Introduction
In any types of government, taxes are needed to have a national fund allotted for the infrastructures and to support the other programs necessary for the total development of the country. The government imposes taxes not only on the individuals but also on the entities that gathered the income for the past years. Their contribution is expected by the new government and by extending their efforts in paying the right amount of taxes. Since there is great increase in the sales, the subject tax amount in the year 2007-2009 will also increase.
Taxes in the Philippines
There are many kinds of taxes imposed in the country. But in the businesses, the corporate tax is the taxes applied on the income derived from the domestic corporations of the Philippines. This also includes the income that came from the other countries or gained outside the Philippines. According to the record, the current corporate income tax rate which has been effective from 1 November 2005 is 35% (from the previous 32%). This increase is to help address budget concerns. However, the rate will be reduced to 30% starting from 1 January 2009.
A minimum corporate income tax rate (MCIT) of 2% of the gross income is imposed, if it is higher than the normal corporate income tax. MCIT is imposed on domestic and resident foreign corporations from the fourth taxable year following the year in which such corporations were registered with the Bureau of Internal Revenue. MCIT is computed on an annual basis. However, recent tax regulations require that beginning on the quarter ended September 2007, the computation and payment of MCIT shall also apply at the time of filing of the quarterly corporate income tax. Nevertheless, this requirement is still being contested. Dividends received by a resident corporation from a domestic corporation are not subject to tax. Dividends received by a domestic corporation from a non-resident corporation are subject to corporate tax. However, the tax paid in the foreign country may be used as tax credit subject to certain limitations.
The Other Relevant Taxes
The business enterprises that sell motorcycles in Mandaluyong are also affected by the various taxes depending on the sales they inhibit for the past taxable years. Since the enterprise are locally based, the Local Business Tax (LBT) will be given in a rate that will not exceed on 0.75%, will be imposed on the gross sales / receipts of the preceding calendar year is payable to the local government units where its principal and / or branch office(s) is / are located. However, LBT is not imposed on an enterprise which has been granted certain tax incentives provided certain conditions are met.
The gains of the enterprise from the sales of stock but not traded in the stock exchange are subject to capital gains tax of 10% (5% for the first P100,000) unless exempted under a tax treaty. The motorcycles enterprises are bound to pay the tax on capital gains according to the sale of shares listed and traded through the local stock exchange are also subject to stock transaction tax of 0.5% based on the gross selling price, which is payable by the seller or transferor. Generally, gains on sale of real and personal property are subject to the normal income tax if the real property is used in trade or business. However, gains on sale of real properties which are treated as capital assets are subject to 6% final tax based on the gross selling price or fair market value, whichever is higher.
The Percentage tax or Gross Receipts tax (GRT) is ranging from 3% to 30% is imposed on the sales or receipts of certain corporations engaged in activities or industries which are not subject to the VAT. Among such activities are banking, insurance, common carriers or transportation contractor, overseas dispatch, amusement, etc.
Also the Excise Tax is imposed on certain goods or articles manufactured or produced in the Philippines for domestic sale or consumption, or for any other disposition, and to certain imported items. For imports, the excise tax is in addition to any applicable customs duties and VAT.
Conclusion
All of the taxes imposed by the government are monitored and the enterprises should follow the schedule of payment and the payment modes to avoid the tax evasion cases. Significantly, there is a need to support the taxes imposed by the government to improve the infrastructures and other facilities, as well as programs offered by the government.
Source:
Cabrera, A.B., Lim, M.P., Limbo, G.M., Navarro, J.C., & Cabalsi, B.C., (2008) Philippines, Mergers & Acquisitions - Asian Taxation Guide [Online] Available at: http://www.pwc.com/en_SG/sg/mergers-and-acquisitions-asian-taxation-guide-2008/assets/maasiantaxguide-2008-ph.pdf [Accessed 04 Aug 2010]
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