SELF-PACED LEARNING MODULE

COLLEGE DEPARTMENT

MODULE 2
Subject:

INCOME TAXATION

AISAT COLLEGE – DASMARIÑAS, INC.

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 Unit Income Taxation
Module Concepts of Tax
AE26-IT Income Taxation Units: 3 Page |2

INFORMATION SHEET PR-2.1.1

“CONCEPTS OF TAXATION”

Essential Characteristics of Tax

As indicated in the definition, they are the following:

(1) It is an enforced contribution. -A tax is not voluntary payment or donation and its imposition is in no
way dependent upon the will of assent of the person taxed;

(2) It is generally payable in money: - Unless qualified by law, the terms "taxes" or "tax" is usually
understood to be a pecuniary burden – an exaction to be discharged alone in money which must be in
legal tender;

(3) It is proportionate in character. - A tax is laid by some rules of apportionment according to which the
persons or property share the public burden. It is ordinarily based on the ability to pay;

(4) It is levied on persons or property. - A tax may also be imposed on acts or transaction or contracts. In
each case, however it is only person who pays the tax;

(5) It is levied by the state which has jurisdiction over the person or property. - The persons and property
must be subject to the jurisdiction of the taxing state. This is necessary in order that tax can

boundary lines; be enforced. The taxing power of a state necessarily stops at its

(6) It is levied by the law making body of the state. - The power to tax is a legislative power which only
the legislative body (national or local) can exercise through the enactment of statutes or ordinances. The
power to tax is also granted by the Constitution and by law to local government units (I.e., provinces,
cities, municipalities and barangays) but the power of the latter is subject to such limitations as may be
provided by law; and

(7) It is levied for public purposes. - The taxation involves and a tax constitute, a charge or burden
imposed to provide income for public purposes - the support of the government, the administration of
the law, or the payment of public expenses.

Objects of Taxation

Objects of taxation may refer to the subject to which taxes are imposed. Generally, taxes are imposed
on the following:

1. Persons, whether natural or juridical persons

a. Natural person - refers to individual taxpayers.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:
MODULE 1st – 3rd
PRELIM
2 Meeting MS. EMERITA S. MERCADAL MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Income Taxation
Module Concepts of Tax
AE26-IT Income Taxation Units: 3 Page |3

b. Juridical person – includes corporations, partnership, and any association

2. Properties whether real, personal, tangible or intangible properties.

3. Excise objects, such as:

a. Transaction -- business, profession, selling, servicing.

b. Privilege - gratuitous transfer, donation.

c. Right - power, faculty or demand inherent in one person and incidental to another.

d. Interest - an advantage accruing from anything.

Kinds of taxes under existing laws

They are:

1. National taxes - Those imposed by the National government under the National Internal
Revenue Code and other laws particularly the Tariff and Customs Code; and

2. Local taxes - those imposed by the local governments to meet particular needs under the
Local government Code, such as real property tax and the community tax (formerly residence tax).

Kinds of national internal revenue taxes

1. The following are deemed to be national internal revenue taxes:

a. income tax;

b. estate and donor's taxes;

c. value-added tax;

d. other percentage taxes;

e. excise taxes on certain goods;

f. documentary stamp taxes; and

g. other taxes as are or hereafter may be imposed and collected by Bureau of Internal
Revenue

2. The following are, among others, the national taxes imposed by special laws:

a. custom duties;

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
2 Meeting MS. EMERITA S. MERCADAL MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Income Taxation
Module Concepts of Tax
AE26-IT Income Taxation Units: 3 Page |4

b. travel tax;

c. energy tax, and

d. private motor vehicle tax.

Situs of Taxation

Situs is the place of taxation. It is the tax jurisdiction that has the power to levy taxes upon tax object.
Situs rules serve as the basis of reference in gauging whether the tax object is within or outside the tax
jurisdiction of the taxing authority.

Double taxation

Double taxation means a sovereign act of taxing twice for the same purpose in the same year upon the
same property or activity of the same person, when it should be taxed once for the same purpose and
same character of tax.

Elements of Double Taxation

1. Primary elements: same object

2. Secondary elements

a. Same type of tax

b. Same purpose of tax

c. Same taxing jurisdiction

d. Same tax period

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
2 Meeting MS. EMERITA S. MERCADAL MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Income Taxation
Module Concepts of Tax
AE26-IT Income Taxation Units: 3 Page |5

Types of Double Taxation

1. Direct double taxation - this occurs when all the elements of double taxation exist for both
impositions.

Example:

a. An income tax of 10% on monthly sales and a 2% income tax on the annual sales (total on
monthly sales).

2. Indirect double taxation - this occurs when at least one of the secondary elements of double
taxation is not common for both impositions.

Examples:

a. The national government collects income tax from taxpayer on his income while the local
government collects community tax upon the same income.

b. The national government levies business tax on the sales or gross receipts of business while
local government levies business tax upon the same sales or receipts.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
2 Meeting MS. EMERITA S. MERCADAL MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Income Taxation
Module Concepts of Tax
AE26-IT Income Taxation Units: 3 Page |6

STUDENT NAME: __________________________________ SECTION: __________________

PERFORMANCE TASK PR-1.1.1

PERFORMANCE TASK TITLE: Q&A ON CONCEPTS OF TAX

PERFORMANCE OBJECTIVE: After completing this performance task, you were being knowledgeable in
different concepts of tax including the characteristics of tax, objects of taxation, kinds of
taxes, etc.
TOOLS AND MATERIALS: Pen and paper

EQUIPMENT : none

ESTIMATED COST : none

PROCESS / PROCEDURE
Based on your understanding, answer the following questions:
1. What are the essential characteristics of tax? Briefly discuss.
2. Difference between National taxes and Local Taxes
3. Based on your understanding about Tax, what is TAX and why do we need to pay tax?
4. Why do Businesses need to pay tax to the government?
5. Download the latest BIR Tax Rate Table, BIR Withholding Tax Table, E-birforms software and
BIR form 1701 from the BIR websitewww.bir.gov.ph (Attach with your answers)

Instructions :
You may prepare it either typed written or written report. Write it legibly.
Tasks must be neat and presentable. Avoid erasures.

PRECAUTIONS : •Avoid copy and paste performance task of other

ASSESSMENT METHOD: PERFORMANCE TASK CRITERIA CHECKLIST

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
2 Meeting MS. EMERITA S. MERCADAL MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Income Taxation
Module Concepts of Tax
AE26-IT Income Taxation Units: 3 Page |7

STUDENT NAME: _____________________________________ SECTION: ___________

PERFORMANCE TASK CRITERIA CHECKLIST PR-1-1.1

Did I … CRITERIA SCORING
1 2 3 4 5
1. Logic and key points. All corresponding ideas about the topic are
logically presented.
2. Content. Content of the essay flows and is passionate.
3. Cleanliness. Very clean and well presented.
4. Spelling and Grammar. No error in spelling and grammar.
5. Word usage. Word choice and usage are professionals.

GRADES

Teacher’s Remarks □ Quiz □ Recitation □ Project

5 - Excellently Performed
4 - Very Satisfactory Performed
3 - Satisfactory Performed
2 - Fairly Performed
1 - Poorly Performed

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
2 Meeting MS. EMERITA S. MERCADAL MR. WILBERT A. MAÑUSCA
Subject Teacher School Director