This document discusses taxation in the Philippines. It covers several key points: 1. The types of taxes imposed by the Philippine government at both the national and local levels, including income tax, VAT, property tax, and others. 2. How taxes are collected in the Philippines, with national taxes handled by the Bureau of Internal Revenue and local taxes by local treasurer's offices. 3. Details on personal and corporate income tax rates, capital gains tax, VAT rates, and tax exemptions in the Philippines. 4. An overview of local fiscal administration and its important aspects like budgeting, revenue generation, financial reporting, and resource allocation.

1. OUTLINE.
GOVERNMENT TAXATION
LOCAL FISCAL
ADMINISTRATION
REPORTER, ROLDAN P. OYAO, MPA.
DPA. 2 STUDENT.

2. • Government taxation is the
process by which
governments collect
revenue from individuals,
businesses, and other
entities to fund public
expenditures and provide
essential services. Taxation
is a key component of
public finance and is used
to finance various
government activities, such
as infrastructure
development, education,
healthcare, defense, and
social welfare programs.

3. • Types of Taxes:
• There are different types of taxes that governments impose, including:
• Income Tax: A tax on individuals' and businesses' income.
• Corporate Tax: A tax on the profits of corporations.
• Sales Tax: A tax on the sale of goods and services.
• Property Tax: A tax on the value of real estate and other properties.
• Value Added Tax (VAT): A tax on the value added at each stage of
production or distribution of goods and services.
• Excise Tax: A tax on specific goods like tobacco, alcohol, and gasoline.
• Customs Duties: Taxes on imports and exports.

4. •Taxation Policy:
• Governments design tax policies based on
economic, social, and political considerations.
They balance the need to generate revenue
with the potential impact on economic growth,
income distribution, and overall societal well-
being.

5. • Progressive, Regressive, and :
• Tax systems can be categorized as progressive, regressive, or
proportional:
• Progressive Tax: As income increases, the tax rate also
increases. This is designed to reduce income inequality.
• Regressive Tax: As income increases, the tax rate decreases.
This can disproportionately affect lower-income individuals.
• Proportional Tax: The tax rate remains constant regardless of
income, ensuring a consistent tax burden across income levels.
• Proportional Taxes

6. •Tax Collection and Enforcement:
•Tax authorities are responsible for collecting
taxes and enforcing compliance with tax laws.
They may use audits, penalties, and legal
actions to ensure that taxpayers accurately
report their income and pay the appropriate
amount of taxes.

7. •Taxation and Economic Impact:
• Taxation plays a significant role in shaping
economic behavior. For example, high
taxes on certain goods might discourage
their consumption, while tax incentives can
encourage specific economic activities,
such as research and development.

8. •Taxation and Government Spending:
The revenue generated from taxation funds
government expenditures. Governments
allocate these funds to various sectors and
programs based on national priorities and
needs.

9. •Taxation and Public Policy:
Taxation can be a tool for achieving
various policy objectives, such as reducing
carbon emissions through environmental
taxes or promoting homeownership
through mortgage interest deductions.

10. •Tax Evasion and Avoidance:
Some individuals and businesses may engage
in tax evasion (illegally avoiding taxes) or tax
avoidance (legally minimizing taxes), which can
have significant implications for revenue
collection and fairness.

11. • .International Taxation:
• Taxation also extends to international transactions and cross-border
activities, leading to complexities in determining tax liabilities and preventing
tax base erosion.
• Tax Reforms:
• Governments may periodically review and reform their tax systems to adapt
to changing economic and social conditions and to improve efficiency and
fairness.
• Overall, taxation is a crucial tool that governments use to finance their
operations and provide essential public services, and it has a profound impact
on individuals, businesses, and the broader economy.

12. •How are taxes collected in the
Philippines?
•Taxes imposed at the national level are
collected by the Bureau of Internal
Revenue (BIR), while those imposed at
the local level (i.e., provincial, city,
municipal, barangay) are collected by a
local treasurer's office.

13. Taxation in the Philippines
•

14. • The policy of taxation in the Philippines is governed chiefly by
the Constitution of the Philippines and three Republic Acts.
• Constitution: Article VI, Section 28 of the Constitution states that
"the rule of taxation shall be uniform and equitable" and that
"Congress shall evolve a progressive system of taxation.
• national law: National Internal Revenue Code—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;

15. •Local laws: major sources of revenue for
the local government units (LGUs) are the
taxes collected by virtue of Republic Act
No. 7160 or the Local Government Code
of 1991, and those sourced from the
proceeds collected by virtue of a local
ordinance.

16. •The taxes imposed by the national government of
the Philippines include, but are not limited to:
•income tax;
•estate tax;
•donor's tax;
•value-added tax;
•percentage tax;
•excise tax; and
•documentary stamp tax.

17. • Compensation and self-employment income
Individuals, including nonresident aliens, earning compensation
income are taxed based only on the income tax schedule for
individuals. On the other hand, self-employed individuals and
professionals are taxed based on the income tax schedule for
individuals, applicable percentage taxes, and value-added tax (VAT).
However, if their gross sales (or gross receipts plus other non-
operating income) does not exceed the VAT threshold, they have
the option to be taxed either on the basis of the income tax
schedule for individuals and the applicable percentage taxes, or just
with a flat tax rate of 8% on their gross sales (or gross receipts plus
other non-operating income

18. • Interests, royalties, prizes and other winnings
• Interest income from bank deposits, deposit substitutes, trust funds, and other
similar products (except for its long-term variants) is taxed at the rate of 20%.
• Royalties, except on books, literary works and musical compositions, are taxed
at the rate of 10%
• Prizes and winnings from Philippine Charity Sweepstakes
Office (PCSO) Lotto in excess of P10,000 (upon which individual prizes and
winnings P10,000 or below are taxed on the basis of the income tax schedule
for individuals) are taxed at the rate of 20%
• Interest income from a depository bank under the expanded foreign currency
deposit system is taxed at the rate of 15%.
• Income from long-term deposits and investments, when pre-terminated in less
than three years after making such deposit or investment, is taxed at the rate of
20%; less than four years, 12%; and, less than five years, 5%.

19. •Capital Gains
• Capital gains from the sale of shares of stock not
traded in stock exchange are taxed at the rate of 15%
• Capital gains from the sale of real property are taxed at
the rate of 6%, except when such proceeds would be
used to construct a new principal residence within
eighteen months after the sale of a previous principal
residence had occurred.[

20. • the value-added tax (VAT) rate since 2006 is 12%.
• The new VAT threshold was changed from Php 1,919,500 to Php 3,000,000 as a
result of the passage of the Tax Reform for Inclusion and Acceleration (TRAIN) Law.
• agricultural and marine food products in their original state;
• fertilizers, seeds, seedlings, fingerlings, and feeds and feed ingredients;
• importation of personal and household effects of persons resettling in the
Philippines;
• importation of professional instruments, wearing apparel, and domestic
animals;
• services subject to percentage tax;
• agricultural contract growers and millers;
• health care services;

21. • health care services;
• educational services;
• agricultural cooperatives, and cooperatives that are non-
agricultural and non-electric in nature;
• residential lots worth at most P1,500,000, or house and
lots worth at most P2,500,000
• monthly lease of residential units at most P15,000;
• books and mass media publications (e.g. newspaper and
magazine);

22. • transport services by non-Philippine carriers;
• cargo vessels and aircraft;
• financial services;
• sales to senior citizens and persons with disability;
• from 2019, drugs prescribed for diabetes, high cholesterol
and hypertension; and,
• annual sales of any other goods or services not
exceeding P3,000,000.

23. CLASSIFICATION
TAXES CAN BE CLASSIFIED IN DIFFERENT WAYS:
Direct tax Indirect tax
Borne directly by the taxpayer:
the person who pays the tax or
duty is also the taxable person.
Levied periodically following
submission of a tax return by
the company (e.g. income tax).
Paid by a taxpayer who does not
directly bear the tax expense, the tax
is levied on the consumer and paid
by the vendor.
Levied regularly following the
occurrence of a particular event and
without the need for a tax notice (e.g.
VAT collected by the company from
the consumer who bears the tax
expense and transferred to the state

24. IMPERSONAL AND PERSONAL
TAXES
Impersonal tax Personal tax
Taxes an economic item
without considering the
personal circumstances of
the taxpayer (e.g.
property tax, communal
business tax, VAT).
Taxes an economic amount
adjusted to take the personal
circumstances of the taxpayer into
consideration (e.g. income tax).

25. DISTRIBUTIVE AND PRO-RATA
TAXES
Distributive tax Pro-rata tax
the rate of taxation is not known
in advance but determined
according to the sum to be
collected by the public
authorities. This sum is then
shared among the various
taxpayers (e.g. local taxes).
the rate of taxation is determined
but the sum to be paid is not
known in advance (e.g. communal
business tax).

26. PROPORTIONAL AND
PROGRESSIVE TAXES
Proportional tax Progressive tax
Is obtained using a fixed rate
(e.g. VAT).
Is determined using a scale
which enables the tax to be
increased in line with the
taxable item (e.g. income
tax).

27. ANALYTIC AND SYNTHETIC
TAXES
Analytic tax Synthetic tax
This type of tax only takes
one item into account (e.g.
property tax).
This tax takes into account a group
of items to which an overall tax is
applied (e.g. income tax, net wealth
tax, communal business tax).

28. LOCAL AND NATIONAL TAXES
Local (or National (or State) tax
Tax determined by the
commune where
established.
The tax is allocated to the
national budget and set
at identical rates
nationwide.

29. PHILIPPINES NOTES REDUCTION IN
PERSONAL INCOME TAX RATES
FROM 2023 — ORBITAX TAX NEWS &
ALERTS
• The Philippines Department of Finance recently issued
a release reminding taxpayers of a further personal
income tax rate reduction with effect from 1 January 2023
as provided by the Tax Reform for Acceleration and
Inclusion (TRAIN) Act (Republic Act No. 10963). The
TRAIN Act, approved in 2017, provided for a reduction in
personal income tax rates with effect from 1 January
2018, with a further reduction as follows from 1 January
2023:

30. •up to PHP 250,000 - 0%
•over PHP 250,000 up to 400,000 - 15%
•over PHP 400,000 up to 800,000 - 20%
•over PHP 800,000 up to 2 million - 25%
•over PHP 2 million up to 8 million - 30%
•over PHP 8 million - 35%
•The rate reductions are made in the four middle
brackets. The bracket threshold and the top rate
(35%) are maintained.

31. LOCAL FISCAL ADMINISTRATION
•adequately and efficiently to meet the needs of the
local population. Local fiscal administration refers
to the management and oversight of financial
matters at the local government level. It involves
the planning, allocation, collection, and expenditure
of funds within a specific geographical area, such
as a city, town, county, or municipality. Local fiscal
administration plays a crucial role in ensuring that
public services are funded

32. • Key aspects of local fiscal administration include:
1.Budgeting: Local governments create budgets to plan
and allocate financial resources for various programs and
services, such as public safety, education, infrastructure,
and social services. The budgeting process involves
estimating revenues (such as taxes, fees, and grants)
and allocating funds to different departments or projects.
2.Revenue Generation: Local governments collect
revenue through various means, including property taxes,
sales taxes, income taxes, fees, fines, and grants from
higher levels of government. Effective revenue generation
is essential for funding local services and initiatives.

33. 1.Financial Reporting: Local fiscal administrators
are responsible for maintaining accurate financial
records and preparing regular financial reports to
ensure transparency and accountability. These
reports are often shared with the public, elected
officials, and oversight bodies.
2.Expenditure Control: Local governments must
manage their expenditures to ensure that they stay
within budget and avoid overspending. This
involves monitoring expenses, controlling costs,
and making adjustments as needed.

34. 1.Debt Management: If a local government needs
additional funds for large projects, it might issue
bonds or take on debt. Proper debt management
involves evaluating the ability to repay, securing
favorable terms, and adhering to debt repayment
schedules.
2.Financial Planning: Effective local fiscal
administration requires long-term financial
planning. This involves anticipating future revenue
and expenditure trends, considering economic
factors, and setting goals for the municipality's
financial stability and growth.

35. 1.Compliance and Regulation: Local fiscal
administration must adhere to relevant laws,
regulations, and accounting standards. Compliance
ensures that financial practices are legal and
transparent.
2.Public Engagement: Engaging with the public in the
budgeting process and financial decisions is important
for transparency and community involvement. Public
hearings, town hall meetings, and other methods of
engagement help gather input and feedback from
residents.

36. 1.Resource Allocation: Local fiscal administrators
need to prioritize resource allocation to address the
most pressing needs of the community, balancing
various demands with available funds.
2.Performance Evaluation: Regularly assessing
the effectiveness of financial decisions and the
impact of expenditures is essential to ensure that
local government funds are being used efficiently
and achieving desired outcomes.

37. THANNK YOU