...Taxation Updates For COOPERATIVES Dean Estelita C. Aguirre Resource Person AIT “Learning through Quality Training” Objectives of the Seminar To review: > the tax exemption provisions of COOP Code vis-à-vis the NIRC and the LGC; and > the COOP BIR compliance requirements. To present and clarify > recent tax rulings, RR and court decisions > problem areas affecting COOPs AIT “Learning through Quality Training” Presentation Outline Part I Review 1) Legal Bases of Exemptions 2) Classification of Coops 3) Tax Exemption/taxability of Coops 4) Taxability of COOP Members & Directors Part II Recent Development 1) CTA Decisions: Final Tax on Interest 2) RMC 34-2008 on Director’s fees 3) RR14-2007 on Microfinancing 3) BIR ruling on CTE AIT “Learning through Quality Training” Legal Bases of Exemptions AIT “Learning through Quality Training” Legal Bases of Exemptions 1. Cooperative Code of the Philippines Article 61 Article 62 2. Bureau of Internal Revenue Section 109 of NIRC RR No. 20-2001 3. Local Government Code of 1991 Section 133 Section 234 AIT “Learning through Quality Training” Article 61 and 62, RA 6938 apply to Art 61 Coops transacting with members only Art 62(1) Coops transacting with members and non-members with Reserves of P10M & below Art 62(2) Coops transacting with members and non-members with Reserves of over P10M AIT “Learning through Quality Training” Local Government Code Section 133(n) exempts all duly registered COOPs from taxes, fees and charges...
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...CHAPTER 2 TAX ADMINISTRATION Problem 2 – 1 TRUE OR FALSE 1. True 2. False – not the BIR, but the Department of Finance 3. False – the BIR is responsible to collect national taxes only. 4. False – The review shall be made by the Court of Justice. 5. True 6. True 7. False – The Secretary of Justice and the Courts also interprets the provisions of the Tax Code. 8. False – the fact that taxes are self-assessing the BIR assessment is necessary to ensure the reliability of the ITR. 9. False – the BIR or the Government is not allowed by law to appeal to the CTA. (Acting Collector of customs vs. Court of Appeals, Oct. 31, 1957) 10. True 11. False – Appeal to the SC shall be made within 15 days from the receipt of the decision of the CTA. 12. False – the CIR can conduct a jeopardy assessment when there are no accounting records. 13. True 14. False – the taxpayer needs to waive first his right on the secrecy of bank deposits before BIR can inquire into his bank deposits. 15. True Problem 2 – 2 TRUE OR FALSE 1. False – there must be a Letter of Authority. 2. False – the supporting documents must be submitted to the BIR within 60 days from the date a protest is filed. 3. True 4. True 5. False – destraint as a tax collection method is applicable only to personal property. 6. False – criminal violations already filed in court are not subject to compromise. 7. True 8. False, collection must be within 5 years 9. True 10...
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...TAXATION LAW I. General Principles POWER OF TAXATION TAXATION – power by which the sovereign through its law-making body raises revenue to defray the necessary expenses of government from among those who in some measure are privileged to enjoy its benefits and must bear its burdens. Two Fold Nature of the Power of Taxation 1. It is an inherent attribute of sovereignty 2. It is legislative in character Extent of Taxing Power Subject to constitutional and inherent restrictions, the power of taxation is regarded as comprehensive, unlimited, plenary and supreme. Scope of Legislative Taxing Power 1. Amount or rate of tax 2. Apportionment of the tax 3. Kind of tax 4. Method of collection 5. Purpose/s of its levy, provided it is for public purpose 6. Subject to be taxed, provided it is within its jurisdiction 7. Situs of taxation TAXES – enforced proportional contributions from the persons and property levied by the law-making body of the State by virtue of its sovereignty in support of government and for public needs. Characteristics of Taxes 1. forced charge; 2. pecuniary burden payable in money; 3. levied by the legislature; 4. assessed with some reasonable rule of apportionment; (see theoretical justice) 5. imposed by the State within its jurisdiction; 6. levied for a public purpose. Requisites of A Valid Tax 1. should be for a public purpose 2. the rule of taxation shall be uniform 3. that either the person...
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...INCOME TAXATION Preservation of book of accounts All the books of accounts, including the subsidiary books and other accounting records of corporations, partnerships or persons shall be preserved by them within 3 years (except in case of a false or fraudulent return) from the Last entry in each book and for which period the commissioner is authorized to make an assessment Exception: 1. Fraud, irregularity or mistakes as determined by the commissioner; 2. The taxpayer request reinvestigation; 3. Verification or compliance with withholding tax laws and regulation; and 4. In the exercise of the commissioner’s power to obtain information from other persons, in which case, another or separate examination and inspection may be made Keeping of book accounts All corporations, companies, partnerships or persons required by law to pay internal revenue taxes shall keep a journal and a ledger, or their equivalents. 1. Those whose gross quarterly sales, earning receipts or output do not exceed fifty thousand pesos (50,000) shall keep and use a simplified set of bookkeeping records duly authorized by the secretary of finance wherein all transaction and results of operation are shown. 2. Those whose gross quarterly sales, earnings receipts or output exceed one hundred fifty thousand pesos (150,000) shall have their books of accounts audited and examined yearly by independent certified public accountant and their income tax returns accompanied with a duly accomplishment...
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...GENERAL AUDIT PROCEDURES AND DOCUMENTATION 1. When does the audit process begin?The audit process commences with the issuance of a Letter of Authority to a taxpayer who has been selected for audit. 2. What is a Letter of Authority? The Letter of Authority is an official document that empowers a Revenue Officer to examine and scrutinize a Taxpayer’s books of accounts and other accounting records, in order to determine the Taxpayer’s correct internal revenue tax liabilities. 3. Who issues the Letter of Authority? Letter of Authority, for audit/investigation of taxpayers under the jurisdiction of National Office, shall be issued and approved by the Commissioner of Internal Revenue, while, for taxpayers under the jurisdiction of Regional Offices, it shall be issued by the Regional Director. 4. When must a Letter of Authority be served? A Letter of Authority must be served to the concerned Taxpayer within thirty (30) days from its date of issuance, otherwise, it shall become null and void. The Taxpayer shall then have the right to refuse the service of this LA, unless the LA is revalidated. 5. How often can a Letter of Authority be revalidated? A Letter of Authority is revalidated through the issuance of a new LA. However, a Letter of Authority can be revalidated— Only once, for LAs issued in the Revenue Regional Offices or the Revenue District Offices; or Twice, in the case of LAs issued by the National Office. Any suspended LA(s) must be attached to the new LA issued (RMO...
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...RESEARCH ON JOINT VENTURE IN THE PHILIPINES Group Research Work Submitted to the Ramon V. Del Rosario College of Business De La Salle University – Manila In Partial Fulfillment Of the requirements in BUS520M Business Law Submitted by: GROUP 4 Amparo, Lourdes Lagman, Mia Marie Legaspi, Jill Noreen Submitted to: Atty. Antonio Ligon April 6, 2016 I. Background 1. Philippine Business a. History 2. Doing business in the Philippines b. Forms of business 3. Definition and Origin of Joint Venture (JV) II. Statement of the Problems 1. What are the applicable laws in joint ventures? 2. What are the tax implications? 3. Are our current joint venture laws sufficient? Especially with the Asean integration? III. Statement of Objectives The research study aims to: 1. Identify the applicable laws in joint ventures 2. Identify the tax implications in joint ventures 3. Identify insufficiencies (if any) in our current joint venture laws and make recommendations IV. Discussion 1. Nature of Joint Ventures in Philippine setting 2. Governing Laws 3. Foreign Investments 4. Scope of Joint Venture Business Activity 5. Taxes in Joint Venture 6. Example of JVs in the Philippines V. Analyses VI. Recommendations VII. Learning Points VIII. References I. Background of Philippine Business History Historians state that the early start of business...
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...COMPILED NOTES: SABABAN, MAMALATEO & CHAVEZ MARIVIC B. DE GRACIA TAXATION 2 MARIVIC DE GRACIA TRANSFER TAX -refers to the burden imposed upon the right to gratuitously transfer or transmit property, tangible or intangible from one person to another. Filing: within 6 months from the date of death 15%-relative 30%-stranger Filing: within 30 days from the date of donation -are taxes imposed upon the gratuitous disposition of private property. ESTATE TAX FORMULA: KINDS OF TRANSFER TAXES: ESTATE TAX NIRC Donation mortis causa Tax levied on the transmission of properties from decedent to his heirs Tax on the privilege to transmit property at death Excise tax or privilege tax Effective upon death Tax base is the net estate Net estate amounting to P200,000 is exempted 20% highest rate DONOR’S TAX NIRC Donation inter vivos Tax levied on the transmission of properties from a living person to another living person. Gross Estate (Sec. 85) TAX ON THE TRANSFER OF REAL PROPERTY LGC Less: Ordinary Deductions (Sec. 86)_____________ Equals: Net Estate before share of surviving spouse Less: Share of surviving spouse________________ Equals: Net estate before special deductions Less: Special deductions______________________ Equals: Net taxable estate Multiply:Tax Rate (Sec 84)______________________ Equals: Estate Tax Payable If there’s tax credit available: Excise tax or privilege tax Effective during the life time of the donor Tax base is the net gift within the calendar year...
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...PRINCIPLES OF INCOME TAXATION ( promote sustainable economic growth ( provide equitable relief to a greater number of taxpayers ( improve levels of disposable income ( increase economic activity ( create a robust environment for business ( provide for the needs of those under its jurisdiction and care. ( General Principles: 1) Resident Citizen – all income from within & without 2) Nonresident Citizen – income within 3) Overseas contract worker – income within 4) Alien – income within 5) Domestic Corporation – within & without 6) Foreign Corporation – within x------------------------------------x 2. IMPORTANT BASIC TERMS IN GENERAL (NIRC §22) 2.1 Taxable Year ( Calendar year 2.2 Fiscal Year ( Accounting period of 12 months ending on the last day of any month other than December 2.3 Securities ( Proof of what Corporation owes, i.e. shares of stock, etc. 2.4 Ordinary Income ( Any gain from sale or exchange of property, not a capital asset or property 2.5 Gross Income - §27(A) & (E)(4) ( Domestic Corporations shall be imposed an income tax of 35% 2.6 Ordinary Loss ( Any loss from the sale or exchange of property which is not a capital asset ( Ordinary losses may only be charged against ordinary gains 2.7 Capital Assets - §39(A)(1) ( That which is NOT an ordinary asset ...
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...Tax Deduction Definition: Tax deductions pertain to taxes proper which do not include surcharges, penalties, or fines incident to delinquency. These are taxes which have been previously deducted from gross income and a refund of the same was received. Nature: According to NIRC Sec 34 C., taxes are deductible with the exception of those with respect to which the law does not permit deduction. (1) In General. - Taxes paid or incurred within the taxable year in connection with the taxpayer's profession, trade or business, shall be allowed as deduction, except (a) The income tax provided for under this Title; (b) Income taxes imposed by authority of any foreign country; but this deduction shall be allowed in the case of a taxpayer who does not signify in his return his desire to have to any extent the benefits of paragraph (3) of this subsection (relating to credits for taxes of foreign countries); (c) Estate and donor's taxes; and (d) Taxes assessed against local benefits of a kind tending to increase the value of the property assessed. Provided, That taxes allowed under this Subsection, when refunded or credited, shall be included as part of gross income in the year of receipt to the extent of the income tax benefit of said deduction. (2) Limitations on Deductions. - In the case of a nonresident alien individual engaged in trade or business in the Philippines and a resident foreign corporation, the deductions for taxes provided in paragraph (1) of this Subsection...
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...* Value Added Tax is a uniform tax imposed on person, who in the course of trade or business sells, barters, exchanges or leases goods or properties or renders services and on any person who imports goods. * Who are liable? * Any individual , trust, estate, partnership, corporation, joint venture, cooperative or association who in the course of trade or business: a. Sells, barters, exchanges goods or properties b. Sells or renders services c. Leases properties 4. Importation * Nature and Characteristics -VAT is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines. -Seller is the one statutorily liable for the payment of tax but the amount of the tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. Business Taxes Abolished by the Introduction of VAT 1. Advance sales tax 2. Compensating tax 3. Sales tax on the original sales 4. Subsequent sales tax 5. Contractor’s tax 6. Broker’s tax 7. Miller’s tax 8. Tax on cinematographic film owner’s, lessors and distributors 9. Excise tax on matches, solvents and video tapes 10. tax on hotel and motel 11. Tax on lending investors 12. Tax on dealer’s in securities 13. Caterer’s tax 14. Tax on insurance premiums on non-life insurance companies (except crop insurance) 15. Franchise tax (except on radio and television broadcasting companies whose annual gross receipts do not exceed P10...
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...ATENEO CENTRAL BAR OPERATIONS 2007 Taxation Law SUMMER REVIEWER PART I – GENERAL PRINCIPLES TAXATION – power inherent in every sovereign State to impose a charge or burden upon persons, properties, or rights to raise revenues for the use and support of the government to enable it to discharge its appropriate functions SCOPE OF TAXATION TAXATION IS: Unlimited, Far-reaching, Plenary Comprehensive Supreme STAGES OF TAXATION: (LAP) 1. Levy 2. Assessment 3. Payment Basic Principles of a Sound Tax System 1. Fiscal Adequacy 2. Theoretical Justice 3. Administrative Feasibility INHERENT LIMITATIONS (SPING) 1) Situs or territoriality of taxation 2) Must be for a Public purpose • Test is whether proceeds will be used for something which is the duty of the State to provide. • Legislature is not required to adopt a policy of “all or none.” • Incidental benefit to individual does not defeat exemption 3) International comity • Property of a foreign State of government may not be taxed by another 4) Non-delegability of the taxing power • Contemplates power to QuickTime™ and a TIFF (Uncompressed) decompressor determine kind,thisobject, extent, are needed to see picture. amount, coverage, and situs of tax; • Distinguish from power to assess and collect • Exemptions: (a) presidential taxing powers; (b) local governments 5) Exemptions of Government agencies • Taking money from one pocket • to the other Applies only to entities exercising government functions (acta jure imperii) CONSTITUTIONAL...
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...INCOME TAXATION GBS 1 OBJECTIVE: The students at the end of the module should be able to distinguish the different kinds of taxes, the nature, scope, basis, theory, purpose, situs, limitations, subject of taxation and escape from taxation, the powers of the sovereign, characteristics of taxes, and the basic principles of a sound tax system, as well as the different taxable income and deductions. Definition of Terms TAXATION – is a power inherent in every sovereign state to impose a charge or burden upon persons, properties or rights to raise revenues for the use and support of the government and to enable it to discharge its appropriate functions. - It is a mode of raising revenue for public purposes. (Cooley) TAX – is a forced burden, charge, imposition or contribution assessed in accordance with some reasonable rule of apportionment by authority of the sovereign state upon person, property, or rights exercised, within its jurisdiction to provide public revenues for the support of the government, administration of the law or payment of public expenses. INCOME TAX SYSTEM OF THE PHILIPPINES • GROSS INCOME TAXATION-where a Final Tax is imposed on the gross amount of specified types of income. Example: Interest, royalty, prize, dividend, capital gain • NET INCOME TAXATION- certain deductions are allowed and subtracted from the aggregates of income not subject ot final tax; the tax is computed based on the resulting net income. THEORY AND BASIS OF TAXATION > necessity to defray the...
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...(First Name, Middle Name, Last Name) / TRUST FAO:(First Name, Middle Name, Last Name) S A N G A 9 Trade Name C A T H E R I N E E N T E R P R I I L L O T E E - J S E S C R A M E 10 Registered Address (Indicate complete registered address) 7 2 W E S T R O A D 2 Q U E Z O N C I T Y 11 Date of Birth (MM/DD/YYYY) 12 Email Address S A N J U A N 0 9 / 1 0 / 1 9 8 6 14 Civil Status Single With Income 13 Contact Number 0 2 7 2 2 2 9 2 2 15 If Married, indicate whether spouse has income 17 Main Line of Business X Married Legally Separated 16 Filing Status Joint Filing Widow/er Separate Filing With No Income T R A D I N G X Itemized Deduction 20 Method of Deduction [Sec. 34 (A-J), NIRC] 21 Method of Accounting X Cash 22 Income Exempt from Income Tax? 24 Claiming Additional Exemptions? Accrual Yes Yes No No 18 PSIC 19 PSOC Optional Standard Deduction (OSD) 40%...
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...Voluntary versus Involuntary Unemployment At a very basic level, unemployment can be broken down into voluntary unemployment- unemployment due to people willingly leaving previous jobs and and now looking for new ones- and involuntary unemployment- unemployment due to people getting laid off or fired from their previous jobs and needing to find work elsewhere. Not surprisingly, economists generally view involuntary unemployment as a larger problem than voluntary unemployment since voluntary unemployment likely reflects utility-maximizing household choices. Frictional Unemployment The easiest type of unemployment to explain is known as frictional unemployment. Frictional unemployment is unemployment that occurs because it takes workers some time to move from one job to another. While it may be the case that some workers find new jobs before they leave their old ones, a lot of workers leave or lose their jobs before they have other work lined up. In these cases, a worker must look around for a job that it is a good fit for her, and this process takes some time. During this time, the individual is considered to be unemployed, but unemployment due to frictional unemployment is usually thought to last only short periods of time and not be specifically problematic from an economic standpoint. This is particularly true now that technology is helping both workers and companies make the job search process more efficient. Frictional unemployment can also occur when students move into...
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...Public Fiscal Administration fiscal administration generally refers to the process/es involved in the revenue generation, allocation, and expenditures of the government. Public finance belongs to the branch of economics but that was during the earlier times. With the emergence of the field of public administration, much interest has been directed towards fiscal administration. Again, this subfield of public administration covers a wide range of issues and topics affecting government operations like taxation, public expenditures and borrowing, resource allocation, revenue administration, auditing and intergovernmental relations. As Briones (1996) puts it, “public fiscal administration embraces the formulation, implementation, and evaluation of policies and decisions on taxation and revenue administration; resource allocation, budgeting, and public expenditure; public borrowing and debt management; and accounting and auditing.” Through the years, many researches were devoted on these topics and issues; the government has also introduced reforms like reforms in tax administration, value added tax (VAT), expanded value added tax (E-VAT), procurement reforms, the medium-term expenditure framework (MTEF), accounting reforms, re-engineering the bureaucracy program (REBP), transforming local finance, and many others. Fiscal policy refers to the "measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government...
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