Taxes …. Tell Them Apart

May 3, 2013 5:24 pm4 commentsViews: 80

Business owners should be able to distinguish the different kinds of taxes being imposed on a business entity.  As the saying goes, “Ignorance of the law excuses no man”, so does “Ignorance of taxes excuses no one from paying the tax penalties”.   It is easy for business owners or managers to state that they are unaware of the taxes that are being imposed.  And if to say so will acquit them of the tax penalties, then it would be impossible to discern what the truth or lie is.  Hence, it is expected that business owners and managers would understand the business taxes because mistaking them is not an excuse.

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To help you understand some of the basic taxes, here is a summary with their descriptions :

Capital Gains Tax  is a tax imposed on the gains presumed to have been realized by the seller from Tax-2the sale, exchange, or other disposition of capital assets located  in the country, including pacto-de-retro sales and other forms of conditional sale.

Documentary Stamp Tax  is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto.

Income Tax  is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on a person’s income, emoluments, profits and the like.

Percentage Tax  is a business tax imposed on persons or entities who sell or lease goods, properties or services in the course of trade or business.

Value Added Tax  is a business tax imposed and collected from the seller in the course of trade or business on every sale of properties (real or personal) or lease of goods or properties (real or personal). It is an indirect tax, thus, it can be passed on to the buyer.

TaxesWithholding Tax on Compensation  is the tax withheld from individuals receiving purely compensation income.

Expanded Withholding Tax  is a kind of withholding tax which is prescribed only for certain payors and is creditable against the income tax due of the payee for the taxable quarter year.

Final Withholding Tax  is a kind of withholding tax which is prescribed only for certain payors and is not creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes the full and final payment of the Income Tax due from the payee on the said income.

Withholding Tax on Government Money Payments  is the withholding tax withheld by government offices and instrumentalities, including government-owned or government-controlled corporations and local government units, before making any payments to private individuals, corporations, partnerships and/or associations.

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4 Comments

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