TAXATIO N

TAXATION
Mode of raising revenue for public purpose

TAX
The enforced proportional contribution from persons and property, levied by the State, by virtue of its sovereignty, for the support of government and for all public needs

UNDERLYING PRINCIPLES BEHIND THE POWER TO TAX

PRINCIPLE OF NECESSITY The existence of

the government is a necessity; the main source of revenue of the government is taxes. The government will not be able to survive and continue to perform its functions without taxes BENEFITS RECEIVED PRINCIPLE In return for the enforced contribution of the citizens, the latter receive general protection and enjoyment of benefits in an organized society. The power of taxation is therefore founded on the reciprocal duties of protection and support between the state and its inhabitants.

PURPOSE OF TAXATION
Primary to provide funds or property with which the

government discharges its appropriate functions for the protection and general welfare of its citizens Non-revenue objectives
To strengthen anemic enterprise by grant of tax

exemptions To protect local industries against foreign competition by increasing import taxes As a bargaining tool in trade negotiations To counter effects of inflation or depression To reduce inequalities in the distribution of wealth To promote science and invention, finance educational activities, and other similar objectives in the promotion of the general welfare

1. Fiscal adequacy

The sources of revenue should be sufficient and elastic to meet the demands of governmental expenditure.

2.

Equality or Theoretical Justice

The tax burden should be in proportion to the taxpayers ability to pay

3. Administrative

Feasibility
Tax laws must be capable of convenient, just, and effective administration on the part of both the government and the

CLASSIFICATION OF TAXES AS TO SCOPE OR AUTHORITY IMPOSING THE TAX

1.
a)

NATIONAL imposed by the national government

taxes under the National Internal Revenue Code /R.A. 8424 administered by the Bureau of Internal Revenue b) taxes/fees/charges under the Tariff and Customs Code administered by the Bureau of Customs c) taxes under special laws such as the Community Tax Law, Narcotics Drug Law, Special Education Fund Law, Sugar Adjustment Act, Peace and Order Fund Law

2.

LOCAL imposed by the local government

 Under the supervision and

control of the Department of Finance. Its powers and duties comprise:

1.The assessment and collection of all national internal revenue taxes, fees, and charges

2. The enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts.

It is levied upon corporate

and individual incomes in excess of specified amounts and less certain deductions and/or specified exemptions in cases permitted by law

 It is a tax on consumption

levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines and on importation of goods into the Philippines.

Value Added Lola Litas, Stall Number 30Tax 2008 Year-end Sales
Gross Sales Price VAT Rate Output Tax (VAT on sales) Less Input VAT (VAT on purchases) P 500,000 12% P 60,000

Purchase Price of raw mat

VAT Rate VAT due and payable

200,000
12% 24,000 P36,000

 Is a business tax imposed on

persons or entities who sell or lease goods, properties or services in the course of trade or business whose gross annual sales or receipts do not exceed P1,500,000 and are not VAT-

Persons Exempt From VAT Domestic Carriers and Keepers of Garages international carriers

franchises (franchises on radio and TV broadcasting companies with annual gross receipts not exceeding P10,000,000
Overseas Dispatch, Message or Conversation Originating from the Philippines

Banks and non-bank financial intermediaries

Finance Companies Life Insurance Premiums Amusement Winnings Stock Transactions

A tax imposed on goods manufactured or produced in the Philippines for domestic sale, consumption or any other disposition, and on things that are imported

1. Alcohol Products - Sec. 141 to 143

distilled spirits, wines, fermented liquors

2. Automobiles
-1600 cc engine displacement and above

3. Non-essential Products
- jewelry and pearls (precious or semi-precious, real or imitation) - perfumes and toilet waters - yachts and other vessels for pleasure or sports

4. Mineral Products Sec. 151 -metallic, non-metallic minerals and quarry resources

5. Indigenous Petroleum Sec. 148 - lubricating oil and greases, processed gas, waxes and petrolatum, denatured alcohol to be used for motive power, naptha, gasoline, kerosene, diesel fuel oil, thinners, liquefied petroleum gas, aviation turbo fuel, bunker fuel oil and asphalts

6. Tobacco Products Secs. 144 to 147 - scraps, cigars, cigarettes, smoking tobacco, chewing tobacco, tobacco inspection fees uses both ad valorem and specific

is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto.

Original Issue of Shares of Stock with par value Bank Checks, Drafts, Certificate of Deposit not bearing interest and other Instruments

Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Due-bills, Certificate of Obligation, or Shares or Certificates of Stock

Capital Gains Tax - a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of

Transfer taxes are those imposed upon the gratuitous disposition of private property. Under our law, they are taxes levied on the transmission of property from a decedent to his heirs or from donor to donee. Types 1.Donors Tax 2.Estate Tax

 Under the supervision

and control of the Department of Finance. Its powers and duties include:

1. Assessment and collection of lawful revenues/taxes from imported articles and all other dues, fees, charges, fines and penalties accruing under the Tariff and Customs Code of the Philippines (TCCP);

2. Enforce the TCCP and all other laws, rules and regulations relating to tariff and customs administration; 3. Exercise exclusive jurisdiction over seizure and forfeiture cases under the Tariff and Customs laws.

Power to Create Sources of Revenue. Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units. Local Government Code

EXAMPLES OF TAXES IMPOSED BY THE LOCAL GOVERNMENT

Real property taxes (amellar)

Transfer tax
Professional tax

Amusement tax
Business permit

Mayors permit