Tax

LEARNING ADVANCEMENT REVIEW CENTER
RM 413 DONA AMPARO BUILDING ESPANA BOULEVARD CORNER G. TOLENTINO ST.

SAMPALOC, MANILA PW 3
CONTACT # (02) 244 6342
6342 / 0915 537 1189 / 0943 595 5364
TAXATION GARCIA/ CO/ WONG

PRE-WEEK NOTES
PART 1
Summary: Taxation of Self-employed/Professional Individuals under Train Law (RR 8-2018) (RMC 23-2018)
Income Tax Options on Business Income or Income from Profession

If annual gross sales/receipts and non-operating income is If annual gross sales/receipts and non-
≤ P3,000,000 operating income is >P3,000,000
Options Option 1 (8% income Option 2 Option 3 (Graduated Option 1 Option 1 (Graduated
tax) (Graduated 0%- 0%-35%) (Graduated 0%- 0%-35%)
35%) 35%)
Tax Base Receipts + Other Net taxable income Net Taxable income Net Taxable Net Taxable income
income income
Deductions None Itemized OSD Itemized OSD
deductions deductions
Tax rate 8% in excess of Graduated income Graduated income Graduated income Graduated income tax
P250,000n* tax rates of 0% to tax rates of 0% to tax rates of 0% to rates of 0% to 35%
35% 35% 35%
VAT/Percentage Exempt 3% Percentage tax 3% Percentage tax or 12% VAT 12% VAT
or 12% VAT 12% VAT
Submission of FS No Yes No Yes No
with the BIR
* For mixed income earner, 8% income tax will be applied on gross receipts and other income without deduction of P250,000.
Conditions to elect 8% GRT

1. Gross sales/receipts and non-operating income is ≤P3,000,000
2. Non-VAT registered
3. Taxpayer not subject to other percentage taxes (e.g. amusement tax)
4. 8% tax is elected in the 1st quarter Income Tax Return (ITR) or 1st Quarter Percentage Tax Return, or BIR Form 1901 (for new
registrants), or BIR Form 1905 (for existing business taxpayers).
(Choice shall be made every taxable year and shall be irrevocable for the said year)
What to do when gross sales/receipts exceed P3,000,000 during the year?

1. File next quarterly and annual ITR using 0%-35% graduated income tax rate and credit 8% income tax paid from the previous
quarter/s.
2. Register as VAT taxpayer and issue VAT OR/Invoice
3. Pay 3% Percentage Tax on gross sales/receipts and other non-operating income from the beginning of the year until end of the
month when VAT threshold was exceeded
4. Pay VAT on receipts starting on the 1st day of the month following the month when the VAT threshold was exceeded.
Rules in claiming Optional Standard Deduction (OSD)

1. OSD is 40% of gross sales/receipts
2. OSD is elected in the 1st quarter ITR (Irrevocable for the taxable year)
Issuance of Receipts
1. Transactions valued of P100 or more
2. If buyer is VAT registered, issue OR/Invoice regardless of the amount
3. Duplicate OR/Invoice shall be kept for 10 years.
Bookkeeping Requirements
1. All taxpayers shall keep relevant and appropriate set of books which must be BIR approved.
2. All books of accounts (in a. Native language b. English or c. Spanish) including the subsidiary books, and other accounting
records shall be preserved by them for a period of ten (10) years from the day following the deadline for the filing of the return or if
filed after the deadline from the date after the filing of the return for the taxable year when the last entry was made in the books of
accounts.
2. If annual sales exceed P3,000,000, Books of Accounts shall be audited by CPA.
ITR Filing and Payment
For Business income earners including income For Purely compensation income earners
from practice of profession
Quarterly filing May 15, August 15, November 15 Not applicable
Annual filing On or before April 15 of the succeeding year On or before April 15 of the succeeding year
Installment Payment of tax due in excess of P2,000
April 15 1st installment

October 15 2nd installment
3% Percentage Tax Filing and Payment
Quarterly filing 25th of the month following the close of the taxable quarter (BIR Form 2551Q)
VAT Filing and Payment
Monthly 20th (Non-EFPS) or 21st -25th (EFPS), of the following month (BIR Form 2550M)
Quarterly 25th of the month following the close of the taxable quarter (BIR Form 2550Q)
LEADTAX Pre Week Page 1 of 19

LEARNING ADVANCEMENT REVIEW CENTER LEAD
Effective 2023: VAT Filing shall be limited to quarterly filing and payment
Withholding Tax Filing/Remittance
Expanded/Final First two months of each calendar quarter : 10th (non-eFPS) or 15th (eFPS), of the following month
Withholding Tax (BIR Form 0619 E/F)
Quarter: Last day of the month following the close of the quarter (BIR Form 1601EQ/ 1601FQ /
Alphalist of Payees
Expanded/Final First two months of each calendar quarter : 10th (non-eFPS) or 15th (eFPS), of the following month
Withholding Tax (BIR Form 0619 E/F)
Capital Gains Tax a. Shares of stock

• Ordinary Return – 30 days after each transaction (BIR Form 1707)
• Final Consolidated Return – on or before April 15 of the following year (BIR Form 1707 A)
b. Real Property- 30 days following each sale or other disposition (BIR From 1706)
Withholding Tax on Non-EFPS Filing/Payment

Compensation 10th (January to November Returns)
15th (December Return) of the following month (BIR Form 1601 C)
EFPS Filing 11th – 15th of the following month
EPFS Payment 15th (January to November returns), 20th (December return) of the following
month
PART II
Income Subject to Final Taxes on certain passive income from Philippine Sources /Regular Rates/Capital Gain Tax
Rates:
Legend: Final tax on passive income Xxx
RES – Resident alien Add: Capital gain tax Xxx
CIT - Citizen Total Final Taxes Xxx
NRA-NETB – Non resident alien not engaged in business
DOM – Domestic corporation Add: Regular (Basic) Tax Xxx
RFC – Resident foreign corporation Total Income Tax Expenses Xxx
NRFC – Non resident foreign corporation
RES/CIT NRA-ETB NRA-NETB DOM RFC NRFC
FINAL TAX RATES ON PASSIVE INCOME
Interest in any currency

20% 20% 25% 20% 20% 30%
bank deposit
Yield or any other
monetary benefit from 20% 20% 25% 20% 20% 30%
deposit substitute***
Deposit Substitute – an alternative form of obtaining fund from the PUBLIC other than
deposits, through the issuance, endorsement, or acceptance of “debt instrument” for the
borrower’s own account, for the purpose of re-lending or purchasing of receivables and other
obligations, or financing their own needs or the need of their agent or dealer (RR 14-2012)
Public- is defined as borrowing from twenty (20) or more individual or corporate lenders at
any one time.
Yield or any other
monetary benefit from
20% 20% 25% 20% 20% 30%
trust funds and similar
arrangements
Royalties in general 20% 20% 25% 20% 20% 30%
Royalties on books, as
well as other literary
10% 10% 25% - - -
works and musical
composition
Prizes exceeding
20% 20% 25% Regular rate Regular rate 30%
P10,000
Prizes ≤P10,000 Basic tax Basic tax 25% Regular rate Regular rate 30%
Other Winnings,
20% 20% 25% Regular rate Regular rate 30%
regardless of amount

25%
A final withholding
tax equal to
PCSO and / or Lotto Exempt* twenty-five percent
(25%) of the
winnings >P10,000 20% * One the entire income
apparent received from all
inconsistencies
under the TRAIN
sources within
Law the Philippines,
(NIRC of 1997,
Sec. 25 (B), NIRC)
PCSO and/or Lotto

winnings amount Exempt Exempt 25%
≤P10,000
Notes: Not included are winnings exempt from income tax such as but not
limited to:
• Winnings under Sec. 126 of the Tax Code (subject to OPT only of 4%,
10% as the case may be)
Actual amount paid for every winning ticket after
Sec. 126 – 10%
deducting the cost of the ticket
Tax on
Winnings from double, forecast/quinella and trifecta bets 4%
winnings
Prize of winning race horse owners 10%
• Prizes and awards made primarily in recognition of religious, charitable,

scientific, educational, artistic, literary, or civic achievement but only if
• 1. The recipient was selected without any action on his part to enter
the contest or proceeding;
• 2. The recipient is not required to render substantial future services
as a condition to receiving the prize or award
• All prizes and awards granted to athletes in local and international
sports competitions and tournaments whether held in the Philippines or
abroad and sanctioned by their national sports associations.
Interest income received
from depository bank
under expanded foreign 15%
7.5%*
currency deposit system (NRC- Exempt Exempt 15% * One the apparent Exempt
Exempt) inconsistencies under the
TRAIN Law
(Notes: Joint Accounts
on Forex Deposits)
Joint Accounts on Forex Deposits – if the bank account is jointly in the name of the non-
resident and a resident taxpayer, 50% of the interest shall be exempt while the other 50%
shall be subject to the 15% final tax.
Interest income from
long-term deposit or
investment in the form
of savings, common or
individual trust funds,
Regular rate* Regular rate%*
deposit substitutes,
(RMC 7-2015) (RMC 7-2015)
investment management Exempt Exempt 25% 30%
30%(Corporate 30%(Corporate
accounts and other
Tax) Tax)
investments evidenced
by certificates in such
form prescribed by
Bangko Sentral ng
Pilipinas (BSP)
If pre-terminated before fifth year, a final tax shall be imposed based on remaining maturity:
4 years to less than 5
5% 5% 25% 20% 20% 30%
years
3 years to less than 4
12% 12% 25% 20% 20% 30%
years
Less than 3 years 20% 20% 25% 20% 20% 30%
15% (tax
Dividend from domestic sparing rule) or
10% 20% 25% Exempt Exempt
corporation 30% (no tax
sparing rule)
Share of an individual in
the distributable net
income after tax of a
PARTNERSHIP (OTHER
THAN a general 10% 20% 25% - - -
professional
partnership) of which he
is a partner (beginning
January 1, 2000)

Income derived by a
depository bank from
foreign currency
transactions with non-
residents, OBUs in the - - - Exempt Exempt Exempt
Philippines, local
commercial bank
including branches of
foreign banks
Interest income from
foreign currency loan
granted by depository
banks under expanded
- - - 10% 10% Exempt
system to residents
other than OBUs in the
Philippines and other
depository bank
Any income of non-
residents (individual or
corporation) from
Exempt Exempt Exempt
transactions with
depository banks under
expanded system
Interest on foreign loans
contracted
- - - - - 20%
on or after August 1,
1986
TAX ON CAPITAL GAINS
First 5% First 5%
P100,000 P100,000
capital capital
Sale of shares of stock gain gain
Amount 10% Amount 10%
not traded in the stock 15% 15% 15% 15% in excess in excess
of exchange of of
P100,000 P100,000
capital capital
gain gain
Sale, barter, transfer

and/or assignment of
shares of stock of
First 5% First 5%
publicly-listed P100,000 P100,000
companies not compliant capital capital
gain gain
with mandatory Amount 10% Amount 10%
minimum public in excess in excess
15% 15% 15% 15% of of
ownership (10% of the P100,000 P100,000
capital capital
publicly-listed gain gain
companies’ issued and * One the apparent * One the apparent
inconsistencies under the inconsistencies under the
outstanding shares, TRAIN Law TRAIN Law
exclusive of any
treasury shares) (RR No.
16-2012)
Sale of real property 6% of GSP 6% of GSP 6% of GSP or
6% of GSP or
classified as capital or FMV or FMV FMV
FMV whichever is - -
asset (located in the whichever whichever whichever is
higher
Philippines) is higher is higher higher
PART III
Taxpayers Specially Subject to Other Percentage Taxes (BICAP FLOW) Sections 117 to 127
B Banks F Franchises
I International Carriers L Life Insurance Premiums
C Common carriers by land O Overseas Communications
A Amusement taxes W Winnings
P PSE sales or those listed and traded through LSE or IPO
OTHER PERCENTAGE TAXES (SUMMARIZED)
Percentage Tax Tax Basis Tax Due Dates

Rate
Sec. 116 – Tax on Gross Quarterly Sales or Receipts 3% 25th days after the
persons exempt end of each quarter
from VAT under
Sec. 109 (BB)
(annual gross sales
or receipts do not
exceed
P3,000,000)
Sec. 117 – Actual or Minimum Gross Receipts whichever is higher 3% 25th days after the

Rate
Percentage tax on Areas of Business Operations end of each quarter
domestic carriers Minimum Quarterly Gross Receipts Manila and other Provinces
and keepers of cities
garages (Transport 1. Jeepney for hire P2,400 P1,200
of passengers) – 2. Public Utility Bus
land Not exceeding 30 passengers P3,600 P3,600
Exceeding 30 but not exceeding 50
….passengers P6,000 P6,000
Exceeding 50 passengers P7,200 P7,200
3. Taxis P3,600 P2,400
4. Car for hire with chauffeur P3,000 P3,000
5. Car for hire without chauffeur P1,800 P1,800
.
Sec. 118 – Quarterly Gross Receipts 3% 25th days after the
Percentage tax on end of each quarter
International
air/shipping
carriers doing
business in the
Philippines
Sec. 119 – Tax on Gross Receipts: 25th days after the
franchises Frachises on gas and water utilities end of each quarter
2%
Frachises on Radio and television broadcasting companies whose annual gross
receipts of the preceding year do not exceed P 10,000,000 and did not opt to 3%
register as VAT taxpayer Gross Receipts
Except from RMC 33-2013, PAGCOR is subject to a franchise tax.
Gross revenue or earnings
5%
Sec. 120 – Tax on Amount paid for such services ( by the person who used the communication 10% 25th days after the
overseas dispatch, facilities) end of each quarter
message or
conversation Exempted from Sec. 120 are:
originating from 1. Government
the Philippines 2. Diplomatic services
3. International organizations
4. News services
Sec. 121 – Tax on Gross receipts on interest, commissions and discounts from lending activities ; 25th days after the
banks and non- income from financing leasing: end of each quarter
bank financing
intermediaries
performing quasi – Remaining Maturity period of instrument is 5 years or less (Not in excess of 5
5%
banking functions years)
Remaining Maturity period of instrument is More than 5 years (In excess of 5
1%
years)
Dividends and equity shares and net income of subsidiaries 0%
Royalties, rentals of properties, real or personal, profits from exchange and all
7%
other items treated as gross income under Sec. 32 of the Code
Net trading gains within the taxable year on foreign currency, debt securities,
7%
derivatives and other similar financial instruments
Sec. 122 – Tax on Gross receipts derived from interest, discounts, commission and other items of 25th days after the
Finance gross income paid to finance companies and other financial intermediaries not 5% end of each quarter
Companies/Other performing quasi banking functions (From Other Sources)
Non-Bank Financial Interest, commissions and discounts paid from their loan transactions from
Intermediaries finance companies as well as income from financial leasing: (From Lending)
Remaining Maturity period is 5 years or less 5%
Remaining Maturity period is more than 5 years 1%
25th days after the
Sec. 123 – Tax end of each quarter
Life Insurance
Total premiums collected 2%
Companies (except
purely cooperative
companies or
associations)
Sec. 124 – Tax on Total premiums collected/paid 25th days after the
Agents of foreign end of each quarter
insurance Generally (agents of foreign insurance companies (fire/marine or miscellaneous 4%
companies (Fire, agent)
marine or
miscellaneous
insurance):
(except Owners of property obtain insurance directly with foreign insurance companies
5%
reinsurance
premium)

Rate
Gross receipts 25th days after the
Jai-alai and race track 30% end of each quarter
Sec. 125 – Cockpits, cabarets, night or day clubs 18%
Amusement taxes
Professional basketball games 15%
Boxing exhibitions 10%
20 days from the
date the tax was
Actual amount paid for every winning ticket after deducting the cost of the ticket 10%
Sec. 126 – Tax on deducted and
winnings withheld
Winnings from double, forecast/quinella and trifecta bets 4%
Prize of winning race horse owners 10%
Sec. 127 (A) 5 banking days
Every stock broker from the date of
who effected a collection
sale, barter,
exchange or other
disposition of 6/10
Gross selling price or gross value in money of shares of stocks sold, bartered,
shares of stock of 1
exchanged or otherwise disposed
listed and traded %
through the Local
Stock Exchange
(LSE) other than
the sale by a
dealer in securities
(B)A 30 days from the
corporate date of listing of
issuer/stock the shares of stock
broker, whether in the local stock
domestic of exchange
foreign, engaged in
Gross selling price or gross value of in money of shares of stocks sold, bartered,
the sale, barter, 5 banking days
exchanged or otherwise disposed in accordance with the proportion of stocks
exchange or other from the date of
sold, bartered or exchanged or after listing in the stock exchange
disposition through collection
Initial Public
Offering
• Up to 25 %
(IPO)/Secondary 4%
Public Offering of
shares of stock in
closely held
corporations
• Over 25% but not over 33 1/3% 2%
• Over 33 1/3 % 1%
PART IV

Process Flow for the Assessment and Collection of Taxes
Filing of Returns Within three (3) years FLD/FAN
Issuance NIC 30 PAN 15
days days
of LA
Served w/in 30 Audit terminated Paid w/in Protested Not paid/ Not
days in 120 days 30 days w/in 30 Protested w/in
days 30 days
Claim for refund Assessment Final

A
2 years after payment
Admin & Judicial

Granted Remedies (w/in 5 yrs)
No Yes
SC (15 days) CTA (30 days) TCC/Gov’t
Check End
Final Decision
End For
execution
____________________________________________________________________________________
A Protest w/in 30 days
Reconsideration Reinvestigation
-Not suspend collection -60 days to submit docs
-Suspends collection
CIR inaction 180 CIR decision after

CIR decision days 180 days
End Yes Favorable No Favorable
No Yes
Final SC (15 CTA (30
days) ** Adverse End
decision days)*
End
Notes:
* Appeal Court of Tax Appeals – If the protest is denied, in whole or in part, by the Commissioner, the taxpayer may
appeal to the CTA within 30 days:
1. From the receipt of the adverse (unfavourable) decision or
2. From the lapse of the 180 days period (new provision)
The CTA is a court of special jurisdiction and can only take cognizance of such matters as are clearly within its jurisdiction.
In other words, an original action for refund cannot be brought directly to the CTA. It has to be ﬁled ﬁrst with the CIR and it
can be brought only to the CTA in case of the CIR’s denial of the claim or because of inaction for a period of 180 days from
the time of the filing of the supporting documents.
**Appeal to CTA en banc- 15 days from the date of receipt of decision of a CTA division.

PART V
COURT OF TAX APPEALS
a. Creation of CTA
There is hereby created a court of tax appeals (CTA) which shall be the same level as the court of appeals, possessing all the
inherent powers of a court of justice. (Sec.1, R.A. No. 1125, as amended by R.A. No. 9282)
b. Composition of CTA
The CTA shall consist of a presiding justice and 8 associate justice.( sec. 1 R.A. No. 1125, as amended by R.A. No. 9503)
c. Sitting En Banc or Division
The CTA may sit en banc or in three division, each division consisting of three justices (Sec. 2 R.A. No. 1125, as amended by R.A.
No. 9503).
d. What will constitute a Quorum
Five (5) justices shall constitute a quorum for sessions en banc and Two (2) justices for session of a division (Sec. 2 R.A. No. 1125,
as amended by R.A. No. 9503).
e. Rendition of a decision or a resolution
The affirmative votes of five members of the court en banc shall be necessary to reverse a decision of a division but a simple
majority of the justices present necessary to promulgate a resolution or decision in all cases or 2 members of a division level (Sec. 2
R.A. No. 1125, as amended by R.A. No. 9503).
f. Jurisdiction of the CTA(sec.7, R.A. no.1125 as amended)
The CTA shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal
(b) Jurisdiction over cases involving criminal offenses
(c) Jurisdiction over tax collection cases.
g. Exclusive appellate jurisdiction
The CTA shall exercise exclusive appellate jurisdiction to review by appeal:

(1) Decision of the CIR in cases involving disputed assessments, refunds of internal revenues, fees or other charges, penalties
in relation there to, or other matters arising under NIRC or other laws administered by the BIR;
(2) Inactions by the CIR in cases involving disputed assessments, refund of internal revenues taxes, fees or other charges,
penalties in relation there to, or other matters arising under NIRC or other laws administered by the BIR, where NIRC
provides a specific period of action, in which case the inaction shall be deemed a denial;
(3) Decisions, order, or resolution of the regional trial court in local tax cases originally decide or resolved by them in the
exercise if their original or appellate jurisdiction;
(4) Decision of the commissioner of customs in cases involving liability for customs duties, fees or other money charges,
seizure, detention or release of property affected, fines, forfeitures or other penalties, in relation there to, or other matter
arising under customs;
(5) Decisions of the central board of assessment appeals in the exercise of its appellate jurisdiction over cases involving the
assessment and taxation of real property originally decided by the provincial or city board of assessment appeals;
(6) Decisions of the secretary of finance on customs cases elevated to him automatically for review from decisions of the
commissioner of customs which are adverse to the government under Sec.2315 of the Tariff and customs code;
(7) Decisions of the secretary of trade and industry in the case of agricultural product, commodity or article, and the secretary
of agriculture in the case of agricultural products, commodity or article, involving dumping and countervailing duties under
Section 301 and 301, respectively, of the tariff and customs code, and safeguard measures under R.A. No. 8800, where
either party may appeal the decisions to impose or not impose said duties.
h. Jurisdiction over cases involving criminal offenses
The CTA shall exercise jurisdiction over cases involving criminal offenses;
(1) Exclusive original jurisdiction over all criminal offenses arising from violation of the NIRC or Tariff and Customs Code and
other laws administered by the BIR or the BOC: provided, however that offenses or felonies where the principal amount of
taxes and fees, exclusives of charges and penalties, claimed is less than P1,000,000 or where of the CTA shall be appellate.
(2) Exclusive appellate jurisdiction in criminal offenses:
(a) Over appeals from review of the judgment, resolution or orders of the regional trial court in tax cases originally decided
by them, in their respective territorial jurisdictions;
(b) Over petitions for review of the judgments, resolutions or orders of the regional trial court in the excise of their
appellate jurisdiction over tax cases originally decided by the metropolitan circuit trial court in their respective
jurisdictions.
i. Jurisdiction over tax collection cases
The CTA shall exercise jurisdiction over tax collection cases:

(1) Exclusive original jurisdiction in tax collection cases involving final and executor assessment for taxes, fees, charges and
penalties: provided, however, that collection cases where the principal amount of taxes and fees, exclusive of charges and
penalties, claimed is less than P1,000,000 shall be tried by the proper Municipal Court, Metropolitan Trial Court Regional
Trial Court.
(2) Exclusive appellate jurisdiction in tax collection cases:
(a) Over appeals from the judgment resolution or orders of the regional trial court in tax collection cases originally decided
by them, in their respective territorial jurisdictions.
(b) Over petitions for review of the judgments, resolutions or orders of the regional trial courts in the exercise of their
appellate jurisdiction over tax collection cases decide by the metropolitan trial court and municipal circuit trial court, in
their respective jurisdictions.
MULTIPLE CHOICE

1. Inaction by the CIR in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties
in relation thereto, or other matters arising under NIRC or other laws administered by the BIR, where the NIRC provides a specific
period of action, in which case the inaction shall be deemed a denial, shall be appealed to the:
a. Secretary of Finance b. Court of Tax Appeals c. Court of Appeals d. Supreme Court
2. The court of tax appeals is composing of:

a. 1 justice and 2 associate justices
b. 1 justice and 5 associate justices
c. 1 justice and 8 associate justices
d. 1 justice and 14 associate justices
3. How many votes shall be necessary to reverse a decision of a Division of the Court of Tax Appeals?
a. Five affirmative votes of members of the Court en banc
b. Five affirmative votes of the Justices of present during the deliberation
c. Simple majority of the justices present during the deliberation
d. Votes unnecessary because decision of a Division cannot reversed.
4. The court of tax appeals shall have an exclusive appellate jurisdiction to review by appeal over the following except
a. Decision of the Commissioner of Customs
b. Inaction by the Commissioner of Internal Revenue
c. Decision of the Commissioner of Internal Revenue
d. Decision of the City Board of Assessment Appeals
5. Julia an importer protested an assessment and. classification by the collector of customs. However, the collector of customs
denied Julia's protest. Hence, Julia went to appeal adverse decision by the collector of customs with the Commissioner of Custom,
which of the following statement is correct in case the Commissioner decides to favour or deny Julia?
I. Adverse decision against Julia appeal to Court of Tax Appeal.

Ii. Adverse decision against the government appeal to Court of Tax Appeal.
III. Adverse decision against Julia appeal to Secretary of Finance.
IV. Adverse decision against the government appeal to the Secretary of Finance.
a. I and II b. III and IV c. I and IV d. I, II, III, and IV
6. The Court of Tax Appeals shall have an exclusive appellate jurisdiction to review by appeal cases of nonagricultural product,
commodity or article decided by
a. Secretary of Finance c. Secretary of Trade
b. Secretary of Agriculture d. Commissioner of Internal Revenue
7. The Court of Tax Appeals shall have exclusive appellate jurisdiction over
a. Criminal cases arising from violations of the National Internal Revenue Code where the principal amount of taxes if P2,000,000
b. Criminal cases arising from violations of the Tariff and Customs Code where the principal amount of taxes is P1,000,000.
c. Criminal cases arising from violation of law administered by the Bureau of Customs where the principal amount involved is
P500,000.
d. Tax collections cases involving final and executor assessments for taxes, fees, charges and penalties cases where the principal
amount of taxes and fees, exclusive of charges and penalties, claimed is P1,500,000.
8. All criminal cases arising from violation of the provisions of the National Internal Revenue Code where the principal claim does not
exceed P1,000,000 shall be under the exclusive jurisdiction of
a. Commissioner of Internal Revenue c. Municipal of Trial Court
b. Court of Tax Appeals d. Court of Appeals
PART VI (RR 21 -2018)

Case 1: Mr. A has been assessed deficiency income tax of P1,000,000 exclusive of interest and surcharges, for taxable year 2018.
The tax liability has remained unpaid despite the lapse of June 30, 2020, the deadline for payment stated in the notice and demand
issued by the Commissioner. Payment was made by the taxpayer on February 10, 2021.
Required: How much is the total amount due on February 10, 2021?
Basic Tax Due - Income Tax 1,000,000.00
Add: 25% surcharge for late payment 250,000.00
12% Deficiency interest from 4. 16. 2019 to 6.30.2020 (442 days) 145,315.07 395,315.07
Total Amount Due, June 30, 2020 1,395,315.07
Add: 12% Delinquency Interest from 7.01.2020 to 2.10.2021 (225 days)
based on total amount due of P1,395,315.07 as of 6.30.2020) 103,215.09
Total Amount Due, February 10, 2021 1,498,530.16
Case 2: Transitory Provision

In cases where the tax liability/ies or deficiency taxes became due before the effectivity of the TRAIN Law on January 1, 2018, and
where the full payment thereof will only be accomplished after the said effectivity date, the interest rates shall be applied as follows:
Period Applicable Interest Type and Rate
For the period up to December 31, 2017 Deficiency and / or delinquency interest at 20%
For the period January 1, 2018 until full payment of the tax Deficiency and/or delinquency interest at 12%.
liability
The double imposition of both deficiency and delinquency interest under Section 249 prior to its amendment will still apply in so for
as the period between the date prescribed for payment until December 31, 2017.
A Company has been assessed deficiency income tax of P1,000,000, exclusive of interest and surcharge, fro taxable year 2015. The
tax liability has remained unpaid despite the lapse of June 30, 2017, the deadline for payment stated in the notice and demand
issued by the Commissioner. Payment was made by the taxpayer only on February 10, 2018.
Required: How much is the total amount due on February 10, 2018?

Basic Tax Due - Income Tax 1,000,000.00
Add: 25% surcharge for late payment 250,000.00
20% Deficiency interest from 4. 16. 2016 to 6.30.2017 (441 days) 241,643.84 491,643.84
Total Amount Due, June 30, 2017 1,491,643.84
Add: 20% Deficiency Interest from July 1, 2017 to December 31, 2017
(184 days based on basic tax of P1,000,000) 100,821.92
20% Deliquency Interest from July 1, 2017 to December 31, 2017
(184 days based on total amount due of P1,491,643.84 as of June 30, 2017) 150,390.39
12% Deliquency interest from January 1, 2018 to February 10, 2018 (41 days
based on total amount due of P1,491,643.84 as of June 30, 2017) 20,106.54 271,318.85
Total Amount Due on February 10, 2018 1,762,962.69
TAXATION UNDER THE LOCAL GOVERNMENT CODE
Principle of Preemption
Where the National government elects to tax a particular area, it impliedly withholds from the local government the delegated power
to tax the same field. This doctrine principally rests on the intention of Congress. Examples are taxes levied under the NIRC, Tariffs
and Customs Code or special laws cannot be taxed by LGU.
The LGC of 1991 governs the tax power as well as other revenue raising powers exercised by:
1. Provinces
2. Cities
3. Municipalities
4. Barangays
What are Taxes that the LGU may levy?

Provinces Municipalities Cities Barangays
Tax on transfer of real Tax on business : (Business The city may levy taxes same Tax on stores or retailers with
property license or permit) as provinces fixed business establishments
Tax on printing and Manufacturers The city may levy taxes same The rate shall not exceed 1%
publications as municipality of gross sales
Franchise tax Wholesalers Service fees for regulation or
use of barangay properties
Tax on sand, gravel and other Exporters Barangay clearance
quarry resources extracted
from public lands
Professional tax Retailers Cockfightings
Amusement tax Contractors Recreation with admission fees
Toll fees Toll fees Toll fees Toll fees
Community tax Community tax Community tax
Tax on trucks or delivery vans Bank and other financial Billboars and signboards
institutions
(Taxing powers of provinces) The tax base and tax rates are shown in the following matrix:
Taxes imposable by province Tax Base Tax Rate
1. Transfer tax Selling price or market value
Not more than ½%
(Higher)
2. Tax on business of printing and Not more than ½%;
publication Annual gross receipts for the
preceding year On newly started business, not exceeding
1/20 of 1% of capital investment
3. Franchise tax Not more than ½%;
Annual gross receipts for the
preceding year On newly started business, not exceeding
1/20 of 1% of capital investment
4. Sand and gravel tax Fair market value per cubic meter Not more than 10%
5. Professional tax Not exceeding P300
6. Amusement tax on admission Gross receipts from admission fees Amended RA 9640 Not more than 10%
7. Fixed tax on delivery vehicles of
manufacturers, producers, wholesalers, Not exceeding P500 per delivery vehicle
dealers or retailer in certain products
What is the local tax rate on business (Business permit)?

Manufacturers Graduated annual fixed rate, however, when gross sales or receipts exceeds P6.5million the rate is
37.5% of 1%.
Wholesalers Graduated annual fixed rate, however, when gross sales or receipts exceed P2million the rate is 50%
of 1%.
Exporters Not exceeding ½ of the rates imposed on Manufacturers and Wholesalers.
Retailers 2% gross sales do not exceed P400,000; 1% if it exceeds P400,000.
Contractors Graduated annual fixed rate, however, if gross receipts exceed P12million the rate is 50% of 1%.
Banks and other 50% of 1% on their gross receipts
financial institution
Peddlers P50 per peddler
Others As provided by Sanggunian provided it shall not exceed 2% of gross receipts.
Local Government Tax Collecting Units

The persons/offices involved in the legislation and collection of local taxes are presented in the following matrix:

LGU Real Property Tax Other Local Taxes Community Tax
Province Governor Governor Not Authorized
SangguniangPanlalawigan SangguniangPanlalawigan
Provincial Assessor Provincial Treasurer
Provincial Treasurer
City/Municipality Mayor Mayor Mayor
SangguniangPanlungsod/Bayan SangguniangPanlungsod/Bayan SangguniangPanlungsod/Bayan
City/Municipal Assessor City/Municipal Treasurer City/Municipal Treasurer
City/Municipal Treasurer
Barangay Not authorized but maybe Sangguniang Barangay Not authorized but maybe
deputized Barangay Treasurer deputized
Elements to consider SITUS of Business Tax

Scenario Jurisdiction is Vested With:
If there is a sale outlet or branch LGU where outlet is situated
If there is no sales outlet or branch LGU where principal office is situated
Manufacturer principal office same as factory outlet or plant LGU where the manufacturers principal office
Manufacturer office different from factory outlet or plant 30% in manufacturer’s principal place of office
70% in the factory principal place of office
Time of payment Within 20 days of January or of each subsequent quarter

January 20 First quarter
April 20 Second quarter
July 20 Third quarter
October 20 Fourth quarter
It may be extended by the Sanggunian for justifiable reasons, without surcharge or

penalties.
Extension cannot exceed 6 months (Sec. 167, LGC)

Penalties on Unpaid Taxes, Fees Penalties for unpaid taxes, fees or charges:
or Charges 1. Surcharge of 25% on taxes, fees, or charges not paid on time
2. Interest not exceeding 2% per month of the unpaid taxes, fees or charges including
surcharges, until the amount is full paid. In no case shall the total interest exceed 36
months (Sec. 168, LGC).
Nature of real property taxes

The real property taxes are classified as:
Property taxes - The taxes are imposed on the properties.
Direct taxes - The burden of the taxes could not be shifted to other person.
Local taxes - The levy, assessment and collection are made by local government units.
Revenue taxes - Generally, the objective of the imposition is to raise revenue; in some cases, however, the purpose is
regulatory such as in Idle Land Tax where the imposition is being made to penalize property owners who do not make their
property productively.
Ad valorem taxes - The taxes are based on the value of the property, i.e. either assessor's value of assessed value.
Proportional taxes - The real property tax on land is based on a flat tax rate.
Fundamental principles
• The appraisal, assessment, levy and collection of real property tax shall be guided by the following fundamental principles:
• Real property shall be appraised at its current and fair market value;
• Real property shall be classified for assessment purposes on the basis of its actual use;
• Real property shall be assessed on the basis of a uniform classification within each local government unit;
• The appraisal, assessment, levy and collection of real property tax shall not be let to any private person; and
• The appraisal and assessment of real property shall be equitable.
What are the procedures in computing real property tax?

1. Declaration of real property by owner and local assessor upon ocular inspection
2. Listing of real property in the assessment rolls
3. Assessors determine the FMV (Appraisal of the real property)
4. Determination of Assessed Value or Tax Base:
4.1 Take the schedule of FMV
4.2 Assessed value = FMV x Assessment Level
4.3 Real Property Tax = Assessed Value x Tax Rate**
5. Payment and Collection of Real Property Tax.
** Tax Rate
Local Government Unit Rates of Basic RPT
1. Province Not exceeding 1% of the assessed value
2. City Not exceeding 2% of the assessed value
3. Municipality within Metro Manila Not exceeding 2% of the assessed value
What other real property tax may be imposed?

1. Basic real property tax
2. 1% additional real estate tax to finance Special Education Fund
3. 5% additional ad valorem on Idle Lands
4. Special levy or special assessments on lands specially benefited by public works
5. Payment and collection of real property tax.
Collection of real property tax

1. Date of accrual of tax the real property tax for any year shall accrue on the first (1st) day of January.

2. Payment of real property taxes in installment – Except the special levy, the payment of which shall be governed by the
ordinance, the owner of the real property or the person having legal interest therein may pay the basic real property tax and the
additional tax for the Special Education Fund (SEF) thereon without interest in four (4) equal installments as follows:
1st installment On or before March 31
2nd installment On or before June 30
3rd installment On or before September 30
4th installment On or before December 31
3. Application of payment of real property tax – The payments shall first be applied to prior years’ delinquencies, interests and
penalties, if a any, and only after said delinquencies are settled may tax payments be credited for the current period.
4. Tax discount for advanced prompt payment - If the basic real property tax and the additional tax accruing to the SEF are
paid in advance in accordance with the prescribed schedule of payment are provided above, a discount of not exceeding twenty
percent (20%) of the annual tax due may be granted to the taxpayer.
5. Interests on unpaid real property tax - In case of failure to pay the real property tax (basic and special; levies) upon the
expiration of the periods for payment, or when due, as the case maybe , shall subject the taxpayer to the payment of interest at the
rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid,
but not to exceed thirty-six (36) months.
PREFERENTIAL TAXATION
I. PWD and Senior Citizen

Person with Disability Senior Citizen
Goods and services for their 20% discount given, may be claimed as a 20% discount given, may be claimed as a
exclusive use and enjoyment or deduction deduction
availment
Tax incentives for qualified Additional deduction of 25% of total salaries Additional deduction of 15% of total salaries
establishments selling of goods paid to disabled employees paid to senior citizen employees
and services
Private entities that improve or Additional deduction of 50% of direct cost of Not applicable
modify their physical facilities modification of physical facilities
Water and electricity consumption Not Applicable Public utilities such as water and electricity who
gave 5% discount may claim such as
deduction
Electric consumption not exceeding 100 kw hrs

and water consumption not exceeding 30 m3.
Monthly utilization of water and electricity

provided that meter bases are under the name
of the senior citizen
Notes:
Senior Citizens Center and residential
care/group homes, at least fifty (50%) per
cent discount on the consumption by a
Senior Citizens Center and residential
care/group homes (electricity, water and
telephone)
II. Special Economic Zone

ECOZONES or “Special Economic Zones” (SEZ)
This refer to selected areas with highly developed or which have the potential to be developed into agri-industrial, industrial,
tourist, recreational, commercial, banking, investment and financial centers whose meters and bounds are fixed or delimited by
Presidential Proclamations.
An ECOZONE may contain any or all of the following:

1. Industrial estates (IEs)
2. Export processing zones (EPZ)
3. Free trade zones and tourist
4. Recreational centers
Industrial Refers to a tract of land subdivided and developed according to a comprehensive plan under a unified
Estate (IE) continuous management and with provisions for basic infrastructure and utilities, with or without pre-built
standard factory buildings and community facilities for the use of a community of industries.
Export Refers to a specialized industrial estate located physically and / or administratively outside the customs
Processing territory and predominantly oriented to export production. Enterprises located in export processing zones are
Zone (EPZ) allowed to import capital equipment and raw materials free from duties, taxes and other import restrictions.
Free Trade Refers to an isolated policed area adjacent to a port of entry (such as a seaport) and / or airport where
Zone imported goods may be unloaded for immediate transhipment or stored, repacked, sorted, mixed, or otherwise
manipulated. However, movement of these imported goods from the free-trade area to a non-free trade area in
the country shall be subject to customs and internal revenue rules and regulations.
Tourist / Refers to an area within the ECOZONE where tourist accommodation facilities such as hotels, apartelles, tourist
Recreational inns, pension houses, resorts, sports and / or recreational facilities are provided to render tourism services for
Center both local and foreign tourists, travellers and investors in accordance with the guidelines issued by the PEZA.
.

Fiscal incentives
PEZA offers both fiscal and non-fiscal incentives as well as ready-to-occupy business locations in world-class economic zones and IT
parks or buildings.
Fiscal and non-fiscal incentives are available to PEZA-registered Economic Zone Export as may be determined by PEZA.
The following are the fiscal incentives:

A. Income Tax Holiday (ITH)- 100% exemption from corporate income tax
1. Four (4) years ITH for Non-pioneer project
2. Six (6) years ITH for Pioneer Project, ITH Extension years may be granted if project complies with the following criteria,
(one criterion is equivalent to one ITH extension year, provided that the total ITH entitlement period shall not exceed
eight (8) years.
a. The average net foreign exchange earnings of the project for the first three (3) years of operations is at least
US$500,000 and
b. The capital equipment to labor ratio of the project does not exceed US$10,000 to one (1) year for the year immediately
preceding the ITH extension year applied for.
c. The average cost of indigenous raw materials used in the manufacture of the registered product is at least fifty percent
(50%) of the total cost of raw materials for the preceding years prior to the ITH extension year.
1. Three (3) years ITH for expansion project (ITH applies to incremental sales)
2. Upon expiry of the Income Tax Holiday: 5% Special Tax on Gross Income and exemption from all national and local taxes.
Gross Income refers to gross sales or gross revenues derived from the registered activity, net of sales discounts, sales
returns and allowances and minus cost of sales or direct costs but before any deduction is made for administrative expenses
or incidental losses during a given taxable period.
Formula for gross income:
Gross Sales/gross revenue P xx
Less: Sales discounts P xx
Sales returns and allowance xx (xx)
Net Sales xx
Less: Cost of Sales/direct costs ( xx)
Gross Income xx
B. Tax and duty free importation of raw materials, capital equipment, machineries and spare parts.
C. Exemption from wharfage dues and export tax, impost or fees.
D. VAT zero-rating of local purchases subject to compliance with BIR and PEZA requirements
E. Exemption from payment of any and all local government imposts, fees, licenses or taxes.
However, while Income Tax Holiday, no exemption from real estate tax, except machineries installed and operated in the economic
zone for manufacturing, processing or for industrial purposes shall be exempt from real estate taxes for the first three (3) years of
operation of such machineries.
Production equipment not attached to real estate shall be exempt from real property taxes.
F. Exemption from expanded withholding tax
III. BOI
A. What are preferred areas of Investment under the Board of Investment?

1. Business Process Outsourcing
2. Electronics Industry
3. Renewable Energy
4. Shipbuilding
B. What are tax incentives given to BOI registered enterprises?

1. Income tax holiday
2. Exemption from taxes and duties on imported spare parts
3. Exemption from wharfage dues and export tax, duty, impost and fees
4. Reduction of the rates of duty on capital equipment, spare parts and accessories by Virtue of EO 528
5. Tax exemption on breeding stocks and genetic materials
6. Tax credits
7. Additional deductions from taxable income
Additional Deduction for For the first five (5) years from registration, a registered enterprise shall be allowed an additional
Labor Expense deduction from the taxable income of fifty percent (50%) of the wages corresponding to the increment
in the number of direct labor for skilled and unskilled workers if the project meets the prescribed ratio
of capital equipment to number of workers set by the Board: Provided, That this additional deduction
shall be doubled if the activity is located in less developed areas as defined in Art. 40.
IV. Micro Business Enterprises
A barangay Micro-Business Enterprises (BMBE) refers to any business activity or enterprise engaged in the production, processing or
manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those
arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, shall
not be more than Three Million (P3M) Pesos.
These assets include those arising from loans but not the land on which the plant and equipment are located.
‘’Service’’ shall exclude those rendered by any one, who is duly licensed with the government after having passed a government
licensure examination, in connection with the exercise of one’s profession (e.g Accountant, Lawyer, Physician, Engineer, Architect,
Real Estate Consultant, etc.)
Registered BMBEs can avail of the following incentives:

1. Income tax exemption from income arising from the operations of the enterprise;
2. Exemption from the coverage of the Minimum Wage Law (BMBE employees will still receive the same social security and health
care benefits as other employees);
3. Priority to a special credit window set up specifically for the financing requirements of BMBEs; and
4. Technology transfer, production and management training, marketing assistance programs for BMBE beneficiaries.
The LGUs are also encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt the BMBEs from
local taxes, fees and charges.
V. Double Taxation Agreement
What is Double Taxation Agreements?
If a non-resident has income source in the Philippines and is a resident in another country, it may be liable to pay tax in both
countries under their tax laws. To avoid “Double Taxation” (DT) in this situation, the Philippines has negotiated DT treaties with 39
countries. A non-resident in another country with which the Philippines has a DT treaty may be able to claim exemption or partial
relief from the Philippines tax on certain type of income from Philippine sources.
What are types of Philippine Income May be subject of preferential tax rate or tax exempt?
a. Preferential tax rates : Dividends, Interest, Royalties and Shipping and Air Transport.
b. Tax exempt: Depending on the provisions of the DTA, you may claim the benefits of an exemption from the tax on income for
personal services, teachers, researchers, artistes, athletes, students, trainees, directors fees, pensions, government service, gains
from sales of shares/alienation of property and independent personal services not rendered more than 183 days.
Where to apply tax treaty relief application?
All tax treaty relief application shall only be submitted to and received by the International Tax Affairs Division (ITAD) of the BIR.
A non-resident individual or corporation must first secure Tax Identification Number for TTRA from Revenue District Office No. 39
before filing the TTRA in ITAD.
TARIFF AND CUSTOMS CODE
TARIFF AND CUSTOMS TAXATION

1. Tariff and customs laws – include:
a. Provisions of the Tariff and Customs code (TCC) of the Philippines and regulations issued pursuant there to; and
b. Other laws and regulations subject to the enforcement by the Bureau of Customs (BOC) or otherwise within its
jurisdiction
Note: Tariff means taxes, and Customs refer to the required procedure for importation to and exportation from the
Philippines of products, commodities, or articles.
2. Functions of the BOC, in general:

a. Assessment and collection of the lawful revenues from imported articles and all other dues, fees, charges, fines, and
penalties under the tariff and customs laws;
b. Prevention and suppression of smuggling and other frauds upon the customs;
c. Supervision and control over the entrance and clearance of vessels and aircrafts engaged in foreign commerce;
d. Enforcement of tariff and customs laws and all other laws, rules and regulations relating to the tariff and customs
administration;
e. Supervision and control over the handling of foreign mails arriving in the Philippines, for the purpose of the collection of
the lawful duty on the datable articles thus imported and the prevention of smuggling through the medium of such
mails;
f. Supervision and control of all import and export cargoes, landed or stored in piers, airports, terminal facilities, including
container yards and freight stations, for the protection of government revenue; and
g. Exercise exclusive original jurisdiction over seizure and forfeiture cases under the tariff and customs laws.
3. Functions of the BOC under the Administrative Code 1987:

a. Collect customs duties, taxes and the corresponding fees, charges and penalties;
b. Account for all customs revenues collected.
c. Exercise police authority for the enforcement of tariff and customs laws;
d. Prevent and suppress smuggling, pilferage and all other economic frauds within all ports of entry;
e. Supervise and control exports, imports, foreign mails, and the clearance of vessels and aircrafts in all ports of entry;
f. Administer all legal requirements that are appropriate;
g. Prevent and prosecute smuggling and other illegal activities in all ports under its jurisdiction;
h. Exercise supervision and control over its constituent units; and
i. Perform such other functions as may be provided by law.
4. Territorial jurisdiction of the BOC.

The right of supervision and police authority of the BOC covers all seas, coasts, ports, airports, harbors, bays, rivers, and
other inland waters (whether navigable or not from the sea) within the jurisdiction of the Philippines.
5. Tariff (Tarifa) defined.

a. Customs duties, toll or tribute payable upon merchandise to the national government; or
b. Rate of customs; or
c. List of articles liable to duties.
6. Customs duties, defined.

a. Taxes on the importation and exportation of commodities; or
b. Tariff or tax assessed upon merchandise from, or exported to, a foreign country.
Tariff and customs are actually synonyms with one another because they both refer to the taxes imposed on imported or
exported wares, articles, or merchandise.
7. Kinds of tariffs or customs duties;

a. Regular tariffs or customs duties. These are the taxes that are imposed or assessed upon merchandise from, or
exported to, a foreign country for the purpose of raising revenues.
High tariffs on exports may also serve to discourage the exportation of certain articles (usually raw materials) in order to
promote their manufacture into finished products.
b. Special tariffs or custom duties. These are additional import duties imposed on specific kinds of imported articles
under certain conditions.
They are imposed for the protection of consumers and manufacturers as well as Philippine products from undue competition
posed by foreign made products.
8. Kinds of regular tariffs or custom duties:

a. Ad valorem custom duties. These are computed on the basis of transaction value of the imported article.
b. Specific custom duties. These are computed on the basis of a unit of measure, such as per kilogram, per piece, per
dozen, per liter, etc.
c. Mixed or compound customs duties. These are imposed both ad valorem and specific customs duties, e.g., 10% ad
valorem plus P100 per piece.
9. Kinds of special Tariffs or customs duties:

a. Anti-dumping duty. These is a special imposed on the importation of a product, commodity, or article of commerce
into the Philippines at less than its normal value when destined for domestic consumption in the exporting country,
which importation is causing or is threatening to cause material injury to a domestic industry, or materially retards the
establishment of a domestic industry producing the like product. The Anti-dumping duty is the difference between the
export price and the normal value of such product, commodity, or article.
The imposing authority is the Secretary of Trade and Industry in the case of non-agricultural product, article; or the
Secretary of agriculture, in the case of agricultural product, commodity, or article, after formal investigation and
affirmative finding of the Tariff Commission.
b. Countervailing duty. This is an additional customs duty imposed on any product, commodity, or article of commerce
which is granted directly or indirectly by the government in the country of origin or exportation, any kind ir form of
specific subsidy upon the production, manufacture or exportation of such product, commodity, or article has caused or
Threatens to cause material injury to a domestic industry or has materially retarded the growth or prevents the
establishment of a domestic industry.
The duty shall be equivalent to the subsidy, bounty, or subvention. The imposing authority is the Secretary of Trade
and Industry in the case of non-agricultural product, commodity, or article; or the Secretary of Agriculture, in the case
of agricultural product, commodity, or article, after formal investigation and affirmative finding of the Tariff
Commission.
c. Marking duty. This is an additional customs duty imposed on foreign articles (or its container if the article itself cannot
be marked) not marked in any official language of the Philippines in a conspicuous place as legibly, indelibly and
permanently in such manner as to indicate to an ultimate purchaser in the Philippines the name of the country of origin.
The duty shall be 5% ad valorem of the articles. The imposing authority is the commissioner of the customs.
d. Discriminating duty. This is a new or additional customs duty imposed upon articles wholly or impart of the growth or
product of, imported in a vessel of any foreign country which: (1) imposes, directly or indirectly, upon the disposition or
transportation in transit through or re-exportation from such country of any article wholly or in part of the growth or
product in the Philippines any unreasonable charge, exaction, regulation, or limitation which is not equally enforced
upon like articles of every foreign country; (2) discriminates against the commerce of the Philippines, directly or
indirectly, by law or administrative regulation or practice, by or in respect to any customs, tonnage, or port duty, fee,
charge, exaction, classification, regulation, condition, restriction or prohibited in such manner as to place the commerce
of any foreign country.
The duty shall not exceed 100% ad valorem of the article. The imposing authority is the President of the Philippines.
Total Amount Due to the Government
FOB/FCA value xxx
Add: Dutiable insurance Xxx
Add: Dutiable Freight Xxx
Dutiable Value (Foreign Currency) Xxx
Multiply by : Exchange rate
Dutiable Value (Php) Xxx
Multiply by: Rate of Duty (%)
Customs Duty Xxx
Add the following:
Brokerage fee (if applicable) Xxx
Customs Documentary Stamp P30
Excise tax, if any Xxx
Total Landed Cost (TLC) Xxx
Multiply by: VAT rate 12%
Value Added Tax Xxx
Summary:
Customs Duty Xxx
Value Added Tax Xxx
Excise Tax, if any Xxx
Customs Documentary Stamp P15
Total Amount Due to the Government Xxx

EXCISE TAX
BASIC CONCEPT:
• Excise Tax is a tax on the production, sale or consumption of a commodity in a country.
APPLICABILITY:
• On goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition; and
• On goods imported.
TYPES OF EXCISE TAX:
• Specific Tax – refers to the excise tax imposed which is based on weight or volume capacity or any other physical unit of
measurement
• Ad Valorem Tax – refers to the excise tax which is based on selling price or other specified value of the goods/articles
MANNER OF COMPUTATION:
• Specific Tax = No. of Units/other measurements x Specific Tax Rate
• Ad Valorem Tax = No. of Units/other measurements x Selling Price of any specific value per unit x Ad Valorem Tax Rate
MAJOR CLASSIFICATION OF EXCISABLE ARTICLES AND RELATED CODAL SECTION:
1. Alcohol Products (Sections 141-143)
a. Distilled Spirits (Section 141)
b. Wines (Section 142)
c. Fermented Liquors (Section 143)
2. Tobacco Products (Sections 144-146)

a. Tobacco Products (Section 144)
b. Cigars & Cigarettes (Section 145)
c. Inspection Fee (Section 146)
3. Petroleum Products (Section 148)
4. Miscellaneous Articles (Section 149-150)

a. Automobiles (Section 149)
b. Non-essential Goods (Section 150)
c. Non-essential Service (Section 150-A) - RA 10963 [TRAIN Law))
d. Sweetened Beverages (Section 150-B)-(RA 10963 [TRAIN Law])
5. Mineral Products (Sections 151)
PERSONS LIABLE TO EXCISE TAX:

In General:
a. On Domestic or Local Articles
• Manufacturer
• Producer
• Owner or person having possession of articles removed from the place of production without the payment
of the tax
b. On Imported Articles
• Importer
• Owner
• Person who is found in possession of articles which are exempt from excise taxes other than those legally
entitled to exemption
Others:
On Indigenous Petroleum
• Local Sale, Barter or Transfer
o First buyer, purchaser or transferee
• Exportation
o Owner, lessee, concessionaire or operator of the mining claim
TIME OF PAYMENT:
In General
• On domestic products
o Before removal from the place of production
• On imported products
o Before release from the customs' custody
NON-ESSENTIAL GOODS
• Twenty percent (20%) based on the wholesale price or the value of importation used by the Bureau of Customs in
determining Tariff and Customs Duties, net of Excise and Value-Added taxes
SWEETENED BEVERAGES (RA 10963-TRAIN Law)

PRODUCT TAX RATE
Per Liter of Volume Capacity
Using purely caloric sweeteners, and purely non-caloric sweeteners, or a mix of caloric and non- Php6.00
caloric sweeteners
Using purely high fructose corn syrup or in combination with any caloric or non-caloric sweetener Php12.00
Using purely coconut sap sugar and purely steviol glycosides Exempt
INVASIVE COSMETIC PROCEDURES - (RA 10963-TRAIN Law)

SERVICE Tax Rate
Performance of Services on Invasive Cosmetic Procedures 5%
DOCUMENTARY STAMP TAX

The original issue of shares P2 on each P200 of the par value of shares of stock
If without par value, based on the actual consideration

Sales, agreement to sell, deliveries or P1.50 on each P200 of the par value.
transfer of shares of stock
If without par value, the DST shall be 50% of the DST paid upon the original issue of
stock.
Bonds, debentures, certificate of stock or Same as original issue of shares (P2/200)
indebtedness issued in foreign country
Certificates of profits or interest in P1 on each P200
property or accumulations
Bank checks, drafts, certificates of deposit P3
not bearing interest
Debt instruments P1.50 on each P200
Bills of exchange P0.60 on each P200
Acceptance of bills and other bills of P.60 on each P200
exchange
Bills of exchange P.60 on each P200
Insurance does not exceed P100,000 Exempt
Insurance from P100,000 – P300,000 P20
Insurance from P750,000 - P1,000,000 P150
Insurance more than P1,000,000 P200
Annuities P1 on each P200
On pre-needs plans (P0.40/P200)

Certificates P30
Warehouse receipts P30
No tax in any one calendar month covering property the value of which does not
exceed P200
Jai-alai, horse race, tickets, lotto P0.20 and if the cost of ticket exceed P1,000 an additional of P0.20 on every P1
Bills of lading P2 if the value of such goods >P100 – P1,000
P20 >P1,000
Proxy P30
Power of attorney P10
Leases and other hiring arrangement P6 for the first P2,000 or fractional part thereof
Additional P2 for every P1,000 in excess of P2,000

Mortgage, pledge, deed of trust P40 if the amount secured does not exceed P5,000.
Additional P20 for every P5,000 in excess of P5,000

Real property P15 for every P1,000
Charter parties and similar instruments (a) If the registered gross tonnage of the ship, vessel or streamer foes not exceed
one thousand (1,000) tons,and the duration of the charter or contract does
not exceed six (6) months, One thousand pesos (P1,000); and for each
month or fraction of a month in excess of six (6) months, an
additional tax of Fifty pesos (P100) shall be paid.
(b) If the registered gross tonnage exceed one thousand (1,000) tons and does
not exceed then thousand (10,000) tons, and the duration of the charter or
contract does not exceed six (6) months, Two thousand pesos (P2, 000);
and for each month or fraction of a month in excess of six (6) months,
an additional tax of Two hundred pesos (P200) shall be paid.
(c) If the registered gross tonnage exceeds ten thousand (10,000) tons and the
duration of the charter or contract does not exceed six (6) months, Three
thousand pesos (P3, 000); and for each month or fraction of a
month in excess of six (6) months, an additional tax of Three hundred
pesos (P300) shall be paid.
Effects of failure to stamp taxable documents
Documents not to be recorded An instrument, document or paper which is required by law to be stamped and which has
been signed, issued, accepted or transferred without being duly stamped, shall not be
recorded.
Documents not admitted or used in An instrument, document or paper or any copy thereof or any record of transfer of the
evidence in any court same which is required by law to be stamped shall not be admitted or used in evidence in
any court until the requisite stamp or stamps arc affixed thereto and cancelled.
No jurat or acknowledgment shall No notary public or other office authorized to administer oaths shall add this jurat or
be added acknowledgment to any document subject to documentary stamp tax unless the proper
documentary stamps are affixed thereto and cancelled.
Note: Does the failure to affix or stamp a document or paper affect the validity of the transaction?
No, the failure to affix or stamp a document or paper does not render the transaction or contract invalid. The document or paper
shall not be recorded nor shall any copy be admitted or used in evidence in any court until the requisite stamp shall have been
affixed and cancelled. The failure to affix and cancel the stamp shall prohibit any notary public from adding his jurat or
acknowledgment to any document subject to the documentary stamp tax.

INCOME TAXATION
The following table summarizes the situs of taxable income and the allowable of personal exemptions to individual taxpayers:
Individual taxpayer Income within Income without
1. Resident citizen √ √
2. Resident alien √ x
More than one year (stayed in the Phils)
3. Nonresident citizen √ x
At least 183 days (outside the Phils) (365 days ÷ 2 )
4. Nonresident alien (ETB) √ x
More than 180 days (stayed in the Phils)
5. Nonresident alien not engaged in business(NETB) √ x
180 days or less (stayed in the Phils) (360 days ÷ 2 )
GENERAL PRINCIPLES: WHO ARE TAXABLE?
Domestic Corporation – a corporation created or organized in the Philippines under its laws
Resident Foreign Corporation – a foreign corporation engaged in trade or business within the Philippines; and
Non-resident Foreign Corporation – a foreign corporation not engaged in trade or business within the Philippines.
Individuals who are engaged in trade or business.
GENERAL PRINCIPLES:
Income Subject to Income Tax (by Corporate Taxpayers)
Taxable Income
Domestic Corporation Worldwide
Resident Foreign Corporation Income from within the Philippines
Non-resident Foreign Corporation Income from within the Philippines
ESTATE TAX
Taxability of the estate in accordance to the classification of a decedent and type of property
Classification of Decedent Properties located in the Philippines Properties located in a Foreign Country
Tangible Tangible Intangible
Real Real
personal Intangible personal properties personal personal
properties properties
properties properties properties
Resident Citizen √ √ √ √ √ √
Non-Resident Citizen √ √ √ √ √ √
Resident Alien √ √ √ √ √ √
Non-Resident Alien √ √ √ (no X * (with X X X
reciprocity) reciprocity)
*What intangible properties are considered as situated within the Philippines?

1. Franchise which must be exercisable in the Philippines;
2. Shares, obligations or bonds issued by domestic corporations;
3. Shares, obligations or bonds issued by any foreign corporation, 85% of business of which is in the Philippines;
4. Shares, obligations or bonds issued by any foreign corporation, if such shares, obligations or bonds have acquired
business in the Philippines;
5. Shares or rights in any partnership, business or industry established in the Philippines.
***Special Deductions:
Citizen/Resident decedent NRA decedent
Standard deduction P5,000,000 P500,000
Family home P10,000,000 (maximum) Not Applicable
Benefits under RA 4917 As provided Not Applicable
B. ESTATE TAX RATES
There shall be levied, assessed, collected and paid upon the transfer of the net estate of every decedent, whether resident or non-
resident of the Philippines, a tax at the rate of six percent 6% based on the value of such net estate.

DONOR’S TAX
Formal Requisites of a Donation

FORMAL REQUISITES
PERSONAL PROPERTY REAL PROPERTY
Amount of donation P5,000 or less More than P5,000 Regardless of amount
Form of donation Oral or in writing In writing otherwise VOID In public instrument otherwise VOID
The acceptance may be made in the same

instrument (deed of donation) or in a separate
public instrument.
If the acceptance is made in a separate

instrument, the donor shall be notified in
authentic form.
Additional Oral donation requires None None
Requirement simultaneous delivery
Classification of Donors
1. Residents and Citizen – taxable globally
2. Non-resident Alien:
a. With reciprocity
b. Without reciprocity
Classification of Properties located in the Philippines Properties located in a Foreign Country
Donor
Tangible Tangible Intangible

Real Intangible personal Real
personal personal personal
Resident Citizen √ √ √ √ √ √
Non-Resident √ √ √ √ √ √
Citizen
Resident Alien √ √ √ √ √ √
Non-Resident √ √ √ (No X **(With X X X

reciprocity) reciprocity)
Alien
Donor Tax Rates

The donor’s tax is fixed at 6% based on annual total gifts exceeding ₱250,000 (exempt gift), regardless of whether the donee is
a stranger or not.
However, the donation of real property is now subject to Documentary Stamp Tax of P15 for every P1,000.

Tax

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LEARNING ADVANCEMENT REVIEW CENTER

RM 413 DONA AMPARO BUILDING ESPANA BOULEVARD CORNER G. TOLENTINO ST.

TAXATION GARCIA/ CO/ WONG

Income Tax Options on Business Income or Income from Profession

Conditions to elect 8% GRT

What to do when gross sales/receipts exceed P3,000,000 during the year?

Rules in claiming Optional Standard Deduction (OSD)

ITR Filing and Payment

Installment Payment of tax due in excess of P2,000

April 15 1st installment

3% Percentage Tax Filing and Payment

VAT Filing and Payment

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Withholding Tax Filing/Remittance

Capital Gains Tax a. Shares of stock

Withholding Tax on Non-EFPS Filing/Payment

RES/CIT NRA-ETB NRA-NETB DOM RFC NRFC

FINAL TAX RATES ON PASSIVE INCOME

Interest in any currency

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RES/CIT NRA-ETB NRA-NETB DOM RFC NRFC

PCSO and/or Lotto

• Prizes and awards made primarily in recognition of religious, charitable,

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RES/CIT NRA-ETB NRA-NETB DOM RFC NRFC

Sale, barter, transfer

OTHER PERCENTAGE TAXES (SUMMARIZED)

Percentage Tax Tax Basis Tax Due Dates

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• Over 25% but not over 33 1/3% 2%

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Claim for refund Assessment Final

2 years after payment

Admin & Judicial

A Protest w/in 30 days

CIR inaction 180 CIR decision after

End Yes Favorable No Favorable

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The CTA shall exercise:

The CTA shall exercise exclusive appellate jurisdiction to review by appeal:

h. Jurisdiction over cases involving criminal offenses

The CTA shall exercise jurisdiction over tax collection cases:

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2. The court of tax appeals is composing of:

I. Adverse decision against Julia appeal to Court of Tax Appeal.

a. I and II b. III and IV c. I and IV d. I, II, III, and IV

PART VI (RR 21 -2018)

Case 2: Transitory Provision

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TAXATION UNDER THE LOCAL GOVERNMENT CODE

What are Taxes that the LGU may levy?

What is the local tax rate on business (Business permit)?

Local Government Tax Collecting Units

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Elements to consider SITUS of Business Tax

Time of payment Within 20 days of January or of each subsequent quarter

It may be extended by the Sanggunian for justifiable reasons, without surcharge or

Extension cannot exceed 6 months (Sec. 167, LGC)

Nature of real property taxes

What are the procedures in computing real property tax?

What other real property tax may be imposed?

Collection of real property tax

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