Republic Act No. 9442 amending the MAGNA CARTA FOR DISABLED PERSONS had been approved on April 30, 2009 and introduced specific benefits and privileges to persons with disability in relation to its purchases of certain goods or services, protection from public ridicule and from vilification, and incentives to seller establishments, to those caring for and living with persons with disability, and to those individuals or non-governmental institutions establishing homes to suit the needs of persons with disability.

Revenue Memorandum Circular No. 41 – 2009 dated July 23, 2009 (RMC 41-2009) was issued to clarify the meaning of “Managerial and Technical Positions” under Section 25(C) of the Tax Code, as amended. Compared to the normal tax rate of 5-32% bracket 5-32%, if a resident alien or non-resident alien engaged in trade or business, or 25%, if a non-resident alien not engaged in trade or business, the 15% rate is a good break because of a material rate gap on rates of income tax on compensation of approximately 17% (32%-15%), and 10% (25%-15%), respectively.

In general, allowances and other form of compensation income, are taxable, irregardless of how they are called. However, there are noted exceptions on this rule by virtue of a law or a regulations. For sure, they will make employees happier because no withholding tax on compensation will be deducted from their salaries.

Withholding tax system in the Philippines is quite an interesting topic for those engaged in trade or business, or those in practice of profession. This is a system of advance collection scheme where the approximate income tax of a specific income payment is being deducted and remitted to the BIR. By this, BIR is more assured that income will be declared and reported, thus, this is in the form of a check and balance.

Income refers to all wealth which flows to the taxpayer other than a mere return of capital. It is a flow wealth that goes into the taxpayer within a specified time, arising from the use of capital, use of labor through either physical and/or intellectual faculties, or from other sources where after the transaction, the taxpayers becomes more wealthier than before the transaction.

In a corporate world, dividends is not a new topic. As a matter of fact, it is one of the major consideration for an investor to purchase shares of stock of a company. It represents the share in the net learning’s distribution in a corporation and could be in the form of cash, property, shares of stocks or and liquidating dividends upon liquidation. How are they taxed, then?