Defined as a tax on all yearly profits arising from property, professions, trades, or offices, or as a tax on the person’s income, emoluments, profits and the like. It may be succinctly defined as a tax on income, whether gross or net, realized in one taxable year.

A kind of taxpayer which is taxable on all income derived from sources within and without the Philippines

Under this Income Tax System, it does not matter whether the income received by the taxpayer is classified as compensation income, business or professional income, passive investment income, capital gain, or other income. All items of gross income, deductions, and personal and additional exemptions, if any, are reported in one income tax return, and one set of tax rates are applied on the tax base.

Under this Income Tax System, different types of income are subject to different sets of graduated or flat income tax rates. The applicable tax rate(s) will depend on the classification of the taxable income and the basis could be gross income or net income. Separate income tax returns (or other types of return applicable) are filed by the recipient of income for the particular types of income received.

Under this Income Tax System, all compensation income, business or professional income, capital gain and passive income not subject to final tax, and other income are added together to arrive at the gross income, and after deducting the sum of allowable deductions, the taxable income is subjected to one set of graduated tax rates or normal corporate income tax.

A feature of the Philippine Income Tax where the tax burden is borne

by the income recipient upon whom the tax is imposed.

A feature of the Philippine Income Tax where the The tax rate increases as the tax base increases. It is founded on the ability to pay principle and is consistent with Sec. 28, Art. VI, 1987 Constitution.

Which of the following is NOT a criteria in imposing Philippine Tax

A Resident Alien is:

1. 1. An alien actually present in the Philippines who is not a mere transient or sojourner is a resident for income tax purposes.

2. 2. One who comes to the Philippines for a definite purpose, which in its nature may be promptly accomplished.

A Non-resident Alien is considered engaged in trade or business within

the Philippines if:

Means all remuneration for services performed by an employee for his employer under an employer-employee relationship, unless explicitly excluded by the Tax Code of special law.

The value derived from an exercise of profession, business or utilization of capital including profit and gain derived from sale or conversion of assets. Examples are net income from business and gain from the sale of assets used in trade or business.

An income in which the taxpayer merely waits for the amount to come in. Examples are royalty, interest, prizes, and winnings.

An income derived from sale of assets not used in trade or business. Examples are sale of family home and other capital assets.

Income is realized when there is a gain or profit derived from a closed and completed transaction. The realization of gain may take the form of actual receipt of cash or may occur as a constructive receipt of income.

Mere increase in the value of property without actual realization, either through sale or other disposition, is taxable.

Which of the following is not an example of a CONSTRUCTIVE RECEIPT?

Gross Income means all income derived from whatever source, including (but not limited to)the following items, EXCEPT:

The total income of a taxpayer subject to tax. It includes the gains, profits, and income derived from whatever source, whether legal or illegal.

Means gross income less statutory deductions and exemptions.

Means the pertinent items of gross income specified in the Tax Code, less the deductions and/or personal and additional exemptions, if any, authorized for such types of income by the Tax Code or other special laws.

Sources of income subject to tax are the following, EXCEPT:

Means any goods, services, or other benefit furnished or granted in cash or in kind, in addition to basic salaries, to an individual employee, except a rank and file employee.

Facilities and privileges furnished or offered by an employer to his employees that are relatively small value and are offered or furnished by the employer merely as means of promoting health, goodwill, contentment, and efficiency of his employees.

An earning derived from depositing or lending of money, goods or credits.

A form of earnings derived from the distribution made by a corporation out of its earnings or profits and payable to its stockholders, whether in money or in property.

Where a person pays royalty to another for the use of its intellectual property, such royalty is generally a passive income of the owner thereof subject to withholding tax.

Refers to earnings derived from leasing real estate as well as personal property. Aside from the regular amount of payment for using the property, it also includes all other obligations assumed to be paid by the lessee to the third party in behalf of the lessor (e.g., interest, taxes, loans, insurance premiums, etc.).

Refer to income received or earned but is not taxable as income because it is exempted by law or by treaty.

The term “exclusions” refers to items that are included in the determination of gross income because: