Readingd in Philippine History Fabro, Lesly Ann A. DEC. 15, 2020

READINGD IN PHILIPPINE HISTORY
MODULE 16
FABRO, LESLY ANN A. DEC. 15, 2020
CLASSIFICATIONS OF TAXES – RESEARCH THE MEANING OF ALL THE TAXES UNDER EACH
CLASSIFICATION.
A. According to the Subject Matter or Object
1. Direct tax – Direct taxes are one type of taxes an individual pays that are paid straight or
directly to the government, such as income tax, poll tax, land tax, and personal property tax.
Such direct taxes are computed based on the ability of the taxpayer to pay, which means
that the higher their capability of paying is, the higher their taxes are.
2. Property tax- imposed on property (real or personal), in proportion either to its value or
in accordance with some other reasonable method of apportionment. • Example: Real
property tax
3. Excise tax- tax imposed upon the: – Performance of an act – Enjoyment of a privilege –
Engaging in an occupation • Example: Income tax
B. According to Who Bears the Burden

1. Direct tax- tax that is demanded from the person who also shoulders the burden of the
tax. (e.g. Income tax, estate tax, donor’s tax)
2. Indirect tax- tax demanded from one person in the expectation and intention that he shall
indemnify himself at the expense of the others. (e.g. VAT, percentage tax)
C. According to the Determination of the Amount

1. Specific tax- tax of a fixed amount imposed by the head or number, or by some standard
of weight or measurement; it requires no assessment other than a listing of classification of
the subjects to be taxed. (e.g. Excise tax on distilled spirits, cigars and cigarettes)
2. Ad Valorem tax- tax of a fixed proportion of the value of the property with respect to
which the tax is assessed; it requires the intervention of assessors or appraisers to estimate
the value of such property before the amount due from each taxpayer can be determined.
(e.g. Real estate tax)
D. According to Purpose
1. General , fiscal or revenue tax – . tax that is imposed solely to raise revenue for
government expenditures. (e.g. Income tax, VAT)
2. Special or Regulatory tax- tax imposed for a special purpose. (e.g. Sugar adjustment taxes,
Oil price stabilization fund)
E. According to Scope
1. National scope- tax imposed by the national government. (e.g. Internal revenue taxes,
customs duties) .
2. Municipal or local scope- tax imposed by municipal agencies. (e.g. Sand and gravel tax,
occupation tax)
F. According to the Graduation or Rate

1. Proportional tax- tax based on a fixed percentage of the amount of the property, receipts
or other basis to be taxed. (e.g. VAT) •
2. Progressive tax- tax the rate of which increases as the tax base or bracket increases. (e.g.
Income tax, estate tax, donor’s tax) •
3. Regressive tax- tax the rate of which decreases as the tax base or bracket increases.
RESEARCH ON ALL OF THE FOLLOWING BELOW
Taxes imposed by the National Govt.
1. Income tax- Income tax is a type of tax that governments impose on income generated by
businesses and individuals within their jurisdiction, and used to fund public services, pay
government obligations, and provide goods for citizens.
2. Estate tax- a tax on the right of the deceased person to transmit his/her estate to his/her
lawful heirs and beneficiaries at the time of death and on certain transfers, which are made
by law as equivalent to testamentary disposition. It is not a tax on property. It is a tax
imposed on the privilege of transmitting property upon the death of the owner. The Estate
Tax is based on the laws in force at the time of death notwithstanding the postponement of
the actual possession or enjoyment of the estate by the beneficiary.
3. Donor’s tax- Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous
transfer of property between two or more persons who are living at the time of the transfer.
It shall apply whether the transfer is in trust or otherwise, whether the gift is direct or
indirect and whether the property is real or personal, tangible or intangible.
4. Value-added tax- (VAT) is a form of sales tax. It is a tax on consumption levied on the sale,
barter, exchange or lease of goods or properties and services in the Philippines and on
importation of goods into the Philippines. It is an indirect tax, which may be shifted or
passed on to the buyer, transferee or lessee of goods, properties or services.
5. Percentage tax- is a business tax imposed on persons, entities, or transactions specified
under Sections 116 to 127 of the National Internal Revenue Code of 1997 (also known as Tax
Code), as amended, and as required under special laws.
6. Excise tax- is a tax on the production, sale or consumption of a commodity in a country.
7. Documentary tax stamp- is a tax on documents, instruments, loan agreements and
papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or
property incident thereto.
Income tax for Individuals

1. Compensation in come ( salary and wages )- Compensation describes the cash rewards
paid to employees in exchange for the services they provide. It may include base salary,
wages, incentives and/or commission.
A salary (or wage) is a fixed amount paid in exchange for an employee’s services
2. Income of self-employed individuals and/ or professionals- The 8% tax is applicable only
to self-employed individuals (sole proprietors and professionals) whose gross receipts or
gross sales and other non-operating income for the year do not exceed the three million
pesos (P3,000,000) value-added tax (VAT) threshold and are not subject to other types of
percentage tax. If the small business is owned by a corporation, the 8% tax will not apply.
3. Capital gains tax- is a tax on the growth in value of investments incurred when individuals
and corporations sell those investments.
4. Interests- the monetary charge for the privilege of borrowing money, typically expressed
as an annual percentage rate (APR). Interest is the amount of money a lender or financial
institution receives for lending out money.
5. Rents- used as a part of the produce which is paid to the owner of land for the use of his
goods and services.
6. Royalties- are payments made in exchange for the right to use another party's property. If
you make or receive royalties, it's important that you keep track of your payments.
7. Dividends- a share of profits and retained earnings that a company pays out to its
shareholders. When a company generates a profit and accumulates retained earnings, those
earnings can be either reinvested in the business or paid out to shareholders as a dividend.
The annual dividend per share divided by the share price is the dividend yield.
8. Annuities- insurance contracts that promise to pay you regular income either
immediately or in the future.
9. Prizes and winnings- The Internal Revenue Code states that under certain circumstances
the value of prizes and awards/gifts to individuals is considered taxable income.
Merchandise or products won as a prize or award will be considered at the fair market value
and could also be considered taxable income.
Prizes and winnings from sources within the Philippines - 20%. However, prizes amounting
to P10,000 or less shall be declared as part of the income subject to the schedular tax rates
10. Pensions- a type of retirement plan where employers promise to pay a defined
benefit to employees for life after they retire.
11. Partner’s share from the profits of partnership- When forming a partnership, the
business owners have the option of creating an agreement that dictates how profits or
losses pass through to members of the partnership.
V111. ASSESSMENT ;
Directions: Read each question carefully and then encircle the answer that best fits the
question.
1. C
2. B
3. A
4. A
5. C
1X. REFLECTION :
Having read this module I realized that, basically, everything that I have or even do is
being taxed. While having my readings about the income tax reform, Idiscovered that the
Philippines has the highest personal andcorporate taxes. I was wondering how other
countries, even though they have lower income taxes, still managed to boost their
economy.
Not only do our taxes disproportionately burden the poor and benefit the rich, but they
also yield too little revenue given the distortions they create. And still there is importance of
tax in the Philippines. Taxes help the government fund their projects for economic
development. It's also the lifeblood of outstanding government employees, like teachers.
Contributing your share of the pie greatly helps in the development of the Philippines as a
whole.

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READINGD IN PHILIPPINE HISTORY

FABRO, LESLY ANN A. DEC. 15, 2020

B. According to Who Bears the Burden

C. According to the Determination of the Amount

F. According to the Graduation or Rate

Income tax for Individuals

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