Philippines Tax Code and Value-Added Tax (VAT)

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Questions and Answers

What is the primary purpose of budgeting principles?

To measure company performance

To track personal goals

To promote national development (correct)

To maintain personal journals

What is meant by 'open, transparent, and accessible' budget documents and data?

They are only accessible through special requests

They are confidential documents

Only government officials can access them

They are available to the general public (correct)

What is organizational accountability tracking used for?

To monitor national development

To keep personal journals

To measure company performance (correct)

To track personal goals

What is the purpose of closely aligning budgets with the medium-term strategic priorities of the government?

To ensure effective allocation of resources Signup and view all the answers

What is personal accountability tracking used for?

To set and achieve personal goals Signup and view all the answers

What is the purpose of presenting a comprehensive, accurate, and reliable account of public finances?

To provide transparency and accountability Signup and view all the answers

Why is it important to design the capital budgeting framework in a cost-effective and coherent manner?

To meet national development needs Signup and view all the answers

What is the purpose of actively planning, managing, and monitoring budget execution?

To ensure effective allocation of resources Signup and view all the answers

What is the primary objective of using public revenue and public expenditure?

To secure stability in price levels Signup and view all the answers

What is referred to as the income of the state?

Public Revenue Signup and view all the answers

When does the government borrow?

When its revenue falls short of its expenditure Signup and view all the answers

What deals with the methods of budget preparation, authorization, execution, and accountability?

Public Budgeting Signup and view all the answers

What is the critical exercise of allocating revenues and borrowed funds to attain the economic and social goals of the country?

Government budgeting Signup and view all the answers

What is the result of a growing deficit when the economy is close to full capacity?

More damaging Signup and view all the answers

What is a major area of government activity through fiscal operations?

Maintaining economic stability Signup and view all the answers

According to Keynes, what is the benefit of borrowing in a recession?

Creating economic stimulus and shortening the recession Signup and view all the answers

What is Value-Added Tax (VAT) according to the Tax Code of 1997?

A tax on consumption levied on the sale of goods and services Signup and view all the answers

Why is it difficult to reduce tax rates?

Because many people are evading the tax system Signup and view all the answers

What is the purpose of the sin tax?

To reduce consumption, raise additional revenue and/or improve population health Signup and view all the answers

What is the problem with the tax system according to the text?

It is too complicated Signup and view all the answers

Why do compensation earners end up paying more in taxes?

Because they earn more than the self-employed Signup and view all the answers

What is the effect of tax evasion on the government's revenue?

It decreases the government's revenue Signup and view all the answers

What is the characteristic of Value-Added Tax (VAT) as an indirect tax?

It may be shifted or passed on to the buyer Signup and view all the answers

What should be the characteristic of the rules of the tax system?

They should be as plain and simple as possible Signup and view all the answers

What is the primary function of a public-private partnership?

To increase the quality and efficiency of public services Signup and view all the answers

How much does the government lose annually due to tax evasion?

P500 billion Signup and view all the answers

What is the main goal of the attached agency of the Department of Finance?

To assess and collect customs revenues Signup and view all the answers

What type of corporation is a Government-Owned and Controlled Corporation (GOCC)?

Either a stock or a non-stock corporation Signup and view all the answers

What is the main focus of public finance?

The way revenue is raised and expenditure is incurred Signup and view all the answers

What is the benefit of public-private partnerships in delivering public services?

It increases the quality and efficiency of public services Signup and view all the answers

What is the purpose of the attached agency of the Department of Finance in terms of trade?

To facilitate trade through an efficient and effective customs management system Signup and view all the answers

What is the result of tax evasion on the government's revenue?

It decreases the government's revenue Signup and view all the answers

What is the primary aim of investment incentives?

To influence the locational decisions of investors Signup and view all the answers

What is initiated through the issuance of a Budget Call?

Budget preparation Signup and view all the answers

What is the role of the Development Budget Coordination Committee (DBCC)?

To determine overall economic targets Signup and view all the answers

What type of incentive is a tax holiday?

Fiscal incentive Signup and view all the answers

What is the purpose of investment incentives in shaping the benefits of foreign direct investment?

To stimulate foreign affiliates to operate in desired ways Signup and view all the answers

What is included in the Budget Call issued by the Department of Budget and Management (DBM)?

Budget parameters and policy guidelines and procedures Signup and view all the answers

What is the purpose of providing financial incentives?

To provide grants and loans Signup and view all the answers

What is the broader context in which investment incentives are effective?

Economic and political context Signup and view all the answers

Study Notes

Types of Taxes

Value-Added Tax (VAT): a form of sales tax on consumption of goods and services in the Philippines and on importation of goods
Sin Tax: excise taxes on potentially harmful goods (e.g. sugar-sweetened beverages, tobacco, and alcohol) to reduce consumption and raise revenue

Tax Issues in the Philippines

Tax evasion: the government loses around P500 billion annually
Tax evasion affects tax rates and hinders reduction of tax rates

Budgeting Principles

Manage budgets within clear, credible, and predictable limits for fiscal policy
Closely align budgets with national development needs in a cost-effective and coherent manner
Design capital budgeting framework to meet national development needs
Ensure budget documents and data are open, transparent, and accessible
Provide for inclusive, participative, and realistic debate on budgetary choices
Present a comprehensive, accurate, and reliable account of public finances
Actively plan, manage, and monitor budget execution

Organizational and Personal Accountability Tracking

Individuals set goals and track progress towards achieving them (e.g. using journals, planners, or apps)
Companies use performance metrics to track progress towards specific business objectives (e.g. tracking sales figures, customer satisfaction ratings, or employee productivity metrics)

Public-Private Partnerships (PPPs)

Collaboration between government agencies and private-sector companies to finance, build, and operate projects (e.g. public transportation networks, parks, and convention centers)
Can increase the quality, efficiency, and competitiveness of public services

Tax Code of 1997 (Tax Code)

Specifies deductions authorized for certain types of income
Less deductions, if any, for such types of income

Public Finance

Studies the way revenue is raised and expenditure is incurred upon different items to maintain economic stability
Major activities: fiscal policy formulation, taxation and revenue administration, budgeting and expenditure, public borrowings and debt management, and accounting and auditing

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Description

This quiz covers the Tax Code of 1997 and its amendments, including deductions and special laws, as well as Value-Added Tax (VAT) in the Philippines.