TAXATION

Group 4
 OBJECTIVES:
General Information: History of Tax:
• Definition of Taxation
• History in General
• Definition of Tax
• History in Philippines
• Purpose and Significance
• Evolution (Pre colonial to Modern)
• Types of Tax
• System of Payment (Pre colonial
• Principles of Tax
• Each President Tax Law
• Who pays tax and those exempted
• Bureau of Internal Revenue
• Government Usage of Tax (Power of Tax)

Present
Times:
• Distinction of Tax
• Characteristics of Tax
• Classification of Tax
• Contemporary Tax System
 General
Information
 Taxation Tax
it is the process by which a it is a mandatory financial
government or authority charge or levy imposed by
imposes financial charges a government on
or levies on individuals, individuals, businesses, or
businesses, or property to property to fund public
fund public expenditures expenditures and services.
and services.
 purpose of taxation
1. Revenue Generation:
• Taxes provide the government with the funds needed to finance
public services like healthcare, education, infrastructure, and
defense.

2. Wealth Redistribution:
• Taxes help reduce economic inequality by funding social welfare
programs for lower-income groups.
3. Economic Stabilization:
• Tax policies can manage inflation, stimulate growth during
recessions, and stabilize the economy.

4. Behavioral Influence:
• Taxes can encourage or discourage certain behaviors, such as
using sin taxes to reduce smoking or promoting environmentally-
friendly practices with carbon taxes.

5. Encouraging Investment:
• Tax incentives can stimulate investment in sectors like R&D, green
energy, or housing.
significance of taxation
• Enabling Government Functionality:
Taxes are essential for funding government operations and public
services.

• Supporting Economic Development:

Taxes support infrastructure, which is vital for business growth
and public well-being.

• Promoting Social Welfare:

Taxes fund programs that reduce poverty and provide support for
vulnerable groups.
 • Maintaining National Security:
Tax revenue helps maintain defense, law enforcement, and public
safety.

• Ensuring Equity and Fairness:

Progressive tax systems help reduce income inequality and
ensure public services for all.

• Environmental and Social Impact:

Taxes, such as green taxes or sin taxes, encourage responsible
behaviors that benefit society and the environment.
 Types of tax
The Philippines has a wide range of taxes that are imposed by both
national and local government authorities. These taxes can be
broadly categorized into national taxes (administered by the Bureau
of Internal Revenue or BIR) and local taxes (administered by local
government units or LGUs).
Income Taxes
• Individual Income Tax:
Tax on the income of individuals, including employees,
professionals, and business owners. The rates are
progressive, ranging from 0% to 35% depending on income
levels.
• Corporate Income Tax:
Tax on the income of corporations, with a standard rate of
25% as of 2020, though smaller businesses may qualify for a
lower rate under certain conditions.
 • Capital Gains Tax:
Tax on the sale of capital assets such as real property and
shares of stock, usually at a rate of 6% for real estate
transactions and 15% for shares of stock.

Value-Added Tax (VAT)

• VAT:
A consumption tax imposed on the sale of goods and
services, with a standard rate of 12%. This tax is collected at
each stage of production or distribution and ultimately paid
by the consumer.
Excise Taxes
• Excise Tax on Goods:
Imposed on certain goods such as alcohol, tobacco,
petroleum products, and automobiles. The rates vary
depending on the specific goods.
• Excise Tax on Sugary Beverages:
Introduced under the Tax Reform for Acceleration and
Inclusion (TRAIN) law, this tax is applied to sugary
drinks and soft drinks.
Estate and Donor’s Tax
• Estate Tax:
Tax imposed on the transfer of a deceased person’s
estate, with a progressive rate of 6% on the value of the
estate above a certain threshold.
• Donor’s Tax:
Tax imposed on donations, with rates ranging from 0%
to 15%, depending on the amount donated.
Property Taxes
• Real Property Tax:
Imposed on land, buildings, and other real estate
properties. The rate varies depending on the location
and value of the property. The local government units
are responsible for collecting this tax.
• Transfer Tax:
Tax on the transfer of property (e.g., land or real
estate), usually paid by the seller or donor.
Local Taxes
Local government units (LGUs) have the authority to
impose certain taxes, such as:

• Business Taxes:
Local business taxes on businesses operating within a
particular city or municipality.
• Barangay Clearance Fees:
Fees for obtaining clearance from the barangay (village
or district) in certain transactions.
Percentage Tax
• Percentage Tax:
This is an indirect tax on businesses with annual gross
sales or receipts of P3 million or less. It is imposed at a
fixed rate, typically 3% on gross receipts.

Documentary Stamp Tax (DST)

• Tax on various documents, such as contracts, deeds,
and shares of stock. The rates are based on the type
and value of the document.
 PRINCIPLES OF TAX

1. Equity (Fairness) – Taxes should be fair and based

on taxpayers’ ability to pay.
2. Ability to Pay – Tax burden should be proportionate
to income or wealth.
3. Certainty – The tax system should be clear and
predictable.
4. Convenience – Taxes should be easy to pay and
administer.
5. Efficiency - Taxes should not distort economic
activity or be too costly to collect.
6. Simplicity – The system should be easy to
understand and comply with.
7. Elasticity – The tax system should adapt to changing
economic conditions.
8. Productivity – The system must generate sufficient
revenue for the government.
9. Transparency – Taxpayers should know how their
money is being used.
10. Neutrality – The tax system should avoid favoring
particular sectors or behaviors.
 WHO PAYS TAXES?
• Individuals: People pay taxes on income (e.g., from jobs or
investments), property, and consumption (e.g., sales tax or
VAT).
• Businesses: Companies pay taxes on their profits (corporate
income tax) and may collect indirect taxes like VAT or sales
tax.
• Self-Employed/Freelancers: These individuals pay income
tax based on their earnings.
• Property Owners: People or companies owning property pay
property taxes.
• Foreigners: Non-residents earning income within the country
may also pay taxes on that income (e.g., rental income or
business profits).
 WHO ARE EXEMPTED FROM
PAYING TAXES?
• Low-Income Individuals: People earning below a
certain threshold may be exempt from paying income tax.
• Senior Citizens & Persons with Disabilities: Often
entitled to special tax exemptions or deductions.
• Small Businesses: Some small businesses with low
revenues may be exempt from certain taxes or eligible for
lower tax rates.
• Non-Profit Organizations: Charitable organizations and
non-profits may be exempt from income tax on donations or
earnings related to their mission.
• Religious Institutions: Churches, mosques, synagogues,
and other religious organizations are often exempt from
property and income taxes related to their religious or
charitable activities.
• Government Entities: Public institutions and government
organizations are usually exempt from taxes in their
operations.
• Certain Income: Some types of income, such as small gifts
or inheritances, may be exempt from tax up to a certain
limit.
• Foreign Diplomats & International Organizations:
Diplomats and staff of international bodies like the United
Nations enjoy tax exemptions due to diplomatic immunity or
international agreements.
• Temporary Residents or Foreign Nationals: In some
cases, foreign nationals or individuals on short-term work
visas may be exempt from certain taxes, depending on the
country’s tax treaties and rules.
• Agricultural Exemptions: Some countries offer tax
exemptions or incentives to farmers or those involved in
agriculture, such as exemptions from VAT on certain
agricultural products or property tax relief on farmland.
THE GOVERNMENT’S USAGE OF
TAX REVENUE
• Public Services: Funding healthcare, education,
transportation, and public safety (e.g., police, fire
departments).
• Social Welfare: Supporting social security,
unemployment benefits, subsidies, and affordable
housing.
• Economic Growth: Financing infrastructure, public
investments, and economic recovery programs.
• Defense and Security: Allocating funds for national
defense, military, and law enforcement.
• Environmental Protection: Supporting sustainability
projects and disaster relief efforts.
• Governance: Funding government operations, foreign
relations, and public administration.
• Research and Development: Supporting innovation,
scientific research, and technology development.
ADDITIONAL
• Withholding Tax: A tax deducted at the source of
income, such as salary, dividends, interest, and royalties.
The payer (e.g., employer, company) withholds the tax
and remits it to the government.
For example:
Dividends: Tax withheld on income paid to shareholders.
Interest: Tax on interest payments made to creditors or
investors.
Royalties: Tax on payments made for the use of intellectual
property, such as patents or trademarks.
• Branch Profit Tax: Taxes on profits made by a foreign
company’s branch in another country, often paid by the
foreign entity itself.
• Limitation of Taxes: Laws that reduce the tax burden,
such as credits, deductions, and exemptions, or limit the
maximum tax rate.
• Territoriality of Taxation: Public services are normally
provided within the boundaries of the State. Thus, tax can
be imposed only within the territories of the State.
• International Comity: International comity pertains to
mutual courtesy or reciprocity between states. It is a basic
principle of international law that all states are equally
sovereign.

• Exemption of the government: The taxation power is

broad. The government can exercise the power upon
anything including itself. However, the government
normally does not tax itself as this will not raise additional
funds but will only impute additional costs.
• Situs of Taxation: The location where income or
assets are taxed, based on factors like where the
activity occurs or where assets are located.

• Deductions: Expenses that reduce taxable income,

thereby lowering the amount of tax owed. Examples
include business expenses or charitable donations.
Double Taxation: When the same income is taxed by
two or more jurisdictions. It can be avoided or reduced
through tax treaties.
The two main types are:
• Direct double taxation: Same income taxed in multiple
jurisdictions (e.g., income earned in one country taxed by
both the source and the residence country).
• Indirect double taxation: Same income taxed at
different stages (e.g., corporate tax on profits, and
individual tax on dividends).
History of
Tax
History of tax in general (worldwide)
The first time when the tax
system was first used:
​

The tax system was first officially used in ancient

Mesopotamia around 3000 BCE, where taxes
were paid in goods or labor instead of money.
Ancient Civilizations:
• Egypt (around 3000 BCE): Taxes were collected in the form of
grain and labor, often to fund large-scale projects like the
pyramids. Records on the Rosetta Stone confirm taxation as
part of their governance​
- Rosetta Stone, discovered in 1799, records some of
the earliest known references to taxation in Egypt.
Ancient Civilizations:
• Mesopotamia (3000 BCE): The concept of tariffs, such as taxes
on trade goods, emerged. These early taxes supported local rulers
and infrastructure​
- A tariff is a tax imposed on goods or services imported
into a country.
• Roman Empire: The Romans developed a complex tax system,
including sales taxes, property taxes, and tariffs. Under Emperor
Augustus, a direct income tax system was introduced​
Middle Ages:
• Taxation systems were based largely on feudal
obligations. Lords collected taxes in the form of
goods and services, such as crops or military
service.
• In England, William the Conqueror instituted
property taxes, recorded in the Domesday Book
(1086)​
Early Modern Era:
• Excise and income taxes were introduced in
England during the 17th century to fund wars and
governance. The American colonies also adopted
various taxes, which became central to conflicts
like the American Revolution (e.g., the Stamp Act)​
Industrial Revolution to
Present:
• The 19th century saw the introduction of capital
gains and inheritance taxes. The modern progressive
tax system emerged to address growing economic
disparities​.
• The 20th century brought technological
advancements in tax collection, making systems
more efficient. International tax treaties also began
to harmonize cross-border taxation​
HISTORY OF TAX IN PHILIPPINES
Taxation has been a fundamental aspect of governance in
the Philippines since pre-colonial times.

PILONCITOS
Pre-Colonial Period
• Tax System: Barangays collected taxes called buwis in the form of
crops, livestock, or labor.
• Purpose: To support the datu (chief), defense, and community
development.
• System of Payments
• Barter
• Cowrie Shells
• Precious Metals and Stones
• Decorative Items
• Agricultural Products
• Labor and Service
Spanish Period (1521–1898)
• Tributo (Personal Tax): A fixed annual tax imposed on Filipino
natives and Chinese mestizos.
encomienda system
• Purpose: To fund the Spanish administration and religious missions.
• Contribution: Established the foundation of formal taxation but
was exploitative, leading to poverty and uprisings.
• System of Payments:
American Period (1898–1941)
• Internal Revenue Law of 1904: Modernized tax
collection. (Luke E. Wright)
• Purpose: To fund public infrastructure, education, and
health programs.
• Contribution: Introduced efficiency and a formalized
system of taxation.
Japanese Occupation (1942–1945)
• Taxes Implemented: The Japanese imposed various taxes,
such as the oyatoi (labor tax), war taxes, and tributes in cash
or kind.
• Purpose: To finance Japanese military campaigns and
support their war effort in Southeast Asia.
• Contribution: The occupation showed the need to fix and
improve the tax system after the war to help the economy
recover and prevent abuse.
 TAX LAWS UNDER PRESIDENTS
(POST- INDEPENDENCE)

MANUEL ROXAS (1946–1948)

• REPUBLIC ACT NO. 44: FIRST REVENUE ACT TO ADDRESS WAR DAMAGES.
• PURPOSE: RECONSTRUCTION AFTER WORLD WAR II.
• CONTRIBUTION: HELPED REBUILD THE NATION’S ECONOMY AND
INFRASTRUCTURE.

ELPIDIO QUIRINO (1948–1953)

• AMENDMENTS TO THE NATIONAL INTERNAL REVENUE CODE: INCREASED
TAXES TO ADDRESS DEFICITS.
• PURPOSE: STRENGTHENED POST-WAR ECONOMIC RECOVERY.
• CONTRIBUTION: STABILIZED GOVERNMENT FINANCES.
Ferdinand Marcos (1965–1986)
• Presidential Decree No. 231 (Local Tax Code):
Decentralized tax collection to local governments.
• Purpose: Empowered local governments financially.
• Contribution: Promoted rural development but faced
corruption issues.
• Value-Added Tax (VAT) introduced in 1980: Shifted the tax
burden to consumption.
• Purpose: Increased revenue.
• Contribution: Funded infrastructure projects like roads and
schools.
Corazon Aquino (1986–1992)
• Executive Order No. 273: Instituted the modern VAT system.
• Purpose: Broadened the tax base.
• Contribution: Stabilized the post-Marcos economy.

Fidel Ramos (1992–1998)

• RA 7646 (Expanded VAT Law): Extended VAT coverage.
• Purpose: Generated revenue for growth programs.
• Contribution: Spurred infrastructure development.
Joseph Estrada (1998–2001)
• Focused on improving tax collection efficiency rather than
introducing new taxes.
• Contribution: Reduced budget deficits.

Gloria Macapagal-Arroyo (2001–2010)

• RA 9337 (Expanded VAT Act of 2005): Increased VAT rate
from 10% to 12%.
• Purpose: Addressed fiscal deficits.
• Contribution: Stabilized the economy during the global
financial crisis.
Benigno Aquino III (2010–
2016)
• Sin Tax Reform Act of 2012: Raised taxes
on alcohol and tobacco.
• Purpose: Funded health programs.
• Contribution: Boosted public health funding.
Rodrigo Duterte (2016–2022)
• TRAIN Law (Tax Reform for Acceleration and
Inclusion Act):
o Lowered income tax for individuals.
o Increased taxes on sugary drinks, fuel, and
automobiles.
o Purpose: Made taxation progressive and
funded infrastructure projects.
o Contribution: Boosted disposable income
for the middle class but raised living costs.
Ferdinand "Bongbong" Marcos Jr. (2022–
Present)
• Proposed Wealth Tax and Digital Tax:
o Expanding tax coverage to include online
transactions.
o Purpose: Adapt taxation to the digital age.
o Contribution: Ensures fairness and raises
revenue for modernization projects.
 HISTORY OF THE BUREAU OF
INTERNAL REVENUE (BIR) IN THE
PHILIPPINES
THE BUREAU OF INTERNAL REVENUE (BIR) IS THE
GOVERNMENT AGENCY RESPONSIBLE FOR TAX COLLECTION
IN THE PHILIPPINES. IT PLAYS A CRUCIAL ROLE IN THE
COUNTRY’S ECONOMY BY ENSURING THAT TAXES ARE
COLLECTED AND THAT THE GOVERNMENT HAS THE
NECESSARY FUNDS TO RUN PROGRAMS AND PROVIDE
 History of the Bureau of Internal
Revenue
• Established: The BIR was founded on August 1, 1904, during the
American colonial period. It was originally part of the Department of
Finance under the American regime.
• Functions: Initially, the BIR was created to ensure the efficient
collection of internal revenue taxes, including income taxes, excise
taxes, and import duties.
• Evolution: Over time, the BIR expanded its role as tax policies
evolved and became central to the Philippine government’s revenue
system.
 Importance of the bir
• Revenue Collection: The BIR is the primary source of government
revenue in the Philippines. It collects taxes that fund government
operations, public infrastructure, social services, and welfare
programs.
• Tax System Oversight: The BIR ensures that the tax system is fair
and effective, contributing to economic stability by preventing tax
evasion and corruption.
• Economic Growth: Through its tax collection, the BIR supports
government spending in areas like education, health, infrastructure,
and poverty alleviation, contributing to national development.
 Key Person Behind the Bureau of
Internal Revenue

• First Commissioner: The first commissioner of the

BIR was Lorenzo Tañada, who helped establish the
agency's foundation during the American period. His
leadership and vision were pivotal in ensuring that
the Philippine government could collect taxes
efficiently.
 Commission on Audit (COA)
• Role of COA: The Commission on Audit (COA) is a constitutional
body that ensures the proper and lawful use of government funds.
They audit the financial activities of government agencies, including
the BIR, to ensure transparency and accountability in the use of
taxpayer money.
• Contribution to the Economy: COA plays a vital role in
maintaining public trust by monitoring government agencies,
preventing misuse of funds, and ensuring that public resources are
used efficiently, which in turn supports economic stability and
growth.
Present
Times
 DISTINCTION OF TAX
FROM OTHER TERMS
• TOLL:
- a tax is the demand of sovereignty, while a toll is a demand for
proprietorship
- a tax is paid for the use of the government’s property, while a toll
is paid for the use of another's property
• PENALTY:
- a tax is intended to raise revenue, while a penalty is designed to
regulate conduct
- a tax may be imposed by the government only, while penalty may
be imposed by the government of a private individual.
 • DEBT:
- tax is based on law, while the debt is based on
contract
- a tax may not be assignable, while a debt is
assignable​
- tax is generally payable in cash, while debt is payable
in cash or in-kind

• REVENUE
- this refers to all the funds or income derived by the
government whether from tax or any other source
 • INTERNAL REVENUE
- it refers to taxes imposed by the legislature other
than duties on imports and exports. The revenue is
generated from all sources of income within a country's
own borders.

• CUSTOMS DUTIES
- they are taxes imposed on goods exported into a
country
 CHARACTERISTICS
Enforced Contribution
This emphasizes taxes that are not voluntary; they are
required by the law. The government mandates
individuals and organizations to pay taxes based on
specific criteria (such as income, property, value, or
sales).
2. PROPORTIONATE IN CHARACTER
Refers to how the burden depends on the individual’s or
entity’s ability to pay. The amount of tax that is required to
pay is typically proportional to their income, wealth, or
consumption.
This principle can take different forms depending on the
type of tax system in place

• Flat (proportional) Tax System - Everyone pays the same

percentage of their income, regardless of how much they earn.
• Progressive Tax System - tax rate increases as the taxable
amount (usually income) rises.
• Regressive Tax System - Individuals with lower incomes pay a
higher proportion of their income than wealthier individuals.
• Capital and Wealth Taxes - Designed to be proportionate to the
level of wealth or assets an individual holds. The tax usually
applies to a person's net worth, which is assets minus liabilities.
• Consumption Taxes - The more goods and services a person
consumes, the higher the total tax they pay, which is directly
proportional to their level of consumption.
3. GENERALLY PAYABLE IN MONEY
Taxes are typically paid in the form of money rather
than goods or services. This characteristic
highlights the efficiency, universality, and
practicality of monetary payments in modern tax
payments.
4. LEVIED ON PERSONS OR PROPERTY
Taxes are imposed either directly on individuals or on their
property, assets, or income.
• LEVIED ON PERSONS OR PROPERTY
Taxes are imposed either directly on individuals or on their
property, assets, or income.

• LEVIED ON PROPERTY
▪ Property Taxes – These are the taxes levied on the value of
property owned by individuals or businesses. This can apply to both real
property (land, building) and personal property (vehicles, equipment).
▪ Capital Gains Taxes – These apply to the sale of property or
assets where the selling price exceeds the original purchase price, essentially
taxing the profit made from the sale.
LEVIED ON INCOME OR PROFITS FROM PROPERTY
• Rental Income Taxes – Taxes are also imposed on income derived
from property. If someone rents out a building or land, the rental
income is taxable.
• Business Property Taxes – In some jurisdictions, businesses pay
taxes on their tangible assets, such as machinery, equipment, and
inventory.
5. LEVIED BY STATE WITH JURISDICTION
• This emphasizes the authority and power of the state (or government)
to impose taxes within its legal boundaries or jurisdictions.

• Government Rights to Tax

• Jurisdictional Limits
• Geographical or Political Boundaries – Taxes can be levied at various
levels of government.
• Local Taxes – Municipalities can impose taxes like property
taxes or sales taxes within their limits.
• State (regional) Taxes – Can impose taxes on income, sales,
properties, and more within their region.
• National Taxes – The federal government can levy taxes,
such as income taxes, that apply across the county.
 • International Jurisdictions
International Taxes - Governments sometimes impose taxes
on activities that extend beyond their borders, such as
international trade tariffs, duties on imported goods, or taxes on
foreign income.
6. LEVIED BY THE LAWMAKING BODY
Taxes can only be imposed by an authorized legislative or lawmaking
body. This ensures that taxation is legitimate, transparent, and based
on established legal principles, rather than arbitrary decisions made by
individuals or the executive branch.
o Imposition by Legislation
▪ Lawmaking Authority – Taxes can only be levied by a body that
has the authority to create laws, such as a national parliament,
congress, or regional legislature.
o Constitutional Basis
▪ Constitutional authority – The right of a lawmaking body to levy
taxes is typically grounded in a country’s constitution or founding legal
framework.
o Democratic Process
▪ Representation – In democracies, the lawmaking body that levies
taxes is usually composed of elected representatives.
7. PUBLIC PURPOSE
• Tax revenue is used for purposes that serve the public interest, rather
than for the benefit of individuals or specific private interests.
o Funding the Public Services
o Promoting Social Welfare
o Environmental and Public Health Initiatives
 CLASSIFICATION OF TAXES
DIRECT AND INDIRECT TAXES
• DIRECT TAXES
- These taxes are primarily imposed on individuals based on their ability
to pay measured by income and wealth, and this burden cannot be
shifted to another person.
- Examples include income tax, property tax, and wealth tax.
 CLASSIFICATION OF TAXES
• DIRECT AND INDIRECT TAXES
• INDIRECT TAXES
- These taxes are levied on the production or consumption of goods and
services, or transactions like imports and exports. They are often
passed on to consumers in the form of higher prices.
- Examples include sales tax, value-added tax (VAT), excise tax, and
customs duties.
KEY DIFFERENCES
 TRAIN LAW
The TRAIN Law (Tax Reform for Acceleration and Inclusion),
officially Republic Act No. 10963, is part of the Philippine
government’s Comprehensive Tax Reform Program (CTRP). Signed
by President Duterte in December 2017, was in effect in January
2018, and is still in effect.

The main goal is to create a more just, simple, and effective tax
collection system.
 KEY POINTS ON THE CURRENT TAX
SYSTEM
• Lowering the Personal Income Tax (PIT)
• Expanding the Value-added tax base in products
• Increasing the excise tax on petroleum products and automobiles
• Excise tax on sweetened beverages
• Imposed higher taxes on tobacco and alcohol
• Higher tax-exempt bonuses
• Expanded VAT exemptions for goods and services
• Simpler Estate Tax
 Tax Structure
The country imposes a territorial tax system. Only Philippine-sourced
income is subject to Philippine taxes.

Income Tax Table

Corporate Income Tax Rates:
1.Domestic Corporations:
30% on net taxable income
2. Resident Foreign Corporations:
30% on net taxable income
3. Branch Profit Remittance Tax:
15% on the total profits remitted by a
branch to its head office abroad.
Implications for Self-Employed Individuals and Professionals

Individuals who are self-employed and professionals are also affected

by the revised tax rates under the TRAIN Law. They can choose for
either the graduated income tax rates or a flat rate of 8% on gross
sales or receipts over PHP 250,000, providing them with options based
on their financial circumstances.

The current tax system guarantees that as a person's income rises, the
tax rate on the additional income also increases, leading to a higher
total tax liability for individuals with higher earnings within this bracket.
Impact of TRAIN Law

The TRAIN Law’s adjustments have benefited many Filipinos’ take-home

pay. Lower income tax rates for most individuals have led to an increase
in net income and enhanced purchasing power. However, higher-income
earners may experience a reduction in their take-home pay due to the
continuously revised tax brackets.
The taxation policy in the Philippines is chiefly governed by the
following Republic Acts:

• The Corporate Recovery and Tax Incentives for Enterprises Act

(CREATE Act)
• Tax Reform for Acceleration and Inclusion (TRAIN) Law
• Article VI, Section 28 of the Constitution
• The National Internal Revenue Code
• Local Government Code of 1991.
Ease of Paying Taxes (EOPT) Act
The Ease of Paying Taxes Act, also known as Republic Act No. 11976,
became effective on January 22, 2024. This legislation aims to update
tax administration and simplify processes to encourage easier
compliance for taxpayers. Changes include the new classification of
taxpayers.
Taxpayers are now categorized based on gross sales:
• Micro: Less than PHP 3 million
• Small: PHP 3 million to less than PHP 20 million
• Medium: PHP 20 million to less than PHP 1 billion and
• Large: PHP 1 billion and above.
Fringe benefits tax (FBT)

Fringe benefits are provided to managerial and supervisory-level

employees by the employer and are subject to a final FBT of 35% on
the grossed-up monetary value of those benefits. This FBT is a final tax
payable that the employer must pay on a quarterly basis and is
deductible as part of the fringe benefit expense. Benefits subject to FBT
are no longer included in the employees’ taxable income.
Filing Your Income Tax in 2024

Filing income tax returns is a legal obligation for every taxpayer in the
Philippines. The Bureau of Internal Revenue (BIR) has simplified the
process to make it more accessible. You can file your income tax returns
online through the BIR’s e-filing system or manually at the nearest BIR
office.
The deadline for filing income tax returns in the Philippines is usually on
April 15th of each year.
 TAX ESCAPES

1.Tax evasion – also known as tax dodging, refers to any action or

scheme that tends to illegally reduce or avoid tax obligations.

2.Tax avoidance – also known as tax minimization, refers to any act or

strategy that reduces or completely avoid paying taxes by any legally
permissible means.

3. Tax exemption – also known as tax holiday, refers to the protection,

privilege or freedom from being liable to a tax which others are
obligated to pay.
 THEORIES OF TAXATION

LIFEBLOOD THEORY – Taxes are the lifeblood of the government, for

without taxes, the government can neither exist nor endure. Without
taxes, government cannot fulfil its mandate of promoting the general
welfare and well-being of the people. (CIR v. Algue, Inc., G.R. No. L-
28896, February 17, 1988, 158 SCRA 9)

NECESSITY THEORY – The exercise of the power to tax emanates from

necessity because without taxes, government cannot fulfil its mandate
of promoting the general welfare and well-being of the people. (CIR v.
Bank of Philippine Islands, G.R. No. 134062, April 17, 2007, 521 SCRA
373)
BENEFITS-PROTECTION THEORY – Taxpayers receive benefits from taxes
through the protection the State affords to them. For the protection
they get arises their obligation to support the government through
payment of taxes. (CIR v. Algue, Inc., G.R. No. L-28896, February 17,
1988, 158 SCRA 9)

SYMBIOTIC RELATIONSHIP THEORY – Taxation arises because of

reciprocal relation of protection and support between the state and
taxpayers. The State gives protection and for it to continue giving
protection, it must be supported by the taxpayers in the form of taxes.
(CIR v. Algue, Inc.,G.R. No. L-28896, February 17, 1988, 158 SCRA 9)
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