DEFENITION OF TERMS: Classification of Individual Income Taxpayers

Question 1

• time of the adaption of the Feb. 2 1987. Constitution
  -fathers and mothers are citizen of the Philippines
• naturalized on accordance with law.

Answer 1

CITIZEN

Question 2

a Filipino Citizen who permanently resides in the Philippines

Answer 2

RESIDENT CITIZEN

Question 3

• the fact of his physical presence abroad with a definite intention to reside therein
• a citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for the employment on a permanent basis.
  -previously considered as non-resident citizen and who arrives in the Philippines at an time the taxable year to reside permanently in the Philippines likewise be treated as a non-resident citizen for the taxable year.

Answer 3

NON-RESIDENT CITIZEN

Question 4

-individual whose residence is within the Philippines and who is not a citizen thereof.
-not a mere transient or sojourner
-depending on his intention with regard to the length and nature of his stay

Answer 4

RESIDENT ALIEN

Question 5

an individual who’s residence is not within the Philippines and who is not a citizen thereof.

Answer 5

NON-RESIDENT ALIEN

Question 6

non-resident alien who shall come to the Philippines and stay for an aggregate period of more than one hundred eighty (180) days during any calendar year.

Answer 6

NON-RESIDENT ALIEN IN TRADE AND BUSINESS (NRAETB)

Question 7

non-resident alien who shall come to the Philippines and stay for an aggregate period of one hundred eighty (18) days or less during any calendar year.

Answer 7

NON-RESIDENT ALIEN NOT ENGAGED IN TRADE AND BUSINESS (NRANETB)

Question 8

-means all remuneration for services performance by an employee for his employer under an employer-employee relationship unless specifically excluded by the Code.

Answer 8

COMPENSATION INCOME

Question 9

individuals whose source of income is purely derived from an employer-employee relationship

Answer 9

COMPENSATION INCOME EARNERS

Question 10

individual performing services under an employer-employee relationship. The terms covers all employees, including officers and employees whether elected or appointed, of the government of the Philippines or any political subdivision or any agency or instrumentality.

Answer 10

EMPLOYEE

Question 11

refers to an employee holding neither managerial nor supervisory position as defined under existing provisions of the Labor Code of the Philippines, as amended.

Answer 11

RANK AND FILE EMPLOYEE

Question 12

any person for whom an individual performance or performed any services of whatever nature, under an employer-employee relationship.

Answer 12

EMPLOYER

Question 13

exist when a person for whom services were performed (employer) has the right to control and direct an individual who performs the services (employee) , not only as the result of the work to the accomplished but also as to the details, methods and means by which it is accomplished.

Answer 13

EMPLOYER AND EMPLOYEE RELATIONSHIP

Question 14

means any good, service or other benefit furnished or granted in cash or in kind other than the basic compensation, by an employer to an individual employee (except rank and file employee as defined herein) such as, but not limited to the ff: housing expenses etc.

Answer 14

FRINGE BEENFITS

Question 15

refers to a worker in the private sector who is paid with a statutory minimum wage rates, or to an employee in the public sector with compensation income of not more than statutory minimum wage rates in the non-agricultural sector where the worker/employee is assigned.

Answer 15

MINIMUM WAGE EARNER (MWE)

Question 16

refers to an individual whose business does not realize gross sales or receipts exceeding P100,000 in any 12-month period

Answer 16

MARGINAL INCOME EARNER

Question 17

an individual earning compensation income from employment, and income from business, practice of profession and/or other sources aside from employment

Answer 17

MIXED INCOME EARNER

Question 18

refers to Filipino citizens employed in foreign countries who are physically present in a foreign country as a consequence of their employment thereat.

Answer 18

OCWs or OFWs

Question 19

-sole proprietor or independent contractor who reports income earned form self-employment.
-includes those hired under a contract of service or job order, and professionalism who’s income is derived purely from the practice of profession and not under an employer-employee relationship.

Answer 19

SELF-EMPLOYED

Question 20

a person formally certified by professional body belonging by virtue of having completed a required examination or course of studies an/or practice, whose competence can usually be measure against an established set of standards.

Answer 20

PROFESSIONAL

Question 21

refers to the total amount of money or its equivalent represents the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with services and deposits and advance payments actually constructively received during the taxable period for the services performed or to be performed for another person, except returnable security deposits for purposes of these regulations.

Answer 21

GROSS RECEIPTS

Question 22

refers total sales transactions net of VAT, if applicable< reported during the period, without any other deduction. However, this subjects to the 8% income tax rate option shall be net of the following deductions: (check page 22)

Answer 22

GROSS SALES

Question 23

refers to the pertinent items of gross income specified in the Code less Deductions, if any, authorized for such types of income by the Code or other special laws

Answer 23

TAXABLE INCOME

Question 24

refers to the ceiling fixed by law to determine VAT registrable taxpayers. the VAT threshold is currently set at three million pesos and the same shall be used to determine the income tax liability of self-employed individuals and/or professionals under Sections 24(A)(2)(b) and 24(A)(2)(c)(2) of the Tax Code, as amended.

Answer 24

VAT THRESHOLD

Question 25

shall mean a branch established in the Philippines by multinational companies and which headquarters do not earn or derive income from the Philippines and which act as supervisory, communications and coordinating center for their affiliates subsidiaries or branches in the Asia-Pacific Region and other foreign markets.

Answer 25

REGIONAL OR AREA HEADQUARTERS (RHQs)

Question 26

shall mean a branch established in the Philippines by multinational companies which are engaged in any of the following sourcing and procurement of raw materials and components, corporate finance advisory services etc.

Answer 26

REGIONAL OPERATING HEADQUARTERS (ROHQs)

Question 27

In connection with offshore banking, shall mean funds in foreign currencies which are accepted and held by Offshore banking Unit of foreign Currency Deposit Unit in the regular course of business, with the obligation in return an equivalent amount to the owner thereof, with or without.

Answer 27

DEPOSITS

Question 28

shall mean alternative from of obtaining funds form the public other than deposits, though the issuance, endorsement, or acceptance of debt instruments for the borrowers own account, for the purpose of relending or purchasing of receivables and other obligations, or financing their own needs or the needs of their agents or dealer.

Answer 28

DEPOSIT SUBSTITUTES

Question 29

shall refer to the conduct if banking transactions whereby any person, whether natural or juridical, may deposit foreign currencies forming part of the Philippine International reserves in accordance with the provisions of R.A. 64246.

Answer 29

FOREIGN CURRENCY DEPOSIT SYSTEM (FCDS)

Question 30

shall to that unit of a local bank or a local branch of a foreign bank authorized by the Bangko Sentral ng Pilipinas to engage in the foreign currency denominated transactions, pursuant to the provisions of R.A as amended.

Answer 30

FOREIGN CURRENCY DEPOSIT UNIT (FCDU)

Question 31

shall refer to the conduct of banking transactions in foreign currencies involving the receipt of funds principally from external an internal sources and the utilization of such fund pursuant ng Pilipinas.

Answer 31

OFFSHORE BANKING SYSTEM

Question 32

shall mean a branch, subsidiary or affiliate of a foreign banking corporation which is duly authorized by the BSP to transact offshore banking business in the Philippines in accordance with the provisions of presidential decree.

Answer 32

OFFSHORE BANKING UNIT (OBU)