SPECIAL LAWS Flashcards
(108 cards)
1
Q
Barangay Micro Business Enterprise Act is also known as?
A
RA 9178.
2
Q
What is the purpose of BMBE Act?
A
To encourage the formation and growth of barangay micro business enterprises by granting them incentives and other benefits and to integrate these enterprises of the informal sector into the mainstream economy.
3
Q
Who signed the BMBE law and when?
A
By President Gloria Macapagal Arroyo on November 13, 2002. Its IRR was issued on February 7, 2003.
4
Q
What is a BMBE?
A
It refers to any business entity engaged in the production/processing/manufacturing of products/commodities including agro-processing/trading and services WHOSE TOTAL ASSETS INCLUDING THOSE ARRISING FROM LOANS BUT EXCLUSIVE OF LAND ON WHICH THE BUSINESS OFFICE AND PPE ARE SITUATED SHALL NOT BE MORE THAN 3,000,000.
“Services” shall EXCLUDE THOSE RENDERED BY LICENSED PROFESSIONALS.
5
Q
Who are eligible to register as BMBE?
A
Any person whether natural or judicial having the qualifications provided under law.
- Assets excluding land does not exceed 3,000,000
- Services are not professional requiring license to practice.
6
Q
What are the incentives of being a BMBE?
A
- INCOME TAX EXEMPTION FROM INCOME ARISING FROM THE OPERATIONS OF THE ENTERPRISE.
- EXEMPTION FROM THE COVERAGE OF THE MINIMUM WAGE LAW.
- PRIORITY TO A SPECIAL CREDIT WINDOW SETUP SPECIFICALLY FOR FINANCING REQUIREMENTS OF BMBEs
- TECHNOLOGY TRANSFER/PRODUCTION AND MANAGEMENT TRAINING AND MARKETING ASSISTANCE FOR BENEFICIARIES
- LGUs ARE ENCOURAGED TO REDUCE OR SOMETIMES EXEMPT BMBEs FROM PAYING LOCAL TAXES AND FEES.
7
Q
How does one register as a BMBE?
A
The OFFICE OF THE TREASURER OF THE CITY/MUNICIPALITY shall register the BMBE and issue a CERTIFICATE OF AUTHORITY enabling the BMBE to avail of the benefits.
Any application SHALL BE PROCESSED WITHIN FIFTEEN (15) WORKING DAYES UPON SUBMISSION OF COMPLETE DOCUMENTS, otherwise the BMBE shall be DEEMED-REGISTERED.
The LGU shall issue the certificate of authority free of charge, but, to defray the administrative costs of registering and monitoring BMBEs, MAY CHARGE A FEE NOT EXCEEDING 1,000.
8
Q
How long is a certificate of authority of BMBEs valid?
A
The certificate of authority of a BMBE shall be effective for 2 YEARS.
9
Q
How are BMBEs tax exemptions revoked?
A
The BMBE tax exemption could be revoked for any of the following reasons:
- Transfer of business address
- Value of assets EXCEED 3,000,000
- Voluntary surrender of certificate of authority
- Death of sole proprietor
- Merger/consolidation with an entity not eligible to be a BMBE
- Sale/transfer of BMBE enterprise
- Falsification of documents
- Retirement from business/ suspension /cessation of operation for one year
- Making false or omitting required declarations or statements.
10
Q
What is Documentary Stamp Tax?
A
DST is an EXCISE TAX levied on documents/instruments/loan agreements and papers evidencing the acceptance, assignment, sale, or transfer of an obligation, rights or property incident thereto.
The amount of tax is either FIXED OR BASED ON THE FACE VALUE OF THE DOCUMENT OR INSTRUMENT.
11
Q
Who are liable to pay DST?
A
DST is paid by the person making/signing/
issuing/accepting/transferring documents.
WHENEVER ONE PARTY TO THE TAXABLE DOCUMENT ENJOYS EXEMPTION FROM DST, THE OTHER PARTY TO THE TAXABLE DOCUMENT WHO IS NOT EXEMPT SHALL BE LIABLE TO PAY THE DST.
12
Q
When are DSTs filed and paid?
A
DST returns shall be filed and paid at the same time WITHIN 10 DAYS AFTER THE CLOSE OF THE MONTH WHEN THE TAXABLE DOCUMENT WAS SIGNED/ISSUED/TRANSFERRED.
DSTs may also be either paid through purchase of DST stamps.
13
Q
What is the effect of failure to pay DST?
A
Failure to pay DST shall not invalidate the related document, however, it shall not:
- be recorded
- admitted or used as evidence in court until the stamp is affixed thereto
No notary or other officer authorized to administer oaths shall add his jurat/acknowledgement to the document unless the proper stamp is affixed thereto.
14
Q
What is the DST rate for original issuance of shares of stock?
A
- Par value - 2php per 200 of par value
2. Without par value - 2php per 200 based on issue price
15
Q
What is the DST rate for sales/agreements to sell/deliveries or transfer of shares of certificates of stock?
A
- Par value - 1.50php per 200 of par value
- Without par value - 50% of the DST paid on the original issue of the stock
DOUBLE CHECK ITEM NUMBER 2. EXAMPLES AND RATE DO NOT AGREE WITH EACH OTHER.
16
Q
What is the DST rate for bonds/debentures/ certificates of stock or indebtedness issued in foreign countries?
A
0.50php per 200 of the face value.
17
Q
What is the DST rate for certificate of profits or interest in property or accumulations?
A
1.00php per 200 of the face value
18
Q
What is the DST rate for bank checks/drafts/certificates of deposit NOT BEARING INTEREST and other instruments?
A
3.00php per check, draft, or certificate
19
Q
What is the DST rate for Debt Instruments?
A
1.50php per 200 of the issue price.
20
Q
What is the DST rate for bills of exchange or drafts?
A
0.60php per 200 of the face value.
21
Q
What is the DST rate for acceptance of bills of exchange and others?
A
0.60 per 200 of the face value.
22
Q
What is the DST rate for foreign bills of exchange and letters of credit?
A
0.30 per 200 of the face value.
23
Q
What is the DST rate for life insurance policies?
A
Rate of DST depends on the amount of life insurance:
A. 100,000 AND BELOW - EXEMPT B. 100,001 to 300,000 - 20php C. 300,001 to 500,000 - 50php D. 500,001 to 750,000 - 100php E. 750,001 to 1,000,000 - 150php F. More than 1,000,000 - 200php
24
Q
What is the DST rate for policies of insurance upon properties?
A
0.50php per 4.00 of the amount of premium charged.
25
What is the DST rate for fidelity bonds and other insurance policies?
0.50php per 4.00 of the amount of premium charged.
26
What is the DST rate for policies of annuities and pre-need plans?
A. ANNUITIES - 1.00php per 200 of the premium or installment payment or contract price collected.
B. PRE-NEED PLANS - 0.40php per 200 of the premium or contribution collected.
27
What is the DST rate for indemnity bonds?
0.30php per 4.00 of the premium charged.
28
What is the DST rate for for certificates?
30.00php
29
What is the DST rate for warehouse receipts?
30.00php
30
What is the DST rate for Jai-alai and horse racing tickets/lotto/or other authorized numbers games?
0.20php/ticket worth 1.00php PLUS 0.20 for each 1.00php in excess of 1.00php.
Lotto tickets: no more DST.
31
What is the DST rate for bills of lading or receipts?
A. If the value exceeds 100 but not over 1,000 - 2 php
| B. Exceeds 1,000 - 20php
32
What is the DST rate for proxies?
30php
33
What is the DST rate for powers of attorney?
10php
34
What is the DST rate for leases and other hiring agreements?
6php on the first 2,000 PLUS 2php for every 1,000 in excess of the first 2,000 per year.
35
What is the DST rate for mortgages/pledges and deeds of trusts?
A. 5,000 or less - 40php
| B. On each 5,000 in excess of the first 5,000 - 20php
36
What is the DST rate for deeds of sale and conveyances of real property?
A. Consideration is 1,000 or less - 15php
| B. On each 1,000 in excess of 1,000 - 15php
37
What is the DST rate for registered gross tonnage of vessel not exceeding 1,000 tons with a duration not exceeding 6 months?
1,000 plus addition 100 per month in excess of 6 months.
38
What is the DST rate for registered gross tonnage of vessel exceeding 1,000 tons with a duration not exceeding 6 months?
2,000 plus additional 200 per month in excess of 6 months.
39
What is the DST rate for registered gross tonnage of vessel exceeding 10,000 tons with a duration not exceeding 6 months?
3,000 and additional 300 per month in excess of 6 months
40
What is the DST rate for assignments and renewals of certain instruments?
Same rate as that of the original instrument.
41
What is a special economic zone?
Special Economic Zones (SEZ) or ECOZONES are selected areas with highly developed or which have the potential to be developed into agro-industrial, industrial, tourist/recreational/ financial centers. An ecozone may contain any of the following:
1. Industrial Estates
2. Export Processing Zones
3. Free trade zones
4. Tourist/recreational centers
42
Who manages ecozones?
Ecozones SHALL BE OPERATED BY THE PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA) as a SEPARATE CUSTOMS AUTHORITY.
"Customs territory" means the national territory of the Philippines outside of the proclaimed boundaries of the ECOZONES except those areas specifically declared by other laws and/or presidential proclamations to have the status of SEZ and/or free ports.
43
What is an Industrial estate?
IE refers to a tract of land subdivided and developed according to a comprehensive plan under a unified continuous management and with provisions for basic infrastructure and utilities, with or without pre-built standard factory buildings and community facilities for use of the community of industries
44
What is an Export Processing Zone?
EPZ is a specialized industrial estate located physically and/or administratively outside customs territory, predominantly oriented to export production. Enterprises located in EPZs are allowed to import capital requirements and raw materials FREE FROM DUTIES, TAXES AND OTHER IMPORT RESTRICTIONS.
45
What are Free Trade Zones?
These are isolated policed area adjacent to a port of entry where imported goods may be unloaded for immediate transshipment without being subject to import duties.
46
T or F
Movement of imported goods from a free trade area to a non-free trade area in the country shall be subject to import duties.
True.
47
Briefly explain the purpose of PEZA.
PEZA is a government agency in the Philippines attached to the Department of Trade and Industry created to help promote investments in the export-oriented manufacturing industry into the country by assisting investors in registering and facilitating their business operations and providing tax incentives.
48
Explain the composition of the board of PEZA.
PEZA shall have:
A. ONE Director General
a. rank of undersecretary
b. appointed by the President
c. at least 40yo and 10 years experience in relevant
field
d. proven probity and integrity and a degree in either
economics, business, public administration, law, or
management
B. THREE Deputy Director Generals
a. Each is assigned to PLANNING, OPERATIONS, AND
ADMINISTRATION
b. appointed by the PEZA Board
c. at least 35yo and 10 years experience in relevant
field
d. proven probity and integrity and a degree in either
economics, business, public administration, law, or
management
```
The board of PEZA shall be composed of:
A. Secretary of DTI as CHAIRMAN
B. Director General as VICE CHAIRMAN
Undersecretaries of the following:
C. DOF
D. DOLE
E. DILG
F. DENR
G. DA
H. DPWH
I. DOST
J. NEDA
K. DOE
One representative from:
L. labor sector
M. investors/business sector
```
49
How shall establishments located within ecozones be taxed?
Establishment located in ecozones SHALL BE EXEMPT FROM LOCAL AND NATIONAL TAXES. In lieu thereof, it shall be taxed as follows:
1. Still subject to REAL PROPERTY TAX
2. FIVE PERCENT (5%) TAX ON THE GROSS INCOME to be remitted to the government as follows:
a. 3% to the National Government
b. 2% directly remitted to the city/municipality
treasurer of the local government.
50
What laws passed grant fiscal incentives to ecozones?
1. PD 66 - created Export Processing Zone Authority
2. EO226 aka Omnibus Investment Code of 1987
3. RA 7844 - Export Development Act - tax credit
see book and handouts for the specific incentives granted.
51
T or F
PEZA registered companies are exempt from CWT.
True
52
PEZA registered companies are exempted from being a withholding agent.
False. PEZA registered companies are NOT exempted from being a withholding agent.
53
What is the tax treatment when a regular VAT-registered supplier from Customs Territory sells to a PEZA registered enterpise?
1. IF THE BUYER IS PEZA REGISTERED AND SUBJECT TO 5% SPECIAL TAX - sale(either goods or services) is considered an EXPORT and therefore a ZERO-RATED SALE.
2. IF THE BUYER IS PEZA REGISTERED BUT NOT SUBJECT TO 5% SPECIAL TAX - sale(either goods or services) is considered an EXPORT and therefore a ZERO-RATED SALE (same as above)
54
What is the tax treatment when sales are made by a vat exempt supplier from customs territory to a PEZA Registered enterprise?
The sale shall be vat exempt.
55
What is the tax treatment when a PEZA registered enterprise sells goods/services to a buyer within the customs territory?
It shall be treated as "technical importation" on the perspective of the buyer, and shall therefore pay the corresponding import taxes (VAT on importation plus others as the case may be)
56
Executive Order No. 226 is known as?
Omnibus Investment Code of 1987.
57
Omnibus Investment Code of 1987.
Executive Order No. 226
58
What is the composition of the Board of Investments?
Board of BoI shall be composed of SEVEN GOVERNORS:
1. Secretary of DTI - CHAIRMAN
2. THREE undersecretaries of DTI chosen by the President for a 4 YEAR TERM
3. THREE other representatives from other government agencies and private sector.
59
Explain the Investment Priorities Plan of EO 226.
IPP shall mean the overall plan prepared by the BoI which contains:
1. Specific activities and generic categories of economic activity wherein investments are to be encouraged and the corresponding products and commodities to be grown/processed or manufactured pursuant thereto for the market
2. SPECIFIC PUBLIC UTILITIES WHICH CAN QUALIFY FOR INCENTIVES which shall be supported by studies of existing and prospective regional demands for the services of such public utilities
60
What is the criteria in determining investment priority?
That no economic activity shall be included in the IPP UNLESS IT IS SHOWN TO BE ECONOMICALLY/TECHNICALLY/FINANCIALLY SHOUND AFTER THOROUGH INVESTIGATION AND ANALYSIS BY THE BOARD. Determination shall be based on LONG-RUN COMPARATIVE ADVANTAGE. The BoI shall take into account:
1. Economic soundness of the specific activity as shown by its internal rate of return
2. Extent of contribution of an activity to a specific developmental goal
3. Other indicators or comparative advantage
4. Measured capacity
5. Market and technical aspects and considerations of the activity
61
What are the qualifications to be registered under the Investment Priority Plan?
An applicant must satisfy the BoI that:
1. He is A CITIZEN OF THE PHILIPPINES if he is a NATURAL PERSON.
2. AT LEAST 60% OF THE CAPITAL IS OWNED AND CONTROLLED BY CITIZENS OF THE PHILIPPINES if the applicant is a JURIDICAL PERSON ORGANIZED UNDER PH LAW, and AT LEAST 60% ITS DIRECTORS ARE CITIZENS OF THE PH. If the 60% degree of ownership is not met, the following MUST BE SATISFACTORILY ESTABLISHED:
a. That it proposes a PIONEER PROJECT and the nature thereof cannot be readily and adequately filled by Philippine nationals, OR if the applicant is EXPORTING AT LEAST 70% of its total production, the export requirement provided may be reduced under meritorious cases under such conditions and/or limited incentives as determined by the BoI.
b. That it obligates itself to attain the status of a Philippine national WITHIN 30 YEARS FROM THE DATE OF REGISTRATION or with such longer period as the BoI may require taking into account the export potential of the project, provided that A REGISTERED ENTERPRISE WHICH EXPORTS 100% OF ITS TOTAL PRODUCTION NEED NOT COMPLY WITH (b) THIS REQUIREMENT.
c. That the pioneer will not engage in activities reserved by the Constitution or other laws reserved for PH citizens or corporations.
3. The applicant is proposing to engage in a preferred project listed or authorized in the current IPP within a reasonable time to be fixed by the BoI, OR IF SO NOT LISTED, AT LEAST FIFTY (50%) OF ITS TOTAL PRODUCTION IS FOR EXPORT .
4. The applicant is capable of operating on a sound and efficient basis of contributing to the national development of the preferred area in particular and of the national economy in general
5. If the applicant is ENGAGED OR PROPOSES TO ENGAGE IN ACTIVITIES OTHER THAN PREFERRED PROJECTS, it has installed or undertakes to install an accounting system adequate to identify the investments/revenues/costs of each preferred project undertaken by the enterprise separate from that of the aggregate investment.
62
What are the incentives granted to BoI-registered enterprises?
1. INCOME TAX HOLIDAY
2. ADDITIONAL DEDUCTION FOR LABOR EXPENSE
3. TAX AND DUTY EXEMPTION ON IMPORTED CAPITAL EQUIPMENT
4. TAX CREDIT ON DOMESTIC CAPITAL EQUIPMENT
5. EXEMPTION FROM CONTRACTOR'S TAX
6. SIMPLIFICATION OF CUSTOMS PROCEDURE
7. UNRESTRICTED USE OF CONSIGNED EQUIPMENT
8. EMPLOYMENT OF FOREIGN NATIONALS
9. EXEMPTION ON BREEDING STOCKS AND GENETIC MATERIALS
10. TAX CREDIT ON DOMESTIC BREEDING STOCKS AND GENETIC MATERIALS
11. TAX CREDIT FOR TAXES AND DUTIES ON RAW MATERIALS
12. ACCESS TO BONDED MANUFACTURING/TRADING WAREHOUSE SYSTEM
13. EXEMPTION FROM TAXES AND DUTIES ON IMPORTED SPARE PARTS
14. EXEMPTION FROM WHARFAGE DUES AND ANY EXPORT TAX, DUTY, IMPOST, AND FEE.
63
Explain the Income Tax Holiday incentive granted to BoI-registered enterprises.
Income Tax Holiday
A. For SIX (6) YEARS FROM COMMERCIAL OPERATION FOR PIONEER FIRMS and FOUR (4) YEARS FOR NON-PIONEER FIRMS, newly registered firms shall be FULLY EXEMPT FROM INCOME TAXES LEVIED BY THE NATIONAL GOVERNMENT. Subject to guidelines as may be prescribed by the BoI, the income tax exemption WILL BE EXTENDED FOR ANOTHER YEAR in the following cases:
a. Project meets the prescribed ration of capital equipment to number of workers set by BoI
b. Utilization of indigenous raw materials at rates set by BoI
c. Net foreign exchange savings or earnings amount to at least $500,000 ANNUALLY during THE FIRST THREE YEARS OF OPERATIONS.
B. (3 YEARS ITH FOR EXPANSION PROJECTS) For a period of THREE YEARS FROM COMMERCIAL OPERATIONS, registered EXPANDING shall be entitled to an exemption from income taxes levied by the National Government proportionate to their expansion under such terms and conditions as the BoI may determine, provided that during the period within which this incentive is availed of by the expanding firm it shall not be entitled to additional deduction for incremental labor expense.
64
T or F
The initial income tax holiday granted to firms may be extended but shall not exceed 10 years.
False. The tax holidays may be extended, but ONLY UP TO 8 YEARS.
65
Explain the Additional Deduction for Labor Expense incentive granted to BoI-registered enterprises.
For the first FIVE (5) YEARS from registration, a registered enterprise shall be allowed an additional deduction from the taxable income of FIFTY (50%) PERCENT OF THE WAGES CORRESPONDING TO THE INCREMENT IN THE NUMBER OF DIRECT LABOR FOR WORKERS IF THE PROJECT MEETS THE PRESCRIBED RATIO OF CAPITAL EQUIPMENT TO NUMBER OF WORKERS SET BY THE BOI. This additional deduction shall be DOUBLED IF THE ACTIVITY IS LOCATED IN LESS DEVELOPED AREAS.
66
T or F
In general, the ITH is the same for both BOI and PEZA-registered companies.
True.
6 years ITH for pioneer
4 years ITH for non-pioneer
3 years ITH for expansion projects
67
Explain the Tax and Duty Exemption on Imported Capital Equipment incentive granted to BoI-registered enterprises.
Within 5 years from the effectivity, IMPORTATIONS OF MACHINERY AND EQUIPMENT AND ACCOMPANYING SPARE PARTS OF NEW AND EXPANDING REGISTERED ENTERPRISES SHALL BE EXEMPT FROM CUSTOMS DUTIES AND NIRC TAXES PAYABLE THEREON, provided that it shall comply with the following:
a. They are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices
b. They are reasonably needed and will be used exclusively by the registered enterprise
c. Approval of the BoI was obtained for such importation
If the registered enterprise SELLS/TRANSFERS/DISPOSES OF SUCH EQUIPMENT/MACHINERY WITHIN FIVE (5) YEARS FROM DATE OF ACQUISITION, the registered enterprise and vendee shall be SOLIDARILY LIABLE TO PAY TWICE THE AMOUNT OF TAX EXEMPTION GIVEN, EXCEPT WHEN THE BOI ALLOWS SUCH SALE/TRANSFER.
BoI only allows such sale/transfer when:
a. The sale is made to another registered enterprise or domestic producer ENJOYING THE SAME INCENTIVE
b. for reasons of proven technical obsolescence
c. for purposes of replacement to improve/expand the operations of the registered enterprise.
68
Explain the Tax Credit on Domestic Capital Equipment incentive granted to BoI-registered enterprises.
A 100% tax credit on the value of the national internal revenue tax and customs duties that would have been waived on the machinery/equipment had these items been imported shall be given to new and expanding registered enterprises which purchases machinery/equipment from a domestic manufacturer, PROVIDED THAT:
a. the said equipment are reasonably needed and will be exclusively used by the registered enterprise
b. the equipment would have qualified for tax and duty-free importation
c. approval of BoI was obtained
d. purchase is made within 5 years from effectivity of the code
If the registered enterprise SELLS/TRANSFERS/DISPOSES OF SUCH EQUIPMENT/MACHINERY WITHIN FIVE (5) YEARS FROM DATE OF ACQUISITION, the registered enterprise and vendee shall be SOLIDARILY LIABLE TO PAY TWICE THE AMOUNT OF TAX EXEMPTION GIVEN, EXCEPT WHEN THE BOI ALLOWS SUCH SALE/TRANSFER.
BoI only allows such sale/transfer when:
a. The sale is made to another registered enterprise or domestic producer ENJOYING THE SAME INCENTIVE
b. for reasons of proven technical obsolescence
c. for purposes of replacement to improve/expand the operations of the registered enterprise.
69
Explain the Exemption from Contractor's tax incentive granted to BoI-registered enterprises.
The registered enterprise shall be EXEMPT FROM PAYMENT OF CONTRACTOR'S TAX, whether national or local.
70
Explain the Simplification of Customs Procedure incentive granted to BoI-registered enterprises.
Customs procedures for the importation of equipment, materials and supplies and exports of processed products by registered enterprises shall be SIMPLIFIED BY THE BOC.
71
Explain the Unrestricted Use of Consigned Equipment incentive granted to BoI-registered enterprises.
Machinery, equipment and spare parts consigned to registered enterprises shall not be subject to restrictions as to period use of such machinery/ equipment/spare parts, PROVIDED that the APPROPRIATE RE-EXPORT BOND IS POSTED, and that THE CONSIGNED ITEM IS FOR THE EXCLUSIVE USE OF THE REGISTERED ENTERPRISE.
If the registered enterprise SELLS/TRANSFERS/DISPOSES OF SUCH EQUIPMENT/MACHINERY WITHIN FIVE (5) YEARS FROM DATE OF ACQUISITION, the registered enterprise and vendee shall be SOLIDARILY LIABLE TO PAY TWICE THE AMOUNT OF TAX EXEMPTION GIVEN, EXCEPT WHEN THE BOI ALLOWS SUCH SALE/TRANSFER.
72
Explain the Employment of foreign nationals incentives granted to BoI registered enterprises.
A registered enterprise may employ foreign nationals in supervisory, technical or advisory positions for a period not exceeding five (5) years from its registration, extendible for limited periods at the discretion of the Board: Provided, however, That when the majority of the capital stock of a registered enterprise is owned by foreign investors, the position of president, treasurer
and general manager or their equivalents may be retained by foreign nationals beyond the period set
forth herein. Foreign nationals under employment contract within the purview of this incentive, their spouses and unmarried children under twenty-one (21) years of age, who are not excluded by Section 29 of
Commonwealth Act Numbered 613, as amended, shall be permitted to enter and reside in the
Philippines during the period of employment of such foreign nationals. A registered enterprise shall train Filipinos as understudies of foreign nationals in administrative, supervisory and technical skills and shall submit annual reports on such training to the Board.
73
RA 7160 is known as?
Local Government Code of the Philippines.
74
The Local Government Code of the Philippines is known as?
RA 7160.
75
RA 7160, in relation to taxation, provides that?
It provides that each local unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions of the code, consistent with the basic policy of local autonomy, and such taxes/fees/charges shall accrue exclusively to the LGU.
76
What is the local taxing authority in each LGU?
The power to impose a tax/fee/charge or to generate revenue under RA 7160 shall be the "SANGGUNIAN" of the LGU through an appropriate ordinance.
77
What are the fundamental principles of local taxation?
1. Taxation shall be UNIFORM in each LGU
2. Taxes/fees/charges and other impositions shall:
a. be EQUITABLE and PRACTICABLE on the taxpayer's
ability to pay
b. be levied and collected only FOR PUBLIC PURPOSE
c. NOT EXCESSIVE/OPPRESSIVE/CONFISCATORY
d. NOT CONTRARY TO LAW/POLICY
3. The collection shall IN NO CASE BE LET TO ANY PRIVATE PERSON
4. Revenue collected SHALL INURE SOLEY TO THE BENEFIT OF THE LGU unless specifically provided herein
5. Each LGU shall EVOLVE A PROGRESSIVE SYSTEM OF TAXATION.
78
What are the types of local taxes imposed?
1. Community Tax
2. Real Property Tax
3. Local Business Tax
79
Who are the persons liable for community tax? How much community tax shall they pay?
1. INDIVIDUALS - every person who is:
A. Aged 18 and above who is regularly employed on a wage or salary basis for at least 30 consecutive working days or
B. One who is engaged in business or occupation, or
C. One who owns real property with an aggregate value of 1,000 or more or
D. One who is required by law to file an income tax return.
Individuals shall pay an ANNUAL COMMUNITY TAX OF PHP 5 PLUS ADDITIONAL PHP 1 FOR EVERY PHP 1,000 OF INCOME, BUT IN NO CASE SHALL THE COMMUNITY TAX EXCEED PHP 5,000.
2. JURIDICAL PERSONS - shall pay an annual community tax of PHP 500 and an additional annual tax which shall NOT EXCEED PHP 10,000 in accordance with the following:
A. PHP 2 for every PHP 5,000 WORTH OF REAL PROPERTY in the PH owned by it during the preceding year based on the valuation used for the payment of the real property tax under existing laws, found in the assessment rolls of the city or municipality where the real property is situated.
B. PHP 2 for every PHP 5,000 OF GROSS RECEIPTS OR EARNINGS DERIVED by it from business in the PH during the preceding year.
Dividends received by a corporation from another corporation shall be considered as part of the gross receipts or earnings of the said corporation for community tax purposes.
80
Who are the persons exempt from paying community taxes?
1. Diplomatic and consular representatives
| 2. Transient visitors when their stay in the PH DOES NOT EXCEED 3 MONTHS.
81
What is issued upon payment of the community tax?
Community tax certificate - PHP 1.00
82
When is the presentation of a community tax certificate necessary?
1. INDIVIDUALS
a. acknowledges any document before a notary public
b. takes oath of office upon election or appointment
c. receives any license, certificate, or permit from
public authority
d. receives money from any public fund
e. transacts with official business
2. JURIDICAL PERSONS
a. receives any license, certificate, or permit from
public authority
b. transacts with official business
c. receives money from any public fund
83
How shall the proceeds of community taxes collected be apportioned?
50% - general fund of the city/municipality
| 50% - to the barangay where the tax was collected.
84
Explain the time of payment for community taxes.
The community tax shall ACCRUE IN THE 1ST DAY OF JANUARY OF EACH YEAR and SHALL BE PAID NOT LATER THAN THE LAST DAY OF FEBRUARY OF EACH YEAR.
If a person reaches the age of 18 or otherwise loses the benefit of exemption ON OR BEFORE THE LAST DAY OF JUNE, he shall be liable for community tax on the day he reaches such age or upon the day the exemption ends.
However, if a person reaches the age of eighteen (18) years or loses the benefit of exemption on or before the last day of March, he shall have twenty (20) days to pay the community tax without becoming delinquent.
Persons who come to reside in the Philippines or reach the age of eighteen (18) years on or after the first (1st) day of July of any year, or who cease to belong to an exempt class on or after the same date, shall not be subject to the community tax for that year.
Corporations established and organized on or before the last day of June shall be liable for the
community tax for that year. But corporations established and organized on or before the last day of
March shall have twenty (20) days within which to pay the community tax without becoming
delinquent.
Corporations established and organized on or after the first day of July shall not be subject to the community tax for that year. If the tax is not paid within the time prescribed above, there shall be added to the unpaid amount an interest of twenty-four percent (24%) per annum from the due date until it is paid.
85
What are the fundamental principles of Real Property Taxation?
1. Real property shall be APPRAISED AT ITS CURRENT AND FAIR MARKET VALUE.
2. Real property shall be CLASSIFIED for assessment purposes ON THE BASIS OF ITS ACTUAL USE.
3. Real property shall be assessed ON THE BASIS OF A UNIFORM CLASSIFICATION WITHIN EACH LOCAL GOVERNMENT UNIT.
4. The appraisal, assessment, levy and collection of real property tax shall not be let to any private person
5. The appraisal and assessment of real property shall be EQUITABLE.
86
What is the composition of the chief officials of the BIR?
1 Commissioner and 4 deputy commissioners, each assigned to:
a. Operations group
b. Legal group
c. Information systems group
d. Resource management group
87
Explain the declaration of real property by its owner or administrator.
It shall be the duty of all owners or administrators of real property to PREPARE AND FILE WITH THE CITY/MUNICIPALITY ASSESSOR A SWORN STATEMENT DECLARING THE TRUE VALUE OF THEIR PROPERTY.
The sworn declaration of real property shall be FILED WITH THE ASSESSOR ONCE EVERY THREE YEARS DURING THE PERIOD FROM JANUARY 1ST TO JUNE 30TH commencing with the year 1992.
88
Explain the duty of persons acquiring real property OR making improvements thereon.
It is the duty of persons/authorized representatives
1. acquiring at any time real property in any municipality
2. making improvements on real property
TO PREPARE AND FILE WITH THE PROVINCIAL/CITY ASSESSOR A SWORN STATEMENT DECLARING THE TRUE VALUE OF THE PROPERTY WITHIN SIXTY (60) DAYS AFTER SUCH ACQUISITION OR COMPLETION OF SUCH IMPROVEMENT.
89
What is the rule when a person claims exemption from real property tax?
Every person who shall claim real property tax exemption shall file with the provincial/city assessor within 30 days from the date of declaration of real property sufficient documentary evidence in support of such claim.
If the required evidence is not submitted within the period prescribed, the property shall be listed as taxable in the assessment roll, but will be dropped if actually proven to be tax exempt.
90
What are the classes of real property for assessment purposes?
1. Residential
2. Agricultural
3. Commercial
4. Industrial
5. Mineral
6. Timberland
7. Special
91
What are the special classes of real property?
1. Hospitals
2. Cultural
3. Scientific
4. Local Water Districts
5. GOCCs rendering public services
6. Transmission and generation of electrical power
92
What properties are exempted from real property taxes?
1. Owned by Republic of the Philippines or any of its political subdivisions EXCEPT when the beneficial use thereof has been granted to a taxable person.
2. Charitable institutions, churches, non-profit/religious cemeteries, and those lands used for religious/charitable or educational purposes.
3. Machineries and equipment that are actually/directly and exclusively used by local water districts and GOCCs used in the supply and generation of electricity and water
4. All properties owned by duly registered cooperatives
5. Machinery and equipment used for pollution control and environmental protection.
93
What are the rates levied on real property?
PROVINCE - 1% OF THE ASSESSED VALUE OF THE REAL PROPERTY
WITHIN METROPOLITAN MANILA AREA - 2% OF THE ASSESSED VALUE OF THE REAL PROPERTY PLUS:
a. 1% FOR SPECIAL EDUCATION FUND
b. 5% if idle
The assessed value shall be computed as the fair market value of the property multiplied by the applicable percentage based on the assessment/classification of the property.
**See classes and assessment levels on handouts.
94
When does real property tax accrue?
RPT shall accrue on the first day of January of every year.
95
Explain the additional levy on real property for the special education fund.
A province/city/municipality within the Metropolitan Manila Area may levy and collect an annual tax of 1% on the assessed value of real property which shall be in addition to the basic RPT.
The proceeds thereof shall exclusively accrue to the Special Education Fund.
96
Explain the ad valorem tax on idle lands.
A province/city/municipality within the Metropolitan Manila Area may levy and collect an annual tax on idle lands at the rate NOT EXCEEDING 5% of the assessed value of the property which shall be in addition to the basic RPT.
Idle lands shall include the following:
A. Agricultural lands MORE THAN 1 HECTARE IN AREA one half of which is uncultivated/ unimproved.
B. Lands other than agricultural located in a city/municipality MORE THAN 1,000sqm in area one half of which remains unutilized or unimproved by the owner of the property.
Agricultural lands with at least 50 trees to a hectare shall not be considered idle. Also, lands actually used for grazing shall likewise not be considered idle.
97
Explain the payment of RPT in installments.
```
RPT and additional taxes for SEF due may be paid in 4 EQUAL INSTALLMENTS with the following schedule:
1st - On or before March 31st
2nd - On or before June 30
3rd - On or before September 30
4th - On or before December 31st
```
Payments shall first be applied to prior year delinquencies, interest and penalties, if any.
98
What is the maximum amount that a province may impose on the sale/barter/donation/transfer of ownership of real property?
NOT MORE THAN 50% OF 1% (0.005) of the total consideration involved or fair market value whichever is higher.
It shall be the duty of the SELLER/DONOR/TRANSFEREOR to pay the local business tax within 60 days from date of execution.
99
What is the maximum amount that a province may impose on businesses engaged in printing and publication?
NOT MORE THAN 50% OF 1% OF GROSS ANNUAL RECEIPTS FOR THE PRECEDING CALENDAR YEAR OF THE BUSINESS.
In the case of a newly started business, the tax shall not exceed 1/20th of 1% (0.0005) of the capital investment.
100
What is the maximum amount that a province may impose on businesses enjoying a franchise?
NOT MORE THAN 50% OF 1% OF GROSS ANNUAL RECEIPTS FOR THE PRECEDING CALENDAR YEAR OF THE BUSINESS.
In the case of a newly started business, the tax shall not exceed 1/20th of 1% (0.0005) of the capital investment.
101
What is the maximum amount that a province may impose on businesses engaged in sand, gravel and quarry resources?
NOT MORE THAN 10% OF FMV IN THE LOCALITY PER CUBIC METER OF STONES/SAND/GRAVEL/EARTH.
102
What is the maximum amount that a province may impose on professionals exercising a practice requiring government examination?
NOT MORE THAN 300 PHP, payable in the province where he practices his profession, if he practices in several places, in the province where he maintains his principal office.
The professional tax shall be PAYABLE ANNUALLY ON OR BEFORE JANUARY 31ST.
103
What is the maximum amount that a province may impose on operators of amusement places?
NOT MORE THAN 30% OF THE GROSS RECEIPTS FROM ADMISSION FEES.
104
What is the annual fixed tax for delivery truck/van of manufacturers or producers/wholesalers?
The province may impose a local business tax of NOT MORE THAN PHP 500 FOR EVERY TRUCK/VAN/OTHER VEHICLES OF MANUFACTURERS/PRODUCERS/DEALERS OF:
1. Distilled spirits
2. Liquors
3. Soft drinks
4. Cigars and cigarettes
5. Other items as determined by the sangguniang panlalawigan
105
What is the maximum amount that a province may impose on banks and other financial institutions?
NOT EXCEEDING 50% OF 1% ON THE GROSS RECEIPTS OF THE PRECEDING CALENDAR YEAR DERIVED FROM INTEREST/COMMISSIONS AND DISCOUNTS FROM LENDING/LEASING/RENTALS AND SALES.
106
What is the maximum amount that a province may impose on peddlers?
NOT EXCEEDING PHP 50 ANNUALLY.
107
RA 9505 is known as?
Personal Equity Retirement Account Act of 2008
108
Personal Equity Retirement Account Act of 2008 is known as?
RA 9505
