powerponit presentation of mr. dolce ramirez

7/29/2019 Powerponit Presentation of Mr. Dolce Ramirez

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PHILIPPINE

TAXATION


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BENJAMIN FRANKLINWROTE, INTHISWORLD,NOTHINGCANBESAIDTO

BECERTAINEXCEPTDEATHANDTAXES.


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Mans love to his country isalways opposed by hisdispleasure to part away withhis treasure or savings to paytaxes.

Nobody Enjoys

Paying Taxes


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The Question

About Paying

Taxes


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WHYSHOULDWEPAY

TAXES?

Taxes are the lifeblood of

the nation. (Lifeblood theory)

Without taxes, governmentcan neither exist nor endure.


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[] In Luke, 20:22-25, Jesus wasasked by the Pharisees, Tell us,

is it against our law for us to paytaxes to the Roman Emperor ornot?

Taxation is in Accord with

the Bible


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Jesus said to them, show me asilver coin. Whose face and name

are these on it? The Emperors,

they answered. So Jesus said,well then, pay to the Emperor

what belongs to the Emperor and

pay to God what belongs to God.


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Taxation


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DEFINITION

[] An inherent power ofsovereign[] Imposes burden uponpersons and property

[] Raises revenues forpublic purposes


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As opined by CJ Marshall of the

US SC, taxation is a destructivepower which interferes with thepersonal and property rights of the

people as it takes from them aportion of their property for thesupport of the government.

Power to Tax Includes

the Power to Destroy


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Justice Holmes of US SCbrushed aside Marshalls viewby declaring that the power

to tax is not the power todestroy while this Court sits.

Contrary View: Power to Tax

Not Power to Destroy


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[] A valid tax should not be judiciallyrestrained merely because it would

prejudice taxpayers property.

[] An illegal tax could be judicially

declared invalid.

Reconciliation of

Marshalls View withHolmes View


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THEORYAND BASISOFTAXATION

[] Necessity theory

[] Benefits-Protectiontheory


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OBJECTIVESOF

TAXATION

[] Revenue[] Regulatory

[] Compensatory


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STAGESOF TAXATION

[] Levy or imposition of tax[] Collection (including

assessment)


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[] National Tax Laws

NIRC and Tariff and Customs Code[] Local Tax Laws

Local Government Code on Local Tax

Ordinances[] Miscellaneous Tax Laws

Philippine Tax Laws


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As long as the legislature, inimposing a tax, does not violate applicable

constitutional limitations or restrictions,the courts cannot inquire into the wisdomof a taxing act.

The Courts power in taxation islimited only to the application andinterpretation of the law.

Power of Judicial Review in

Taxation


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CHARACTERISTICSOF

TAXES[] An enforced contribution[] Generally payable in money

[] Proportionate in character

[] Levied on persons, property or exerciseof a right or privilege

[] Levied by state having jurisdiction

[] Levied by legislature[] Levied for public purpose

[] Paid at regular a periods or intervals


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BASIC PRINCIPLESOFA

SOUND TAX SYSTEM

[] Fiscal adequacy[] Administrative feasibility

[] Theoretical justice


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CLASSIFICATIONOF TAXES

As to subject or object

1. Personal (poll or capitalization)Imposed on all residents, whether citizens or not

(e.g.,community tax)

2. Property

Imposed on property (e.g.,property tax)

3. ExciseImposed upon performance of an act, the

enjoyment of a privilege or the engaging in occupation(e.g.,income tax, estate tax, donors tax)


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WHOBEARSTHEBURDEN

1. Direct

Personal taxes due from naturalpersons; non-transferable (e.g.,incometax, donors tax, estate tax)

2. Indirect

Business taxes due from either natural

or juridical persons; transferable(e.g.,VAT, documentary stamp tax)


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DETERMINATIONOFAMOUNT

1. SpecificBased on some standard of weight or

measurement (e.g., excise taxes on distilled

spirits and wines, cinematographic films)

2. Ad valorem

Based on the value fixed by law or as

appraised (e.g., real estate tax, custom duties)

3. Mixed or compound

Both specific and ad valorem


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PURPOSE

1. GeneralFor purpose of raising public funds

for the government (e.g., income tax,

VAT, transfer taxes)

2. SpecialPrimarily for the regulation of

useful or non-useful occupation orenterprises and secondarily only forraising public funds (e.g.,customsduties, excise taxes)


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GRADATIONORRATE

1. Proportional or flat rateRate of tax increases or

decreases in relation to bracket.

2. ProgressiveIncreases as the tax base or bracket

goes higher

3. RegressiveDecreases as the tax base or

bracket goes higher


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IMPOSINGAUTHORITYNationalTaxes imposed by national government(e.g.,NIRC taxes)

LocalTaxes imposed by local government units

(e.g., community taxes, business licensesand permits, professional tax, real estatetax)


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Sources

[] Philippine Constitution

[] Existing tax laws of the Philippines

(National, Local and Miscellaneoustax laws)

Tax Laws, In

General


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NATURE[] Not political in character

[] Civil in nature and not subjectto

ex post factolaw prohibition

[] Not penal in character


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[] Tax evasion

[] Tax avoidance

Escape from

Taxation


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A tax evader breaksthe law (tax

evasion), the taxavoider sidesteps it

(tax avoidance).


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As a general rule,there are no limitations

upon the power to tax.

LIMITATIONS ON THE

POWER OF TAXATION

RATIONALE FOR


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RATIONALEFORLIMITATIONS

To prevent abuse on the exercise ofthe otherwise unlimited power of

taxation.

To serve as a standard fordetermining whether a tax law or anact of the taxing authorities in theimplementation of tax laws is valid ornot.


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LIMITATIONSONTHEPOWEROF

TAXATIONInherent limitations

These are part and parcel of the power

of taxation and originate from the verynature of taxation.

Constitutional limitations

These are the restrictions imposed bythe constitution.


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oPublic purpose of taxes

oNon-delegability of the taxing power

oTerritoriality or the situsof taxation

oExemption of the government from

taxes

o International comity

INHERENT

LIMITATIONS


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Due process of the lawEqual protection of the law

Freedom of speech and of the press

Non-infringement of religiousfreedom

CONSTITUTIONAL

LIMITATIONS


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Non-impairment of contracts

Non-imprisonment for debt or

non-payment of poll tax

Origin of appropriation, revenue and

tariff bills

Uniformity, equitability and

progressivity of taxation

Delegation of legislative authority to

fix tariff rates, import and export quotas


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Tax exemption of properties actually, directlyand exclusively used for religious, charitable and

educational purposes. Voting requirements in connection.

with the legislative grant of tax exemption.

Non-impairment of the Supreme . Courts jurisdiction in tax cases.

Tax exemption of revenues and assets,including grants

endowments, donations or contributions toeducational institutions.

.


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Double taxation, in its

general sense, meanstaxing the same subject or

object twice during the sametaxing period.

DOUBLE TAXATION

N hibi i


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There is no constitutional

prohibition against double taxation inthe Philippines.

It is something not favored, but isnevertheless permissible.

Double taxation is not prohibited by ourconstitution.

No prohibitionagainst double

Taxation


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1. Direct double taxation

Taxing the same object or property twice,by the same taxing authority, for the sametaxing purpose, within thesame tax period.

2. Indirect double taxationNot repugnant to the constitution.

Kinds of Double

Taxation


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An exemption from taxation may be

defined as a grant of immunity, expressor implied, to particular persons orcorporations from the obligation to pay

taxes.

TAX EXEMPTIONS


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Immunities from taxation whichoriginate from the Constitution areknown as constitutionalexemptions; those which emanatefrom legislation are statutoryexemptions.

Kinds of Tax Exemptions


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Exemptions from taxation are highly

disfavored in law.

He who claims exemption should proveby convincing proof that he is

exempted.

Selected Principles

Governing Tax Exemptions


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Tax exemptions must bestrictly construed.

Tax exemptions are notpresumed.

Constitutional grants of tax

exemption are self-executing. Tax exemptions are personal.


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No statutory construction needed if law is

clear.

Statutes granting tax exemptions are

construed stricissimi jurisagainst thetaxpayer and liberally in favor of thetaxing authority.

Interpretation of Tax

Laws


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Income Taxation-

Individuals


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GENERALPRINCIPLESOFINCOMETAXATIONINTHE

PHILIPPINESORTHESOURCERULEOFINCOMETAXATIONFORASPROVIDEDINTHE NIRC OF 1997.

a. A citizen of the Philippines residing

therein is taxable on all income derivedfrom sources within and without thePhilippines.

b.

A nonresident citizen is taxable onlyon income derived from sources withinthe Philippines.


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c.An individual citizen of the Philippines

who is working and deriving income abroadas an overseas contract worker is taxableon income from sources within thePhilippines. Provided, That a seaman who

is a citizen of the Philippines and whoreceives compensation for servicesrendered abroad as a member of thecomplement of a vessel engaged

exclusively in international trade shall betreated as an overseas contract worker.


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d. An alien individual, whether aresident or not of the Philippines,is taxable only on income

derived from sources within thePhilippines.


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INCOME TAXATION2

Basic formula for the computation ofincome tax of a resident citizen from

income derived solely fromcompensation.


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Gross compensation income

derived from all sources from withinand without the Philippines

LESS: Personal and additionalexemptions (1)

Insurance premium for health

and hospitalization (2)


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-------------------------------------------------------Taxable Income

MULTIPLIED BY: The schedular tax rate-------------------------------------------------------Income Tax dueLESS: Taxes withheld on the compensation

incomeTax credits

-------------------------------------------------------

Net Income Tax payable================================


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Income Taxation 3

Personal exemption (regardless of status)

P50,000

Additional exemption (whether

single or married) P25,000

for each qualified dependent child not toexceed four (4) dependents

Insurance premium for health

and hospitalization (family hasgross income of not more than

P250,000 for taxable year P2,400


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Income Taxation4

Basic formula for the

computation of income tax of aresident citizen from mixed incomederived both from compensation and

from exercise of a profession or fromengaging in trade or business.


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Gross compensation income derived

from all sources from within andwithout the Philippines

LESS: Personal and additionalexemptions (1)

Insurance premium for healthand

hospitalization (2)

--------------------------------------------------------------


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Taxable Compensation Income

PLUS: Net income derived from exercise of a

profession or engaging in trade or business

(see page 6 for formula) ***

--------------------------------------------------------------

Total mixed taxable incomeMULTIPLIED BY: The schedular tax rate

--------------------------------------------------------------

Income Tax due

(Forward)


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Income Taxation 5

Income Tax dueLESS: Taxes withheld on the

compensation income

Quarterly income taxes paidTax credits

-------------------------------------------------

Net Income Tax payable on mixed income==============================


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Income Taxation6

*** Computation of net income derived fromexercise of a profession or engaging in trade orbusiness under the optional standard

deduction.

Total receipts from all sources from

within and without the Philippines

LESS: Exclusions from gross income

Income subject to final taxes

--------------------------------------------------------------


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Gross receipts derived from all sources from withinand without the Philippines*

LESS: Excess personal and additionalexemptions (1)Insurance premium for health and

hospitalization (2)Optional standard deduction (40% of

gross receipts derived from all sources withinand without the Philippines*)

--------------------------------------------------------------Net income derived from exercise of a profession

or engaging in trade or business


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Income Taxation7

*** Computation of net income derived fromexercise of a profession or engaging in trade orbusiness using itemized deduction.

Total sales from all sources from

within and without the Philippines

LESS: Exclusions from gross income

Income subject to final taxes


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---------------------------------------------------------Gross sales derived from all sources from

within and without the PhilippinesLESS: Excess personal and additionalexemptions (1)

Insurance premium for health and

hospitalization (2)Itemized deductions---------------------------------------------------------Net income derived from exercise of a

profession or engaging in trade or business

Income Taxation


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Income Taxation8

NOTES AND COMMENTS ON MIXED

INCOME.

An individual receiving a combination ofcompensation, business and professional

income shall first deduct the allowablepersonal and additional exemptions fromcompensation income, only the excess therefrom can be deducted from business or

professional income.


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In the case of husband and wife, the

husband shall be the proper claimant forthe exemptions unless he waives it in favor

of his wife.

================================


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CONTENTSOFTHISMATERIALWASSOURCEDFROMTHEFOLLOWINGREFERENCETEXTBOOKS:

TAXATION, VOLUME 1, GENERAL PRINCIPLESBY ABELARDO T.

DOMONDON, 2009 9TH EDPHILIPPINE TAXATION HANDBOOK, A SIMPLIFIED COURSEBY

DANILO A. DUNCANO, CPA, 2009 EDLAWOF BASIC TAXATIONINTHE PHILIPPINESBY BENJAMIN B.

ABAN, REVISED EDITION


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******THE END********

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