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MARY JOY P. JUNIO, CPANotre Dame of Midsayap College

Midsayap, Cotabato

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Income Tax

System•

Global income tax

system• Gross income taxsystem•

Schedular tax system

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This income tax systemis a combination of gross compensation

income and/or netincome from business,trade or profession to

arrive at the total(global) income subjectto tabular tax rates

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• Compensationincome•

Net income frombusiness, trade orprofession•

Passive income• Capital gains

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The taxpayer’s income tax is

fixed or computed based onthe gross income. Theusual allowable deductions

are completely disregardedin computing this incometax.

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Examples:• Fringe

benefit tax• Passive income subject

to final tax• Capital gains tax on

real property •

Minimum CorporateIncome Tax

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Since income taxes areeither computed basedon global tax system or

gross income taxsystem, their filing andpayment should beaccompanied withseparate BIR form asrequired per category of income.

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• Annual income taxreturn (for globalincome tax)

• Capital gains tax return(for sale of real

property classified ascapital assets)