Taxation Fundamentals Quiz

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary purpose of taxes?

To increase personal savings accounts.

To fund government spending and public services. (correct)

To provide profits for businesses.

To subsidize private investments.

Which of the following documents provides directives or instructions, guidelines, processes, workflows and procedures for tax enforcement?

Revenue Memorandum Orders (correct)

Local Government Code

Revenue Memorandum Circulars

Revenue Regulations

According to the 'lifeblood doctrine', what is taxation considered to be for the government?

A temporary measure of income raising.

A secondary source of funding.

An optional program.

The very essence keeping it operational. (correct)

Under which principle are consumption taxes based?

Amount of goods and services utilized Signup and view all the answers

What percentage of tax revenue is generally allocated to local governments?

40% Signup and view all the answers

Which type of tax is directly imposed on an individual's income and properties?

Direct tax Signup and view all the answers

Which of the following programs is NOT directly funded by taxes?

Corporate bonuses Signup and view all the answers

Which of the following is not considered a type of income tax?

Excise tax Signup and view all the answers

What is the legislative body's role in the power of taxation?

To impose taxes on subjects within its jurisdiction Signup and view all the answers

A Filipino citizen residing in the Philippines is taxed on what basis?

Income earned both within and outside the Philippines Signup and view all the answers

Why are taxes considered a necessary financial obligation?

To generate revenues for nation-building and services. Signup and view all the answers

What is the tax basis for non-resident Filipino citizens, such as OFWs?

Income earned only within Philippines Signup and view all the answers

What is the primary use of tax funds allocated to the national government?

To invest in programs that benefit the whole country Signup and view all the answers

The main purpose of the tax system can be MOST accurately be described as:

A system of extracting funds for public benefits Signup and view all the answers

Which of the following is an example of an indirect tax?

Value-added tax (VAT) Signup and view all the answers

What is taxed under 'business income'?

Practice of profession and trade Signup and view all the answers

Which body has the power to rule on the legality of taxes, imposts, assessments, or tolls?

The Supreme Court Signup and view all the answers

What is the primary authority that empowers local government units to create their own revenue sources?

The Constitution Signup and view all the answers

Where do the taxes, fees, and charges collected by local government units exclusively accrue?

Local government units themselves Signup and view all the answers

What is NOT exempt from taxes and duties for non-stock, non-profit educational institutions?

Profits from commercial ventures. Signup and view all the answers

Which of the following does the Congress provide to encourage participation in scientific research?

Tax deductions Signup and view all the answers

Which Republic Act reformed the Philippine Tax system by introducing the Tax Reform for Acceleration and Inclusion?

Republic Act No. 10963 Signup and view all the answers

Under the National Internal Revenue Code, which area is MOST directly related to the consequences of failing to comply with tax obligations?

Statutory Offenses and Penalties Signup and view all the answers

What is NOT typically covered under the National Internal Revenue Code?

Local government revenue regulations Signup and view all the answers

What is the tax rate for individual income tax for those under the graduated tax table?

Variable rates ranging from 15% to 35% Signup and view all the answers

What is the income tax rate for non-individual entities?

Rates between 20% to 25%. Signup and view all the answers

Which of the following is NOT a valid criteria for a taxpayer to be unqualified for the 8% income tax rate?

Having taxable income of ₱200,000 Signup and view all the answers

Which of the following is true about the 8% income tax option for individuals?

It is in lieu of percentage and income taxes Signup and view all the answers

What is the optional standard deduction (OSD) a percentage of?

Gross sales, receipts, revenues or fees. Signup and view all the answers

When is the selection of a tax regime and method of deduction typically considered irrevocable?

After the first quarterly income tax return is filed. Signup and view all the answers

If a taxpayer who originally opted for the 8% income tax rate, breaches the VAT threshold of ₱3,000,000, what can they do?

They must switch to itemized deductions. Signup and view all the answers

Which of the following does not affect which tax regime an individual uses?

Whether they are self-employed. Signup and view all the answers

Under what condition is a Net Operating Loss Carryover (NOLCO) not allowed as a deduction?

When there has been a substantial change in the ownership of the business or enterprise. Signup and view all the answers

How is NOLCO deduction presented in an income tax return?

As a separate item of deduction. Signup and view all the answers

When presenting unused NOLCO what detail must be shown in Notes to the Financial statements?

Taxable year the loss was incurred and its usage. Signup and view all the answers

What is the consequence of not complying with the requirement to separately show NOLCO in the tax return and other details?

The taxpayer will lose eligibility to the NOLCO. Signup and view all the answers

Which taxpayers are subject to percentage tax?

Those not VAT-registered, selling or leasing business goods/services. Signup and view all the answers

What is the percentage tax rate on gross sales or receipts?

3% Signup and view all the answers

Which of the following best describes Value-Added Tax (VAT)?

It's imposed on the seller, passed to the buyer as part of price. Signup and view all the answers

What is the standard VAT rate for non-exempt domestic goods and services?

12% Signup and view all the answers

Which of the following best defines documentary stamp tax?

A tax on documents, loan agreements, and papers that evidence the transfer of an obligation, right, or property. Signup and view all the answers

What is a consequence of not paying documentary stamp tax on a required document?

The document will be deemed invalid for public record and inadmissible as evidence in court until the tax is paid. Signup and view all the answers

Which of the following is considered excise tax, based on the content?

Tax on the consumption or sale of goods like tobacco and alcohol. Signup and view all the answers

What action should NOT be done according to the content?

A notary public should add their jurat to any document without the proper documentary stamps affixed. Signup and view all the answers

Which of these is NOT a listed method to pay taxes directly according to the content?

Through the tax bureau's physical office. Signup and view all the answers

Study Notes

BIR Tax Returns and Filing Made Easy

The presentation outlines how to make BIR tax returns and filing easy.
The managing partner, Mark Anthony Pojol, provides guidance on tax procedures.

Outline

Key topics covered in the presentation, including: definitions, reasons, application, types of taxes, payment methods, and effective tax compliance.

What are taxes?

Mandatory contributions from individuals and legal entities to fund national development initiatives.
A compulsory financial charge or levy.

Why does the government collect taxes?

Finances basic social services (schools, hospitals, roads) and economic growth.
Funds various public expenditures, vital for citizens and economic growth.
Without taxes, governmental functions would halt.

Where do our taxes go?

40% is allocated to local governments to fund local services alongside local funds.
60% is allocated to the national government and used for national programs.
Some taxes are channeled to the poorest via targeted transfers like the 4Ps program.

What are the relevant laws on taxes?

Inherent Powers of the State:
- The power of taxation is inherent to the state, exercised through the legislature.
- This power allows the state to impose taxes on individuals and property within its jurisdiction.
- The goal is to generate funds for the government's legitimate operations.
Police Power:
- The state’s authority to enact regulations for the general welfare.
- This power is vested in the legislature.
- Its laws can prescribe penalties, but must not contradict the constitution.
Power of Eminent Domain:
- The state's right to acquire private property for public use.
- Just compensation must be provided to the owner.
- Due process must be observed.
Philippine Constitution: Specific constitutional articles (VI, VIII, X, XIV) outline several rules and specific allocation schemes.
National Internal Revenue Code (NIRC): Relevant laws, including amendments and special acts (like TRAIN).
Administrative Materials:
- Revenue Regulations, Memorandum Orders, and Circulars provide specific rules and procedures on NIRC compliance.
Local Government Code: Includes parts governing local taxation, business permits, and real property taxation.
Several specific laws, examples, and policies are provided for understanding tax regimes.

Who pays taxes?

Residents pay based on income earned inside and outside of the Philippines.
Filipinos abroad are taxed based on income earned in the Philippines.
Resident and non-resident aliens are taxed based on their income in the Philippines.
Domestic corporations are based on income (domestic and foreign).
Foreign corporations are based on domestic income.

What are the different types of taxes?

Progressive taxation: Taxes are based on income and/or consumption, wherein higher incomes pay more.
Income tax: Progressive tax based on the ability to pay.
Consumption tax: Higher consumption = higher taxes.
Direct taxes: Paid from income and property (e.g., income tax, transfer taxes).
Indirect taxes: Collected based on consumption (e.g., excise taxes, percentage tax, VAT, documentary stamp taxes).
- Detailed types of taxes, along with rules and regimes.
- Examples: income (compensation, business, passive), capital gains, donor's, estate, documentary stamp, excise, VAT, and withholding.

How to pay taxes?

Online or offline using the eBIRFORMS platform.
Validating the form and saving the confirmation email.
Paying over-the-counter at authorized agent banks (AABs) or electronically (GCash, Paymaya, etc.).

Tax deadlines

Various filing deadlines for different tax types (annual, quarterly, monthly).
Given as examples, with relevant FORM types, like 1701/2, 1701Q, 1702Q, 2551Q, and 1601-C.

Tax filings

Rules relating to submission of filings using specific requirements and methods.

How to pay?

Instructions for submitting tax details and payment during tax payments.
Specific TIN instructions are listed for paying taxes via apps and online.

How to manage your tax compliances effectively?

Understanding business model/types & relevant taxes is vital.
Preparedness and early filing are essential compared to the hassle of last minute rushes.
Keeping updated records, being honest, and hiring a professional if needed are all crucial for effective tax management.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on the basics of taxation with this quiz covering various aspects such as the purpose of taxes, types of taxes, and government allocation. Understand key concepts like the 'lifeblood doctrine' and the role of legislative bodies in tax enforcement. Perfect for anyone looking to strengthen their understanding of tax systems.