[TOPIC 1] OVERVIEW OF THE PHILIPPINE TAX SYSTEM | The National Internal Revenue Taxes

Summary

In this video, the presenter explains the overview of the National Internal Revenue Taxes in the Philippines. These taxes, which fund government operations, are grounded in key principles such as fiscal adequacy, equity, and administrative feasibility. The video covers the three main categories of national taxes: income taxes, transfer taxes, and business taxes, detailing their structures and purposes. It also touches on the importance of documentary stamp taxes on legal transactions. Future videos will delve deeper into transfer taxes, business taxes, and excise taxes to further explain their roles in the Philippine taxation system.

Takeaways

• 😀 National Internal Revenue Taxes are the primary source of government revenue in the Philippines, enabling it to fund public services and operations.
• 😀 Tax laws in the Philippines are guided by fundamental principles, including fiscal adequacy, theoretical justice, and administrative feasibility.
• 😀 Fiscal adequacy ensures that the taxes raised are sufficient to meet government expenditures.
• 😀 Theoretical justice dictates that taxes should be based on a taxpayer's ability to pay, ensuring fairness in the taxation system.
• 😀 Administrative feasibility means that tax laws must be enforceable and practical to implement effectively.
• 😀 The necessity theory states that taxes are a fundamental part of governance, providing funds for essential public services like education, health, and infrastructure.
• 😀 The lifeblood theory emphasizes that without taxes, the government would be paralyzed due to lack of financial resources.
• 😀 The benefit-protection theory suggests that citizens pay taxes in return for the public services and protections they receive from the state.
• 😀 National Internal Revenue Taxes in the Philippines can be divided into three main categories: income taxes, transfer taxes, and business taxes.
• 😀 Income taxes are levied on individuals and corporations based on their earnings, including personal income, capital gains, and passive income.
• 😀 Transfer taxes are imposed on the transfer of property, either through gratuitous transfers (e.g., gifts or inheritance) or onerous transfers (e.g., sales or exchanges).
• 😀 Business taxes include VAT (Value-Added Tax), percentage taxes, and excise taxes, all of which are designed to tax specific goods, services, and transactions.
• 😀 Documentary Stamp Tax is imposed on transactions involving written documents, such as contracts or certificates, required for legal and administrative purposes.

Q & A

What are national internal revenue taxes in the Philippines?

National internal revenue taxes, also known as national taxes, are the primary source of revenue for the Philippine government. These taxes are essential for funding government operations and services.

What are the main principles of taxation in the Philippines?

The three main principles of taxation in the Philippines are fiscal adequacy (ensuring sufficient funds for government expenditures), theoretical justice (taxes should be based on taxpayers' ability to pay), and administrative feasibility (tax laws should be enforceable and practical).

What is fiscal adequacy in taxation?

Fiscal adequacy refers to the idea that the taxes imposed by the government should generate enough revenue to meet government expenditures, ensuring that the government can operate effectively.

How does the principle of theoretical justice influence tax laws?

The principle of theoretical justice suggests that taxes should be levied according to the taxpayer's ability to pay. This ensures that individuals or businesses are taxed based on their financial capacity.

What does administrative feasibility mean in terms of taxation?

Administrative feasibility means that tax laws must be structured in a way that allows them to be effectively enforced by the government. This ensures that tax collection is efficient and practical.

What is the necessity theory of taxation?

The necessity theory of taxation posits that taxation is necessary for the government to generate funds to meet the needs of its citizens, such as for protection, infrastructure, healthcare, and education.

What is the lifeblood theory of taxation?

The lifeblood theory states that taxes are essential for the survival of the government, as without taxes, the government would lack the financial resources to operate and serve its citizens.

What is the benefits protection theory of taxation?

The benefits protection theory suggests that there is a reciprocal relationship between the government and its citizens. The government provides essential services such as education, healthcare, and security, and in return, citizens must pay taxes to support these services.

What are the three main categories of national taxes in the Philippines?

The three main categories of national taxes in the Philippines are income taxes, transfer taxes, and business taxes.

What types of taxes fall under income taxes in the Philippines?

Income taxes in the Philippines include graduated taxes, an 8% optional rate, corporate taxes, and final taxes on passive income. These taxes are levied on individuals and businesses based on their income.

What is the difference between gratuitous and onerous transfers?

Gratuitous transfers refer to property transfers given without compensation (such as gifts or inheritances), while onerous transfers involve a transfer in exchange for compensation (such as a sale).

What types of taxes are imposed on transfer transactions?

Transfer taxes are imposed on transactions involving the transfer of property. These taxes include estate tax (for transfers upon death) and donor's tax (for gifts made during a person's lifetime).

What are business taxes in the Philippines?

Business taxes in the Philippines include value-added tax (VAT), percentage tax, and excise tax. VAT is imposed on goods and services, percentage tax applies to specific business activities, and excise tax is levied on goods such as cigarettes and vehicles.

What is excise tax, and what products are subject to it?

Excise tax is a tax imposed on specific goods, often considered luxury or sinful products, such as cigarettes, alcohol, and vehicles. It is also levied on certain goods deemed harmful or non-essential.

What is a documentary stamp tax?

A documentary stamp tax is imposed on documents and transactions that are in writing. It is required for certain transactions, such as securing diplomas or filing documents with the government.