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Philippine Taxation System

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Alyza Burdeos

on 25 September 2014

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Transcript of Philippine Taxation System

Philippine Taxation System
Taxation
- is the process of tax collection.
Purposes of Taxation
Primary purpose
:

Equity - Taxation must be based on the ability to pay

Certainty- The amount to be paid, as well the time and manner for payment, must be certain

Convenience- The time for payment and the manner of collection must not be oppressive

Economy- The tax to be levied must be just enough to sustain the government and its function
Taxation in the Philippines
BIR
History of Taxation
Understanding the taxation system in the Philippines
Kinds of Taxes
Income Tax
A kind of tax wherein all yearly
Donor’s Tax

A kind of tax that is imposed on donations inter-vivos

profits arise from property, possessions, trades,
or offices

Tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition.
Tax imposed on the privilege of transmitting property upon the death of the owner.

Kinds of Taxes
It shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect and whether the property is real or personal, tangible or intangible.

Kinds of Taxes
Value-added Tax (VAT)
Tax collected on every sale, barter, exchange or transaction of taxable goods, properties, lease of goods, services, or properties on the course of trade as they pass along the production and distribution chain.
It is an indirect tax, which can be passed on to the buyer.
Kinds of Taxes
It is incurred by individuals and corporations.
Capital Gains Tax
Tax imposed on the gains presumed to have been realized by the seller for the sale, exchange or other disposition of real property located in the Philippines, classified as capital assets.
Kinds of Taxes
Tax applicable to specified goods manufactured in the Philippines for domestic sale or consumption. It is also imposed on things that are imported.
Excise Tax
Specific tax: imposed on certain goods based on weight or volume capacity or any other physical unit or measurement.
Ad valorem tax: imposed on certain goods based on selling price or other specified value of the goods
Kinds of Taxes
A.K.A. Documentary Stamp Tax
Tax on documents, instruments, loan agreements and papers, agreements evidencing the acceptance, assignments, sale or transfer of an obligation, rights or property, incident thereto.
Documentary Tax
WITHHOLDING TAX
Withholding Tax
A system where the taxes withheld on certain income payments are intended or equal or at least approximate the tax due of the payer on said income.

Expanded withholding tax
Final withholding tax
Estate Tax
the amount of an employee's pay withheld by the employer and sent directly to the government as partial payment of income tax.
A system where the amount of income tax withheld by the withholding agent is constituted as a full payment of the income tax due from the payer on the said income

“Pay as you go or pay as you earn”
A method of collecting the income tax at source upon receipt of the income.

Withholding tax for compensation income
Bureau of Internal Revenue
-the country’s leading tax collecting
agency contributing over 75% of total national government (NG) tax revenue
2 Types of Taxes
National Taxes
- imposed by the national government through the National Revenue Code and other laws

Local Taxes
- refer to those imposed and collected by the local government

Definition of
- A compulsory contribution to state revenue, levied by the government on worker's income, business profit and added to the cost of some goods, services and transactions
4 Canons for Good
T a x a t i o n

Who should pay
TAXES?
1. Individuals
a. Resident Citizen
b. Non- resident Citizen
c. Resident Alien
d. Non- resident Aliens

2. Corporations
a. Domestic Corporations
b. Foreign Corporations

3. Estate under judicial settlement

4. Trusts irrevocable both as to the trust property and as to the income
Who (or what) are those exempted in paying
TAXES
?
Other purposes
to equitably contribute to the wealth of the nation
to protect new industries
to protect local producers
Religious Institutions
Charitable Institutions
Non-Profit, Non-Stock Educational Institutions
Non-profit Cemeteries
Government Institutions
Foreign Diplomats
Assessment and collection of all internal revenue taxes, fees and charges

Enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts

It shall also give effect to the administer supervisory and police powers conferred to it by the National Internal Revenue Code and special laws.
Powers and Duties of
BIR
Process of Taxation
1. Levy or Imposition
2. Assessment and Collection
3. Payment
4 R's of Taxation
Revenue

Redistribution

Repricing

Representation
Effects of
Taxation

Tax Evasion
An illegal practice where a person, organization, corporation intentionally avoids his or her tax paying liability
Reasons for Tax Evasion
Weak surveillance system
Rampant corruption in tax department
Complicated Tax Laws and Filing Mechanism
Tax deductions offering loopholes to Tax Evaders
Absence of social security system
Tax rates are too high
Lack of Transparency in Government Expenditures
Ancient Egypt
3000-2800 B.C.
Genesis 47:24
In the Philippines...
Manila Acapulco-Galleon Trade

Polo Y Servicio (Forced Labor)

Bandala

Tribute
Encomienda System
to generate funds or revenues
-Adam Smith
The Wealth of Nations
It covers the passing of the law by the government, making of rules by the Government, entire set of people appointed as tax commissioners, assessment; the appellate authorities & so on
Full transcript