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7/29/2019 A - General Principles
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PLEASESHUT-
OFF YOUR
CELL -
PHONES
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PRE-BAR REVIEW
IN
TAXATION
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COVERAGE OF
TAXATION
1) General Principles of Taxation
2) NIRC Include: CTR
Act of 1997 (R.A. 8424)
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Continuation …….
Provisions already in effect
Exclude: EVAT Exclude: Percentage
Taxes, Excise Taxes andDocumentary Stamp
Taxes
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Continuation …….
(3) Tariff and Customs
CodeExclude: Arrastre
and Classification of Commodities
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Continuation …….
(4) Republic Act No. 1125
Creating the Court of Tax Appeals
(5) The Local Govt. Code
on Taxation
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GENERAL
PRINCIPLES
• Importance
– Foundations
– Validity
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CONCEPT
•Inherent power
•Exercised through
the legislature•Impose burdens
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Continuation …….
– Upon subjects andobjects
– W/in its jurisdiction
•To meet recognizedobjects of govt.
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NATURE
• INHERENT POWER
– Basis, manifestation• LEGISLATIVE
– Basis, manifestation
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THEORY OF
TAXATION
• Lifeblood
• The power to
destro
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BASIS OR
RATIONALE
• Symbiotic
relationship•
Jurisdiction
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PURPOSES OR
OBJECTIVES
• Revenue
• Sumptuary
• Compensatory
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PRINCIPLES,
CHARACTERISTICS,CANONS OF A SOUND
TAX SYSTEM • Fiscal adequacy
• Administrative feasibility
• Theoretical ustice
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TAXATION
DISTINGUISHED
• Police power
• Eminent domain
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BASIS FOR
DISTINCTIONS
• Purpose
• Amount
• Property taken
• Disposition of property
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Continuation …….
• Compensation
• Relation to the non-impairment clause
• Imposing authority
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LIMITATIONS
• Purpose
• Kinds
– Inherent –
Constitutional
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INHERENT
• Public purpose
• No improper
delegation
• Territoriality
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Continuation …….
• Govt. exemption
respected • Comity recognized
• No double taxation
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PUBLIC PURPOSE
•
Meaning• When should it
exist ?
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TAXPAYER’s SUIT
• Injury aspect
• Zone of protection
• Transcendental
importance
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LOCUS STANDI
TRANSCEN-DENTAL
IMPORTANCE
*INJURY
ASPECT
*ZONE OF
PROTEC-TION
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NO IMPROPER
DELEGATION
• Completeness
• Sufficiently deter-
minate standards
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CONSTITUTIONAL
DELEGATION
• Flexible tariff clause
• Delegation to localgovernments
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TERRITORIALITY
• Meaning
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BASIS
• Jurisdiction
• Symbiotic relation
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EXCEPTIONS
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OUTSIDE TAXED
OUTSIDE TAXED
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OUTSIDE - TAXED
• Resident citizens
taxed on incomesfrom without
• Mobilia sequuntur
personam
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OUTSIDE TAXED
INSIDE
NOT TAXED
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INSIDE - NOT
TAXED
• Comity - In par parem
non habet imperium• Reciprocity
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OUTSIDE TAXED
INSIDE
NOT TAXED
* COMITY
* RECIPROCITY
SITUS
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SITUS
• Meaning• Basis
• Situs of property taxes
– Real. Lex situsLex rei sitae
C ti ti
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Continuation …….
– Personal
• Tangible. Mobilia
sequuntur personam
• Intangible. Business
situs
• Situs of excise taxes
• Situs of transfer taxes
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BASIS OF SITUS OF
INCOME TAXATION
• Domicillary theory
• Nationality theory •
Doctrine of source
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GENERAL
PRINCIPLES OFINCOME TAXATION
• Individuals, incldg
estates and trusts
• Cor orations
INDIVIDUALS
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INDIVIDUALS
• Citizens – Residents w/in w/o
– Non-residents,
OCWs, seamen w/in
•Aliens w/in
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CORPORATIONS
• Domestic w/in w/o
• Foreign w/in
FROM WITHIN
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FROM WITHIN
• Interest•
Dividends – Domestic
– Foreign 50% 3 years
• Services
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Continuation …….
• Rentals & royalties
• Sale of – Real property
– Personal property
FROM WITHOUT
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FROM WITHOUT
• Interest•
Dividends – Domestic
– Foreign 50% 3 years
• Compensation
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Continuation …….
• Rentals & royalties
• Gains from sale of – Real property
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CONSTITUTIONAL
LIMITATIONS
• General or indirect
• Specific or direct
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GENERAL OR
INDIRECT
• Due process
• Equal protection• Freedom of the press
C ti ti
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Continuation …….
•
Religious freedom• Non-impairment
clause
•Law making
• Executive clemency
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DUE PROCESS
• Substantive
• Procedural
– Notice –
Hearing
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EQUAL
PROTECTION
• No discrimination
• vs. Uniformity •
Valid classification
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VALID
CLASSIFICATION
• Substantial
distinctions• Germane to the issue
Continuation …….
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Continuation …….
• Applicable not only to
existing conditions
• Applicable to allmembers of the same
class
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DOUBLE TAXATION
• No specific
prohibition
• Violates equalprotection
DIRECT DUPLICATE
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DIRECT DUPLICATE
TAXATION
• Same:
– Taxing authority
– Subject or object
– Purpose
– Taxing period
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Continuation …….
•Taxing all for first
time w/o taxing allfor the second time
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EASING DOUBLE
TAXATION
• Tax treaties - exemption
• Tax deduction• Tax credit
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FREEDOM OF THE
PRESS
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RELIGIOUS
FREEDOM
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NON-IMPAIRMENT
CLAUSE
• Obligations of contract
• Overrides taxing power • Police power superior
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LAW MAKING
• One subject one title
• Three readings
• Printed copies
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EXECUTIVE
CLEMENCY
• Penal provisions
• No tax amnesty
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SPECIFIC OR
DIRECT
• No imprisonment for poll tax
• Uniform & equitable
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Continuation …….
• Progressive system
• Delegation
• Supreme Court
review
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Continuation …….
• Law making• Utilization
• Tax exemptions
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TAX SYSTEMS
• Regressive system
• Proportional system
• Progressive system
SUPREME COURT
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SUPREME COURT
REVIEW
• Tax, impose,
assessment or toll• Penalty
LAW MAKING
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LAW MAKING
• Origination
• Presidential veto
• Title
UTILIZATION
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UTILIZATION
• No use for religious
• Special purpose tax
• Automatic release of LGUs’ share
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TAX EXEMPTIONS
• Majority vote
• Real property tax
exemption
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Continuation …….
• Revenues and assets
– Non-profit, n/s
– Proprietary, coops
• Grants, endowments
REAL PROPERTY
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REAL PROPERTY
TAX EXEMPTIONS
Charitable institutions,
churches, parsonages and
convents appurtenant thereto,
mosques, non-profit cemeteries All lands, buildings and
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improvements of all kinds,• Actually, directly and
exclusively used for • Religious, charitable and
educational purposes
REVENUES AND
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REVENUES AND
ASSETS
• Non-profit, non-stock• Educational institutions
• Actually, directly and
exclusively used
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• Educational purposes
REVENUES AND
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REVENUES AND
ASSETS
• Proprietary educationalinstitutions, incldg those
cooperatively owned
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Continuation …….
• Exempt subject to limit-ations provided by law
– Dividends
– Provisions for reinvestment
EXEMPT
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EXEMPT
DONATIONS
• Subject to conditions setby law
• All grants, endowments,
donations, contributions
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• Used, actually, directlyand exclusively
• For educational purposes
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TAXES
• Enforced contributions
• To raise revenues
• To fulfill objectives of government
SOURCES OF
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SOURCES OF
TAX LAWS
• Constitution
• Tax legislation
TAX
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TAX
LEGISLATION
• National tax laws
– NIRC – TCCP
Continuation …….
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• Local tax laws
– Tax ordinances
• Misc. tax laws
– Land transport taxes – VRB taxes
CLASSIFICATION
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CLASSIFICATION
• Subject or object
– Personal, poll, capitation
– Property – Excise
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Continuation …….
• Who bears burden
– Direct
– Indirect
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Continuation …….
• Amount
– Specific –
Ad valorem – Compound
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Continuation …….
•Purpose
– General, fiscal, or
revenue – Special or regulatory
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Continuation …….
• Authority imposing
– National –
Local
Continuation …….
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• Gradation or rate
– Proportional
– Progressive or
graduated – Regressive
Continuation …….
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• Source
– Constitutional
– Statutory
– Treaty
– Contractual
Licensin ordinance
TAX VS DEBT
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TAX VS. DEBT
• Basis
• Failure to pay
• Mode of payment• Assignability
Continuation
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• Interest
• Authority• Prescription
SET OFF
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SET-OFF
NATIONAL
LOCAL
NO
SET-OFF
SOLUTIO
INDEBETI
NO
SET-OFF
LEGAL
COMP.
LEGAL
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LEGAL
COMPENSATION
• Mutuality of parties – Debtors/creditors
• Both debts due and
demandable
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TAX VS. TOLL
• Purpose
• Amount
• Authority
TAX VS. SPECIAL
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TAX VS. SPECIAL
ASSESSMENTS
• Subject
• Liability
• Basis
• A lication
TAX VS LICENSE
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TAX VS. LICENSE
FEE
• Purpose• Basis
• Amount
Continuation …….
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• Time of payment
• Effect of non-payment
• Surrender
TAX
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TAX
EXEMPTIONS
• Tax exemptions – Broad
– Narrow
PRINCIPLES
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PRINCIPLES•
Strictissimi juris• No exemption by
implication • Power to tax, exempt
• Restrictions• Vs. tax amnesty
KINDS
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KINDS
• Clarity
– Express
– Implied
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• Extent
– Total –
Partial
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• Intent
– Intentional –
Accidental or byomission
TAX
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TAX
AVOIDANCE VS.TAX EVASION
• Means and methods
• Amount
•Validity
END OF
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END OF
GENERALPRINCIPLES !!!
The next topic is Tax
Remedies includingR.A. No. 1125
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