Taxation in the Philippines

(information from: http://alpellas.com/philippine-tax.html):

IN GENERAL: The principal taxes levied include: taxes on income and gains, taxes on transactions, and taxes on property. Taxes on income and gains include income tax and capital gains tax on sale of shares of stocks and real property. Individual resident foreigners who derive their income from all sources in the Philippines and in foreign countries are taxed from 1-35% on gross compensation income (arising from an employer-employee relationship) and net on non-compensation (business and other) income are taxed accordingly: twenty percent (20%) on royalties, prizes, and winnings. Twenty percent (20%) interest on bank deposit and substitute arrangements, and five percent (5%) capital gains tax on sale of realty.

Introduction to the tax system

The laws governing taxation in the Philippines are contained within the National Internal Revenue Code. This code underwent substantial revision with passage of the Tax Reform Act of 1997. This law took effect on January 1, 1998.

Taxation is administered through the Bureau of Internal Revenue which comes under the Department of Finance. The chief executive of the Bureau of Internal Revenue is the Commissioner who has exclusive and original jurisdiction to interpret the provisions of the code and other tax laws. The commissioner also has the powers to decide disputed assessments, grant refunds of taxes, fees and other charges and penalties, modify payment of any internal revenue tax and abate or cancel a tax liability. Taxpayers can appeal decisions by the Commissioner directly to the Court of Tax Appeals.

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All About Auditors

(Information which follows is from http://alpellas.com/auditors-philippines.html):

What Investors Need to Know About Auditors

When companies register their business in the Philippines and file annual and other reports, they must disclose important financial information. In many cases, this information must be audited. An external auditor shall enable an environment of good corporate governance as reflected in the financial records and reports of the company. In this topic you will learn the role of the auditor in reviewing a company’s financial books and records and their value to the public mostly to investors

What Is an Auditor?

An auditor is an independent certified public accountant who examines the financial statements that a company’s management has prepared. The Philippine government requires companies to file reports and submit financial statements that are accurate, truthful, and complete and prepared according to a set of accounting standards. These financial statements must be examined and reported on by an independent auditor.

Responsibility for Preparation of Company’s Financial Statements?

It is the company’s management who has the responsibility for preparing the company’s financial statements and related disclosures. An independent auditor then subjects the financial statements and disclosures to an audit. During the audit, the outside auditor obtains an understanding of the company’s internal controls and then applies “auditing procedures,” which may include inspection of the company’s books and records, observation, inquiries, and confirmations. The procedures the outside auditor uses must be sufficient to allow the auditor to obtain enough competent evidence to express an opinion on the fairness of the financial statements and whether they conform to GAAP in all material respects. If the auditor cannot reach that conclusion, then the auditor must either require the company to change the financial statements or decline to issue a standard audit report.

Examination of Financial Statement by an Independent Auditor

An independent auditor examines the company’s financial statements and provides a written report that contains an opinion as to whether the financial statements are fairly stated and comply in all material respects with Generally Accepted Accounting Principles (GAAP). In addition, some companies also use internal auditors to review the financial reporting processes and internal accounting controls to assure that the company’s systems are appropriately designed and operating effectively.

The Value of Audited Financial Statements.

Government agencies require the filing of audited financial statements in order to obviate the fear of loss from reliance on inaccurate information, thereby encouraging public investment in the Nation’s industries. An audit provides the public with additional assurance — beyond managements’ own assertions — that a company’s financial statements can be relied upon. Audited financial statements has important implications for investors making investment decisions, for banks and financial institutions that may extend credit or make loans to the company, and for other businesses and members of the public who deal with the company.

What Else Should I Know?

In addition to serving as auditors, some accounting firms offer non-audit consulting services to their audit clients such as management advisory, tax compliance consulting, and all other related services.

The SEC’s Office of Investor Education and Assistance provides a variety of services to address the problems and questions you may face as an investor. We cannot tell you what investments to make, but we can tell you how to invest wisely and avoid fraud.

“ More and more folks are retiring at an earlier age, while they are still healthy enough to enjoy their lives. The problem is, in the First World, even a couple in their late fifties that have a $500,000 investment portfolio, which includes their home equity and other investments, won’t have enough retirement income to take advantage of their hard-won freedom. ”

The FREEDOM HANDBOOK
By Bruce Silverman
http://funphilippinesretirement.com
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