This document discusses various aspects of income taxation in the Philippines under the National Internal Revenue Code (NIRC). It defines the different types of taxes under the NIRC and characteristics of income tax. It also discusses the government's right to tax income and different income tax systems. The key principles in determining taxable income such as realization, economic benefit, and severance are explained. The document provides examples and formulas for computing taxable income. It concludes with the different methods of income taxation in the Philippines.
This document discusses various aspects of income taxation in the Philippines under the National Internal Revenue Code (NIRC). It defines the different types of taxes under the NIRC and characteristics of income tax. It also discusses the government's right to tax income and different income tax systems. The key principles in determining taxable income such as realization, economic benefit, and severance are explained. The document provides examples and formulas for computing taxable income. It concludes with the different methods of income taxation in the Philippines.
This document discusses various aspects of income taxation in the Philippines under the National Internal Revenue Code (NIRC). It defines the different types of taxes under the NIRC and characteristics of income tax. It also discusses the government's right to tax income and different income tax systems. The key principles in determining taxable income such as realization, economic benefit, and severance are explained. The document provides examples and formulas for computing taxable income. It concludes with the different methods of income taxation in the Philippines.
This document discusses various aspects of income taxation in the Philippines under the National Internal Revenue Code (NIRC). It defines the different types of taxes under the NIRC and characteristics of income tax. It also discusses the government's right to tax income and different income tax systems. The key principles in determining taxable income such as realization, economic benefit, and severance are explained. The document provides examples and formulas for computing taxable income. It concludes with the different methods of income taxation in the Philippines.
Such other taxes as are or hereafter may be imposed and collected by the BIR CHARACTERISTICS OF INCOME TAX
Direct Tax National Tax Excise Tax General Tax Progressive Tax WHAT IS THE SOURCE OF THE RIGHT OF THE GOVERNMENT TO TAX INCOME?
The fundamental doctrine of income taxation is that the right of a government to
tax income emanates from its partnership in the production of income, by providing the protection, resources, incentive, and proper climate for such production. (CIR vs Lednicky, GR Nos. 18169, L-18262, and L-21434, July 31, 1964) INCOME TAX SYSTEMS
SEMI GLOBAL GLOBAL, SCHEDULAR (UNITARY) SEMI TAX SYSTEM TAX SYSTEM SCHEDULAR FEATURES OF THE PHILIPPINE INCOME TAXATION
The law has adopted the most comprehensive tax situs by using all possible legal criteria in the determination of its tax base, i.e. , nationality and residence of the taxpayer as well as the source of taxable income. The individual income tax system, in the main, is progressive in nature by providing for graduated rates of income tax. In certain instances, however, final taxes are imposed such as those on passive investment income. The present income tax system is now more schedular than global in the case of individual income taxpayers but it has maintained much of its global treatment on corporations.
Reference: Tax Law and Jurisprudence by Vitug and Acosta
WHEN DEALING WITH MONEY OR PROPERTY IN RELATION TO INCOME TAXATION, WE ASK THE FOLLOWING?
1. Is this capital or is this
income? 2. Has it been realized or is it merely inchoate? (e.g cash dividends or stock dividends? BASIC PRINCIPLES IN DETERMINING IF MONEY OR PROPERTY CAN BE CONSIDERED INCOME
Claim of Economic Realization Right Benefit Principle Doctrine Theory
Severance All Events
Test Theory Test SAMPLE QUESTION
MR. A is a RFC. He purchased a parcel of land in Makati City in 1970 at a
consideration of P 1 Million. In 2011, the land, which remained undeveloped and idle, had a fair market value of P 20 M. Mr. B, another RFC, is very much interested in the property and he offered to buy the same for P 20 M. The assessor of Makati City re-assessed in 2011 the property at P 10M. Is Mr. A liable for income tax in 2011 based on the offer to buy by Mr. B? Explain. TAXABILITY OF INCOME
Income, gain or profit is subject to income tax, when
the following requisites are present: 1. There is income, 2. The income, gain or 3. The income, gain or gain or profit. profit is received or profit is not exempt realized during the from income tax (not taxable year excluded by law or treaty from taxation.) WHAT IS TAXABLE INCOME?
The term “taxable income” means the pertinent items of
gross income specified in this Code, less the deductions, if any, authorized for such types of income by this Code or other special laws. (Sec 31, NIRC) Illustration of how Taxable taxable income is Income Exclusions
computed (purely compensation income earners) Mandatory Deductions (SSS/GSIS, PHIC, Pag – Ibig) Illustration of how taxable income is Taxable Exclusions Income computed
Allowable Cost of Deductions Goods Sold BASIC FORMULA
GROSS INCOME (SEC 32) XX
LESS: ALLOWABLE DEDUCTION (SEC 34) XX TAXABLE INCOME (SEC 31) XX KINDS OF INCOME TAXATION
Net Income Taxation
Gross Income Taxation
Final Income Taxation
THANK YOU. UPLOADING OF THIS IN THE INTERNET IS STRICTLY PROHIBITED. ATTY A REFERENCES: INCOME TAXATION LAW ILLUSTRATED AND SIMPLIFIED BY CHAVEZ, TAX LAW AND JURISPUDENCE BY VITUG, TAX MADE LESS TAXING BY INGLES AND COMPACT REVIEWER IN TAXATION BY BOADO.
