The Philippine tax system.pdf (Readings In Philippine History)

Presentation in Philippine Tax system. Readings in Philippine History.

Taxation, Tax, Revenue

1. THE PHILIPPINE TAX SYSTEM:
CHALLENGES AND ISSUE GROUP 4

2. LEARNING OBJECTIVES 1.EXPLAIN THE NATURE AND PURPOSE OF TAXATION;
2. IDENTIFY THE TYPES OF NATIONAL AND LOCAL TAXES AND;
3. DEVELOP A PROPOSITION ON THE CHALLENGES AND ISSUES OF
OF THE PHILIPPINE TAXATION SYSTEM.

3. TAX IT IS LEVIED ON PERSONS
PROPERTIES, BUSINESS
TRANSACTIONS, PRIVILEGES,
AND BENEFITS.

4. TAXATION MEANS LAYING A TAX THROUGH
WHICH THE GOVERNMENT
GENERATES INCOME TO DEFRAY
ITS EXPENSES.

5. INTERNAL REVENUE
VS
EXTERNAL REVENUE

6. BUREAU OF INTERNAL REVENUE
IS THE GOVERNMENT AGENCY IN
THE PHILIPPINES, RESPONSIBLE
FOR THE ASSESSMENT AND
COLLECTION OF INTERNAL
REVENUE TAXES.

7. TYPES OF TAXES:
LOCAL & NATIONAL TAXES

8. 01
NATIONAL TAXREFERS TO TAXES IMPOSED BY A
NATIONAL GOVERNMENT ON ITS
CITIZENS AND BUSINESSES TO
GENERATE REVENUE FOR PUBLIC
EXPENDITURES AND SERVICES.

9. 01NATIONAL INTERNAL REVENUE
CODE OF 1997
IS A KEY PHILIPPINE LAW THAT
GOVERNS THE COUNTRY'S
TAXATION SYSTEM.

10. TYPES OF
NATIONAL TAXES

11. 1.CAPITAL GAINS TAXA TAX ON PROFITS FROM SELLING OR
TRANSFERRING CAPITAL ASSETS IN THE
PHILIPPINES, INCLUDING CONDITIONAL SALES
LIKE PACTO DE RETRO AGREEMENTS.

12. A PERSON SELLS A HOUSE IN MANILA FOR ₱5
MILLION, WHICH THEY ORIGINALLY BOUGHT
FOR ₱3 MILLION. THE ₱2 MILLION PROFIT IS
SUBJECT TO CAPITAL GAINS TAX.

13. 2. DOCUMENTARY STAMP TAXA TAX ON LEGAL DOCUMENTS THAT CONFIRM
TRANSACTIONS INVOLVING OBLIGATIONS,
PROPERTY TRANSFERS, OR RIGHTS, SUCH AS
LOAN AGREEMENTS AND DEEDS OF SALE.

14. A BANK ISSUES A LOAN TO A BORROWER,
AND THE LOAN AGREEMENT IS SUBJECT
TO DOCUMENTARY STAMP TAX.

15. 3. DONOR’S TAXA TAX ON THE GRATUITOUS TRANSFER OF
PROPERTY BETWEEN LIVING INDIVIDUALS,
WHETHER DIRECT, INDIRECT, OR IN TRUST, BASED
ON A GRADUATED TAX RATE.

16. A BUSINESS OWNER TRANSFERS
OWNERSHIP OF A PIECE OF LAND TO A
FRIEND AS A GIFT, MAKING THE
TRANSFER SUBJECT TO DONOR’S TAX.

17. 4. ESTATE TAXA TAX ON THE RIGHT TO TRANSFER A DECEASED
PERSON’S ESTATE TO HEIRS, BASED ON
EXISTING LAWS AT THE TIME OF DEATH AND
COMPUTED USING A GRADUATED TAX RATE.

18. A PERSON PASSES AWAY, LEAVING A ₱10
MILLION ESTATE TO THEIR CHILDREN. THE
HEIRS MUST PAY ESTATE TAX BEFORE THEY
CAN CLAIM THE INHERITANCE.

19. 5. INCOME TAXA TAX ON ANNUAL EARNINGS FROM
EMPLOYMENT, BUSINESS, OR PROPERTY, WITH
INDIVIDUALS TAXED PROGRESSIVELY AND
CORPORATIONS TAXED AT A FIXED RATE.

20. A TEACHER EARNING ₱30,000 PER
MONTH PAYS INCOME TAX BASED ON
THE GRADUATED TAX RATE.

21. 6. PERCENTAGE TAX IS A SMALL BUSINESS TAX IN THE
PHILIPPINES FOR THOSE WHO ARE
NOT REQUIRED TO PAY VAT.

22. 7. VALUE ADDED TAXVAT IS A CONSUMPTION TAX
APPLIED AT EACH STAGE OF
PRODUCTION.

23. 8. EXCISE TAX
TAX ON SPECIFIC GOODS THAT ARE
HARMFUL TO HEALTH OR THE
ENVIRONMENT OR CONSIDERED LUXURY
ITEMS IN THE PHILIPPINES.

24. 9. WITHHOLDING TAX ON
COMPENSATIONTAX TAKEN FROM AN EMPLOYEE'S
SALARY BEFORE THEY GET PAID.

25. 10. EXPENDED WITHHOLDING
TAX
TAX THAT BUSINESSES DEDUCT WHEN
PAYING PROFESSIONALS, FREELANCERS,
OR SERVICE PROVIDERS.

26. 11. FINAL WITHHOLDING TAXTAX THAT IS AUTOMATICALLY
DEDUCTED FROM CERTAIN
TYPES OF INCOME

27. 12. WITHHOLDING TAX ON
GOVERNMENT MONEY PAYMENTS IS THE TAX THAT THE GOVERNMENT
AUTOMATICALLY DEDUCTS WHEN
PAYING FOR GOODS, SERVICES, OR
PROJECTS.

28. 01
LOCAL TAX
IS A FEE COLLECTED BY LOCAL
GOVERNMENT UNITS, SUCH AS CITIES
OR MUNICIPALITIES, TO FUND PUBLIC
SERVICES LIKE ROADS, SCHOOLS,
AND WASTE MANAGEMENT.

29. IS A PHILIPPINE LAW THAT
DECENTRALIZES POWER TO LOCAL
GOVERNMENT UNITS (LGUS) BY
GRANTING THEM AUTONOMY IN
GOVERNANCE 01REPUBLIC ACT NO. 7160

30. TYPES OF
LOCAL TAXES

31. 1.TAX ON TRANSFER OF REAL
PROPERTY OWNERSHIP TAX IMPOSED ON THE SALE, DONATION, BARTER,
OR ON ANY OTHER MODE OF TRANSFERRING
OWNERSHIP OR TITLE OF REAL PROPERTY.

32. 1.TAX ON TRANSFER OF REAL
PROPERTY OWNERSHIP IF YOU OWN PROPERTY IN A PROVINCE, YOU
PAY 1% OF ITS ASSESSED VALUE.
IF YOU OWN PROPERTY IN METRO MANILA
OR A CITY, YOU PAY 2% OF ITS ASSESSED
VALUE.

34. 2. TAX ON BUSINESS OF PRINTING
AND PUBLICATION TAX ON THE BUSINESS OF PERSONS ENGAGED IN THE
PRINTING AND/OR PUBLICATION OF BOOKS, CARDS,
POSTERS, LEAFLETS, HANDBILLS, CERTIFICATES,
RECEIPTS, PAMPHLETS, AND OTHERS OF SIMILAR
NATURE.

35. EXAMPLE FOR TAX ON BUSINESS OF PRINTING
AND PUBLICATION
PRINTING SHOPS
NEWSPAPER PUBLISHERS
MAGAZINE AND BOOK PUBLISHERS

36. 3. FRANCHISE TAXALSO CALLED A PRIVILEGE TAX, IS A FEE THAT
SOME BUSINESSES MUST PAY TO OPERATE IN
CERTAIN STATES. IT ALLOWS THEM TO BE
OFFICIALLY REGISTERED AND DO BUSINESS THERE.

37. EXAMPLE OF FRANCHISE TAX PUBLIC UTILITY COMPANIES (MERALCO,
MAYNILAD)
TELECOMMUNICATIONS (GLOBE, SMART, PLDT)
TRANSPORTATION SERVICES (LRT, PNR, BUS
COMPANIES)

38. 4. TAX ON SAND, GRAVEL, AND
OTHER QUARRY RESOURCES IS CALLED THE "EXCISE TAX ON MINERAL PRODUCTS" OR
"QUARRY TAX." IT'S A TAX ON EXTRACTING AND USING
THESE RESOURCES, WITH REVENUE OFTEN FUNDING
ENVIRONMENTAL CONSERVATION, INFRASTRUCTURE, AND
SOCIAL SERVICES.

39. 6. AMUSEMENT TAX
A TAX IMPOSED ON BUSINESSES THAT
PROVIDE ENTERTAINMENT OR RECREATIONAL
ACTIVITIES, SUCH AS MOVIES, THEATERS,
CONCERTS, AND AMUSEMENT PARKS.

40. 7. ANNUAL FIXED TAX FOR EVERY
TRUCK OR VAN A TAX IMPOSED ON OWNERS OR
OPERATORS OF DELIVERY TRUCKS OR
VANS, LEVIED ANNUALLY AT A FIXED
RATE.

41. 8. TAX ON BUSINESSA TAX IMPOSED ON BUSINESSES, COMPANIES,
OR ENTERPRISES FOR CONDUCTING BUSINESS
OPERATIONS, OFTEN BASED ON THEIR INCOME,
PROFITS, OR REVENUE.

42. 9. FEES FOR SEALING AND LICENSING
OF WEIGHTS AND MEASURES A FEE CHARGED FOR VERIFYING AND
CERTIFYING THE ACCURACY OF WEIGHTS AND
MEASURES USED IN BUSINESS
TRANSACTIONS.

43. 10. FISHERY RENTALS, FEES, AND
CHARGES THESE ARE FEES THAT THE BARANGAY (LOCAL
COMMUNITY OR ADMINISTRATIVE DIVISION)
COLLECTS FOR THE USE AND MANAGEMENT OF
FISHING RESOURCES OR WATER BODIES WITHIN ITS
JURISDICTION

44. 11. COMMUNITY TAXThe community tax is paid in the place of
residence of the individual or in the place
where the principal office of the juridical
entity is located

45. 12. TAXES LEVIED BY THE BARANGAYS
ON STORES OR RETAILERS The Barangay Business Tax or Barangay Permit
Fee, is typically a fixed annual fee or a small
percentage of gross sales, depending on local
ordinances.

46. 13. SERVICE FEES OR CHARGESService fees or charges are additional
costs imposed by businesses or service
providers for specific services rendered

47. 14. BARANGAY CLEARANCEis an official document issued by the barangay (the
smallest administrative unit in the Philippines) that
certifies a person’s good standing in the community. It
is often required for job applications, business permits,
or legal transactions.

48. THE PHILIPPINE TAX SYSTEM:
ISSUES AND CHALLENGES

49. THE TAX SYSTEM IN THE PHILIPPINES PLAYS A
CRUCIAL ROLE IN FUNDING GOVERNMENT SERVICES
AND INFRASTRUCTURE. WHILE TAXATION IS
NECESSARY FOR NATIONAL DEVELOPMENT, MANY
FILIPINOS VIEW IT AS BURDENSOME, INEFFICIENT,
AND UNFAIR. THESE ISSUES NOT ONLY HINDER
ECONOMIC GROWTH BUT ALSO CONTRIBUTE TO
SOCIAL INEQUALITY AND DISCOURAGE COMPLIANCE
AMONG TAXPAYERS.

50. MAJOR PROBLEMS IN THE PHILIPPINE TAX

51. 1.HIGH INCOME TAX RATE The Philippines imposes one of
the highest corporate income tax
rates in ASEAN, at 30%, making it
less attractive to foreign investors
compared to neighboring
countries like Vietnam (20%) and
Thailand (20%).

52. Additionally, personal income tax
rates can reach 32%, reducing the
take-home pay of middle-class
Filipinos. For example, an ordinary
worker earning ₱500,000 annually
is heavily taxed, leaving little room
for savings and investment.

53. 2. NARROW TAX BASE The tax system grants numerous
exemptions, limiting the revenue
the government collects. The
Value-Added Tax (VAT) law, for
instance, has 59 exemptions,
covering various industries and
goods.

54. While some of these exemptions
benefit specific groups—such as
senior citizens. On the other hand,
some businesses avoid paying their
fair share of taxes. Luxury goods
like high-end watches and jewelry
sometimes exploit these
exemptions, while essential goods
remain taxed at 12% VAT.

55. 3. WIDESPREAD TAX EVASION Many professionals, such as
doctors, lawyers, and freelancers,
underreport their income or do not
issue receipts, significantly
reducing their tax liability.

56. A 2013 Bureau of Internal Revenue
(BIR) report found that doctors
declared an annual income of only
₱1 million on average, which is far
lower than their expected earnings.
Additionally, the strict bank
secrecy law makes it difficult for
authorities to investigate and
prosecute tax evaders.

57. 4. COMPLEX TAX SYSTEM The Philippines ranks poorly in
the Ease of Paying Taxes index,
largely due to the numerous
forms, steps, and documentary
requirements involved in tax
compliance.

58. Many small business owners
struggle to register with the BIR, file
VAT returns, and compute their
taxes correctly, leading to either
unintentional non-compliance or the
need to hire costly accountants. The
complicated system discourages
people from properly fulfilling their
tax obligations.

59. 5. REGRESSIVE TAXATION
(UNFAIR BURDEN ON THE POOR) Indirect taxes, such as the
excise tax on fuel, raise
transportation and goods costs,
disproportionately affecting low-
income Filipinos.

60. For instance, a minimum-wage
earner buying ₱100 worth of
groceries pays ₱12 in VAT,
which represents a larger
percentage of their income
compared to a wealthy
individual spending ₱10,000.

61. THE PHILIPPINE TAX SYSTEM NEEDS URGENT
REFORM TO ADDRESS ITS INEFFICIENCIES AND
INEQUITIES. BY LOWERING TAX RATES, BROADENING
THE TAX BASE, SIMPLIFYING THE PROCESS, AND
ENSURING FAIRER TAX BURDENS, THE GOVERNMENT
CAN ENCOURAGE COMPLIANCE AND PROMOTE A
MORE JUST SYSTEM.

62. WITHOUT THESE CHANGES, TAXPAYERS—
ESPECIALLY THE MIDDLE AND LOWER
CLASSES—WILL CONTINUE TO BEAR THE
BRUNT OF AN UNFAIR AND INEFFICIENT
SYSTEM THAT BENEFITS THE WEALTHY AND
WELL-CONNECTED.

63. THANK YOU!