Tax Identification Part I

Tax Identification

• Local government imposes taxes, licenses, and other impositions, including Community Tax.
• Real Property Tax is a direct tax on the ownership of lands, buildings, or improvements, payable regardless of use, with value varying according to factors such as usage.

Power of LGUs

• Local Government Units (LGUs) have the power to levy taxes, fees, and charges on any base or subject not specifically enumerated under the Local Government Code (LGC), the National Internal Revenue Code (NIRC), or other applicable laws.

Taxation Concepts

• Tax Exemption implies that the national government withholds from the local government the delegated power to tax a particular area.
• The Situs Rule states that personal properties may be considered real properties for taxation purposes when essential to the conduct of business.
• The Economic Benefits Principle emphasizes the usage of property, regardless of ownership, to determine tax exemption or liability.
• The Origin Principle suggests that goods and services are taxed only in the country where they are consumed.

Value-Added Tax (VAT)

• VAT is a tax on consumption levied on the sale, lease, barter, or exchange of goods, properties, or services in the Philippines and on importation of goods into the Philippines.
• Input VAT refers to the VAT due from or paid by a VAT-registered person on importation of goods or local purchase of goods, properties, or services.
• Output VAT refers to the VAT due on the sale or lease of taxable goods or properties or services by any person registered or required to register under Section 236 of the NIRC.

Business Tax

• Business Tax is imposed on persons, entities, or transactions specified under Sections 116 to 127 of the NIRC and as required under special laws.
• Percentage Tax is a sales tax of various rates, generally 3%, imposed upon the gross sales or gross receipts of non-VAT taxpayers.

Business and Industry

• Engaging in business implies habitual commercial activity involving the sale of goods or services to customers or clients.
• Common carriers include persons, corporations, firms, or associations engaged in the business of carrying or transporting passengers or goods by land, water, or air, for compensation, offering their services to the public.
• International Air or Sea Carriers are air or sea carriers owned by foreign corporations that operate in the Philippines, transporting passengers or cargoes from the Philippines to overseas and vice versa.
• Banks and non-bank financial intermediaries are entities engaged in the lending of funds obtained in the form of deposits.