1.
General Principles of Taxation
Definition and purpose of taxation
Characteristics and nature of taxes
Types of taxes (national, local, direct, indirect)
Basic principles: equality, equity, fiscal adequacy, administrative feasibility
The power to tax (limitations, exemptions, tax evasion vs. avoidance)
2. Income Taxation
Individual Taxation:
o Taxable income vs. non-taxable income
o Allowable deductions (personal and additional exemptions)
o Computation of taxable income for different types of taxpayers (residents, non-
residents, OFWs)
o Graduated income tax rates (as per TRAIN law)
Corporate Taxation:
o Regular corporate income tax (RCIT)
o Minimum corporate income tax (MCIT)
o Taxation of special corporations (proprietary educational institutions, hospitals)
o Final taxes and capital gains tax
Taxable vs. Non-Taxable Transactions:
o Fringe benefits tax (FBT)
o Passive income tax (e.g., interest, dividends, royalties)
3. Business Taxes
Value-Added Tax (VAT):
o VATable transactions (sales of goods and services)
o Zero-rated and exempt transactions
o Input VAT vs. Output VAT (VAT computation)
o VAT registration threshold
Percentage Tax:
o Applicable to non-VAT-registered businesses
o Transactions subject to percentage tax (e.g., 3% on gross receipts)
Excise Tax:
o Tax on specific goods (e.g., tobacco, alcohol, fuel)
4. Withholding Taxes
Expanded withholding tax (EWT)
Withholding tax on compensation (employees)
Final withholding tax (e.g., payments to non-residents)
Creditable vs. non-creditable withholding taxes
Filing and remittance deadlines
5. Other National Taxes
Estate Tax:
o Computation of the net estate
o Tax-exempt transfers and deductions (funeral expenses, medical expenses)
Donor’s Tax:
o Tax on gifts or donations above exemption thresholds
Documentary Stamp Tax (DST):
o Transactions subject to DST (e.g., loans, share transfers, insurance)
6. Local Taxation
Local government taxes under the Local Government Code
Real property tax (RPT)
Community tax certificate (CTC)
Business permits and municipal tax
Tax amnesty programs (if applicable)
7. Tax Remedies and Penalties
Remedies for taxpayers:
o Protest and appeals
o Tax refund or credit
Bureau of Internal Revenue (BIR) remedies:
o Tax assessments
o Tax liens and distraint
Penalties for tax violations (evasion, non-compliance)
8. International Taxation
Tax treaties and double taxation agreements
Taxation of foreign income (foreign tax credits)
Transfer pricing basics
Study Tips:
1. Focus on the TRAIN Law (Tax Reform for Acceleration and Inclusion): It
introduced major changes in income tax, VAT, and excise tax.
2. Practice computations: Many taxation problems in the CPALE require solving for taxes
due, deductions, or refunds.
3. Know the filing requirements and deadlines: These are frequently tested.
4. Understand the differences: For example, VAT vs. percentage tax, or tax avoidance vs.
evasion.
