📚 Taxation Reviewer for Board Exam
(Philippines)
Simple | Straight to the Point | Board-Focused
I. 💡 Basic Concepts and Principles of Taxation
✅ What is Taxation?
● Taxation is the power of the state to impose a financial charge or levy upon a person
or property to raise revenue for public purpose.
✅ Characteristics of Taxes
1. Enforced Contribution
2. Payable in Money
3. Proportionate in Character
4. Levied by the Legislature
5. For Public Purpose
✅ Types of Taxes
● As to Subject: Personal (Poll), Property, Excise
● As to Rate: Proportional, Progressive, Regressive
● As to Authority: National (BIR), Local (LGU)
II. 📑 Income Taxation
✅ Who are Taxpayers?
● Individuals (Resident citizen, NR citizen, Resident alien, NR alien)
● Corporations (Domestic, Resident foreign, Non-resident foreign)
✅ Taxable Income Formula:
Gross Income
– Deductions/Exemptions
= Taxable Income
✅ Individual Income Tax Rates (TRAIN Law):
● Graduated rates: 0% to 35%
● Up to ₱250,000 annual income = 0% tax
✅ Corporate Income Tax (as of CREATE Law):
● 25% for most domestic corporations
● 20% for those with net taxable income ≤ ₱5M and total assets ≤ ₱100M (excluding land)
III. 🛒 Gross Income and Exclusions
✅ Inclusions in Gross Income:
● Compensation
● Business income
● Gains from property
● Dividends
● Interest
● Rents and royalties
✅ Exclusions from Gross Income:
● Life insurance proceeds
● Gifts, bequests, and donations
● Compensation for injuries/sickness
● Retirement benefits under law
● Certain benefits (13th month pay up to ₱90,000)
IV. ✂️ Deductions from Gross Income
✅ Itemized Deductions:
● Business expenses
● Interests
● Taxes
● Losses
● Bad debts
● Depreciation
● Charitable contributions
✅ Optional Standard Deduction (OSD):
● 40% of gross income (for individuals and corporations)
V. 🧾 Withholding Taxes
✅ Types:
1. Withholding Tax on Compensation (WTC) – from employee salary
2. Expanded Withholding Tax (EWT) – on professional fees, rent, etc.
3. Final Withholding Tax (FWT) – on income where tax is final (e.g., interest income from
bank)
VI. 🧮 Value-Added Tax (VAT)
✅ VAT Rate: 12%
● Applies to sale of goods/services, importation
✅ VAT Threshold:
● If annual gross sales/receipts > ₱3M → VAT-registered
● Below ₱3M → may opt for Percentage Tax (3% or 1% under special rules)
VII. 🧾 Percentage Tax (Non-VAT)
● 3% of gross sales or receipts (but temporarily 1% under certain conditions from July
2020 to June 2023 under CREATE Law)
VIII. 🧱 Other National Taxes
✅ Excise Tax
● Tax on specific goods: alcohol, tobacco, petroleum, automobiles, etc.
● Two types: Specific (fixed amount), Ad valorem (percentage)
✅ Capital Gains Tax (CGT)
● 15% on sale of shares (non-traded)
● 6% on sale of real property (capital asset)
✅ Documentary Stamp Tax (DST)
● Tax on documents, loan agreements, shares, etc.
IX. 🏙️ Local Taxation (LGC)
✅ Local Government Units (LGUs) can impose:
● Real Property Tax (RPT)
● Business Tax
● Community Tax (Cedula)
✅ Real Property Tax:
● Based on Assessed Value × Tax Rate
● Rates:
○ Province: 1%
○ City/Municipality in Metro Manila: 2%
X. 🗓️ Filing and Deadlines (E.g., BIR Forms)
Form Purpose Deadline
1700 Individual (Pure Comp) Apr 15
1701 Self-employed/Professional Apr 15
1702 Corporation 15th day of 4th month after FY
2550M/Q VAT Monthly/Quarterly 20th of following month
1701Q Quarterly ITR May 15, Aug 15, Nov 15
BONUS: 🔍 Common Tax Law Doctrines
● Lifeblood Doctrine – Taxation is essential for government survival.
● Vita Bread Doctrine – Exemptions are strictly construed against taxpayer.
● Imprescriptibility of Fraud – Tax fraud has no prescription.
