GABOOGLE NOTES

Income Taxation - Outline

PERSONS IN TAXATION

Person - means an individual, a trust, estate or corporation. (22 A)

JURIDICAL ENTITIES

Corporation - shall include partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), association, or insurance companies,

but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating consortium agreement under a service contract with the Government. (22 B)

General professional partnerships are partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business. (22 B)

note: on joint ventures or consortium, if it does not fall under that definition (e.g. if the service contract is NOT with the Government) it shall be a “Partnership” or under the definition of a “Corporation” in the tax code.

Domestic Corporation – Corporation created or organized in the Philippines under its laws (22 C)

Foreign Corporation – “Means a corporation which is not domestic.”(22 D) So it’s a corporation NOT created or organized under PH law.

Resident Foreign Corporation -

NATURAL PERSONS

Resident Citizen – You know this.

Non- Resident Citizens (22 E):

(1) A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein.

Note: Establishes what? 1. Fact of PHYSICAL PRESENCE abroad 2. Fact of definite INTENTION to reside.

(2) A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis.

Note: this persons leaves the country for 1. Employment or 2. To be an Immigrant. Compare to #1, this person could have left the country as a tourist.

(3) A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be physically present abroad most of the time during the taxable year.

(4) A citizen who has been previously considered as nonresident citizen and who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines shall likewise be treated as a nonresident citizen for the taxable year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival in the Philippines.

(5) The taxpayer shall submit proof to the Commissioner to show his intention of leaving the Philippines to reside permanently abroad or to return to and reside in the Philippines as the case may be for purpose of this Section.

GABOOGLE NOTES

TAXES

CAPITAL1 GAINS TAX

General Rule:

Real Property: 6% Tax Rate

For Shares of Stocks Not Traded in the Stock Exchange

- Not over P100,000 - 5%

- Any amount in excess of P100,000 - 10%

EX:

Stocks Traded and Listed in the Stocks Exchange

1 Capital asset means property held by the taxpayer (whether or not connected with his trade or business), but does not include –

a) stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year; orb) property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; orc) property used in the trade or business of a character which is subject to the allowance for depreciation provided in subsection (F) of Sec. 34 of the Code; ord) real property used in trade or business of the taxpayer.