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Transcript of Economic project
purpose of generating revenues for public purposes. The Benefit Principle
The Ability-to-Pay Principle
The Equal Distribution Principle A tax is proportional.
A tax is regressive.
A tax is progressive. To equitably contribute to the wealth
of the nation. To protect new industries. To protect local producers. Fiscal adequacy Equality or Theoretical Justice Administrative Feasibility Consistency or Compatibility with Economic Goals It is enforce contribution.
It is generally payable in cash.
It is proportionate in character.
It is levied on person or property.
It is levied by the state which has jurisdiction over the person or property.
It is levied by the lawmaking body of the state.
It is levied for public purposes. As to a subject matter 1. Personal, Poll, or Capitation Tax
Example~ Residence Tax 2. Property Tax
Example~ Real Estate Tax 3. Excise Tax
Example~ Value Added Tax As to who bears the burden 1. Direct Tax 2. Indirect Tax 1. Specific Tax As to determination of Account 2. Ad Valorem Tax As to purpose 1. General Tax 2. Special Tax As to scope 1. National Tax 2. Local Tax Distinction of Tax from other Terms Tax distinguish from Toll Tax distinguish from Penalty Tax Distinguish from Debt Tax Distinguish from other Terms:
b. Internal revenue
c. Custom duties Entities Exempted from Taxation 1. Religious Institutions 2. Charitable Institutions 3. Nonprofit, nonstock educational institutions 4. Nonprofit cemeteries 5. Government Institutions 6. Foreign diplomas Situs of Taxation is a Latin term which means "situation", "location", or "place". Its literal meaning refers to place taxation. Concept of Double Taxation The two concepts of double taxation are:
1. Direct duplicate
2. Indirect Duplicate Elements of Direct Duplicate:
a. Taxing twice
b. By the same taxing authority
c. Within the same taxing jurisdiction
d. For the same purpose
e. In the same taxable period
f. Involving the same purpose Forms of Escape from Taxation Shifting Kinds of Shifting:
a. Forward Shifting
b. Backward Shifting
c. Onward Shifting Capitalization Transformation Tax Evasion Tax Avoidance Tax Exemption a. National Internal Revenue Code
b. Tariffs and Customs Code of the Philippines
c. The Sugar Adjustment Act
d. The Narcotics Drug Act
e. The Special Education Fund Law
f. The travel tax
g. The private motor vehicle act
h. The Energy Taxes
i. Republic act nos. 1093; 1125; 2211
j. Presidential Decree No. 477 Kinds of Taxes under existing Law 1. National Taxes 2. Local Taxes a. The local tax code
b. The real property tax code
c. The tax ordinance of the respective barangay, municipalities and province. Different Authorities in imposing tax in the Philippines. 1. National Governmet
2. Municipal or Local Government Classification of Tax Payers 1. Individual Taxpayer
2. Corporate Taxpayer
3. General Professional Partnership
4. Estates and Trusts 1. Finance Secretary
2. Commissioner on Internal Revenue
3. Commissioner of Customs
4. Provincial treasurer
5. City Treasurer
6. Municipal Treasurer Public Officers in Charge of Tax Collection Tax Remedies of the Government and Taxpayers 1. Distraint (a. Actual Distraint b. Constructive Distraint)
5. Other administrative action such as giving of rewards to informers, etc.
6. Judicial Actions such as filing of civil and criminal actions INCOME INCOME TAX Refers to the tax imposed on the net income or on the entire income received by a taxpayer in one taxable period. Refers to all wealth which flows into the taxpayer other than as mere return on capital. CAPITAL Refers to the investment made which is the source of income. GROSS INCOME Refers to all income but not excluding exempt income and income subject to final income tax. TAXABLE INCOME Refers to a pertinent item of gross income specified in the tax code less deduction of personal and/or additional exemptions. NET INCOME Refers to the gross income less allowable deductions. Status of Taxpayers Single Head of the Family Married The TAX RETURN is the sworn statement wherein the taxpayer states the facts as to the nature and extent of his tax liability for the taxable year. Who Shall File Income Tax Return Under the law, income tax return shall be filed by every resident citizen deriving compensation income from all sources, or resident alien and nonresident citizen with respect to compensation income from within the Philippines, or marginal income earner, except the following: 1.) An individual whose gross compensation income does not exceed his/her total personal and additional exemptions;
2.) An individual receiving purely compensation income, regardless of amount, from only one employer in the Philippines for the calendar year, the income tax of which has been withheld correctly by the said employer (tax due equals tax withheld);
3.) An individual whose income has been subjected to final withholding tax alien employees as well as Filipino employee occupying the same position as that of the alien employee of regional area headquarters and regional operating headquarters of multinational companies, petroleum service contractors and subcontractors, and offshore banking units, nonresident alien not engaged in trade or business and;
4.) An individual who is exempt from income tax. LEGEND: Z- zero exemption ME- married Employe 1,2,3,4- number of qualified dependent S- single S/ME= P50,000 each working employee
Qualified Dependent Child= P25,000 each but not exceeding 4 children Use Table A for single/married employees with no qualified dependent
1. Married employee (husband or wife) whose spouse is unemployed.
2. Married employee (husband or wife) whose spouse is non-resident citizen receiving income from foreign source.
3. Married employee (husband or wife) whose spouse is engaged in business.
4. Single with dependent father/mother/brother/sister/senior citizen.
6. Zero exemption for employees with multiple employers for their 2nd, 3rd... employees (main employer claims personal and additional exemption)
7. Zero exemption for those who failed to file application for registration. Use Table B for the following single/married employees with qualified dependent children.
1. Employed husband and husband claims exemption of children.
2. Employed wife whose husband is also employed or engaged in business, husband waived claim for dependent children in favor of the employed wife.
3. Single with qualified dependent children. The Bureau of Internal Revenue filed a tax evasion case worth P150.68 million at the Department of Justice against former Chief Justice Renato C. Corona. His daughter, Ma. Carla Beatriz C. Castillo and son-in- law, Constantino T. Castillo III is also included in the complaint.
Corona as a public official was required to submit under oath his statement of assets, liabilities and net worth annually including that of his spouse and children under 18 years of age.
In his SALNs, Corona’s net worth ranged between P7 million to P22 million but BIR Commissioner Kim Henares said Corona did not declare all his assets in his SALN and also did not declare two real properties. After examining Corona’s bank records and compared it with his networth, they discovered a substantial disparity between the acquisition cost of the properties declared in his SALNs and the cost declared in the certificates authorizing registrations.
The BIR found that Corona’s deficiency income tax liability amounted to P120.5 million for the nine-year period. If a taxpayer’s expenditure in a given year exceeded his reported income, the excess spending would represent unreported income.
Corona’s daughter and Castillo are both facing the same violation for attempting to evade taxes. Corona’s daughter attempting to evade or defeat taxes in 2010 while Castillo in 2003 and 2009.The BIR said Castillo’s tax liability was P20.25 million while the deficiency income tax liability of Corona’s daughter amounted to P9.93 million. One of the example in Taxation. Tax Evasion Is is an illegal practice where a person or organization or a corporation intentionally avoids paying his/her true tax liability.
Those caught evading taxes are generally subject to criminal charges and substantial penalties. Effects: 1. There will be no funds for the improvement of infrastructures.
2. Graft and Corruption. The Bureau of internal revenue (BIR) fieldtax evasion cases worth P85 million against a towel supplier and a molasses trader for undervaluing their sales and income to avoid paying taxes. BIR field a complaint against Teresita Develuz Aslam, who owns Hudges Industries and a supplier of towels and linen. Based on BIR's data,Hudges posted P84.59 M in 2009 and P85.66 M in 2010. Aslam's accountant Amado Nagar Saito is also being charged for her financial statemens for 2009 and 2010. BIR field a case against Bacolod-based molasses trader Jollinecaa corporation for failing to supply correct and accurate info. Jolinecaa also failed to declare and pay VAT on sugar sales. On 2006 P17.1 M is the total tax of Jolinecaa corporation. 2 Firms Face P85 M Tax Evasion Cases