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TAX AND TAXATION ➔ The payment of this tax would remit the issue of

a residence certificate. Corporations were also


TAX subject to the residence tax.

➔ Is levied compulsorily by the government on its


citizens to defray the expenses of the WHAT IS A CEDULA?
government.
➔ A tax, by definition, is a payment in return for Also known as a ‘residence certificate’, is a
which no direct and specific quid pro quo is legal identity document in the Philippines.
rendered to the taxpayer.
Issued by cities and municipalities to all
TAXATION persons that have reached the age of majority and
upon payment of a community tax, it is considered as
➔ The imposition of financial charges or other a primary form of identification in the Philippines and
levies, upon a taxpayer (an individual or legal is one of the closest single documents the Philippines
entity) by a state such that failure to pay is has to a national system of identification.
punishable by law.
➔ It is the inherent power by which the sovereign Why is cedula important?
state imposes financial burden upon persons and A person is required to present a cedula
property as a means of raising revenues in order
when he or she acknowledges a document before a
to defray the necessary expenses of the
notary public; takes an oath of office upon election or
government
appointment to a government position; receives
IMPORTANT CHARACTERISTICS OF TAX. money from a public fund; transacts official business;
or receives salary from a person or corporation.
(1) A tax is a compulsory payment levied by the
The Four R’s of Taxation
government on its citizens and various business firms.
As payment of tax is compulsory, refusal to pay tax Revenue
invites punishment
The taxes raise money to spend on armies,
(2) No direct quid pro quo relationship between the roads, schools, and hospitals, and on more indirect
taxpayer and the tax-levying authority. government functions like market regulation or legal
That is to say, a taxpayer cannot demand any systems.
reciprocal benefits for paying taxes.
Repricing
(3) A tax is levied to incur public expenditure for the
benefit of the country as a whole. Taxes are levied to address externalities; for
example, tobacco is taxed to discourage smoking, and
(4) The basis of taxation cannot be the same for all a carbon tac discourages use of carbon-based fuels.
periods. It is reviewed periodically by the taxing
authority. Representation

As what goes with the slogan ‘no taxation


without representation’, it implies that: rulers tax
THE DEVELOPMENT OF THE COMMUNITY TAX citizens, and citizens demand accountability from
their rulers as the other part of this bargain.
➔ The cedula was imposed by the Americans on
January 1, 1940, when Commonwealth Act No. Redistribution
465 went into effect, mandating the imposition
of a base residence tax of fifty centavos and an This refers to transferring wealth from the
additional tax of one peso based on factors such richer sections of society to poorer sections.
as income and real estate holdings.

Reporter: Cristhy Maghuyop | Winky Colina | Angelie Matilos


Why Tax? D. Excise or License Taxes

The main purpose of taxation is to Taxes imposed on the privilege, occupation


accumulate funds for the functioning of the and business not falling within the classification of
government machineries. No government in the poll taxes or property taxes.
world can run its administrative office without funds
Who should pay taxes?
and it has no such system incorporated in itself to
generate profit from its function. 1. Individuals
The government’s ability to serve the people a. Resident Citizen
depend upon the taxes that are collected. Taxes are b. Non-resident Citizen
indispensable in the government operation and c. Resident Aliens
without it, the government will be paralyzed. d. Non-resident Aliens
2. Corporations
a. Domestic Corporations
THE PHILIPPINE TAX SYSTEM
b. Foreign Corporations
LOCAL TAXES 3. Estate under judicial settlement
4. Trust irrevocable both as to the trust property and
➔ refer to those imposed and collected by the
as to the income.
local government.

NATIONAL TAXES Who (or what) are those exempted in paying taxes?
➔ refer to national internal revenue taxes imposed 1. Charitable institutions, churches, parsonages or
and collected by the national government convents appurtenant thereto, mosques, and
through the Bureau of Internal Revenue (BIR) nonprofit cemeteries and all lands, buildings and
improvements actually, directly and exclusively
used for religious, charitable or educational
The Forms of Taxes Imposed on Persons and
purpose (Article VI, Section 28, Paragraph 3).
Property
2. Non-stock non-profit educational institutions
A. Personal, capitation or poll taxes
used actually, directly, and exclusively for
Taxes of fixed amount upon residents or persons of a educational purposes (Article XVI, Section 4(3)).
certain class without regard to their property or
Exempted to tax as state in the Article 283 of Rules
business.
and Regulations Implementing Local Government
B. Property Taxes Code of 1991 (RA 7160)

→ Real Property Tax → Local Water Districts


→ Estate Tax (Inheritance Tax)
→ Cooperatives duly registered under RA 6938, otherwise
→ Gift or Donor’s Tax
known as the Cooperative Code of the Philippines
→ Capital Gains Tax
→ Non-stock and non-profit hospitals and educational
C. Income Taxes institutions

Taxes imposed on the income of the taxpayers from → Printer and/or publisher of books or other reading
whatever sources it is derived. Tax on all yearly profits materials prescribed by DECS (now DepEd) as school texts
arising from property, possessions, trades. or references, insofar as receipts from the printing and /or
publishing thereof are concerned.

Reporter: Cristhy Maghuyop | Winky Colina | Angelie Matilos

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