TAXES

PRESENTED AND PREPARED BY PURCHIA PAGUE ECO – 1 (08719) 10:30 – 12:00 NOON
OBJECTIVES
LEARN the basic DEFINITION of taxes.
KNOW the general Purpose taxes.
RECOGNIZE important TYPES OF TAXES.
DISCOVER other EXAMPLES of taxes.
Discern taxing principles from another.
UNDERSTAND the IMPORTANCE of taxes.
WHAT IS TAX?
an amount of money that a government requires
people to pay according to their income, the
value of their property, etc., and that is used to pay
for the things done by the government.
(Merriam-Webster, 2017)
WHAT IS IT FOR?
It is the Primary means used by the
government sector to obtain the revenue
needed to operate.

It gives the government control over

resources and allocation decisions.
(Salvador, Montaño, Lopez, & Madrazo, 20
MPORTANT TAXES
Income taxes
Sales taxes
wealth taxes
(Salvador, Montaño, Lopez, & Madrazo, 20
INCOME TAXES
Based on the amount of income earned or
received by members of the society.
personal income tax – most common income
tax; comes due for 1st quarter on April 15th
every year.
primary source of tax revenue at a national level.
(Salvador, Montaño, Lopez, & Madrazo, 20
OTHER INCOME TAXES
Corporate profits tax
Taxes placed on income/profit received by
corporations.
Social security tax
Taxes placed on the wage earnings of workers.
gsis
Self-employment tax
individuals who receive income from business or
from practice of profession.
(Salvador, Montaño, Lopez, & Madrazo, 20
INCOME TAXES
Annual income tax return

The annual income

tax return
summarizes all the
transactions
covering the
calendar year of the
taxpayer.
(Salvador, Montaño, Lopez, & Madrazo, 20
ERSONAL EXEMPTIONS
Basic personal expenses
Php50,000.00 mandatory deduction allowed to
individual citizens in the Philippines regardless of the
status.
Additional personal exemptions
Php25,000.00 mandatory deduction for each
qualified dependent child. Maximum: 4 dependent
children or php100,000.00.
(tax and accounting center, 2017)
INCOME TAXES
A. For Individuals Earning Purely Compensation Income and Individuals Engaged in
Business and Practice(Bureau
of Profession.
of Internal Revenue, 2017)

Amount of Net Taxable Income Rate

Over But Not Over
------------------- P10,000 5%
P500 + 10% of the Excess over
P10,000 P30,000 P10,000
P2,500 + 15% of the Excess over
P30,000 P70,000 P30,000
P8,500 + 20% of the Excess over
P70,000 P140,000 P70,000
P22,500 + 25% of the Excess over
P140,000 P250,000 P140,000
P50,000 + 30% of the Excess over
P250,000 P500,000 P250,000
INCOME TAXES
CALCULATION (withholding-tax-table-based)
DETERMINE YOUR TAXABLE
INCOME.
Taxable income = (Monthly Basic Pay + Overtime Pay + Holiday
Pay + Night Differential) - (SSS/PhilHealth/Pag-IBIG deductions -
Tardiness - Absences)

Using your taxable income, compute your income tax by

referring to the Bureau of Internal Revenue (BIR) tax table.
(Santos Jr. & Arciga, 2014)
INCOME TAXES
CALCULATION (withholding-tax-table-based)
Using your taxable income, compute your income tax by referring to the
Bureau of Internal Revenue (BIR) tax table.

(Santos Jr. & Arciga, 2014)

INCOME TAXES
SAMPLE CALCULATION (withholding-tax-table-
based)
DETERMINE YOUR TAXABLE
Taxable income = (Monthly Basic Pay
INCOME. + Overtime Pay + Holiday Pay + Night
Differential - Tardiness- Absences -
Employee A
SSS/Phil-Health/Pag-Ibig deductions)
Civil Status: Married with one (1) dependent. Taxable income = [Php 25,000.00 –
Basic Monthly Pay: Php 25,000.00 (Php 581.30 – Php 312.50 – Php
SSS Contribution (Table): Php 581.30 100.00)]
PhilHealth Contribution (Table): Php 312.50 Taxable income = (Php25,000.00 –
Pag-IBIG Contribution: Php 100.00 Php 993.80)

Taxable income = Php 24,006.20

(Santos Jr. & Arciga, 2014)

INCOME TAXES
SAMPLE CALCULATION (withholding-tax-table-
based)
Using your taxable income, compute your income tax by referring to the
Bureau of Internal Revenue (BIR) tax table.

(Santos Jr. & Arciga, 2014)

INCOME TAXES
SAMPLE CALCULATION
based)
Calculate based on given table
Employee A
Status: "ME1/S1“ (Married with one (1)
dependent.
The highest amount that does not exceed
Employee A's taxable income of P24,006.20 is
P17,917 (ME1/S1 row, Column 6).
The heading of Column 6 reads "1,875.00 + 25%
over."
(withholding-tax-table-
This means Employee A's tax is
P1,875 plus 25% of the difference
of his taxable income (P24,006.20)
and the amount in the table
(P17,917).
Tax = 1,875 + [(24,006.20-17,917) X .25]
= 1,875 + (6,089.2 x .25)
= 1,875 + 1,522.3
Monthly Income Tax = P3,397.30
(Santos Jr. & Arciga, 2014)
SALES TAXES
Also known as excise tax.
indirect tax charged on the sale of a particular good. Indirect
means the tax is not directly paid by an individual consumer.
Taxes placed on the retail sales of almost all
goods purchased.
Major source of revenue for governments.
(Salvador, Montaño, Lopez, & Madrazo, 20
SALES TAXES
Value added tax
tax on consumption levied on the sale, barter,
importation, exchange of
goods/properties/services.
Percentage
tax is a business tax imposed on persons or
entities/transactions.
(Bureau of Internal Revenue, 2017)
LOCAL TAXES
no local taxes imposed on income of individuals
in the Philippines.

certain individuals are required to pay a basic

community tax of PHP 5.00 + annual additional
tax not exceeding PHP 5,000.00, computed at
PHP 1.00 for every PHP 1,000.00 of income.
(Bureau of Internal Revenue, 2017)
WEALTH TAXES
Property taxes – key source of revenue used by
local gov’t to finance education expenditures.
Inheritance tax – a.k.a. estate tax. levied on
assets passed along after death.
Gift tax – a.k.a. donor tax. levied on assets
passed only while living.
(Bureau of Internal Revenue, 2017)(Salvador, Montaño, Lopez, & Madrazo, 20
WEALTH TAXES
Luxury car tax– imposed on whoever is selling
the car but distributors pass it onto the buyers.
Alcohol and tobacco tax– levied on alcoholic
and tobacco goods.
Petroleum and mineral tax– levied on
petroleum (gas), mineral and non-mineral
(coal) taxes. (Salvador, Montaño, Lopez, & Madrazo, 20
TYPES OF TAXES
Proportional – EVERYONE PAYS THE SAME
PERCENTAGE OF INCOME TAX
REGARDLESS
PROGRESSIVEOF INCOME
– MORE LEVEL.=
INCOME
LARGER PERCENTAGE OF INCOME IN
TAXES; INCREASING TAX RATE WITH
REGRESSIVE– MORE INCOME = SMALLER
INCOME.
PERCENTAGE OF INCOME IN TAXES;
DECREASING TAX(Salvador,
RATE Montaño, Lopez, & Madrazo, 20
WITH INCOME.
TYPES OF TAXES
WHY TAX?
Revenue effect
generation of revenue from taxes is
used to undertake government
functions.
Allocation effect
taxes on specific goods/activities to
change
production/consumption/exchange.
(Salvador, Montaño, Lopez, & Madrazo, 20
AXING PRINCIPLES
Ability-to-pay principle
Taxes are based on the
income/resource ownership ability of
the people.
Benefit principle
taxes collected from received benefits
from goods provided by tax revenue.
(Salvador, Montaño, Lopez, & Madrazo, 20
REFERENCES
Bureau of Internal Revenue. (2017, May 8). Income Tax. Retrieved from Bureau of Internal
Revenue: https://www.bir.gov.ph/index.php/tax-information/income-tax.html
Merriam-Webster. (2017, May 8). Definition of Tax. Retrieved from Merriam-Webster:
https://www.merriamwebster.com/dictionary/tax
Salvador, L. S., Montaño, V. S., Lopez, A. A., & Madrazo, N. D. (2015). Introduction to Economics.
Mutya Publishing House.
Santos Jr., R., & Arciga, J. (2014, March 20). Income Tax Calculator. Retrieved from Rappler:
http://www.rappler.com/business/53216-income-tax-calculator
Tax and accounting center incorporated. (2017, May 9). Personal exemptions for income tax.
Retrieved from tax and accounting center incorporated:
http://taxacctgcenter.org/personal-exemptions-for-income-tax-in-the-philippines/
 END OF
PRESENTATION

PRESENTED AND PREPARED BY PURCHIA PAGUE ECO – 1 (08719) 10:30 – 12:00 NOON