Tax Structure System in tye Philippines

1. Tax structure in the
Philippines and other
3rd World Countries
JONELA MARIE U. DACASIN

2. Tax Structure in the Philippines
Two (2) Major Episodes of Policy Reforms, first in 1986 and
another in 1997.
1. Tax Reform Package (TxRP) of 1986 – was designed to
promote a fair, efficient, and simple tax system.
2. Comprehensive Tax Reform Program (CTRP) - the major
components of this was enacted into various laws beginning in
June 1996 with the passing of National Internal Revenue
enacted as Republic Act No. 8424 or the Tax Reform Act of 1997
and subsequent laws amending it; the law was most recently
amended by Republic Act No. 10963 or the Tax Reform for
Acceleration and Inclusion Law.

3. Tax law in the Philippines covers:
• National Taxes
• Local Taxes
National Taxes- refer to national internal revenue taxes imposed
and collected by the national government through the Bureau of
Internal Revenue (BIR) and
Local Taxes- refer to those imposed and collected by the local
government.

4. Laws that Govern Taxation in the Philippines
The 1987 constitution;
The National-International Revenue Code (RA
8424);
The Tax Reform for Acceleration and Inclusion act
(RA 10963): TRAIN Law;
The Tariff and Customs Code of 1978 (PD 1464, as
amended); and
Local Government Code of 1991 (RA 7160).

5. The National-International Revenue Code (RA 8424)
Covers the organization and function of the Bureau of Internal
Revenue;
The types and rates of taxes including as to when payable;
Remedies in case of assessment and assessment concerns; and
Offenses and penalties.

6. Types of Taxes
1. Estate Tax
Estate tax is charged to your estate or properties when the
titleholder meets their demise. At a rate of 6%, the heir
or the rightful beneficiary of the estate should settle this tax
before transferring the title to the heir or beneficiary’s name.
2. Documentary Stamp Tax
This refers to the tax imposed on contracts, loan agreements,
certificates, and other legal papers that serve as proof of
transfer/sale of an ownership/obligation of a property or

7. 3. Percentage Tax
Percentage tax is a business tax imposed on merchants or
businesses that lease/sell products, services, and properties. They
are not VAT-registered, with a yearly gross sale at a maximum of
P750,000.
4. Capital Gains Tax
Capital Gains tax refers to what an individual or a business pays
upon making profits out of selling a valuable asset. These sold
assets subjected to capital gains are pieces of jewelry, stocks,
properties, and other goods appraised with high value.

8. 5. Income Tax
This refers to the tax that is imposed on an individual’s
earnings, be it salary or profits, from his/her profession,
business, trade, or properties at rates ranging from 5% to 32%
depending on their income bracket.
6. Withholding Tax
Withholding tax is the amount from an employee’s wage
deducted by the employer and directly paid to the government
for the employee’s partial income tax.

9. 7. Value-Added Tax or VAT
Value-Added Tax serves as a consumption fee that is placed on a
product when there is an additional value to its manufacturing and
final sale. Since it is considered an indirect tax, the customers pay
for VAT.
8. Excise Tax
Excise Tax is placed on products sold in the country and
considered an indirect type of tax because this can be recovered by
the seller/producer by increasing the price of these products. This
is emphasized in the TRAIN law. Example placement of an excise
tax can be cited from the products with health risks such as liquors
and tobacco.

10. 9. Donor’s Tax
Donor’s Tax is placed on a gift, donation, or willful free-of-charge
transfer of property between the benefactor to recipients on their
lifetime. There are some cases where BIR would scrap this tax. An
example of this is the goods provided to the victims of the
destructive typhoon Yolanda.

11. The 1987 Constitution
Article VI, Section 28 – Let us discuss the each of the four
paragraphs:
First: Rule on taxation: uniform and equitable; and progressive
system;
Second: President’s power to fix tariff rates, import
and export quotas, tonnage and wharfage dues, and other
duties or imposts;
Third: Exemption from taxation of select institutions; and
Forth: The requirement for tax exemption law passage:
concurrence of a majority of all members of Congress.

12. The Tax Reform for Acceleration and Inclusion act (RA10963):
TRAIN Law
 Effective on January 1, 2018;
 Aimed to make the Philippine tax system simpler, fairer, and
more efficient;
 Aim to raise revenue to fund government projects and
investments; and
 Covers personal income tax, estate tax, donor’s tax, value-
added tax, excise tax, and administrative measures.

13. The Tariff and Customs Code of 1978 (PD 1464, as amended)
 Functions of the Bureau of Customs relevant to taxation: To
increase the revenues of the government (Tax on vehicles and
petroleum products);
 Import and export cargoes (International trade); and
 Administrative and Judicial Proceedings.

14. Local Government Code of 1991 (RA 7160)
Local taxes are grounded on the Republic Act 7160, also
known as the Local Government Code of 1991. These
and fees, on the other hand, are levied by the local
government units (provincial, city, municipality, and
barangay).
1. Franchise Tax
2. Basic Real Property Tax
3. Sand, Gravel and other Quarry Resources Tax
4. Business of Printing and Publication Tax .

15. 5. Annual Fixed Tax for Delivery Trucks and Vans
6. Professional Tax
7. Amusement Tax
8. Community Tax
9. Barangay Tax
10. Barangay Clearance
“The best things in life are free, but sooner or later
the government will find a way to tax them”

16. Bibliography
Borracho.2020.Laws that Govern Taxation in the Philippines.LexClassroom.August 10,
2022.https://lexclassrooms.com/laws-govern-taxation/.
List of Taxes in the Philippines.CarpolLaw.&Associates.https://carpolaw.com/practice-
areas/tax/list-taxes-philippines/.
eCompareMo.2020.Types of Taxes in the Philippines.
of-taxes-philippines
https://www.bir.gov.ph/index.php/legal-matters/guide-to-philippines-tax-law-research.html
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