THE PHILIPPINE TAXATION

SYSTEM
WHAT IS TAXATION?

● The act or practice of imposing taxes.

● A means by which government finance their expenditure
by imposing charges on citizens and corporate entities.
 TAXATION DURING PRE-
COLONIAL PERIOD (900-
1521)

During the pre-colonial period, government were called

barangays. There was no datu that is strong enough to unite
the archipelago into one nation. However, some barangays
unite to form a confederation that is ruled by a datu or raja.
BUWIS OR HANDUG

Ancient Filipinos practice paying taxes for the protection

from their datu. This was the collected tax or tribute from the
people.

The chieftain’s family members were enjoying exemption

from paying taxes.
THREE CLASSES
● Tumao class - the nobility of the pure royal descent.
● Timawa class - third rank of nobility; however they are
expected to pay taxes and support the Maginoo class.
● Oripun class - consists of the commoners and slaves, works
for the tumao and timawa class.

The priestly class were scribes that are tasked to record

history and keep track of tributes and taxes that were
expected from the classes.
 TAXATION DURING SPANISH PERIOD

TAXES IMPOSED BY THE SPANISH GOVERNMENT IN THE PHILIPPINES:

● TRIBUTO ● THE TAX REFORM OF 1884

● SANCTORIUM

● DONATIVO ● CEDULA PERSONALES

● CAJA DE COMUNIDAD

● SERVICIO PERSONAL
 TRIBUTO
Tributo was a general tax paid by the Filipinos to Spain which
amounted to eight reales. Those who were required to pay the tributo:

REALES IS A SPANISH DOLLAR OR KNOW AS “ATOCHA COINS” REFERS TO SILVER

OR GOLD SPANISH COINS.
 SANCTORIUM
Sanctorum was a tax in the amount of 3 reales. These were
required for the cost of Christianization, including the
construction of the churches and the purchase of materials
for religious celebrations.
 DONATIVO
Donativo was the tax in the amount of half reales for the
military campaign of the government against the muslims. In
the later years, however, the amount collected from donativo
was almost exclusively used for the Spanish fort in
Zamboanga.
 CAJA DE COMUNIDAD

Caja de comunidad was a tax collected in the amount of 1

reale for the incurred expenses of the town in the
construction of roads, repair of bridges, or the improvement
of public buildings
 Servicio Personal
Polo y servicio is the system of forced labor which evolved
within the framework of the encomienda system, introduced
into the South American colonies by the Conquistadores and
Catholic priests who accompanied them.
THE TAX REFORM OF 1884
One of the good reforms which Spain introduced in the 19th
century was the Tax Reform o 1884, as provided by the Royal
Decree on March 6, 1884, this tax reform contained two
important provisions.
 Cedula Personales
Cedulas were first issued based on the Royal Decree on
March 6, 1884. All men and women residents of the island-
Spaniards, foreigners, and natives- who were over 18 years
old were required to obtain a cedula.
Brief History of Taxation in
the Philippines
(video by Roughneck501 )
https://www.youtube.com/watch?v=g9SMUffH0_g
● Ancient Filipinos practice paying taxes for the protection
from their datu.
● The collected tax was called BUWIS.
● Everyone in the community is required to pay their taxes.
● Native Filipinos aged between 16 to 60 yrs old compelled
to pay tribute to the king of spain with 8 reales or 1 peso
per year.
● Cedula, to identify the tax payer
AMERICAN ERA
 •July 2, 1904 - Bureau of Internal Revenue (BIR) was
AMERICAN ERA created through the passage of Reorganization Act No. 118
•January 1, 1913 - Creation of 8 divisions
1) Accounting
2) Cash
3) Clerical
4) Inspection
5) Law
6) Real Estate
7) License and,
8) Records
AMERICAN ERA The first three (3) BIR
Collectors

•Wenceslao Trinidad (1918-

1922);
•Juan Posadas, Jr. (1922-1934)
•Alfredo Yatao (1934-1938)
AMERICAN ERA May 1921
•Act No.299
•Bureau was left with five (5)
divisions, namely: 1) Administrative,
2) Law, 3) Accounting, 4) Income
Tax and 5) Inspection
AMERICAN ERA May 1921
•Act No.299
•Bureau was left with five (5)
divisions, namely: 1) Administrative,
2) Law, 3) Accounting, 4) Income
Tax and 5) Inspection
AMERICAN ERA
• Income tax merge with Income
division and Secret Service
Section
•1939 - Miscellaneous Tax
Division
Taxation during Post
War Era

● 3 reorganization
July 4, 1946- the Bureau was re-establish
separately.
1st major reorganization:
● October 1, 1947
Executive Order No. 94
-Accounting Unit, Revenue Accounts,
Statistical Division
-all records in the records section
under administrative division
-all legal work were centralized in the
law division
2nd major reorganization-
January 1, 1951
● Legal
Income Tax
● Assessment Division
● Collection
Memorandum Order No. V-
188- withholding tax unit
3rd major reorganization- March 1, 1954
Revenue Memorandum Order No. 41
Offices:
● Specific Tax Division
● Litigation Section
● Processing Section
● Office of the City
Revenue Memorandum Order No. V-536

Chiefs of Branches:
● Tax audit
● Collection
● Investigation
● Legal
● Administrative
January 1957- Collector to Commissioner

R.A 233- Rewards Law (June 19, 1959)

Marcos Administration

Statement: Marcos government raised

tax on gasoline and petroleum
What started it:

- the parliamentary election and the

opposing NPA group
What happened:

- Several reporters in Cebu are dead and police

and civilians injured because of the NPA’s
ambush, which result to scaring civilians who is
up to vote

- “I remind everyone there is an Order for the

arrest of all persons who prevent the Board of
Canvassers from performing their duty to
canvas.”
The result:

- The political opposition has once

again misrepresented the facts
on the issue of the new fuel
prices
- principal purpose in raising the
price of gasoline
- Government economists
- reduction in our oil import bill
- petroleum prices
Tax System During
Marcos Administration
1965 when Ferdinand Marcos
was elected as the President of
the Philippines and during his
reign as executive

Import Liberalization
Program (ILM)

Intensifying tax collections in PH

through indirect taxation
Aquino
Administration
● The late President Corazon Aquino
reformed the tax system within months
after EDSA 1
● Operation: "Walang Lagay"
● January 30, 1987
● Executive Order (EO) No. 127.
● Value-added tax (VAT)

● Revenue Information Systems Services

Inc (RISSI)

● Taxpayer Identification Number (TIN)

Ramos
Administration
● The year 1993 marked the entry into
the Bureau of its first lady
commissioner
● Liwayway Vinzons- Chato
● Tax Computerization Project (TCP)
1994.
● Approved on July 1997 through the
passage of EO No. 430
 Estrada
Administration

Statement: Creation of Republic Act No. 8756 or Incentives

for Regional Headquarters of Foreign Multinationals
Republic Act No. (8756)
Taxation
● All foreign employees employed from both RHQ and
ROHQ are taxable of 15% from their gross income.
● Filipinos who are also working from these establishments
are also charged with the same tax.
Arroyo
Administration

● 14th president of the

Philippines
● 2nd female of the president of
the Philippines
Bureau of Internal Revenue

https://www.bir.gov.ph/index.php/transparency/bir-history.html
Atty. Rene G. Bañez
Commission on Internal Revenue (2001)

● Taxpayer-focused
● Implementation of change initiative
● Enhancement of revenue-generating capability
● Voluntary Assessment Program and comprise
● Technology-based system (Electronic Filling and
Payment System - eFPS)
Guillermo L. Parayno Jr.
Commission on Internal Revenue (2002)

● Voluntary Assessment and Abatement Program

(VAAP) - to taxpayer with under-declared
sales/receipts/income
● Enhance the collection performance
● Expansion of electronic services
● Conduct of special operation on high profile tax
evaders
● Improve taxpayer service
Jose Mario C. Buñag
Commission on Internal Revenue (2006)

● Expansion of the RATE program to the Regional

Offices
● Inclusion of new payment gateways
● Implementation of the Benchmarking
● Nationwide Rollout of computerized Systems (NRCS)
● National Program Support for Tax Administration
Reform (NPSTAR)
○ Funded by different international development
Lilian B. Hefti
Commission on Internal Revenue (2007)

● Strengthening of business intelligence

● Information sharing between the BIR and LGUs was
intensified
● Enhanced the Bureau’s audit capabilities
Sixto S. Esquivas
Commission on Internal Revenue (2008)

● Oplan Kandado Program

● Taxpayer Feedback Mechanism
● Handang Maglingkod Project
Joel L. Tan-Torres
Commission on Internal Revenue (2009)

● High visibility public awareness campaign

● Institutionalized several programs/project
● Filing of tax evasion was intensified
● Linkages with various agencies
P-noy Aquino
Administration
● Appointing Atty. Kim S. Jacinto-
Henares as Commissioner of Internal
Revenue.
● Filing of Tax Evasion Cases under the
RATE program
● Efficient Tax Collection of BIR
TRAIN LAW
-The Tax Reform for Acceleration and Inclusion (TRAIN) Act, officially cited as Republic Act No.
10963,

-s the initial package of the Comprehensive Tax Reform Program (CTRP) signed into law by President
Rodrigo Duterte on December 19, 2017.[1]

-The TRAIN Act is the first of four packages of tax reforms to the National Internal Revenue Code of
1997, or the Tax Code, as amended.[2]

-This package introduced changes in personal income tax (PIT),[3] estate tax, donor's tax, value added
tax (VAT), documentary stamp tax (DST) and the excise tax of tobacco products, petroleum products,
mineral products, automobiles, sweetened beverages, and cosmetic procedures.[4]
The Comprehensive Tax Reform Program (CTRP) is needed
to accelerate poverty reduction and to sustainably address
inequality.By making the tax system simpler, fairer, and
more efficient, additional - and a more sustainable stream of
- revenues will be generated to make meaningful
investments in our people and infrastructure, which will help
achieve our vision for the Philippines.
Train Law (CONS)

1. Increased pride of products and other services

2. Increase in DST and dollar deposit

Issues concerning Taxation
in the Philippines
1. Philippines has the highest
income tax rates in ASEAN
- 30% corporate
tax
- 32% maximum
personal income
tax
2. Tax can “turn-off” foreign
investors
- The corporate tax in the Philippines is 30%. Foreign Investors are
turned off with the high tax preferring to invest in the low-tax
neighbors.
3. Train Law has increased
poverty
- Household poverty incidence increased by 0.26 percentage points

- Poverty among individuals rose 0.65 percentage points

- Poverty among fisherfolk rose 1.35 percentage points, and among

farmers 0.06 percentage points

- Poverty incidence for transport workers fell 8.16 percentage

points
IMPORTANCE OF
TAXATION &
CONCLUSION OF
THE OVERALL TOPIC
 =

IMPORTANCE OF TAXES in SOCIETY

 HEALTH
● Social healthcare
● Medical research
● Social Security, etc.
 EDUCATION
● Fundraising,
● Furnishing,
● And maintaining the public
education system
GOVERNANCE
GOVERNANCE
● Governance = CRUCIAL
component in the smooth
running of country affairs
+++
TAXES= contribute to the gross
domestic product (GDP) of a
country

TAXES = SPUR ECONOMIC

GROWTH= RIPPLE EFFECT ON
COUNTRY’S ECONOMY
TAXES =DETERRENT FOR
UNDESIREABLE ACTIVITIES
IMPORTANCE OF TAX to BUSINESS
Taxes = help raise the
standard living of a country
 References:
https://www.bir.gov.ph/index.php/transparency/bir-
history.html?fbclid=IwAR1WTWOjfXlyze0GUxGS8R3n7CQy6CxYa18ZLZhw5lm6Ka5zUBMKmSo8m8A

https://www.bworldonline.com/train-spurred-economic-activity-increased-poverty-pids/

https://www.rappler.com/thought-leaders/159027-philippine-tax-system-problems-effects-filipinos
https://richardkleincpa.com/importance-of-taxes/

https://www.officialgazette.gov.ph/1984/07/30/statement-
president-marcos-on-why-the-government-raised-the-
specific-tax-on-gasoline-and-petroleum-products/

https://juan.tax/blog/tax-insight-taxation-ninoys-time/