Taxation

Discovering

National Taxation System

 Percentage Tax
specified under Sections 116 to
127 of the National Internal
- A business tax imposed on persons, entities, or transactions
Revenue Code of 1997 (also known as Tax Code), as amended,
and as required under special laws.

- A business tax imposed on persons or entities who sell

or lease goods, properties or services in the course of

trade or business whose gross annual sales or receipts do

not exceed P1,500,000 and are not VAT-registered.

Sample Assuming a person who is registered as a self-employed professional (e.g., lawyer,

accountant, doctor, architect, engineer, writer or blogger), has an annual gross
receipts of P1,200,000, and is a NonVAT registered taxpayer, receives gross
Problem receipts for the month of February amounted to Php 100,000.
In the case above, the person is under taxpayers who are required to file Monthly
Percentage Tax Return BIR form 2551M. The computation of his PT due and
payable for the month of February is as follows:
Monthly Percentage tax due = gross receipts x 3%
=P100,000 x 3%
=P3,000
Assuming he don’t have any creditable percentage tax withheld Per BIR form 2307,
is not filing an amended return, and he is filing on or before the due date, the total
amount payable for the month is equal to his percentage tax due for the month.
Percentage tax due
Less: Creditable percentage tax withheld per BIR form 2307
Less: Tax paid in return previously filed (for amended return)
Equals: Total Percentage Tax Payable
Add: Penalties (Interest, surcharge and compromise)
Equals: Total amount payable
Income Tax
Direct tax levied on the income of a person includes

companies, individuals, and other forms of legal entities.

Income tax is levied on various kinds of income, which are

divided into different heads which include salaries,

business income, and capital gains.

The rate of tax could be different for a different kind of

income. There could be certain deductions from income

or the entire income may be taxed at a flat rate.

Income Tax
Taxes are collected by the government in three primary ways:

Voluntary Payment by taxpayers into designated banks, like

advance tax, and self-assessment tax.

Taxes Deducted at Source (TDS) which is deducted from your

monthly salary before you receive it and Taxes Collected at

Source (TCS).
Income taxes are the source of revenue for governments. They

are used to fund public services, pay government obligations,

and provide goods for citizens.

 Value-Added Tax
Value-Added Tax (VAT) is a consumption tax placed on sellers

engaged in trade or business in the Philippines. VAT applies to the

seller’s products and services during the manufacturing or retail

process. According to the Bureau of Internal Revenue (BIR), VAT

may be shifted or passed on to the buyer, transferee or lessee of

goods, properties or services.

The government applies VAT to products and services at a rate of

0% to 12% to the prices of goods or services sold, depending on

the businesses’ transactions. BIR also levies imported goods from

abroad with VAT.

Current
As of this writing, the BIR imposed tax rates for the following items subject to

VAT in the Philippines:

VAT
Sale of Goods and Properties
12% VAT for the gross selling price or gross value in money of goods and

properties sold, bartered or exchanged.

Rates

Sale of Services and Use or Lease of Properties

12% VAT of gross receipts acquired from the sale or exchange of services,

including properties used or leased by individuals.

Export Sales and Other Zero-Rated Sales

Sale of Goods and Services are subject to 0% VAT for PEZA-registered

entities enjoying fiscal incentives.

Entities Required to File VAT Returns

According to BIR, the following individuals are required by law to file and

declare their VAT Returns:

VAT-registered individuals or businesses engaged in selling, exchanging,

leasing of goods or properties, and rendering services, if the actual gross sales

or receipts accumulate up to Php 3,000,000.00;

Taxpayers required to sign up as a VAT taxpayer but failed to register; and
Any individual who imports goods regardless if it’s in line with the course of

their business or not.

According to BIR’s guidelines, VAT taxpayers must file their declarations as

long as their VAT registration is ongoing, regardless if there are no taxable

transactions during the month or the business does not exceed the

P1,500,000.00 threshold for 12 months.

 Documentary Stamp Tax
- Documentary Stamp Tax or DST is one of the

taxation schemes in the Philippines. It includes

documents such as different transactions and

records of shares of stocks, issue of tax on sales,

stamp taxes on bank checks, agreements on

documents, etc. It is also important to have

knowledge about documentary stamp tax

because its high value of transaction will also

increase the amount of DST that you will be

required to pay.
Documentary Stamp Tax
- The interpretation of the documentary stamp
tax on the original issue of worth/share of
stock with or without par value computation
explains that for every 200 pesos, the
transactional part of the tax value is two pesos
(PHP2.00). While when there is no par value on
stock on the agreement of sale and transfer of
shares, it has a percentage unit value of fifty
percent (50%). It is also important to know that
only one tax must be collected on each sale or
stock passed from one individual to another.

 Excise Tax
- An excise, or excise tax, is any duty on

manufactured goods that is levied at the

moment of manufacture rather than at

sale. Excises are often associated with

customs duties; customs are levied on

goods that become taxable items at the

border, while excise is levied on goods

that came into existence inland.

 Excise

Tax
- The excise taxes that generate the biggest

revenue at the federal level include fuel, airline

tickets, tobacco, alcohol and health-related goods

services. Excise taxes are taxes required on

specific goods or services. Excise taxes are

primarily taxes that must be paid by businesses,

usually increasing prices for consumers indirectly.

Excise taxes can be ad valorem (paid by

percentage) or specific (cost charged by unit).

 Excise Tax

- Excise taxes are primarily for businesses. Consumers may or may not see
the cost of excise taxes directly. Many excise taxes are paid by merchants

who then pass the tax on to consumers through higher prices. Merchants

pay excise taxes to wholesalers and consider excise taxes in product

pricing which increases the retail price overall.There are some excise taxes

however that are paid directly by a consumer including property taxes and

excise taxes on certain retirement account activities.

- Federal, state, and local governments have the authority to institute

excise taxes. While income tax is the primary revenue generator for federal

and state governments, excise tax revenue also makes up a small portion

of total revenue.

 Estate Tax
The Estate Tax is based on the legislation in

effect at the time of death, regardless of whether

the recipient has real ownership or enjoyment of

the estate.
The right of a deceased person to convey his or

her estate to his or her rightful heirs and

beneficiaries at the moment of death, as well as

some transfers authorized by law as equivalent to

testamentary disposition, is subject to estate tax.

It isn't a property tax. It is a tax levied on the

privilege of transferring property after the owner's

death.

 ESTATE TAX UNDER THE

TRAIN LAW

The estate tax of every decedent, whether resident

or non-resident of the Philippines, is computed by

multiplying the net estate with six (6) percent. Prior

to the TRAIN Act, estate taxes ranged from five

percent to twenty percent.

SOME MANDATORY REQUIREMENTS:
 Certified true copy of the Death Certificate; (One (1) original copy and
two (2) photocopies)
TIN of decedent and heir/s; One (1) original copy for presentation only)
Any of the following: (One (1) original copy and two (2) photocopies)
a) Affidavit of Self Adjudication;
b) Deed of Extra-Judicial Settlement of the Estate, if the estate has been settled
extra judicially;
c) Court order if settled judicially;
d) Sworn Declaration of all properties of the Estate;
FOR REAL PROPERTIES:

· Certified true copy/ies of the Transfer/Original/

Condominium Certificate/s of Title of real property/ies

(front and back pages), if applicable; (One (1) original copy

and two (2) photocopies)

· Certified true copy of the Tax Declaration of real

properties at the time of death, if applicable; (One (1)

original copy and two (2) photocopies)

· Certificate of No Improvement issued by the Assessor's

Office where declared properties have no improvement.

(One (1) original copy and two (2) photocopies)

FOR PERSONAL PROPERTIES:

· Certified true copy/ies of the Transfer/Origin· Certificate of Deposit/ Investment/ Indebtedness owned by the

decedent and the surviving spouse, if applicable; (One (1) original copy and two (2) photocopies)
· Photocopy of Certificate of Registration of vehicles and other proofs showing the correct value of the same, if

applicable; (One (1) original copy and two (2) photocopies)

· Proof of valuation of shares of stock at the time of death, if applicable: (One (1) original copy and two (2)

photocopies)
a. For shares of stocks not listed/not traded - Latest Audited Financial Statement of the issuing corporation
with computation of the book value per share;
b. For shares of stocks listed/traded - Price index from the PSE/latest FMV published in the newspaper at the
time of transaction;
c. For club shares - Price published in newspapers on the transaction date or nearest to the transaction date.
 Donor's Tax
Donor’s Tax is a tax on a donation or gift, and is

imposed on the gratuitous transfer of property

between two or more persons who are living at

the time of the transfer. It shall apply whether the

transfer is in trust or otherwise, whether the gift is

direct or indirect and whether the property is real

or personal, tangible or intangible.

 Tax Rates

(The rate applicable shall be based on the law prevailing at the time of donation)

Effective January 1, 2018 and onwards (Republic Act (RA) No. 10963/TRAIN)
Rate - The donor’s tax for each calendar year shall be six percent (6%) computed on the basis of the

total gifts in excess of Two Hundred Fifty Thousand Pesos (P250,000) exempt gift made during the

calendar year.

Notes:
1. When the gifts are made during the same calendar year but on different dates, the
donor's tax shall be computed based on the total net gifts during the year.
2. The relationship between the donor and the donee(s) shall not be considered.
Republic Act No. 10963 (TRAIN Law) does not distinguish donations made to
relatives, or donations made to strangers.
 Tax Rates
January 1, 1998 to December 31,
2017 (RA No. 8424)
Notes:
1. When the gifts are made during the same calendar year but on different dates, the
donor's tax shall be computed based on the total net gifts during the year.
2. Donation made to a stranger is subject to 30% of the net gift. A stranger is a person
who is not a:
· Brother, sister (whether by whole or half-blood), spouse, ancestor and lineal

descendants; or
· relative by consanguinity in the collateral line within the fourth degree of

relationship.
 Tax Rates
July 28, 1992 to December
31, 1997 (RA No. 7499)
Note:
Donation made to a stranger shall be either the amount computed in accordance

with the preceding schedule or twenty percent (20%) of the net gifts, whichever is

higher. A stranger is a person who is not a:

Brother, sister (whether by whole or half-blood), spouse, ancestor and lineal

descendant; or
relative by consanguinity in the collateral line within the fourth degree of

relationship.
 Filing Date of Donor's Tax
The return shall be filed within thirty (30) days after the gift (donation) is

made. A separate return is filed for each gift (donation) made on different

dates during the year reflecting therein any previous net gifts made in the

same calendar year. Only one return shall be filed for several gifts (donations)

by the donor to the different donees on the same date. If the gift (donation)

involves conjugal/community property, each spouse shall file separate return

corresponding to his/her respective share in the conjugal/community

property. This shall likewise apply in the case of co-ownership over the

property being donated.

Capital Gains Tax
A government fee on the profit made from selling certain types of assets
which includes stock investments or real estate property.
Capital gains tax only becomes due once you sell your investment.
Capital Gains Tax is a tax imposed on the gains presumed to have been
realized by the seller from the sale, exchange, or other disposition of
capital assets located in the Philippines, including pacto de retro sales
and other forms of conditional sale.
 How the Capital Gains tax works:

Two Standard Capital Tax Rates for Long- and Short-term Investments:
1. Short-term Capital Gains Tax Rate
All short-term capital gains are taxed at your regular income tax rate.
2. Long-term Capital Gains Tax Rate
The tax rate paid on most capital gains depends on the income tax bracket.
Example:
You won't owe tax while stock gains value inside your portfolio. However,
once you sell shares, the profit must be reported on your tax return. As a
result, you pay a tax on your profit at the capital gains rate.
Short-term capital gains or losses - occur when you've owned an asset
for a year or less.
Long-term capital gains or losses - occur if you sell an asset after
owning it for longer than one year. •
Short-term capital gains have a higher tax rate than long-term
capital gains.
Thank You!

Aristado, Timothy
Badenas, Karryle C.
De castro, Aira Joy
Diokno, Lara Isabelle
Lopez, Glizella Maye
Melendrez, Marianne
Molining, Princess Molieanne
Samsaman, Crissa