QuestionsQuestions (Republic Act No. 55)
It is levied on the amount by which the net worth on February 26, 1945 exceeds the net worth on December 8, 1941.
50% for excess over P6,000 but not over P50,000; 60% for P50,000–P100,000; 70% for P100,000–P300,000; 80% for P300,000–P500,000; 90% for P500,000–P1,000,000; and 95% for excess over P1,000,000.
It means the increase in net worth attributable to income from sources within the Philippines or incident to property held within the Philippines during any part of Dec. 8, 1941 to Feb. 26, 1945.
The date of organization is used in place of December 8, 1941 for the purposes of the Act.
Net worth is the value of assets (real/personal property and/or cash in banks, plus credits, interests, and rights—subject to exclusions) less liabilities incurred in carrying on a trade or business or acquiring property.
Amounts received during Dec. 8, 1941 to Feb. 26, 1945 as proceeds of life insurance policies issued on or before Dec. 31, 1941; and war damage claims and other claims against the Government of the Republic of the Philippines and foreign governments (and their instrumentalities).
If a taxpayer subsequently receives payment on account of such claims, the amount/value received is considered part of his assets on Feb. 26, 1945.
Real property is construed as the assessed value; for personal property and real property not yet assessed, value is the fair market value.
It must be declared at the same value in inventories as of Dec. 8, 1941 and Feb. 26, 1945, except that improvements made during the period are included in the Feb. 26, 1945 inventory at their fair market value.
The person who received it by gift or inheritance, or any other person taking title through a series of acquisitions by the same mode, is deemed to have acquired the property on or before Dec. 8, 1941.
A deduction equivalent to 6% per annum on the net worth on Dec. 8, 1941 computed for Dec. 8, 1941 to Feb. 26, 1945. The total deduction cannot exceed 75% of the excess net worth on Feb. 26, 1945 over that on Dec. 8, 1941.
The shareholder may deduct from his excess net worth a proportion of the corporation’s tax payable, based on the number of shares held to the total shares issued and outstanding; allocation among stock classes requires approval of the Collector of Internal Revenue.
Prior to the last day for filing returns, the corporation must issue appropriate statements to its stockholders to enable them to compute the deduction allowed under Section 3.
Returns must be rendered in duplicate in the prescribed manner, on or before the last day of the third month following the approval of the Act, and filed with the Collector of Internal Revenue, the provincial revenue agent, or the treasurer of the place of legal residence/principal business (or with the Collector of Internal Revenue in Manila if none in the Philippines).
Only one consolidated return is filed for married persons by either spouse, unless impracticable—in which case separate returns may be filed but consolidated for tax purposes. Assets and liabilities of unmarried minors are included in the return of the parent/parents or guardians.
A 15% surcharge on the unpaid tax, plus 1% interest per month on the tax from the time it becomes due until paid.
A surcharge of 50% of the tax is added. The Collector may grant a reasonable extension of time in meritorious cases.