TAXATION.pptx

TOUR GUIDE 🤳
walk everyone through the room you are in, what’s on
your desk, etc
This is a fun way to get to know each other a bit deeper
and to feel more physically connected even though
we’re physically apart.

SOURCES AND USES OF PUBLIC
FUNDS
The biggest source of government funds is taxes. Taxes
in the Philippines are collected by two (2) tax collecting
agencies:
1.The Bureau of Internal Revenue
2.The Bureau of Customs

Taxes collected by these agencies
include
•Income taxes of individuals and businesses,
•Property taxes,
•Residence taxes,
•Import taxes,
•Inheritance taxes,
•Gift taxes, and other specific taxes

Government also earns income from
non-tax revenues
•Collection of fines and fees
•Licenses and registration charges
•and Commercial revenues

PUBLIC EXPENDITURES
NATIONAL DEFENSE, PEACE AND ORDER

PUBLIC EXPENDITURES
HEALTH AND
WELFARE

PUBLIC EXPENDITURES
ECONOMIC DEVELOPMENT

PUPOSE OF TAXATION
1.Raise income for government
2.Compensatory purposes and Sumptuary
or Regulatory Purposes

THREE LAWS IN STUDYING
TAXATION
1.NIRC – National Internal Revenue Code as
amended by the TRAIN Law
2.Local Government code of 1992 (LGC)
3.Customs modernization tariffs Act (CMTA)

INCOME – is all wealth that flows into the
taxpayer other than a mere return on
capital. Income is any increase in the net
worth other than a mere return on capital.
The law does not distinguish between the
source. It can be illegal or legal; it can be in
cash or in kind.

Myra earns her salary as a supervisor
in Casino. The NIRC classifies her as
pure COMPENSATION INCOME
EARNER (CIE)

Myra’s sister, Anie mostly cares for her children.
She also makes money by selling fishball, initially
online until she opened a small store. The NIRC
classified her as a SELF EMPLOYED
INDIVIDUAL engaged in TRADE OR
BUSINESS (SEITB)

Their Brother, Brandon is a Clinical Psychologist
and he used to make his living with a small clinic.
The NIRC classified him as a SELF EMPOYED
INDIVIDUAL engaged in a PROFESSION or
SEIP. When he began teaching, he became a
MIXED INCOME EARNER, with his salary as a
professor and his income from the clinic

CORPORATIONS are JURIDICAL or
ARTIFICIAL PERSONS with a distinct and
SEPARATE PERSONALITY apart from the
OWNERS.
Corporations earn income from TRADE
AND BUSINESS only.

SOURCES OF INCOME
1.Sale of CAPITAL ASSETS or capital gains
2.Sale of ORDINARY ASSETS or ordinary gains
3.ROYALTIES from inventions, musical compositions of
literary works and scientific works
4.Prizes or winnings from GAMES OF CHANCE

TRACING TRANSACTIONS
1.Did the person receive anything?
2.Is it income?
3.Is it taxable?
4.If yes, what kind of tax is applicable?

IT CHEAT SHEET
Source of Income Kinds of Income /IT
TAXPAYER Within PH Outside PH 24 (a) 24 (b) 24 (c) 24 (d)
RC / / NIT FWT FWT FWT
NRC / X NIT FWT FWT FWT
RA / X NIT FWT FWT FWT
NRAETB / X NIT FWT FWT FWT
NRANETB / X GIT GIT FWT FWT
DC / / NIT FWT FWT FWT
RFC / X NIT FWT FWT X
NRFC / X GIT GIT FWT X

KIND OF TAXPAYERS
RC – Resident Citizens – is a
Filipino who is residing in the
Philippines

KIND OF TAXPAYERS
NRC – Non-Resident Citizens – is a Filipino
who
1.Intends to permanently immigrate to other
country
2.Is a Permanent Resident of another country
3.An OFW, SEAMAN

KIND OF TAXPAYERS
1.RA – Resident Aliens – are non-Filipinos who live in
the Philippines
2.Non-resident aliens are classified as:
- NRAETB – Non-resident Aliens Engaged in Trade
and Business
- NRANETB – Non-resident Aliens not Engaged in
Trade and Business

KIND OF TAXPAYERS
IF THE ALIEN DO NOT STATE INTENTION TO DO BUSINESS IN
THE PHILIPPINES, THEN WE FOLLOW THESE RULES:
1. IF he stays for a total of 180 days, he is not engaged in trade or
business
2. If the alien stays for a total of 181 days or more, he is engaged in
trade or business. Actual trade or business is not material
3. Non-resident alien is also engaged in trade or business if he
enters into regular transactions, hires employees, put up a
business.

KIND OF TAXPAYERS
DC Domestic Corporation – one that is
registered under the laws of the
Philippines

KIND OF TAXPAYERS
RFC Resident Foreign Corporation – if a
foreign corporation has branch in the
Philippines

KIND OF TAXPAYERS
NRFC Non-resident Foreign Corporation
– if a foreign corporation does not have
branch in the Philippines but is doing
business

AS A GENERAL RULE, NIRC
IMPOSES THREE INCOME TAXES
1. NIT- NET INCOME TAX
2. GIT – GROSS INCOME TAX
3. WT – WITHOLDING TAX

NET INCOME TAX FORMULA
GROSS INCOME – ALLOWABLE
DEDUCTION = TAX BAZE
TAX BASE X TAX RATE
= INCOME TAX

WITHOLDING TAX – IS TAX COLLECTED
BY WITHOLDING AGENT.
THE WITHOLDING AGEN COLLECTS THE
TAX AT THE POINT WHERE IT IS EARNED

GROSS INCOME TAX – is the tax
on all the income

SECTION 24 (B)
Covers all sources of PASSIVE INCOME.
They include bank deposits in the
Philippines, dividends, prizes or winnings
and royalties

SECTION 24 (C)
Capital Gains from Sale of Shares of
Stock not Traded in the Stock Exchange.
The provisions of Section 39(B) notwithstanding, a final tax at the rate of
fifteen percent (15%) is hereby imposed upon the net capital gains
realized during the taxable year from the sale, barter, exchange or other
disposition of shares of stock in a domestic corporation, except shares
sold, or disposed of through the stock exchange

SECTION 24 (D)
Capital Gains from Sale of Real Property.

SAMPLE PROBLEM
Ed Sheeran was invited by wish 107.5 to do a concert
tour in the Philippines with guesting on a bus, two
performances in Manila and one in Cebu. He agreed
to paid 200,000 pesos plus 10% of the gross ticket
sales, for three weeks of work.
One month after his arrival, Ed consults you on his tax
liability, if any.

TAXATION.pptx

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TAXATION.pptx