Course description

1. Taxation (General Definition)

Taxation is the inherent power of the State to impose and collect proportionate contributions in the form of taxes from persons and property within its jurisdiction for public purpose, as authorized by law.

Legal Basis: This power is recognized under Article VI, Section 28 of the 1987 Constitution, and implemented by the National Internal Revenue Code (NIRC) of 1997, as amended.

2. Business Taxation

Business taxation refers to the imposition of taxes on entities engaged in trade or business, whether as a corporation, partnership, or self-employed individual. These taxes may include:

• Income Tax – tax on taxable income from business operations (Sec. 27–28, NIRC)

• Value-Added Tax (VAT) – 12% tax on sale of goods or services (Sec. 106–108, NIRC)

• Percentage Tax – 3% (now 1% temporarily under CREATE Law) for non-VAT businesses (Sec. 116, NIRC)

• Excise Tax – tax on production/sale of certain goods (Sec. 129–288, NIRC)

• Local Business Tax – levied by LGUs under the Local Government Code

3. Individual Taxation

Individual taxation involves the imposition of income tax on natural persons based on their taxable income derived from employment, business, practice of profession, or other sources.

There are different tax rates and brackets based on the taxpayer's classification:

• Compensation Income Earners (e.g., employees)

• Self-Employed and Professionals

• Mixed Income Earners

Legal Basis: Sections 24–26 of the NIRC, as amended by the TRAIN Law

Example (TRAIN Law):

• 0% tax on income up to ₱250,000

• Graduated rates from 20% to 35% on higher income brackets

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