JOHN PAUL B.

MANAHAN
BSCOEIV

DIFFERENT KINDS OF TAX IN THE PHILIPPINES

1. Capital Gains Tax is a tax imposed on the gains presumed to have been realized
by the seller from the sale, exchange, or other disposition of capital assets located in
the Philippines, including pacto de retro sales and other forms of conditional sale.
Sample Computation:
How to Calculate Capital Gains Tax on Rental Property
1) Occupy your rental property for two years of the five years you owned the
property to qualify for the capital tax gain.
2) List your original property price on a sheet of paper. For example, if your
purchase price was P 300,000, list that price on a sheet of paper.
3) Subtract the cost of improvement to your rental property. For example, if your
total improvement cost was P 12,000, subtract this amount from the purchase
price of P 300,000.
4) Subtract the depreciation cost, such as property taxes, loan interest and all
other costs that resulted in depreciation of the property value. For example, if
your depreciation was P24, 000, this would be subtracted from the purchase
price of P300, 000. Purchase price P300, 000 - P12, 000 - P24, 000 = P264,
000. This total is the adjusted basis.
5) Determine the fair market value. If the fair market value is $520,000, write
down that amount.
6) Subtract your adjusted basis amount from the fair market value to get the
taxable gain amount. For example, subtract P264, 000 from P520,000.
7) Subtract the selling cost from the fair market value. If your selling cost was
P3,500, subtract that amount to determine your capital gain on your rental
property. For example, P520, 000 - P264, 000 - P3, 500 = P252, 500.
2. Documentary Stamp Tax is a tax on documents, instruments, loan agreements and
papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights,
or property incident thereto.
Sample Computation:

A residential condominium in Makati City with a floor area of 50sqm has a Selling
Price (SP) of 1.0M. The current zonal value per square meter for that condo in Makati
is currently Php50, 000/sqm. It is stipulated that the buyer shall shoulder DST. How
much is the DST?

First let’s compute for the ZV:

ZV=Zonal Value x Floor Area

=50,000 pesos/sqm x 50sqm
=2,500,000 pesos
Since ZV is higher than SP, we shall use ZV to compute the DST:

DST=1.5% x ZV
=0.015 x 2,500,000 pesos
=37,500 pesos

Therefore, the buyer shall have to pay 37,500 pesos for the DST

3. Donor's Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer
of property between two or more persons who are living at the time of the transfer.

4. Estate Tax is a tax on the right of the deceased person to transmit his/her estate to
his/her lawful heirs and beneficiaries at the time of death and on certain transfers
which are made by law as equivalent to testamentary disposition.
5. Income Tax is a tax on all yearly profits arising from property, profession, trades
or offices or as a tax on a person’s income, emoluments, profits and the like.

Sample income tax calculation

Philippine
2009/2010
Peso (P)
Employment income 1,400,000
Benefits provided home 240,000
host 200,000
total
440,000
benefits
Gross income 1,840,000
Less
Social security and other mandatory contributions (10,500)
Personal allowance (50,000)
Taxable income 1,779,500
Income tax due
On the first 500,000 125,000
On the excess 500,000 (32%) 409,440
Total tax due P534,440

7. Percentage Tax is a business tax imposed on persons or entities who sell or lease
goods, properties or services in the course of trade or business whose gross annual
sales or receipts do not exceed P550,000 and are not VAT-registered.
Sample Computation:
8. Specific Tax the principal specific taxes in the Philippines are those on tobacco,
alcoholic beverages, gasoline and oil. Excise duties are imposed on both imports and
domestic production, with higher rates for imports.

9. Value Added Tax is a business tax imposed and collected from the seller in the
course of trade or business on every sale of properties (real or personal) lease of
goods or properties (real or personal) or vendors of services. It is an indirect tax, thus,
it can be passed on to the buyer.

Sample Computation:
A call is made from Manila to Hong Kong for 3 mins. and 30 seconds (there are five
6-second pulses in 30 seconds).

Exchange rate = P52.00

Computation:

1. (3 mins x $ 0.3636) + (5 x US$ .03636) = $ 1.2726

2. $ 1.2726 x P 52.00 = P 66.18
3. P 66.18 + 10% OVCOM = P 72.80.
(This is the total amount you will pay for the call.)

10. Withholding Tax on Compensation is the tax withheld from individuals

receiving purely compensation income.

11. Expanded Withholding Tax is a kind of withholding tax which is prescribed

only for certain payors and is creditable against the income tax due of the payee for
the taxable quarter year.

12. Final Withholding Tax is a kind of withholding tax which is prescribed only for
certain payors and is not creditable against the income tax due of the payee for the
taxable year. Income Tax withheld constitutes the full and final payment of the
Income Tax due from the payee on the said income.

13. Withholding Tax on Government Money Payments is the withholding tax

withheld by government offices and instrumentalities, including government-owned
or -controlled corporations and local government units, before making any payments
to private individuals, corporations, partnerships and/or associations.