Final Tax

Question 1

Who are automatically subject to Final Income Tax? And what rates?

Answer 1

NRA-NETB - 25%
NRFC - 30%
SAE - 15%

They do not need to file ITR but they need to file if they have a gain on sale of domestic sticks directly to a buyer (so d to kasama sa computation ng FT nila)

Question 2

Years to be considered as short term deposit

Answer 2

Less than 5 yrs

Question 3

Rule on prizes

Answer 3

Above 10,000 - 20% FT

On or below 10,000 - included in NIT

Question 4

Rule on winnings

Answer 4

Above 10,000 - 20% (kasama PCSO)

10,000 or less (PCSO) - Exempt

Question 5

Pretermination of long term deposits. Any previously untaxed or exempted interest shall now be taxed

Answer 5

Holding period
Less than 3 yrs - 20%
3 yrs to less than 4 - 12%
4 yrs to less than 5 - 5%
5 yrs or more - 0%

TRAIN:
Pre terminated before 5th yr - 20% FT
Over 5 yrs - Exempt

Question 6

FT - EFCDS on all taxpayers

Answer 6

Citizen and RA - 20%
DC - 15%
RFC - 7.5%
NRA and NRFC (Non residents) - Exempt

Question 7

Tax of NRANETB

Answer 7

Generally, 25% of gross income

Kahit sa mga passive income except EFCDU…

Question 8

4 Passive Income of Corporation and their rates

Answer 8

Domestic and RFC (20%)
NRFC (30%)

1. Interest on bank deposit
2. Yield or any other monetary benefit from deposit substitute or trust funds
3. Royalties

DC (15%)
RFC (7.5%)
NRFC (Exempt)
4. Interest from EFCDU

Question 9

Intercorporate Dividend

Answer 9

From domestic to domestic or resident corp - Exempt

From Domestic to NRFC - 15% Final WT

Question 10

Individuals - Dividend or share of a partner in NI of partnership

Answer 10

Citizen and RA - 10%
NRAETB - 20%
NRANETB - 25%

Question 11

Those passive income subject to 20% FT individuals (except NRANETB automatic 25%)

Answer 11

1. Interest on bank deposit
2. Yield or any other monetary benefit from deposit substitute or trust funds
3. Royalties, except books, literary works (10%)
4. Prizes of more than 10,000 (10k or less NIT)
5. Winnings (except for PCSO lotto for 10,000 or less - exempt)

Question 12

Tax Informer’s Reward FT

Answer 12

10% of fees recovered or 1,000,000

Must not be within the 6th degree of consanguinity of BIR or public official or employee

Question 13

Income payments to subcontractors of petroleum service contractors

Answer 13

FT- 8% of gross income derived from such contracts

Petroleum service contractors NIT