PHILIPPINE INCOME TAXATION

1. NATIONAL IINNTTEERRNNAALL RREEVVEENNUUEE
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2.  Means profit or gains.
 Amount of money coming to a person or
corporation within a specified time, whether as
payment for services , interest or profit from
investment.
 It means cash or its equivalent.
 Can also be thought as a flow of the fruits of
one’s labor.

3.  CAPITAL is a fund, while INCOME is a flow
 CAPITAL is wealth, while INCOME is the
service of wealth
 PROPERTY is a tree, while INCOME is the
fruit

4. 1. There must be gain or profit
2. The gain or profit is realized or received,
actually or constructively; and
3. It is not exempted by law or treaty from income
tax
Income tax is assessed on the income received
from any property, activity or service that
produces the income because the Tax Code
stands as an indifferent neutral party on the
matter of where income comes from.

5. a. Income Tax
b. Estate and Donor Taxes
c. Value-added Tax
d. Other percentage Taxes
e. Excise Taxes
f. Documentary stamp taxes, and
g. Other Taxes as are hereafter may be imposed
and collected by the BIR

6.  A tax imposed on taxable income in one
taxable year.
 It is based on the gross income/ taxable income
payable yearly by individual persons or
corporations

7.  PRESUMPTIVE Income Tax – a scale of income
taxes is imposed in relationto a group of person’s
actual expendituresand the presumed income.
 COMPOSITE Income Tax – a tax consisting of a
series of separate quasi-personal taxes, assessed on
the particular source of income with a
superimposed personal tax on the income as a
whole
 UNITARY Income tax – incomes are arranged
according to source. Separate items are added
together & the rate applied to the resulting total
income

8.  GLOBAL SYSTEM – a system employed where the
tax system views indifferently the tax base and
generally treats in common all categories of taxable
income of the individual
- it taxes all categories of income except certain
passive income and capital gains
 SCHEDULAR SYSTEM – is a system employed
where the income tax treatment varies and is made
to depend on the kind or category of taxable income
of the taxpayer.
- it itemizes the different income and provide for
varied percentages of taxes, to be supplied thereto

9.  PROGRESSIVE
 GLOBAL SYSTEM for taxable corporations
 SCHEDULAR SYSTEM for individuals

10.  TAX ON INDIVIDUALS
 TAX ON CORPORATIONS
 INCOME TAX ON ESTATES
 TAX ON TRUSTS

11.  To provide large amount of revenue
 To off-set progressive sales and consumption
of taxes
 To mitigate the evil effects from the inequalities
in the distribution of income and wealth which
are considered deterrents to social progress by
a progressive scheme of taxation

12.  Any person subject to tax imposed by Tax
Code
 Income Taxpayer – person who derive taxable
income
Kinds:
- Individual taxpayer
- Corporate taxpayers
- Estates under juridical settlement
- Trusts

13.  Single, married or legally separated
 Head of the family
 Married individuals who : file joint income tax
return or file separate income tax return

14.  RESIDENT CITIZEN – citizen of the
Philippines residing therein is taxable on all
income derived from sources within and
without the Philippines
 NONRESIDENT CITIZEN – is taxable only on
income derived from sources within the
Philippines
 ALIEN – whether a resident or not of the
Philippines, is taxable only on income derived
from sources within the Philippines

15.  DOMESTIC CORPORATION – is taxable on all
income derived from sources within and
without the Philippines
 FOREIGN CORPORATION – whether engaged
or not in trade or business in the Philippines, is
taxable only on incomederived from sources
within the Philippines.

16. Individuals
 Resident citizens receiving income from
sources within or outside the Philippines
 employees deriving purely compensation income
from 2 or more employers, concurrently or
successively at anytime during the taxable year
 employees deriving purely compensation income
regardless of the amount, whether from a single or
several employers during the calendar year, the
income tax of which has not been withheld correctly
(i.e. tax due is not equal to the tax withheld)
resulting to collectible or refundable return

17.  self-employed individuals receiving income from the
conduct of trade or business and/or practice of
profession
 individuals deriving mixed income, i.e.,
compensation income and income from the conduct
of trade or business and/or practice of profession
 individuals deriving other non-business, non-professional
related income in addition to
compensation income not otherwise subject to a final
tax

18.  individuals receiving purely compensation income
from a single employer, although the income of
which has been correctly withheld, but whose
spouse is not entitled to substituted filing
 marginal income earners