GENERATE

FUNDS

BORROW FROM LOCAL AND

INTERNATIONAL BANKS

SELL PUBLIC LANDS AND

GOVERNMENT

PROPERTIES

INVEST IN CORPORATIO

N

COLLECT TAX

POLITICAL INSTITUTIONS

TAX VS TAXATIONA FEE/

BURDENTO SUPPORT

THE “SERVICES” OF THE

GOVERNMENT

% FROM INCOME,

PROPERTIES, TRANSACTIONS

SYSTEM OF RAISING/

COLLECTING

POWER OF THE LEGISLATURE

REGULATES FLOW OF INCOME TO CHECK

INFLATION

to stabilize prices and stimulate greater/lesser productionTo increase domestic production: how does tax work on import?

Capital deficient businesses?Detrimental or luxurious businesses?

PURPOSE OF TAXATION

Paid either in the place where income is earned or the place of residence of the taxpayer.

E.g. Ms. L resides in Quezon City and works in Makati.

PLACES OF TAXATION: INCOME TAX

This is paid where the property is situated.

You were born in Pasig. Your current house is situated in Makati and you work in Taguig. Where is your place of payment for your Real Property Tax?

PLACES OF TAXATION: REAL PROPERTY TAX

This is paid in the place where the business or occupation is located.

Ms. S resides in Caloocan City and has a beauty parlor in Manila.

PLACES OF TAXATION: BUSINESS OCCUPATION TAXES

Taxes on tangible properties are paid in the place where the property is located

Taxes of intangible properties (immovable) is the owner’s domicileThis refers to the place of permanent residence of the owner

PLACES OF TAXATION: PERSONAL PROPERTY TAX

P 50,000 for each individual, regardless of status and P25, 000 per qualified dependent, not exceeding 4 DEPENDENTS.

These dependents are below 21 years old, unemployed and unmarried; or with disabilities

ALLOWABLE EXEMPTIONS (AE)

Gross income (Monthly Income) x 12

I. GROSS INCOME (GI)

GROSS INCOME – ALLOWABLE EXEMPTIONS (P50,000 (STATUS) + NO. OF

DEPENDENTS (not to exceed 4) x P25,000

II. TAXABLE INCOME (TI)

Refer to the tax rate tableAMOUNT UNDER THE RATE COLUMN + [ PERCENTAGE (TAXABLE INCOME – AMOUNT UNDER THE OVER COLUMN)]

III. TAX DUE (TD)

TAX RATE TABLE (REFERENCE FOR TAXABLE INCOME)

OVER BUT NOT OVER RATE

P 10,000 5%

P 10,000 P 30,000 P 500 + 10% of the excess over P 10,000

P 30,000 P 70,000 P 2,500 + 15% of the excess over P 30,000

P 70,000 P 140,000 P 8,500 + 20% of the excess over P70,000

P 140,000 P 250,000 P 22,500 + 25% of the excess over P140,000

P 250,000 P 500, 000 P 50,000 + 30% of the excess over P250,000

P 500, 000 P 125,000 + 32% of the excess

Refer to the withholding tax tableStep 1: check the status

ME1 OR S1ME: MARRIED EMPLOYEES: SINGLE1: NUMBER OF QUALIFIED DEPENDENT

Step 2: Align the monthly income to the nearest possible amount not exceeding its subsequent constant numerical value

Step 3: monthly income – matched nearest amount Step 4: multiply the result from step 3 to the indicated

%Step 5: add the result to the “exemption amount”

WITHHOLDING TAX SHOULD CLOSELY MATCH THE TAX DUE

IV. WITHHOLDING TAX (WT)

WITHHOLDING TAX TABLE

TAX DUE – WITHHOLDING TAXTAX REFUND

NEGATIVE: RETURN OF EXCESS TAX

TAX PAYABLEMORE THAN 0: ADDITIONAL CREDIT FOR THE GOVERNMENT

V. TAX PAYABLE VS TAX REFUND

MR. O, MARRIED, HAS A MONTHLY SALARY OF P32,000. HE HAS 7 CHILDREN. FOUR ARE ALREADY WORKING. TWO ARE STILL IN HIGH SCHOOL & ONE IN ELEMENTARY.

FIND THEIR: (A) GROSS INCOME, (B) NET INCOME, (C) TAX DUE, (D) WITHHOLDING TAX, (E) TAX PAYABLE OR TAX REFUND

EXAMPLE