Notes on Philippine Taxation
Lecture Notes XIII
Selected Topics on Philippine Taxation
I. Sources of Revenue from Internal Revenue Tax
Internal Revenue Taxes are taxes that are specifically provided by R.A 8424- The National Internal Revenue Code of the Philippines
Section 21 of the NIRC provides the following taxes, fees and charges that are deemed to be National Internal Revenue Taxes:
1. Income tax is the right to earn an income by engaging in an occupation, the basis of which is the net taxable income.
2. Business tax is the right to make an onerous transfer in the normal conduct of business, the basis of which is the net sale or gross receipts.
a. General Consumption tax or other percentage taxes- refers to percentage taxes on sales or gross receipts of non- VAT business. Percentage taxes are basically levied on the retail sales before consumption
b. Value-added tax- is levied on the consumption of goods and utilization of services in the Philippines
- The value added tax is applied on every stage of distribution of materials, supplies and services purchased.
c. Excise tax- This is commonly levied on production and importation of products that are generally harmful to health
-"sin products," these are collected with excise tax. Under the Tax Code, sin products include tobacco, alcohol and luxury items, among others.
-Not all production and importation are subject to excise tax. Only those goods that are either harmful or wasteful are subject to excise tax to discourage their consumptions and usage
Note: In general, income tax is paid only when there is net income. When there are losses, income tax is not to be paid, except when the income of a corporation is subject to minimum corporate income tax (MCIT). However, the business is required to pay business tax whether there is net income or loss because the basis of business tax is net sales or gross receipts.
3. Transfer tax is the right to make casual and gratuitous transfer of one 's property to the
Selected Topics on Philippine Taxation
I. Sources of Revenue from Internal Revenue Tax
Internal Revenue Taxes are taxes that are specifically provided by R.A 8424- The National Internal Revenue Code of the Philippines
Section 21 of the NIRC provides the following taxes, fees and charges that are deemed to be National Internal Revenue Taxes:
1. Income tax is the right to earn an income by engaging in an occupation, the basis of which is the net taxable income.
2. Business tax is the right to make an onerous transfer in the normal conduct of business, the basis of which is the net sale or gross receipts.
a. General Consumption tax or other percentage taxes- refers to percentage taxes on sales or gross receipts of non- VAT business. Percentage taxes are basically levied on the retail sales before consumption
b. Value-added tax- is levied on the consumption of goods and utilization of services in the Philippines
- The value added tax is applied on every stage of distribution of materials, supplies and services purchased.
c. Excise tax- This is commonly levied on production and importation of products that are generally harmful to health
-"sin products," these are collected with excise tax. Under the Tax Code, sin products include tobacco, alcohol and luxury items, among others.
-Not all production and importation are subject to excise tax. Only those goods that are either harmful or wasteful are subject to excise tax to discourage their consumptions and usage
Note: In general, income tax is paid only when there is net income. When there are losses, income tax is not to be paid, except when the income of a corporation is subject to minimum corporate income tax (MCIT). However, the business is required to pay business tax whether there is net income or loss because the basis of business tax is net sales or gross receipts.
3. Transfer tax is the right to make casual and gratuitous transfer of one 's property to the
References: Valencia, Edwin G. and Gregorio F. Roxas. Transfer and Business Taxation Principles and Laws with Accounting Applications. Baguio City: Valencia Educational Supply, 2009. Bureau of Internal Revenue, www.bir.gov.ph/taxinfo/tax_income.html Department of Finance. What you need to know about RA 9337 The Reformed Value Added Tax Law. www.vatreform.gov.ph Republic Act 9504, The Reformed Value Added Tax Law www.lawphil.net/statutes/repacts/.../ra_9504_2008.html