lease
The lease or or thethe useuse of, of, or
or the
the right
right to to use
use ofof any
any industrial,
industrial, commercial
commercial or or scientific
scientific equipment;
equipment;
• The supply
The supply of of scientific,
scientific, technical,
technical, industrial
industrial or or commercial
commercial knowledge
knowledge or or information;
information;
• The supply
The supply of of any
any assistance
assistance that that is is ancillary
ancillary and and subsidiary
subsidiary to to and
and is is furnished
furnished as as aa means
means of of
enabling the
enabling the application
application or or enjoyment
enjoyment of of anyany suchsuch property,
property, or or right
right as as isis mentioned
mentioned in in
subparagraph (b)
subparagraph (b) hereof,
hereof, or or any
any such
such knowledge
knowledge or or information
information as as is
is mentioned
mentioned in in subparagraph
subparagraph
(c) hereof;
(c) hereof;
• The supply
The supply of of services
services by by aa non-resident
non-resident person person or or his
his employee
employee in in connection
connection with with the the use
use of of
property or rights belonging to, or the installation or operation of any brand, machinery, or other
property or rights belonging to, or the installation or operation of any brand, machinery, or other
apparatus
apparatus purchased
purchased from from such
such non-resident
non-resident person; person;
• The supply
The supply of of technical
technical advice, advice, assistance
assistance or or services
services rendered
rendered in in connection
connection with with technical
technical
management
management or or administration
administration of of anyany scientific,
scientific, industrial
industrial or or commercial
commercial undertaking,
undertaking, venture, venture,
project
project or or scheme;
 •e The
The lease
lease of
of motion
motion picture
picture films,
films, films,
films, tapes
tapes and
and discs;
discs; and
and
•e The
The lease
lease or
or the
the use
use ofof or
or the
the right
right to
to use
use radio,
radio, television,
television, satellite
satellite transmission
transmission and
and cable
cable
television
television time.
time.

Zero-Rated Sales
Zero-Rated Sales of
of Goods
Goods

Zero-Rated
Zero-Rated Transactions
Transactions are
are transactions
transactions that
that are
are subject
subject to
to VAT
VAT but
but the
the rate
rate is
is at
at 0%.
0%.

(a)
(a) Export
Export Sales
Sales —– the
the term
term means:
means:

Sale and
Sale and actual
actual shipment
shipment of of goods
goods from
from the
the Philippines
Philippines toto aa foreign
foreign country,
country, irrespective
irrespective ofof any
any
shipping arrangement
shipping arrangement thatthat maybe
maybe agreed
agreed upon
upon which
which maymay influence
influence or or determine
determine thethe transfer
transfer
of
of ownership of the goods so exported and paid for in acceptable foreign currency or
ownership of the goods so exported and paid for in acceptable foreign currency or its
its
equivalent in
equivalent in goods
goods oror services,
services, and
and accounted
accounted for
for in
in accordance
accordance with with the
the rules
rules and
and regulations
regulations
of
of the
the Bangko
Bangko Sentral
Sentral ng
ng Pilipinas
Pilipinas (BSP);
(BSP);

The sale
The sale of
of goods,
goods, supplies,
supplies, equipment
equipment and
and fuel
fuel to
to persons
persons engaged
engaged in
in international
international shipping
shipping or
or
international air transport operations.
international air transport operations.

Provided, that
Provided, that the
the goods,
goods, supplies,
supplies, equipment,
equipment, and
and fuel
fuel shall
shall be
be used
used exclusively
exclusively for
for
international
international shipping
shipping or
or air
air transport
transport operations.
operations.

The
The sale
sale ofof goods,
goods, supplies,
supplies, equipment
equipment and and fuel
fuel toto persons
persons engaged
engaged in in international
international shipping
shipping oror
international
international air air transport
transport operations
operations is is limited
limited to to goods,
goods, supplies,
supplies, equipment
equipment and and fuel
fuel that
that shall
shall
be used
be used in in the
the transport
transport of of goods
goods and
and passengers
passengers from from aa port
port in in the
the Philippines
Philippines directly
directly to
to aa
foreign port, or vice versa, without docking or stopping at any other
foreign port, or vice versa, without docking or stopping at any other port in the Philippines port in the Philippines
unless
unless thethe docking
docking or or stopping
stopping at at any
any other
other Philippine
Philippine portport isis for
for the
the purpose
purpose of of unloading
unloading
passengers and/or
passengers and/or cargoes
cargoes that
that originated
originated fromfrom abroad,
abroad, or or to
to load
load passengers
passengers and/orand/or cargoes
cargoes
bound
bound for for abroad;
abroad; Provided,
Provided, further,
further, that
that ifif any
any portion
portion of of such
such fuel,
fuel, goods,
goods, supplies
supplies oror
equipment is
equipment is used
used forfor purposes
purposes other
other than
than that
that mentioned
mentioned in in this
this paragraph,
paragraph, such such portion
portion ofof
fuel,
fuel, goods,
goods, supplies,
supplies, and and equipment
equipment shall
shall bebe subject
subject to to 12%
12% VAT
VAT

(b) Exemptions
(b) Exemptions Under
Under Special
Special Laws
Laws or
or International
International Agreement
Agreement

Sales
Sales to
to persons
persons oror entities
entities or
or entities
entities whose
whose exemption
exemption from
from direct
direct and
and indirect
indirect taxes
taxes under
under
special laws or international agreements to which the Philippines is a signatory effectively
special laws or international agreements to which the Philippines is a signatory effectively
subjects
subjects such
such sales
sales to
to zero-rate.
zero-rate.

(c)
(c) Sale
Sale of
of raw
raw materials,
materials, inventories,
inventories, supplies,
supplies, equipment,
equipment,

packaging
packaging materials,
materials, and and goods,
goods, to to aa registered
registered export
export enterprise,
enterprise, toto be
be used
used directly
directly andand
exclusively in
exclusively in its
its registered
registered project
project oror activity
activity pursuant
pursuant toto Sections
Sections 294
294 (E)
(E) and
and 295
295 (D)
(D) ofof
Republic
Republic Act
Act No.No. 11534
11534 oror the
the "Corporate
"Corporate Recovery
Recovery and
and Tax
Tax Incentives
Incentives for
for Enterprise
Enterprise Act"
Act"
("CREATE
("CREATE Act"),
Act"), andand Section
Section 5,5, Rule
Rule 22 of
of its
its IRR
IRR for
for a
a maximum
maximum period
period ofof seventeen
seventeen (17)
(17) years
years
from the date of registration, unless otherwise extended
from the date of registration, unless otherwise extended under the under the SIPP;
 Provided,
Provided, that
that the
the term
term "registered
"registered export
export enterprise"
enterprise" shall
shall referto
referto an
an export
export enterprise
enterprise asas
defined
defined under
under Section
Section 4 4 (M),
(M), Rule
Rule 1 1 of
of the
the CREATE
CREATE ActAct IRR,
IRR, that
that is
is also
also aa registered
registered business
business
enterprise as
enterprise as defined
defined in in Section
Section 4 4 (W)
(W) of of the
the same
same IRR:
IRR: Provided
Provided further,
further, That
That the
the above-
above-
described
described sales
sales toto existing
existing registered
registered export
export enterprises
enterprises located
located inside
inside ecozones
ecozones andand freeport
freeport
zones shall
zones shall also
also bebe qualified
qualified for
for VAT
VAT zero-rating
zero-rating under
under this
this sub-item
sub-item until
until the
the expiration
expiration ofof the
the
transitory period (amended by RR No. 21-2021)
transitory period (amended by RR No. 21-2021)

The following
The following transactions,
transactions, previously
previously subject
subject toto VAT
VAT pursuant
pursuant to
to RR
RR 9-2021
9-2021 as
as zero
zero rated
rated sales,
sales,
are
are now
now subject
subject toto VAT
VAT in
in line
line with
with the
the successful
successful implementation
implementation of of a
a VAT
VAT refund
refund system
system asas
provided
provided under
under subject
subject to
to adjustments
adjustments stated
stated in
in RR
RR No.
No. 13-2021
13-2021 and
and 21-2021.
21-2021.

Condition:
Condition: Directly
Directly and
and exclusively
exclusively used
used for
for the
the project
project or
or registered
registered activity
activity

•e Sale of
Sale of raw
raw materials
materials or
or packaging
packaging materials
materials to to aa non-resident
non-resident buyer
buyer for
for delivery
delivery to
to aa resident
resident
local export-oriented enterprise to be used in manufacturing, processing,
local export-oriented enterprise to be used in manufacturing, processing, packing or re-packing packing or re-packing
in the
in the Philippines
Philippines of of the
the said
said buyer’s
buyer’s goods
goods andand paid
paid for
for in
in acceptable
acceptable foreign
foreign currency
currency andand
accounted
accounted for for in
in accordance
accordance withwith the
the rules
rules and
and regulations
regulations ofof the
the BSP.
BSP.
•e Sale
Sale ofof raw
raw materials
materials oror packaging
packaging materials
materials to to export-oriented
export-oriented enterprise
enterprise whose
whose export
export sales
sales
exceed seventy
exceed seventy percent
percent (70%)
(70%) ofof total
total annual
annual production.
production.
•e Those
Those considered
considered export
export sales
sales under
under E.O.E.O. 226,
226, otherwise
otherwise known
known as as the
the Omnibus
Omnibus Investment
Investment
Code
Code of of 1987,
1987, and
and other
other special
special laws.
laws.

Conditions
Conditions for
for vatability:
vatability:

•e The successful
The successful establishment
establishment and and implementation
implementation of of anan enhanced
enhanced VAT VAT refund
refund system
system that that
grants refunds of creditable input tax within ninety (90) days from the filing of the VAT
grants refunds of creditable input tax within ninety (90) days from the filing of the VAT
refund
refund application with the Bureau: Provided, That, to determine the effectivity of item no.
application with the Bureau: Provided, That, to determine the effectivity of item no.
1, all
1, all applications
applications filedfiled from
from January
January 1, 1, 2018
2018 shall
shall bebe processed
processed and and mustmust be be decided
decided within
within
ninety (90)
ninety (90) days
days from
from the
the filing
filing ofof the
the VAT
VAT refund
refund application;
application; and and
•e (2) All
(2) All pending
pending VAT VAT refund
refund claims
claims as as ofof December
December 31, 31, 2017
2017 shall
shall be be fully
fully paid
paid in in cash
cash by by
December
December 31, 31, 2019.
2019.
•e Provided,
Provided, ThatThat thethe Department
Department of of Finance
Finance shallshall establish
establish a a VAT
VAT refund
refund center center inin the
the Bureau
Bureau
of
of Internal
Internal Revenue
Revenue (BIR)(BIR) and
and in in the
the Bureau
Bureau of of Customs
Customs (BOC) (BOC) that
that will
will handle
handle thethe processing
processing
and granting
and granting of of cash
cash refunds
refunds of of creditable
creditable inputinput tax.tax.
•e An amount equivalent
Anamount equivalent to to five
five percent
percent (5%) (5%) ofof the
the total
total VATVAT collection
collection of of the
the BIR
BIR and
and thethe BOC
BOC
from the
from the immediately
immediately preceding
preceding year year shall
shall bebe automatically
automatically appropriated
appropriated annually annually and and shall
shall
be
be treated as a special account in the General Fund or as trust receipts for the purpose of
treated as a special account in the General Fund or as trust receipts for the purpose of
funding claims
funding claims forfor VAT
VAT refund:
refund: Provided,
Provided, That That any any unused
unused fund,
fund, at at the
the endend ofof the
the year
year shall
shall
revert to
revert to the
the General
General Fund.
Fund.
•e Provided,
Provided, further,
further, That
That the
the BIR
BIR and and BOC BOC shall
shall be be required
required to to submit
submit to to the
the Congressional
Congressional
Oversight Committee
Oversight Committee on on the
the Comprehensive
Comprehensive Tax Tax Reform
Reform Program
Program (COCCTRP)
(COCCTRP) aa quarterly
quarterly
report ofof all
report all pending
pending claims
claims for
for refund
refund and and any
any unused
unused fund.
Zero-Rated Transactions are
Zero-Rated Transactions are transactions
transactions that
that are
are subject
subject to
to VAT
VAT but
but the
the rate
rate is
is at
at 0%.
0%.

1. Services
1. Services other other than than processing,
processing, manufacturing
manufacturing or or re-packing
re-packing of of goods
goods rendered
rendered to to aa person
person
engaged in business conducted outside the Philippines
engaged in business conducted outside the Philippines or to a non-resident person not engaged or to a non-resident person not engaged
in business
in business who who is is outside
outside the the Philippines
Philippines when when the the services
services are are performed,
performed, the the consideration
consideration
for
for which
which is is paid
paid forfor inin acceptable
acceptable foreign foreign currency
currency and and accounted
accounted for for inin accordance
accordance with with the the
rules
rules and
and regulations
regulations of of the
the BSP;
BSP;
Services rendered
2. Services rendered to to persons
persons or or entities
entities whose
whose exemption
exemption from from direct
direct and and indirect
indirect taxestaxes under
under
specials
specials laws laws or or international
international agreements agreements to to which
which the the Philippines
Philippines is is a a signatory
signatory effectively
effectively
subjects the
subjects the supply
supply of of such
such services
services to to zero
zero rated
rated (0%)(0%) rate;
rate;
3. Sale
Sale of services, including provision of basic infrastructure, utilities,
of services, including provision of basic infrastructure, utilities, and and maintenance,
maintenance, repair repair andand
overhaul
overhaul of equipment, to a registered export enterprise, to be used directly and exclusively in
of equipment, to a registered export enterprise, to be used directly and exclusively in
its registered
its registered project project or or activity
activity pursuant
pursuant to to Sections
Sections 294 294 (E) (E) and
and 295 295 (D) (D) of of CREATE
CREATE Act, Act, andand
Section
Section 5, 5, RuleRule 2 2 ofof its
its IRRIRR forfor a a maximum
maximum period period of of seventeen
seventeen (17) (17) years
years from from the the date
date of of
registration,
registration, unless unless otherwise
otherwise extended extended under under the the SIPP;
SIPP; Provided,
Provided, That That the the term
term "registered
"registered
export
export enterprise"
enterprise" shall shall refer
refer to to anan export
export enterprise
enterprise as as defined
defined under under SectionSection 4 4 (M),
(M), Rule
Rule 1 1 of
of
the CREATE
the CREATE IRR, IRR, that
that is is also
also aa registered
registered business
business enterprise
enterprise as as defined
defined in in Section
Section 4 4 (W)
(W) of of the
the
same IRR: Provided, further, That the above-described sales to existing registered export
same IRR: Provided, further, That the above-described sales to existing registered export
enterprises located
enterprises located inside
inside ecozones
ecozones and and freeport
freeport zones zones shallshall alsoalso bebe qualified
qualified for for VAT
VAT zero-rating
zero-rating
under
under this
this sub-item
sub-item until until thethe expiration
expiration of of the
the transitory
transitory period period (amended
(amended by by RRRR No.
No. 21-2021)
21-2021)
4. Sale
Sale ofof services,
services, including
including provision
provision of of basic
basic infrastructure,
infrastructure, utilities,utilities, and and maintenance,
maintenance, repair repair andand
overhaul
overhaul of of equipment,
equipment, to to aa registered
registered export export enterprise,
enterprise, to to bebe used
used directly
directly and and exclusively
exclusively in in
its registered
its registered project project or or activity
activity pursuant
pursuant to to Sections
Sections 294 294 (E) (E) and
and 295 295 (D) (D) of of CREATE
CREATE Act, Act, andand
Section 5,
Section 5, RuleRule 22 of of its
its IRRIRR forfor aa maximum
maximum period period of of seventeen
seventeen (17) (17) years
years from from the the date
date of of
registration, unless otherwise extended under the
registration, unless otherwise extended under the SIPP; Provided, That the term "registered SIPP; Provided, That the term "registered
export enterprise"
export enterprise" shall shall refer
refer to to anan export
export enterprise
enterprise as as defined
defined under under SectionSection 4 4 (M),
(M), Rule
Rule 11 of of
the
the CREATE
CREATE IRR, IRR, that
that is is also
also a a registered
registered business
business enterprise
enterprise as as defined
defined in in Section
Section 4 4 (W)
(W) of of the
the
same IRR:
same IRR: Provided,
Provided, further, further, That That the the above-described
above-described sales sales to to existing
existing registered
registered export export
enterprises located
enterprises located inside
inside ecozones
ecozones and and freeport
freeport zones zones shallshall alsoalso bebe qualified
qualified for for VAT
VAT zero-rating
zero-rating
under
under this
this sub-item
sub-item until until thethe expiration
expiration of of the
the transitory
transitory period period (amended
(amended by by RRRR No.
No. 21-2021)
21-2021)
Transport of
5. Transport of passengers
passengers and and cargo
cargo by by domestic
domestic air air or or sea
sea vessels
vessels from from the the Philippines
Philippines to to aa
foreign
foreign country.
country. Gross Gross receipts
receipts of of international
international air air or or shipping
shipping carrierscarriers doing doing business
business in in the
the
Philippines derived from transport of passengers and cargo from the Philippines to another
Philippines derived from transport of passengers and cargo from the Philippines to another
country
country shallshall be be exempt
exempt from from VAT; VAT; however,
however, they they are are still
still liable
liable to to a a percentage
percentage tax tax of of three
three
percent
percent (3%)(3%) based based on on their
their gross
gross receipts
receipts derived
derived from from transport
transport of of cargo
cargo from from the the Philippines
Philippines
to another
to another country country as as provided
provided for for inin Sec.
Sec. 118
118 of of the
the TaxTax Code;
Code; and and
6. Sale
Sale ofof power
power or or fuel
fuel generated
generated through through renewable
renewable sources sources of of energy
energy such such as, as, but
but not
not limited
limited to, to,
biomass,
biomass, solar, solar, wind,
wind, hydropower,
hydropower, geothermal geothermal and and steam,
steam, ocean ocean energy,
energy, and and otherother emerging
emerging
sources using
sources using technologies
technologies such such as as fuel
fuel cells
cells andand hydrogen
hydrogen fuels; fuels; Provided,
Provided, however,however, that that zero
zero- -
rating
rating shall apply strictly to the sale of power or fuel generated through renewable sources of
shall apply strictly to the sale of power or fuel generated through renewable sources of
energy, and
energy, and shall shall notnot extend
extend to to the
the salesale ofof services
services related
related to to the
the maintenance
maintenance or or operation
operation of of
plants
plants generating
generating said said power.
 The
The following
following transactions,
transactions, previously
previously considered
considered as
as zero
zero rated
rated sales,
sales, are
are now
now subject
subject to
to VAT
VAT in
in line
line
with the
with the successful
successful implementation
implementation ofofaa VAT
VAT refund
refund system
system as
as provided
provided under
under RR
RR 21-2021.
21-2021.

1.
1. Processing,
Processing, manufacturing
manufacturing or or re-packing
re-packing goods
goods forfor other
other persons
persons doing
doing business
business outside
outside thethe
Philippines, which goods are subsequently exported, where the services are paid for in
Philippines, which goods are subsequently exported, where the services are paid for in
acceptable
acceptable foreign
foreign currency
currency andand accounted
accounted for
for in
in accordance
accordance with
with the
the rules
rules and
and regulations
regulations of of
the BSP
the BSP
2. Services
2. Services performed
performed by by subcontractors
subcontractors and/or
and/or contractors
contractors inin processing,
processing, converting,
converting, or or
manufacturing
manufacturing goods
goods for
for an
an enterprise
enterprise whose
whose export
export sales
sales exceed
exceed seventy
seventy percent
percent (70%)
(70%) of
of total
total
annual production.
annual production.

Conditions
Conditions for
for vatability:
vatability:

•e The
The successful
successful establishment
establishment and and implementation
implementation of of anan enhanced
enhanced VAT VAT refund
refund system
system that
that
grants
grants and pays refunds of creditable input tax within ninety (90) days from the filing of the
and pays refunds of creditable input tax within ninety (90) days from the filing of the
VAT refund
VAT refund application
application with
with the
the Bureau
Bureau
•e The
The Secretary
Secretary of of Finance
Finance shall
shall provide
provide transitory
transitory rules
rules forfor the
the grant
grant ofof refund
refund under
under the
the
enhanced
enhanced VAT VAT Refund
Refund System
System after
after the
the determination
determination of of the
the fulfillment
fulfillment ofof the
the condition
condition by by
the Commissioner
the Commissioner of of Internal
Internal Revenue
Revenue
•e Department of
Department of Finance
Finance shall
shall establish
establish aa VAT
VAT Refund
Refund Center
Center in in the
the BIR
BIR and
and inin the
the Bureau
Bureau of of
Customs
Customs that
that will
will handle
handle the
the processing
processing andand granting
granting ofof cash
cash refunds
refunds of of creditable
creditable input
input tax
tax

Effectively
Effectively zero-rated
zero-rated sale
sale of
of goods
goods and
and properties
properties —– shall
shall refer
refer to
to the
the local
local sale
sale of
of goods
goods and
and properties
properties
by
by aa VAT-registered
VAT-registered person
person toto a
a person
person or
or entity
entity who
who was
was granted
granted indirect
indirect tax
tax exemption
exemption under
under special
special
laws
laws or
or international
international agreement.
agreement.

Effectively zero-rated
Effectively zero-rated sale
sale of
of services
services —– shall
shall refer
refer to
to the
the local
local sale
sale of
of services
services by
by aa VAT-registered
VAT-registered person
person
to
to aa person
person oror entity
entity who
who was
was granted
granted indirect
indirect tax
tax exemption
exemption under
under special
special laws
laws or
or international
international
agreement.
agreement.

Note:
Note: RMC
RMC 24-2022,
24-2022, 36-2002,
36-2002, 38-2022
38-2022 and
and RMC
RMC 49-2022
49-2022 provides
provides some
some clarifications
clarifications on
on the
the changes
changes
per
per RR
RR No.
No. 21-2021
21-2021

The
The concerned
concerned taxpayer
taxpayer must
must seek
seek prior
prior approval
approval oror prior
prior confirmation
confirmation from
from the
the appropriate
appropriate offices
offices of
of
the BIR so that a transaction is qualified for effective zero-rating. Without an approved application for
the BIR so that a transaction is qualified for effective zero-rating. Without an approved application for
effective zero-rating,
effective zero-rating, the
the transaction
transaction otherwise
otherwise entitled
entitled to
to zero-rating
zero-rating shall
shall be
be considered
considered exempt
exempt

Transactions Deemed
Transactions Deemed Sale
Sale

Transactions Deemed
Transactions Deemed Sale
Sale are
are transaction
transaction that
that are
are considered
considered as
as sale
sale for
for VAT
VAT purposes
purposes although
although there
there is
is
no actual
no actual sale.
 1.
1. Transfer,
Transfer, use
use oror consumption
consumption not not inin the
the course
course of of business
business of of goods
goods oror properties
properties originally
originally
intended for
intended for sale
sale or
or for
for use
use inin the
the course
course of of business
business
2. Distribution
2. Distribution oror transfer
transfer to:
to:
a.
a. Shareholders
Shareholders or or investors
investors as as share
share in in the
the profits
profits of
of the
the VAT
VAT registered
registered persons;
persons; or or
b. Creditors
b. Creditors in in payment
payment of of debt.
debt.
3.
3. Consignment of goods if actual sale
Consignment of goods if actual sale isis not
not made
made within
within sixty
sixty (60)
(60) days
days following
following the
the date
date said
said
goods were consigned;
goods were consigned; and and
4.
4. Retirement
Retirement fromfrom or or cessation
cessation of of business
business and and change
change of of business
business withwith respect
respect to
to all
all goods
goods on on
hand,
hand, whether
whether capital
capital goods,
goods, stock-intrade,
stock-intrade, supplies
supplies or or materials
materials as as of
of the
the date
date of of such
such
retirement
retirement or or cessation,
cessation, whether
whether or or notnot thethe business
business is is continued
continued by by the
the new
new owner
owner or or
successor.
successor.

Change in
Change in status
status from
from VAT
VAT to
to Non-VAT
Non-VAT // Cessation
Cessation of
of Registration
Registration Goods
Goods or
or properties
properties originally
originally intended
intended
for
for sale
sale or
or use
use in
in business,
business, and
and capital
capital goods
goods which
which are
are existing
existing during
during said
said occurrence
occurrence isis subject
subject to
to
output tax.
output tax.

Change
Change in
in status
status from
from VAT
VAT to
to Non-VAT
Non-VAT

Except when
Except when change/cessation
change/cessation of
of business
business is
is due
due to:
to:

1. Change
1. Change of
of control
control of
of aa corporation
corporation byby acquisition
acquisition of
of the
the controlling
controlling interest
interest of
of such
such corporation
corporation
by
by another
another stockholder
stockholder (individual
(individual or
or corporate)
corporate) or
or group
group of
of stockholders.
stockholders.

However, the
However, the exchange
exchange of of goods
goods oror properties
properties including
including the
the real
real estate
estate properties
properties used
used in
in
business
business or
or held
held for
for sale
sale or
or for
for lease
lease by
by the
the transferor,
transferor, for
for shares
shares of
of stocks,
stocks, whether
whether resulting
resulting in
in
corporate
corporate control
control or
or not,
not, is
is subject
subject to
to VAT.
VAT.

2. Change
2. Change inin the
the trade
trade or
or corporate
corporate name
name of of the
the business;
business;
3. Merger
3. Merger or
or consolidation
consolidation ofof corporations.
corporations. The
The unused
unused input
input tax
tax of
of the
the dissolved
dissolved corporation,
corporation, as
as of
of
the date
the date ofof merger
merger or
or consolidation,
consolidation, shall
shall be
be absorbed
absorbed by by the
the surviving
surviving or
or new
new corporation
corporation

COMPUTATIONS OF
COMPUTATIONS OF VAT
VAT

VAT
VAT Payable
Payable

It
It refers
refers to
to the
the excess
excess of
of output
output tax
tax over
over allowable
allowable input
input tax.
tax. In
In the
the case
case of
of importation,
importation, it
it is
is the
the VAT
VAT
due
due onon such
such importation.
importation.

Output
Output Tax
Tax

It
It refers
refers to
to the
the VAT
VAT on
on sale
sale or
or lease
lease of
of taxable
taxable goods,
goods, properties
properties or
or services
services by
by any
any person
person registered
registered or
or
required under
required under the
the VAT
VAT system
Output
Output Tax
Tax Computation
Computation

Rules:

1. Billed Inclusive
1
GROSS SALES (GS) = Total Invoice Amount x
(exclusive of VAT) (inclusive of VAT) 1.12

OUTPUT TAX (OT) = GS x 12%

2. Billed Exclusive
OUTPUT TAX (OT) = Total Invoice Amount x __ 12
(inclusive of VAT) 112
Sale
Sale of
of Real
Real Property
Propert

OUTPUT TAX

Gross Selling Price - (x 1/1.12)

(inclusive of VAT)

Zonal Value or Fair Market Value - (x .12)

(exclusive of VAT)
 OUTPUT TAX = Total Amount Received X 1
(inclusive of VAT) 1.12

or

Gross Receipts X 12%

(exclusive of VAT)

Importation
Importation of
of Goods
Goods

OUTPUT
OUTPUT TAX
TAX = Total Landed
= Total Landed Cost
Cost X
X 12%
12%

Landed
Landed Cost
Cost consists
consists of
of the
the invoice
invoice amount,
amount, excise
excise tax
tax (if
(if any),
any), customs
customs duties,
duties, freight
freight and
and insurance
insurance and
and
other charges
other charges prior
prior to
to release
release of
of goods
goods from
from customs
customs custody
custody

Computation
Computation of
of VAT
VAT Payable
Payable

Output Tax (Total Invoice Amount x 1/1.12) XXX

Less: Input Tax (IT)
Transitional/Presumptive IT XXX
IT carried over from previous quarter XXX
Importation of Goods XXX XXX
VAT Payable XXX

Effect
Effect of
of Excess
Excess Output
Output Tax
Tax or
or Input
Input Tax
Tax

•e IfIf the
the output
output tax
tax exceeds
exceeds input
input tax,
tax, the
the excess
excess shall
shall be
be the
the VAT
VAT payable.
payable.
•e = IfIf input
input tax
tax inclusive
inclusive of
of input
input VAT
VAT carried
carried over
over from
from the
the previous
previous quarter
quarter exceeds
exceeds the
the output
output tax,
tax,
the balance may be credited in the following
the balance may be credited in the following month/quarter.
Problem
Problem 1
1

Compute the
Compute the transitional
transitional input
input tax
tax on
on each
each of
of the
the following
following independent
independent cases:
cases:

1. MZET
1. MZET Inc.
Inc. registered
registered as
as aa value-added
value-added taxpayers
taxpayers on
on January
January 2 2 of
of the
the year.
year. Inventory
Inventory as
as of
of January
January 11
had aa value
had value for
for income
income tax
tax purposes
purposes of
of Two Hundred Fifty
Two Hundred Fifty Thousand
Thousand Pesos
Pesos (P250,000).
(P250,000). The
The VAT
VAT paid
paid on
on
such inventories
such inventories when
when purchased
purchased waswas Thirty Thousand Pesos
Thirty Thousand Pesos (P30,000).
(P30,000).

2.
2. MZET
MZET Inc.
Inc. registered
registered as
as a
a value-added
value-added taxpayers
taxpayers on July 1.
on July 1. Inventories
Inventories as
as of
of that
that date
date had
had aa value
value for
for
income tax
income tax purposes
purposes ofof One
One Hundred
Hundred Forty-Eight
Forty-Eight Thousand
Thousand Pesos
Pesos (P148,000).
(P148,000). The VAT paid
The VAT paid on
on such
such
inventories
inventories when
when acquired
acquired was Two Thousand
was Two Thousand Five
Five Hundred
Hundred Pesos
Pesos (P2,500.00)
(P2,500.00)

Answer
Answer 1
1

Transitional | 5,000.00 | 30,000.00} 30,000.00

—_—

Input Tax | 2,960.00 | 2,500.00 | 2,960.00

Problem
Problem 2
2

Compute the
Compute the VAT
VAT due
due during
during the
the quarter.
quarter. J.J. Cruz,
Cruz, aa taxpayer,
taxpayer, is
is engaged
engaged in in aa restaurant
restaurant business
business andand aa
jeepney operator
jeepney operator atat the
the same
same time.
time. He He has
has complied
complied with
with the
the registration
registration requirements
requirements of of the
the BIR.
BIR. For
For
the quarter
the quarter Jan
Jan —– March
March 2018,
2018, gross
gross receipts
receipts from
from restaurant
restaurant business
business amounted
amounted to to Two
Two Million
Million Eight
Eight
Hundred Twenty-Two
Hundred Thousand Pesos
Twenty-Two Thousand Pesos (P2,822,000)
(P2,822,000) andand Three Hundred Eighty-Five
Three Hundred Eighty-Five Thousand
Thousand Pesos Pesos
(P385,000) from jeepney operations. During the period, he paid One Hundred
(P385,000) from jeepney operations. During the period, he paid One Hundred Seventy-Nine Thousand Seventy-Nine Thousand
Two Hundred Pesos
Two Hundred Pesos (P179,200)
(P179,200) for
for the
the repair
repair of
of the
the building
building where
where hishis office
office isis located.
located.

Supplies purchased
Supplies purchased for
for common
common use
use amounted
amounted to
to Twenty-Two
Twenty-Two Thousand Four Hundred
Thousand Four Hundred Pesos
Pesos (P22,400).
(P22,400).
He also disbursed the following amounts:
He also disbursed the following amounts:

Tires and
Tires and spare
spare parts
parts P78,400
P78,400

Kitchen
Kitchen utensils
utensils 26,880
26,880

VAT paid:
VAT paid:

Jan
Jan P36,000
P36,000

Feb
Feb 20,000
Answer
Answer 2
2

Restaurant (Vatable) 2,822,000.00

Jeepney Operations (Exempt) 385,000.00
Total Sales 3,207 ,000.00

Amount Attributable to
aoe Total VAT Mixed cea Restaurant
Operations
Repairs and Maintenance 179,200.00 19,200.00 19,200.00
Supplies 22,400.00 2,400.00 2,400.00
Tires and spare parts 78,400.00 8,400.00 8,400.00
Kitchen Utensils 26,880.00 2,880.00 2,880.00
32,880.00 21,600.00
Allocation of Exempt Sales
Exempt Sales / Total Sales 12.00% 2,592.00

Allocation of Vatable Sales

Vatable Sales / Total Sales 88.00% 19,008.00
Total Input 32,880.00 10,992.00 21,888.00

Restaurant 2,822,000.00
Rate 12%
Output Tax 338,640.00

Less: Input Tax:

Input Tax 32,880.00
Less: Input Tax allocable to
exempt sales 10,992.00 21,888.00
VAT Payable 316,752.00
Less: Payments (Jan & Feb) 56,000.00
VAT Due 260,752.00
Problem
Problem 3
3

Compute for the VAT payable during the quarter

MZET Corporation is a domestic corporation engaged in automobile

business. During the fourth quarter of 2018, it made the following
transactions:

Gross sales/receipts from:

Sales of automobiles P7,040,000
Repairs 1,760,000

Payment for:
Purchases and supplies 5,285,000
Repairs of the building used in the business 207,200

TOTAL | VAT
Sales from Automobiles 7,040 ,O00.00 844,800 00
Income from Repairs 1,760 ,000.00 211,200.00
Total Sales 8,800 ,000.00 1,056,000
OO

TOTAL | VAT |
Purchases and Supplies 5,285,000.00 566 ,250 OO
Repairs of the Building 207,200.00 22,200.00
Total Expenses 5,492,200.00 588,450 OO

Output 1,056 ,000.00

Less: Input 588,450.00
VAT Payable 467,550.00 (A)
Problem
Problem 4
4

Compute the VAT payable for the month of June 2018

MCZ Realty, Inc., a domestic corporation, is engaged in business as a real estate
lessor. On June 30, one of its properties (land and building) being offered for
rent/lease was sold at Ten Million Five Hundred Thousand Pesos (P10,500,000.00)
to JSZ Corporation. During the month of June, total rental income (net of VAT) is
One Million Five Hundred Forty Thousand Pesos (P1,540,000.00).
Additional Information:
1. Fair market value as determined by the Commissioner P 8,000,000
2. Fair market value as shown in the schedule of 7,000,000
Values of the City Assessor
3. Book value at the time of sale 2,400,000
4. Total input tax available 500,000

Answer
Answer 4
4

| AMOUNT | VAT |
Value of the Land and Building:
Selling Price 10,500,000.00 1,125,000.00
Fair Market Value (per Commiss 8,000,000.00 960,000.00
Fair Market Value (per City Asse: 7,000,000.00 840,000.00
Book Value 2,400,000.00

Rental Income 1,540,000.00 184,800.00

Output Tax
Sale of Land and Building 1,125,000.00
Rental Income 184,800.00 1,309,800.00
Less: Input Tax 500,000.00
VAT Payable 809,800.00

Problem 5
Problem 5

ETHAN, aa VAT
ETHAN, VAT taxpayer,
taxpayer, imported
imported articles
articles with
with aa dutiable
dutiable value
value of
of Two
Two Hundred
Hundred Thousand
Thousand Pesos
Pesos
(P200,000) and
(P200,000) and customs
customs duties
duties andand other
other charges
charges ofof Forty
Forty Thousand
Thousand Pesos
Pesos (P40,000).
(P40,000). He
He sold
sold the
the
articles to DREW, also a VAT taxpayer for Three Hundred Eighty-Five Thousand Pesos (P385,000). DREW
articles to DREW, also a VAT taxpayer for Three Hundred Eighty-Five Thousand Pesos (P385,000). DREW
sold
sold the
the goods
goods to
to FRIDAY,
FRIDAY, aa VAT
VAT taxpayer
taxpayer forfor Four
Four Hundred
Hundred Ninety-Two
Ninety-Two Thousand
Thousand Eight
Eight Hundred
Hundred Pesos
Pesos
(P492,800).
(P492,800). FRIDAY
FRIDAY sold
sold the
the articles
articles toto GWEN,
GWEN, consumer
consumer for for Six
Six Hundred
Hundred Sixteen Thousand Pesos
Sixteen Thousand Pesos
(P616,000).
(P616,000). Assume
Assume that
that sales
sales are
are inclusive
inclusive of
of VAT.
Answer
Answer 5
5

ETHAN DREW FRIDAY

Gross VAT Gross VAT Gross VAT
Sales 385,000.00 4125000 492,800.00 52,800.00 616,000000 66,000.00
Purchase 240,000.00 28,800.00 385,000.00 41,250.00 492,80000 52,800.00
VAT Payable ~ 12,450.00 — ~ 11,550.00 — ~43,200.00 —

INPUT TAX
INPUT TAX

It refers
It refers to
to the
the VAT
VAT due
due from
from oror paid
paid byby aa VAT-registered
VAT-registered person
person onon importation
importation of
of goods
goods or
or local
local
purchase of goods or services, including lease or use of property, from another VAT-registered person in
purchase of goods or services, including lease or use of property, from another VAT-registered person in
the course of his trade or business. It shall also include the transitional and presumptive
the course of his trade or business. It shall also include the transitional and presumptive input tax input tax
determined in
determined in accordance
accordance with
with Section
Section 111
111 of
of the
the NIRC.
NIRC.

Persons
Persons who
who can
can avail
avail of
of Input
Input Tax
Tax Credits
Credits

1. PURCHASER
PURCHASER of
of domestic
domestic goods
goods or
or properties
properties
IMPORTER upon
2. IMPORTER upon payment
payment of
of VAT
VAT prior
prior to
to release
release of
of goods
goods from
from Custom
Custom
PURCHASER of
3. PURCHASER of services
services

PROVIDED that
PROVIDED that the
the purchaser/importer
purchaser/importer is
is VAT
VAT registered
registered

Sources
Sources of
of Input
Input Taxes
Taxes

1.
1. Domestic
Domestic purchases
purchases or or importation
importation of of goods
goods
a. for
for sale
sale
a20oc0@

raw materials
b. raw materials in in production
production including
including packaging
packaging materials
materials
c. supplies
supplies inin the
the course
course ofof business
business
raw materials supplied in the
d. raw materials supplied in the sale
sale ofof services
services
e.
e. equipment/machineries
equipment/machineries used in trade or
used in trade or business
business except
except automobiles
automobiles aircraft
aircraft and
and yachts
yachts
2. Purchase
Purchase ofof property
property (real
(real oror personal)
personal) where
where VATVAT has
has been
been actually
actually paid
paid
WD

Purchase of
3. Purchase of services
services where
where VAT VAT has
has been
been actually
actually paid
paid
Transactions “deemed
4. Transactions “deemed sale” sale”
NOUR

5. Transitional
Transitional Input
Input Tax
Tax
6. Presumptive
Presumptive Input
Input Tax
Tax
Transaction Deemed Sale
7. Transaction Deemed
Requisites
Requisites on
on Deductibility
Deductibility of
of Input
Input Tax
Tax

1.
1. Supplier must
Supplier must be
be VAT
VAT registered
registered
2. VAT OR/Invoice issued
VAT OR/Invoice issued
3. Name,
Name, business
business style
style (if
(if any),
any), address
address and
and TIN
TIN of
of customer/buyer
customer/buyer indicated
indicated in
in VAT
VAT OR/SI
OR/SI (if
(if in
in
excess
excess of
of P1,000)
P1,000)

Transitional Input
Transitional Input Tax
Tax

A person
A person who
who becomes
becomes liable
liable to
to VAT
VAT oror any
any person
person who
who elects
elects to
to be
be aa VAT-registered
VAT-registered person
person shall,
shall,
subject to
subject to the
the filing
filing of
of an
an inventory
inventory according
according toto rules
rules and
and regulations
regulations prescribed
prescribed by by the
the Secretary
Secretary ofof
Finance,
Finance, upon
upon recommendation
recommendation of of the
the Commissioner,
Commissioner, be be allowed
allowed input
input tax
tax on
on his
his beginning
beginning inventory
inventory ofof
goods, materials and supplies equivalent to two percent (2%) of the value such inventory or actual VAT
goods, materials and supplies equivalent to two percent (2%) of the value such inventory or actual VAT
paid on
paid on such
such goods,
goods, materials
materials and
and supplies,
supplies, whichever
whichever is is higher,
higher, which
which shall
shall bebe creditable
creditable against
against the
the
output tax
output tax

Presumptive
Presumptive Input Tax
Input Tax

4% presumptive input
4% presumptive input tax
tax (of
(of the
the gross
gross value
value in
in money
money of
of purchases
purchases of
of primary
primary agricultural
agricultural products
products
used
used as
as inputs
inputs to
to their
their production)
production) is
is allowed
allowed to
to persons
persons or
or firms
firms engaged
engaged in
in processing/manufacturing
processing/manufacturing
of the
of the following
following products:
products:

1. Sardines
Sardines
Pe

2. Mackerel
Mackerel
RWN

3. Milk
Milk
4. refined sugar
refined sugar
5. cooking oil
cooking oil
anu

6. packed
packed noodle-based instant
noodle-based instant meals
meals

Claims
Claims for
for Input Tax on
Input Tax on Depreciable
Depreciable Goods
Goods

Purchases or
Purchases or imports
imports ofof capital
capital goods*,
goods*, which
which are
are depreciable
depreciable assets
assets for
for income
income tax
tax purposes,
purposes, the
the
aggregate
aggregate acquisition
acquisition cost
cost of
of which
which (exclusive
(exclusive of
of VAT)
VAT) in
in a
a calendar
calendar month
month exceeds
exceeds One
One Million
Million pesos
pesos
(P1,000,000.00),
(P1,000,000.00), regardless
regardless ofof the
the acquisition
acquisition cost
cost of
of each
each capital
capital good,
good, shall
shall be
be spread
spread evenly
evenly in
in the
the
following manner:
following manner:

*Capital goods
*Capital goods oror properties
properties refers
refers to
to goods
goods or
or properties
properties with
with estimated
estimated useful
useful life
life greater
greater than
than one
one (1)
(1)
year and
year and which
which are
are treated
treated as
as depreciable
depreciable assets
assets under
under Sec.
Sec. 34(F)
34(F) of
of the
the Tax
Tax Code,
Code, used
used directly
directly or
or
indirectly in
indirectly in the
the production
production oror sale
sale of
of taxable
taxable goods
goods oror services.
services.

Claims
Claims for
for Input Tax on
Input Tax on Depreciable
Depreciable Goods
Goods

a. If
a. If the
the estimated
estimated useful
useful life
life of
of aa capital
capital good
good isis five
five (5)
(5) years
years or
or more
more – — The
The input
input tax
tax shall
shall be
be spread
spread
evenly over
evenly over aa period
period ofof sixty
sixty (60)
(60) months
months and and the
the claim
claim for
for input
input tax
tax credit
credit will
will commence
commence in in the
the
calendar
calendar month
month when
when thethe capital
capital good
good isis acquired.
acquired. The
The total
total input
input taxes
taxes on
on purchases
purchases or or importation
importation of
this type
this type of
of capital
capital goods
goods shall
shall be
be divided
divided by
by (60)
(60) and
and the
the quotient
quotient will
will be
be the
the amount
amount to
to be
be claimed
claimed
monthly.
monthly.

b. If
b. If the
the estimated
estimated useful
useful life
life ofof aa capital
capital good
good isis less
less than
than five
five (5)
(5) years
years —– The
The input
input tax
tax shall
shall be
be spread
spread
evenly on a monthly basis by dividing the input tax by the actual number of months comprising the
evenly on a monthly basis by dividing the input tax by the actual number of months comprising the
estimated
estimated useful
useful life
life of
of the
the capital
capital good.
good. The
The claim
claim forfor input
input tax
tax credit
credit shall
shall commence
commence in in the
the calendar
calendar
month that
month that the
the capital
capital goods
goods were were acquired
acquired

c. The amortization
c. The amortization of of the
the input
input VATVAT shall
shall only
only be
be allowed
allowed until
until December
December 31,31, 2021,
2021, after
after which
which
taxpayers with
taxpayers with unutilized
unutilized input
input VAT
VAT on
on capital
capital goods
goods purchased
purchased or
or imported
imported shall
shall be
be allowed
allowed to
to apply
apply the
the
same as
same as scheduled
scheduled until
until fully
fully utilized.
utilized.

Note: RMC
Note: RMC No.
No. 21-2022
21-2022 illustrates
illustrates how
how it
it can
can be
be declared
declared per
per return
return

Claims
Claims for
for Input
Input Tax
Tax on
on Depreciable
Depreciable Goods
Goods

A manufacturer
A manufacturer purchased
purchased capital
capital goods
goods on
on different
different occasions
occasions as
as follows:
follows:

Month of Amount 12% Input Tax Useful No. of Last Month of

Purchase (Php) Life W Coya dali Amortization
Amortiza-
tion
Jan 2018 |8,500,000.00 | 1,020,000.00 6 years 60 December 2022
Feb 2019 | 8,500,000.00 | 1,020.000.00 4 years 48 January 2022
Dec 2021 | 10,000,000.00 | 1,200.000.00 5 years 60 November 2026
Jan 2022 | 10,000,000.00 | 1,200.000.00 5 years - “Outright claim
on Jan. 2022

Claims
Claims for
for Input Tax on
Input Tax on Depreciable
Depreciable Goods
Goods

1. For
1. For purchase
purchase made
made onon January 2018, the
January 2018, the amortization
amortization shall shall be
be for
for the
the shorter
shorter period
period ofof 55 years
years
only or up to December 2022 although the useful life is 6 years.
only or up to December 2022 although the useful life is 6 years.
2. For
For purchase
purchase made
made onon February
February 2018,
2018, the the amortization
amortization shall shall be
be for
for period
period of of 4
4 years
years only
only oror up
up
to January
to 2022 since
January 2022 since the
the useful
useful life
life of
of the
the asset
asset is
is shorter
shorter thanthan 55 years.
years.
For purchase
3. For purchase made
made onon December
December 2021,2021, thethe amortization
amortization shall shall be
be forfor the
the period
period ofof 5
5 years
years oror up
up
to November
to November 2026.
2026.
For purchase
4. For purchase made
made on on January 2022, no
January 2022, no amortization
amortization shall shall be
be made
made and and the
the input
input VAT
VAT shall
shall be
be
claimed on
claimed on the
the month
month of of purchase
purchase or or January 2022.
January 2022.

Apportionment
Apportionment of
of Input Tax on
Input Tax on Mixed
Mixed Transactions
Transactions

1. All
1. All the
the input
input taxes
taxes that
that can
can be
be directly
directly attributed
attributed to
to transactions
transactions subject
subject to to VAT
VAT may
may bebe
recognized for input tax credit; Provided, that input taxes that can be directly attributable to VAT
recognized for input tax credit; Provided, that input taxes that can be directly attributable to VAT
taxable
taxable sales
sales ofof goods
goods andand services
services to
to the
the Government
Government or or any
any of
of its
its political
political subdivisions,
 instrumentalities
instrumentalities or or agencies,
agencies, including
including Government-Owned
Government-Owned or or Controlled
Controlled Corporations
Corporations (GOCCs)
(GOCCs)
shall not
shall not be
be credited
credited against
against output
output taxes
taxes arising
arising from
from sales
sales to
to non
non Government
Government entities;
entities; and
and
2. If
2. If any
any input
input tax
tax “cannot
“cannot directly
directly attributed”
attributed” to to either
either aa VAT
VAT taxable
taxable oror VAT-exempt
VAT-exempt transaction,
transaction,
the
the input
input tax
tax shall
shall bebe pro-rated
pro-rated to to the
the VAT
VAT taxable
taxable and
and VAT-exempt
VAT-exempt transactions
transactions andand only
only the
the
ratable portion
ratable portion pertaining
pertaining to to transactions
transactions subject
subject to
to VAT
VAT may
may bebe recognized
recognized for
for input
input tax
tax credit
credit

Determination
Determination of
of Creditable
Creditable Input
Input Tax
Tax

•e All
All input
input taxes
taxes creditable
creditable toto a
a VAT-registered
VAT-registered person
person during
during a
a taxable
taxable month
month or
or quarter,
quarter, plus
plus any
any
input tax carried over from the preceding month or quarter, shall be reduced by the amount of
input tax carried over from the preceding month or quarter, shall be reduced by the amount of
the claim
the claim for
for refund
refund or
or tax
tax credit
credit for
for VAT
VAT and
and other
other adjustments,
adjustments, such
such as
as purchase
purchase returns
returns or
or
allowances
allowances and and input
input tax
tax attributable
attributable to to exempt
exempt sales
sales

Input Tax Formula

On domestic purchase of goods and properties PXxXx

On domestic purchase of services XXX
On importation of goods XXX
On lease of goods and properties XXX
Transitional/presumptive input tax XXX
Carry-over from previous quarter _XXX
Total Input Tax XXX
Less:
Claim for refund PXxxx
Claim for tax credit XXX
Adjustment for purchase return XXX
Input tax attributable to exempt sales _XXX
Net creditable input tax for the quarter Pxxx

Allocation
Allocation of
of Input Taxes between
Input Taxes between VAT
VAT Taxable
Taxable and
and VAT
VAT Non-Taxable
Non-Taxable Operations
Operations

IfIf aa VAT-registered
VAT-registered person
person is
is also
also engaged
engaged inin other
other activities
activities not
not subject
subject to
to VAT,
VAT, the
the input
input taxes
taxes paid
paid for
for
purchases of
purchases of goods
goods and
and services
services which
which cannot
cannot bebe directly
directly attributed
attributed to
to either
either operation
operation shall
shall be
be
allocated between
allocated between the
the VAT
VAT taxable
taxable and
and VAT
VAT non-taxable
non-taxable operations
operations using
using the
the total
total sales.
 Allocation of input Taxes between VAT.
Taxable and VAT Non-Taxable Operations

Formula

Total Sales/Receipts Input to be

VAT Taxable Operations X Un-attributed allocated to
Input taxes = VAT taxable
Total Sales/Receipts operations
VAT Taxable & Non-taxable
Operations

Total Sales/Receipts Un-attributed Input to be

VAT Non-taxable Operations X_ Input taxes allocated to
VAT non-taxable
Total Sales/Receipts operations
VAT Taxable & Non-taxable
Operations

Illustration:
ERA Corporation has the following sales during the month
Sale to private entities subject to 12% P 100,000.00
Sale to private entities subject to 0% P 100,000.00
Sale of exempt goods P 100,000.00
Sale of government, subjected to 5% final VAT P 100,000.00
withholding
Total sales for the month P 400,000.00
 The following input taxes were passed on by its VAT suppliers:
Input tax on taxable goods (12%) P 5,000.00
Input tax on zero-rated sales P 3,000.00
Input tax on sale of exempt goods P 2,000.00
Input tax on sale to government P 4,000.00
Input tax on depreciable capital good not P 20,000.00
attributable to any specific activity (monthly
amortization for 60 months)

The creditable input tax for the month shall be computed as follows:
Input tax on sale subject to 12% _ - P5,000.00
Input tax on zero-rated sale - P3,000.00
Ratable portion of the input tax not
directly attributable to any activity

Taxable sales (0% and 12%) X Amount of input tax not

Total Sales directly attributable

P200.000.00 X P20,000.00 = P10,000.00

P400,000.00
Total creditable input tax for the month P18.000.00
B. The input tax attributable to sales to government for the month shall
be computed as follows:
Input tax on sale to government - P4,000.00
Ratable portion of Input tax not directly
attributable to any activity:

Taxable sales to gov't. X Amount of input tax not

Total Sales directly attributable

P100,000.00 X P20,000.00 = P5,000.00

P400,000.00

Total input tax attributable to sales = P9,000.00

to government

C. The input tax attributable to VAT-exempt sales for the month

shall be computed as follows:
Input tax on VAT-exempt sales - P2,000.00
Ratable portion of Input tax not directly
attributable to any activity:

VAT-exemptsales X Amount of input tax not

Total Sales directly attributable

P100,000.00_ X P20,000.00 = P5,000.00

P400,000.00

Total input tax attributable to

VAT-exempt sales P7,000.00
Allocation
Allocation of
of Input Taxes between
Input Taxes between VAT
VAT Taxable
Taxable and
and VAT
VAT Non-Taxable
Non-Taxable Operations
Operations

The table below

The table below shows
shows a
a summary
summary of
of the
the foregoing
foregoing transactions of ERA
transactions of ERA Corporation:
Corporation:

Output Input Tyra 7 Total Creditable NetVAT Credits VAT Due

7s VAT Not directly Input Input VAT Payable
directly Attributable 7
p Natasa ACoR-Ti
1s) (=) activity
Sale subjectto | 12,000 5,000 5,000 | 10,000 10,000 2,000 0 2,000 0 0
12% VAT
Sale subject to 0 3,000 5,000 8,000 8,000 0 0 0} 8,000 0
0% VAT
Sale of Exempt 0 2,000 5,000 | 7,000* 0 0 0 0 0} 7,000*
Goods
Sale of Govt. 12,000 4,000 5,000 9,000 9,000 3,000 | 5,000** (2,000) 0 0
Subject
to 5% *
CW VAT WH

*These amounts are not available for input tax credit but may be recognized as cost or expense
“Effective January 1, 2021, standard input VAT of 7% on sales to Government as provided in SEC 4.114-2(a) is no longer applicable due to the
change from Final VAT WH to Creditable VAT WH
“Withheld by Government entity as Creditable VAT WH

VAT COMPLIANCE
VAT COMPLIANCE REQUIREMENTS
REQUIREMENTS

Persons Required
Persons Required to
to Register
Register (Mandatory)
(Mandatory)

General Rule
General Rule

Any person
Any person who
who is:
is:

•e Commencing
Commencing business
business
•e = Liable
Liable to
to VAT
VAT
•e VAT-exempt
VAT-exempt person
person (optional
(optional registration)
registration)

In
In general
general —– any any person
person who,
who, inin the
the course
course of of trade
trade oror business,
business, sells,
sells, barters,
barters, exchanges
exchanges goods
goods oror
properties or
properties or engages
engages inin the
the sale
sale of
of services
services subject
subject to
to VAT
VAT imposed
imposed inin Secs.
Secs. 106
106 and
and 108
108 of
of the
the Tax
Tax Code
Code
shall register
shall register with
with the
the appropriate
appropriate RDO RDO using
using the
the appropriate
appropriate BIRBIR forms
forms andand pay
pay an
an annual
annual registration
registration
fee in
fee in the
the amount
amount of of P500.00
P500.00 using
using BIR
BIR Form
Form 0605
0605 for
for every
every separate
separate oror distinct
distinct establishment
establishment or or place
place
of business (save a warehouse without sale transactions) before the start of
of business (save a warehouse without sale transactions) before the start of such business and every such business and every
year thereafter
year thereafter on on or
or before
before the
the 31st
31st of
of January.
January.

Mandatory
Mandatory -- any
any person
person who,
who, inin the
the course
course ofof trade
trade oror business,
business, sells,
sells, barters,
barters, exchanges
exchanges goods
goods or
or
properties
properties or
or engages
engages in
in the
the sale
sale of
of services
services shall
shall be
be liable
liable to
to register
register if:
if:

•e His gross
His gross sale
sale or
or receipts
receipts of
of the
the past
past 12
12 months,
months, other
other than
than those
those that
that are
are exempt
exempt under
under Sec.
Sec.
109 (1)(A)
109 (1)(A) to
to (U)
(U) of
of the
the NIRC,
NIRC, have
have exceeded
exceeded P3,000,000;
P3,000,000; or or
•e There are reasonable
There are reasonable grounds
grounds toto believe
believe that
that his
his gross
gross sales
sales or
or receipts
receipts for
for the
the next
next 12
12 months,
months,
other than
other than those
those that
that are
are exempt
exempt under
under Sec.
Sec. 109
109 (1)(A)
(1)(A) to
to (U)
(U) of
of the
the Tax
Tax Code,
Code, will
will exceed
exceed
P3,000,000.
Any
Any person,
person, whose
whose gross
gross sales
sales or
or receipts
receipts inin any
any twelve
twelve (12)-month
(12)-month period
period shall
shall exceed
exceed thethe amount
amount of of
Three
Three Million
Million Pesos
Pesos (P3,000,000.00)
(P3,000,000.00) shall
shall register
register in
in accordance
accordance with
with Section
Section 236236 (A),
(A), and
and shall
shall pay
pay the
the
annual
annual registration
registration fee
fee prescribed
prescribed within
within ten
ten (10)
(10) days
days after
after the
the end
end of
of the
the last
last month
month of of that
that period.
period.

He shall
He shall be
be liable
liable to
to VAT
VAT commencing
commencing from from the
the first
first day
day of
of the
the month
month following
following his
his registration.
registration. However,
However,
franchise grantees
franchise grantees ofof radio
radio and
and television
television broadcasting,
broadcasting, whose
whose gross
gross annual
annual receipts
receipts for
for the
the preceding
preceding
calendar year
calendar year exceeded
exceeded TenTen Million
Million Pesos
Pesos (P10,000,000.00)
(P10,000,000.00) shall
shall register
register within
within thirty
thirty (30)
(30) days
days from
from the
the
end
end ofof the
the calendar
calendar year.
year. [Sec.
[Sec. 66 (b)
(b) (3),
(3), RR
RR No.
No. 6-97]
6-97]

Optional
Optional VAT
VAT Registration
Registration

A
A person
person may
may opt
opt to
to register
register as
as VAT
VAT if
if he/she/it
he/she/it will
will fall
fall in
in any
any of
of the
the following:
following:

1. Any
Any person
person who
who is is VAT-exempt
VAT-exempt under under Sec.
Sec. 4.109-1
4.109-1 (B) (B) (1)
(1) (V)
(V) may
may elect
elect to
to be
be VAT
VAT registered;
registered;
2. Any
Any person
person whowho is is VAT-registered
VAT-registered but but enters
enters into
into transactions
transactions whichwhich areare exempt
exempt fromfrom VAT
VAT
(mixed transactions)
(mixed transactions) may may optopt that
that the
the VAT
VAT apply
apply to to his
his transactions
transactions would
would be be exempt
exempt under
under
Section
Section 109
109 (1);
(1);
3. Any person who elects
3. Any person who elects to to register
register shall
shall not
not bebe entitled
entitled to to cancel
cancel registration
registration for
for the
the next
next three
three
(3)
(3) years;
years; and
and
4.
4. Franchise
Franchise grantees
grantees of of radio
radio and/or
and/or television
television broadcasting
broadcasting with with annual
annual gross
gross receipts
receipts not
not
exceeding
exceeding TenTen Million
Million Pesos
Pesos (P10,000,000.00)
(P10,000,000.00) (This (This option
option onceonce exercised
exercised isis irrevocable)
irrevocable)

Procedures
Procedures for
for Registration
Registration

In general,
In general, any
any person
person who
who inin the
the course
course of
of trade
trade or
or business,
business, sells,
sells, barters,
barters, exchanges
exchanges goods
goods oror
properties,
properties, or
or engages
engages in
in the
the sale
sale of
of services
services subject
subject to
to VAT
VAT imposed
imposed on on Secs.
Secs. 106
106 and
and 108
108 of
of the
the Code,
Code,
as amended, shall register the VAT tax type with the RDO having jurisdiction over the head office.
as amended, shall register the VAT tax type with the RDO having jurisdiction over the head office.

Annual
Annual Registration
Registration

Five
Five Hundred
Hundred Pesos
Pesos (P500.00)
(P500.00) payable
payable on
on or
or before
before the
the 31st
31st day
day of January
of January

Note:
Note: Pursuant
Pursuant to
to Revenue
Revenue Memorandum
Memorandum Circular
Circular (RMC)
(RMC) No.
No. 5-2023, Transitory Provisions
5-2023, Transitory Provisions for
for the
the
Implementation
Implementation of of the
the Quarterly
Quarterly Filing
Filing of
of VAT
VAT Returns
Returns Starting
Starting January
January 1,
1, 2023
2023 pursuant
pursuant toto Section
Section
114(A) of
114(A) of the
the NIRC
NIRC of
of 1997,
1997, as
as amended
amended by by RA
RA 10963,
10963, or
or the
the TRAIN
TRAIN Law.
Law.

In line
In line with
with Section
Section 37
37 of
of RARA 10963,
10963, amending
amending certain
certain provisions
provisions of of Section
Section 114114 (A)
(A) of
of the
the Tax
Tax Code
Code of
of
1997, as
1997, as amended,
amended, andand as
as implemented
implemented underunder Section
Section 4-114-1
4-114-1 (A)(A) of
of RR
RR No.
No. 13-2018,
13-2018, which
which provides
provides
that “beginning
that “beginning January
January 1,1, 2023,
2023, the
the filing
filing and
and payment
payment required
required under
under this
this Subsection
Subsection shall
shall be
be done
done
within twenty-five
within twenty-five (25)
(25) days
days following
following the
the close
close of
of each
each taxable
taxable quarter.
quarter.

No longer
No longer required
required toto file
file Monthly
Monthly VAT
VAT return
return (BIR
(BIR Form
Form 2550M)
2550M) -for
-for transactions
transactions starting
starting January
January 1,
1,
2023.
2023. BUT
BUT there
there is
is an
an RMC
RMC issued
issued which
which would
would allow
allow optional
optional monthly
monthly filing
filing and
and payment
payment ofof returns.
In
In order
order to
to avoid
avoid confusion
confusion during
during the
the initial
initial implementation
implementation thereof,
thereof, particularly
particularly for
for taxpayers
taxpayers that
that are
are
under fiscal
under fiscal period
period of
of accounting,
accounting, the
the following
following transitory
transitory provision
provision are
are hereby
hereby provided:
provided:

December 2022 | January 2023 | February 2023 | December 2022 | January 2023 | February 2023
. Required to

Januaryuary 31,2023
1, 2550M no later
than20.2023
January Notapplicable
PP |NotRequiredto|
File 2550M Not anoicable
PP | “tater than | Not applicable
PP
February
23,2023"
Required to file Required to file
February 2550M not later Not Required to . . . 2550Q not later
28,2023 than January File 2550M | Notapplicable | Not applicable | Not applicable | “tan March
20,2023 27,2023
Required to file
. Not Required to | Not Required to | 2550Q not later . .
March 31,2023 | Not applicable File 2550M File 2550M than January | Not applicable | Not applicable
25,2023

Note*- that the 25'" day of deadline falls on a Saturday.

Effective Date
Effective Date of
of Registration
Registration

•e IfIf the
the effective
effective date
date of
of registration
registration falls
falls on
on the
the first
first or
or second
second month
month ofof taxable
taxable quarter,
quarter, the
the initial
initial
monthly VAT
monthly VAT declaration
declaration shall
shall bebe filed
filed within
within twenty
twenty (20)
(20) days
days after
after the
the end
end of
of the
the month,
month, and and
the initial
the initial quarterly
quarterly return
return shall
shall be
be filed
filed on
on oror before
before the
the 25th
25th day
day after
after the
the end
end of
of the
the taxable
taxable
quarter
quarter

Where
Where to
to File
File and
and Pay
Pay

•e The monthly
The monthly VAT VAT declaration
declaration andand quarterly
quarterly return
return (BIR
(BIR Form
Form No.
No. 2550M
2550M and and 2550Q)
2550Q) shall
shall be
be
filed with, and paid to a duly BlRaccredited bank of the Revenue District/BIR Office where the
filed with, and paid to a duly BIRaccredited bank of the Revenue District/BIR Office where the
taxpayer is
taxpayer is required
required to
to be
be registered.
registered.
•e Where
Where no no payment
payment is is involved,
involved, shall
shall be
be filed
filed with
with the
the Revenue
Revenue District
District Officer,
Officer, Collection
Collection Agent,
Agent,
duly
duly authorized
authorized Municipal/City
Municipal/City treasurer
treasurer ofof Municipality/City
Municipality/City where
where thethe taxpayer
taxpayer isis registered
registered or
or
required to
required to be
be registered.
registered.

Cancellation
Cancellation of
of Registration
Registration

•e All applicants
All applicants for
for cancellation
cancellation or or registration
registration duedue to
to closure/cessation
closure/cessation or or termination
termination ofof business
business
shall
shall be
be subjected
subjected to to immediate
immediate investigation
investigation by by the
the Revenue
Revenue District
District Officer
Officer concerned
concerned to to
determine the
determine the taxpayer’s
taxpayer’s taxtax liabilities.
liabilities. [Sec.
[Sec. 9.236-6
9.236-6 of
of RRRR 16-2005,
16-2005, asas amended]
amended]
•e Requirements (RMC
Requirements (RMC 57-2020)
57-2020)
o
o BIR Form
BIR Form 19051905
o
o List of
List of ending
ending inventory
inventory of of goods,
goods, supplies,
supplies, including
including capital
capital goods
goods
o
o Inventory list of unused invoices and receipts (if applicable)
Inventory list of unused invoices and receipts (if applicable)
o
o Unused
Unused invoices
invoices and
and receipts
receipts andand all
all other
other unutilized
unutilized accounting
accounting forms
forms (for
(for destruction)
destruction)
•e Additional documents:
Additional
 ooO Special
Special Power
Power of of Attorney
Attorney // BoardBoard Resolution
Resolution or or Secretary’s
Secretary’s
ooO Certificate
Certificate & & Government
Government Issued Issued ID ID
• The RDO,
The RDO, upon
upon receipt
receipt of of the
the notice,
notice, registration
registration update,
update, inventory
inventory list
list of
of goods,
goods, inventory
inventory list
list of
of
unused
unused sales
sales invoice/official
invoice/official receipts/other
receipts/other accounting
accounting forms,
forms, and and the
the unused
unused sales
sales
invoices/official receipts
invoices/official receipts and and allall other
other unutilized
unutilized accounting
accounting forms
forms shall:
shall:
ooO “End
“End date”
date” the the tax
tax types
types of of the
the taxpayer;
taxpayer;
ooO Destruct,
Destruct, in the presence of the taxpayer
in the presence of the taxpayer or or his
his authorized
authorized representative,
representative, the the unutilized
unutilized
SI/ORs and other accounting forms by cutting them crosswise and lengthwise at
SI/ORs and other accounting forms by cutting them crosswise and lengthwise at the
the
middle
middle thereof
thereof so so that
that thethe same
same shall
shall bebe divided
divided into
into four
four ensuring
ensuring thatthat the
the same
same will
will nono
longer be
longer be used
used as as originally
originally intended;
intended; and and
o Return
Return to to taxpayer
taxpayer the the destructed
destructed SI/ORs SI/ORs and
and other
other accounting
accounting forms
forms for
for burning
burning and/or
and/or
proper
proper disposition
disposition
• Cancellation of
Cancellation of business
business registration
registration may may be be granted
granted onon the
the following
following instances:
instances:
ooO Closure/cessation
Closure/cessation of of business
business operations;
operations;
o
O Dissolution
Dissolution of of corporation/partnership;
corporation/partnership;
ooO Merger/consolidation;
Merger/consolidation;
ooO Death
Death of of an
an individual.
individual.
• Cancellation of
Cancellation of business
business registration
registration may may be be granted
granted onon the
the following
following instances:
instances:
ooO Closure/cessation
Closure/cessation of of business
business operations;
operations;
ooO Dissolution
Dissolution of of corporation/partnership;
corporation/partnership;
ooO Merger/consolidation;
Merger/consolidation;
ooO Death of
Death of anan individual.
individual.

INVOICING, RETURNS
INVOICING, RETURNS AND
AND PAYMENT
PAYMENT

Invoicing Requirements
Invoicing Requirements (RMC
(RMC 62-2005):
62-2005):

Invoicing
Invoicing Requirements
Requirements (information
(information that
that must
must be
be contained
contained in
in the
the VAT
VAT receipts/invoice):
receipts/invoice):

1. Name,
1. Name, TIN,TIN, Business
Business Style
Style and
and address
address ofof seller
seller
2. Date
2. Date ofof transaction
transaction
3. Name,
3. Name, TIN TIN (if
(if VAT
VAT registered
registered and
and amount
amount exceed
exceed P1,000.00),
P1,000.00), business
business style,
style, if
if any,
any, and
and address
address
of
of the
the VAT-registered
VAT-registered purchaser,
purchaser, customer
customer or or client
client
4. Quantity
Quantity
aus

5. Unit
Unit Cost
Cost
Description of
6. Description of item/nature
item/nature ofof service
service rendered
rendered
7. Total
Total Cost
Cost
wo on

8. VAT
VAT amount
amount
9. Authority
Authority to to Print
Print Receipt
Receipt Number
Number at at the
the lower
lower left
left corner
corner of
of the
the invoice
invoice or
or receipt
receipt

IfIf mixed
mixed transaction:
transaction:

• VAT exempt
VAT exempt sales
sales
• VAT
VAT zero-rated
zero-rated sales
Note:
Note: Taxpayer
Taxpayer have
have the
the option
option to
to maintain
maintain separate
separate set
set of
of OR/invoice
OR/invoice for
for transactions
transactions subject
subject to
to 12%
12% or
or
0% and
0% and exempt
exempt from
from VAT
VAT. .

Consequences
Consequences of
of Issuing
Issuing Erroneous
Erroneous VAT
VAT Invoice
Invoice or
or VAT
VAT Official
Official Receipt
Receipt

A.
A. Issuance
Issuance of
of aa VAT
VAT Invoice
Invoice or
or VAT
VAT Receipt
Receipt byby a
a non-VAT
non-VAT person
person —– If
If a
a person
person who
who is
is not
not VAT-registered
VAT-registered
issues an
issues an invoice
invoice or
or receipt
receipt showing
showing his
his TIN,
TIN, followed
followed by
by the
the word
word “VAT”,
“VAT”, the
the erroneous
erroneous issuance
issuance shall
shall
result to the following:
result to the following:

1. The
1. The non-VAT
non-VAT person
person shall
shall be
be liable
liable to:
to:

a.The
a.The percentage
percentage taxes
taxes applicable
applicable to
to his
his transactions;
transactions;

b.VAT due
b.VAT due on
on the
the transactions
transactions under
under Sec.
Sec. 106
106 or
or 108
108 of
of the
the NIRC,
NIRC, without
without the
the benefit
benefit of
of any
any input
input tax
tax
credit; and
credit; and

c.A
c.A fifty
fifty percent
percent (50%)
(50%) surcharge
surcharge under
under Sec.
Sec. 248
248 (B)
(B) of
of the
the Tax
Tax Code.
Code.

2. VAT
2. VAT shall
shall be
be recognized
recognized as
as an
an input
input tax
tax credit
credit to
to the
the purchaser
purchaser under
under Sec.
Sec. 110
110 of
of the
the NIRC,
NIRC, provided
provided
the
the received
received information
information are
are shown
shown onon the
the invoice
invoice or
or receipt
receipt

B. Issuance
B. Issuance of of aa VAT
VAT Invoice
Invoice oror VAT
VAT Receipt
Receipt on on anan Exempt
Exempt Transaction
Transaction by by aa VAT-Registered
VAT-Registered Person
Person – — IfIf aa
VAT-registered person
VAT-registered person issues
issues aa VAT
VAT invoice
invoice or or VAT
VAT official
official receipt
receipt for
for aa VATexempt
VATexempt transaction,
transaction, but
but fails
fails toto
display prominently
display prominently on on the
the invoice
invoice oror receipt
receipt thethe words
words “VAT-exempt
“VAT-exempt sale”,
sale”, the
the transaction
transaction shall
shall become
become
subject to
subject to VAT
VAT and
and the
the issuer
issuer shall
shall be
be liable
liable to
to pay
pay VAT
VAT thereon.
thereon. The purchaser shall
The purchaser shall be
be entitled
entitled to
to claim
claim
an
an input
input tax
tax credit
credit onon his
his purchase
purchase provided
provided that that the
the required
required information
information are are shown
shown on on the
the invoice
invoice or or
receipts.
receipts.

Invoice
Invoice or
or Instrument
Instrument of
of Sale
Sale or
or Transfer
Transfer For
For “Transaction
“Transaction Deemed
Deemed Sale”
Sale”

•e In
In thethe case
case ofof transfer,
transfer, useuse oror consumption
consumption not not in in the
the course
course ofof business,
business, a a memorandum
memorandum entry entry
in the subsidiary sales journal to record withdrawal of goods for
in the subsidiary sales journal to record withdrawal of goods for personal use is required. personal use is required.
•e In the
In the case
case of
of distribution
distribution or or transfer
transfer to to shareholders
shareholders as as share
share or or to
to creditors
creditors in in payment
payment of of debt
debt
and
and Consignment of goods, an invoice shall be prepared at the time of the occurrence of the
Consignment of goods, an invoice shall be prepared at the time of the occurrence of the
transaction
transaction which which should
should include
include all all the
the required
required information.
information.
•e In the
In the case
case of
of retirement
retirement from from or or cessation
cessation of of business,
business, an an inventory
inventory list list shall
shall bebe prepared
prepared and and
submitted
submitted to to the
the Revenue
Revenue District
District Officer
Officer who
who has jurisdiction over
has jurisdiction over thethe taxpayer’s
taxpayer’s principal
principal place
place
of business
of business notnot later
later than
than thirty
thirty (30)
(30) days
days after
after the
the retirement
retirement or or cessation
cessation fromfrom business.
business.
•e IfIf the
the business
business is is to
to be
be liquidated
liquidated and and the
the goods
goods in in the
the inventory
inventory are are sold
sold oror disposed
disposed to to VAT
VAT
registered
registered buyers,
buyers, an an invoice
invoice or or instrument
instrument of of sale
sale oror transfer
transfer shall
shall bebe prepared,
prepared, citing
citing the
the
invoice
invoice number
number wherein
wherein the the tax
tax was
was imposed
imposed on on thethe deemed
deemed sale.
 For Manual EFPS
2550M_ /|Large and_| Not later Group A: 25 days |At the time of
Non-Large | than the 20" | following end of the | filing or before
taxpayer | day month 25" of the
following the |Group B: 24 days | following month
close of the | following end of the
month month
Group C: 23 days
following end of the
month

Manual EFPS
2550M Group D: 22 days following | At the time of
end of the month filing or before
Group E: 21 days following | 25* of the
end of the month following
month
2550Q__| Not later than the 25** day following the close of each taxable
quarter
Beginning January 1, 2023, the filing and payment required under the Tax Code shall be
done within twenty-five (25) days following the close of each taxable quarter.
Suspension of
Suspension of Business
Business Operation
Operation (Sec.
(Sec. 115
115 of
of the
the NIRC)
NIRC)
1.
1. Failure
Failure to
to issue
issue receipts
receipts oror invoices;
invoices;
2.
2. Failure
Failure to
to file
file VAT
VAT return;
return;
3. Understatement
3. Understatement of of taxable
taxable sales
sales oror receipts
receipts byby thirty
thirty percent
percent (30%)
(30%) or
or more
more of
of his
his correct
correct
taxable sales
taxable sales oror receipt
receipt for
for the
the taxable
taxable quarter;
quarter; or
or
4.
4. Failure of any person to register
Failure of any person to register

VAT
VAT Exempt
Exempt Transactions:
Transactions:

SEC.
SEC. 109.
109. Exempt Transactions. —–
Exempt Transactions.

(1) Subject
(1) Subject to
to the
the provisions
provisions of
of Subsection
Subsection (2)
(2) hereof,
hereof, the
the following
following transactions
transactions shall
shall be
be exempt
exempt from
from
the value-added tax.
the value-added tax.

(A)
(A) Sale
Sale or
or importation
importation ofof agricultural
agricultural and
and marine
marine food
food products
products in
in their
their original
original state,
state, livestock
livestock and
and
poultry of
poultry of or
or king
king generally
generally used
used as,
as, or
or yielding
yielding or
or producing
producing foods
foods for
for human
human consumption;
consumption; and
and
breeding stock and genetic materials
breeding stock and genetic materials therefor.
Products
Products classified
classified under
under this
this paragraph
paragraph shall
shall be
be considered
considered in in their
their original
original state
state even
even if if they
they have
have
undergone the
undergone the simple
simple processes
processes ofof preparation
preparation or or preservation
preservation forfor the
the market,
market, suchsuch asas freezing,
freezing, drying,
drying,
salting,
salting, broiling,
broiling, roasting,
roasting, smoking
smoking oror stripping.
stripping. Polished
Polished and/or
and/or husked
husked rice,
rice, corn
corn grits,
grits, raw
raw cane
cane sugar
sugar
and
and molasses,
molasses, ordinary
ordinary salt
salt and
and copra
copra shall
shall be
be considered
considered inin their
their original
original state;
state; [94]
[94]

(B)
(B) Sale
Sale or
or importation
importation of of fertilizers;
fertilizers; seeds,
seeds, seedlings
seedlings and
and fingerlings;
fingerlings; fish,
fish, prawn,
prawn, livestock
livestock and
and poultry
poultry
feeds, including
feeds, including ingredients,
ingredients, whether
whether locally
locally produced
produced or or imported,
imported, used
used inin the
the manufacture
manufacture ofof finished
finished
feeds (except
feeds (except specialty
specialty feeds
feeds for
for race
race horses,
horses, fighting
fighting cocks,
cocks, aquarium
aquarium fish,fish, zoo
zoo animals
animals and
and other
other
animals
animals generally
generally considered
considered as as pets);
pets);

(C) Importation
(C) Importation ofof personal
personal and
and household
household effects
effects belonging
belonging toto the
the residents
residents ofof the
the Philippines
Philippines returning
returning
from
from abroad
abroad and
and nonresident
nonresident citizens
citizens coming
coming to to resettle
resettle in
in the
the Philippines:
Philippines: Provided,
Provided, That
That such
such goods
goods
are exempt
are exempt from
from customs
customs duties
duties under
under the
the Tariff
Tariff and
and Customs
Customs Code
Code ofof the
the Philippines;
Philippines;

(D) Importation
(D) Importation of of professional
professional instruments
instruments and and implements,
implements, tools
tools of of trade,
trade, occupation
occupation or or employment,
employment,
[95] wearing
[95] wearing apparel,
apparel, domestic
domestic animals,
animals, and and personal
personal and and household
household effectseffects belonging
belonging to to persons
persons
coming
coming to to settle
settle in
in the
the Philippines
Philippines or or Filipinos
Filipinos or or their
their families
families and
and descendants
descendants who who areare now
now residents
residents
or citizens
or citizens of of other
other countries,
countries, such
such parties
parties hereinafter
hereinafter referred
referred to to as
as overseas
overseas Filipinos,
Filipinos, inin quantities
quantities and and
of
of the
the class
class suitable
suitable toto the
the profession,
profession, rank
rank oror position
position ofof the
the persons
persons importing
importing saidsaid items,
items, [95]
[95] for
for their
their
own use and not for barter or sale, accompanying such persons, or arriving
own use and not for barter or sale, accompanying such persons, or arriving within a reasonable time: within a reasonable time:
[96] Provided,
[96] Provided, ThatThat the
the Bureau
Bureau of of Customs
Customs may, may, upon
upon the
the production
production of of satisfactory
satisfactory evidence
evidence thatthat such
such
persons
persons are are actually
actually coming
coming to to settle
settle inin the
the Philippines
Philippines andand the
the goods
goods areare brought
brought fromfrom their
their former
former
place of
place of abode,
abode, exempt
exempt suchsuch goods
goods from
from payment
payment of of duties
duties and
and taxes:[97]
taxes:[97] Provided,
Provided, further,
further, That
That thethe
vehicles,
vehicles, vessels,
vessels, aircrafts,
aircrafts, machineries
machineries and and other
other similar
similar goods
goods forfor use
use inin manufacture,[97]
manufacture,[97] shall shall not
not fall
fall
within
within this
this classification
classification andand shall
shall therefore
therefore be be subject
subject to
to duties,
duties, taxes
taxes and
and other
other charges;
charges;

(E) Services
(E) Services subject
subject to
to percentage
percentage tax
tax under
under Title
Title V;
V;

(F) Services
(F) Services by
by agricultural
agricultural contract
contract growers
growers and
and milling
milling for
for others
others of
of palay
palay into
into rice,
rice, corn
corn into
into grits
grits and
and
sugar cane into raw sugar;
sugar cane into raw sugar;

(G) Medical,
(G) Medical, dental,
dental, hospital
hospital and
and veterinary
veterinary services
services except
except those
those rendered
rendered by
by professionals;
professionals;

(H)
(H) Educational
Educational services
services rendered
rendered by
by private
private educational
educational institutions,
institutions, duly
duly accredited
accredited byby the
the Department
Department
of
of Education(DepED),
Education(DepED), the the Commission
Commission on on Higher
Higher Education
Education (CHED),
(CHED), the
the Technical
Technical Education
Education and and Skills
Skills
Development
Development Authority
Authority (TESDA)
(TESDA) and
and those
those rendered
rendered by
by government
government educational
educational institutions;
institutions; [55]
[55]

(1) Services
(I) Services rendered
rendered by
by individuals
individuals pursuant
pursuant to
to an
an employer-employee
employer-employee relationship;
relationship;

(J) Services
(J) Services rendered
rendered by
by regional
regional or
or area
area headquarters
headquarters established
established in
in the
the Philippines
Philippines by
by multinational
multinational
corporations
corporations which act as supervisory, communications and coordinating centers for their affiliates,
which act as supervisory, communications and coordinating centers for their affiliates,
subsidiaries
subsidiaries or
or branches
branches in in the
the Asia-Pacific
Asia-Pacific Region
Region and
and dodo not
not earn
earn oror derive
derive income
income from
from the the
Philippines;
(K)
(K) Transactions
Transactions which
which are
are exempt
exempt under
under international
international agreements
agreements to
to which
which the
the Philippines
Philippines is
is a
a signatory
signatory
or
or under
under special
special laws,
laws, except
except those
those under
under Presidential
Presidential Decree
Decree No.
No. 529;
529; [55]
[55]

(L)
(L) Sales
Sales by
by agricultural
agricultural cooperatives
cooperatives duly
duly registered
registered with
with the
the Cooperative
Cooperative Development
Development Authority
Authority toto
their members as well as sale of their produce, whether in its original state or processed form, to non- -
their members as well as sale of their produce, whether in its original state or processed form, to non
members;
members; theirtheir importation
importation of of direct
direct farm
farm inputs,
inputs, machineries
machineries andand equipment,
equipment, including
including spare
spare parts
parts
thereof, to
thereof, to be
be used
used directly
directly and
and exclusively
exclusively in
in the
the production
production and/or
and/or processing
processing of
of their
their produce;
produce;

(M)
(M) Gross
Gross receipts
receipts from
from lending
lending activities
activities by
by credit
credit or
or multi-purpose
multi-purpose cooperatives
cooperatives duly
duly registered
registered with
with
the Cooperative
the Cooperative Development
Development Authority;
Authority;

(N)
(N) Sales
Sales byby non-agricultural,
non-agricultural, non-
non- electric
electric and
and non-credit
non-credit cooperatives
cooperatives duly
duly registered
registered with
with the
the
Cooperative Development Authority: Provided, That the share capital contribution of each member does
Cooperative Development Authority: Provided, That the share capital contribution of each member does
not
not exceed
exceed Fifteen
Fifteen thousand
thousand pesos
pesos (P15,000)
(P15,000) and
and regardless
regardless of
of the
the aggregate
aggregate capital
capital and
and net
net surplus
surplus
ratably
ratably distributed
distributed among
among the
the members;
members;

(O) Export
(O) Export sales
sales by
by persons
persons who
who are
are not
not VAT-registered;
VAT-registered;

(P) Sale
(P) Sale of
of real
real properties
properties not not primarily
primarily held
held for
for sale
sale to
to customers
customers or or held
held forfor lease
lease in in the
the ordinary
ordinary course
course
of trade
of trade oror business
business or or real
real property
property utilized
utilized for
for low-cost
low-cost and and socialized
socialized housing
housing as as defined
defined by by Republic
Republic
Act
Act No.
No. 7279,
7279, otherwise
otherwise known known as as the
the Urban
Urban Development
Development and and Housing
Housing Act Act of
of 1992,
1992, and and other
other related
related
laws,
laws, residential lot valued at One million pesos (P1,500,000) and below, house and lot, and other
residential lot valued at One million pesos (P1,500,000) and below, house and lot, and other
residential dwellings valued at Two million five hundred thousand
residential dwellings valued at Two million five hundred thousand pesos (P2,500,000) and below: pesos (P2,500,000) and below:
Provided, That
Provided, That beginning
beginning January
January 1, 1, 2021,
2021, the
the VATVAT exemption
exemption shall shall only
only apply
apply to to sale
sale of of real
real properties
properties
not primarily
not primarily held
held for
for sale
sale toto customers
customers or or held
held forfor lease
lease in in the
the ordinary
ordinary course
course of of trade
trade or or business,
business, sale
sale
of real
of real property
property utilized
utilized for
for socialized
socialized housing
housing as as defined
defined by by Republic
Republic ActAct No.
No. 7279,
7279, sale sale ofof house
house and
and lot,
lot,
and other
and other residential
residential dwellings
dwellings with with thethe selling
selling price
price of of not
not more
more than than Two Two million
million pesos
pesos
(P2,000,000):[95] Provided,
(P2,000,000):[95] Provided, further,
further, That
That every
every three
three (3)(3) years
years thereafter,
thereafter, thethe amount
amount herein herein stated
stated shall
shall
be adjusted to its present value using the Consumer Price Index, as published by the Philippine Statistics
be adjusted to its present value using the Consumer Price Index, as published by the Philippine Statistics
Authority (PSA);
Authority (PSA); [98]
[98] [99]
[99]

(Q)
(Q) Lease
Lease of
of a
a residential
residential unit
unit with
with a
a monthly
monthly rental
rental not
not exceeding
exceeding Fifteen
Fifteen thousand
thousand pesos
pesos (₱15,000);
(#15,000);
[100]
[100]

(R) Sale,
(R) Sale, importation,
importation, printing
printing oror publication
publication ofof books,
books, and
and any
any newspaper,
newspaper, magazine,
magazine, journal, review
journal, review
bulletin,
bulletin, oror any
any such
such educational
educational reading
reading material
material covered
covered by by the
the UNESCO
UNESCO Agreement
Agreement on on the
the
Importation
Importation of of Educational,
Educational, Scientific
Scientific and
and Cultural
Cultural Materials,
Materials, including
including the
the digital
digital or
or electronic
electronic format
format
thereof: Provided,
thereof: Provided, That
That the
the materials
materials enumerated
enumerated herein
herein are
are not
not devoted
devoted principally
principally to
to the
the publication
publication
of paid advertisements;
of paid advertisements;

(S)
(S) Transport
Transport of
of passengers
passengers by
by international
international carriers;[95]
carriers;[95]

(T) Sale,
(T) Sale, importation
importation or
or lease
lease of
of passenger
passenger oror cargo
cargo vessels
vessels and
and aircraft,
aircraft, including
including engine,
engine, equipment
equipment and
and
spare
Spare parts
parts thereof
thereof for
for domestic
domestic oror international
international transport
transport operations;
(U) Importation
(U) Importation of
of fuel,
fuel, goods
goods and
and supplies
supplies by
by persons
persons engaged
engaged inin international
international shipping
shipping or
or air
air transport
transport
operations:
operations: Provided, That the fuel, goods, and supplies shall be used for international shipping or
Provided, That the fuel, goods, and supplies shall be used for international shipping or air
air
transport operations; [95]
transport operations; [95]

(V) Services
(V) Services of
of bank,
bank, non-bank
non-bank financial
financial intermediaries
intermediaries performing
performing quasi-banking
quasi-banking functions,
functions, and
and other
other
non-bank financial intermediaries;
non-bank financial intermediaries;

(W) Sale
(W) Sale or
or lease
lease of
of goods
goods and
and services
services toto senior
senior citizens
citizens andand persons
persons with
with disability,
disability, as
as provided
provided under
under
Republic Act
Republic Act Nos.
Nos. 9994
9994 (Expanded
(Expanded Senior
Senior Citizens
Citizens Act
Act of
of 2010)
2010) and
and 10754
10754 (An
(An Act
Act Expanding
Expanding the
the Benefits
Benefits
and
and Privileges
Privileges of
of Persons
Persons With
With Disability),
Disability), respectively;
respectively; [95]
[95]

(X)
(X) Transfer
Transfer of
of property
property pursuant
pursuant to
to Section
Section 40(C)(2)
40(C)(2) of
of the
the NIRC,
NIRC, as
as amended;
amended; [95]
[95]

(Y) Associations
(Y) Associations dues,
dues, membership
membership fees,
fees, and
and other
other assessments
assessments and
and charges
charges collected
collected by
by homeowners’
homeowners’
associations
associations and
and condominium
condominium corporations;
corporations; [95]
[95]

(Z)
(Z) Sale
Sale of
of gold
gold to
to the
the Banko
Banko Sentral
Sentral ng
ng Pilipinas
Pilipinas (BSP);[101]
(BSP);[101]

(AA) Sale
(AA) Sale of
of or
or importation
importation of
of prescription
prescription drugs
drugs and
and medicines
medicines for:
for: [102]
[102]

(i)
(i) Diabetes,
Diabetes, high
high cholesterol,
cholesterol, and
and hypertension
hypertension beginning
beginning January
January 1,
1, 2020;
2020; and
and [103]
[103]

(ii)
(ii) Cancer,
Cancer, mental
mental illness,
illness, tuberculosis,
tuberculosis, and
and kidney
kidney diseases
diseases beginning January 1,
beginning January 1, 2021.
2021. [104]
[104]

Provided, That
Provided, That the
the DOH
DOH shall
shall issue
issue aa list
list of
of approved
approved drugs
drugs and
and medicines
medicines for
for this
this purpose
purpose within
within sixty
sixty
(60)
(60) days
days from
from the
the effectivity
effectivity of
of this
this Act;
Act; and
and [105]
[105]

(BB) Sale
(BB) Sale or
or importation
importation of
of the
the following
following beginning
beginning January 1, 2021
January 1, 2021 to
to December
December 31,
31, 2023:
2023: [106]
[106]

(i)
(i) Capital
Capital equipment,
equipment, its
its spare
spare parts
parts and
and raw
raw materials,
materials, necessary
necessary for
for the
the production
production ofof personal
personal
protective equipment components such as coveralls, gown, surgical cap, surgical mask, N-95 mask, scrub
protective equipment components such as coveralls, gown, surgical cap, surgical mask, N-95 mask, scrub
suits, goggles and face shield, double or surgical gloves, dedicated shoes, and shoe covers, for COVID-19
suits, goggles and face shield, double or surgical gloves, dedicated shoes, and shoe covers, for COVID -19
prevention;
prevention; andand [106]
[106]

(ii)
(ii) All
All drugs,
drugs, vaccines
vaccines and
and medical
medical devices
devices specifically
specifically prescribed
prescribed and
and directly
directly used
used for
for the
the treatment
treatment of
of
COVID-19; and [106]
COVID-19; and [106]

(iii) Drugs
(iii) Drugs for
for the
the treatment
treatment of of COVID-19
COVID-19 approved
approved by by the
the Food
Food and
and Drug
Drug Administration
Administration (FDA)(FDA) for
for use
use in in
clinical trials,
clinical trials, including
including raw
raw materials
materials directly
directly necessary
necessary for for the
the production
production of of such
such drugs:
drugs: Provided,
Provided, That
That
the Department of Trade and Industry (DTI) shall certify that such equipment, spare parts or raw
the Department of Trade and Industry (DTI) shall certify that such equipment, spare parts or raw
materials for importation are not locally available or insufficient in quantity, or
materials for importation are not locally available or insufficient in quantity, or not in accordance with not in accordance with
the quality
the quality or or specification
specification required:
required: Provided,
Provided, further,
further, That
That for
for item
item (ii),
(ii), within
within sixty
sixty (60)
(60) days
days from
from thethe
effectivity of
effectivity of this
this Act,
Act, and
and every
every three
three (3)
(3) months
months thereafter,
thereafter, thethe Department
Department of of Health
Health (DOH)
(DOH) shall
shall issue
issue
aa list
list of
of prescription
prescription drugs
drugs and
and medical
medical devices
devices covered
covered by by this
this provision:
provision: Provided,
Provided, finally,
finally, That
That the
exemption
exemption claimed
claimed under
under this
this subsection
subsection shall
shall be
be subject
subject toto post
post audit
audit by
by the
the Bureau
Bureau of
of Internal
Internal
Revenue or
Revenue or the
the Bureau
Bureau of
of Customs
Customs asas may
may be
be applicable.
applicable. [106]
[106]

(CC)
(CC) Sale
Sale or
or lease
lease of
of goods
goods oror properties
properties or
or the
the performance
performance ofof services
services other
other than
than the
the transactions
transactions
mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed
mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the
the
amount of
amount of Three million pesos
Three million pesos (P3,000,000.00).
(P3,000,000.00). [107]
[107]

VAT REFUND
VAT REFUND

Refund or
Refund or Tax
Tax Credit
Credit of
of Input
Input Tax
Tax

1.
1. Persons
Persons Who
Who May
May File
File Claim
Claim
2.
2. Basis
Basis of
of Claim
Claim
3.
3. Limitations
Limitations on
on Refund
Refund oror Tax
Tax Credit
Credit

Claims
Claims for
for Refund/Tax
Refund/Tax Credit
Credit Certificate
Certificate (TCC)
(TCC) of
of Input Tax
Input Tax

Who
Who can
can claim:
claim:

a.
a. Zero-rated
Zero-rated sales
sales or
or lease
lease of
of goods,
goods, properties
properties or
or services
services -- within
within 2
2 years
years after
after close
close of
of taxable
taxable quarter
quarter
when the
when the sales
sales were
were made
made (Sec.12A)
(Sec.12A)

b.
b. Cancellation
Cancellation of
of VAT
VAT registration
registration —– within
within 22 years
years from
from the
the date
date of
of cancellation
cancellation (date
(date of
of cancellation
cancellation
being referred
being referred hereto
hereto is
is the
the date
date of
of issuance
issuance of
of tax
tax clearance
clearance by
by the
the BIR)
BIR)

Where
Where toto file
file –
— appropriate
appropriate BIR
BIR office
office (VCAD/LTS
(VCAD/LTS or
or RDO) havingjurisdiction
RDO) having jurisdiction over
over the
the principal
principal place
place of
of
business of the taxpayer
business of the taxpayer

Period
Period within
within which
which refund
refund of
of taxes/TCC/refund
taxes/TCC/refund of
of input
input taxes
taxes shall
shall be
be made
made —– within
within 90
90 days
days [filed
[filed
starting January
starting January 1,1, 2018]
2018] from
from the
the date
date of
of submission
submission of
of complete
complete documents
documents in
in support
support of
of the
the
application filed
application filed

a. Manner
a. Manner ofof giving
giving refund
refund —– upon
upon warrants
warrants drawn
drawn by
by the
the CIR
CIR or
or duly
duly authorized
authorized
representative
representative

Place
Place of
of Filing
Filing Application
Application or
or Claim
Claim

Claims for
Claims for refunds
refunds shall
shall be
be filed
filed with
with the
the appropriate
appropriate BIRBIR Office,
Office, Large
Large Taxpayers
Taxpayers Service
Service (LTS),
(LTS), Revenue
Revenue
District
District Office
Office (RDO)
(RDO) having jurisdiction over
having jurisdiction over the
the principal
principal place
place ofof business
business of
of the
the taxpayer.
taxpayer. Claims
Claims for
for
input
input tax
tax refund
refund of
of direct
direct exporters
exporters shall
shall be
be exclusively
exclusively filed
filed with
with the
the VAT
VAT Credit
Credit Audit
Audit Division
Division (VCAD)
(VCAD)
with the
with the exception
exception of of claims
claims with
with aa mix
mix of
of VAT
VAT zero-rated
zero-rated sales
sales emanating
emanating fromfrom sales
sales of
of power
power oror fuel
fuel
from
from renewable
renewable energy
energy sources
sources

Period
Period within
within which
which Refund
Refund or
or Tax
Tax Credit
Credit of
of Input
Input Taxes
Taxes shall
shall be
be acted
acted upon
upon

In
In proper
proper cases,
cases, the
the Commissioner
Commissioner shall
shall grant
grant a
a tax
tax credit/refund
credit/refund for
for creditable
creditable input
input taxes
taxes within
within ninety
ninety
(90) days from the date of submission of complete documents in support of the application
(90) days from the date of submission of complete documents in support of the application filed.
The 90-day
The 90-day period
period to
to process
process and
and decide,
decide, pending
pending the
the establishment
establishment of
of the
the enhanced
enhanced VAT
VAT Refund
Refund
System shall
System shall only
only be
be up
up to
to the
the date
date ofof approval
approval of
of the
the Recommendation
Recommendation Report
Report onon such
such application
application for
for
VAT
VAT refund
refund byby the
the Commissioner
Commissioner or or his
his duly
duly authorized
authorized representative;
representative; Provided,
Provided, that
that all
all claims
claims for
for
refund/tax
refund/tax credit
credit certificate
certificate filed
filed prior
prior toto January
January 1,
1, 2018
2018 will
will be
be governed
governed by
by the
the one
one hundred
hundred twenty
twenty
(120)-day processing
(120)-day processing period.
period.

Final
Final Decision
Decision

In
In case
case ofof full
full or
or partial
partial denial
denial ofof the
the claim
claim for
for tax
tax refund,
refund, the
the taxpayer
taxpayer affected
affected may,
may, within
within thirty
thirty (30)
(30)
days from
days from the
the receipt
receipt of
of the
the decision
decision denying
denying thethe claim,
claim, appeal
appeal the
the decision
decision with
with the
the Court
Court ofof Tax
Tax
Appeals;
Appeals; Provided,
Provided, however,
however, that
that failure
failure on
on the
the part
part of
of any
any official,
official, agent,
agent, or
or employee
employee ofof the
the BIR
BIR to
to act
act
on
on the
the application
application within
within ninety
ninety (90)-day
(90)-day period
period shall
shall be
be punishable
punishable under
under Section
Section 269
269 of
of the
the Tax
Tax Code,
Code,
as amended
as amended

VAT
VAT Refund
Refund Process
Process (RMO
(RMO 47-2020)
47-2020)

. .—_@ : .@
HEAD OF
RO/GS RO/GS REFERS CONCERNED OFFICE CONCERNED
PROCESSING VERIFIES, =X coMMONIGATES/\_ RESULTING IN (\ RDOILTAD. ) CONSOLIDATES RETROis
OFFICE ISSUES DOCUMENTS FINDINGS TO VAT ASSESSMENT FOR ELA (IF THERE IS ISSUANCE OF
REFUND TO EXISTING ELA) ND/PAN/FAN

VAT
VAT Refund
Refund Process:
Process: Direct
Direct Exporters
Exporters

1 2 > 3

DIRECT TARD REVIEWS ACIR-AS/DCIR-

EXPORTER FILES DOCKET WITH OG/CIR APPROVES
CLAIMS AT VCAD REPORT CLAIM
VAT
VAT Refund
Refund Process:
Process: Zero
Zero —– Rated TPs
Rated TPs

a
INDIRECT ASSESSMENT
EXPORTER FILES RD/ACIR-LTS
DIVISION / HREA
CLAIMS AT RDO / APPROVES CLAIM
REVIEWS CLAIMS
LTAD

VAT
VAT Refund:
Refund: Time
Time Frame
Frame (RMC
(RMC 47-2020)
47-2020)

Claims less Claims P50M to Claims more than

than P50 million P150M P150 million
Verification processing 55 53 53

Review (TARD) 15 15 13
Approval:
ACIR-AS 5
DCIR-OG 3
CIR 3
Total No. of Days 75 75 75
VAT
VAT Refund:
Refund: Time
Time Frame
Frame LTS
LTS

Local Purchases | mportation

Verification/processing 62 60
Review (Office of HREA) 8 8
Approval by ACIR-LTS 5 5
Approval by CIR 2
Total No. of Days 75 75

VAT
VAT Refund:
Refund: Time
Time Frame
Frame LTS
LTS

Finance Service/Accounting Division 10

Administrative Service 5

Total No. of Days 15

VAT
VAT Refund:
Refund: Time
Time Frame
Frame Region
Region

Verification/processing (RDOs) 55

Review (Assessment Division) 15

Approval of Regional Director 5

Total No. of Days 75

VAT
VAT Refund:
Refund: Time
Time Frame
Frame Region
Region

Finance Service/Accounting Division 5

Finance Division
Administrative and Human Resource 3
Management Division
Office of the Regional Director 3
Total No. of Days 15

Manner
Manner of
of Giving
Giving Refund
Refund

Refund shall
Refund shall be
be made
made uponupon warrants
warrants drawn
drawn byby the
the Commissioner
Commissioner or or by
by his
his duly
duly authorized
authorized
representative
representative without the necessity of being countersigned by the Chairman, Commission on
without the necessity of being countersigned by the Chairman, Commission on Audit
Audit
(COA), the provision of the Revised Administrative Code to the contrary notwithstanding. Refunds under
(COA), the provision of the Revised Administrative Code to the contrary notwithstanding. Refunds under
this paragraph
this paragraph shall
shall be
be subject
subject to
to post
post audit
audit by
by the
the COA
 PERCENTAGE TAXES
PERCENTAGE TAXES

Other Percentage
Other Percentage Taxes
Taxes Imposed
Imposed under
under Title
Title V
V of
of The
The NIRC
NIRC

116 Tax on VAT- Gross Quarterly | 3% Gross Receipts Section 109 —

exempt person | Sales or Tax (GRT with option Exempt
whose annual _ | Receipts to register as VAT
sales/ receipts taxpayer)
Transactions:
do not exceed
3,000,000 atod, gtot
1% Gross Receipts
Tax (effective July 1,
2020 to June 30,
2023) per RR No. 4-
2021

117 Percentage tax on Quarterly 3% Gross Owners of bancas

domestic carriers and Gross Receipts and owners of
keepers of garages: Receipts Minimum animal drawn two-
> Cars for rent or hire gross wheeled vehicle
> Transportation
contractors
> Other domestic
carriers by land, air
or water

Computing
Computing the
the Percentage Tax Minimum
Percentage Tax Minimum Gross
Gross Receipts
Receipts Required
Required

1. Jeep for hire

a. Manila and other cities P2,400.00
b. Provincial P1,200.00

2. Public Utility Bus

a. Not exceeding 30 passengers P3,600.00
b. Exceeding 30 but not exceeding
50 passengers P6,000.00
C. Exceeding 50 passengers P7,200.00
3. Taxi
a. Manila and other cities P3,600.00
b. Provincial P2,400.00

4. Car for hire (with chauffeur) P3,000.00

5. Car for hire P1,800.00

(without chauffeur) (Sec. 117, NIRC)

118 Percentage tax on: | Quarterly |3%

> international Gross —_| Gross
carriers Receipts | Receipts
> International air Tax
Carriers
> International
shipping
carriers

119 Tax on franchise Quarterly 3% Gross Receipts

> Radio and/or television | Gross Tax (With option to
broadcasting Receipts register as VAT
companies whose derived from | taxpayer)
annual gross receipts _| the business
of the preceding year | covered by | 2% GRT (without
does not exceed P10 the law | option to register as
Million, if P10 Million granting the | VAT Taxpayer)
and above, subjectto | franchise
VAT
> Gas 2%
> Water 2%
120 Tax on overseas Amount paid 10% > Government
dispatch, message for such (payable by > Diplomatic
or conversation services the person Services
originating from the paying for the > International
Philippines services and Organization
paid to the > News Services
person
rendering the
services)

121 Tax on bank and Gross 1% 1510% -

non-bank receipts (financial
financial (schedular) inter
intermediaries mediation
income)

7%-other
income

122 Tax on finance Gross 1%I/5/ (from

companies receipts lending activity)
7% (other
income)
0% (dividends
and equity shares
and net income of
subsidiaries)
 123 Tax on life Total 2%
insurance premium
premium collected
> Every person
of company or
corporation

Premiums
Premiums Exempt from Tax
Exempt from Tax

Premiums refunded
1. Premiums refunded within
within six
six (6)
(6) months
months after
after payment;
payment;
Premiums paid
2. Premiums paid upon
upon reinsurance
reinsurance by by aa company
company thatthat has
has already
already paid
paid the
the tax;
tax;
3. Premiums
3. Premiums collected
collected oror received
received by by any
any branch
branch of of aa domestic
domestic corporation,
corporation, firm
firm or
or association
association
doing
doing business
business outside
outside the
the Philippines;
Philippines;
4.
4. Premiums
Premiums collected or received on
collected or received on account
account of of any
any reinsurance;
reinsurance; and
and
5.
5. Portion
Portion of
of the
the premiums
premiums collected
collected oror received
received byby the
the insurance
insurance companies
companies on on variable
variable contracts.
contracts.

124 Tax on agents of Premium Paid | 10%

Foreign Insurance (except payable
Companies (FIC) Reinsurance) | by agent,
> Every fire, marine or or 5%
miscellaneous payable
insurance agent by owner
authorized under the of property
Insurance Code Insurance
> Owners of property who if there is
obtain insurance no agent
directly with foreign
companies
 125 Amusement taxes Gross | 18% cockpits, Boxing
> Proprietor, lessee or | Receipts | cabarets, night exhibitions
operator of: or day clubs wherein world or
i
cockpits, cabarets, 10% boxing h oriental
a
night and day club, hibit championships
boxing exhibitions, exnibition in any division is
professional 15% professional at stake subject
basketball games, basketball to some
Jai-alai, Race tracks games conditions

30% Jai-alai
and race tracks

Exemption
Exemption of
of Boxing
Boxing Exhibition
Exhibition from Tax
from Tax

Boxing exhibition
Boxing exhibition wherein
wherein World
World oror Oriental
Oriental Championships
Championships in
in any
any division
division is
is at
at stake
stake shall
shall be
be exempt
exempt
from
from amusement
amusement taxtax subject
subject to
to the
the following
following conditions:
conditions:

1. At
1. Atleast one (1)
least one (1) ofof the
the contenders
contenders for
for World
World oror Oriental
Oriental
Championship
Championship is is aa citizen
citizen of
of the
the Philippines;
Philippines; and
and
2. Said
2. Said exhibitions
exhibitions are are promoted
promoted by by the
the citizen/s
citizen/s ofof the
the Philippines
Philippines or
or by
by aa corporation
corporation or
or
association
association at
at least
least sixty
sixty percent
percent (60%)
(60%) of
of the
the capital
capital of
of which
which isis owned
owned by
by such
such citizen/s.
citizen/s.

126 Tax on Winnings of 10%

winnings bettor;
> Persons who | Prize of
wins in horse | OWNErS of
races winning
horses
-

127 Tax on sale, barter GSP or 6/10 of 1% Payable by Sale by a dealer

or exchange of shares of
stock listed and traded
through the local stock
exchange
> Seller or transferor of
the shares of stock
> Issuing corporations in
primary offering* or
the seller in
secondary offering
Gross Value | seller or transferor in securities
on Money
Remarks: A dealer in
securities is subject to VAT
1-4% (Schedular) payable
by the issuing corporation
in primary offering or by the
seller in secondary offering

*Tax on shares of stocks sold, bartered, exchanged or other disposition through Initial Public Offering (IPO)
provided under Section 127 (B') of the NIRC of 1997, as amended, is repealed. Thus, every sale, barter,
exchange or other disposition through IPO of shares of stock in closely held corporations shall no longer be
subject to the tax imposed under Section 127(B) upon the effectivity of RA No. 11494 (RR 23-2020)

Manner
Manner of
of Filing
Filing and
and Payment
Payment

A. In general 1. The Percentage Tax Return (2551Q) shall be filed quarterly,

on the 25* day of the month following the end of the
quarter (RMC 26-2018).
2. Any person retiring from a business subject to percentage
tax shall file his return and pay the tax due thereon within
25 days after closing his business.
3. In the case of a person whose VAT registration has been
cancelled and who becomes liable under Sec. 116 of the
NIRC, the tax shall accrue from the date of cancellation.

B. Tax on Overseas Dispatch, The person rendering the service is

message or conversation required to collect and pay the tax
originating from the Philippines within 25 days after the end of each
quarter
C. The taxes shall be payable within 25
1. Amusement taxes days after the end of each quarter.
2. Tax on Winning (horse races)
D. Others
1. Capital Gains The stock broker or the seller in the case of
realized from sale secondary offering shall remit/pay the tax
of shares of within 5 banking days from the date of
stocks listed and collection/sale thereof and to submit on
traded in the local Monday of each week to the secretary of the
stock exchange Stock exchange a return which shall contain a
including declaration of all the transactions during the
secondary offering preceding week and taxes collected by him
and turned to the BIR.

2. Public Offering The corporate issuer shall file the return and
of shares of pay the corresponding tax within 30 days from
stock (Primary the date of listing of the shares of stock in
offering) the local stock exchange
 TITLE
TITLE VII
VII

DOCUMENTARY STAMP
DOCUMENTARY STAMP TAX
TAX

SEC.
SEC. 173.
173. Stamp
Stamp Taxes Taxes UponUpon Documents,
Documents, Loan Loan Agreements,
Agreements, Instruments
Instruments and and Papers.
Papers. -- Upon
Upon
documents,
documents, instruments,
instruments, loan loan agreements
agreements and and papers,
papers, and and upon
upon acceptances,
acceptances, assignments,
assignments, sales sales and
and
transfers
transfers ofof the
the obligation,
obligation, rightright oror property
property incident
incident thereto,
thereto, there
there shall
shall bebe levied,
levied, collected
collected andand paid
paid
for, and in respect of the transaction so had or accomplished, the corresponding documentary stamp
for, and in respect of the transaction so had or accomplished, the corresponding documentary stamp
taxes
taxes prescribed
prescribed in in the
the following
following Sections
Sections ofof this
this Title,
Title, by
by the
the person
person making,
making, signing,
signing, issuing,
issuing, accepting,
accepting,
or
or transferring
transferring thethe same
same wherever
wherever the the document
document is is made,
made, signed,
signed, issued,
issued, accepted
accepted or or transferred
transferred when
when
the
the obligation
obligation or or right
right arises
arises from
from Philippine
Philippine sources
sources or or the
the property
property is is situated
situated inin the
the Philippines,
Philippines, and
and
the
the same
same time
time such
such actact is
is done
done or or transaction
transaction had:
had: Provided,
Provided, ThatThat whenever
whenever one party to
one party to the
the taxable
taxable
document enjoys
document enjoys exemption
exemption from from thethe tax
tax herein
herein imposed,
imposed, the the other
other party
party whowho isis not
not exempt
exempt shall be
shall be
the
the one
one directly
directly liable for the
liable for the tax.
tax.

Important
Important to
to Remember
Remember DST
DST Rates
Rates &
& Tax
Tax Base
Base

Document/Instrument
Document/Instrument Legal
Legal Basis
Basis Tax
Tax Due/Rate
Due/Rate
1. Original
1. Original issue
issue of
of shares
shares of
of | Section
Section 174
174 Two peso
Two peso (P2.00)[170]
(P2.00)[170] on on eacheach
stock
stock Two
Two hundred pesos (P200), or
hundred pesos (P200), or
fractional part
fractional part thereof:
thereof:
•e parpar value,
value, of of such
such shares
shares
of
of stock
stock
•e in in the
the case
case of
of the
the
original issue
original issue of shares of shares
of
of stock
stock without
without par
par
value,
value, actual
actual
consideration
consideration for
for the
the
issuance of
issuance of such
such shares
shares
of
of stock
stock
•e in in thethe case
case of of stock stock
dividends,
dividends, on on thethe actual
actual
value
value represented
represented by
by
each share.
each share.
2.
2. Stamp
Stamp Tax
Tax on
on Sales,
Sales, | Section
Section 175
175 •e OneOne peso
peso and _ fifty
and fifty
Agreements
Agreements to
to Sell,
Sell, centavos (P1.50)[171]
centavos (P1.50)[171] on on
Memoranda
Memoranda of
of Sales,
Sales, each Two
each Two hundred
hundred pesos pesos
Deliveries
Deliveries or
or Transfer
Transfer of
of (P200) or
(P200) or fractional
fractional part part
Shares
Shares or
or Certificates
Certificates of
of Stock
Stock thereof,
thereof, par par value
value
•e = fifty
fifty percent
percent (50%)[172]
(50%)[172]
of
of the
the documentary
documentary
stamp
stamp tax tax paid
paid uponupon the the
original
original issue of said
issue of said
stock,
stock, without
without par par value
value
3.
3. Stamp
Stamp Tax
Tax on
on_ Bonds,
Bonds, | Section
Section 176
176 P0.75
PO.75 per per P200.00
P200.00 or or fraction
fraction
Debentures,
Debentures, Certificate
Certificate of
of thereof
thereof
 Stock
Stock or
or Indebtedness
Indebtedness Issued
Issued
in
in Foreign
Foreign Countries
Countries
Stamp Tax
4. Stamp Tax on on Certificates
Certificates ofof Section
Section 177
177 (P1.00)[173]
(P1.00)[173] on
on each
each Two
Two
Profits or Interest in Property
Profits or Interest in Property hundred
hundred pesos
pesos (P200),
(P200), or
or
or Accumulations.
or Accumulations. fractional
fractional part part thereof,
thereof, of of thethe
face
face value
value of of such
such certificate
certificate or or
memorandum.
memorandum.
5. Stamp
Stamp TaxTax onon Bank
Bank Checks,
Checks, Section
Section 178
178 there
there shall
shall be
be collected
collected aa
Drafts, Certificates of Deposit
Drafts, Certificates of Deposit documentary stamp tax of Three
documentary stamp tax of Three
not
not Bearing
Bearing Interest,
Interest, and
and pesos
pesos (P3.00),
(P3.00), each each bank bank check,
check,
Other
Other Instruments.
Instruments. draft,
draft, or or certificate
certificate of of deposit
deposit
not
not drawing
drawing interest,
interest, or or order
order for for
the payment
the payment of of anyany sum sum of of
money
money
6. Stamp
Stamp Tax
Tax on
on All
All Debt
Debt Section
Section 179
179 One peso
One peso and and fiftyfifty centavos
centavos
Instruments
Instruments (P1.50)[175]
(P1.50)[175] on
on each
each Two
Two
hundred
hundred pesos
pesos (P200),_
(P200), or
or
fractional
fractional part part thereof,
thereof, of of thethe
issue price
issue price of of anyany suchsuch debt debt
instrument
instrument
Stamp Tax
7. Stamp Tax on
on All
All Bills
Bills of
of Section
Section 180
180 sixty centavo
sixty centavo (P0.60)[176]
(P0.60)[176] on on
Exchange or Drafts.
Exchange or Drafts. each Two hundred peso (P200),
each Two hundred peso (P200),
or
or fractional
fractional part part thereof,
thereof, of of the
the
face value
face value of of anyany suchsuch bill bill of of
exchange or
exchange or draft. draft.
8. Stamp
Stamp Tax Tax Upon
Upon Acceptance
Acceptance Section
Section 181
181 Sixty
Sixty centavos
centavos (P0.60)[177]
(P0.60)[177] on on
of Bills
of Bills ofof Exchange
Exchange andand each
each TwoTwo hundred
hundred pesos pesos (P200),
(P200),
Others
Others or
or fractional
fractional part part thereof,
thereof, of of the
the
face value
face value of of anyany suchsuch bill bill of of
exchange,
exchange, or
or order,
order, or
or the
the
Philippine
Philippine equivalent
equivalent to to such such
value,
value, if if expressed
expressed in in foreign
foreign
currency.
currency.
Stamp Tax
9. Stamp Tax on
on Foreign
Foreign Bills
Bills of
of Section
Section 182
182 tax
tax of
of Sixty
Sixty centavos
centavos (P0.60)[178]
(P0.60)[178]
Exchange
Exchange and
and Letters
Letters of
of on
on eacheach Two Two hundredhundred pesos
pesos
Credit.
Credit. (P200),
(P200), or or fractional
fractional part part thereof,
thereof,
of the
of the face
face value
value of of any
any such
such bill bill
of
of exchange or letter of credit, or
exchange or letter of credit, or
the
the Philippine
Philippine equivalent
equivalent of of such
such
face
face value,
value, if if expressed
expressed in in foreign
foreign
currency.
currency.
10. Stamp
10. Stamp TaxTax on
on Life
Life Insurance
Insurance Section
Section 183
183
Policies
Policies

11. Stamp Tax

11. Stamp Tax on
on Policies
Policies of
of Section
Section 184
184 Fifty
Fifty centavos
centavos (P0.50)
(PO0.50) on
on each
each
Insurance
Insurance Upon
Upon Property
Property Four
Four pesos
pesos (P4.00),
(P4.00), oror fractional
fractional
part
part thereof,
thereof, ofof the
the amount
amount of of
premium
premium charged
charged
12. Stamp
12. Stamp Tax
Tax on
on Fidelity
Fidelity Bonds
Bonds Section
Section 185
185 Fifty centavos
Fifty centavos (P0.50)(PO.50) on on each
each
and
and Other
Other Insurance
Insurance Policies.
Policies. Four
Four pesos
pesos (P4.00),
(P4.00), or or fractional
fractional
part thereof,
part thereof, of of the
the premium
premium
charged.
charged.
13.
13. Stamp
Stamp Tax
Tax on
on Policies
Policies of
of Section
Section 186
186 policies of
policies of annuities:
annuities:
Annuities
Annuities and
and Pre-Need
Pre-Need One
One peso
peso (P1.00)[180]
(P1.00)[180] on on each
each
Plans.
Plans. Two hundred
Two hundred pesos pesos (P200)
(P200) or or
fractional
fractional part
part thereof,
thereof, of of the
the
premium or
premium or installment
installment payment
payment
or contract
or contract price
price collected.
collected.
pre-need
pre-need plans:
plans:
Forty centavos (P0.40)[181]
Forty centavos (PO.40)[181] on on
each
each Two
Two hundred
hundred pesos pesos (P200),
(P200),
or
or fractional
fractional part
part thereof,
thereof, of of the
the
premium
premium or
or contribution
contribution
collected
collected
14.
14. Stamp
Stamp Tax
Tax on
on_ Indemnity
Indemnity Section
Section 187
187 Thirty
Thirty centavos
centavos (P0.30)
(P0.30) on on each
each
Bonds
Bonds Four pesos
Four pesos (P4.00),
(P4.00), or or fractional
fractional
part
part thereof,
thereof, of of the
the premium
premium
charged.
charged.
15.
15. Stamp
Stamp Tax
Tax on
on Certificates
Certificates Section
Section 188
188 Thirty
Thirty pesos
pesos (P30.00)
(P30.00) each
each
certificate
certificate
16.
16. Stamp
Stamp Tax
Tax onon Warehouse
Warehouse Section
Section 189
189 Thirty pesos
Thirty pesos (P30.00
(P30.00 eacheach receipt
receipt
Receipts
Receipts
17.
17. Stamp
Stamp TaxTax onon Jai-Alai,
Jai-Alai, Horse
Horse Section
Section 190
190 Twenty centavos
Twenty centavos (P0.20)/ticket
(P0.20)/ticket
Racing
Racing Tickets,
Tickets, Lotto
Lotto oror Other
Other worth
worth P1.00
P1.00 and
and_ additional
additional
Authorized
Authorized Numbers
Numbers Games Games P0.20
PO.20 for
for each
each P1.00
P1.00 in in excess
excess of of
P1.00
P1.00 cost
cost ofof ticket
ticket
18.
18. Stamp
Stamp Tax
Tax on
on Bills
Bills of
of Lading
Lading Section
Section 191
191 •e Two
Two peso
peso (P2.00),[186]
(P2.00),[186] if if
or Receipts
or Receipts the value
the value of of such
such goods goods
exceeds
exceeds One
One hundred
hundred
pesos (P100)
pesos (P100) and and does does
not
not exceed
exceed One
One
Thousand
Thousand pesospesos (P1,000)
(P1,000)
•e Twenty
Twenty pesos
pesos
(P20.00),[187]
(P20.00),[187] ifif the the
value
value exceeds
exceeds One
One
thousand pesos
thousand pesos (P1,000)
(P1,000)
•e hat
hat freight
freight tickets
tickets
covering
covering goods,
goods,
merchandise
merchandise or or effects
effects
carried
carried as as accompanied
accompanied
baggage of passengers
baggage of passengers
on
on land
land and_
and water
water
carriers
carriers primarily
primarily
engaged
engaged in
in the
the
transportation
transportation of
of
 passengers are
passengers are hereby
hereby
exempt
exempt
19.
19. Stamp
Stamp Tax
Tax on
on Proxies
Proxies Section
Section 192
192 P30
P30 each
each proxy
proxy
20.
20. Stamp
Stamp Tax
Tax on on Powers
Powers of
of Section
Section 193
193 P10
P10 each
each document
document
Attorney
Attorney
21.
21. Stamp
Stamp Tax
Tax onon Leases
Leases and
and Section
Section 194
194 Six
Six pesos
pesos (P6.00)[190]
(P6.00)[190] for for the
the
Other
Other Hiring
Hiring Agreements
Agreements first
first Two
Two thousand
thousand pesos
pesos
(P2,000),
(P2,000), or
or fractional
fractional part
part
thereof,
thereof, and and an an additional
additional Two Two
peso (P2.00)[191]
peso (P2.00)[191] for for every
every OneOne
Thousand
Thousand pesos
pesos (P1,000)
(P1,000) or
or
fractional
fractional partpart thereof,
thereof, in in excess
excess
of the
of the first
first Two thousand pesos
Two thousand pesos
(P2,000) for each year of the
(P2,000) for each year of the
term
term of
of said
said contract
contract or
or
agreement.
agreement.
22.
22. Stamp
Stamp Tax
Tax on
on Mortgages,
Mortgages, Section
Section 195
195 (a) When
(a) When the the amount
amount secured
secured
Pledges
Pledges and
and Deeds
Deeds of
of Trust
Trust does
does not not exceed
exceed Five Five thousand
thousand
pesos
pesos (P5,000),
(P5,000), Forty pesos
Forty pesos
(P40.00).[192]
(P40.00).[192]

(b)
(b) On
On each
each FiveFive thousand
thousand pesospesos
(P5,000),
(P5,000), or
or fractional
fractional part
part
thereof
thereof in
in excess
excess of
of Five
Five
thousand
thousand pesos
pesos (P5,000), an
(P5,000), an
additional
additional tax tax of of Twenty
Twenty pesospesos
(P20.00).[193]
(P20.00).[193]
23.
23. Stamp
Stamp Tax
Tax on
on Deeds
Deeds of
of Sale,
Sale, Section
Section 196
196 (a) When
(a) When the the consideration,
consideration, or or
Conveyances
Conveyances and
and value received
value received or or contracted
contracted to to
Donation[194]
Donation[194] of
of Real
Real be paid for such realty after
be paid for such realty after
Property
Property making
making proper
proper allowance
allowance of of any
any
encumbrance,
encumbrance, does does not not exceed
exceed
One thousand
One thousand pesos pesos (P1,000)
(P1,000)
fifteen
fifteen pesos
pesos (P15.00).
(P15.00).

(b)
(b) ForFor eacheach additional
additional One
One
thousand
thousand Pesos
Pesos (P1,000),
(P1,000), or
or
fractional part
fractional part thereof
thereof in in excess
excess
of One
of One thousand
thousand pesos pesos (P1,000)
(P1,000)
of such
of such consideration
consideration or or value,
value,
Fifteen
Fifteen pesos
pesos (P15.00).
(P15.00).
24.
24. Stamp
Stamp Tax
Tax on
on Charter
Charter Parties
Parties Section
Section 197
197 a) If
a) If the
the registered
registered grossgross tonnage
tonnage
and
and Similar
Similar Instruments.
Instruments. of
of the
the ship,
ship, vessel
vessel or or steamer
steamer
does not exceed one
does not exceed one thousand thousand
(1,000)
(1,000) tons,
tons, andand thethe duration
duration of of
the
the charter
charter or or contract
contract does
does notnot
exceed six
exceed six (6)(6) months,
months, One One
 thousand pesos
thousand pesos (P1,000);[195]
(P1,000);[195]
and
and for
for each
each month
month or or fraction
fraction
of
of aa month
month in in excess
excess of of six
six (6)
(6)
months, an additional tax
months, an additional tax of Oneof One
hundred pesos
hundred pesos (P100.00)[196]
(P100.00)[196]
shall be
shall be paid.
paid.

(b)
(b) IfIf thethe registered
registered gross
gross
tonnage exceeds
tonnage exceeds one one thousand
thousand
(1,000)
(1,000) tonstons andand does
does not not exceed
exceed
ten
ten thousand
thousand (10,000)(10,000) tons, tons, and
and
the
the duration
duration of of thethe charter
charter or or
contract does
contract does not not exceed
exceed six six (6)
(6)
months,
months, Two
Two thousand
thousand pesos
pesos
(P2,000);[197]
(P2,000);[197] and
and for
for each
each
month
month or or fraction
fraction of of aa month
month in in
excess
excess of of sixsix (6)
(6) months,
months, an an
additional
additional tax tax ofof TwoTwo hundred
hundred
pesos (P200)[198]
pesos (P200)[198] shall shall bebe paid.
paid.

(c)
(c) IfIf the
the registered
registered gross
gross
tonnage
tonnage exceedsexceeds ten ten thousand
thousand
(10,000) tons
(10,000) tons andand the
the duration
duration of of
the
the charter
charter or or contract
contract does does not
not
exceed
exceed six six (6)
(6) months,
months, Three Three
thousand pesos
thousand pesos (P3,000);[199]
(P3,000);[199]
and for
and for each
each month
month or or fraction
fraction
of
of aa month
month in in excess
excess of of six
six (6)
(6)
months,
months, an
an additional tax of
additional tax of
Three
Three hundred
hundred pesos
pesos
(P300)[200]
(P300)[200] shall shall bebe paid.
paid.
25.
25. Stamp
Stamp TaxTax on
on Assignments
Assignments | Section
Section 198
198 •e P1,000.00
P1,000.00 and and additional
additional
and
and Renewals
Renewals of
of Certain
Certain P100/month in
P100/month in excess
excess of of
Instruments.
Instruments. 6months
6months
•e P2,000.00
P2,000.00 and and additional
additional
P200/month
P200/month in in excess
excess of of
6months
6months
•e P3,000.00
P3,000.00 and and additional
additional
P300/month
P300/month in excessin excess of of
6months
6months
26.
26. Documents
Documents and and Papers
Papers Not
Not | Section
Section 199
199
Subject to
Subject to Stamp
Stamp Tax.
Tax.
27. Payment
27. Payment of
of Documentary | Section
Documentary Section 200
200 55 days
days after
after the
the close
close ofof the
the
Stamp Tax
Stamp Tax month
month (RMC
(RMC No.
No. 1-98,
1-98, as
as
amended by
amended by RR
RR 6-2001)
6-2001)
Shares
Shares of
of Stock:
Stock:

ABC Corporation,
ABC Corporation, aa newly
newly formed
formed corporation
corporation organized
organized under
under the
the Philippine
Philippine laws,
laws, issued
issued on
on October
October
17,
17, 2023 shares of stocks to one of its incorporators, Mr. Francis, for P250,000.00. The par value of
2023 shares of stocks to one of its incorporators, Mr. Francis, for P250,000.00. The par value of the
the
shares issued is at P200,000.00
shares issued is at P200,000.00

How
How much
much is
is the
the DST?
DST?

Par
Par Value
Value ofof the
the Shares
Shares P200,000.00
P200,000.00
Divided by
Divided by 200.00
200.00
Basis
Basis P1,000.00
P1,000.00
Multiply by
Multiply by DST
DST Rate
Rate P2.00
P2.00
DST Due
DST Due P2,000.00
P2,000.00
How
How much
much assuming
assuming it it is
is without
without Par
Par Value?
Value?

Par
Par Value
Value of
of the
the Shares
Shares P250,000.00
P250,000.00
Divided
Divided byby 200.00
200.00
Basis
Basis P1,250.00
P1,250.00
Multiply by
Multiply by DST
DST Rate
Rate P2.00
P2.00
DST Due
DST Due P2,500.00
P2,500.00

IfIf the
the shares
shares with
with par
par value
value were
were subsequently
subsequently sold
sold by
by Mr.
Mr. Francis
Francis for
for P400,000.00.
P400,000.00. How
How much
much is
is the
the DST
DST
Due?
Due?

Par
Par Value
Value ofof the
the Shares
Shares P200,000.00
P200,000.00
Divided
Divided byby 200.00
200.00
Basis
Basis P1,000.00
P1,000.00
Multiply by
Multiply by DST
DST Rate
Rate P1.50
P1.50
DST
DST Due
Due P1,500.00
P1,500.00

IfIf the
the shares
shares without
without par
par value
value were
were subsequently
subsequently sold
sold by
by Mr.
Mr. Francis
Francis for
for P400,000.00.
P400,000.00. How
How much
much is
is the
the
DST Due?
DST Due?

DST
DST Due
Due P2,500.00
P2,500.00
xx 50%
50%
P1,250.00
P1,250.00

Peter
Peter sold
sold one
one of
of his
his vacant
vacant lots
lots in
in his
his hometown
hometown in in Cagayan
Cagayan de
de Oro
Oro City
City acquired
acquired by
by him
him from
from five
five years
years
ago for
ago for P6Million.
P6Million. He
He sold
sold it
it to
to Jhon
Jnon for
for P15Million,
P15Million, equivalent
equivalent to
to the
the FMV
FMV at
at the
the time
time of
of sale.
sale.
How
How much
much is
is the
the DST?
DST?

DST Due
DST Due P15Million
P15Million
Divided by
Divided by P1,000.00
P1,000.00
Basis
Basis P15,000.00
P15,000.00
Multiply by
Multiply by DST
DST Rate
Rate P15.00
P15.00
DST Due
DST Due P225,000.00
P225,000.00

EXCISE TAX
EXCISE TAX

ALCOHOL PRODUCTS
ALCOHOL PRODUCTS

Revenue Regulations
Revenue Regulations No.
No. 17-2012
17-2012 Prescribing
Prescribing the
the Implementing
Implementing Guidelines
Guidelines on
on the
the Revised
Revised Tax Rates on
Tax Rates on
Alcohol and
Alcohol and Tobacco
Tobacco Products
Products Pursuant
Pursuant to
to the
the Provisions
Provisions of
of Republic
Republic Act
Act No.
No. 10351
10351 and
and to
to Clarify
Clarify Certain
Certain
Provisions of
Provisions of Existing
Existing revenue
revenue Regulations.
Regulations. (December
(December 21,
21, 2012)
2012)

Revenue Regulations
Revenue Regulations No.
No. 7-2021
7-2021 Prescribes
Prescribes the
the rules
rules and
and regulations
regulations to
to implement
implement thethe provisions
provisions of
of RA
RA
Nos.
Nos. 11346
11346 and
and 11467
11467 relative
relative to
to Excise Tax on
Excise Tax on alcohol
alcohol products,
products, tobacco
tobacco products,
products, heated
heated tobacco
tobacco
products,
products, vapor
vapor products
products and
and disposition
disposition of
of Excise
Excise Tax
Tax collection
collection (Malaya
(Malaya Business
Business Insight
Insight on
on May
May 19,
19,
2021)
2021)

Alcohol
Alcohol Products
Products —– shall
shall refer
refer to
to fermented
fermented liquors,
liquors, proof
proof spirits,
spirits, wines,
wines, and/or
and/or spirits
spirits or
or distilled
distilled spirits,
spirits,
as defined
as defined in
in these
these Regulations.
Regulations.

Fermented Liquors
Fermented Liquors —– such
such asas beer,
beer, lager
lager beer,
beer, ale,
ale, porter
porter and
and other
other fermented
fermented liquors
liquors regardless
regardless if
if
manufactured in factories or sold and brewed at microbreweries or small establishments such as pubs
manufactured in factories or sold and brewed at microbreweries or small establishments such as pubs
and
and restaurants,
restaurants, except
except tuba,
tuba, basi,
basi, tapuy
tapuy and
and similar
similar fermented
fermented liquors.
liquors.

A.
A. Alcohol
Alcohol Products
Products Distilled
Distilled Spirits
Spirits

Excise Tax Due = Ad valorem tax + Specific tax

Date of effectivity Ad valorem tax Specific tax
(start date) [based on the net retail price per proof (per proof liter)
(excluding the excise and value-added
taxes)|
January 1, 2020 20% P24.34
January 23, 2020 22% P42.00
January 1, 2021 22% P47.00
January 1, 2022 22% P52.00
January 1, 2023 22% Ps59.00
January 1, 2024 22% P66.00
2025 Onwards specific tax rate shall be
22% increased by 6% and every year
thereafter
 Facts:
ABC Corporation removes from its factory Brand “X” with
the following details:
- 2,400 bottles at 330 ml.
- 40% alcohol strength
- NRP at P3o0.00 per bottle
Question:
How much is the excise tax that ABC Corp. should pay to the
BIR?

Step tr
Com pute the proof of Brand “X”
40% alcohol strength x 2 = 80 proof
Step 2
Compute the excise tax due
a. Ad valorem tax due per 330 ml. bottle
INRP of 330 ml. bottle P30.00
Multiply by proof °.80
INRP per proof P24.00
Multiply by Ad valorem rate 22%
Ad valorem tax due per 330m1 bottle P 5.28

b. Specific tax due per 330 ml. bottle

Specific tax rate per proof liter Ps9-oco
Multiply by proof of 330 ml
bottle (.330 x .80) o.264
Specific tax due per 330 ml bottle P 15-58
c. Total excise tax due from removal
Total excise tax due per 330ml. Bottle P20.86
Multiply by volume removed 2,400
Total excise tax due from removal Ps50,064

Wines
B. Wines
Date of effectivity (start date) Specific
tax (per liter)
January
1, 2020
Sparkling wines/champagnes where the NRP (excluding the excise and VAT) per
bottleof 750 ml volume capacity, regardless of proof is:
a. Php 500 or less P328.98
b. More than Php soo Po21.15
Still wines and carb d wines ining 14% of alcohol by vol or less P39.48
Still wines and carbonated
wines containing more than 14% of alcohol by volume but P78.96
not more than 25% of alcohol by volume
Fortified wines ining more than 25% of alcohol by vol: Taxed as distilled spirits
January 23, 2020* P50.00
January 1, 2021 P53.00
January 1, 2022 P56.18
January 1, 2023 Pso.55
January 1, 2024 P63.12
2025 Onwards specific tax rate shall be increased by 60 and
every year thereafter

Note: *Beginning January 23, 2020, the classification of wines was removed pursuant to RA No. 11467. All
‘ypes of wines are subject to specific excise tax rates per liter.
 C. Fermented
C. Fermented Liquors
Liquors

Date of effectivity (start date) Specific tax (per liter)

January 1, 2020 P26.43
January 23, 2020 P35.00
January 1, 2021 P37.00
January 1, 2022 P39.00
January 1, 2023 P41.00
January 1, 2024 P43.00
2025 Onwards specific tax rate shall be increased
by 6% and every year thereafter

A removal of 1000 cases x 24 bottles/case x 500 ml/bottle.

Compute for the excise tax.

Compute the excise tax due

Volume of removals (1,000 x 24 x 500 ml) 12,000.00

Multiplied by specific tax due per liter 4l

EXCISE TAX DUE P 492,000.00

AUTOMOBILES
AUTOMOBILES

Issuances
Issuances on
on Automobiles
Automobiles

RR
RR No.
No. 4-2017
4-2017 Amends
Amends certain
certain provisions
provisions of
of RR
RR No.
No. 2-2016
2-2016 particularly
particularly in
in the
the issuance
issuance of
of Authority
Authority to
to
Release Imported
Release Imported Goods
Goods for
for imported
imported automobiles
automobiles already
already released
released from
from customs
customs custody
custody

RR No.
RR No. 5-2018
5-2018 Implements
Implements the
the adjustment
adjustment of
of rates
rates on
on Excise
Excise Tax
Tax on
on Automobiles
Automobiles pursuant
pursuant to
to the
the
provisions of
provisions of RA
RA No.
No. 10963
10963 (TRAIN
(TRAIN Law),
Law), amending
amending for
for the
the purpose
purpose Revenue
Revenue Regulations
Regulations No.
No. 25-2003
RR
RR No.
No. 24-2018
24-2018 Further
Further amends
amends Section
Section 99 of
of Revenue
Revenue Regulations
Regulations No.
No. 25-2003
25-2003 relative
relative to
to the
the
determination by
determination by the
the Department
Department of of Energy
Energy whether
whether the the automobiles
automobiles subject
subject to
to Excise
Excise Tax
Tax exemption
exemption
are
are Hybrid
Hybrid or
or Purely
Purely Electric
Electric Vehicles
Vehicles pursuant
pursuant to
to the
the provisions
provisions of
of the
the TRAIN
TRAIN Law
Law

RMO
RMO No.No. 32-2020
32-2020 Creates
Creates and
and modifies
modifies the
the Alphanumeric
Alphanumeric Tax
Tax Code
Code (ATC)
(ATC) for
for Excise
Excise Tax
Tax in
in BIR
BIR Form
Form No.
No.
2200-AN
2200-AN (Excise
(Excise Tax
Tax Return
Return for
for Automobiles
Automobiles and
and Non-Essential
Non-Essential Goods)
Goods) pursuant
pursuant toto the
the implementation
implementation
of
of the TRAIN Law
the TRAIN Law

D.1
D.1 Automobiles
Automobiles Automobile
Automobile shall
shall mean
mean anyany four
four (4)
(4) or
or more-wheeled
more-wheeled motor motor vehicle
vehicle regardless
regardless of
of
seating capacity,
seating capacity, which
which isis propelled
propelled by by gasoline,
gasoline, diesel,
diesel, electricity
electricity or
or any
any other
other motive
motive power:
power: Provided,
Provided,
That, buses,
That, buses, trucks,
trucks, cargo
cargo vans, jeepneys/jeepney substitutes,
vans, jeepneys/jeepney substitutes, single
single cab
cab chassis,
chassis, and
and special-purpose
special-purpose
vehicles
vehicles shall
shall not
not be
be considered
considered as as automobiles
automobiles

D.1
D.1 Automobiles
Automobiles

Truck/cargo van shall

Truck/cargo van shall mean
mean aa motor
motor vehicle
vehicle of
of any
any configuration
configuration that
that is
is exclusively
exclusively designed
designed for
for the
the
carriage
carriage of
of goods
goods and
and with
with any
any number
number of of wheels
wheels and
and axles:
axles: Provided, That pick-ups
Provided, That pick-ups shall
shall be
be considered
considered
as trucks. Hybrid electric vehicle shall mean a motor vehicle powered by electric energy, with or
as trucks. Hybrid electric vehicle shall mean a motor vehicle powered by electric energy, with or without
without
provision for
provision for off-vehicle
off-vehicle charging,
charging, in in combination
combination withwith gasoline,
gasoline, diesel
diesel or
or any
any other
other motive
motive power:
power:
Provided,
Provided, That
That for
for purposes
purposes ofof this
this Act,
Act, aa hybrid
hybrid electric
electric vehicle
vehicle must
must bebe able
able to
to propel
propel itself
itself from
from aa
stationary condition
stationary condition using
using solely
solely electric
electric motor.
motor.

Provided, that
Provided, that hybrid
hybrid vehicles
vehicles shall
shall be
be subject
subject to
to fifty
fifty percent
percent (50%)
(50%) ofof the
the applicable
applicable excise
excise tax
tax rates
rates on
on
automobiles under
automobiles under this
this Section;
Section; Provided,
Provided, further,
further, that
that purely
purely electric
electric vehicles
vehicles and
and pickups
pickups shall
shall be
be
exempt
exempt from
from excise
excise tax
tax on
on automobiles.
automobiles.

1. For automobiles intended for sale, locally assembled and imported

Po up to P600,000 rn
Over P600,000; Up to P1,000,000 10%
Over P1,000,000; Up to P4,000,000 20%
Over P4,000,000 50%

2. For
2. For imported
imported automobiles
automobiles intended
intended for
for personal
personal use
use Taxable
Taxable base
base is
is BOC
BOC total
total landed
landed value
value

Note: Total
Note: Total landed
landed value
value is
is defined
defined as
as the
the total
total of:
of:

•e market
market value
value ofof per
per reference
reference books
books or
or the
the dutiable
dutiable value
value per
per Tariff
Tariff and
and Customs
Customs Code,
Code,
whichever is
whichever is higher
higher
•e customs duties
customs duties and
and other
other charges
Exceptions:
Exceptions:

•e Importation of
Importation of more
more than
than one
one automobile
automobile within
within 12
12 months
months byby same
same person
person
•e Sale
Sale or
or transfer
transfer of
of more
more than
than one
one imported
imported automobile
automobile within
within 12
12 months
months toto the
the same
same buyer
buyer
•e Importation
Importation ofof automobiles
automobiles inin the
the name
name of
of several
several buyers
buyers but
but represented
represented by by aa single
single person
person

Model: Honda City 1.5 E CVT

Manufacturer’s wholesale price P 890,000 *

(* Net of excise tax and value-added tax)

Computation of tax due:

P 890,000
Multiply by 10%
Ad Valorem Tax due P 89,000
Plastic
Plastic Surgery
Surgery -- refersrefers to to a a surgical
surgical specialty
specialty or or procedure
procedure concerned
concerned with with restoration,
restoration,
construction, reconstruction,
construction, reconstruction, or or improvement
improvement in in the
the form,
form, function
function and and appearance
appearance of of body
body
structure
structure thatthat are are missing,
missing, defective,
defective, damaged
damaged or
or misshapen.
misshapen. It
It encompasses
encompasses both
both
reconstructive
reconstructive and and aesthetic
aesthetic surgery.
surgery.
Cosmetic Surgery
Cosmetic Surgery -- refersrefers to to aa typetype of of plastic
plastic surgery
surgery thatthat aimsaims to to improve
improve aa person’s
person’s
appearance, through invasive cosmetic procedures, surgeries, and
appearance, through invasive cosmetic procedures, surgeries, and body enhancements directed body enhancements directed
solely on
solely on improving,
improving, altering,
altering, or or enhancing
enhancing the the person’s
person’s appearance
appearance and and dodo not
not necessarily
necessarily
promote
promote the the proper
proper functions
functions of of the
the body
body or or prevent
prevent or or treat
treat illness
illness or or disease.
disease. Cosmetic
Cosmetic
surgery
surgery cancan bebe performed
performed on on allall areas
areas of of the
the head,
head, neck
neck and and body.
body. Since
Since the
the treated
treated areas
areas
function properly,
function properly, cosmetic
cosmetic surgery
surgery is is elective
elective
Reconstructive Surgery
Reconstructive Surgery shall
shall refer
refer to to another
another typetype ofof plastic
plastic surgery
surgery whichwhich aimsaims toto improve
improve
function
function andand give
give a a normal
normal appearance
appearance to to a
a part
part ofof aa person’s
person’s bodybody thatthat has
has been
been damaged,
damaged,
ameliorate aa deformity
ameliorate deformity arising
arising from,
from, or or directly
directly related
related to,to, aa congenital
congenital or or developmental
developmental defect
defect
or abnormality, a personal injury resulting from accident or
or abnormality, a personal injury resulting from accident or trauma, or disfiguring disease,trauma, or disfiguring disease,
tumor,
tumor, virus
virus oror infection
infection

Invasive
Invasive Cosmetic
Cosmetic Procedure
Procedure -- refers
refers toto aa surgery
surgery that
that is
is carried
carried out
out by
by entering
entering the
the body
body
through the
through the skin
skin or
or through
through aa body
body cavity
cavity or
or anatomical
anatomical opening,
opening, butbut with
with the
the smallest
smallest damage
damage
possible
possible toto these
these structures.
structures. Invasive
Invasive Cosmetic
Cosmetic Procedures
Procedures shall
shall include,
include, but
but not
not be
be limited
limited to
to
the following:
the following:
1. Liposuction
1. Liposuction
2.
2. Mammoplasty
Mammoplasty
3. Breast
3. Breast lift
lift
4. Buccal
4. Buccal Fat
Fat Reduction
Reduction
5. Buttocks
5. Buttocks Augmentation
Invasive
Invasive Cosmetic
Cosmetic ProcedureProcedure shallshall include,
include, but
but not
not bebe limited
limited toto the
the following:
following:
6. Chin
6. Chin Augmentation
Augmentation
7.
7. Facelift/Neck
Facelift/Neck lift lift
8. Thread
8. Thread Lift Lift
9. Embedded
9. Embedded Protein Protein Threads
Threads
10. Hair Restoration/ Transplantation
10. Hair Restoration/ Transplantation
11. Eyelid
11. Eyelid Surgery
Surgery
Invasive
Invasive Cosmetic
Cosmetic ProcedureProcedure shallshall include,
include, but
but not
not bebe limited
limited toto the
the following:
following:
12.
12. Abdominoplasty
Abdominoplasty or Tummy Tuck
or Tummy Tuck
13. Auto
13. Auto Grafting
Grafting
14. Rhinoplasty/Alar
14. Rhinoplasty/Alar Trimming Trimming
15.
15. Otoplasty
Otoplasty
Invasive
Invasive Cosmetic
Cosmetic ProcedureProcedure shallshall include,
include, but
but not
not bebe limited
limited toto the
the following:
following:
12. Abdominoplasty
12. Abdominoplasty or Tummy Tuck or Tummy Tuck
13. Auto
13. Auto Grafting
Grafting
14. Rhinoplasty/Alar
14. Rhinoplasty/Alar Trimming Trimming
15.
15. Otoplasty
Otoplasty
Non-Invasive Cosmetic
Non-Invasive Cosmetic ProcedureProcedure -- refers
refers toto aa conservative
conservative treatment
treatment that that does
does not
not require
require
incision
incision into
into thethe body
body or or the
the removal
removal of of tissue,
tissue, or
or when
when no no break
break in in the
the skin
skin is
is created
created andand there
there
is no
is no contact
contact with with mucosa,
mucosa, or or skin
skin break,
break, oror internal
internal body
body cavity
cavity beyond
beyond aa natural
natural oror artificial
artificial
body
body orifice. Non- Invasive Cosmetic Procedures shall include, but not be limited to
orifice. Non- Invasive Cosmetic Procedures shall include, but not be limited to the
the
following:
following:
1.
1. Acupuncture
Acupuncture Rejuvenation
Rejuvenation TherapyTherapy
2.
2. Air
Air Dissector
Dissector
3.
3. Botulinum
Botulinum Toxin Toxin Injection/Treatment
Injection/Treatment
4. Collagen
4. Collagen Induction
Induction TherapyTherapy
5.
5. Dermal
Dermal Fillers
Fillers (Cross-linked
(Cross-linked and and Non-cross-linked)
Non-cross-linked)
Non-Invasive
Non-Invasive Cosmetic Procedure shall include,
Cosmetic Procedure shall include, but
but not
not be
be limited
limited to to the
the following:
following:
6.
6. Non-surgical face-lifting & skin tightening using radio frequency, ultrasound, infrared
Non-surgical face-lifting & skin tightening using radio frequency, ultrasound, infrared
7. Carbon
7. Carbon dioxide
dioxide (CO2 (CO2
)) fractional
fractional laser
laser resurfacing
resurfacing
8.
8. Lasers
Lasers and
and light
light treatments
treatments
9. Body
9. Body treatments
treatments and and contouring
contouring procedures
procedures
Non-Invasive
Non-Invasive CosmeticCosmetic Procedure
Procedure shall
shall include,
include, but
but not
not be
be limited
limited
to the following:
to the following:
11. Cleanings
11. Cleanings and and Facials
Facials
12. Peelings
12. Peelings (Face(Face and and Body)
Body)
13.
13. Injectable
Injectable and and Weight
Weight Management
Management Treatment
Rates
Rates and
and Base
Base of
of Excise
Excise Tax
Tax
Rate:
Rate: five
five percent
percent (5%)
(5%)
Tax
Tax Base:
Base: Gross
Gross Receipts,
Receipts, net
net of
of excise
excise tax
tax and
and VAT
VAT
Coverage:
Coverage: invasive
invasive cosmetic
cosmetic procedures,
procedures, surgeries
surgeries andand body
body enhancements
enhancements directed
directed solely
solely
towards improving,
towards improving, altering,
altering, or
or enhancing
enhancing thethe patient’s
patient’s appearance
appearance and and do
do not
not meaningfully
meaningfully
promote the proper function of the body or prevent or treat illness
promote the proper function of the body or prevent or treat illness or disease. or disease.

Rates and
Rates and Base
Base ofof Excise
Excise Tax
Tax
“Gross Receipts”
“Gross Receipts” means
means thethe total
total amount
amount of of money
money oror its
its equivalent
equivalent representing
representing the
the contract
contract
price or
price or service
service fee,
fee, including
including deposits
deposits applied
applied asas payments
payments forfor services
services rendered
rendered and
and advance
advance
payments actually
payments actually or or constructively
constructively received
received for
for services
services performed
performed or or to
to be
be performed
performed for
for
another
another person
person butbut excluding
excluding the
the 5%
5% excise
excise tax
tax and
and VAT.
VAT.

“Constructive
“Constructive Receipt”
Receipt” occurs
occurs when
when the
the money
money consideration
consideration oror its
its equivalent
equivalent is
is placed
placed under
under
the control
the control of
of the
the person
person who
who rendered
rendered the
the service
service without
without restrictions
restrictions by
by the
the payor/customer.
payor/customer.
Also
Also covers
covers exchange
exchange deal
deal arrangement
arrangement

Exclusions
Exclusions
1.
1. Procedures
Procedures necessary
necessary to to ameliorate
ameliorate a a deformity
deformity arising
arising from
from or
or directly
directly
related to:
related to:
o
o congenital
congenital or
or developmental
developmental defect
defect oror abnormality,
abnormality,
o
© personal
personal injury resulting from an accident or
injury resulting from an accident or trauma,
trauma,
o
o disfiguring
disfiguring disease,
disease, tumor,
tumor, virus
virus or
or infection;
infection;
2.
2. Cases
Cases or
or treatments
treatments covered
covered by by the
the National
National Health
Health Insurance
Insurance Program;
Program; and
and
3.
3. Non-invasive
Non-invasive cosmetic
cosmetic procedures.
procedures.

Illustration
IIlustration 1:
1:
Where the invasive
Where the invasive cosmetic
cosmetic procedure
procedure is is performed
performed in in aa clinic
clinic or
or any
any place
place outside
outside aa hospital.
hospital.
To
To improve her body shape, Miss X decided to undergo liposuction procedure and sought the
improve her body shape, Miss X decided to undergo liposuction procedure and sought the
services
services ofof “Dok
“Dok Salamat,”
Salamat,” a a clinic
clinic operated
operated outside
outside the
the hospital
hospital and
and owned
owned by by Melo
Melo Medical
Medical
Group,
Group, Inc.
Inc. Dok
Dok Salamat
Salamat charged
charged MissMiss X X the
the amount
amount of of P50,000
P50,000 (inclusive
(inclusive of of 12%
12% VAT
VAT but
but
exclusive
exclusive ofof 5%
5% excise
excise tax)
tax) for
for the
the service
service rendered.
rendered. Show
Show thethe computation
computation for for the
the excise
excise tax.
tax.

Sample computation of excise tax on non-essential services

Original Price (inclusive of VAT) P_50,000,00
Gross Receipts (net of 12% VAT)(50,000/112%) 44,642.85
Add: 50% excise tax (44,642.85 x 5%) 2,232.15
12% VAT [(44,642.85+2,232,15) x 12%] 5,625.00
Total Amount to be collected from Ms. X P52,500.00
 Sample computation of excise tax on non-essential services
In the books of Melo Medical Group, Inc.:

Cash P52,500.00
Excise Tax Expense 2,232.15
Excise Tax Payable 2,232.15
Output VAT 5,625.00
Service Income 46,875.00

If the amount charged is inclusive of both 12% VAT and 5% excise tax, then the
computation of the excise tax will be as follows:

Original Price (inclusive of VAT and excise) Ps0,00.00

Gross Receipts (net of VAT, inclusive of excise)(50,000/112%) 44,642.86
Gross Receipts (net of Excise and VAT)(44,642.86/105%) 42,517.01
Add: 50% excise tax (42,517.01 x 5%) 2,125.85*
12% VAT \(44,642.85 x 12%) 5:357-14
Total Amount to be collected from Ms. X Ps0,000.00
*T he excise tax is to be remitted by Melo Medical Group, Inc.

LOCAL
LOCAL GOVERNMENT
GOVERNMENT TAXES
TAXES

Governing Law:
Governing Law: RA
RA 7160
7160 or
or the
the Local
Local Government
Government Code
Code of
of the
the Philippines
Philippines

•e Community
Community TaxTax
•e Real Property Tax
Real Property Tax
•e Local Business tax
Local Business tax

Community Tax
Community Tax —– local
local tax
tax levied
levied by
by cities
cities or
or municipalities
municipalities as
as provided
provided for
for under
under Sections
Sections 156
156 to
to 164
164 of
of
the Local
the Local Government
Government Code.
Code.

Type
Type Requirement
Requirement Rate
Rate
Individuals
Individuals • 1818 years
years ofof age
age oror over
over P5.00
P5.00
• Employed
Employed for for at
at least
least 30
30 Then
Then additional
additional of of P1.00
P1.00 for
for
consecutive
consecutive days days during
during every
every P1,000.
P1,000. In
In no
no_ case
case
the
the calendar
calendar year;
year; oror exceeding
exceeding P5,000.00
P5,000.00
• Engage
Engage inin business;
business; or or
• Owns
Owns real
real property
property
Juridical persons
Juridical persons • Every
Every corporation
corporation no
no P500.00
P500.00
 matter
matter howhow created
created or or Then
Then additional
additional taxtax in in nono case
case
organized,
organized, whether
whether exceeding
exceeding P10,000:
P10,000:
domestic
domestic or
or resident
resident • P5,000.00
P5,000.00 worth
worth of of real
real
foreign, engaged
foreign, engaged in or
in or property
property during
during the
the
doing
doing business
business in
in thethe preceding
preceding yearyear based
based on on
Philippines shall
Philippines shall pay
pay an an the
the valuation
valuation used used in in the
the
annual community
annual community tax tax payment of
payment of real
real property
property
tax
tax under
under existing
existing laws laws – —
P2.00
P2.00
• P5,000.00
P5,000.00 worth
worth of of gross
gross
receipts
receipts or
or earnings
earnings
derived from
derived from preceding
preceding
year–
year— P2.00
P2.00

Exempt:
Exempt:

1. Diplomatic
1. Diplomatic and
and consular
consular representatives;
representatives; and
and
2. Transient
2. Transient visitors
visitors when
when their
their stay
stay in
in the
the Philippines
Philippines does
does not
not exceed
exceed three
three (3)
(3) months
months

Place of
Place of payment
payment –
— place
place of
of residence
residence or
or principal
principal place
place of
of the
the juridical entity
juridical entity

Deadlines —– accrue
Deadlines accrue on the 11*st day
on the day of
of January of each
January of each year
year which
which shall
shall be
be paid
paid not
not later
later than
than the
the last
last day
day
of February
of February of
of each
each year.
year.

Community Tax
Community Tax Certificate
Certificate —– issued
issued upon
upon payment
payment of
of the
the prescribed
prescribed amount
amount and
and if
if not
not liable,
liable, upon
upon
payment of
payment of P1.00
P1.00

Real Property
Real Property Tax
Tax

•e Appraisal
Appraisal of of Real
Real Property
Property
•e Assessment
Assessment Levels
Levels
On Lands:
On Lands:
Class
Class Assessment
Assessment Levels
Levels
Residential
Residential 20%
20%
Agricultural
Agricultural 40%
40%
Commercial
Commercial 50%
50%
Industrial
Industrial 50%
50%
Mineral
Mineral 50%
50%
Timberland
Timberland 20%
20%
Rates of
Rates of levey
levey
1%
1% -- province
province ofof the
the assessed
assessed value
value of
of the
the real
real property
property
2%
2% -- city/municipality
city/municipality ofof the
the assessed
assessed value
value of
of the
the real
real property
property
1% - Special Educational Fund
1% - Special Educational Fund
Sample
Sample Computation:
Computation:

Jason’s residential land

Jason’s residential land is
is located
located in
in Cagayan
Cagayan de
de Oro
Oro City
City measuring
measuring 500
500 sqm
sqm with
with the
the following
following
additional
additional information:
information:

1.
1. FMVinin the
FMV the Tax
Tax Declaration
Declaration —– P10,000.00/sq.m
P10,000.00/sq.m
2.
2. Zonal
Zonal Value
Value —– P8,000.00/sq.m
P8,000.00/sq.m
3.
3. Assessment
Assessment Level —– 20%
Level 20%

Taxable
Taxable Value
Value of
of the
the land:
land:

Land
Land Area
Area 500
500 sq.m
sq.m
Valuation
Valuation P10,000.00
P10,000.00
FMV
FMV P5Million
P5Million
Assessment
Assessment Level
Level 20%
20%
Taxable
Taxable Value
Value P1Million
P1Million

Basic
Basic Real
Real Property
Property Tax:
Tax:

Assessed
Assessed Value
Value P1Million
P1Million
Basic
Basic RPT
RPT on
on Cities
Cities 2%
2%
Basic
Basic RPT
RPT due
due P20,000.00
P20,000.00

Special
Special Education
Education Fund:
Fund:

Assessed
Assessed Value
Value P1Million
P1Million
Basic
Basic RPT
RPT on
on Cities
Cities 1%
1%
SEF
SEF Due
Due P10,000.00
P10,000.00

How
How much
much total
total RPT:
RPT:
Basic RPT due
Basic RPT due P20,000.00
P20,000.00
SEF
SEF Due
Due P10,000.00
P10,000.00
Total
Total P30,000.00
P30,000.00

IfIf the
the taxpayer
taxpayer in
in advance:
advance:
Total
Total RPTRPT Due
Due P30,000.00
P30,000.00
Discount
Discount 20%
20%
P6,000.00
P6,000.00
 COMMUNITY
COMMUNITY TAX
TAX

The community
The community tax
tax is
is aa poll
poll or
or capitation
capitation tax
tax imposed
imposed upon
upon residents
residents of
ofaa city
city or
or municipality.
municipality. It
It replaced
replaced
the former residence tax. It may be levied by a city or municipality but not a province.
the former residence tax. It may be levied by a city or municipality but not a province.

Persons liable
Persons liable to
to pay
pay community
community tax:
tax:

1. Individuals
1. Individuals –
— Every
Every inhabitant
inhabitant of
of the
the Philippines
Philippines 18
18 years
years of
of age
age or
or over:
over:

a.
a. who
who has
has been
been regularly
regularly employed
employed on
on a
a wage
wage or
or salary
salary basis
basis for
for at
at least
least 30
30 consecutive
consecutive working
working days
days
during any calendar year; or
during any calendar year; or

b. who
b. who is
is engaged
engaged in
in business
business or
or occupation;
occupation;

c.
c. or
or who
who owns
owns real
real property
property with
with an
an aggregate
aggregate assessed
assessed value
value of
of P1,000.00
P1,000.00 or
or more;
more; or
or

d. who
d. who is
is required
required by
by law
law to
to file
file an
an income
income tax
tax return
return (Sec.
(Sec. 157,
157, LGC).
LGC).

2.
2. Juridical
Juridical Persons –Every corporation
Persons —Every corporation nono matter
matter how
how created
created or or organized,
organized, whether
whether domestic
domestic or
or
resident foreign,
resident foreign, engaged
engaged in
in or
or doing
doing business
business in
in the
the Philippines
Philippines (Sec.
(Sec. 158,
158, LGC).
LGC).

Amount
Amount of
of Community
Community Taxes
Taxes

1.
1. Individuals
Individuals –
—

a.
a. Basic:
Basic: P5.00
P5.00

b.
b. Additional:
Additional: Additional
Additional tax
tax of
of P1.00
P1.00 for
for every
every P1,000.00
P1,000.00 of
of income
income regardless
regardless of
of whether
whether from
from business,
business,
exercise
exercise of
of profession
profession or
or from
from property
property which
which in
in no
no case
case shall
shall exceed
exceed P5,000.00
P5,000.00

NOTE: In
NOTE: In case
case of
of husband
husband and
and wife,
wife, the
the additional
additional tax
tax shall
shall be
be based
based on
on the
the total
total property,
property, gross
gross receipts
receipts
or
or earnings
earnings owned
owned or
or derived
derived by
by them.
them.

2. Juridical persons
2. Juridical persons —– additional
additional tax,
tax, which,
which, in
in no
no case,
case, shall
shall exceed
exceed P10,000.00
P10,000.00 in
in accordance
accordance with
with the
the
following schedule:
following schedule:

a.
a. For
For every
every P5,000.00
P5,000.00 worth
worth ofof real
real property
property in
in the
the Philippines
Philippines owned
owned by by it
it during
during the
the preceding
preceding year
year
based
based on
on the
the valuation
valuation used
used for
for the
the payment
payment ofof real
real property
property tax
tax under
under existing
existing laws,
laws, found
found inin the
the
assessment rolls of the city or municipality where the real property is situated - Two pesos (P2.00); and
assessment rolls of the city or municipality where the real property is situated - Two pesos (P2.00); and

b.
b. For
For every
every P5,000.00
P5,000.00 of
of gross
gross receipts
receipts oror earnings
earnings derived
derived by
by it
it from
from its
its business
business in
in the
the Philippines
Philippines
during the
during the preceding
preceding year-
year- Two
Two pesos
pesos (P2.00)
(P2.00) (Sec.
(Sec. 157
157 && 158,
158, LGC).
LGC).

Venue
Venue of
of Payment
Payment

Residence
Residence ofof the
the individual,
individual, or
or in
in the
the place
place where
where the
the principal
principal office
office of
of the juridical entity
the juridical entity is
is located
located
(Sec. 160,
(Sec. 160, LGC).
Payment
Payment of
of community
community tax,
tax, when
when required:
required:

Accrues on
Accrues on the
the 1st
1st day
day of
of January
January of
of each
each year
year which
which shall
shall be
be paid
paid not
not later
later than
than the
the last
last day
day of
of February
February
of each year (Sec. 161, LGC).
of each year (Sec. 161, LGC).

Penalty
Penalty for
for delinquency:
delinquency:

An interest
An interest of
of 24%
24% per
per annum
annum from
from the
the due
due date
date until
until it
it is
is paid
paid shall
shall be
be added
added to
to the
the amount
amount due
due (Sec.
(Sec.
161, LGC)
161, LGC)

Exemptions
Exemptions from
from Community Tax
Community Tax

1.
1. Diplomatic
Diplomatic and
and consular
consular representatives
representatives

2. Transient
2. Transient visitors
visitors when
when their
their stay
stay in
in the
the Philippines
Philippines does
does not
not exceed
exceed three
three (3)
(3) months
months (Sec.
(Sec. 159,
159, LGC)
LGC)

Definition
Definition of
of Community
Community Tax
Tax Certificate:
Certificate:

It
It is
is issued
issued to
to every
every person
person or
or corporation
corporation upon
upon payment
payment of
of the
the community
community tax.
tax. It
It may
may also
also be
be issued
issued to
to
any person
any person or
or corporation
corporation NOT
NOT subject
subject to
to the
the community
community tax
tax upon
upon payment
payment of
of P1.00
P1.00 (Sec.
(Sec. 162,
162, LGC)
LGC)

Conditions:
Conditions: Bonded
Bonded in
in accordance
accordance with
with law
law (Sec.
(Sec. 164,
164, LGC)
LGC)

Proceeds
Proceeds of
of the
the community
community tax
tax collected
collected through
through the
the barangay
barangay treasurers
treasurers shall
shall be
be apportioned
apportioned as
as
follows:
follows:

1.
1. 50%
50% accrues
accrues to
to the
the general
general fund
fund of
of the
the city
city or
or municipality
municipality concerned;
concerned; and
and

2.
2. 50%
50% accrues
accrues to
to the
the barangay
barangay where
where the
the tax
tax is
is collected
collected

Presentation
Presentation of
of community
community tax
tax certificate,
certificate, when
when required:
required:

1.
1. Acknowledgment
Acknowledgment of of any
any document
document before
before aa notary
notary public.
public. (This
(This is
is in
in accordance
accordance with
with the
the provisions
provisions of
of
the LGC,
the LGC, note
note that
that this
this is
is no
no longer
longer included
included under
under the
the competent
competent evidences
evidences of
of identity
identity under
under the
the
Revised Rules on Notarial Practice);
Revised Rules on Notarial Practice);

2.
2. Taking
Taking an
an oath
oath of
of office
office upon
upon election
election or
or appointment
appointment to
to any
any position
position in
in the
the government
government service;
service;

3. Receiving
3. Receiving any
any license,
license, certificate
certificate or
or permit
permit from
from any
any public
public authority;
authority;

4.
4. Paying
Paying any
any tax
tax or
or fee;
fee;

5.
5. Receiving
Receiving any
any money
money from
from any
any public
public fund;
fund;

6.
6. Transacting
Transacting other
other official
official business;
business; or
or

7.
7. Receiving
Receiving any
any salary
salary or
or wage
wage from
from any
any person
person or
or corporation
corporation (Sec.
(Sec. 163,
163, LGC)
 COLLECTION OF
COLLECTION OF BUSINESS
BUSINESS TAXES
TAXES

BUSINESS TAX
BUSINESS TAX INCOME TAX
INCOME TAX
As
As to
to nature
nature Imposed
Imposed in in the
the exercise
exercise of
A
A taxof police
tax onon all
policeall yearly
yearly profits
profits arising
arising
power for regulatory
power for regulatory purposes from
frompurposes property,
property, professions,
professions,
and paid
and paid for for thethe privilege
privilege of
trades
trades or of
or offices,
offices, oror as
as aa tax
tax on
ona a
carrying on
carrying on aa business
business in in the
the year
person’s year
person’s income, income, emoluments,
emoluments,
the
the tax
tax was
was paid.
paid. profits and
profits and thethe like.
like.
As
As to
to date
date of
of payment
payment Paid
Paid atat the
the beginning
beginning of Due on
of the
Due on or or before
the year
year before thethe 1515*"th day
day of
of
as a fee to allow the business to
as a fee to allow the business
the 4th to
the 4th month following the
month following the
operate for
operate for the
the rest
rest of
of the
the year.
close of
close year.
of thethe taxpayer’s
taxpayer’s taxabletaxable
year.
year.
As aa prerequisite
As prerequisite to
to the
the conduct
conduct It is
It is aa prerequisite
prerequisite to
to the
the conduct
conduct Not
Not a a prerequisite
prerequisite
of business
of business of business
of business

Tax Period and

Tax Period and Manner
Manner of
of Payment
Payment

Tax period:
Tax period: It
It is
is based
based on
on calendar
calendar year,
year, unless
unless otherwise
otherwise provided
provided (Sec.
(Sec. 165
165 LGC)
LGC)

Manner
Manner of
of payment:
payment: It
It may
may be
be paid
paid in
in quarterly
quarterly installments
installments (Sec.
(Sec. 165,
165, LGC).
LGC).

Accrual of
Accrual of Tax
Tax

GR: Business
GR: Business tax
tax accrues
accrues on
on the
the 1st
1st day
day of
of January
January of
of each
each year.
year.

XPN:
XPN: New
New taxes,
taxes, fees
fees or
or charges,
charges, or
or changes
changes in
in the
the rates
rates thereof
thereof which
which shall
shall accrue
accrue on
on the
the 1st
1st day
day of
of the
the
quarter next following the effectivity of the ordinance imposing such new levies or rates (Sec. 166, LGC).
quarter next following the effectivity of the ordinance imposing such new levies or rates (Sec. 166, LGC).

Time of
Time of Payment
Payment

Within
Within 20
20 days
days of
of January
January oror of
of each
each subsequent
subsequent quarter
quarter (i.e.
(i.e. Jan.
Jan. 20,
20, April
April 20,
20, July
July 20,
20, and
and Oct.
Oct. 20).
20). It
It
may be
may be extended
extended by by the
the sanggunian
sanggunian for for justifiable reasons, without
justifiable reasons, without surcharges
surcharges oror penalties.
penalties. Extension
Extension
cannot
cannot exceed
exceed 66 months
months (Sec.
(Sec. 167,
167, LGC).
LGC).

Accrual
Accrual of
of tax
tax refers
refers to
to the
the time
time the
the tax
tax becomes
becomes due
due and
and collectible
collectible

Time of
Time of payment
payment refers
refers to
to the
the date
date the
the tax
tax is
is payable
payable without
without penalty.
penalty. For
For late
late payment
payment thereof,
thereof,
surcharge, interest,
surcharge, interest, and
and other
other penalties
penalties are
are imposable.
imposable.

Penalties
Penalties on
on Unpaid
Unpaid Taxes,
Taxes, Fees,
Fees, or
or Charges
Charges

1.
1. Surcharge
Surcharge of
of 25%
25% on
on taxes,
taxes, fees
fees or
or charges
charges not
not paid
paid on
on time;
time;

2. Interest
2. Interest not
not exceeding
exceeding 2% 2% per
per month
month of of the
the unpaid
unpaid taxes,
taxes, fees
fees or
or charges
charges including
including surcharges,
surcharges, until
until
the amount is fully paid. In no case shall the total interest exceed 36 months (Sec. 168, LGC).
the amount is fully paid. In no case shall the total interest exceed 36 months (Sec. 168, LGC).
Authority
Authority of
of Treasurer
Treasurer in
in Collection
Collection and
and Inspection
Inspection of
of Books
Books

Persons authorized
Persons authorized to
to collect
collect such
such taxes,
taxes, fees
fees and
and charges:
charges:

Provincial, city,
Provincial, city, municipal,
municipal, or
or barangay
barangay treasurer,
treasurer, or
or their
their duly
duly authorized
authorized deputies
deputies (Sec.
(Sec. 170,
170, LGC).
LGC).

Persons
Persons authorized
authorized to
to inspect
inspect the
the books
books of
of persons
persons or
or association
association

The
The local
local treasurer
treasurer or
or his
his deputy
deputy duly
duly authorized
authorized in
in writing,
writing, may
may examine
examine thethe books,
books, accounts
accounts and
and other
other
pertinent records of any person, or association to ascertain and collect the correct amount of
pertinent records of any person, or association to ascertain and collect the correct amount of tax. tax.

When
When should
should examination
examination be
be made
made

Examination shall
Examination shall be
be made
made during
during the
the regular
regular business
business hours,
hours, only
only once
once for
for every
every tax
tax period,
period, and
and shall
shall
be certified
be certified to
to by
by the
the examining
examining official
official (Sec.
(Sec. 171,
171, LGC).
LGC).

TAXPAYER’S REMEDIES
TAXPAYER’S REMEDIES

Prior to
Prior to assessment
assessment

1.
1. Administrative
Administrative appeal
appeal to
to the
the Secretary
Secretary of Justice
of Justice

a. Administrative
a. Administrative appeal
appeal questioning
questioning the
the constitutionality
constitutionality or
or legality
legality within
within 30
30 days
days from
from the
the effectivity
effectivity
of the tax ordinance or revenue measure;
of the tax ordinance or revenue measure;

b. Secretary
b. Secretary ofof Justice shall render
Justice shall render aa decision
decision within
within 60
60 days
days from
from date
date of
of receipt
receipt of
of the
the appeal;
appeal;

c. Within
c. Within 30 30 days
days after
after receipt
receipt of
of the
the decision
decision or or the
the lapse
lapse of
of 60-day
60-day period
period without
without action
action from
from the
the
Secretary
Secretary of Justice, aggrieved
of Justice, aggrieved party
party may
may file
file appropriate
appropriate proceedings
proceedings with
with aa court
court of
of competent
competent
jurisdiction.
jurisdiction.

NOTE:
NOTE: Such
Such appeal
appeal shall
shall not
not have
have the
the effect
effect of
of suspending
suspending the
the effectivity
effectivity of
of the
the ordinance
ordinance and
and the
the
accrual
accrual of
of the
the payment
payment ofof the
the tax,
tax, fee,
fee, or
or charge
charge levied
levied therein
therein (Sec.
(Sec. 187,
187, LGC).
LGC).

NOTE:
NOTE: The
The three
three separate
separate periods
periods (30-30-60)
(30-30-60) are
are given
given for
for compliance
compliance as
as a
a pre-requisite
pre-requisite before
before seeking
seeking
redress in a competent court (Jardine Davies Insurance Brokers, Inc. vs. Aliposa, G.R.
redress in a competent court (Jardine Davies Insurance Brokers, Inc. vs. Aliposa, G.R. No. 118900,No. 118900,
February
February 27,
27, 2003).
2003).

2. Action
2. Action for
for declaratory
declaratory relief
relief to
to determine
determine any
any question
question of
of construction
construction or
or validity
validity of
of aa tax
tax law
law and
and for
for
the declaration of the taxpayer’s liability thereunder.
the declaration of the taxpayer’s liability thereunder.

After
After an
an assessment
assessment

1.
1. Protest
Protest of
of the
the assessment
assessment

a.
a. When
When thethe correct
correct tax,
tax, fee,
fee, or
or charge
charge is
is not
not paid,
paid, the
the Local
Local Treasurer
Treasurer shall
shall issue
issue a
a notice
notice of
of assessment
assessment
within the applicable prescriptive period, (Sec. 195, LGC) stating the nature of the levy, the amount
within the applicable prescriptive period, (Sec. 195, LGC) stating the nature of the levy, the amount of
of
deficiency, the surcharges, interests and
deficiency, the surcharges, interests and penalties.
b.
b. Within
Within 60
60 days
days from
from receipt
receipt of
of the
the assessment,
assessment, the
the taxpayer
taxpayer may
may file
file a
a written
written protest
protest of
of the
the
assessment
assessment with
with the
the local
local treasurer
treasurer contesting
contesting the
the assessment;
assessment; otherwise
otherwise the
the assessment
assessment shall
shall become
become
final
final and
and executory.
executory.

c. The
c. local treasurer
The local treasurer shall
shall decide
decide the
the protest
protest within
within 60
60 days
days from
from the
the time
time of
of its
its filing.
filing. If
If the
the local
local
treasurer finds
treasurer finds the
the assessment
assessment toto be
be wholly
wholly or
or partly
partly correct,
correct, he
he shall
shall deny
deny the
the protest
protest wholly
wholly or
or partly
partly
with notice
with notice to
to the
the taxpayer.
taxpayer.

d. The taxpayer
d. The taxpayer shall
shall have
have 30
30 days
days from
from the
the receipt
receipt of
of the
the denial
denial of
of the
the protest
protest oror from
from the
the lapse
lapse of
of the
the
60-day period
60-day period prescribed
prescribed herein
herein within
within which
which toto appeal
appeal with
with the
the court
court ofof competent
competent jurisdiction
jurisdiction
otherwise
otherwise the
the assessment
assessment becomes
becomes conclusive
conclusive and
and unappealable
unappealable (Sec.
(Sec. 195,
195, LGC).
LGC).

e. The competent
e. The competent court
court referred
referred to
to is
is the
the RTC/MTC/MetC/MCTC
RTC/MTC/MetC/MCTC which which acts
acts in
in the
the exercise
exercise of
of its
its original
original
jurisdiction, depending on the amount. Local tax cases originally decided by the MTC/MetC/MCTC may
jurisdiction, depending on the amount. Local tax cases originally decided by the MTC/MetC/MCTC may
be
be appealed
appealed to
to RTC.
RTC.

NOTE:
NOTE: When
When an
an assessment
assessment is
is seasonably
seasonably disputed,
disputed, the
the collection
collection of
of tax,
tax, fee,
fee, or
or chrage
chrage subject
subject matter
matter of
of
the assessment should be held in abeyance pending final determination thereof.
the assessment should be held in abeyance pending final determination thereof.

2.
2. Action
Action for
for refund
refund

a.
a. A written claim
Awritten claim for
for refund
refund or
or credit
credit is
is filed
filed with
with the
the local
local treasurer.
treasurer.

b. A
b. A claim
claim or
or proceeding
proceeding isis then
then filed
filed with
with the
the court
court ofof competent
competent jurisdiction (depending upon
jurisdiction (depending upon the
the
jurisdictional amount) within 2 years from the date of the payment of such tax, fee, or
jurisdictional amount) within 2 years from the date of the payment of such tax, fee, or charge, or from charge, or from
the
the date
date the
the taxpayer
taxpayer is
is entitled
entitled to
to aa refund
refund or or credit
credit (Sec.
(Sec. 196,
196, LGC).
LGC).

NOTE: The
NOTE: The filing
filing of
of aa written
written claim
claim for
for refund
refund with
with the
the local
local treasurer
treasurer isis aa condition
condition precedent
precedent for
for
maintaining
maintaining a court action. If the local treasurer does not act on the written claim for refund and the 2-
a court action. If the local treasurer does not act on the written claim for refund and the 2-
year statute of limitation is about to expire, the taxpayer should forthwith initiate the court action and
year statute of limitation is about to expire, the taxpayer should forthwith initiate the court action and
consider
consider the
the treasurer’s
treasurer’s inaction
inaction asas aa denial
denial of
of his
his claim
claim for
for refund.
refund.

3. Right
3. Right of
of redemption
redemption —– one
one (1)
(1) year
year from
from the
the date
date of
of the
the sale
sale or
or from
from the
the date
date of
of forfeiture
forfeiture (Sec.
(Sec. 179,
179,
LGC).
LGC).

NOTE:
NOTE: The
The owner
owner shall
shall not
not be
be deprived
deprived of
of possession
possession and
and to
to rentals/income
rentals/income thereof
thereof until
until the
the expiration
expiration
of
of the
the time
time allowed
allowed for
for its
its redemption.
redemption.

Judicial Remedies
Judicial Remedies

1.
1. Court
Court Action
Action

a. Within
a. Within 30
30 days
days after
after receipt
receipt of
of decision
decision or
or lapse
lapse of
of 60
60 days
days in
in case
case of
of Secretary
Secretary of
of Justice’s inaction
Justice’s inaction
(Sec. 187,
(Sec. 187, LGC);
LGC);

b. Within
b. Within 30
30 days
days from
from receipt
receipt when
when protest
protest of
of assessment
assessment is
is denied
denied or
or lapse
lapse of
of 60
60 days
days in
in case
case of
of local
local
treasurer’s
treasurer’s inaction
inaction (Sec.
(Sec. 195,
195, LGC);
c.
c. If
If no
no action
action is
is taken
taken by
by the
the treasurer
treasurer in
in refund
refund cases
cases and
and the
the two
two year
year period
period is
is about
about to
to lapse
lapse (Sec.
(Sec.
195, LGC);
195, LGC);

d.
d. If
If remedies
remedies available
available does
does not
not provide
provide plain,
plain, speedy
speedy and
and adequate
adequate remedy.
remedy.

2. Action
2. Action for
for declaratory
declaratory relief
relief

3. Injunction
3. Injunction -may
–may be be resorted
resorted to to as
as an
an ancillary
ancillary remedy
remedy in in an
an action
action for
for declaratory
declaratory relief
relief or
or for
for
annulment of
annulment of aa tax
tax ordinance,
ordinance, provided
provided it it be
be shown
shown that
that the
the collection
collection of of tax
tax pending
pending thethe final
final
resolution of
resolution of the
the case
case would
would cause
cause irreparable
irreparable injury
injury to
to the
the taxpayer
taxpayer who
who has
has nono other
other adequate
adequate remedy
remedy
in the
in the ordinary
ordinary cause
cause of of law
law (Physical
(Physical Therapy
Therapy Organization
Organization ofof the
the Philippines,
Philippines, Inc.,
Inc., vs.
vs. Municipal
Municipal Board
Board
of
of Manila,
Manila, G.R.
G.R. No.
No. L-10448,
L-10448, August
August 30,30, 1957).
1957).

SUMMARY PROCEDURE
SUMMARY PROCEDURE

Protest of Assessment

Assessment
(made by the local
treasurer (LT))

Receipt by the taxpayer

Taxpayer does not protestwithin

Taxpayer protests 60 days
(Written protest must be filed . 0 fi
with LT within 60 days) (Effect: a eecautory) find and

If LT finds protest meritorious, LT

issues a notice of cancelling the LT does not act on the protest
accuse: If LT finds protest without merit, within60 days”
. LT denies protest. /
Cancellation may be whole or (also deemed
a denial)
partial

Taxpayer appeals Taxpayer does not appeal

G0 days from receipt of the denial (Effect: Assessment is final,
bf the protest or from lapse of the unappealable and executory)
60 day period prescribed
Where: Court of competent
jurisdiction
 Appeal to MTC/MeTC/MCTC Appeal to ATC
If assessment is below P300K if assessment isabove P300K
outside NCR and P400K in NCR outside NCR and P400K in NCR

Appeal to CTA division,

File MR with CTA division incase
Appeal to RTC, of adverse decision within 15
Appeal to CTA en banc (Rule 43) days,
Petition for review with CTAen
banc if MR is denied
a |

| ©UST Tax Team 2018

Appeal to SC

NOTE: Jurisdictional amount

NOTE: Jurisdictional amount of
of P300k
P300k &
& 400k
400k was
was amended.
amended. Please
Please READ
READ if
if you
you want to get
want to get updated:
updated:

Eighteenth Congress
Eighteenth Congress

Second Regular
Second Regular Session
Session

Begun and
Begun and held
held in
in Metro
Metro Manila,
Manila, on
on Monday,
Monday, the
the twenty-seventh
twenty-seventh day
day ofofJuly, two thousand
July, two thousand twenty.
twenty.

[[ REPUBLIC
REPUBLIC ACT
ACT NO.
NO. 11576,
11576, July 30, 2021
July 30, 2021 ]]

AN
AN ACT
ACT FURTHER
FURTHER EXPANDING
EXPANDING THE JURISDICTION OF
THE JURISDICTION OF THE
THE METROPOLITAN
METROPOLITAN TRIAL
TRIAL COURTS,
COURTS, MUNICIPAL
MUNICIPAL
TRIAL COURTS
TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS,
IN CITIES, MUNICIPAL TRIAL COURTS, AND AND MUNICIPAL
MUNICIPAL CIRCUIT TRIAL COURTS,
CIRCUIT TRIAL COURTS,
AMENDING FOR THE PURPOSE BATAS PAMBANSA BLG. 129, OTHERWISE KNOWN AS “THE
AMENDING FOR THE PURPOSE BATAS PAMBANSA BLG. 129, OTHERWISE KNOWN AS “THE JUDICIARY JUDICIARY
REORGANIZATION
REORGANIZATION ACT
ACT OF
OF 1980,”
1980,” AS
AS AMENDED
AMENDED

Be it
Be it enacted
enacted by
by the
the Senate
Senate and
and House
House of
of Representatives
Representatives of
of the
the Philippines
Philippines in
in Congress
Congress assembled:
assembled:

Section
Section 1.
1. Section
Section 19
19 of
of Batas
Batas Pambansa
Pambansa Blg.
Blg. 129,
129, otherwise
otherwise known
known as
as “The
“The Judiciary
Judiciary Reorganization
Reorganization Act
Act
of
of 1980,”
1980,” as
as amended,
amended, isis hereby
hereby amended
amended to
to read
read as
as follows:
follows:

“Section 19.
“Section 19. Jurisdiction of the
Jurisdiction of the Regional
Regional Trial
Trial Courts
Courts in
in Civil
Civil Cases.
Cases. —– Regional
Regional Trial
Trial Courts
Courts shall
shall exercise
exercise
exclusive original
exclusive original jurisdiction:
jurisdiction:

“xXXX
M“
xx

“(2)
“(2) In
In all
all civil
civil actions
actions which
which involve
involve the
the title
title to,
to, or
or possession
possession of,
of, real
real property,
property, or
or any
any interest
interest therein,
therein,
where the
where the assessed
assessed value
value exceeds
exceeds Four
Four hundred
hundred thousand
thousand pesos
pesos (P400,000.00),
(P400,000.00), except
except for
for forcible
forcible
entry
entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon
into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon
the
the Metropolitan
Metropolitan Trial
Trial Courts,
Courts, and
and Municipal Trial Courts
Municipal Trial Courts in
in Cities,
Cities, Municipal Trial Courts,
Municipal Trial Courts, and
and Municipal
Municipal
Circuit Trial Courts;
Circuit Trial Courts;

“(3)
“(3) In
In all
all actions
actions in
in admiralty
admiralty and
and maritime jurisdiction where
maritime jurisdiction where the
the demand
demand or
or claims
claims exceeds
exceeds Two
Two
million pesos (P2,000,000.00);
million pesos (P2,000,000.00);

“(4) In
“(4) In all
all matters
matters of
of probate,
probate, both
both estate
estate and
and intestate,
intestate, where
where the
the gross
gross value
value of
of the
the estate
estate exceeds
exceeds Two
Two
million pesos (P2,000,000.00)’
million pesos (P2,000,000.00)’

“xXXX
M“l
xx

“(8) In
“(8) In all
all other
other cases
cases in
in which
which the
the demand,
demand, exclusive
exclusive of
of interest,
interest, damages
damages of
of whatever
whatever kind,
kind, attorney’s
attorney’s
fees,
fees, litigation
litigation expenses
expenses and
and costs
costs or
or the
the value
value of
of the
the property
property in
in controversy
controversy exceeds
exceeds Two
Two million
million
pesos
pesos (P2,000,000.00).”
(P2,000,000.00).”

Section 2.
Section 2. Section
Section 33
33 of
of the
the same
same law
law is
is hereby
hereby amended
amended to
to read
read as
as follows:
follows:

“Section
“Section 33.33. Jurisdiction
Jurisdiction of
of the
the Metropolitan
Metropolitan Trial
Trial Courts,
Courts, Municipal Trial Courts
Municipal Trial Courts in in Cities,
Cities, Municipal
Municipal
Trial Courts, and
Trial Courts, and Municipal
Municipal Circuit
Circuit Trial
Trial Courts
Courts in
in Civil
Civil Cases.
Cases. —– Metropolitan
Metropolitan Trial
Trial Courts,
Courts, Municipal
Municipal Trial
Trial
Courts in Cities, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:
Courts in Cities, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

“(1) Exclusive
“(1) Exclusive original
original jurisdiction over civil
jurisdiction over civil actions
actions and and probate
probate proceedings,
proceedings, testate
testate andand intestate,
intestate,
including
including thethe grant
grant of of provisional
provisional remedies
remedies in in proper
proper cases,
cases, where
where the the value
value ofof the
the personal
personal property,
property,
estate,
estate, or amount of the demand does not exceed Two million pesos (P2,000,000.00), exclusive of
or amount of the demand does not exceed Two million pesos (P2,000,000.00), exclusive of
interest, damages of whatever kind, attorney’s fees, litigation expenses, and
interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs, the amount of which costs, the amount of which
must
must bebe specifically
specifically alleged:
alleged: Provided,
Provided, That
That interest,
interest, damages
damages of of whatever
whatever kind,kind, attorney’s
attorney’s fees,
fees, litigation
litigation
expenses,
expenses, and and costs
costs shall
shall bebe included
included in in the
the determination
determination of of the
the filing
filing fees:
fees: Provided,
Provided, further,
further, That
That
where
where there
there are
are several
several claims
claims or
or causes
causes of of actions
actions between
between the the same
same or or different
different parties,
parties, embodied
embodied in in
the
the same
same complaint,
complaint, the the amount
amount ofof the
the demand
demand shall shall bebe totality
totality of
of the
the claims
claims inin all
all the
the causes
causes ofof action,
action,
irrespective
irrespective of of whether
whether the the causes
causes of
of action
action arose
arose outout ofof the
the same
same or or different
different transactions;
transactions;

“xXXX
M“
xx

“(3)
“(3) Exclusive
Exclusive original jurisdiction in
original jurisdiction in all
all civil
civil actions
actions which
which involve
involve title
title to,
to, or
or possession
possession of, of, real
real property,
property,
or any
or any interest
interest therein
therein where
where thethe assessed
assessed value
value ofof the
the property
property or or any
any interest
interest therein
therein does
does notnot exceed
exceed
Four
Four hundred
hundred thousand
thousand pesos
pesos (P400,000.00)
(P400,000.00) exclusive
exclusive on on interest,
interest, damages
damages of of whatever
whatever kind, kind, attorney’s
attorney’s
fees,
fees, litigation
litigation expenses
expenses and
and costs:
costs: Provided,
Provided, That
That inin cases
cases of
of land
land not
not declared
declared forfor taxation
taxation purposes,
purposes, the
the
value of
value of such
such property
property shall
shall be
be determined
determined by by the
the assessed
assessed value
value of
of the
the adjacent
adjacent lots.
lots.

“(4)
“(4) Exclusive
Exclusive original jurisdiction in
original jurisdiction in admiralty
admiralty and
and maritime
maritime actions
actions where
where the
the demand
demand or
or claim
claim does
does not
not
exceed
exceed Two
Two million
million pesos
pesos (P2,000,000.00).”
(P2,000,000.00).”

Section 3.
Section 3. Delegated
Delegated Authority
Authority of
of the
the Supreme
Supreme Court
Court to
to Adjust
Adjust the
the Jurisdictional
Jurisdictional Amounts
Amounts for
for First
First and
and
Second Level Courts. – The Supreme Court, unless otherwise provided by law, without
Second Level Courts. — The Supreme Court, unless otherwise provided by law, without prejudice, prejudice,
however,
however, on
on the
the part
part of
of the
the Congress
Congress to
to adjust
adjust the
the amounts
amounts when
when the
the circumstances
circumstances so so warrant,
warrant, may
may be
adjust
adjust the jurisdictional amount
the jurisdictional amount for for first
first and
and second
second level
level courts
courts to:
to: (1)
(1) reflect
reflect the
the extraordinary
extraordinary
supervening inflation
supervening inflation or
or deflation
deflation ofof currency;
currency; (2)
(2) reflect
reflect change
change inin the
the land
land valuation;
valuation; (3)
(3) maintain
maintain the
the
proportion
proportion of
of caseload
caseload between
between first
first and
and second
second level
level courts.
courts.

Section 4.
Section 4. The provisions of
The provisions of this
this Act
Act shall
shall apply
apply prospectively
prospectively to to all
all civil
civil cases
cases filed
filed in
in the
the second
second level
level
courts and
courts and first
first level
level courts
courts from
from the
the date
date of
of its
its effectivity
effectivity thereof.ℒαwρhi৷
thereof. Lawphil

Section
Section 5.5. Separability
Separability Clause.
Clause. –— If
If any
any provision
provision of
of this
this Act
Act is
is declared
declared unconstitutional,
unconstitutional, the
the same
same shall
shall
not
not affect
affect the
the validity
validity and
and effectivty
effectivty ofof the
the other
other provisions
provisions thereof.
thereof.

Section 6.
Section 6. Repealing
Repealing Clause.
Clause. —– All
All laws,
laws, decrees,
decrees, and
and orders
orders inconsistent
inconsistent with
with the
the provisions
provisions of
of this
this Act
Act
shall be
shall be considered
considered amended
amended or or modified
modified accordingly.
accordingly.

Section 7.
Section 7. Effectivity.
Effectivity. —– This
This Act
Act shall
shall take
take effect
effect fifteen
fifteen (15)
(15) days
days following
following its
its publication
publication in
in the
the Official
Official
Gazette
Gazette or
or in
in two
two (2)
(2) newspapers
newspapers ofof general
general circulation.
circulation.

Approved,
Approved,

(SGD.)
(SGD.) LORD
LORD ALLAN
ALLAN JAY
JAY Q.
Q. VELASCO
VELASCO

Speaker
Speaker of
of the
the House
House of
of Representatives
Representatives (SGD.)
(SGD.) VICENTE
VICENTE C.
C. SOTTO
SOTTO III
III

Senate President
Senate President

This Act
This Act was
was passed
passed by
by the
the Senate
Senate of
of the
the Philippines
Philippines as
as Senate
Senate Bill
Bill No.
No. 1886
1886 on
on February
February 8,
8, 2021,
2021, and
and
adopted by
adopted by the
the House
House of
of Representatives
Representatives as
as an
an amendment
amendment to to House
House Bill
Bill No.
No. 6589
6589 on
on May
May 19,
19, 2021.
2021.

(SGD.)
(SGD.) MARK
MARK LLANDRO
LLANDRO L.
L. MENDOZA
MENDOZA

Secretary
Secretary General
General

House
House of
of Representatives
Representatives (SGD.)
(SGD.) MYRA
MYRA MARIE
MARIE D.
D. VILLARICA
VILLARICA

Secretary of
Secretary of Senate
Senate

Approved: JUL 30
Approved: JUL 30 2021
2021

(SGD.)
(SGD.) RODRIGO
RODRIGO ROA
ROA DUTERTE
DUTERTE

President of
President of the
the Philippines
NOTE:
NOTE: TheThe competent
competent court
court referred
referred toto is
is the
the RTC/MTC/MetC/MCTC
RTC/MTC/MetC/MCTC which
which acts
acts in
in the
the exercise
exercise of
of its
its
original jurisdiction,
original jurisdiction, depending
depending on on thethe amount.
amount. Local
Local tax
tax cases
cases originally
originally decided
decided by by the
the
MTC/MetC/MCTC may
MTC/MetC/MCTC may be
be appealed
appealed toto RTC.
RTC.

Claim for
Claim for Refund
Refund of
of Tax
Tax Credit
Credit for
for Erroneously
Erroneously or
or Illegally
Illegally Collected
Collected Tax,
Tax, Fee,
Fee, or
or Charge
Charge

Grounds
Grounds for
for the
the refund
refund of
of local
local government
government taxes,
taxes, fees
fees or
or charges:
charges: (Sec.
(Sec. 196,
196, LGC.)
LGC.)

1.
1. Erroneously
Erroneously collected
collected

2. Illegally
2. Illegally collected
collected

Procedure
Procedure for
for the
the refund
refund of
of local
local government
government taxes,
taxes, fees
fees or
or charges
charges

1.
1. A
A written
written claim
claim for
for refund
refund or
or credit
credit is
is filed
filed with
with the
the local
local treasurer.
treasurer.

2. A
2. A claim
claim or
or proceeding
proceeding isis then
then filed
filed with
with the
the court
court ofof competent
competent jurisdiction (depending upon
jurisdiction (depending upon the
the
jurisdictional amount) within two (2) years from the date of the payment of such tax, fee, or charge, or
jurisdictional amount) within two (2) years from the date of the payment of such tax, fee, or charge, or
from the
from the date
date the
the taxpayer
taxpayer isis entitled
entitled to
to aa refund
refund or
or credit
credit (Ibid.).
(Ibid.).

CIVIL
CIVIL REMEDIES
REMEDIES BY
BY THE
THE LGUs
LGUs FOR
FOR COLLECTION
COLLECTION OF
OF REVENUES
REVENUES

Available
Available remedies
remedies to
to the
the LGUs
LGUs in
in collecting
collecting revenues:
revenues:

1. Local
1. Local government
government lien
lien

Local
Local taxes,
taxes, fees,
fees, charges,
charges, andand other
other revenues
revenues constitute
constitute a a lien,
lien, superior
superior toto all
all liens,
liens, charges
charges or
or
encumbrances in favor of any person, enforceable by appropriate administrative or judicial action, not
encumbrances in favor of any person, enforceable by appropriate administrative or judicial action, not
only
only upon
upon any
any property
property or or rights
rights therein
therein which
which may
may bebe subject
subject to
to the
the lien
lien but
but also
also upon
upon property
property used
used in
in
business, occupation,
business, occupation, practice
practice of
of profession
profession or
or calling,
calling, or
or exercise
exercise of of privilege
privilege with
with respect
respect toto which
which the
the
lien
lien is
is imposed
imposed (Sec.
(Sec. 173,
173, LGC).
LGC).

The lien
The lien may
may only
only be
be extinguished
extinguished upon
upon full
full payment
payment of
of the
the delinquent
delinquent local
local taxes
taxes fees
fees and
and charges
charges
including related surcharges and interest.
including related surcharges and interest.

2.
2. Civil
Civil remedies
remedies (Secs.
(Secs. 173
173 &
& 174,
174, LGC)
LGC)

a.
a. Distraint
Distraint of
of personal
personal property
property

b.
b. Levy
Levy of
of real
real property
property

c. Judicial
c. Judicial action
action

Levy
Levy of
of real
real property
property may
may be
be simultaneously
simultaneously issued
issued with
with the
the warrant
warrant of
of distraint
distraint

The levy
The levy of
of aa real
real property
property may
may be
be made
made before
before or
or simultaneous
simultaneous with
with distraint.
distraint. In
In case
case the
the levy
levy on
on real
real
property is not issued before or simultaneously with the warrant of distraint on personal property, and
property is not issued before or simultaneously with the warrant of distraint on personal property, and
the
the personal
personal property
property ofof the
the taxpayer
taxpayer is
is not
not sufficient
sufficient to
to satisfy
satisfy his
his delinquency,
delinquency, thethe provincial,
provincial, city
city or
municipal
municipal treasurer,
treasurer, as
as the
the case
case may
may be,
be, shall
shall within
within 3030 days
days after
after execution
execution of
of the
the distraint,
distraint, proceed
proceed
with the
with the levy
levy on
on taxpayer’s
taxpayer’s real
real property
property (Sec.
(Sec. 176,
176, LGC).
LGC).

LGU
LGU has
has right
right to
to purchase
purchase real
real property
property advertised
advertised for
for sale,
sale, when:
when:

1.
1. No
No bidder
bidder for
for the
the real
real property
property

2. If
2. If the
the highest
highest bid
bid is
is for
for an
an amount
amount insufficient
insufficient to
to pay
pay the
the taxes,
taxes, fees,
fees, or
or charges,
charges, related
related surcharges,
surcharges,
interests, penalties
interests, penalties and
and costs
costs

Local government
Local government may
may repeat
repeat the
the remedies
remedies ofof distraint
distraint and
and levy
levy

The remedies
The remedies byby distraint
distraint and
and levy
levy may
may be
be repeated
repeated if
if necessary
necessary until
until the
the full
full amount
amount due,
due, including
including all
all
expenses,
expenses, is
is collected
collected (Sec.
(Sec. 184,
184, LGC).
LGC).

Penalty of
Penalty of the
the local
local treasurer
treasurer for
for failure
failure to
to issue
issue and
and execute
execute the
the warrant:
warrant:

Automatically
Automatically dismissed
dismissed from
from service
service after
after notice
notice and
and hearing,
hearing, if
if found
found guilty
guilty of
of abusing
abusing the
the exercise
exercise
thereof by
thereof by competent
competent authority,
authority, without
without prejudice
prejudice to
to criminal
criminal prosecution
prosecution under
under the
the RPC
RPC and
and other
other
applicable laws
applicable laws (Sec.
(Sec. 177,
177, LGC).
LGC).

Exempt properties
Exempt properties from
from distraint
distraint or
or levy
levy

The
The following
following property
property shall
shall be
be exempt
exempt from
from distraint
distraint and
and the
the levy,
levy, attachment
attachment oror execution
execution thereof
thereof for
for
delinquency in
delinquency in the
the payment
payment ofof any
any local
local tax,
tax, fee
fee or
or charge,
charge, including
including the
the related
related surcharge
surcharge and
and interest:
interest:
[ToBe-ChoP-LBM]
[ToBe-ChoP-LBM]

1.
1. Tools
Tools and
and implements
implements necessarily
necessarily used
used by
by the
the delinquent
delinquent taxpayer
taxpayer in
in his
his trade
trade or
or employment;
employment;

2.
2. One
One horse,
horse, cow,
cow, carabao,
carabao, oror other
other Beast
Beast of
of burden,
burden, such
such as
as the
the delinquent
delinquent taxpayer
taxpayer may
may select,
select, and
and
necessarily used
necessarily used by
by him
him in
in his
his ordinary
ordinary occupation;
occupation;

3. His
3. His necessary
necessary Clothing,
Clothing, and
and that
that ofofall his family;
all his family;

4.
4. Household
Household furniture
furniture and
and utensils
utensils necessary
necessary forfor housekeeping
housekeeping and
and used
used for
for that
that purpose
purpose by
by the
the
delinquent taxpayer,
delinquent taxpayer, such
such as
as he
he may
may select,
select, of
of aa value
value not
not exceeding
exceeding P10,000.00;
P10,000.00;

5.
5. Provisions,
Provisions, including
including crops,
crops, actually
actually provided
provided for
for individual
individual or
or family
family use
use sufficient
sufficient for
for 4
4 months;
months;

6.
6. The
The professional
professional Libraries
Libraries of
of doctors,
doctors, engineers,
engineers, lawyers
lawyers and judges;
and judges;

7.
7. One
One fishing
fishing Boat
Boat and
and net,
net, not
not exceeding
exceeding the
the total
total value
value of
of P10,000.00,
P10,000.00, by
by the
the lawful
lawful use
use of
of which
which a
a
fisherman
fisherman earns
earns his
his livelihood;
livelihood; and
and

8. Any
8. Any Material
Material or
or article
article forming
forming part
part of
of aa house
house or
or improvement
improvement ofof any
any real
real property
property (Sec.
(Sec. 185,
185, LGC).
 Summary
Summary For
For Procedure
Procedure for
for Distraint
Distraint

Summary For Procedure for Distraint

Failure of the person owing any local tax, fee, or charge

to pay the same at the time required (Sec. 175[a], LGC).
I
Written notice to the taxpayer concerned
Contents: informing to seize or confiscate any personal property belonging to that
person or subject to the lien
How much: In sufficient quantity
to satisfy
the tax, fee, or charge in question, together
with any increment thereto incident to delinquency and the expenses
of seizure.
Notice from: LT or his deputy
|
Issuance of a duly authenticated certificate
Contents: the fact of delinquency and the amounts
of the tax, fee, or charge and
penalty
Purpose: Such certificate shall serveas sufficient warrant for the distraint of personal
property
By who: LT or his deputy. (Sec. 175/a], LGC).
|
Making of an account of the goods, chattels or effects distrained (including a
statement of the sum demanded and a note of the time and place of sale
By who: The officer executing the distraint
Note: A copy of which signed by himself shall be left either with (1) the owner or person
from whose possession the goods, chattels or effects are taken, or (2) at the dwelling
or place of business of that person and with someone of suitable age and discretion.
(Sec. 175[b], LGC).
|
Notification to public of distraint and sale
The officer shall causea notification to be exhibited in not less than 3 public and
conspicuous places (one of which shall be at the office of the chief executive of the
LGU) inthe territory of the LGU where the distraint is made, specifying the time and
place of sale, and the articles distrained (Sec. 175[c], LGC.)
NOTE: The time of sale shall not be lessthan 20 days after the notice to the owner or
possessor of the property.
T
within days Unsold within T20 days
Before selling and
anner: at a public auction Effect: the same shall be within 120 days,
tothe highest bidder for considered as soldto the LGU taxpayer was able to
ca concerned pay all proper charges
For how much: amount of the Effect: the goods or
assessment made thereon by the effects distrained shall
Report by LT Committee on Appraisal be restored to the
To: Chief executive
of Effect of “deemed sale” owner
LGU transaction: To the extent of the
Period: Within 5 days appraised amount, the tax
after the sale delinquencies shall be cancelled
(Sec. 175 fe]. LGC).
© UST Tax Team 2018 L__
Application of proceeds to satisfy thetax, including the
surcharges, interest, and other penalties incident to
delinquency, and the expenses of the distraint and sale.
NOTE: The expenses chargeable upon the seizureand
sale shall embrace only the actual expenses of the
seizure and preservation of the property pending the
sale, and no charge shall be imposed for the services of
the local officer or his deputy (Sec. 175/[f], LGC).

|
[ Further distraint of other Return of the excess to the
properties owner of property sold
If: proceeds of the sale ar If: proceeds of the sale exceed all
insufficient to satisfy the
charges
claim
 Failure of the person owing any local tax, fee, or charge to pay the same at
the time required (Sec. 176, LGC

Levy of real property before, simultaneously or after distraintof personal

property belonging to the delinquent tax payer

Preparation of a duly authenticated certificate

By: LT
Contents: the name of the taxpayer and the amount of the tax, fee, or charge, and
penalty due from him (Sec. 176, LGC).

Service/mailing of written notice of the levy to:

(1) Assessor
(2) Register of Deeds of the province or city where the property is located who
shall annotate the levy on the tax declaration and certificate of title of the
property, respectively, and
(3) delinquent taxpayer or, if he be absent from the PH, to his agent or the
manager of the business in respect to which the liability arose, or if there be
none, to the occupantof the property in question (Sec. 176, LGC).
|
Report on levy within 10 days from ey by the levying officer(Sec. 176,
LGC,

Advertisement of the sale within 30 days afterlevy.

Posting notice inthe main entrance of the municipal building or city hall and
conspicuous place inthe barangay where the real property is located
Publication once a week for 3 consecutive weeks ina newspaper of general
Note: Before the date circulation inthe LGU where the property is located (Sec. 178, LGC)_
of sale, the owner |
may stay the [ |
proceedings by : . Unsold/insufficiently sold: LT shall purchasethe
paying the delinquent Sale of levied property property on behalf of the LGU if: (a) There is no
tax, interest and roug se © or auction bidder (b) The highest bid is insufficient to pay the
expenses of sale : (Sec. 178, LGC) deficiency tax (Sec. 128).
I UST Tax Team 2018
[
0

Report
of the sale
Period: Within 30 days after the sale Issuance of the certificate of sale to the
By who: the LT or his deputy purchaser (Sec. 178)
Towhom: the sanggunian concerned.
i I
Proceeds of saleis Warrant of Levy issued by LT, as alegal
applied to delinquent tax, execution inthe LGU concerned (Sec.
expenses, and charges. 258, LGC).
ge cccceeensccceccsssccceeesnseeens I
: If proceeds are in i [ ]
i: excess, suchis :: [Redeemed within one year from date Not redeemed: - 2a final
fi deed of
: returned to the : of sale: sale shall be issuedto the
: taxpayer. Otherwise, Property returns to taxpayer, a purchaser (if sold)/LGU (if
levy may be repeated certificate of redemption is issued. unsold) (Sec. 180, LGC).
until full amount due is
collected..
 Judicial Action
Judicial Action

LGU’s enforcement
LGU’s enforcement of
of the
the judicial remedy in
judicial remedy in collection
collection of
of taxes:
taxes:

The LGU
The LGU concerned
concerned may
may enforce
enforce the
the collection
collection ofof delinquent
delinquent taxes,
taxes, fees,
fees, charges
charges and
and other
other revenues
revenues byby
civil action
civil action inin any
any court
court of
of competent
competent jurisdiction.
jurisdiction. The civil action
The civil action shall
shall be
be filed
filed by
by the
the local
local treasurer
treasurer
within
within 5 5 years
years from
from delinquent
delinquent taxes,
taxes, fees
fees or
or charges
charges become
become due.
due.

Mode of
Mode of appeal
appeal from
from the
the decision
decision of
of the
the Regional
Regional Trial
Trial Court
Court involving
involving local
local taxes:
taxes:

RA 9282
RA 9282 expanded
expanded thethe jurisdiction
jurisdiction ofof the
the CTA
CTA toto include,
include, among
among others,
others, the
the power
power to to review
review by
by appeal
appeal
decisions, orders
decisions, orders or
or resolutions
resolutions of of the
the RTC
RTC in
in local
local tax
tax cases
cases originally
originally decided
decided oror resolved
resolved byby them
them in
in the
the
exercise of
exercise of their
their original
original or
or appellate
appellate jurisdiction (City of
jurisdiction (City of Iriga
Iriga vs
vs Camarines
Camarines SurSur Electric
Electric Cooperative,
Cooperative, Inc.,
Inc.,
G.R. No.
G.R. No. 192945,
192945, September
September 5, 5, 2012).
2012).

The authority
The authority to
to exercise
exercise either
either original
original or
or appellate
appellate jurisdiction over local
jurisdiction over local tax
tax cases
cases depended
depended on on the
the
amount of
amount of the
the claim.
claim. InIn cases
cases where
where thethe amount
amount sought
sought toto be
be refunded
refunded is is below
below the
the jurisdictional
jurisdictional
amount
amount of
of the
the RTC,
RTC, the
the MetC,
MetC, MTC,
MTC, MCTC
MCTC areare clothed
clothed with
with ample
ample authority
authority to
to rule
rule on
on such
such claims.
claims.

In
In cases
cases where
where the the RTC
RTC exercises
exercises appellate jurisdiction, itit necessarily
appellate jurisdiction, necessarily follows
follows that
that there
there mustmust be be aa court
court
capable of
capable of exercising
exercising original
original jurisdiction
jurisdiction –— otherwise
otherwise there there would
would be be no no appeal
appeal over
over which
which the the RTC
RTC
would exercise
would exercise appellate
appellate jurisdiction.
jurisdiction. The The Court
Court cannot
cannot consider
consider thethe City
City Treasurer
Treasurer as as thethe entity
entity that
that
exercises
exercises original jurisdiction not
original jurisdiction not only
only because
because it it is
is not
not a a “court”
“court” within
within the the context
context of of B.P.
B.P. Blg.
Blg. 129,
129, but
but
also because
also because B.P. B.P. 129
129 expressly
expressly delineates
delineates the the appellate
appellate jurisdiction
jurisdiction of of the
the Regional
Regional Trial Trial Courts,
Courts,
confining
confining as as itit does
does said
said appellate jurisdiction to
appellate jurisdiction to cases
cases decided
decided by by MeTC,
MeTC, MTC, MTC, and
and MCTC.
MCTC. Verily,
Verily, unlike
unlike
in
in the
the case
case ofof the
the CA,
CA, B.P.
B.P. 129
129 does
does notnot confer
confer appellate jurisdiction on
appellate jurisdiction on the
the RTC
RTC over
over rulings
rulings mademade by by
non-judicial entities. The RTC exercises appellate jurisdiction only from cases decided by the MeTC, MTC
non-judicial entities. The RTC exercises appellate jurisdiction only from cases decided by the MeTC, MTC
and
and MCTC
MCTC in in the
the proper
proper cases.
cases. The
The nature
nature ofof the jurisdiction exercised
the jurisdiction exercised by by these
these courts
courts is is original,
original,
considering it
considering it will
will be
be the
the first
first time
time that
that aa court
court willwill take
take judicial cognizance of
judicial cognizance of aa case
case instituted
instituted for for
judicial action
judicial action (China
(China Banking
Banking Corp.
Corp. v.v. City
City Treasurer
Treasurer of of Manila,
Manila, G.R.
G.R. No.
No. 204117, July 01,
204117, July 01, 2015).
2015).

If principal amount of taxes, fees, exclusive of charges and penalties does not exceed P300,000
or P400,000 in Metro Manila

If principal amount of taxes, fees exclusive of charges and penalties exceeds P300,000 or
Original
8 P400,000 in Metro Manila, provided, the amount is less than 1 million
Appellate The RTC shall exercise appellate jurisdiction over all cases decided by the MeTC, MTC, and
ppets MCTC in their respective territorial jurisdiction

Original If principal amount of taxes, fees exclusive of charges and penalties is P 1 million or above
Appellate Over appeals from the judgments, resolutions or orders of the RTC in tax collection cases
originally decided by them in their respective jurisdiction.
CTA EN BANC
1. Decisions or resolutions over petitions for review of the Court in Divisions in the exercise
ofits exclusive appellate jurisdiction over local taxes decided by the RTC in the exercise of
their original jurisdiction;
Appellate
2. Over petitions for review of the judgments, resolutions or orders of the RTC in the exercise
of their appellate jurisdiction over tax collection cases originally decided by the MeTC, MTC
and MCTC in their respective territorial jurisdiction.

(PLEASE
(PLEASE READ
READ THE
THE LAW
LAW I| CITED
CITED ABOVE
ABOVE AS
AS TO THE JURISDICTION
TO THE JURISDICTION OF
OF MTC
MTC RTC.
RTC. HOWEVER
HOWEVER FOR
FOR CTA
CTA
DIVISION
DIVISION && CTA
CTA EN
EN BANK
BANK FOLLOW THE A.M.
FOLLOW THE A.M. No.
No. 05-11-07-CTA
05-11-07-CTA OR
OR Revised
Revised Rules
Rules of
of CTA.
CTA.
 REAL
REAL PROPERTY
PROPERTY TAXATION
TAXATION

Real property
Real property tax
tax is
is aa direct
direct tax
tax on
on ownership
ownership of
of lands
lands and
and buildings
buildings or
or other
other improvements
improvements thereon
thereon not
not
specially exempted, and is payable regardless of whether the property is used or not, although
specially exempted, and is payable regardless of whether the property is used or not, although the valuethe value
may vary
may vary in
in accordance
accordance withwith such
such factor.
factor.

NOTE:
NOTE: Real
Real property
property tax
tax is
is a
a fixed
fixed proportion
proportion of
of the
the assessed
assessed value
value of
of the
the property
property being
being taxed
taxed and
and
requires, therefore, the intervention of assessors.
requires, therefore, the intervention of assessors.

The present
The present law
law onon real
real property
property taxation
taxation (R.A.
(R.A. 7160,
7160, LGC)
LGC) adopts
adopts actual
actual use
use of
of real
real property
property asas basis
basis of
of
assessment
assessment (Sec.
(Sec. 199[b],
199[b], LGC),
LGC), even
even ifif the
the user
user is
is not
not the
the owner
owner (Province
(Province of
of Nueva
Nueva Ecija
Ecija v.
v. Imperial
Imperial
Mining
Mining Co.,
Co., Inc.
Inc. G.R.
G.R. No.
No. 59463,
59463, November
November 19, 19, 1982).
1982).

FUNDAMENTAL PRINCIPLES
FUNDAMENTAL PRINCIPLES

Fundamental principles
Fundamental principles governing
governing real
real property
property taxation
taxation [CAULE]
[CAULE]

1.
1. Real
Real property
property shall
shall be
be appraised
appraised at
at its
its Current
Current and
and fair
fair market
market value.
value.

2.
2. Real
Real property
property shall
shall be
be classified
classified for
for assessment
assessment purposes
purposes on
on the
the basis
basis of
of its
its Actual
Actual use.
use. (Doctrine
(Doctrine of
of
Usage)
Usage)

NOTE:
NOTE: Actual
Actual use
use refers
refers to
to the
the purpose
purpose forfor which
which the
the property
property is
is principally
principally or
or predominantly
predominantly utilized
utilized by
by
the person
the person in
in possession
possession of
of the
the property.
property.

3.
3. Real
Real property
property shall
shall be
be assessed
assessed on
on the
the basis
basis of
ofaa Uniform
Uniform classification
classification within
within each
each LGU
LGU

4.
4. The
The appraisal,
appraisal, assessment,
assessment, levy
levy and
and collection
collection of
of real
real property
property tax
tax shall
shall not
not be
be Let
Let to
to any
any private
private
person.
person.

5. The
5. The appraisal
appraisal and
and assessment
assessment of
of real
real property
property shall
shall be
be Equitable
Equitable (Sec.
(Sec. 197,
197, LGC).
LGC).

NOTE: Real
NOTE: Real Property
Property shall
shall be
be classified,
classified, valued
valued and
and assessed
assessed on
on the
the basis
basis of
of its
its actual
actual use
use regardless
regardless of
of
where located, whoever owns it and whoever uses it (Sec. 217,
where located, whoever owns it and whoever uses it (Sec. 217, LGC).LGC).

NATURE OF
NATURE OF REAL
REAL PROPERTY
PROPERTY TAX
TAX

1.
1. Direct
Direct tax
tax whose
whose burden
burden could
could not
not be
be shifted
shifted by
by the
the one
one who
who pays
pays to
to other
other persons
persons

2.
2. Ad
Ad valorem
valorem tax
tax based
based on
on the
the assessed
assessed value
value of
of the
the property
property

3. Local
3. Local tax
tax

4.
4. Imposed
Imposed on
on use
use and
and not
not ownership
ownership

5.
5. Progressive
Progressive in
in character
character pending
pending to
to a
a certain
certain extent
extent on
on the
the use
use and
and value
value of
of the
the property
property

6. Indivisible
6. Indivisible single
single obligation
LGUs
LGUs responsible
responsible for
for the
the administration
administration of
of real
real property
property tax
tax

1.
1. Provinces
Provinces

2.
2. Cities
Cities

3.
3. Municipalities
Municipalities in
in Metro
Metro Manila
Manila Area
Area

SUBJECTS OF
SUBJECTS OF REAL
REAL PROPERTY
PROPERTY TAXATION
TAXATION

Definition of
Definition of Real
Real Property
Property

Under
Under Article
Article 415
415 of
of the
the New
New Civil
Civil Code,
Code, the
the following
following are
are Immovable
Immovable Property:
Property:

1.
1. Land,
Land, buildings,
buildings, roads
roads and
and constructions
constructions ofofall
all kinds
kinds adhered
adhered to
to the
the soil;
soil;

2. Trees,
2. plants, and
Trees, plants, and growing
growing fruits,
fruits, while
while they
they are
are attached
attached to
to the
the land
land or
or form
form an
an integral
integral part
part of
of an
an
immovable;
immovable;

3. Everything
3. Everything attached
attached to
to an
an immovable
immovable inin aa fixed
fixed manner,
manner, inin such
such aa way
way that
that it
it cannot
cannot be
be separated
separated
therefrom
therefrom without
without breaking
breaking the
the material
material or
or deterioration
deterioration of
of the
the object;
object;

4. Statues,
4. Statues, reliefs,
reliefs, paintings
paintings or
or other
other objects
objects for
for use
use or
or ornamentation,
ornamentation, placed
placed in
in buildings
buildings or
or on
on lands
lands by
by
the owner of the immovable in such a manner that it reveals the intention to attach them
the owner of the immovable in such a manner that it reveals the intention to attach them permanently permanently
to
to the
the tenements;
tenements;

5.
5. Machinery,
Machinery, receptacles,
receptacles, instruments
instruments or
or implements
implements intended
intended by
by the
the owner
owner of
of the
the tenement
tenement for
for an
an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works;
meet the needs of the said industry or works;

6. Animal
6. Animal houses,
houses, pigeon-houses,
pigeon-houses, beehives,
beehives, fish
fish ponds
ponds oror breeding
breeding places
places of
of similar
similar nature,
nature, in
in case
case their
their
owner
owner has
has placed
placed them
them or
or preserves
preserves them
them with
with the
the intention
intention to
to have
have them
them permanently
permanently attached
attached to
to the
the
land, and forminga permanent part of it; the animals in these places are included;
land, and forming a permanent part of it; the animals in these places are included;

7.
7. Fertilizer
Fertilizer actually
actually used
used on
on a
a piece
piece of
of land;
land;

8.
8. Mines,
Mines, quarries,
quarries, and
and slag
slag dumps,
dumps, while
while the
the matter
matter thereof
thereof forms
forms part
part of
of the
the bed,
bed, and
and waters
waters either
either
running or
running or stagnant;
stagnant;

9.
9. Docks
Docks and
and structures
structures which,
which, though
though floating,
floating, are
are intended
intended by
by their
their nature
nature and
and object
object to
to remain
remain at
at a
a
fixed
fixed place
place on
ona a river, lake,
river, lake, or
or coast;
coast;

10.
10. Contracts
Contracts for
for public
public works,
works, and
and servitudes
servitudes and
and other
other real
real rights
rights over
over immovable
immovable property.
property.

NOTE: An
NOTE: An object
object used
used indirectly
indirectly for
for the
the general
general purpose
purpose of
of the
the business
business shall
shall not
not be
be treated
treated as
as real
real
property.
The
The SC
SC has
has generally
generally heldheld that
that ArtArt 415
415 of
of the
the Civil
Civil Code
Code provides
provides an
an exclusive
exclusive enumeration
enumeration of of what
what
constitutes real
constitutes real property,
property, forfor tax
tax purposes,
purposes, however,
however, it it is
is common
common for for otherwise
otherwise personal
personal properties
properties
under
under the
the Civil
Civil Code
Code to to be
be classified
classified asas real
real property
property (Mindanao
(Mindanao BusBus Co.
Co. v.
v. City
City Assessor,
Assessor, G.R.
G.R. No.
No. L-
L-
17870,
17870, September
September 29, 29, 1962).
1962).

NOTE:
NOTE: the
the NIRC
NIRC and
and the
the LGC
LGC prevail
prevail in
in classifying
classifying property
property for
for tax
tax purposes.
purposes. Under
Under the
the LGC,
LGC, machinery,
machinery,
which may
which may or
or may
may not
not be
be permanently
permanently attached
attached toto land,
land, is
is subject
subject to
to real
real property
property tax.
tax.

Improvement
Improvement is is a
a valuable
valuable addition
addition made
made toto aa property
property oror an
an amelioration
amelioration inin its
its condition,
condition, amounting
amounting toto
more than
more than aa mere
mere repair
repair oror replacement
replacement of of parts
parts involving
involving capital
capital expenditures
expenditures and and labor,
labor, which
which isis
intended
intended toto enhance
enhance its its value,
value, beauty
beauty or
or utility
utility or
or to
to adapt
adapt itit for
for new
new or
or further
further purposes
purposes (Sec.
(Sec. 199
199 [m],
[m],
LGC).
LGC).

Requisites
Requisites for
for taxability
taxability of
of an
an improvement
improvement [ESI]
[ESI]

1. Must
1. Must enhance
enhance the
the value
value of
of the
the property
property

2.
2. Must
Must be
be separately
separately assessable
assessable

3.
3. Can
Can be
be treated
treated independently
independently from
from the
the main
main property
property

NOTE: Whenever
NOTE: Whenever real
real property
property has
has been
been divided
divided into
into condominium,
condominium, each
each condominium
condominium owned
owned shall
shall be
be
separately
separately assessed,
assessed, for
for purposes
purposes of
of real
real property
property taxation
taxation and
and other
other tax
tax purposes
purposes to
to the
the owner
owner thereof
thereof
and
and tax on each such condominium shall constitute a lien solely thereof (Sec. 25, R.A. No. 776,
tax on each such condominium shall constitute a lien solely thereof (Sec. 25, R.A. No. 776,
Condominium Act).
Condominium Act).

Doctrine of
Doctrine of Essentiality
Essentiality

Properties
Properties considered
considered asas personal
personal under
under the
the Civil
Civil Code
Code may
may nonetheless
nonetheless be be considered
considered as as real
real property
property
for tax
for tax purposes
purposes where
where said
said property
property isis essential
essential toto the
the conduct
conduct of of business.
business. The
The property
property to to be
be
considered
considered as as immobilized
immobilized for
for RPT
RPT must
must be be “essential
“essential and
and a a principal
principal element”
element” ofof an
an industry
industry without
without
which such
which such industry
industry would
would bebe unable
unable to
to carry
carry onon the
the principal
principal industrial
industrial purpose
purpose forfor which
which it it was
was
established.
established.

Examples:
Examples:

1.
1. Gasoline
Gasoline station
station equipment
equipment and and machineries
machineries likelike above
above ground
ground and
and underground
underground tanks, tanks, elevated
elevated
water tanks,
water tanks, water
water tanks,
tanks, gasoline
gasoline pumps,
pumps, computing
computing pumps
pumps water
water pumps,
pumps, carcar washers,
washers, car
car lifts,
lifts,
air
air compressors,
compressors, tire tire inflators
inflators and
and the
the like
like attached
attached to to the
the pavement
pavement andand to to the
the shed
shed (Caltex
(Caltex
Phils.
Phils. v.
v. CBAA,
CBAA, GR GR No.
No. 50466,
50466, May
May 31,
31, 1982).
1982).
2. A
2. A mining
mining Company’s
Company’s siltation
siltation dam
dam andand decant
decant system
system are
are not
not machineries
machineries but but improvements
improvements
subject
subject to to real
real property
property tax
tax (The
(The Provincial
Provincial Assessor
Assessor ofof Marinduque
Marinduque v. v. CA,
CA, G.R.
G.R. No.No. 170532,
170532, April
April
30,
30, 2009).
 3.
3. Pipelines
Pipelines embedded
embedded and and attached
attached to
to the
the land
land which
which cannot
cannot be
be removed
removed therefrom
therefrom without
without
dismantling the
dismantling the steel
steel pipes
pipes welded
welded to
to it
it to
to form
form the
the pipeline
pipeline (MERALCO
(MERALCO v.
v. CBAA,
CBAA, G.R.
G.R. No.
No. L-
L-
46245, May
46245, May 31,
31, 1982).
1982).

Kinds of
Kinds of real
real property
property tax
tax and
and special
special levies
levies [REIS]
[REIS]

1.
1. Basic
Basic Real
Real property
property tax
tax

2. Additional
2. Additional levy
levy on
on real
real property
property for
for the
the Special
Special Education
Education Fund
Fund (Sec.
(Sec. 235,
235, LGC)
LGC)

3.
3. Additional
Additional ad
ad valorem
valorem tax
tax on
on Idle
Idle lands
lands (Sec
(Sec 236,
236, LGC)
LGC)

4. Special
4. Special levy
levy by
by LGUs
LGUs (Sec
(Sec 240,
240, LGC)
LGC)

Imposed by
Imposed by other
other laws:
laws:

1. Socialized
1. Socialized Housing
Housing Tax(RA
Tax(RA 7279,
7279, March
March 24,
24, 1992)
1992)

LGUs are
LGUs are authorized
authorized to
to impose
impose an
an additional
additional one-half
one-half percent
percent (0.5%)
(0.5%) on
on the
the assessed
assessed value
value of
of all
all lands
lands in
in
urban areas
urban areas in
in excess
excess of
of P50,000,
P50,000, except
except those
those from
from lands
lands which
which are
are exempted
exempted from
from the
the coverage
coverage of of RA
RA
7279.
7279.

IMPOSITION OF
IMPOSITION OF REAL
REAL PROPERTY
PROPERTY TAXES
TAXES

Power
Power to
to Levy
Levy Real
Real Property
Property Taxes
Taxes

Extent
Extent of
of the
the local
local taxing
taxing power
power in
in real
real property
property taxation
taxation

Provinces,
Provinces, cities,
cities, and
and municipalities
municipalities do do not
not only
only have
have the
the power
power to
to levy
levy real
real estate
estate taxes,
taxes, but
but they
they may
may
also fix
also fix real
real estate
estate tax
tax rates.
rates. Sec.
Sec. 233
233 of
of the
the LGC
LGC provides
provides that
that they
they shall
shall fix
fix aa uniform
uniform rate
rate of
of basic
basic real
real
property tax
property tax applicable
applicable toto their
their respective
respective localities.
localities.

Real properties
Real properties subject
subject to
to tax
tax

1.
1. For
For Basic
Basic Real
Real Property Tax and
Property Tax and Special
Special Levy
Levy on
on Education
Education Fund:
Fund:

a. Land
a. Land

b. Building
b. Building

c.
c. Machinery
Machinery

d. Other
d. Other improvements
improvements (Sec.
(Sec. 232,
232, GC)
GC)

2. For
2. For Special
Special Levy
Levy on
on Idle
Idle Lands
Lands and
and Special
Special Levy
Levy on
on Public
Public Works
Works (Special
(Special Assessments):
Assessments):

a.
a. Land
Land Only
Only

Rates of
Rates of levy
1.
1. In
Inaa Province
Province -- at
at the
the rate
rate not
not exceeding
exceeding 1%
1% of
of the
the assessed
assessed value
value of
of real
real property;
property; and
and

2. In
2. Inaa City
City or
or Municipality
Municipality within
within the
the Metro
Metro Manila
Manila area
area -- at
at the
the rate
rate not
not exceeding
exceeding 2%
2% of
of the
the assessed
assessed
value of real property (Sec. 233, LGC).
value of real property (Sec. 233, LGC).

Ordinance
Ordinance imposing
imposing special
special levy
levy for
for public
public works
works must
must contain
contain the
the following:
following:

1. The
1. The ordinance
ordinance shall
shall

a.
a. Describe
Describe the
the nature,
nature, extent,
extent, and
and location
location of
of the
the project;
project;

b.
b. State
State estimated
estimated cost;
cost; and
and

c. Specify
c. Specify metes
metes and
and bounds
bounds by
by monuments
monuments and
and lines
lines

2. It
2. It must
must state
state the
the number
number of
of annual
annual installments,
installments, not
not less
less than
than 5
5 years
years nor
nor more
more than
than 10
10 years.
years.

NOTE: In
NOTE: In the
the apportionment
apportionment of of special
special levy,
levy, Sanggunian
Sanggunian may
may fix
fix different
different rates
rates depending
depending whether
whether such
such
land is
land is more
more oror less
less benefited
benefited by
by the
the proposed
proposed work
work

3. Notice
3. Notice to
to the
the owners
owners and
and public
public hearing
hearing (Sec.
(Sec. 242,
242, LGC)
LGC)

4. Owner
4. Owner can
can appeal
appeal to
to the
the LBAA
LBAA and
and CBAA
CBAA

Special levy
Special levy or
or special
special assessment
assessment by
by LGUs
LGUs

A
A province,
province, city
city or
or municipality
municipality may
may impose
impose a a special
special levy
levy on
on the
the lands
lands within
within its
its territorial jurisdiction
territorial jurisdiction
specially benefited
specially benefited by
by public
public works
works projects
projects or
or improvements
improvements by by the
the LGU
LGU concerned.
concerned.

XPN:
XPN: It
It shall
shall not
not apply
apply to
to lands
lands exempt
exempt from
from basic
basic real
real property
property tax
tax and
and the
the remainder
remainder of
of the
the land,
land,
portions of which have been donated to the LGU concerned for the construction of such projects or
portions of which have been donated to the LGU concerned for the construction of such projects or
improvements
improvements (Sec.
(Sec. 240,
240, LGC).
LGC).

NOTE: The
NOTE: The special
special levy
levy shall
shall not
not exceed
exceed 60%
60% of
of the
the actual
actual cost
cost of
of such
such projects
projects and
and improvements,
improvements,
including the costs of acquiring land and such other real property in connection therewith.
including the costs of acquiring land and such other real property in connection therewith.

Additional
Additional levy
levy on
on real
real property
property for
for the
the Special
Special Education
Education Fund
Fund

A province,
A province, city,
city, or
or aa municipality
municipality within
within the
the Metro
Metro Manila
Manila area
area may
may levy
levy and
and collect
collect anan annual
annual tax
tax of
of 1%
1%
on the
on the assessed
assessed value
value of
of real
real property,
property, which
which shall
shall be
be in
in addition
addition to
to the
the basic
basic real
real property
property tax.
tax. The
The
proceeds
proceeds thereof
thereof shall
shall exclusively
exclusively accrue
accrue to
to the
the Special
Special Education
Education Fund
Fund created
created under
under RA RA 5447
5447 (Sec.
(Sec. 235,
235,
LGC).
LGC).

Additional
Additional ad
ad valorem
valorem tax
tax on
on idle
idle lands
lands

A province
A province or
or city
city or
or aa municipality
municipality within
within the
the Metro
Metro Manila
Manila area
area may
may levy
levy an
an annual
annual tax
tax on
on idle
idle lands
lands at
at
the rate not exceeding 5% of the assessed value of the property which shall be in addition to the basic
the rate not exceeding 5% of the assessed value of the property which shall be in addition to the basic
real property
real property tax
tax (Sec.
(Sec. 236,
236, LGC).
The
The following
following are
are considered
considered “idle
“idle lands”
lands”

1. Agricultural
1. Agricultural lands:
lands:

a.
a. More
More than
than one
one (1)
(1) hectare
hectare in
in area
area

b.
b. Suitable
Suitable for
for cultivation,
cultivation, dairying,
dairying, inland
inland fishery,
fishery, and
and other
other agricultural
agricultural uses
uses

c. One-half
c. One-half (1/2)
(1/2) of
of which
which remain
remain uncultivated
uncultivated or
or unimproved
unimproved by
by the
the owner
owner or
or person
person having
having legal
legal
interest.
interest.

NOTE:
NOTE: Agricultural
Agricultural lands
lands planted
planted to to permanent
permanent oror perennial
perennial crops
crops with
with at
at least
least fifty
fifty (50)
(50) trees
trees to
to a
a
hectare shall
hectare shall not
not be
be considered
considered idle
idle lands.
lands. Lands
Lands actually
actually used
used for
for grazing
grazing purposes
purposes shall
shall likewise
likewise not
not be
be
considered idle
considered idle lands.
lands.

2. Lands
2. Lands other
other than
than agricultural:
agricultural:

a.
a. Located
Located in
in a
a city
city or
or municipality
municipality

b.
b. More
More than
than one
one thousand
thousand square
square meters
meters (1,000
(1,000 m2)
m2) in
in area
area

c. One-half
c. One-half (1/2)
(1/2) of
of which
which remain
remain unutilized
unutilized or
or unimproved
unimproved by
by the
the owner
owner or
or person
person having
having legal
legal interest.
interest.

Regardless
Regardless of of land
land area,
area, this
this Section
Section shall
shall apply
apply toto residential
residential lotslots inin subdivisions
subdivisions duly
duly approved
approved by by
proper authorities,
proper authorities, the
the ownership
ownership of of which
which hashas been
been transferred
transferred to to individual
individual owners,
owners, who
who shall
shall be
be liable
liable
for
for the
the additional
additional tax:
tax: Provided,
Provided, however,
however, that
that individual
individual lots
lots of
of such
such subdivisions,
subdivisions, ownership
ownership of of which
which
has not
has not been
been transferred
transferred to to the
the buyer
buyer shall
shall be
be considered
considered as as part
part ofof the
the subdivision,
subdivision, and
and shall
shall bebe subject
subject
to
to the
the additional
additional tax
tax payable
payable byby subdivision
subdivision owner
owner oror operator
operator (Sec.
(Sec. 237,
237, LGC).
LGC).

Causes for
Causes for Exemption
Exemption from
from Idle
Idle Lands
Lands Tax
Tax

1.
1. Force
Force majeure
majeure

2. Civil
2. Civil disturbance
disturbance

3. Natural
3. Natural calamity
calamity

4.
4. Any
Any cause
cause or
or circumstance
circumstance which
which physically
physically or
or legally
legally prevents
prevents the
the owner
owner or
or person
person having
having legal
legal
interest from improving, utilizing or cultivating the same (Ibid.).
interest from improving, utilizing or cultivating the same (Ibid.).

Purpose
Purpose of
of imposing
imposing ad
ad valorem
valorem taxes
taxes on
on idle
idle land
land

To
To penalize
penalize property
property owners
owners who
who dodo not
not use
use their
their property
property productively.
productively. It
It is
is also
also designed
designed to
to encourage
encourage
utilization
utilization of
of land
land resources
resources in
in order
order to
to contribute
contribute to
to national
national development.
development.

Exemption
Exemption from
from Real
Real Property
Property Taxes
1.
1. Real
Real property
property owned
owned byby the
the Republic
Republic of
of the
the Philippines
Philippines or
or any
any of
of its
its political
political subdivisions
subdivisions except
except when
when
the beneficial
the beneficial use
use thereof
thereof has
has been
been granted
granted for
for consideration
consideration or
or otherwise
otherwise to to aa taxable
taxable person.
person.

NOTE: This exemption

NOTE: This exemption shall
shall not
not apply
apply to
to real
real properties
properties the
the beneficial
beneficial use
use of
of which
which has
has been
been granted,
granted, for
for
consideration or otherwise, to a taxable person (Testate Estate of C.T. Lim v. City of Manila,
consideration or otherwise, to a taxable person (Testate Estate of C.T. Lim v. City of Manila, G.R. No. G.R. No.
90639,
90639, February
February 21,
21, 1990).
1990).

2. Charitable
2. Charitable institutions,
institutions, churches,
churches, parsonages,
parsonages, or or convents
convents appurtenant
appurtenant thereto,
thereto, mosques,
mosques, non
non-profit
-profit
or
or religious
religious cemeteries,
cemeteries, andand all
all lands,
lands, buildings,
buildings, and
and improvements
improvements actually,
actually, directly
directly and
and exclusively
exclusively used
used
for religious,
for religious, charitable,
charitable, oror educational
educational purposes.
purposes.

NOTE: The tax

NOTE: The tax exemption
exemption herein
herein rests
rests on
on the
the premise
premise that
that they
they are
are actually,
actually, directly
directly and
and exclusively
exclusively used
used
by said entities or institutions for their stated purposes and not necessarily because they are owned by
by said entities or institutions for their stated purposes and not necessarily because they are owned by
religious, charitable or educational institutions.
religious, charitable or educational institutions.

3. All
3. All machineries
machineries and
and equipment
equipment that
that are
are actually,
actually, directly
directly and
and exclusively
exclusively used
used by
by local
local Water
Water utilities
utilities
and
and government-owned
government-owned or or controlled
controlled corporations
corporations engaged
engaged inin the
the supply
supply and
and distribution
distribution of
of water
water
and/or generation and transmission of electric power.
and/or generation and transmission of electric power.

4.
4. All
All real
real property
property owned
owned by
by duly
duly registered
registered Cooperatives
Cooperatives as
as provided
provided for
for under
under RA
RA 6938.
6938.

5. Machinery
5. Machinery and
and equipment
equipment used
used for
for Pollution
Pollution control
control and
and environmental
environmental protection
protection (Sec.
(Sec. 234,
234, LGC).
LGC).

NOTE:
NOTE: Pollution
Pollution control
control andand infrastructure
infrastructure devices
devices refers
refers toto infrastructure,
infrastructure, machinery,
machinery, equipment
equipment and/or
and/or
improvements
improvements used for impounding, treating or neutralizing, precipitating, filtering, conveying and
used for impounding, treating or neutralizing, precipitating, filtering, conveying and
cleansing
cleansing mine
mine industrial
industrial waste
waste and
and tailings
tailings as
as well
well asas eliminating
eliminating or or reducing
reducing hazardous
hazardous effects
effects of
of solid
solid
particles, chemicals,
particles, chemicals, liquids,
liquids, oror other
other harmful
harmful by-products
by-products and and gases
gases emitted
emitted from
from any
any facility
facility utilized
utilized inin
mining
mining operations
operations for
for their
their disposal
disposal (RA
(RA No.
No. 7942,
7942, Sec.
Sec. 3).
3).

Except as
Except as herein
herein provided,
provided, any
any exemption
exemption from
from payment
payment ofof real
real property
property tax
tax previously
previously granted
granted to,
to, or
or
presently
presently enjoyed
enjoyed byby all
all persons,
persons, whether
whether natural
natural or juridical, including
or juridical, including all
all government-owned
government-owned or or
controlled corporations,
controlled corporations, are
are hereby
hereby withdrawn
withdrawn upon
upon the
the effectivity
effectivity of
of the
the LGC.
LGC.

A
A taxpayer
taxpayer claiming
claiming exemption
exemption mustmust submit
submit sufficient
sufficient documentary
documentary evidence
evidence toto the
the local
local assessor
assessor within
within
30 days
30 days from
from the
the date
date ofof the
the declaration
declaration of
of real
real property;
property; otherwise,
otherwise, it
it shall
shall be
be listed
listed as
as taxable
taxable in
in the
the
Assessment Roll
Assessment Roll (Sec.
(Sec. 206,
206, LGC).
LGC).

Other properties
Other properties exempt
exempt from
from real
real property
property tax
tax

1.
1. Real
Real property
property inin any
any one
one city
city or
or municipality
municipality belonging
belonging to
to a
a single
single owner,
owner, the
the entire
entire assessed
assessed valuation
valuation
of
of which
which is
is not
not in
in excess
excess of
of P1,000.00.
P1,000.00.

2.
2. Land
Land acquired
acquired by by grant,
grant, purchase,
purchase, or
or lease
lease from
from the
the public
public domain
domain for
for conversion
conversion into
into dairy
dairy farms
farms for
for
aa period
period of
of 55 years
years from
from the
the time
time of
of such
such conversion.
3.
3. Machinery
Machinery of of aa pioneer
pioneer and
and preferred
preferred industry
industry as
as certified
certified by
by the
the Board
Board of
of Investments
Investments used
used oror
operated for
operated for industry,
industry, agriculture,
agriculture, manufacturing,
manufacturing, or
or mining
mining purposes,
purposes, during
during the
the first
first 3
3 years
years of
of the
the
operation of
operation of the
the machinery.
machinery.

4. Perennial
4. Perennial trees
trees and
and plants
plants of
of economic
economic value
value except
except where
where the
the land
land upon
upon which
which they
they grow
grow is
is planted
planted
principally to
principally to such
such growth.
growth.

5. Properties
5. Properties owned
owned by
by non-stock
non-stock or
or non-profit
non-profit educational
educational institutions,
institutions, the
the total
total assessed
assessed value
value of
of
which does not exceed P3,000.00, including those owned by Educational Foundations organized
which does not exceed P3,000.00, including those owned by Educational Foundations organized under under
R.A.
R.A. No.
No. 6055.
6055.

APPRAISAL
APPRAISAL AND
AND ASSESSMENT
ASSESSMENT OF
OF REAL
REAL PROPERTY
PROPERTY TAXES
TAXES

Fundamental Principles
Fundamental Principles of
of Appraisal,
Appraisal, Assessment,
Assessment, Levy,
Levy, and
and Collection
Collection of
of Real
Real Property
Property Taxes[CAULE]
Taxes[CAULE]

1. Real
1. Real property
property shall
shall be
be appraised
appraised at
at its
its Current
Current and
and fair
fair market
market value;
value;

2.
2. Real
Real property
property shall
shall be
be classified
classified for
for assessment
assessment purposes
purposes on
on the
the basis
basis of
of its
its Actual
Actual use;
use;

3. Real
3. Real property
property shall
shall be
be assessed
assessed on
on the
the basis
basis of
of aa Uniform
Uniform classification
classification within
within each
each LGU;
LGU;

4. The
4. The appraisal,
appraisal, assessment,
assessment, levy
levy and
and collection
collection of
of real
real property
property tax
tax shall
shall not
not be
be Let
Let to
to any
any private
private
person;
person; and
and

5. The
5. The appraisal
appraisal and
and assessment
assessment of
of real
real property
property shall
shall be
be Equitable
Equitable (Sec.
(Sec. 198,
198, LGC).
LGC).

NOTE: Real
NOTE: Real Property
Property shall
shall be
be classified,
classified, valued,
valued, and
and assessed
assessed onon the
the basis
basis of
of its
its actual
actual use
use regardless
regardless of
of
where
where located,
located, whoever
whoever owns
owns it
it and
and whoever
whoever uses
uses it
it (Sec.
(Sec. 247,
247, LGC).
LGC).

Steps in
Steps in the
the assessment
assessment and
and collection
collection of
of real
real property
property tax
tax

1.
1. Declaration
Declaration of
of real
real property.
property.

2.
2. Listing
Listing of
of real
real property
property in
in the
the assessment
assessment rolls.
rolls.

3. Appraisal
3. Appraisal and
and valuation
valuation of
of real
real property.
property.

4.
4. Determination
Determination of
of assessed
assessed value
value and
and RPT.
RPT.

5.
5. Payment
Payment and
and collection
collection of
of tax.
tax.

Limitations of
Limitations of local
local government
government to
to administer,
administer, appraise,
appraise, levy,
levy, and
and collect
collect real
real property
property taxes
taxes

1.
1. Authorization
Authorization Limitation
Limitation —– the
the LGC
LGC authorizes
authorizes only
only certain
certain LGUs
LGUs to
to administer
administer real
real property
property taxation
taxation
(Sec. 200,
(Sec. 200, LGC).
LGC).

2.
2. Fundamental
Fundamental principles
principles of
of appraisal,
appraisal, assessment,
assessment, levy
levy and
and collection
collection of
of real
real property
property taxes
taxes (Sec.
(Sec. 198,
198,
LGC).
3.
3. The
The real
real property
property taxes
taxes collected
collected shall
shall accrue
accrue solely
solely to
to the
the benefit
benefit of
of the
the LGU
LGU concerned
concerned (Sec.
(Sec. 5,
5, Art.
Art. X,
X,
1987
1987 Constitution).
Constitution).

Rule
Rule on
on Appraisal
Appraisal of
of Real
Real Property
Property Tax
Tax at
at Fair
Fair Market
Market Value
Value

All
All real
real property,
property, whether
whether taxable
taxable oror exempt,
exempt, appraised
appraised at
at the
the current
current and
and fair
fair market
market value
value prevailing
prevailing in
in
the locality
the locality where
where the
the property
property is
is situated
situated (Sec.
(Sec. 201,
201, LGC)
LGC)

Fair
Fair market
market value
value (FMV)
(FMV) isis the
the price
price at
at which
which aa property
property may
may be
be sold
sold by
by aa seller
seller who
who is
is not
not compelled
compelled to
to
sell and
sell and bought
bought byby aa buyer
buyer who
who is
is not
not compelled
compelled to
to buy
buy (Sec.
(Sec. 199(I),
199(1), LGC).
LGC).

Assessed
Assessed value
value isis the
the fair
fair market
market value
value of
of the
the real
real property
property multiplied
multiplied by
by the
the assessment
assessment level.
level. It
It is
is
synonymous
synonymous toto taxable
taxable value
value (Sec.199(h),
(Sec.199(h), LGC).
LGC).

“Fair
“Fair market
market value”
value” vs.
vs. “assessed
“assessed value”
value”

FAIR MARKET
FAIR MARKET VALUE
VALUE ASSESSED VALUE
ASSESSED VALUE
As
As to
to determination
determination Declared
Declared by the owner subject | Determined by
by the owner subject Determined by the
the application
application
to
to final
final determination
determination by by the
the | of
of the
the assessment
assessment level
level to
to the
the
assessor
assessor FMV.
FMV. It It is
is synonymous
synonymous to to the
the
taxable value
taxable value
As
As to
to basis
basis Supposed
Supposed to to be
be the
the actual
actual value
value | Merely
Merely a a percentage
percentage of
of the
the FMV
FMV
of the real property in the open | depending on the assessment
of the real property in the open depending on the assessment
market
market level of
level of the
the property
property in
in question
question

Approaches
Approaches in
in estimating
estimating the
the fair
fair market
market value
value of
of real
real property
property for
for RPT
RPT purposes
purposes

1. Sales
1. Sales analysis
analysis approach
approach —The sales price
–The sales price paid
paid in
in actual
actual market
market transactions
transactions is
is considered
considered byby taking
taking into
into
account
account valid
valid sales
sales data
data accumulated
accumulated from from among
among the
the Register
Register of
of Deeds,
Deeds, notaries
notaries public,
public, appraisers,
appraisers,
brokers,
brokers, dealers,
dealers, bank
bank officials,
officials, and
and various
various sources
sources stated
stated under
under the
the Local
Local Government
Government Code;
Code;

2.
2. Income
Income capitalization
capitalization approach
approach —– TheThe value
value of
of an
an income-producing
income-producing property
property is
is no
no more
more than
than the
the
income derived
income derived from
from it.
it. An
An analysis
analysis of
of the
the income
income produced
produced is
is necessary
necessary in
in order
order to
to estimate
estimate the
the sum,
sum,
which
which might
might be
be invested
invested inin the
the purchase
purchase ofof the
the property.
property.

3. Reproduction
3. Reproduction cost
cost approach
approach —– aa formal
formal approach
approach used
used exclusively
exclusively inin appraising
appraising man-made
man-made
improvements
improvements such
such as
as buildings
buildings and
and other
other structures,
structures, based
based on
on such
such data
data as
as materials
materials and and labor
labor costs
costs to
to
reproduce
reproduce aa new
new replica
replica of
of the
the improvement
improvement (Allied
(Allied Banking
Banking Corporation,
Corporation, et.et. al.,
al., v.
v. Quezon
Quezon City
City
Government,
Government, G.R.
G.R. No.
No. 154126,
154126, Oct.
Oct. 11,
11, 2005).
2005).
Steps
Steps in
in determination
determination of
of Fair
Fair market value [FMV]
market value [FMV]

a. Assessor
a. Assessor of
of the
the province/city
province/city or
or municipality
municipality may
may summon
summon the
the owners
owners of
of the
the properties
properties to
to be
be affected
affected
and
and may take depositions concerning the property, its ownership, amount, nature and value (Sec. 213,
may take depositions concerning the property, its ownership, amount, nature and value (Sec. 213,
LGC).
LGC).

b. Assessor
b. Assessor prepares
prepares aa schedule
schedule of
of FMV
FMV for
for different
different classes
classes of
of properties.
properties.

c. The schedule
c. The schedule ofof FMV
FMV isis published
published in
in a
a newspaper
newspaper of of general
general circulation
circulation in in the
the province,
province, city
city or
or
municipality concerned
municipality concerned or or inin the
the absence
absence thereof,
thereof, shall
shall be
be posted
posted in in the
the provincial
provincial capitol,
capitol, city
city or
or
municipal hall
municipal hall and
and in
in two
two other
other conspicuous
conspicuous public
public places
places therein
therein (Sec.
(Sec. 212,
212, LGC).
LGC).

d. General
d. General revision
revision of
of property
property assessment
assessment is
is made
made (Sec.
(Sec. 219,
219, LGC).
LGC).

e. Sanggunian
e. Sanggunian enacts
enacts aa real
real property
property tax
tax ordinance.
ordinance.

PROCEDURE FOR LEVY FOR PURPOSES OF SATISFYING REAL PROPERTY TAXES

LOCAL GOVERNMENT CODE

Tax constitutes a lien on the property superior to all liens and may only be extinguished upon payment of the tax and charges(Sec. 257,
LGC)Issuance of the certificate of sale to the purchaser (Sec. 178, LGC).

y
Time for payment of real property tax expires (Sec. 258, LGC) The delinquent taxpayer has one (1) year
from the date of sale to redeem theproperty. If property is redeemed, a certificate of redemption will
be issued (Sec. 179, LGC).
v
Warrant of levy issued by LT which has the force of legal execution in the LGU concerned, Warrant of levy issued by LT, which has
the force of legal execution in the LGU concerned.If property is not redeemed, a final deed of sale shall be issued to the purchaser.

Warrant mailed to or served upon the delinquent owner. Written notice of levy and warrant is mailed/served upon the assessor and the
Register of Deeds of the LGU (Sec. 258, LGC). The local treasurer shall purchase the property on behalf of the LGU if:
a.) There is no bidder b.)The highest bid is insufficient to pay the deficiency tax (Sec. 181, LGC).

Before the date of sale the owner may stay the . .

by paying the delinquent tax, 30 days “om service of warrant, LT > see aa
proceedings
interest and expenses of sale (Sec 260, LGC) shall advertise sale of property (Sec. , 4
260, LGC)
 v v
IF there is a bidder AND highest bid is sufficient to pay real IF there is no bidder OR highest bid is
property tax and related interests and costs, bidder pays and insufficient to pay real property tax and
treasurer reports sale to sanggunian 30 days after the sale. LT related interest and costs, LT shall purchase
will deliver to purchaser the certificate of sale. Proceeds of sale the prop in behalf of the LGU.
in excess of delinquent tax, interest, expenses of sale remitted to
owner(Sec. 260, LGC). Registrar of Deeds shall transfer the title of
forfeited prop to LGU without need of
Within one year from sale, owner may redeem upon payment of Court order.
the delinquent tax, interest due, expenses of sale (from date of
delinquency to date of sale), and additional interest of 2% per Within one year from forfeiture, owner may
month on the purchase price from date of sale to date of redeem prop by paying to Treasurer full
redemption. Delinquent owner retains possession and right to amount of tax, interest, costs of sale (Sec. 263,
the fruits. Price paid plus interest of 2% per month shall be LGC).
returned to the buyer(Sec. 261, LGC).
Sanggunian concerned may by ordinance,
IF not redeemed, deed of conveyance shall be issued to the sell/dispose by public auction of prop
purchaser(Sec. 262, LGC). acquired by forfeiture(Sec. 264, LGC).

!
Levy may be repeated until full amount due; including all expenses is collected (Sec. 265, LGC).

REFUND OR
REFUND OR CREDIT
CREDIT OF
OF REAL
REAL PROPERTY
PROPERTY TAXES
TAXES

Remedy
Remedy ofof a
a taxpayer
taxpayer in
in case
case of
of excessive
excessive collections
collections

The taxpayer may

The taxpayer may file
file aa written
written claim
claim for
for refund
refund or
or credit
credit for
for taxes
taxes and
and interests
interests with
with the
the local
local treasurer,
treasurer,
in
in case
case an
an assessment
assessment of
of RPT
RPT or
or any
any other
other tax
tax under
under Real
Real Property Taxation (Title
Property Taxation (Title II,
Il, LGC)
LGC) is
is found
found to
to be
be
illegal or erroneous (Sec. 253, LGC).
illegal or erroneous (Sec. 253, LGC).

Period
Period for
for claim
claim for
for refund
refund

The claim
The claim must
must be
be filed
filed with
with the
the local
local treasurer
treasurer within
within two
two (2)
(2) years
years from
from the
the date
date the
the taxpayer
taxpayer is
is
entitled
entitled to
to such
such reduction
reduction or
or adjustment
adjustment (Ibid.).
(Ibid.).

Procedure for claim for refund or credit

Taxpayer files a written claim for refund or credit with

the treasurer within 2 years from the date the taxpayer
is entitled to such reduction or adjustment.

t
Provincial or City Treasurer should decide the claim
within 60 days from receipt of the claim.

‘
In case of denial, appeal to the LBAA within 30 days
as in protest case.

Appeal to CBAA within 30 days if LBAA gives an

adverse decision.
Payment
Payment Under
Under Protest
Protest

Guidelines in
Guidelines in paying
paying tax
tax under
under protest
protest

1. No
1. No protest
protest shall
shall be
be entertained
entertained unless
unless the
the taxpayer
taxpayer first
first pays
pays the
the tax.
tax. There
There shall
shall be
be annotated
annotated on
on the
the
tax
tax receipts
receipts the
the words
words "paid
"paid under
under protest"
protest" The
The protest
protest in in writing
writing must
must bebe filed
filed within
within 3030 days
days from
from
payment
payment of of the
the tax
tax to
to treasurer
treasurer who
who shall
shall decide
decide the
the protest
protest within
within 60
60 days
days from
from receipt.
receipt.

2. The
2. The tax
tax or
or aa portion
portion paid
paid under
under protest
protest shall
shall be
be held
held in
in trust
trust by
by the
the treasurer
treasurer concerned.
concerned.

3. In
3. In the
the event
event that
that the
the protest
protest is
is finally
finally decided
decided in
in favor
favor of
of the
the taxpayer,
taxpayer, the
the amount
amount or
or portion
portion of
of the
the
tax
tax protested
protested shall
shall be
be refunded
refunded to
to the
the protestant,
protestant, or
or applied
applied as
as tax
tax credit
credit against
against his
his existing
existing or
or future
future
tax liability.
tax liability.

4.
4. In
In the
the event
event that
that the
the protest
protest is
is denied
denied or
or upon
upon the
the lapse
lapse of
of the
the 60-day
60-day period,
period, the
the taxpayer
taxpayer may
may

avail appeal
avail appeal the
the assessment
assessment before
before the
the Local
Local Board
Board of
of Assessment
Assessment Appeals
Appeals (Sec.
(Sec. 252,
252, LGC).
LGC).

5. In
5. In case
case there
there is
is adverse
adverse decision
decision by
by the
the LBAA,
LBAA, the
the taxpayer
taxpayer may
may appeal
appeal with
with the
the CBAA
CBAA within
within 30
30 from
from
receipt of
receipt of the
the adverse
adverse decision
decision by
by the
the LBAA.
LBAA.

XPN: The
XPN: The protest
protest contemplated
contemplated in in Section
Section 252
252 of
of the
the LGC
LGC is
is needed
needed when
when there
there is
is aa question
question asas to
to the
the
reasonableness of
reasonableness of the
the amount
amount assessed,
assessed, notnot where
where the
the question
question raised
raised is
is on
on the
the very
very authority
authority and
and
power of
power of the
the assessor
assessor to
to impose
impose the the assessment
assessment and
and of
of the
the treasurer
treasurer toto collect
collect the
the tax
tax (Ty
(Ty v.
v. Trampe,
Trampe, G.G.
R.
R. No.
No. 117577,
117577, December
December 1, 1, 1995).
1995).

By posting
By posting the
the surety
surety bond,
bond, aa taxpayer
taxpayer maymay bebe considered
considered toto have
have substantially
substantially complied
complied with
with Section
Section
252 of
252 of the
the LGC
LGC for
for the
the said
said bond
bond already
already guarantees
guarantees thethe payment
payment toto the
the Office
Office of
of the
the Local
Local Treasurer
Treasurer of
of
the
the total
total amount
amount of of real
real property
property taxes
taxes and
and penalties
penalties due.
due. (Camp John Hay
(Camp John Hay Development
Development Corporation
Corporation v.v.
Central
Central Board
Board of
of Assessment
Assessment Appeals,
Appeals, G.R.
G.R. No.
No. 169234,
169234, October
October 2,
2, 2013)
2013)

PROCEDURE
PROCEDURE FOR FOR TAXTAX REFUND
REFUND BASEDBASED ON ON PROCEDURE
PROCEDURE FOR
FOR TAX
TAX REFFUND
REFFUND BASED
BASED ON
ON
UNREASONABLE
UNREASONABLE COLLECTION COLLECTION OF OF RPTRPT SOLUTIO
SOLUTIO INDEBITI
INDEBITI
Payment under
Payment under protest
protest at at the
the time
time ofof payment
payment or or Payment under
Payment under protest
protest is
is NOT
NOT required.
required.
within 30
within 30 days
days thereafter
thereafter is is MANDATORY.
MANDATORY.
Treasurer
Treasurer has has 60
60 days
days fromfrom receipt
receipt of of the
the protest
protest Treasurer
Treasurer hashas 60
60 days
days from
from claim
claim for
for refund
refund to
to
to decide.
to decide. decide on the claim.
decide on the claim.
Taxpayer
Taxpayer may may appeal
appeal the the decision
decision or or inaction
inaction of of Treasurer’s
Treasurer’s denial
denial would
would bring
bring the
the case
case within
within the
the
the treasurer
the treasurer to to the
the LBAA
LBAA within
within 30 30 days
days from
from original jurisdiction of
original jurisdiction of the
the RTC.
RTC.
receipt of
receipt of the
the decision
decision or or expiration
expiration of of 60
60 days.
days.
The LBAA
The LBAA hashas 120
120 days
days from
from receipt
receipt of of the
the appeal
appeal The decision
The decision of of the
the RTC
RTC isis appealable
appealable to to the
the CTA
CTA (in
(in
to decide.
to decide. division) by way of petition for
division) by way of petition for review. review.
Taxpayer may
Taxpayer may appeal
appeal thethe decision
decision of of LBAA
LBAA to to CBAA
CBAA The decision
The decision of of CTA
CTA inin division
division maymay bebe the
the subject
subject
within 30 days from receipt of the decision.
within 30 days from receipt of the decision. of a review by CTA en banc.
of a review by CTA en banc.
The adverse
The adverse decision
decision of of CBAA
CBAA may may bebe appealed
appealed to to The
The decision
decision of of CTA
CTA enen banc
banc may
may bebe appealed
appealed to to
the CTA
the CTA inin division
division within
within 30 30 days
days from
from receipt
receipt ofof the
the SC
SC byby way
way of of petition
petition forfor review
review onon certiorari
certiorari
decision.
decision. within 15
within 15 days
days from
from the
the receipt
receipt ofof decision.
decision.
The decision
The decision ofof CTA
CTA division
division may
may be
be subjected
subjected toto aa
Motion for
Motion for Reconsideration
Reconsideration or or New
New Trial
Trial before
before the
the
CTA en
CTA en banc,
banc, and
and thereafter,
thereafter, an
an appeal
appeal to to SC
SC by
by
means of petition for review on certiorari.
means of petition for review on certiorari.

Repayment
Repayment of
of Excessive
Excessive Collections
Collections

Remedy
Remedy available
available for
for a
a taxpayer
taxpayer whose
whose real
real property
property was
was erroneously
erroneously assessed
assessed

When
When an an assessment
assessment of of basic
basic real
real property
property tax,
tax, or
or any
any other
other tax
tax levied
levied under
under this
this Title,
Title, is
is found
found toto be
be
illegal
illegal or
or erroneous
erroneous andand the
the tax
tax is
is accordingly
accordingly reduced
reduced oror adjusted,
adjusted, the
the taxpayer
taxpayer may
may file
file a
a written
written claim
claim
for refund
for refund oror credit
credit for
for taxes
taxes and
and interests
interests with
with the
the provincial
provincial oror city
city treasurer
treasurer within
within 22 years
years from
from the
the
date
date the
the taxpayer
taxpayer is
is entitled
entitled toto such
such reduction
reduction or
or adjustment
adjustment (Sec.
(Sec. 253,
253, LGC).
LGC).

TAXPAYER’S
TAXPAYER’S REMEDIES
REMEDIES IN
IN LOCAL
LOCAL GOVERNMENT TAXATION
GOVERNMENT TAXATION

Available remedies
Available remedies to
to the
the taxpayer
taxpayer under
under real
real property
property taxation
taxation

1. Dispute
1. Dispute assessment
assessment (Protest)
(Protest)

a. Any
a. Any owner
owner oror person
person having
having legal
legal interest
interest in
in the
the property
property who
who is
is not
not satisfied
satisfied with
with the
the action
action of
of the
the
assessor
assessor in
in the
the assessment
assessment of
of his
his property;
property; or
or

b.
b. Any
Any owner
owner of
of real
real property
property affected
affected by
by aa special
special levy
levy or
or any
any person
person having
having legal
legal interest
interest therein
therein may
may
protest the
protest the assessment
assessment by by filing
filing an
an appeal
appeal toto the
the LBAA
LBAA within
within 60
60 days
days from
from receipt
receipt ofof notice
notice of
of the
the
assessment.
assessment.

2. Claim
2. Claim for
for refund
refund or
or tax
tax credit
credit

3. Redemption
3. Redemption of
of Real
Real Property
Property (Sec.
(Sec. 261,
261, LGC)
LGC)

4. Judicial
4. Judicial

A.
A. Court
Court Action
Action

i.i. Appeal
Appeal to
to the
the CTA
CTA en
en banc
banc within
within 15
15 days
days from
from receipt
receipt in
in case
case of
of adverse
adverse decision
decision by
by the
the CBAA
CBAA

ii.
ii. Appeal
Appeal by
by certiorari
certiorari with
with the
the SC
SC within
within 15
15 days
days from
from notice
notice in
in case
case of
of adverse
adverse decision
decision by
by the
the CTA.
CTA.

B. Suit
B. Suit assailing
assailing the
the validity
validity of
of the
the tax
tax sale
sale (Sec.
(Sec. 267,
267, LGC)
LGC)

Deposit
Deposit of
of amount
amount forfor which
which the
the real
real property
property was
was sold
sold together
together with
with interest
interest of
of 2%
2% per
per month
month from
from
date of
date of sale
sale to
to the
the time
time of
of institution
institution ofof action.
action.

Contesting
Contesting an
an Assessment
Assessment of
of Value
Value of
of Real
Real Property
Property

Available
Available remedy
remedy for
for a
a taxpayer
taxpayer contesting
contesting an
an assessment
assessment
Any
Any owner
owner or
or person
person having
having legal
legal interest
interest in
in the
the property
property not
not satisfied
satisfied with
with the
the action
action ofof the
the assessor
assessor in
in
the assessment
the assessment of of his
his property
property maymay within
within 6060 days
days from
from thethe date
date of
of receipt
receipt of of the
the written
written notice
notice of
of
assessment
assessment appeal
appeal toto the
the Board
Board ofof Assessment
Assessment Appeals
Appeals of of the
the provincial
provincial oror city
city by
by filing
filing aa petition
petition under
under
oath
oath inin the
the form
form prescribed
prescribed forfor the
the purpose,
purpose, together
together with
with copies
copies ofof the
the tax
tax declarations
declarations and and such
such
affidavits or
affidavits or documents
documents submitted
submitted in in support
support ofof the
the appeal
appeal (Sec.
(Sec. 226,
226, LGC).
LGC).

Appeal to
Appeal to the
the Local
Local Board
Board of
of Assessment
Assessment Appeals
Appeals (LBAA)
(LBAA)

Composition
Composition of
of the
the LBAA
LBAA

1.
1. The
The Registrar
Registrar of
of Deeds,
Deeds, as
as Chairman;
Chairman;

2. The
2. The provincial
provincial or
or city
city prosecutor
prosecutor as
as member;
member;

3.
3. The
The provincial
provincial or
or city
city engineer
engineer as
as a
a member
member (Sec.
(Sec. 227,
227, LGC).
LGC).

Jurisdiction of the
Jurisdiction of the LBAA
LBAA

LBAA has
LBAA has Jurisdiction
Jurisdiction to
to hear
hear appeals
appeals of
of owners
owners or
or persons
persons having
having legal
legal interest
interest in
in the
the property
property who
who are
are
not
not satisfied
satisfied with
with the
the action
action of
of the
the assessor
assessor on
on an
an assessment
assessment of
of his
his property.
property.

NOTE: In
NOTE: In the
the exercise
exercise of
of its
its appellate
appellate jurisdiction, the LBAA
jurisdiction, the LBAA shall
shall have
have the
the power
power to
to a.
a. summon
summon
witnesses,
witnesses,

b.
b. administer
administer oaths,
oaths,

c.
c. conduct
conduct ocular
ocular inspection,
inspection,

d.
d. take
take depositions,
depositions, and
and

e. issue
e. issue subpoena
subpoena and
and subpoena
subpoena duces
duces tecum.
tecum.

The proceedings
The proceedings of
of the
the Board
Board shall
shall be
be conducted
conducted solely
solely for
for the
the purpose
purpose of
of ascertaining
ascertaining the
the facts
facts without
without
necessarily
necessarily adhering
adhering toto technical
technical rules
rules applicable
applicable in judicial proceedings
in judicial proceedings (Sec.
(Sec. 229[b],
229[b], LGC).
LGC).

Period for
Period for the
the decision
decision of
of an
an appeal
appeal

The
The LBAA
LBAA shall
shall decide
decide the
the appeal
appeal within
within 120
120 days
days from
from the
the date
date of
of receipt
receipt of
of such
such appeal.
appeal. The
The Board,
Board,
after hearing, shall render its decision based on substantial evidence or such relevant evidence
after hearing, shall render its decision based on substantial evidence or such relevant evidence on record on record
as
as aa reasonable
reasonable mind
mind might
might accept
accept as
as adequate
adequate to
to support
support the
the conclusion
conclusion (Sec
(Sec 229[a],
229[a], LGC).
LGC).

Appeal to
Appeal to the
the Central
Central Board
Board of
of Assessment
Assessment Appeals
Appeals (CBAA)
(CBAA)

Composition of
Composition of the
the CBAA
CBAA

1.
1. A
A Chairman;
Chairman; and
and

2.
2. Two
Two (2)
(2) members
members (Sec.
(Sec. 230,
230, LGC).
Jurisdiction of
Jurisdiction of the
the CBAA
CBAA

The Board
The Board shall
shall have
have appellate
appellate jurisdiction over all
jurisdiction over all assessment
assessment cases
cases decided
decided by
by the
the LBAA
LBAA (Sec.
(Sec. 230,
230,
LGC).
LGC).

NOTE:
NOTE: The
The CBAA
CBAA can can bebe appointed
appointed by by the
the Supreme
Supreme Court
Court to
to act
act asas aa court-appointed
court-appointed factfact finding
finding
commission
commission to to assist
assist the
the Court
Court in
in resolving
resolving the
the factual
factual issues
issues raised
raised in
in the
the cases
cases before
before it.
it. In
In that
that regard,
regard,
the CBAA is not acting in its appellate jurisdiction (Mathay v. Undersecretary of Finance, En banc Minute
the CBAA is not acting in its appellate jurisdiction (Mathay v. Undersecretary of Finance, En banc Minute
Resolution,
Resolution, Nov.
Nov. 5,
5, 1991).
1991).

The owner
The owner of
of the
the property
property oror the
the person
person having
having legal
legal interest
interest therein
therein oror the
the assessor
assessor who
who is
is not
not satisfied
satisfied
with
with the
the decision
decision of
of the
the Board
Board may,
may, within
within 3030 days
days after
after receipt
receipt of
of the
the decision
decision of
of said
said Board,
Board, appeal
appeal toto
the Central Board of Assessment Appeals, as herein provided. The decision of the Central Board shall be
the Central Board of Assessment Appeals, as herein provided. The decision of the Central Board shall be
final and
final and executory(Sec.
executory(Sec. 229[c],
229[c], LGC).
LGC).

CBAA has
CBAA has NO
NO authority
authority to
to hear
hear purely
purely legal
legal issues
issues

Such
Such authority
authority is
is lodged
lodged with
with the
the regular
regular courts.
courts. Thus,
Thus, the
the issue
issue of
of whether
whether R.A.
R.A. 7160
7160 repealed
repealed P.D.
P.D. 921,
921,
is
is an
an issue
issue which
which does
does not
not find
find referral
referral to
to the
the CBAA
CBAA before
before resort
resort is
is made
made to
to the
the courts
courts (Ty,
(Ty, v.
v. Trampe,
Trampe,
G.R.
G.R. No.
No. 117577.
117577. December
December 1, 1, 1995).
1995).

Appeal to
Appeal to LBAA
LBAA or
or CBAA
CBAA do
do NOT
NOT suspend
suspend the
the collection
collection of
of tax
tax

An appeal
An appeal on
on assessments
assessments ofof real
real property
property shall
shall in
in no
no case,
case, suspend
suspend the
the collection
collection of
of the
the corresponding
corresponding
realty
realty taxes the property involved as assessed. This is without prejudice to subsequent adjustment
taxes the property involved as assessed. This is without prejudice to subsequent adjustment
depending upon
depending upon the
the final
final outcome
outcome ofof the
the appeal
appeal (Sec.
(Sec. 231).
231).

NOTE:
NOTE: NoNo court
court shall
shall have
have the
the authority
authority to
to enjoin
enjoin or
or restrain
restrain the
the collection
collection of
of any
any tax,
tax, fee,
fee, or
or charge
charge
collected by the provincial, city or municipal treasurer. “No injunction rule”
collected by the provincial, city or municipal treasurer. “No injunction rule”

Instances
Instances where
where CTA
CTA (En
(En Banc)
Banc) has
has exclusive
exclusive appellate jurisdiction over
appellate jurisdiction over cases
cases filed
filed with
with CBAA
CBAA

1. In
1. In the
the exercise
exercise of
of its
its appellate
appellate jurisdiction
jurisdiction

2.
2. Over
Over cases
cases involving
involving the
the assessment
assessment and
and taxation
taxation of
of real
real property
property

3. Originally
3. Originally decided
decided by
by the
the provincial
provincial or
or CBAA
CBAA

Period within
Period within which
which CBAA
CBAA should
should resolve
resolve aa case
case submitted
submitted to
to it
it for
for decision
decision

The Central
The Central Board
Board shall
shall decide
decide cases
cases brought
brought onon appeal
appeal within
within 12
12 months
months from
from the
the date
date of
of receipt
receipt
thereof, which decision shall become final and executory after the lapse if 15 days from the date of
thereof, which decision shall become final and executory after the lapse if 15 days from the date of
receipt thereof by the appellant.
receipt thereof by the appellant.

Exception
Exception when
when prior
prior resort
resort to
to administrative
administrative action
action is
is not
not required
In
In disputes
disputes involving
involving real
real property
property taxation,
taxation, the the general
general rule
rule is is to
to require
require thethe taxpayer
taxpayer to to first
first avail
avail of
of
administrative remedies
administrative remedies and and pay
pay the
the tax tax under
under protest
protest before
before allowing
allowing anyany resort
resort to to aa judicial action,
judicial action,
except
except when
when thethe assessment
assessment itselfitself is
is alleged
alleged to to be
be illegal
illegal or
or is
is made
made without
without legal
legal authority.
authority. For For example,
example,
prior
prior resort
resort to
to administrative
administrative action
action is is required
required when
when among
among the the issues
issues raised
raised is is an
an allegedly
allegedly erroneous
erroneous
assessment,
assessment, likelike when
when the the reasonableness
reasonableness of of the
the amount
amount is is challenged,
challenged, whilewhile direct
direct court
court action
action is is
permitted when only the legality, power, validity or authority of the assessment
permitted when only the legality, power, validity or authority of the assessment itself is in question. itself is in question.
Stated differently,
Stated differently, the
the general
general rulerule ofof aa prerequisite
prerequisite recourse
recourse to to administrative
administrative remedies
remedies applies
applies when
when
questions of
questions of fact
fact are
are raised,
raised, but
but the
the exception
exception of of direct
direct court
court action
action is is allowed
allowed whenwhen purelypurely questions
questions of of
law
law are
are involved.
involved. (Capitol
(Capitol Wireless,
Wireless, Inc.Inc. vs.
vs. Provincial
Provincial Treasurer
Treasurer of of Batangas,
Batangas, G.R. G.R. No. No. 180110.
180110. May May 30,30,
2016)
2016)

Effect of
Effect of Payment
Payment of
of Taxes
Taxes

Effect
Effect of
of appeal
appeal on
on the
the payment
payment of
of real
real property
property tax
tax

Appeal on
Appeal on assessments
assessments of
of real
real property
property shall,
shall, inin no
no case,
case, suspend
suspend the
the collection
collection ofof the
the corresponding
corresponding
realty
realty taxes
taxes on
on the
the property
property involved
involved as
as assessed
assessed by by the
the provincial
provincial or
or city
city assessor,
assessor, without
without prejudice
prejudice to
to
subsequent adjustment
subsequent adjustment depending
depending upon
upon the
the final
final outcome
outcome of of the
the appeal
appeal (Sec.
(Sec. 231,
231, LGC).
LGC).

Payment
Payment of
of Real
Real Property
Property Tax
Tax Under
Under Protest
Protest

Reason
Reason for
for the
the necessity
necessity of
of prior
prior payment
payment before
before protest
protest may
may be
be entertained
entertained by
by the
the courts
courts

The basis
The basis for
for requiring
requiring payment
payment before
before protest
protest can
can be
be entertained
entertained isis that
that taxes
taxes are
are the
the lifeblood
lifeblood of
of the
the
nation and
nation and asas such
such collection
collection cannot
cannot bebe restrained
restrained byby injunction
injunction oror any
any like
like action
action (Manila
(Manila Electric
Electric
Company
Company v. v. Barlis,
Barlis, et.
et. al.,
al., G.R.
G.R. No.
No. 114231,
114231, May
May 18,
18, 2001).
2001).

Rules
Rules as
as to
to the
the necessity
necessity of
of paying
paying real
real property
property tax
tax prior
prior to
to protest
protest

GR: The
GR: The taxpayer
taxpayer must
must pay
pay the
the real
real property
property tax
tax assessed
assessed prior
prior to
to protesting
protesting aa real
real property
property tax
tax
assessment (Sec.
assessment (Sec. 252,
252, LGC).
LGC).

XPN: The
XPN: The payment
payment ofof the
the tax
tax prior
prior to
to protest
protest isis not
not necessary
necessary where
where the
the taxpayer
taxpayer questions
questions the
the
authority and power of the assessor to impose the assessment and of the treasurer to collect the
authority and power of the assessor to impose the assessment and of the treasurer to collect the tax (Ty, tax (Ty,
et.
et. al.,
al., v.
v. Trampe,
Trampe, G.R.
G.R. No.
No. 117577.
117577. December
December 1, 1, 1995).
1995).

NOTE:
NOTE: The
The protest
protest contemplated
contemplated under
under Section
Section 252252 isis required
required where
where there
there is
is a
a question
question as
as to
to the
the
reasonableness or correctness of the amount assessed. Hence, if a taxpayer disputes the reasonableness
reasonableness or correctness of the amount assessed. Hence, if a taxpayer disputes the reasonableness
of
of an
an increase
increase inin aa real
real property
property tax
tax assessment,
assessment, he he isis required
required toto “first
“first pay
pay the
the tax”
tax” under
under protest.
protest.
Otherwise,
Otherwise, the
the city
city or
or municipal
municipal treasurer
treasurer will
will not
not act
act on
on hishis protest
protest (Ibid.).
 TAXPAYER’S REMEDIES INVOLVING COLLECTION OF REAL PROPERTY TAX
LOCAL GOVERNMENT CODE

Submission of Assessment Roll

By: LT
When: Before December 31 of each year
(Sec. 248, LGC)

Notice of Deadline
Posted at a conspicuous place at
the LGU once a week for 2
consecutive weeks (Sec. 249, LGC)

|
|
Taxpayer disagrees with
Taxpayer agrees with
; vere ceeds
assessment
axpayer Ss under
Taxpayer pays. pe protest.

Protest filed within 30 days

from payment of tax with
LT.

Protest decided in favor of i : 60 days lapsed and there is

the taxpayer Protest is denied inaction from the LT.

Taxpayer may appeal with

LBAA
Note: LBAA must decide
within 120 days from
receipt.
|

LBAA rejects the protest:

LBAA grants protest the owner may appeal to
CBAA within 30 days from
receipt of decision of the
LBAA (Sec. 229 [c], LGC)

© UST Tax Team 2018

GGAA qrarkseppast CBAA rejects the protest:

Appeal with the CTA (RA
9282).

The amount or portion of

the tax protested shall be CTArejects appeal: Appeal
refunded or applied as tax CTA grants appeal with SC within
15 days
credit (Sec. 252 [c], LGC)
A.M. No.
A.M. No. 05-11-07-CTA
05-11-07-CTA November
November 22,
22, 2005,
2005, AS
AS AMENDED
AMENDED BY
BY September
September 16,
16, 2008
2008

REVISED RULES
REVISED RULES OF
OF THE
THE COURT
COURT OF
OF TAX
TAX APPEALS
APPEALS

RULE 4
RULE 4

JURISDICTION OF
JURISDICTION OF THE
THE COURT
COURT

SECTION
SECTION 1. Jurisdiction of
1. Jurisdiction of the
the Court.
Court. —-– The
The Court
Court shall
shall exercise
exercise exclusive
exclusive original jurisdiction over
original jurisdiction over or
or
appellate jurisdiction to review by appeal the cases specified in Republic Act No. 1125,
appellate jurisdiction to review by appeal the cases specified in Republic Act No. 1125, Section 7, as Section 7, as
amended by
amended by Republic
Republic Act
Act No.
No. 9282,
9282, Section
Section 7.
7. (n)
(n)

SEC. 2.
SEC. 2. Cases
Cases within
within the
the jurisdiction of the
jurisdiction of the Court
Court enen banc.
banc. –
— The
The Court
Court en
en banc
banc shall
shall exercise
exercise exclusive
exclusive
appellate jurisdiction
appellate to review
jurisdiction to review by
by appeal
appeal the
the following:
following:

(a)
(a) Decisions
Decisions oror resolutions
resolutions on
on motions
motions for
for reconsideration
reconsideration or
or new
new trial
trial of
of the
the Court
Court in
in Divisions
Divisions in
in the
the
exercise of
exercise of its
its exclusive
exclusive appellate
appellate jurisdiction over:
jurisdiction over:

(1)
(1) Cases
Cases arising
arising from
from administrative
administrative agencies
agencies —– Bureau
Bureau ofof Internal
Internal Revenue,
Revenue, Bureau
Bureau of
of Customs,
Customs,
Department
Department of
of Finance,
Finance, Department
Department of Trade and
of Trade and Industry,
Industry, Department
Department ofof Agriculture;
Agriculture;

(2) Local
(2) Local tax
tax cases
cases decided
decided by
by the
the Regional
Regional Trial
Trial Courts
Courts in
in the
the exercise
exercise of
of their
their original
original jurisdiction; and
jurisdiction; and

(3)
(3) Tax
Tax collection
collection cases
cases decided
decided by
by the
the Regional
Regional Trial
Trial Courts
Courts in
in the
the exercise
exercise of
of their
their original jurisdiction
original jurisdiction
involving final
involving final and
and executory
executory assessments
assessments for
for taxes,
taxes, fees,
fees, charges
charges and
and penalties,
penalties, where
where thethe principal
principal
amount of taxes and penalties claimed is less than one million pesos;
amount of taxes and penalties claimed is less than one million pesos;

(b)
(b) Decisions,
Decisions, resolutions
resolutions or
or orders
orders of
of the
the Regional
Regional Trial
Trial Courts
Courts in
in local
local tax
tax cases
cases decided
decided or
or resolved
resolved by
by
them
them inin the
the exercise
exercise of
of their
their appellate jurisdiction;
appellate jurisdiction;

(c)
(c) Decisions,
Decisions, resolutions
resolutions or
or orders
orders of
of the
the Regional
Regional Trial
Trial Courts
Courts in
in tax
tax collection
collection cases
cases decided
decided or
or resolved
resolved
by
by them
them in
in the
the exercise
exercise of
of their
their appellate jurisdiction;
appellate jurisdiction;

(d)
(d) Decisions,
Decisions, resolutions
resolutions oror orders
orders on
on motions
motions for
for reconsideration
reconsideration oror new
new trial
trial of
of the
the Court
Court in
in Division
Division in
in
the
the exercise
exercise of
of its
its exclusive
exclusive original jurisdiction over
original jurisdiction over tax
tax collection
collection cases;
cases;

(e) Decisions
(e) Decisions ofof the
the Central
Central Board
Board of
of Assessment
Assessment Appeals
Appeals (CBAA)
(CBAA) inin the
the exercise
exercise of
of its
its appellate
appellate
jurisdiction over cases involving the assessment and taxation of real property originally decided by
jurisdiction over cases involving the assessment and taxation of real property originally decided by the
the
provincial
provincial or
or city
city board
board ofof assessment
assessment appeals;
appeals;

(f)
(f) Decisions,
Decisions, resolutions
resolutions or
or orders
orders onon motions
motions for
for reconsideration
reconsideration or or new
new trial
trial of
of the
the Court
Court in
in Division
Division in
in
the exercise of its exclusive original jurisdiction over cases involving criminal offenses arising from
the exercise of its exclusive original jurisdiction over cases involving criminal offenses arising from
violations
violations ofof the
the National
National Internal
Internal Revenue
Revenue Code
Code or or the
the Tariff
Tariff and
and Customs
Customs CodeCode and
and other
other laws
laws
administered
administered by by the
the Bureau
Bureau of
of Internal
Internal Revenue
Revenue oror Bureau
Bureau ofof Customs;
(g)
(g) Decisions,
Decisions, resolutions
resolutions oror orders
orders on
on motions
motions for
for reconsideration
reconsideration or
or new
new trial
trial of
of the
the Court
Court in
in Division
Division in
in
the exercise
the exercise of
of its
its exclusive
exclusive appellate
appellate jurisdiction over criminal
jurisdiction over criminal offenses
offenses mentioned
mentioned in in the
the preceding
preceding
subparagraph;
subparagraph; andand

(h) Decisions,
(h) Decisions, resolutions
resolutions or
or orders
orders of
of the
the Regional
Regional trial
trial Courts
Courts inin the
the exercise
exercise of
of their
their appellate
appellate
jurisdiction over
jurisdiction over criminal
criminal offenses
offenses mentioned
mentioned in
in subparagraph
subparagraph (f).(n)
(f).(n)

SEC. 3.
SEC. 3. Cases
Cases within
within the
the jurisdiction of the
jurisdiction of the Court
Court in
in Divisions.
Divisions. –- The
The Court
Court in
in Divisions
Divisions shall
shall exercise:
exercise:

(a) Exclusive
(a) Exclusive original
original or
or appellate
appellate jurisdiction to review
jurisdiction to review by
by appeal
appeal the
the following:
following:

(1)
(1) Decisions
Decisions of
of the
the Commissioner
Commissioner of of Internal
Internal Revenue
Revenue inin cases
cases involving
involving disputed
disputed assessments,
assessments, refunds
refunds
of
of internal
internal revenue
revenue taxes,
taxes, fees
fees or
or other
other charges,
charges, penalties
penalties inin relation
relation thereto,
thereto, or
or other
other matters
matters arising
arising
under the
under the National
National Internal
Internal Revenue
Revenue Code
Code oror other
other laws
laws administered
administered by by the
the Bureau
Bureau of
of Internal
Internal
Revenue;
Revenue;

(2) Inaction
(2) Inaction by by the
the Commissioner
Commissioner of of Internal
Internal Revenue
Revenue in in cases
cases involving
involving disputed
disputed assessments,
assessments, refundsrefunds
of
of internal
internal revenue
revenue taxes,
taxes, feesfees or or other
other charges,
charges, penalties
penalties in in relation
relation thereto,
thereto, or or other
other matters
matters arising
arising
under the
under the National
National Internal
Internal Revenue
Revenue Code Code or or other
other laws laws administered
administered by by the
the Bureau
Bureau of of Internal
Internal
Revenue,
Revenue, where
where the the National
National Internal
Internal Revenue
Revenue Code Code or or other
other applicable
applicable law law provides
provides a a specific
specific period
period
for
for action:
action: Provided,
Provided, thatthat in in case
case of of disputed
disputed assessments,
assessments, the the inaction
inaction of of the
the Commissioner
Commissioner of of Internal
Internal
Revenue within the one hundred eighty day-period under Section 228
Revenue within the one hundred eighty day-period under Section 228 of the National Internal revenue of the National Internal revenue
Code
Code shall
shall be
be deemed
deemed a a denial
denial for for purposes
purposes of of allowing
allowing the the taxpayer
taxpayer to to appeal
appeal hishis case
case to to the
the Court
Court and
and
does not
does not necessarily
necessarily constitute
constitute aa formal formal decision
decision of of the
the Commissioner
Commissioner of of Internal
Internal Revenue
Revenue on on the
the tax
tax
case;
case; Provided,
Provided, further,
further, that
that should
should the the taxpayer
taxpayer opt opt toto await
await the
the final
final decision
decision of of the
the Commissioner
Commissioner of of
Internal
Internal Revenue
Revenue on
on the the disputed
disputed assessments
assessments beyond
beyond the
the one one hundred
hundred eighty
eighty day-period
day-period
abovementioned, the
abovementioned, the taxpayer
taxpayer may may appeal
appeal such
such final
final decision
decision to to the
the Court
Court under
under Section
Section 3(a),
3(a), Rule
Rule 8 8 of
of
these
these Rules;
Rules; andand Provided,
Provided, stillstill further,
further, that
that inin the
the case
case of of claims
claims forfor refund
refund of of taxes
taxes erroneously
erroneously or or
illegally collected, the taxpayer must file a petition for review with the Court prior to the expiration of
illegally collected, the taxpayer must file a petition for review with the Court prior to the expiration of
the two-year period under Section 229 of the National Internal Revenue Code;
the two-year period under Section 229 of the National Internal Revenue Code;

(3) Decisions,
(3) Decisions, resolutions
resolutions or
or orders
orders of
of the
the Regional
Regional Trial
Trial Courts
Courts in
in local
local tax
tax cases
cases decided
decided or
or resolved
resolved by
by
them
them inin the
the exercise
exercise of
of their
their original jurisdiction;
original jurisdiction;

(4) Decisions
(4) Decisions ofof the
the Commissioner
Commissioner ofof Customs
Customs inin cases
cases involving
involving liability
liability for
for customs
customs duties,
duties, fees
fees or
or other
other
money
money charges,
charges, seizure,
seizure, detention
detention or
or release
release of
of property
property affected,
affected, fines,
fines, forfeitures
forfeitures of
of other
other penalties
penalties in
in
relation
relation thereto,
thereto, oror other
other matters
matters arising
arising under
under the
the Customs
Customs Law Law or or other
other laws
laws administered
administered by by the
the
Bureau
Bureau ofof Customs;
Customs;

(5) Decisions
(5) Decisions of
of the
the Secretary
Secretary of
of Finance
Finance on
on customs
customs cases
cases elevated
elevated to
to him
him automatically
automatically for
for review
review from
from
decisions of
decisions of the
the Commissioner
Commissioner ofof Customs
Customs adverse
adverse to
to the
the Government
Government under
under Section
Section 2315
2315 of
of the
the Tariff
Tariff
and
and Customs
Customs Code;
Code; and
and

(6)
(6) Decisions
Decisions of
of the
the Secretary
Secretary of
of Trade
Trade and
and Industry,
Industry, in
in the
the case
case of
of nonagricultural
nonagricultural product,
product, commodity
commodity
or
or article,
article, and
and the
the Secretary
Secretary of
of Agriculture,
Agriculture, in
in the
the case
case of
of agricultural
agricultural product,
product, commodity
commodity oror article,
involving
involving dumping
dumping and
and countervailing
countervailing duties
duties under
under Section
Section 301
301 and
and 302,
302, respectively,
respectively, of
of the
the Tariff
Tariff and
and
Customs Code,
Customs Code, and
and safeguard
safeguard measures
measures under
under Republic
Republic Act
Act No.
No. 8800,
8800, where
where either
either party
party may
may appeal
appeal the
the
decision
decision to
to impose
impose or
or not
not to
to impose
impose said
said duties;
duties;

(b) Exclusive
(b) Exclusive jurisdiction over cases
jurisdiction over cases involving
involving criminal
criminal offenses,
offenses, to
to wit:
wit:

(1) Original
(1) Original jurisdiction over all
jurisdiction over all criminal
criminal offenses
offenses arising
arising from
from violations
violations of
of the
the National
National internal
internal Revenue
Revenue
Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue of
Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue of the
the
Bureau of Customs, where the principal amount of taxes and fees, exclusive of charges
Bureau of Customs, where the principal amount of taxes and fees, exclusive of charges and penalties, and penalties,
claimed
claimed isis one
one million
million pesos
pesos or
or more;
more; an
an

(2)
(2) Appellate jurisdiction over
Appellate jurisdiction over appeals
appeals from
from the judgments, resolutions
the judgments, resolutions or
or orders
orders ofof the
the Regional
Regional Trial
Trial
Courts in their original jurisdiction in criminal offenses arising from violations of the National Internal
Courts in their original jurisdiction in criminal offenses arising from violations of the National Internal
Revenue
Revenue Code Code or Tariff and
or Tariff and Customs
Customs CodeCode and
and other
other laws
laws administered
administered by by the
the Bureau
Bureau ofof Internal
Internal
Revenue
Revenue or or Bureau
Bureau ofof Customs,
Customs, where
where the
the principal
principal amount
amount ofof taxes
taxes and
and fees,
fees, exclusive
exclusive of
of charges
charges and
and
penalties, claimed
penalties, claimed isis less
less than
than one
one million
million pesos
pesos or
or where
where there
there is
is no
no specified
specified amount
amount claimed;
claimed;

(c)
(c) Exclusive jurisdiction over
Exclusive jurisdiction over tax
tax collections
collections cases,
cases, to
to wit:
wit:

(1) Original
(1) Original jurisdiction in tax
jurisdiction in tax collection
collection cases
cases involving
involving final
final and
and executory
executory assessments
assessments for
for taxes,
taxes, fees,
fees,
charges and
charges and penalties,
penalties, where
where the
the principal
principal amount
amount ofof taxes
taxes and
and fees,
fees, exclusive
exclusive of
of charges
charges and
and penalties,
penalties,
claimed is one million pesos or more; and
claimed is one million pesos or more; and

(2) Appellate
(2) Appellate jurisdiction over appeals
jurisdiction over appeals from
from the
the judgments, resolutions or
judgments, resolutions or orders
orders ofof the
the Regional
Regional Trial
Trial
Courts
Courts in
in tax
tax collection
collection cases
cases originally
originally decided
decided byby them
them within
within their
their respective
respective territorial jurisdiction. (n)
territorial jurisdiction. (n)

RULE
RULE 7
7

PROCEDURE
PROCEDURE IN
IN THE
THE COURT
COURT OF
OF TAX
TAX APPEALS
APPEALS

SECTION
SECTION 1. 1. Applicability
Applicability of
of the
the Rules
Rules of
of the
the Court
Court of
of Appeals,
Appeals, exception.
exception. —– The
The procedure
procedure in in the
the Court
Court en
en
banc or
banc or in
in Divisions
Divisions in
in original
original and
and in
in appealed
appealed cases
cases shall
shall be
be the
the same
same as as those
those in
in petitions
petitions for
for review
review
and appeals before the Court of Appeals pursuant to the applicable provisions of Rules 42, 43, 44 and 46
and appeals before the Court of Appeals pursuant to the applicable provisions of Rules 42, 43, 44 and 46
of the Rules of Court, except as otherwise provided for in these
of the Rules of Court, except as otherwise provided for in these Rules. (n) Rules. (n)

RULE 8
RULE 8

PROCEDURE IN
PROCEDURE IN CIVIL
CIVIL CASES
CASES

SECTION
SECTION 1. 1. Review
Review of
of cases
cases in
in the
the Court
Court enen banc.
banc. —– In
In cases
cases falling
falling under
under the
the exclusive
exclusive appellate
appellate
jurisdiction of the Court en banc, the petition for review of a decision or resolution of the Court
jurisdiction of the Court en banc, the petition for review of a decision or resolution of the Court in
in
Division must
Division must bebe preceded
preceded byby the
the filing
filing of
of aa timely
timely motion
motion for
for reconsideration
reconsideration or
or new
new trial
trial with
with the
the
Division. (n)
Division. (n)

SEC.
SEC. 2.
2. Review
Review ofof cases
cases in
in the
the Court
Court in
in Division.
Division. —– In
In appealed
appealed cases
cases falling
falling under
under the jurisdiction of
the jurisdiction of the
the
Court
Court in
in Division
Division in
in Sections
Sections 3(a)(1)
3(a)(1) to
to 3(a)(6)
3(a)(6) and
and 3(c)(2)
3(c)(2) of
of Rule
Rule 4,
4, the
the party
party filing
filing the
the case
case shall
shall be
called
called the
the Petitioner
Petitioner and
and the
the party
party against
against whom
whom the
the case
case is
is filed
filed shall
shall be
be called
called the
the Respondent.
Respondent. The
The
pleading shall
pleading shall be
be entitled
entitled Petition
Petition for
for Review.
Review.

In tax
In tax collection
collection cases
cases originally
originally filed
filed with
with the
the Court
Court under
under Section
Section 3(c)(1)
3(c)(1) of of Rule
Rule 4,4, the
the party
party filing
filing the
the
case shall be called the Plaintiff and the party against whom the case is filed shall be called the
case shall be called the Plaintiff and the party against whom the case is filed shall be called the
Defendant.
Defendant. The The pleading
pleading shall
shall bebe entitled
entitled Complaint.
Complaint. In In appealed
appealed tax tax collection
collection cases,
cases, the
the original
original
captions shall
captions shall be
be retained.
retained. The The party
party filing
filing the
the appeal
appeal shall
shall be
be called
called the
the Appellant
Appellant and and thethe party
party against
against
whom the
whom the appeal
appeal isis filed
filed shall
shall be
be called
called the
the Appellee.
Appellee. (RCTA,
(RCTA, Rule
Rule 5,
5, Sec.
Sec. 1a)
1a)

SEC. 3.
SEC. 3. Who
Who may may appeal;
appeal; period
period to to file
file petition.
petition. —– (a)
(a) A A party
party adversely
adversely affected
affected by by aa decision,
decision, ruling
ruling or or
the
the inaction
inaction of of the
the Commissioner
Commissioner of of Internal
Internal Revenue
Revenue on on disputed
disputed assessments
assessments or or claims
claims for
for refund
refund of of
internal
internal revenue
revenue taxes,taxes, oror byby a a decision
decision or or ruling
ruling ofof the
the Commissioner
Commissioner of of Customs,
Customs, the the Secretary
Secretary of of
Finance, the
Finance, the Secretary
Secretary of of Trade
Trade andand Industry,
Industry, thethe Secretary
Secretary of of Agriculture,
Agriculture, oror aa Regional
Regional Trial
Trial Court
Court in in the
the
exercise
exercise ofof its
its original jurisdiction may
original jurisdiction may appeal
appeal to to the
the Court
Court by by petition
petition for
for review
review filed
filed within
within thirty
thirty days
days
after receipt
after receipt of of aa copy
copy of of such
such decision
decision or or ruling,
ruling, or or expiration
expiration of of the
the period
period fixed
fixed by by law
law forfor the
the
Commissioner of Internal Revenue to act on the disputed assessments. In case of inaction of the
Commissioner of Internal Revenue to act on the disputed assessments. In case of inaction of the
Commissioner
Commissioner of of Internal
Internal revenue
revenue on on claims
claims for
for refund
refund of of internal
internal revenue
revenue taxes
taxes erroneously
erroneously or or illegally
illegally
collected, the
collected, the taxpayer
taxpayer mustmust file
file aa petition
petition for for review
review within
within thethe two-year
two-year period
period prescribed
prescribed by by law
law from
from
payment or
payment or collection
collection of of the
the taxes.
taxes. (n)(n)

(b) A
(b) A party
party adversely
adversely affected
affected byby aa decision
decision or or resolution
resolution of of aa Division
Division ofof the
the Court
Court on on aa motion
motion forfor
reconsideration
reconsideration or or new
new trial
trial may
may appeal
appeal toto the
the Court
Court by by filing
filing before
before itit a
a petition
petition for
for review
review within
within fifteen
fifteen
days from
days from receipt
receipt of of aa copy
copy ofof the
the questioned
questioned decision
decision or or resolution.
resolution. Upon
Upon proper
proper motion
motion andand the
the
payment of
payment of the
the full
full amount
amount of of the
the docket
docket andand other
other lawful
lawful fees
fees andand deposit
deposit forfor costs
costs before
before the
the
expiration
expiration of of the
the reglementary
reglementary periodperiod herein
herein fixed,
fixed, the
the Court
Court may may grant
grant anan additional
additional period
period not
not
exceeding fifteen
exceeding fifteen days
days from
from the
the expiration
expiration of of the
the original
original period
period within
within which
which to to file
file the
the petition
petition for
for
review. (Rules of Court, Rule 42,
review. (Rules of Court, Rule 42, sec. 1a)sec. 1a)

(c) A
(c) A party
party adversely
adversely affected
affected by
by aa decision
decision oror ruling
ruling of
of the
the Central
Central Board
Board of
of Assessment
Assessment Appeals
Appeals andand the
the
Regional
Regional TrialTrial Court
Court in
in the
the exercise
exercise ofof their
their appellate jurisdiction may
appellate jurisdiction may appeal
appeal to
to the
the Court
Court by
by filing
filing before
before
it aa petition
it petition for
for review
review within
within thirty
thirty days
days from
from receipt
receipt of
of aa copy
copy of
of the
the questioned
questioned decision
decision or
or ruling.
ruling. (n)
(n)

SEC.
SEC. 4.
4. Where
Where to to appeal;
appeal; mode
mode of of appeal.
appeal. —– (a)
(a) An
An appeal
appeal from
from a a decision
decision or or ruling
ruling or
or the
the inaction
inaction of of the
the
Commissioner of
Commissioner of Internal
Internal Revenue
Revenue on on disputed
disputed assessments
assessments or or claim
claim for
for refund
refund of of internal
internal revenue
revenue taxes
taxes
erroneously or
erroneously or illegally
illegally collected,
collected, the
the decision
decision or or ruling
ruling of
of the
the Commissioner
Commissioner of of Customs,
Customs, thethe Secretary
Secretary of of
Finance,
Finance, the
the Secretary
Secretary of Trade &
of Trade & Industry,
Industry, the
the Secretary
Secretary of of Agriculture,
Agriculture, andand the
the Regional
Regional Trial
Trial Court
Court in in
the exercise of their original jurisdiction, shall be taken to the Court by filing before it a petition for
the exercise of their original jurisdiction, shall be taken to the Court by filing before it a petition for
review
review asas provided
provided in in Rule
Rule 42
42 of
of the
the Rules
Rules of
of Court.
Court. TheThe Court
Court inin Division
Division shall
shall act
act on
on the
the appeal.
appeal. (n)(n)

(b) An
(b) An appeal
appeal from
from aa decision
decision or
or resolution
resolution of
of the
the Court
Court in
in Division
Division on
on aa motion
motion for
for reconsideration
reconsideration or
or
new trial shall be taken to the Court by petition for review as provided in Rule 43 of the Rules
new trial shall be taken to the Court by petition for review as provided in Rule 43 of the Rules of Court. of Court.
The Court
The Court enen banc
banc shall
shall act
act on
on the
the appeal.
appeal. (n)
(c)
(c) An
An appeal
appeal from
from aa decision
decision oror ruling
ruling of
of the
the Central
Central Board
Board of
of Assessment
Assessment Appeals
Appeals or or the
the Regional
Regional Trial
Trial
Court in
Court in the
the exercise
exercise of
of their
their appellate
appellate jurisdiction shall be
jurisdiction shall be taken
taken to
to the
the Court
Court byby filing
filing before
before itit aa petition
petition
for review
for review asas provided
provided inin Rule
Rule 43
43 of
of the
the Rules
Rules of
of Court.
Court. The Court en
The Court en banc
banc shall
shall act
act on
on the
the appeal.
appeal. (n)(n)

RULE 16
RULE 16

APPEAL
APPEAL

SECTION
SECTION 1. 1. Appeal
Appeal toto Supreme
Supreme CourtCourt byby petition
petition for
for review
review onon certiorari.
certiorari. —– A A party
party adversely
adversely affected
affected byby
aa decision
decision or or ruling
ruling of
of the
the Court
Court en en banc
banc may
may appeal
appeal therefrom
therefrom by by filing
filing with
with the
the Supreme
Supreme Court
Court aa
verified petition
verified petition for
for review
review on on certiorari
certiorari within
within fifteen
fifteen days
days from
from receipt
receipt ofof aa copy
copy ofof the
the decision
decision or or
resolution,
resolution, as as provided
provided in in Rule
Rule 45 45 of
of the
the Rules
Rules of of Court.
Court. If If such
such party
party hashas filed
filed aa motion
motion for for
reconsideration or for new trial, the period herein fixed shall run from the party’s receipt of a copy of the
reconsideration or for new trial, the period herein fixed shall run from the party’s receipt of a copy of the
resolution denying
resolution denying thethe motion
motion forfor reconsideration
reconsideration or or for
for new
new trial.
trial. (n)
(n)

SEC. 2.
SEC. 2. Effect
Effect of
of appeal.
appeal. –- The
The motion
motion for
for reconsideration
reconsideration or or for
for new
new trial
trial filed
filed before
before the
the Court
Court shall
shall be
be
deemed
deemed abandoned
abandoned if, if, during
during its
its pendency,
pendency, thethe movant
movant shall
shall appeal
appeal to
to the
the supreme
supreme Court
Court pursuant
pursuant to
to
Section 1 of this Rule. (2002 Internal Rules of the Court of Appeals, Rule VI,
Section 1 of this Rule. (2002 Internal Rules of the Court of Appeals, Rule VI, sec. 15a) sec. 15a)

RULES OF
RULES OF COURT
COURT

RULE 42
RULE 42 -- PETITION
PETITION FOR
FOR REVIEW
REVIEW FROM
FROM THE
THE REGIONAL
REGIONAL TRIAL
TRIAL COURTS
COURTS TO
TO THE
THE COURT
COURT OF
OF APPEALS
APPEALS

RULE 43
RULE 43 -- APPEALS
APPEALS FROM
FROM THE
THE COURT
COURT OF
OF TAX
TAX APPEALS
APPEALS AND
AND QUASI-JUDICIAL
QUASI-JUDICIAL AGENCIES
AGENCIES TO
TO THE
THE COURT
COURT
OF APPEALS
OF APPEALS

This Rule
This Rule shall
shall apply
apply toto appeals
appeals from
from judgments
judgments or or final
final orders
orders of
of the
the Court
Court of of Tax Appeals and
Tax Appeals and from
from
awards, judgments, final
awards, judgments, final orders
orders or or resolutions
resolutions ofof oror authorized
authorized by by any
any quasijudicial
quasijudicial agency
agency in in the
the
exercise of its quasi-judicial functions. Among these agencies are the Civil Service
exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Commission, Central
Board
Board of of Assessment
Assessment Appeals,
Appeals, Securities
Securities and
and Exchange
Exchange Commission,
Commission, Office
Office of of the
the President,
President, Land
Land
Registration
Registration Authority,
Authority, Social
Social Security
Security Commission,
Commission, Civil Civil Aeronautics
Aeronautics Board,
Board, Bureau
Bureau of of Patents,
Patents,
Trademarks and
Trademarks and Technology
Technology Transfer,
Transfer, National
National Electrification
Electrification Administration,
Administration, Energy
Energy Regulatory
Regulatory Board,
Board,
National Telecommunications Commission,
National Telecommunications Commission, Department
Department of of Agrarian
Agrarian Reform
Reform underunder Republic
Republic Act
Act No.
No.
6657,
6657, Government
Government Service Service Insurance
Insurance System,
System, Employees
Employees Compensation
Compensation Commission,
Commission, Agricultural
Agricultural
Inventions
Inventions Board,
Board, Insurance
Insurance Commission,
Commission, Philippine
Philippine Atomic
Atomic Energy
Energy Commission,
Commission, Board Board ofof Investments,
Investments,
Construction Industry Arbitration Commission, and voluntary arbitrators
Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law authorized by law

RULE 44
RULE 44 -- ORDINARY
ORDINARY APPEALED
APPEALED CASES
CASES

Section
Section 1. Title of
1. Title of cases.
cases. —– In
In all
all cases
cases appealed
appealed to to the
the Court
Court ofof Appeals
Appeals under
under Rule
Rule 41,
41, the
the title
title of
of the
the
case shall
case shall remain
remain as as it
it was
was inin the
the court
court of
of origin,
origin, but
but the
the party
party appealing
appealing the
the case
case shall
shall be
be further
further
referred
referred toto as
as the
the appellant
appellant and
and the
the adverse
adverse party
party asas the
the appellee.
appellee. (1a,
(1a, R46)
R46)

RULE
RULE 45
45 -- APPEAL
APPEAL BY
BY CERTIORARI
CERTIORARI TO
TO THE
THE SUPREME
SUPREME COURT
COURT

RULE 46
RULE 46 -- ORIGINAL
ORIGINAL CASES
In
In all
all cases
cases originally
originally filed
filed in
in the
the Court
Court of
of Appeals,
Appeals, the
the party
party instituting
instituting the
the action
action shall
shall be
be called
called the
the
petitioner and
petitioner and the
the opposing
opposing party
party the
the respondent.
respondent. (1a)
(1a)

RULE
RULE 65
65 -- CERTIORARI,
CERTIORARI, PROHIBITION
PROHIBITION AND
AND MANDAMUS
MANDAMUS

Section 1.
Section 1. Petition
Petition for
for certiorari.
certiorari. —– When
When any any tribunal,
tribunal, board
board oror officer
officer exercising
exercising judicial or quasijudicial
judicial or quasijudicial
functions
functions has has acted
acted without
without or or inin excess
excess of of its
its or
or his jurisdiction, or
his jurisdiction, or with
with grave
grave abuse
abuse ofof discretion
discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in
in the ordinary course of law, a person aggrieved thereby may file a verified petition in the
the
proper court,
proper court, alleging
alleging the
the facts
facts with
with certainty
certainty and and praying
praying thatthat judgment
judgment be be rendered
rendered annulling
annulling oror
modifying the
modifying the proceedings
proceedings of of such
such tribunal,
tribunal, board
board or or officer,
officer, and
and granting
granting such
such incidental
incidental reliefs
reliefs as
as law
law
and justice may
and justice may require.
require.

The
The petition
petition shall
shall be
be accompanied
accompanied by by aa certified
certified true
true copy
copy of
of the judgment, order
the judgment, order or
or resolution
resolution subject
subject
thereof,
thereof, copies
copies ofof all
all pleadings
pleadings and
and documents
documents relevant
relevant and
and pertinent
pertinent thereto,
thereto, and
and a a sworn
sworn certification
certification
of non-forum
of non-forum shopping
shopping as as provided
provided in
in the
the third
third paragraph
paragraph of
of section
section 3,
3, Rule
Rule 46.
46. (1a)
(1a)

EEND
ND
 ALLOWABLE DEDUCTIONS
ALLOWABLE DEDUCTIONS FROM
FROM THE
THE GROSS
GROSS ESTATE
ESTATE FOR
FOR RESIDENTS,
RESIDENTS, CITIZENS
CITIZENS AND
AND NON-RESIDENT
NON-RESIDENT ALIENS
ALIENS Annex "C"
Annex "C" ver.
ver. 2
2
October
October 29,
29, 1936
1936 –
— June
June 30,
30, 1939
1939 July 1,
July 1, 1939
1939 –
— September
September 14,
14, 1950
1950
March 01,1917-
March 01,1917- October
October 28,
28, 1936
1936 (Revised
(Revised September 15,
September 15, 1950-December
1950-December 31,
31, 1972
1972
DEDUCTION
DEDUCTION (Commonwealth Act
(Commonwealth Act of
of 106)
106) (Commonwealth Act
(Commonwealth Act No.
No. 466)
466)
Administrative Code)
Administrative Code) (RA No.
(RA No. 579)
579)
A. Residents
A. Residents and
and Citizens
Citizens

Actual funeral
Actual funeral expense
expense but
but not
not exceeding
exceeding 5%
5% of
of the
the gross
gross Actual funeral
Actual funeral expense
expense but
but not
not to
to exceed
exceed 5%
5% of
of the
the gross
gross
1 Funeral Expense
Funeral Expense Actual funeral
Actual funeral expense
expense Actual funeral
Actual funeral expense
expense
estate
estate estate
estate

22 |Family Home
Family Home No provision
No provision No provision
No provision No provision
No provision No provision
No provision

33_|Standard Deduction
Standard Deduction No provision
No provision No provision
No provision No provision
No provision No provision
No provision

4
4 |Medical Expenses
Medical Expenses No provision
No provision No provision
No provision No provision
No provision No provision
No provision

Judicial expenses
Judicial expenses ofof the
the
55 |testamentary or
testamentary or intestate
intestate Actual
Actualjudicial expenses
judicial expenses Actual
Actualjudicial expenses
judicial expenses Actual judicial
Actual expenses
judicial expenses Actual judicial
Actual expenses
judicial expenses
prproceedings
di

66 |Claims against
Claims against the
the estate
estate Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required

7 Claims against
Claims against insolvent
insolvent Total amount
Total amount ofof claim
claim (provided
(provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the
7
persons
persons value of
value of the
the gross
gross estate
estate of
of the
the decedent)
decedent) value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent

Outstanding amount
Outstanding amount asas of
of date
date of of death
death ,, contracted
contracted bona
bona Outstanding amount
Outstanding amount asas of
of date
date of of death
death ,, contracted
contracted bona
bona
fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money oror fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money oror
. ao: . | ae . . money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the
88 |Unpaid mortgages
Unpaid mortgages No provision.
No provision. May
May be
be related
related to
to claims
claims against
against the
the estate
estate No provision.
No provision. May
May be
be related
related to
to claims
claims against
against the
the estate
estate decedent's property undiminished by such mortgage or decedent's property undiminished by such mortgage or
decedent's property undiminished by such mortgage or decedent's property undiminished by such mortgage or
indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross
estate.
estate. estate.
estate.

Actual Value
Actual Value of of Loss/es
Loss/es provided
provided (1)(1) the
the loss/es
loss/es have
have notnot
Losses arising
Losses arising from
from fire,
fire, Actual Value
Actual Value of
of Loss/es
Loss/es provided
provided (1)
(1) the
the loss/es
loss/es have
have notnot been compensated
been compensated by by insurance
insurance or or otherwise;
otherwise; (2)
(2) at
at the
the time
time
9 storms, shipwreck,
storms, shipwreck, or or othe
othe No provision No provision been compensated
been compensated by by insurance
insurance oror otherwise;
otherwise; and
and (2)
(2) at
at the
the of filing
of filing the
the return,
return, such
such loss/es
loss/es have
have notnot been
been claimed
claimed as as
9 No provision No provision
casualty, or
casualty, or from
from robbery,
robbery, pl p time of
time of filing
filing the
the return,
return, such
such loss/es
loss/es have
have not
not been
been claimed
claimed as as} deduction for
deduction for income
income tax tax purposes;
purposes; andand (3)
(3) such
such loss/es
loss/es
theft or
theft or embezzlement
embezzlement deduction for
deduction for income
income tax
tax purposes.
purposes. were incurred
were incurred notnot later
later than
than the
the last
last day
day ofof deadline
deadline for
for
payment of
payment of estate
estate tax.
tax.

FMV of
FMV of the
the property
property identified
identified as
as received
received or or transferred
transferred to to FMV of
FMV of the
the property
property identified
identified as
as received
received or or transferred
transferred to to
the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5 the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5
years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe
included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines

Percentage of
Percentage of Deduction:
Deduction: Percentage of
Percentage of Deduction:
Deduction:
100% - -ifif the
100% the transfer
transfer is is within
within 11 year
year prior
prior toto the
the death
death ofof the
the |100%- -ifif the
100% the transfer
transfer is is within
within 11 year
year prior
prior toto the
the death
death ofof the
the
present decedent present decedent
10 Property
10 |Property Previously
Previously Taxed
Taxed No provision
No provision No provision
No provision present decedent present decedent
perty y p p 80% - - if the
80% the transfer
transfer is is more
more thanthan 11 year
year butbut not
not more
more than
than 2 2 | 80%80% - -ifif the
the transfer
transfer is is more
more thanthan 11 year
year butbut not
not more
more than
than 2 2
years
years years
years
60% - - if the
60% the transfer
transfer is is more
more thanthan 2 2 years
years but but not
not more
more than
than 3 3 |60% - -ifif the
60% the transfer
transfer is is more
more thanthan 2 2 years
years but but not
not more
more than
than 3 3
years
years years
years
40% - - if the
40% the transfer
transfer is is more
more thanthan 3 3 years
years but but not
not more
more than
than 4 4 |40% - -ifif the
40% the transfer
transfer is is more
more thanthan 3 3 years
years but but not
not more
more than
than 4 4
years
years years
years
20% - - if the
20% the transfer
transfer is is more
more thanthan 4 4 years
years but but not
not more
more than
than 5 20% |20% - -ifif the
the transfer
transfer is is more
more thanthan 4 4 years
years but but not
not more
more than
than 5 5
years
years years
years
The amount
The amount of of all
all bequests,
bequests, legacies,legacies, devises,
devises, or or transfers,
transfers, to to} The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, or or transfers,
transfers,
or for
or for the
the use
use of of the
the Government
Government of of the
the Philippines,
Philippines, or or any
any | to to or
or for
for the
the use
use of of the
the Government
Government of of the
the Philippines,
Philippines, or or any
any
11 |Transfers for public use No provision No provision political subdivision
political subdivision thereof,thereof, for for exclusively
exclusively public
public purposes
purposes political subdivision
political subdivision thereof,
thereof, for for exclusively
exclusively public
public purposes
purposes
11 Transfers for public use No provision No provision
P p p provided
provided the the amount
amount of of the
the deduction
deduction for for any
any transfer
transfer shall
shall not
not] provided
provided the the amount
amount of of the
the deduction
deduction for for any
any transfer
transfer shall
shall
exceed the
exceed the value
value of of thethe transferred
transferred property
property required
required to to be
be not exceed
not exceed the the value
value of of the
the transferred
transferred property
property required
required to to
included in
included in the
the gross
gross estate.
estate. be included
be included in in the
the gross
gross estate.
estate.
The amount
The amount of of all
all bequests,
bequests, legacies,legacies, devises,
devises, or or transfers
transfers to to | The
The amount
amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, or or transfers
transfers to to
12 Transfers to
Transfers to the
the surviving
surviving No provision No provision the surviving
the surviving spouse
spouse and and the the legitimate
legitimate oror recognized
recognized natural
natural | the the surviving
surviving spouse
spouse and and the
the legitimate
legitimate oror recognized
recognized natural
natural
12 No provision No provision
spouse and
spouse and children
children Pp p or adopted
or adopted children
children not not exceeding
exceeding three three (3)
(3) thousand
thousand pesospesos | or or adopted
adopted children
children not not exceeding
exceeding three three (3)(3) thousand
thousand pesos
pesos
each.
each. each.
each.
The net share of the surviving spouse in the conjugal The net share of the surviving spouse in the conjugal
Share in
Share in the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse in
in the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse in
in the
the conjugal
conjugal The net Share of the Surviving Spouse in the conjugal The net share of the Surviving spouse in the conjugal
13
13 it artnership property and his/her part of the gains artnershio property and his/her part of the gains partnership property
partnership property minus
minus the
the obligations
obligations properly
properly chargeable
chargeable partnership property
partnership property minus
minus the
the obligations
obligations properly
properly
property partnership property and his/her part of the gains partnership property and his/her part of the gains
Property p P property P 9 p P property p 9 to such
to such property
property chargeable to
chargeable to such
such property
property

Amount Received by Heirs

14 Amount Received by Heirs
14 No provision
No provision No provision
No provision No provision
No provision No provision
No provision
Under R.A
Under R.A No.
No. 4917
4917
Page 11 of
Page of 4
4
Note: All
Note: All deductions
deductions require
require proof
proof and
and verification
verification
 ALLOWABLE DEDUCTIONS
ALLOWABLE DEDUCTIONS FROM
FROM THE
THE GROSS
GROSS ESTATE
ESTATE FOR
FOR RESIDENTS,
RESIDENTS, CITIZENS
CITIZENS AND
AND NON-RESIDENT
NON-RESIDENT ALIENS
ALIENS Annex "C"
Annex "C" ver.
ver. 2
2
January
January 1,
1, 1973
1973 –
- December
December 31,
31, 1985
1985 January 1,1, 1986
January 1986 -- July
July 27,
27, 1992
1992 July 28,
July 28, 1992
1992 -- December
December 31,
31, 1997
1997 January
January1, 1998 -- December
1, 1998 December 31,
31, 2017
2017
DEDUCTION
DEDUCTION
(Presidential Decree
(Presidential Decree No.
No. 69)
69) (Presidential Decree
(Presidential Decree No.
No. 1994)
1994) (R.A No.
(R.A No. 7499)
7499) (R.A No.
(R.A No. 8424)
8424)
A. Residents
A. Residents and
and Citizens
Citizens
Actual funeral
Actual funeral expenses
expenses oror inin an
an amount
amount equal
equal to
to 5%
5% of
of the
the Actual funeral
Actual funeral expenses
expenses oror inin an
an amount
amount equal
equal to
to 5%
5% of
of the
the
1 Funeral Expense
Funeral Expense 5% of
5% of the
the gross
gross estate
estate but
but not
not to
to exceed
exceed P50,000.00
P50,000.00 5% of
5% of the
the gross
gross estate
estate but
but not
not to
to exceed
exceed P50,000.00
P50,000.00 gross estate,
gross estate, whichever
whichever isis lower,
lower, but
but in
in no
no case
case to
to exceed
exceed gross estate,
gross estate, whichever
whichever isis lower,
lower, but
but in
in no
no case
case to
to exceed
exceed
=

P100,000.00
P100,000.00 P200,000.00
P200,000.00
Actual FMV
Actual FMV or
or P1M,
P1M, whichever
whichever is
is lower.
lower. Barangay
Barangay Actual FMV
Actual FMV or
or P1M,
P1M, whichever
whichever is
is lower.
lower. Barangay
Barangay
2 Family Home No provision No provision
2 |Family Home No provision No provision Certification is
Certification is mandatory.
mandatory. Certification is
Certification is mandatory.
mandatory.

33 |Standard Deduction
Standard Deduction No provision
No provision No provision
No provision No provision
No provision One million
One million pesos
pesos (P1,000,000)
(P1,000,000)

Actual Medical
Actual Medical Expenses
Expenses incurred
incurred by
by the
the decedent
decedent within
within one
one
(1) year prior to his death, substantiated with receipts and in
4
4 |Medical Expenses
Medical Expenses No provision
No provision No provision
No provision No provision
No provision (1) year Prior ee ee eet tatared wiih recepis and in
no case to exceed Five Hundred Thousand Pesos
(P500,000)
(P500,000)
Judicial expenses
Judicial expenses ofof the
the
Actual
Actualjudicial expenses of
judicial expenses of the
the testamentary
testamentary or
or intestate
intestate Actual
Actualjudicial expenses of
judicial expenses of the
the testamentary
testamentary or
or intestate
intestate Actual
Actualjudicial expenses of
judicial expenses of the
the testamentary
testamentary or
or intestate
intestate Actual judicial
Actual expenses of
judicial expenses of the
the testamentary
testamentary or
or intestate
intestate
5 testamentary or
testamentary or intestate
intestate
proceedings
proceedings proceedings
proceedings proceedings
proceedings proceedings
proceedings
pr
proceedings
Outstanding amount
Outstanding amount as as of
of date
date ofof death
death with
with duly
duly notarized
notarized Outstanding amount
Outstanding amount as as of
of date
date of
of death
death with
with duly
duly notarized
notarized Outstanding amount
Outstanding amount asas of
of date
date of
of death
death with
with duly
duly notarized
notarized
document. IfIf the
document. the loan
loan was
was contracted
contracted w/in
wiin 3
3 years
years before
before the document. IfIf the
the document. the loan
loan was
was contracted
contracted w/in
wiin 33 years
years before
before the
the document.
document. IfIf the
the loan
loan was
was contracted
contracted w/in
wiin 3
3 years
years before
before the
the
6 Claims against
Claims against the
the estate
estate Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required
death, a
death, a statement
statement showing
showing thethe disposition
disposition ofof the
the proceeds
proceeds death, a
death, a statement
statement showing
showing thethe disposition
disposition of of the
the proceeds
proceeds of death, aa statement
of death, statement showing
showing thethe disposition
disposition ofof the
the proceeds
proceeds ofof
of the
of the loan
loan is
is required.
required. the loan
the loan is
is required.
required. the loan
the loan is
is required.
required.
Claims against
Claims against insolvent
insolvent Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the
7
persons
persons value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent

Outstanding amount
Outstanding amount asas of
of date
date ofof death
death ,, contracted
contracted bona
bona Outstanding amount
Outstanding amount asas of
of date
date ofof death
death ,, contracted
contracted bonabona Outstanding amount
Outstanding amount as as of
of date
date ofof death
death ,, contracted
contracted bona
bona Outstanding amount
Outstanding amount asas of
of date
date of of death
death ,, contracted
contracted bona
bona
fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money or or fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money or or fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money or or fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money or or
money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the
8 Unpaid mortgages
Unpaid mortgages
decedent's property
decedent's property undiminished
undiminished by by such
such mortgage
mortgage or or decedent's property
decedent's property undiminished
undiminished by by such
such mortgage
mortgage or or decedent's property
decedent's property undiminished
undiminished by by such
such mortgage
mortgage or or decedent's property
decedent's property undiminished
undiminished by by such
such mortgage
mortgage or or
indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross
estate.
estate. estate.
estate. estate.
estate. estate.
estate.
Actual Value
Actual Value of of Loss/es
Loss/es provided
provided (1)(1) the
the loss/es
loss/es have
have not not Actual Value
Actual Value of of Loss/es
Loss/es provided
provided (1)
(1) the
the loss/es
loss/es have
have not not Actual Value
Actual Value ofof loss/es
loss/es provided
provided (1)(1) the
the loss/es
loss/es have
have not
not been
been Actual Value
Actual Value of of loss/es
loss/es provided
provided (1)
(1) the
the loss/es
loss/es have
have not
not
Losses arising
Losses arising from
from fire,
fire, been compensated
been compensated by by insurance
insurance or or otherwise;
otherwise; (2)(2) at
at the
the time
time been
been compensated
compensated by by insurance
insurance or or otherwise;
otherwise; (2)
(2) at
at the
the time
time compensated by
compensated by insurance
insurance or or otherwise;
otherwise; (2) (2) at
at the
the time
time ofof been compensated
been compensated by by insurance
insurance or or otherwise;
otherwise; (2)(2) at
at the
the time
time
storms, shipwreck,
storms, shipwreck, or or othe
othe of filing
of filing the
the return,
return, such
such loss/es
loss/es have
have not not been
been claimed
claimed as as of filing
of filing the
the return,
return, such
such loss/es
loss/es have
have notnot been
been claimed
claimed as as filing the
filing the return,
return, such
such loss/es
loss/es have
have not not been
been claimed
claimed as as of filing
of filing the
the return,
return, such
such loss/es
loss/es have
have notnot been
been claimed
claimed as as
9
casualty, or
casualty, or from
from robbery,
robbery, deduction for
deduction for income
income tax tax purposes;
purposes; and and (3)
(3) such
such loss/es
loss/es deduction for
deduction for income
income tax tax purposes;
purposes; and and (3)
(3) such
such loss/es
loss/es deduction for
deduction for income
income taxtax purposes;
purposes; and and (3)(3) such
such loss/es
loss/es were
were deduction for
deduction for income
income tax tax purposes;
purposes; andand (3)
(3) such
such loss/es
loss/es
theft or
theft or embezzlement
embezzlement were incurred
were incurred notnot later
later than
than the
the last
last day
day of
of deadline
deadline forfor were incurred
were incurred notnot later
later than
than the
the last
last day
day of
of deadline
deadline forfor incurred not
incurred not later
later than
than the
the last
last day
day ofof deadline
deadline forfor payment
payment of of were incurred
were incurred notnot later
later than
than the
the last
last day
day of
of deadline
deadline for
for
payment of
payment of estate
estate tax.
tax. payment of
payment of estate
estate tax.
tax. estate tax.
estate tax. payment of
payment of estate
estate tax.
tax.

FMV of
FMV of the
the property
property identified
identified as
as received
received oror transferred
transferred to to FMV of
FMV of the
the property
property identified
identified as
as received
received oror transferred
transferred to to FMV of
FMV of the
the property
property identified
identified as
as received
received or or transferred
transferred to to FMV of
FMV of the
the property
property identified
identified as
as received
received or or transferred
transferred to to
the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5 the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5 the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5 the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5
years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe
included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines

Percentage of
Percentage of Deduction:
Deduction: Percentage of
Percentage of Deduction:
Deduction: Percentage of
Percentage of Deduction:
Deduction: Percentage of
Percentage of Deduction:
Deduction:

100% - -ifif the

100% the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the 100%
100% - -ifif the
the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the 100%
100% - -ifif the
the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the 100% - -ifif the
100% the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the
present decedent
present decedent present decedent
present decedent present decedent
present decedent present decedent
present decedent
Property Previously
10 Property Previously Taxed
Taxed
80% - - ifif the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 22 80% - - ifif the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 2 2 80% - - if the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 22 80% - -ifif the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 22
years
years years
years years
years years
years
60% - - ifif the
60% the transfer
transfer is
is more
more than
than 22 years
years but
but not
not more
more than
than 33 60% - - ifif the
60% the transfer
transfer is
is more
more than
than 22 years
years but
but not
not more
more than
than 60% - - if the
60% the transfer
transfer is
is more
more than
than 2
2 years
years but
but not
not more
more than
than 33 60% - -ifif the
60% the transfer
transfer is
is more
more than
than 2
2 years
years but
but not
not more
more than
than 33
years
years 3 years
3 years years
years years
years
40% - -ifif the
40% the transfer
transfer is is more
more than
than 3 3 years
years butbut not
not more
more than
than 4 4 40% - - ifif the
40% the transfer
transfer is is more
more than
than 3 3 years
years butbut not
not more
more than
than 40% - - if the
40% the transfer
transfer is is more
more than
than 3 3 years
years but but not
not more
more than
than 44 40% - -ifif the
40% the transfer
transfer is is more
more than
than 33 years
years but
but not
not more
more than
than 44
years
years 4 years
4 years years
years years
years
20% - - ifif the
20% the transfer
transfer is is more
more than
than 4 4 years
years butbut not
not more
more than
than 5 5 20% - - ifif the
20% the transfer
transfer is is more
more than
than 4 4 years
years butbut not
not more
more than
than 20% - - if the
20% the transfer
transfer is is more
more than
than 4 4 years
years but but not
not more
more than
than 55 20% - -ifif the
20% the transfer
transfer is is more
more than
than 44 years
years but
but not
not more
more than
than 55
years
years 5 years
5 years years
years years
years
The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, or or transfers,
transfers, to to or
or for
for The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, or or transfers,
transfers, to to or
or for
for The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, or or transfers,
transfers, to to The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, oror transfers,
transfers,
the use
the use ofof the
the Government
Government of of the
the Republic
Republic of of the
the Philippines,
Philippines, the use
the use of of the
the Government
Government of of the
the Republic
Republic of of the
the Philippines,
Philippines, or for
or for the
the use
use of of the
the Government
Government of of the
the Republic
Republic of of the
the to or
to or for
for the
the use
use of of the
the Government
Government of of the
the Republic
Republic ofof the
the
Transfers for
11 Transfers for public
public use
use
or any
or any political
political subdivision
subdivision thereof,
thereof, for
for exclusively
exclusively public
public or any
or any political
political subdivision
subdivision thereof,
thereof, forfor exclusively
exclusively public
public Philippines, or
Philippines, or any
any political
political subdivision
subdivision thereof,
thereof, forfor exclusively
exclusively Philippines, or
Philippines, or any
any political
political subdivision
subdivision thereof,
thereof, for
for exclusively
exclusively
purposes.
purposes. purposes.
purposes. public purposes.
public purposes. public purposes.
public purposes.
The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, or or transfers
transfers to to The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, or or transfers
transfers The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, or or transfers
transfers to to
Transfers to
Transfers to the
the surviving
surviving the surviving
the surviving spouse
spouse and and the
the legitimate
legitimate oror recognized
recognized natural
natural to the
to the surviving
surviving spouse
spouse andand the
the legitimate
legitimate or or recognized
recognized the surviving
the surviving spouse
spouse and and the
the legitimate
legitimate or or recognized
recognized natural
natural
12 Deleted provision
Deleted provision
spouse and
spouse and children
children or adopted
or adopted children
children not not exceeding
exceeding three
three (3)
(3) thousand
thousand pesos
pesos natural or
natural or adopted
adopted children
children not
not exceeding
exceeding threethree (3)(3) thousand
thousand or adopted
or adopted children
children not not exceeding
exceeding threethree (3)(3) thousand
thousand pesospesos
each.
each. pesos each.
pesos each. each.
each.
The net
The net share
share of
of the
the surviving
surviving spouse
spouse inin the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse inin the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse in
in the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse inin the
the conjugal
conjugal
Share in
Share in the
the conjugal
conjugal
13 partnership property
partnership property minus
minus the
the obligations
obligations properly
properly partnership property
partnership property minus
minus the
the obligations
obligations properly
properly partnership property
partnership property minus
minus the
the obligations
obligations properly
properly chargeable
chargeable partnership property
partnership property minus
minus the
the obligations
obligations properly
properly
property
property
chargeable to
chargeable to such
such property
property chargeable to
chargeable to such
such property
property to such
to such property
property chargeable to
chargeable to such
such property
property
Amount Received
Amount Received byby Heirs
Heirs Actual retirement
Actual retirement benefits
benefits provided
provided the
the same
same is
is included
included in
in
14 No provision
No provision No provision
No provision No provision
No provision
Under R.A
Under R.A No.
No. 4917
4917 the computation
the computation ofof gross
gross estate
estate

Note: All
Note: All deductions
deductions require
require proof
proof and
and verification
verification Page 2
Page 2 of
of 4
4
 ALLOWABLE DEDUCTIONS
ALLOWABLE DEDUCTIONS FROM
FROM THE
THE GROSS
GROSS ESTATE
ESTATE FOR
FOR RESIDENTS,
RESIDENTS, CITIZENS
CITIZENS AND
AND NON-RESIDENT
NON-RESIDENT ALIENS
ALIENS Annex "C"
Annex "C" ver.
ver. 2
2
October
October 29,
29, 1936
1936 –
— June
June 30,
30, 1939
1939 July 1,
July 1, 1939
1939 –
— September
September 14,
14, 1950
1950
March 01,1917-
March 01,1917- October
October 28,
28, 1936
1936 (Revised
(Revised September 15,
September 15, 1950-December
1950-December 31,
31, 1972
1972
DEDUCTION
DEDUCTION (Commonwealth Act
(Commonwealth Act of
of 106)
106) (Commonwealth Act
(Commonwealth Act No.
No. 466)
466)
Administrative Code)
Administrative Code) (RA No.
(RA No. 579)
579)
B. Non-resident
B. Non-resident aliens
aliens
(Starting from
(Starting from July
July 1,
1, 1939,
1939, deductions
deductions enumerated
enumerated hereunder
hereunder shall
shall only
only be
be allowed
allowed if
if the
the executor,
executor, administrator,
administrator, or
or anyone
anyone of
of the
the heirs,
heirs, as
as the
the case
case may
may be,
be, includes
includes in
in the
the return
return required
required to
to be
be filed,
filed, the
the value
value at
at the
the time
time of
of his
his
death of
death of that
that part
part of
of the
the gross
gross estate
estate of
of the
the nonresident
nonresident situated
situated inin the
the Philippines)
Philippines)
Actual funeral
Actual funeral expense
expense but
but not
not exceeding
exceeding 5%
5% of
of the
the gross
gross Actual funeral
Actual funeral expense
expense but
but not
not exceeding
exceeding 5%
5% of
of the
the gross
gross
11 Funeral Expense
Funeral Expense Actual funeral
Actual funeral expense
expense Actual funeral
Actual funeral expense
expense
estate
estate estate
estate
22 |Family Home
Family Home No provision
No provision No provision
No provision No provision
No provision No provision
No provision

33 |Standard Deduction
Standard Deduction No provision
No provision No provision
No provision No provision
No provision No provision
No provision

4
4 |Medical Expenses
Medical Expenses No provision
No provision No provision
No provision No provision
No provision No provision
No provision

Judicial expenses of the

55 Judicial expenses of the Actual
Actualjudicial expenses
judicial expenses Actual
Actualjudicial expenses
judicial expenses Actual
Actualjudicial expenses
judicial expenses Actual
Actualjudicial expenses
judicial expenses
testamentary or
testamentary or intestate
intestate

66 |Claims against
Claims against the
the estate
estate | Outstanding
Outstanding amount
amount as
as of
of date
date of
of death.
death. Proof
Proof required
required Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required

7 Claims against
Claims against insolvent
insolvent Total amount
Total amount ofof claim
claim (provided
(provided the
the same
same is
is included
included in
in the
the | Total
Total amount
amount ofof claim
claim (provided
(provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the
7
persons
persons value of
value of the
the gross
gross estate
estate of
of the
the decedent)
decedent) value of
value of the
the gross
gross estate
estate of
of the
the decedent)
decedent) value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent

Outstanding amount
Outstanding amount asas of
of date
date of of death
death ,, contracted
contracted bona
bona Outstanding amount
Outstanding amount asas of
of date
date of of death
death ,, contracted
contracted bona
bona
fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money oror fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money oror
. wo: . | ae . . money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the
88 |Unpaid mortgages
Unpaid mortgages No provision.
No provision. May
May be
be related
related to
to claims
claims against
against the
the estate
estate No provision.
No provision. May
May be
be related
related to
to claims
claims against
against the
the estate
estate decedent's property undiminished by such mortgage or decedent's property undiminished by such mortgage or
decedent's property undiminished by such mortgage or decedent's property undiminished by such mortgage or
indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross
estate.
estate. estate.
estate.

Actual Value
Actual Value of of Loss/es
Loss/es provided
provided (1)(1) the
the loss/es
loss/es have
have notnot
Losses arising
Losses arising from
from fire,
fire, Actual Value
Actual Value of
of Loss/es
Loss/es provided
provided (1)
(1) the
the loss/es
loss/es have
have not not been compensated
been compensated by by insurance
insurance or or otherwise;
otherwise; (2)(2) at
at the
the time
time
storms, shipwreck,
storms, shipwreck, or or othe
othe a. a. been compensated
been compensated by by insurance
insurance oror otherwise;
otherwise; and
and (2)
(2) at
at the
the of filing
of filing the
the return,
return, such
such loss/es
loss/es have
have not not been
been claimed
claimed as as
99 No Provision
No Provision No provision
No provision . a : . . .
casualty, or
casualty, or from
from robbery,
robbery, time of
time of filing
filing the
the return,
return, such
such loss/es
loss/es have
have not
not been
been claimed
claimed as as] deduction for
deduction for income
income tax tax purposes;
purposes; and and (3)
(3) such
such loss/es
loss/es
theft or
theft or embezzlement
embezzlement deduction for
deduction for income
income tax
tax purposes.
purposes. were incurred
were incurred not not later
later than
than the
the last
last day
day ofof deadline
deadline for
for
payment of
payment of estate
estate tax.
tax.

FMV of
FMV of the
the property
property identified
identified as
as received
received or or transferred
transferred to to FMV of
FMV of the
the property
property identified
identified as
as received
received or or transferred
transferred to to
the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5 the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5
years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe
included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines

Percentage of
Percentage of Deduction:
Deduction: Percentage of
Percentage of Deduction:
Deduction:

100% - -ifif the

100% the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the | 100%
100% - -ifif the
the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the
present decedent
present decedent present decedent
present decedent
10
10 | Property
Property Previously
Previously Taxed
Taxed No
No provision
provision No
No provision
provision 80% -- ifif the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than22 |80% -- ifif the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 22
years
years years
years
60% - - if the
60% the transfer
transfer is
is more
more than
than 2
2 years
years but
but not
not more
more than
than 33 |60% - -ifif the
60% the transfer
transfer is
is more
more than
than 2
2 years
years but
but not
not more
more than
than 3
3
years
years years
years
40% - - if the
40% the transfer
transfer is
is more
more than
than 3
3 years
years but
but not
not more
more than
than 4
4 |40% - -ifif the
40% the transfer
transfer is
is more
more than
than 3
3 years
years but
but not
not more
more than
than 4
4
years
years years
years
20% - - if the
20% the transfer
transfer is
is more
more than
than 4
4 years
years but
but not
not more
more than
than 5 |20% - -ifif the
20% the transfer
transfer is
is more
more than
than 4
4 years
years but
but not
not more
more than
than 5
5
years
years years
years

The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, oror transfers,
transfers, toto | The
The amount
amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, or or transfers,
transfers,
or for
or for the
the use
use ofof the
the Government
Government of of the
the Philippines,
Philippines, oror any
any to or
to or for
for the
the use
use ofof the
the Government
Government of of the
the Philippines,
Philippines, or
or any
any
wit fers f bli No provision No provision political subdivision
political subdivision thereof,
thereof, for
for exclusively
exclusively public
public purposes
purposes political subdivision
political subdivision thereof,
thereof, forfor exclusively
exclusively public
public purposes
purposes
11 Transfers for public use No provision No provision
Fansters tor public use p p provided
provided the the amount
amount of of the
the deduction
deduction forfor any
any transfer
transfer shall
shall not
not] provided
provided the the amount
amount of of the
the deduction
deduction for for any
any transfer
transfer shall
shall
exceed the
exceed the value
value of of the
the transferred
transferred property
property required
required toto be
be not exceed
not exceed the the value
value ofof the
the transferred
transferred property
property required
required toto
included in
included in the
the gross
gross estate.
estate. be included
be included in in the
the gross
gross estate.
estate.

Transfers to the surviving

12 Transfers to the surviving
12 No provision
No provision No provision
No provision No provision
No provision No provision
No provision
spouse and
spouse and children
children

The net share of the surviving spouse in the conjugal The net share of the surviving spouse in the conjugal
Share in
Share in the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse in
in the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse in
in the
the conjugal
conjugal The net Share of the Surviving spouse in the conjugal The net share of the Surviving spouse in the conjugal
13
13 it artnership property and his/her part of the gains artnershio property and his/her part of the gains partnership property
partnership property minus
minus the
the obligations
obligations properly
properly chargeable
chargeable partnership property
partnership property minus
minus the
the obligations
obligations properly
properly
property partnership property and his/her part of the gains partnership property and his/her part of the gains
Property p P property P 9 p P property p 9 to such
to such property
property chargeable to
chargeable to such
such property
property

Amount Received by Heirs

14 Amount Received by Heirs
14 No provision
No provision No provision
No provision No provision
No provision No provision
No provision
Under R.A
Under R.A No.
No. 4917
4917
Page 3
Page 3 of
of 4
4
Note: All
Note: All deductions
deductions require
require proof
proof and
and verification
verification
 ALLOWABLE DEDUCTIONS
ALLOWABLE DEDUCTIONS FROM
FROM THE
THE GROSS
GROSS ESTATE
ESTATE FOR
FOR RESIDENTS,
RESIDENTS, CITIZENS
CITIZENS AND
AND NON-RESIDENT
NON-RESIDENT ALIENS
ALIENS Annex "C"
Annex "C" ver.
ver. 2
2
January
January 1,
1, 1973
1973 –
- December
December 31,
31, 1985
1985 January 1,1, 1986
January 1986 -- July
July 27,
27, 1992
1992 July 28,
July 28, 1992
1992 -- December
December 31,
31, 1997
1997 January
January1, 1998 -- December
1, 1998 December 31,
31, 2017
2017
DEDUCTION
DEDUCTION
(Presidential Decree
(Presidential Decree No.
No. 69)
69) (Presidential Decree
(Presidential Decree No.
No. 1994)
1994) (R.A No.
(R.A No. 7499)
7499) (R.A No.
(R.A No. 8424)
8424)
B. Non-resident
B. Non-resident aliens
aliens
(Starting from
(Starting from July
July 1,
1, 1939,
1939, deductions
deductions enumerated
enumerated hereunder
hereunder shall
shall only
only be
be allowed
allowed if
if the
the executor,
executor, administrator,
administrator, or
or anyone
anyone of
of the
the heirs,
heirs, as
as the
the case
case may
may be,
be, includes
includes in
in the
the return
return required
required to
to be
be filed,
filed, the
the value
value at
at the
the time
time of
of his
his
death of
death of that
that part
part of
of the
the gross
gross estate
estate of
of the
the nonresident
nonresident situated
situated inin the
the Philippines)
Philippines)
Actual funeral
Actual funeral expenses
expenses oror inin an
an amount
amount equal
equal to
to 5%
5% of
of the
the Actual funeral
Actual funeral expenses
expenses oror inin an
an amount
amount equal
equal to
to 5%
5% of
of the
the
11 Funeral Expense
Funeral Expense 5% of
5% of the
the gross
gross estate
estate but
but not
not to
to exceed
exceed P50,000.00
P50,000.00 5% of
5% of the
the gross
gross estate
estate but
but not
not to
to exceed
exceed P50,000.00
P50,000.00 gross estate,
gross estate, whichever
whichever isis lower,
lower, but
but in
in no
no case
case to
to exceed
exceed gross estate,
gross estate, whichever
whichever isis lower,
lower, but
but in
in no
no case
case to
to exceed
exceed
P100.000.00
P100,000.00 P200.000.00
P200,000.00
22 |Family Home
Family Home No Provision
No Provision No Provision
No Provision No Provision
No Provision no provision
no provision

33 |Standard Deduction
Standard Deduction No Provision
No Provision No Provision
No Provision No Provision
No Provision no provision
no provision

4
4 |Medical Expenses
Medical Expenses No Provision
No Provision No Provision
No Provision No Provision
No Provision no provision
no provision

Judicial expenses
Judicial expenses ofof the
the
Actual
Actualjudicial expenses of
judicial expenses of the
the testamentary
testamentary or
or intestate
intestate Actual
Actualjudicial expenses of
judicial expenses of the
the testamentary
testamentary or
or intestate
intestate Actual
Actualjudicial expenses of
judicial expenses of the
the testamentary
testamentary or
or intestate
intestate Actual judicial
Actual expenses of
judicial expenses of the
the testamentary
testamentary or
or intestate
intestate
5 testamentary or
testamentary or intestate
intestate
proceedings
proceedings proceedings
proceedings proceedings
proceedings proceedings
proceedings
proceedings
proceedings

Outstanding amount
Outstanding amount as as of
of date
date of
of death
death with
with duly
duly notarized
notarized Outstanding amount
Outstanding amount as as of
of date
date of
of death
death with
with duly
duly notarized
notarized Outstanding amount
Outstanding amount asas of
of date
date of
of death
death with
with duly
duly notarized
notarized
document. IfIf the
document. the loan
loan was
was contracted
contracted w/in
wiin 33 years
years before
before the
the document. IfIf the
document. the loan
loan was
was contracted
contracted w/in
wiin 33 years
years before
before the
the document. IfIf the
document. the loan
loan was
was contracted
contracted w/in
wiin 33 years
years before
before the
the
6 Claims against
Claims against the
the estate
estate Outstanding amount
Outstanding amount as
as of
of date
date of
of death.
death. Proof
Proof required
required
death, a
death, a statement
statement showing
showing thethe disposition
disposition ofof the
the proceeds
proceeds death, a
death, a statement
statement showing
showing thethe disposition
disposition ofof the
the proceeds
proceeds of of death, aa statement
death, statement showing
showing the
the disposition
disposition ofof the
the proceeds
proceeds of of
of the
of the loan
loan is
is required.
required. the loan
the loan is
is required.
required. the loan
the loan is
is required.
required.

Claims against
Claims against insolvent
insolvent Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the Total amount
Total amount ofof claim
claim provided
provided the
the same
same is
is included
included in
in the
the
7
persons
persons value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent value of
value of the
the gross
gross estate
estate of
of the
the decedent
decedent

Outstanding amount
Outstanding amount asas of
of date
date ofof death
death ,, contracted
contracted bona
bona Outstanding amount
Outstanding amount asas of
of date
date ofof death
death ,, contracted
contracted bonabona Outstanding amount
Outstanding amount as as of
of date
date ofof death
death ,, contracted
contracted bona
bona Outstanding amount
Outstanding amount asas of
of date
date of of death
death ,, contracted
contracted bona
bona
fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money or or fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money or or fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money or or fide and
fide and for
for an
an adequate
adequate and
and full
full consideration
consideration in in money
money or or
money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the money's worth.
money's worth. For
For purposes
purposes of of deduction,
deduction, thethe value
value of
of the
the
8 Unpaid mortgages
Unpaid mortgages
decedent's property
decedent's property undiminished
undiminished by by such
such mortgage
mortgage or or decedent's property
decedent's property undiminished
undiminished by by such
such mortgage
mortgage or or decedent's property
decedent's property undiminished
undiminished by by such
such mortgage
mortgage or or decedent's property
decedent's property undiminished
undiminished by by such
such mortgage
mortgage or or
indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross indebtedness must
indebtedness must be
be included
included in in the
the value
value of
of the
the gross
gross
estate.
estate. estate.
estate. estate.
estate. estate.
estate.

Actual Value
Actual Value of of Loss/es
Loss/es provided
provided (1)(1) the
the loss/es
loss/es have
have not not Actual Value
Actual Value of of Loss/es
Loss/es provided
provided (1)
(1) the
the loss/es
loss/es have
have not not Actual Value
Actual Value ofof loss/es
loss/es provided
provided (1)(1) the
the loss/es
loss/es have
have not
not been
been Actual Value
Actual Value of of loss/es
loss/es provided
provided (1)
(1) the
the loss/es
loss/es have
have not
not
Losses arising
Losses arising from
from fire,
fire, been compensated
been compensated by by insurance
insurance or or otherwise;
otherwise; (2)(2) at
at the
the time
time been
been compensated
compensated by by insurance
insurance or or otherwise;
otherwise; (2)
(2) at
at the
the time
time compensated by
compensated by insurance
insurance or or otherwise;
otherwise; (2) (2) at
at the
the time
time ofof been compensated
been compensated by by insurance
insurance or or otherwise;
otherwise; (2)(2) at
at the
the time
time
storms, shipwreck,
storms, shipwreck, or or othe
othe of filing
of filing the
the return,
return, such
such loss/es
loss/es have
have not not been
been claimed
claimed as as of filing
of filing the
the return,
return, such
such loss/es
loss/es have
have notnot been
been claimed
claimed as as filing the
filing the return,
return, such
such loss/es
loss/es have
have not not been
been claimed
claimed as as of filing
of filing the
the return,
return, such
such loss/es
loss/es have
have notnot been
been claimed
claimed as as
9
casualty, or
casualty, or from
from robbery,
robbery, deduction for
deduction for income
income tax tax purposes;
purposes; and and (3)
(3) such
such loss/es
loss/es deduction for
deduction for income
income tax tax purposes;
purposes; and and (3)
(3) such
such loss/es
loss/es deduction for
deduction for income
income taxtax purposes;
purposes; and and (3)(3) such
such loss/es
loss/es were
were deduction for
deduction for income
income tax tax purposes;
purposes; andand (3)
(3) such
such loss/es
loss/es
theft or
theft or embezzlement
embezzlement were incurred
were incurred notnot later
later than
than the
the last
last day
day of
of deadline
deadline forfor were incurred
were incurred notnot later
later than
than the
the last
last day
day of
of deadline
deadline forfor incurred not
incurred not later
later than
than the
the last
last day
day ofof deadline
deadline forfor payment
payment of of were incurred
were incurred notnot later
later than
than the
the last
last day
day of
of deadline
deadline for
for
payment of
payment of estate
estate tax.
tax. payment of
payment of estate
estate tax.
tax. estate tax.
estate tax. payment of
payment of estate
estate tax.
tax.

FMV of
FMV of the
the property
property identified
identified as
as received
received oror transferred
transferred to to FMV of
FMV of the
the property
property identified
identified as
as received
received oror transferred
transferred to to FMV of
FMV of the
the property
property identified
identified as
as received
received or or transferred
transferred to to FMV of
FMV of the
the property
property identified
identified as
as received
received or or transferred
transferred to to
the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5 the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5 the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5 the decedent
the decedent by by gift,
gift, bequest,
bequest, devise
devise or
or inheritance
inheritance within
within 5 5
years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe years prior
years prior to
to the
the present
present decedent's
decedent's death
death which
which must
must bebe
included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines included in
included in the
the gross
gross estate
estate situated
situated in
in the
the Philippines
Philippines

Percentage of
Percentage of Deduction:
Deduction: Percentage of
Percentage of Deduction:
Deduction: Percentage of
Percentage of Deduction:
Deduction: Percentage of
Percentage of Deduction:
Deduction:
100% - -ifif the
100% the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the 100%
100% - -ifif the
the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the 100%
100% - -ifif the
the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the 100% - -ifif the
100% the transfer
transfer is
is within
within 11 year
year prior
prior to
to the
the death
death of
of the
the
present decedent
present decedent present decedent
present decedent present decedent
present decedent present decedent
present decedent

Property Previously
10 Property Previously Taxed
Taxed 80% - - ifif the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 2
2 80% - - ifif the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 2
2 80%
80% - - if the
the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 2
2 80% - -ifif the
80% the transfer
transfer is
is more
more than
than 11 year
year but
but not
not more
more than
than 2
2
years
years years
years years
years years
years
60% - - ifif the
60% the transfer
transfer is
is more
more than
than 2
2 years
years but
but not
not more
more than
than 3
3 60%
60% - - ifif the
the transfer
transfer is
is more
more than
than 2
2 years
years but
but not
not more
more than
than 60% - - if the
60% the transfer
transfer is
is more
more than
than 2
2 years
years but
but not
not more
more than
than 3
3 60% - -ifif the
60% the transfer
transfer is
is more
more than
than 2
2 years
years but
but not
not more
more than
than 3
3
years
years 3 years
3 years years
years years
years

40% - -ifif the

40% the transfer
transfer is
is more
more than
than 3
3 years
years but
but not
not more
more than
than 4
4 40%
40% - - ifif the
the transfer
transfer is
is more
more than
than 3
3 years
years but
but not
not more
more than
than 40% - - if the
40% the transfer
transfer is
is more
more than
than 3
3 years
years but
but not
not more
more than
than 4
4 40% - -ifif the
40% the transfer
transfer is
is more
more than
than 3
3 years
years but
but not
not more
more than
than 4
4
years
years 4 years
4 years years
years years
years

20% - - ifif the

20% the transfer
transfer is
is more
more than
than 4
4 years
years but
but not
not more
more than
than 5
5 20%
20% - - ifif the
the transfer
transfer is
is more
more than
than 4
4 years
years but
but not
not more
more than
than 20% - - if the
20% the transfer
transfer is
is more
more than
than 4
4 years
years but
but not
not more
more than
than 5
5 20% - -ifif the
20% the transfer
transfer is
is more
more than
than 4
4 years
years but
but not
not more
more than
than 5
5
years
years 5 years
5 years years
years years
years
The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, oror transfers,
transfers, to
to or
or for
for The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, oror transfers,
transfers, to
to or
or for
for The amount
The amount ofof all
all bequests,
bequests, legacies,
legacies, devises,
devises, oror transfers,
transfers, to
to The amount
The amount of of all
all bequests,
bequests, legacies,
legacies, devises,
devises, oror transfers,
transfers,
the use
the use of
of the
the Government
Government of of the
the Republic
Republic of of the
the Philippines,
Philippines, the use
the use of
of the
the Government
Government of of the
the Republic
Republic of of the
the Philippines,
Philippines, or for
or for the
the use
use of
of the
the Government
Government of of the
the Republic
Republic ofof the
the to or
to or for
for the
the use
use of of the
the Government
Government of of the
the Republic
Republic ofof the
the
Transfers for
11 Transfers for public
public use
use
=
a

or any
or any political
political subdivision
subdivision thereof,
thereof, for
for exclusively
exclusively public
public or any
or any political
political subdivision
subdivision thereof,
thereof, for
for exclusively
exclusively public
public Philippines, or
Philippines, or any
any political
political subdivision
subdivision thereof,
thereof, for
for exclusively
exclusively Philippines, or
Philippines, or any
any political
political subdivision
subdivision thereof,
thereof, for
for exclusively
exclusively
purposes.
purposes. purposes.
purposes. public purposes.
public purposes. public purposes.
public purposes.
Transfers to
Transfers to the
the surviving
surviving
12 No provision
No provision No provision
No provision No provision
No provision No provision
No provision
spouse and
spouse and children
children
The net
The net share
share of
of the
the surviving
surviving spouse
spouse inin the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse inin the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse in
in the
the conjugal
conjugal The net
The net share
share of
of the
the surviving
surviving spouse
spouse inin the
the conjugal
conjugal
Share in
Share in the
the conjugal
conjugal
13 partnership property
partnership property minus
minus the
the obligations
obligations properly
properly partnership property
partnership property minus
minus the
the obligations
obligations properly
properly partnership property
partnership property minus
minus the
the obligations
obligations properly
properly chargeable
chargeable partnership property
partnership property minus
minus the
the obligations
obligations properly
properly
property
property
chargeable to
chargeable to such
such property
property chargeable to
chargeable to such
such property
property to such
to such property
property chargeable to
chargeable to such
such property
property

Amount Received
Amount Received byby Heirs
Heirs
14 No provision
No provision No provision
No provision No provision
No provision No provision
No provision
Under R.A
Under R.A No.
No. 4917
4917
Note: All
Note: All deductions
deductions require
require proof
proof and
and verification
verification Page 4
Page 4 of
of 4
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