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TAXATION (Autosaved)

This document summarizes key aspects of taxation in the Philippines. It defines taxation as the means by which the government raises revenue through legislative acts to fund its operations. Taxes are proportional contributions from taxpayers that are essential to sustaining the government. The document outlines tax purposes, types, rates, limitations and reforms like lowering personal income tax rates, providing tax exemptions for low-income professionals and employees, and implementing taxes on sugary drinks.

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Caranay Billy
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235 views

TAXATION (Autosaved)

This document summarizes key aspects of taxation in the Philippines. It defines taxation as the means by which the government raises revenue through legislative acts to fund its operations. Taxes are proportional contributions from taxpayers that are essential to sustaining the government. The document outlines tax purposes, types, rates, limitations and reforms like lowering personal income tax rates, providing tax exemptions for low-income professionals and employees, and implementing taxes on sugary drinks.

Uploaded by

Caranay Billy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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TAXATION

Taxation
 isthe process or means by which the sovereign,
through its law making body, raises revenue to
defray the expenses of the government.
 itis method of apportioning the cost of
government among those who in some measure
are privileged to enjoy its benefits and must,
therefore, enjoy its burden.
 TAXATION IS THE PROCESS - THE LEVYING AND
IMPOSITION

 TAX IS THE PRODUCT – THE PROPORTIONAL


CONTRIBUTIONS PAID BY THE TAX PAYERS

 TAX IS THE “LIFEBLOOD” OF THE STATE


BASIS OF TAXATION
Government necessity - meaning the existence of the
government depends upon its capacity to perform its 2
basic functions which is to serve and protect the
people.

If the government is unable to perform these 2 basic


functions, it ill be paralyzed. Taxes are the reason why
government is able to continue its projects.
Tax is the “lifeblood “ of the government.
Purpose of Taxation
 Primary purpose is to raise revenue in order to support the
government.
 Secondary purpose:
 Use to reduce social inequality
 Utilized to implement the police power of the state
 Used to protect local industries against unfair competition
 Utilized by the government to encourage the growth of local
industries
NATURE OF THE POWER OF TAXATION

 itis inherent in sovereignty – being essential to


the existence of every government.
 Essentially a legislative function – being the power
falls to the legislature as a part of the more
general power of law-making
 Subject to constitutional and inherent limitations
Inherent Limitations:
 Public purpose
 Non-delegation of the power of taxation
 Exemption from taxation of government entities
 International comity
 Territorial jurisdiction
Constitutional limitations
 Due process of law
 Equal protection of the laws
 Rule of uniformity and equity in taxation
 No imprisonment for non-payment of a poll tax
 Non-impairment of the obligation of contract
 Non-infringement of religious freedom
 Exemption of religious, charitable and educational entities, non
profit cemeteries and churches from taxation
 Exemption of non-profit, non-stock educational institutions from
taxation
 Concurrence by the majority of all the members of
the Congress for the passage of a law granting tax
exemption
 Authorityof the president to veto the particular
item or items in a revenue or tariff bills
 Non-impairment to the jurisdiction of the Supreme
Court to tax assets
ASPECTS OF TAXATION

LEVYING OR IMPOSITION OF THE TAX


WHICH IS A LEGISLATIVE ACT

COLLECTION OF THE TAX LEVIED


WHICH IS ESSENTIALLY
ADMINISTRATIVE IN CHARACTER
BASIC PRINCIPLES OF A SOUND TAX
SYSTEM
1. Fiscal adequacy – which means that the sources of
revenue should be sufficient to meet the demands of
public expenditures.
2. Equality or theoretical justice – which means that tax
imposed should be proportionate to the tax payer’s ability
to pay ( this is the so called ability to pay principle.)
3. Administrative feasibility – which means that the tax laws
should be capable of convenient, just and effective
administration.
GENERAL CHARACTERISTICS OF TAX

 IT IS AN ENFORCED CONTRIBUTION
 IT IS GENERALLY PAYABLE IN MONEY
 IT IS PROPORTIONATE IN CHARACTER
 IT IS LEVIED ON PERSONS AND PROPERTY
 ITIS LEVIED BY THE LAW MAKING BODY OF THE
STATE
 IT IS LEVIED FOR PUBLIC PURPOSE
DOUBLE TAXATION
 Double taxation standing alone and not being forbidden by our
fundamental law is not a valid defense against the legality of a tax
measure.
 KINDS OF Double taxation
1. Direct Duplicate Taxation – is that the same subject is taxed twice when it
should be taxed but once, in a fashion that both taxes are imposed for the
same purpose by the same taxing authority, within the same jurisdiction
or taxing district, for the same taxable period and for the same kind or
character of a tax. This kind is legally objectionable for being oppressive
and inequitable.
2. Indirect Double Taxation – this is not unconstitutional, but it is being
avoided so as not to bring injustice to the tax payer.
Methods to avoid double taxation
1. Allowing reciprocal contributions either by law or by treaty.
2. Allowance of tax credit for foreign taxes paid
3. Allowance of deduction for foreign taxes paid
4. Reduction of the Philippine tax
TYPES OF TAX RATE:
5. Regressive – if the average rate decreases as the tax base
increases.
6. Proportional - also called Flat or Uniform taxes – the average
rate of tax remains constant for all levels of the tax base.
7. Progressive – is one where average rate increases as the
amount of the tax base increases. ( this is what we are using)
CLASSIFICATION OF TAXES
AS TO Subject Matter or object:
 PERSONAL, Poll or Capitation Tax – fixed amount imposed on individuals
whether citizens or not, residing within a specified territory without
regard to their property or the occupation in which they may be
engaged. Ex: Community Tax
 Property Tax – imposed on property whether real or personal, in
proportion either to its value or in accordance with some other
reasonable method of apportionment. Ex: Real Estate Tax
 Excise Tax – imposed upon the performance of an act, the enjoyment of
a privilege, or the engaging in an occupation. Ex: Estate Tax, Donor’s
Tax, Income Tax, Value Added Tax
As to who bears the burden
 Direct tax
 Indirect Tax
 AS TO DETERMINATION OF AMOUNT
 Specific Tax – imposed based on a physical unit of measurement as by head or number,
by weight or length or volume. Ex; Tax on distilled spirit, cigars, wines etc.
 Ad Valorem – tax on the fixed portion on the value of property; needs an independent
appraiser to determine its value. Ex: Real Estate Tax, certain custom’s duties,
gasoline, excise taxes on cigarettes
 AS TO PURPOSE
 General, Fiscal or Revenue – tax with no particular purpose or object for which the
revenue is raised, but is simply raised for whatever need may arise. Ex: Income Tax,
Value Added Tax
 Special or Regulatory _ tax imposed for a special purpose regardless of whether
revenue is raised or not, and is intended to achieve some social or economic end.
As to Authority Imposing the Tax or Scope

 National Tax – imposed by the national government


Ex: internal Revenue Taxes, Tariff and Custom Duties
 Municipal
or Local Tax – imposed by municipal
governments for specific needs. Ex: Real Estate
Taxes, Municipal Licenses.
Tax Evasion Vs. Tax Avoidance
 Tax avoidance happens when the tax payer minimizes his tax
liability by taking advantage of legally available tax planning
opportunities. This is otherwise known as Tax Minimization,
others call it Tax Planning. It is the process of controlling one’s
actions as to avoid undesirable tax consequence. Tax Avoidance is
completely legal activity

 Tax Evasion – occurs when the tax payer resorts to unlawful


means to lessen or to get away with his tax liability. This is also
known as Tax Dodging. Example: under declaration of sales,
overstatement of expenses, and backdating on important
document.
GRADUATED Income tax schedule
If taxable But not over Tax due is Plus Of the excess
income is over over

P 10,000 5%

10,000 30,000 500.00 10% P 10,000


30,000 70,000 2,500.00 15% 30,000
70,000 140,000 8,500.00 20% 70,000
140,000 250,000 22,500.00 25% 140,000
250,000 500,000 50,000.00 30% 250,000
500,000 125,000.00 32% 500,000
1. New Personal Income Tax Rates
Personal income tax rates will be lowered, while salaried employees earning annual
income of P250,000 or below will be exempted from paying income taxes.
2. Lower Tax Rates for Professionals
With the revised personal income tax table, salaried employees will surely benefit from
the lower tax rate. Self-employed professionals, meanwhile, can expect to pay lower
taxes as well with the reduced tax rates for professionals, as follows:

ANNUAL SALES OR
TAX RATE
GROSS RECEIPTS

P250,000 and below 0%

P500,000 and below Exempt from 3% Percentage Tax

Below P3 million May choose either 8% flat tax on gross receipts or follow personal
income tax table

Subject to personal Above P3 million income tax table


Professionals will no longer have to file and pay the
percentage tax; instead they will be charged
a withholding tax of 8% flat rate on gross sales or
receipts.
Self-employed professionals earning annual income of P3
million and below may choose to pay the 8% flat tax or
follow the personal income tax table.
3. Tax on 13th Month Pay and Other Bonuses
The threshold for tax exemption on 13th month pay and other
bonuses received by salaried employees has been raised from the
current P82,000 to P90,000. This means 13th month pay and bonuses
paid to employees that amount to P90,000 or below will not be
taxed.
4. Tax on Drinks using Sugar and Caloric / Non-Caloric Sweeteners 
Beverages that use sugar and other sweeteners will be taxed
effective January 2018. These include soft drinks and other cola
drinks, fruit juices, and powdered drinks, among others.
The sugar tax is as follows:
P6.00 per liter of drink that uses caloric and non-caloric
sweeteners 
P12.00 per liter of drink that uses high fructose corn syrup (HFCS)
5. Tax exemption of milk, 3-in-1 coffee, medicines
for diabetes, etc.
Exempted from the sugar tax are milk, 3-in-1 coffee,
100% natural fruit juice or vegetable juice,
medically-indicated beverages, and drinks and
beverages that use natural sweeteners such as coco
sugar or stevia.
Meanwhile, drugs and medicines prescribed
for diabetes, high cholesterol, or hypertension will
also be exempted from the 12% VAT.
6.Taxes on LPG, Diesel, Gasoline, and other fuel
products

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