a rapier 2 Tones Tax as a Tx Adnstaton hich ofthe ellowing isa power ofthe Cammisanerf internal Revene? 2 sesmentangcaeton aes £ Sigetnent ota rtrares pena. a nes epoca tte provost the NIC 5 Rf tom adminseing the sperisony and pie onered bythe Mand other awe 18: The Conmisoner of ltermal Revenue can dept te power 0 Pend or rebar even & [Riiccwatesand repltons tothe Serta of Financ Seg aSreanign even oerto establishments of cable {1 omprumieor abt tn aby 1. Tee Bins oder the supertsonet Dee bvrenel Case ee Deparment of lace. 5 SePresden: ‘long 2p. Asto tax payments measures whi oftefallowing tbl forthe (jaleaton rp taepaye incor? Pious scone ee payments of PML Remon vale add taxpayers of PM Geary percentage tapes of 7200000 {Sane doearenay samp tacP2M 21. Whoienotslaretapave? PMinmgeompanes Usted compares ks wih 120M adored apa (None ofthese 2 terms of ancl neasres wi ofthe flown sesh fr (Slave wapayersis incorrect 2 Grose eeenps ending PIB Net worth exceeding F300 2 Gros purchases enceding PBIOM trom ler eceedia P58 hag Inteducton once Tar CHAPTER 3 INTRODUCTION TO INCOME TAXATION ‘Chapter Overview and objectives “is caper dscases the coneep of tar come he pes oftpayers. 7 ee income ane tr his chap, readers are expected to Sesckncn aetaseag, Tone! comereend snd demoncroe {Recenayatgenincne 2 Thetypesofincome axpayers 5. Thegeneralrulesin income rasan 4 Thence tae stus rules CONCEPT OF INCOME sincome sbjectto tax? StS eee sedan condemn sIncome for taxation purposes? ax concept of incomes spy refered to 2 "gross income” ener the WRC tem of income iter oa a ite of gros ncone > asm a simply means table Income in aya em. Une be N em te mone tere o pe none os san pero exempta ew Techs po Peraintomny icone tate be ject inse boa define as ay iw f weak Se na eerie tira ners kms tee on de et exe tpt iene for Pa such as dealings in properties and other regular or casual {GROssiNcOME. jr cpl ha ace nt ewe, 7 ey nw contac ae reattir cue fs reurn on wad Mea Stoperey that ncrenses the taxpayer's Rete ‘ompensition or personal mures rtorou ats deemed etary sic secrnopanssasnentor PO TSO node! aman Reputation rarcenes) 509 Tourer Sree rome Fn Reerm of capt scyunee Ed earn on aa Thu fone reputation cnn be mesued fancy Any stem omincome ‘amples ince moral damages recived fam SG Orsdelamaton or sander TET Se en orn core im not tale Benson of ae Beare copa merely amas ne na el Se cetern Sav Pea, Sc ee ery afloat capt Recovery otest profits ono apres deren im nex worh e te loe fprots oes crease et worth The recovery of xa ey iain sa were rerio a teneh eras. ndennty contac gs ss money, Under Sec 32 ofthe M Toe wl of ie mir pido he has o bene Pm Broce ern aegis oF Oeste eX oe cena nema Te res ofa en te pre ec es oy i re Tn pom end omental mca owe eign rn gr Sit enaer oc maturity ofthe poicy (he the insures ns ne 2 SE LSy em om greiner reed ert ction on ay ee Magne aetna OUhapa 3 nvosectin to Income Ta ‘he Pano guramer omens a rai et ee of a ef fr eee et ence rh amar hl prt PMID lastraton3 Dare Crone nc eperienced an uns eines come afer comp eee patted iencon. Davao Crocodile sued the competi for {Bhagemen and was awarded an nde ot F300.000 The 7200000 nde camps he ce ot Poet tthe patent infingeent The sme a em fro non to ncame or profs not iaandd o compere fr tel Hattie of income; hence, its an item af grass income, plat ear gpedesraiztion ‘REALIZED BENEFTT ‘Was meant by rele bene? Fn ans any farm cf antag ee yh ee Th Deer to anacreweln et nh ote aay ae Sen ee cane acer nod oan “Thefellowingarenotbenefts bene, not table ; ‘T™ fect of oun - properties eens ut obgaton ss increase oxtioeingetirn ont a eencrere copra tee. the fdr one ran eset ome . Beara masey or propery to be hel ints fo, ft be etl tater pron arte appre ned obey fort coun porn fe port's bene nen advance He ide dapaye was graied 7200 wansportaton aa nes ta ese tps an wa owe by es emp! kop he Taree o0 reed by the enplye ener come sce ths Sateen (8230) aby upon een. acer nvesetion once Ta re “realled” concept ‘hterm raed means earned. requires ht there degree of underking trisrifie fromthe taxpayer abe ented of te esse equlstes ofa realized bene: 4, There mst ean exchange transaction 41 Thewansaton volves sneer ety, 4 llncreses the net worth fhe recipe ‘pes of Transfers 1 blateral transfers or exchonges. uch: 8 rer These are referredto “onerous ronson. 2 Unilateral ransers sch: 2 Succession uae of propery upon dsth ' Donssee ‘Thee area refered toasts unacos Inder curren wage ute ances are simply refered to as “occ ile itera ante ae ele “exchanges” Bette dered fo Sooocs ansactions are “earued or rized’ Rene, they ate subject come ta Benet derived from gratutous trasacsons are not reaiaeé bass ofthe absence ofan ering proces. Benes derived fom gaious tanascsone 2 ‘sett ranger ae natincome x. 4 Compler transactions Camper" vanactons are party gratutows and party ooerocs. These ae ‘anonly refered to as “rangers for less he full ond edocs snaioon” The gatutousperton ofthe trasacon is sabje 9 Tae a we oe ‘ent rom the onerous portion subject to incre tx ‘tesration tapayer sold bs car which was previous prcbasfo P190000 and with = ‘arte ale af 80000 foo PAD OO, ‘etranscton willbe snzdfallows: eae i iseead ig sony fH: Ata P30 subjects income tax eon sooo b ‘ae °papi 3 - wnodecnen tolncome Tax ‘Gracies 3 Invaduction to ineuene Ta emir nieonrtngervogman ototecaccl ton scing pce ove the con an tem of rosa We Mendes the lowing pestle tems fg income seater ner? peer ie watsmet tat neat prego ere ee NS ras ee NS pre ecm BE Sn pre oe en Sy nina] cs eas 2 Sete ma a ce lan el Meee : seal emarenec areata ans or come denved Seoven relates corporations, and been 2 Sa Se sp ae enaie nce Ww made Deween Seperate ies ference ar ee Parva Ee ted companies sch aseween NOE Ctreon in Lace ee iaanes na peween ster CO! 2M ea rom a am) ree seman nd acne cout Ts apes repress SW Nora endo ernie cons dea one “Sac econome rons . Mprsemcerendeate Racers 150000 owen tbe ses os bome ofc ts branch fice ae nt abe ec Tams hing de gr et nnn otc rns 2 Retief eb ater mew mere of ont #3 rae Sas of remption of Unrealized Income ermal. tnpayers wil Have the 20 Tas erence in wei oe ease ite ve of Hs HEPC SHE res nan 17 poy cm when te cme hes nam exchange ranean nc i ener patie = om Bs oes ot ean bomever ha oy cme rend in at be = {Sever ued the same segue he nonssh propery neon ceed conser sae atthe fa vaio propery cored Mortars ‘Scoping income reaiaed we noah consteracone woud opens we senet evasion Since amayers can easly ether nse ne rw we ESTAS Eat Sie abe ent. Furdermore tence SELES Sor sno nore teed since propria busines PSS Ease cer now that 2 proprietors business fx Nosateacty Mode of Receipt Realzation Beets rile ems ence maybe eae ie 1 eal receipe te axper te was ‘ire mates aa pal ent encom he rm ft 2. Constructive receipt inst recep neves no actual phycl taking ofthe Income but be a of Secangonts changers oP Se aE Seat ot rts nan orchard or growth of seen EE vane rtd dann he scovry ofrminera reserves Renin of sets Fe Ley scrves fro conden is an exchange but ors a eh ere conmderation recived om eng epee neon came orice ees 8 Rem of FSS ROMEees a A Ofet f dete of be txepper i connerance fo he sale pode Sector omen te tare tases sa 2 Alen Reset ales a Sapged i ade cr sins 1 tengaged in wade or Deasess | Corporations "Domes arporvoon 2 sae reg corprmon 8 Nomesidne Srp comorscce |NDIIDUAL INCOME TAXPAYERS Under te Consunaton,tiens are + These who are cathe of the Phlppines at she cine of adoption of she oestnion on Febrary 22987 These whose thers or mothers are Cees of he Pipes Those bom Store jauary £7 1973 of Fpans nate whe sac Pins etna pen renga ope mor 4 Those who are nacraine i scoraanes So chew ‘casstcatonofcioens: A: Resident ize Fp ies eng he Piggies © Nonresident inn nce 5 A ataen ofthe Paine: who esabiates te ihe . ‘Strtine fate Rs phyealprescaceabrond Sia eekcee ere{rapt 3 neato some Tan ba fet of debe af he tangy in consideration for the sale of gods 1 Depot oftheincome he axpaye'chcng acount © Matured detachable ners coupons on coupon bans ot yet ena 44 Terese the capita ofa partner he proto the partership Inflow of wealth without increase et wort The info of wealth #0 poo tha dee Rt increase Bi net worth i Inco do tthe ttl aborne oben amples 2 Receipt of propery inst 1. Borrowing ofmoney under an obligation to return NOT EXEMPTED BY LAW, CONTRACT, OR TREATY ‘An em of gos income isnot expe by the Constuso, lw, contac ‘The folowing tems of coe are exempted by aw fom taxation: bene, they sotconiere ems of pos income face oad employe tt nd Revere fn ra nose etna toe SSS Pap Bio Pens tence Satan and wee mime age ees and aiid senior orn fentrncme eng rss ORE) Income of Toren, government snd foregone own oneal cororaons 7. Tncome of ternational mission an organs with nome ax mm ‘tems of rs incame that are exempted fom tuto are discs exe Under Ecusons in roe Inne n Cape "TYPES OF INCOME TAXPAYERS A. Induce army I Nemresden cten ‘hap 3 odcton fo nome Tat 2 Alen 4" Tesidet len 1 Nonresident en 2 engaged mrad or bsiness 1 notengaged in tec orbasines 3 Taxableertesend rss 5 Corporsions 1 Domest corporacion 2 Foren corporation Resident eign corporation 1 Nonresident fee corporation INDIVIDUAL INCOME TAXPAYERS iisens Unde the Constion, tien are 4 Those who ae cizes ofthe onstaton n ebay 2.1987 1 Those whose ters or mothers a cient fhe Philipines © haw tor bere fay, 197 of Filpin macers whe elated Piping sizes upon reaching te og oma 4 Thove who are natured i actordanes th the aw ‘hssieaton ofctzens: ‘Resident lien A Flipn zen residing inthe Phin 1B. Nonresident citizen ncases ¥ Late of he Piles who estubaes to the sastcaon ofthe immanent of hs phys presence abroad wits dogs 2% im fh Pipes wholes he Philpins during te tae ‘oF Fran employment on 4 Phlippines atthe time of adoption ofthe‘Chapter 3 -Intioducton to income Tax Filipinos working in Philippine embassies or Phiippine consulate offices ae considered non-resident ctiaens. Allen [A. Resident allen ~ an indvidal whois residing inthe Philippines but citizen there such a: 1. An alien who lives inthe Philippines without definite intention a5 savior 2 One who comes to the nature would require an extend temporary inthe Philippines al to retum ta his domiclabroad: Philippines for a definite purpose which in fed stay and to that end males his hm though itmay be his intention a al [An alien who has acquire residence in the Philippines reais is stats ‘Neh unt he abandons the ame or actually departs rom the Pilipies. |B. Non-resident alien - an individval who Isnt residing in the Philppines Ivo snot cizen hereof 1 Nom-resdent aliens engeged in business (9RAETB)~ aliens who Inte Philipines fran aggregate pried of more than 180 days theyear 2. Non-resident allensnot engaged n busines (NA-NETB) - include: se eiens who come to the Pilippines fr = definite purpose which i ature maybe promply accomplished Allens tho shall come fo the Phiipines and stay eeren fr ‘egrets prio of nat more than 100 days during the year “THE GENERAL CLASSIFICATION RULE FOR INDIVIDUALS, ‘The intention ofthe taxpayer regarding the nature of his stay with Dlesde the Philippines shall determine his appropriate resi 2itcaion. The taxpayer sall submit to the CIR ofthe BIR docume soos suchas visas work contracts and other document indicating Intention. Documents purporting short term stay such as tourist visa shall not res {he recasicaton ofthe taxpayer's normal residency. Documents pu longterm say such a migration visa or working visa fr an ext erod would teult in the automatic redassifeation of the tarp residency Chapter 3 Introduction to fncome Tar 2 Amalien is normally non-resident. allen win come othe Piippnes with = tourist vin would sllbe classified as non-resident alien. bs Metzen is ormally resident A elzen who would go abroad under 2 tourist isa would stl be cnsidered a resident cizen. fe nalen who come tothe Philipines with an immigration wsa would D® ‘eclassied a aresient alien upon his arrival 44. clizen no would go abroad with 2 cworyear wor Fecasifedss2non-sedent ctnen upon his deparure 2. Length ofstay In default of such documentary proof the length of say ofthe considered 2 Chaens staying abroad fr a petiod ron-residet. Allens who stayed in the Phlippines for more than 1 year as oft the exale year ae considered resident. ‘Alena ho are staying in the Philippines for not more than 2 year bat ‘Move than 180 days are deemed non-resident allens engaged in business 44 Allens vtho stayed in the Philippines for not moce than 180 days are ansidered aon resident alles not engaged in rade or business saxpayer is of at last 103 days are considered endof stration 1 Daniel Marlo Aresmendi Mexican actor, was contacted by 2 Philippine elvision ‘Campy to do's projec in the Phils fe arived inthe County on February 29 trl andeturned to eric three weeks later upon completion of prec Dane Mero Arexmend shal be classified as om NRA-NETB In 2021 Hs say i for @ ‘sn purpose whch ine naturel be complished imme Iustraton2 Nanoed fs,» Uiyannaonl rived inthe country om Navembor 4, 2021 Mr Ibe tye nie passes thn win ony wertng wane pre. ‘arth year 202, Mr bri woul be considered an [Link] Becoute he stayed ine Phigpines for ls than 180 days as of December 3, 2021 I he sll within the Plime unt December 3, 2022 hell qualify a resident ain for 2022 stration3 (thot any defn inteon a othe mature of is stay, han Miguel» Fpino Sito etch uippnes and sayed aoad fom Man I3. 2000 fo Ape 2aatttore returning he Paps fete yr jn nen te ce terran 83 he willbe classed a resident tien forthe year 2021 because he absent {ess than 18 days in 2021. ts i ae a nTaxable Estates and Trusts 1 Beate sate evfers tothe properties right, and obligations of 4 deceased po not exngusshed By hs death fxtates under jdical settlement are treated inva taxpayers ‘state table onthe come ofthe properties left by the decedent st Shier extayedioal setement are exempt ents. The income of properaes af he estate unger extrajudicial setement is taxable othe heir rest | oust os an arrangement whereby one person (grantor oF tasty) tran (e"Soaates) propery to another person (Beneiiay), which wal be \nscethe management fa hia party (Oust or fila) . crus thats irevocaly designated bythe grantor treated in taxation * Tab indus eapayer Te income af he property eld in trust aa CRE ie Truss no are designated as revocable bythe grantor are {Gaablc enue andar not considered as individual taxpayers, Te incon Repiia nS Under revocable ust s unable to the grantor not to “Woes the erst agreement it slent as to revocability ofthe trust, the iru presumed tbe revocable CORPORATE INCOME TAXPAYERS The term ‘corporation stall include one person corporations (0 Tthatrinpe ao ste how creates oF organized joint-stock companies, j BEREE Ei Seaton or insurance companies, except general profess ZRESLSMEIT oc sEttire er consortium formed for the purpose cere cahing constacton proj engaging in petroleum. coal geothermal, eee Teac eestor to an operating consortium agreement und (ernce contract nth the government ence. the tem carparation incudesprofitoriented and non-profit insti BEES ita insotutions, cooperatives, government agencies Sorumeneaites sodas lenges, cor religious and oer organiato Domestic Corporation Ponca coperaton is» corporation that i organized In accordance Priigpine lors includes one-person corporations (OPC) owned and reise bp tesident evens inthe Phlippnes oaptes 4 evo Foreign Corporation Jetengm corporation sone organiied under afore le types of foreign conporations: Pr pesdent oregn corporation (REC) ~ Soren © boducts ines inthe Philippines through + permanen ‘branch 1 Mee ttalent foreign corporation (NRFC) ~» foreign carprition wich does fot operate or conduct busines nthe Prppines ccporan wien opr wt Ceabhcnanent (88 ‘tera Terni ame ecto SDT i ante nu ona bono Tens SOM 2 eA re ec tren oe nas acne nt oer Special Corporations Corpora are domestic or foreign corporations which ace subject Special tax als or preferential tx ates (OTHER CORPORATE TAXPAYERS 4 One-person corporation (Rene person corporation is & corporation witha single stockholder who may ‘bea natural perso, ust or an estate Banks and quasi-banks, prenecd, trust. insurance. public and public sted companies, and non-chartered COCCS may not scorperate 35 One-Person Corporations. A natural person who is loensed to exerase a profession may fot organize as a One Person Corporation forthe purpose cf exercising such profession except av atherwise provided under specal ws. 2. Partnership ‘Aparmnership [sa business organization owned by two or more persons who Contribute thei industry or resources ta common fund forthe purpose of fvding the profits fom the venture Types of partnership 4a} General professional partnership (PP)chaste 3 nreouaten ome Tax A 6s» pro hi are by pena forte se prone cxersgs cm prt sate sah ee from engaging in any trade or business. 7 [Link] is not treated 38 corporation and isnot 2 taxable eniy. ef exempt from income tax. ut the partners are taxable intel india ‘capacity with respect ta their shar inthe income af the parmership. 2) Busnes parmersio AA business parmership is one formed for profit It is table as 3 corporation, amples: A parmertip berween Any. Mendoca 4 lawyer, and Mark Santos, Secountane © price In taon advisory services would be 2 busin parmerstipsnce the ove parmers are notin the sare profession. bb A parmership Sebeeen acountants Hum and Vhinson to venture ino chat parler would be @ Busnes partners since the venture snot Process common pofeon Ryparmarsip beneeer accountants Juan and Miguel tb votre ino 3 eros woud bea ener professional partnership. 14. Denuss Winey sod Andy partnered to operate a dental cnc During Season ty ave converting thle ina a beauty saloon Thi pares ‘Sebusinax puseship since searing nome fom busines. 3. Joint venture ‘joint ventre i business undertaking for a particular purpose. may ‘rganined 25 a partership ora corporation. “Typesofoint ventures: a Exempt tnt ventures romps oie ventres are those formed forthe purpose of undertl ‘constracion projects or engaging In petroleum, coal, geothermal ther eneey operations pursuant to ab perating consortium agree Under sence contract with the Government. Similar toa GPP, dis typeof one venture isnot rete as a comport and is taxexerpton te regula income, but ther venturersare taxable their share inthe net income af the jin venture. Taxable join ventures ‘Aiother oat ventures are taxable as corporations. Crapter 3 -tedcton 1 Ireore Tae 4. Co-ownership sh comers jit onnestp of property formed forthe parpeae presoreingtne same and/or dividing is income. come colecton ‘A corownershp thats limited 0 property preservation or acome USSR teow erable ety and is exempt butte co-owrers are taxable 00 ‘hare onthe income of he co-owned propery pe However a co-owmership that relavests the income of the co-owned POPE peter income producing properses or ventures will Bt considers? Unnegiseredpartnerehip table as a corporation. {THE GENERAL RULES IN INCOME TAXATION corporate taxpayers ___ Dames corporation z Resident forelgn corporation ¥ Non-resident foreign corporation z 1 Yaen with he itty re a ear. pt ret ees 4 domes (Sree are tac ni or ens eared wit te Fe, 12 TRENIRC ses he tern eta Se Ppp” to mess outs te PPPs ‘The Residency and Citizenship Rule ‘Taxpayers who are residents and citizens ofthe Philippines such as resident citizen and domestic corporations are taxable on all income from sources within Snd without the Philippines. A corporation 1s a citizen of the country of Incorporation. Thus a domestic corporation sa ctizen ofthe Philippines. Basis othe extraterritorial taxation Resident citizens and domestic corporations derive most ofthe benefits from the Pippine government compared fo all other classes of taxpayers by virtue of their proximity tothe Philippine government. ”Drvileges aver alens. Aso, between resident and resident and non-resident ctaens, resid situs have ull access ofthe public services of our government because they In the country. The taxation of foreign income of resident citizens and dome ‘corporations properly reflects ths ference In benefits consistent with ti Benefit Received Theory. ‘The extraterrtrial tax treatment of resident citizens and domestic corporation is also intended as 2 safety net othe pote loss of tax revenues brought bi sits relocation or the practice of executing or structuring transactions such tl ‘income wil be realized abroad to avoid Philippine income tas. ‘Theisoue of international double taration The rule on extrteroril taxadon on resident citizens and dom corporations exposes these taxpayers to double taxation. However, the Allows tax cre for taxes pain foreign countries. Infact. resident citizens yf domestic corporations pay minimal taxes inthe Philppnes on their for Income because o the taxed. SITUS OF INCOME “Tae stu of income isthe pace of taxation of income, the authority to impose ta upon the income, ‘Siew of ncome vs. source of ncome Situs of income shouldbe dferentitd from the source of income. The I evans tothe att or property that produces the income. the jrsdction hat a Situs is important in determining wheter oF not an income is taxable in Piilippnes Stasis partelarly Important to taxpayers taxable only oni ‘within However, es ls important to taxpayers taxable on global income purpose of the computation of the Foreign ax credit {INCOME STTUS RULES Debtors residence ‘ier the intangible employed Location of he property Pace where the services rendered Deesoftncome TP imerest income 2. Royalties, 2 Rentincome © Serace ncome Chapter 3 -Intoduction to Income Ta stration ‘anpayer had the following income: merestincome rom depositsimaforegntbank 30000 Interest fom domestic bonds “30000 Foyates ror boks published in the Philippines 100,000 Feat income ra properties abroad (the ase contracts were execute ine Philippines) 150.000 rofessional efor services rendered in he Professional eso nee aoe Phiipines to na-resident cents paid in US Dollars) sus rates the flowing are the sts ofthe aforementions oping the Wiha — snerest on foreign depos 7 = Fusoooos F 99000 Interest rom domeste bands 0 sue Royalties rom Boos in the Philipines act ieee Ret income on foreign properties Profesional fes| Toa resident cizen or domestic corporation taxpayers would Be iMeome while other taxpayers would be taxable only on the in the Phlippines. ‘OTWeR INCOME SITUS RULES [A Gain on sale of properties 1 Personal property 7" Domest ecurities ~ presumed eared within the Philippines Other personal properties ~earted inthe place where the property is sold 2, Real property - earned where the property is located Ecssooeo 2 asaGnd F Leoaaoe taxable on the world come om wach ystration taxpayer a the following income Canon sl of domestic stocks P 200000 Cain onsale of foregn bonds 00000 Gainon sale oa commercial lat n Baguio Cy 500,000 Gainonsal fear in Ontario, Canada 00.000 Gainonsale of machineries in Mexico, Pampanga 250,000 Interest income on foreign bonds 50.000 Dividends on domestic tock 150,000 »Chapter 3 toduction to tacome Tox ‘The lowing able summarizes the situs ofthe foregoing income: 7 Within without Ganon sl of domesti tacks 200006 Ganon sale of foreign bonde P 100.000 Gainon sale of commercial at 500.00 amon sale ofr nanan 200.000 ‘amon ese of machineries 230000 Interest on foreign bonds 50000 Dividends on deme tacks _—_1s.000 Tol Eonauo Z—sn000 B. Dividend income om: 4. Domestic corporation - presume earned within 2. Foreign corporation 2 Reset reign corporation depends on the re-dominance test “The predominance est Tn ra ofthe Paippine gross income over the werd ros incom {he resent foreign corporation Inthe Dee year period preceding ear dvdend declaration wees 40%, te pardon of the ahidend corresponding 0 ‘lppne osncme ras carved within Last Som he ene dvdendsrecelved is erned abroad 1) Non eset frig corporation = e2med abroad In'20D, Sarah received 2 P406,000 dividend income frm ABC Corporation, Caporation had the ming rss income 2018 trough 2020 Too! — E_aaoog Z—gooo F—sva90 FLo00.000 leaDc corporations: 1 Domenic operation the etre 400000 eared within 2 Non-resident foreign corporation =the entire P40,00is eared abroad 3 Resent foreign corporation =the P40,00dvidend shal be spit Grose tacome Rat = #600,00/P3,000 000 = 60% ned within th Pippines(€0%xP400,000) pe tos he Pines 1% 400.00) 240000 ——Inana Eanoo0 chapter} nvoducon to Income Tax deemed earned “Supposing that the rato Is 49%, che entire P400,000 wil be aes sable th Plippines (¢ Morehandlsing income - earned where the property's =0l4 stration suse ofrossincome ois purchased and sold win 200.000 oets purchased within and old abroad 0000 (aos purchased abroad andsold within 150000 Goods purchased and sold abroad 3502000 ‘eincome earned within and without shall be: Wihin—— —athous purchased and sold within 200,000, Durcased within and sold abroad 100,000 Pathan broad and sold win 150.000 Parchased abroad andsaldabeoad 380.000 eal asoong © Lasoo _. Manufacturing income - earned where the goods are manufactured and sold — 7 [Operations Production | Distribution ot Within | Toa income fam production and disiibuase | earned within the Philippines ‘Without | Total income rom production and aribatoe ‘seared without the Philippines ‘Without Production income is earned within Distribution income seared without Witoat | Witkin [Disuibution income is earned within -_ Production Income i earned without stration 1 and Ie manufacures goods and sls them through bean ech ateablshed market prices and eportad te owing ea meee Momecitice — ranch __total Ste P 4.000.000 F 2.000000, Fe.000.000 Goxofgoods sold 2.400000 __izan000 * S.sa0.o00 Pisoovos Fone9 Ezsvoo09 Grosincomeme seus of the goes ince of nan under each of Tie fownng folowing seman Sten Hameo eect ae a 1 Phiipenes Phigpacr P2sno0o Fo x as ora 0 2400600, Nod Phigpres 1400000 socauo Nes —Abwad Phirppnes 00000 1600.00 Sra rodeos ae usbvon a conus a a ne Iaserasion 2 Assuming padction conducted by 2 parent corporation and ‘pada ys Subslary corpraton: 2 as Pace Ssbsidan Tel _— F sevenee 7 2000000 7 6000000 (GIAPTER 3: SELF-TEST EXERCISES sgeseeeeeeeeeeeae Discussion Questions 1 Enumerate the characarates of peer ocame 2 Whar are copa tems coneeced wth tts vee 5 whens incune concer eaiza? 1 Disongush excange fom analy Whar x eompien ansacace? How sane” 6 What holding gain? Why exmpe from acon” 5S compae seul recep win conarucave rei. Enumerste and expan the casscanns of ncoridea SRS 9. narconsctte a apie enate and Tus” fo. Enumerate and explain he casnfcatons of corpora SESS 1. Diseus the erably ofeach cas of ayers 12 Explan sta Diflerenate srs fom source of noose, 13 Whatis the situ of the flowing come? Sse Gecotgeocemis 7 Zenon Gesaove — Exaaaoa Faunaoo E2009 gece The pons income eed by each corporation able ah i Sonrieome TREE SSS achat ia spate payer Thess fection shal Be § Ryainone esha prt orate & Reta focome eee “ eG € Gain on sale of movable property Tefaong are thes oincame fore pret operat: Fees tromtlmeney Seraca ane Subd. — itn vibe Ddend ince Fo dome corporation cea Pa ea gm Fn eed name fe ree gn peraioe No2 Abroad ‘Abroad 41,600,000 ndising income Bi3) patppeer Mond 1400000 fae abd Phin ° 4600.00 ‘ers rN. 1 Retr of apa and Retr on opt amount repre ers ores oe ap ‘Thetoing ae thease fo thesubslay orportin | cia eure OF Scena fara Subsidy. — Within Cuvsiderauon _Forthelossof “capital” “capa. a eee Phipps 7800000 F oo a Spel tea "ance "aoe soo0n0 2 oe Aad rntipaes Aboot soo 00 = Red Abend” pits £00000 n = [ wares Feabrr ae adie to master the trates as thishavea sg | Inyo comprehension of drone aera oe trode in sued apne