Kinds of Taxes Under Existing Philippine Laws

1. Taxation is a way of raising income in order to defray the necessary expenses of the government.
It is the inherent power of the state to demand contribution to finance all the government expenses.
There are many different kinds of taxes in the Philippines. But we can group them into two basic
types, namely, national taxes and local taxes.

2. These are taxes imposed and collected by the national government through the Bureau of
Internal Revenue (BIR).

3. The Republic Act No. 8424 otherwise known as the Tax Reform Act of 1997, as amended. It
covers the organization and function of the Bureau of Internal Revenue (BIR). It sets out the power
and duties of the BIR and the powers and authorities of its commissioner, regional directors, and
revenue officers. The largest content of the code pertains to the income tax. This portion of the Act
states the definitions, general principles, tax rates, and computations of income tax on individual
taxpayers, corporations, estates, and trusts. It also prescribes the accounting periods, methods of
accounting, and other income tax requirements that taxpayers should comply.

4. The law governing tariff and customs duties otherwise known as Presidential Decree NO. 1464
which consolidated and codified the tariff and customs laws in the Philippines. The office charged
with the administration and enforcement of the law is the Bureau of Customs and Tariff
Commission.

5. Restricted agricultural production by paying farmers to reduce crop area. Its purpose was to
reduce crop surplus so as to effectively raise the value of crops, thereby giving farmers relative
stability again.

6. An act to provide for the registration of, with the collector of internal revenue, and the imposition
of fixed and special taxes upon all persons who produce, import, manufacture, compound, deal in,
dispense, sell, distribute, or give away opium, marihuana, or any synthetic drugs.

7. Otherwise known as Republic Act No. 5447, it consists of broad requirements that mandate
schools provide financial support appropriate for public education.

8. The Travel Tax is a levy imposed by Philippine government on individuals who are leaving the
Philippines, whether Filipino citizens or not, irrespective of the place where the air ticket is issued
and form or place of payment, as provided for by Presidential Decree (PD) 1183.

9. The provisions of this Act shall control, as far as they apply, the registration and operation of
motor vehicles and the licensing of owners, dealers, conductors, drivers, and similar matters.

10. Otherwise known as the Batas Pambansa Blg. 36, its purpose is to impose an energy tax on
electric power consumption and to give businesses and consumers an incentive to use alternative
energy sources, such as solar and wind power, and to raise revenue for the government in order to
finance public spending.
11. The RA No. 1093 (An Act to Punish Tax Evasion and Willful Refusal to Pay Taxes By Aliens with
Deportation), RA No. 1125 (An Act Creating The Court of Tax Appeals) and RA 2211 (An Act
Creating A Joint Legislative-Executive Tax Commission, Defining Its Objectives, Powers And
Functions, And For Other Purposes), are laws imposed by the government which concerns about
the tax laws in the Philippines.

12. A presidential decree providing for the increase in capitalization of rural banks.

13. These are the taxes imposed by the local government. Usually collected in the form of property
taxes, and is used to fund a wide range of civic services from garbage collection to sewer
maintenance. The amount of local taxes may vary widely from one jurisdiction to the next.

14. Otherwise known as Republic Act No. 7160 or the Local Government Code of 1991, as amended.
These taxes, fees or charges are imposed by the local government units, such as provinces, cities,
municipalities, and barangays, who have been given the power to levy such taxes by the code.

15. All real property in the province is assessed annually for taxation purposes on the basis of its
real and true value.

16. These are taxes imposed by the barangay or the municipality or province, in which each of it
varies from place to place given certain conditions. These taxes or laws needs to be approved by the
government before they get imposed to their respective divisions.

Kinds of national internal revenue taxes

-Income tax

-Estate and donor’s taxes

-Value-added tax

-Excise taxes

-Documentary stamp taxes

Modes of and procedure for payment of internal revenue taxes

-payment for withholding taxes including Fringe Benefit Tax and for taxes, fees and charges
collected under special schemes/procedures/ programs of the government. Taxpayers are not
required to enroll with any AAB where they intend to file tax returns/payment forms and/or pay
internal revenue taxes

DEFINITION of Transfer Tax

A transfer tax is any kind of tax that is levied on the transfer of ownership or title to property from
one entity to another. Transfer taxes are usually non-deductible, although they may be added to the
basis on the sale of securities and/or investment property.
Kinds of death taxes

In the U.S., there are actually two different kinds of "death taxes": the estate tax, which is levied by
the federal government and certain states, and the inheritance tax, which is levied by only a handful
of

Nature of Estate Tax

Estate tax is a tax on the right of the deceased person to transmit his estate to his lawful heirs and
beneficiaries. It is not a tax on property. Estate tax is held to be an excise tax imposed on the
privilege of transmitting property upon the death of the owner

Purpose of the Tax

Taxes are levied in almost every country of the world, primarily to raise revenue for government
expenditures, although they serve other purposes as well.

Meaning of Net Estate

Net estate is the estate of a person left to be distributed. It is calculated by taking the value of all
assets and subtracting all debts of the person who died, including funeral costs, expenses of
administering the estate, and any other allowable deductions.

Tax imposed on Net Estate

The estate tax is imposed on the transfer of the decedent's estate to his lawful heirs and
beneficiaries based on the fair market value of the net estate at the time of the decedent's death. It
is not a tax on property. It is a tax imposed on the privilege of transmitting property upon the death
of the owner.

Rates and Computation of Estate tax

Previously, a tax based on the value of the net estate of the decedent, whether resident or
nonresident of the Philippines, was computed based on a tax schedule where an estate worth
P200,000 and over was taxed from 5 percent to 20 percent. Under the TRAIN law, it will now be
subject to a flat rate of 6 percent

Meaning of gross estate

The term "gross estate" refers to the total dollar value of an individual's property and assets at the
time of his or her death. ... When those charges are deducted, the sum figure represents the net
value of an individual's estate.

Property Included in gross estate

These assets may include stocks, bonds, real estate, automobiles, jewelry, antiques, artwork, and
other collectibles. The resulting gross estate figure is typically established for federal income tax
purposes
Determination of value of estate

The "date of the death" estate valuation refers to the fair market value of each underlying estate
asset, at the time of a decedent's death. For bank, investment, and retirement accounts, this would
be the statement values on the date of death

Deduction of Gross Estate

The taxable estate is the gross estate less certain deductions. One of the deductions that the tax law
allows is a deduction for certain expenses and losses of the decedent.

Funeral/Medical Expenses

Individual taxpayers cannot deduct funeral expenses on their tax return. While the IRS allows
deductions for medical expenses, funeral costs are not included. Qualified medical expenses must
be used to prevent or treat a medical illness or condition.

Standard deduction/ Family home allowance

Starting January 1, 2018, compensation income earners, self-employed

and professional taxpayers (SEPs) whose annual taxable incomes are

P250,000 or less are exempt from the personal income tax (PIT).

The 13th month pay and other benefits amounting to P90,000 are

likewise tax-exempt.

SEPs who are also earning compensation income shall be subject to:

On Compensation Income - graduated income tax (IT) schedule

On Income from Business or Practice of Profession -

If Gross Sales and/or Gross Receipts and other Non-Operating

Income do not exceed P3,000,000 - either 8% fixed tax or

graduated IT schedule.

If Gross Sales and/or Gross Receipts and other Non-Operating

Income exceed P3,000,000 – graduated IT schedule.

Tax schedule effective January 1, 2018 until December 31, 2022 is as

follows:

AMOUNT RATES

Not Over P250,000 0%

Over P250,000 but not over P400,000 20% of the Excess Over P250,000
Over P400,000 but not over P800,000 P30,000 + 25% of the Excess over P400,000

Over P800,000 but not over P2,000,000 P130,000 +30% of the Excess over P800,000

Over P2,000,000 but not over P8,000,000 P490,000 + 32% of the Excess over P2,000,000

Over P8,000,000 P2,410,000 +35% of the Excess over P8,000,000

Share of surviving spouse

A surviving spouse may also receive the deceased spouse's share of jointly owned assets, like the
family home and bank accounts, if they were owned with a right of survivorship.

Exemption from the tax

Most taxpayers are entitled to an exemption on their tax return that reduces your tax bill in the
same way a deduction does. Federal and state governments frequently exempt organizations from
income tax entirely when it serves the public, such as with charities and religious organizations.

Filling of return and payment of tax

When filing your yearly income tax return, certain documents are required to be attached with the
BIR form. ... Meanwhile, for the Electronic Filing Payment System or EFPS and eBIRforms, you are
supposed to file 15 days from the deadline of filing or date of electronic filing of the BIR annual
income tax return.