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    Lumbera Lecture

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    Rye
    The document discusses various tax concepts related to determining residency status for tax purposes and the resulting tax treatment of different types of income. It addresses how to identify non-resident alien engaged in trade or business and the indicators of double taxation. The types of income discussed include interest, dividends, capital gains, prizes and winnings. It also summarizes the income tax rates and withholding tax rates that apply to various entities including resident citizens, domestic corporations, resident foreign corporations, and non-resident foreign corporations.

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    Lumbera Lecture

    Uploaded by

    Rye
    32 views3 pages
    The document discusses various tax concepts related to determining residency status for tax purposes and the resulting tax treatment of different types of income. It addresses how to identify non-resident alien engaged in trade or business and the indicators of double taxation. The types of income discussed include interest, dividends, capital gains, prizes and winnings. It also summarizes the income tax rates and withholding tax rates that apply to various entities including resident citizens, domestic corporations, resident foreign corporations, and non-resident foreign corporations.

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    The document discusses various tax concepts related to determining residency status for tax purposes and the resulting tax treatment of different types of income. It addresses how to identify non-resident alien engaged in trade or business and the indicators of double taxation. The types of income discussed include interest, dividends, capital gains, prizes and winnings. It also summarizes the income tax rates and withholding tax rates that apply to various entities including resident citizens, domestic corporations, resident foreign corporations, and non-resident foreign corporations.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    32 views3 pages

    Lumbera Lecture

    Uploaded by

    Rye
    The document discusses various tax concepts related to determining residency status for tax purposes and the resulting tax treatment of different types of income. It addresses how to identify non-resident alien engaged in trade or business and the indicators of double taxation. The types of income discussed include interest, dividends, capital gains, prizes and winnings. It also summarizes the income tax rates and withholding tax rates that apply to various entities including resident citizens, domestic corporations, resident foreign corporations, and non-resident foreign corporations.

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    of 3

    Part 1E Lumbera Lecture

    NRA ETB, any one of these indicators would indicate that an alien is such (BIR issuance)

    1. Aggregate period of >180 days


    - Alien stays in the Philippines for more than 180 days, then he is assumed to be a NRA ETB
    2. Principle of Habituality
    - Regularly enters into commercial transactions regardless of length of days
    3. Putting up a Branch
    4. Appointing an Agent
    5. Hiring of Employees

    Double Taxation in the Strict Sense

    1. Taxing Twice
    2. Same Subject Matter
    3. Taxing Taxable Period
    4. Purpose
    5. Kind of Tax

    -to reduce DDT(strict sense), provide Tax Credit

    Screenshot 766

    o If the debtor is a non-resident of the Philippines, the interest income paid to the
    debtor is without
    o If the debtor is a resident of the Philippines, the interest income paid to the debtor
    is within
    o X-Debtor who owes 100k paid 10k interest; C earned 10k interest income
     If X is a RC and Y is also a RC, then interest is within
     If C is RC, NRC, RA, NRAETB, NRANETB, RC, NRC, RFC then such is
    taxable within
     If X is a NRC, then the interest is without
     If Y is a RC/ DC, then he is taxable
     If Y is NRC, RA, NRAETB, NRANETB, RFC, NRFC, then such is not
    taxable

    Part 1H

    Dividends of Corporations

    - Application of S 42(2(b))

    If X(recipient) were a RC/DC, then he is taxable within and without

    If X were a NRC/RA/NRAETB/NRANETB/RFC/NRFC, then can only be taxed PHP 22K


    Income Tax of Resident citizen (pag wala sa B,C,D ed isa A , check SS for requirements)

    A. <3m – NIT / 8%
    - 8% in excess of 250k, except MIE
    >3M – NIT

    B. Interest in bank deposits(peso account) – 20% FWT


    Interest in foreign currency – 15% FWT
    Long term deposit which does not preterminated – exempted; less than 4 yrs – 5%; less than 3
    yrs 12% ; less 20%
    Royalties – 20% except literary and musical compositions 10%
    Prizes and Winnings in games of chance – 20%
    PCSO and lotto - <10k no tax
     10k 20%

    Dividends issued by DC – 10%

    Issued by FC – NIT because it’s not in B, then it’s in A

    C. FWT 15%
    D. CGT of 6% of FMV at the time of sale(tax declaration) / Assessed value(tax declaration) / ZV)(BIR
    Website), whichever is higher
    - Includes involuntary sales (choose NIT OR CGT)
    - Includes Foreclosure of mortgage (CGT does not apply at the point of sale of auction of
    property / foreclosure of mortgage) CGT is paid at the time of consolidation by the highest
    bidder
    - Exemption – sale of principal residence – inform the BIR you’re availing such within 30 days
    from sale(because CGT is due within 30 days from sale), within 18 mos you buy or build in
    lieu of the one sold; avail such once every 10 years; sell principal residence; historical cost is
    considered
    - Condo units are covered so long as it is RESIDENTIAL; if commercial in nature then it is
    ordinary not subject to D

    Application : if A owns the lot and B owns the house, B can avail of the exemption because he is
    in actual physical residence

    If A(actually residing therein),B,C, siblings sell the ancestral house, then only A can avail of the
    exemption which pertains to the portion of his share

    Income Tax of Corporations

    Domestic Corporation

    A. Corporate Income Tax of 30%


    B. Interest of Bank deposit
    Peso account – 20% FWT
    Foreign Currency Deposit – 15% FWT; but long-term deposit exclusions do not apply
    Royalties – 20% but literary and musical compositions do not apply to corp entities
    No prizes and winnings
    Intercorporate Dividend Tax
    - DC – DC exempt from ICDT
    C. 15% FWT
    D. FWT of 6%

    MCIT – 2% in lieu of CIT

    - Applied beginning the fourth year from the corporation’s commencement of operation
    - 2% ON GROSS is higher than the tax on the net

    IAET – Final tax of 10% in addition to A,B,C and/or D

    Resident Foreign Corporation

    D does not apply because a RFC is not allowed to own real property

    ICDT – dc  RFC is still exempt

    MCIT 2% limited to income derived from Phil sources

    IAET does not apply

    NRFC

    A and B - GIT of 30%

    D does not apply, not allowed to hold property

    MCIT and IAET not applicable

    Section 30 – corporations exempt from NIT(A) derived as suchoo

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