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CONFLICT
GOVERNMENT --------------- PEOPLE
REMEDIES
- Computation of Taxes
- Filing of Returns
- Assessment and
Collection
Tax
NATIONAL INTERNAL REVENUE TAXES
Tabular
Gratuitous Onerous
(Individual)
Mortis
Corporate
Causa VAT
CGT
Excise
Income Taxation: Individual
Gross Income Computation
Classification Components of Gross Income Applicable Tax Rates
of Individuals
Resident and Compensation, Business, Passive Incomes not Tabular
Citizen subjected to FWT and Capital Gains not Final taxes
subjected to CGT, wherever may be derived Capital Gains Taxes
Non-resident Same items above however only those Tabular
Citizen derived within. Moreover, interest income Final taxes
from FCDS shall be exempted from tax. Capital Gains Taxes
Resident Alien Same above, except only those derived within Tabular
the Philippines. Final taxes
Capital Gains Taxes
Non-resident Same items above however only those Tabular
Alien ETB derived within. Moreover, interest income Final taxes
from FCDS shall be exempted from tax. Capital Gains Taxes
Non-resident All incomes derived within shall be subjected 25% of the Gross
Alien NETB to one tax rate only, except those capital Income
gains. Capital Gains taxes
Income Taxation: Individual
Exclusions from Gross Income
Holiday pay, Overtime pay, Night shift differential, and Hazard pay
(HONsHa) earned by MWE
13th Month Pay, Bonuses and Other benefits (de minimis) not
exceeding PhP 82,000.
De Minimis not exceeding their statutory limits
Proceeds of life insurance paid to the heirs upon death of the
insured
Retirement benefits under RA 7641
Separation pay paid to the employee for causes beyond the control
of said employee
SSS, GSIS, PhilHealth and Pag-IbIG contributions and union dues.
Etc.
Income Taxation: Individual
Allowable Deductions
General Rule: Expenses to be deductible should be
ORDINARY and NECESSARY for the business, and
must be SUBSTANTIATED.
Exception: Optional Standard deduction may be
claimed without substantiation. Take note:
1. RESIDENTS (RC and RA) and CITIZENS (RC and
NRC) can claim OSD. NRAETB and NRANETB
cannot claim OSD.
2. DOMESTIC and RESIDENT FOREIGN
corporations can claim OSD.
Itemized Deductions:
General Business Expenses (salaries and wages, supplies and
repairs, operating expenses, rentals, advertising, travelling expense,
insurance premiums against fire, EAR)
Interest
Taxes
Losses
Bad Debts
Depreciation
Depletion
Charitable and other contribution
Research and Development
Pension Trust
Premiums payments on health and/or hospitalization insurance
General Business Expenses
Salaries: all remuneration, including wages and
other forms of compensation for services actually
rendered plus the grossed-up monetary value of
fringe benefits granted by the employer to the
employee. Provided, a withholding tax should be
imposed (FBT or Wtax) so that the salary may be
claimed as deduction.
Materials and Supplies: cost of these expense
when actually consumed.
Travelling: any expenses incurred for
transportation and allowances provided they are
incurred solely for carrying on the trade,
business or profession.
Rent Expense
LESSEE LESSOR
15%).
Income Taxation: Corporation
Shall include partnerships, except GPP, domestic and
foreign corporations, joint ventures, joint accounts, stock
corporations and insurance companies.
In the computation of GROSS INCOME, the same rule shall
be observed as in the case of an individual taxpayer, except
that a corporation has no compensation income and does
not have winnings and prizes.
In the computation of ALLOWABLE DEDUCTIONS, the same
ruling shall be observed as in the case of an individual,
except those specific items which has a different statutory
ceilings.
Shall be taxed at 30%.
No Personal exemptions.
Income Taxation: Minimum Corporate
Income Tax
Domestic and resident foreign corporations
shall be taxed at 2% (MCIT) based on their
gross income (net sales minus cost of goods
sold) if:
a. It has been in the fourth year of operation;
and
b. It incurred a zero taxable income or net loss;
or
c. The normal tax is lesser than the MCIT.
Income Taxation: Minimum Corporate
Income Tax
The MCIT shall be carried over and credited
against the normal tax for the next three (3)
years following the taxable year where the
corporation is taxed at MCIT.
Provided, that if the corporation is still taxed at
MCIT following such year, the previous MCIT shall
be DEFERRED and cannot be credited against the
years MCIT.
The three-year carry-over provision shall be
counted continually regardless whether the
corporation pays MCIT or NCIT.
Income Taxation: Dealings in Property
ORDINARY ASSETS CAPITAL ASSETS
1. Held for trade (stocks, inventories, etc.) All items not included as ordinary assets
shall be construed as capital assets.
2. Real properties acquired by real estate
dealers or developers (for resale)
3. Properties USED in business subject to
DEPRECIATION
4. Real Properties USED in trade or
business (investment property for lease)
Income Taxation: Dealings in Property
ORDINARY ASSETS CAPITAL ASSETS
1. Sale of ordinary asset may arise 1. Sale of capital asset may arise to either capital
to either an ordinary gain or an gain or capital loss. HOWEVER, in case of REAL
ordinary loss which SHALL BE PROPERTY HELD AS CAPITAL ASSET, the selling
included or deductible from the price of such or the FMV whichever is higher
GROSS INCOME. shall be subject to 6% CGT. Personal properties
held as capital asset cannot be subjected to CGT.
2. Excess of ordinary loss SHALL BE 2. Capital gains or capital losses SHALL BE
deductible against CAPITAL GAINS subject to holding period if held as in case of an
individual taxpayer. NO HOLDING PERIOD shall
be available for a corporation.
3. Excess capital gains over capital losses SHALL
BE INCLUDED in the computation of gross
income.
4. Excess capital losses over capital gains
CANNOT BE deducted from ordinary gains.
Comparison
ORDINARY ASSETS CAPITAL ASSETS
If received by an individual from FOREIGN CORP. RC, NRC, RA, NRAETB 5-32%
If received by DOMESTIC from FOREIGN CORP. NRANETB 25%
30%
If received by DOMESTIC from DOMESTIC
- exempt -
If given by a DOMESTIC to:
a. RFC -exempt-
b. NRFC 15% or 30%
Winnings in PCSO Lotto -exempt-
Capital Gains on Stocks, traded of 1% of the selling price
Capital Gains on Stocks, not traded 5-10%
Stock Dividends -exempt-
Interest on a any transactions other than Added to gross income
deposit on banks
Gratuitous Transfers: Estate Taxation
Gross Estate
RC NRC RA NRA