Taxation Fundamentals Quiz

Revenue regulations provide a detailed explanation of the rules and regulations related to the National Internal Revenue Code (NIRC) and other related statutes, ensuring effective enforcement.

Revenue Memorandum Orders are directives and instructions that outline guidelines, processes, workflows, and procedures for tax-related matters.

Revenue Memorandum Circulars publish important sections, amplifications, and interpretations of tax laws, rules, and regulations.

Direct taxes are paid directly from your income and property. Examples include individual and corporate income taxes, transfer taxes (capital gains, donor's tax, estate tax).

Indirect taxes are collected based on consumption. Examples include excise taxes, business taxes (percentage tax or VAT), documentary stamp taxes.

Income tax is based on the ability-to-pay principle, meaning people with higher incomes pay a larger share of taxes.

Consumption tax is based on the amount of goods and services used. The more you consume, the higher the tax you pay.

Income tax is a direct tax imposed on various income types. These include compensation income (salaries, wages, bonuses, benefits), business income (profession, trade, asset sales), and passive income (bank deposits, royalties, dividends).

The Supreme Court has the power to decide cases involving the legality of taxes, fees, and other related levies.

Local governments can impose taxes, fees, and charges to generate revenue, subject to national guidelines.

Local governments receive a portion of national tax revenue distributed by the government.

Non-profit educational institutions are exempt from taxes if their assets are used exclusively for educational purposes.

Certain tax incentives, like deductions, are provided to encourage private investment in research and development.

The National Internal Revenue Code (NIRC) is the primary law governing taxation in the Philippines.

The NIRC outlines the organization, functions, and powers of the Bureau of Internal Revenue (BIR), which is responsible for tax administration.

The NIRC outlines various types of taxes, including income tax, value-added tax, and excise tax, and specifies the regulations regarding these taxes.

A compulsory financial charge imposed on individuals or legal entities to fund government spending and public services.

Taxes provide the government with the funding necessary to operate its functions and provide essential services like education, healthcare, infrastructure, and public safety.

The government uses collected taxes to finance various programs and expenditures. Approximately 40% goes to local government services and 60% goes to national programs that benefit the entire country.

This doctrine emphasizes the importance of taxation as a crucial source of revenue that enables the government to function effectively. Just as blood is vital to a human body, taxes are the lifeblood of the government.

The power of the government to impose burdens (taxes) on individuals and entities within its jurisdiction to raise funds for public purposes.

The government leverages its power of taxation to raise revenue for nation-building. It uses these funds to finance essential services and programs aimed at improving citizens' lives and promoting economic growth.

Tax compliance involves ensuring that taxpayers fulfill their obligations according to the regulations set by tax laws. This includes filing tax returns, paying taxes due, and maintaining accurate records.

Effective tax compliance involves understanding your tax obligations, keeping accurate records, and filing returns on time. This minimizes the risks of penalties and ensures that your taxes are used to support government initiatives.

A tax regime where individuals' taxable income is taxed at a fixed rate of 8% instead of using the graduated tax table.

A tax regime where individuals' taxable income is taxed based on a graduated tax table, with different rates applied to different income brackets.

These are individuals whose income is solely from employment (salary, wages, etc.). They cannot opt for the 8% income tax regime.

This is a method of calculating income tax where a taxpayer can deduct specific expenses, like medical expenses or charitable donations, from their taxable income.

A simplified way to calculate income tax where a taxpayer can deduct a fixed percentage of their gross sales or receipts, without having to provide detailed financial statements.

The tax filing requirements for individuals in the Philippines, typically done on a quarterly basis.

The initial choice of a tax regime and deduction method made by a taxpayer on their first quarterly income tax return cannot be changed later.

The threshold for taxpayers who are required to register as Value-Added Tax (VAT) payers, based on their annual gross sales or receipts.

A tax levied on documents, instruments, and agreements involving the transfer or assignment of obligations, rights, or property. It's a way for the government to collect revenue from transactions and activities relating to these legal documents.

Failing to pay DST can have serious consequences. Documents lacking the required stamps won't be legally recognized and cannot be used as evidence in court. Essentially, the document becomes invalid.

Excise taxes are levied on the production or consumption of specific goods or services. They are designed to regulate and raise revenue from items like alcohol, tobacco, and fuel.

These taxes are imposed on the production, sale, or consumption of specific goods or services like: alcohol, tobacco, petroleum products, vehicles, non-essential goods, sweetened drinks, and mineral products.

You can pay your taxes online through eBIRForms or eFPS, or pay over-the-counter at authorized agent banks. This is how you ensure your taxes are submitted and paid correctly to the government.

A business tax imposed on sellers who are not VAT-registered. It's calculated at 3% of gross sales or receipts. It's applicable to VATable activities below the VAT threshold and also applies to specific transactions regardless of VAT threshold.

A type of business tax imposed on sellers of goods and services. It's usually passed on to the buyer as part of the price. It's 12% for most domestic and imported goods and services, 0% for exports, and exempt for certain goods and services.

A net loss incurred in a taxable year by an exempt taxpayer cannot be deducted.

To use NOLCO, there shouldn't be significant changes in the ownership of the business.

NOLCO is applied on a first-in, first-out basis. Older losses are deducted before newer ones.

NOLCO is deducted separately on income tax returns, both quarterly and for the annual final adjustment.

NOLCO is shown separately on the taxpayer's income tax return, with unused portions detailed in the Notes to the Financial Statements.

If the NOLCO reporting requirements are not met, the taxpayer cannot claim the NOLCO.