REVENUE

GENERATION
Group 4
 Hello, everyone!

Before we start our lesson today,

let us know the coverage of this
chapter:
Taxation system in the Philippines
Types f Taxes
Taxation Laws and Regulations
Taxation and Economic Development
Taxation Reforms and Challenges
Tax is a mandatory financial charge or
levy imposed on individuals or
organizations by a government.
Taxation System in
Philippines
Group 4
 Taxation System in Philippines

The taxation system in the Philippines is

governed by the Bureau of Internal
Revenue (BIR) and the Bureau of Customs
(BOC).

-It follows a self-assessment system

where taxpayers are responsible for
determining their tax liabilities and filing
tax returns.
-Taxes collected are used to fund
government programs and services, such
as infrastructure development, education,
healthcare, and social services.
Some taxes are vary depending on government:
Some taxes are vary depending on government:
Types of Taxes
Group 4
 TYPES OF TAXES
National Taxes

Direct Taxes: These taxes are levied directly on

individuals or corporations based on their income, wealth,
or specific transactions.

Examples include:
Income Tax: Progressive tax applied to individual and
corporate income (e.g., salaries, profits). Rates range
from 5% to 35% for individuals, with a 30% flat rate for
corporations.
 TYPES OF TAXES

National Taxes

Indirect Taxes: These taxes are embedded in the price

of goods and services, ultimately borne by the consumer.

Examples include:
Value Added Tax (VAT): Applied to the sale of
goods, services, and imports. Standard 12% tax levied
on the sale of most goods and services. Some
essential items and services are exempt.
 TYPES OF TAXES

National Taxes

Excise Tax: Imposed on specific goods like cigarettes,

alcohol, and petroleum products. Rates vary depending
on the products.
Franchise Tax: These taxes levied on corporations
granted the privilege to operate a business in the
Philippines.
 TYPES OF TAXES
National Taxes

Documentary Stamp Tax: These taxes levied on various

documents, transactions, and instruments such as
contracts, loans and insurance policies. The tax rate
depends on the documents value.

Withholdings Taxes: These taxes withheld by payors

(employers, banks, etc.) on certain income payments and
remitted to BIR includes income tax withheld on salaries
and final withholding tax on winnings.
 TYPES OF TAXES
Local Taxes

Property Tax: These taxes are including on real

property such as lands, buildings or establishments.
Rates are set by Local Government Units (LGUs).
Business Tax: These taxes imposed on businesses
operating within an LGUs jurisdiction and the
rates/categories vary depending on the LGUs.
Community Tax (Cedula): These taxes are minor tax
imposed on all Filipino residents aged 18-60 yrs. old.
 TYPES OF TAXES

Other noteworthy taxes

Donor’s Tax: These taxes are on the transferring

of property by donations.
Estate Tax: These taxes are on the transferring of
property upon death.
Capital Gains Tax: These taxes are on the profit
earned from the sale of capital assets like Stocks
or Real Estate.
Taxation Laws and
Regulations
Group 4
 The primary legislation governing taxation in the
Philippines are the:

i. National Internal Revenue

Code (NIRC)
This comprehensive code
serves as the foundation of
the Philippine tax system,
outlining different types of
taxes, tax rates, exemptions,
and procedures.
 The primary legislation governing taxation in the
Philippines are the:

ii. Tax Reform for Acceleration and Inclusion

(TRAIN) Law

Officially known as Republic Act No. 10963

It was the first package of the Comprehensive
Tax Reform Program implemented in the
Philippines and signed into law by President
Rodrigo Duterte on December 19, 2017.
It aimed to achieve multiple goals simultaneously,
balancing the need for revenue generation with
tax relief for individuals and businesses,
promoting economic growth, and addressing
structural issues in the tax system.
 The primary legislation governing taxation in the
Philippines are the:

iii. Corporate Recovery and Tax Incentives for

Enterprises Act (CREATE Act)

Officially known as Republic Act No. 11534, is

the second package of the Comprehensive
Tax Reform Program in the Philippines.
It seeks to balance supporting business
recovery with promoting a more efficient and
sustainable tax incentive system. It remains to
be seen how effectively it achieves these
goals, with ongoing evaluations and
discussions about its impact.
 The primary legislation governing taxation in the
Philippines are the:

iv. Bureau of Internal Revenue (BIR)

Is a vital agency in the Philippines

responsible for collecting taxes and
ensuring compliance with tax laws. It
operates under the Department of
Finance and plays a crucial role in
generating revenue for the
government, which funds various public
services and infrastructure projects.
Taxation and Economic
Development
Group 4
 Impacts on Economic Development

1. Government Revenue: Taxation is the primary source of government

revenue. This revenue funds critical investments in:

Infrastructure: Building roads, bridges, and other public infrastructure

facilitates the movement of goods and people, boosting economic
activity.
Education and healthcare: Investments in these sectors improve the
skills and health of the workforce, leading to higher productivity and
economic growth.
Public safety and security: A stable and secure environment
attracts businesses and investments, fostering economic
development.
 Impacts on Economic Development

2. Income Redistribution: Progressive tax systems can redistribute income

from wealthier individuals to poorer ones, reducing inequality and potentially
stimulating broader economic growth by increasing aggregate demand.

3. Market Corrections: Some taxes, like environmental taxes, can address

market failures by reflecting the true cost of externalities (e.g., pollution) and
encouraging more efficient resource allocation.

4. Investment and Business Activity: A stable and predictable tax system can
encourage investment and business activity leading to job creation and
economic growth. However, high or low complex taxes can deter investment and
hinder economic activity.
 Current Developments

1. Tax Incentives Review: The government is currently reviewing

its system of tax incentives, aiming to streamline and rationalize
them to ensure they are effective in attracting investments and
promoting targeted economic activities.
2. Digital Economy Taxation: The Philippines is exploring ways to
tax the digital economy more effectively, as traditional tax laws
may not be well-suited to capture income generated online.
3. Focus on Tax Administration: The Bureau of Internal Revenue
(BIR) is implementing various initiatives to improve tax
administration, such as digitalization and taxpayer education, to
increase tax compliance and collection
 Taxation Reforms in the
Philippines: Progress and
Challenges
Group 4
 Recent Reform Initiatives:

Tax Reform for Acceleration and Inclusion (TRAIN)

Law (2018): Reduced personal income tax for low- and
middle-income earners, broadened VAT coverage, and
introduced excise taxes on sugar-sweetened beverages,
among other changes.

Corporate Recovery and Tax Incentives for Enterprises

Act (CREATE Act) (2021): Lowered corporate income tax
from 30% to 25%, with further reductions planned, and
introduced various incentives for businesses.
 Progress Mode:

Increased Revenue: Both TRAIN and CREATE

resulted in higher tax collection, providing additional
resources for government spending.
Improved Equity: TRAIN reduced the tax burden on
low- and middle-income earners, making the system
more progressive.
Enhanced Business Environment: CREATE aims to
attract investments and stimulate economic activity
through lower corporate taxes and incentives.
 Challenges Remaining:

Limited Revenue Mobilization: The Philippines' tax-to-GDP ratio

remains low compared to regional peers, indicating potential for
further revenue generation.
Informal Sector Taxation: A significant portion of the economy
operates informally, escaping taxation and hindering revenue
collection.
Tax Exemptions and Incentives: Complex and extensive
exemptions and incentives create loopholes and reduce tax bases,
impacting revenue potential.
Administrative Inefficiency: Inefficient tax administration, including
limited digitalization and data sharing, hampers effective tax
collection.
THANK
YOU!
REPORTERS:
DEGUITO, WILRIZA
DELA HELBA, JOSEPH
DIAZ, JAY
HUERTA, ERICKA MAE