Philippine Taxation - PDF

Lesson 2: Philippine Taxation Presented By Teacher Ren  Where do our taxes go? Presentation title 2  “Ang tax parang pagibig, masakit ibigay kapag di mo nararamdamang bumabalik sayo” Presentation title 3 ...

Lesson 2: Philippine Taxation Presented By Teacher Ren  Where do our taxes go? Presentation title 2  “Ang tax parang pagibig, masakit ibigay kapag di mo nararamdamang bumabalik sayo” Presentation title 3  Why we need to file our taxes Presentation title 4  Why we need to file our taxes Financial Credential- “ I am an earning Individual Proof of Income- Getting insurance, Applying for a visa, Applying for a loan, Credit Card Catering to bigger clients ( OR ) Open up new partnerships ( Accreditation Process, BIR 2303) Presentation title 5 TAX A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Presentation title 6 TAX A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Presentation title 7  It is the process by which TAXATION the sovereign, through its law making body, races revenues use to defray expenses of government.  TAXATION It is a means of government in increasing its revenue under the authority of the law, purposely used to promote welfare and protection of its citizenry. It is the collection of the share of individual and organizational income by a government under the authority of the law. Presentation title 9 Presentation title 10 Taxation Taxation is a reality that all the citizens must contend with for the primary reason that the government raises revenue from the people they govern to be able to function fully. Presentation title 11  Taxation in the Philippines Taxation, as a government mechanism to raise funds, developed and evolved through time, and in the context of the Philippines, we must understand that it came with our colonial experience.(BIR 2303) Presentation title 12  BIR 2303 Presentation title 13  -Registration/ Renewal Fee- Universal ( BIR 0605) -Withholding Tax ( Compensation and Salary ) Freelancer (10 %) Professional (5%) if annual salary is less than 3 Million Pesos Presentation title 14  Taxation Taxation is the inherent power of the sovereign, exercised through the legislature, to impose burdens upon the subjects and objects within its jurisdiction, for the purpose of raising revenues to carry out the legitimate objects of the government.It is the power of the sovereign to impose burdens or charges upon persons, property or property rights for the use and support of the government to be able to discharge its functions. Presentation title 15  Taxation Taxes imposed at the national level are collected by the Bureau of Internal Revenue (BIR), while those imposed at the local level (i.e., provincial, city, municipal, barangay ) are collected by a local treasurer's office. Presentation title 16  Principle of Equity, Uniformity and progressivity of Taxation Section 28 (c), Article VI of the Constitution provides that “the rule of taxation shall be uniform and equitable and that Congress shall evolve a progressive system of taxation Presentation title 17 The tax is uniform when it operates with the same force and effect in every place where the subject of it is found. "Uniformity" means all property belonging to the same class shall be taxed alike. It does not signify an intrinsic, but simply a geographic, uniformity (Churchill & Tait vs. Conception, 34 Phil. 969). Uniformity does not require the same treatment; it simply requires reasonable basis for classification. The Concept of Uniformity in Taxation It Implies that all taxable articles or properties of the same class shall be taxed at the same rate. It requires the uniform application and operation, without discrimination, of the tax in every place where the subject of the tax is found. It does not, however, require absolute identity or equality under all circumstances, but subject to reasonable classification. Presentation title 20  The Concept of Equity in Taxation It requires that the apportionment of the tax burden be, more or less, just in the light of the taxpayer’s ability to shoulder the tax burden and, if warranted, on the basis of the benefits received from the government. Its cornerstone is the taxpayer’s ability to pay. Presentation title 21  Progressive Tax It requires that the rate or amount of tax increases as the amount of the income or earning to be taxed increases. Presentation title 22  Evolution of Philippine Taxation Spanish Period Present Pre – Colonial Period (900 – 1521). American Taxation Period During The Commonwealth Period Presentation title 23 Pre – Colonial Period (900 – 1521) Government- Barangays No National Government Confederation- United Barangays Ruled by the Datu or Raja Buwis or Handug- Taxes Paid to the Datu Chieftains family were exempted The Judicial Process was influenced by religion and deities assisted by the Group members who were called the “Elders” 24 The Four Maharlika Classes (includes datu) were the nobility of pure royal descent Timawa or the warrior class composed of free men Required to give service to the datu by hunting They could acquire property, acquire any job they want, pick their own wives, and acquire an Alipin Pay Taxes to Support the Maginoo Class The Four Alipin ( commoners and slave ) Classes 1. They renders services to the tumao and timawa for debts or favors. The Alipin did not likely make any money for their services, and hence they do not pay taxes. The Priest 1. The priestly class were scribes that are tasked to record history, and keep track of tributes and taxes that were expected from the governed. Spanish Period During this period tax is being imposed to support the colony, several taxes and monopolies were established. The government introduced a “New Income – Generating means”. Examples are the following: Presentation title 27 Manila – Acapulco Galleon Trade (1565 – 1815) The Spanish government continued trade relations with these countries and Manila became the Center of Commerce-China, Japan, Maluccas, Siam, India, Cambodia, Borneo. Galleon Trade is a ship trade going back and forth yearly between Manila and Acapulco. The fundamental income is generating business for the Spanish. 28 Manila – Acapulco Galleon Trade (1565 – 1815) The Galleon trade brought silver from Nueva Castilla and silk from China by way of Manila. During the Galleon trade, force labor was a character of Spanish colonial taxation and was required from the Filipinos. Male Filipinos were obligated to serve which results to deaths in seventeenth century. 29 Polo Y Servicio ( Forced Labor This revolved within the framework of the Encomienda System. Men ranging from 16 to 60 years of age were obligated to give 40 days personal services to community projects. One could be exempted from the polo by paying a fee called falla (which was worth one and a half real). Presentation title 30  Bandala Bandala system was implemented by Spanish authorities in the Philippines that requires native Filipino farmers to sell their goods to the government. Giving the Promissory Notes Bandala (from the Tagalog word “mandala” , a round stack of rice stalks to be threshed), an annual forced sale and requisitioning of goods such as rice. Presentation title 31  Encomienda System A Compliance with the decree issued by King Philip II in 1558, distributed lands in Cebu to loyal Spanish subjects The encomienda was not actually a land grant but was a favor from the king under which the Spaniard receiving his favor was given the right to collect tributes–or taxes–from the inhabitants of the area assigned to him. Encomendero Encomienda is a Public Office Presentation title 32  The encomenderos were required by law to perform the following duties: a. to give protection to the natives b. to help the missionaries convert the natives to Christianity c. to promote education Presentation title 33 Tribute/ Buwis a. Tributos ( Tributes) b. Collected for the official's salary c. Paid in cash or kind, with tobacco, chickens, produce, gold, blankets, cotton, rice, or other products. d. In 1884, the payment of tribute was put to a stop because of the “cedula” wherein colonists were required to pay for personal identification.(18 yrs of age) Presentation title 34 Tribute/ Buwis a. Contador de' Resultas- Chief Royal Accountant ( Commissioner on Internal Revenue) b. Taxation in the Philippine during Spanish colonial period was characterized by a heavy burden place. Presentation title 35 Taxation under the Americans The Americans aimed to make the economy self-sufficient by running the government with the possible sum revenue and create surplus in the budget. Presentation title 36 Taxation under the Americans Later on, the Urbana would be replaced by tax on real state, which became known as land tax. The problem with the tax was that land titling in the rural area was very disorderly. The Internal Revenue Law of 1904- was passed as a reaction to the problems of collecting land tax Presentation title 37  It prescribed ten major sources of revenue: 1. Licensed taxes on firms dealing in alcoholic beverages and tobacco, 2. Excise taxes on alcoholic beverages and tobacco products, 3. taxes on banks and bankers, 4.Document stamp taxes 5. Cedula 6. Taxes on insurance and insurance companies 7. Taxes on forest products 8. Mining concession 9. Taxes on business and manufacturing 10. Occupational licenses Presentation title 38  Taxation During The Commonwealth Period. New Measures were Introduced Income tax rate were increased in 1936, adding a surtax rate on individual net income in excess of 10,000. Income tax rates of corporation were also increased. In 1937 the cedula tax was abolished which appeared to be progressive move. In 1940 a residence tax was imposed on every citizen aged 18 years old and every corporation. Presentation title 39 Presentation title 40 Presentation title 41  Fiscal Policies at the Present The policy of taxation in the Philippines is governed chiefly by the Constitution of the Philippines and three Republic Acts Fiscal Policy refers to the "measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes Presentation title 42  ∙ Constitution: Article VI, Section 28 of the Constitution states that "the rule of taxation shall be uniform and equitable" and that "Congress shall evolve a progressive system of taxation" ∙ National law: National Internal Revenue Code—enacted as Republic Act No. 8424 or the Tax Reform Act of 1997and subsequent laws amending it; the law was most recently amended by Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act and, ∙ Local laws: major sources of revenue for the local government units (LGUs) are the taxes collected by virtue of Republic Act No. 7160 or the Local Government Code of 1991, and those sourced from the proceeds collected by virtue of a local ordinance. Presentation title 43  ISSUANCE OF CERTIFICATES (CERTIFIED TRUE COPY OF TAX DECLARATION, NON-IMPROVEMENT, NON-PROPERTY, LIST OF PROPERTY HOLDINGS, CERTIFICATE OF ASSESSMENT, TAX MAP COPY, FIELD APPRAISAL AND ASSESSMENT SHEET) Presentation title 44 Thank you