Types Of Taxes In The Philippines
December 10, 2020
What are the different types of taxes in the Philippines?
- Capital Gains Tax
- Documentary Stamp Tax
- Donor’s Tax
- Estate Tax
- Income Tax
- Percentage Tax
- Value-added Tax
- Withholding Tax
- Excise Tax
There are different types of taxes in the Philippines. If you want to keep up with them, you have to know each one. After all, there is no excuse not to know when it is our duty as taxpayers and citizens! To help you, we listed them down below. Read on!
Capital Gains Tax
This type of tax is imposed on the earnings of a seller for the sale of capital assets in the Philippines. ‘Capital Assets’ are any property that is not (1) stocks held in trade or inventory (2) properties for sale in the ordinary course of business (3) property which is subject to the allowance of depreciation and (4) property used in trade and business.
Documentary Stamp Tax
This is the tax that is put on documents that serve as proof of acceptance, assignment, sale, or transfer of an obligation, rights, and property. The taxpayer would be the one who made, signed, issued, and accepted the document. It is required to be filed within 5 days after the month when it is made. One example of this is a deed of sale.
A gift or donation also has an imposed tax. This applies to the transfer of goods that are free of charge, whether tangible or intangible, between 2 living persons. The amount of tax is 6% and is computed by adding all the gifts sent on a calendar year.
This is the required tax on the privilege to transfer property from a deceased person to his or her beneficiaries or heirs upon death. The amount of 6% will be based on the net value of the property given.
This tax is levied upon a taxpayer’s income or compensation coming from the property, the practice of the profession, and the conduct of trade or business. This applies to individuals whether they’re earning mixed-income from different employers, or are self-employed. The income could come abroad or within the country, but there are some exceptions, including an overseas Filipino worker.
This is a business tax required on individuals, entities, and transactions. This applies to those that are not Vat-Registered and have total annual sales that are less than 3 million pesos.
VAT is mandated on the sale or exchange of goods, properties, and services in the Philippines. It also applies to imported goods. This is required for persons or entities with annual gross sales amounting to more than 3 million pesos. The amount of required VAT is at 12%
Withholding Tax On Compensation
This is the tax withheld from the salaries of employees. The employers deduct this and submit this to the Bureau of Internal Revenue (BIR). For minimum wage workers, there is no tax required.
Other types of this tax include the Expanded Withholding Tax, Final Withholding Tax, and Withholding Tax on Government Money Payments.
This is imposed on commodities that are produced, sold, and consumed in the Philippines. This also applies to both imported goods and goods produced in the country.
The two types of excise tax are the specific tax and ad valorem tax. The first one is computed based on physical attributes such as weight and volume, while the second is based on selling price.
Excise tax is commonly required on alcohol, tobacco, petroleum, automobiles, non-essential goods and services, sweet beverages, and mineral goods. Some of these items have a progressive tax rate every year.
We hope that you gained more understanding of the types of taxes in the Philippines. There are also local taxes for local government units and tariffs on custom duties that are not discussed in this blog.
To summarize, the national taxes required in this country are Capital Gains, Documentary Stamp, Donor, Estate, Income, Percentage, VAT, Withholding, and Excise tax. It is recommended to review each one and remit them on time to avoid penalties.
If you need any help in managing your taxes, Benito Keh can help you organize your finances. For more information, click here.