INCOME OVERVIEW (Exclusion, types of income, exemption, manner of taxation)

Increase Net Worth Pxxxxxx

Less: Exclusion from Income xxxxxx NOT Income
=Income Pxxxxxx
Compensation Pxxxx
Business Income xxxx
Passive Income xxxx
Capital Gains xxxx
Less: Income Exempt from Income Tax xxxxxx
= Taxable Income Pxxxxxx Must be collected at source
- Income Collected with Final Tax xxxxxx based on Gross Amount, and to
=Returnable income in 1700, 1701, 1702 Pxxxxxx be remitted by the payor using
Less: Allowable Dudeuctions final w/tax return
40% Standard xxxxxx Must be elected in the first
Itemized with supporting receipts quarter tax return
=Net Taxable with regular Tax Rate Pxxxxxx
X % %
= Income Tax Due Pxxxxx
Less: Tax Credits
2316 xxxxx Must be attached to the tax
2307 xxxxx return
=Net Tax Payable Pxxxxx
Section 42. Income from Sources Within the Philippines

(1) Interests. - Interests derived from sources within the Philippines, and interests on bonds, notes or other
interest-bearing obligation of residents, corporate or otherwise;

(2) Dividends. - The amount received as dividends:

(a) from a domestic corporation; and
(b) from a foreign corporation, 50% or more of its business done in the Philippines, earned
w/i = amount proportionate to business done in the Philippines

(3) Services. - Compensation for labor or personal services performed in the Philippines;

(4) Rentals and royalties. - Rentals and royalties from property located in the Philippines

(5) Sale of Real Property. - gains, profits and income from the sale of real property located in the Philippines;
(6) Sale of Personal Property. - gains; profits and income from the sale of personal property sold in the Philippines
TAXPAYERS INCOME EARNED
W/I W/O
Domestic corp. Yes Yes
Foreign corp. Yes No
Resident Citizen Yes Yes
Alien Yes No
Non-Resident Yes No

CORPORATION

Domestic Corporations , Corporations that are created or organized in the Philippines or under its
laws
Taxable with Philippine Income Tax on its income from all sources, within and outside the
Phil.
Returnable and Taxable Income in 1702
Income collected with Final Taxes 0619F
Foreign Corporations , corporations which is not domestic.

Resident foreign corporation, a foreign corporation engaged in trade or business within the Philippines.
Taxable with Philippine Income Tax on its income from sources within the Philippines
Returnable and Taxable Income in 1702 (within)
Income collected with Final Taxes 0619F (within)

Non Resident Foreign Corporation, foreign corporation not engaged in trade or business within the Philippines.
Income collected with Final Tax @ source and remitted by Resident of the Philippines
CITIZEN
(1) Resident citizen - is a citizen of the Philippines who has a permanent home or place of abode in the Philippines
to which he/she intends to return whenever he/she is absent for business or pleasure.
Stays in the Philippines for 183 days or more.

(2) Nonresident citizen - is a citizen of the Philippines who:

(a) Resident of foreign country - establishes the fact of his/her physical presence abroad with the
definite intention to reside therein;
(b) Immigrant - leaves the country to reside abroad, either as an immigrant or for employment on a
permanent basis;
(c) works and derives income from abroad and whose employment thereat requires him to be physically
present abroad most of the time during the taxable year; or,
(d) Balikbayan - who has been considered nonresident citizen previously and who arrives in the Philippines at
anytime during the taxable year to reside permanently in the Philippines shall be treated as nonresident
citizen for the taxable year in which he arrives in the Philippines with respect to his income abroad until
the date of his arrival in the Philippines

ALIEN
(1) Resident alien - is an individual who is not a citizen of the Philippines but whose residence is within the
Philippines.

(2) Nonresident alien - is an individual who is not a citizen of the Philippines and whose residence is not within
the Philippines.

(3) A nonresident alien is deemed engaged in trade or business in the Philippines if he/she has stayed in the
Philippines for an aggregate period of more than 180 days during any calendar year.
 The term 'taxable year' means

the calendar year, means an accounting period of twelve (12) months ending on the last
day of December.
or
the fiscal year, means an accounting period of twelve (12) months ending on the last day of any
month other than December.

Taxable Year of Corporation. - A corporation may employ either calendar year or fiscal year as a
basis for filing its annual income tax return

Section 46. Change of Accounting Period. If a taxpayer, other than an individual, changes his
accounting period from fiscal year to calendar year, from calendar year to fiscal year, or from one
fiscal year to another, the net income shall, with the approval of the Commissioner, be computed on
the basis of such new accounting period.

Section 47.(A) Returns for Short Period Resulting from Change of Accounting Period. - a
separate final or adjustment return shall be made for the period between the close of the last fiscal
year for which return was made and the following December 31.

Section 27. In the case of corporations adopting the fiscal-year accounting period, the taxable
income shall be computed without regard to the specific date when specific sales, purchases and other
transactions occur. Their income and expenses for the fiscal year shall be deemed to have been earned
and spent equally for each month of the period.
RELATED VIDEO

INDIVIDUAL INCOME TAXPAYERS https://youtu.be/rPw8-TAP3_s