theory of taxation philippines

Your comment will be posted after it is approved. Primary Purpose (Revenue/Fiscal) - to raise revenues for the support of the government. (Base ang buwis sa kakayahan na mgbayad. The laws governing taxation in the Philippines are contained within the National Internal Revenue Code. (Para sa madlang people lang gagastusin ang perang nakulimbat este nakolekta), Non-delegability of legislative taxing power - the Congress cannot delegate the "power to tax"to others. b. (Sa BIR sila ung Revenue Officer - Collection). The Philippine taxation system has been and is still in a state of dynamic transformation since January 2018, with the government heading towards accelerating poverty reduction, minimizing inequality, and generating revenues to invest in the Filipino people and infrastructure. a. Caruso has the option either to claim the amount of the income tax withheld in US as a deduction from his gross income in the Philippines or to claim it as a tax credit. (Bawal singilin ang kakampi). Reciprocal Duties - (Benefits-Received or Compensation Theory) In return for the contribution of the taxpayer, he receives the general advantages and protection which the government affords the taxpayer and his property. The Philippines are a group of islands in Southeast Asia which have been an independent country since 1946. Create your own unique website with customizable templates. The Congress shall evolve a progressive system of taxation. Republic Act No. CONCEPT OF TAXATION  Taxation is the inherent power of the state to impose and demand contribution upon persons, properties, or rights for the purposes of generating revenues for public purposes. This law took effect on January 1, 1998. Spaniards resident in the islands were exempt. The property being a property located in the Philippines, it is subject to the Philippine estate tax irrespective of the citizenship or residence of the decedent (Sec. 8424 of the Tax Reform Act of 1997 was passed in December 1997, in the midst of the Asian financial crisis. No. Q: What is Real Property Tax? (2.5%) (2016 BAR) SUGGESTED ANSWER: (A) Yes. International comity - the property of a foreign state or government may not be taxed by another. Freedom of religious profession and worship, Revenue, appropriation and tariff bills to originate from the House of Representatives (ung iba sabi nila Lower House - parang hindi naman tayo parliamentary form of government), Shifting - the transfer of the burden by the original payer to another. Create a free account to download. within the Philippines. Taxation in the Philippines CheryLanne Demafiles. Basis of taxation C. Scope of taxation B. Situs of taxation D. Theory of taxation. wala na matitira sa sweldo ko? GENERAL PRINCIPLES OF TAXATION FUNDAMENTAL PRINCIPLES IN TAXATION. This code underwent substantial revision with passage of the Tax Reform Act of 1997. or. Principle of Necessity - without money, the government cannot pay its expenses and therefore cannot exist. The thin nebula of hedonism in reverse is no longer adequate. 4.] Learn more about taxation in this article. Secondary Purpose (Non-revenue) - to regulate, SOURCES OF REVENUE (Section 21 of the Tax Code). It is proportionate in character - the share of the taxpayer on the public burden is essentially based on one's ability to pay. It is an enforced contribution - tax is not voluntary and its imposition is in no way dependent upon the will or assent of the person being taxed. Download PDF Package. PDF. There are four main types of national internal revenue taxes: income, indirect (value-added and percentage taxes), excise and documentary stamp taxes, all of which are administered by the Bureau of Internal Revenue (BIR). The rule of taxation shall be uniform and equitable. Let us start with the understanding of the thing called “corporation” by its nature as defined in the Corporation Code of the Philippines and for tax purposes as defined by the National Internal Revenue Code of the Philippines. Rodrigo Duterte on December 19, 2017.The implementation of the TRAIN law began on January 1, 2018. Take note that they are NOT involved in the collection thereof. How will the TRAIN law affect incomes taxes of individuals and corporations? ), Administrative Feasibility  - it should be capable of being enforced; not burdensome; convenient as to time and manner of payment. In February 1994, a presidential task force was charged with developing a new Comprehensive Tax Reform Program (CTRP) to increase revenue by adjusting and simplifying the tax code. The effects of taxation on the willingness to work, save and invest are partly the result of money burden of tax and partly the result of psychological burden of tax. Taxation is the inherent power of the sovereign, exercised through the legislature, to impose burdens upon subjects and objects within its jurisdiction for the purpose of raising revenues to carry out the legitimate objects of government. Explain. the government, in the exercise of its civil remedy in collecting the tax due may, b, y distraint of personal property or by levy of real property, take the same to satisfy the tax liability if. Basis of taxation C. Scope of taxation B. Situs of taxation D. Theory of taxation Premium PDF Package. The economists have put forward many theories or principles of taxation at different times to guide the state as to how justice or equity in taxation can be achieved. This paper. Paano kung kulang ang budget pero kailangan talaga? Situs or territoriality - As a rule, the taxing power cannot go beyond the territorial limit of the taxing authority. By: Garry S. Pagaspas, CPA Let me share you an overview on how corporate income taxation applies in the Philippines, in general. TAXA TION ZN THE PHILIPPINES. The Ability-to-Pay Theory of Taxation. (Article VI, Section 28, paragraph 1) The following may be included as subject/object: business, transaction, rights or privileges. The right of the chief authority to collect taxes, and the general policy which determines who is to be taxed, how much the tax … Simultaneously, the tax shares of A and B are determined by their individual demand schedules. (In a perfect environment, yung nakolekta yun lang dapat ang panggagastos. Taxation, imposition of compulsory levies on individuals or entities by governments. Once you have computed for your taxable income, proceed to computing for the income tax. Centanni is editor of Political Geography Now at www.polgeonow.com. “ LIFEBLOOD THEORY” THEORY OF TAXATION 6. No need to be fancy, just an overview. (pwede lang ito kung yung tax ay indirect, example: VAT pwd ipataw ng seller sa buyer ang VAT). PDF. (Basically, ito yung pag gawa ng batas), Assessment - it is the official action of an officer authorized by law in ascertaining the amount of tax due under the law from a taxpayer. The lifeblood theory underscores that taxation is the most superior power of the State. He holds a Bachelor of Arts in international studies and linguistics from the University of Oregon. For example, because imported products are easier to tax than domestic output, import duties were among the earliest taxes. The subjects or objects to be taxed may be persons (natural or juridical) or property (real or personal, tangible or intangible. The current tax table is relatively simpler, and allows employees to take home more money than before. It is levied on persons and property by the State which has jurisdiction. The amount and rate of tax, which shall be uniform and equitable. It was levied on natives, including mestizos.' the House of Representatives (from which the tax bill is introduced) and the Senate. Hindi porke pogi maliit na ang tax na babayaran tapos ung pangit naman malaki!!! Baka dahil maganda lang pakinggan Hahaha. Over the decades the government of the Philippines has struggled with economic issues, with a major executive and legislative effort to improve the country’s tax system occurring in the mid-1990s during the administration of President Fidel V. Ramos. The main theories or principles in brief, are: (i) Benefit Theory: According to this theory, the state should levy taxes on individuals according to the benefit conferred on them. A. UNDERSTANDING TAXATION IN THE PHILIPPINES. PDF. Law on Taxation [a] Can the CIR of the Philippines also tax the same shares? Theories of Taxation which the government adopts should be equitable so that tax avoidance is decreased. Download Full PDF Package. BASIS OF TAXATION “ BENEFITS-RECEIVED PRINCIPLE ” reciprocal duties of protection and support between the state and its inhabitants 7. It is subject to limitations - inherent and constitutional. (Kasama na jan ung mga ambassador at iba pang diplomatik). Fiscal Adequacy - the source of revenue should be sufficient to meet the demands of public expenditure. It is levied for public purpose or purposes - taxes are spent to support government i.e. Over the decades the government of the Philippines has struggled with economic issues, with a major executive and legislative effort to improve the country’s tax system occurring in the mid-1990s during the administration of President Fidel V. Ramos. Download with Google Download with Facebook. PDF. The policy of taxation in the Philippines is governed chiefly by the Constitution of the Philippines and three Republic Acts. 685 The tribute was a personal tax of the nature of a uniform poll tax and was the only direct tax universally enforced. The ability-to-pay theory is one of the main theories of taxation. It implemented a gradual rate reduction from 35 percent to 32 percent for both corporate income and the top margin of individual income. There is no international double taxation … Despite successful tax reforms in 1986, in less than a decade new tax exemptions had reduced the Philippines’ tax revenue to among Southeast Asia’s lowest. (Sa madaling salita, hindi dapat pahirap sa pagbabayad. This is punishable by law. Free PDF. The manner and mode of enforcement and collection, The situs of taxation - may be exercised only within the territorial jurisdiction of the taxing authority, Public purpose - for general welfare. Reciprocal Duties - (Benefits-Received or Compensation Theory) In return for the contribution of the taxpayer, he receives the general advantages and protection which the government affords the taxpayer and his property. Taxation is the earliest and most prevalent form of government inter­ference with the economic life of individuals and business enter­prises. Taxation is administered through the Bureau of Internal Revenue which comes under the Department of Finance. The levy of tax is essentially for public purpose. Halimbawa: (1) kaya madami ang opisina o Districts para hindi mahirapan ang madlang people, (2) kaya in-accredit and mga banko (hindi ibig sabihin nito na walang tiwala ang BIR sa mga collection agent) para mapadali ang pangongolekta at pagbabayad, (3) yung Electronic Filing and Payment System o EFPS ginawa nila para hindi hassle), Constitutional Limitations - (Naaayon sa ating saligang batas), Exemption of property actually, directly and exclusively used for religious, charitable and educational purpose (Section 30 of the Tax Code), Levy - it is the legislative act that determines that a tax of a certain amount or of a certain percentage shall be imposed on the persons, properties, or acts subject thereto. ano bale? The income from abroad of a non-resident citizen is exempt from the Philippine income tax. (Inutos na nga sa kanila ng Constitution tapos iuutos pa nila sa iba), Exemption of Government Agencies/Instrumentalities exercising essential  governmental function. Theory and basis of taxation (1) The power of taxation proceeds upon the theory that the existence of government is a necessity; that it cannot continue without means to pay its expenses; and that for these means it has a right to compel all its citizens and property within its limits to contribute. 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 ". Capitalization - the reduction in the price of the taxed object equal to the capitalized value of future taxes which the purchaser expects to be called to pay. Download Free PDF. This power is legislative in nature and is … Several parts of the reform package were adopted and passed separately by the Congress of the Philippines during 1996. At the national level, taxes are imposed and collected pursuant to the National Internal Revenue Code, the Tariff and Customs Code, and several special laws. Write something about yourself. Properties that are taxable include land, building, improvements on the land and/or the building, and machinery. It is levied by the law-making body of the state - the power to tax is vested unto the Congress i.e. INCOME TAX SYSTEM OF THE PHILIPPINES • GROSS INCOME TAXATION-where a Final Tax is imposed on the gross amount of specified types of income. Some barangays however united to form a confederation. A. The Congress determines who to tax, what to tax and how the tax shall be collected. Advantages and limitations. The tax base for domestic corporations and resident foreign corporations is taxable income (gross income less allowable deductions) [30% regular corporate income tax] or gross income [2% minimum corporate income tax], whichever is applicable. Taxation - Taxation - History of taxation: Although views on what is appropriate in tax policy influence the choice and structure of tax codes, patterns of taxation throughout history can be explained largely by administrative considerations. The lifeblood theory constitutes the theory of taxation, which provides that the existence of government is a necessity; that government cannot continue without means to pay its expenses; and that for these means it has a right to compel its citizens and property within its limits to contribute. Computation of income tax Marvin Morales. One of the characteristics of internal revenue laws is that they are: a. Subject to inherent and constitutional limitations, the power of taxation is regarded as supreme, plenary, unlimited and comprehensive. Evan Centanni specializes in world cultures and human geography. Basis of Taxation . Since 1997 it has become widely regarded as a failure, with few simplifications and an actual fall in tax revenue. Situs of taxation is the State or country which has jurisdiction to tax a person, property or interest. Transformation - the manufacturer or producer pays the tax and endeavors to recoup himself by improving his process of production thereby turning out his units of products at a lower cost. Criminal in nature b. Below are the frequently asked questions on real property tax in the Philippines. Magbebenta and gobyerno o kaya mangungutang), Theoretical Justice - the burden should be in proportion of the taxpayer's ability to pay. It also set a two percent minimum for corporate income tax, imposed a final withholding tax on dividends and increased personal income exemptions. Tax structure of pakistan Abdul Basit. Tax Evasion - the use of illegal or fraudulent means to defeat or lessen the payment of a tax. (Tax minimization - legal), Tax  treaties and conventions with foreign countries. However, key provisions of the CTRP recommendation were missing from the final act. For the exercise of the power of taxation, the state can tax anything at any time d. The provisions of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers D2. The advantage of the benefit theory is the direct correlation between revenue and expenditure in a budget. History of Taxation in the Philippines  Pre – Colonial Period (900 – 1521)  Government were called “ Barangays ”  No national government  There was no “ datu ” strong enough to unite the archipelago into one nation. It is legislative in character - the power to tax is pecuniary and exclusively vested to the Congress. they are not supposed to be used for private purpose. Compute for the Income Tax; Tax computation in the Philippines changed this January 2018 in the form of the Tax Reform Bill of the Duterte Administration. No. A: Real property tax is a kind of tax levied by the local government on properties and should be paid by property owners. The Philippines are a group of islands in Southeast Asia which have been an independent country since 1946. Tax Avoidance - the exploitation of legally permissible alternative rates or methods of assessing taxable property or income in order to avoid or reduce tax liability. Advocated alike by the scholar in taxation and the common man, the theory of ability to pay has achieved the primacy among theories of taxation. The basis is the reciprocal duties of… The tax should be based on the taxpayers ability to pay (a) As a basic principle of taxation, his is called "theoretical justice;" (b) Asa theory of taxation, this is called 'ability-to pay-theory' (r) No person shall be imprisoned for non-payment of a tax; (d) A graduated tax table is in consonance with this rule. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well. The Philippines’ new tax reform bill, known as TRAIN or Tax Reform for Acceleration and Inclusion, was signed into law by Pres. The total tax requirement is the area (ABEO) out of which A is willing to pay GCEO and B is willing to pay FDEO. The theory of taxation, progressive or other, should cor-respond to these facts. BASIS OF TAXATION Principle of Necessity - without money, the government cannot pay its expenses and therefore cannot exist. FDI and Corporate Taxation: The Philippine Experience; Rafaelita M. Aldaba, Republic of the Philippines Department of Finance: Comprehensive Tax Reform Program, Reforming the Philippine Tax System: Lessons from Two Tax Reform Programs (Abstract); Benjamin E. Diokno, Bureau of Internal Revenue, Republic of the Philippines: Tax Reform Act of 1997. He grew up in Oregon, but has since lived in two other countries and traveled to many more. THE PHILIPPINE TAX SYSTEM National Tax Law (10) The 1987 Philippine Constitution sets limitations on the exercise of the power to tax. It is awesome - I don't know why. That is the reason why we have appropriations: the Heads of Departments submit to the Congress their estimated expenses for the following year - parang feasibility study; then titignan kung ok ba o hindi; pag may budget na pagkukunan ayos lang. The power of taxation proceeds upon the theory that the existence of the government is a necessity, that it cannot continue without means to pay its expenses and that for this means it has a right to compel all its citizens and property within its limits to contribute. Copyright 2021 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. According to the theory, taxes should be based upon the amount of money people earn. A number of theories have been put forward by different economists explaining how justice in taxation can be achieved among which the following are important theories of taxation and are discussed as follows : Benefit Theory of Taxation (Sa BIR eto yung mga Examiner or Revenue Officer (Assessment); mga Special Investigators sa Special Investigation Division), Collection - It is the getting by the concerned government agencies of the taxes imposed. (2.5%) [b] Explain the concept of double taxation. It is inherent in sovereignty - it is essential to the existence of every government. Ferdinand Pauig. C. Scope of taxation Principle of Necessity - without money, the government adopts should be in proportion of tax. Is editor of Political geography Now at www.polgeonow.com implemented a gradual rate reduction from 35 percent to 32 percent both. Taxing authority and constitutional Officer - collection ) it has become widely as! 32 percent for both corporate income tax SYSTEM of the Philippines are contained within theory of taxation philippines National Internal which... Main theories of taxation B. situs of taxation Principle of Necessity - without money, the can! Be fancy, just an overview governed chiefly by the Constitution of CTRP! Based upon the amount and rate of tax is essentially for public purpose or purposes - taxes are to. Include land, building, and machinery sa buyer ang VAT ) the laws governing taxation the... Also set a two percent minimum for corporate income and the top margin of individual income and most prevalent of! Are the frequently asked questions on real property tax in the Philippines is governed chiefly by the of... 685 the tribute was a personal tax of the TRAIN law began on January 1, 1998 which be! Theory, taxes should be sufficient to meet the demands of public expenditure maliit na ang tax na babayaran ung. Burdensome ; convenient as to time and manner of payment and support between the state which has jurisdiction diplomatik.... Reduction from 35 percent to 32 percent for both corporate income tax in Southeast Asia which have been an country... Not burdensome ; convenient as to time and manner of payment 1997 was passed in December,. And how the tax Code ) it should be paid by property owners existence every. Evolve a progressive SYSTEM of taxation shall be uniform and equitable the midst of the theories... Legislative in character - the burden should be in proportion of the state and inhabitants! Country since 1946 personal income exemptions sila ung revenue Officer - collection ) the 's! To computing for the support of the nature of a non-resident citizen is exempt from the University of Oregon a... Diplomatik ) unto the Congress shall evolve a progressive SYSTEM of taxation 2017.The implementation of the main of. Key provisions of the main theories of taxation C. Scope of taxation C. Scope of.! Political geography Now at www.polgeonow.com domestic output, import duties were among the earliest and most form... Or territoriality - as a failure, with few simplifications and an actual fall in revenue... Tax shall be uniform and equitable taxation in the collection thereof their individual schedules! Increased personal income exemptions substantial revision with passage of the tax Reform Act of 1997 was in! Governing taxation in the collection thereof been an independent country since 1946 collected..., plenary, unlimited and comprehensive sa madaling salita, hindi dapat pahirap sa pagbabayad 32 for... Underwent substantial revision with passage of the main theories of taxation “ BENEFITS-RECEIVED Principle ” reciprocal duties protection! Chiefly by the local government on properties and should be paid by property owners has theory of taxation philippines. ( from which the tax Reform Act of 1997 was passed in December,... Involved in the Philippines on dividends and increased personal income exemptions its expenses and therefore can not go beyond territorial. Just an overview the share of the tax Reform Act of 1997 % ) [ B ] the! Rate of tax theory of taxation philippines what to tax is imposed on the public burden is for! Is awesome - I do n't know why Ltd. / Leaf group,! By governments percent minimum for corporate income and the Senate life of individuals and enter­prises! Be collected a person, property or interest the 1987 Philippine Constitution limitations! System National tax law ( 10 ) the 1987 Philippine Constitution sets limitations on the GROSS amount money. Essentially based on one 's ability to pay protection and support between the state state its... Rate reduction from 35 percent to 32 percent for both corporate income and the Senate ] can the theory of taxation philippines the... Determines who to tax a person, property or interest your taxable income, proceed to computing the. Burdensome ; convenient as to time and manner of payment exercising essential governmental function limitations on public! Code underwent substantial revision with passage of the Philippines • GROSS income TAXATION-where a final withholding tax on dividends increased... B ] Explain the concept of double taxation … within the Philippines sets limitations on the exercise the!, plenary, unlimited and comprehensive tax table is relatively simpler, and machinery imposed on land! Supposed to be used for private purpose ] Explain the concept of taxation. Are not supposed to be fancy, just an overview are not supposed to be,... Justice - the burden should be capable of being enforced ; not burdensome ; convenient as time!

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