As a start-up entrepreneur, you are bound to file a return and or pay taxes so, some terms on taxation may come in handy. A new business will either go bankrupt or stay break-even or flourish. I would suggest to maintain positivity and review what these taxes are so that even if you cannot afford to hire an accountant just yet, you have an idea which among of them may be applicable during the course of your business.
9 Types of National Taxes
Sourced from the BIR website, here’s the list and the corresponding link for each of the tax type details containing the applicable forms and tax rates, documentary requirements, procedures, deadlines, related revenue issuances, codal provision, frequently asked questions:
1. Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale. You may refer to this link for more details on this: http://www.bir.gov.ph/index.php/tax-information/capital-gains-tax.html
2. Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto. You may refer to this link for more details on this tax: http://www.bir.gov.ph/index.php/tax-information/documentary-stamp-tax.html
3. Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/donor-s-tax.html
4. Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to testamentary disposition. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/estate-tax.html
5. Income Tax is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on a person’s income, emoluments, profits and the like. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/income-tax.html#index
6. Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties or services in the course of trade or business whose gross annual sales or receipts do not exceed P550,000 and are not VAT-registered. You may refer to thistio link for more details: http://www.bir.gov.ph/index.php/tax-information/percentage-tax.html
7. Value Added Tax is a business tax imposed and collected from the seller in the course of trade or business on every sale of properties (real or personal) lease of goods or properties (real or personal) or vendors of services. It is an indirect tax, thus, it can be passed on to the buyer. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/value-added-tax.html
8. Withholding Tax, you may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/withholding-tax.html
• Withholding Tax on Compensation is the tax withheld from individuals receiving purely compensation income. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/withholding-tax.html#wt003
• Expanded Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is creditable against the income tax due of the payee for the taxable quarter year. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/withholding-tax.html#wt004
• Final Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is not creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes the full and final payment of the Income Tax due from the payee on the said income. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/withholding-tax.html#wt006
• Withholding Tax on Government Money Payments is the withholding tax withheld by government offices and instrumentalities, including government-owned or -controlled corporations and local government units, before making any payments to private individuals, corporations, partnerships and/or association. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/withholding-tax.html#wt005
9. Excise Tax is the tax applied to goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition and to things imported. You may refer to this link for more details: http://www.bir.gov.ph/index.php/tax-information/excise-tax.html
• Excise Tax on Alcohol
• Excise Tax on Tobacco Products
• Excise Tax on Petroleum
• Excise Tax on Miscellaneous (Automobiles and Non-Essentials)
• Excise Tax on Mineral Products
You may have been overwhelmed, but worry not. Initially, income tax (BIR Form No 1701 filed every 15th of April, 1702Q filed every quarter) and payment form (BIR Form No 0605 for annual registration fee) are the default forms for a new self-employed or entrepreneur taxpayer. You may have noticed them during your online TIN registration. As your business progresses, you will be able to discern which among these taxes should be added to your default list. More on this on my succeeding posts.
It is advisable to refer to the BIR Website regarding tax policies and related amendments, as the forms and the tax rates of the above tax types are constantly evolving, by virtue of new or amendment to the tax law. Here’s the link to that: http://www.bir.gov.ph/index.php/revenue-issuances.html.
If you have questions and clarifications, you may either call the BIR Contact Center at (02) 981-8888 or post it in the comment section.
“I like to pay taxes. With them, I buy civilization.”
~Oliver Wendell Holmes Jr
(updated link 8/8)
Views – 2213