Documente Academic
Documente Profesional
Documente Cultură
ACADEMICS DEPARTMENT
http://www.facebook.com/atlas.ue
0915-1049090 & 0905-2101285
ATLAS 2012-2013
TAXATION
KINDS OF DONATION:
DONATION MORTIS CAUSA takes effect upon the death of the donor. It
partakes of the nature of a testamentary disposition and shall be governed by the
law on succession
DONATION INTER VIVOS intended by the donor to take effect during his
lifetime. The delivery of the property may be postponed, however, until the
donors death. The donors tax is imposed on donation inter vivos.
ATLAS 2012-2013
TAXATION
Tangible Personal
Properties
Intangible Personal
Properties
Real Properties
RULE OF RECIPROCITY:
a. When there is reciprocity The intangible personal properties situated in
the Philippines given as gifts by a non-resident alien donor are not
subject to donors tax.
b. When there is no reciprocity The intangible personal properties
situated in the Philippines given as gifts by a non-resident alien donor are
subject to donors tax.
ATLAS 2012-2013
TAXATION
THE TAX
PLUS
OF EXCESS
SHALL BE
OVER
Exempt
100,000
0
2%
100,000
200,000
2,000
4%
200,000
500,000
14,000
6%
500,000
1,000,000
44,000
8%
1,000,000
3,000,000
204,000
10%
3,000,000
5,000,000
404,000
12%
5,000,000
10,000,000
1,004,000
15%
10,000,000
When the donee or beneficiary is stranger, the tax payable shall be thirty
percent (30%) of the net gifts.
ATLAS 2012-2013
BUT NOT
OVER
100,000
200,000
500,000
1,000,000
3,000,000
5,000,000
10,000,000
TAXATION
FORMAT OF COMPUTATION:
STRANGER RELATIVE
Total (gross) gifts
xxx
xxx
Less: Deductions (Exemptions)
xxx
xxx
Total net gifts
xxx
xxx
Add: Prior net gifts
xxx
xxx
Total net gifts subject to tax
xxx
xxx
Tax Due
xxx
xxx
Total tax due
xxx
Less: Tax credits/payments
Payments for prior gifts
(xxx)
Foreign donors tax paid
(xxx)
Tax Payable (overpayment)
xxx
Net gift shall mean the net economic benefit from the transfer that
accrues to the donee
Every donation between the spouses during the marriage shall be void
except for moderate gifts, which the spouse may give each other on the
occasion of any family rejoicing, and donation mortis causa.
The donors tax shall not apply unless and until there is a completed gift.
Only resident or citizen donors are allowed donors tax credit. Because
property in foreign country, when donated by a resident or citizen donor, pays a
foreign donors tax and the Philippine donors tax, foreign donors tax credit
offers a relief against the heavy burden of two taxes to pay.
The tax credit allowed shall be lower amount between the actual donors
tax in the foreign country and the limit. Limit is computed using the formula:
LIMIT = (Net gifts, foreign country/ Net gifts, world) x Philippine
donors tax
Where donor taxes were paid in two or more foreign countries, the tax credit
is computed as follows:
a.
Determine the limitation A, which is the total amount allowed for
each foreign country. The amount allowed is the lower amount between
actual donors tax paid to a foreign country and limit;
ATLAS 2012-2013
TAXATION
b.
Determine the limitation B, which is the lower amount between
the total actual donors taxes paid to all the foreign countries and the limit
for all the foreign countries;
c.
Determine the final tax credit allowed, which is the lower amount
between Limitation A, and Limitation B.
For a foreign donors tax paid to a foreign country, a credit is allowed to reduce
the Philippine donors tax to pay, under the following formula:
One
foreign
country
Two or
more
foreign
countries
Limit
xxx
Actual foreign donors tax
xxx
Allowed (lower between actual and limit)
xxx
Limit A by country
xxx
Limit B by total
xxx
Limit [lower between Limit A and B]
xxx
Actual total foreign donors taxes
xxx
Allowed tax credit (lower between allowed limit and actual total
foreign donors taxes) xxx
ADMINISTRATIVE PROVISIONS:
Filing of Return and Payment of tax Requirements any individual who
makes any transfer by gift (except those which, under Section 101, are exempt
from the tax) shall, for the purpose of the said tax, make a return under oath in
duplicate. The return shall set forth:
a.
Each gift made during the calendar year which is to be included in
computing net gifts
b.
The deductions claimed are allowable
c.
Any previous net gains made during the same calendar year
d.
The name of the donee
e.
Such further information as may be required by rules and
regulations made pursuant to law.
Time of Filing and Payment of Tax the return of the donor required in this
Section shall be filed within thirty (30) days after the date the gifts is made
and the tax due thereon shall be paid at the time of filing.
Place of Filing of Return
a.
In case of resident donors:
Authorized agent bank
Revenue District Officer
Revenue Collection Officer
Duly authorized Treasurer of the city or municipality where
the donor was domiciled at the time of the transfer
b.
In case of non-resident donors:
Philippine Embassy or Consulate where he is
domiciled at the time of the transfer
Office of the Commissioner
ATLAS 2012-2013
TAXATION
-Any person or entity who, in the course of his trade or business, sells, barters, exchanges,
leases goods or properties and renders services subject to VAT, if the aggregate amount of
actual gross sales or receipts exceed One Million nine hundred nineteen thousand Five
Hundred Pesos (1,919,500).
-A person required to register as VAT taxpayer but failed to register
-Any person, whether or not made in the course of his trade or business, who imports goods
The Monthly VAT Declaration (BIR Form 2550M) and Quarterly VAT Return (BIR Form 2550Q)
shall be filed with any Authorized Agent Bank (AAB) in the place where the taxpayer is
registered or required to be registered. In cases of no-payment, the return shall be filed with the
Revenue District Office (RDO)/LTDO and LTAD where the taxpayer is registered or required to
be registered. In places where there are no AABs, it shall be filed with and the tax paid to the
Revenue Collection Officer or duly Authorized City or Municipal Treasurer of the place where the
RDO is located.
Output tax means the VAT due on the sale, lease or exchange of taxable goods or properties or
services by any person registered or required to register under section 236 of the Tax Code.
Input tax means the VAT paid by a VAT-registered person in the course of his trade or business
on importation of goods or local purchase of goods or services, including lease or use of
property, from a VAT-registered person. It shall also include the transitional input tax determined
in accordance with Section 111 of the Tax Code.
The term "goods or properties" shall mean all tangible and intangible objects, which are capable
of pecuniary estimation and shall include:
a) Real properties held primarily for sale to customers or held for lease in the ordinary course of
trade or business
b) The right or the privilege to use patent, copyright, design or model, plan, secret formula or
process, goodwill, trademark, trade brand or other like property or right
c) The right or the privilege to use in the Philippines any industrial, commercial or scientific
equipment
ATLAS 2012-2013
TAXATION
d) The right or the privilege to use motion picture film, films, tapes and discs
e) Radio, television, satellite transmission and cable television time
The term "sale or exchange of services" means the performance of all kinds of services in the
Philippines for others for a fee, remuneration or consideration, including those performed or
rendered by the following:
a) Construction and service contractors
b) Stock, real estate, commercial, customs and immigration brokers
c) Lessors of property, whether personal or real
d) Warehousing services
e) Lessors or distributors of cinematographic films
f) Persons engaged in milling, processing, manufacturing or repacking goods for others
g) Proprietors, operators or keepers of hotels, motels, resthouses, pension houses, inns, resorts
h) Proprietors or operators of restaurants, refreshment parlors, cafes and other eating places,
including clubs and caterers
i) Dealers in securities
j) Lending investors
k) Transportation contractors on their transport of goods or cargoes, including persons who
transport goods or cargoes for hire and other domestic common carriers by land, air and water
relative to their transport of goods or cargoes
l) Services of franchise grantees of telephone and telegraph, radio and television broadcasting
and all other franchise grantees except those under Section 119 of the Tax Code
m) Services of banks, non-bank financial intermediaries and finance companies
n) Services of non-life insurance companies (except their crop insurances), including surety,
fidelity, indemnity and bonding companies
o) Similar services regardless of whether or not the performance thereof calls for the exercise or
use of the physical or mental faculties
The phrase "sale or exchange of services" shall include:
a) The lease or the use of or the right or privilege to use any copyright, patent, design or model,
plan, secret formula or process, goodwill, trademark, trade brand or other like property or right
b) The lease or the use of, or the right to use of any industrial, commercial or scientific
equipment
c) The supply of scientific, technical, industrial or commercial knowledge or information
d) The supply of any assistance that is ancillary and subsidiary to and is furnished as a means
of enabling the application or enjoyment of any such property, or right or any such knowledge or
information
e) The supply of services by a nonresident person or his employee in connection with the use of
property or rights belonging to, or the installation or operation of any brand, machinery or other
apparatus purchased from such non-resident person
f) The supply of technical advice, assistance or services rendered in connection with technical
management or administration of any scientific, industrial or commercial undertaking, venture,
project or scheme
g) The lease of motion picture films, films, tapes and discs
h) The lease or the use of or the right to use radio, television, satellite transmission and cable
television time
ATLAS 2012-2013
TAXATION
It is a sale, barter or exchange of goods, properties and/or services subject to 0% VAT pursuant
to Sections 106 (A) (2) and 108 (B) of the Tax Code.
The following services performed in the Philippines by VAT-registered persons shall be subject
to zero percent (0%) rate:
a) Processing, manufacturing or repacking goods for other persons doing business outside the
Philippines which goods are subsequently exported where the services are paid for in
acceptable foreign currency and accounted for in accordance with the rules and regulations of
the Bangko Sentral ng Pilipinas (BSP)
b) Services other than those mentioned in the preceding paragraph, the consideration for which
is paid for in acceptable foreign currency and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP)
c) Services rendered to persons or entities whose exemption under special laws or international
agreements to which the Philippines is a signatory effectively subjects the supply of such
services to zero percent (0%) rate
d) Services rendered to vessels engaged exclusively in international shipping
e) Services performed by subcontractors and/or contractors in processing, converting, or
manufacturing goods for an enterprise whose export sales exceeds seventy percent (70%) of
total annual production
Taxpayers may file their application with the Audit Information, Tax Exemption and Incentives
Division (AITEID) at the BIR National Office.
ATLAS 2012-2013
TAXATION
The Contractor's Final Payment Release Certificate is issued by the BIR before a government
contractor is fully paid for his contract with the government. Taxpayers may file their application
at the BIR National Office at the Audit Information, Tax Exemption and Incentives Division
(AITEID)
a) 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
b) Distribution or transfer to:
Shareholders or investors as share in the profits of the VAT-registered person; or
Creditors in payment of debt
c) Consignment of goods if actual sale is not made within sixty (60) days following the date such
goods were consigned
d) Retirement from or cessation of business, with respect to inventories of taxable goods
existing as of such retirement or cessation
It is a sale of goods, properties or service and the use or lease of properties which is not subject
to output tax and whereby the buyer is not allowed any tax credit or input tax related to such
exempt sale.
a) Sale of non-food agricultural products, marine and forest products in their original state by the
primary producer or owner of the land where the same were produced
b) Sale of cotton and cotton seeds in their original state and copra
c) Sale or importation of agricultural and marine food products in their original state, livestock
and poultry of a kind generally used as, or yielding or producing foods for human consumption
and breeding stock and generic materials thereof
d) Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and
poultry feeds, including ingredients, whether locally produced or imported, used in the
manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium
fish, zoo animals and other animals generally considered as pets)
e) Sale or importation of coal and natural gas, in whatever form or estate, and petroleum
products (except lubricating oil, processed gas, grease, wax and petrolatum) subject to the
Excise Taxes imposed under Title VI of the Tax Code
f) Sale or importation of raw materials to be used by the buyer or importer himself in the
manufacture of petroleum products subject to excise tax, except lubricating oil, processed gas,
grease, wax and petrolatum
g) Importation of passenger and/or cargo vessels of more than five thousand tons, whether
coastwise or ocean-going, including engine and spare parts of said vessel to be used by the
importer himself as operator thereof
h) Importation of personal and household effects belonging to residents of the Philippines
returning from abroad and nonresident citizens coming to resettle in the Philippines; Provided,
that such goods are exempt from customs duties under the Tariff and Customs Code of the
Philippines
i) Importation of professional instruments and implements, wearing apparel, domestic animals,
and personal household effects (except any vehicle, vessel, aircraft, machinery, other goods for
use in the manufacture and merchandise of any kind in commercial quantity) belonging to
ATLAS 2012-2013
TAXATION
persons coming to settle in the Philippines, for their own use and not for sale, barter or
exchange, accompanying such persons, or arriving within ninety (90) days before or after their
arrival, upon the production of evidence satisfactory to the Commissioner of Internal Revenue,
that such persons are actually coming to settle in the Philippines and that the change of
residence is bona fide
j) Services subject to percentage tax under Title V of the Code
k) Services by the agricultural contract growers and milling for others of palay into rice, corn into
grits, and sugar cane into raw cane sugar
l) Medical, dental, hospital and veterinary services subject to the provisions of Sec. 17 of RA
7716, as amended
m) Educational services rendered by private educational institutions, duly accredited by the
Dept. of Education Culture and Sports (DECS), and Commission on Higher Education (CHED),
and those rendered by the government educational institutions
n) Sale by the artist himself of his works of art, literary works, musical compositions and similar
creations, or his services performed for the production of such works
o) Services rendered by individuals pursuant to an employer-employee relationship
p) Services rendered by regional or area headquarters established in the Philippines by
multinational corporations which act as supervisory communications and coordinating centers
for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn or derive
income from the Philippines
q) Transactions which are exempt under international agreements to which the Philippines is a
signatory, or under special laws, except those under the following laws:
P.D. No. 66 - Export Processing Zone Authority (EPZA) registered firms
P.D. No. 529 - Petroleum Exploration Concessionaires under the Petroleum Act of 1949
P.D. No. 1590 - Philippine Airlines (PAL) relative to domestic transport of goods or cargoes
r) Sales by agricultural cooperatives duly registered with the Cooperative Development Authority
(CDA) to their members as well as sale of their produce, whether in its original state or
processed form, to non-members; their importation of direct farm inputs, machineries and
equipment, including spare parts thereof, to be used directly and exclusively in the production
and/or processing of their produce
s) Sales by electric cooperatives duly registered with the Cooperative Development Authority
(CDA) or National Electrification Administration (NEA), relative to the generation and distribution
of electricity, as well as their importation of machineries and equipment, including spare parts,
which shall be directly used in the generation and distribution of electricity
t) Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered
with the Cooperative Development Authority (CDA) whose lending operation is limited to their
members
u) Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with the
Cooperative Development Authority: Provided, that the share capital contribution of each
member does not exceed Fifteen Thousand Pesos (P 15,000) and regardless of the aggregate
capital and net surplus ratably distributed among the members
v) Export sales by persons who are not VAT-registered
w) Lease of a residential unit with a monthly rental not exceeding Eight Thousand Pesos (P
8,000.00), regardless of the amount of aggregate rentals received by the lessor during the year,
provided that the exemptions likewise applies to lease of residential units where the monthly
rental per unit exceeds P 8,000.00 but the aggregate rentals of the lessor during the year do not
exceed P 550,000.00.
x) Sale, importation, printing or publication of books and any newspaper, magazine, review or
ATLAS 2012-2013
TAXATION
bulletin which appears at regular intervals with fixed prices for subscription and sale and which
is not devoted principally to the publication of paid advertisements
y) Sale or lease of goods or properties or the performance of services other than the
transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts
does not exceed the amount of P 550,000.00
z) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business or real property utilized for low-cost and socialized housing as
defined by Republic Act No. 7279, otherwise known as the Urban Development and Housing Act
of 1992 and other related laws, house and lot and other residential dwelling valued at P
1,000,000 and below.
If any of you lacks wisdom let him ask God, who gives generously to all without reproach,
and it will be given him. -James 1:5
God is able to do immeasurably more than what we can think or imagine. Ephesians 3:20
I can do all things through Christ who strengthens me. Philippians 4:13
ATLAS 2012-2013
TAXATION