WHAT IS TAXATION?
• Taxation is a term for when a taxing authority, usually a government, levies
or imposes a financial obligation on its citizens or residents. Paying taxes to
governments or officials has been a mainstay of civilization since ancient
times.
CONCEPT OF TAXATION
• Taxation is the inherent power of the state to impose and demand
contribution upon persons, properties, or rights for the purpose of generating
revenues for public purposes.
• Taxes are enforced proportional contributions from persons and property
levied by the lawmaking body of the state by virtue of its sovereignty for the
support of the government and all public needs.
ESSENTIAL CHARACTERISTICS OF TAX
1. It is an enforced contribution.
2. It is generally payable in money.
3. It is proportionate in character, usually based on the ability to pay.
4. It is levied on persons and property within the jurisdiction of the state.
5. It is levied pursuant to legislative authority, the power to tax can only
be exercised by the law making body or congress.
6. It is levied for public purpose.
7. It is commonly required to be paid a regular intervals.
TYPES OF TAXES IN THE PHILIPPINES
• National Taxes are those that we pay to the government through the
Bureau of Internal Revenue.
• Local Taxes are taxes, fees or charges are imposed by the local government
units, such as provinces, cities, municipalities, and barangays, who have
been given the power to levy such taxes by the code.
NATIONAL TAXES
• Capital Gains Tax is a tax imposed on the gains presumed to have been
realized by the seller from the sale, exchange, or other disposition of capital
assets located in the Philippines, including pacto de retro sales and other
forms of conditional sale.
• Documentary Stamp Tax is a tax on documents, instruments, loan
agreements and papers evidencing the acceptance, assignment, sale or
transfer of an obligation, rights, or property incident thereto.
• Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous
transfer of property between two or more persons who are living at the time
of the transfer.
• Estate Tax is a tax on the right of the deceased person to transmit his/her
estate to his/her lawful heirs and beneficiaries at the time of death and on
certain transfers which are made by law as equivalent to testamentary
disposition.
• Income Tax is a tax on all yearly profits arising from property, profession,
trades or offices or as a tax on a person’s income, emoluments, profits and
the like. Self- employed individuals and corporate taxpayers pay quarterly
income taxes from 1st quarter to 3rd quarter.
• Percentage Tax is a business tax imposed on persons or entities who sell or
lease goods, properties or services in the course of trade or business whose
gross annual sales or receipts do not exceed the amount required to register
as VAT-registered taxpayers.
• Value Added Tax is a business tax imposed and collected from the seller in
the course of trade or business on every sale of properties (real or personal)
lease of goods or properties (real or personal) or vendors of services.
• Excise Tax is a tax imposed on goods manufactured or produced in the
Philippines for domestic sale or consumption or any other disposition.
• Expanded Withholding Tax is a kind of withholding tax which is prescribed
only for certain payers and is creditable against the income tax due of the
payee for the taxable quarter year.
• Final Withholding Tax is a kind of withholding tax which is prescribed only
for certain payers and is not creditable against the income tax due of the
payee for the taxable year. Income Tax withheld constitutes the full and final
payment of the Income Tax due from the payee on the said income.
LOCAL TAXES
• Local taxes the local government taxation in the Philippines are based on
Republic Act 7160 or otherwise known as the Local Government Code of
1991, as amended. These taxes, fees or charges are imposed by the local
government units, such as provinces, cities, municipalities, and barangays,
who have been given the power to levy such taxes by the code.
• Tax on Transfer of Real Property Ownership – tax
Imposed on the sale, donation, barter, or on any other mode of transferring
ownership or title of real property.
• Tax on Business of Printing and Publication – tax on
The business of persons engaged in the printing and/or publication of books,
cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and
others of similar nature.
• Franchise Tax – tax on businesses enjoying a franchise, at the rate not
exceeding fifty percent (50%) of one percent (1%) of the gross annual
receipts for the preceding calendar year based on the incoming receipt, or
realized, within its territorial jurisdiction.
• Tax on Sand, Gravel and Other Quarry Resources – tax imposed on ordinary
stones, sand, gravel, earth, and other quarry resources, as defined under the
National Internal Revenue Code, as amended, extracted from public lands or
from the beds of seas, lakes, rivers, streams, creeks, and other public waters
within its territorial jurisdiction.
• Professional Tax – an annual professional tax on each person engaged in
the exercise or practice of his profession requiring government examination.
• Amusement Tax tax collected from the proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia, and other places of
amusement.
Tax on Business – taxes imposed by cities, municipalities on businesses
before they will be issued a business license or permit to start operations
based on the schedule of rates prescribed by the local government code, as
amended.
• Fees for Sealing and Licensing of Weights and Measures – fees for the
sealing and licensing of weights and measures at such reasonable rates as
shall be prescribed by the sangguniang bayan of the municipality or city.
• Fishery Rentals, Fees and Charges rentals, fees or charges imposed by the
municipality/city to grantees of fishery privileges in the municipal/city
waters, e.g., fishery privileges to erect fish corrals, oysters, mussels or other
aquatic beds or bangus fry areas and others as mentioned in the local
government code, as amended.
• Community Tax – tax levied by cities or municipalities to every inhabitant
of the Philippines eighteen (18) years of age or over who has been regularly
employed on a wage or salary basis for at least thirty (30) consecutive
working days during any calendar year, or who is engaged in business or
occupation, or who owns real property with an aggregate assessed value of
One thousand pesos (P1,000.00) or more, or who is required by law to file an
income tax return.
• Taxes that may be levied by the barangays on stores or retailers with fixed
business establishments with gross sales of receipts of the preceding
calendar year of Fifty thousand pesos (P50,000.00) or less, in the case of
cities and Thirty thousand pesos (P30,000.00) or less, in the case of
municipalities, at a rate not exceeding one percent (1%) on such gross sales
or receipts.
• Service Fees or Charges fees or charges that may be collected
By the barangays for services rendered in connection with the regulations or
the use of barangay-owned properties or service facilities, such as palay,
copra, or tobacco dryers.
• Barangay Clearance a reasonable fee collected by barangays
Upon issuance of barangay clearance – a document required for many
government transactions, such as when applying for business permit with
the city or municipality.
