CHAPTER 10: TAX MANAGEMENT

• TAXES

  are the 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.
• TAXABLE INCOME

  means the pertinent items of income provided for in the National Internal Revenue Code
• INCOME TAX

  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.
• GROSS INCOME

  Compensation for services in whichever form paid, including, but not limited to fees, salaries, wages, commissions and similar items;
• COMPENSATION INCOME

  income arising from personal services under an employer-employee relationship, whether it takes the form of salaries, honoraria, bonuses, pensions, allowances, representation fees, and other similar incomes
• REGULAR COMPENSATION

  Includes basic salary, fixed allowances for representation
• PROFESSIONAL INCOME

  Income earned by an individual from the sole proprietorship business or from the practice of his profession. Tax rates range from 5% to 32% of taxable income.
• PASSIVE INCOME

  Income earned which are subjected to different final withholding tax rates.
• WITHHOLDING TAXES

  also known as "taxation at source, " refers to the National Internal Revenue Code (NIRC) requirement that taxes imposed on income are to be deducted or withheld by the pay or and the same be remitted directly to the BIR, Therefore, taxes are practically collected at the time the transaction is executed or when the taxable act occurs.