Help me doing my script for my reporting regarding this e,f and g. Thanks! e. Types of
Question:
Help me doing my script for my reporting regarding this e,f and g. Thanks!
e. Types of Philippines Income Taxes
The National Internal Revenue Code (NIRC) as amended by the Tax Reform for Acceleration and Inclusion Law (TRAIN Law) enumerates the several types of income taxes in the Philippines. First, individual income tax is imposed on different types of individuals, regardless of residence and citizenship. Mainly, the types of income tax imposed are ordinary or regular income tax, final withholding tax, and capital gains tax. Such is applied on gross sales or receipts, total gross income, or net taxable income, depending on the taxpayer's eligibility to specific rules provided by the Tax Code. Special rules also apply to married taxpayers, minimum wage earners, senior citizens, and persons with disabilities, such as exemption, division of income, and discounts.
Moreover, corporate income tax is also imposed on different types of entities that are taxed as corporations. Specifically, the law imposes corporate income tax on corporations, partnerships other than GPP, joint-stock companies, joint ventures, joint accounts, associations, and insurance companies. Like individuals, corporations also have their classifications. Namely, the types of corporations are domestic corporations, resident foreign corporations, non-resident foreign corporations, and special corporations. The tax imposed is dependent on the taxpayer's classification, which may lead them to be subjected to regular corporate income tax, minimum corporate income tax, or gross income tax. Other tax rates are also applicable, such as improperly accumulated earnings tax, branch profit remittance tax, and other special tax rates. Corporations may also be subject to capital gains tax on their capital gains from capital assets. Requisites are also provided by law to limit who may avail of specific tax rates and exemptions. Further, special rules apply to proprietary educational institutions, non-stock non-profit hospitals, FCDU of local banks, international carriers, offshore banking units, and regional [operating] headquarters of multinational corporations.
f. Kinds of Taxpayers
There are five (5) classifications of taxpayers: resident citizens, non-resident citizens, resident aliens, non-resident aliens engaged in trade or business, and non-resident aliens not engaged in trade or business. Such are classified according to citizenship and residence. Resident citizens are taxpayers who are citizens and residents of the Philippines, while non-resident citizens are Philippine citizens not residing in the Philippines. Examples of the former include the majority of the people we personally know, including well-known artists such as Angel Locsin and Maja Salvador. The latter, however, includes overseas workers, immigrants, permanent employment, physical presence at work abroad, most of the time (183 days and over). On the contrary, resident aliens are individuals whose residences are within the Philippines but are citizens thereof. Non-resident aliens are further categorized into two (2) types, namely non-resident aliens engaged in trade or business (NRAETB) and non-resident aliens not engaged in trade or business (NRANETB) who are both residents of the Philippines. However, the former conducts business in the country while the latter does not. The former may include business owners of international companies or brands such as Amazon, forever 21, and Ikea, while the latter may include artists who conduct concerts in the country.
Additionally, there are three (3) types of income earners: Purely Compensation Income Earner, Purely Self-Employed or Professional (SEP) Income Earner, and Mixed-Income Earner. Taxpayer classification is essential as it will determine the situs of income, manner of computing tax, treatment of certain income, and the allowable deductions applicable.
g. Taxable Period
As defined by The Investopedia Team (2021), a taxable period, also known as a tax year, includes the months that are covered by a specific tax return. According to PricewaterhouseCoopers or PwC (2022), the taxable period generally runs from January 1st to December 31st of each year. Tax returns are filed after each taxable period, declaring total income, unpaid taxes throughout the year, and amounts to be settled at the time of filing.
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill