The taxes we pay

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Know the types of national and local taxes we have in the Philippines

MANILA, Philippines – Nothing comes for free in the country, as almost all transactions require tax payments.

The Tax Reform Act of 1997 identifies whose duty it is to pay taxes. It also states the types of taxes that individuals and corporations have to pay.

According to the law, there are two basic types of taxes: national and local.

National taxes are those we pay to the government through the Bureau of Internal Revenue (BIR), while local taxes are the ones levied by local government units (LGUs).

Rappler enumerates what these taxes are. Just click on each of the items on this list to know more about them.

National Taxes

This is the tax an individual or business pays for when they sell an asset for profit. Capital gains are usually realized from the sale of stocks, jewelry, property and other high-value goods.

This refers to tax on documents, loan agreements and papers evidencing the sale or transfer of an obligation or ownership of a property.

Yes, even gifts and donations are taxed. Relief goods sent during calamities are an example. Typhoon Yolanda was a different case, however. BIR scrapped taxes on goods delivered to Yolanda-ravaged areas as long as they were coursed through the proper government agencies.

When a loved one passes away, the rightful beneficiary or heir of his or her estate should pay this tax before the estate is transferred to the heir’s name. 

This is the tax imposed on goods produced for sale, and sold, in the country. An excise is considered an indirect tax, meaning the producer or seller is expected to recover the tax by raising prices of his or her product. For instance, taxes imposed on “sin” products tobacco and alcohol are called excise taxes.

This is tax on a person’s income or profit arising from property, practice of profession, or conduct of trade or business.

This is a business tax. It is imposed on persons who sell or lease goods, properties or services in the course of their business, are not VAT-registered, and whose gross annual sales and/or receipts do not exceed P750,000.

A form of consumption tax that is imposed on a product whenever value is added at a stage of production and at final sale. It is an indirect tax; it is passed on to consumers.

Income tax that employers withhold from employees’ salaries, and pay directly to government.

Local taxes

This is tax on real properties that covers 6 classes: agricultural, commercial, industrial, residential, timberland and mineral.

LGUs may impose tax on a business franchise at a rate not exceeding 50% of 1% of the gross annual receipts for the preceding calendar year.

LGUs may collect tax from printing or publication of books, cards, posters, tarpaulins, pamphlets, and other published or printed materials.

LGUs may collect not more than 10% of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters.

This tax is imposed on persons engaged in the exercise or practice of their professions requiring government examination. Doctors, lawyers, engineers, and other professionals are covered by this tax.

All forms of entertainment such as movies, plays and concerts are taxed. The tax is usually included in the admission price.

This tax, which is also called buwis pampamayanan, requires one to pay a base fee of P5 and an additional increase of P1 for every P1,000 of income.

Trucks and vans delivering goods such as soft drinks, cigarettes, beer, etc. pay LGUs roughly P500 annually.

Sari-sari stores and retailers whose annual gross sales or receipts are not greater than P50,000 are subject to barangay tax. This tax shall accrue on the first day of January of each year.

This clearance serves as legal permission for a particular individual/host/company to conduct an event or start a business in a barangay.

– Loren Bustos/

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