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What is the purpose of BIR 1700?

For individuals earning purely compensation

income from two or more employers within the
same taxable year, they are required to file BIR
Form 1700 as their annual income tax return.
Individuals having two or more employers are
not qualified for substituted filing, thus they are
required to file their annual tax return on their
own. 3
TAXATION

Taxation is a system of raising money to finance

government expenditures. All governments
require payments of money-taxes-from its
people.

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Lifeblood Theory

“Lifeblood Theory” like blood which acts as a

support to every human organ so it could
perform every duty inside the body, tax acts as
the blood which supports government and state.
The government cannot continue to perform its
basic functions of serving and protecting its
people without means to pay for its expenses.
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BASIS OF TAXATION.

“BENEFITS-RECEIVED PRINCIPLE” reciprocal

duties of protection and support between the
state and its inhabitants. The state collects taxes
from the subjects of taxation in order that it may
be able to perform the functions of government.
The citizens, on the other hand pay taxes in
order that they may be secured in the enjoyment
of the benefits of organized society. 7
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Income Tax

Income Tax is a tax on a person's income,

emoluments, profits arising from property,
practice of profession, conduct of trade or
business or on the pertinent items of gross
income specified in the Tax Code of 1997 (Tax
Code), as amended, less the deductions if any,
authorized for such types of income, by the Tax
Code, as amended, or other special laws. 9
Who are required to pay income tax in the Philippines?

1. Individuals
2. No Individuals

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Individuals

1. Resident citizens receiving income from

sources within or outside the Philippines
2. Non-resident citizens receiving income from
sources within the Philippines.
3. Aliens, whether resident or not, receiving
income from sources within the Philippines.

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Non-Individuals
1. Corporations including partnerships, no
matter how created or organized.
2. Domestic corporations receiving income
from sources within and outside the
Philippines.
3. Foreign corporations receiving income from
sources within the Philippines.
4. Estates and trusts engaged in trade or
business. 12
List of sources of gross income: (NIRC 1997 Chapter 6 Section 32 A)

1. Compensation for services in whatever form

paid, including, but not limited to fees,
salaries, wages, commissions, and similar
items;
2. Gross income derived from the conduct of
trade or business or the exercise of a
profession;
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List of sources of gross income: (NIRC 1997 Chapter 6 Section 32 A)

3. Gains derived from dealings in property;

(Note: subject to 6% capital gains tax for
individuals and for corporation if land and
building is not used in business)
4. Interests; (Note: generally subject to 20% final
withholding tax)
5. Rents;
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List of sources of gross income: (NIRC 1997 Chapter 6 Section 32 A)

6. Royalties; (Note: generally subject to 20%

final withholding tax,10% if from books and
literary works)
7. Dividends; (Note: generally subject to 10%
final withholding tax for individuals, tax exempt
for corporation)
8. Annuities;
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List of sources of gross income: (NIRC 1997 Chapter 6 Section 32 A)

9. Prizes and winnings; (Note: generally subject

to 20% final withholding tax, except those that
are tax exempt based on specific criteria in the
law)
10. Pensions; and
11. Partner's distributive share from the net
income of the general professional partnership.
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Compensation Income
1. Employed individuals that earn
compensation income pay their income taxes
monthly. Employers withhold the income tax
of their employees from their monthly gross
income and remit these sums to the BIR.
2. Philippine individual income tax is
progressive. The tax rate increases as the tax
base increases which means that tax payers
with more capacity to pay will pay more 17

taxes.
Compensation Income
3. Income tax is computed at the end of the year
based on all compensation income derived
during the year.

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Tax Reform for Acceleration and Inclusion (TRAIN) –
Revenue Regulations No. 8-2018 on Income Tax.

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 Republic Act 10963 or the
TRAIN Law
• The Tax Reform for Acceleration and Inclusion (TRAIN) is the
first package of the comprehensive tax reform program
(CTRP) envisioned by President Duterte’s administration,
which seeks to correct a number of deficiencies in the tax
system to make it simpler, fairer, and more efficient.

• Through TRAIN, every Filipino contributes in funding more

infrastructure and social services to eradicate extreme
poverty and reduce inequality towards prosperity for all.

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 Republic Act 10963 or the
TRAIN Law
• TRAIN addresses several weaknesses of the current tax system by
lowering and simplifying personal income taxes, simplifying estate and
donor’s taxes, expanding the value-added tax (VAT) base, adjusting oil
and automobile excise taxes, and introducing excise tax on sugar-
sweetened beverages.

• On Tuesday, December 19, Duterte signed into law Republic Act No.
10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) bill,
which aims to generate revenue to fund a multi-billion dollar
infrastructure program key to the governments economic agenda.

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 Republic Act 10963 or the
TRAIN Law

The goal of the first package of the Comprehensive Tax

Reform Program (CTRP) or TRAIN is to create a simpler, fair,
and more efficient system, as per the constitution, where
the rich will have a bigger contribution and the poor will
benefit more from the government’s programs and services.

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