This content provides a comprehensive overview of individual income taxation in the Philippines under Republic Act No. 8424 (Comprehensive Tax Reform Program of 1997), detailing different taxpayer classifications, income computation formulas, tax rates, and crucial exclusions from gross income.
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okay this is the
individual income taxation based on
ra8424 or the comprehensive income tax
reform program of 1997.
take a look at the um presentation here
we have the different kinds of taxpayers
we have the
employee individual slang tyoha self-employed
self-employed
partner in a general professional partnership
partnership
that states interesting
taxpayer employee self-employed
partner in a general professional
partnership and
estates and trust now the formula for
the computation
of income tax
worry what is according to the kind of
individual taxpayer so a formula
exemption not on 50 000 for the
taxpayer and kumaya 25 000
for each child maximum of four children so
atom computation you have the gross
income which is the compensation income
and then the deduction personal
additional and health insurance premium
so you arrive at the on
taxable net income
so your taxable net income
will be subject to the 0 to 32
tax rates then you have your tax due
now um merentine creditable withholding tax
tax
that's a compensation every end of every pay
pay
the ir therefore at the end of the period
period compensation
nagre mititosa d-i-r that was at the end
of the period
uh employer duns
employee a certificate compensation
an income tax return at the end of the
year and formed on a 1700
certification withholding 2036.
you compute for the tax due you apply
the 0 to 32 percent tax rate and then
now now we have this
among uh sole proprietors so merciless income
optional standard deduction which is 40
percent of the gross income or itemized reduction
reduction
and 40 deduction from the gross income
minus 40 percent
60 percent taxa volume business now
uh itemized deduction present
i know um business official
either optional standard deduction or
itemized deduction independent optional
and itemized couple pineal
standard deduction is
so same personal and additional benefit
personal and additional exemptions are
granted to the
personal and additional exemption
american employee merundin and
businessman so same tax rate zero to 32
rental business is subject to that
submarines and creditable withholding tax
tax
quarterly payment of taxes the quarterly
payment of taxes required to say among
businesses that
q701 series
so uh quarterly income payment of taxes
though unsupported income payment of
taxes on
puerto computing for the quarter
and then it profile so every quarter
cumulative income uh cumulative expenses
quarterly income tax payment admiral
creditable withholding tax payment that
will be the total
taxes paid in advance imam my nation's
attacks you to arrive at
so now being general partner at bitterness
bitterness
a partner in a general professional partnership
partnership
in partnership general professional
partnership is not taxable
but the partners in that gpp
are taxable in the same manner as
in general professional partnership
the gross income optional standard deduction
deduction
or itemized then you have the net income
then the allowable deductions fifty thousand
thousand
twenty five thousand and two thousand
four hundred
self-employed and partner in a general
professional partnership we have the
same creditable
quarterly and creditable then we have
the same
net income so unformulated themselves
employed a partner in general
professional partnership
on the distinguished language
taxpayer the general professional
partnership itself is not taxable
but the individual but the partners
but the partners shares in the gpp
individual income tax now we have these
so if the tax money is more young
property itself
and you call that estate now
so what the parents did was to create
expenses so usually [Music]
so it is considered as a taxpayer
then we have the same tax rate
and then come here with holding it
quarterly declaration
creditable withholding
is covered by the 40 percent optional deduction
so that is a good question
you cater to the different needs of the taxpayers
taxpayers
hinduism formula taxpayers know
uh young employees of employee general
professional partnership essays and
trust me
on different ways of computing taxes
employees supervisory and
rank and file so self-employed mental
so we go to the general principles of
income taxation
we go back to our lesson so we go to the
general principles
in um
income taxation in the philippines so
uh same we have the same i know
principles in
so general principles of income taxation
a citizen of the philippines residing
there in is taxable
on all income derived from sources within
within
the philippines so citizen
resident citizen packs a ball on all income
income
under the philippine jurisdiction now
non-resident citizen is taxable
only on income derived from sources
within the philippines so
kaitlyn citizen shopper and unresident nisha
nisha
an individual citizen of the philippines
who is working
and deriving income from abroad as an
overseas contractor
is taxable only on income derived from sources
sources
within the philippines provided that a
seaman who is a citizen of the philippines
philippines
and receives compensation for services
surrendered out abroad
as a member and complement of a vessel
engaged exclusively
in international trade shall be treated
as an overseas contract worker so you
see mankillah
uh abroad
attacker exclusively in international trade
trade
now see man
o f w i uh and sila
resident citizens i say they intend to
go back to the philippines
every time nawalana cilantro say bambansa
bambansa
but for taxation purposes considered as non-resident
from the philippine sources outside the
philippines or in camilla abroad indiana
ah so we have this citizen individual
and alien oxynabinating citizen
so these are citizens who are born of
filipino parents or who acquired filipino
filipino
citizenship by process of naturalization
so on young citizens
i further classified into
resident citizen non-resident citizen
and resident
classified further into engage in trade or
or
business and are not engaged in trade or
business and engage in trade or business
business
not engaged in trade or business is
further classified into
special aliens and ordinary aliens
so under the ctrp ethereum
classification and individuals
classification and taxpayers
classification and individual
now bucket nothing in a classified
uh resident citizen talks about an oil
income within and without the philippines
philippines
pagnan resident yang only on income
within the philippines
young alien gangnam
on income within the philippines so the
class and taxpayers
are taxable on income within the
philippines only based on the principle
of territoriality pero iton resident
citizen is an exemption to the
territoriality rule
because he is taxable on income within
and without the philippines
now under the ctrp classified armed not
engaged in trade or business
non-resident alien at the yuma
employed by offshore banking units uh
multinational petroleum
persons not engaged in trade or business
into special aliens
classification young not engaged in
trade or business
without a special special giant
ordinary areas because young special
ordinary aliens 50 percent on tax nila
so tony president duterte tangled preferential
preferential
in law so i think special aliens young
employees of foreign
um petroleum service contractor subcontractor
subcontractor
officer banking units uh regional
operating headquarters of multinational corporations
corporations
digital area headquarters of multinational
multinational
area operating headquarters
then offshore banking units and then
service petroleum service contractors if
you will take note these are all
american i know
a person who is leaving or dwelling in a
certain place permanently or for a
considerable length of
time the place where a man makes his
home or where he dwells permanently
or for an extended period of time is
said to be a resident of that place
a citizen of the philippines who works
and derives income from abroad and whose
employment the rat requires him to be
physically present abroad most of the
time during the taxable year
shall be considered as non-resident citizen
citizen
legally speaking in other forms
in other laws like civil law
criminal law this is not the definition of
of
a residency distance a taxation long nathan
nathan
okay this is an important um provision a
citizen who has been previously
considered as non-resident citizen and
who arrives in the philippines
at any time at any time during the
taxable year to reside permanently in
the philippines shall likewise be treated
treated
as a non-resident citizen for the
taxable year in which he arrives
in the philippines with respect to his
income derived from sources abroad
until the date of his arrival in the philippines
on her income in the philippines outside
the philippines
now nobody tell you situation filipinas
paramedician properties abroad president
filipinas so taxable on income
within and without the philippines now
what is the
the question here is during the taxable period
period
july shadowmating filipinas so you can come
come
and without the philippines
so who is an ocw or ofw
on ocw or ofw is a filipino citizen
employed outside the philippines and is
physically present
in that country or territory in order to
perform work
his wages and salaries are paid by an
employer based abroad and are not born
by any entity or employer in the philippines
philippines
to be officially recognized as ofw
the filipino must be duly registered as
such in the philippines
overseas employment and administration
and must possess
this happens this happened in the case
of rose
uh uh and otelloville
yunnan x x factor filipino
tiny claim overseas contract workership
as x factor winner i can be taxable
under philippine jurisdiction
on hindustani commissioner hinares because
because
hindi naka presents w
worker so legitimately then the income
from the
x factor hindi part channel compensation
will not be
taxed because w is
territory young income outside the
central classification now
this is the principal now non-resident
alien individual who shall come to the
philippines and stay
korean for an aggregate period of more
than 180 thousand
during all any calendar year shall be deemed
deemed
as non-resident alien engaged in trade
or business
so if you know requirement alien
and stays in the philippines for more
than 180 days
so he is considered as a non-resident
i know subject launches
compensation income indonesia engaged in
extraterrestrial areas are persons who
are not citizens of the country where
so he's an alien here filipino nasa abroad
so the general formula for computing the income
income
tax so we have this kenny napping recent natin
natin
gross income gross incoming nasa formula
where how to arrive at this gross income
is another thing
so my principle now all income from
whatever source whether legal or illegal
is taxable
so this is the universe this is the
uh total income
so from the total income you this did you
you
reduce it by the exclusion from gross income
income
exclusions from gross income the law
provides for the exclusion from gross income
income
so all income from whatever source
whether legal or illegal
are taxable minus exclusions from
young income how are illegal income taxed
taxed
when they are not filed with the bir
pre-illegally and independent profiles
so illegal income or taxed
using net worth method
so what is network method
so in the network method the taxpayers
net income
is determined both at the beginning and
at the end
of the same taxable year the increase or
decrease in net worth
is adjusted by adding all non-deductible expenses
expenses
and subtracting their from non-taxable receipts
receipts
as determined under the prevailing tax rules
rules
the resultant figure is the bir's
computed taxable
income before allowable and personal
additional exemptions for individual
taxpayer the computed taxable income
will be compared to the taxpayers
declared income
as per bir forms if it appears
that the declared income is lower than
the vir's computed amount
based on the net worth method then the
taxpayer should explain the difference
to the bir
any unexplained increase in network will
be presumed to be derived from
taxable sources and hence will be
assessed for
deficiency so i know eb sabihin
after young uh taxpayer not passionate
income tax return
what the bir is going to do will be
to conduct a surveillance and
external audit of that taxpayer ego
uh income yeah new difference
what is the legal basis for the use of
the net worth in computing the taxable
income of the individual taxpayer
so it is empowered and commissioner
the use of the network method is founded
on the 1997 tax code as amended under
section 40 and this exists still in
the train now therefore the taxable
income shall be computed upon the basis
of the taxpayers annual accounting period
period
in accordance to the method of
accounting regularly employed in keeping
the books of accounts of such
taxpayers but if no such method of
accounting has been employed or if the
method employed does not clearly
reflect the income the computation shall
be made in accordance with such method
as in the opinion of the commissioner
reflects the income
moreover under section 6 of the said tax code
code
where there is no reason to believe that
the tax return filed by the taxpayers
but the taxpayer is false incomplete or
erroneous the commissioner shall assess
the proper tax
on best evidence obtainable
when i was an examiner so i'm processed
now man the
using the best evidence obtainable
i live i served as an examiner for 10 years
years
analytical skills small so
very i know very challenging mugging
examiner although
examination more and you cannot validly
director happened to be a friend
of a classmate foundation
during the time of commissioner i began
an exam for all the examiners to be
during the time of president uh ramos
but the congress did that did not allow
us to have that
did not approve of the did not approve
of the
foreign to be a value strainer so it was
an honor for me to be considered as that
kind of trainer
examiner because of that integrity because
you are always in a psychological battle again
left and right you work for the
superiors and you work
also for the taxpayers vimana manka away
and taxpayers pero sometimes in the
uh during the conduct of examination
that will be elevated to the legal
office for the
examiner exclusions from gross income so
we have the gross income illegal
and legal but not an exclusion to arrive
at the
gross income so unanimous exclusion you
have to memorize these items
exclusions under the chain law so an
exclusion is different from a deduction
become a confused case
exclusion and reduction new exclusion
after the total income within and without
without
legal and illegal young deduction comes
after gross income
so an exclusion is not the same as
deduction a deduction is a subtraction
from gross income
to arrive at a taxable income
an exclusion does not even count as a
gross income therefore
it cannot become part of taxable income
although it may seem that an
exclusion exclu increases wealth
so these are the exclusions from gross income
income
partner gross income so we have the life
insurance the proceeds of life insurance
policies paid to the heirs of benefit or
beneficiaries upon the death of the insured
insured
whether in a single sum or otherwise but
if such amounts are held by the insurer
under an agreement to pay interest
they're on
the interest payment shall be included
in the gross income
holder then that interest will be
subject to
income tax period premiums in the subject
subject exclusion
amounts received by ensured as return of premiums
uh personal property and real
property the value of property acquired
by gift backus device
or decent pamana provided however that
income of such
property as a gift request device or
descent of income
from any property [Music]
for income taxation hinisha kasama exclusion
incomes were not subject to
income tax but subject to donors and
then the income from that property will
be subject to
that will be subject to income tax that will form part of the gross income
will form part of the gross income unexcluded language value no property
unexcluded language value no property period
period income no
so compensation for injuries or sickness amounts received through accident or
amounts received through accident or health insurance or underworkman's
health insurance or underworkman's compensation acts
compensation acts i'll come as compensation for personal
i'll come as compensation for personal injuries or sickness
injuries or sickness plus the amounts of any damages received
plus the amounts of any damages received whether by suit or agreement
whether by suit or agreement on account of such injuries or sickness
on account of such injuries or sickness so compensation and family
into a different productive life in that in productive life in a bogo because of
in productive life in a bogo because of the injury but he can acquire another
the injury but he can acquire another productive life
productive life so he's being compensated for the injury
so he's being compensated for the injury to rehabilitate himself
to rehabilitate himself and be more productive and to be
and be more productive and to be productive again in some other way
productive again in some other way so hindi taxable
so income exam under treaty income of any kind to the extent required by any
any kind to the extent required by any treaty obligation
treaty obligation binding upon the government of the
binding upon the government of the philippines
philippines you know the memorandum of agreement
you know the memorandum of agreement entered
entered into by the philippines with other
into by the philippines with other unknowns with other countries
unknowns with other countries transactions
categorization john because individual uh
uh each uh entity each each treaty has
each uh entity each each treaty has peculiar terms and conditions so you
peculiar terms and conditions so you have to inquire into the terms and
have to inquire into the terms and conditions of the
conditions of the treaty
so retirement benefits pensions so retirement benefit received under
retirement benefit received under republic act 7641 and those received by
republic act 7641 and those received by officials and employees of private
officials and employees of private groups
groups whether individual or corporate in
whether individual or corporate in accordance with reasonable
accordance with reasonable private benefit plans maintained by the
private benefit plans maintained by the employer so what is reasonable
employer so what is reasonable will be determined by the circumstances
will be determined by the circumstances okay the term reasonable private benefit
okay the term reasonable private benefit plan means pension gratuity stock bonus
plan means pension gratuity stock bonus or profit sharing plan
or profit sharing plan maintained by an employer for the
maintained by an employer for the benefit of some or all of his officials
benefit of some or all of his officials or employees
or employees korean contributions are made by such
korean contributions are made by such employers for the officials
employers for the officials or employees or both for the purpose of
or employees or both for the purpose of distributing to such officials and
distributing to such officials and employees the earnings
employees the earnings and principle of the fund thus
and principle of the fund thus accumulated annually
accumulated annually it is provided in said plan that no time
it is provided in said plan that no time that at no time shall any part of the
that at no time shall any part of the corpus or income of the fund be used for
corpus or income of the fund be used for or diverted to
or diverted to any purpose other than for the exclusive
any purpose other than for the exclusive benefit of the set officials or
benefit of the set officials or employees so benefit
employees so benefit retirement benefit planning business
retirement benefit planning business parasite employees and officials
parasite employees and officials activities known parallel benefits
activities known parallel benefits employees and officials
employees and officials so that is the reasonable
so that is the reasonable engage
so retirement benefits pension gratuities
gratuities provided the retiring official employee
provided the retiring official employee has been in the service for the same
has been in the service for the same employer for at least 10 years
employer for at least 10 years and it's not less than 50 years of age
and it's not less than 50 years of age at the same time what is a reasonable
at the same time what is a reasonable plan retirement plan
or excluded from the gross income so when the official or employee has been
when the official or employee has been in the service of the same employer
in the service of the same employer for at least 10 years
for at least 10 years topwashing retiring employee or official
topwashing retiring employee or official is not less than 50 years old
is not less than 50 years old and the benefits granted and the
and the benefits granted and the benefits granted
benefits granted as an and the benefits granted under
as an and the benefits granted under this uh pension plan shall be availed
this uh pension plan shall be availed off by the
off by the official or employee only once
and you benefit nakohama from the pension plan
pension plan is non-taxable or exclusion from
is non-taxable or exclusion from gross income ilangan
nyon employer not less than 10 years and at the time of retirement i not
and at the time of retirement i not younger than 50 years old
younger than 50 years old now elan once millennial once mulan
now elan once millennial once mulan yonder
retirement benefits goal so young retirement benefits indian
so young retirement benefits indian subjects uh
subjects uh uh indian partner gross income for all
uh indian partner gross income for all the
the benefits bir indian talks about what if
benefits bir indian talks about what if nakaku
nakaku retirement benefits copper less than 50
retirement benefits copper less than 50 years old
years old subject
more than 10 years or at least 10 years same employer at not less than 50 years
same employer at not less than 50 years old
old in the example i are
in the example i are 10 years ago i are at 50 years old
benefits trabajosa pup at the age of 65 claim only upon benefits benefits
claim only upon benefits benefits pension benefits
pension benefits i'm a living partner yes
any amount received by an official or employee or by his heirs from the
employee or by his heirs from the employer
employer as a consequence of separation of such
as a consequence of separation of such official or employee
official or employee from the service of the employer because
from the service of the employer because of death sickness
of death sickness or other physical disability often for
or other physical disability often for any other cause beyond
any other cause beyond the control of the said official or
the control of the said official or employee
employee exclusion patent
exclusion patent provisions of any existing law to the
provisions of any existing law to the country notwithstanding social security
country notwithstanding social security benefits retirement gratuities pensions
benefits retirement gratuities pensions and other similar benefits received by
and other similar benefits received by resident or non-resident citizen of the
resident or non-resident citizen of the philippines or aliens
philippines or aliens who can't reside permanently in the
who can't reside permanently in the philippines from foreign government
philippines from foreign government agencies and other institutions private
agencies and other institutions private or
or public who come
public who come to the site permanently in the
to the site permanently in the philippines from foreign government
philippines from foreign government agencies and other institutions
agencies and other institutions so at the social security benefits
so at the social security benefits retirement benefits
retirement benefits gratuities pensions and other similar
gratuities pensions and other similar benefits received by resident or
benefits received by resident or non-resident of the philippines
non-resident of the philippines berton aliens who come to reside in the
berton aliens who come to reside in the philippines
philippines from foreign government agencies or
from foreign government agencies or other
other institutions what's that
institutions what's that pension and retirement benefits
at a young state in veterans pension number veterans exam then
pension number veterans exam then okay young
okay young sss retirement benefits
sss retirement benefits exclusion but then the exemption
exclusion but then the exemption exclusion or
exclusion or dsis benefits excluded
dsis benefits excluded trust income income derived from foreign
trust income income derived from foreign government
government income derived from investment in the
income derived from investment in the philippines in the loan
philippines in the loan in loans stops bonds or other
in loans stops bonds or other domestic securities
domestic securities are deposit in banks in the philippines
are deposit in banks in the philippines by
by foreign government soyuma foreign
foreign government soyuma foreign government and taxpayer
government and taxpayer financing institutions owned and
financing institutions owned and controlled
controlled an international regional corporation
an international regional corporation so exclusive excluded jensen camilla
so exclusive excluded jensen camilla income derived by the government or its
income derived by the government or its political
political subdivision so among incoming government
subdivision so among incoming government agencies
agencies at all prices and awards made primarily
at all prices and awards made primarily in recognition
in recognition of religious charitable purpose
of religious charitable purpose charitable scientific educational
charitable scientific educational artistic
artistic literary or civic achievement
the recipient was selected without any action on his part to enter the contest
the recipient is not required to render substantial future services as a
substantial future services as a condition
condition no future services
no future services present past present and future
present past present and future yeah um
religious charitable scientific educational artistic
educational artistic literary human nobel prize winner
they were not required to do those things but they
things but they did those things and there that and for
did those things and there that and for that
that like i don't know recognition
like i don't know recognition different award or price will not be
different award or price will not be part of the
part of the ross
they performed activities prior to the award somali casa pinoy big
prior to the award somali casa pinoy big brother
brother my prize
all prices and awards granted to athletes in local and international
athletes in local and international sports competitions and tournaments
sports competitions and tournaments whether held in the philippines or
whether held in the philippines or abroad and
abroad and sanctioned by their national sports
sanctioned by their national sports association
association is sanctioned by national sport
is sanctioned by national sport association
13 month pay another benefit so 13 month pay
pay nothing that day 82 000 90 000
nothing that day 82 000 90 000 so this will be 90 000 now
so this will be 90 000 now young gross benefit uh
young gross benefit uh 13-month pay and other benefits not
13-month pay and other benefits not exceeding
exceeding 90 000 will be part of the exclusion
90 000 will be part of the exclusion from gross income
from gross income okay benefits received by employees
okay benefits received by employees under certain republic acts or
under certain republic acts or benefits received from medicare
benefits received from medicare sssgsis gains
sssgsis gains from sale of bonds adventures my
from sale of bonds adventures my short-term investments
short-term investments are government bonds and adventures
are government bonds and adventures ex young mutual gains on mutual funds
ex young mutual gains on mutual funds example excluded
example excluded by the young french benefit not taxable
by the young french benefit not taxable men thank you natalia
men thank you natalia french benefit not the minimum benefits
french benefit not the minimum benefits not a small value
not a small value indica computation
[Music] na bini bigusa managerial employees
na bini bigusa managerial employees taxable pero hindi partner compensation
taxable pero hindi partner compensation incoming
incoming it stops in different manner very in the
it stops in different manner very in the minimus benefits
minimus benefits hindisha
is within the threshold hindisha partner gross income
gross income pero uh
pero uh gross in asa threshold magic impartial
gross in asa threshold magic impartial gross income remember that we'll go to
gross income remember that we'll go to the details of that in the computation
the details of that in the computation of
of compensation of income foreign
exclusions yeah within the threshold uh when more than the threshold in this
90 uh 90 000 exclusions
all the exclusion shilla up to a certain point
point nagigim park in silence um
nagigim park in silence um gross income and the minimus benefits
gross income and the minimus benefits within the threshold exclusion from
within the threshold exclusion from gross income
gross income pugnac exchanges a threshold
pugnac exchanges a threshold a 90 000 exclusion from gross income and
a 90 000 exclusion from gross income and other benefits
90 000 your other benefits together with the minimus benefit
the minimus benefit your excess non-magicking partner gross
your excess non-magicking partner gross income so equally finance
income so equally finance exclusion from gross income exclusion
exclusion from gross income exclusion sila if within the limits
sila if within the limits so my limit individual individual
so my limit individual individual limit uh the minimum benefit
limit uh the minimum benefit individually exit silence
benefit so monetize unused vacation leave credits of employees not exceeding
leave credits of employees not exceeding 10 days
benefits okay next meeting the long time
okay next meeting the long time agreement benefits
agreement benefits okay
uh last item today is the mini miss benefits remind you
benefits remind you okay
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