Kerek CPAR Lectures PDF

CPAR 2018 Audio Lectures TAXATION LAW 1 Atty.
Dante Dela Cruz

Transcript 3S AY 2018-2019

INTRODUCTION AND GENERAL PRINCIPLES
Bakit nagagawa ng government na maningil ng taxes? Because the government must exist and there are three
powers that the government can exercise without need of any constitutional grant, without need of any law
because they are fundamental powers.
FUNDAMENTAL POWERS OF THE STATE
Police Power
The first one is police power. This is the power of the State to regulate our right to enjoy our liberty, as well as our
right to enjoy our property. And the government will do this in order to promote public welfare. ‘Yan ang primordial
consideration: promotion of public welfare. Salus populi est suprema lex. The welfare of the people is the supreme
law. We live in a country where there is democracy. If you want to roam around, you can. You want to go to Cebu,
Davao, wherever in the Philippines, you have that right. You are free. But when will the government curtail your
right to liberty even if you have not committed a crime? (Because if you committed a crime and you are duly
convicted, you will be deprived of your right to liberty because you will be in prison) Pero kailan ‘yung wala ka
namang ginawang crime and yet the government can say and deprive you of your right to enjoy your liberty and
your right to roam around? It is when allowing you to roam around will endanger public welfare. Here is a leper. A
person suffering from leprosy. Will that disease be transmissible to others? Yes. But if a person is a leper, is he
committing a crime? No. He has a disease but not committing a crime. But if the State allows him to roam around,
will there be danger that he will transfer the disease to others by being within or inside a group? And if he transfers
this to others, will there be a possibility that the others will transfer this to another others? And soon we’ll have a
country where all have become lepers (grabe this extreme example guys HAHAHA) and the government will not
allow that to happen. What will the government do? The government will confine this person to run his facility tests,
depriving him of the right to liberty.
So are you saying na kapag ang tao may transmissible disease, idideprive na siya ng right to liberty? No, only if you
will endanger public welfare if you were allowed to enjoy your liberty to roam around. Here is a woman. A woman
is diagnosed, and is confirmed, to be an HIV positive. Anong sakit niya? Sexually transmitted disease. Also
communicable? Yes. Will that woman be deprived of the right to enjoy liberty to roam around? No, because in
allowing her to roam around, she does not cause danger to the welfare of the public. Hindi 'yan matatransfer by
merely mingling with the crowd. Para matransfer 'yan, you must have sex and you don't do that in a public place.
So hindi por que contagious 'yung disease, or transmissible, ang importante ay nakakaendanger ng public welfare.
Look at the right to your property. If you own a thing, can you do anything to your thing? Can you use your thing?
Can you lend it to others? Yes, you can do anything because you own it. When will the government come in to
deprive you of the right to enjoy your thing? If your thing or property possess[es] danger to the welfare of the
Guinto, Ignacio, Bag-ayan, Acuna, Dela Cruz, Corpuz, Montero, Santos, Constantino, Hiponia, Cueva, Salazar, Baylon
CPAR 2018 Audio Lectures TAXATION LAW 1 Atty. Dante Dela Cruz

public. Tingnan mo. Gawin nating 'yung great fire in the USA, na may danger sa public. Ito 'yung property. In between,
may alley. Have you seen an alley? Ano'ng mas malapad, street or alley? Street. Road or alley? Road. The narrowest
passage is an alley. Ilan lang ang pwedemg dumaan sa alley? Chances are dalawang tao. And now bakit sinabing
great fire? Ito maraming buildings dito. 'Yan. Ito may building din. And this block, itong mga buildings na 'to, on fire.
Ito nalang ang hindi. And the authorities were convinced [that] even if they will summon all the firefighters in the
world, there’s no way they can prevent the fire from taking this property, this building. And they are afraid if that
happens which is inevitable, considering the distance between this building and this building. The chances of the
fire going to this side is very high. Pero hindi pa ‘to nasusunog ha. Pero kapag pinabayaan talagang pupunta ron.
Anong ginawa ng government? Dinestroy ito. Dinemolish. And because it was demolished, the distance between
this building which is on fire and this building gets wider. The fire did not reach this side.
Later, the owner of the property is asking payment from the insurance company. Sabi ng insurance company why
should we pay you. Because naka-insure and building ko. Basahin niyo po ‘yung contract of insurance, naka-insure
against fire. Was your building destroyed by fire? No, and therefore it is not covered by the insurance. Anong ginawa
ng may-ari? Pinuntahan ang government. You took my property. You demolished my property. You should pay.
Anong sabi ng government? Why did we destroy your property? Because your property causes danger to the
welfare of the public and the welfare of the public is the supreme consideration.
So nagdemanda siya. Nakarating sa korte. Anong magiging hatol? May matatanggap siya? Wala. Anong ibig sabihin?
The moment the government exercises police power, you don’t receive any [monetary] compensation. You receive
compensation but not tangible. What do you receive if the government exercises police power? The altruistic feeling
that because you allow the government to take your property and demolish your property, you were able to help
the government to promote public welfare. ‘Yun ang compensation. So ang natatanggap mo sa police power, para
kang nag-donate sa government to promote public welfare. ‘Di ba sa donation you don’t get anything from the
done except a thank you. ‘Yun ang ibabayad sa’yo ng government. Thank you.
Eminent Domain
Ngayon, kung and property mo ay hindi nakakapinsala, kasi kapag dinemolish ‘yan, kapag sinira ‘yan, necessarily
the property is obnoxious. Ibig sabihin nakakapinsala kaya sisirain. Pero the moment exercises the power of
eminent domain, which is the power of the State to take your property upon payment of just compensation in order
to promote public welfare. Ang problema who determines the compensation? So dito ang compensation tangible,
may bayad. Sino ang maddetermine ng just [compensation]? Dapat mag-agree si owner at ‘yung mag-eexercise.
At tandaan ang eminent domain ay pwedeng maexercise ng government at even private individuals. Ang police
power ang nag-eexercise n’yan, government lang. It cannot be exercised by private individuals.
Kailan pwedeng mag-exercise ang private individuals ng eminent domain? If the business is for public welfare. My
dear, ang NLEX, ang SLEX, government project ‘yan. Pero and gumawa n’yan, private contractor. They were allowed

to exercise eminent domain. Kaya ngayon sila ay nakakasingil ng toll. At ‘wag kang mag-alala, ang toll nagwawakas.
Ang tax, hindi nagwawakas. Hanggang mamatay ka, may tax ka. Nailibing ka na nga, may tax pa rin. Ang toll, is the
use of the property belonging to another. And then, you will pay for the use until the owner recovers the investment
and profit.
To prove to you na ang toll nagwawakas, gumamit ka na ba ng NLEX? Nagbabayad ng toll? Tingin mo nagwakas na
dati ‘yung bayad as NLEX? Yes. Ang NLEX ginawa nung panahon ni President Marcos. President Marcos was elected
in 1965. He was reelected in 1969 and cannot run for another reelection in ’73. Probably he did not want to step
down yet, he declared Martial Law in 1972. At isa sa mga naging projects niya ang NLEX. Alam na alam ko ‘yan kasi
nung ginawa ‘yan, pinaalis lahat ng bahay as Bagong Baryo at isa sa mga pinaalis, bahay namin kasi nakatira kami
sa squatters area. Ginawa ‘yung NLEX. Ang gumawa n’yan private contractor. So naninigil siya ng toll. At ‘yan ay
naka BOT (Build-Operate-Transfer). The private contractor built it. It will operate to recover investment and profit.
‘Pag narecover na niya, itatransfer na. It was transferred to the government. So ang may-ari na ng NLEX
government. At ang government hindi na tayo sisingilin dun kasi we own the property. Kaya nga hindi tayo sinisingil
ng toll sa España, sa Roxas Boulevard, kasi nga the people own the property. Ano’ng naging problema? Sino ang
naging in-charge sa maintenance? The government (DPWH and the local government na nakakasakop).
Ang naging problema dyan, wala nang nagma-man ng booths, ‘yung mga bayaran. Wala ng ilaw. May isang popular
‘yan na hatol (?). Hindi niya napuna ‘yung concrete barriers. Bumangga ‘yung kanyang kotse. Patay. At ‘yung ibang
farmers, ‘yung mga kalabaw nila tumatawid kasi guys farm yun eh. Natanggal na ‘yung mga bakod. So the people
were allowed and strangers (?). Nakiusap sila sa government. Tinawid ng government kaya bumalik ang
pagbabayad. Kasi natapos na ‘yung pagbabayad natin eh, sa toll. So merong pumasok na contractor, maintenance,
na napakamura na ng bayad. Eh may nakaisip i-widen ‘yung NLEX. Panibagong gastos kaya tumaas ang toll. At
malapit na naman matapos, hinabaan ang NLEX. Panibago na naman. At malapit na naman siyang matapos,
nagbukas na naman ng mga nakita nila na profitable. Nandyan na ‘yung TPLEX, SCTEX, andami nang mga TEX. Kasi
natatapos po ‘yan. Timing lang, and it will end. Kaya kapag nakita na naman ni contractor na “oh malapit na mag-
end”, mag-eexpand na naman ‘yan para makasingil. At tayo naman natutuwa rin kasi optional lang ang paggamit
ng expressway. You’re not required. If you want to go up north and you don’t want to pay toll, don’t choose the
NLEX. Because if you choose the NLEX and you do not pay, that is evasion. If you do not want to use NLEX, use the
Mc Artur Highway. That is tax avoidance, but lawful avoidance.
Eh paano kapag hindi magkasundo si owner at si government sa halaga [ng just compensation]? Let the court
decide. At dahil ‘yan ay eminent domain, ‘yung property mo dito wholesome. Halimbawa, masikip na ‘yung kalsada
because of progress. Alam mo sa isang lugar kapag walang traffic, walang progress. Kaya kailangan magkatraffic.
Ibig sabihin nagiging progressive ‘yung lugar. Ang problema ng government hindi niya malagyan ng underpass kasi
malambot ‘yung lupa. Hindi rin siya makapag-overpass kasi maraming affected na businesses. Anong gagawin niya?
I-widen ‘yung road. Pag wina-widen mo ‘yung road, nag-eeminent domain ka. Babayaran mo ngayon ‘to. Dati ito
lang ‘yung kalsada eh. Luluwagan. Babayaran mo ‘to. At dahil magbabayad, the government will suffer expenses.

Paano mababawi ng government ‘yung ginastos to improve the property. Paano? Tanong, dati ikaw, looban ‘yung
property mo. Nasa looban kayo. Para makarating ka ng kalsada, maglalakad ka ng mahaba. At ang lupa mo naging
katabi ng kalsada because of the expansion. Will you be benefitted by the expansion? Did the government incur
expenses? Will the value of your land go up? Can the government collect income tax? ‘Wag. ‘WAAAAAAG. Wala
namang income eh. Nag-increase lang sa value.
How can the government recover the expenses incurred in improving the surroundings resulting in the appreciation
of the value of your land? The government collects from you special assessment.
Taxation Power
At ang pangatlo ang pinaka-importante. Dito tayo mahaba ang usapan. Power of Taxation. Here we are talking of
the National Internal Revenue Code and the Local Government Code. [This is] the power of the State to demand
proportionate contributions from persons and property in order to promote public welfare. We have to defray the
necessary expenses of the government.
Alamin muna natin ano ang basic principles [of a] sound tax system. First, dapat and pera enough. Fiscal Adequacy.
Dapat enough or sufficient sa needs ng country. Sino ba namang president ang ayaw maalala na siya ang the best
president the Philippines ever had. And how could you be remembered as the best president the Philippines ever
had? Give what your people need. Gusto ng tao peace and order, ‘di ba? Lagyan mo ng pulis bawat kanto, sigurado
may peace and order. Walang hold uppers, eh may pulis bawat kanto eh. Parang nung martial law, walang
nanghohold up, kasi may marines bawat kanto. Walang nagtatapon ng basura. Walang nagtatapon ng balat ng
candy. Bakit? Kapag nagtapon ka ng balat ng candy, huhulihin ka ba at ikukulong? Hindi. Ayaw ni President Marcos.
Bakit mo ikukulong ‘yan edi magiging unproductive ‘yan. Unproductive na, burden pa ng government kasi pakakainin
mo pa ‘yan. ‘Wag ikulong. Anong gagawin? Bigyan ng walis. Linisin ang EDSA. Magbunot ng damo. Magtatapon ka
pa? Whole day. 8-12. Ipalilinis sa’yo. Kaya may pera. Gusto mo maganda ang education? Lagyan mo ng magandang
paaralan. Lagyan mo ng malaking sweldo. Kaya lang ang problema, kakaunti lang ang nagbabayad ng tax. Parang
tatay, kapag kulang ang pera, even if you want the best education for your children, sampu ang anak mo, minimum
wage earner ka, you probably cannot send them to school. Magsusuffer. So siguraduhin mo na the amount
collected is enough.
Pangalawa, although gusto mong enough, ano kaya ang susunod na basic principle niya? Equality or Theoretical
Justice. Ibig sabihin, while we want to collect, make sure that it based on one’s ability to pay.
At tatandaan mo ang administrative feasibility. It must be capable of effective, just, and convenient administration.
‘Wag ka nalang rin gagawa ng tax course kung hindi mo rin kayang ipatupad.

NATURE AND LIMITATIONS
Tapos makikita mo ‘yung nature of taxation, ‘yan ay inherent in sovereignty. Ano ang ibig sabihin ng word na
inherent? Siya ay inborn. Siya ay innate. The State exercises power of taxation even without constitutional grant
because the State exists because there is money for the government to continue its existence. Pangalawa na
makikita ay ‘yan ay essentially legislative in character. My dear, ang gumagawa ng law tungkol sa taxation ay
Congress. Ang Congress natin as of today, may two (2) houses: the House of Representatives and the Senate. At
itanim sa utak ang constitutional limitation na ‘to: all revenue bills and bills of local application will only originate
from the House1. Sakanya nag-ooriginate ‘yung revenue bills at lahat ng bills of local application. Ano na sir ang silbi
ng Senate? Amendment. Revision. But not introduction of a tax law. The moment na makakita tayo ng bagong batas
tungkol sa taxation, itanim mo sa utak mo na ang nag-introduce nito, Congressman. Hindi nag-iintroduce ng
revenue bills ang Senate. They can only introduce amendments, revisions, pwede mong baguhin. So ‘yung existing,
pwede nilang baguhin. Kagaya ng VAT. 10% ginawang 12%. Pwede kasi existing na.
Next. Ano mang power na hindi mo lalagyan ng limitation, baka magkaroon ng abuso kaya ‘yan ay subject to
inherent and constitutional limitations. My dear, ito ang problema. Dapat ba nating i-memorize lahat? Baka
magkabali-baliktad pa. Ang gawin mo nalang i-memorize mo nalang ‘yung inherent kasi lima lang ‘yon. So lahat ng
hindi mo alam papasok sa constitutional. ‘Di ba? Or kung gusto mo i-memorize mo ‘yung constitutional.
1.) Non-delegability of the power to tax. What has been delegated to you, you do not delegate to others. Lagyan natin
ng example. Ako ang President. Kayo and House. Kayo ang Senate. And then nag-deliver ako ng State of the Nation
Address. Sabi ko sainyo, kailangan ko ng dagdag na pera so please enact laws that will assure a good budget.
Naisipan niyo, sabi niyo, kapag tatayo gagawa, matatagalan pa kasi ang dami natin. Tapos magkakaroon pa tayo ng
mga pagtatalo. Bakit hindi tayo gumawa ng law. Tutal si President ang may gusto at marami naman siyang advisers
so let us pass a law authorizing the president to enact tax laws because he is surrounded by competent and
intelligent advisers and it is easier for them to make a law kasi agent (?) ‘yun eh. Pwede ‘yon? No, bawal ‘yon. You
do not delegate to the other branch of the government the power to enact tax laws. Ang pwede lang ay Congress,
kaya non-delegability.
2.) Pangalawa, exemption of the government from taxation. Ito ‘yung Destination of Income Theory. Useless na i-tax
ang government kasi siya rin naman ang sisingil. You pass a law imposing tax on the collections made by the BIR
or of the collections made by the Bureau of Customs. That would be exercise in futility.
3.) Pangatlo, kasama rin ang territorial jurisdiction. Tax laws will only affect people and property within our territory.
Lagyan natin ng halimbawa. Malapit na ang laban ni Senator Pacquiao at Matthysse. Magkakaroon kaya sila ng
premyo? Question. Can we tax the prices that will be gained by Senator Pacquiao? The fight is in Malaysia. Can we

1
Art VI. Section 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private
bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

tax Senator Pacquiao or the price that he will gain therefrom? Yes, because of territorial jurisdiction. He is a
resident citizen. Can we tax Matthysse? We cannot. We do not have territorial jurisdiction. Paano kung ‘yung laban
gagawin dito? Yes, we can tax kasi pumasok siya sa territory natin.
Kaya ‘wag kang kakabahan, kasi diba nababalita na nagtatayo ‘yung China ng mga kung ano-ano sa Philippine
territory. Baka hindi nila alam, pwede natin silang singilin ng DIS (? I can’t hear it properly I’m sorry but I think it’s
something like a property tax). Aba, property namin ‘yan. Nagtatayo kayo dyan. Umuupa kayo. Eh sir paano kapag
‘di nagbabayad? Ifo-foreclose natin. Sir paano kapag ayaw pumayag? Hihingi tayo ng tulong (LOL). Hindi kasi marami
ang umaangal bakit daw pinapabayaan. You don’t know what’s happening. Probably, baka meron ‘yang
___inaudible___ ‘Di ba? Kasi hindi naman natin nadedevelop. Sayang lang. Eh baka may ibabayad. Baka uupa lang
sila kasi kailangan nila para sakanilang country din. Nakikita mo? Andaming investments? Hindi niyo ba napupuna
na yumayaman tayo? Hindi niyo ba nararamdaman? Kumakain ka ba on time? Nakakapagtext ka ba kung gusto
mo? ‘Di ba? You have money. Kaya ‘wag mong isiping mahirap ka. Yumayaman eh. Kasi tingnan mo ha. Ano ang
magandang basehan bakit yumayaman ang country? Dumadami na ang luxury cars dito. These businesses will not
come here if there are no buyers. Ayaw mo lang bumili (huhuhu I don’t like where this is going, guys. Chz). Tingnan
mo ‘yang mga nasa pader. Andaming SUVs. Alam mo kung bakit? Mas mura sila kasi maliit ang tax nila eh. ‘Yung
mga high-end, mababa ang tax. Tingnan mo. Bakit ba sir mababa ang tax non? Ewan ko, sino ba gumawa ng batas.
So yumayaman ang country. Matuwa ka. ‘Wag kang malulungkot. At tingnan mo, ‘yung mga mangingisda natin
nakakapangisda na ba? O, baka may quid pro quo ‘yan. Sige dalawin mo kami dito. Let the marine resources go to
you. Oh tapos magbigay ka na rin ng investment kasi, pwede namin kayong bigyan ng investment because we can
protect your country. It’s an investment kasi walang pwedeng umatake sainyo. So take it positively. ‘Wag mong i-
negative. Ganon ang tax. Maniwala ka na ‘yung pera mo ginagamit sa tamang paraan. Hindi ibinubulsa ng mga
namamahala. Kasi kapag nalaman mo na ibinubulsa, tanggal kaagad. Tsaka ‘wag mo silang pagdududahan para
mag-enjoy ka.
4.) And next, pang-apat ay ‘yung international comity. How much will it cost you to reach USA? Eight (8) pesos. You will
be in USA. Take a jeepney bound to Roxas Boulevard. Reaching Kalaw, alight. Walk a little. Go inside US Embassy.
Where are you? In USA, because of international comity: friendly relations among nations because of treaty. My
dear, ang embassies ng iba’t ibang bansa, although technically nasa Philippines, because of a treaty, they are
considered as extension of their territories. Kaya ang sweldo ng ambassadors at ng consuls nila, although the
services will be rendered in the Philippines, it should be outside of our power to tax because we will consider their
services done inside their territory. ‘Yan ang international comity. So sa loob ng isang araw, halos maiikot mo ang
buong mundo. Kailangan mol ang ‘yung mga embassy. ‘Dun ka lang. Pare, saan ka galing? US. Saan ka papunta
ngayon? Australia (LOL huhu).
‘Di ba. ‘Yan ‘yung significance ng international comity. We have a treaty. Kaya tingnan mo minsan ‘yung mga
pelikulang pinapanood mo totoo ‘yun eh. Meron ‘yung babaeng chinase ‘di ba. Hinahabol eh. Nakapasok sa embassy

ng USA. Hindi na nahabol because that will be an affront to the integrity of the country kapag hinabol mo ‘yun. Eh
kas inga, may treaty na kapag nakapasok sa embassy ng isang bansa, nandun siya sa bansang ‘yon. Kaya ‘wag kang
aangal na “uy nasa Philippines ‘yan”. Hindi, nasa America sila. Conversely, meron din tayong Philippine Embassy sa
America. Kapag nandun ka, wala ka sa America, nasa Philippines ka.
5.) At tatandaan, lahat ng perang masisingil, hindi ka pwedeng gumawa ng batas na gagamitin for private gain, only
for public purpose. Madaling unawin kung public ‘yan. Follow?
ASPECTS OF TAXATION AND AN EXPANDED EXPLANATION ON THE NON-IMPAIRMENT OF CONTRACTS LIMITATION
It’s high time now na pag-aralan na natin ‘yung taxation natin.
Aspects. The aspects of taxation are first, the levy or the imposition of the tax. Dito mafifeel mo ‘yung burden.
Mararamdaman mo ‘yung impact of taxation. At ang naglelevy or nag-iimpose ay ang Congress. And then makikita
mo ‘yung [second,] collection of the tax sa part ng government, sa part ng individual payment. Dito ‘yung marirelax
na ‘yung burden. Mawawala na. Incidents of taxation. Kaya nga ang levy or imposition (first aspect) is legislative.
Ang mag-eexercise [naman] nito (second aspect; collection), office ng President. Kaya ito ay executive. Through
the BIR or Bureau of Customs. My dear, itong dalawang ‘to, levy at collection, ‘yan ang tinatawag na taxation process.
And therefore the taxation process is both legislative and executive. Combination siya.
Ngayon, ang sabi ng Constitution, meron daw tayong progressive system. At sabi rin sa Constitution, there must be
no impairment of obligations of contracts so gusto nating malaman, sino ang superior? Police power, taxation, or
non-impairment? Kasi isa sa mga constitutional limitation[s] ‘yung non-impairment of obligations of contracts.
Para malinaw, pakinggan ang example na ‘to. Sabi ni President, “Congress, wala ba kayong magagawa para ‘yung
ating mga fishermen ay magkaroon naman ng disenteng source of income? May ready market? And Congress,
pangalawang agenda ko, wala ba kayong magagawa tungkol sa nangyayaring jueteng? Kasi imbis na makakolekta
tayo ng buwis, hindi kasi patago nilang ginagawa.”. In response, the Congress, ngayong 2018, gumawa ng dalawang
law. Two laws were passed. Unang law grants exemption sa lahat ng manufacturer na itatayo sa coastal area at
gagamit ng raw materials galing sa sea. And the exemption is good for ten (10) years. At gumawa rin sila ng another
law allowing jueteng in three (3) regions. Experimental basis. At bibigyan kayo ng franchise to operate jueteng for
ten (10) years.
By virtue of this law, two contracts were signed. ‘Yung isang contract, contract with A and the government. Si A
magtatayo ng business. Manufacturer siya. Itatayo niya ‘yung kanyang business sa Cavite at magmamanufacture
siya ng candies at ang raw materials niya tahong or mussel. Kaya exempt siya sa tax. Na-meet niya lahat eh. Cavite,
sa coastal area, tahong ay product of the sea. 10 years ‘yang exempt. Another contract is made with B and the
government. Binigyan siya ng franchise mag-operate ng jueteng also for ten (10) years.

In 2025, iba na ngayon ‘yung presidente. Sabi ni President: “unang agenda, I need more money. Marami tayong i-
eeffect na projects. Please make laws that will guaranty enough money. Kaya sa 2025, ‘yung bagong Congress
gumawa ng dalawang laws. ‘Yung isa imposing 120 of 1% (???) gross receipts tax on all manufacturers of candies.
Eto si A, objects. Sabi ni A, up to 2028 exempt po ako. And this law violates the contract. Ano ang magpiprevail, law
vs. contract?
Pangalawang law na ginawa, sabi ni Secretary of Agriculture sa Congress, “my dear Congress, in three years time,
we will soon import all our agricultural products”. Why? Naconvert ba into residential and commercial ang ating
agricultural lands? Hindi. Nandun pa rin ‘yung agricultural lands. Eh bakit tayo mag-iimport ng agricultural
products? Wala pong farmers eh. Nasaan ang farmers? Naging jueteng collector. How can we ask them to return
to farming? Walang bisa Sir kasi mas malaki kinikita nila sa balato at commission. At kahit merong bagyo, hindi sila
kinakabahan kasi mas maraming tumataya. Anong pwede nating gawin? Sir, alisin ‘yung trabaho nilang ‘yun. Ah
okay. So another law was passed – a law prohibiting all forms of gambling. Si B nag-object. Sabi ni B, may franchise
ako up to 2028. So sinong magpi-prevail, law vs. contract?
Ito na, bakit gumawa ng law imposing taxes? Anong purpose ng law na ‘to? To raise revenue. So ‘yung unang law to
raise revenue, and therefore, power of taxation. ‘Yung pangalawang law, number two (2), anong purpose? Eh kasi
mawawalan tayo ng farmers, kaya hindi ‘yan to raise revenue. ‘Yan ay need to promote public welfare. So anong
purpose nyan? Exercise of police power.
Question. Law vs. Contract. Sino ang superior here? Law is inferior (guys sabi dito ni sir superior, pero sure ako na
nalito lang siya. Inferior dapat) to the non-impairment clause kapag [‘yung law ay exercise of] power of taxation.
Therefore, contract will prevail. Power of taxation is inferior to the non-impairment clause because the objective
is only to raise revenues. On the other hand, police power is superior to the non-impairment clause because the
objective is to promote public welfare. Sinong magpprevail dito [sa first example]? Law or contract? Contract. Sa
second example? Law.2
In short, contract will prevail kapag power of taxation. Law will prevail kapag police power.
--- END OF TRANSCRIPT OF ATTY. DELA CRUZ’S CPAR AUDIO LECTURE # 1 ---

2
Paraphrased

THE SYSTEMS
Progressive taxation compared to progressive rate because these two are two different things.
When we say progressive system, we are talking with the system, the system is progressive the moment, our direct
taxes are equal or greater than indirect taxes. It will be regressive if the direct taxes will be less than the indirect
taxes.
When we say direct taxes, the one who is required to pay is the one paying, if it is indirect, the one who is required
to pay is not the one paying because he shifts the burden to another. Example of Direct tax- Income Tax, imposed
upon you, you pay the tax; Estate Tax, the estate pays; Donor’s Tax, the donor pays. In Value Added Tax(VAT), you will
noticed, the tax is imposed on the seller yet the seller shifts the burden to the buyer, that’s Indirect, like OPT, Excise
taxes, so the burden is shifted. So if we can shift the burden, it’s indirect.
As regards to rates however, we have progressive rates, regressive rates and proportional rates, here we look at
the amount to be tax and the rate to be use. If the amount of the tax increases, the rate increases, that is
Progressive. Like the Income tax, pag lumaki income mo, lalaki ang rate na gagamitin. Regressive, as the base
increases, the rate decreases, so walang ganito sa Philippines, kasi sa atin, Ability-to-pay principle. The more
income you have, the more tax you pay. Pero meron tayong Proportional, even if the amount to be tax increases,
the base increases, the rate will not increase, example nito ay VAT,tignan mo ang VAT, tumataas ang amount, 1M
or !0M, parehong 12%. Meon ba tayo, dati na tax na minsan progressive, minsan regressive? ANs. Donor’s Tax. Kung
naalala mo dati, kasi sa bagong TRAIN Law, wala nang distinction, so dati, donor and done are not strangers, with
table but if they are strangers, we used the fixed rate, subalit ngayon, wala nang distinction, wala nang stranger or
hindi.
Knowing the basic principles. We now go to the Tax Proper. Pag-aaralan muna natin ay NIRC.
TAXPAYERS
So sa NIRC, titignan muna natin sino ang mga taxpayers. Ang Taxpayers, pwedeng Citizen of the Philippines. Pag
sinabing citizen ka, isa kang Pilipino, at yung isa, Alien. Pag sinabing alien ka, you are non-Filipino, madame ang
tawag ditto ay Foreigner, pero ang tamang tawag sa kanya ay Alien, so pa gang bf mo ay Americano, sya ay Alien.
Nakasanayan kasi natin na pag sinabing Alien, those who are from outer space or other planet.
Una, Citizen muna. Resident Citizen, why, dahil you are residing in the Philippines, so paano pag sometimes, so
scenario 1, scenario 2, paano pag jetsetter ka, meaning minsan pumupunta ka sa ibang bansa, minsan nasa
Philippines ka. So minsan, punta kang Japan, then uwe kang PH, then punta kang Korea then uweng PH then punta
kang Europe then uweng PH, so aalamin natin kung resident ka. Titignan yung kalahati ng taon, basta nasa PH ka,

so if you are in the PH, for at least 183 days. At least!, resident ka. At kelan ka namang tatawaging Non-resident?
Kasi you are residing in a foreign country. May mga Pilipino ba na nasa America na yet they are Filipinos? Tama, so
they are non-resident.
Kelan ka naman non-resident uli? Kung bumabyahe ka, nasa PH ka, nasa foreign country ka pero nasa PH ka for
less than 183 days. O baka naman, nagging isa kang OFW, and may I reiterate this, a person may be both a resident
and a non-resident in one calendar year. And ang pagdi-determine kung resident ka or non-resident is done in a
year to year basis. Bakit ako Sir pwedeng maging resident and non-resident? Mula January, hanggang ngayon, nasa
PH ka, so resident ka, eh bigla pupunta kang Saudi or US para magwork kana dun as OFW, so kelan ka aalis, kunwari,
June 6. SO June 6 onwards, non-resident ka! Because hindi temporary yung pag-alis mo, na babalik ka agad, not
being tourist but as employee, so you will work there, so OFW. So minsan ang pag-alis sa PH, tinitignan, bakit ka
umalis? Mamasyal lang, so doon titignan yung 183 days. Pero kaya ka umalis kasi mag stay kana dun kasi need ng
work mo, OFW ka.
Or baka sa barko ka nagtatrabaho, ikaw ay nasa vessel at crew or complement. Kaya lang titignan yung route ng
vessel. Dapat and route nito ay international, regardless of registry, hindi kailangang na sa ibang bansa niregister
or sa PH. Ang tinutukoy ditto ay barko kung saan ka crew kagaya ng seaman. (Have you seen seaman? Pag madami
sila seamen, nakakita na kayo ng seamen? Ikaw? Araw araw? Hindi, occasional lang? kelan ka nakakakita? Hahaha
weekly ba yan pare? So nagpupunta ka sa pier? kulay puti ang uniform nyan.) Kailangan lang ang byahe nya is
international, so pag bayhe nya is Manila to Cebu, hindi applicable.
Kelan ka naman Alien? Ang alien, pwedeng resident, kasi residing sya sa PH, pumunta ka sa Chinatown, may mga
Chinese ba dun? Bakit until now twag sa kanila Chinese? Because probably, they don’t want to renounce their
citizenship or probably, they are not qualified. Parang ibang Filipino, nasa America, bakit di sila nagihing American?
Probably they are not qualifies or they don’t want to renounce Philippine citizenship.
Meron din mga Alien, na non-resident. Pero tinatwag silang already engaged in the business in the PH, because
they are actually engaged in business in the PH or they are presumed to be engaged in the business in the PH. Why
will they be presumed? If they are in the PH for more than 180 days. So at least 181 days kasi more than. At yan my
dear, hindi kailangang continuous. Yung 180 days at 183 days na nakita mo ay aggregate lang. In one calendar year,
pag nagtotal ka, kasi minsan punta kang January, balik kang March, balik ka July etc, basta pag tinotal mo ay 180
days. At pwede ding not engaged in business, kasi di ka naman engaged in the business in the PH. Why is it
important to know whether may business or wala, whether resident or hindi. Ang unang topic muna natin ay Income
Tax. Itong arrangement: Income tax, Estate, Donor’s, VAT, OPT, Excise, Doc’s Stamp, Special Laws, Local Government.
Importante kasi baka magkakaroon ka ng Income sa PH at sa labas ng PH, papaano kung ikaw ay Resident citizen?
(iti-table ko nalang kasi ganun sya boardJ)

Income Inside PH Income Outside PH
RC Taxable Taxable
NRC Taxable Not Taxable
RA Taxable Not Taxable
NRA-ETB Taxable Not Taxable
NRA-NETB Taxable Not Taxable
Therefore, it is imperative that you know whether the income is inside or outside, because there are taxpayers who
are not taxed outside. The problem, do you know how to determine whetehr an income is earned inside or outside?
So we now determine.
Items of Income. Ang madaling kakakitaan ay pagpapautang so Loan, at magkakaroon yan ng interest income,
ipagpalagay natin ang debtor ay isang Filipino at ang creditor ay isang American. So necessarily, si American may
interest income.
SCENARIO 1: (GUYS, ang hirap pag paragraph, para mas maintindihan, ginawan ko ng table J scenario 1 at scenario
2 sya.. ito yung scenario 1 na paragraph form per lecture ni Sir…)
And if this debtor is a resident of the PH, and the creditor is a resident of the PH, Are we to tax the income of the
American? Yes, so taxable.
If the Filipino is in the PH and the American is in USA, do we tax the income of the American? Not taxable.
If the Filipino is in USA but the American is in the PH, do we tax the income of the American? So Taxable
Paano if yung Filipino is in USA and the American is in America also, do we tax the income of the American? No
SCENARIO 1: ( ito na yung table niya J)

Where Debtor’s TAXPAYER (check
Debtor(Filipino) Creditor(American)
resides creditor)
Nasa PH Nasa PH Taxable INSIDE RA
Nasa PH Nasa America Taxable INSIDE NRA
Nasa America Nasa PH NO OUTSIDE RA
Nasa America Nasa America NO OUTSIDE NRA
SCENARIO 2:
Baligtarin ko, yung debtor yung American, at yung Filipino yung creditor.

Where Debtor’s TAXPAYER (check
Debtor(American) Creditor(Filipino)
resides creditor)
Nasa PH Nasa PH Taxable INSIDE RC
Nasa PH Nasa America Taxable INSIDE NRC
Nasa America Nasa PH Taxable OUTSIDE RC
Nasa America Nasa America NO OUTSIDE NRC
The Code provides, if the source of income is by lending activity, so by lending loan, to determine whether the
income is earned inside the PH or outside the PH, check where the debtor resides, saan sya nakatira (Check 4th
column)
Then titignan mo ang taxpayer( ang taxpayer ay si creditor, check 5th column)
So ang titignan mong base ay yung nasa 4th and 5th , do we tax a RA inside? YES, so TAXABLE (now, check mo na
yung tamang answers na nasa 3rd column J, pero sige na nga, ipaparagraph ko din sa scenario 1 lang, then sa
scenario 2, pacheck nalang table. ThanksJ,) do we tax NRA on income inside? YES, how about RA on income outside,
NO!. Dow we tax NRA on income outside? NO!
Pangalawang pwede mong pagkakitaan, magbibenta ka, Sales. Ano pwede mo ibenta? Your goods and your
services. How do we know if the sale of goods occurred in the PH or in a foreign country? Tinitignan ano binenta
mo, para malaman natin kung tayo ba ay mag li-lex rei sitae or lex loci celebrationes. Alam mo kasi yung principle
na mobilia sequuntur personam. So tignan natin ano binenta mo. Are selling real property, meaning immovable,
ang tinitigan ay nasaan ang property, location. So ang lupa ay binenta mo sa PH, pero nasa America ang lupa,
OUTSIDE. Binenta mo sa America ang lupa sa PH, INSIDE. Don’t look at the place of sale, look at the location- lex rei
sitae,location of the property. So paano pa gang binenta mo ay alahas, damit, sasakyan, so personal property,
movable. Ang titignan mo saan binenta, place of sale. If binenta mo sa America ang alahas mo Outside, pag sa PH,
Inside.
Ang tanong magkano ang ilalagay mong cost sa binenta mo na goods? Ano ang cost na gagamitin? Walang
problema kung ang goods ay manufactured or purchased, meron syang costs, eh paano pag yung goods,
nareceived mo by donation. Bigay ng boyfriend mo kasi generous sya pero nag break na kayo, and you heeded to
the advice of your mother and you sold all the bf gave to you worth 2million, so sold mo sa PH is 2million, so how
much is the cost you will deduct from the selling price? Ang sabi ng code, if you received a thing by way of donation
and later you will sell it, ang ilalagay mong cost is how much is the cost of the property in the hands of the donor,
kung binili nya, kung magkano nya binili. Eh paano pag na-acquire mo by way of inheritance, namatay ang bf
mo,umiiyak ka, tapos pinatawag ka ng executor of his will, may iniwanan syang will, pinamanahan ka nya, so deep
inside, you are happy. So later, you sold the property, magkano ilalagay mong costs ng property, titignan magkano

yung nilagay sa estate tax return ng bf mo kasi yung property na pinaman sayo, part ng kanyang gross estate. So
magkano ang fair market value ng property at the time of inheritance.
Paano naman pag source ng income mo ay by way of dividends. Ang nagbibigay lang anman ng dividends ay
corporation, dividends from corpo. At ang corporation ay dalawa, isang Domestic. Kapag domestic ang nagbigay,
always within, always inside, all dividends declared by domestic corporations are considered income within. Paano
kung may investment ka rin, bumili ka ngs shares of stock ng Microsoft Corporation, so mga Foreign Corpo, so
dividends coming from foreign corporation. Kapag yan foreign, inaaalam mo kung si foreign ba resident
foreign(RFC) or non-resident foreign(NRFC). Pag RFC, ibig sabihin, engaged in business, ang gagawin mo titignan
mo yung nakalipas na 3 years nya bago nagdeclare ng dividends. Magkanoa ng gross income sa PH versus total
gross income. So ang gagawin mo, gross income in PH divided by the total gross income, kapag ang lumabas diyan,
50% or more, then the dividend id partly within and partly without. Kapag ang lumabas ay less than 50%, then the
dividend is within. Bago pa yung TRAIN Law and RA8424, as amended, may dati na tayong Tax Code. At sa lumanng
tax code, may nakalagay na, pag umabot sya ng 85%, 85% or more yan daw ay within, nawala yan sa income tax
pero hindi yan nawala sa estate tax. Kaya pag naalala mo sa Estate tax, pag stockholder ka ng shares of stock
issued by a foreign corpo 85% of its business is in the PH, we consider it within. Yung na amend yung law, nawala
ito. At pag itong NRFC ang nagbigay, lagging without. So ipagpalagay natin, Dividend received Php100,000, kelan
natanggap. Scenario 1, ang gross income(GI) nya says sa PH 60Million at ang GI nya sa foreign country ay 40Million,
kaya total 100Million at 60M/100M is 60% so partly within and partly without. Magkano ang within? 60M/100M times
100K =Php60,000 within. And therefore, pag RC ka, and others, yung 60k taxabale yung 40k taxable, idadagdag mo
as part of your taxable income.
Kapag ito ang without nya naman ay 60M, so ang within is 40M/100M times 100K eh di Php40,000. Ang 40K within
taxable ang 60K without, not taxable kasi sya lang ang tinatax sa outside. Kaya ito isasama mo as part of Taxable
income
Scenario 2: GI PH 40M, at GI foreign country 60M, so magiging 40M/100M= 40% so lahat ng income without. Kaya
yung 100k dividends, sa RC taxable as part of taxable income, yung others, not taxable.
Eh paano pag ang nagbigay ay Domestic? Within, kapag galing sa Domestic corporation. Yan ay taxable but not
part of taxable income kasi may final tax yan, and therefore you will never see sa ITR ng individual as part of taxable
income dividend from domestic corpo, lahat ng given by them although within, pag ibibigay sa individual, may final
tax kasi passive income. Kapag sa Corporation iba, kapag domestic yan, sa RC, yan ay exempt, kapag Non resident-
15%.
Aalisin lang yung mga exclusions at exemptions, unang aalisin dyan yung mga de minimis benefits- Of relatively
small value given to promote health, good will, contentment and efficiency of the employees. At yung mga ibibigay
sayo, for the convenience of the employer, and yung ibibigay sayong 13th month pay at bonus. Ito may specific

amount, up to 90K lang yan. Ito naman may ceiling so up to the ceiling. Kung may excess sa ceiling, the excess
shall be charged to the 90K kasi baka yung 13th month mo di naman kalakihan kunwari 40k so may bakante pang
50K. pero rice subsidy mo umabot ng 30K eh ang rice subsidy lang ay 18K, yung 12K sana ay matatax na kasi up to
ceiling lang pero kaya syang kainin ng 90K. so ang lumalabas, yung mga sobra sa de minimis, taxable but if the 90K
is not yet exhausted, then the excess sa ceiling ng benefit will be absorbed by the 90K. At medyo yung TRAIN Law,
naiba, wala na syang exemption, wala ang personal exemption at additional exemption. Kukunin mo nalang yung
total nyan in 1 year, at yun nga lang, paaano tinatax ang compensation income? Gagamit ng graduated rates, naka
tax table.
Paano kung nagkataon dalawa ang category ng employee mo, ang employee pwedeng rank-and-file or pwedeng
managerial or supervisors na tatanggap ng benefit. So benefit given to rank-and-file employees, lahat ng benefits
na ibibigay mo ay taxable and will be part of taxable income except yung mga enumerated jan( De minimis, relatively
of small value, convenience of the employer, bonus) , paano pag ibibigay sa managerial employees? Taxable din,
taxable pero not part of taxable income. So benefit given to rank-and-file employees, lahat ng benefits na ibibigay
mo ay taxable and will be part of taxable income except kung De minimis, relatively of small value, convenience of
the employer, bonus. At dalawa ang convience of employer, or necessary consequence of employment. Nakakita
kaba ng rank-and-file binigyan ng kotse? Pwede, oo, necessary consequence of employment, kailangan sa trabaho
nya, bigyan mo sya ng kotse kaya di mo sya ita-tax dun. Bakit mo sya bibigyan? Salesman, medical representative.
Rank-and-file sila and need to give kotse kasi they will visit doctors. Now kapag ikaw ay boss, ano pagkakaiba ng
Rank-and-file sa managerial, ang managerial employees, may power of control, they can hire and terminate
employees. Rank-and-file are those being terminated, no power to hire and terminate. Kaya lang yung tatanggapin
nilang benefit ay hindi na idadagdag sa taxable income kasi isa-subject sa fringe benefits tax.
FRINGE BENEFITS TAX
Yang fringe benefits tax (FBT) na yan imposed yan employer ah at withheld at source. So pag in-analayze mo, in
effect ang natax ay the employee, kasi binawas sa kanya yan eh, winendheld at source. Ano ang kamukha ng FBT?
ang VAT, sinisingil sayo ni seller, si government sinisingil lang kay seller. Ang FBT, binabawas ni employer sa benefit
mo parang ikaw ang nagbayad, pero sisingilin ni BIR si employer not the employee. At kung mapapansin mo, para
ma appreciate mo, sa pagdedetermine ng FBT, kinukuha mo ang grossed-up monetary value at minumultiply mo
ng applicable rate. Before the amendment kapag ikaw at resident, and ginagamit na multiplier ay 32%, pag NRA
25%, kapag Special Alien 15% gamit. At to arrive at the grossed up monetary value, kinkuha mo lang yung monetary
value, dinidivide mo yung applicable rate at yung applicable rate, makikita mo 100% yung benefit pero ang kinuhang
tax ay 32 kaya divisor mo ay pag resident 68% kai nga 100% eh, siningil yung atx na 32. Yung Non resident alien, 75,
yung special alien 85. Sa bagong TRAIN Law, nagalaw ito, binago na, 35 na ang ceiling, umadjust din to, 65% na, 100%
yan kaya yung binawas na 35%, kinuha sa benefit mo. Yun yun eh, sisingilin ni BIR s employer nito na binawas kaya
nag 65 lang. So importanteng malaman mo ito, yung monetary value because the two are mechanical, divide
multiply eh. Ano-anao kaya ang mga benefit na ibibigay? Mag-isip tayo. Ang business natin ay construction, ang

office natin ay nasa Manila, sumali tayo at nanalo tayo sa bidding, construction ng 5 star hotel sa Baguio City. Ang
contract price is 500million o baka 1Billion pa, syempre pa gang construct, meron tayong Carpenter , mga
employees, pero mag appoint tayo ng project engineer. At yung construction, ginagawa sa umaga at hapon 8am-
5pm. So dahil may project engineer, umalis sa manila gabi ng mga 11pm, then dumating sa Baguio 5am in time for
the 8am operation. Then 5pm umuwe na sya sumakay bus pa Manila, dumating sa Mnaial mga 11:30pm the sumakay
ulit ng bus pa-Baguio, dumating ulit dun 5-5:30am then after work babalik ulit sa Manila!!!!! So napansin natin na
yung project engineer natin pumapayat kasi pag araw nasa work then gabi nasa byahe, so mamatay to so common
sense will tell us let’s give our project engineer a place where he can stay. Monetary value pag binigyan natin ng
housing. Housing is fo the use of the managerial employee. Aalimin natin ngayon, ibinigay sa kanya yung USE. Ang
tanong ngayon, si employer ba ang may-ari ng bahay. Kung tayo may-ari, titignan yung FMV or kung bumili, tignan
mo yung cost whichever is higher. At kung sino ang nakikinabang sa pabahay? Employee at employer. Tama? Tama,
multiplied by 50% times 5%. Tanong, tama ban a gawin to? Wag, mali! Exempt sa tax yun, bakit exempt? Kasi kaya
mo sya binigyan ng pabahay ay for thr convenience of the employer and the employee necessary consequence of
employment. Wag itatax yun, kaya ka naming binigyan ng pabahay kasi need naming na anjan ka.
Eh halimbawa President ka ng company, at isa sa benefit mo ay housing, so no need na tumira ka jan kaya lang
bibigyan ka ng pabahay. Halimbawa need natin ng president ng company, inofferan natgin si Mr. A, Mr.A can you
join as as Pres. Or sales Manager, so as sales manager Mr.A, you will entertain clients at paminsan minsan, invite
mo sya sa place mo at para maging presentable, bibigyan ka anmain ng titirhan. Hindi yan for the convenience of
the employer, yan for the convenience of the employee, at saka mo ito gagawin. Well magtataka ka, bakit
minumultiply ng 50% kasi nga may benefit, employer and employee. Bakit minumultiply ng 5%? Kasi the estimated
life of a house is 20 years kaya 5% kung ayaw mo multiply pwede mo syang divide ng 20.
What if yung bahay, uupahan lang? the employer leases, kukunin lang magkano yung rent, multiplied by 50%. Itanim
sa utak, wag mong isa-subject sa FBT kapag for the convenience of the employer and/or necessary consequence
of employment. Example doctor, binigyan ng bahay yung driver nya para lagging available kahit madaling araw, kay
hindi iatatx kasi for the convenience of the employer.
Susunod na pwede mog ibigay, binigyan mo ng kotse ang 2 new employees, isa sales manager to meet clients at
isa chief accountant. Ilan ang isa-subject sa FBT? yung binigay sa chief accountant, kasi ung binigay kay sales
manager, necessary consequence of employment. Aalamin mo na ngayon, kanino ibibigay yung ownership ng Car.
Kapag ownership over the car is given to the employee, then yan ang cost, ang monetary value. What if ipapagamit
lang, only the right to use, aalamin natin ngayon kung si employer ba bumili. Kung bibili, kukunin natin yung cost
times 50% divided by 5. Bakit divided 5> estimated life ng car, 5 years. Or the employer merely lease, uupa lang, mag
rerent a car, kukunin lang yung rental times 50%.
Ito yung masakit, yung pangatlo, Loan. Ang monetary value of Loan. Amount of the loan multiplied by the difference
between 12% minus the rate imposed by the employer. Kaya langsa TRAIN Law, in effect, na apektuhan to. Kasi sa

dating law 12% minus the rate imposed. Halimbawa, pinautang ka ng mamnagement ng 1million at ang interest
rate, 3%. Ang monetary value ay 1Million time 12% minus 3% kaya 9% so ang monetary value ay 90K. eh kaso sa TRAIN
Law ay the market rate, in effect paar syang na amend, na ang market rate is 6% ngayon for loan or forbearance
of money unless may stipulation. At wala pang ruling na nilalabas ano ang market rate so ipi presumed natin na
ito parin.
Paano naman kung paaralin ka pa, Educational benefit, magkano ang monetary value. Lalagyan mun antin gg given
to the employees, yan ay yung cost except if exempt, aba, bat ma-exempt? If you are required to render future
service over a period agreed upon, wala nang tax. Managerial employee ka, sabi ko sayo, paaralin ka namin, kame
magbabayad, ipapadala ka nmin sa America para mag-aral, at dahil pag-aaralin ka, mata-tax kame, eh ayaw naming
matax, so ilalagay naming sa contract natin na we will send you to school, we will provide yu with education benefit
but after getting the benefit, you are not to leave the company for 3 years otherwise you will reimburse us, yan
ang tax shield. So yung gastos iki-claim naming as expenses hahanapan kame ng BIR ng proff of payment of FBT,
ipapakita ng employer yung contarct naalagay po jan na matapso ang benefit, di sya aalis, magrerender sya ng
future service for 3 yaers kaya wala pong tax. Kasi pag di yan nilagay sa contarct, magbabayad ang company ng
FBT based on cost ng education so normal yan, tax avoidance ang tawag dyan.
Paano kung pati mga anak pinaparal? Dependents, ang monetary value, cost din. Kung ayaw mong matax kasi
mabait yung company, pati mga anak mo papaaralin, eh dahil sa pagpapaaral sa mga anak mo, magbabayad ng
FBT, ano gagain ng management? Mga empleyado, paaaralin naming mga anak nyo pero ayaw naming ma tax kame
kaya ilalagay natin dito na ma exempt tayo sa tax kasi we will equire your children to be subjected to competitive
examination meaning, ang paaaralin lang ng company ay yung mga anak ng managerial employee na makapasa
sa exam, pag pumasa, paaralin kasi wala kameng tax kasi ipapakita sa BIR na lahat na pinapaaral ay pumasa sa
exam so pag di ka pumasa, di ka paaralin. Kaya yung iba nagagalit kasi yung anak nya maganda lang. eh kasi naman
ang magbabayad yung employer kasi.
Tapos paano pag ipapadala ka sa ibang bansa, ano kaya ang sasakyan, ang topic natin managerial ah, di ipapadal
pag rank-and-file eh. Bakit ka ipapadala? Para umattend ng… mabibitin so tomorrow nalang!!!!
FRINGE BENEFIT
Valuation of Expenses for foreign Travel
Illustration:
In foreign travel, you will take the plane. For air fare: Ikaw ba ay sumakay sa first class or nageconomy ka. And then

pagdating sa foreign country , sasakay ka ng taxi o ng car, may tinatawag na inland travel. At syempre maghohotel
ka kaya may hotel accomodation. Kapag may documentary evidence na kaya ka nadyan, bakit ka nagforeign travel,
para to attend a conference, a meeting, a seminar, a symposium, a convention. Kaya ka aattend, business
connected. Kapag sumakay ka ng first class, so may documentary evidence na ipinadala ka because of this.
Correct? kukunin lang ung cost nito. Ang monetary value is the cost of the airplane times 30%. Pag nageconomy
ka, exempt yan. Yan ay isang eroplano lang yan. ang pagkakaiba ng first class is dun ka sa harap. Malapit ka sa
piloto. Pwede ka nga mahiga dun e. Kasi maluwag talaga. pag nasa economy ka, wala ung tuhod mo nakadikit na
halos sa upuan ng isa. Kasi medyo makitid. Kaya mas mura ang pamasahe dito mas mahal ito. pero itatax yan.
Pag inland travel, ieexempt yan.
Kapag hotel accommodation, ung cost ng hotel accommodation minus US$ 300 per day. So maganda ang kunin
mong hotel accommodation, ang bayad 300 lang para walang matatax. Pero kung wala kang mapapakita kung kaya
ka ipinadala sa ibang bansa, ay para umattend ng conference meeting, iprepresume, pleasure trip yan. So pag
walang documentary evidence na ikaw ay ipinadala para umattend ng mga conference na yan, ito puro cost. cost
cost cost, wala imiminus. follow?
Ayan ang iyong makukuha bilang isang empleyado. e ayaw mo ung empleyado ka. so gusto mong you are the boss
of your own self. magtatayo ka ng sarili.
So dun tayo sa scenario 2. Scenario 1 natin employer-employee.
TAX ON INDIVIDUALS
Self-employed/ Professionals
This time ikaw ay self-employed. Meaning meron kang business or trade or gusto mo pag cpa ka na, magpractice
of profession. Kapag galing ka sa business income my dear, syempre magkakaroon ka ng gross income, tama?
Ayos? So kukunin ung gross mo. pero di ka itatax agad. yan ang pagkakaiba. ang compensation income, wala kang
deduction. itatax ka sa gross. At dun, itatax ka tax table. Dito iba. Correct?
Maganda ito, sa bagong train law. Ung gross mo my dear, pwede kang magclaim ng deduction. Kaya lang pag
engage ka in business, pag nandito ka: self-employed, business or trade, may option ka. Ang option mo dito matax
ka nung graduated rate. So tax table. Or kung gusto mo, masubject ka sa 8% ng gross. Follow?
Provided, ung gross mo not more than 3,000,000. Kapag lumagpas ka ng 3M, wala ka ng option, graduated ka na
lang. So kung gusto mong maggraduated, ano ang pwede mong ibawas sa gross. Pag pinili mo ung graduated,
pwede kang magdeduct ng allowable deduction mo. Less allowable deduction. Anong allowable deduction? May

option ka na naman dito sa allowable deduction mo. Gusto mong magOSD para wala kang problema. Kung ayaw
mo yan, kasi mas mababa yan kung mag-iitemize ka. As the word suggest, ia-itemize mo. iisa-isahin mo. Option mo
yan. Am i clear? Ulitin ko ha. Kapag nagbusiness ka, at maliit lang ung business mo o nagpapractice ka ng
profession, maliit lang ung income mo. Hindi ka lumalagpas ng 3m, pwede kang mamili.
Gusto mong matax sa tax table, dito ka. Follow? Or gusto mong 8% ka na lang. Ayos?
Ngayon, dahil option yan, dun ka sa lesser ang babayaran. Ang tawag dun tax avoidance. Pag inavail mo ito, dito ka.
Pag inavail mo ito, gross na lang kukunin plus other income.
ALLOWABLE DEDUCTIONS
Capital vs. Revenue Expenditures
Dito tau ngayon, ano ang pwede mong i-itemize. Una expenses mo. Follow? Un nga lang pag expenses, titingnan pa
ng BIR. Baka expenses mo, capital expenses or ung tinatawag na capital expenditure. Pag capital expenditure, di
ka papayagang ideduct kasi it will enhance the value of the asset. or it will prolong the life. Ang sabi, should be
capitalize. Ano ang ibig sabihin ng icacapitalize? Will be added as part of the cost of the asset benefited by the
expenditure. Except.
Naku may exception na naman. Baka isa kang private educational institution. Kung isa kang eductational
institution, may option ka. Kung gusto mo capital expenditure, capitalize. Or iconsider as revenue expenditure and
therefore deductible na kaagad.
Matanong kita, may building ka. At kinakabahan ka dahil ung building mo mga 20-30 years old na. Sabi mo, ang
bagyo lumalakas, Pano kung lumakas ang earthquake, huwag naman. And feel mo, pag nagintensity 8, 9 or 10, wag
naman. Baka bumigay ung building mo, e un bahay mo. Tama? So anong gagawin mo, ireretrofit. Ipapastrengthen
mo. Tatawag ka ng contractor, pwede mo bang pagtibayin mga poste ko, Mga haligi. So lalagyan niya ng additional
na bakal. Magkakaroon ka ng expenditure. Tama? Question, will the value of your asset, your building increase?
Sagot. Will it also extend its life? Yes. Yung nagastos mo, papayagan ka ba ng BIR ideduct as expense? Hindi.
Idadagdag mo daw un sa cost ng asset. Ang tawag dun icacapitalize.
Pero kung pano kung iskwelahan ka. ikaw ang gumawa. Pag iskwelahan ka raw, sabi ng tax code, mamili ka. pwede
mong icapitalize, or gusto mong ideduct na kaagad. Bakit ganun kalenient or accommodating pag school? Kasi
nakita nila ang school ang magiging foundation ng kabataan. And the youth my dear, will be the future of the
country. So let us protect our your. Correct. Let us encourage our school to always improve. So pag nagiimprove
ang school, nagiimprove ang students. Nakita mo improve na improve ka, correct? Kasi nagiimprove ang school

mo. Naintindihan ako?
Option mo idagdag sa value ng asset o ideduct na kaagad.
And baka naman ang expense hindi to be capitalize. Ang tawag sa kanya ay revenue expenditure. And therefor yan
ay deductible na. Am i clear?
Anu-ano ang expense na pwede mong ideduct?
1. Interest Expense
Una, interest expense. Para madeduct, interest expense should be not between related taxpayers.
Illustration:
Kailangan mo ng additional capital. Eto ung prospective creditors: pwede kang umutang sa bangko, Pwede kang
umutang sa isang lending company. Pwede ka ring umutang sa tatay mo kasi tatay mo nagpapautang. At dito sa
lending, ikaw ang may-ari ng 50% outstanding e sa iyo. Ang hinihinging interest ay nung bangko, sabi niya 5%. Sabi
nung lending dahil boss ka naman namin, para may principle of separation ng boss at business, 4%. Sabi ng tatay
mo, "Grabe naman yan, ang tataas magpatubo, sakin ka na lang 2%."
So mamimili ka ng uutangan. Pag umutang ka sa bangko, deductible. Pag umutang ka sa lending company, not
deductible. Sa tatay mo not deductible. Bakit di mo madededuct, because your father is related to you. Because
the lending firm is related to you. You own more than 50% of the outstanding shares of a corporation or a firm, it
is related to you. Yung bangko wala namang sinabi na may relation sa iyo. So dito ka umutang para madeduct. Am
i clear?
Prepaid Interest
Next, baka may prepaid interest. If prepaid ung interest, ano mangyayari? Deductible yan in the year the principal
is paid.
Illustration:
Suppose umutang ka 10M. Ang ginawa ng creditor binawas niya ung interest. So prepaid interest is 1M. Kaya ang
naging proceeds na natanggap mo, 9M. Ngayon, ang tanong kailan mo babayaran. Nakalagay sa contract to be
paid, in 1 payment. Magbabayad ka 2021, 10M. Therefor, ano ang deductible interest expense? Deductible interest
expense from 2018 up to 2020, zero. Magdededuct ka interest expense, 2021 pa. Dun mo pa madededuct ung interest

expense. Was it explained clearly?
Interest on Indebtedness Periodically Amortized
What if ang pagbabayad mo hulugan? So payable in periodic amortization. Magbabayad ka, sa 2019-1M, 2020-2M,
2021-3M, so fully paid na utang mo 2022-4M. Magkano and deductible interest expense? So ang deductible IE sa
2018, zero. Sa 2019-ang binayaran mo 1M out of the obligation 10M, interest prepaid 1M, you deduct 100,000. Kung
kelan ka nagbabayad ng principal, dun ka magbabayad ng prepaid interest. Dumating ang 2020, magkano binayaran
mo? 2M. Ang utang mo 10M. Ang interest prepaid, 1M. Papayagan ka ng BIR magdeduct ng 200,000. Dumating ang
2021. Nagbayad ka ng 3M out of 10M. 1M interest magdededuct ka ng 300,000. And finally fully paid sa 2022 nagbayad
ka ng 4M out of 10M, interest prepaid 1M, magdededuct ka ng 400,000. So makikita mo the prepaid interest was
deducted anyway. Kung mapapansin mo kung kelan ka nagbabayad, unti unti mong nadededuct. Pag nag-one
lumpsum ka, dun mo lang dededuct.
Deductible Interest Expense:
What if may pera ka sa bangko. Kikita siya ng interest income. So nandun ka sa situation na uutang ba or
magwiwithdraw na lang. Ano kaya ang ipapayo kung ikaw ang kinonsult. E kasi ung interest mo e meron kang
interest income subject to final tax. Assuming meron kang bank deposit. Ung bank deposit mo magbibigay ng
interest income gross e 100,000. Alam mong subject yan sa final tax na 20%. Ngayon pag wiwithdrawhin mo, wala
kang uutangin. So ang option mo, iwithdraw yan or maincur ang interest expense na babayaran mo 90,000. Ano
ang gagawin mo? ano mas nakakabuti? Withdrawhin ung pera? Pag withdrawhin mo walang interest expense, wala
ka ring interest income. Pag di mo winithdraw, may pera ka sa bangko may interest ka na 100,000 pero babawasan
ng 20%. Pero may interest expense ka rin na 90,000. Ano makakabuti? Drinawing mo ung bulsa. Sabi mo eto ung
bulsa mo. Kapag di mo winithdraw, if you borrow money, may lalabas na 90,000. Kasi interest expense yan. Pero
may papasok 100,000 minus ung tax na 20,000 net na papasok 80,000. Pero kung di ka uutang, wiwithdrawhin mo.
Ano kaya nakakabuti, borrow? withdraw?
Kung ako magpapayo jan, sasabihin ko sa kanya, just borrow the money. It will be better. Sabi naman ni taxpayer,
"atty. How can it be better, only 80,000 will go to my pocket kasi susubject sa 20% final tax eto 90,000 will go out.
Sasagot mo sa kanya, "because you are not thinking about the tax consequence. Kasi pag umutang ka expense ito.
Un nga lang sabi ng law, pag may interest income ka subject to final tax, ung interest expense mo is to be reduced
by the interest income multiplied by the applicable rate. Ipapakita ko sau ha. Kapag umutang ka, may interest
expense na 90,000. Pero babawasan yan ng interest income subject to final tax. Magkano interest income mo
subject to final tax, diba 100,000. Multiplied by the applicable rate, 33%. Imumultiply nati ng 33%, eto ngayon ung
deductible interest expense, 57,000. So you can reduce the taxable income, correct? Assuming na lang nasa table
ka ng 30% so maaavail mo ung tax na 30%. How much is 30% nyan. 17,100. Makakapagtipid ka ng 17,100. So which is
better? Mayroon kang 97,100. Ang lalabas lang 90,000. Kasi pag di ka umutang walang deductible expense kasi wala

ka namang binayaran.
Pangalawa, na pwede mong maging expense.
2. Bad Debts
May mga tao ba marunong mangutang pero balasubas. Hindi ka papayag kaya magiging expense mo na naman.
ang tawag dun, bad debts. Ang requirement lang para pumayag sa BIR, the receivable should be written-off. Mere
setting up of provision is not allowed as deduction. A debit to bad debt expense and a credit to allowance for bad
desbts is not deductible. Because you are hoping mababayaran ka, asset mo pa rin siay e. Hindi pa siya expense.
You are just being conservative. Debit ka ng bad debts expense. Sir, malalaman pa ba ng BIR na di ko pa niwrite-
off? Oo naman. Ipapasubmit ng BIR yang financial statement. Tingnan mo beginning balance ng allowance 120,000.
Tapos during the year, nagdebit ka ng bad debt expense. Nagdebit ka ng 100,000 nagcredit ka ng allowance 100,000.
Tiningnan sa end. Ang naging end mo 220,000. Makikita ba ito ng BIR? Oo makikita sa balance sheet. ito saan
makikita? sa Income statement. nagclaclaim ka ng bad debts expense e. Hindi pwede iaassess ka namin. Why did
you deduct 100,000 when you did not write-off. Tapos sabi mo pano niyo nalaman na di ako nagwrite-off? Lumaki
ung ending mo. So ang credit mo 100,000 nag 220,000 wala kang niwrite-off. Kung ito nakita namin na 200,000 lang,
papayagan ka namin magdeduct ng 20,000 kasi nagwrite-off ka ng 20,000.
What if yang niwrite-off mo na yan e nagbabayad? tatanggapin mo ba yan? Papano mo siya irerecord sa libro?
Syempre ibabalik mo ung receivable kasi niwrite-off mo. So if subsequently debit mo muna receivable credit
allowance. Debit ung cash credit ung receivable. At kung titingnan mo you are not touching income account. Puro
asset account yan and contra-asset. ang tanong, if there is subsequent recovery of receivables previously written-
off ito ba taxable? Magiging taxable ba kung matapos mong iwrite-off ay magbabayad. Ang isasagot mo jan we will
look at the "tax benefit theory."
Illustration 1:
Let income or loss before magwrite-off: Taxpayer 1- 80,000, Taxpayer 2- 20,000, Taxpayer 3- 10,000 loss. A/R written-
off, nagwrite-off ng 40,000, nagwrite-off ng 40,000, nagwrite-off ng 40,000.
Kaya ito ung magiging net income after the write-off. 40,000, negative 20,000, negative 50,000. What if nagkaroon
ng subsequent recovery? Ipagpalagay mo na recover lahat 40,000. What if narecover lang partial. Magkano gusto
mo marecover? Alangan marecover ng 50,000, 40,000 lang ung niwrite-off. Gusto ko may audience participation.
Magkano gusto mo marecover? 10,000. Ang magiging tanong, magkano ang taxable recovery? magkano rin dito
ang taxable recovery? Bakit ko ginawang full? Bakit ko ginawang 10,000? Alam mo kung ako examiner hindi ko
itatanong e. Tatama ka dito e. ito itatanung ko. Ang magiging sagot mo lang e nakabase sa "nung nagwrite- off ba
nakinabang?" Pag nakinabang hanggang saan nakinabang? Pag full, taxable in full. Pag partial, taxable partially. Pag

walang benefit, wala.
Taxpayer 1: Kung di siya nagwite-off ng 40,000 na marerecover naman pala, magkano dapat ito, zero. Magkano
taxable sa kanya? 80,000. Sa magkano siya natax? 40,000 and therefor taxpayer benefitted in full, itatax siya sa
40,000.
Taxpayer 2: Dito kung di siya nagwrite-off sa magkano siya itatax, sa 20,000. and therefor was the taxpayer
benefitted up to 40,000? No. because he was only able to avoid the tax for 20,000 because if the taxpayer did not
write-off, it will be taxed sa 20,000. And therefor the benefit is only up to 20,000. And therefor the recovery may not
be taxable in full even if it is recovered in full because you cannot be benefitted in full.
It's possible there is recovery in full but you will not be taxed in full because you did not benefit in full. Because you
will only be taxed up to the amount you are benefitted. In taxpayer 2, if the taxpayer, did not write-off 40,000, the
taxpayer will only be taxed in 20,000. And therefor the 40,000 was not a full benefit.
Taxpayer 3: Dito kung di siya nagwrite-off, may matatax ba sa kanya. Wala. And therefor was the taxpayer
benefitted? At dahil walang benefit walang taxable recovery. And therefor conclusion, recovery of receivables
previously written-off, may be taxable in full, may be taxable in part, may not be taxable depending on the amount
of the benefit you will receive out of that write-off.
Illustration 2:
Taxpayer 1: 10,000 ang narecover. Because 10,000 was recovered, how much is the actual bad debts? only 30,000
and therefor should deduct only 30,000. And because this should be 30,000, how much should this be? 50,000. For
how much was he taxed? 40,000. And he must be taxed for? 50,000 And therefor he will be taxed at 10,000.
Taxpayer 2: Here, there is recovery of 10,000. If there is recovery of 10,000, how much should this be? 30,000. And
because this is 30,000, for how much should be taxed? For nothing. And therefor was there a benefit for this? Wala
and therefor walang taxable. Bad debts is 30,000 dpat ito zero parin. Kaya walang benefit.
Taxpayer 3: At ito walang benefit. Am i clear? At para lalong gumanda, tingnan ko kung makakasagot ka ha?
Ayos? Tingnan mo kung naiintindihan mo yan bago ko bigyan ng modification. o tingnan mo ha. Dadagdagan ko
lang ng 10,000 para makita ko kung naintindihan mo. Gagawin ko itong 30,000. Pwede? Pwede 30,000 ha. Ginawa ko
siyang 30,000. Magkano ngayon ito? magiging negative 10,000. At gagawin ko lang ung recovery hindi 10,000.
Gagawin ko ang recovery ay 20,000. Pag 20,000 20,000 din ito. Dito pag narecover ay 20,000, magkano ito? We
recover 20,000. At dahil nakarecover ka ng 20,000, magkano dapat ito? 20,000. Therefor magkano dapat ang taxable
income? 10,000. May nireport ka bang taxable income? Wala. were you benefitted up to 10,000? And therefor you

will be taxed at 10,000. Thank you. Getting louder and clearer.
Yan ang tax benefit. Susunod, mabibitin ako marami pang expenses yan. And therefore… Next meeting itutuloy.
DEDUCTIBLE EXPENSE #3: ENTERTAINMENT, AMUSEMENT, AND RECREATIONAL EXPENSES (EAR)
Pangatlong item ng expenses, nakadalawa na tayo diba? Interest tsaka ____. Pangatlo, the easiest way to a man’s
heart is through his stomach. Kaya nga kung may prinopose ka na contract with another, ano magandang gawin?
Siguraduhin mong busog sya, kerek? Kung nanliligaw ka, ipasyal mo, kerek? Pakainin mo. Kaya magkakaroon ng
gastos. So long as business connected, madededuct mo ba ang entertainment, amusement, and recreational
expenses (EAR expenses)? Ang tanong, magkano ang ipapayag ng government na ideduct mo? Titingnan ano ang
binenta mo. Seller ka ba ng goods o seller ka ba ng services? Yung actual EAR na ginastos mo, kukunin natin- yung
actual entertainment, amusement, and recreational expenses, so it must be substantiated by receipts. Di mo ba
napapansin bakit sila humihingi ng resibo dahil kailangan nilang gamitin versus kukunin mo yung net sales Hindi
kailangan nakolekta pati receivables kasali kasi NET SALES ng goods- imumultiply mo yan ng ½ of 1% ang papayagan
ng BIR na madeduct mo ay which ever is lower. Kapag services naman ang binebenta mo, kagaya nalang pag
contractor ka, kukunin natin yung actual EAR na nagastos mo ikukumpara natin sa NET RECEIPTS- at dahil receipts
yan even if the services are not yet rendered but there is already down payment or full payment (BAKIT MAY
TUMUTUNOG? NAGEECHO BA? GWAPO AKOOOOO? NAGEECHO BA? Okay?). So kapag services ang narerender, down
payment, advanced payment isasama mo yan pero RECEIVABLES WAG MO ISASAMA. TANDAAN KUNG KAILAN MO
IDADAGDAG. IBA KASI ANG SALE OF GOOD SA SALE OF SERVICES. Pag sale of goods, SALES EH. Pag services, RECEIPTS.
Are you following? Dun lang mag-ingat ka na sa gagamitin mong base. Tapos imultiply mo yung gagamitin mong
BASE sa 1% at ikukumpara mo whichever is lower. Naintindihan ako?
DEDUCTIBLE EXPENSE #4: RESEARCH AND DEVELOPMENT COST

SUBTOPIC: DEDUCTION BY OUTRIGHT METHOD AND SPREADOUT METHOD
Ipagpalagay mo nung grumaduate ka sa high school, you are the face of the night. Pag araw, face of the day ka
rin. You were then the most beautiful during your high school years. Inaayos mo sarili mo, happy ka dun.
Nagkasundo ang class mo magreunion kayo mga 25 years later. Gagraduate ka sa HS 16/15 ka. 30 years later, 45 ka
na. 45 na rin kaklase mo. Nagkita-kita kayo sa venue, you’re surprised, Bakit ganun? Bakit mas maganda na sila
sayo? Di ka naman nagdepreciate, di ka naman nagdeteriorate, you maintained what you were doing pero bakit
mas maganda na sila sayo? Why is it that your classmates are now looking better than you? Take this now to
business. We , today, control 80% of the market, the 20% is being shared by the competititors so we’re happy.
Assuming we have a consumer product, like shampoo, kasi a woman cannot live without shampoo. Favorite kasi ng
mga babae amuyin ang buhok nila. Di ko nga alam kung bakit eh. (TAPOS NAG-AYA SYA NG MGA NAKATAYONG LALAKI

NA UMUPO SABI NYA, BAKIT LAGI NALANG NAKATAYO ANG MGA LALAKI? BAKA MAMAYA PAG KAILANGAN NANG TUMAYO,
AYAW NA TUMAYO. Comment: ANUNA??) Now, and so, maganda kasi ang product natin, nakakaalis ng dandruff at at
the same time mabango. So yan ang quality. Di natin binago. Eh kaso yung kalaban nating isa, may ginawa sya,
nilagyan nya ng Downy yung shampoo nya at nakakapagpakapal ng buhok. Would that change our market? Aba,
kinain ang market natin. Makita natin 70% nalang ang control ng company natin, pero happy pa rin tayo. Yung isang
kalaban naman, aba ang nagawa nya, ang kanyang buhok finifinger nalang. Finifinger nalang. Finger nalang ang
ginagamit. Minsan kasi pwede kasing fingerin ang buhok- finger combing. Kumain na naman ng market natin. Yung
isang kalaban naman natin and inimbento naman, matibay ang kapit ng buhok. Kahit makipagsabunutan, hindi
natatanggal ang buhok. And So Naalarm Na Ang Execom. Sabi ng EXECOM, if we do not do something about this,
tomorrow we will wake up without share in the market and we dont want that to happen. Anong gagawin natin?
Magconduct tayo gn research. Pang-apat ah, RESEARCH AND DEVELOPMENT COST. So kailangan magresearch sa
gaawin sa shampoo. Nakaimbento tayo ng shampoo, pag ginamit mo sa buhok mo nagcocolor, you don’t need to
go to the parlor. At good for one use lang. Pag naligo ka, mawawala na. Pwede ka papalit-palit. Yan naimbento
natin. Eh magkano lang ang shampoo, isang sachet? Piso lang? Hindi ba piso? Malaki kasi market ng shampoo sa
babae. Ang mga lalaki naman di nagshashampoo. Bakit ka nagsashampoo, pare? Di mo naman naamoy. Sayang pa.
Eh sa mga babae, crowning glory nila yun. Pag-maayos kasi ang buhok ng babae, ibig sabihin maayos sa katawan
yan. Eh so naimbento natin yun, so malaking gastos yan. Ang packaging iniba rin natin, kasi diba yung iba di
mabuksan ang sachet ng walang gunting, pero tayo ginawa nalang nating ziplock lang. So marami tayo idedevelop
so malamang malaki gastos nyan. So sabi ng law, “Papayagan ka namin mamili, ano gusto mo ideduct mo kaagad
ang tawag dun outright- yan OUTRIGHT METHOD.” Eh kaso on second thought, tinanong natin si Chief Accountant,
pag idinenduct ano mangyayari? Sir sa sobrang laki we will have a loss at baka di naitn mabawi yan in the next 3
years para sana maideduct sa net income, ang tawag dun net operating loss carry over. Eh sayang sir ang
deduction. Mas maganda kapag SPREAD NATIN, ididiffer natin, isspread over period of 5 years or 60 months sir.
Kailan magdededuct? Kapag pinili natin ang SPREADOUT METHOD. Kailan magdeduct? Sabi sa law, magsisimula tayo
magdeduct sa time na maramdaman natin ang benefit . Deductible in the year the benefit is received.
DEDUCTIBLE EXPENSE #5: PENSION TRUSTS
Ikaw sabi mo, magpractice ako ng profession. Ang ibibgay lang sayo ng auditing firm maraming trabaho, bat di
nalang ako magtayo sariling business? Nagtayo ka ng business this year. PANGLIMA NA TO. Sa pagtayo mo ng
business, ang start mo ng operation 2018 ang employees mo ay 100 at kung titingnan mo ang mga edad nyan,
kukuha ka bang matandang employee? Syempre hindi. Ang edad ay 20-30. Lumipas ang 30 taon, 2048, meron ka pa
ring 100 employees kaya lang 20 dun old employees, 80 new employees. At sa 20 na old, meron dyan 8 na nung
pumasok 30 y.o palang so sa 2048, 60 na sila. At meron dyan, others, ang edad, 58, 55 or others. Ito kayang 8 na ‘to,
magreresign pa? Malamang di na. Wala na kukuha sa kanila eh. Ano sabi ng law, pagdating ng 65 nyan, compulsory
retirement yan. Plus 5 years, magreretire yan. Ang sabi ng law, babayaran mo yan. Kung wala silang CBA, sabi sa
labor code, babayaran mo yan. Ang maliit na ibabayad mo 1 month per year of service. Ano basis? Average? HINDI.
THE HIGHEST SALARY AND MOST PROBABLY IT’S THE CURRENT. Nung pumasok sila ang sweldo 25k, ngayon 40k na, at

they rendered 35 years of service, so imagine kung ang sweldo nya 40k x 35 years so 1.4 Million times 8 employees=
WOW, YAN AY 11.2MILLION. (may joke sya aboout fingers at multiplication) Imagine you will be needing 11.2 M in 5
years, saang kamay ng Diyos mo kukunin yun? Taon taon may magreretire na naman? Kaya sabi ng law mag-ipon
ka, gagawa ka ng lalagyan. Kaya gagawa ka ng fund, para sa pension ng retirees mo. Para madeduct mo yan, dapat
yan nasa kamay ng independent person, therefore, you will be deprived of possession. Kapag nasayo ang fund, di
papayag ang BIR na magdeduct kasi ilalagay mo ang pangalan kung kanino ang pondo. Ang plan din ay approved
ng BIR. Titingnan dyan ang binigay mo na contribution. Pag ang contribution ay para sa past year ,yan ay iispread
mo ng 10 years. Pag para sa current year, deductible in full. Ipagpalagay natin, itatatag mo yan 2048, kinausap mo
yung actuarial, Mr. Actuarial, magkano po ang dapat kong kcontribute sa pondo para pag dumating ang 5 years,
may 11.2 M ako? Kasi po kikita pa ng interest yan, titingnan ni Acturial ang present value of your money. Halimbawa
sabi nya para sa PAST YEARS, ibig sabihin counted from 2018 to 2047, magcontribute ka raw ng 700k at sabi nya
yung CURRENT YEAR, dapat mag contribute ka and every year thereafter, mag contribute ka 200k. Ang tanong,
magkano ang deductible? So lalabas ito ang contribution mo sa 2048. Para sa past year, 700 ang madededuct mo
lang 10% kaya 70k, para sa current year na kinontribute mo 200 x 100% so ang ideduct mo sayong INCOME
STATEMENT ay 270k. Pero ang kinontribute mo 900k (700k+200k). Ngayon, pag dating ng 2049, hanggang 2057,
magkokontribute ka ng yearly 200 lang, magkano deductible mo? Para sa past year magdeduct ka 70k, current
year 200k kaya ang deductible ay 270k. Even if nagcocontrib ka alng ng 200 kasi ang kinontribute mo ngayon, every
year magdeduct ka ng 10%. Kaya pagdating ng 2058 onwards, ang contribution mo lang ay 200k, wala ka ng
idededuct sa past year, kerek? Ang idededuct mo lang ay current year- 200k ang deductible mo lang ay 200. Okay
ba? Was it explained very clear?
DEDUCTIBLE EXPENSE #6: RENTS/LEASE

SUBTOPIC: DEPRECIATION
Punta naman tayo sa pagpapaupa, expense pa rin. Rental. Kapag rental naman, rent expense, madalas yung rent
na sinisingil para sa current, at may mga lessor gusto magbigay ka pa ng advanced rent. Kung ikaw ay nagdodorm,
nanghihingi rin sila madalas ng security deposit. At kapag long term lease, malamang mag-iintroduce ka ng
improvement. Kapag may improvement, ano man daw ang inimporve mo dyan, di mo pwede kunin at it will belong
to the lessor na upon the termination or expiration of the lease. Titingin tayo ngayon sa mata ni lessee kasi
DEDUCTION ang topic natin. Unless pagsasabayin natin. PAG LESSEE KA, ito yung current rent na to deductible yan.
Itong advanced rent, not deductible. Ang security deposit, not deductible. Kasi ang security deposit is to be returned
upon expiration of the lease- EXCEPT if it is forefeited. If forfeited, ano mangyayari dyan? Aalamin bakin finorfeit.
Finorfeit pala kasi may unpaid rent. If unpaid mga bills mo, or mga damages you caused, magiging ano ngayon to?
DEDUCTIBLE NA TO. Am I clear?
Lagyan natin ng mukha ni lessor. Kapag lessor, the current rent is taxable. The advanced rent, is taxable. OHH
ITATAX NA YAN. KAHIT ANONG BASIS PA YAN. Sir, bakit itatax? THE MONEY IS RECEIVED BY THE LESSOR THEREFORE
THE BENEFIT IS ALREADY RECEIVED BY THE LESSOR. Pano sir kung binawi? DI BINABAWI YAN. Kapag sinigil ka ng
advanced rent, good for 1 year, panigurado lang nya yan kasi baka aalis ka, at mahirapn syang humanap ng papalit

sayo at walang income yung property kaya nanghihingi sya ng advanced rent. Kung gusto mo umalis, pwede, pwede
ikaw pa rin ang gagamit nun during the term na may advance rent ka. Eh pano yung deposit? Mababawi ba?
SYEMPRE, ibabalik yun except if may ganito ka (referring to forfeiture exceptions). Pano yung security deposit?
HINDI SYA TAXABLE KASI IBABALIK NGA. Except kapag nasa exception- Kapag nasa exception, UNPAID RENT, TAXABLE.
MERALCO, MAYNILAD BILLS, NOT TAXABLE. DAMAGES, NOT TAXABLE. Bakit taxable sa unpaid rent dun sa finorfeit na
security deposit? Kasi bayad yun sa rent na di nabayaran. Bat sa meralco di taxable? KASI DI YAN PUPUNTA SA BULSA
NI LESSOR. San pupunta yan? Pag di nya binayaran yan, puputulan yan. Deductible na yan. PROVIDED ENGAGED KA
SA BUSINESS HA. Baka residential. Kasi pag residential, di wala.PERO IF ENGAGED KA IN BUSINESS, EXPENSE NA YAN
. Hindi mo nga binayaran pero in effect binayaran mo kasi yung deposit di binalik. Yung damages, deductible
exppenses na yan, kasi may nasira ka. Pero si lessor di taxable. Eh pano kung yung inupahan mo, long term lease
tapos kaya mo pala inupahan kasi nakakuha ka ng franchise kasi magtatayo ka ng businesss ng Jollibee, KFC.
Halimbawa, may lease ka sa lupa, magtayo ka ng building, sabi pag nagtayo ka ng improvement, at ikaw si lessee,
ag idededuct mo daw every year ay ang FMB ng improvement, at madalas dyan yung cost, iispread mo daw yan
over the remaining term of the lease or the estimated life whichever is shorter- that would be your annual
deduction. Annual depreciation mo at yan ay deductible.
Sa mata naman ni lessor, sya naman ay may option. Kung gusto nya, unang option OUTRIGHT. Irereport nya as
income yung FMB ng property, at madalas cost yan, at every year sya ang magdeduct, kasi nireport na nya na
income. Kung ayaw naman nya, kasi naapakamahal so ang laki ng matatax, kaya papayagan sya MAGSPREADOUT,
ididiffer nya. Papano ka magspread? Kukunin mo yung book value?, Kung di ibibigay ang FMB at the end of the
expration of the lease. Pag nakuha mo na yung book value, ididivide mo sya sa remaining term of the lease at yung
ang ireport mo na income. At syempre, kailangan ng illustration. Ipagpalay natin na nag lease ka. Ito ang terms,
ang rent ay 200k per year, Siningil ka ng na rent para sa 3 years - advanced rent. So 200k plus 400k (200 current,
400 advanced) tapos ang nakalagay pa ang term ng lease, supposed 20 years. At magstart yan ng January 1 , 2018.
At magbibigay ka raw ng security deposit na 200k. Eh ikaw nagintroduce ka ng improvement, may usapan it will
belong to the lessor. Eh ang cost ng improvement mo, ay 25M. Let’s say estimated life ay 25 years. Date of
completion, March 31, 2018. Now, ang magiging tanong, magkano ang idededuct na expense? Sa 2018, yung rental
mo, meron kang current rent na 200k, yung advanced wala ka idededuct. You cannot deduct the advanced rent.
Tapos magdededuct ka ng depreciation, tama? Ang cost mo 25M, ididivide mo ngayon yan sa ESTIMATED LIFE, OR
REMAINING TERM WHICHEVER IS SHORTER. Ano mas maikli? Sasapakin kita, hindi 20 yun! 19.75. Hindi magagamit ni
lessee for 20 yrs and improvement kasi at the time of completion of the improvement, the lease is already 3 months
old. So hindi 20, kung gusto mo 20 ang divisor, dapat nacomplete sya January din. Alam kung san galing ang 75? Yan
ang grade mo sa law nung nag-aaral ka. Magkano yan? Iddivide lang. ANNUAL DEPRECIATION = DEPRECIATION
COST/ESTIMATED LIFE OR REMAINING LIFE WICH IS SHORTER. THAT IS ANNUAL DEPRECIATION. Magkano? 1,265,823.
(sa annual dep cost for 2018) Pag 2018, di ka magdededuct ng 1 year, imultiply mo sya ng 9/12. San galing ang 9?
Ayun o (remaining months). Yung 12 oh, ayun (months in a year)? (Magkano yan, 949,367- ito yung deductible
expense, 1,149,367 in 2018. ( CURRENT RENT + PARTIAL DEDUCTIBLE EXPENSE FOR ANNUAL DEPRECIATION). DEDUCTIBLE
EXPENSE FOR ANNUAL DEPRECIATION= ANNUAL DEPRECIATION X TIME.) Yung Security deposit? WALA MUNA. Wala

namang sinabi na naforfeit na. Sir, magkano ang ideduct sa 2019? Magkano pag 2019? Pag 2019, magkacurrent ka
diba? Kukuha ka ng 200k. Kasi annually 200k. Tapos dito, 1,265, 823. Hindi ka na nag multiply ng 9/12 kasi one year
na. So ang idededuct mo sa 2019 ay 1,465,823. (CURRENT + ANNUAL DEPRECIATION)
LESSOR NAMAN TAYO. Current rent 200k. Advanced 400k. Tapos improvement na diba? Magkano ang cost? Kasi
kukunin mo BOOK VALUE. Para makuha mo ang BOOK VALUE kung di mo makuha ang cost.. Ang cost ay 25M.
Assuming iispread nya, hindi pa kanya. (Pag nagoutright sya, 25M minus depreciation) Kasi ang mangyayari,
gagamitin pa ni lessee. So less the depreciation. 25M, idedepreciate ng 25 years. (25M divided by 25 YEARS)
Imumultiply ng gano katagal gagamitin ni lessee, so 19.75. Magkano ngayon yan? (1m x 19.75) 19,750,000. Ito ngayon
ang BOOK VALUE, at the end of the lease. Ilan yan 5,250,000 Yan ang irereport nya. 5, 250,000 DIVIDED BY REMAINING
TERM (5.250M / 19.75) = 265, 823 imultiply ko ngayon yan sa 9/12 so 199, 367. Kaya ang income nya in 2018 is 799, 367.
Tanong, magkano income nya sa 2019? Magkano ilalagay mo rent? WALA. SASAPAKIN KITA WALA. KASI DI NA SYA
MAGBABAYAD SA RENT KASI NAGADVANCE NA NGA SYA! Bat pa magbabayad kung may advance?Di na sya magreport
ng rent income kasi naireport na nya sa 2018. So 265,823 nalang ang irereport nya. (Note: Di ko talaga alam san nya
nakuha yung 5,250,000. POTA HAHAHA)
(Note: Sobrang daming DITO sa part na to so di ko maintindihan san ba nagrerefer yung DITO.) Dito magstart ang
lease. Magstart sya January 1, 2018. Mageend sya December 31, 2037. Follow? Fallow? Yan ay 20 years. Lease yan.
Tapos si lessee gumawa ng improvement, March 31, 2018. Pero ang improvement nya aabot hanggang DITO, DITO
SYA. Kasi 25 years eh, diba? So tapos na yung lease, may improvement pa. So magwawakas yan plus 25 years, diba?
Ilagay na natin March 31 na rin plus 25 years, is 2043. Mula DITO hanggang DITO, ang magclaim ng depreciation si
LESSEE, si lessor hindi kasi hindi nya nirereport as income pa agad-agad. Kaya kailangan mula dito, si lessor daw
magrereport ng income para DITO yung FMB na irereport nya ay sakto na. DITO mageend diba, aalamin mo magkano
yung halaga ng improvement pagdating dito. Diba ang value ng improvement eto, tama? So nung magexpire, ang
BOOK VALUE ng improvement, 5, 250, 000, the lessor will become richer by 5.250 when the lease contract expires.
Eh sabi ng rule, mag rereport ka na ba dito palang para outright ka dito or dito, para ispread mo? So pag spread
pinili mo, kailanga pag dating dito naireport mo yun, mula dito nagrereport ka na (2018). Sa 2018, ang nireport nyang
income of improvement, nagreport sya ng 199,367. Tapos mula 2019 hanggang 2043, March, nagrereport sya annually
ng 265, 823. TAMA? Ilang taon yan? Diba 19.75. At yung 75 na yan, ito na yan. So may 19 years ka pa na irereport,
imumultiply mo ng 19, dapat ang total nyan ito, 5,250,000- YAN ANG TOTAL para pagdating dito, MULA DITO HANGGANG
DITO, naireport mo na. Para pagdating ng end of the lease, sayo na, ikaw na magdededuct ng depreciation expense
because the building now belongs to you. DITO, you are hoping na pagnagexpire, nandyan pa ang building. Magkano
TO? Pag di nagequal yan, mali ang sinabi ko. Or butal butal. Magkano to? 5050637. May sobrang 4 pesos? Baka sa
rounding off. At the end of the lease, the lessor reported 543250. At later, dahil sya na may-ari, sya na MAGDEDUT
ng depreciation expense. Di na sya magreport dito, KASI NAREPORT NA NYA. No question? Another item of deduction
na.

DEDUCTIBLE EXPENSE #7: SALARIES TO EMPLOYEES
Syempre salaries. Syempre may expense din yan. So syempre yung amount. KAPAG ang empleyado mo senior
citizen, na nasa poverty level or PWD, may mga senior citizen pa ba na nagtatrabaho parin? Andami. KAMI. Senior
Citizen. Dito sa CPAR andami namin. (Nagkwento sya about sa anak nya. NAGLAW DIN YUNG ANAK NYA. OMG???????/
May judge din daw sa hearing na student dati nni Atty.D. anez. HAHAHA. Mas masarap daw sa academe. DAMI NYA
KWENTO AYOKO NA ITRANSCRIBE. Basta yung gist, pumipila raw sya for government ID something, tapos may lumapit
sa kanya na student nya na HEAD pala ng department na yun tapos dinala sya sa office nung department para di
na sya pumila. Eh di na nya maalala ang name, face lang. Tapos sabi nung student ipinasa raw sya ni Atty. SO
NAPAISIP SYA, if binagsak pala nya yung student na yun baka raw pinabayaan na sya sa pila HAHAHA LOL. So apg di
talaga pasado ang bata, tanungin mo dapat, ANO ANG GUSTO MO GAWIN KO PARA MAIPASA KA LANG? Dapat isipin
mo taht your student will become somebody. YUNG ANAK NYA NASA US NA. DAMI NYA KWENTO. Nagapply daw sa US
yung anak nya eh ang employees dun naging student nya. So nung nakita biodata ng anak nya, “Ang tatay mo ba si
Atty. D? Mabait ka rin? Masipag ka rin? You’re hired.”GANYAN) Kapag senior citizen ang kinuha mong employee, ang
deductible expenses mo ay plus 15% ng sweldo nya. So if sweldo nya ay 10k, ang idededuct mo 11500.. Assuming ang
salary nya ay 10k, magdadagdag ka ng 15% at yan ay 1500, yan ang deductible. So magandang empleyado ang senior
citizen. Sa ibang bansa, ang kinukuha nila mga Senior citizen kasi para yung mga senior citizen wag maging idle
kasi yung mga 60 malakas pa yung mga yan. Pag PWD dadagdagan mo ng 25%, so if sweldo nya ay 25k, magdagdag
ka ng 2500. Okay? Yung special law, tsaka natin pag-usapan. Kasi ngayon, ineencourage ang mga mga businesses
na gumawa ng breastfeeding station, para maidededuct nila. Kasi kawawa naman yung mga babae pag walang
breastfeeding station, ilalabas nila yung ano nila, ANG HIRAP SABIHIN, yung container, ganyan. (ANUNA)
DEDUCTIBLE EXPENSE #8: LOSSES
PANO NAMAN KUNG LOSSES. Titignan mo yung TOTAL LOSS, pag TOTAL LOSS kunin mo yung BOOK value less
insurance recovery at salvage. Sundan? Pano kung PARTIAL LOSS? Ibig sabihin, maibabalik sa dating condition.
Kukunin mo yung BOOK value, icocompare mo sa cost to restore the asset back to its original condition kung ano
mas mababa, yun ang kukunin mo tapos ileless mo kung anong makukuha mong insurance recov at salvage. Pano
kung demolition? Losses due to demolition? If yung dinemolish mo acquired to be used in business, NOT
DEDUCTIBLE, it must be capitalized. Syempre di naman naintindihan. Lagyan natin ng drawing. May franchise ka
para magtayo ng gasoline station or outlet ng kfc, tapos nakita mo yung lupa na maganda kasi may simbahan,
eskwelahan, etc. Eh may old building at hindi gagamitin for our outlet. Sabi natin sa may –ari if binebenta nila. Yung
land daw 20M. Yung building bibilhin din 2M kasi luma na. So binili natin both para idemolish ang building. Can we
deduct? NO. Idadagdag mo to sa cost of the land. ICAPITALIZE MO- idagdag sa presyo ng lupa. Pero if used in
business na, ipagpalagay mo may buildingna 2 storey, bawat unit may garahe, (nagdrawing sya) may rooms sya,
ano yung business natin? Bakit may kanya kanyang garahe? Anong business natin???? (NAGJOJOKE ATA SYA) Ang
business antin, MOTEL. Lawful ba ang motel? Last Feb 14, bakit kayo tumatawa, maganda ba yung Feb 14? Gusto yan
ng mga businessman. Gumawa pa ng Mother’s day. Father’s day. Grandpaent’s day. Baka mamaya may Ex’s day pa.

Anong occasion pag Feb 14? Wala kang boyfriend. Makikita mong para kang aping-api. Tayo sa business natin,
naobserve natin 40% lang ang occupancy, andaming vacant. Yung competitors natin may queue. Imagine?
Maaalarm ba tayo? SURE. KASI BAKA MAG-OUT OF BUSINESS NATIN. So tinawag ko ang 2 kong empleyado at
pinagpanggap ko silang customer para pumasok sa competitor Motel para makita natin ang reason why people
patronize them more. So pagdating nila sinalubong agad sila ng guard, at tinanong, “Ano po ang gusto mo sir?” Ang
sabi nung lalaking employee, “I am a lover of nature.” “Sir, dito po kayo, sa jungle room po.” Pagpasok mo, para kang
nasa jungle. Kasi you love nature eh. Ibig sabihin ang rooms nila nakakasa sa taste mo. Samantalang tayo, anong
nakikita sa kwarto natin? PURO MIRROR LANG. Samantalang sa kanila, may jungle theme. Pati amoy, amoy damo.
Kaya ang ganda. So nagreport sila sakin, ‘Ang problema pala natin ang rooms nila magaganda. Tapos may
nagsuggest, “Sir, gusto mo dagdagan ng 3 floors.” Ang sabi ko naman, “You must be out of your mind.” “Sir kaya
naman ng foundation eh.” “Di naman yun ang problema eh. Pag ginawa mo yan, alam mo naman ang impression
ng tao. You’re not there to conduct a meeting or pray a rosary. Tanungin kita anong ginagawa ng tao dun? Bakit
madalas dalawang tao, lalaki’t babae? Minsan lalaki lalaki o babae babae? Anong gagawin? Kakain? Malamang hindi.
MAY IDEA KA? Sa edad mong yan, hindi mo pa naeexperience yan. Wala kang boyfriend. Hindi naman kailangan
naexperience mo. Anong gagawin? Matutulog? Nagiging totoo ka sa sarili mo? “Halika magmotel tayo tulog tayo?”
(ANUNAAAAA HAHAHAHAHA). Lalaki ang tanungin natin. Pare, anong gagawin ng dalawang tao sa motel?
Magpapahinga naman? Talaga ang ganda nyan. Ikaw ano naman sagot? Magsusugal. Alam natin magsesex yan.
Kaya sabi ko, alam nyo kayo, magsasuggest lang kayo di pa maganda. Pag ginawa mong mataas yan, kaya nga
ginagawa natin may sariling garahe, because we want them to feel that they have the utmost privacy. Kapag ginawa
mong may ibang floors at mataas yan, magtatayo ka ng elevator or stairs, imagine the scenario, nasa stairs,
NAGKASALUBONG ANG MAGASAWA? WHAAAAAT DO YOU MEAAAAAAN???? So hindi natin gaagwin nyan. Ang
ginagawang mataas, HOTEL. Makita mo man ang asawa mo sa hotel, di mo iassume na she’s there for sex. Iba kasi
ang impression ng tao. In the hotel, we transact some business. In the motel, you do monkey business. So anong
gagawin natin? Itumba ang building na yan kasi di na natin magagamit. Idedemolish na yan at dati yang ginagamit
sa business. Ang idededuct mo BOOK VALUE less salvage, alangan namag may insurance yan eh di babayran ng
Insurance company kasi sinadya mong idemolish.
DEDUCTIBLE EXPENSE #9: TAXES
Next item will be taxes. Titingnan natin kung Philippine tax ba yan or foreign tax. Kapag nagbayad ka ng tax,
Philippine tax, may non-eductible taxes sya. Ano yang non-deductible? Look at NIRC. Ilan ang National Internal
Revenue Taxes? seven. Ano yung di mo pwede ideduct? Income tax, Philippine income tax ha- not deductible. Ano
pa di pwede? ESTATE TAX. Ano pa? DONOR’S TAX. Maliwanag? Pano yung VAT? So meron din tayong deductible taxes.
Yung VAT, as a rule, nadededuct yan as input tax or cost/expense. Follow? Pwede ba madeduct ang VAT? Yes, if
you’re VAT Registered, you deduct it as input tax. If you’re not VAT registered, you deduct it as cosst or expense.
Ayos ba? pwede rin OPT. Nadededuct yan. Ano yung OPT? Pwede rin excise tax. Pwede rin documentary stamp tax.
Tama? Tapos sa local government, NIRC to ha, National Inernal Revenue Code. Pano naman local government code?
Pwede ba ako magdeduct ng real estate tax? Yes!! If ginagamit mo sa business ang property mo, real property tax.

Ano pa nadededuct? Community Tax. Ang tawag dyan dati nung araw ay RESIDENCE TAX. Ang community tax or
cedula ay com tax. Pano naman kung yung tax ay foreign tax? Aalamin mo kung federal or state tax- sa US lang
naman yun. All others, national tax nila yun. Pag foreign INCOME tax, kapag ikaw ay resident citizen, nasa individual
kasi ako, all others (NON-RESIDENT, RESIDENT ALIEN, NON-RESIDENT ALIEN, WHETHER ENGAGED OR NOT ENGAGED),
SA APAT NA NASA PARENTHESIS, NOT DEDUCTIBLE YAN. Bakit di nagdededuct sa non resident? Because they’re not
taxed on foreign income. Ang pwede lang resident. Kapag resident citizen ka, may option ka, pwede mo sya
idededuct as deduction or i-kecredit mo sya, tax credit subject to limit. Ah, siguro alas dose na. Nagkakaunawaan?
At ito rin, magkakaillustration sa domestic corporation. Pero maiiba ito sa ESTATE OR DONOR’S TAX. TIME NA. OKAY
NA YAN.
SPECIAL DEDUCTIONS BY SPECIAL LAWS
Una, have you read that breastmilk is best for babies. Yeeeees. So we encourage our mothers to breastfeed. But
the problem sometimes is the mother should go to a place and probably she would bring her baby, and if the baby
wants to drink milk, how can the mother do that? Nakuha mo? Alangan naman ilalabas mo yung container mo, eh
may mga ibang lalaki mahilig manilip, mahilig makitingin. So to protect these women and encourage them to
breastfeed, the government will encourage establishments to put up a breastfeeding station. Tignan mo yung mga
malls ngayon diba may breastfeeding sections? Na-encourage sila kasi may special reductions. Syempre
mapapagastos ka, may ref, ipapa-aircon mo diba? So meron kang magiging cost tama? Yan yung magiging
deductible mo. Ano yung premium plus 100% made-deduct mo. So kung ang nagastos mo sa pagpapagawa 100,000,
magkano deductible expense? 200 ohhhhh ayaw mo pa ba nyan?
DONATIONS OF LAND TO PUBLIC SCHOOLS
Pano naman kung gusto mo tulungan yung school mo eh galling kang public school? Applicable lang ‘to sa public
school ha. So kung galing kang public school tas pasok ka sa Adopt-a-School (ASA) program ng DepEd, kung ang
ido-donate mo daw dyan ay lote, kasi ang pera as-is, ang problema lang yung lote, kerek? Assuming you will donate
a piece of land, kukunin natin yung Fair Market Value (FMV) nyan, VERSUS yung zonal valuation or yung assessed
value nyan, tapos gagamitin mo whichever is higher, VERSUS magkano mo nabili, kukunin mo whichever is lower,
tapos plus 50%.
Illustration:
Yung FMV ay 12 Million, ang assessed value 10 Million, ang gagamitin mo 12 Million, versus the cost, nasusundan mo
ko? Kung ang pagkakabili mo sa lote ay 8 Million, ang gagamitin 8 Million. Kung ang cost mo ay 14 Million, ang

gagamitin ay 12 Million. Tapos hindi lang yan ang ide-dedeuct mo. Pinapayagan ka pa ng special deduction
magdagdag ng 50% sa ASA, so parang ene-encourage ka, kerek?
Kapag nag-donate ka naman ng building na ikaw ang nagpagawa, kukunin yung cost plus 50%ng cost mo kasi nag-
construct ka eh. Syempre kung nag-donate ka ng lumang building, yung book value, kung ano ang dino-donate mo.
Kailangan kasama sa ASA, kasi pag hindi, ide-deduct mo yan ng may limit, kerek am I clear?
PRO BONO SERVICES OF LAWYERS
Next, kaming mga lawyers, required po kami mag-render ng pro bono service at least 60 hours. So pano kung nag-
render ka ng free legal service in excess of 60 hours? Yung 1st 60 kasi required yan per year. Eh yang excess,
papayagan ka i-deduct yan. So pano computation sa excess? Kukunin yung value nyan na kung hindi mo sana nilibre
ay may babayaran ka. So may value yan VERSUS Gross Income mo. Gross Income multiplied by 10%. So may lalabas
na amount diba? Ide-deduct mo whichever is lower. Oh may deduction ka pa. Value ng services na ni-render mo
for free.
Example:
Nag-render ka ng services, ang equivalent sana nun kung siningil mo yung kliyente ay 100,000, na hindi mo siningil
kasi mahirap nga kaya kami ang nag-aabono kaya a bono kerek kasi pro bono. So kung 100,000, pwede ba namin
ideduct? Titingnan kung magkano ang total na kinita mo in one year – gross income. Kaya Gross Income yun, na-
deduct mo yung cost, hindi mo na-deduct yung expenses. Diba sa accounting, i-deduct mo yung cost, gross income.
I-deduct mo yung expenses, net. Nakatutok tayo sa Gross Income.
Illustration:
Gross Income mo in the year 3 Million, multiply ng 10%, so 300,000. Eh yung value ng pro bono eh 100,000, so 100,000
ide-deduct mo. Kung ang value ng pro bono 400,000 so 300,000 ang ide-deduct mo. So ico-compare mo yan how
much could that services be if collected VERSUS 10% ng naging Gross Income mo.
EDUCATION
Kapag naman paaaralin mo, educational ha, TESDA meron ohhhhh. Kapag yan educational benefit sa TESDA,
magkano nagastos mo plus 50% deduction. So ine-encourage na tulungan mo yung mga tao mag-aral sa TESDA at
yung nagasatos mo makaka-deduct ka ng amount plus 50%.

EXCLUSIONS
Matapos malaman yung ibabawas, alamin mo yung hindi isasama. Kasi kung may Total, aalisin mo yung deduction,
aalisin mo yung exclusion. Natanggap mo pero hindi dapat isama.
PROCEEDS OF LIFE INSURANCE
Una mo na ipapasok na pera na ie-exclude ay proceeds of life insurance. Halimbawa may husband, so inisip nya
pano pag namatay sya, tas yung asawa nya housewife? So kumuha ka naman ng life insurance. Ang amount ng
proceeds, sabi nya pwede na siguro 80M and ang nilagay na beneficiary ay yung wife. At dito ang topic ay income
tax, maiiba yan pag ang topic ay estate tax. Then namatay si husband, nakabayad sya ng premiums amounting to
8M but there will be proceeds amounting to 80M to be received by the wife.
Q: Ano ang naging cost nito? Is this the insurance premiums of 8 Million?
ANS: No, the cost is the life of the husband. Ang tanong ano ang mas mahalaga, yung 80M o yung buhay ng asawa
mo? Ohhhhh. What is the value of life? Immeasurable. That is the reason why there is no limit as to the amount of
insurance proceeds. You can insure your life for any amount unlike in property insurance, you can only insure your
property up to the amount of its FMV. Sa life insurance, so long as mababayaran mo yung premium kaya hindi sya
taxable because you lost life and the amount of life is immeasurable.
Eh pano kung ganito, pumunta ka sa agent, tinanong mo “ay pag namatay lang ako pwede makuha yung proceeds,
pwede ba ma-enjoy ko rin habang nabubuhay ako”? Sumagot ang agent, “ah sir ang gusto mo ay may term ang
inyong insurance contract, kaya lang sir mas malaki nga lang po ang premium na babayaran pero may limit po ang
number of years”. So may term na ang contract, example 30 years, so kung na-complete mo yung 30 years, ang
proceeds ay 80M less yung insurance premiums. So let’s say, nakabayad ka ng 12M, then taxable po ang 68M. So
yung hindi tinatax, kasi yan ang amount received as returns of premium. Eh bakit sir magiging taxable? Para kang
nag-invest lang, you did not die eh. Pag namatay, ayan walang tax.
CASH SURRENDER VALUE
Ano pa ang amounts received as returns of premium? Cash Surrender Value (CSV). After paying for some time,
itong si insured, nawalan ng trabaho so magde-default sya. So ayan sabi ng insurance company wag mag-alala
kasi may CSV. Ang halaga nyan, let’s say meron ng 4M na CSV, if ica-cancel, meron ng 4M. yan hindi taxable, exclusion
yan. Kasi galing sa premium na binayad. Pero syempre mas maliit yan sa naibayad na. pero may isa pang option, i-
apply sa future insurance premium. So nagtanong si insured, pano kung naubos na yan, wala pa rin syang trabaho.
Answer: maca-cancel.

ASSIGNMENT OF INSURANCE CONTRACT
May isa pang option, merong friend si insured na may utang sa kanya, so pwedeng i-assign. So inassign nya sa
friend yung insurance contract. Friend pays 6M to the insured at sya pa magbabayad ng insurance premium.
Nakabayad pa sya ng let’s suppose, 12 M and then later insured dies. So magkakaron ngayon ng proceeds,
mapupunta kay friend. Nakatanggap sya ng 80M less Cost. Ang cost nya yung 18M (6M + 12 M). Kaya ang taxable
62M.
PRIZES AND AWARDS
Pangatlong item na hindi mo isasama ay Prizes and Awards. Exclusion sya kapag binigay in recognition of your
exemplary performance provided you are not required to render future service as a condition for receiving the
award AND you did not take an active part to join the contest in the field of religious, civic, educational, literary, and
scientific works.
EDUCATION
Q: You are chosen as one of the Ten Most Outstanding Students in the Philippines. May premyo, ita-tax?
ANS: Hindi. Bakit? You did not take an active part to join the contest.
Q: Eh sir pano ko mananalo kung hindi ako nag-participate?

ANS: You participated but you did not join. Ang sabi ng Code, “join” hindi sinabi nag-participate. Syempre bibigyan
ka ng notice, iinterviewhin, may mga gagawin ka. Hindi ka sumali, nag-participate ka.
Q: Eh sir pano ko magpaparticipate kung hindi ako sumali?

ANS: Ni-nominate ka ng school mo or ng organization mo.
LITERARY
1. Q: What if magaling kang manunulat, binigyan ka ng Carlos Palanca Award. Taxable?

ANS: Hindi ita-tax ang premyo. Hindi ka naman sumali. Mula sa mga ginawa mo pagaaralan nila.
2. Q: Pano kung ikaw ang naging FAMAS Best Actress sa pelikulang “Walang Damit”. May premyo, itatax?
ANS: Hindi, you are not required to render future service.
Q: Eh Sir kung hindi ako gumawa ng pelikula hindi ako mananalo.

ANS: Ang pelikula mo ang pinanuod nila. At mula sa pelikula mo nakita ka nila kaya ikaw ang Best Actress.

3. Q: What if ikaw ang Binibining Pilipinas? May pag-asa ka kaya? Yung iba ang ganda-ganda, ang pangit ng sagot
ayun talo. Yung iba hindi kagandahan, ang ganda ng sagot panalo eh kasi matalino eh. So it is the totality kerek.
Kaya ikaw sumali ka, tyak tatalunin mo sila sa talent portion. Sa swimsuit matatalo ka, so dun ka lang babawi
sa talent. So nanalo ka, may premyo, taxable?
ANS: Yes!!! You will then be required to render future service. Nanalo ka, so magiging Ambassadress of Good
Will ka for 1 year at maraming mga conditions.
SCIENTIFIC
Q: Naimbento mo “Plantsa Remote Control”. Para wala ng babaeng mapapaso. May prize ka, taxable?
ANS: No.
SPORTS
Ine-encourage ng government ang sports. If you bring home the gold, guaranteed prize mo 5M. Lalagpas pa kasi
ang daming nagppledge. Kung ikaw nagbigay ng premyo, deductible expense mo by special law. Yun naman
tumanggap non, hindi taxable. Sapat na sa country na mapakinggan sa buong mundo ang Lupang Hinirang.
TAX EXCLUSION: PRIZES AND WINNINGS
O tapos na tayo sa price of exports. What about other prices? Throughout the Philippines and from foreign country.
Pag galing sa Philippines, inaalam yung amount. Para malaman kung ano ang gagawin. Yung premyo sa lotto, hindi
sya under sa prices. Dun siya sa winnings, kasi gambling yon e. So kapag galing sa Philippines, tinitignan mo yung
amount. Kapag 10,000 or less, yan ay nagiging part of taxable income. Kapag sya ay more than 10,000, siya ay final
tax. Kaya kung tatanggap ka ng prices, nanalo ka sa SM, tapos Robinson, tapos Rustan’s, tapos Puregold. Dito
tumama ka ng 8,000, dito 9,000, dito 10,000, dito 12,000. Eto magiging part of taxable income (8,000, 9,000, 10,000),
eto final tax (12,000). Hindi mo siya inaaaggregate. It is on a first price basis. Bawat first na matamaan mo sa raffle,
pag hindi lumalampas ng 10,000, hindi ka sisingilin ng final tax ng sponsor or promoter nung contest. At kapag
lumampas ng 10,000, wag mo tatanggalin yung 10,000. Halimbawa, 12,000 ah, isipin mo pag 12,000, yung 10,000 part
ng taxable income tapos yung 2,000, final tax, hindi. Yung buong amount. So pag 12,000, dun ka kukuha ng 20%. Kasi,
hindi siya dapat hiwa-hiwalay. Buo mo siya. Kasi kapag inaggregate mo yan, lampas ng 10,000 yan. Nag-aaggregate
tayo sa number of days para malaman mo kung resident citizen or non-resident citizen, at kung engaged or not
engaged in business kapag alien.

Kapag galing sa foreign country, inaalam mo kung sya ay resident citizen. Yan ay part of taxable income always,
regardless of the amount. So halimbawa, ikaw ay tumama sa pa-raffle ng Abercrombie and Fitch, Coco Cabana.
Kunware 8,000 lang, eto 12,000, taxable income parehas yan. We cannot instruct Coco Cabana to deduct the final
tax, wala tayong jurisdiction sa nagbigay ng premyo. “E sir bakit dito may nakikita ako prices are tax-free”. Ang ibig
sabihin, the sponsor will shoulder the tax. Para hindi ka na mabigatan. Kasi minsan, merong department store ang
promo nila, Mercedes Benz. Imagine kung 3M yon, at ikaw ang nanalo, sisingilin ka ng 20% final tax dyan. 600,000.
Kaya madalas hindi nila nakukuha, ibinebenta na lang, yun namang bumibili babaratin, sasabihin ng bumibili 3M ang
market value nyan, pero magbabayad ka ng 20% nyan, 600,000 yan. So nanalo ka lang ng 2.4M. Pag hindi mo
nabayaran yung tax kasi nakalagay prices not claimed within 60 days shall be forfeited. So yung iba
magsasamantala. “bilhin ko nalang ng 1M”. Pero kapag galing sa other taxpayers, not taxable. Not part of taxable
income, because it is not taxable. Ang topic kasi natin ay individual eh, kung nagkataong corporation yan, domestic
corporation, taxable ah. “Bakit sir eto lang ang taxable?” Only a resident citizen insofar as individuals are concerned,
are taxable in income outside.
Matapos malaman yan, tignan naman natin yung winnings. Sugal to. Eto gambling, wagering transaction. To wager
is to gamble. Inaallow naman natin, kasi pag winnings, aalamin nyo muna yung gambling ban a ginawa, legal, or
illegal. Meron bang mga legal? Meron. Kaya merong exclusion. Exclusion kapag galing sa PCSO. Sweepstakes. And
Lotto. Exclusion siya up to 10,000 na lang sa bagong TRAIN Law. Sa luma, exception yan. Kaya kung nanalo ka sa
lotto 100m last year, makukuha mo buo, walang tax. Because of the amendment, exempt na lang ay up to 10,000.
Dati full amount, exemption, under sa old law. At meron ding mga, pag legal, not part of taxable income, kasi,
nasubject na to final tax. “Sir may mga sugal ba na legal?” Meron, Kagaya ng PAGCOR. And lately, may jai-alai. Hindi
nadadagdag yan sa taxable income, dahil nasubject na yan sa tax. Have you heard of horse racing? Pwede kang
tumaya don, mananalo ka, may winnings. Cockpits, have you seen cockpits? Sabungan. Tumaya ka sa manok, nanalo
yung manok mo, may winnings. PAGCOR. Nakapunta ka na ba sa mga hotel, yung may sugalan? Madalas yan sa mga
5-star hotel, kasi parang ang pumupunta dyan mga kadalasan, mayayaman. Kasi kung mahirap ka, wag ka pupunta
dyan. Dun ka na lang sa illegal na sugal. “Sir paano ko ba malalaman kung legal or illegal?” Simple. Kapag natatakot
kang mare-raid yung sugalan, illegal yan. Kapag nire-raid yan, eh ikaw ba pumunta ka ng karerahan ng kabayo,
kinakabahan ka na mare-raid? Hindi ah, legal yan. Sa sabungan, nire-raid? Hindi. Alam na may tayaan don, kasi may
pustahan dun. You place your bets. PAGCOR, may tayaan? Yes. You place your bet, mahal e, itataya mo talaga. Sugal
yan, hindi ire-raid yan. Kaya hindi na yan itatax kasi natax na yan. Pero pag illegal, kagaya ng mahjong, pusoy, tong-
its. Basta illegal. Dyan, nanalo ka, kukunin yung net. Net winnings. Pag net winnings, taxable yan, part of taxable
income. Ang problema lang kasi hindi dinedeclare ng iba kasi, wala namang evidence na nanalo sila, kasi wala
namang document yan eh diba. Kaya in theory, ang ganda ng laws in theory. Pero sa application, how will the
government know na nanalo ka sa mahjong, tongits, sakla? Eh wala namang proof, kaya hindi natatax. Ang topic
natin, dapat bang matax, YES. Hindi lang natatax. Kaya idadagdag mo. Be honest, tell the government. Naglaro ka
ng pusoy, nanalo ka. Pano kapag net losses, natalo ka e. Yan ay not deductible. Follow? Eto masakit sa sugal. Kapag
nanalo ka, lahat ng winnings mop ag may asawa ka, net winnings mo, ang may ari, both spouses. Kayong dalawa.
Kaya magiging conjugal or community yan. Pero pag natalo ka, losses, such spouse alone suffers the loss. Mag-isa

ka. So tuwing nagsusugal, ke legal or illegal, at nananalo ka, lahat ng panalo mo, sa inyong mag-asawa. Pag natalo
ka, mag-isa ka. At ang masakit pa, in illegal, the loser can recover his losses. Nag-pusoy kayo, natalo ka. Sabi mo
sa nanalo, balato. Wag kang pabalato. Ibalik mon a yung talo ko. Eh bakit ko ibabalik? Ilalabas mo yung law, basahin
mo. Lahat ng losses ko, mababawi ko. At sabi dyan pag hindi mo kusang binalik despite the demand, I can go to
court. Hindi applicable yung in pari delicto. Diba you can only go to court if your hands are clean. Not applicable in
gambling. Pag sa gambling na ilegal, ayaw mo isauli, pwede ko kunin. Exception to the in pari delicto rule. Ano kasi
ang purpose ng law? To discourage gambling na illegal. Kaya lang iobserve mo yung tao, pag sugal, ayaw nila bawiin.
Most probably, they didn’t know the law. E ngayon alam mo na, pwede ka nang makipagsugal sa ganyan. Pag natalo
ka, bawiin mo, baka di naman nya alam kapag natalo siya mababawi nya.
TAX EXCLUSION: COMPENSATION FOR INJURIES AND DAMAGES
Next exclusion, compensation for injuries and damages. Hindi na yan tinatax. Ang topic natin exclusions diba? Si
Ms. A, is a sidewalk vendor. Nagtitinda siya ng nilaga at inadobong mani. Sa ingles, peanut. Etong si Mr. B was driving
his car, avoiding the two boys who suddenly crossed the street, he swerves his car to the right, unfortunately hitting
A. Yung kotse nya nabangga si A, nabangga na din yung mani ni A. So A, magdedemanda si A. A sues B. Sabi ni B sa
kanya, alam mo Ms. A, may dalawa kang option e. ituloy ang kasong ito, magkita tayo sa court, kukuha ako ng
lawyer, magagastusan ako, maaabala ka. Pero ultimately pagbabayaran din ako kasi I caused injury to you, pero
alam mo naman hindi sadya yon. So it is an accident really. But because I caused injury, the court will require me
to pay for your damages, but it will take time bago matapos yang kaso nay an. Maabala ka, di ka makapagtitinda
pag may hearing. Ako din maabala. Second option. Ayaw mo mangyari yan, let’s settle. Ano ba ang hihingiin mo sa
korte na baka naman kaya ko nang ibigay. Alam mo naman ang lawyer, di naman ako tatanggapan ng pro bono
nyan. So, kesa ibigay ko sa lawyer, bakit hindi sayo na lang. If you will not ask for the moon and the stars, dapat
within my reach. Be reasonable. Option mo: see you in court, or let us settle. Honest naman si Mr. B. Sabi naman ni
A, handa ka bang bayaran ang mga hihingiin ko? Sige. Eto demand ko: A demands for treatment. Unang una, yung
sakit na nararamdaman ko. Magkano yung sakit mo? Tatlong libo. Binayaran. O eh paano yung kahihiyan ko? Bakit
napahiya ka? Diba nung araw na yon nakaduster ako, maluwag. Nung kinarga ako, hindi hinahawakan yung laylayan,
so bumaba, at nakita nakapanty lang ako e butas. Ang tawag na nga sa akin Miss Butas. Imagine mo kahihiyan ko.
Magkano ba kahihiyan mo? 2000. Malaki na yon para sa kanya. O ayos na? Hindi pa. E yung kati? Anong kati? Makati,
kita mo naka-cast ako. Tapos nasa squatter’s area ako nakatira, pinasok ng surot. Kinagat. Alam mo ba ang kagat
ng surot, hindi masakit, makati. O bayaran mo yung kati ko. Magkano ba? 3000. O ano pa? Op op, ang binayaran mo
lang, physical pain. Paano naman yung nagastos ko pa? Actual damages. Ang aking gamot, doctor, vitamins.
Magkano yan? 8000. O tapos na? Teka, ang binayaran mo pa lang ang actual, and moral, kasi may physical and
mental pain, e pano naman yung paninda ko, yung mani ko. Sempre wala nang kakain ng mani ko, nasagasaan na
e. Bakit? Hindi ba kayo nakakain ng mani? Ikaw pare, kumakain ng mani? Araw araw? Ano gusto mo, yung medyo
basa o yung tuyo? Basa kasi nilaga, tuyo kasi adobo. Ikaw ayaw mo kumain ng mani? Ayaw nyo ng mani? Ah
tinatagyawat kayo sa mani. Ah okay. Ako kasi, di ako tinitigyawat sa mani. Sa pisngi lang. *HAHAHAHAHHAHAHAHAHA*.
Eh kayo ang may sabi. Eh ako malinaw ang sabi ko. Ano sa English ang mani? Peanut. E sa Spanish? Di nyo alam.

Ako kahit sa latin alam ko yan. Ikaw pare alam mo sa latin ang mani? *HAHAHAHAHAHA BENTA NI ATTY D HAHAHAHA*
Ay sorry di nya alam. Bata pa. Ang tanong: o babayaran mo ba yung mani ko? Oo. Magkano yang mani mo? Kung
hindi mo sana nasagasaan yung mani ko, maibebenta ko yan ng 28,000. Bakit ba? Ako kasi araw araw ako kumakain
ng mani. Sabi nga nila, Atty di ka kaya magka-arthritis? Sabi ko, hindi naman kasi, good for the brain, so mas gusto
mo ba may arthritis ka or malilimutin ka? E dun na lang ako sa di ako malilimutin. Eh at least yung arthritis
maeexercise mo yan. So ang tanong: sabi, 28000, eto ba ay exclusion? Oo. Lahat yan exclusion. Compensation for
injuries and damages. Eh paano to sir, selling price. Dalawa element ng selling price. Yung cost and profit. Eto
exclusion to. Eto taxable to. (??)
TAX EXCLUSION: SEPARATION PAY
Susunod. Separation pay. Bakit ka tatanggalin? Due to health, sickness, death, and for causes beyond the control
of employee. Lahat ng matatanggap mo ay exclusion. Syempre, hindi ito kagaya nung kaso na yung isang employee
e cook ng isang restaurant, nadiscover nung owner na may TB yung cook nya. Hindi naman nya pwede ilipat sa
service o magwwaiter, kasi baka maubo. Kaya tinanggal. Umangal siya. Bakit siya tinanggal? Due to health. Pero
babayaran ka, exclusion yung benefit mo. Yung isa may sakit naman, yung isa naman namatay na. Pag namatay na,
syempre tatanggalin na. Kasali na din dyan ang physical disability ah. Eto maganda. Ilang beses nabibigay to. For
causes beyond the control of the employee. I am the employer, lahat kayo employees. At napipikon ako at tuwing
nanghihingi kayo ng salary adjustments at di ko kaya ibigay, you are threatening me with a strike, with a labor
unrest. Sabi nyo, we will have a strike. So medyo worried din ako, kasi kapag nagiistrike din ang empleyado ko, wala
din akong output. At ang masakit don, meron din akong fixed cost. So I will be at a loss. Mahirapan din naman ako
na mag adjust, kaya minsan nagsasara e. Anyway, minsan ang empleyado papipiliin yan. Mag resign sya or
iterminate ka, pero same lang matatanggap mo. Pero kapag terminated ka, masama ang record mo, there will be
record na you were retrenched kaya other employers will have an impression na you were inefficient. Mag resign
kayo or materminate, you will receive 3M. Ano gagawin mo, magresign or tatanggalin kita? Kapag nagresign ka,
lahat ng tatanggapin mo, babawasan ko ng withholding tax, kasi your separation is for a cause within your control,
it is voluntary, taxable ang tatanggapin mo. Kapag naterminate ka, lahat ng tinanggap mo, exclusion from income,
hindi ka itatax. Eh paano naman dumating yung araw na ang edad mo, dapat magpahinga ka na. May tinatawag na
retirement pay. Bakit ka nagretire? Gusto mo e, optional. Bakit ka nagretire? Compulsory. If gusto mong maexempt
sa tax kahit optional yan, dapat may qualified retirement plan ang company mo, at dapat inapprove yan ng BIR at
dapat nagrender ka ng at least 10 years of service, and at least 50 years old. If mandatory, laging exclusion yan,
provided that the benefit to be excluded is availed only once. Illustration. Tatlong magkakaibigan pumasok sa
company ngayon, 2018. A, B, and C, pare-parehas silang 20 years old. Nakalagay sa retirement plan, kapag naka10
years ka na, pwede ka na mag avail ng retirement plan. Is this beneficial to the company? Yes. Kung ikaw pumasok
sa company, at 20 years old ka lang, and after 10 years pwede ka na magretire, ang babayaran ko lang sayo ay
yung length of service multiplied by the number of years, one month per year. So kung 40 ka, mataas na sweldo
mo. Kung wala kang qualified retirement, wala kang ipaparetire agad. Pagtumanda ka, mas lalong lumalaki ang
binabayaran. Ngayon, in 2028, sabi nila A, gusto ko na magretire, may optional retirement tayo, papakasal na ako

sa partner ko, kakagraduate lang. Sabi naman ni B, ako hindi pa, kasi incoming freshman pa lang, senior high yung
partner ko. Eto naman si C, cinoconvince pa nga lang mag highschool. Plus ten years, 2038. Si A, magreretire,
nakatanggap ng 4M, non taxable. (incomprehensible lecture from this point since puro “eto, nakareceive ng ganito.
Tapos siya, ganito na ang kita. Eto, non-taxable. Eto, taxable.” Kasi tinuturo na lang nya sa board yung figures.) Kung
Judiciary ka, 70 years ang retirement age. Kung ikaw naman ay military or pulis? 56 years old, or 30 years of service,
whichever comes first. At yung iba, depende sa profession. Sa eroplano, 40 pa lang retirement na ng stewardess.
ANSWERING HANDOUTS: GENERAL PRINCIPLES
No person shall be imprisoned for non payment of debt and tax. False, only poll tax.
Taxes are civil and penal in nature. False, only civil, not penal. Because taxes being civil, even if it is suspended, the
right remains.
Taxes may be collected in an unlimited amount. TRUE. Because it is based on the needs of the state.
License fee may be collected in an unlimited amount. False. It will only be collected based on the cost.
Taxes imposed on persons and property are property rights (not sure about the question). TRUE
Special assessment is imposed on persons. False. Only on land.
Tax collection is a legislative power. False, administrative.
Imposition of tax is administrative. False, legislative.
Provisions in the constitution on taxation are grants. False. They are limitations.
Due process of law in taxation under the constitution is a grant of power. False. It is a limitation.
There may be double taxation in the Philippines. TRUE. It is not prohibited in the Constitution, but it is not practiced.
Taxation may be used as an implement of police power. TRUE.
License fee are charged under police power. TRUE
Special assessments are imposed on land only. TRUE
Taxes are imposed regardless of public improvements. TRUE
Special assessments are imposed regardless of public improvements. False. SA will only be imposed if there is
public improvement which benefited the lot.
(the rest of the lecture was based on their handouts, so di ako makarelate. Lol.)
INCOME TAX PAYABLE
Ito, mayroon tayong nagbebenta ng reptiles, correct? Tapos binigay sa’kin ang mga sumusunod. Tapos ang
magiging tanong kung ilan ang sales ...Compute the income tax payable in the first, second, and third .. annual ITR.
Dahil namili ka na 8% ka, wala tayong idededuct, correct? Tama? Ang kaniyang sales, 400. So sa sales, 400. Ito na
yung magiging taxable. Correct? Kaya lang, dahil wala naman siyang compensation income, maaavail niya ung 250,

so ibabawas natin ung exemption, db? So bale eto ung sales eh. So taxable na is 400 less ung 250 na exclusion, 250,
ang itatax mo na lang, yung 150. Ang taxable lang ay ung 150. Imumultiply lang ng 8%, ito ung babayaran niya sa 1st
quarter. Magkano babayaran sa 1st quarter? 12, 000. Iyan lang. Tapos ung second quarter, sa 2nd quarter may naging
income doon. Idadagdag mo ngayon, db? Tama? Magkano? 600. So plus 600 na. Magiging anon a ‘to? 1 million na.
Ayos? So ung 1 million mo, magbabawas ka rin. 1 million minus 250. May matitirang 750. Imumultiply mo ng 8% db?
Ano ang tax due? 60. Imaminus mo ‘yung... so 60 minus mo ung 1st quarter na binayaran db na 12? Ang babayaran
mo sa 2nd quarter ay 48. Natututo? Yaaaaaan.
Tapos pagdating ng 3rd quarter, ang naging sales mo doon, magkano? 2 million ba yon? O 2 million. So plus 2 million
ka dito db? Oy. Kaya ito, 3 million. Ayos ba? So ung 3 million natin babawasan natin ngayon ng 250. Tama? Ang
magiging taxable, 2,750,000. Imumultiply ng 8%. Magkano yan? 220? O 220. Ibabawas mo ngayon ang 1st quarter na
binayaran. Correct? Magkano binayad sa 1st quarter? 1st is 12. 2nd, 48. Total, 60. Ito ung due sa 3rd quarter, magkano?
160.
Tapos kumita sa 4th quarter, magkano? 3,500. So ang total, 3.5, ang total ay nako, 6.5 lumagpas sa threshold, hindi
ka pwede mag8%. Hindi ka papayagan. Kasi ang dapat huwag kang lalagpas ng 3M. O sir edi huwag na lang akong
magbenta. Alangan naming hilo ka di ka magbebenta. Kaya maiiba. Hindi ka na pwede gumawa nito, magdededuct
ka na. Db sales yan? Cost of sales. Follow? Oy. So bawas mo ung cost of sales. Less of cost sales. Magkano ung
cost? Itotal mo... 1,700,000. So ang gross income is 4,800. Follow? Ibabawas mo ung expenses, correct? Magkano
un? 1,680,000. So ang magiging taxable mo ay 3, 120. Eto ang taxable. Gagamit tayo ng table ha. Tama? Huwag kang
magdededuct ng 250 kasi lagpas ka sa 400. Am i clear? Oy. O huwag kang magdededuct kasi nagdededuct ka lang
ng 250 pag nagcocompute ka using the graduated rate, kung hindi ka lumalagpas ng 400. Kapag lumagpas, forget
the 250 kasi nakainclude na siya sa running total. So computin na natin ang tax due. Tax due para sa 3,120. The first
2 million, magkano un? 490. May excess na 1,120. Ilang percent? 32%. Magkano yan? 358,400. Total tax due? 848.
Tapos nagbayad siya ng taxes, correct? So less taxes paid. Follow? 1st quarter, magkano binayaran? 12. O dededuct
mo yan. 2nd quarter magkano binayaran? Ilan? 48. 3rd quarter magkano binayaran? Ilan? 160. Total? 220. Still due?
628, 400.
INCOME TAX DUE
Okay next question kung wala ng question. Wala na? Ms. Gomez operates a small night club which employs dancers
to dance with the patrons ... meron palang ganiyian pwede mo pala isayaw ung mga babae. Noong araw kasi ... ang
tawag. Pag isasayaw na ung babae, may bayad. Binabayaran ung babae eh. Napakavaluable ng babae. If you want
to dance with a woman, pay. Kaya ang tawag don mga bailarina??? Dancers in a ... at ang gaganda ng mga babae
noong araw. E kasi noon, pagka-kwan, un talaga ung anyo kasi wala pa ung mga cosmetics, wala pa ung kung ano
anong ginagawa. Talagang natural beauty. E ngayon iba eh. Db ung iba, ung iba pati labi ginagalaw. Ung ibang labi
nga parang lagging nahalik parang Angelina Jolie ... pinapalaki. Lahat ngayon pinapalaki. Labi pinalaki. Ung iba nga

dibdib pinalaki, correct? One time nga may nasalubong ako. Di ko alam bading pala ang laki ng dibdib. Naglalagay
na rin sila db. Kaya ngayon, noong araw kapag maganda, maganda. Ngayon pag maganda, since when.
Other non-operating income. Can he avail? Hindi siya pwede kasi ang sabi ng law para makaavail ka, unang
requirement, hindi ka lumalagpas ng 3 million, correct? At may isa pa. Dapat hindi ka subject sa other percentage
tax other than the 3% sa parangraph 1. E ang nightclub, subject sa 18% yan eh. So dahil may 18% ka, kahit hindi ka
lumalagpas ng 3 million, hindi ka na pwede mag-optional nung 8%. Kasi kung titingnan mo hindi naman siya lalagpas
diyan, correct? Tama? Hindi na pwede. Multiple choice pala ‘yan. Boy, because it is subject to 18% opt under section
125 and not to the 3% opt under section 116. Correct? Nasa 125 siya eh. Okay?
What is the income tax due? Magcocompute tayo ngayon para malaman natin kung anong isasagot natin. Kunin
mo ung gross receipts. Magkano? Oy. 2.8 tapos may cost. Magkano ung cost? 100. So 2.7 tama? Tama? 2.7 less
expenses. Magkano? 35. So meron tayong 2,665. Tama? May other operating income ba? Other income? Magkano?
150. So taxable ay 2,815,000. Ayan. Kunin mo na ung tax due niyan db? Tax due. 2,815. Nasa bracket na 2. Ung 2m ay
490 ba? So 490. Ung excess na 815 at 32% isn 260,800. So ang total is 750,800. Yan ang babayaran.
COMPENSATION INCOME AND BUSINESS INCOME
Number 40. Maginoo Co. Mayroon siyang compensation income tapos may cafeteria siya. O dahil cafeteria yan,
mayroon siyang business income. Gross 1,500. Operating income of 700. Sabi diyan, mag-aavail siya nung 8%. So
hindi natin pagsasamahin ung dalawa. Hiwalay. Huwag pagsasamahin ha. So kunin muna natin ung compensation
income niya. Ayos ba? Magkano ung gross compensation income? O gross compensation income is 4,000,500. Pero
kasama na daw diyan ung mga benefit so may exclusion na un magkano ung ieexclude? 90. So magkano na lgn
ung traxable niya? 3,910,500. Ha? So kukunin natin ung tax niyan db. O magkano ung tax niyan? Tax due para sa
3,915,500. Ung unang 2 million ay 490. Ung excess na 1,910,500 at ... 611,360. So ang tax dun sa compensation ay
1,101,360. Sa compensation palang yan. Cocomputin natin ngayon ung business income niya. Db may business
income? Meron ba? Meron. Magkano un? So ang business income niya, gross, ano ung gross? 1.5. huwag kang
magdededuct ng cost huwag kang magdededuct ng expenses pero magaadd ka ng other income. Magkano ung
other income? 700. Kaya ito ay 2.2. 2.2 ba? Imumultiply mo ng 8%. Total? 176. Magkano total na babayaran? 1,277,360.
Alam saan galing ung 1,277? Eto ung compensation income tax, eto ung business income tax.
Ay mayroong follow up. In the previous number, what would Maginoo’s total income tax if he did not avail? Dahil
hindi ka nag-avail, pagsasamahin namin. Nacompute na natin ung compensation income. Magkano total non?
3,910,500. Cocomputin natin ung business income, correct? Gross, magkano business income gross? 1.5 follow? Less
cost. Anong cost? 500. Matitira magkano? 1 million. Alisin expenses, correct? Magkano? 300. Magkano matitira? 700.
Aadd mo ung income, correct? Add other income magkano? 700. Total? 1.4. ay magdededuct ka pa ban g 250 diyan?
Huwaaaag. Bakit hindi magdededuct? Kasi may compensation income. Correct? Natanggal na un don. Pag walang
compensation income, business income lang, magdededuct ng 250. Eto nagdededuct tayo, correct? Hoy. Itanim sa

utak ha. Titingnan mo kung anong source ng income. Pag ang source ng income business lang, walang
compensation magdeduct ka ng 250. Pag compensation lang walang business income, compensation
magdededuct ka lang ng 250 pag nasa bracket ng not more than 4. Pag nag more than 4, forget. Ayos? Pag may
compensation na, may business pa. Dinededuct sa compensation kasi may table yon wag ka na magdededuct ng
250. Dito, huwag ka magdededuct. Am i clear? Naliliwanagan? Salamat. Ang daming tatandaan? Bakit kayo
nagaccountancy? O. E db nung pumasok ka sa accountancy anong sabi ng mga kaibigan ng nanay at tatay mo. Buti
ka pa mare ang tali talino ng anak mo nag-accountancy. Db may mga presumption. Ano ung mga presumption pag
may matatalino... pag engineering, pag engineering db mabigat, accounting, db? Kaya kami sabi ng --- naming
dalawa lang ang pipiliin niyong courses ha. Huwag na huwag kayong mageenroll ng engineering. Magenroll lang
kayo ng education major in PE, ganon. At mageenroll lang kayo ng commerce, pwede. Buti na lang, mageenroll
talaga ako education eh. Education ang pupuntahan ko tapos ung kasama kong player sabi pare wag don sabi ko
bakit, pare eh ung nagmamajor diyan puro lalaki diyan konti lang babae diyan sa commerce tayo may maganda.
Kita mo? O syempre san tayo? Edi dun ako pupunta. E kasi nung araw wala pang accountancy. Nung panahon
namin, commerce lang. Pag 3rd year ka na, doon ka lang magmamajor. Oh. Kaya kung nagkataong wala akong
kasamang player na mahilig sa babae, wala hindi tayo nagmeet. Iyun kukunin ko eh. Education major in PE. Puro
laro ang gusto ko noon eh. So presumption.
Ito na ung itatax mo db? O tax due ngayon niyan. Total mo muna. Add mo. 1.4 e correct? Tama? Tama ba 1.4. magkano
taxable income mo? 5,310,500. Are you following? Kaya ito tax due na natin yan. Tax due 5,310 bracket nasa 2m. 490
ba? 490. Excess of 3,310,500 at 32% is 1,059,360. Total tax due 1,549,360.
Ayan may follow up na naman. Maginoo nagresign para makapagconcentrate sa cafeteria business. Okay? Total
compensation income may 180 siya don pero kasama don ung benefits na bonus 30. In 2019, the bakery, ba cafeteria
lang naging bakery na ha. Okay. Ano bang malaki, cafeteria o bakery? O basta bakery. Siguro cafeteria puro kape.
Bakery nagbebake. Okay? Nagkagross sales siya ng 2,300. Cost of sales 750, operating expenses 450. Tama? May
non operating income din. Income tax due for 2019 if avails the income tax rate option, the gross sales ... a madali
lang to parang naulit lang ung ginawa natin correct? Maghihiwalay na naman tayo. Tama? Tama? Bago tayo
maghiwalay. Syempre maghihiwalay na db. Compensation muna tayo ha. Compensation income. Magkano ung
gross compensation income? 180. Less ung bonus. Exclusion un. Magkano un? 30. So taxable is 150. Correct? Tama?
Kunin na natin ung tax due. 150 e may exclusion, correct? May exclusion ng 250. So ang tax due ay? Wala. Walang
taxable income eh. Walang taxable income so ang tax due, 0. Punta tayo sa business income. This is income, gross.
Magkano ung gross? 2.3. Magkano ang cost? Oy. Saan nag-avail to db? O. Gross is... gross, 2.3. Ang tanong, tingnan
mo mabuti ha. 250 hindi nagamit lahat. Correct? Oy. 150 lang ung compensation income. Hindi nagamit lahat meron
pang hindi nagagamit na 100. Pwede ba un ideduct dito? Wag. WAAAAG kang magdededuct. Kapag may
compensation income, doon ginagamit un. Pag mixed ang income mo lahat ng 250 nasa compensation. Wala kang
maidededuct sa 8%. Are you following? Tandaan ‘yun ha. Nagagamit mo lang ung 250 sa business income kung
walang compensation income. Pag meron, dun siya sa compensation. So imumultiply mo na to ng 8%. Tama? Ah
meron bang other income to? Ah may other income. So plus other income magkano? 235. So total 2,535? 2,535 times

8% equals 202,800. Total tax due 202,800. Sir bakit inadd mo pa ung 0? Syempre teacher eh para makita mo.
Naiintindihan na si train? O db? Dali lang pala si train.
Pong pagong tama. Meron siyang compensation income tapos mayroon siyang poultry farm nagsusupply sa wet
market. Ano ba ibig sabihin ng wet market? Ha? Db may fry market? Ano ung wet tingnan mo oh pati diyan sa
palengke may wet and dry ah. Pag wet, mga isda, mga gulay correct? Pag dry, mga daing? Tapos its gross sales
total 5M ... compute the income tax due. Meron tayong compensation income na inabot ng 10 million tapos may
nakadagdag don. Tapos kukunin natin ung ating taxable income diyan. Okay? Compensation muna tayo. Hindi ka
mag-aavail ng 8% kasi hindi pwede. Correct? Pagsasamahin ung 2 income pagtinatax na. Unahin natin ung
compensation. Magkano ung compensation income? 10 million. Alisin mo ung exclusion correct? Magkano ung
exclusion? Hanggang 90 lang. So ang itatax ay 9,910,000. Follow? Tapos magbubusiness income na tayo. Business
income. Gross? 5 million. Less cost. 2,300. May matitirang 2.7 less expenses, 580. May matitirang 2,120. Oy. 2,120. Plus
other income. May other income? Plus other income. Magkano? 230. Total? 2,350. Total taxable? Oy total taxable?
12,260,000. Follow? I-tax mo na ngayon ‘yan. Tax due para sa 12,260,000. The first 8 million, magkano? 2,410. Excess
of 4,260 times ceiling, 35 na. Ceiling nay an. Magkano na? 1,491,000. And then tax due, 3,901,000. Parang pagod na
pagod kayo? Wala naman kayong ginawa kundi kumopya.
All income payments which are required to be subjected to withholding tax shall be subject to the corresponding
tax to be withheld by the present... syempre true. Is the application to withhold imposed upon the buyer/payor...
*inaudible* hence are justifiable ... to be subjected to withholding tax ... grant of mandatory audit of ... the ability as
well as the imposition... upon verified complaint of the buyer/payor.
All income payments received by a minimum wage earner are exempted... No! Baka marami ka pang nakuhang
ibang income eh.
An individual payee shall not be subjected to withholding if he in the total of the income pay he received is not
more than 250. Hindi ah. Ano ung mga income na subject sa withholding tax? So parehong false. Next.
If the tax has actually been withheld at source, a --- refund shall be made to the recipient, that’s the employee,
even though such withholding taxes has been paid to the government by the... Yes, entitled ka. Pera mo ‘yan na
winithhold ni employer. Siya mananagot sa government pag di niya niremit yan.
TAX CREDIT AND WITHHOLDING TAX
An income subject to income tax may be subject to withholding tax. However income...*inaudible* hindi ka nga
sinubject pero wala lang withholding.

For the taxable year 2018, a Filipino with a dependent child received the following as professional fees as a cpa and
as consultant. At ang tanong dito, compute his taxable income in the quarterly. So hindi mo muna titingnan ung
compensation kasi hindi sinusubject sa quarter pag compensation. Ang sinusubject ay business income. Am I clear?
So lagyan natin ng illustration yan. Dito na lang sa gitna para kita ng lahat.
Magkano ung monthly? Ano ung iaavail niya dito? Osd no? Tama? Covered? Pwede ba? Oh. He is sabi diyan may
monthly fee siya na 250 ... 3%. Calculate the tax payable kung magaavail siya ng osd... so doon muna tayo sa business
income ha. Magkano natanggap niyang gross? Monthly fees professional. So professional fee, 250 times 3. So first
quarter magkano? 750. Bakit ko minultyiply ng 3? Kasi quarter. Correct? So ito ung 1st quarter. Tapos mag-oosd
correct? Osd is 20% na may 300. Ang tanong diyan, magkano ung quarterly and annual ITR. Tama? Mag-aavail siya
ng 8%, db? Tama ba ako? Ayos ba? Yes. So. Magkano ung taxable niya? 450. Ayos? Imumultiply mo ng 8%. Eto ung
tax due. Sa 1st quarter, magkano? Ah bakit ka nag-8%, sorry, sorry. Okay. May less pa ba? Mayroon pa bang ibang
income to? Wala. Walang ibang income. So tax payable tayo correct? The first 400 is oy. 30 may sobrang 50
imumultiply ng 25. Magkano yan? 12,500. Magkano babayaran niya? 42,500. Yan ang babayaran mo sa 1st quarter.
Yan ba ay naintindihan? Ay may tax credit yan correct? Sorry. Sorry. Db may tax credit? Okay. Tax due, tax due is
42,500. Less excess. Magkano ung excess? Oy. 15,500. At tsaka ung withholding tax correct? Magkano ung
withholding tax? Oy. Magkano winiwithhold ayan nakalagay naman. Magwiwithhold ng 12,500. 12,500 times 3. Ilan?
37,500. Total excess, 52, 53. 53 ba? 53. So magkano babayaran? 0. O walang babayaran. Tapos plus 750 correct? Oy.
Bakit plus 750? Anim na buwan na. Sa 2nd quarter, ito ay 1.5 db? Tapos less plus 300 uli db? Tama? So 600 na. Ito
magiging 900. Itatax na natin ngayon ung 900 db? Oy. O 900. The first 800 is 130. May excess na 100. Ilang percent?
30%. Ilan yon? 30. So ang total, 160. Ibabawas mo ung 15,500. Tapos ito plus 37,500 na correct? Oy. 75 na db? Ittimes
2 mo to eh. Tama? 75. Pakita ko na nga dito. Dapat itaas natin. O dito 57,500 ay 53 anyway naintindihan mo naman
e correct? 53 eto 0. Plus 37,500 times 2 na correct? So magiging ilan na? 75 saka 0 ung 1st quarter db? So total, ilan
total nito? 90,500. Magkano babayaran? 69,500. Are you following? Darating ngayon ang 3rd quarter. Oy nasusundan
ba? Salamat. Pagdating ng 3rd quarter, magpplus 750 ka ulit. Db? Kaya 2,250,000. Are you following? So plus 300 uli
db? So 900 to. Tama ba ako? Magkano ang taxable? 1,350. Itatax na natin ung 1,350 db? 1,350 the first 800 is 130 may
excess na 550 immultiply ng ... equals 165 so ang total tax due, 295. Imminus mo ngayon ung excess na 15,500
correct? Ito magiging db siyam na buwan na, magiging 112,500 tapos ung 1st quarter 0, ung 2nd quarter 69,500. Total
ng apat na to, 197,500. Babayaran sa 3rd quarter ay 97,500. Yan ang babayaran.
O iaannual na natin ha. Pagsasamahin na natin. Kunin mo na ung compensation. Magkano sinusweldo niya sa
pagtuturo? Magkano daw? Gross pay niya ay 900. Tama? Tapos ibabawas, may net pay siya na 819,400 tama? Pero
idadagdag mo ung ano? Syempre. Okay. Kailangan makuha natin ung gross. Kung ang nakalagay ay net pay,
magkano net pay? 819,400 iaadd mo ngayon ung withholding tax, magkano un? 75. Total 894,400. Sir bakit hindi natin
iaadd ung mga sss? Talagang deduction un. Iaalis un? Tapos pupunta na tayo sa... meron siyang mga nakadagdag
na benefits diyan correct? So less exclusion. Magkano ung exclusion? 65. Magkano ung taxable compensation
income? Taxable compensation is 829,400. Magcocompute tayo ng business income db? Gross. Magkano ung gross,
annual. Magkano ba per month yan? 250? 250 times 12 equals 3 million. Less osd db? 40%, magkano? 1,200. May

other income ba to? Wala no? O 1,200. So magkano ang taxable? Baka mali ung binibigay niyong amount ah.
Magkano ung amount diyan? Tama naman db? Tama. So magkano to? 1.8. magkano total taxable? Total taxable
income is 2,629,400. Itatax na natin tama? Oy. O tax due. Tax due para sa 2,629,400. Magkano ung 2 million? 490.
Tapos ung excess na 629,400 multiplied by 32%. How much? 201,408. Total tax liability? 691,408 less tax credit. Tama?
Magkano ung excess sa previous? 15,500. Are you following? Tapos ung creditable withholding tax, nagwiwithhold
ng magkano 12,500. 12,500 times 12. Magkano un? 150. Tapos taxes paid. Tama ba? Wala sa 1st quarter 2nd agad.
Correct? Magkano sa 2nd? 69,500. Sa 3rd magkano binayad? 97,500. Meron pa? Meron pang creditable? Creditable
withholding tax sa compensation income correct? Magkano withhold don? San nakuha yon? Given. 75. Meron pa?
Itotal na. 407,500. Magkano matitirang taxable income, tax due. 283,908. Very good.
ON THE 8% INCOME TAX OPTION OF INDIVIDUAL TAX PAYERS
Let’s continue our handout on Individual tax payers. Saan na? 70? 47?
Calculate... Letter B na? Okay. Sa letter A ba naideduct ba natin yung 13th month pay na 65? Tignan nga natin baka
di nadeduct eh. Oh nadeduct ah? Okay. So letter B na.
Calculate his tax payable in the quarterly and annual ITR vis-a-vis 8% income tax option.
So magkahiwalay natin cocomputin correct? Uy! Tama? Maghihiwalay tayo kasi pipiliin niya ang masubject sa 8%.
Kunin muna natin yung sa first quarter. Wala tayong ibang gagawin kundi gagamit tayo ng 8% diba? Uy!
Magdededuct ba tayo ng 250?
So kukunin mo yung 1st quarter, gross receipts mo diba 250? 250 x 3. So sa first quarter magrereport tayo ng sales,
750 diba? Are we to deduct the 250, yung first 250? Wag, kasi may compensation income. Tatandaan yan. Aalisin mo
ang 250 kapag mag-aavail ka ng 8% kung walang compensation income. The moment may compensation income,
yung 250 dun gagamitin sa compensation income. So imumultiply mo na agad to ng 8%. Correct? So ang tax due
mo for the first quarter ay 60. Follow?
Tapos sa second quarter magdadagdag ka ng 750 ulit. So ang second quarter mo ay 1.5. Tama ba? Huy! Tama ba?
Parang di alam ah. Imumultiply mo ngayon ng 8% yan. Magkano total niyan? 120. Ha? Meron bang withholding? Wala
namang withholding diyan diba. Meron ba? Ay may withholding pala tayo. Sorry.
So less… less excess. Magkano yung excess? Oy! Ilan excess? 15.5. Ayos ba? 15.5. At tsaka yung creditable, correct?
Correct! 750 x 5%, ilan yun? 37.5? Oy! 37.5. Total? 53. Ayusin ko lang at nalilito ka. Gandahan natin ang presentation.
Yan.

Ang gross natin, lagay ko rito malaki space eh, 250 x 3, kaya ang first quarter mo will have 750. At 8%, you pay 60.
Less excess, yung excess 15.5 at yung creditable withholding tax ay 37.5, so it will be 55. Kaya ang due sa first quarter
ay 7,000. Loud and clear?
Plus 750 dito. Kaya ang second quarter mo ay may 1.5M. Imumultiply natin ng 8%, 1.2. Correct? Less yung excess na
15.5. Yung creditable mo, times 2 na to correct? 75 na diba? Tama? 75 na yan kasi times 2 na. Tapos yung due mo
nung nakaraan, 7,000. Total nito, 55 so 62. Tama ba? Oy! So ito, 120. Ito, 97,500. Now magkano ang due sa second
quarter? 22,500. Yan ba ay nasusundan?
Plus, pagdating ng third quarter madadagdagan to ng 750. Kaya sa third quarter, ito 2,250,000. Tapos imumultiply
mo ng 8%, magiging 180. 180 ba? 180. Aalisin mo na ngayon, 15.5 pa rin yan. Ito madadagdagan pa ng 37.5 Correct?
Kaya ito magiging, 122? 112,500. Tsaka yung binayaran mo nung first quarter, 7,000. Binayaran mo ng second quarter,
22,500. Total? Teka teka teka teka. Tama ba? Tama ba? O magkano to? 157,500. So ang due sa third quarter ay 22,500.
Tapos gagawa na tayo ng consolidated, tama? Kasi isang ITR lang ang finafile ng self-employed at tsaka may
compensation income diba? Pagsasamahin na natin. Kunin muna yung compensation income.
Magkano yung total compensation income nito? Magkano yung gross compensation? Magkano yung net pay niya?
Magkano yung net pay? Ha? So dun muna tayo sa compensation income.
Net pay, how much? 819,400. Add mo yung creditable withholding tax, magkano? 75. Total? 894,400. Alisin mo yung
13th month kasi may 13th month yan, correct? So less yung 13th month. Up to magkano, 90. Pero 65 lang yun, 65 lang
diba. So magkano taxable income? 829,400.
So kunin muna natin yung tax due niyan. Ayos ba? Tax due para sa 829,400. Lalagpas siya ng 800, wag mo ibabawas
yung 250, correct? Oy! Oh so, nasa first 800 ay 130. Yung excess ay 29,400, magkano yan? Ilang percent? Ilan? 30%.
Magkano yan? Ha? 8,820. Total? 138,820. Follow? Mamaya na yung creditable. Pwede? Pwede namang pagsamahin
yun diba? Oy! Mamaya mo na ibawas. May creditable yun diba?
Oh so banatan natin yung business income niya. Magkano yung gross at mag-e-8% siya diba? Diba mag-e-8% siya?
Diba? Oh. So 8% income tax on business income.
So gross receipts diba? Magkano yung gross receipts? Ha? 250 x 12 = 3M. Imumultiply mo ng 8% diba? Oy! Oh 8%.
Magkano yan? 240. Magkano ang total tax liability niya? 378,820.

Alisin mo na ngayon mga ibabawas, correct? Less excess. Magkano excess? 15.5. Creditable withholding tax oh.
Magkano yung total creditable? 150? 150. Follow? Tapos tax paid oh. Tax paid, first quarter. Magkano first quarter?
7,000. Second quarter? 22,500. Third quarter? Magkano? 22,500 din. Tapos yung sa compensation, correct?
Creditable withholding tax sa compensation? Magkano? 75. Meron pa? Meron pa. 75 sakto? Itotal mo ngayon. Ang
tagal naman. Aanim lang yung iaadding. Ilan? 292,500. Magkano yung still due? Still due is, ilan? 86,320.
ON THE ELECTION OF TAX RATE OPTIONS
And finally 48. Mr. R. Dabog elected the 8% income tax rate option by updating his registration information using
the BIR form 1905. A month before the due date for filing either the first quarterly return or the first quarterly
percentage tax, he decided that it would be better for him to be taxed at the graduated rate. Can you signify his
decision to be taxed under the grad--Ay my dear! The moment pumili ka, for that year na nakapili ka, IRREVOCABLE.
Ang pagpili, ginagawa taun-taon. Pero the moment na pumili, di na pwedeng palitan. Palipasin mo muna yung taon
na yan. Maliwanag? So hanapin natin, ayun, yun lang main answer no.
Boy: No, the election made in Feb. 2 is irrevocable. No amendment of the options shall be made for the taxable year
2018. Beginning 2019, he shall be automatically subjected to the graduated rate until he opts to avail again the 8%.
Correct? Kasi lagi mong iniindicate yan sa first quarterly return mo.
That completes our study of individual—partial pala. Because mababanggit ulit yan as we progress.
CORPORATION AS TAX PAYERS
The second group of tax payers subject to income tax will be CORPORATIONS. Yan.
Kapag organized ka in the Philippines observing Philippine laws, tatawagin ka naming “domestic corporation”. Kapag
inorganize ka sa ibang bansa, tatawagin ka naming “foreign”. Pag pumunta ka rito para magbusiness, tatawagin ka
naming “resident” kasi engaged in business ka. Kapag may income ka dito pero di ka naman engaged in business,
tatawagin ka naming “non-resident” because you are not engaged in business in the Philippines.
Sir, paano nagkaka-income eh wala palang business dito? Diba? Ito, walang problema, may business dito, ito may
business dito. Paano nagkaka-income, non-resident pero may income dito? Ikaw ba, pwede kayang dumating ang
panahon, ikaw ay mangingibang-bansa, mangingibang-bansa. Alam mo ba yung connecting flight? Pag sasakay ka
ng Philippine Airlines, pupunta ka halimbawa ng Europe. Baka pagdating ng say, Japan, tama? Pagdating ng Japan,
lilipat ka ng ibang eroplano. Di ko alam kasi ah di pa ako pumupunta ng ganyan. Pero tawag dun kasi, connecting
flight hindi direct flight, tama? Pag connecting flight, halimbawa sumakay ka ng PAL hanggang Japan at mula Japan
sasakay ka ng another airline, tama, papunta na sa Europe. Tama? So that airline is not engaged in business here,

nandun siya sa Japan eh. Pero yung binayaran mong fare, diba hanggang doon (Europe) na? So dito, babayaran na
lang siya ng travel agency mo dito. Kaya nagkakaroon sila ng income dito though they don’t have business in the
Philippines. In effect, may business sila. May income sila eh. Follow?
Now, itong tatlong corporations na to, pwedeng magkaroon ng income. Income within the Philippines - lahat sila
tinatax, income within. Iba-iba lang ang pangalan. So basic muna tayo. Kapag nagka-income outside the Philippines,
ito (domestic) lang ang tinatax, itong dalawang to hindi tinatax. So all foreign corporations are taxed only on income
within.
Tapos ano yung base niyan? Ano yung itatax natin? Yung base, my dear, ito (domestic) tinatax natin sa net income.
Ito (foreign) sa gross income. Yan, follow?
TAX RATE OF CORPORATIONS
Tapos ano ginagamit na rate? Taas ko rito ah. Bago nagkaroon… so before RA8424 which took effect 1998, ang
effectivity. Okay? Medyo ito pa rin yung Tax Code natin. Yung TRAIN Law is an amendment, but it did not totally
remove RA8424. Nagkaroon lang pagdadagdag, pagbabawas. Follow? Before RA8424, ang ginagamit na rate ay… So
effectivity nito ay 1998 eh. So ibig sabihin 1997 and earlier, okay? Ang rate ng tax nun ay 35%. And nagtake-effect
1998, so nung 1998 ang naging tax rate ay 34% na lang. Nung 1999, ang naging rate, 33% na lang. At beginning year
2000 onwards until inamend na naman, lifeblood theory kailangan daw ng dagdag na pera, kaya naamend siya,
hanggang October 2005 lang yung 32%. Tapos dumating yung November effectivity nung amendment kasi kailangan
daw ng dagdag na pera, hanggang 2008 lang naman, magdagdag daw tayo kaya nag-35%. Ano ang quick draw ko?
Parang ganito eh, sabi kasi ng RA8424, 32% na lang. Eh nung dumating yung November of ’05, sabi pwede dagdagan
niyo yung rate ng tax kasi kailangan natin ng pera tapos babawi na lang kayo, paglipas ng tatlong taon na yun,
ibababa naman namin. Oh so maganda, kasi nung pumasok na yung ’09 up to the present unless baguhin na naman
ng—magkakaroon ng amendment ang corporation eh, iibahin yung rate… mukhang, mukha lang ah? Iba iba. Mukha
lang. Para ma-encourage yung investment. Diba? Kasi ngayon, ang rate ngayon is 30%. Are you following?
Subalit, may amendment na naman. Tama? Ano ang amendment? Kapag ikaw daw ay existing corporation, yung
1998 ah? 1998, kapag existing corporation ka na or magnew-new corporation tayo, mag-eestablish. Pag new
corporation, okay, beginning 1998 pag existing ka na --- [feeling naputol sa part na’to, weird] ---okay? At ito
applicable lang --- [naputol na naman] --- my dear, nakuha niyo? Nakukuha ba, di naiintidihan? Burahin natin para
maging maliwanag. Parang nalilito eh. Ito naiintindihan mo to? Yan ang gagamitin, tama?
Eh diba nagtake-effect kasi 1998, diba? Para maimprove, sinabi ng RA8424, wag nang 1998 baka malito ka pa, RA8424,
yan ang effectivity niyan tama? Kapag ikaw daw already existing nung pumasok yung law, pag existing ka na,
existing corporation, or kung sakali daw na new corporation ka on the fourth year of operation mo. “On the fourth
year of operation” - lagyan ko ng asterisk ah kasi nag-issue ng BIR ruling. Sa BIR ruling parang hindi fourth year eh,
parang fifth year. Kasi kung ikaw daw ay inorganize ng year 2000, masasubject ka daw sa 2004. Kung ikaw ay

inorganize ng 2004, masasubject ka ng 2008. Pag inorganize ka ng 1990 syempre masasubject ka kailan? Kung 1990
ka inorganize, kailan ka masasubject? Sa 1990? Wag, wag ‘94! ‘98, my dear! Yung law nagtake-effect dito lang, paano
ka masasubject nung ‘94? Common sense! Wala pang law nung ’94! Follow? At bakit sinabi ko ito ang gagamitin
mo? Theory ito ah. Parang hindi siya fourth year. Kasi kung yung 2000, my dear, kapag ang 2000 is your first year,
ang 2001 is the second, ang 2002 is the third. Dapat 2003, fourth year mo na yan eh, correct? Dapat masubject ka
na diyan. Eh sabi ng ruling hindi. So lumalabas tuloy ininterpret nila yung phrase “on the fourth year” to mean “after
completing four years” diba? Bale on the fifth. Kasi on 2005, nung 2004 ika-fifth year of operation mo to eh, if you
started here eh. Naiintindihan? So pagka application ang ibibigay ng examiner, yan ang gagamitin mo ha? Okay?
NORMAL CORPORATE INCOME TAX, MINIMUM CORPORATE INCOME TAX, DIFFERED CHARGES (MCIT)
Pag nandiyan ka daw, bibigyan ka na, mangyayari, at ikaw ay domestic corporation at resident foreign. Resident
foreign or domestic lang ha, hindi covered ang non-resident. Ang magiging tax mo daw, kukunin ang iyong gross
income, imumultiply daw ng… Meron ka daw tatawagin, minimum kasi minimum na babayaran mo, “minimum
corporate income tax” mo base sa gross income multiplied by 2% versus the normal corporate income tax or net
income times the applicable rate. Follow? At ang babayaran mo daw ay whichever is higher. Nakukuha?
Lagyan natin ng illustration. Assuming existing na tayo ha. Assuming existing na and our gross income ay ito less
allowable deduction = net income or loss. Halimbawa ito (gross income) ay 4M, at ito (allowable deduction) ay 3.5M.
So may net income na .5M. Magkano daw babayaran mo sa BIR?
So magnonormal tayo. .5M x 30% as of today. Ang minimum yung gross, 4M x 2%. So ito 150, ito 120. Ito (normal)
babayaran mo. Ang entry mo diyan sa libro, debit the provision for income tax which is 150, credit income tax
payable, 150. No problem, correct? Magrerecord ka muna ng payable kasi babayaran mo yan on the fourth year of
the fourth month pa following the close of the taxable period, correct? Ayos sa payable mo yan.
So sa sumunod na taon, let’s say yung una natin is year A, ito year B. Sa year B, (gross income) nag-5M. Tapos ito
(allowable deduction) nag-4.7M kaya may profit na .3M. Nasusundan ba? So ang normal mo, .3M x 30%. Ang minimum
mo 5M x 2%. Kaya ito (normal) 90, ito (minimum) 100. Debit provision for income tax, 90. The debit is on the normal.
Ang irerecord mo na provision for income tax is always the normal. Maliwanag? Come on, normal. 150, correct (Year
A)? Yan ang ginamit mo. 90 (Year B), yan ang ginamit mo. Credit now the income tax payable of 100. Are you
following?
Syempre hindi balanse yung entry natin diba at hindi pwede yan sa accounting. Ito kasi ang logic. Parang
sinasabihan ka ng government, “My dear taxpayer, the government needs 100 and taxes are the lifeblood. We know
that you will only pay 90. So if you pay us 90, kumbaga sa dugo 90cc binigay mo sa amin. Eh kailangan ng
government 100cc. Pag binigyan mo kami ng 90, anemic ang government, magkakasakit ang government, the
government cannot protect the people well. So for the government to protect the people well, bigyan mo muna

kami ng 100. Mag-abono ka muna ng 10. Anyway, papayagan ka namin gamitin yan parang advance payment of
taxes mo. Bayaan mo muna ang government magsurvive. Pabayaan mo kami mabuhay. Bigyan mo kami ng 100.”
Yan ang babayad mo. Irerecord mo yung difference as an asset, differed charge - MCIT for 10. Follow? Para kang
nag-abono muna. Kailan ba mangyayari yun?
Sa Year C, ipagpalagay mo nag-6M tayo, correct tama? Tapos dito nagkaroon lang tayo ng 5.5M. Follow? So ito
magiging, .5M. So ang magiging normal mo, .5M x 30% = 150. Ang iyong minimum ay 6M x 2% is 120. So mataas na to,
correct? Maliwnag? So ang gagawin natin, irerecord mo ngayon yan sa libro. Debit provision for income tax, 150.
Correct? At dahil mas mataas na siya, pwede mo na siyang ibawas sa babayaran. So magcrecredit ka na ng differed
charge - MCIT na 10. Kaya ang babayaran mo na lang na income tax payable ay 140 na lang.
O diba? So mutually beneficial. Natulungan mo yung government na manatiling afloat kasi yan ang dugong
kailangan. Sa susunod naman dahil mataas yung normal mo, bawiin mo na. At least nagsurvive yung government.
Eh what if… ganito ah, tuloy-tuloy ah.
Year D, nag-7M. Follow? Tapos ito nag-6.6M. Kaya ang profit lang, .4M. So kukunin mo normal niyan, ano normal
niyan? Normal is 120 (.4M x 30%). Tapos may minimum na 7M x 2% diba, 140. Ito yung babayaran mo. Magkano
rerecord mong differed charge? Differed charge – MCIT, magkano? 20. Are you following? Kasi yun yung difference
diba.
Darating tayo ngayon sa Year E. Nung dumating ang Year E, nag-8M to tapos ito nag-7.5M so .5M. Are you following?
Ang normal mo, .5 x 30%, 150. Ang minimum mo, 8M x 2%, 160. Ito na naman, madadagdagan ang differed charge ng
10. Hindi mo magagamit yung differed charge na yun kasi mas mataas ang minimum. Kaya ang entrada mo dito,
debit provision for income tax, 150. Tama? 150. Differed charge – MCIT, 10. And then income tax payable, 160. Yan
ang entrada. Nasundan ako?
Year F. Aba ang gross income mo nag-9M, ang masakit, 8.5M pa rin. So may .5M ka. Kaya ang normal mo, .5M x 30%,
150. Tapos 9M x 2%, 180. Ito pa rin. At dahil mataas pa rin yung minimum, hindi mo nagagamit yung differed charge.
Kaya gagamit pa rin ng differed charge mo, may differed charge ka this time na 30. Follow?
Pagdating ng Year G, ito nag-10M tapos ito nag-9.4M. Kaya ito, .6M. .6M x 30%, 180 lang. Ang iyong 10M imumultiply
mo ng 2%, diba 200, ito mangyayari correct? So meron ka ditong differed charge na 20. Ano napuna mo? Ilan na
ang differed charges mo? Apat na. Correct?
At sabi ng Code, you can avail the differed charge only in the next succeeding three years. Yung nangyari sa Year
D, dapat magamit mo sa Year E, Year F, Year G. Tatlo na lumipas, di mo nagagamit. Ibig sabihin aalisin mo na daw.
Hindi na siya asset. You lost it. And we cannot correct the books in Year D, already closed.

Saan ba natin isinasara ang income at tsaka mga expenses sa retained earnings? If we call it as assets, therefore
expense will be under. Pag ang expense under, ano yung retained earnings? Over. Bawasan mo na. Dedebit mo sa
year na to ang retained earnings mo. Magkano yung amount dun? 20. Icrecredit mo na yung differed charge MCIT
na 20 so mawawala na siya sa libro. Aalisin mo sa libro. Pero yung tatlo andun pa rin.
Swerte naman pagdating ng Year H, nag-12M ka tapos nag-10.2M ka. So meron kang 1.8M. 1.8M imultiply mo ng 30%,
ilan yun? 540. Tapos 12M x 2% is only 240. Ito gagamitin mo diba? So debit provision for income tax, magkano? 540.
At dahil tumaas na yan, gagamitin mo na lahat ng differed charges mo. Are you following? Gamitin mo na. Credit
differed charge MCIT, meron kang 10, meron kang 30, meron kang 20. At yung iba, income tax payable na 480.
Follow?
Linagyan ko, sinadya ko na yung 480 mas mataas pa rin dito sa due mo na 240. Tama? Gagawin ko, anong
mangyayari kung mas mababa na?
Oh, ipagpalagay natin na yung H ay 12M. Follow? Tataasan natin yung expense para pag minultiply mo to, mataas
pa rin. Kaya kung ito ay 11M lang, 1M yan. Correct? So magiging normal mo, 1M. Ibaba pa natin. Para makita mo.
11.1M. Kung 11.1M yan edi .9M diba? .9M x 30%, ilan? 270. Follow? Tapos 12M x 2% is 240. Edi panalo pa rin to diba?
Tama!
So irerecord mo ngayon. Debit provision for income tax, 270. Credit the differed charges MCIT, ang total nun 60
diba? Diba 60 to? And then give credit income tax payable of 210 na lang diba? Ngayon, anong pinapakita ko? Ang
minimum, 240. Ang income tax payable, 210. Magkano ibabayad mo sa BIR? 210 or 240? 210.
Listen carefully. The minimum is being compared only to the normal. The moment na tumaas na yung normal,
gagamitin mo na yung normal at lahat ng differed charges ideduct mo even to the point na magzero to kasi baka
ang lalaki ng differed charge. Dito kasi, sa una kong illustration, hindi mo mapapansin kasi mas mataas siya eh
kaysa sa minimum.
Baka mamaya kasi ilagay sa theory, kapag yung after deducting the differed charges, the income tax payable must
at least be equal to minimum. Wrong. Even if it is lower, ito babayran mo. Kahit nga maubos yan, halimbawa ito
eksato nagkataon 270 to, 0 lang income tax payable. Am I clear?
What if ito nangyari sa situation? Letter G na tayo.
EXEMPTION FROM MCIT DUE TO LOSSES

Year I na tayo, tama? Gross income, gross allowable deduction, net income or loss. Year I. 14M. 14.2M. May loss na
.2M. Magbabayad pa rin ba ng tax ang corporation na to kahit nalugi na? And therefore income tax is not tax on
utang. It is not a tax that will be enforced only if you have income. Even if there’s loss, there will be income tax.
That shows that income tax is an excise tax. Income tax is the privilege is to engage in an activity where you will
probably have utang. Kaya ang normal nito is 0, tama? Normal is 0 pero may minimum, correct? Minimum is 14M x
2%, that is 20. Yan ang iyong babayaran.
Sir, diba unfair? Lugi na nga ako, magbabayad pa ako. Kaya nga bibigyan ka ng option kasi baka sa papel ka lang
lugi, sa bulsa hindi. Correct? Bibigyan ka, mamili ka. Gusto mong bayaran yan o magpa-exempt. Option mo diba?
Option mo, bayaran to. Just pay. Pay the minimum or gusto mo magrequest ka for exemption from MCIT. Magpa-
exempt ka kasi nalulugi ka naman eh. Pero ba yung ilalagay mong ground ay acceptable ground for exemption.
Kaya lang mag-iisip kang mabuti ah? Yung consequence na ikaw ay exempt at yung consequence na ikaw ay hindi
exempt.
Magrerequest ka for exemption from MCIT dahil sa losses. Kailangan yung losses mo unang pinaggalingan
prolonged labor dispute. How long is prolonged? Ano ibig sabihin ng may labor dispute? Nagstrike ang mga
empleyado mo. So imbis na pumasok sa pabrika, ang ginawa nila nag-picket sa labas. Oh so pag walang work, may
stoppage ng work, walang production, magkakalosses. Correct? Normal yun, wala kang production eh. Eh may sabi
ang mga accountants, alam mo na merong tinatawag na fixed costs correct? Ke mag-operate tayo, ke hindi,
nandiyan na yan. So malulugi talaga tayo kasi wala tayong output diba? Ang tanong, para pumayag si Commissioner,
syempre to the Commissioner yan magrereach ka sa Secretary of Finance eh. Para pumayag si Commissioner, my
dear, gaano kahaba ang labor dispute? Gaano kahaba ang strike? Ayun. Dapat mahaba. More than 6, pag more than
6 kasi mahaba yan kaya more than 6 months. Pag less, di papayagan. Pangawalang dahilan baka binagyo yung
lugar niyo kaya may force majeure. Pangatlong dahilan papayagan ka ay dahil nagkaroon ng legitimate business
reverses.
Ano ang consequence? Ayan. Pag nagpa-exempt ka, edi wala kang babayaran. Pag nagbayad ka, nagbayad ka at
baka di ka pa magsara, itinuloy mo pa. Dumating ngayon ang Year J.
Ang gross income mo biglang nag-15M. At nakabawi tayo, ang naging expenses lang natin ay, let’s say, ay 13.5M.
Kaya ang naging profit natin ay 1.5M. Tama? Ang tanong, magkano ang babayran natin sa BIR? Ano ang magiging
entry natin? Magkano ng normal natin? So normal natin ay 450. Mali. Kapag binayaran mo, ito pinili mo yung
nagbayad ka, di ka nagpa-exempt, ang minimum mo is 1.5M, tama? Less .2M so you multiply by 30%, kaya ang normal
mo is 390. Ang minimum mo is 15M x 2% is 300. Ito ang gagamitin mo. So debit provision for income tax, 390. Credit
differed charge MCIT, 20. Ang income tax payable, only 110.
NET OPERATING LOSS CARRY-OVER (NOLCO)

Kapag di ka exempt sa tax, binayaran mo eh, yung naging lugi mo, naging incentive mo pa yan. Bakit? Parang
sinasabi ng Tax Code, despite the loss, don’t stop. Sige lang. Continue the business. Kapag nagprofit ka na, ibawas
mo. Ang tawag dito “net operating loss carry-over” (NOLCO). Tama? Naibawas mo na, bumaba ang tax liability mo,
correct? At yung ibinayad mong tax, ibabawas mo pa rin. O diba ang gandang motivation? You were able to deduct
the NOLCO from the income and in determining how much you will pay, you will deduct the differed charge. Kasi
nakarecord to as differed charge, correct? Diba differed charge to eh. Ang entry mo dito debit provision for income
tax, diba 0? Debit differed charge MCIT, 280. Kaya income tax payable, 280. Kaya ngayon tumaas si normal kay
minimum, tama? Magagamit mo pa siya. Kagaya ng natutunan natin kanina. Yun nga lang, my dear, yung NOLCO
nagagamit lang in the next 3 years. So okay lang na nalugi ka, lugi lugi lugi. Basta pagdating ng ika-apat na taon,
magprofit ka para magamit. Kapag nag-apat na taon, di mo pa rin nagagamit, itong isa di mo na madededuct, ito
na lang tatlo. Laging three years immediately preceeding. Kaya palaki nang palaki yung binabayaran mo kasi
umaasa ka naman na mababawi para makapag-NOLCO ka tapos lahat ng differed charges ibawas mo na.
DIVIDENDS
Now, proceed to the next topic kung walang question. Di ka ba nagtataka, para lang maipasok lang yung topic ah.
Kung halimbawa, ito yung San Miguel Corporation. This is a domestic corporation, tama? Tapos syempre may
stockholder yan diba? At si domestic corporation, nagdeclare ang nagbayad ng cash dividend sa kanyang
stockholder at ang kanyang stockholder niya ay ikaw, you. So ikaw ay individual, tama? Halimbawa entitled ka sa
100,000 na dividend tapos may isa pa siyang stockholder, ipagpalagay natin ang stockholder niya ay XYZ
Corporation. So ito ay corporation, follow? Na domestic din. Pag ang dividend niya, 100,000, anong gagawin ng San
Miguel Corporation? Yang 100,000 na yan, yung 10% or 10,000, ibibigay sa BIR. Follow? At yung 90% or 90,000, ibibigay
sa’yo. Correct? At itong dividend na natanggap mong to, yang 100%, not part of your taxable income. Ayos? Kasi
itong 10% na pinadala sa kanila ay final tax, siya ang sasagot sa income na’to. Correct? Samantalng itong XYZ,
makikita mo ah? Magkano ibabawas niya? Walang ibabawas. So 0 ang pupunta sa BIR. Follow? So yung buong 100%,
100,000, pupunta sa XYZ. Kaya yung total na 100%, hindi rin idadagdag as part of taxable income kasi hindi sinubject
kasi exempt sa tax. Are you following? Napapansin mo na?
And therefore you will conclude ha, all dividends that a stockholder, other than a non-resident foreign, will not be
part of the taxable income of a resident citizen, resident alien, non-resident alien - engaged or not engaged –
because they’re subject to final tax. Yung resident citizen, resident alien, non-resident citizen: 10%. Non-resident
alien – engaged: 20%, 25% sa not engaged. Domestic and resident foreign, exempt. Yun lang non-resident foreign
nasasubject sa 15%. Are you following?

And therefore pagka domestic ka nagbibigay, hindi mo makikitang part of taxable income ang dividend given by
domestic corporations. Now the reason ah? Bakit ito ineexempt, parang spoiled ka naman? Pag kami, babawasan.
Pag ikaw, hindi babawasan. Kasi, my dear, tignan mo to. Pag nag-umpisa ang corporation, ito yung start diba?
Tama? Sa first year ng operation, syempre dahil first year ang kanyang retained earnings, diba 0? Tama? Pero
meron siyang capital invester diba? So hindi sila pantay. Retained earning 0 eh. Dito yung paid-in capital mo eh.
Correct? Let’s say nag-invest sila ng 100M. So hindi pantay diba? Later magkaka-income, tama? Kaya yung retained
earnings, tumataas to. Bakit tumataas? May income, may dividend na natatanggap diba? Tama? Tanggap nang
tanggap ng dividend, tanggap nang tanggap ng income, pataas nang pataas. Hanggang sa dumating sa point na
100M na rin to. Pwede? Pwede to, di mo naman ginagalaw diba? Unless meron kang mga other investment. Tama?
Nagpantay na. Pantay na. So this is now 100% of the paid-in diba?
IMPROPERLY ACCUMULATED EARNINGS TAX (IAET)
Masama bang naiipon ang income sa isang kamay? Yes. Kasi lesser money in circulation. Pero wala tayong magawa
kasi diskarte nila yan. Kaya ito yung batas. Kapag kayo nagpantay na, 100% na ng iyong capital ang iyong naiipon,
baka naman dapat mo nang idistribute. Kasi the moment pinalagpas mo yan, nag-exceed na, nandito na, more than
100% ka na ng paid-in mo, correct? Bakit mo iniipon? Sasabihin ng rule, ah you are improperly accumulating your
earnings. Tama? Kaya isasubject ka na namin sa 10%, na may computation yan, tama? Kaya hindi mo na sinasubject
ito para pag nasubject, dun palang babawasan ng 10%. Kasi baka di na isubject, baka ideclare. Edi dun babawasan
ng 10. Am I clear?
Subalit, hindi ka subject sa improperly accumulated earnings tax (IAET)… Subject ka sa improperly accumulated
earnings tax except! Ah may except! Except, group 1, baka sila ay mga bangko and the non-bank financial
intermediaries. Kahit lumagpas pa sila ng 100%, sige lang. Bangko kayo eh. Yung pangalawa na hindi kasali sa IAET
ay ang mga insurance companies. At yung pangatlo ay yung mga publicly-held corporations. Ano sir ibig sabihin ng
publicly-held corporations? The shares are available to the public. Para mabili nila. Walang improperly accumulated
earnings yan. Or paano sir paano kung wala ako diyan, baka nasa group 2 ako? Og except ka pa rin, di ka subject.
Nasa group 2 ka.
If the accumulation of profit ay para sa, una, para sa expansion. Ano pa? Improvement and repairs? Kaya pala nag-
iipon ay para palakihin yung business. Pangalawa? Bakit kayo nag-iipon? Pamabayad pala. Their retirement. Bakit
ka pa nag-iipon? Kasi baka gusto natin additional capital, kaya pala tayo nag-iipon. Follow? Ba’t ka pa nag-iipon?
Ano kaya? You are prohibited to declare dividend by virtue of a loan agreement. Baka nakalagay sa contract of
loan, my dear corporation ah hangga’t di bayad ang utang mo sa amin, hindi ka pwede magdeclare ng dividend. So
ba’t ka magdedeclare ng dividend, we will the violate the agreement. Or baka naman we expect some problems.
Kaya baka defendan tayo sa mga kaso kaya to provide for possible contingencies kaya tayo nag-iipon.
Magproprovide tayo para sa contingencies.

So ano ang tinatawag na retained earnings dito, the unappropriated retained earnings. So all you have to do is
appropriate it meaning naka-earmark for particular undertaking kung ayaw mong mangyari yun. Subalit may mga
businesses pinepresume sila improperly accumulated earnings. So ito, presumed. Presumed na sila ay nag-
iimproperly accumulate ng earnings. Ano yan? If you are a mere holding company. O diba may mga holding
companies. Kasi may uso ngayon. Yung mga business ngayon, nasa kanila na ang lahat eh. Tignan mo. May holding
company, meron silang security agency, meron silang manpower. Para yung kailangan nung isang business nila
dito lang kukunin. Diba? Ganun-ganun lang. Sila na rin may-ari ng bangko para yung pera nila dun na rin idedeposit
eh. Tama? Tapos mere investment company. At tsaka yung allows the business to accumulate its profit beyond the
reasonable needs of the business.
TAXING EDUCATIONAL INSTITUTIONS
Next. Paano naman kung ikaw ay isang eskwelahan? My dear, ang educational institution, pwedeng public. Kapag
public ka, ieexempt ka. Kasi ito ay the government. Di tinatax yan. Example? University of the Philippines.
Pamantasan ng Lungsod ng Maynila. Polytechnic University of the Philippines. Bakit hindi tinatax ang mga public
educational institution? Destination of income theory. Ano mang income ang magkaroon sila, pumupunta rin sa
government tama? Imagine, itatax mo ang government, kukunin mo sa government, bibigay mo din sa government.
Follow?
Eh paano naman kung mga non-stock, non-profit? Oh yan, non-stock, non-profit, kagaya ng mga religious
organization, tama? Exempt din yan. Exempt din to provided na lahat ng mga makukuha nila actually, directly and
exclusively used for educational purposes. Kaya observe mo, lalo yung mga religious institutions, they keep on
getting bigger and bigger and bigger. Kasi lahat ng mga natatanggap nila, hindi natatax provided na di sila
magdedeclare ng dividend. Eh di naman nagdedecare yan eh kaya di natatax ang mga eskwelahan. Example ng
religious organization na non-stock, non-profit na mga eskwelahan, andiyan ang University of Santo Tomas. Diba?
Catholic yan eh. Andiyan ang San Beda, San Sebastian.
Dalhin natin dun sa natatax. Siya ay proprietary educational institution. Kagaya ng University of the East. Kagaya ng
Far Eastern University. Pag nandito kayo, gagamit muna tayo ng predominance test. Ididivide yung gross income
niya. Okay? Gross income from school-related activities over total income. Kapag ang lumabas ay 50% or more, siya
ay subject lang sa, so siya ay magiging special corporation, subject sa 10%. At kapareho din dito ang treatment
nung non-profit hospital ha? Wag mo iisipin na porke non-profit hospital, exempt kasi may non-profit dito eh. Ito
ay non-profit educational institution exempt. Non-profit hospital treated as proprietary educational. Did I say it loud
and clear?
Dito special siya kaya 10%. Kapag yan nagless than 50%, ordinary na siya. At dahil ordinary na siya, subject na siya
sa normal corporate income tax na minumultiply sa rate versus sa MCIT, if applicable. Bakit sinabi kong if
applicable? Kasi baka kakaumpisa lang niya, wala pa siya sa fourth year. Pag naka-fourth year na yang school nay

an, isasubject na yan sa MCIT kasi di na siya special. So you cannot hide under the name of a school but your
business is really to have profit.
Sir, anu-ano ba idadagdag natin sa school-related? Lahat ng activities primarily designed para sa students. Tuition
fee, school-related. Miscellaneous fee, school related. Sir, what if nagtayo ang school ng bookstore? Titignan natin.
Nasaan yung bookstore? Nasa loob ng campus, school-related. Nasa labas ng campus, yan ay other income niya.
Kasi nagcacater siya, ba’t mo ilalagay sa labas, so nagcacater ka sa outside. Kapag insidem okay lang although
minsan may bibiling mga visitor kasi primariliy sa students. Nagtayo ng canteen! If inside the campus, school-
related. Restaurant inside the campus is school-related. Follow? Itinayo niya outside, magiging not school-related.
Sir, nagtayo ng dormitory? Residence for the students. Nasan yung dormitory? Sa loob ng campus? Okay, school-
related. Pag outside, not school-related. Am I clear sa pagdedetermine whether idadagdag mo as school-related?
Bakit Sir, may mga school pinapaupahan yung baba nila? Ito kasi ang system niyan kaya may other income ka eh.
Yung other income mo basta wag lalagpas ng 50% kasi hanggang 50 eh. Yun yung threshold eh. Hanggang 50 lang
yung other income. Ito kasi, napansin ng school, ano ba yan yung mga kalaban nating school, hindi nagdedevelop
ng faculty. Tayo ang nagdedevelop. Ihahire natin sila fresh graduate na magagaling, nagtuturo. At pag magaling na,
here come the other schools, iinvite. Yung pasweldo natin, 100 per hour. Bigla nilang aalukin ng 300 per hour. Lilipat
talaga yan. Diba? 400 per hour, lilipat talaga yan eh gusto naman nating mamaintain yung mga yan. So dagdagan
naitn ng sweldo. Papano? Taasan natin tuition. Nako delikado. If we will increase the tuition fee, baka yung bagong
papasok, mas konti pa sa aalis. Tama? Akala mo ba gusto ng mga school magtaas nang magtaas? Yun ang dahilan
eh. They want to keep the faculty who are being pirated by other bigger schools. Kaya mga bigger schools talagang
nagproproduce, ang dami nilang magagaling kasi kinukuha nila eh. Magaling ang estudyante, magaling ang faculty,
magandang kombinasyon. Mag-iisip naman tayo. Ano ba yan, laging tayo ang training ground? Di pwede yan!
Bibigyan din natin ng maganda to. Papano Sir? Adjust mo yung tuition. Sir, pag nag-increase ka baka ang umalis na
student natin isang daan. Ang pumasok, konti na lang kasi mataas tuition natin eh! Oo nganno baka di natin kaya.
Sir, may naisip kami. Paupahan na lang natin ating mga building na bakante. May magtayo diyan ng restaurant, may
magtayo ng bookstore. Paupahin natin please. Okay yan. Wag lang papalagpasin ng 50% ng total income. Para
school pa rin tayo. Naiintindihan sa schools? Ayos?
Now, matapos mong malaman, papano kinocompute ang kanyang total income? Kukunin natin ang total income,
correct? Sa kanyang total income, magbabawas na siya ng deduction at magkakaroon siya ngayon ng option.
Pwedeng kagaya ng diniscuss natin sa individual, magkaroon siya ng itemized deduction or baka gusto niya mag-
optional standard deduction (OSD). Ano pagkakaiba niya sa individual sa OSD? Ang OSD which is 40%, follow? Sa
individual, siya ay kapalit, in lieu of costs, in lieu of expenses, because the 40% of individual, base sa gross sales or
receipts. Diyan ka magmumultiply ng 40 %. Kaya in effect, ang individual pag nag-aavail ng OSD, natatax ang capital.
Kasi ang nadededuct mo lang na cost 40%, 60% is not deducted. Follow?
Samantalang pag ikaw ay corporation, ang OSD is in lieu, kapalit siya ng expense. Oh yan lang ang kapalit niya. So
dito lumalabas, gross sales or receipts less costs equals magkakaroon ng gross income at tsaka imumultiply ng

40%. So sa corporation, di natatax ang capital kasi nadedeuct yung cost. Am I clear? Maliwanag ang banat sa
corporation? Yan na muna ang general tapos later tsaka natin hihimay-himayin anong klaseng corporation ang
meron tayo.
PARTNERSHIP AS TAX PAYERS
We go to the third group of taxpayer subject to income tax. Ano yung pangatlong grupo? Ayun! Ang pangatlong
grupo ay PARTNERSHIP.
Ang partnership pwedeng ordinary partnership. Pwede rin general professional. Ang ordinary partnership treated
as if corporation. As if siya ay corporation except wala siyang improperly accumulated earnings tax. Do not subject
the partnership to improperly accumulated earnings tax. Reason? Hindi naiipon ang profit. Kahit hindi idistrubute
sa partners. Anong principle gagamitin? Constructive receipt of income. At tatandaan mo, for taxation purposes,
kaya tayo minsan nalilito, ang ordinary partnership tinatax every year as a corporation to determine the profit. But
it is erroneus to say that every year, dinidetermine kung may profit o wala ang partnership para sa partners.
Pagdating mo sa law, tandaan mo to, the income of the partnership or the loss is determined only once. It will not
be determined on a year-to-year basis. We determine the profit of the partnership on a year-to-year basis for
purposes of taxation but not for the purpose of getting the share of the partner. Nalalaman mo lang kung tumubo
o nalugi ang partnership when the partnership is dissolved. Pag niliquidate mo yan, dun mo lang malalaman. Dun
lang tayo nagdedetermine kung tumubo or nalugi. Listen, what about yung pinamimigay natin sa partner?
Temporary recording of their share in the profit. Kaya nga nasa libro magkano binigay sa’yo. Pag may winithdraw
ka diba nasa libro kasi sa final analysis pag nagsara tayo, ang share mo 1M ang nabigay na namin sa’yo ito. So
magbabalik ka. Correct? Nakukuha? Remember that ah.
What we see in P2, or in your APAR ba? What we see there is the determination on a year-to-year for purpose of
temporarily recording the share. Kaya nga i-observe mo sa P2, ayaw nila lagyan ng industrial partner pag naglalagay
ng liquidation. Follow? Kasi may problema tayo pag linagyan mo. Kasi pag industrial baka hindi siya subject. Correct?
Kaya minsan may mali eh. Pag tinitignan mo, bakit puro capitalist partner? Bakit di lagyan ng industrial at limited
partner pag nagliliquidation? Diba? Para Makita natin ano mga nangyari. Ipinapaubaya nila sa law. Law ang
nagdidiscuss ng liquidation ng may industrial at may limited because of the consequence nung the income or the
loss must be determined only once. Tama ba yung naipaliwanag ko? Ayos? Kaya litong-lito ka diyan pag board exam
eh. Kaya nga pinaghiwalay na siguro para makita. Diba? Kasi all along ang alam mo ang distribution ng profit, final
na, correct? Yun na natanggap eh. Kasi pag ginawa mong ganyan. Bibigyan kitang simpleng paliwanag.
Ito, puro capitalist general. Itong dalawang to, industrial. Walang stipulation sa profit and loss, assuming. May profit,
hahatiin mo, correct? Bibigyan mo sila, just and equitable, diba? Nalugi, di mo bibigyan, correct? Sila lang. Nalugi, di
mo bibigyan. Sila lang. Nagprofit, bibigyan mo sila. Correct? And therefore kung 25 taon ang partnership at 10 taong
may profit, 10 taong may share sila, 15 taon lugi. Pag tinotal mo yung profit, halimbawa total profit, 100M, ang total

loss, 120M. May loss na 20M. Lahat sila loss, ito profit. Di niyo ba naisip? Saan ka nakakita ng partnership may dalawa
masaya yung sampu malungkot. Nasalubong mo sila. Pare, bakit kayo malungot? Nadissolve na partnership namin,
pare. Nalugi ba? Lugi, pare. Eh bakit nasalubong ko yung dalawa tumubo daw. Oo nga eh, nagtataka kami bakit sila
may tubo eh. Oh kasi taun-taon binibigyan mo sila ng profit, pag may loss hindi mo sila shinishare. Tama? Kaya di
ginagawa. Kami ngayon ang gagawa. Ay di pala, yung law pala. Okay naintindihan mo? Naintindihan mo na? Salamat.
Dito na tayo ah. Wag siya mag-iimproperly accumulated earnings tax. Dahil treated siya as a corporation, kuunin
natin yung net income niya. Net income subject to tax, kukunin natin yung 30%. As of today, 30%. 30% will go to the
BIR. Are you following? 70%, ano tawag dito? “Net income after tax”. Follow? Idadagdag mo ngayon yung other
income. Plus other income not included here. Plus ito ngayon, itong dalawang to will be available to partners. Yan.
Available to partners. Diba? Tama? Kumbaga sa corporation, ito yung net income after tax, ito yung other income,
ito yung retained earnings diba? Nakukuha? Magiging retained earnings to, kung corporation. Dito kukuha ng
dividend. Tama? Dito ngayon available to partners, ididivide na sa partners according to their agreement or
stipulation. Pag wala, capital contribution. Correct? Tama? At ito, temporary lang, diba? So dito, pag dinivide mo na
partners, makukuha mo na share of a partner diba? Tama? Eh diba dito pag nagdeclare ng dividend, sa stockholder
kung corporation, tama? At yung tatanggapin niya babawasan ng 10%, final tax diba? So dito ibibigay sa partner,
babawasan din ng 10%, final tax na din diba? So exactly the same. Paano ka maliligaw? So ang matatanggap mo na
lang, 90% pupunta sa partner. Kaya yung 100% na share niya is not part of taxable income, kasi dito rin kung
corporation 10%. 90% pupunta kay stockholder. Tapos yan buong natanggap na yan 100%, not part of taxable income
kasi may exactly the same. Naipaliwanag? Naintindihan mo?
What if ang gusto naman natin practicing mo ang iyong profession? Halimbawa napasok ka sa SGV, DMG, ….. [mga
accounting firms]. Eh nagkita-kita kayo, uy siguro tama na yung natutunan natin no? High time, tayo naman ang
maging partners na magtatayo. Let’s be the founding partners but we will practice the profession. Kaya ang itatatag
natin ay general professional partnership. At ito, dito kasi ang motivation natin, profit kaya corporation tayo. Dito
ang motivation natin, to render service to the public. Pag nagtayo tayo ng accounting firm or auditing firm, we’re
not motivated by profit, we want service to the public. Pag tayo lawyers at nagtayo tayo ng law firm, hindi tayo
looking after the money, we want to help the people. Kaya yun minsan ang pagkakaiba ng law practice at tsaka
accounting practice. Ang accounting practice sigurado ka nagbabayad ang client eh. Samantalang sa law practice,
ang dami naming trouble. Naalala mo yung 60 hours mandatory dapat libre. Diba? Kaya di tayo nagpapractice ng
profession for profit. Kaya tayo ay exempt from income tax.
Kaya yung ating net income plus other income so total income. Yung ating total income, 0 ang pupunta sa BIR. Are
you following? Dito meron na tayong available na to partners. Tapos ididivide na natin sa partners. Makukuha mo
na yung share ni partner. Follow? Now, pag nakuha mo na yung share ni partner, ilang percent ang babawasin mo?
Hindi pwedeng 15? Napalitan na ba yung 720,000? So ilalagay pa rin natin yan kasi pwede ibigay yan before ha? Dati
pag ang nagiging share mo, sa old ha, up to 720, tama? 10% ipapadala sa BIR. 90% ibibigay kay partner. 100% minus,
may aalisin ka, yun mga exempt sa tax, yan. Yan ay magiging part of taxable income. Sa lumang law, pag lumagpas

ng 720 ang tatanggapin mo, 15% ipapadala sa BIR. 85% pupunta kay partner. Yung 100% minus yung exempt will be
part of taxable income. So anong ibig mong sabihin? Tignan mo ah.
Net income natin eh, let’s suppose, 8M. Dalawa lang tayong partner. May other income tayo eh. Meron tayong, let’s
suppose, dividend na natanggap. Let’s suppose may natanggap din tayong bank interest income. Let’s say ang total
niyan, 2M, to simplify. So ang available to partners, 10M, tama? Halimbawa equal tayo so ang magiging share ng
bawat isa 5M, diba? Hindi mo idadagdag lahat yan. Matatanggap mo pero di mo idadagdag kasi ito hindi dapat
madagdag sa taxable. Edi aalisin mo yung magiging share mo dito, babawasan mo ng 1M, correct? Kasi equal kayo
eh. 4M lang yung idadagdag mo as taxable cause ito nagpass through lang. You will receive your share in the total
income but because your share in the total income, included income which are not to be taxed because already
previously taxed. Remove them from the taxable income but include them as part of the amount that you will
receive from the partnership. And later, itatax mo, correct? Diba? Ibabawas mo yung creditable withholding tax.
Naipaliwanag ba nang maayos? Ayos ba? Naiintindihan ako? Hindi, nalilito ka lalo? Sana Sir di mo na binaggit yan,
lalo kami nalito eh.
Kasi nga pag nagtayo ng partnership baka may cash in bank tayo. Tingin mo yang cash in bank natin kikita ng pera?
Babawasan ng bangko ng withholding tax so makuuha natin net. Ibibigay sa atin. Magpapartihan tayo. Pati ba yun,
pagpapartihan? Eh kung di mo pagpapartihan yun kanino mo ibibigay yun? So pagpapartihan natin, natanggap
natin. Dapat ba nating idagdag pa as part of taxable income. Hindi. Eh Sir bakit natin to dinadagdag? Kasi hindi pa
tayo natatax. Dito natax na kaya di tayo tinatax. Correct? Di mo idadagdag sa taxable income. Ito wala pang tax oh,
exempt from income tax eh. Kaya lalabas tuloy, the share of a partner in the GPP is part of taxable income except
yung dapat hindi natax na natanggap mo. Was it explained clearly? O sige hanggang diyan na muna parang litong-
lito ka na eh. Pero maganda naman yung discussion diba?
Tapos lalagyan ko rin ng isa diyan. Pupunta ako sa pang-apat, estates and trusts. Isasama ko ang co-ownership at
joint venture. Ayos ba? May handout na kayo diyan diba? Pero bago yun, aansweran natin yung exercises para di
tayo natatambak. Next meeting pakidala yung exercises ah. Corporation tapos partnership, tama? Any questions?
See you next meeting. Ingat, babye. Love you too!
GROSS PHILIPPINE BILLINGS
Airlines, kapag airlines, mga international carrier, walang problem pag domestic, ang pinag uusapan dito ay resident
international, tinagnan mo yung mga international air carrier, pwede kasi yung corporation ay domestic, kagaya ng
PAL, Cebu Pac pero may foreign, itong foreign ay resident kasi engaged in business dito, kagaya ng Eva Air, ang
kinukuha lang natin kapag resident international air carrier, kukunin mo lang yung gross Philippine billings, yung
manggagaling sa Philippines ah, kapag nag originate, dito nag take off yung airplane, yan ay part ng Philippine

billings, dito kasi nanggaling yung airplane, ngayon titignan natin kung yung manggagaling sa Philippines ay direct
flight na, meaning from Philippines to foreign destination na, direcho na, eh paano kung may connecting flight,
halimbawa Philippines mag stop over sa Singapore, pero lilipat sa ibang eroplano or itutuloy lang yung flight, from
Singapore pupunta kasi ng Japan, pero dito nag originate, ang itatax lang ay from Philippines to Singapore, eh paano
pag nag originate sa foreign country, so foreign country destination nya ay PHL, wag mo isasama, kasi nag originate
sa foreign country, eh paano kung titigil sa PHL para mag tuloy, pano kung may interconnecting flight, assuming
galing Japan, pupunta sya ng PHL, wag isasama, kasi sa Japan nag orihginate, tapos lilipad ule, aalis ng PHL same
airline, different airplane, kapag same airline, pupunta ng Rome, titignan natin umalis ba within 48 hours; same
airline pero umalis left within 48 from time of landing, wag mo isasama, eh paano kung lagpas 48 hours, ahh titignan
natin, except kung yung delay ay justified, wag mo rin isasama, bakit ma dedelay, baka kasi may force majeure or
baka di papayagan kasi may dadating na important personalities, pero kung different airline yan at pupunta ng
Rome, idadagdag mo kasi dito sya mag ooriginate, yan ang Gross Philippine Billings. At dahil topic ay income tax 2
½% yan kapag ang topic ay business tax, 3% yan, di yan double taxation.
Kunin mo yung Gross Philippine Billings, sya ay Manila to Tokyo, direcho continuous flight, 2,000 passengers, 2,000
pesos per passenger, that will be 4M, tapos merong Manila to Taipei, oh nilipat, may pag lipat, Manila to Taipei to
Tokyo, di natin lahat to itatax, itatax lang natin mula Manila to Taipei, at papano iallocate yan? Titignan natin
magkano ang Manila to Taipei ticket, 1,000 per ticket; 3000 at 1000 per ticket (?); 3M, pwede na tayo mag allocate
ng 4M na to.
Manila to Taipei P1,000 over P2,000 na Manila to Taipei to Tokyo multiplied by 4M so merong 2M Gross Philippine
Billings 7M multiplied by 2.5% is P175,000. Madali ba?
A Corp., submitted ng following data for the year ending so, isang domestic corp, tapos mag cclaim sya ng tax
credit doon sa binayad sa ibang bansa, ang convertion rate at 1:50, kunin muna natin is yung PHL ah. Magkano yung
gross: 4M, deduction 2.5; therefore net income? 1.5. USA, magkano yung gross: 2M, ang deduction ay 15,000 times
50 is 750,000 (40,000 USD times 50: 2M), net income 1M to 50, total income, 2,750,000 times 30% is 825,000 pero mag
cclaim daw sya ng tax credit, so less foreign tax paid sa USA, actual, magkano binayad dyan? 3,000? 3000 times 50
is 150,000 limit net income foreign country 1,250,000, total income is 2.750M multiplied by the Philippine income tax
due of 825,00. Bakit sir sya ang numerator kasi itong income na to outside the PHL ay tina-tax natin pero
ipinagbayad yan ng tax sa ibang bansa, ang itatanong natin, mag kano sa sinisingil naming sa 825 ang para dito,
magkano? 375,000, out of this income the PHL gov is collecting 375,000, in effect parang di ka na tax sa foreign
country kasi ibabawas mo yun tax eh, kaya ito 150, still due 675,000.
Eh paano daw if sya ay resident foreign, itatax ka lang sa Philippines, so ang gross mo 4M less deduction of 2.5M,
1.5 times 30% = 450,000, sir di ako pwede mag deduct ng tax credit? Hindi, kasi di naman naming tina tax ang income
outside, para maka deduct ka, tina tax ang income outside

Next, ayy dahil non-resident foreign ka, kukunin yung Philippines, gross 4M less deduction wala, 4M multiply by 30
you pay 1.2M.
Next, icclaim daw nya na deduction, so Philippines ang net ay 1.5, tapos sa USA ang gross ay 2M tapos ang deduction
nya ay 750 at may tax na icclaim as deduction na 150. Kaya ang total income nya ay 2.6 multiply by 30% = 780,000.
Hindi papayuhan ng tax deduction kundi tax credit, he will be paying lesser.
Naging resident international carrier, oh edi gross lang tama… gross Philippine billings, magkano nga yun ay 4M
times, anong susunod…
SAMPLE PROBLEMS/ COMPUTATION
Number 39: Foreign Corporation but its expenses outside of the PH is 3 million unallocated its income tax is:
*so kukunin muna natin PH income nya*
Ang Gross nya sa Philippines (PH) ay 4M iaallocate natin yung deduction na 4 million income sa PH or for total
income is 6 multiplied by expenses of 3M so we will deduct 2M so 2M to be multiplied by 30% of the tax liability is
600,000
If it is a resident foreign and remitted 60% of its net traffic in said office, total tax liability we will use the original
data based on the computation natin.
How much yung PH net nya? 1.5M to be multiplied by the corporate rate of 30% that is 450 this is the income tax
We get now the remittance tax and niremit nya ay 1.5 million times 70% times 60% times 15% magkano to? = 994,500
total tax liability 544,500
Bat binagit yung 70%? para MAKHUA YUNG NET INCOME AFTER TAX TAS 60% TO GET THE AMOUNT OF REMITTANCE 15
TO GET THE TAX ? MALINAW?
NEXT Number 41: A resident foreign provided the following data for the year… *kukunin lang income sa PH ignore
USA* tas may natanggap na dividend
Gross PH = 40 million less allowable deduction of 12 we deal with 28M tapos nakatanggap ng dividend ignore and
4M so lang total ay 22M

Ano ang tanong dyan? magkano ang total tax liability? Nagremit sya ng 40 percent so imultiply mo tsa 30 percent
yan ang income tax magkano yun? 9.6M tapos may remittance dba? kerek? niremit nya yung dividend from the
domestic so 5M yun ay exempt tas niremit nya yung income which is 32M TIMES 70 PERCENT TIMES 40 PERCENT
TIME 15 PERCENT = 1344 TOTAL TAX LIABILITY IS 10,944,000. DUMADALI? DUMADALI?
MAGANDA ANG SUSUNOD :)
Meron tayong Gross PH 1 Million less deduction of 300 PH NET 700 USA 500 Less 200 USA is 300 JAPAN ay 500 Minus
100 JAPAN is 400 am i clear?
Then we check the other income ang gagawin muna natin ay domestic dividend from San Miguel is 70 so other
income natin may matatangap tayong dividend from SMC na 70 Domestic to Domestic so exempt then may
natanggap na dividend from Ford otore so dividend in the amount of 120. Follow? Tapos meron tayong share sa San
Miguel shares directly to buyer (not traded) magkano? 150.
dati ito minumultiply naamend ba? ilan na ngayon? 15 percent na magkano yan? 22,500 next royalties philippines
20% so 10,000 are you following? royalties from outside country 30% 100USD nasusundan?
Next, interest income other than bank 60 other than bank tapos meryon tayong rent na 250 tax 100 yung rent na
yan dito latin lalagay 250 other rent meron pa tayong 100 ph naman next ng 10,000 ififinal tax? hindi kapag prices
regardless of amount idadagdag regardless of amount
Next: interest income 50,000 interest dollars magkano interest? dati 7.5 ngayon 15% magkano na to? 7,500 kapag
domestic can be taxed with and without so total mo 1,060,000 then to plus 345770 plus 400 magkano total nun? so
net income nya ay 2,230,000 multiplied by 30 percent equals 669 packed ngayon makukuha mo yung tax liability ni
domestic. Ilan? 709,000
Gagawin nating resident foreign, pah resident foreignano mangyayari dito?
Yung dividend sa SMC magkano? 70 exempt then royalties not traded gagamitin ba natin yung 15%? Hindi. Ang
nagalaw lang domestic hndi nagalaw yung foreign kaya ang gain nya ay 150. Ang not traded yung first 100 ay 5%
yung excess na 15 ay 10 percent eto 5
Royalties sa Ph ay 50 parehas ang treatment sa domestic and foreign resident eh pano yung interest? sa foreign
currency na 50 nagalaw ba? hndi! yung dati pa din then multiplied by 7.5% ilan yan? 3,750 at saka yung net income
magkano net income? 1,060,000 tas 30% equals 318 total? 341,750.

Gawin nating non resident freign dun tayo sa dividend sa SMC na 70% exempt pa din? Hndi! may final tax na 15% so
imultiply na 15% equals 10,500 tapos yung gains ganun pa din? YES. Yung Gain na 150 yung first 100 na 5 yung excess
ay by 10 yung royalties ganun pa din? wala na sya dyan yung interest ganun pa din wala na parang yung individual
OFW na exempt so kunin m lang net income. Magkano? 1060 plus yung royalty sa PH ay 50 tama ba?
So ang total ay 1,410,000 x 30 magkano to? 423,000 total tax liability 443,500
SYEMPRE NATARANTA KA SAAN NANGALING 1,410,000 KASI KAPAG NON RESIDENT TINATAX SA GROSS ETO BA NAKANET?
HNDI! SO DEDUCTION NA 300 KAYA ANG TOTAL AY 1,410,000 NAKUHA BA? SALAMAT
Number 45: Non resident ofriegn dito sa 46 madali lang gross profit 800 capital gain ignor dividend interest ignore.
Gross na 800. Deduction expenses 16 magkano daw tax payable saka tax due?
First Quarter: Gross income 800 less deduction of 600 merong 200 x 30% is 60 versus the minimum 800 x 2 ay 60
yung ang tax due less witholding tax. How much 15 excess of previous period 10,000 total 25 therefore due sa first
quarter ay 25,000 so answer mo ay 60 tas 25.
Second Quarter: Eto naging 1.6 minus 1.2 400 times 30% 120 minimum ay 1.6 x 2 is 32 ang gagamitin ay 120 less 35
excess of 10 tax due of 25 total of 80 due sa second quarter at 40. Dumadali?
*Sir bat hndi mo inadd 2nd sa first? last time yun! iba na yun this time! nakalagay kasi cumulative! dapat alam nyo
cumulative*
Next, dumating ang 3rd quarter, 2400 tas 1.7 tas naging 65, 2400 minus 1.7 is .7x30 is 210 then 2.4 x 2% ay kaya ang
gagamitin natin ay 210 kaya eto ay 65 kaya eto 35 kaya ang total ay 150 therefore ang due sa third quarter ay 60
tapos nag 3 1 at nag 2 3.1 minus 2.1 is 1M x 30 is 300.
Then 3.1x 2 is 65 ang gagamitin natin ay 300 tas magkano na witholding? 115 tapos 10 tapos 25 total: 260 magkano
pa ang due? ang annual ay 40.
Hndi mo magagawa ang second quarter kung hndi mo gagawin 1st quarter!
Ang gross natin 495 tama? forss income divided by 99% is 500 tapos yung deduction ay 480 kaya ang net ay 20
multiplied by 30% normal is 6 versus minimum 500x2 is 10 so we will use 10 tapos merong excess na NCIT (not sure)
tapos may creditable witholding rax na 100% therefor eto yung due sa first quarter.
Maggawa natin yung second quarter walang sinabing cumulative so iaadd natin so plus ang nakuhang amound
dyan ay 792 divided by 99% is 800 so magiging 1.3! Follow? less deduction plus ang deduction ay 700 kaya ang total

ay 1,080,000. Net is 120 yung 120 imultiply sa 30 36 yan versus NCIT na 1.3x 26 so ang gagamitin ay 36 magkano
excess 10 tapos may CWT (not sure) 1.3x1% is 13 tapos yung binayaran mo nung first quarter so ang total ay 28 eto
magiging due sa 2nd quarter 8k.
NEXT: DITO MAY IMPROPER ACCUMULATING SO ANG KUKUNIN MUNA NATIN ANG TAX LIABILITY DYAN MAY INCOME NA
1.5 EXPENSES NA 600 BUSINESS ASSETS OTHERS IGNORE SO 3 LANG ICONSIDER MUNA PARA MALAMAN ANG INCOME
TAX DUE IN 2018……..
Ang gross income 1.5 ang deduction .6 kaya may income ka na 900 tapos may other income gain of sale of business
asset ignore interest etc. other income 60 gain 60 taxable is 960 imumultiply mo ng 30 percent tax due is …..
so magdeduct tayo magkano less 130 kaya magiging net income ay 830 to be multiplied by 30 percent equals 249
yan ang iyong tax liability
Eh may follow up eh magkano daw nag properly accumulated earnings? ang gagawin mo lang kunin m lahat ng
income taxable income etc. magkano taxable income? 830 add mo ung other income yung bang gain nandyan na?
yung note ko na 130 am i clear? and then add mo ung other income interest on kerek? deposits meron dung interest
then gain on sale ayos?
oy, ilagay muna natin yung interest on deposit 5,000 ididvided mo ng 5,000 divided by 80 percent is 6,250 next item
meron tayong natanggap na share of stock na at least 10 ang selling price 150 so may gain 150 minus 115 may gain
na 35 income yan eh tapos meron pang divided from domestic magkano? 35 add mo ano pa ang income? wala na
wala na therefore itotal mo na ang tota ay 1,0362 less taxes paid income tax nagbayad ng 249 tas magkano bank
interest icnome 6350 times 30 percent magkano yan 1250 tapos ung gain magkano binayaran dyan? yung gain on
sale 35 yan dba times 2018 na ang year tama ba ako? so times 50 na magkano to? 5250 ano pa ang nakakabawas
sa income natin nagbayad tayo ng dividends magkano yung dividends 120 ano pa reserve 300,000 total deduction
sa income 675,500 therefore if properly accummulated earnings 367,750 ano ang rate? 30 percent…074. madali
mahirap? madali. akala mo lang eh!
The records of a domestic corporation so may gross income 6718 income tax payable in 2016 and inorganize sya
nung 2000 so gross tas may other income, capital gain ignore bakit? kasi real property interest income on bank of
deposit and shares of stock ignore din so dalawa lang icoconsider natin! 2M saka 1940 tignan natin ang gross
nasusundan nyo ba ako?
Gross income 2M allowable deduction ay 1940 may net sa 60 imumultiply sa 30 normal ay 18 versus minunm 2M
times 2 percent is 40 kaya ang babayaran ay 40. what is the accounting entry o dba madali lang debit provision
from income tax 18 at idedebit mo muna to…. income tax payable of 40

Taxable income by 2018 bago mag 2018 dadaan ka muna ng 2017 kerek? so sa 2017, eto 2018 eh ang gross natin sa
2017 ay 3M ang allowable decution ay 3.1 nagkaron ng .1 loss tapos imumultiply 30 percent ay o tas ang minimum
ay 3M times 2 percent ay 60 kaya may babayaran tayong 60.
Ang tinatanong income tax payable sa 2018 kaya kukunin natin ang 2018 2M saka 3.5M eto kasi 2017, oh tignan 4M
no gross? 4M gross is 4M deduction magkano? 3.5M kaya may .5 less NOLCO?(not sure) may nolco na .1 kaya taxable
400 times 30 percent 120 minimun is 4M times 2 percent so we use 120 follow? less the differed charges NCIT meron
tayo sa 2016 ay sorry magkano? 22 tapos 2017 ay ilan? total 82 taxable tax due? 38. ang nagtanong nanaman ng
accounting entry so debit provision for income tax ung normal 120 icecredit mo na differed charges sa NCIT sa 2017
16 tapos sa icnome tax payable of 38 nakukuha? dali lang dba :( dba???? tahimik na tahimik ka hndi ko tuloy alam
kung naiintinidhan mo.
Walang tanong? Oy wala? Can I proceed? Iihi lang daw si sir.
Calendar year BOI registered enterprise tas ikaw ay nasa BOI meron kay tinatawag na income tax holiday so hndi
ka itatax holiday compute the tax cover by the income tax holiday magkano dapat babayaran nya na hndi na nya
babayaran kukunin lang natin taxable income for the year which is 15M nakalibre sya ng 30 percent ay 40M yan
sana ung babayaran nya pero dahil may holiday hndi sa kanya siningil if the enterprise is peza registered compute
the tax payable dhail peza ka tas GIP 5 percent ka ang gross income mo ay kukunin m sales less cost of sales
magkano sales 90M magkano cost? 45 gross is 45 to be multiplied by 5 percent of the gross income in liue of other
taxes yan kaya 2.25 million yan ang babayaran mo.
Using the same data in number 58 the BOI started expansion project which starter operations on April 1, 2018 so
hndi 1 year 9 months lang kasi April 1 and only the expansion is under…. so kukunin m naging effect ng expansion
kasi ang sabi nya ang holidya nya para lang sa expansion…..
2015: 79M
2016: 80M
2017: 81M
Ano kinukuha?
Highest yun magiging based figure, so titingnan natin magkano tinaas ng kanyang income magkano ba total sales
nya? 90! tignan mo to ha sales ay 90M aalisin m yung base year nya yun yung highest at yung highest ay 81M so
dahil sa expansion lumaki sales mo tawag dyan ay increase in sales by 9M tama? kukunin mo ngayon ung
percentage ng increase sa sales sa total sales mo ang increase ay 9M.. so ang percentage nyan ang increase ay
9M ididvided mo sya sa sales mo ang sales ay 90M equals ( hndi 1 year 9months so 9 over 12 lang magkano yan
ilang percent yan? 7.5 percent yan ang increase mo sa macocompute mo na income tax holiday mo

Next, ano sagot?
Akalain mo hndi alam ang gagawin!
Eto yung exemption rate the 9M is exempt out of the 90M ang exemption rate ay 7.5 ang taxable income natin ay
15M dba? so magkano exemption 7.5 so alisin mo less exemption na 7.5 dba? magkano yung 7.5 percent ng 15M?
1.125 yan yung exempt eh yan yung taxable oy! magkano taxable? eh kaso nag tanong magkano mapapaexempt?
magkano itatax yung matitira itatax eh tintanong magkano holiday so palitan natin ang exemption so less
exemption ay multiplied by 7.5 kerek? oy? so eto yung magiging taxable icnome nya so ang exemption ay 1125
multiplied by 30 percent which is income tax holiday which is 337500
Pag ang tintanong ng examiner magkano napaexempt nya eto yun pag magkano babayaran nya yung difference
eto yun dapat bayaran nya pa eh sinabi ang exempt ay expansion lang hndi exempt yung hndi naintindahn na?
salamat .
Next, James Lustre Manager of PEZA beside his salary he also received a fringe benefit which is normally sibject to
FDT the manager salary is (oh hiwalay yan eh false) the peza registered mbakit ka maeexempt iba naman yung
peza iba naman yung empleyado both
statements are false. Once the profit has been subjected the same shall no longer be subjected to iat
nothwithstanding … when finally be subject to tax on dividents both are true
Lets have the handout on partnership….
SAMPLE PROBLEMS: PARTNERSHIP
Alin ang mali? sa number 1? boy kasi iaadd mo pa other income na hndi dinubject number 2 wrong number 3 dog
kasi hndi naman sya 720 4, dog 5 dog 6 dog 7 dog 8 dog 9 A 10 A 1 A 2D …… nagsagot lang si sir
Problem: AB PARTNERSHIP with A and B are partners who are both resident citizens had net professional income
of 500, its other income includes bank interest of net royalty income net also A, single and has own separate catery
business his business …. 2018 has net sales of 1M , cost of sales 500, operating expenses of 300 the net share of
GPP so may mga choices na ibibgay sayo lagyan natin ng computation.
Si A may sariling business na may income na 1M na may cost of sales na 500 operating expense of 300 so kunin m
muna gross income 1M cost is 500 less expenses of 300 may net income sya na 200 tapos kunin natin yung ay mali
pala ako ang tanong net income of GPP pala

Akala ko taxable income na eh so gross income of GPP = 800 net income ay 500 add other income ang other income
ay bank interest ay 8 tapos may royalty na 10 so ang total nila ay 518 tama ba? kasi walang tax yan kasi exempt yan
from tax tapos pano sya naghahati? wala? grabe (inulit nya lang problem) presumed natin income so 50% ang
share ni A 259 less the creditable witholding tax of 10% magkano yun 25900 tama ba? magkano net share? 233,100.
The net taxable income ang income tax payable who shares profit ang loss equally with B in their GPP is? nasundan
ba? so computin na ntin ung gross income nya nacompute natin 1M less cost of sales na 500 tapos less deduction
of 300 meron syang 200 add mo yung income nya sa partnership or his share in GPP pero hndi yun kasama sa
taxable eto kasi kasama sa paghahatiin pero eto lang ang itatax less the income should not be included ayos ba?
matatanggap mo pero hndi m idadagdag so add the share ang share mo ay amount received mo ay net income is
500 divided by 250. magkano total neto? 450 yan ang taxable. wala ng dinededuct na personal exemption….
Tax due tinanong din the first 400 ay 30 may excess na 50 times 25% equals 12.5 tax due ay 425 less crditable
witholding tax babawas m ngayon yan magkno yan 25,900 its still due 16600 lumiliwanag?
Sir bat eto hndi natin sinama sa taxable income kasi yung partnership ginawa lang passageway….. pero hndi kasama
sa itatax eto hndi pa natatax eto natax na…… alangan namang itatax mo eh yung isa exempt na, yung witholding
nakabase sa tinaggap
answer is letter A
Using the preceding number but it is a business partnerhip the taxable income syempre eto lang kung business
partnership yan hndi yan taxable ang answer ay 500 lang.
Problem: Using the preceding number the net distributable of B net income of 500 times 70% tama? equals 350 ano
tawag dyan? eto yung net income after tax add other income yung sa bank ayos ba? at saka yung sa royalty 10 ang
tawag dito 368 net distributable available to partners how do they divide equally so imultiply mo by 50 percent eto
share ni A times 50 ay 184 eto yung a’s share subject sa final tax ano ba tanong dyan? imultiply na sa 90 may final
tax na 90 times 90 percent 165600.
Paganda ng paganda kasi nalilito ka na hehehehe
Sir bakit inaadd?
Kasi tinatax dito corporation sya eh eto yung net income after tax eto madadagdag dba 30 percent yung tax eto
yung net income itatax corpo eto retained earnings eto din mapupunta dun tapos madedeclare dividend eto
makukuha nya dito makukuha yungr etained arning yung retained earning dividend isubject 10% witholding tax kaya
eto makukuha mo

Kapag partnership engaged in busines isipin mo corporation sya tax only the taxable income do not include in the
taxable income those which are subject to final tax yung exclusion wag mo sya isama yun matatax ng 30 yung
matitira lalagay mo sa retained earninggs saka mo lang ipapasok yung other income palaki ng palaki yung retained
earnings so dapat magdeclare ng dividend kasi pag hndi ka nagdeclare baka lumagpas sa … capital mag 10 percent
ka pag dineclare mo mag 10 percent so ideclared mo ang retained earnings mo to avoid…. so tatandaan mo kapag
partnership at business partnership consider it a corporation except… pag GPP wag mo itatax ung paghahatian
pag sinama mo passive income wag mo itatax pero wag m isasama sa paghahatian kasi pag hndi saan pupunta
pupunta sa bulsa mo?
Problem: A and B are partners….. expenses if the partnership is a GPP ….the taxable income of A is?
hndi to pwede magclaim ng osd kasi nakanet na yan magkano makukuha mo? magkano ang gross mo? gross ay
800 less cost wala 800 pa din less deduction 40 percent magosd ka eh ng 40 percent therof 320 net income mo is
480 tama ba? oy tandaan mo osd is inlieu of cost and expenses tas aadd mo GPP hndi nga kasi tatanong muna
natin magkano si A ang sales nya ay 400 tama? gross income ang sales nya 400 ay 800 ba nilagay ko?
Para makuha natin kunin muna natin kay A magkano gross income ni A 400 pala eh OF A HA!! 400 wala ka idededuct
na cost wala din na deduction kasi OSD ka na ang OSD mo ay 40 therfore 160 kukunin mo shares mo sa GPP
magkano gross income ng GPP 800 magkano cost ng GPP 350 kaya merong 2450 deduction ng GPP yung 350 na
cost of deduction so buo na yun dba magkano deduction? oy 350 so may net na 450 pano sila naghahatian sino si
4 si A so imuumltiply ng 40 percent magkano 180 so total 420 ano ang tanong dyan? 420 tapos tinanong magkano
taxable income ni B so kunin natin magkano gross income? 4 hndi sya mag osd so may cose ba or deductionna
kaagad less cost magkano cost?
Ay tama may correction to nasa bulletin board ayan ang classic example between the printed and written provision
the written provision will prevail kaya pag sinulatan m yan ang amendment sa interpretation of the true intention
of the parties ang sinabi sayo ang cost of sale ay 200 ang deduction 50 so meron pa tayong 200 iaadd mo na
ngayon yung share nya ang share nya 450 minus 60 percent 270 taxable nya ay 47
if the partnership is OP magkano ang tax due nya? alangan namang magkamali ka pa! magkano gross nyan? net
income ay 450 times 30 percent is 135 pahirap o padali? PADALI.
PROBLEM: A lawyer was rejected by his extremely sexy and gorgeous secretary meron kayang ganung babae? dito!
sexy? nasan? nandito? gorgeous? nasan? dito! nasan? nasa puso at isip ko lang he became so enraged that he
raped her 10 times within 15 minutes hindi tao to tinalo pa rabbit since then he became know as the machine gun
rapist for his defensee he availed the services of ACCRA who charged him 10M for legal services how much should
a lawyer withhold as CWD hindi sya authorized as withholding agent so hndi pwede magdeduct nyan. so wala 0

PROBLEM: A and B are co owners by property given by property co owner … tandaan mo ang purpose of co
ownership bakit nagkakaron ng coownership lets say parents died iniwan property neto may mangga so income
producting property manga orchard tas may 4 na anak yung 4 children will become co owners kung walang will na
iniwan tig 1/4 sila ano purpose ng co ownership? preservation and enjoyment of the property hndi nila purpose ang
profit incidental lang, ang harvest ay exempt from tax pero yung share ng bawat co owner ay kasama sa respective
taxable income ……. follow? kaya yung nagiging fruits wag m na itax pero itax mo si co owner na tatanggap yung
share will be reported as part of the texable income so 0 din.
PROBLEM: A’s share in the net income of co ownership magkano matatanggap nya gross income of 500 less
expenses 300 but 10 percent is not deductible so gross is 500 less deduction of 300 times 90 percent 270 matitira
230 tapos they share ni the profit 75 and 25 so multiply mot o sa 75 magkano total nya? 11702500
suppose a and b did not divide bbut invest so naging business partnership may net income after deduction ang net
income na 50 itatax mo na sa 25% which is 125
TAXABLE INCOME OF PARTNERS IN ITR
So meron silang sariling gross income at tsaka deductions 400, 250, 280 at 120. Kunin natin ang Sariling gross
income ni X, 400, less deduction na 250,so si X ay may 150 na net. Tapos si Y, 280 tsaka 120, correct? 280 less 120 =
160. Tapos may other income, yung other income, dividend from domestic, idadagdag? idadagdag? Hindi kasi may
final tax na yan. Na-tax na yan. Dividend from foreign, idadagdag? Yes, kasi di pa natatax yan. Bakit sir hindi na-tax?
Wala tayong jurisdiction over the foreign corporation to instruct them to withhold the tax. Kasi nasa iba yan e, so
dividend galing sa foreign ito 10, ito 8, follow? And then meron pa, prize galing sa supermarket raffle, so prize.
magkano yung kay X, 15, hindi mo idadagdag kasi hindi magkaparehas eh, ganito oh, yung kay Y, parehas? 8 ba yung
kay Y? Idagdag mo kasi parehas. Nakuha? Eh sir kung nagkataong yung kay X ay 10, idadagdag mo kasi parehas?
oo kasi parehas. No, hindi yun ang dahilan. Ang dahilan, kapag di lumalagpas ng 10, ina-add. pag lumagpas ng10,
fina-final tax yung buo. Okay? Follow? Sumunod, royalty dinadagdag? Hindi, kasi may final tax. Di sinabi kasi kung
saan nanggaling eh. Pag di sinabi kung saan nanggaling, ipre-presume mo Philippines. Kasi kung galing sa ibang
bansa yan, aba edi idadagdag mo. Follow? Tapos kukunin mo na yung share nya sa , may dalawang partnership.
May share sila sa ordinary partnership, idadagdag natin? hindi, kasi yung share doon subject na sa final tax. Yung
idadagdag ko lang ay yung sa GPP. Correct? Share, share sa GPP, ang ating gross ay 400 minus 180, diba? 400
minus 180, how do they distribute, magkano kay X? 40%. Magkano 40% ng 220? 88. Ito times 60% magkano? 132.
Meron pa? Meron pa? Wala na. Di ba wala na? Tama ba ako wala na? Wala na diba? Salamat. So, magkano total
nito? Ang tanong dito, determine the respective taxable income of partners X and Y in their ITRs. So magkano to?
Total nito, taxable income, 248 at si Y, ilan? 308. Sir, bakit dika nagdededuct ng exemption? Wala na beginning 2018.

INCOME TAX LIABILITY AND INCOME TAX DUE - JOINT VENTURE WITH GOVERNMENT
Next question. A company (A co), domestic, bought construction business formed a joint venture to build houses
for the poor, a government project, therefore the joint venture considering it is a construction contract with the
government is exempt from tax. And therefore, zero. How much is the income tax liability the contracts credit of A
company. So, kukunin natin ang kanyang income tax liability. Ayos ba? Kunin mo yung gross income niya na sarili,
cooperation. Si A company may 2 million. Ayos ba? Tapos meron siyang deduction na 1.2 Okay. Kunin natin. A
company. A Co. Gross income 2 Million. Allowable deduction, 1.2. So meron siyang 800k. Tapos may share siya sa
Joint Venture. Bakit natin idadagdag yung share sa joint venture? Hindi pa natatax yan, correct? Naeexempt yan eh.
Therefore, the amount that they will receive will be a part of their respective taxable income. Ang gross income ng
joint venture, magkano? 80M less deduction of 60, may matitirang 20Million, they divide it equally, so times 1/2,
diba? So this is 10M. Total nya is 10.8M. Ang tanong dyan ay, anong tanong dyan? income tax due and therefore
multiply it by 30%. Ang due ay 3,240,000. At ang alam ko wala ka na ring kitang mahirap, so far.
INCOME TAX LIABILITY - JOINT VENTURE OF CORPORATIONS
A. Co, B. Co, domestic corporation both engaged in the transfer of oil the joint venture will now be subject to tax. It
is not for petroleum exploration, it is not a construction contract with the government and therefore the joint
venture as a corporation. Tama? E di parang corporation na siya kasi partner sa joint venture in effect taxable
partnership yung joint venture. 5M minus 3.5M. So gross is 5M minus deduction of 3.5M, net income is 1.5M multiplied
by 30%. Tax liability is 450K. Para sa Joint Venture. The share of A Company in the distributable net income of the
Joint Venture, magkano raw ang matatanggap ni A company? Kunin natin yung net income ng joint venture as
computed earlier, the net income is 1.5M multiplied by 70%,there's the net income after tax. 1,050,000. How do they
divide? They will divide equally, correct? We multiply by 1/2, correct? So, times 1/2, it will now be the distributable
share, correct? The distributable share is 525K. Ilan ang net, imumultiply mo ng 100%, net distributable share is 525.
Bakit sir di natin isusubject sa final tax ito? This is the dividend from domestic corporation to another domestic
corporation and therefore, exempt from tax, na-tax na kasi yan, correct? Tandaan, wag kakalimutan, dividend from
domestic corporation to another domestic corporation and to resident foreign is exempt from tax. Kaya 100%. Final
tax on the share of A Company, wala kasi exempt nga, zero.
TAXABLE INCOME OF ESTATE
Si Mr. A was born 100 years ago, so pinanganak sya July 5, 1918, correct? Siya namatay today while celebrating his
100th Birthday, July 5, 2018. It's possible may mga naiwan siyang property. Ito naiwan niyang property. May fishpond
siya, dahil patay na siya, mamatay ang fish? Hindi. Ito mga apartment and townhouses and building for rent,
mamamatay ang tenant? Hindi. Meron pa siyang mga coconut plantings, mamamatay ang coconut? Hindi. Ito ay
ang tinatawag na estate, estate of A. Hindi natin topic ang Taxation of the Estate insofar as Estate Tax is concerned.
Ang topic natin, itong estate na to, pwede bang nung mamamatay si A, ang mga anak nagtatalo kung sino

magmamana. Dahil hindi nagsesettle, yung estate nananatiling buhay at magkakaincome, di ba? Kanino mapupunta
yung income? Hindi sa heirs, hindi pa kayo magkasundo eh. Kaya ito, may gross income, yung gross income, kanino
yan? Gross income of the estate of A, not of the heirs. Siyempre yung mga isda diyan, pinapakain, pinapasweldo
mga trabahador diyan at itong mga pinapaupahan mya mga expenses diyan, idededuct mo ngayon, less the
allowable deduction for expenses. At baka may anak na dapat bigyan ng sustento, correct? So, magdededuct ka
ng distribution sa heir pero identify mo saan galing yung binibigay mo sa heir, kasi baka galing sa estate. Wag mo
idededuct. Kailangan nanggaling sa income of the estate. Kailangan nanggaling sa kinita kasi kung manggagaling
sa estate, ibig sabihin distribution of the inheritance. Kailangan manggaling sa income para distribution of the
income of the estate. Now, dito magkakaroon ka ng income tapos ibabawas mo yan, diba? Magkakaroon ka ngayon
ng taxable income of the estate as if we are taxing an individual. Kaya ang treatment sa kanya kagaya ng treatment
sa individual. Gagamit tayo ng ginagamit na tax para sakanya. Am I clear sa estate? Ayos ha?
TAX ON TRUSTS
What if si Mr. A eh buhay pa at meron siyang mga properties na nasa iba't-ibang lugar. Buti nalang registered under
the Torrens System kaya kahit may squatter ay hindi mawawala sa kanya. Pero may mga property na if properly
attended to, it will produce better profit. At nagkataon na meron din siyang mga anak sa iba't-ibang lugar, correct?
Na dapat bigyan ng suporta. Anak nya sa iisang asawa, kaya lang nag-aaral sa iba't-ibang lugar. Yung isa gusto sa
Cebu, yung isa sa Davao, yung isa sa Dumaguete, pinagbibigyan naman niya. Pero tinanong ka ngayon ni Mr. A
"paano ko mapapangalagaan itong aking mga properties?". Sabi mo, "mag-appoint po kayo ng magrerepresent
sainyong agent. So, ano yung agent? Bakit? Representative mo po. Yung kikitain ng aking mga properties doon ay
idadagdag ko ba sa taxable income? Ah opo, kasi yung agent po, representative niyo lang, kayo pa rin po ang may
income. For tax purposes, wala ba akong pwedeng gawin para hindi na siya maidagdag sa akin? Parang gusto po
ninyo mahiwalay? Oo, pwede ba? Pwede po, magcrecreate kayo ng trust. Hindi kayo mag-aapoint ng agent. Because
the agent represents you. Yung trust, matatax as a separate entity kung present ang mga requirements. So, itatayo
niyo po ay trust. At kayo po ang magiging trustor, magdedesignate po kayo ng beneficiary, tapos po may taong
mamamahala, magiging trustee niyo. Tapos po, gagawin niyong yung trust, yung designation ay irrevocable. Kapag
po nameet niyo yan, meron na po kayong separate taxable entity. Kasi itatax na po to as one person. Kukunin po
ang gross income ng trust kagaya ng sa estate. Get the gross income of trust less po yung deduction to realize
the income at tsaka po yung distribution sayong beneficiary. Makukuha po natin ang inyong net income. Kasi
nakakapagdeduct ng exemption dati pero ngayon wala na, correct? Tama? Net income po yan na ngayon taxable
na po. Kasi wala na po. Dati may deduction po ito eh. Kasi parang individual po yan. Iyon nga lang po baka
magcrecreate kayo ng dalawang trusts, or tatlo or higit pa. The moment po you created two or more trusts, yan
pong two or more trusts titignan natin, yan po ba may common? Iisa lang po ba ang trustor? Kayo lang po? Dapat
po dalawa o higit pa depende po sa bawat trust isa lang ang beneficiary, hindi uulitin sa ibang trust. Eh kaso po
may common beneficiary, anong mangyayari? Gagawa ka po ng , dahil two or more yan, gagawa po kayo ng
separate ITRs, correct? Income Tax Return of the trust. So kung dalawa po yan, gagawa ng isa at gagawa ng isa
rin. Ang gagawin po ng BIR, icoconsolidate po yan. Bakit icoconsolidate ng BIR? Kasi po nameet yung dalawang

requirements, pagsasamahin yung income, so malamang po magkakaroon kayo ng deficiency income tax. Bakit?
Eh kasi po gagawa po kayo ng separate ITRs ng trust. So, yung income nun at yung income nung isa parehong nag-
umpisa sa mababa. Halimbawa income nito 1M, yung isa 1M, di po ba? Bandang umpisa mababa. Pag napagsama
po baka mas mataas yung rate. Am I clear? Kasi tignan mo, kung ang income ng isang trust ay nandun lang sa 180,
yung isa 180. E di hindi po matatax yan kasi 250 po yung exclusion, correct? Walang matatax. Pag pinagsama po ng
BIR yan, 360 na yan. Tama? Magkakatax liability na po kayo. Di niyo nakuha? Si Mr. A dalawa ang ginawang trusts
pero ang beneficiary niya si B sa una, si B pa rin sa pangalawa. So, common ang trustor, common ang beneficiary.
Iyong Trustee 1 gagawa ng kanyang ITR and taxable income ay 180. Eh di ba up to 250 exempt yan sa tax table,
tama? So, malamang di yan matatax. Pag pinagsama, combined, matatax na yun. Ito ipalagay mo 500, iyon 500. So,
nasa mababang rate. Pag combined yan, 1M na yan, nasa bracket na han ng 800. Kaya maganda po magkaiba yung
beneficiary. Am I clear on the illustration? Salamat.
TAX ON INCOME OF THE ESTATE
Gagawin na natin yung No. 12, namatay siya January 2016, survived by his wife and 4 qualified dependent children,
he left a net estate of 80M which is in the hands of an executor. Ignore the 80M, we will not subject the 80M to
income tax. Masusubject yan sa estate tax but not income tax. Interesado tayo sa magiging income. In 2016, 2017
and 2018, the estate has identical gross which is of 7, cost of 4 and basic expense of 2.2. The net taxable income of
the estate in 2016, so sa 2016 at 2017 lumang law diba, 2018 ang bago. So kunin natin yung gross less cost less
expenses so 7,4 and 2.2. Ito lang titignan mo muna, gross ay 7M less cost of 4M, may gross income na 3M less
deduction of 2.2M. So sa 2016, meron tayong net na 800K. 2017, meron tayong net na 800K. 2018, also 800. Anong
sabi ng law sa RA8424 yung luma kasi ang amendment the TRAIN. If the decedent dies, the estate can still claim
the same exemption as if he died at the end of the year and therefore yung exemption nung isang tao, maki-claim
pa rin ni estate so magdededuct tayo ng personal exemption 50, correct? Additional exemption of 100, tama? Kasi
sabi apat ang qualified dependent children. 150 kaya ang taxable income niya sa 2016 ay taxable income will be 650.
If the estate is not yet settled, it is still in the hands of the executor, because probably the heirs find it difficult to
distribute the estate between or amongst themselves, in the succeeding year, you do not deduct the same
exemption, only 20K. So ang taxable income, 780. At mula ngayong January 1, 2018, wala ng personal, wala ng
additional exemption.
TAXABLE INCOME OF AN INDIVIDUAL AND OF ESTATE
A died on January 2, 2018 leaving the a net estate, ignore the net estate there, nasa kamay pa ng executor. (B
married one of the heirs. (NOTE: Diko maintindihan 28:04 kung the blank of A married one of his heirs). In 2019, the
following year na. At ito po ay bagong tax code na at may gross income na 800K, expenses of 500. B has his own
gross sales of 600, cost of 400, expenses of 120K. The executor distributed to B the following: from the properties
in the estate, ignore it is a distribution of inheritance, from the current use, consider because it is coming from the
income. For 2019, both estate estate of A and B do not avail of the 8% income tax rate option. Kapag di ka nag avail,

kukunin natin ang iyong taxable income, correct? So tinatanong dito ang taxable income of the estate in 2019. Gross
income is 800 less expenses of 500 less distribution coming from the income. Magkano binigay 85 subject to
withholding tax na ilang percent? 15 yan so divided by 85%. Magkano to, 100, ito 600. Magkano taxable? 200. Wala
ng deduction yun. Sir, anong mangyayari sa 100 na nadeduct? If it's deducted from gross income of the asset, it
forms part of the taxable income of the beneficiary or the heir who receives it. Ibinawas mo, itatax natin yung
tumanggap. Hindi kayo makakawala sa taxation. Kasi kung hindi itatax, lahat ibibigay mo, correct? E di wala ng
matitira, wala ng taxable. Nadeduct eh so hindi natax yung 100. Dapat itax natin yan. The taxable income of B, so si
B may sariling gross sales, tapos may cost may expenses. Magkano daw ang kanyang taxable income? Gross sales
600, cost 400, so gross income is 200 less deduction na 120. Magkano matitira? 80. Add the amount receive na 100.
Total 180. Yan ang taxable, correct? what is The income tax payable or refund. Tax due para sa 180, the first 250 is
0 less the creditable withholding tax na 100 times 15% is 15. Meron pa siyang refund na 15.
TAXABLE INCOME OF TRUSTS
A created 2 trusts, with different trustees but with common beneficiary. The following data pertain to the trust and
the beneficiary's own account. Determine the taxable income of Trust 1 and Trust 2. So kunin lang natin ang gross
ng Trust 1 amd Trust 2 tapos yung beneficiary. Trust 1 gross less deduction. Gross is trust 1 is 450 less deduction of
75 at tsaka ya ng distribution na 150, total of 225. Kaya ang net niya ay 225. Yan na yung taxable niya, correct? Si
Trust 2 ang gross ay 1,090,000 less deduction of 125 at 175. Total is 300. Kaya ang itatax sakanya ay 790K. Tapos
magkano daw sa concolidated trust? I-plus mo lang 225 at 790. Ang total ay 1,015,000. Anf then, beneficiary. Kukunin
mo lang yung kanyang amount received. From Trust1 ay 150, from Trust 2 ay 175. Total is 325. Tapos na ba? Hindi pa
kasi meron siyang sarili. So own gross income niya, magkano? 250 may expenses na 100, kaya meron siyang 150. A
total of 475.
TAXABLE INCOME/TAX DUE/TAX LIABILITY IN OLD LAW VS TRAIN LAW
In 2017, A created a trust for his daughter, B and appointed C as trustee. He transferred a 10-door apartment where
rent is 190/per month net of 5%. Tapos may deductible received by the trust with cost of revenues of 400. So kunin
muna natin yung gross, 190 tama? Gross 190 divided by 95 times 12(months). Magkano yan? 2.4M. Mag-aalis tayo
ngayon ng applicable na mga deductions. Deductible expense was received by the trust with cost of revenues na
400 and deductible expenses of 580. So alisin muna natin yung cost na 400. Tapos may deduction pa na 580 in each
of the taxable years of 2017 and 2018. So pareho, 580. Tapos meron daw in both years, 30% of the net income was
given to B. So may distribution, correct? Magkano binibigay? 30% of the net income, ay magkano? Isusubtract mo
lang to. So, 2.4 minus 980 is 1,420,000. 1,420,000 times 30% is 426K. So net income ay 994,000. Dahil 2017 nacreate,
magdededuct ka ng personal exemption. 20K ang personal nyan. So ang taxable ay 974,000. For 2017, 974K. Ang
tanong diyan at tax di ba? Tax due para sa 974 ay lumang table, so first 500. Magkano yung first 500? 125K. Yung
excess na 474? times 32%? 151,680. Total is (125K + 151,680) = 276,680 less the creditable. 2.4M times 5% is 120K. Still
due is (276,680 - 120K) = 156,680. Did you get that? May follow up, 2018. Kaya sa 2018, net income is 994K less personal

exemption na wala na. So, taxable is 994. Get the tax due para sa 994. Anong bracket? 800, so magkano? 130K. Yung
excess na 194K, ilang percent? 30%. Ilan to? 58.2K. Total tax liability na (130K + 58.2K) = 188,200 less the credible
withholding tax na 2.4M times 5% which is 120K. Magkano tax liability? 68,200. Yan yung sinasabi nilang makakatipid
ka, correct? Ibig sabihin sir, yung exam ngayon, titignan namin yung year? Yes, napakaimportante. Kaya humirap
eh. Kasi you know the past and you should know the present.
TAXATION 1 INCOME COMPUTATION
16.) A resident citizen died leaving a net asset of 4 in the state under administration total income of
2,280,000 net of 5% ( so babaguhin natin to) 2,280,000 ÷ 95% = 2,400,000
Meron pa tayong Distribution and deduction in car expenses to 1,200, 000 ( 75% lang deductibles ) so less deduction
1,200,000 x 75% = 900,000 tapos may distribution sa daughter. Ang dinistribute sa daughter is 200,000 at 75% so bale
150,000 (200,000 x .75 = 150,000). Sa son nagdistribute ng 300,000 x 75% = 225,000.
Determine the tax is still due to the estate.
Meron tayong 1,275,000. So ang taxable estate ay 1,125,000. To get the tax due, parang individual lang 1,125,000. The
first 800,000 ( I think is 130,000) may excess na 325,000 ilang percent --- 30% ( magkano yun? ) 325, 000 x .30 =
97,500 and total ay 227,500. Less the creditable withholding tax 2,400,000 x 5% = 1,200,000
Still due = 107,500.
17.) Nag-establish siya ng trust para kay Yael and Dingdo. The transfer to the trust to the income producing
properties. Ang magiging tanong is magkano daw ang taxable .... Income tax payable.
So kunin natin meron syang vacant lot sa dalawang tita niya. Sa lote 100,000 monthly and then sa office building 23
750. Gross para sa vacant lot ( 100,000 x 12 = 1,200,000 ) at sa office building ( 23 750 ÷ 95% x 12 = 300,000) . So ang
total income is 1,500,000.
Alisin natin ngayon ang mga allowable to be deducted. Meron tayong deductible expenses 1,300,000 tapos nag
distribute pa ng income sa beneficiary amounted to 75,000 each gross .
Compute the income tax payable.
May deduction na 1,300,000 at may distribution sya 75,000 x 2 = 150,000 kaya 1,450,000. Kaya ang taxable income nya
at 50,000.
Kunin mo na ang tax due para sa 50,000. The first two 50,000 is exempt kaya wala, less the creditable withholding
tax. Nag withhold doon sa 300,000 x 5% = 150,000 kaya meron ka pang refund na 50.
Meron ba bang iba?
Nagwithholding tax sya eh.
Monthly rental diba? .... 300 tapos .... A vacant lot lease for 100 monthly gross. An office building with the monthly
rental of 23,750. Tama? 300 x 5% diba? Is 15 lang.
Oy..... Oyyyy.. Salamat!

Tapos????
Hindi nagwithhold eh ng 5% sa 1.2 million diba? Nagwithhold ba?
Kung nagwithhold mag 60 yun . So magkano yun? 10% nun is ... 60 yun... Wala namang withholding sa vacant lot eh.
A vacant lot lease for 100 monthly gross of withholding tax of 5% .... An office building withholding .... Ah!...... Lalagyan
din natin . Hindi niya lang nacompute. Tama? Hindi lang tayo nagdivide? So meron pa din tayo sa vacant lot.
Creditable withholding tax na 1.2 million x 5% is 60. Therefore total 75.
Okay? ..
Let's have the handouts on gross income tapos deduction tapos lecture sa capital assets.
PS: (Nagsasagot lang sila)2.) Dog 3.) C 4.) Dog 5.) Dog 6.) Dog 7.) Dog 8.) Dog 9.) C 10.) Boy 11) A 12.) A 13.) Magcocompute
na tayo.
FRINGE BENEFITS COMPUTATION

So kunin mo lang yung monetary value .
Electricity 20,000 x 30% = 6000
And then water 2000 x 30% = 600
Grocery 10,000 x 100% = 10
There's no gasoline accord sa company yun .. Representation ..... That is for 16,600.
14.) A
15.) Ang tinatanong ay FBT. Kunin mo muna yung monetary value. Ang monetary value ng educational assistance ay
100,000 x 100% = 100 tapos may contribution para sa welfare.... Exempt yan and then meron tayong rental . Yung
rental yung amount is 120. 50% lang ang monetary value so 60. This is 160 .. Kaya mo na kunin ngayon ang gross up
. monetary value 160... Anong year to? --- 2018. Idivide natin ang 65%. Ilan? 246,154. Makukuha na natin ngayon ang
FBT . FBT is 246,154 x 35% will give you 86154.
So hindi sya mahirap eh basta alam mo lang ang monetary value.
16.) 45 .... 35 ... 20 .... 1,000,000 pero 40% lang ang isasubject natin. So 1,000,000 x 40% = 400,000. Ididistribute natin
sa resident tsaka ng special, .. Dito i-45% mo. Ito 35%. Ito 20%. So makukuha mo na yung monetary value. Ang
monetary value 180.. Ito 140, ito ...80.
Tapos ididivide na natin ... Correct? .. Kada serial idivide mo to ng 65. Idivide mo to ng 75. Ito 85. Tama ba? .... Para
makuha mo ang monetary value... Gross up monetary value. Magkano to? Anong year ba to?
.... Ah! Dalawang taon pala to... Sorry!
2017 and 2018

So wag muna ito. Pang 2018 to eh diba.
Noong 2017. Hindi pa 65.
Ano noong 2017 ang para sa resident = 68 , eh ang nonresident = 75, special alien = 85. Magkano to?

Eto na ang gross up .. Gross up monetary value. Ilan to? 264,705 ; 186,667 ; 94,118. Imumultiply mo to ng difference
so 32, 25 and 15. Magiging magkano ang FBT? 84,705 ; 46,667 and 14,118 total is 145,491.
Gagawin nating 2018:
Magdidivide ka ng 65. Ito the same... Ito maiiba magdidivide ka ng 65. Ito maiiba na to. Magkano na ngayon to? ( so
wala na to alisin ko na to )
Magkano to didivide mo ng 65 yan?
276,923 ; 96,923 ; eto the same, eto magbabago na. Ididivide na natin to ng ... 123 077; eto magiging 43 077so ang total
is 186,667.
Eto na ngayon ang 2018.
A company owns a condo unit.
Kunin lang natin yung higher.
Monetary value ang xxx is 2.1 million pero ang yyy is 3 million. Kaya ang gagamitin mo ay 3 million x 50% x 5% = 75 .
Kunin na natin ang gross up.
Anong year to? ---- 2017.
Dahil 2017, 75 ÷ 68 = 110, 294.
FBT 110, 294 x 32 = 35, 294
Pag ginawang 2018,
Ang gross up 75 ÷ 65 = 115, 385
Kaya ang FBT 115, 385 x 35 = 40385
18) Mining engineer kalimutan mo kasi kailangan niyan necessary consequences of employment so zero.
Etong chief accountant car plan.
The company shoulder the other 50 and so ang prince benefit tax due kunin mo. Kunin mo ang monetary value na
340. Ang ibibigay sa kanyang ownership . ang monetary value nung 340 ay 100% kaya 340.
Kunin mo na ngayon ang gross up ( anong year to? --- 2018 )
So 65 = 523 077.
So makukuha mo na ang FBT nya :
523 077 at 35% = 183, 077
Tapos tinatanong din yung deductible expense, pag deductible expense na ay yung prince benefits na binigay.
Prince benefits expense yung cost ng car which is 340 and prince benefit expense na 183,077 kaya ang deductible
expense nya at 523,077.
Ibinigay na ang ownership at payable installment so may dadagdag yun na interest dito sa EFBT so kunin mo lang
yung momentary value.
Ang monetary value at 120 pero dahil binigay ang ownership sa kanya eh 100% yan. Kaya lang payable in 5 years
kaya ididivide mo ng 5 kaya 24.
Tapos may gross up 24 ÷ 65 = 36,923
Kaya makukuha mo na ang FBT (mechanical eh)
36,923 x 35% = 12 922

The sales manager purchased a brand new car amounting to 500 of which 200 was contributed by the company (
madali lang kunin mo lang yung value na binibigay nya. So monetary value tsaka ibibigay ang ownership. Yung 200
, 100% yan. Kaya 200 yan tas makukuha muna yung gross up by dividing . 2018 yan noh?
So divide mo sya ng 65.
= 307, 692
FBT 307,692 by 35% = 107, 692
And then nagbigay ng salary
3 maids - 4,000
Personal driver - 8000
Magkano daw ang FBT
Kunin mo muna yung monetary value. Ang monetary value para sa salary ---- exempt, para sa maid 4000 x 3 x 12 =
144,000 ;
Para sa driver 8000 x 1 x 12 = 96,000 and the home owners 1200 x 1 x 1 = 1200. Ang monetary value is 241, 200. Kaya
ng kunin ang gross up . Gross up ay 241,200 by 65 = 371,077
FBT. 371,077 x 35 = 129 877
Kunin natin ngayon ang monetary value.

Naamend yung current train ngayon sa law of xx money. 6% nalang but general law will not repeal as a special law.
The tax code is a special law . Ang civil code is a general law. Kaya page meron changes dapat special law din kaya
wag mo babaguhin yung nasa tax code .....
Pag general law , articles
Pag special laws , sections
Kaya ang tax codes , sections. Ang negotiable instruments laws, sections. Ang partnership, articles. Corporation
codes, special laws kasi sections.
Kaya pag nagconflict sa general law, and nagpreprevail is special law.
Kukunin mo yung monetary value. Magkano inutang? ---- 100,000 x the difference between the standard rate of 12
minus yung inimpose na rate which is 3% ---- so 9% = 9,000
Gross up monetary value ( 9% ÷ 65 = 13,846 )
Kaya ang FBT ( 13,846 x 35 = 4846 )
In 2018, plane tickets

With documentary evidence. Plane fare....
Ano mauuna? -- first class
( magkano pamasahe x magkano conversion x 30% = Monetary value ) 1,000 x 50 x 30% = 15
Economy ---- exempt kasi with documentary evidence
In 2018, plane tickets
With documentary evidence. Plane fare....

Ano mauuna? -- first class
( magkano pamasahe x magkano conversion x 30% = Monetary value ) 1,000 x 50 x 30% = 15
Economy ---- exempt kasi with documentary evidence
Susunod Hotel. Magkano hotel ---- 2700 .. (2 + 7 = 9) so minus 9 x 50 = 90,000
In land travel ay exempt total 105,000 pa local. Makukuha mo na yung gross up pag dinivide mo yan sa gross up
monetary value ÷ (105%) current = 161,538. FBT is 161,538 x 35 = 56,538.
Pag walang documentary evidence ---- lahat yan meron.
Sa plane
1st class 1000 x 50 = 50,000
Eco 500 x 50 = 25000
Hotel 2700 x 50 = 135 000
In land travel 600 x 50 = 30 000
Eto ang ating monetary value . magkano? ---- 240.
Makukuha mo na yung gross up.
Gross up monetary value 240 ÷ 65 = 369 231
FBT na 369 231 x 35% = 129 231
FRINGE BENEFIT TAX
Item 25. In 2018, ABC paid for the annual rental of a residence and house of their general manager amounting to
P136. The entry to record the benefit, kunin muna natin yung binayaran, correct? Kunin mo muna yung babayarang
tax. Ang monetary value niyan, ang binayaran niya ay P136, correct?, amounting to P136 x 50% is only P68. So ang
gross (up) is P68 divided by 65% (2018) = P104.615, so ang FBT P104.615 by 35% is 36.0615. So magrerecord na tayo,
correct?
Debit Credit
Fringe Benefit Expense (rental) P136
Fringe Benefit Tax Expense 36.615
Cash/Payable 172.615
Nasundan? Naintindihan? OK!
So hindi mo sya magagawan ng entry kapag di mo muna kinompute to, kasi di mo macocompute yung tax na
babayaran.

Next.
Item 26. A means of promoting the health, goodwill and contentment of (eto yata yung may correction sa board,
2018 yan di ba?) alright, so kukunin natin yung monetized unused vacation leave. May changes to di ba? Sa
monetized. Aalamin natin kung magkano yung fringe benefit, i-minus natin yung exempt, diba? Tama? Equals
Taxable. Are you following?
Monetized Leave Credits (Ilang araw yan? 15, so 24(,000)) 24 (,000)

Exempt Leave Credit (10 days yung Exempts sa law)(10/15 * 24(,000)) 16 (,000)
Taxable (24-16) 8 (,000)
Sumunod. Rice Subsidy.
Rice Subsidy 36 (,000)

Exempt sa Rice (P2,000/per month)(2,000*12=24,000) 24 (,000)
Taxable 12 (,000)
Next.
Uniform Allowance 12 (,000)

Exempt* 6 (,000)
Taxable 6 (,000)
*Pero nagmamahal na ang mga damit, kaya kulang yan. Naaawa ako sa kanila. May nagtanong sakin, Sir, di ba dapat
kasama yung sa clothing allowance yung mga panty at bra, sabi ko, wag ka nalang mag panty kung aangal ka.
Correct? Dapat sayo na yun. Personal Hygeine mo na yun. So gusto nila mas mahal.
Next.
Achievement Award for Lector Service in the form of tangible personal property kasi if in the form of cash hindi
pwede i-deduct di ba? Tama? Magkano yung Achievement Award na binigay?
Achievement award 20 (,000)

Exempt (20-10) 10 (,000)
Taxable 10 (,000)
Tandaan ha, dapat hindi CASH or certificate, kailangan OTHER PROPERTY. Otherwise, TAXABLE in FULL.

Next. Gifts given during christmas and major anniversary celebration
Gifts given 15 (,000)

Exempt (15-5) 5 (,000)
Taxable 10 (,000)
Next. Medical Benefits.
Medical Benefits 20 (,000)

Exempt 10 (,000)
Taxable 10 (,000)
Next. Laundry Allowance
Laundry Allowance 12 (,000)

Exempt (300/month)(300*12=3,600) 3,600
Taxable 8,400*
*Akalain mo yun, pati yun kina-calculator pa. Pero wala tayong magagawa.
Next. 13th month Pay, Major Bonus and Productivity Bonus (sama sama na natin, correct? Tama? Alam ko dalawa
ang productivity bonus. Productivity Bonus ng CBA at and Productivity Bonus kay Special Law, diba? Pero hindi
naman kasi lahat ng company may Union. May mga company na walang union kaya wala silang CBA - Collective
Bargaining Agreement - kaya there may be a situation that there is union but there’s also situation when there’s
no union. Tama? Yes? Kaya kunin natin.
13 month pay 30 (,000)

Mid Year 30 (,000)
Productivity Bonus 15 (,000)
Total Bonus 75 (,000)
Magkano na exempt ngayon? 90 (,000) correct? Correct! So pede sya kumain ng 15 (,000), correct? Eh ang tanong
lang naman magkano ang deductible. So add mo lhat ng deductible na to. …….. (blurred)...... So magkano lahat? 214?
Ha? ……… 21 saka 2, 214. Tama. ayan. So yan ang deductible mo………
So magkano yung ating taxable? Ha? (Total Taxable Items above - 15,000 Excess from Bonus Exemption) (64,400-
15,000) 49,400.

Item 27. Enrique Gil, Filipino, Manager of PEZA Registered Enterprise received Fringe Benefits which are normally
subject to FBT in the PEZA Registered Enterprise. Still Liable to the FBT? Of course naman! Alangan namang di ka
liable, di naman exempted yung empleyado mo. Ok? Tama? So the answer is (D) - The value of the Fringe Benefit is
gross up (Gross Up means Fringe Benefit Amount divided by 65%) by 65% and multiplied by 35%.
GROSS INCOME
Eto naman theory lang. Wala akong ipapaliwanag kasi Theory.
1. B
2. C
3. B
4. D
5. D
6. B
7. C
8. C
9. D
10. C
11. C
12. C
13. C
14. D
15. D
16. B (PCSO Winnings ngayon taxable na, ha? Ang 10 (,000) lang yung may exempt)
17. C
18. A
19. B
20. C
21. A
22. C
23. D
24. C
25. In 2018, A inherited a set of jewelry from her father (Ops, tinuro ko sainyo yan. Kapag inheritance anong
magiging cost? FMV (Fair Market Value), correct? Tama? ok? So sabi jan...). Her father acquired the property
for P200. At the time of the inheritance, face is 500 and the selling price of Jewelry is for 550, correct? A’s gross
profit?

So kapag yan naman mo, kunin mo selling price less FMV at the time of inheritance.
Selling Price 550

At the of the inheritance (FMV) 500
(ESTATE TAX RETURN) 50*
*Eto yung amount na nasa Estate Tax Return.
Selling Price 550

Cost on the hands of the Donor 200
350**
**Yung pangalawa naman is selling price ay 550. Ang magiging cost ay yung COST ON THE HANDS OF THE DONOR.
Yun ay binili for 200 kaya, 350. Klaro?
26. C
27. A
28. B
29. C
30. D
31. A
32. D
33. C
34. Kapag naka-cash method hindi kasali ang inventory, kapag accrual method kasali ang inventory. Tinatanong
lang naman Gross, kaya kunin mo yung dalawang sales. Correct? Sale ng niraise, selling price? 270. Pinurchase ay
160. Total ay 430. Correct? At magkano yung cost nyang niraise? 190. Yung pinurchase? 140. Total cost 330. So may
profit na 100. Plus yung rental income. 105. So total. 205. Kaya letter (A). Cash method yan. Tapos meron tayong
Accrual. So add mo na ngayon yung inventory. Add the Ending inventory which is 113 less inventory at the beginning
110. Kaya 3. Kaya ang answer ay 208. Letter (B).
35. Magkano daw ang tax due/ refund.
Salaries, net of payroll deduction 200*
*Dahil naka-net yung salaries na 200, magadd tayo nung mga di dapat binawas jan, di ba? OK? Tingnan muna natin
yung payroll deductions.
Creditable Withholding Tax (Added) 16.5

Contributions (Not to be added, talagang binagawas)

Advances (Added) 30
Then other income na...
Allowances (Added) 25
Meron pa bang iba? Tapos meron tayong..
13 month pay 26
14th Month 26
Total Bonus 52
Less Exemption (90,000) 90
Excess of Exemption 38
Christmas Cash Gift 10

Less Exemption (5,000) 5
Taxable 5*
*Pero since 5 lang yung taxable sa Cash Gift, kaya paring kainin ng Excess Exemption sa Bonus na 38. Kaya walang
taxable.
Next. Meron tayong premium on Health and Hospitalization Insurance, Ok? Pwede bang magdeduct? Syempre hindi
di ba? Kasi? Meron tayong premium on health and hospitalization tapos may bank interest income. Oh. Cocompute-
in na natin. Di ba? Magkano yung taxable income? 271.5** Hindi umabot ng 400. Kaya magcocompute tayo ng Tax
due para 271.5. So 271.5 magdededuct ka ng first 250, di ba? Kasi di umabot ng 400. May excess ngayon ng 21.5. Ilang
% yung tax rate? 20%. So tax due is 4.3.
** 271.5 = (200+ 16.5+30+25) (Check amounts above). No additional taxable bonus or gift since Exemption is more
than the given bonus.
So ang tax due mo 4.3 (4,300) less the creditable withholding tax given amounting to ilan? 16.5. Meron pa tayong tax
due or refund. Magkano refund? 12.2 (16.5-4.3).
Naiintindihan? Ok? Salamat!
O magcocompute ulit tayo.

35. Gross compensation income, correct? Tapos iaadd natin other income. Ayos ba? Oy. Salamat. Isa isahin natin,
prizes received as best athlete, IGNORE, kasi in recognition of your performance in that field of sports. Kagaya din
ng pangalawa, IGNORE. Price won in a supermarket raffle, isasama? OO kase, hindi naman past ng 10 (,000). Ayos
ba? And then meron pa tayong mga 13th month, Christmas bonus, mid-year bonus, di ba? Tapos okay lagay na natin.
Salary, gross compensation 480 ba yon? O, gross compensation income 480. Add Other income. Ano yung ano dyan,
other income? Price no? Price. Magkano yung price? 10. Ano sumunod? 13th month na? Magkano yung 13? 45. Tapos
may Mid year magkano? 45. Tapos 90. Correct? Less exemption of 90. Wala nang sobra correct? Ano pa meron?
Cash gift? O magkano yung gift? 10. Magkano exclusion? 5. Taxable yon? Meron pa? Wala nang ibang other income?
Wala na. Total add mo 5, di ba? Total, 495 alisin natin yung mga SSS, di ba? Magkano SSS? 3.6 sumunod pag-ibig 1.2,
sumunod, phil health magkano? 1.8, sumunod, union dues, magkano? 2.4. Meron pa? Wala na? Wala na. Total? 9.
Taxable? Ilan taxable? 486. Anong tanong tax due? Tax due. 486. Lumagpas ng… so wala ka ng minus 250 ha 400 na
kaagad. Magkano yung 400? 30. May excess na? 86. Ilan? 25% is 21.5 tama ba? Total tax liability? 51,500. Meron bang
withholding to? Wala noh?
Let’s have the next..
Meron silang… may professional fee siya 400, expenses 180, 600, 200 expenses connected with rental. Ok? So
magkano daw yung kanilang tax na babayaran?
Yung kanilang munang income.
Professional Fee 400

Less Deduction 180
220
Rental Income 600

Less Deduction 200
400
Divided by 2 (Husband and Wife) 200*
So si husband (220+200) 420. Si Spouse merong 200. Yun na yung taxable nila. Merong other income pa ba to? Wala
na. Kunin natin yung tax liability.
Kay Husband.
Taxable Income 420
First 400 is P30 (,000), (400)
Excess of 20
Multiplied by 25% 5

Tax Liability (30 + 5) 35
Kay Wife
Taxable Income 200
First 250 is 0% ( 250)
0
Total of Tax Liability of H&W 35

Less Creditable Withholding Tax
Profession (10%) (400*10%) (40)
Rental (5%) (600*5%) (30)
Tax Due or Refund (35)
Sir hindi ba pwedeng paghatiin ko yung computation? Pwede naman basta same lang ng answer. Ha? Hoy! Kasi
kapag hahatiin mo, hahatiin mo din yung creditable withholding tax, kaya you will arrive at the same answer. Tama?
Kasi ang magasawa isang ITR lang. Separate ang computation. Kaya kung gagawin ko kay husband yan. Kung
gagawin ko na hiwalay ha. Kay Husband ang tax liability 35 tapos may practice of profession na creditable
withholding na (40) at saka sa rental (30 divided by 2) (15). Diba? Kaya ito (55) kaya si husband may sobrang (20)
diba? Tapos si wife, ang taxable nya 0 tapos sa rental meron nyang creditable withholding na (30 divided by 2) (15).
Total na sobra nila (35). Kaya kung ang tanong magkano ang refund kay husband 20. Kay wife 15. So babantayan
mong mabuti anong tinatanong ni examiner. Si husband ba? (20) Si wife? (15). silang dalawa? (35).
Ang magasawa hiwalay ang computation pero isang ITR. Hindi kayo magdadalawang ITR.
Next.
D, married, with 4 qualified dependednt children had the following:
Salary, Net
13th Month Pay
Productivity Bonus
So ignore the 19 but add the 80. So meron tayong compensation. Salary 400. CWT. 80. Tapos may 13th month pay
42. Tapos ano pang dagdag? Productivity Bonus 42. Meron pang ibang Item? Oh wala na. So 84 less exempt of 90.
So wala. Total nya ay 480 (400 Salary + 80). Itatax mo ngayon di ba? Tax due para sa 480 ay pag lumagpas ng 400
P30 (,000) plus yung 25% of (480-400) is 20, so magiging 50. Less yung CWT na 80. May sobra pa sya na magkano?
(50-80) (30).

36. A
37. A (din ang exemption)
39. Pinaupahan niya yung building nya correct? May lease contract. Instead of paying of rentals magiging..
Magbabayad sya sa stockholders..so pina-iikot nya lang, correct. So imbis na idiretso ay inyong pinapadaan kunyari
hindi income. Eh ang sabi ano daw ang tama. Ano yan. Oh? Natanggap ng stockholders mula sa Mr. Right Realty,
correct? Alin ang tama? Mr. Right Realty who recognized rental income, included sa kanilang ITR. At yung amount
na matatanggap ng stockholder should be considered dividend and therefore (C). Nakuha?
Ay alanganin na to. Pero kaya pa natin tong 40 and 41. Ay may naiwan ba? 38?
38. A owns 1000 common shares of Domestic corporation, acquired at 110 per share. He received a 10% stock
dividend. OK? Ang nangyari binenta nya yung 500 share. So….
Selling Price (500 share * P120) 60,000

Less Cost* (500 share * P100) 50,000
Gain 10,000
*Oh magcocompute tayo ng cost ha. Initially ilan yung binili na common? 1000. Magkano bili? 110? So total, 110,000.
Eh nagkaron ngayon ng stock dividend na 10% , so 100 shares, tama? So 0 ang cost nyan di ba? So 110,000 divided
by 1100 (1000+100) shares is P100 per share. So ang cost ng isa ay 100 na.
Madali lang? Oy! Pangbihira ka ha. NEXT!
40-41. Gross Income.. naku na-organized 2014 pa. Correct. So… ang gross ay 2,000,000. Tama? Ang net income
magkano? Net is 50,000 times 30% is 15,000 versus the minimum (MCIT) correct? 2M times 2% ay 40,000. Oh
nakalimutan na nyo yan. Tapos ma-rerecover ang 80% di ba? Oy! Apply the Tax Benefit Theory. Magkano dineduct?
100. Nagbenefit ba in full? Yes! Kaya nagresulta sa deduction na 100 eh. Kaya sa narecover na 80%, should the 80
be taxable? YES! Because there is full benefit and therefore letter (C).
Ay mahaba ang 42. Next meeting na yan. Pwede? ok!


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CPAR 2018 Audio Lectures TAXATION LAW 1 Atty.

Dante Dela Cruz

FUNDAMENTAL POWERS OF THE STATE

ASPECTS OF TAXATION AND AN EXPANDED EXPLANATION ON THE NON-IMPAIRMENT OF CONTRACTS LIMITATION

It’s high time now na pag-aralan na natin ‘yung taxation natin.

SCENARIO 1: ( ito na yung table niya J)

FRINGE BENEFITS TAX

Valuation of Expenses for foreign Travel

Pag inland travel, ieexempt yan.

So dun tayo sa scenario 2. Scenario 1 natin employer-employee.

Capital vs. Revenue Expenditures

Option mo idagdag sa value ng asset o ideduct na kaagad.

Anu-ano ang expense na pwede mong ideduct?

Interest on Indebtedness Periodically Amortized

Deductible Interest Expense:

Pangalawa, na pwede mong maging expense.

DEDUCTIBLE EXPENSE #3: ENTERTAINMENT, AMUSEMENT, AND RECREATIONAL EXPENSES (EAR)

DEDUCTIBLE EXPENSE #4: RESEARCH AND DEVELOPMENT COST

DEDUCTIBLE EXPENSE #5: PENSION TRUSTS

DEDUCTIBLE EXPENSE #6: RENTS/LEASE

DEDUCTIBLE EXPENSE #8: LOSSES

DEDUCTIBLE EXPENSE #9: TAXES

SPECIAL DEDUCTIONS BY SPECIAL LAWS

DONATIONS OF LAND TO PUBLIC SCHOOLS

PRO BONO SERVICES OF LAWYERS

PROCEEDS OF LIFE INSURANCE

CASH SURRENDER VALUE

PRIZES AND AWARDS

Q: Eh sir pano ko mananalo kung hindi ako nag-participate?

Q: Eh sir pano ko magpaparticipate kung hindi ako sumali?

1. Q: What if magaling kang manunulat, binigyan ka ng Carlos Palanca Award. Taxable?

Q: Eh Sir kung hindi ako gumawa ng pelikula hindi ako mananalo.

TAX EXCLUSION: PRIZES AND WINNINGS

TAX EXCLUSION: COMPENSATION FOR INJURIES AND DAMAGES

TAX EXCLUSION: SEPARATION PAY

ANSWERING HANDOUTS: GENERAL PRINCIPLES

INCOME TAX PAYABLE

INCOME TAX DUE

COMPENSATION INCOME AND BUSINESS INCOME

TAX CREDIT AND WITHHOLDING TAX

ON THE 8% INCOME TAX OPTION OF INDIVIDUAL TAX PAYERS

ON THE ELECTION OF TAX RATE OPTIONS

CORPORATION AS TAX PAYERS

TAX RATE OF CORPORATIONS

What if ito nangyari sa situation? Letter G na tayo.

EXEMPTION FROM MCIT DUE TO LOSSES

NET OPERATING LOSS CARRY-OVER (NOLCO)

IMPROPERLY ACCUMULATED EARNINGS TAX (IAET)

TAXING EDUCATIONAL INSTITUTIONS

PARTNERSHIP AS TAX PAYERS

GROSS PHILIPPINE BILLINGS

SAMPLE PROBLEMS/ COMPUTATION

MAGANDA ANG SUSUNOD :)

Gagawin nating resident foreign, pah resident foreignano mangyayari dito?

Walang tanong? Oy wala? Can I proceed? Iihi lang daw si sir.

Next, ano sagot?

Akalain mo hndi alam ang gagawin!

Lets have the handout on partnership….

SAMPLE PROBLEMS: PARTNERSHIP

Paganda ng paganda kasi nalilito ka na hehehehe

Sir bakit inaadd?

TAXABLE INCOME OF PARTNERS IN ITR

So dun tayo sa scenario 2. Scenario 1 natin employer-employee.