SHS-GAS

1. Prepared by: Melody G. Genese – SHS

2. A tax (from the Latin taxo) is a
mandatory financial charge or some
other type of levy imposed upon a
taxpayer (an individual or a legal entity)
by a state or the functional equivalent of
a state in order to fund various public
expenditures.

3. Purposes and Significance of Tax
Primary Purpose: generate funds or
revenues use to defray expenses by the
government in promoting
The general welfare of the citizenry Public
expenditure.
Other purposes: to equitably contribute to the
wealth of the nation.

7. TYPE OF TAXES
1. INCOME
2. BUSINESS TAXES

9. Personal income tax is often collected on a pay-as-you-earn
basis, with small corrections made soon after the end of the
tax year.
The income tax rate for individuals ranges from 5% to 32%.
INDIVIDUAL

10. Corporate
The income tax rate for corporations is
30%.
- It is a direct tax imposed by a
jurisdiction on the income or capital of
corporations or analogous legal entities.

12. BUSINESS
TAXES

13. Value added tax is a general consumption tax
that requires a 12% additional tax on the sales
price of goods and/or services by VAT-registered
seller or seller required by law to be under the
VAT system. It is an indirect tax, which may be
shifted or passed on to the buyer, transferee or
lessee of goods, properties or services.

15. Percentage tax is a business tax imposed on
persons or entities/transactions
1. Who sell or lease goods, properties or services in the
course of trade or business and are exempt from value-
added tax (VAT) under Section 109 (w) of the National
Internal Revenue Code, as amended, whose gross annual
sales and/or receipts do not exceed Php 1,919,500 and who
are not VAT-registered; and

16. 2. Engaged in businesses specified in
Title V of the National Internal Revenue
Code.

17. Real Property Tax
Revenues of the Local Government Units are earned
from their local and external sources. One of these
local sources is the Real Property Tax (RPT). RPT is
a property tax that is paid yearly. It is imposed on all
types of real properties including lands, buildings,
improvements, and machinery.

19. Excise taxes
Excise taxes apply to goods
manufactured or produced in the
Philippines for domestic sales or
consumption or for any other
disposition and to things imported.

21. Classification Of Taxes,
Their Advantages And Disadvantages

22. Basically, tax can be classified into
two broad categories:
1. Direct Tax
2. Indirect Tax

23. 1. Direct Tax
A direct tax is a tax paid by a person
on whom it is legally imposed. In direct
tax, the person paying and bearing tax
is the same. It is the tax on income
and property.

24. Example:
* Income Tax
* Vehicle Tax
* Expenditure Tax
* property Tax
* Interest Tax
* Gift Tax etc.

25. Advantages Of Direct Tax
* Direct tax is equitable as it is imposed on
person as per the property or income.
* Time, procedure and amount of tax paid to be
paid is known with certainty.

26. * Direct tax is elastic. The government can change tax
rate with the change in the level of property or income.
* Direct tax enhances the consciousness of the
citizens. Taxpayers feel burden of tax and so they can
insist the government to spend their contributions for
the welfare of the community.

27. Disadvantages Of Direct Tax
* Direct tax gives mental pinch to the taxpayers as they
have to curtail their income to pay to the government.
* Taxpayers feel inconvenience as the government impose
tax progressively.
* Tendency to evade tax may increase to avoid tax burden.
* It is expensive for the government to collect tax
individually.

28. 2. Indirect Tax
An indirect tax is a tax imposed on one
person but partly or wholly paid by
another. In indirect tax, the person
paying and bearing tax is different. It is
the tax on consumption or
expenditures.

29. Examples of indirect taxes are:
* VAT
*Entertainment Tax
* Excise Duty
* Sales Tax
* Hotel Tax
* Import And Export Duty etc.

30. Advantages Of Indirect Tax
* Indirect tax is convenient as the taxpayer does not have to pay
a lump sum amount for tax.
* There is mass participation. Each and every person getting
goods or services has to pay tax.
* There is a less chance of tax evasion as the taxpayers pay the
tax collected from consumers.
* The government can check on the consumption of harmful
goods by imposing higher taxes.

31. Disadvantages Of Indirect Tax
* Indirect tax is uncertain. As demand fluctuates, tax will also
fluctuate.
* It is regretful as the tax burden to the rich and poor is same.
* Indirect tax has bad effect on consumption, production and
employment. Higher taxes will reduce all of them.
* Most of the taxes are included in the price of goods or services.
As result, taxpayers do not know how much tax they are paying
to the government.

32. DIFFERENTIATE DIRECT
& INDIRECT TAX.
ACTIVITY