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    MarrielDeTorres
    The document summarizes general principles of income taxation in the Philippines, including: 1) Income tax rates vary depending on citizenship status and location of income sources. 2) Minimum wage earners are exempt from income tax on their taxable income. 3) Passive income like interest, royalties, prizes and dividends are subject to final tax rates ranging from 5-20%, depending on the type of income. 4) Capital gains from the sale of shares not traded on the stock exchange or from the sale of real property are subject to final tax rates of 5-10% or 6% respectively.

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    TAX 1 Reviewer

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    59 views3 pages
    The document summarizes general principles of income taxation in the Philippines, including: 1) Income tax rates vary depending on citizenship status and location of income sources. 2) Minimum wage earners are exempt from income tax on their taxable income. 3) Passive income like interest, royalties, prizes and dividends are subject to final tax rates ranging from 5-20%, depending on the type of income. 4) Capital gains from the sale of shares not traded on the stock exchange or from the sale of real property are subject to final tax rates of 5-10% or 6% respectively.

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    The document summarizes general principles of income taxation in the Philippines, including: 1) Income tax rates vary depending on citizenship status and location of income sources. 2) Minimum wage earners are exempt from income tax on their taxable income. 3) Passive income like interest, royalties, prizes and dividends are subject to final tax rates ranging from 5-20%, depending on the type of income. 4) Capital gains from the sale of shares not traded on the stock exchange or from the sale of real property are subject to final tax rates of 5-10% or 6% respectively.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    59 views3 pages

    TAX 1 Reviewer

    Uploaded by

    MarrielDeTorres
    The document summarizes general principles of income taxation in the Philippines, including: 1) Income tax rates vary depending on citizenship status and location of income sources. 2) Minimum wage earners are exempt from income tax on their taxable income. 3) Passive income like interest, royalties, prizes and dividends are subject to final tax rates ranging from 5-20%, depending on the type of income. 4) Capital gains from the sale of shares not traded on the stock exchange or from the sale of real property are subject to final tax rates of 5-10% or 6% respectively.

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    GENERAL PRINCIPLES OF INCOME TAXATION IN THE PHILIPPINES (Sec.

    23)

    (1) RESIDENT CITIZEN – Sources from within and without the Philippines

    (2) NONRESIDENT CITIZEN - Sources from within the Philippines

    (3) OFW & SEAMEN – Sources from within the Philippines

    (4) DOMESTIC CORPORATION - Sources from within and without the Philippines

    (5) RESIDENT & NONRESIDENT ALIEN - Sources from within the Philippines

    (6) FOREIGN CORPORATION - Sources from within the Philippines

    INCOME TAX RATES (Sec. 24, A)

     For married individuals, their individual incomes shall be computed separately


    based on their respective taxable income. Provided, that if any income cannot be
    attributed definitely attributed to any one of them the same shall be divided equally
    between the spouses for purposes of determining their respective taxable income.

     Minimum wage earners are exempt from the payment of income tax on their taxable
    income.

    RATES ON CERTAIN PASSIVE INCOME (Sec. 24, B)

    (A) Interests, Royalties, Prizes, and other winnings

    Final Tax of 20%:

     Any currency bank deposit and yield


     Any other monetary benefit from deposit substitutes, trust funds, & similar
    arrangements
     Royalties (XPN: Royalties on books, other literary works, & musical
    compositions, a final tax of 10% will apply)
     Prizes (XPN: Prizes amounting to P 10,000 or less, income tax of 5% will
    apply)
     Other winnings (XPN: PCSO and Lotto Winnings)

    Final Tax of 7.5%:

     Interest income from a depositary bank under the foreign currency deposit
    system (XPN: Nonresident individual)
    Interest from long-term deposits
     GR: Exempt from tax under this section
     XPN: termination before the 5th year, final tax shall be imposed on the entire
    income , deducted and withheld by the depositary bank from the proceeds of
    such:
     4 to less than 5 years – 5%
     3 to less than 4 years – 12%
     less than 3 years – 20%

    (1) Cash and/or property dividends

    Final Tax of 10%:

    On income received by an individual from a domestic corporation or from a joint


    stock company, insurance or mutual fund companies operating headquarters of
    multinational companies OR share of an individual in the distribution of net income
    after tax of a partnership (XPN: GPP), or share of an individual from the net income
    after tax of an association, a joint account, or a joint venture or consortium taxable
    as a corporation of which he is a member or co-venturer.

    CAPITAL GAINS FROM SALE OF SHARES OF STOCK NOT TRADED IN THE STOCK
    EXCHANGE (Sec. 24, C)

    imposed upon the net capital gains realized during the taxable year from the sale, barter,
    exchange or other disposition of shares of stock in a domestic corporation, except shares
    sold, or disposed of through the stock exchange.

     Not over P100,000 – 5%


     On any amount in excess of P100,000 – 10%

    CAPITAL GAINS FROM SALE OF REAL PROPERTY (Sec. 24, D)

    Final tax of 6% based on the gross selling price or current FMV as determined by Sec. 6 (E)
    of this Code:

    (E) Authority of the Commissioner to Prescribe Real Property Values. - The


    Commissioner is hereby authorized to divide the Philippines into different zones or
    areas and shall, upon consultation with competent appraisers both from the private
    and public sectors, determine the fair market value of real properties located in each
    zone or area. For purposes of computing any internal revenue tax, the value of the
    property shall be, whichever is the higher of:

    (1) The fair market value as determined by the Commissioner; or


    (2) The fair market value as shown in the schedule of values of the Provincial
    and City Assessors.
    XPN: Disposition of Principal Residence (Exempt from payment of CGT)
     Proceeds are fully utilized for acquiring or constructing a new principal residence
    within 18 months

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