TAXATION, NATIONAL
INTERNAL REVENUE
CODE, BIR
SARANGAYA, GAIL V.
SEMFILA EA2 2015-2016
TAXATION
TAXATION
⊸An INVOLUNTARY FEE levied
on corporations or individuals
that is enforced by a level of
government in order TO
FINANCE GOVERNMENT
ACTIVITIES
OBJECTIVES
⊸ SIMPLICITY – compliance by
the taxpayer and enforcement by
the revenue authorities should be as
EASY as possible.
⊸ EFFICIENCY - taxation
interferes as LITTLE as possible in
the choices people make in the
private marketplace
OBJECTIVES
⊸ FAIRNESS - requires that equally
situated taxpayers pay equal taxes
and that better-off taxpayers pay
more tax
⊸ REVENUE SUFFICIENCY - part
of the reason for the deficit is that
revenue sufficiency may conflict
with efficiency and fairness
NATIONAL
INTERNAL
REVENUE
CODE
1.
NIRC Outline
I. TITLE I ORGANIZATION AND FUNCTION
OF THE BUREAU OF INTERNAL
REVENUE
II. TITLE II TAX ON INCOME
III.TITLE III ESTATE AND DONOR'S TAXES
IV.TITLE IV VALUE- ADDED TAX
V. TITLE V OTHER PERCENTAGE TAXES
VI.TITLE VI EXCISE TAXES ON CERTAIN
GOODS
VII.TITLE VII DOCUMENTARY STAMP TAX
VIII.
TITLE VIII REMEDIES
IX. TITLE IX COMPLIANCE
REQUIREMENTS
X.
TITLE X STATUTORY OFFENSES AND
PENALTIES
XI. TITLE XI ALLOTMENT OF INTERNAL
REVENUE
XII. TITLE XII OVERSIGHT COMMITTEE
XIII.TITLE XIII REPEALING PROVISIONS
XIV. TITLE XIV FINAL PROVISIONS
2.
National Internal
Revenue Code
State Policy
⊸It is hereby declared the policy of the State to
PROMOTE SUSTAINABLE ECONOMIC GROWTH
through the rationalization of the Philippine
internal revenue tax system, including tax
administration; TO PROVIDE, as much as possible,
an equitable relief to a greater number of taxpayers
in order to improve levels of disposable income and
increase economic activity; and to create a robust
environment for business to enable firms to
compete better in the regional as well as the global
market, at the same time that the State ensures that
Government is able to provide for the needs of those
under its jurisdiction and care.
TITLE II: TAX ON
INCOME
CORPORATION
⊸ Include partnership, joint-stock
companies, joint accounts, association,
or insurance companies but does not
include general professional
partnerships and joint venture or
consortium formed for the purpose of
undertaking construction projects in
energy operations pursuant to an
operating consortium agreement under a
service contract with the government
DOMESTIC
⊸ Created or organized in the
Philippines or under its laws
RESIDENT ALIEN
⊸ An individual whose
residence is within the
Philippines and who is not a
citizen thereof
RESIDENT FOREIGN
CORPORATION
⊸ A foreign corporation
engaged in trade or business
within the Philippines
TAXPAYER
⊸ Any person subject to tax
subject by this title
POLL TAX
⊸ A tax of a uniform, fixed
amount applied to an
individual in accordance with
the census
INCOME TAX
⊸ Tax on a person's income, emoluments,
profits arising from property, practice of
profession, conduct of trade or business or
on the pertinent items of gross income
specified in the Tax Code of 1997 (Tax
Code), as amended, less the deductions
and/or personal and additional
exemptions, if any, authorized for such
types of income, by the Tax Code, as
amended, or other special laws.
INDIVIDUAL INCOME
TAX
⊸ 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
INDIVIDUAL INCOME
TAX
• 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, nonprofessional related income in addition to
compensation income not otherwise subject to a final
tax
INDIVIDUAL INCOME
TAX
• 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
⊸ Non-resident citizens receiving income from
sources within the Philippines
⊸ Aliens, whether resident or not, receiving
income from sources within the Philippines
⊸ Corporation shall include partnerships, no
matter how created or organized.
INDIVIDUAL INCOME
TAX
⊸ Domestic corporations receiving income from
sources within and outside the Philippines
⊸ Foreign corporations receiving income
from sources within the Philippines
⊸ Estates and trusts engaged in trade or business
CORPORATE AND
PARTNERSHIP TAX
⊸ Many countries impose corporate tax,
also called corporation tax or company tax,
on the income or capital of some types of
legal entities
⊸ Similar tax may be imposed at state or
lower levels
⊸ May also be referred to as INCOME TAX
OR CAPITAL TAX
INCOME TAX ON CORPORATE
AND PARTNERSHIP INCOME
⊸ Corporations may be taxed on their incomes,
property, or existence by various jurisdictions.
Many jurisdictions impose a tax based on the
existence or equity structure of the corporation.
For example, Manila imposes a tax on
corporations organized in that state based on
the number of shares of capital stock issued and
outstanding. Many jurisdictions instead impose
a tax based on stated or computed capital, often
including retained profits
PHILIPPINE CORPORATE
AND PARTNERSHIP TAX
⊸ Corporate income tax rate both for domestic
and resident foreign corporations in Philippines is
30%, based on net taxable income.
⊸ Company tax is payable by domestic companies
on all income derived from sources within and
outside the Philippines. Foreign corporations,
whether resident or nonresident, are taxable only
on income derived from sources within the
Philippines.
PHILIPPINE CORPORATE
AND PARTNERSHIP TAX
⊸ The corporate income tax rate both for domestic
and resident foreign corporations is 30%.
Excluded from the income tax are dividends received
from domestic corporations; interest on Philippine
currency bank deposit and yield or any other
monetary benefit from deposit substitutes and from
trust funds and similar arrangements; and other
passive income previously subject to final taxes.
⊸ Regional operating headquarters are taxed at
10% on taxable income.
PHILIPPINE CORPORATE
AND PARTNERSHIP TAX
⊸ Special economic zone enterprises duly
registered with the Philippines Economic Zone
Authority are taxed at the rate of 5% on gross
income in lieu of national and local taxes, except
real property tax. The term 'gross income' refers to
gross sales or gross revenue derived from the
business activity within the Ecozone, net of sales
discount, sales returns and allowances, less the cost
of sales or direct costs but before deduction is made
for administrative expenses and incidental losses
during the taxable period.
TAX DEDUCTION
⊸ Reduction of the income subject to tax,
for various items, especially expenses
incurred to produce income.
⊸ Subject to limitations or conditions
⊸ Allowed only for expenses incurred that
produce current benefits, and
capitalization of items producing future
benefit is required, sometimes with
exceptions
INCOME TAX DEDUCTIONS
⊸ Except for taxpayers earning compensation
income arising from personal services rendered
under an employer-employee relationships where
the only deduction provided that the gross family
income does not exceed P250,000 per family is the
premium payment on health and/or
hospitalization insurance, a taxpayer may opt to
avail any of the following allowable deductions
from gross income:
▫Optional Standard Deduction - an amount not
exceeding 40% of the net sales for individuals and gross
income for corporations
INCOME TAX DEDUCTIONS
▫ Itemized Deductions which include the
following:
⋅Expenses
⋅Interest
⋅Taxes
⋅Losses
⋅Bad Debts
⋅Depreciation
⋅Depletion of Oil and Gas Wells and Mines
⋅Charitable Contributions and Other Contributions
⋅Research and Development
⋅Pension Trusts
TAX EXEMPTIONS
⊸ Various tax systems grant a tax exemption to
certain organizations, persons, income, property
or other items taxable under the system.
⊸ may also refer to a personal allowance or
specific monetary exemption which may be
claimed by an individual to reduce taxable
income under some systems
⊸ Tax exempt status may provide a potential
taxpayer complete relief from tax, tax at a
reduced rate, or tax on only a portion of the
items subject to tax.
EXEMPTION FROM
INCOME TAX
⊸ An individual who is a minimum wage
earner
⊸ An individual whose gross income does
not exceed his total personal and additional
exemptions
⊸ An individual whose compensation income
derived from one employer does not exceed P
60,000 and the income tax on which has been
correctly withheld
EXEMPTION FROM
INCOME TAX
⊸ An individual whose income has been
subjected to final withholding tax (alien
employee as well as Filipino employee
occupying the same position as that of the
alien employee of regional headquarters and
regional operating headquarters of
multinational companies, petroleum service
contractors and sub-contractors and
offshore-banking units, non-resident aliens
not engaged in trade or business)
EXEMPTION FROM
INCOME TAX
⊸ Those who are qualified under “substituted filing”.
However, substituted filing applies only if all of the
following requirements are present :
▫ the employee received purely compensation income
(regardless of amount) during the taxable year
▫ the employee received the income from only one employer
in the Philippines during the taxable year
▫ the amount of tax due from the employee at the end of the
year equals the amount of tax withheld by the employer
▫ the employee’s spouse also complies with all 3 conditions
stated above
EXEMPTION FROM
INCOME TAX
⊸ Non-resident
▫ A citizen of the Philippines who establishes to the
satisfaction of the Commissioner the fact of his physical
presence abroad with a definite intention to reside
therein
▫ A citizen of the Philippines who leaves the Philippines
during the taxable year to reside abroad, either as an
immigrant or for employment on a permanent basis
▫ A citizen of the Philippines who works and derives
income from abroad and whose employment thereat
requires him to be physically present abroad most of the
time during the taxable year
EXEMPTION FROM
INCOME TAX
⊸ Overseas Filipino Worker, including
overseas seaman
⊸ Charitable organizations
⊸ Religious groups
⊸ Duty Free shopping also termed as “Taxfree shopping”
⊸ Veteran workers
⊸ Under poverty
PHILIPPINE
CONSTITUTION
(TAX REFORM ACT OF 1997)
PROHIBITIONS
⊸ Section 20, Article III, Bill of Rights
-Prohibition against imprisonment for
non-payment of poll tax
⊸Section 28, Article VI, Legislative
Department
-Requirement of uniformity and equity in
taxation
⊸Section 29, Article VI, Legislative
Department
-Prohibition against taxation
appropriation for religious purposes
PROHIBITIONS
⊸ Section 28, Article VI, Legislative
Department
-Prohibition against taxation of religious,
charitable and educational entities(Religious and
charitable institutions exempt from property taxes)
⊸Section 4, Article XVI, Education
-Prohibition against taxation of non-stock ,
non-profit educational institutions and proprietary
educational institutions (exempt from property and
income taxes as well as customs duties except
income derived from business activity not related
to its educational purpose)
TITLE III: VALUE
ADDED TAX
VALUE-ADDED TAX (VAT)
OR GOODS AND SERVICES
TAX (GST)
⊸ Form of consumption tax
⊸ From the perspective of the buyer, it is a tax
on the purchase price
⊸ From that of the seller, it is a tax only on the
value added to a product, material, or service,
from an accounting point of view, by this stage
of its manufacture or distribution
⊸ The manufacturer remits to the government
the difference between these two amounts, and
retains the rest for themselves to offset the
taxes they had previously paid on the inputs.
AMENDMENTS
REPUBLIC ACTS
National Internal Revenue Code of 1997
(NIRC)
R.A.
8424
Tax Reform Act
December 11,
1997
Starts: January 1, 1998
R.A.
8761
Act imposing Value-Added Tax (VAT) on
certain services
Section 5
February 16,
2000
Starts: January 1, 2001
R.A.
9010
Act to further defer the imposition of VAT
Starts: January 1, 2003
February 27,
2001
REPUBLIC ACTS
R.A.
9224
Act rationalizing Excise Tax on
automobiles
Section 149
August 29,
2003
Starts: October 4, 2003
Act to exclude several services from the
coverage of VAT
R.A.
9238
Act to reimpose Gross Receipt Tax (GRT)
on banks and non-bank financial
intermediaries performing or not
performing Quasi-Banking functions
Section 108, 109, 121, 122
Starts: January 1, 2004
February 5,
2004
REPUBLIC ACTS
Act rationalizing provisions on
Documentary Stamp Tax (DST)
R.A.
9243
Section 174, 175, 176, 177, 178, 179, 180, 183,
186, 199
February 17,
2004
Starts: March 20, 2004
R.A.
9294
Act restoring tax exemption of Offshore
Banking Units (OBUs) and Foreign
Currency Deposit Units (FCDUs)
Section 27, 28
Starts: May 21, 2004
April 28, 2004
REPUBLIC ACTS
Act rationalizing provisions on
Documentary Stamp Tax (DST)
R.A.
9243
Section 174, 175, 176, 177, 178, 179, 180, 183,
186, 199
February 17,
2004
Starts: March 20, 2004
R.A.
9294
Act restoring tax exemption of Offshore
Banking Units (OBUs) and Foreign
Currency Deposit Units (FCDUs)
Section 27, 28
Starts: May 21, 2004
April 28, 2004
REPUBLIC ACTS
R.A.
9334
Act increasing Excise Tax Rates (ERT)
imposed on alcohol and tobacco products
Section 131, 141, 142, 143, 144, 145, 288
December 31,
2004
Starts: January 1, 2005
Act amending the sections of NIRC
R.A.
9337
Section 27, 28, 34, 106, 107, 108, 109, 110,
111, 112, 113, 114, 116, 117, 119, 121, 148, 151,
236, 237, 288
Starts: July 1, 2005
November 1, 2005
May 24, 2005
REPUBLIC ACTS
Act amending the sections of NIRC
R.A.
9361
Section 110(B)
November 21,
2006
Starts: December 13, 2006
Act amending the sections of NIRC
R.A.
9504
Section 22, 24, 34, 35, 51, 79
June 17, 2008
Starts: July 6, 2008
R.A.
10001
Act reducing taxes on life insurance
policies
Section 123, 183
Starts: March 5, 2010
February 23,
2010
REPUBLIC ACTS
R.A.
10021
Act to allow exchange of information by
the BIR of tax matters pursuant to
internationally-agreed tax standards
Exchange of Information on Tax Matters
Act of 2009
March 8, 2010
Section 6, 71, 270
R.A.
10026
Act granting income tax exemption to
local water districts
Section 27(C), 289-A
March 11, 2010
ROLES OF
BIR
BUREAU OF INTERNAL
REVENUE
⊸attached agency of Department
of Finance
⊸COLLECTS more than one-half
of the TOTAL REVENUES OF
THE GOVERNMENT
⊸Main office: BIR National Office
Bldg., BIR Road, Diliman,
Quezon City, Philippines
INCUMBENT BIR
OFFICIALS
Commissioner of
Internal Revenues
Kim S. Jacinto-Henares
Deputy
Commissioner
Information Systems
Group
Lilia C. Guillermo
Deputy
Commissioner
Resource
Management Group
Celia C. King
Deputy
Commissioner Legal
and Inspection
Group
Estela V. Sales
Deputy
Commissioner
Operations Group
Nelson M. Aspe
ROLES AND
FUNCTIONS
SECTION 2: POWERS
AND DUTIES OF THE BIR
⊸ Under supervision and control of
Department of Finance
⊸Power and duty to comprehend
assessment and collection of all
national internal revenue
⊸Give effect to and administer the
supervisory and police powers of
the Code and other tax laws
SECTION 3: CHIEF
OFFICIALS OF THE BIR
⊸Chief to be known as
“Commissioner of Internal
Revenue” or Commissioner
⊸Along with 4 Deputy
Commissioners
SECTION 4-8: POWERS AND
DUTIES OF THE
COMMISSIONER
⊸Interpret provisions of the code and
other tax laws
⊸Decisional power over matters relating
to BIR and the code
⊸Power to obtain information, summon
and examine testimonies
⊸Make assessments and prescribe
additional requirements
⊸Delegate power
⊸Ensure provision and distribution of
forms, receipts, and certificates
SECTION 9-18: POWERS
AND DUTIES OF REVENUE
DISTRICT OFFICERS
⊸ Supervision of its districts;
implement, administer, enforce the
law; coordinate with regional offices
and local governments
⊸ Examine efficiency of employees
⊸ Authorities to administer oaths,
take testimony, make arrest and
seizures
⊸ Reports violation
GAME TIME!!
WHO IS THE CURRENT
COMMISSIONER OF
INTERNAL REVENUES?
Kim S. JacintoHenares
The Bureau of Internal
Revenue (BIR) is an
attached agency of the
.
Department of
Finance
Corporate income tax rate
both for domestic and
resident foreign
corporations in Philippines
is is
.
30 %
What is a tax on a person's
income, emoluments,
profits arising from
property, practice of
profession, conduct of
trade or business or on the
pertinent items of gross
income specified in the
Tax Code of 1997?
Income Tax
•http://www.bir.gov.ph/index.php/tax-information/income-tax.html#it0015
•http://www.bir.gov.ph/index.php/tax-code.html
•http://www.chanrobles.com/legal6nationalinternalrevenuecodeof1997.ht
ml
REFERENCES
•http://quezoncity.gov.ph/index.php?option=com_content&view=article&i
d=226&Itemid=347
•http://www.tradingeconomics.com/philippines/corporate-tax-rate
http://www.gov.ph/section/republic-acts/
http://www.lawphil.net/statutes/repacts.html
Thanks!
HOPE YOU LISTENED!