#PHTax | The taxes we pay




The purpose of taxation is to provide funds for the general welfare  and protection of its citizens and to enable it to finance its multifarious activities. It protects local industries against foreign competition through imposition of high customs duties on imported goods. It also aims to reduce inequalities in wealth and income by imposing progressively higher tax rates.

Nothing is free in this country. Almost all transactions require tax payments.

Since the the power to tax is the strongest of all the powers of the government, the legislature is free to select the subjects or objects to be taxed

The basis of taxation is found on the reciprocal duties of protection and support between the State and the inhabitants. The citizens pay the portion of taxes demanded in order that he may be secured in the enjoyment of benefits of an organized society.

We list down all kinds of taxes we pay.

INCOME TAX

TIPS: How to compute your income tax?

This is tax on a person's income or profit arising from property, practice of profession, or conduct of trade or business. It is the amount of money coming to a person or corporation within a specified time, whether as payment for services, interest, or profits from investment.

CAPITAL GAINS TAX

This is the tax an individual or business pays for when they sell capital asset. The term 'capital assets' is defined as a property held by the taxpayer but does not include stock in trade or other property included in inventory if on hand at the close of the taxable year, property primarily for sale to customers in the ordinary course of trade or business, personal property used in the trade or business and subject to depreciation, and real property used in the trade or business.

VALUE-ADDED TAX (VAT)

It is a general consumption tax that requires a 12% additional tax on the sales price of goods or services by VAT-registered seller or seller required by law to be under VAT system. A taxpayer's registration for VAT business becomes compulsory when his expected annual gross sales or receipts exceed P1,919,500 or he has realized gross receipts or sales of more than the threshold. Persons with taxable business transactions that do not exceed P1,919,500 per year has the option to register under the VAT system. It is passed on to consumers. Check your receipt or invoice if the seller is VAT registered or not.

PERCENTAGE TAX

It is imposed on persons who sell or lease goods, properties or services in the course of their business, are not VAT-registered, and whose gross annual sales and/or receipts do not exceed P1,919,500. Domestic carriers and keepers of garages, franchise, overseas dispatch or message from the Philippines, bank and non-bank financial institutions, life insurance companies, amusement places, and sale of shares of stock in local stock exchange are subject to percentage taxes. The provision of the Revenue Regulations exempting businesses with annual gross sales of P100,00 and below is now deleted. Its removal would effectively make the sales or receipts subject to business tax.

ESTATE TAX

It is a tax on the transfer of the net estate of the decedent. Net estate is equal to the difference between gross estate and deductions. The gross estate consists of all properties owned by a decedent at the time of his death, however, it shall not include the separate properties of the surviving spouse. The gross estate is to be reduced by the decedent's debts, funeral expenses, share of the surviving spouse, and other permissible deductions to arrive at a net taxable estate.

DONOR'S TAX

Gifts or voluntary transfers of property or right from one person to another for free are also taxed.

EXCISE TAX

Like VAT, an excise tax is another type of indirect tax imposed on the producer but passed on to the consumer. It is generally imposed on harmful or non-essential goods manufactured or produced in the Philippines for domestic sale, consumption or for any other disposition, including imported goods.

DOCUMENTARY STAMP TAX

It is levied upon a right or privilege. It is applicable only to transactions effected and consummated within the Philippines. Although the documentary stamp tax is affixed on the document, it is the transaction that is being taxed and not the document.

WITHHOLDING TAX

It is a tax that taxpayers withhold for the transactions with the Philippine government or any of its political subdivisions, instrumentality or agencies, including government owned and controlled corporations. It is also the income tax that employers withhold from employees' salaries, and pay directly to government.

LOCAL TAXES

Local taxes are the ones levied by local government units (LGUs). Provinces are authorized to impose taxes on the transfer of real property ownership, business of printing and publication, franchise tax, quarry resources, profession, amusement, and delivery truck or van of manufacturers or producers and wholesalers, dealers of certain products such as distilled spirits and soft drinks. Municipalities may levy taxes, fees and charges that are levied by provinces. Municipalities are also authorized specifically to impose fixed annual tax on the gross receipts of contractors, banks and other financial institutions, sale of merchandise or article of commerce. Cities have the broadest tax powers, embracing both specific and general tax powers as provinces and municipalities may impose. There are also common local taxes like community, professional and real estate tax. Barangays may levy to the exclusion of the other LGUs the taxes on stores or retailers with fixed business establishment, and services rendered in connection with the regulation of the use of barangay-owned properties or services facilities.


Author: Paul Michael Camania Jaramillo

Student| Youth Advocate | Leader | Environmental Advocate | Writer | Blogger | RH Advocate

I am neither especially clever nor especially gifted. I am only very, very curious. — Albert Einstein
I write about darkness because I want to show the light — Jose Rizal


He has been involved in different advocacy and defending human rights. As a blogger, writer, netizen and an advocate, he has found focus & interest on sexuality & reproductive health, deaf rights & legal access and youth development, leadership, environment advocacy, issues in the nation and in the world, religion, culture and human rights At the age of 14, he has fully embraced the call of leadership.

He was a Lussoc National High School 'The Sring' and 'Ang Batis' news editor. A radical visionary leader, he has led organizations of the Supreme Student Government, Science Club, Youth for Environment in Schools Organization, Interact Club, Math Club, Philippine National Red Cross and other organizations in their institution. He was also awarded as a distinguished student leader as a former officer of the Supreme Student Government and received President Gloria Macapagal Arroyo Campus Journalism Award. He attended two National Leadership Training for the Student Government Officers, Rotary Youth Leadership Awards, Youth for Environment Summer Camp, Science Leaders Congress and Schools Press Conference. Joined and won in the several contests from their school to the national level.

He is an organist and an officer of the Church of Christ (Iglesia Ni Cristo).

Paul is a BS Accountancy student at the Northwestern University. He works for CBAA Biznews and  The Blog of Innocence: SilentVoice Points. He is the College Editors Guild of the Philippines-Ilocos Chairperson. CEGP is the oldest and broadest intercollegiate alliance of student publications in the Asia-Pacific.


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