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---- DISCLAIMER ---- Copyright Disclaimer Under Section 107 of the Copyright Act 1976, allowance is made for "fair use" for purposes such as criticism, comment, news reporting, teaching, scholarship, ...

---- DISCLAIMER ---- Copyright Disclaimer Under Section 107 of the Copyright Act 1976, allowance is made for "fair use" for purposes such as criticism, comment, news reporting, teaching, scholarship, and research. Fair use is a use permitted by copyright statute that might otherwise be infringing. Non-profit, educational or personal use tips the balance in favor of fair use.



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Taxation Taxation Presentation Transcript

  • Taxation 101:Basic Rules and Principles in Philippine Taxation February 8, 2013
  • The Four R’s of TaxationTaxation has four main purposes oreffects:1. Revenue2. Redistribution3. Repricing4. Representation
  • The Four R’s of TaxationRevenueThe taxes raise moneyto spend on armies,roads, schools andhospitals, and on moreindirect governmentfunctions like marketregulation or legalsystems.
  • The Four R’s of TaxationRedistributionThis refers to the transferringwealth from the richer sectionsof society to poorer sections.RepricingTaxes are levied to addressexternalities; for example,tobacco is taxed to discouragesmoking, and a carbon taxdiscourages use of carbon-basedfuels.
  • What is a “cedula”?RepresentationAs what goes with theslogan "no taxationwithoutrepresentation" , itimplies that: rulers taxcitizens, and citizensdemand accountabilityfrom their rulers as theother part of thisbargain.
  • Why Tax?The main purpose of taxation is to accumulate funds forthe functioning of the government machineries. Nogovernment in the world can run its administrativeoffice without funds and it has no such systemincorporated in itself to generate profit from itsfunctioning.The government’s ability to serve the people dependsupon the taxes that are collected. Taxes areindispensable in the government operation and withoutit, the government will be paralyzed.
  • The Philippine Tax SystemTax law in the Philippines covers national andlocal taxes. National taxes refer to nationalinternal revenue taxes imposed and collectedby the national government through the Bureauof Internal Revenue (BIR) and local taxes referto those imposed and collected by the localgovernment. The 1987 Philippine Constitutionsets limitations on the exercise of the power totax. The rule of taxation shall be uniform andequitable. The Congress shall evolve aprogressive system of taxation. (Article VI,Section 28, Paragraph 1).
  • What is Tax Evasion?Tax evasion happens whenthere is fraud throughpretension and the use of otherillegal devices to lessen one’staxes. There is tax evasion,under-declaration of income,and non-declaration of incomeand other items subject to tax,Under-appraisal of goodssubject to tariff , and over-declaration of deductions.
  • What is Tax Avoidance? The exploitation by the taxpayer of legally permissible alternative rates or methods of assessing taxable property or income to reduce or entirely avoid tax liability - Availing of all deductions allowed
  • Tax Avoidance versus Tax Evasion VALIDITY: Legal; not subject to illegal; subject to criminal penalty criminal penalty EFFECT: Minimization of taxes Almost always results in absence of tax payments MEANS & METHOD Legal; valid means Illegal methods
  • The Forms of Taxes Imposed on Persons and Property A) Personal, capitation or poll taxes These are taxes of fixed amount upon residents or persons of a certain class without regard to their property or business B) Property taxes 1. Real Property Tax - an annual tax that may be imposed by a province or city or a municipality on real property such as land, building, machinery and other improvements affixed or attached to real property.
  • The Forms of Taxes Imposed on Persons and Property 2. Estate Tax (Inheritance Tax) - a tax on the right of deceased person in transmitting property at the time of death and on the privilege that a person is given in controlling to a certain extent the disposition of his property to take effect upon death. 3. Gift or Donor’s Tax - a tax on the privilege of transmitting one’s property or property rights to another or others without adequate and full valuable consideration.
  • The Forms of Taxes Imposed on Persons and Property4. Capital Gains Tax - tax imposed on the sale or exchange of property . Those imposed are presumed to have been realized by the seller for the sale, exchange or other disposition of real property located in the Philippines, classified as capital assets.C. Income Taxes - Taxes imposed on the income of the taxpayers from whatever sources it is derived. Tax on all yearly profits arising form property, possessions, trades or
  • The Forms of Taxes Imposed on Persons and PropertyD. Excise or License Taxes - Taxapplicable to specified goodsmanufactured in the Philippines for domestic sale or consumption.These are imposed on alcohol products;on tobacco products; on petroleumproducts like lubricating oils, grease,processed gas etc; on mineral productssuch as coal and coke and quarryresources; on miscellaneous articlessuch as automobiles.
  • The Branches of Government vis-à-vis the Tax LawUnder these lies two other taxes:1.Documentary Stamp Tax - a tax imposed upondocuments, instruments, loan agreements andpapers and upon acceptance of assignments, salesand transfers of obligation and etc.2. Value added tax- is imposed on any personwho, in the course of trade or business sells,barters, exchanges, leases, goods or properties,renders services, or engages in similartransactions.
  • Products like Papawash have value-added taxes, too.