Professional Documents
Culture Documents
Experience
Education
Part
Part
Part
Part
1:
2:
3:
4:
1.
2.
3.
4.
5.
6.
7.
Income in the
Philippines
Resident Citizen
TAXABLE
TAXABLE
Non-resident Citizen
TAXABLE
NOT TAXABLE
Overseas Contract
Workers
TAXABLE
NOT TAXABLE
Resident Alien
TAXABLE
NOT TAXABLE
Non-resident Alien
TAXABLE
NOT TAXABLE
Type of Individual
10
1.
2.
3.
4.
5.
11
6.
7.
8.
9.
10.
Gross Income
Less: Allowable Deductions
Gross Taxable Income
Less: Personal Exemptions
Taxable Income
Compensation
from EmployerEmployerEmployee
Relationship
Income from
Trade, Business,
or Practice of
Profession
Pxxx,xxx.xx
Pxxx,xxx.xx
Not applicable
xxx,xxx.xx
Pxxx,xxx.xx
Pxxx,xxx.xx
Xxx,xxx.xx
xxx,xxx.xx
Pxxx,xxx.xx
Pxxx,xxx.xx
13
A.
14
A.
EXPENSES
General Requirements:
1.
2.
3.
15
B.
16
B.
INTEREST
Limitations on deductibility:
The amount of deductible interest shall be
reduced by an amount equal to 33% of
interest income earned which had been
subjected to final withholding tax
Example:
Interest expense
Less: Limitation
Interest income P10,000
X rate
33%
Allowable interest expense
P40,000
3,300
P36,700
17
C.
18
D.
19
E.
DEPRECIATION:
The gradual diminution in the service or
useful value of tangible property due from
exhaustion, wear and tear and normal
obsolescence
Amortization of the value of intangible assets
with definitely limited duration
Allowable depreciation methods
1. Straight-line method
2. Declining balance method
3. The sum-of-the-years digit method
20
E.
DEPRECIATION:
1. Straight-line method
Annual depreciation = Cost / useful life
Asset acquisition cost - P100,000
Estimated useful life - 5 years
Year
1
2
3
4
5
BV at
beg of year
100,000
80,000
60,000
40,000
20,000
Depreciation
Depreciation
Rate
Expense
20%
20,000
20%
20,000
20%
20,000
20%
20,000
20%
20,000
Accumulated
Depreciation
20,000
40,000
60,000
80,000
100,000
BV at
end of year
80,000
60,000
40,000
20,000
-
21
E.
DEPRECIATION:
2. Declining balance method
Annual depreciation
= Book value at beginning of year * deprecation
rate (usually double the straight-line rate)
Asset acquisition cost - P100,000
Estimated useful life - 5 years
Year
1
2
3
4
5
BV at
beg of year
100,000
60,000
36,000
21,600
12,960
Depreciation
Depreciation
Rate
Expense
40%
40,000
40%
24,000
40%
14,400
40%
8,640
12,960
Accumulated
Depreciation
40,000
64,000
78,400
87,040
100,000
BV at
end of year
60,000
36,000
21,600
12,960
-
22
E.
DEPRECIATION:
3. Sum-of-the-years digit method
Annual depreciation
= Acquisition cost * deprecation rate (based on
total of the estimated useful years)
Asset acquisition cost - P100,000
Estimated useful life - 5 years
Year
1
2
3
4
5
BV at
beg of year
100,000
66,667
40,000
20,000
6,667
Depreciation
Rate
5/15
4/15
3/15
2/15
1/15
Depreciation
Expense
33,333
26,667
20,000
13,333
6,667
Accumulated
Depreciation
33,333
60,000
80,000
93,333
100,000
BV at
end of year
66,667
40,000
20,000
6,667
-
23
F.
100,000.00
50,000.00
150,000.00
15,000.00
135,000.00
24
G.
25
26
GROSS SALES
LESS: COST OF SALES
GROSS INCOME
ALLOWABLE DEDUCTIONS
NET INCOME
Itemized
1,000,000
400,000
600,000
OSD
1,000,000
1,000,000
300,000
300,000
400,000
600,000
40% of
Gross Sales
27
1.
28
2.
29
Dependent
30
Change of status:
31
Gross Income
Less: Allowable Deductions
Gross Taxable Income
Less: Personal Exemptions
Taxable Income
Compensation
from EmployerEmployerEmployee
Relationship
Income from
Trade, Business,
or Practice of
Profession
Pxxx,xxx.xx
Pxxx,xxx.xx
Not applicable
xxx,xxx.xx
Pxxx,xxx.xx
Pxxx,xxx.xx
Xxx,xxx.xx
xxx,xxx.xx
Pxxx,xxx.xx
Pxxx,xxx.xx
32
TAXABLE INCOME
From
To
10,000.00
10,000.01
30,000.00
30,000.01
70,000.00
70,000.01
140,000.00
140,000.01
250,000.00
250,000.01
500,000.00
500,000.01
above
Basic
500.00
2,500.00
8,500.00
22,500.00
50,000.00
125,000.00
TAX DUE
Additional
5% of amount
10% of excess over 10,000
15% of excess over 30,000
20% of excess over 70,000
25% of excess over 140,000
30% of excess over 250,000
32% of excess over 500,000
33
NET INCOME
Itemized
300,000
OSD
600,000
50,000
50,000
100,000
150,000
150,000
100,000
150,000
450,000
22,500
50,000
2,500
25,000
60,000
110,000
34
35
36
When to File
The ITR shall be filed on or before April 15 of each
year covering income for the preceeding taxable
year
37
1.
2.
3.
4.
5.
6.
Taxable income
Allowable deductions
NOLCO
Income tax rate
Special income taxation
MCIT
39
Tax on Corporations:
A domestic corporation is taxable on all
income derived from sources within and
without the Philippines
A Foreign corporation, whether engaged
or not in trade or business in the
Philippines, is taxable only on income
derived from sources within the
Philippines
40
P XXX.XX
XXX.XX
P XXX.XX
XXX.XX
P XXX.XX
41
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
Expenses
Interests
Taxes
Losses
Bad Debts
Depreciation
Depletion
Charitable and other contributions
Research and development
Pension trusts
42
General Requirements:
1.
Travel expenses
Rentals
43
General Requirements:
2. Substantiated by adequate proof documented
by official receipts or adequate records which
reflect the:
3.
4.
44
45
46
47
48
Definition
49
5.
6.
An indebtedness exists.
The interest has been paid or incurred.
The indebtedness must be that of the taxpayer.
The indebtedness is connected with the
taxpayers trade, business or exercise of
profession.
The interest was paid or incurred during the
taxable year.
The interest is stipulated in writing.
50
51
Limitations on deductibility
52
Interest incurred or paid on all unpaid businessbusinessrelated taxes shall be fully deductible from
gross income and shall not be subject to the
limitation on deduction. Thus, such interest
expense shall not form part of the expense that
is to be diminished by 33% of interest income
subjected to final tax.
53
Types of losses
1.
2.
3.
Ordinary losses
Losses incurred in trade, business or profession.
Losses of property connected with trade, business or
profession if due to casualty, etc.
Capital losses
Losses from sales or exchanges of capital assets
(allowable only to the extent of capital gains).
Securities becoming worthless (considered loss from
sale or exchange, on last day of the taxable year).
Special kind of losses
Losses from wash sales of stock or securities.
Wagering losses.
Abandonment losses in petroleum operations.
55
2.
3.
4.
5.
56
57
P500,000
P150,000
P135,000
P225,000
59
2011
(P135,000)
0
0
2009 NOLCO
Applied NOLCO (2010 & 2012)
Forfeited NOLCO
P500,000
375,000
P125,000
2012
P225,000
225,000
0
Definition
61
5.
62
Includes:
63
Must be reasonable;
Must be for property used or employed in the
business, or temporarily not in use;
Must be charged off during the taxable year; and
Must be supported by a statement submitted
together with the tax return.
64
65
2.
66
2.
3.
67
68
69
Limitations on deductions
Contribution made to a pension trusts may be
claimed as deduction in the following manner:
a) Amount contributed for the normal service cost
- 100% deductible; and
b) Amount contributed for the past service cost
1/10 of the amount contributed is deductible in
year the contribution is made, the remaining
balance will be amortized equally over nine
consecutive years.
70
b)
c)
d)
e)
73
74
Persons liable
Limitations
Tax rate
Tax base
Treatment of excess MCIT
75
Persons liable
Beginning on the 4th taxable year from start of
operations, Domestic and resident foreign
corporations:
Whenever such corporation has zero or
negative taxable income; or
Whenever the amount of MCIT is greater than
the normal income tax due from such
corporation.
76
Application of MCIT
The comparison between the normal income tax
and the MCIT shall be made at the end of every
quarter of the taxable year and at the end of the
taxable year
77
Limitations
78
Tax rate
Tax base
79
A. Trading or Merchandising
Gross sales
Less: sales returns, discounts, and allowances
Net sales
Cost of goods sold:
Invoice cost of the goods sold
Import duties
Freight in transporting the goods
Insurance while the goods are in transit
Gross income
81
B. Manufacturing
Gross sales
Less: sales returns, discounts, and allowances
Net sales
Cost of goods sold:
Raw materials used
Direct labor
Manufacturing overhead
Freight in transporting the goods
Insurance while the goods are in transit
Gross income
82
C. Services
Gross receipts
Less: discounts and allowances
Net receipts
Cost of services:
Salaries and employees benefits of personnel, consultants, and
specialists directly rendering the service
Cost of facilities directly utilized in providing the service such as
depreciation or rental of equipment used and cost of supplies
Includes interest expense in the case of banks and other
financial institutions
Gross income
83
84
GROSS SALES
COST OF SALES
GROSS INCOME
OPERATING EXPENSES
NET INCOME
REGULAR INCOME TAX (30% of Net Income)
MCIT (2% OF Gross Income)
MCIT Balance, beginning of the year
MCIT excess over RCIT
Available MCIT
INCOME TAX DUE FOR THE YEAR
LESS: MCIT TO BE APPLIED
INCOME TAX PAYABLE
2010
1,000,000
400,000
600,000
580,000
20,000
2011
1,100,000
450,000
650,000
620,000
30,000
2012
1,300,000
500,000
800,000
680,000
120,000
6,000
12,000
9,000
13,000
36,000
16,000
6,000
6,000
6,000
4,000
10,000
10,000
10,000
12,000
12,000
13,000
13,000
36,000
10,000
26,000
85
1.
2.
3.
4.
5.
6.
7.
8.
Scope
Withholding tax on wages
Withholding tax table
Computation of withholding tax
Annualized computation of income tax
Nature of expanded withholding tax (EWT)
EWT Rates
EWT computation
87
88
1.
2.
89
3.
4.
91
5.
92
6.
7.
for December)
Annual information returns Annual
information return containing the list of
employees, total compensation and taxes
withheld, must be submitted not later
than January 31.
93
8.
BIR forms
1902 Application for registration for individuals
earning purely compensation income
1601C Monthly remittance return of income taxes
withheld on compensation
1604CF Annual information return of income tax
withheld on compensation and final withholding taxes
2316 Employers certificate of compensation payment
/ tax withheld
1700 Annual income tax return for individuals
earning compensation income
94
95
365
(104)
261
466
121,626
12
10,136
96
365
(52)
313
466
145,858
12
12,155
97
365
365
466
170,090
12
14,174
98
365
28
393
466
182,905
12
15,242
99
SEMI-MONTHLY
1
0.00 + 0%
Over
2
3
4
0.00 + 5% 20.83 + 10% 104.17 +
Over
Over
15% Over
5
354.17 +
20% Over
6
937.50 +
25% Over
7
2,083.33 +
30% Over
8
5,208.33 +
32% Over
2,083
417
2,500
1,250
3,333
2,917
5,000
5,833
7,917
10,417
12,500
20,833
22,917
3,125
4,167
5,208
6,250
3,542
4,583
5,625
6,667
4,375
5,417
6,458
7,500
6,042
7,083
8,125
9,167
8,958
10,000
11,042
12,083
13,542
14,583
15,625
16,667
23,958
25,000
26,042
27,083
101
SEMI-MONTHLY
1
0.00 + 0%
Over
2
3
4
0.00 + 5% 20.83 + 10% 104.17 +
Over
Over
15% Over
5
354.17 +
20% Over
6
937.50 +
25% Over
7
2,083.33 +
30% Over
8
5,208.33 +
32% Over
2,083
417
2,500
1,250
3,333
2,917
5,000
5,833
7,917
10,417
12,500
20,833
22,917
3,125
4,167
5,208
6,250
3,542
4,583
5,625
6,667
4,375
5,417
6,458
7,500
6,042
7,083
8,125
9,167
8,958
10,000
11,042
12,083
13,542
14,583
15,625
16,667
23,958
25,000
26,042
27,083
Mr. Psy, joined the company as a manager on March 1, 2012 with a monthly salary of P50,000. He is married with 3 children.
Semi-monthly salary
Withholding tax:
Tax on 15,625
Tax on over 15,625 (30%)
Net pay
25,000.00
2,083.33
2,812.50
4,895.83
20,104.17
102
Monthly salary
Number of months from March 1 to Dec. 31
Total annual compensation
Less: Personal exemptions (ME3)
Taxable Income
Using annual tax table:
Income Tax Due
Tax on 250,000
Tax on over 250,000 (30%)
Less: Taxes withheld by employer
Semi-monthly withholding tax
X number of periods (10 months)
TAX STILL DUE (REFUNDABLE)
50,000
10
500,000
125,000
375,000
50,000
37,500
4,896
20
87,500
97,917
(10,417)
103
Illustration:
Assuming (A) withholds 15% EWT from its
payments of management fees to (B), a
VAT-registered entity, amounting to
P 1,000,000 (exclusive of VAT).
Monthly Remittance Return of (A)
EWT Due (15% of P 1,000,000)
P 150,000
P 320,000
150,000
P 170,000
104
105
106
TAX
RATE
ATC
IND
CORP
10%
WI 010 WC 010
15%
WI 011 WC 011
10%
WI 020
15%
WI 021
10%
WI 030
15%
WI 031
10%
WI 040
15%
WI 041
10%
WI 050
15%
WI 051
EWT- professional entertainers- if the current year's gross income does not exceed P720,000.00
- if the current year's gross income exceeds P720,000.00
EWT- professional athletes- if the current year's gross income does not exceed P720,000.00
- if the current year's gross income exceeds P720,000.00
EWT- movie, stage, radio, television and musical directors- if the current year's gross income does not exceed P720,000.00
- if the current year's gross income exceeds P720,000.00
EWT- management and technical consultants
- if the current year's gross income is P720,000 and below
- if the current year's gross income exceeds P720,000
107
TAX
ATC
RATE
IND
10%
WI 060
15%
WI 061
10%
WI 070
15%
WI 071
10%
WI 080
15%
WI 081
10%
WI 090
15%
WI 091
5%
WI 100 WC 100
5%
WI 110 WC 110
2%
WI 120 WC 120
CORP
108
TAX
ATC
RATE
IND
CORP
15%
WI 130
10%
WI 140 WC 140
10%
WI 141
10%
WI 151
15%
WI 150
10%
WI 152
15%
WI 153
1%
WI 640 WC 640
of Goods
109
TAX
RATE
ATC
IND
CORP
2%
WI 157 WC 157
1%
WI 158 WC 158
2%
WI 160 WC 160
15%
WI 159
10%
WI 515 WC 515
1%
WI 530
1%
WI 535 WC 535
5%
WI 540 WC 540
1%
WI 610 WC 610
EWT- Income payments on purchases of minerals, mineral products & quarry resources
1%
WI 630 WC 630
of Services
EWT- Income payments made by top 10,000 private corporations to
their local/resident supplier of goods
EWT- Income payments made by top 10,000 private corporations to
their local/resident supplier of services
EWT- additional payments to government personnel from importers, shipping
and airline companies or their agents for overtime services
EWT- commission,rebates, discounts & other similar considerations paid/granted to
independent & exclusive distributors, medical/technical & sales representatives
& marketing agents & sub-agents of multi-level marketing companies
110
111
112
1.
2.
for December)
Annual information returns Annual
information return containing the list of
payees, TIN, amount of income
payments and taxes withheld, must be
submitted not later than January 31.
113
3.
BIR forms
1601E Monthly remittance return of
creditable income taxes withheld (Expanded)
1604E Annual information return of
creditable income taxes withheld (Expanded)
2307 Certificate of creditable tax withheld
at source
114
50,000
6,000
56,000
50,000
10%
5,000
51,000
115
1.
2.
3.
4.
Nature (characteristics)
Coverage (persons liable)
Basis (transactions)
Rate (VAT percentage)
117
118
119
1.
2.
3.
120
1.
2.
3.
121
4.
5.
6.
7.
8.
9.
10.
11.
12.
124
13.
14.
15.
125
16.
17.
18.
19.
20.
21.
127
1.
2.
3.
Export sales
Foreign currency denominated sale to a
non-resident
Sale to person or entities deemed tax
exempt under special law or international
agreement
129
130
131
132
133
134
136
137
138
139
OUTPUT TAX
Sales/receipts inclusive of VAT
Divide by: 100% + VAT rate
Sales/receipts excluding VAT
X VAT rate
LESS: INPUT TAX
Costs/expenses inclusive of VAT
Divide by: 100% + VAT rate
Costs/expenses excluding VAT
X VAT rate
VAT PAYABLE
11,200.00
112%
10,000.00
12%
1,200.00
8,400.00
112%
7,500.00
12%
900.00
300.00
140
141
1.
130,000.00
84,000.00
112%
75,000.00
12%
9,000.00
1,100,000.00
112%
982,142.86
12%
117,857.14
126,857.14
3,142.86
142
2.
130,000.00
84,000.00
112%
75,000.00
12%
9,000.00
1,500,000.00
112%
1,339,285.71
12%
160,714.29
60
2,678.57
11,678.57
118,321.43
143
10,000.00
84,000.00
112%
75,000.00
12%
9,000.00
1,500,000.00
112%
1,339,285.71
12%
160,714.29
60
2,678.57
11,678.57
(1,678.57)
144
12,000.00
1,678.57
50,000.00
112%
44,642.86
12%
5,357.14
2,678.57
9,714.29
2,285.71
145
146
Dr. Vicki Kho received the following amounts (exclusive of VAT) for the month:
From a government hospital
From a private hospital
Total receipts
40,000.00
86,511.60
126,511.60
32%
68%
147
15,181.39
13,003.50
4,111.40
2,800.00
1,311.40
11,692.10
3,489.29
2,000.00
1,489.29
148
1.
2.
3.
4.
5.
150
151
Thank You!