Fa

• Income and business taxation


  Taxes paid from earnings and sole proprietor
• Business Tax


  Tax on the production, sale or consumption of goods and services, leasing of property or other business activities
• Compensation income


  Income that is typically derived from employment, e.g. salaries and wages
• De Minimis Benefits


  Other forms of benefit that are of relatively small value and are given to employees to promote health, goodwill, contentment and work efficiency
• Income


  All inflows of wealth to the taxpayer other than those that represents a mere return of capital
• Income Tax


  Tax on a person's income derived from employment, business, trade, practice of profession, or from property, after excluding the deductions allowed under the law
• Taxation


  The process by which a government, through its law making body, imposes charges on its inhabitants to raise money for public use
• Taxable income


  Gross income minus the deductions allowed by law
• Taxes


  Mandatory contributions imposed upon persons and property for the support of the government
• Tax due


  The amount of tax to be paid to the government
• The primary purpose of taxation is to raise revenue that will be used in defraying government expenses
• Secondary purposes of taxation


  • Regulate inflation
  • Minimize adverse effects of certain activities
  • Equitable distribution of wealth
• Taxation


  • Inherent power of the government
  • Legislative in nature
  • Subject to constitutional and inherent limitations
• Reciprocal duties of protection and support


  The government protects the welfare of its people, in return, the people support the government
• Benefits received principle


  Taxes are used for the benefit of the public
• Aspects of Taxation


  • Levy - tax laws, specifying the object and amount of taxation, are enacted
  • Collection - the tax laws are implemented and administered
• Principles of a sound tax system

  • Fiscal Adequacy - revenues should be sufficient to defray expenditures
  • Theoretical Justice - taxes are proportionate to the taxpayer's ability to pay
  • Administrative Feasibility - tax laws can be implemented efficiently and effectively, avoiding unnecessary inconvenience and confusion on the part of the taxpayers
• Characteristics of Tax


  • It is mandatory
  • It levied by the law-making body
  • It is imposed primarily to raise revenues for the government
  • It is generally payable in money
  • It is proportionate in character
  • It is levied on persons and property (or the exercise of a right or privilege) over which the taxing authority has jurisdiction
  • It is levied for public purposes
• Classification of Taxes (as to subject matter)


  • Personal, capitation or poll tax
  • Property tax
  • Excise tax
• Classification of Taxes (as to who bears the burden)


  • Direct tax
  • Indirect tax
• Classification of Taxes (as to the determination of the amount)

  • Ad Valorem
  • Specific
• Classification of Taxes (as to scope)

  • National tax
  • Local tax
• Classification of Taxes (as to rate or graduation)

  • Proportional
  • Progressive
  • Regressive
• Tax


  License Fee
• Types of tax


  • National tax (e.g. income tax, value-added tax)
  • Local tax (e.g. community tax, real estate tax, municipal licenses tax)
• Types of tax rate or graduation


  • Proportional (fixed rate)
  • Progressive (increasing rate as taxable amount increases)
  • Regressive (decreasing rate as taxable amount increases)
• Tax


  Imposed through power of taxation, primary purpose is to raise revenue, amount is unlimited
• License fee


  Imposed through police power, primary purpose is to regulate certain business activities, amount is limited to the costs of regulation
• Toll fee


  Paid for the use of property, e.g. road
• Special assessment


  Imposed because of an increase in the value of land due to public improvement
• Classification of individual income taxpayers


  • Resident citizen
  • Non-resident citizen
  • Resident alien
  • Non-resident alien
• Resident citizens are taxed on all income they derive from sources within and without (outside) the Philippines
• Non-resident citizens and aliens are taxed only on income they derive within the Philippines
• Gross income


  All income derived from whatever source, including compensation income, business income, and passive income
• Salaries


  Compensation that is normally quoted on a per month (per year) basis and is paid periodically (e.g. twice a month) for the performance of a regular work
• Wages


  Compensation that is quoted on a per hour basis and is paid based on the number of hours worked
• Taxable income


  Gross income minus the deductions allowed by law, the amount on which the tax is computed
• Allowed deductions from gross income


  • Contributions for SSS, GSIS, PhilHealth, Pag-IBIG, union dues
  • Compensation for injuries or sickness
• Tax due is computed using the tax table provided
• Centavos are rounded-off when computing taxable income or tax due