An ad valorem tax is a tax based on the value of the item, where the amount of tax increases as the value increases. A specific tax is a fixed amount placed on an item regardless of its price. Examples of ad valorem taxes include VAT and import duties, while specific taxes are often placed on items like alcohol, cigarettes, and sugary beverages at a set rate per unit.

1. AD VALOREM AND
SPECIFIC TAX
PREPARED BY:
KENNIE JOY P. TORREDA

2. WHAT IS TAX?
• TAXES ARE ENFORCED
PROPORTIONAL CONTRIBUTIONS
FROM PEOPLE AND PROPERTIES
LEVIED BY THE LAWMAKING BODY
OF THE GOVERNMENT BY VIRTUE
OF ITS SOVEREIGNTY FOR THE
SUPPORT OF THE GOVERNMENT
AND PUBLIC NEED

4. AD VALOREM TAX
• LATIN WORD WHICH MEANS
“ACCORDING TO THE VALUE”
• A TAX THAT IS THE PERCENTAGE OF THE PRICE OF THE
GOODS. AS THE GOODS INCREASES, THE AMOUNT OF TAX
INCREASES
• CHARGE LEVIED AS A PERCENTAGE OF VALUE OF THE ITEM IT
IS IMPOSED ON, NOT ON THE ITEM’S QUANTITY, SIZE,
WEIGHT. VAT AND IMPORT DUTIES ARE AD VALOREM TAXES

5. EXAMPLES OF AD VALOREM TAX

9. SPECIFIC TAX
• A TAX OF A SPECIFIC AMOUNT PLACED ON TOP OF THE
PRICE OF THE GOODS, REGARDLESS OF THE GOODS
PRICE (FIXED)
• A LEVY ASSESSED BY AN AUTHORITY THAT IS BASED ON
CERTAIN AMOUNT, BUT NOT ON ITS PRICE. A SPECIFIC
TAX IS TYPICALLY INCURVED BY A BUSINESS IN A SET
AMOUNT THAT IS DETERMINED BY THE NUMBER OR
WEIGHT OR TAXABLE ITEMS

10. EXAMPLES OF SPECIFIC TAX
SPECIFIC TAX For example
a tax that is given as
a fixed rate for each unit of a
good or service,
rather than based on its value
ALCOHOLIC DRINKS
CIGARETTES
SWEETENED
BEVERAGE

14. SUMMARY
• Ad Valorem Tax- also known as Percentage Tax
- it is imposed on the monetary value of the taxed
item
Example: 12% of the sales, 20% VAT
• Specific Tax- also known as per unit tax
- it is when a specific amount is imposed upon a good
Example: $2 dollars per shoe, P25 on each mobile phone sold