FINALS Flashcards
These are enforced proportional contributions from persons, properties, or rights by the lawmaking body of the state for the support of the government and all public needs. The bloodline of the government.
Taxes
It pertains to the items of income provided for in the National Internal Revenue Code less, the deductions and personal and additional exemptions, if any. Hence, it is the amount of income that is taxed.
Taxable Income
It refers to the tax on all yearly profits arising from property, professions, trades, or offices or tax on the person’s income, profits, and the like.
Income Tax
Guidelines on what is deemed to be as taxes, fees, and charges by the National Internal Revenue Code
Income Tax
Estate and Donor’s taxes
Value-added Tax
Other Percentage Tax
Excise Taxes
Documentary Stamp Taxes
Other taxes as are of hereafter may be imposed and collected by the Bureau of Internal Revenue
The one who has the list and guidelines of all items that are taxable. References for Taxation in the Philippines
National Internal Revenue Code - Republic Act 8424 (Tax Reform Act of 1997)
- Revenue Regulations issued by the
- The PH Government Body in charge of taxation
BIR (Bureau of Internal Revenue)
money being collected by the government for public use. (funds for projects, social programs, infrastructure, and education).
Taxation
3 TYPES OF TAXES
PROGRESSIVE TAXATION
REGRESSIVE TAXATION
PROPORTIONAL TAXATION
changing. The higher the income, the higher the tax. the lower the income, the lower the tax. examples are PH, the UK, the US, Germany, and Denmark.
PROGRESSIVE TAXATION
Fixed percentages are collected in all class groups. The lower the income, the higher the tax. The higher the income, the lower the tax. examples are Brazil, japan, and other Latin America.
REGRESSIVE TAXATION
The basis of taxation of the PH. adjusted the taxes in terms of income. low income almost no taxes.
Republic Act 8424 (Tax Reform Act of 1997) also known as Tax Reform for Acceleration and Inclusion (TRAIN) Law (Revised Reg No. 8-2018). amended by Former President Duterte in 2018.
producer of the goods
Manufacturer (EXCISE TAX)
2 TYPES OF EXCISE TAX
- Specific
- Ad Valorem (20% imposed rate).
taxed based on weight, volume, capacity, or any type of measurement. (tobaccos are taxed on kilogram bases.)
SPECIFIC
taxed based on fair market value. (real estate, property, cars, etc.)
AD VALOREM (20% imposed rate).
anything sold or profited in the business issued by a receipt is charged with Sales Tax.
BUSINESS OWNERS (SALES TAX)
doctors, lawyers, architects, or businesses that provide service are charged with Service Tax.
SERVICE PROVIDERS (SERVICE TAX)
anyone who works for public or private sectors and is earning will be charged with income tax.
EMPLOYEES (INCOME TAX)
2 TYPES/APPROACH OF TAXATION
DIRECT (INCOME TAX)
INDIRECT (EXCISE, SERVICE, SALES TAX)
refers to taxes imposed directly on an individual’s or entity’s income.
DIRECT (INCOME TAX)
refers to taxes that are not directly levied on income but are instead applied to goods and services. These taxes are typically included in the price consumers pay and are collected by businesses on behalf of the government.
INDIRECT (EXCISE, VAT, SALES TAX)
a form of sales tax that applies to the total income from selling, exchanging, or leasing goods and services. It is an indirect tax which means that the end consumer is being charged for the tax.
Business Taxes – Value-added Tax (12%)
For small businesses with annual sales of goods or receipts from services or lease not exceeding Php 1,919,500.00 and are not VAT registered, a 3% percentage tax is imposed.
Business Taxes – Percentage Taxes (3%)
is the document we utilize to file our Percentage Taxes.
The BIR Form 2551Q
late payment or filing of taxes.
25% of the tax due.
If the form is incorrectly filed.
50% of the tax due.
unpaid dues.
The tax rate is 12% per annum.
The tax is levied to gain revenue and lessen consumption of certain commodities that are considered harmful.
Business Taxes – Excise Tax (6%)
Business Taxes – Excise Tax 6 examples
- Sin Products - beverages, wine, and cigars.
- Petroleum Products - processed gas, waxes, and petroleum, LPG
- Automobiles – any four-wheeled vehicle that is powered by electricity, gasoline, and other motive power.
- Non-essential goods – Perfume, jewelry, expensive phones and gadgets, watches, expensive arts.
- Minerals and Mineral Products
- Sweetened Beverages
tax is passed using properties or real estate because the owner died. prepared before they die. hierarchy.
There is no Inheritance Tax in the Philippines.
Transfer Taxes – Estate Tax (6%)
tax is passed using properties or real estate but the owner is still alive. 250k exceed taxable. filed within 30 days.
There is no Inheritance Tax in the Philippines.
Transfer Taxes – Donor’s Tax (6%)
Two Types of Donor’s Tax
Donation Inter Vivos (Article 746)
Donation Mortis Causa (Article 728)
donations given during one’s lifetime.
Acceptance must be made during the lifetime of the donor and of the donee.
Donation Inter Vivos (Article 746)
donations take effect after the person’s death
Donations which are to take effect upon the death of the donor partake of the nature of testamentary provisions, and shall be governed by the rules established in the Title on Succession.
Donation Mortis Causa (Article 728)
Illegal. It involves deliberately misrepresenting or concealing information to avoid paying the correct amount of taxes.
Tax Evasion:
Legal. It involves using lawful methods to reduce tax liabilities, such as deductions and credits.
Tax Avoidance:
3 General Principles of Income Taxation on Individuals
Citizenship Principle
Residence Principle
Source Principle
Citizenship Principle: A Philippine citizen living in the country is taxed on all income, regardless of where it comes from. A citizen living abroad is only taxed on income from the Philippines.
Citizenship Principle
Anyone residing in the Philippines, whether a citizen or foreigner, is taxed on income earned from within the country.
Residence Principle
All income generated from sources within the Philippines is subject to income tax, regardless of the taxpayer’s residency status.
Source Principle
