NATIONAL INTERNAL REVENUE NATIONAL INTERNAL REVENUE CODE OF 1997CODE OF 1997

ACLC COLLEGE OF SORSOGONACLC COLLEGE OF SORSOGON22NDND TRIMESTER TRIMESTER

Means profit or gains. Amount of money coming to a person or

corporation within a specified time, whether as payment for services , interest or profit from investment.

It means cash or its equivalent. Can also be thought as a flow of the fruits of

one’s labor.

CAPITAL is a fund, while INCOME is a flow CAPITAL is wealth, while INCOME is the

service of wealth PROPERTY is a tree, while INCOME is the

fruit

1. There must be gain or profit2. The gain or profit is realized or received,

actually or constructively; and3. It is not exempted by law or treaty from income

taxIncome tax is assessed on the income received

from any property, activity or service that produces the income because the Tax Code stands as an indifferent neutral party on the matter of where income comes from.

a. Income Taxb. Estate and Donor Taxesc. Value-added Taxd. Other percentage Taxese. Excise Taxesf. Documentary stamp taxes, andg. Other Taxes as are hereafter may be imposed

and collected by the BIR

A tax imposed on taxable income in one taxable year.

It is based on the gross income/ taxable income payable yearly by individual persons or corporations

PRESUMPTIVE Income Tax – a scale of income taxes is imposed in relationto a group of person’s actual expendituresand the presumed income.

COMPOSITE Income Tax – a tax consisting of a series of separate quasi-personal taxes, assessed on the particular source of income with a superimposed personal tax on the income as a whole

UNITARY Income tax – incomes are arranged according to source. Separate items are added together & the rate applied to the resulting total income

GLOBAL SYSTEM – a system employed where the tax system views indifferently the tax base and generally treats in common all categories of taxable income of the individual- it taxes all categories of income except certain passive income and capital gains

SCHEDULAR SYSTEM – is a system employed where the income tax treatment varies and is made to depend on the kind or category of taxable income of the taxpayer.- it itemizes the different income and provide for varied percentages of taxes, to be supplied thereto

PROGRESSIVE

GLOBAL SYSTEM for taxable corporations

SCHEDULAR SYSTEM for individuals

TAX ON INDIVIDUALS

TAX ON CORPORATIONS

INCOME TAX ON ESTATES

TAX ON TRUSTS

To provide large amount of revenue To off-set progressive sales and consumption

of taxes To mitigate the evil effects from the inequalities

in the distribution of income and wealth which are considered deterrents to social progress by a progressive scheme of taxation

Any person subject to tax imposed by Tax Code

Income Taxpayer – person who derive taxable income

Kinds:- Individual taxpayer- Corporate taxpayers- Estates under juridical settlement- Trusts

Single, married or legally separated Head of the family Married individuals who : file joint income tax

return or file separate income tax return

RESIDENT CITIZEN – citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines

NONRESIDENT CITIZEN – is taxable only on income derived from sources within the Philippines

ALIEN – whether a resident or not of the Philippines, is taxable only on income derived from sources within the Philippines

DOMESTIC CORPORATION – is taxable on all income derived from sources within and without the Philippines

FOREIGN CORPORATION – whether engaged or not in trade or business in the Philippines, is taxable only on incomederived from sources within the Philippines.

Individuals Resident citizens receiving income from

sources within or outside the Philippines employees deriving purely compensation income

from 2 or more employers, concurrently or successively at anytime during the taxable year

employees deriving purely compensation income regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return

self-employed individuals receiving income from the conduct of trade or business and/or practice of profession

individuals deriving mixed income, i.e., compensation income and income from the conduct of trade or business and/or practice of profession

individuals deriving other non-business, non-professional related income in addition to compensation income not otherwise subject to a final tax

individuals receiving purely compensation income from a single employer, although the income of which has been correctly withheld, but whose spouse is not entitled to substituted filing

marginal income earners