The document discusses the different types of taxes in the Philippines, including both national taxes levied by the Bureau of Internal Revenue such as income tax, value added tax, and estate tax, as well as local taxes imposed by cities, municipalities, and barangays like real property tax, business permits, and community tax. National taxes provide revenue for the national government while local taxes fund activities of local government units. The taxes are designed to raise funds from citizens, businesses, and property owners to support public services and infrastructure projects.

1. Introduction
to
Taxation
By: Christian Gravador

2. Taxation
• system of raising money to finance government.
• All governments require payments of money—taxes—
from people.
• Governments use tax revenues to pay soldiers and
police, to build dams and roads, to operate schools and
hospitals, to provide food to the poor and medical care
to the elderly, and for hundreds of other purposes.
Without taxes to fund its activities, government could
not exist.
• Taxation is the most important source of revenues for
modern governments, typically accounting for 90
percent or more of their income.

4. Concept of Taxation
• Taxation is the inherent power of the state to
impose and demand contribution upon
persons, properties, or rights for the purpose
of generating revenues for public purposes.
• Taxes are enforced proportional contributions
from persons and property levied by the
lawmaking body of the state by virtue of its
sovereignty for the support of the government
and all public needs

5. Essential characteristics of tax
1. it is an enforced contribution
2. it is generally payable in money.
3. It is proportionate in character, usually based on the
ability to pay
4. it is levied on persons and property within the
jurisdiction of the state
5. it is levied pursuant to legislative authority, the power
to tax can only be exercised by the law making body
or congress
6. it is levied for public purpose
7. it is commonly required to be paid a regular intervals.

6. Types of Taxes in the Philippines
There are many different kinds of taxes in the
Philippines. But we can group them into two
basic types, namely, national taxes and local
taxes. National taxes are those that we pay to
the government through the Bureau of
Internal Revenue.

7. National Taxes
• National taxation is based on the National
Internal Revenue Code of 1997 or the Republic
Act No. 8424 otherwise known as the Tax
Reform Act of 1997, as amended. The import
and export tariffs levied by the Bureau of
Customs under Republic Act No. 1937
otherwise known as the Tariff and Customs
Code of the Philippines (as amended) can also
be considered as national government taxes
or duties.

8. National Taxes
• Capital Gains Tax – is a tax imposed on the gains
presumed to have been realized by the seller from the
sale, exchange, or other disposition of capital assets
located in the Philippines, including pacto de retro
sales and other forms of conditional sale.
• Documentary Stamp Tax – is a tax on documents,
instruments, loan agreements and papers evidencing
the acceptance, assignment, sale or transfer of an
obligation, rights, or property incident thereto.
Examples of documentary stamp tax are those that are
charged on bank promissory notes, deed of sale, and
deed of assignment on transfer of shares of corporate
stock ownership

9. National Taxes
• Donor’s Tax – is a tax on a donation or gift, and is
imposed on the gratuitous transfer of property
between two or more persons who are living at the
time of the transfer. Donor’s tax is based on a
graduated schedule of tax rate.
• Estate Tax – is a tax on the right of the deceased
person to transmit his/her estate to his/her lawful heirs
and beneficiaries at the time of death and on certain
transfers which are made by law as equivalent to
testamentary disposition. Estate tax is also based on a
graduated schedule of tax rate.

10. National Taxes
• Income Tax – is a tax on all yearly profits arising from
property, profession, trades or offices or as a tax on a
person’s income, emoluments, profits and the like.
Self-employed individuals and corporate taxpayers pay
quarterly income taxes from 1st quarter to 3rd quarter.
• Percentage Tax – is a business tax imposed on persons
or entities who sell or lease goods, properties or
services in the course of trade or business whose gross
annual sales or receipts do not exceed the amount
required to register as VAT-registered taxpayers.
Percentage taxes are usually based on a fixed rate.
They are usually paid monthly by businesses or
professionals.

11. National Taxes
• Value Added Tax – is a business tax imposed and
collected from the seller in the course of trade or
business on every sale of properties (real or personal)
lease of goods or properties (real or personal) or
vendors of services. It is an indirect tax, thus, it can be
passed on to the buyer, causing this to increase the
prices of most goods and services bought and paid by
consumers.
• Excise Tax – is a tax imposed on goods manufactured
or produced in the Philippines for domestic sale or
consumption or any other disposition. It is also
imposed on things that are imported.

12. National Taxes
• Expanded Withholding Tax – is a kind of withholding tax
which is prescribed only for certain payers and is creditable
against the income tax due of the payee for the taxable
quarter year. Examples of the expanded withholding taxes
are those that are withheld on rental income and
professional income.
• Final Withholding Tax – is a kind of withholding tax which is
prescribed only for certain payers and is not creditable
against the income tax due of the payee for the taxable
year. Income Tax withheld constitutes the full and final
payment of the Income Tax due from the payee on the said
income. An example of final withholding tax is the tax
withheld by banks on the interest income earned on bank
deposits.

13. Local taxes
the local government taxation in the Philippines
are based on Republic Act 7160 or otherwise
known as the Local Government Code of
1991, as amended. These taxes, fees or
charges are imposed by the local government
units, such as provinces, cities, municipalities,
and barangays, who have been given the
power to levy such taxes by the code.

14. • Tax on Transfer of Real Property Ownership – tax
imposed on the sale, donation, barter, or on any
other mode of transferring ownership or title of
real property.
• Tax on Business of Printing and Publication – tax
on the business of persons engaged in the
printing and/or publication of books, cards,
posters, leaflets, handbills, certificates, receipts,
pamphlets, and others of similar nature.

15. Local taxes
• Franchise Tax – tax on businesses enjoying a franchise,
at the rate not exceeding fifty percent (50%) of one
percent (1%) of the gross annual receipts for the
preceding calendar year based on the incoming
receipt, or realized, within its territorial jurisdiction.
• Tax on Sand, Gravel and Other Quarry Resources – tax
imposed on ordinary stones, sand, gravel, earth, and
other quarry resources, as defined under the National
Internal Revenue Code, as amended, extracted from
public lands or from the beds of seas, lakes, rivers,
streams, creeks, and other public waters within its
territorial jurisdiction.

16. Local taxes
• Professional Tax – an annual professional tax
on each person engaged in the exercise or
practice of his profession requiring
government examination.
• Amusement Tax – tax collected from the
proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia,
and other places of amusement.

17. • Annual Fixed Tax For Every Delivery Truck or Van of
Manufacturers or Producers, Wholesalers of, Dealers,
or Retailers in, Certain Products
• Tax on Business – taxes imposed by cities,
municipalities on businesses before they will be issued
a business license or permit to start operations based
on the schedule of rates prescribed by the local
government code, as amended. Take note that the
rates may vary among cities and municipalities. This is
usually what businesses pay to get their Business
Mayor’s Permit.

18. Local taxes
• Fees for Sealing and Licensing of Weights and
Measures – fees for the sealing and licensing of
weights and measures at such reasonable rates as shall
be prescribed by the sangguniang bayan of the
municipality or city.
• Fishery Rentals, Fees and Charges – rentals, fees or
charges imposed by the municipality/city to grantees
of fishery privileges in the municipal/city waters, e.g.,
fishery privileges to erect fish corrals, oysters, mussels
or other aquatic beds or bangus fry areas and others as
mentioned in the local government code, as amended.

19. Local taxes
• Community Tax – tax levied by cities or
municipalities to every inhabitant of the
Philippines eighteen (18) years of age or over
who has been regularly employed on a wage or
salary basis for at least thirty (30) consecutive
working days during any calendar year, or who is
engaged in business or occupation, or who owns
real property with an aggregate assessed value of
One thousand pesos (P1,000.00) or more, or who
is required by law to file an income tax return.

20. Local taxes
• Taxes that may be levied by the barangays on stores
or retailers with fixed business establishments with
gross sales of receipts of the preceding calendar year
of Fifty thousand pesos (P50,000.00) or less, in the
case of cities and Thirty thousand pesos (P30,000.00)
or less, in the case of municipalities, at a rate not
exceeding one percent (1%) on such gross sales or
receipts.
• Service Fees or Charges – fees or charges that may be
collected by the barangays for services rendered in
connection with the regulations or the use of
barangay-owned properties or service facilities, such as
palay, copra, or tobacco dryers.

21. Local taxes
• Barangay Clearance – a reasonable fee
collected by barangays upon issuance of
barangay clearance – a document required for
many government transactions, such as when
applying for business permit with the city or
municipality.

22. Reference:
Bureau of Internal Revenue, Department of
Republic Act No. 8424 (as amended), and
Republic Act 7160 (as amended), Republic Act
No. 1937 (as amended).