TAXATION

ATTY. GERRY SEBASTIAN, CPA

ALL RIGHTS RESERVED 2017

AGS COPYRIGHT 2017

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Philippine Copyright 2017. Atty. Gerry Sebastian, CPA. All rights reserved. No part of this may be

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reproduced in any form or any means, electronic or mechanical, including photocopying or
xeroxing without written permission from the author. Any copy of this without the express written
consent of the author or his duly authorized representative, either proceeds from an illegitimate
source or is in the possession of one who has no authority to dispose of the same. Unauthorized
users, in addition to the penalties provided by law, shall be punished by the law of karma and
they will not pass the examinations they shall take or be unsuccessful and unhappy in life.

2
PAS

JAC

JOS
ATTY. GERRY SEBASTIAN, CPA

INDIVIDUAL
INCOME TAXPAYERS JET
AGS ALL RIGHTS RESERVED 2017

SPECIFIC
INDIVIDUAL INCOME TAXPAYERS

Same
Computation

2 4
Specific Individual Non-resident
NRA-ETB
Income Taxpayers Citizen

1 3 5

Resident Citizen Resident Alien NRA-NETB

Taxable from 25% Gross

All Source Income Tax

AGS ALL RIGHTS RESERVED 2017 1

(05) Individual Income Taxpayers 2017 - 10 March 2017

RESIDENT CITIZEN

Taxpayer had the following INFO for the taxable year:
Gross Revenues
Philippines, P1,250,000; US, P1,750,000.
Cost of Sales at 60%.
Allowable Deductions
Philippines, P220,000; US, P300,000.
If the Taxpayer is a Resident Citizen, Single with a basic
personal exemption of P50,000, compute the taxable income
and the income tax thereon.
Tax Table
Over P140K but not over P250K P22,500 + 25% of the excess over P140K
Over P250K but not over P500K P50,000 + 30% of the excess over P250K
Over P500K P125,000 + 32% of the excess over P500K

AGS ALL RIGHTS RESERVED 2017 2

RESIDENT CITIZEN

A resident citizen is taxable from what sources?
In order that the sources are distinctly seen, what can we do with the
formula?
Is the tax situs factors demonstrated in the computation?
Is the resident citizen allowed to have exemptions?
What is the taxable income?
What is the income tax?

AGS ALL RIGHTS RESERVED 2017 3

NON-RESIDENT CITIZEN

Taxpayer had the following INFO for the taxable year:
Gross Revenues
Philippines, P1,250,000; US, P1,750,000.
Cost of Sales at 60%.
Allowable Deductions
Philippines, P220,000; US, P300,000.
If the Taxpayer is a Non-Resident Citizen, Single with a basic
personal exemption of P50,000, compute the taxable income
and the income tax thereon.
Tax Table
Over P140K but not over P250K P22,500 + 25% of the excess over P140K
Over P250K but not over P500K P50,000 + 30% of the excess over P250K
Over P500K P125,000 + 32% of the excess over P500K

AGS ALL RIGHTS RESERVED 2017 4

NON-RESIDENT CITIZEN
A non-resident citizen is taxable from what sources?


Is the tax situs factors demonstrated in the computation?
Is the non-resident citizen allowed to have exemptions?
What is the taxable income?
What is the income tax?
Is the computation applicable to a Resident Alien?
Is the computation applicable to a NRA-ETB?

AGS ALL RIGHTS RESERVED 2017 5

(05) Individual Income Taxpayers 2017 - 10 March 2017

NRA-NETB
Non-Resident Alien NOT Engaged in
Trade or Business in the Philippines Exception to the Rule:
The following passive income is treated
differently:
General Rule:
Capital Gains Tax on Sale of Shares of
Entire income received from all sources
Stock not Traded in the Stock
within the Philippines reduced by any
Exchange at 5-10%.
direct expenses is subject to 25% of
Capital Gains Tax on Sale of Real Prop.
such income.
at 6%
Interest Income from EFCDS is
exempt.

AGS ALL RIGHTS RESERVED 2017 6

NRA-NETB R
What is its
I
composition?
Individuals C
NRA-NETB
Income Tax Return
Within PH Without PH
Net Sales/Revenue
Add: Other Taxable Income from Operations BIS
Less: Cost of Sales Except:

Gross Income from Business/Profession CI Certain

Passive
Income
Add: Non-Operating Income & Net Capital Gains
Total Gross Income 25% CG
Less: Allowable Deductions
Less: Exemptions
Taxable Income

AGS ALL RIGHTS RESERVED 2017 7

NRA-NETB Taxpayer had the following INFO for the taxable year:

Gross Revenues
Philippines, P1,250,000; US, P1,750,000.
Cost of Sales at 60%.
Allowable Deductions
Philippines, P220,000; US, P300,000.
Passive Income not subject to Capital Gains Tax, P100,000.
Net Capital Gains, P70,000.
If the Taxpayer is a NRA-NETB, Single with a basic personal
exemption of P50,000, compute the taxable income and the
income tax thereon.
Tax Table
Over P140K but not over P250K P22,500 + 25% of the excess over P140K

9
Over P250K but not over P500K P50,000 + 30% of the excess over P250K
Over P500K P125,000 + 32% of the excess over P500K

AGS ALL RIGHTS RESERVED 2017

NRA-NETB
A NRA-NETB is taxable from what sources?


Is the tax situs factors demonstrated in the computation?
Is the NRA-NETB allowed to have exemptions?
What did you do with the Passive Income of P100,000?
What did you do with the Net Capital Gains of P70,000?
What is the taxable income?
What is the income tax?

AGS ALL RIGHTS RESERVED 2017 10

(05) Individual Income Taxpayers 2017 - 10 March 2017

SPECIFIC
INDIVIDUAL INCOME TAXPAYERS
Residency Citizenship RA NRA-ETB

NRA-NETB
NRC
RC Determine the amounts
Income Tax Return
based on the factors
Source of Income
Gross Sales or Revenues xxx
xxx
Within Without Other Taxable Income from Operations xxx
xxx
Less: Cost of Sales xxx
Net Sales or Revenues xxx
Add: Net Capital Gains and
Other Non-Operating Income xxx
Gross Income xxx
xxx
Multiplied by NRA-NETB
Less: Allowable Rate
Deductions x xxx
25%
Taxable Taxable Not Taxable xxx
Less: Exemptions
Income Tax Due xxx
Taxable Income xxx
Income Tax Due xxx
Less: Withholding Taxes xxx
Income Tax Payable xxx

AGS ALL RIGHTS RESERVED 2017 11

TAXATION
ATTY. GERRY SEBASTIAN, CPA

ALL RIGHTS RESERVED 2017

(05) Individual Income Taxpayers 2017 - 10 March 2017