Professional Documents
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Tax Aspect For Educational Institutions
Tax Aspect For Educational Institutions
Tax Aspect For Educational Institutions
Kinds of Educational
Institutions
Proprietary Educational
Institutions
2. Non-stock, Non-Profit
Educational Institutions
1.
A
Proprietary
educational
institution is any private school
maintained and administered
by private individuals or groups
with an issued permit to
operate from the Department
of Education, Culture and
Sports
(DECS),
or
the
Commission
on
Higher
Education (CHED), or the
Technical Educational and Skills
Development
Authority
(TESDA)
Proprietary Educational
Institutions
Proprietary
Education Institutions
Proprietary educational institutions
shall pay a tax often percent (10%)
on their income. Provided, that if
the gross income from unrelated
trade, business or other activity
fifty percent (50%) of the total
gross income derived by such
educational tax should be 30% on
the net income.
CONSTITUTIONAL
EXEMPTION:
ARTICLE XIV Sec 4 (3):
SECTION 4(3) All revenues and
assets
of
non-stock,
non-profit
education institutions used actually,
directly
and
exclusively
for
educational
purposes
shall
be
exempt from taxes and duties.
Proprietary educational
institutions
including
those
cooperatively
organized
may
likewise
be
entitled
to
such
exemptions
subject
to
the
limitations provided by law including
restrictions
on
dividends
and
provisions for reinvestments.
3.
4.
5.
DECS Recognition vs
Government Permit
DECS
RECOGNITION is
permanent, no need to
renew, while
GOVERNMENT PERMIT is
temporary this is the reason
why some schools
Income Tax
Is
PROPRIETARY EDUCATIONAL
INSTITUTIONS Proprietary
educational institutions pay on Income
tax of ten percent (10%) on their
taxable net income except:
Interests from deposits/deposit
substitute/trust funds/royalties
* 20% (peso)
* 7.5 (under the Expanded FCD
system)
LIMITATIONS:
- if the gross income from the
unrelated trade, business or other
activity exceeds fifty (50%) of
the total gross income derived by
such educational institutions from
all sources, the tax to be applied
and used shall be 35% on the
entire taxable income.
School
Income
2. Unrelated School
Income
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Non-Stock, Non-Profit
Educational Institutions
i.
ii.
iii.
Withholding Tax
The exemption does not cover
withholding taxes as an educational
they are constituted as withholding
agents for the government required
to withhold the tax on compensation
income of their employees or the
withholding tax on income payments
to persons subject to tax pursuant to
Section 57 of the Tax Code of 1997.
Government Educational
Institution
REVENUE
REGULATIONS
NO. 5-2012
29
30
BOOKEEPING RULES
AND
REGULATIONS OF
EDUCATIONAL
INSTITUTION
REGISTRATION REQUIREMENTS
Every person subject to any internal
revenue tax shall register once with
the appropriate Revenue District
Officer:
- Within ten (10) days from date of
employment or
- On or before the commencement of
business or
- Before payment of any tax due or
- Upon filing of a return statement or
declaration.
KEEPING OF BOOKS OF
ACCOUNTS
1.
2.
Corporation,companies,
partnership
or persons are required to keep books
of accounts.
Quarterly sales, earnings receipts do
not exceed P50,000 use SIMPLIFIED
Set of Bookkeeping Records
KEEPING OF BOOKS OF
ACCOUNTS
3.
4.
PRESERVATION OF BOOKS OF
ACCOUNTS AND OTHER
ACCOUNTING RECORDS
All the books of accounts,
including the subsidiary books and
other
accounting
records
of
corporations, partnerships or persons,
shall be preserved for a period of three
(3) years beginning from the last entry
in each book.
PRINTING RECEIPTS OF
COMMERCIAL OR SALES
INVOICES
PRINTING OF RECEIPTS OR
COMMERCIAL OR SALES
INVOICES
PENALTY
For failure to issue a receipt or
invoices shall be fine P1,000 but not
more than P50,000 and imprisonment
of not less than 2 years but not more
than than 4 years upon conviction for
every violation.
REVENUE
MEMORANDUM
CIRCULAR NO. 69-2009
Mandatory Enrollment to and
Availment of the Electronic
Filing Payment System (eFPS)
Facility for Selected Taxpayers
42
1.
2.
3.
4.
5.
43
INCOME TAX
DEDUCTIONS FROM
GROSS INCOME
a.
b.
c.
Kinds of deductions
1. Deductions
from
compensation
income of individual taxpayers.
2. Deductions from business and / or
professional income of individual
taxpayers.
3. Deductions from corporate income.
4. Special deductions.
46
BUSINESS EXPENSES
1.
2.
3.
4.
5.
A.
1.
Expenses
Interest
Taxes
Losses
Bad Debts
Depreciation
Research and Development
Contributions to pension trusts
2.
3.
4.
5.
6.
7.
8.
48
49
ITEMIZED DEDUCTION
There shall be allowed as deduction
from gross income all the ordinary
and
necessary
expenses
paid
incurred during the taxable year in
carrying on or which are directly
attributable to, the development,
management,
operation
and/or
conduct of the trade, business or
exercise of a profession including a
reasonable allowance for salaries,
travel, rental and entertainment
50
51
GUIDING PRINCIPLES
Ordinary,
when
it
is
normal
(common or usual) in relation to the
business of the taxpayer and the
surrounding circumstances.
Necessary, where it is appropriate
and helpful in the development of
the taxpayers business.
It is
intended to realize a profit or to
minimize a loss (Visayan Cebu
Terminal Co. V. Collector, CTA Case
No. 28, 29 June 1957).
52
Seller of services:
Gross receipts
Less
Sales discounts
Cost of services
Gross Income
xxx
(x x)
(x x)
xx
56
Gross
receipts
means
amounts
actually
or
constructively
received
during the taxable year.
However,
for
taxpayers
engaged as seller of services
but employing the accrual
basis of accounting for their
income, the term gross
receipts shall mean amounts
57
Expenses Must be
Reasonable
Expenses Must be
Reasonable
Representation Expenses
Refers to expenses incurred by a
taxpayer in connection with the
conduct of his trade, business or
exercise of profession, in
entertaining, providing amusement
and recreation
Requisites of Deductibility of
Entertainment, Amusement
and
Recreation
Expenses
Requisites of Deductibility of
Entertainment, Amusement
and Recreation Expenses
CEILING ON ENTERTAINMENT,
AMUSEMENT, AND RECREATION
EXPENSE
Actual entertainment, amusement and
recreation expenses paid or incurred
within the taxable year by the taxpayer,
but in no case shall such deduction
exceed of 1% of net sales (i.e., gross
sales less sales returns/allowances and
sales discounts) for taxpayers engaged in
sale of goods or properties; or 1% of net
revenue
(I.e.,
gross
revenue
less
discounts) for taxpayers engaged in sale
65
APPORTIONMENT FORMULA:
NET SALES/NET REVENUE
EXPENSE
ACTUAL
66
ILLUSTRATION:
ERA Corporation is engaged in the
sale of goods and services with net
sales/net revenue of P200,000 and
P100,000, respectively. The actual
entertainment,
amusement
and
recreation expense for the taxable
quarter totaled to P3,000.
67
*Appointment Formula
Sales of Goods (P200,000 x 0.50%)
Sales of Services (P100,000 x 1%)
**Maximum Percentage Ceiling
Sale of Goods (P200,000 x 0.50%)
Sale of Services (P100,000 x 1%)
68
INTEREST EXPENSE
REQUISITES for DEDUCTABILITY
A. These must be an indebtedness;
B. There should be an interest expense
paid
or
incurred
upon
such
indebtedness;
C. The indebtedness must be that of the
taxpayer;
D. The indebtedness must be connected
with the taxpayers trade, business or
exercise of profession;
E. The interest expense must have been
paid or incurred during the taxable
year;
69
F.
INTEREST
In General
The amount of interest paid or
incurred within the taxable year on
indebtedness in connection with the
taxpayer
profession,
trade
or
business
shall
be
allowed
as
deduction
from
gross
income:
Provided,
however,
that
the
taxpayers
otherwise
allowable
deduction for interest expense shall
be reduced by an amount equal to
the 33%of the interest income
71
Example:
Assume that a taxpayer incurred in 2010,
interest expense amounting to P100,000.
This
is
OTHERWISE
ALLOWABLE
DEDUCTION FOR INTEREST EXPENSE but
it will be reduced by an amount equal to
the prescribed percentage of interest
income subjected to the final tax. Thus, if
in 2010, the taxpayer received P60,000
interest income on which the final tax was
withheld and remitted to the BIR by the
payor of such income, then the deductible
amount of interest will be computed as
follows:
72
P 80,20
73
TAXES
All taxes are deductible except:
1. Income
2. Estate Tax
3. Energy Tax
4. Special Assessment Tax
5. Value Added Tax
6. Amnesty Tax
7. 10% Penalty Tax on undue
accountabilities of profit
8. Penalty (25% surcharge, 50%
surcharge compensation
payment)
74
LOSSES
Requisites for the deductibility of a loss.
1. The loss must be incurred in trade,
profession, or business of the taxpayer, or
any transaction entered into for profit;
2. It must be actually sustained within the
taxable year;
3. It must be evidenced by a closed and
completed transaction;
4. It must not be compensated for by
insurance or other form of indemnity; and
5. The taxpayer has filed a sworn declaration
of loss within 45 days after the date of the
occurrence of casualty or robbery, theft, or
embezzlement.
75
Bad
Debts
The requisites
deductibility of bad debts are:
for
77
DEPRECIATION
Requisites that must concur the deduction
or Depreciation from Gross Income
The allowance for depreciation must be
reasonable;
It must be for property used in the trade
or business;
It must be charged off during the
taxable year; and
A statement on the allowance must be
attached to the return.
79
82
83
84
85
REVENUE REGULATION
NO. 2-2011
RETIREMENT PLAN
Benefit received as a result of
voluntary resignation are taxable.
Reason: It is a cause within the
control of the said official or
employee.
The exemption holds regardless of
the employees age and length of
service.
The law does not require that the
exclusion be enjoyed once.
Separation of employee due to
dissolution of a law firm is cause
87
88
RETIREMENT/PENSION PLAN
1.
2.
3.
4.
5.
6.
89
Requisites of a reasonable
retirement benefit plan
1.
2.
3.
4.
5.
91
93
94
Imposition of Improperly
Accumulated Earnings Tax
A.
96
PERSON REQUIRED TO
DEDUCT & WITHHOLD
a.
b.
c.
97
Types of Withholding
Taxes
Withholding Tax on Gross Compensation
Expanded
Time of Withholding
A. Ordinarily, the obligation of the payor to
deduct and withhold arises:
Time of Withholding
Time of Withholding
Withholding tax on compensation
Compensation actually or
Constructive paid
Constructively paid when it credited to
the account of or set apart for an
employee so that it may de drawn
upon by him at ay time although not
then actually reduced to possession
Types of Withholding
Taxes
Withholding Tax on Gross Compensation
Expanded
Gross Compensation
Income
Salaries
& Wages
Overtime Pay
Emergency Pay
Loyalty Pay
Directors Pay
104
Gross Compensation
Income
Allowances
Gross Compensation
Income
Vacation
Leave
Bonus/Incentives
Christmas Bonus
Incentive Pay
Productivity Bonus
Anniversary Bonus
Commission
Profit
Sharing
106
Income Tax
(Jan. to Dec.)
30,000
30,000
30,000
Less Tax
Withheld (Jan. to
Nov.)
28,000
33,000
30,000
Withholding Tax
for December
Refund Jan. 20
2,000
None
None
3,000
None
None
107
R.A. 9504
Minimum Wage Tax
Exemption
Revenue
Regulations No. 102008
July 8, 2008
108
109
110
111
DE MINIMIS
The following shall be considered as de minimis
benefits not subject to income tax, hence, not subject to
withholding tax on compensation income of both
managerial and rank and file employees:
a.
114
117
Gain
118
Dividends
Cash and/or Property Dividends 10%
A final tax at the following rates shall
be imposed upon the cash and/or
property
dividends
actually
or
constructively received by an individual
(except
a
general
professional
partnership)
10% beginning January 2, 2000
119
same
120
Gain
121
2.
Personal properties On
gross rental or lease in excess
of Ten Thousand Pesos
(P10,000.00)
REVENUE REGULATIONS
NO. 2-2006
Mandatory Attachments of
the Summary Alphalist of
Withholding Agents of Income
Payments Subjected to Tax
Withheld at Source (SAWT) to
Tax Returns with Claimed Tax
Credits
Mandatory Submission
Summary
Alphalist
of
Withholding
Agents/Payors
of
Income
Payments
subjected to Creditable Withholding Tax at
Source (SAWT) submitted by the payeerecipient of income.
Monthly Alphalist of Payees (MAP) Annex
B is a consolidated alphalist of income
earners from whom taxes have been
withheld by the payor of income
Mandatory Submission
Persons required to submit Summary Alphalist
of Withholding Agents of Income Payments
subjected to Withholding Taxes (SAWT)
SAWT in hard copy as attachment to the
required tax return.
Submit SAWT electronically in a 3.5 inch
floppy diskette.
All taxpayers required to file the EFPS,
regardless of the number of withholding
agents/payor of income, are strictly
required to attached the electronic copy of
the SAWT to the electronic return
Mandatory Submission
Persons required to submit Monthly Alphalist
of Payees (MAP)
Mandatory Submission
Returns required to be filed with SAWT and
Certificate Tax Withheld at Source
Mandatory Submission
Returns required to be filled with MAP
2.
3.
4.
(Forms 1700,
1702Q and 1702
Monthly and quarterly VAT returns (Forms
2550Q and 2550M)
Monthly percentage tax returns (Form
2551)
Percentage tax return order special laws
(Form 2553)
FORMAT
Up to 10
withholding agents or
income
payees
In hard copy
In 3.5 diskette or CD
inside a sealed letter
envelope, in excel or own
extract programs
validated through the BIR
validation module; or
using the BIR date entry
module
EFPS fillers
In electronic form
attached to electronic
return
Penalties
P1,000
FRINGE
BENEFIT TAX
135
136
Housing
Expense Account
Vehicle of any kind
Household personnel
Interest in loan at less than market rate
138
139
VAT - TAXATION
Categories of
exemptions
VAT-Exempt Transactions
Educational
services rendered by
private educational institutions
duly accredited by the Department
of Education (DepED), the
Commission on Higher Education
(CHED) and the Technical
Education and Skills Development
Authority (TESDA) and those
rendered by government
educational institutions;
VAT on Importation of
Goods
In
DOCUMENTARY
STAMP TAX
Any
DOCUMENTARY STAMPS
Section 188: STAMP TAX ON
CERTIFICATES
Amount :
P15.00
Examples
:
Certificate of
Diploma
Transcript of
Records
Other
Certificates Issues
Thank You
and
May GOD Bless You
in all the days of
your life.