EIT Finals

Investment

Investment

The expenditure on capital goods made for the purpose of income regeneration.

The purchase of goods that is not used today but is used in the future to create wealth or income.

Financial Investing

Making money work for you.

Means using your money to buy assets like stocks, bonds, or real estate that have the potential to grow in value over time.

Career Planning

Finding the right career line and staying there.

Leadership

The prerequisite for high performance either personally or collectively

Autonomous Investment

Investment Spending

Expenditure made that is independent of economic growth.

They are investments made for the good of society and not for the goal of making profits.

Not influenced by changes in the level of income or output in the economy.

Induced Investment

Investment Spending

Investment which changes with the changes in the income level.

Positively related to the income level.

Typically driven by changes in consumer demand, business expectations, or government policies that affect overall economic activity.

Gross Investment

Includes both types of investments spending, but net investment only measures new assets rather than replacement assets.

Total amount of investment spending on new capital goods.

Depreciation

Decrease in the value of existing capital assets due to wear, tear, obsolescence, or other factors.

Savings

The amount left over when the cost of a person’s consumer expenditure is subtracted from the amount of disposable income that they earn in a given period of time.

Income

Factors Determining Investment

An increase in this encourages higher investment from both firms and individual consumers.

Interest Rates

Factors Determining Investment

However, a high rate of this can discourage investment because it makes it more expensive to borrow money.

Advance Fee Fraud

Investment Scams

When you’re asked to pay a fee upfront in exchange for a promised investment opportunity or loan, but you never receive the said investment or loan.

Affinity Fraud

Investment Scams

Scammers target members of a specific group, such as a religious or ethnic community, using trust within the group to deceive victims.

Fraudulent Stock Promotions

Investment Scams

False or misleading information is spread to artificially inflate the price of a stock, benefiting the fraudsters who then sell their shares at a profit.

Binary Options Fraud

Investment Scams

Fraudulent platforms promise high returns on binary options trading but manipulate prices or refuse to pay out winnings.

Cryptocurrency Fraud

Investment Scams

Scammers create fake cryptocurrencies or exchanges, tricking people into investing in non-existent or worthless digital assets.

Government Impersonation

Investment Scams

Scammers pose as government officials, promising investment opportunities or threatening legal action to extort money.

High-Yield Investment Programs

Investment Scams

Investors are promised unusually high returns on their investments but end up losing their money when the program collapses.

Internet and Social Media Fraud

Investment Scams

Scammers use online platforms to promote fake investment opportunities or spread false information to manipulate markets.

Microcap Fraud

Investment Scams

Scammers manipulate the stock prices of small, thinly traded companies, often using false or misleading information.

Ponzi Scheme

Investment Scams

A fraudulent scheme that involves paying existing investors in a nonexistent enterprise with the funds collected from new investors.

Pre-IPO Investment Scam

Investment Scams

Scammers offer shares of private companies before they go public at inflated prices, but the shares are often worthless or nonexistent.

Theft or Misappropriation

Investment Scams

Brokers or financial advisors steal money from their clients’ accounts for personal use.

Broker Embezzlement

Investment Scams

Brokers misuse clients’ funds for their personal expense or to cover trading losses.

Hedge Fund-Related Fraud

Investment Scams

Hedge fund managers mislead investors about the fund’s performance or strategy to attract investments or charge excessive fees.

Late-day Trading

Investment Scams

Illegal practice of placing orders to buy or sell mutual fund shares after the market closes, based on news or events occurring after the close.

Recovery Room Scheme

Investment Scams

Scammers pose as recovery agents, promising to help victims recover money lost in previous investment scams in exchange for upfront fees.

Annuity Fraud

Investment Scams

Deceptive sales tactics are used to sell unsuitable or fraudulent annuity products to investors.

Prime Bank Investment Scam

Investment Scams

Scammers promise access to exclusive investment opportunities with top-tier banks, but the investments are often nonexistent or fraudulent.

Promissory Note Scam

Investment Scams

Investors are promised high returns on promissory notes, but the notes are usually worthless or part of a Ponzi scheme.

Pump-and-Dump Scheme

Investment Scams

Fraudsters artificially inflate the price of a stock by spreading false or misleading information, then sell their shares at a profit before the price crashes.

Pyramid Scheme

Investment Scams

Participants are promised high returns for recruiting new members, but the scheme collapses when it becomes unsustainable.

Boiler Room Scam

Investment Scams

They tend to call older and more vulnerable people using aggressive tactics to get them to invest in scheme which they know are worthless or don’t even exist.

Real Estate Scam

Investment Scams

Scammers use false or misleading information to trick investors into buying properties that are overvalued, in poor condition, or encumbered by liens or debts.

Charles Ponzi

Who was Ponzi Scheme named after?

Multilevel Marketing

A sales strategy in which the salesforce is financially incentivized to recruit and sell inventory to additional salespeople, and which can sometimes be construed as an illegal pyramid scheme.

Consumption

In economics, it is the use of goods and services by households.

The act of using goods or services to satisfy our needs and wants.

Consumption Expenditure

The purchase of goods and services by the use of households.

The money we spend on goods and services for consumption.

Indirect or Productive Consumption

Type of Consumption

When the goods are not meant for final consumption, but instead, are meant for producing other goods which will satisfy human wants.

Direct or Final Consumption

Type of Consumption

When the goods satisfy human wants directly and immediately.

It is when consumers purchase items for their own personal enjoyment or use.

The Basic Circular Model

A simplified representation of how money, goods, and services flow through an economy.

The Consumption Function

Depends on National Income.

Represents the functional relationship between total consumption and gross national income.

Shows how change in income affect consumption levels.

Marginal Propensity to Consume

The proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving.

Marginal Propensity to Save

Represents the proportion of an additional unit of income that a household or individual will save instead of spending on consumption.

Positive Shift

Shifts in the Consumption Curve

Increase in real assets and money holding.

Increase in expectation of future prices.

Curve to the right.

Negative Shift

Shifts in the Consumption Curve

Increase in interest rates.

Increase in taxes.

Curve to the left.

RA 10963

Tax Reform for Acceleration and Inclusion (RA _)

December 19, 2017

On this day, President Rodrigo R. Duterte signed into law Package 1 of the Comprehensive Tax Reform Program (CTRP) also known TRAIN as RA 10963.

Take-home Pay

Amount of your wages or salary that is left after the income tax and other payments have been subtracted.

Net Donations

Refer to the total amount of donations or gifts made by an individual or organization after deducting any applicable expenses or fees associated with those donations.

Excise Tax

Tax on the production, sale, or consumption of a commodity in a country.

Transportation Share

Is the daily average of jeepney and bus operation in Metro Manila based on the National Tax Research Center computation.

Electricity Share

Is based on the Department of Energy power statistics.

Changes on Excise Tax on Sugar-Sweetened Beverages

A health measure meant to discourage the consumption of sugar-sweetened beverages due to their high-sugar content, while encouraging industry players to develop healthier product alternatives.

Republic Act 10754

An Act Expanding the Benefits and Privileges of Persons with Disabilities.

Output Tax

VAT that you charge your customers when you sell goods or services.

Input Tax

VAT you pay on the goods and services you purchase for your business.

Vat Payable

The amount of VAT that you owe to the government after deducting your input tax from your output tax.

• Output Tax - Input Tax

Vat Credit

The amount of input tax that you can deduct from the output tax you owe.

VAT Inclusive

Displayed price already includes the VAT.

VAT Exclusive

Displayed price does not include the VAT.

Fuel Marking

Implements marking of taxed petroleum products and outlines procedures and penalties.

Registry of Petroleum Manufacturers and Importers

Mandates DOF to maintain a registry of petroleum entities and their products.

Tax Incentive Report

Requires submission of tax incentive reports by cooperatives to BIR and DOF.

Simplified Income Tax Returns

Limits individual and corporate tax returns to 4 pages with specified information.

Sweetened Beverages Labeling

FDA mandates unique labeling for sweetened beverages.

Audit Threshold

Implements electronic sales reporting for exporters and Large Taxpayers within 5 years.

Tax Law

Body of rules passed by the legislature by which the government acquires a claim on taxpayers to convey, transfer, and pay to the public authority.

Taxes

The enforced proportional contributions from persons and property levied by the law-making body of the State by virtue of its sovereignty for the support of the government and all public needs.

Build, Build, Build Project

Encompassess all the infrastructures in the Philippines.

• It was designed to make up for the inadequacies in the country’s dismal state of infrastructure.

Bureau of Internal Revenue

Mandated to comprehend the assessment and collection of all national internal revenue taxes, fees, and charges so as to promote a sustainable economic growth.

Taxpayer

Any person subject to tax whose sources of income is derived from within the Philippines.

Taxpayer Identification Number

Required for any individual taxpayer.

RA 8424

Comprehensive Tax Reform Act of 1997

Taxable Year

The calendar year or the fiscal year that covers an accounting period of 12 months ending on the last day of any month other than December.

Constitutional Limitations

• Restrictions in the constitution or implied from its provisions.

• Typically designed to safeguard individual rights, prevent abuse of power, and ensure that tax policies are consistent with constitutional principles.

Inherent Limitations

• Restricts the power although they are not embodied in the constitution.

• Limitations that arise from economic, practical, and social factors that influence the effectiveness and legitimacy of taxation as a revenue-raising tool.

Tax Evasion

• An illegal practice where a person or entity intentionally does not pay due taxes.

• Fraudulent tax practice where a taxpayer adopts illegal measures for refraining from tax liability.

Tax Avoidance

Legal methods used by a taxpayer to minimize the amount of income tax owed.

Shifting

Transfer of tax burden by one on whom the tax is assessed to another.

Transformation

A method by which the manufacturer or producer upon whom the tax is imposed pays the tax and strives to recover such expenses through lower production costs without sacrificing the quality of the product.

Capitalization

Reduction in the selling price of income producing property by an amount equal to the capitalized value of future taxes that may be paid by the purchaser.

Exempt Sales

• Exempt from VAT.

• Typically involve essential goods or services considered vital for societal well-being or are deemed as necessities.

Zero-Rated Sales

• Subject to zero percent VAT rate.

• Typically applied to goods or services that are meant for export or are part of international trade as it allows businesses to claim input VAT credits while remaining competitive in global markets.

Taxable Sales

• Subject to 12% VAT rate.

• Typically involve most commercial transactions where goods or services are sold domestically and are not classified as exempt or zero-rated.

Tax Exclusive Method

Gross Sales/Gross Sales Receipt (excluding VAT) x 12% = VAT

• The VAT is presumed not yet included in the tax base amount.

Tax Inclusive Method

Invoice Price/Invoice Receipts (including VAT) x 12/112 = VAT

• The VAT is presumed to be already included in the tax base amount.

Transactions Deemed Sale

Gross Value of Goods "deemed sold" (excluding VAT) x 12% = VAT

• Transfer, use or consumption not in the course of business of goods or properties originally intended for sale or for use in the course of business.

Withholding Tax

• The tax deducted by an employer from an employee's income.

• The amount deducted from the employee’s income is not fixed.

Compensation

The tax withheld from income payments to individuals arising from an ER-EE relationship.

Withholding Agent

Any person or entity who is in control of the payment subject to withholding tax and therefore is required to deduct and remit taxes withheld to the government.

Compensation or Wages

Refers to all remuneration for services performed by an employee for his employer under ee-er relationships unless exempted by the NIRC and pertinent laws