sale

t for
a ) no
QUICK NOTES IN
Ari
INCOME
a
a TAXATION
@CP
B(
CJ
GENERAL PRINCIPLES 2. As to burden
Purpose of Taxation a. Direct
1. Primary: to raise revenues b. Indirect
2. Secondary 3. As to authority
a. Regulatory a. National
b. Compensatory b. Local
Inherent Powers of the State 4. As to determination of amount
1. Taxation a. Specific
2. Eminent Domain b. Ad Valorem
3. Police 5. As to graduation/ rate
Theory and Basis of Taxation a.
b. sa le
Proportional
Progressive
for
1. Lifeblood theory
c. Regressive
2.
3.
Necessity theory
Benefits-Protection theory
no t
Inherent Limitations
Principles of Sound Tax System
a a )1.
2.
Territoriality
International comity
ria
1. Fiscal Adequacy
3. Public Purpose
2. Administrative Feasibility
A
CP
3. Theoretical Justice 4. Exemption of Government
5. Non-Delegation of taxing power
Characteristics of Tax
1. Forced contribution
B (@ Constitutional Limitations

CJ
2. Generally payable in money 1. Due process of law
3. Levied for public purpose 2. Equal protection of law
4. Exclusively levied by legislature 3. Uniformity in taxation
5. Levied within territorial and legal jurisdiction of the state 4. Progressive system
6. Proportionate in character 5. Non-imprisonment for non-payment of poll tax
Classification of Taxes 6. Non-impairment of obligations and contracts
1. As to Subject 7. Free worship clause
a. Personal, poll, capitation tax 8. Exemption of religious, charitable,non-profit cemeteries
b. Property tax and churches and mosque from property taxes
c. Excise tax 9. Exemptions from taxes of the revenues and assets of
non-profit, non-stock educational institutions
10. Non-appropriation of public funds or property for the Taxpayer Classification
benefit of any church, sect, religion 1. Micro – less than 3 Million
11. No money shall be paid out of Treasury except in 2. Small – 3million to less than 20M
pursuance of an appropriation 3. Medium – 20M to less than 1Billion
12. Concurrence of majority of all the members of the 4. Large – 1Billion or more
Congress for the passage of law granting tax
exemption
13. Non-diversification of tax collections With Loss of Without Loss of
14. Non-impairment of the jurisdiction of the Supreme Government Revenue Government Revenue
Court to review tax cases Tax Evasion Shifting
15.
16.
Non-delegation of taxing power
The President shall have the power to veto any
Tax Avoidance

sa
Tax Exemption le Capitalization
Transformation

17.
particular item(s) in an appropriation, revenue or tariff
LGUs can create its own sources of revenues
t for
TAX AMNESTY – Retrospective, forgiving past tax due.
(delegation of taxing power to LGUs)
a ) no
TAX CONDONATION – Prospective, forgiving future and current
tax due.
Tax Imposed Situs Rule
riaa
Business Tax place where the business A is Vague Tax Laws Vague Tax Exemption
conducted
CP construed against the
government and in favor of
construed against the
taxpayer and in favor of
Income
SERVICE
Tax on
(@
where service is rendered
B the taxpayer the government
Income Tax on Sale
of GOODS CJ
place of sale
CLASSIFICATION OF TAXPAYER
Individual Corporation
Property Tax taxable in their location
Personal Tax place of residence a. RC a. DC
Interests Income debtor’s place of residence b. NRC – at least 183 days b. RFC
Royalties Where intangible is employed c. RA – more than 1 year c. NRFC
d. NRAETB – more than d. Partnership
Rent Income Location of property
180 days e. Joint Venture
Domestic Securities Presumed earned within
e. NRANETB f. Co-Ownership
Dividend Income From Domestic – earned within f. Trust
From RFC – pre-dominance g. Estate
From NRFC – earned without
 Return of Capital Return on Capital
maintains net worth- Increases net worth - TAX ACCRUAL BASIS VS. TAX CASH BASIS
not taxable taxable
Recovery of lost Recovery of lost profits Line Item Tax Accrual Basis Tax Cash Basis
capital
Non Taxable Taxable Cash Income Add Add
Accrued Income Add Ignore
NON-TAXABLE (Considered return of capital)
1. Life Advanced Income Add Add
le
r sa
2. Health Gross Income xxx xxx
3. Moral
o
ot f
• Damages for the above are non-taxable, except Cash Expenses Deduct Deduct

•
interest of the damages.
Payment for Lost Profit is Taxable
a) n
Accrued Expenses Deduct Ignore

riaa
Tax Treatment of Increase in the Value of Property – NOT Amortization of Deduct Deduct

PA
TAXABLE Prepayments
a. Investments in equity or debt securities
C Depreciation Deduct Deduct
b.
c.
B
Foreign currencies held or receivable. (@
Real properties held (revaluation increment)
Net Income xxx xxx
d.
CJ
Decrease in value of foreign currency denominated debt by
virtue of favorable fluctuation in exchange rates
Income from Leasehold Improvement
e. Birth of animal offspring,fruits
f. Increase in value of land due to the discovery of mineral 1. Outright Method
reserves. 2. Spread-Out Method
Gain from Related Party Transactions – taxable, except Cost of Improvement
intercompany sales of home office and branch, not taxable. x remaining useful after lease term
/ total useful life of improvement
= Depreciated Value
/ Remaining Lease Term
= Income to Recognize every year
Installment Method Individual Not Required To File
1. Taxable income does not exceed 250,000
1. Dealers of personal property on the sale of properties
they regularly sell. 2. Purely compensation income earner of one
2. Dealers of real properties, only if their initial payment employer & employer withheld correct income tax
does not exceed 25% of the selling price. 3. Sole income is subject to FWT
3. Casual sale of non-dealers in property, real or personal, 4. Minimum Wage Earner
when their selling price exceeds P1,000 and their initial 5. OFW, OCW
payment does not exceed 25% of the selling price.
Modes of Filing Income Tax Returns
Steps for Instalment Method Formula 1. Manual Filing System
Step 1: Evaluate the seller
Step 2: Compute for the
It it’s under 1, 2, or 3 above
Cash Consi + FV on non-cas
2.
3.
eBIR Forms
sa le
Electronic Filing Payment System (eFPS)
Selling Price consi, + Mortgage Assumed
t for
Step 3: Check if the
Mortgage/Indebtedness
Mortgaged Assumed
(Tax Basis)
a ) no
Penalties for Late Filing or Payment of Tax
❖ Surcharge
assumed exceeds the tax
basis of the asset
= Excess Mortgage
ria a a. 25% of the basic tax for failure to file or pay
deficiency tax on time
A
CP
Step 4: Compute for the Initial Downpayment + other payment b. 50% for willful neglect to file and pay taxes
Payment made during the yr + excess ❖ Interest
mortgage
B (@ a. December 2017 downward – 20% per
annum
CJ
Step 5: Compute for the IP/SP Initial Payment / Selling Price
Ratio ratio exceeds 25%, the instalment b. January 2018 onward – 12% per annum
method is not allowed ❖ Compromise

Step 6: Compute for the Selling Price – Mortgage Installment Payment of Tax – available only for tax due more
Contract Price Assumed + Excess Mortgage than 2,000 pesos. First payment on filling of return and another
payment on or before October 15.
Step 7: Compute for the Gross Selling Price – Tax Basis
Profit
Step 8: Compute for the Gross Gross Profit x collection / contract
Income for each collection price = GI for that collection
FINAL INCOME TAX RATES – INDIVIDUAL DIVIDENDS
ROYALTIES Dividends RC, RA, NRC NRAET NRAETB
Passive Royalties RC, RA, NCR, NRAETB Domestic 10% 20% 25%
NRAET Share in Income
Literary, Book, after Tax in
Musical 10% 25% Taxable
10% 20% 25%
Composition Partnership, Joint
Others 20% 25% Venture/ Accounts
Association
INTEREST 10% - RC,
REIT
Interest Income RC, RA
NRC,
NREAET
NRANETB
sa le RA

Long term Exempt Exempt Exempt

t for
WINNINGS & PRIZES

no
Holding Period: RC, RA,
NRAET NRAETB
4 yrs to less than
5 yrs
5% 5% 25%
a a )
Winnings
NRC

3 yrs to less than

4 yrs
12% 12% 25%
A ria Regardless of
20% 20% 25%

CP
amount
Less than 3 yrs 20% 20% 25% PCSO
Bank Deposit,
Time Savings,
B (@ 10k or less exempt exempt 25%

CJ
20% 20% 25% More than 10k 20% 20% 25%
Substitute, Trust Prizes
fund, Gov Sec More than 10k 20% 20% 25%
FCDU 15% Exempt Exempt
Not more than
RIT RIT RIT
10k
OTHERS
1. Informer Tax Reward – 10% of tax reward
2. Interest on Tax Free Covenants – 30% for all
a. Reward – lower between 10% of tax recovered or 1
individual taxpayer, DC and RFC (Interest income
Million.
received is assumed net of FWT)
3. Amounts withdrawn from decedent’s deposit
account – 6% of amount withdrawn
FINAL INCOME TAX – CORPORATION CAPITAL GAINS TAX RATES
DC RFC NRFC
Interest Real Property Domestic
Interest 20% 20% 25% Stock
Income
FCDU 15% 15% Exempt Rate 6% 15%
Dividend Tax Base Higher between FMV & Net Gain
From DC exempt exempt 25/15 * tax SP
sparing DST P15 /1,000 P1.5/200
From RFC par
Sources PH Exempt RIT 25%
Other
sa le
-Alternative Taxation Rule -Wash

for
Sources RIT, may be N/A N/A Info -Exemption for principal Sale
without exempt
certain no t residence
-Exempt by special laws
condition
a a )
From NRFC RIT N/A N/A
ria Alternative Taxation Rule - option to be taxed at either 6%
From REIT 10% 10%
PA capital gains tax or regular income tax. If seller is Individual, and

@C
buyer is the Government.
OTHER ITEMS SUBJECT TO FINAL TAX
(
JB
Branch Profit Remittance of Corporation 15% Exemption To The 6% Capital Gains Tax – for RC/RA, principal

C
Gross Rentals, Lease, Charter Fees derived by
non-resident owner or lessor of foreign vessel
4.5% residence, escrow account, BIR notified within 30 days from sale,
can only be availed once per 10 years.
Gross Rentals, Lease, Charter Fees derived by 7.5%
non-resident lessor of aircraft, machineries, Exempt By Special Laws- Comprehensive Agrarian Reform
equipment
Program, Socialized housing units by the National Housing
Payments to oil exploration services 8%
contractors/sub-contractors Authority.
Payments to non-resident/foreign 25%
cinematographic film owners, lessor or distributris Wash Sales – non-dealer acquired and sell securities within 30
days before or after, the loss if any is not deductible against
capital gain.
REGULAR INCOME TAX RATES 5. International Carriers – 2.5% on Gross PH billing, subject to
48-hour rule.
INDIVIDUAL 6. OBU’s – RCIT/MCIT
1. Graduated Tax Table 7. FCDU’s – RCIT/MCIT
2. 8% Optional Tax on Gross Sale 8. ROHQ – 10%, starting January 1, 2022 RCIT.
a. Purely self-employed – Gross Sales less 250,000 9. GOCCs – RCIT/MCIT, except: GSIS, SSS, Pag-
b. Mixed Income Earner – use GTT for Ibig/HDMF/PhilHealth, Local Water District
compensation, use 8% only for Gross Sale 10. COOPERATIVE
3. NRANETB – 25% final tax on gross income. a. Transacting to Member only – taxable only to unrelated

CORPORATION
sa le
b. Transacting to Non-Member
1. Reserved at most 10M – taxable only to
1. RCIT – 25% of Taxable Income for DC, RFC/ 25% of
t for
unrelate

no
Gross Income for NRFC 2. Reserved more than 10M – taxable to unrelated
2. MCIT – 2% on Gross Income (1% July 1, 2020 – June
30, 2023),
a a ) + related sale to non-member

a. Exempt – REIT, Subject to Special tax, NRFC

Timing – X + 4th year A ria SPECIAL TAXPAYERS

CP
b. 1. ESTATE – income distribution to heirs is not taxable to
c. Excess MCIT carryover for next 3 years the estate. Corpus distribution is not deductible.
d.
B (@
Relief – prolonged labor dispute, force majeure, 2. TRUST - income distribution to heirs is not taxable to

CJ
Legitimate Business reverses. the trust.
3. MSME’s – 20% on Taxable Income, MCIT applicable. 3. PARTNERSHIP – taxable except GPP
For DC only. 4. JOINT VENTURE – taxable except purpose of
4. Educational Institution & Hospital undertaking construction, engaging in petroleum,
School Hospital pursuant to an operating consortium agreement under
Private 1%/10% 25% a service contract with the government.
Non-Profit exempt 1%/10% 5. CO-OWNERSHIP – exempt, taxable if income from co-
Government exempt exempt owned is reinvested to other income producing
*subject to pre-dominance test properties or venture.
*1% from July 1, 2020 – June 30, 2023
GRADUATED TAX TABLE

Taxable Income Basic Tax Additional Tax

Basic Tax (2022) Additional Tax (2022)
Over But Not Over (2023) (2023)

0 250,000 - - - -

250,000 400,000 - - le
15% of excess
sa
over 250,000
20% of excess
over 250,000

t for
400,000 800,000 22,500
a ) no
30,000 20% of excess
over 400,000
25% of excess
over 400,000
a
ria 130,000
800,000 2,000,000 102,500A 25% of excess 30% of excess

@ CP over 800,000 over 800,000

2,000,000 8,000,000 B (402,500 490,000 30% of excess 32% of excess

CJ over 2,000,000 over 2,000,000

8,000,000 - 2,202,500 2,410,000 35% of excess 35% of excess

over 8,000,000 over 8,000,000
 THE REGULAR INCOME TAX MODEL 15. Gain On Redemption of Shares In A Mutual Fund
Company
Gross Income xx 16. Prizes Or Awards without action
17. Prizes For Sports Competition
Allowable Deductions (xx) 18. Benefits Given to Frontline During Covid 19
Taxable Income xx 19. Minimum Wage Earners
20. Barangay Micro-Business Enterprise (BMBE)
Tax Due xx 21. Non-Stock and Non-Profit Entities
Tax Credits (xx) 22. Qualified Employees’ Trust Fund
Tax Payable/(Overpayment) xx 23. Sale of gold
24. le
Other Income Subject To FWT/CGT
sa
GROSS INCOME t for
INCLUSION FROM GROSS INCOME

a ) no
1.
2.
Compensation For Services
Business Income
EXCLUSION FROM GROSS INCOME
1. Proceed of Policies
riaa 3. Dealings From Properties
2. Gifts, Bequest and Devises A 4. Interest Income
3. Compensation for Damages
CP 5. Rent Income
4.
5.
Income Exempt Under Treaty
Retirement Benefit (RA 7641) B (@ 6.
7.
Active Royalties
Dividends
6.
7.
CJ
Separation And Termination Benefit
Social Security Benefits
8.
9.
Prizes And Winnings
Annuities
8. USVA Benefits 10. Pension
9. Income From Domestic Securities on Deposits In 11. Share In Net Income of Special
Bank Derived From Foreign Government Corporations/Partnership
10. Government Income 12. Income Distributions from Taxable Estates and Trusts
11. Mandatory Payroll Deductions 13. Recoveries Of Bad Debts
12. PERA 14. Tax Refunds
13. 13th Month Pay and Other Benefits 15. Reimbursements Of Expenses
14. Gains On Sale of Long-Term Indebtedness 16. Cancellation Of Indebtedness
DEDUCTIONS SPECIAL ALLOWABLE ITEMIZED DEDUCTIONS
1. Income Distributions Made by Taxable Estates
CLASSIFICATION OF DEDUCTIONS and Trusts
1. COST OF SALES or COST OF SERVICES 2. Transfer To Reserve Funds of Insurance
2. REGULAR ALLOWABLE ITEMIZED DEDUCTIONS Companies
3. SPECIAL ALLOWABLE ITEMIZED DEDUCTIONS 3. Dividend Distribution of A Real Estate
4. NET OPERATING LOSS CARRY OVER (NOLCO) Investment Trust – min of 90%
a. GR: 3 years 4. Transfer To Reserve Fund of Cooperatives
b. 2020-2021: 5 years (Bayanihan Act) 5. Special Deductions Related to Senior Citizens
And Persons With Disability – 20% discount.
LOAN PRINCIPLE – Legitimate, Ordinary, Actual, Necessary
6. sa le
15% SC, 25% PWD on salaries expense.
Jewelry Industry Development Act Of 1998 –
for
REGULAR ALLOWABLE ITEMIZED DEDUCTIONS
50%
1.
2.
Interest Expense – limit (20% x interest income)
Losses – losses without insurance
no7.t Adopt-A-School Act Of 1998 – 50%
3. Taxes – non-income taxes
a a ) 8. Expanded Breastfeeding Promotion Act Of
2009 – 100%
ria
4. Bad Debts
5. Depreciation 9. Free Legal Assistance – Net Revenue x 10% vs.
A
CP
6. Depletion should be income from free assistance given
7. Charitable And Other Contributions – limit (5% 10. Productivity Incentive Act Of 1990 – 50%

B (@
individual/ 10% corporation x taxable income) 11. Labor Training Expenses – 50%

CJ
8. Pension Expense – with requisites 12. Net Operating Loss Carryover
9. Research And Development Costs
10. Entertainment, Amusement, And Recreation
(EAR) Expense – 1% Net Revenue/.5% of Net OPTIONAL STANDARD DEDUCTIONS
Sales ➢ Gross Sale/ Receipt + other operating income -
11. Wagering Losses – up to extent of gain only Individual
➢ Gross Income (including other non-operating) -
Corporation
*all net of discount, allowances, return
 Income Distribution TAX CREDIT
Treatment To Beneficiary
Co-ownership ➢ Expanded Withholding Tax
Taxable Dividend Income (10%
FWT) ➢ Foreign Tax Paid claimed as credit
Non-Taxable ----- Regular Income (15% ➢ Withholding tax on compensation
CWT) ➢ Excess Credits from previous taxable year
Estate ➢ Payment from previous quarter
Judicial Allowable Regular Income (15%
Deduc CWT)

ExtraJudicial Regular income (15%

sa le
for
-preservation ----- CWT)

- more than
Dividend Income (10%
FWT)
not
preservation
Trust a a )
Irrevocable Allowable Regular Income
A ria
CP
(donors tax on Deduc (15%CWT)
investment)

B (@
CJ
Revocable Taxable Income Received not
(donors tax on to grantor taxable, income of
income income received is
distribution) taxable as regular
income.
EXPANDED WITHHOLDING TAX for corporations
Item of Income Payment Rate with gross
Professional Fees 5% income
Professional entertainer for non-VAT exceeding
Professional athletes individuals, P720,000
All directors and producers involved in
movies, stage, television and musical 10%
productions for VAT
individuals and
Management and technical consultants
Business and Bookkeeping agents and corporations with
agencies
Insurance agents and insurance
Gross Income
sa le
Fees of Director who are not employees 5%

for
not exceeding of the company for non-VAT
adjusters
Other Recipients of Talent Fees P720,000,
no t individuals,
Gross Commission of brokers, fees of
agents of professional entertainers and
15%
for corporations a a ) 10%

ria
for VAT
real estate service practitioners with gross
A individuals

CP
Professional fees paid to medical income Income payments made by credit card 0.5%
practitioners by hospitals exceeding companies
& clinics or paid directly by HMO
B (@
P720,000
Income Payment made by NGAs, LGU, 1%
CJ
Payment by the General Professional 10%
Partnerships to its partners for corporations & etc and top withholding agents to its
local/resident suppliers of goods other
with Gross
than those covered by other rates of
Income not withholding tax
exceeding Gross payments to embalmers by
funeral parlors
P720,000,
Payments made by pre-need companies
15% to funeral parlors
Income payments made to suppliers of
agricultural
supplier products in excess of Income payments on purchases of
cumulative amount of P300,000 within minerals, mineral products and quarry
the same taxable year resources
Income payments on purchases of
minerals, mineral products and quarry
resources by Bangko Sentral ng
Pilipinas (BSP) from gold
miners/suppliers
Income payments received by Real
Estate Investment
Trust
al e
Income payments made by political
parties and candidates of local and
5%
Income payments on locally produced
r s
national elections on all their
o
raw sugar
Income payments to certain contractors 2%
ot f
purchases of goods and services
related to campaign expenditures
Income Payment made by NGAs, LGU,
& etc and top withholding agents to its a ) n
On gross amount of interest on the 10%

riaa
refund of meter deposits
local/resident suppliers of services
Income distribution to the beneficiaries 15%
other than those covered by other A
CP
of estate and trusts
rates of withholding tax
Additional Income Payments to
Gross rental or lease for the continued
@
5%
( government personnel from importers,
JB
use or possession of personal
shipping and airline companies or their
property in excess of P10,000 annually
and real property used in business C agents for overtime services
On gross amount of refund given by
which the payor or obligor has
MERALCO to
not taken title
customers with active or terminated
Cinematographic film rentals and other
contracts
payments to resident individuals and
Interest income denied from any other
corporate cinematographic film
debt instruments not within the
owners, lessors and distributors
coverage of deposit substitutes
Tolling fees paid to refineries
COMPENSATION INCOME De Minimis Benefit
Regular Supplementary Exempt
De Minimis Benefit Limit
*Basic Salaries *Holiday, Hazard, Overtime, *BHHON of
*Representation Night Shift MWE Monetized unused vacation leave 10 days per year
*Transportation Taxable *13th-month pay
*COLA *13th-Month Pay and other
credits of private employees
*Fixed *Commissions, Emoluments, benefits Monetized unused vacation and sick
Allowances Honoraria *De Minimis
*Paid Absences *Living Quarter or Meal Benefit leave credits of government -no limit-
*Stock Option Plans *SSS, GSIS, employees
*Fees PAGIBIG, HDMI,
*Taxable Retirement and Union Dues Medical Cash allowance to
al e P1,500 per
Separation
*Profit Sharing or Taxable Bonus
*Other forms of
compensation
dependents

o r s semester
not taxable

n o tf
Rice subsidy
Uniform and Clothing Allowance
P2,000 per month
P6,000 per year
)
aaa
Excess De Minimis Benefits & Other Taxable DMNM
Actual Medical Assistance P10,000 per year
Function Treatment
A ri Laundry Allowance P300 per month
Managerial or Supervisory
CP
Subject to Fringe Benefit Tax (Final Tax) Employee Achievement Award, in
Rank-and-File (@
Part of 13th Month Pay and Other Benefits
B
the form of non-cash tangible
property
P10,000 per year

13th Month Pay and Other Benefits

CJ Christmas and Anniversary gifts P5,000 per year
Daily meal allowance for overtime 25% of minimum
1. 13th month pay, 14th month pay, 15th month
work and night or graveyard shift wage
2. Christmas bonus of private employees
3. Cash gifts other than Christmas or Anniversary gifts of private employees Benefits received under Collective
4. Additional Compensation Allowance (ACA) of government employees Negotiation
5. Other fringe benefits of rank-and-file employees Agreement/Collective Bargaining P10,000 per year
a. Taxable de minimis benefits Agreement and Productivity
b. Personal expenses shouldered by the employee
*First 90,000 exempt, excess is part of Supplementary Compensation Enhancement Incentive schemes
FRINGE BENEFIT TAX
HOUSING PRIVELEGE

PROCEDURE FOR COMPUTATION Housing Privilege Monetary Value

Step 1: Determine the monetary value.
Step 2: Determine the fringe benefit tax rate applicable for the Lease of residential property for
50% of rental payments
taxpayer. residential use of employees
Step 3: Determine the gross-up rate. Assignment of residential 5% x 50% x higher
Step 4: Determine the grossed-up monetary value. property for use of employees between Assessed
Step 5: Determine the fringe benefit tax.
Value and Zonal Value
al e
FRINGE BENEFITS s
Purchase of residential property
o r
tf
1. Insurance Premiums – Excess of What Law Allows on instalment basis for the use 5% x 50% x Acquisition
2. Expenses -Personal/Household/Membership
Expenses
) n o
of employees (exclusive of
interest)
Cost

3. Foreign Travel – Only in Excess Of $300/Day Hotel

aaa Purchase of residential property Higher between

Ari
Cost, 30% Cost of First-Class Plane Ticket. and ownership is transferred in Acquisition Cost and

CP
4. Interest On Loan at Less Than Market Rate the name of employee Zonal Value
5. Holiday And Vacation Expenses
@
B(
6. Educational Assistance – Only If Not Related to Purchase of residential property
Higher between Fair
and ownership is transferred in
CJ
Business, No Written Contract and Not Granted Value and Zonal Value
Through Competitive Scheme the name of employee for less
less Consideration Paid
7. Housing Privilege only if not for armed forces of PH, than adequate consideration
not situated to premises of factory (max 50m), not a
temporary housing (3month max)
8. Motor Vehicle
MOTOR VEHICLE DEALINGS IN PROPERTIES
Tax Treatment of Ordinary Gains and Losses
➢ Ordinary Gain - Fully Taxable
Motor Vehicle Privilege Monetary Value
➢ Ordinary Loss - Fully Deductible
Purchase of motor vehicle in the Acquisition Cost Tax Treatment of Capital Gains and Losses
name of employee ➢ Capital Gain - Capital Loss
Cash received by the = Net Capital gain - taxable
employee = Net Capital loss - not deductible
Cash is given to employee for the
purchase of vehicle, ownership is However, if the cash given
is subjected to WTC, it shall CORPORATE TAXPAYERS
placed in the name of the employee
not be subject to FBT
sa le
Capital gains are fully recognized by corporate taxpayers while

for
anymore. capital losses are recognized only to the extent of capital gains.
In short, only net capital gains are recognized, net capital losses
Purchase of car on instalment basis
the ownership of which is placed in Acquisition Cost ÷ 5
no t
are not deductible.
the employee (exclusive of interest)
a a )
INDIVIDUAL TAXPAYER
a
Ari
Employer shoulders a portion of the ➢ Holding Period- If the capital gains or losses arose
Portion shouldered by
purchase price, the ownership is
placed in the name of employee
the employer

@ CP from capital assets which were held for more than one
year, the amount for the capital gain or loss is reduced
Employer owns and maintains a
B(
Acquisition Cost x
by half.

the business and the employees CJ

fleet of motor vehicles for the use of
20% x 50%
➢ Net Capital Loss Carryover (NCLCO)- Net capital
loss (combined, short & long) from previous year can
Employer leases and maintains a
50% x Rental be claimed as deduction on the following year (1 year
fleet of motor vehicles for the use of
Payments only).
the business and the employees
Lower of:
Aircrafts Not applicable o Net Capital Loss;
Yachts Acquisition Cost x 5% o Net Income in the year the net capital loss
happened; and
o Net capital gain in the following year.
 sale
o t for
QUICK NOTES INaTRANSFER
a) n TAX
Aria
CP
B (@
CJ
GROSS ESTATE FORMULA:
(A) Inventory of Properties at point of death xx → income earned after death is deducted,
(B) Less: Exempt Sales expenses paid after death is added back
(C) Properties not owned (xx)
✓ Merger of the
(D) Properties owned but excluded by law (xx)
usufruct in the owner
Inventory of taxable present property xx of the naked title.
(E) Taxable Transfer xx ✓ The transmission or
Gross Estate xx delivery of the
e
✓
or sal
Proceeds of group insurance taken out by
inheritance or legacy
by the fiduciary heir

✓ Transfer in contemplation of death ✓

n o tf
a company for its employees
Proceeds of GSIS policy or benefit from
or legatee to the
fideicommissary
✓ Revocable transfer, including GSIS
a ) ✓ Special power of
conditional transfer – unless ✓
aa
Accruals from SSS

Ari
appointment
waived the right to revoked before ✓ United States Veterans Administration ✓ Proceed of
death P (USVA) benefit – RA 136

@C
irrevocable life
✓ Property under general power of ✓ War damage payments insurance policy
appointment
B( ✓ All bequests, devises, legacies or transfer payable to the
✓ Proceed of
insurance and insurance forCJ
revocable life to social welfare, cultural and charitable
institutions, no part of net income of which
beneficiary other
than estate,
executors inures to the benefit of any individual, not executor/
✓ Claims against insolvent person more than 30% of donation shall be used administrator
✓ Prior interest by such institutions for administration ✓ Properties held in
✓ Transfer for insufficient purposes. trust by the
consideration ✓ Acquisitions and/ or transfer expressly decedent.
declared as non-taxable by law ✓ Separate properties
✓ Bank deposits withdrawn from the of surviving spouse.
decedent account during the settlement of ✓ Transfer by way of
the estate bona fide sales.
ESTATE TAX MODEL SUMMARY OF DEDUCTION RULES

Exclusive Common Total RC, RA, NRA

NRC
Gross Estate xx xx xx
Losses YES Pro-
Less: Ordinary Deductions Claims against YES rated
a. Claims Against the Estate (xx) (xx) (xx) estate amount
b. Claims Against Insolvent (xx) (xx) (xx) Indebtedness YES
Persons Taxes YES
c. Unpaid Mortgages (xx) (xx) (xx)
Use sa le
Transfer for Public YES YES

for
d. Property Previously Taxed (xx) (xx) (xx)
Vanishing YES YES
e. Transfer For Public Use (xx) (xx) (xx)
t
) no
Deductions
f. Others (xx) (xx) (xx) Family Home YES NO
a
riaa
Estate after deductions xx xx xx Standard YES YES
g. Family Home (xx) Deductions
h. Standard Deductions P A (xx)
RA 4917 YES NO

@C
Share of surviving YES YES
i. Others/ Ra 4917 (xx)

B(
spouse
Net Estate xx
CJ
Tax Credit YES NO
Less: Share of Surviving Spouse in (xx)
Common
Net Taxable Estate xx
Multiply by Estate Tax Rate 6%
Estate Tax Due xx
Tax Credit (xx)
Estate Tax Payable XX
 DONOR’S TAX MODEL
Gross Gift xxx,xxx ✓ Donation To Exempt Donee
Less: Deduction (xxx,xxx) ✓ Donation for Election Campaign
Net Gift - current xxx,xxx ✓ Transfer For Insufficient Consideration of Real
Property Classified as Capital Asset
Add: Prior NG during the year xxx,xxx ✓ General Renunciation of Inheritance
Total Net Gift xxx,xxx ✓ Donation With Reserved Powers
✓ Donation to the Government for Public Use
Less: Exempt Donation
Net Gift subject to tax
(250,000)
xxx,xxx
✓
✓ sa le
Donation to Accredited Non-Profit Institution
Quasi-Transfers
Donor’s Tax Rate x 6%
t for
✓ Void Donations
Donor’s tax Due xxx,xxx
a ) no ✓ Foreign Donations of Non-Resident Alien
Donors
Less: Donor’s tax paid during the year (xxx,xxx)
a a ✓ Donation of Property Exempt Under Reciprocity
Less: Foreign tax credit
P Ari
(xxx,xxx) ✓ Condonation/ Forgiveness of Debt
Donor’s Tax Payable/ (Overpayment)
C xxx,xxx

B (@
CJ
PROPERTY VALUATION

sale
t for
a ) no
riaa
A
CP
B (@
CJ
PROPERTY REGIMES

sale
t for
a ) no
riaa
A
CP
B (@
CJ
TRANSFER TAX – gratuitous transfer of property, 3 Types of Taxpayer
1. Resident/Citizen
right and obligations.
a. RC
b. NRC
Types of Transfer
c. RA
1. Sale/Barter/Onerous
2. NRA
2. Unilateral/Gratuitous
3. Juridical
3. Complex/Mixed
a. Domestic
b. Foreign
Nature of Transfer tax
1. Privilege
sa le
2.
3.
Ad Valorem
National for
NON-TAXABLE TRANSFERS
t
4.
5.
Direct
Fiscal a ) no
riaa
Purpose of Transfer Tax A
1. Benefit Received Theory CP
2.
3.
State Partnership Theory
Ability to Pay Theory B (@
4.
5.
CJ
Redistribution of Wealth Theory
Tax Evasion/Minimization Theory
6. Tax Recoupment Theory
EXCEPTIONAL RULES ON TRANSFER

sale
t for
a ) no
riaa
A
CP
B (@
CJ
 sale
t for
) no
QUICK NOTES INaaBUSINESS TAX
Aria
CP
B (@
CJ
 Business Tax – resident buyer buys to resident seller.

CONSUMPTION TAX VAT on Importation – resident buyer buys goods to non-resident seller.
Exportation – non-resident buyer buys goods to resident seller.

Final Withholding VAT– resident buyer buys service to non-resident

seller. seller.

Business Tax VAT on sa

Exportation
le Final
Importation for Withholding

a) not VAT
As to Buyer Business/Not
aa
Business/Not - Business
As to Seller Business Ari
Business/Not Business Presumed

@ CPDutiable Value + Business

B(
Tax Base Gross Sale Gross Sale Contract Price
CJ Custom Duty +
Excise Tax +
In-land Cost
Tax 12% 12% 0% 12%
Payable To BIR BOC - BIR
 Those who did not exceed the 3M
3% Other threshold and did not opt to
Exempt Percentage Tax register.
NO
Is the seller a Vatable
BUSINESS TAX 12% Value
Gross sale exceed 3M in the past 12
Business? Percentage Tax months, believes gross sale will
YES Added Tax exceed 3M (10M for radio), and
VAT PAYABLE FORMULA Exempt Sale those opt to register.

Output VAT xx - vat imposed on sale Excise Tax

Regular Input VAT Purchases x 12%

le
Higher or 2% of beginning inventory
Less: Input VAT (xx) – vat on purchase TYPES OF Transitional Input VAT & actual input VAT
VAT Due xx sa
for
Monthly VAT Credits INPUT VAT Presumptive Input VAT 4% of SAMAMICOPARE
Less: Tax Credit (xx)
ot Deferred Input VAT Amortize over 60 months or actual if life is
Creditable VAT withheld.
VAT Payable xx
a ) n Input VAT Carry Over
lesser, MAAC should be > 1M and only until
Dec 31, 2021

aa
Advanced VAT for sugar/flour 5% CWT from Government

ri Imported by miller – invoice

PA
VAT paid on amended return Refined Sugar – 12% x 1,400 price + custom duties + other

@C
INSTALLMENT REPORTING OF OV for every 50kg or 168/50kg. charges

Received Payment ( Flour 12% x 75% x 105% x (a+b) Purchase by miller – invoice

Contract Price
x Output VAT
C JB
Distribution to Creditors, Shareholders, own use.
price + freight

Naturally Grown/Timber
Domestic Consignation not sold within 60 days. Products
TRANSACTION
Retirement/Cessation of Business (lower of AC & MV) Sale of jewelry, gold, metallic
DEEMED SALE minerals
Transmission of properties to trustee (MV @ time of transaction)

Exempt Sale – cannot claim input vat (expense)

MIXED 0% Rated Sale – can claim input vat or refund Input Vat not attributed to any
sales should be pro-rated
TRANSACTION Sale to Government – 5% CWT, can claim input vat based on total gross sale.
S
Regular Sale – can claim input Vat
 Specific Customers: Renewable
-Asian Development Bank Sources: Biomass,
ZERO-RATED SALE – input VAT here is creditable! -Intl Rice Research Ins Solar wind,
-United State agency for intl dev hydropower,
Direct Export – acceptable foreign currency, accordance with BSP. -Embassies -UN geothermal,
-Phil National Redcross steam, ocean
GOODS Indirect Export – sale to registered export enterprise, used directly. -PAGCOR -PEZA energy, fuel cell,
-SBMA - REE hydro fuel.
International Carriers – should be use for outbound transfer.

Sale to specific customer – required approval of BIR if without VAT TRANSITION

approval – exempt not 0% rated.
Timely VAT Not Timely

e Registration

sal
Service to specific customer.
RIT *liable to VAT *subject to vat starting

or from month of the month following the

ot f
Sale to non-resident – should be performed in PH,
acceptable currency/ BSP. registration month of breach (can’t

SERVICES Indirect Export – services to REE.

a) n (can
input vat)
avail avail input vat - can only
avail input vat starting

riaa
from month of
Rendered to International Carriers for international carriers.

PA
registration)
*GPT paid during month
C
Outbound transport of passenger/cargo of domestic carriers.
that should be 12% is

B (@
Sale of power/fuel from renewable sources. credit/refunded.

CJ
8% * Pay GPT *Pay for GPT from start
VAT Registrable = output vat (no input vat)
Optional from start of of taxable year up to
ERRONEOUS Non-VAT Taxpayer issues VAT invoice = percentage tax + OV taxable year month of breach
+ 50% surcharge on OV Tax
TAXABLE up to month *subject to vat starting
SALES Exempt Sale billed as regular = OV less IV of breach the month following the
Error in computation of VAT = invoice price + VAT paid / *Liable to VAT month of breach (can’t
from month of avail input vat - can only
112% x 12% less input vat registration avail input vat starting
(can avail from month of
DETERMINATION X 12% VAT Reporting – Quarterly
input vat) registration)
OF VAT 2550Q – 25th day after the taxable quarter
/112% X 12%
Summary List: Purchases, Sale, Importation
EXEMPTION TO BUSINESS TAX E. Employment – employer – employee relationship

F. Crude Oil – intended to be refined at local refinery.

A. Basic Human & Related Products
a. Agricultural marine food products
G. Education
b. Livestock, Poultry
a. School – accredited by DEPED, CHED, TESDA
c. Breeding Stock & Genetic Materials
b. Educational materials – not for advertisement, compliance with
d. Fertilizers, Seeds, Seedlings, Fingerlings
national book development board requirement.
e. Ingredients use in manufacture of finished feeds.
*Should be in original state: preparation, preservation, packaging
H. Export Sale
sa le
for
NRC coming to resettle in PH a. VAT registered – 0%
B. Quasi-Importation
a. Personal Household Effects Exempt form custom duties t
b. Non-VAT – exempt
no
b. Professional Instrument of overseas Filipinos to settle in the PH
a a )
I. Sale Tor Senior Citizen & PWD

ria
i. Must accompany 90 days before or after arrival a. Drugs, vaccine & foods for special medical
ii. Proof of change of residence
A b. Vitamins and mineral supplements*
iii. Not for commercial purpose
CP c. Accessories and equipment*

C.
B (@
Agricultural Services – by agricultural contract grower and milling.
d. Casket/Urn/Theater/Cinemas

CJ
*for senior citizen only
*Palay into rice, corn into grits, sugar cane into raw sugar
J. Regional Area Headquarters – supervisory, communication, coordinating
D. Health centers of a foreign company.
a. Medical/Dental/Hospital/Veterinary Services K. Sale of Gold to BSP
b. Medicine for certain Illnesses L. Association Dues/Membership of
i. Diabetes v. Mental Illnesses M. Services Specifically Subject to Percentage Taxes
ii. High Cholesterol vi. Kidney Diseases N. Association Dues/ Membership of homeowner’s association
iii. Hypertension vii. Tuberculosis
iv. Cancer
 O. Domestic or International Carriers

PH → PH PH → Abroad Abroad → PH
Pass Cargo Pass Cargo Pass Cargo
Domestic Land 3% CCT 12% - - - -
Air/Sea 12% 12% 0% 0% Exempt Exempt
International Land 12% 12% - - - -
Air/Sea 12% 12% Exempt 3% ICT Exempt Exempt
Sale Importation or Lease of Passenger or Cargo vessel/aircraft, engine. Equipment, spare parts – exempt:
→ use for domestic/international operation.
sa le
→ restriction of MARINA: retirement
t for
no
Passenger/Cargo vessel – 15 yrs
Q. Real Property Sale or Lease by a Realty Dealer
Tankers – 10 yrs
Highspeed passenger crafts – 5 yrs
a a ) Before

ria
After 2021
Importation of fuel goods and supplies by shipping /air transport. 2021
A
CP
Socialized Housing Units
House & Lot 450k 450k
@
B(
P. Cooperative – must be registered with CDA. Residential Lot only 180k 180k

CJ
a. Agricultural Cooperative d. Other Cooperative Low-cost housing 750k Vatable
i. own produce (exempt) i. transacting only with members & Residential lot 1,919,500 Vatable
ii. other product transacting with non-members with acc 3,199,200
Residential house & lot 3,199,200
*to member – exempt reserve <= 10M *3.6M starting 2024
* to non-member – vatable *registered product – exempt Lease of Residential
15k/month 15k/month
b. Credit or Multi-purpose * not registered – vatable Unit
i. Lending (exempt) ii. transacting with non-members with acc
ii. non-lending (vatable) reserve > 10M Lease of Residential Unit: if more than 15k/month:
c. Electric Cooperative – vatable *registered or not - vatable ➔ Annual receipt of <= 3M, use GPT
➔ Annual receipt > 3M, 12 VAT
Sale of adjacent lot within 12 months → aggregated.
SERVICES SPECIFICALLY SUBJECT TO PERCENTAGE TAXES
A. Common Carriers Tax – 3% Other Percentage Tax/General Percentage Tax
– vatable sale of non-vat.
B. International Carriers Tax – 3%
Base on Gross Sale. -3% (1% July 1, 2020 – June 30, 2023)
C. Franchise Tax – 3% Radio, 2% Water/Gas
D. Overseas Communication Tax - 10%
E. Gross Receipt Tax – 1/5/7%
F. Amusement Tax – Boxing 10%, BB 15%, Cockpit/NDC 18%, Jai-alai 30%
G. Premiums Tax on Domestic – 2%
sa le
Base on Gross Receipt.

for
H. Premiums Tax on Foreign – 4% agents, 5% direct owners

ot
I. Winnings Tax – horse/jai-alai 10%, combination bets 4%, owner of horse 10%

) n
A. Common Carriers Tax
a aa C. Franchise Tax – public franchise of:

Ari
➔ passenger via land → Radio/Television/Broadcasting

CP
➔ except: banca, two wheeled animal drawn --) VAT registered/ exceed threshold >10M – 12% VAT
➔ Transportation network companies (grab) --) Otherwise – 3% franchise tax
@
B(
--) TNC/Partner driver should have “certificate of public convenience” → Gas /Water Utilities – 2% franchise tax

CJ
– otherwise, vatable. →PAGCOR franchise tax – 5% in lieu of all local/national tax
--) Tax base is base on “Receipt Theory”
D. Overseas Communication Tax
B. International Carriers Tax → caller should be from PH
➔ Air/shipping carriers owned by foreign corporations →caller should be the payor of service
doing business in the PH in their export of goods. →outgoing call (PH → Abroad)
→except: PH embassies, PH government, International
organization, news services
E. Gross Receipt Tax
G. Premiums tax on Domestic Insurance
Bank/ Non-Bank → life/health insurance
Quasi-Bank →total premiums collected, money, notes, credits
Gross Receipt from Lending Activities →pre-issuance fees, reinstatement fee, renewal fee,
5 yrs or less 5% 5% penalties
More than 5 yrs 1% 1% →investment income realize from investment
Dividends and equity share of subsidiaries 0% n/a
Royalties, rental of property 7% n/a H. Premiums Tax On Foreign Insurance
Net trading Gain on foreign currency debt 7% n/a
sa le
→ non-life insurance (fire, marine, or miscellaneous)

for
All other items 7% 5% →through agents – 4%

Pre-termination: Holding Period – recompute the should be percentage tax base on

not
→owners directly obtaining insurance to NRFC – 5%

pre termination date as new date.

a a )
Net Trading Loss can be carried over for the next quarter but cannot carry
over on net taxable year. A ria I . Winnings Tax

CP
→Horse Race/Jai- alai 10% net winnings
→Combination Bet
(@
4% net winnings
F. Amusement Tax →Owners of winning horse
B 10% of winnings

CJ
Boxing 10%
Professional Basketball 15%
Cockpit, Cabarets, Clubs 18%
Jai-Alai, Racetracks 30%
*Boxing exemptions requisites:
1. World/oriental championship
2. One contender is FILIPINO
3. Promoter FILIPINO citizen or corporation 60% owned by FILIPINO.
 e l
QUICK NOTESfoIN r sa
ot
PREFERENTIAL
aa ) TAXATION
n
Aria
CP
B (@
CJ
STRATEGIC INVESTMENT PRIORITIES PLAN INCOME TAX HOLIDAY

➢ Formulated by BOI, FIRB, IPA.

➢ Approved by the President.
➢ Validity: 3 years
➢ Contents:
✓ Priority projects or activities
✓ Location and Industry tiers
✓ Terms and conditions
➢ Power to grant tax incentives.
✓ Investment Capital more than 1B – FIRB sa le
✓ Investment Capital at most 1B – IPA
t for
QUALIFIED BUSINESS ENTERPRISE
a ) no
a.
b.
Export enterprises
Domestic market enterprises riaa
A
CP
FISCAL INCENTIVES – start of availment is the start of
(@
commercial operation (operation should start within 3 years
B
CJ
from date of registration).
a. Income Tax Holiday
b. Special Corporate Income Tax
c. Enhanced Deductions
2 ADDITIONAL YEARS ITH (EXTENSION) – areas
recovering from armed conflict. Added after the ITH period. OTHER INCENTIVES
a. DUTY EXEMPTION
3 ADDITIONAL YEARS ITH (RELOCATION) – relocating ➢ Importation of Capital Equipment, Raw Mat, Spare
from NCR to other areas. Added after exhaustion of all Parts, accessories used directly in registered project
incentives. and not produced domestically in sufficient quantity,
with approval of IPA.
SPECIAL CORPORATE INCOME TAX
➢ Subsequent sale or transfer within 5 years from
➢ five percent (5%) effective July 1, 2020, based on the
importation needs approval from IPA, and is only
gross income earned, in lieu of all national and local
taxes is available for registered export enterprises.
sa le
allowed to certain circumstances:

for
✓ Enterprise with duty exemption
➢ Available for ten years.
✓ Enterprise without duty exemption – upon
➢ Irrevocable choice between enhance deduction or
SCIT. no t payment of duties (based on net book value)

a a ) ✓ Required for pollution abatement and control

ria
✓ Technical obsolescence
ENHANCED DEDUCTION
✓ Donated to TESDA, SUCs, DEPED or CHED
✓ Qualified Capital Expenditure A
o CP
Building – 10% additional depreciation
➢
schools.
Without approval from IPA, RBE and buyer
expense
B (@
Machinery & Equipment – 20% additional
SOLIDARILY liable twice the amount of duties

CJ
o
that should be paid during importation.
depreciation expense
✓ Additional 50% labor expense, Power expense,
Domestic Input, Reinvestment Allowance
✓ Additional 100% training expense
✓ 5 years Enhanced Net Operating Loss Carryover –
for net loss in the first 3 years of operation.
b. VAT EXPOSURE CANCELLATION, SUSPENSION, OR WITHDRAWAL OF
THE ENJOYMENT OF TAX INCENTIVES
PURCHASES
a. Non-compliance with the agreed performance
REE 0% VAT (17 years) targets or material violation of any of the
RDME 12% VAT conditions imposed.
SALES
b. Material misrepresentation of information.
Existing 5% VAT Exempt (regardless who is the
c. Non-compliance of with the reportorial
GIT buyer)
requirements.
Existing ITH 12% VAT (if buyer is from transitioning
& RDME)
0% VAT (if buyer is REE)
RULES ON TRANSITION
1.
sa le
Granted an income tax holiday only →

for
REE/RDME 0% VAT (if seller is on ITH period)
VAT Exempt (if seller is on SCIT Allowed to continue with the availment of the
period)
no t income tax holiday for the remaining period of

c.
12% VAT (if buyer is RDME)
IMPORTATION OF COVID 19 VACCINES a a ) 2.
the income tax holiday.
Currently availing of the 5% gross income
➢ exempt from import duties, taxes and other fees
A ria tax on gross income earned → Allowed to

CP
with required approval or licenses issued by the continue availing the 5% GIT for 10 years.
DOH or FDA. Should Not be intended for resale. 3. Granted an income tax holiday and entitled

B (@ to the five percent tax on gross income

CJ
d. IMPORTATION OF PETROLEUM PRODUCTS earned after the ITH period → allowed to
➢ When importing crude oil for local refining, no exhaust unused income tax holiday and
duties and taxes are imposed initially. continue availing the 5% GIT, both for a total of
➢ The duties and taxes on petroleum products ten years.
derived from refining will only be paid when
these products are lifted or taken out for use.
Registered business enterprises with incentives granted prior
to the effectivity of the CREATE shall be subject to the
following rules. (Create starts at 2021)
➢ Pioneer PEZA - 6 yrs ITH, 5% GIT
➢ Non-pioneer PEZA - 4 yrs ITH, 5% GIT
➢ BCDA - 5% GIT
➢ Pioneer BOI - 6 yrs ITH
➢ Non-pioneer BOI- 4 yrs ITH

Exempt only from Local

Business Tax only
Exempt to all local
taxes during period of sale
during period of ITH. GIT.
t for
a ) no
riaa
A
CP
B (@
CJ
 r s ale
QUICK NOTES IN OTHER o t fo SPECIAL
) n
TAXPAYER
r i aaa
A
@ CP
B(
CJ
 INCENTIVES
BARANGARY MICRO BUSINESS a. REGULAR INCOME TAX EXEMPTION from
ENTERPRISE (BMBE) RA 9178 income arising from operation of the enterprise.
• But still subject to business taxes, VAT, Percentage
Tax, Withholding Tax, FWT, CGT, Annual
BMBE is a business entity whose total assets including those Registration Fee.
arising from loans but exclusive of the land on which the • Required to file an Annual Information Return,
particular business entity’s office, plant, and equipment are together with an Account Information Form, or its
situated, do not exceed P3,000,000. equivalent, containing data lifted from audited

CERTIFICATE OF AUTHORITY – issued by office of the

sa le
financial statements and a sworn statement of
assets owned and/or used in business.

for
treasurer of city or municipality. 2 years of effectivity, • Deadline for filing the same is the 15th day of the
renewable.
no t fourth month following the close of the taxable year,
similar to an Annual Income Tax Return.
REVOCATION OF BMBE TAX EXEMPTION
a a )
b. EXEMPTION FROM COVERAGE OF MINIMUM

ria
• Transfer of place of business WAGE LAW – but BMBE employee is still required
to receive SSS and Health Care Benefit.
• Value of total assets exceeds P3,000,000
A
•
•
Voluntary surrender of the Certificate of Authority
Death of the registered individual owner CP c. PRIORITY TO SPECIAL CREDIT WINDOW SET-
UP -specifically for financing requirements of the
•
B (@
Violation or non-compliance with the provisions of RA 9178 BMBE.

CJ
• Merger or consolidation with an entity which is not eligible to d. TECHNOLOGY TRANSFER, PRODUCTION &
be a BMBE MANAGEMENT TRAINING & MARKETING
• Sale or transfer of the BMBE, if a sole proprietorship without ASSISTANCE PROGRAM.
prejudice to the transferee applying for registration
e. EACH LGU ARE ALSO ENCOURAGE TO EITHER
• Submission of fake or falsified documents
REDUCE THE AMOUNT OF LOCAL TAXES, FEES
• Retirement from business, or cessation/suspension of
operations for one year AND CHARGES IMPOSE OR EXEMPT THE
• Making false or omitting required declarations or statements BMBE.

✓ LGU may charge fee not more than 1,000.

 Additional Incentives
SENIOR CITIZEN/ PERSONS
WITH DISABILITY 1. 5% Discount on monthly consumption of water and
electricity – should be in the name of SC.
Limit: 100kw/h electricity, 30cm water
➢ 20% Discount and VAT EXEMPTION/3% OPT to the
2. Exemption from training fees for socio-economic
ff:
program.
✓ Medicine
3. Free vaccination for indigent senior citizen.
✓ Professional Fees for Doctors, Licensed
4. Educational assistance to SC and PWD.
Health Workers
✓ Medical and Dental fee, Laboratory, Diagnostic
5.
sa le
Express lanes for SC and PWD in all commercial
and government establishment.
for
✓ Actual fair for Land Transportation, Domestic
6. Death benefit assistance of minimum of 2,000 for
✓
Air and Sea shipping
Hotels, lodging establishment, restaurant.
no t
SC.
✓ Theater, Cinema, Concerts, Circuses,
a a )
a SOLO PARENT
Carnivals
ri
PA
✓ Funerals and Burial Services • 10% discount on goods bought for child (infant to 6

@C
➢ 5% SPECIAL DISCOUNT TO PWD & SC on regular years old)
retail of basic and prime commodities- limited to

B (
purchase worth 1,300 per week any unused cannot be
• Exemption to VAT

➢
carried over.
CJ
VIOLATIONS FOR NON-COMPLIANCE
✓ 1st Violation – Fine – 50,000 to 100,000;
Imprisonment – 2 to 6 years; or both
✓ Subsequent Violation – Fine – 100,000 to
200,000; Imprisonment – 2 to 6 years; or both
 sale
t for
QUICK NOTES IN LOCAL
a ) no TAXATION
a ria
A
CP
B (@
CJ
16TH CONSTITUTIONAL LIMITATION 11. Countryside and Barangay Business Enterprises and
cooperatives registered in cooperative code of the
ON THE POWER OF TAXATION Philippines
Each LGU shall exercise the power to create its own sources 12. Taxes on National Government, its agencies and
of revenue and shall have a just share in the national taxes. instrumentalities, and local government units

LIMITATIONS FUNDAMENTAL PRINCIPLE

1. shall not be unjust, excessive, shall not be enacted ➢ Uniform, equitable, public purposes, in no case
without any prior public hearing. collection be let to any private person, revenue
2. Income tax (except levied on bank/ financial
institution), DST, Transfer Taxes, Excise Taxes,
le
collected inure solely to the benefit of the local
sa
government unit levying the tax, fee, charge, or other
Percentage Tax, VAT.
t for
imposition and use of progressive system of taxation.
3. Fees on Customs duties, registration fees vessels
and wharfage (except wharfage on wharves
a ) no
TAXING AUTHORITY

4.
constructed and maintained by LGU)
Toll, Fees, Taxes on goods carried into or out of, or riaa ✓ Legislative (Sangguniang Bayan) – power to
impose tax, fee, or charge
A
CP
passing through, the territorial jurisdictions in the guise ✓ Executive (Mayor/Treasurer)- collection
of charges for wharfage
5. (@
agricultural and aquatic products when sold by
B
PROCEDURE FOR APPROVAL AND EFFECTIVITY

CJ
marginal farmers or fishermen. Public hearings → question for validity within 30 days from
6. enterprises certified to by the Board of Investments effective date → Secretary of justice render decision within
7. contractors and persons engaged in the 60 days from receipt of appeal → file appropriate
transportation of passenger proceedings with a court of competent jurisdiction within 30
8. premium paid on insurances days from lapse period or from decision.
9. registration of motor vehicle /issuance of all kinds of
licenses for driving, except tricycles. *such appeal shall not have the effect of suspending the
10. Philippine products exported, effectivity of the ordinance and the accrual and payment of the
tax, fee, or charge levied.
Publication Time of Payment
➢ Within ten (10) days after their approval, three (3) ➢ First twenty (20) days of January or of each
consecutive days in a newspaper posted in at least subsequent quarter. The Sanggunian concerned may,
two (2) conspicuous and publicly accessible places. extend the time of payment of but only for a period
➢ Furnishing of Copies - furnished the respective not exceeding six (6) months.
local treasurers for public dissemination. • Wala kang interest kung magbabayad ka within 20
days or within 6 months (kung in-impose ni LGU na
Attempt to Enforce Void or Suspended Tax Ordinances pwede)
and Revenue Measures • Kung ma de-delay ka ng bayad, example feb 1 ka
The enforcement of any tax ordinance or revenue measure
after due notice of the disapproval or suspension thereof shall
le
na nagbayad (walang 6 months extension) may
sa
for
surcharge & interest ka from jan1
be sufficient ground for administrative disciplinary action • Kung made-delay ka ng bayad example, july 30 ka
against the local officials and employees responsible therefor.
no tna nagbayad (merong 6 months extension) may

Authority to Adjust Rates of Tax Ordinances a a ) surcharge & interest ka from jan 1 since lagpas ka

ria
na for 6 months.
Local units shall have the authority to adjust the tax rates as
A
CP
prescribed herein not oftener than once every five (5) years, Surcharges and Penalties on Unpaid Taxes, Fees, or
but such adjustment should not exceed ten percent (10%) Charges

B (@
of the rates fixed under the LGC. (Maximum adjustment). ➢ Surcharge - (25%) of the amount of taxes, fees or

Tax Period and Manner of Payment CJ

The tax period of all local taxes, fees and charges shall be the
➢
charges not paid on time (except real property taxes)
Interest - (2%) per month of the unpaid taxes, fees or
charges including surcharges (maximum of 36 months
calendar year. Such taxes, fees and charges may be paid in interest/ 72%)
quarterly installments (every last day of quarter)
Tax Discount for Advanced Prompt Payment MUNICIPAL TAX
➢ If the basic real property tax and the additional Business Tax
taxes are paid in advance in, the Sanggunian ✓ Manufacturer and wholesalers – progressive tax
concerned may grant a discount not exceeding table.
twenty percent (20%) of the annual tax due. ✓ Retailers – 2% with gross sale of 400k or less, 1% if
more than 400k gross sales
SITUS OF LOCAL BUSINESS TAX ✓ Manufacturers, Wholesalers, retailers of essential
➢ With Sales Outlet/Branch - 100% on the sales of SO products – 1/2 of the above rates.
is taxable on place of SO. ✓ Contractors – progressive tax table
➢
•
With Factories and/or Plantations
30% of all sales of principal office is taxable in the
✓
receiptssa le
Banks and financial institutions – 0.5% on gross

place where PO is located. ✓

t for
Peddlers – 50php annually
• 70% of all sales recorded in the principal office shall
be taxable where the factory, project office, plant, or
a )
✓
no Other businesses – 2% of gross sales or receipt in
preceding year
plantation is located
o In case of a plantation and factory is in riaa Municipalities within the Metropolitan Manila Area – may
A
CP
different places: Sixty percent (60%) where exceed the maximum by not more than 50%
the factory is located; and & Forty percent
(@
(40%) where the plantation is located.
B
Fees and Charges
Municipality can collected fee on business and occupation
o
CJ
In case that the business has 2 or more
factories the 70% shall be proportion to all
except Professional Taxes, on the practice of any profession.
the factories according to the volume of
Fees for Sealing and Licensing of Weights and Measures
production
Sealing and licensing of weights and measures at such
reasonable rates. Penalized any fraudulent practices.
Settlement may be mad upon payment of penalty not less than
P200 (not involving commission of fraud)
PROVINCIAL TAXES
Object Rate Note
Transfer of Real Property 50% of 1% based on Selling Price Payable w/in 60 days from execution of deed of
Ownership or FMV if SP is not substantial sale or death (duty of seller, transferor, executor)
Business of Printing and existing business - 0.5% of Gross Exempt: reading materials prescribed by the
Publication Receipt last yr Department of Education, Culture and Sports
new business - .05% of Capital
Investment
Franchise Tax existing business - 0.5% of Gross franchises here are those rights or privileges
Receipt last yr affecting public interest which is conferred upon
new business - .05% of Capital private persons or corporation (kuryente, tubig

Sand, Gravel and Other Quarry

Investment
10% of FMV per cubic of extracted
etc)

sa
Allocation: le
Resources
t for
30% Province
30% Municipality

Professional Tax 300 per year/per profession

a ) no 40% Barangay
In case he practices his profession in several

ria a places – tax in the province where his principal

A office is located. Due: Jan 31

Tax on Delivery Truck or Van CP

500 annually/ per truck
@
(
Amusement Tax
CJB 10% from Gross Receipt Allocation:
50% province
50% municipality

Except: operas, concerts, dramas, recitals,

painting and art exhibitions, flower shows,
musical programs, literary and oratorical
presentations
 Other Fees and Charges
CITIES
The Barangay may levy reasonable fees and charges:
Cities, may levy the taxes, fees, and charges which the province
1. On commercial breeding of fighting cocks, cockfighting
or municipality may impose: May exceed the maximum rates
and cockpits;
allowed for the province or municipality by not more than fifty
2. On places of recreation which charge admission fees;
percent (50%) except the rates of professional and amusement
and
taxes.
3. On billboards, signboards, neon signs, and outdoor
advertisements.
BARANGAYS
Taxes
Stores or retailers with fixed business establishments with sa le
COMMUNITY TAX – for municipalities/ cities
✓ Philippine Resident aging 18year old – 5 basic
gross sales or receipts of the preceding calendar year of:
for
tax + 1 peso additional tax for every 1,000 of
t
➢
➢
50,000 or less (cities) - 1%
30,000 or less (municipality) - 1%
a ) no income (not to exceed 5,000)
✓ Corporations – 500 basic tax + 2 pesos
Service Fees or Charges riaa additional tax for every 5,000 worth of real
A property and gross receipt (not to exceed

CP
Barangays may collect fees or charges for services with the
10,000)
regulation or the use of Barangay owned properties or service.

B (@ Exemption

CJ
Barangay Clearance
1. Diplomatic and consular representatives
Sangguniang Barangay may impose a reasonable fee on
2. Transient visitors when their stay in the Philippines does not
Barangay Clearance. Acted upon within seven (7) working
exceed three (3) months.
days from the filing thereof. In the event that the clearance is
not issued within the said period, the city or municipality may
A community tax certificate may also be issued to any person
issue the said license or permit.
or corporation not subject to the community tax upon payment
of One peso (P1.00).
Time for Payment Socialized Housing Tax (optional)
Accrue on the first (1st) day of January of each year which Additional one-half percent (0.5%) tax on the assessed value
shall be paid not later than the last day of February of each of all lands in urban areas in if value of land is more than
year. Should the taxpayer turn 18 years, lose its exempt status 50,000.
or come to reside in the Philippines at the middle of the year,
the figure below will determine its taxability. Tax on Idle Lands
annual tax on idle lands at the rate not exceeding five percent
Penalty for Delinquency (5%) of the assessed value of the property which shall be in
If the tax is not paid within the time prescribed above, there addition to the basic real property tax.
shall be added to the unpaid amount an interest of twenty-four
percent (24%) per annum from the due date until it is paid. Coverage sa le
for
If one-half of the land type stated below remain uncultivated,
t
REAL PROPERTY AND RELATED TAXES
a no
unutilized or unimproved, considered as an idle land.
)
Agricultural More than one hectare

Real Property Tax riaa Non-Agricultural

meters
More than one thousand square

A
CP
Procedures for Computation:
Step 1: Determine the Fair Market Value IDLE LANDS EXEMPT FROM ADDITIONAL TAX
Step 2: Determine the Assessment Level ( @ May exempt idle lands from the additional levy by reason of

C JB
Step 3: Determine Assessed Value (FMV x Assessment Level)
Step 4: Determine the Tax Rate (Province 1%; Cities &
force majeure, civil disturbance, natural calamity

Municipalities within Metro manila 2%) ESSENTIAL COMMODITIES (Business Tax in Municipalities)
Step 5: Determine the Real Property Tax (Assessed Value x 1. Rice and corn
Tax Rate) 2. Wheat or cassava flour, meat, dairy products,
preserved food, sugar, salt and other
Additional Levy for Special Education Fund (mandatory) agricultural, marine, and fresh water products
(1%) on the assessed value of real property which shall be in 3. Cooking oil and cooking gas
addition to the basic real property tax.
4. Laundy soap, detergents, and medicine;
 5. Agricultural implements, equipment and post accrue all to municipalities and city except some
harvest facilities, fertilizers, pesticides, portion will have to remit to the National to cover
insecticides, herbicides and other farm inputs; expenses of printing and distribution of forms and CTT.
6. Poultry feeds and other animal feeds; Remittance shall be made 10 days after the end of
7. School supplies each quarter.
➢ Municipal treasurer shall deputize the Barangay
8. Cement
treasurer to collect the community tax in their
respective jurisdictions.
o Proceed of community tax directly collected by
PUBLIC UTILITY CHARGES- fix the rates for the imposition
of toll fees or charges for the use of any public road, pier or
sa le
the city or municipal treasurer shall accrue
entirely to the general fund of the city or
wharf, waterway, bridge, ferry or telecommunication system
funded and constructed by the local government unit
t formunicipality
concerned:
Exempt from toll fees:
a ) no o proceeds of the community tax collected
through the Barangay treasurers shall be
1. officers and enlisted men of the Armed Forces
riaa apportioned as follows:
▪ 50% municipality
of the Philippines A
CP
▪ 50% barangay
2. members of the Philippine National Police on

3.
mission
B (@
post office personnel delivering mail,
4.
5.
CJ
physically handicapped,
disabled citizens who are sixty-five (65) years or
SUMMARY OF PENALTY FOR LATE PAYMENTS
Subject Interest Surcharge
older.
Community Tax 24% per annum x
Real Property Tax 2% per month, x
PRINTING OF COMMUNITY TAX CERTIFICATES & max of 36 months
DISTRIBUTION OF PROCEEDS All other local 2% per month, 25%
taxes, fee & max of 36 months
➢ The BIR shall be the one to print CTT and distribute to
charges (add surcharge to
cities and municipalities treasurer. Proceed shall the base)
 sale
t for
a ) no
riaa
A
CP
B (@
CJ