EC1B1 - Intro Taxation
EC1B1 - Intro Taxation
EC1B1 - Intro Taxation
1. Inherent Power
It exists without the necessity of any
specific grant of the power by the
Constitution.
2. Legislative Power
It is exercised by the legislature
through the enactment of statutes.
PURPOSE OF
TAXATION
3. It is proportionate in character
4. It is levied of person or property
5. It is levied by the state
3. As to determination of amount
• Specific
• Ad valorem
4. As to purpose
• General, fiscal or revenue
• Special or regulatory
• Regressive
FUNCTIONS OF
INCOME TAX
Income - refers to all wealth which flows into the taxpayer other than as
mere return on capital.
Compensation income
is the
- remuneration received by an employee from
employment or an income earned by an individual as a result of
an employer employee relationship. “Compensation Income
includes among others, salaries, wages, emoluments, honoraria,
bonuses, allowances (transportation, representation,
entertainment, clothing, COLA), fringe benefits (monetary and
non-monetary), fees including director’s fees, taxable pensions
and retirement pay and other income of similar nature”.
Taxable yearthe
- calendar year, or the fiscal year ending during such
calendar year, upon the basis of which the net income is computed.
Professionan
- economic activity which requires the passing of an
appropriate government boards or bars examination.
Occupation - all economic activities not falling under “profession.
Calendar yearyear
- which starts January 1 and ends December 31 of the
year. Individual taxpayers follow this year.
Withholding Tax-specific proportions of personal income deducted from
employees wage by employers and periodically remitted to the
government.
BIR Form 1700 - if the income of the taxpayer is derived purely from
compensation arising from employer-employee relationship.
Failure to pay the full or part of the amount of tax shown on the return, or the
full amount of tax due for which no return is required to be filed on or before
the due date;
Failure to pay the deficiency tax within the time prescribed for its payment in
the notice of assignment.
2. A surcharge of fifty percent (50%) of the tax or of the deficiency tax,
in case any payment has been made on the basis of such return
before the discovery of the falsity or fraud, for each of the following
violations:
Willful neglect to file the return within the period prescribed by the Code or
by rules and regulations; or
4. Compromise penalty.
Substituted Filing of An
Individual’s Income Tax
Return
“Substituted filing” is when the
employer’s annual return (BIR Form 1604C)
may be considered as the “substituted”
Income Tax Return (ITR) of an employee,
inasmuch as the information provided in
his income tax return (BIR Form 1700)
would exactly be the same information
contained in the employer’s annual return
(BIR Form 1604-CF).
DEFINITION OF
INDIVIDUAL TAXPAYERS
Individual taxpayers are natural persons who generally
derive income subject to tax within the jurisdiction of a
taxing authority. These individual taxpayers are further
classified into two major general classifications as citizens
and aliens.
Under the Philippine Constitution, a person acquires
Philippine citizenship when he:
is born (by birth) with father and/or mother as Filipino citizens;
CLASSIFICATIONS OF CITIZENS
Citizens are classified into two categories as Resident
Citizen and Non-Resident Citizen.
10. Arnold Z, a British, left Manila for Europe for a vacation. He has a
re-entry permit.