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3 Sources

1. NIRC- Natl taxes

2. Local Govt Code of 1991-Local Taxes
3. CMTA- Comprehensive Modernization Act- Tariff and customs duties (GOODS)

Has one subject matter/inside a brgy, brgy inside a city or municipalities, and
inside a province they are local govt. everything is under the Philippines.
Treat each as kinds of taxes.
Concepts of each particular tax.

*Double taxation- hindi pedeng itax ng dalawa , natl or local at the same time, at the same
period for the same purpose.

Principles of taxation-kaya hindi nag aaway away ang natl at local govt.
1. Residual theory- tira, residue whatever is not subjected to tax by natl govt may be
subjected to tax by local govt unit or
Whatever may be subjected to tax by the natl govt that will be to the
exclusion of local govt.
2. Rule of pre-emption-applies to local govt units whichever among them imposes tax or
levy on the particular subject matter that would be to the exclusion of others.

How government collects taxes under the two laws.


1. Income tax
a. Taxable period- 12 months, all are computed here.
i. Fiscal year-any month and ending in 12 month period,
-starts first day of the moth, Corporation
ii. Calendar year-12 months, jan to dec.,
- Individual tax payer and corporation (allowed changing
another taxable period upon BIRS approval and after filing of return)
b. Accounting method-Recording of Revenue and Expense side for 12 month period.
1. Cash-directly received
2. Accrual-constructively received

*all has cycle, Revenue side and Expense side-12 month period
*income and expense prior to taxable period hindi pede, always 12 month period; both should
be parallel if cash sa isa cash dn sa isa.

c. Must know if income or not.

Ask and answer yourself with the questions;
a) May tinanggap kaba?
b) Cash or kind?
c) Illegal or legal sources? Walang paki alam
d) Is it *income- is anything that flows into the wealth of the tax payer
other than mere return of capital or anything that increases your net
worth other than mere return of capital. If yes?
e) Is it taxable income?
*Well learn the ff;
1. Inclusions
2. Exclusions
3. Deductions
4. Concept of compensation
5. Fringe benefits
6. DMB- De Minimis Benefits
7. Capital gains
8. Capitals loss
9. Ordinary gains
10. Ordinary loss
11. Holding period
12. Net capital loss carry over
13. Net capital operating loss carry over

d. Kinds of tax payers

e. Kinds of Income taxes under the law
f. If taxable income, what is the rate and kinds of taxes

2. VAT and Percentage tax

3. Transfer taxes
4. Estate tax
5. Donors tax

II. LG Code of 1991

1. Regular / ordinary local taxes
2. Special local taxes

1. Regular/ ordinary tariff
2. Special tariff


1. RC
Those residing in the phil.
No distinction as to the domicile and residence

2. NRC
Section 22
1. Physical presence abroad with a definite intention to reside therein
2. Leaves the phils. For employment abroad and
- OFWs
- OCWs-Overseas Contract Workers
- Immigrants
- Seaman kahit naglalayag ang barko, no permanent address NRC
for purposes of tax
- Dual citizens-classified as a citizen of another country
o Filipino ka na nagconcert ka into another citizenship and then
dual citizen ka sa Pinas
o You are a NRC-taxpayer- you are living outside of the phils
and permanently leaving outside of the Phils. And therefore
you are considered as a NRC.
*dalawa lang ang klase ng Citizen, RC or NRC.
*your not RC dahil nakatira ka sa ibang bansa, with intent to live outside
phil, clearly, physically outside satisfying the Commissioner for purposes of
3. Individual classified differently in one taxable period, formerly youre a
NRC, an immigrant and you decide to come back to the phils and reside here
permanently, pagdating mo ng pinas hanggang date na yon you are NRC
Pagdating mo ng Pinas at ikaw ay nagrereside na ditto permannetlky then
you ae treated for the rest of the year 55;00 txable period as a RC.
Only instance that a taxpayer is classified differently in one year period
Ikaw ay dating NRC, NRC ka sa simula ng taon
Umuwi ka ng Pinas gitna ng taon at any time, at pag uwi mo ng pinas ang
desisyon mo is to reside permanently, pagdating mo ng Pians hanggang date na
yon , NRC ka. Pero pagdating mo ng pinas onwards until the end of the year, you
will be treated as a RC for purposes of tax
3. RA- you are a citizen of another country and you are living in the phils.
Domicile and residence is used interchangeably. If you are foreigner
and nakatira ka sa pinas ikaw ay RA.

Difference of RA to NRAETB
-who are NRA- foreigners who are not residing in the pinas.
-but may be classified into:
Criteria: 180 day period- If an alien stays in the pinas for an aggregate period of 180 days or
more in one year period, then automatically he is considered as NRAETB.
Mere indicators, beacause what the law provides only is the 180 days period to be considered
Missing any one of the five you will be automatically be considered as an alien NRANETB in the

1. Aggregate means: dumating umalis dumating umalis duimating

umalis ng pinas sa loob ng 12 months, bibilangin lahat if 180 days or
more NRAETB though kumakain lan sa resto or namamasyal, doesnt
matter, no need for any business transaction, stay lang ang
kailangan-pananatali, sa pinas kaht wlang ginagawa, 180 days,
2. Principle of habituallity when an alien habityually enters into
commercial transaction in the pinas regardless of the number of
times or period of times. Pag regularly your making transactions in
the pinas-NRAETB ka
3. When you hire agents in the pinas, you are a NRAETB
4. When you hire employees, wla ka sa pinas pero may inaappoint kang
empleyado then you are considered as a NRAETB in the pinas
5. When you put up a branch of your office or business in the pinas
thats an indication that the tax payer is a NRAETB,