Class notes Tax02

Taxation of Individuals

Classification of Individual Income Taxpayers
1. Resident Citizen
2. Non-resident citizen
3. Resident Alien
4. Non-resident alien engaged in trade or business
5. Non-resident alien not-engaged in trade or business



Citizen
Those who are citizens of the Philippines at the time of the adoption of the Feb. 2, 1987
Constitution
Those whose fathers or mothers are citizens of the Philippines
Those born before Jan. 17, 1973, the date of the adoption of the 1973 Constitution, of
Filipino mothers, who elect Philippine citizenship upon reaching the age of majority; and
Those who are naturalized in accordance with law



Resident Citizen
Residing in the Philippines
Residing in the Philippines and foreign country – within the Philippines for 183 days or
more



Non-Resident Citizen
Residing-foreign country
OFW
Complement crew – vessel
- route – international
- regardless of registration

, Non-Resident Alien Engaged in Business
Alien actually engaged in business in the Philippines
Presumed engaged in business in the Philippines - in the Philippines for more than 180
days.



Sources of Income
Individuals Source of Income
W/in the Phils. W/out the Phils.
Resident Citizen
Non-Resident Citizen
Resident Alien
Non-Resident Alien




Categories of Income and Tax Rates
Compensation Income – taxed at the graduated rates from 5% to 32%
Gross Compensation Income XX
Less: Contributions XX
Personal Exemption XX
Net Taxable Income XX




Business Income – arises from self-employment or practice of profession
- taxed at graduated rates from 5% to 32%

Gross Income XX
Less: Allowable Deductions XX
Personal Exemption XX
Net Taxable Income XX


Passive Income – subject to a separate and final tax.
taxed at fixed rate ranging from 5%
to 25%