Taxation in the

Philippines
 What is TAXATION is defined in many ways.
Taxation? Commonly heard definitions include:

It is the process by which the sovereign, through its law

making body, races revenues use to defray expenses of
government.
It is a means of government in increasing its revenue
under the authority of the law, purposely used to promote
welfare and protection of its citizenry.
It is the collection of the share of individual and
organizational income by a government under the
authority of the law.
 Purpose and Significance of Tax
Primary purpose:
generates funds or revenues use to defray expenses
incurred by the government in promoting the general
welfare of its citizenry. Public expenditure.

Other Purpose:
To equitably contribute to the wealth of the nation.
 Characteristics of Tax
It is enforced contribution. Its payment is not
voluntary nature, and the imposition is not dependent
upon the will of the person taxed.
It is generally payable in cash. This means that
payment by checks, promissory notes, or in kind is not
accepted.
It is proportionate in character. Payment of taxes
should be base on the ability to pay principle; the
higher income of the tax payer the bigger amount of
the tax paid.
It is levied by the state which has jurisdiction over the
person or property. As a general rule, only persons,
properties, acts, right or transaction with in the
jurisdiction of the taxing state are subject for taxation.

 It is levied for public purposes. Taxes or imposed to

support the government for implementation of
projects and programs.
  Classification of Tax
1. As to subject matter 3. As to purpose General
• Personal, Poll or Capitation Tax • Tax (ex. Almost All Taxes)
(ex. Residence Tax) • Special Tax
• Property Tax. (ex. Real State 4. As to scope
Tax) • National Tax (ex. National
2. As to who bears the burden Revenue Taxes)
• Direct Tax (ex. Income Tax) • Local Tax
• Indirect Tax (ex. Buying of
goods and services (RVAT) )
 Tax Exemption
• Religious institutions
• Charitable institutions
• Non-profit, Non-stock educational institution
• Non-profit cemeteries
• Foreign diplomas
 How to Compute Income Tax in the
Philippines
Computing income tax expense and payable is
different for individuals and corporations. Taxable
corporations may be taxed using a fixed income tax
rate.
On the other hand, if you are a self-employed
professional or an owner of a single proprietorship
business, your income tax expense is computed using a
graduated tax rate. It is a progressive tax which the tax
rate increases as the taxable base amount increases.
This means that the higher taxable income you have,
the higher your income tax expense is.
 Personal Exemption

1. Single or divorced without dependent P50,000

2. Head of the Family P50,000

3. Married individuals P50,000

• Government acquisition of goods and services for
current use to directly satisfy individual or collective
needs of the members of the community is called
government final consumption expenditure (GFCE.)
• Government acquisition of goods and services
intended to create future benefits, such as
infrastructure investment or research spending, is
called gross fixed capital formation, or government
investment, which usually is the largest part of the
government
Issues on public finance
•Taxation
•Budget Deficit
•Privatization
• A budget deficit occurs when an individual,
business or government budgets more spending
than there is revenue available to pay for the
spending, over a specific period of time. Debt is
the aggregate value of deficits accumulated over
time. We will be focusing on government deficits
in this lesson