Transfer Taxes
Content
TRANSFER TAXES
TRANSFER TAX 1. Tax on transfer of property. 2. Rates are lower --5% to 20% - estate tax -- 2% to 15 % - donor’s tax 3. esser exemptions INCOME TAX 1. Tax on income 2. Rates are higher -- 5% to 32% 3. !ore exemptions
− ESTATE TAX ∗ ESTATE TAX FORMULA
"ross #state $%ec. &5' $1' )ed*ctions $%ec. &+' $2' ,et share of the %% in the -. ,et #state ess( #xemptions $first .200/000 exemption/ %ec. &0' ,et Taxa1le #state X Tax rate $%ec. &0' #state Tax d*e ess( Tax -redit 2if any3 $%ec. &+2#3 or 110243 #state Tax )*e/ if any ess(
∗ GROSS ESTATE (Sec. 85, CTRP) A. As to resident a ien or Fi i!ino decedent - all real/ tangi1le personal/ intangi1le personal property where5er sit*ated. A. As to non"resident a ien decedent - all real and tangi1le personal property sit*ated in the .hil. - 6ntangi1le personal property with a sit*s in the .hil. 7nless exempted on the 1asis of reciprocity. ∗ Inc #sions in t$e Gross Estate (Sec. 85, CTRP)% a. )ecedent’s interest e. .roceeds of life ins*rance 1. Transfer in contemplation of death f. Transfers for ins*fficient consideration c. Re5oca1le transfer g. .rior interests d. Transfer *nder general power of appointment ∗ E&e'!t Trans'issions (Sec. 8(, CTRP)% 1. The merger of *s*fr*ct in the owner of the na8ed title9 2. :ideicommisary s*1stit*tion9 3. The transmission from the first heir/ legatee or donee in fa5or of another 1eneficiary/ in accordance with the will of the predecessor9 and 0. ;ll 1e<*ests/ de5ices/ legacies or transfers to social welfare/ c*lt*ral and charita1le instit*tions no part of the net income of which in*res to the 1enefit of any indi5id*al9 .ro5ided/ that not more than 30% of the said 1e<*ests/ legacies or transfers shall 1e *sed 1y s*ch instit*tions for administration p*rposes. ∗ )a #e o* Gross Estate% The gross estate shall 1e 5al*ed at its *air 'ar+et ,a #e at the time of death of the decedent. ∗ -ed#ctions *ro' t$e Gross Estate ;. :or resident aliens and citi=ens $# 6T/ T>:%;!' 1. #xpenses/ losses/ inde1tedness/ taxes/ etc. $# 6T-:?--7 T' a. f*neral expenses e. *npaid mortgages 1. @*dicial expenses f. taxes c. claims against the estate g. losses d. claims against insol5ent person 2. Transfer for p*1lic *se 5. %tandard ded*ction 3. >anishing ded*ction +. !edical expenses 0. :amily home
A. ;mo*nts recei5ed 1y heirs *nder R; 0B1A $Retirement 4enefits' 4. :or non-resident aliens $# 6T-T>' 1. #xpenses/ losses/ inde1tedness/ taxes/ etc. $:?--7 T' 2. Transfer for p*1lic *se 3. >anishing ded*ction -E-.CTIONS ON ESTATE TAX APP/ICA0/E TO RESI-ENT A/IENS AN- CITI1ENS%
∗ F#nera E&!enses%
The amo*nt ded*cti1le is the lowest among the following( 1. act*al f*neral expenses 2. 5% of the gross estate 3. .200/000 ∗ C ai's a2ainst t$e Estate% Requisites to be deductible: 1. The de1t instr*ment m*st 1e notari=ed 2. 6f loan was contracted within 3 years 1efore the death of the decedent/ the administrator or exec*tor shall s*1mit a statement showing the disposition of the proceeds of the loan. ,.4.( These re<*isites do not apply if the claim did not arise from contract*al o1ligations. ∗ Ta&es% The following are not deductible: 1. income tax on income recei5ed after death 2. property taxes not accr*ed 1efore death 3. estate tax ∗ /osses% Requisites to be deductible: 1. arising from fire/ storm/ shipwrec8/ or other cas*alty/ ro11ery/ theft or em1e==lement9 2. ,ot compensated 1y ins*rance or otherwise9 3. ,ot claimed as ded*ction in an income tax ret*rn of the taxa1le estate9 0. Ccc*rring d*ring the settlement of the estate9 and 5. Ccc*rring 1efore the last day for the payment of the estate tax $last day to pay( six months after the decedent’s death'. ∗ Trans*er *or P#3 ic .se% Requisites to be deductible: 1. The disposition is in a last will and testament 2. To ta8e effect after death 3. 6n fa5or of the go5ernment of the .hil./ or any political s*1di5ision thereof 0. :or excl*si5e p*1lic p*rposes. ∗ )anis$in2 -ed#ction% Requisites to be deductible: 1. the present decedent died within 5 years from transfer of the property from a prior decedent or donor. 2. The property m*st 1e located in the .hils. 3. The property formed part of the taxa1le estate of the prior decedent/ or of the taxa1le gift of the donor. 0. The estate tax or donor’s tax on the gift m*st ha5e 1een finally determined and paid. 5. The property m*st 1e identified as the one recei5ed from the prior decedent/ or something ac<*ired in exchange therefor. +. ,o 5anishing ded*ction on the property was allowa1le to the estate of the prior decedent. ∗ Fa'i 4 5o'e% Requisites to be deductible: 1. %aid family home m*st ha5e 1een the decedent’s family home. 2. %aid fact m*st 1e certified to 1y the 1arangay captain of the locality where it is located. 3. !axim*m of .1/000/000
∗ Medica E&!enses%
Requisites to be deductible: 1. inc*rred within one year prior to his death 3. !axim*m of .500/000 2. %*1stantiated with receipts -E-.CTIONS ON ESTATE TAX APP/ICA0/E TO NON"RESI-ENT A/IENS 1. #xpenses/ losses/ inde1tedness and taxes $# 6T' For'# a% .hil. "ross #state D Eorld # 6T Eorld "ross #state 2. Transfer for p*1lic *se. 3. >anishing ded*ction on property in the .hilippines.
∗ Estate Ta& Credit
FORMULA: a. One *orei2n co#ntr4 on 4% 1 - The tax credit is whiche5er is lower 1etween( 1. #state tax paid to the foreign co*ntry 2. ,T#/ foreign co*ntry D .hil. estate tax ,T#/ world $,T# - ,et Taxa1le #state' 3. More t$an one *orei2n co#ntr4 - The credit shall 1e that which is the lower amo*nt 1etween imit ; and imit 4 /i'it A. Ehiche5er is lower 1etween( 1. #state tax paid to foreign co*ntry 2. ,T#/ foreign co*ntry D .hil. estate tax ,T#/ world /i'it 0. Ehiche5er is lower 1etween( 1. total of estate taxes paid to all foreign co*ntries 2. ,T# o*tside .hil. D .hil. estate tax ,T#/ world
-ONOR6S TAX ∗ Re7#isites% (A-IC)
1. 2. 3. 0. capacity of the donor donati5e intent deli5ery/ whether act*al or constr*cti5e/ of the s*1@ect gift acceptance 1y the donee
∗ Stran2er - a person who is not a 1rother/ sister/ spo*se/ ancestor and lineal descendant/ or of a
relati5e 1y consang*inity in the collateral within the 0 th ci5il degree.
∗ FORMULA:
a. Cn the 1st donation of a year( "ross gifts ess( )ed*ctions from gross gifts xxx xxx
,et gifts D Tax Rate )onor’s tax on the net gifts
xxx xxx
1. Cn donation of a s*1se<*ent date d*ring the year( "ross gifts made on this date ess( )ed*ctions from gross gifts ,et gifts ;dd( ;ll prior net gifts within the year ;ggregate net gifts D Tax Rate )onor’s tax on aggregate net gifts ess( )onor’s tax on all prior net gifts )onor’s tax on the net gifts on this date xxx xxx xxx xxx xxx xxx xxx xxx xxx
∗ E&e'!tion o* certain 2i*ts%
1. "ifts made 1y a resident a. dowries or gifts made on acco*nt of marriage and 1efore its cele1ration or within one year thereafter 1y parents to each of their legitimate/ illegitimate or adopted children to the extent of the first .10/000. 1. "ifts made to or for the *se of the ,ational "o5ernment or any entity created 1y any of its agencies which is not cond*cted for profit/ or to any political s*1di5ision of the said go5ernment. c. "ifts in fa5or of ed*cational/ charita1le/ religio*s/ c*lt*ral or social welfare corporation/ instit*tions/ fo*ndations/ tr*st or philanthropic organi=ation/ research instit*tion or organi=ation/ accredited non-go5ernment organi=ation $,"C'. .ro5ided/ that no more than 30% of said gifts shall 1e *sed 1y s*ch donee for administration p*rposes. 2. "ifts made 1y a non-resident not a citi=en of the .hil. a. same as $1' 1. same as $c' except accredited non-go5ernment organi=ation $,"C' ∗ Ta& credit *or donor6s ta&es !aid to a *orei2n co#ntr4% 1. )onor was a :ilipino citi=en or resident alien 2. ;t time of foreign donation 3. )onor’s taxes of any character and description 0. ;re imposed and paid 1y the a*thority of a foreign co*ntry. ∗ /i'itations on ta& credit% 1. The amo*nt of the credit in respect to the tax paid to any co*ntry shall not exceed the same proportion of the tax against which s*ch credit is ta8en/ which the decedent’s net gifts sit*ated within s*ch co*ntry taxa1le *nder the ,6R- 1ears to his entire net gift9 and 2. The total amo*nt of the credit shall not exceed the same proportion of the tax against which s*ch credit is ta8en/ which the decedent’s net gift sit*ated o*tside the .hilippines taxa1le *nder the ,6R1ears to his entire net gift.
∗ FORMULA:
a. :or donor’s taxes paid to one foreign co*ntry ," sit*ated in a foreign co*ntry D .)T #ntire net gifts F Tax credit limit $," - ,et "ifts9 .)T - .hil. )onorGs Tax' 1. :or donor’s taxes paid to two or more foreign co*ntry
," o*tside the .hil. #ntire net gifts FTax credit limit
D .)T
The allowa1le tax credit is the lower amo*nt 1etween the tax credit limit *nder $a' and $1'.
EXPAN-E- )A/.E A--E- TAX
− Persons ia3 e to Pa4 t$e )AT% ( S 0 E / S I )
1. ;ny person whether nat*ral of @*ridical who/ in the co*rse of trade or 1*siness/ sells/ 3arters/ exchanges/ or eases goods or properties/ or renders ser5ices9 2. ;ny person who imports goods whether for 1*siness or non-1*siness p*rpose9 and pro5ided/ gross receipts is more than .550/000.00/ otherwise/
∗ more than .100T 1*t less than .550T H3% percentage tax ∗ less than .100T H no 1*siness tax lia1ility Transactions S#38ect to )AT% (S I T S )
1. e5ery sale/ 1arter/ or exchange/ leases goods or properties made in the co*rse of trade or 1*siness9 9. transactions deemed sale for >;T p*rposes9 :. importation of goods9 and 0. e5ery sale of ser5ice made in the co*rse of trade or 1*siness other than ser5ices rendered 1y persons s*1@ect to Iother percentage taxesJ.
E e'ents o* )AT %
1. sale m*st 1e made in the .hilippines9 2. sale m*st 1e of taxa1le goods/ properties or ser5ices9 and 3. sale m*st 1e made 1y a taxa1le person in the co*rse or f*rtherance of his 1*siness.
Rate Str#ct#re #nder t$e )AT S4ste'%
1 1. 0% rate for export sales and persons whose sales are effecti5ely =ero-rated and =ero-rated sales of ser5ices9 and 2. 10% for all other articles and transactions co5ered 1y the >;T.
∗ In!#t Ta& – tax on p*rchase price of goods which is passed on or shifted to a 1*yer K p*rchaser Klessee
1y the s*pplier K seller K lessor. 6t is the >;T paid 1y a >;T-registered person in the co*rse of his trade or 1*siness. ∗ O#t!#t Ta&"" >;T d*e on the sale of taxa1le goods or ser5ices 1y any person registered or re<*ired to register for >;T p*rposes. ∗ Transitiona In!#t Ta& Credit – person who 1ecomes lia1le to >;T or any person who elects to 1e a >;T-registered person shall/ s*1@ect to the filing of an in5entory of goods/ material and s*pplies e<*i5alent to &% of 5al*e of s*ch in5entory or the act*al >;T paid on s*ch goods/ materials and s*pplies/ whiche5er is higher/ which shall 1e credita1le against the o*tp*t tax. ∗ E&!ort Sa es – sale and shipment or exportation of goods from the .hilippines to a foreign -o*ntry irrespecti5e of any shipping arrangement that may 1e agreed *pon which may infl*ence or determine the transfer of ownership of the goods so exported/ or foreign-c*rrency denominated sales. ∗ Forei2n C#rrenc4 -eno'inated Sa es H sales to non-residents of goods assem1led or man*fact*red in the .hilippines for deli5ery to residents in the .hilippines and paid for in con5erti1le foreign c*rrency remitted thro*gh the 1an8ing system in the .hilippines.
∗ ZERO-RATED VS. EXEMPT TRANSACTIONS
L#RC-R;T#) Extent: ;ll 5al*e added tax is remo5ed #D#!.T TR;,%;-T6C,% Cnly remo5es the 5al*e added tax at the exempt stage
Claim for refund: Taxpayer can claim the ref*nd of inp*t taxes passed on to him 1y the s*pplier/ etc. or credit s*ch inp*t taxes against his lia1ilities for o*tp*t taxes on his other non-=ero rated transactions Scope: "enerally/ taxa1le sales/ and ta8en into acco*nt in determining t*rn-o5er or sales for sales for >;Tregistration p*rposes. Registration requirement: Lero-rated person may still register for >;T.
Taxpayer is not entitled to credit or ref*nd of the inp*t tax passed on to him 1y the s*pplier/ etc.
,ot taxa1le sales and therefore not ta8en into acco*nt in determining t*rn-o5er or >;T-registration p*rposes
#xempt person may not register for >;T.
Re2istration Re7#ire'ents%
;. Mandator4 < e5ery person who in the co*rse of trade or 1*siness/ sells/ 1arters/ exchanges/ leases goods or ser5ices for others/ if the aggregate amo*nt of act*al or expected gross sales and K or gross receipts exceeds .550T for any 12-month period. 9. O!tiona -- any of the following persons may/ at their option/ apply for >;T registration( a. seller of goods or ser5ices whose taxa1le sale or gross receipts do not exceed . 55=T for any 12month period9 1. seller of agric*lt*ral or marine food prod*cts in their original state9 c. seller of *ertili=er/ seeds/ seedlings and fingerlings/ fish li5e stoc8 and po*ltry feeds/ incl*ding ingredients whether locally prod*ced or imported/ *sed in the man*fact*re of finished foods9 d. seller of non-food agric*lt*ral/ marine and forest prod*cts in their original state9 e. seller of cotton and cotton seeds in the original state/ and copra. ( 0 FANC ! N.".: Ite#$ % t& e' re(er t& e)*&rt $a+e$ &,+-
Transactions dee'ed sa es *or )AT !#r!oses (Sec. ;=>0)
1. Transfer/ *se or cons*mption not in the co*rse of trade or 1*siness of goods originally intended for sale or for *se in the co*rse of 1*siness9 2. )istri1*tion or transfer to share-holders or in5estors as share in the profits of the >;T -registered persons9 3. -onsignment of goods if act*al sale is not made within +0 days following the date of consignment9 0. )istri1*tion or transfer to creditors in payment of de1t9 5. Retirement from or cessation of 1*siness/ with respect to in5entories of taxa1le goods existing as of s*ch retirement or cessation.
TRANSFER TAX 1. Tax on transfer of property. 2. Rates are lower --5% to 20% - estate tax -- 2% to 15 % - donor’s tax 3. esser exemptions INCOME TAX 1. Tax on income 2. Rates are higher -- 5% to 32% 3. !ore exemptions
− ESTATE TAX ∗ ESTATE TAX FORMULA
"ross #state $%ec. &5' $1' )ed*ctions $%ec. &+' $2' ,et share of the %% in the -. ,et #state ess( #xemptions $first .200/000 exemption/ %ec. &0' ,et Taxa1le #state X Tax rate $%ec. &0' #state Tax d*e ess( Tax -redit 2if any3 $%ec. &+2#3 or 110243 #state Tax )*e/ if any ess(
∗ GROSS ESTATE (Sec. 85, CTRP) A. As to resident a ien or Fi i!ino decedent - all real/ tangi1le personal/ intangi1le personal property where5er sit*ated. A. As to non"resident a ien decedent - all real and tangi1le personal property sit*ated in the .hil. - 6ntangi1le personal property with a sit*s in the .hil. 7nless exempted on the 1asis of reciprocity. ∗ Inc #sions in t$e Gross Estate (Sec. 85, CTRP)% a. )ecedent’s interest e. .roceeds of life ins*rance 1. Transfer in contemplation of death f. Transfers for ins*fficient consideration c. Re5oca1le transfer g. .rior interests d. Transfer *nder general power of appointment ∗ E&e'!t Trans'issions (Sec. 8(, CTRP)% 1. The merger of *s*fr*ct in the owner of the na8ed title9 2. :ideicommisary s*1stit*tion9 3. The transmission from the first heir/ legatee or donee in fa5or of another 1eneficiary/ in accordance with the will of the predecessor9 and 0. ;ll 1e<*ests/ de5ices/ legacies or transfers to social welfare/ c*lt*ral and charita1le instit*tions no part of the net income of which in*res to the 1enefit of any indi5id*al9 .ro5ided/ that not more than 30% of the said 1e<*ests/ legacies or transfers shall 1e *sed 1y s*ch instit*tions for administration p*rposes. ∗ )a #e o* Gross Estate% The gross estate shall 1e 5al*ed at its *air 'ar+et ,a #e at the time of death of the decedent. ∗ -ed#ctions *ro' t$e Gross Estate ;. :or resident aliens and citi=ens $# 6T/ T>:%;!' 1. #xpenses/ losses/ inde1tedness/ taxes/ etc. $# 6T-:?--7 T' a. f*neral expenses e. *npaid mortgages 1. @*dicial expenses f. taxes c. claims against the estate g. losses d. claims against insol5ent person 2. Transfer for p*1lic *se 5. %tandard ded*ction 3. >anishing ded*ction +. !edical expenses 0. :amily home
A. ;mo*nts recei5ed 1y heirs *nder R; 0B1A $Retirement 4enefits' 4. :or non-resident aliens $# 6T-T>' 1. #xpenses/ losses/ inde1tedness/ taxes/ etc. $:?--7 T' 2. Transfer for p*1lic *se 3. >anishing ded*ction -E-.CTIONS ON ESTATE TAX APP/ICA0/E TO RESI-ENT A/IENS AN- CITI1ENS%
∗ F#nera E&!enses%
The amo*nt ded*cti1le is the lowest among the following( 1. act*al f*neral expenses 2. 5% of the gross estate 3. .200/000 ∗ C ai's a2ainst t$e Estate% Requisites to be deductible: 1. The de1t instr*ment m*st 1e notari=ed 2. 6f loan was contracted within 3 years 1efore the death of the decedent/ the administrator or exec*tor shall s*1mit a statement showing the disposition of the proceeds of the loan. ,.4.( These re<*isites do not apply if the claim did not arise from contract*al o1ligations. ∗ Ta&es% The following are not deductible: 1. income tax on income recei5ed after death 2. property taxes not accr*ed 1efore death 3. estate tax ∗ /osses% Requisites to be deductible: 1. arising from fire/ storm/ shipwrec8/ or other cas*alty/ ro11ery/ theft or em1e==lement9 2. ,ot compensated 1y ins*rance or otherwise9 3. ,ot claimed as ded*ction in an income tax ret*rn of the taxa1le estate9 0. Ccc*rring d*ring the settlement of the estate9 and 5. Ccc*rring 1efore the last day for the payment of the estate tax $last day to pay( six months after the decedent’s death'. ∗ Trans*er *or P#3 ic .se% Requisites to be deductible: 1. The disposition is in a last will and testament 2. To ta8e effect after death 3. 6n fa5or of the go5ernment of the .hil./ or any political s*1di5ision thereof 0. :or excl*si5e p*1lic p*rposes. ∗ )anis$in2 -ed#ction% Requisites to be deductible: 1. the present decedent died within 5 years from transfer of the property from a prior decedent or donor. 2. The property m*st 1e located in the .hils. 3. The property formed part of the taxa1le estate of the prior decedent/ or of the taxa1le gift of the donor. 0. The estate tax or donor’s tax on the gift m*st ha5e 1een finally determined and paid. 5. The property m*st 1e identified as the one recei5ed from the prior decedent/ or something ac<*ired in exchange therefor. +. ,o 5anishing ded*ction on the property was allowa1le to the estate of the prior decedent. ∗ Fa'i 4 5o'e% Requisites to be deductible: 1. %aid family home m*st ha5e 1een the decedent’s family home. 2. %aid fact m*st 1e certified to 1y the 1arangay captain of the locality where it is located. 3. !axim*m of .1/000/000
∗ Medica E&!enses%
Requisites to be deductible: 1. inc*rred within one year prior to his death 3. !axim*m of .500/000 2. %*1stantiated with receipts -E-.CTIONS ON ESTATE TAX APP/ICA0/E TO NON"RESI-ENT A/IENS 1. #xpenses/ losses/ inde1tedness and taxes $# 6T' For'# a% .hil. "ross #state D Eorld # 6T Eorld "ross #state 2. Transfer for p*1lic *se. 3. >anishing ded*ction on property in the .hilippines.
∗ Estate Ta& Credit
FORMULA: a. One *orei2n co#ntr4 on 4% 1 - The tax credit is whiche5er is lower 1etween( 1. #state tax paid to the foreign co*ntry 2. ,T#/ foreign co*ntry D .hil. estate tax ,T#/ world $,T# - ,et Taxa1le #state' 3. More t$an one *orei2n co#ntr4 - The credit shall 1e that which is the lower amo*nt 1etween imit ; and imit 4 /i'it A. Ehiche5er is lower 1etween( 1. #state tax paid to foreign co*ntry 2. ,T#/ foreign co*ntry D .hil. estate tax ,T#/ world /i'it 0. Ehiche5er is lower 1etween( 1. total of estate taxes paid to all foreign co*ntries 2. ,T# o*tside .hil. D .hil. estate tax ,T#/ world
-ONOR6S TAX ∗ Re7#isites% (A-IC)
1. 2. 3. 0. capacity of the donor donati5e intent deli5ery/ whether act*al or constr*cti5e/ of the s*1@ect gift acceptance 1y the donee
∗ Stran2er - a person who is not a 1rother/ sister/ spo*se/ ancestor and lineal descendant/ or of a
relati5e 1y consang*inity in the collateral within the 0 th ci5il degree.
∗ FORMULA:
a. Cn the 1st donation of a year( "ross gifts ess( )ed*ctions from gross gifts xxx xxx
,et gifts D Tax Rate )onor’s tax on the net gifts
xxx xxx
1. Cn donation of a s*1se<*ent date d*ring the year( "ross gifts made on this date ess( )ed*ctions from gross gifts ,et gifts ;dd( ;ll prior net gifts within the year ;ggregate net gifts D Tax Rate )onor’s tax on aggregate net gifts ess( )onor’s tax on all prior net gifts )onor’s tax on the net gifts on this date xxx xxx xxx xxx xxx xxx xxx xxx xxx
∗ E&e'!tion o* certain 2i*ts%
1. "ifts made 1y a resident a. dowries or gifts made on acco*nt of marriage and 1efore its cele1ration or within one year thereafter 1y parents to each of their legitimate/ illegitimate or adopted children to the extent of the first .10/000. 1. "ifts made to or for the *se of the ,ational "o5ernment or any entity created 1y any of its agencies which is not cond*cted for profit/ or to any political s*1di5ision of the said go5ernment. c. "ifts in fa5or of ed*cational/ charita1le/ religio*s/ c*lt*ral or social welfare corporation/ instit*tions/ fo*ndations/ tr*st or philanthropic organi=ation/ research instit*tion or organi=ation/ accredited non-go5ernment organi=ation $,"C'. .ro5ided/ that no more than 30% of said gifts shall 1e *sed 1y s*ch donee for administration p*rposes. 2. "ifts made 1y a non-resident not a citi=en of the .hil. a. same as $1' 1. same as $c' except accredited non-go5ernment organi=ation $,"C' ∗ Ta& credit *or donor6s ta&es !aid to a *orei2n co#ntr4% 1. )onor was a :ilipino citi=en or resident alien 2. ;t time of foreign donation 3. )onor’s taxes of any character and description 0. ;re imposed and paid 1y the a*thority of a foreign co*ntry. ∗ /i'itations on ta& credit% 1. The amo*nt of the credit in respect to the tax paid to any co*ntry shall not exceed the same proportion of the tax against which s*ch credit is ta8en/ which the decedent’s net gifts sit*ated within s*ch co*ntry taxa1le *nder the ,6R- 1ears to his entire net gift9 and 2. The total amo*nt of the credit shall not exceed the same proportion of the tax against which s*ch credit is ta8en/ which the decedent’s net gift sit*ated o*tside the .hilippines taxa1le *nder the ,6R1ears to his entire net gift.
∗ FORMULA:
a. :or donor’s taxes paid to one foreign co*ntry ," sit*ated in a foreign co*ntry D .)T #ntire net gifts F Tax credit limit $," - ,et "ifts9 .)T - .hil. )onorGs Tax' 1. :or donor’s taxes paid to two or more foreign co*ntry
," o*tside the .hil. #ntire net gifts FTax credit limit
D .)T
The allowa1le tax credit is the lower amo*nt 1etween the tax credit limit *nder $a' and $1'.
EXPAN-E- )A/.E A--E- TAX
− Persons ia3 e to Pa4 t$e )AT% ( S 0 E / S I )
1. ;ny person whether nat*ral of @*ridical who/ in the co*rse of trade or 1*siness/ sells/ 3arters/ exchanges/ or eases goods or properties/ or renders ser5ices9 2. ;ny person who imports goods whether for 1*siness or non-1*siness p*rpose9 and pro5ided/ gross receipts is more than .550/000.00/ otherwise/
∗ more than .100T 1*t less than .550T H3% percentage tax ∗ less than .100T H no 1*siness tax lia1ility Transactions S#38ect to )AT% (S I T S )
1. e5ery sale/ 1arter/ or exchange/ leases goods or properties made in the co*rse of trade or 1*siness9 9. transactions deemed sale for >;T p*rposes9 :. importation of goods9 and 0. e5ery sale of ser5ice made in the co*rse of trade or 1*siness other than ser5ices rendered 1y persons s*1@ect to Iother percentage taxesJ.
E e'ents o* )AT %
1. sale m*st 1e made in the .hilippines9 2. sale m*st 1e of taxa1le goods/ properties or ser5ices9 and 3. sale m*st 1e made 1y a taxa1le person in the co*rse or f*rtherance of his 1*siness.
Rate Str#ct#re #nder t$e )AT S4ste'%
1 1. 0% rate for export sales and persons whose sales are effecti5ely =ero-rated and =ero-rated sales of ser5ices9 and 2. 10% for all other articles and transactions co5ered 1y the >;T.
∗ In!#t Ta& – tax on p*rchase price of goods which is passed on or shifted to a 1*yer K p*rchaser Klessee
1y the s*pplier K seller K lessor. 6t is the >;T paid 1y a >;T-registered person in the co*rse of his trade or 1*siness. ∗ O#t!#t Ta&"" >;T d*e on the sale of taxa1le goods or ser5ices 1y any person registered or re<*ired to register for >;T p*rposes. ∗ Transitiona In!#t Ta& Credit – person who 1ecomes lia1le to >;T or any person who elects to 1e a >;T-registered person shall/ s*1@ect to the filing of an in5entory of goods/ material and s*pplies e<*i5alent to &% of 5al*e of s*ch in5entory or the act*al >;T paid on s*ch goods/ materials and s*pplies/ whiche5er is higher/ which shall 1e credita1le against the o*tp*t tax. ∗ E&!ort Sa es – sale and shipment or exportation of goods from the .hilippines to a foreign -o*ntry irrespecti5e of any shipping arrangement that may 1e agreed *pon which may infl*ence or determine the transfer of ownership of the goods so exported/ or foreign-c*rrency denominated sales. ∗ Forei2n C#rrenc4 -eno'inated Sa es H sales to non-residents of goods assem1led or man*fact*red in the .hilippines for deli5ery to residents in the .hilippines and paid for in con5erti1le foreign c*rrency remitted thro*gh the 1an8ing system in the .hilippines.
∗ ZERO-RATED VS. EXEMPT TRANSACTIONS
L#RC-R;T#) Extent: ;ll 5al*e added tax is remo5ed #D#!.T TR;,%;-T6C,% Cnly remo5es the 5al*e added tax at the exempt stage
Claim for refund: Taxpayer can claim the ref*nd of inp*t taxes passed on to him 1y the s*pplier/ etc. or credit s*ch inp*t taxes against his lia1ilities for o*tp*t taxes on his other non-=ero rated transactions Scope: "enerally/ taxa1le sales/ and ta8en into acco*nt in determining t*rn-o5er or sales for sales for >;Tregistration p*rposes. Registration requirement: Lero-rated person may still register for >;T.
Taxpayer is not entitled to credit or ref*nd of the inp*t tax passed on to him 1y the s*pplier/ etc.
,ot taxa1le sales and therefore not ta8en into acco*nt in determining t*rn-o5er or >;T-registration p*rposes
#xempt person may not register for >;T.
Re2istration Re7#ire'ents%
;. Mandator4 < e5ery person who in the co*rse of trade or 1*siness/ sells/ 1arters/ exchanges/ leases goods or ser5ices for others/ if the aggregate amo*nt of act*al or expected gross sales and K or gross receipts exceeds .550T for any 12-month period. 9. O!tiona -- any of the following persons may/ at their option/ apply for >;T registration( a. seller of goods or ser5ices whose taxa1le sale or gross receipts do not exceed . 55=T for any 12month period9 1. seller of agric*lt*ral or marine food prod*cts in their original state9 c. seller of *ertili=er/ seeds/ seedlings and fingerlings/ fish li5e stoc8 and po*ltry feeds/ incl*ding ingredients whether locally prod*ced or imported/ *sed in the man*fact*re of finished foods9 d. seller of non-food agric*lt*ral/ marine and forest prod*cts in their original state9 e. seller of cotton and cotton seeds in the original state/ and copra. ( 0 FANC ! N.".: Ite#$ % t& e' re(er t& e)*&rt $a+e$ &,+-
Transactions dee'ed sa es *or )AT !#r!oses (Sec. ;=>0)
1. Transfer/ *se or cons*mption not in the co*rse of trade or 1*siness of goods originally intended for sale or for *se in the co*rse of 1*siness9 2. )istri1*tion or transfer to share-holders or in5estors as share in the profits of the >;T -registered persons9 3. -onsignment of goods if act*al sale is not made within +0 days following the date of consignment9 0. )istri1*tion or transfer to creditors in payment of de1t9 5. Retirement from or cessation of 1*siness/ with respect to in5entories of taxa1le goods existing as of s*ch retirement or cessation.
