Module 16

Taxation

The process by which governments collect charges from individuals and corporate entities to finance government expenditures and operations.

Government Operations
Education
Healthcare
Infrastructure
Public Safety
Economic Development

Importance of Paying Taxes

National Taxes
Local Taxes

Types of Tax

National Taxes

Support the national government. The BIR collects internal revenue taxes, while the Bureau of Customs collects customs duties.

Local Taxes

Support local government units, or LGUs, such as provinces, cities, municipalities, and barangays.

RA 8424 National Internal Revenue Code of 1997

National Taxes

RA 7160 Local Government Code of 1991

Local Taxes

Capital Gains Tax
Documentary Stamp Tax
Donor’s Tax
Estate Tax
Excise Tax
Income Tax
Percentage Tax
Value Added Tax

Types of National Taxes

Basic Real Property Tax
Franchise Tax
Business of Printing and Publication Tax
Professional Tax
Amusement Tax
Community Tax
Annual Fixed Tax for Delivery Trucks and Vans
Barangay Tax
Barangay Clearance

Local Taxes

Pre-Spanish Era

It all started from the Ancient Filipinos, where they pay their taxes to their Datu or the Chiefs for the protection they gave to them, the tax was termed buwis. Everyone is required to pay their taxes, except for the Datu/Chieftain’s household. Punishment for not paying taxes was also implemented during this period.

Tributo

Tribute collected under Spanish colonial authority.

16-60 years old

Age required to pay tax during Spanish Era

Polo Y Servicio

Refers to compulsory labor.

Cedula

The tribute was abolished and was replaced by the _______, a certificate identifying the taxpayer that needs to be carried all the time.

Indocumentado

Lacking the required identifying documents.

Bureau of Internal Revenue

The American period saw the creation and organization of the ____________.

Customs Office

During the Japanese occupation, the bureau was combined with the _________.

William H. Taft

Associated with the establishment of civilian government.

Luke E. Wright

Civil governor during the creation of the BIR.

July 2, 1904

Date of Reorganization Act No. 1189.

August 1, 1904

BIR formally organized and made operational.

Henry Ide

Secretary of Finance and author of the Internal Revenue Law of 1904.

Blue Master Program

Intended to curb abuses by taxpayers and BIR personnel.

Voluntary Tax Compliance Program

Encouraged professionals to report their actual income and pay the correct taxes.

Tax Account Number

TAN

VAT

Formed part of the 1986 Tax Reform Program, which aimed to simplify tax administration and make the tax system more equitable.

Operation Walang Lagay

Promoted honest collection and discouraged bribery.

EO 127

Dated January 30, 1987, reorganized the BIR under Bienvenido Tan Jr.

Jose Ong

The Tax Administration Program introduced improvements such as the TIN, New Payment Control System, and Simplified Net Income Taxation Scheme.

Action-Centered Transformation Program or ACTS

What was the notable taxation program implemented by Fidel V. Ramos?

Tax Computerization Project

TCP

Beethoven Rualo

During Estrada administration, he served as Commissioner.

Economic Recovery Assistance Payment

The historical program rewarded qualifying taxpayers who paid 20% more than their 1997 tax payments with immunity from audit and investigation under that program.

“Humingi ng Resibo, Manalo ng Libo-Libo”

Institutionalized in 1999, encouraged consumers to request receipts.

Tax Reform for Acceleration and Inclusion.

TRAIN

TRAIN LAW

Also known as Republic Act No. 10963, was introduced to simplify the tax structure while promoting equity. It aims to ease the tax burden on lower-income earners and increase government revenue for infrastructure and social services.

Corporate Tax Reduction
Additional Tax Deduction

The TRAIN Law complements recent corporate tax reforms to encourage economic growth:

Corporate Tax Reduction

The standard corporate income tax rate has been reduced to enhance the competitiveness of Philippine businesses.

Additional Tax Deduction

Incentives for strategic investments and specific operating costs make the Philippines more appealing to investors.

70%

Infrastructure projects

30%

Social programs