History of Taxation in the

Philippines
 Tax
Involuntary fees levied on individuals or corporations and
enforced by the government in order to finance
government activities.
- Investopedia

Evasion or failure to pay is punishable by law.

 Taxation in the Pre-colonial Period
(900-1521)

Buwis – collected in
form of cash or in kind.
•It was paid in exchange for the
protection they receive from
the datu.
Unit of Government
(pre-colonial period)
Tumao
(nobility of royal
descent)
Timawa
(warrior class, free
men who pay tax)
Oripun
(commoners and
slaves)
 Taxation During the Spanish Period
(1521 – 1898)
Forms of Direct Taxes

Tithe – 10% of the annual income

Sanctorum – tax paid in support to the church

Tribute (buwis) – tax rent given to the landlord

by the tenant
- In cash or in kind.
 Forms of Indirect Taxes

1. Bandala – enforced sale and requisition of goods annually.

Farmers have no authority over their harvests.

2. Custom Duties and income tax

 Custom Duties and Income Tax
• 1884 – Tribute was replaced by the cedula
personal.

Filipinos were required to pay for personal

identification.

• individuals over the age of 18 are required to pay.

• are jailed for non-payment and failure to show
cedula receipt.
• Gobernadorcillos – responsible for collection of
tribute.
 Indirect Tax
4. Polo y servicious
• Forced labor for 40 days
• Ages 16-60 years old
• Could be exempted if falla is paid
• Falla is a daily fine for one and a half
real.
• 1884, labor was reduced to 15 days
 Other Source of Income

Manila-Acapulco Galleon Trade

(1565 – 1815)
• Main source of income for the colony
• Income is earned through buy and sell.
• Ex. Silver bought from China for resale in
Mexico, Spain and American silver bought
for resale in Chine
 Encomienda System

Land management system.

• Encomendero is given control over a
certain territory and all its inhabitants.
• Encomendero is tasked to protect his
encomienda and keep peace and order.
• In exchange, he was granted rights to
collect taxes.
 Encomienda System

Encomiendas
• Large tracts of land given to a person as
reward for meritorious act.

Encomienderos
• Manage the encomienda and given
authority to collect tributes
Taxation During the American Period
(1898-1946)

Commonwealth Act 465

• Mandated the imposition of base
residence tax amounting to fifty
centavos and additional tax of one
centavo base on income and rel eastate.
• Payment would merit the issuance of a
residence certificate.
Residence Certificate (cedula)
• Legal identity document issued by
cities and municipalities to all persons
who reached the age of majority and
upon payment of community tax.
• Required for legal transactions.
Required for government officials.
Reorganization Act No. 1189 (July 2, 1904)
• Established the Bureau of Internal Revenue (BIR).
• Established under the civil governer Luke E. Wright.
Bureau of Internal Revenue
• John Hord was the first collector (commissioner)
• Started with 69 employees.
• 1973 – an internal revenue office was put up in
each province.
 Japanese Regime

BIR in 1942 - 1945

•BIR was combined with the
Customs Office.
•Headed by a Director of Customs
and Internal Revenue.
 Post War Era

Executive Order No. 94 (October 1, 1947)

• BIR was re-established separately from the Bureau
of Customs.
Republic Act 690
• 25% of the total income is collected
• RA No. 233 (Rewards Law) – enforced to combat
tax evasion. Informers of tax evaders were awarded
25% of the revenue collected from tax evaders.
 Marcos Administration

Commissioner Misael Vers

• Tax reforms were implemented.
• Established 20 regional offices and 90
district offices.
• Various offices were created under the
Bureau. (Internal Audit dept, Internal Tax
Affairs, Adminsitrative Service Dept, Specific
Tax Dept)
Tax Account Number
• Systematized in 1970.
• Each tax payer is provided with a TAN.
• Improved collection performance of the bureau.
National Internal Revenue Code of 1997
• Created in 1977 which updated the 1934 tax
code.
• 1980 – New offices and organizational units were
created to make the bureau more responsive to
the needs of the tax paying public.
 AQUINO ADMINISTRATION
(1986 – 1992)
Implemented the VAT system
• Value Added Tax

Tax Identification Number

• New Payment Control System.
• Simplified Net Income Taxation Scheme.
• “Operation Walang Lagay “ was launched to promote
honest and efficient collection of taxes
 RAMOS ADMINISTRATION
(1992-1998)

Tax Computerization Project (TCP)

• Five year project undertaken in 1994
under the first lady commissioner
Liwayway Vinzons-Chato.
• Establishment of a modern and
computerized integrated tax system and
internal administrative system.
 ESTRADA ADMINISTRATION
(1998 – 2001)

Large Tax Payer’s Monitoring System

• Established to closely monitor the taxx
compliance of the country’s large tax payers.

Humingi ng Resibo, manalo ng libo-libo

• raffle promo launched to encourage and
educate consumers to demand sales invoices
and receipts.
 ESTRADA ADMINISTRATION

Full utilization of tax computerization in the bureau.

• Enforced under Commissioner Dakila Fonacier

Expansion of the use of documentary stamp

Establishment of tie-up with the national government and

LGUs for the prompt remittance of withholding taxes.
 GLORIA ARROYO ADMINISTRATION
(2001-2010)

Reconciliation of Listings for Enforcement (RELIEF)

• A system that detects under declaration of taxable income.

Web based TIN Application and processing

Run After Tax Evaders Program (RATE)

Tax Compliance Verification Drives and Accreditation
 Types of Tax Collected by the BIR

Capital Gains Tax is a tax imposed on the gains

presumed to have been realized by the seller from the
sale, exchange, or other disposition of capital assets
located in the Philippines.

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.
Donor's Tax is a tax on a donation or gift, and is
imposed on the gratuitous transfer of property
between two or more persons who are living at the
time of the transfer.

Estate Tax is a tax on the right of the deceased

person to transmit his/her estate to his/her lawful
heirs and beneficiaries at the time of death and on
certain transfers which are made by law as equivalent
to testamentary disposition.
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 whose gross annual sales or receipts do
not exceed P550,000 and are not VAT-registered.
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)
lease of goods or properties (real or personal) or
vendors of services. It is an indirect tax, thus, it can be
passed on to the buyer.

Withholding Tax on Compensation is the tax withheld

from individuals receiving purely compensation
income.
Excise Tax is a tax on the production,
sale or consumption of a commodity
in a country. It applies to goods
manufactured or produced in the
Philippines for domestic sale or
consumption or for any other
disposition; and to imported goods.
 Activity
• Create a diagram or a chart which shows the
history of taxation in the Philippines. Below
your diagram is an outline which presents the
important developments in the taxation
system of the country from the pre-colonial
times up to the administration of Gloria
Macapagal-Arroyo.