chapter 1

Question 1

National Internal Revenue Taxes (NIRT):

Answer 1

R.A. 8424

Question 2

it is imposed on taxpayer’s earnings. As a rule, there is no imposable tax if a taxpayer incurred a break-even or loss

Answer 2

Income tax (direct tax)

Question 3

tax imposed on income that is derived from trade, profession or occupation

Answer 3

Regular Income Taxes

Question 4

For individual taxpayers –
For corporate taxpayers –

Answer 4

• from 15% to 35%
• 30% of the net taxable income and MCIT =2% of gross income, whichever is higher.

Question 5

earnings that are not covered with regular taxes but subject to final taxes

Answer 5

Final Income Taxes

Question 6

imposed on sale of shares of stock and sale of real property classified as capital asset

Answer 6

Capital Gains

Question 7

interest income earned, royalty income, dividend income, winnings

Answer 7

Passive income

Question 8

is the tax imposed on the right or privilege to engage in an onerous transfer of goods or services in the normal conduct of business.

Answer 8

Business Taxes (Indirect Taxes)

Question 9

12% of gross sales/receipts which is usually passed on to the buyers.

Answer 9

Value-Added Tax

Question 10

a business tax imposed on INDIVIDUALS or BUSINESSES that sell or lease goods or services with an annual revenue that doesn’t exceed P3 million and is NOT VAT registered

Answer 10

Other Percentage Taxes (OPT

Question 11

tax on the production, sale or consumption of a commodity in a country. Under the tax code, only those goods that are either harmful, non-essential or goods that depletes natural resources are subject to excise tax to discourage their consumption and usage

Answer 11

Excise Taxes (sin tax)

Question 12

tax imposed on one’s right to make casual and gratuitous transfer of one’s property to the other person.

Answer 12

Transfer Taxes

Question 13

from 2% to 15% of net taxable gifts if the donation is to relatives, or 30% is the donation is made to stranger, or

Answer 13

Donor’s Tax (donation inter-vivos)

Question 13

from 5% to 20% based on the net taxable estate.

Answer 13

Estate Tax (mortis-causa)

Question 13

is the tax imposed on the right to enter into a transaction that is described in the document needed to be filed in any government office. The most common DST is tax on sale of real property which is 1.5% of the selling price, or zonal value, whichever is higher.

Answer 13

Documentary Stamp Tax (DST)