Jan 1, 2013-Chapter 1-Valencia & Roxas

8/10/2019 Jan 1, 2013-Chapter 1-Valencia & Roxas

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CHAPTER 1GENERAL PRINCIPLESAND CONCEPTS OFTAXATION


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INHERENT POWERS OF THESTATE

ESSENTIAL POWER NECESSARY FOR

THE SOVEREIGN STATES SURVIVAL.

EXIST AS THE CENTRAL FORCE IN

ORDER THAT A GOVERNMENT CAN:

COMMAND

MAINTAIN PEACE AND ORDER,

SURVIVE IRRESPECTIVE OF ANYCONSTITUTIONAL PROVISION.

CHAPTER 1 General Principles and Concepts of Taxation


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THREE INHERENT POWERS OFTHE SOVEREIGN STATE

POLICE POWER

THE POWER TO PROTECT CITIZENS ANDPROVIDE SAFETY AND WELFARE OF SOCIETY.

EMINENT DOMAIN POWER

THE POWER TO TAKE PRIVATE PROPERTY(WITH JUST COMPENSATION) FOR PULIC USE.

TAXATION POWER

THE POWER TO ENFORCE CONTRIUTIONS TO

SUPPORT THE GOVERNMENT, AND OTHERINHERENT POWERS OF THE STATE.CHAPTER 1 General Principles and Concepts of Taxation


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TAXATION DEFINED

!. A POWER Y WHICH AN INDEPENDENTSTATE, THROUGH ITS LAW MAKINGBODY, RAISES AND ACCUMULATES

REVENUE FROM ITS INHAITANTS TO PAYTHE NECESSARY EXPENSES OF THEGOVERNMENT.

". A PROCESS OR ACT OF IMPOSING ACHARGE Y GOVERNMENTAL AUTHORITYON PROPERTY, INDIVIDUALS ORTRANSACTIONS TO RAISE MONEY FOR

PUBLIC PURPOSES.CHAPTER 1 General Principles and Concepts of Taxation


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TAXATION DEFINED (CONTD)

#. A MEANS Y WHICH THE SOVEREIGNSTATE THROUGH ITS LAW$MAKINGODY DEMANDS FOR REVENUE IN

ORDER TO SUPPORT ITS EXISTENCEAND CARRY OUT ITS LEGITIMATEOJECTIVES.



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NATURE OF TAXATIONPOWER

% INHERENT POWER OF SOVEREIGNTY&

% ESSENTIALLY A LEGISLATIVE FUNCTION;

% FOR PUBLIC PURPOSES&% TERRITORIAL IN OPERATION&


TAX EXEMPTION OF GOVERNMENT;

THE STRONGESTAMONG THEINHERENT POWERSOF THEGOVERNMENT& AND

SUJECT TO CONSTITUTIONALAND


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SCOPE OF TAXATION POWER

IT REACHES EVERY TRADE OROCCUPATION

EVERY OBJECTOF INDUSTRY, AND

EVERY SPECIES OF POSSESSION.

IT IMPOSES A URDEN WHICH, IN CASE OF FAILURETO DISCHARGE, MAY E FOLLOWED Y SEIZUREOR CONFISCATION OF PROPERTY.



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SUBJECT TO INHERENT ANDCONSTITUTIONAL LIMITATIONS

INHERENT POWER ITS VERY PURPOSE AND NATURE

RESTRICT TAXATION.

TAX POWER SHOULD EEXERCISED FOR ITS VERYNATURE, PURPOSE ANDJURISDICTION.

A VIOLATION OF THESE INHERENT LIMITATIONS ISTANTAMOUNT TO TAKING A PROPERTY WITHOUTDUE PROCESS OF LAW.



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CONSTITUTION TO PROTECT THE OJECT OF

TAXATION AGAINST ITS ABUSIVEIMPLEMENTATION.

IF A TAX LAW VIOLATES THE CONSTITUTION, SUCHLAW SHALL E DECLARED NULL AND VOID.

SUBJECT TO INHERENT ANDCONSTITUTIONAL

LIMITATIONS (CONTD!



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SIMILARITIES AMONGTAXATION, EMINENT DOMAIN

AND POLICE POWERS!. THEY ARE INHERENT POWERS OF THE STATE&

". THEY CONSTITUTE THE THREE WAYS Y WHICH THESTATE INTERFERES WITH THE PRIVATE RIGHTSAND PROPERTY&

#. THEY ARE LEGISLATIVE IN NATURE AND CHARACTER&

'. THEY PRESUPPOSE AN E"UIVALENTCOMPENSATION&

. THEY ALL UNDERLIE AND EXIST INDEPENDENTLY OFTHE CONSTITUTION&

. THEY ARE ALL NECESSARY ATTRIBUTES OFSOVEREIGNTY& AND

*. THE PROVISIONS IN THE CONSTITUTION ARE JUSTCHAPTER 1 General Principles and Concepts of Taxation


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DISTINCTION OF TAXATION,POLICE POWER, AND

EMINENT DOMAINTAXATION POLICE

POWEREMINENTDOMAIN

1. AS TO

CONCEPT

POWER TO

ENFORCECONTRIUTIONTO RAISEGOVERNMENTFUNDS.

POWER TO

MAKE ANDIMPLEMENTLAWS FOR THEGENERALWELFARE.

POWER TO TAKE

PRIVATEPROPERTY FORPULIC USE WITHJUSTCOMPENSATION.

2. AS TOSCOPE

PLENARY,COMPREHENSIVEAND SUPREME

ROADER INAPPLICATION,GENERALPOWER TOMAKE ANDIMPLEMENTLAWS.

MERELY APOWER TO TAKEPRIVATEPROPERTY FORPULIC USE.



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DISTINCTION OF TAXATION,POLICE POWER, AND EMINENT

DOMAIN (CONTD)

TAXATION POLICEPOWER

EMINENTDOMAIN

3. AS TOAUTHORITY

EXERCISEDONLY YGOVERNMENTOR ITSPOLITICAL

SUDIVISIONS.

EXERCISEDONLY YGOVERNMENTOR ITSPOLITICAL

SUDIVISIONS.

MAY EGRANTED TOPULIC SERVICEOR PULICUTILITY

COMPANIES.

4. AS TOPURPOSE

MONEY ISTAKEN TOSUPPORT THEGOVERNMENT.

PROPERTY ISTAKEN ORDESTROYED TOPROMOTE

GENERALWELFARE.

PRIVATEPROPERTY ISTAKEN FORPULIC USE.



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EMINENT DOMAIN (CONTD!TAXATION POLICEPOWER

EMINENTDOMAIN

#. AS TONECESSITYOFDELEGATION

THE POWERTO MAKE TAX

LAWS CANNOTEDELEGATED.

CAN EEXPRESSLY

DELEGATED TOTHE LOCALGOVERNMENTUNITS Y THELAW MAKING

ODY.

CAN EEXPRESSLY

DELEGATED TOTHE LOCALGOVERNMENTUNITS Y THELAW MAKING

ODY.

$. AS TOPERSONAFFECTED

OPERATES ONA COMMUNITYOR A CLASSOF

INDIVIDUAL.

OPERATES ON ACOMMUNITY ORA CLASS OFINDIVIDUAL.

OPERATES ONPARTICULARPRIVATEPROPERTY OF AN

INDIVIDUAL.CHAPTER 1 General Principles and Concepts of Taxation


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TAXATION POLICEPOWER

EMINENTDOMAIN

7. AS TOBENEFITS

CONTINUOUSPROTECTIONANDORGANIZEDSOCIETY.

HEALTHYECONOMICSTANDARD OFSOCIETY.

MARKET VALUEOF THEPROPERTYEXPROPRIATED.

8. AS TOAMOUNTOFIMPOSITION

GENERALLY,NO LIMIT.

COST OFREGULATION,LICENSE ANDOTHERNECESSARY

EXPENSES.

NO IMPOSITION.


EMINENT DOMAIN (CONTD!



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TAXATION POLICE POWER EMINENTDOMAIN

9. AS TOIMPORTANCE

INSEPERALEFOR THEEXISTENCE OFA NATION + IT

SUPPORTSPOLICE POWERAND EMINENTDOMAIN.

PROTECTION,SAFETY ANDWELFARE OFSOCIETY.

COMMONNECESSITIES ANDINTERESTS OF THECOMMUNITY

TRANSCENDINDIVIDUALRIGHTS INPROPERTY.

10. AS TORELATIONSHIP TOCONSTITUTION

SUJECT TOCONSTITUTIONAL ANDINHERENTLIMITATIONS.

INFERIOR TONONIMPAIRMENT

RELATIVELY FREEFROMCONSTITUTIONALLIMITATIONS.

SUPERIOR TONON IMPAIRMENT

CLAUSE.

SUPERIOR TO ANDMAY OVER RIDE

CONSTITUTIONALIMPAIRMENTPROVISION ECAUSE

THE WELFARE OF THESTATE IS SUPERIOR

TO ANY PRIVATECONTRACT.

DISTINCTION OF TAXATION, POLICEPOWER, AND EMINENT DOMAIN

(CONTD!

CHAPTER 1 General Princi les and Conce ts of Taxation


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TAXATION POLICE

POWER

EMINENT

DOMAIN11. AS TOLIMITATION

CONSTRAINTSY CONSTITU$

TIONAL ANDINHERENT

LIMITATIONS.

LIMITED Y THEDEMAND FORPULICINTEREST AND

DUE PROCESS.

OUNDED YPULIC PURPOSEAND JUSTCOMPENSATION.


EMINENT DOMAIN (CONTD!



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INHERENT LIMITATIONS

THE NATURAL RESTRICTIONS TO SAFEGUARDAND ENSURE THAT THE POWER OF TAXATIONSHALL E EXERCISED Y THE GOVERNMENT ONLYFOR THE BETTERMENT OF THE PEOPLE WHOSEINTEREST SHOULD E SERVED, ENHANCED AND

PROTECTED.!. TAXES MAY E LEVIED ONLY FOR PUBLIC PURPOSES&

". EING INHERENTLY LEGISLATIVE, TAXATION MAY NOT EDELEGATED&

#. TAX POWER IS LIMITEDTO TERRITORIAL JURISDICTIONOF THE STATE&

'. TAXATION IS SUJECT TO INTERNATIONAL COMITY& AND

#. GOVERNMENT ENTITIES ARE GENERALLY TAX%EXEMPT.



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CONSTITUTIONALLIMITATIONS

PROVISIONS OF THE FUNDAMENTAL LAW OF THELAND THAT RESTRICT THE SUPREME, PLENARY,UNLIMITED AND COMPREHENSIVE EXERCISE Y THESTATE OF ITS INHERENT POWER TO TAX.

THE CONSITUTIONAL PROVISIONS THAT LIMIT THE EXERCISEOF THE POWER TO TAX ARE AS FOLLOWS:

!. DUE PROCESS OF LAW;

". E"UAL PROTECTION OF LAW;

&. RULE OF UNIFORMITY AND E"UITY;

'. PRESIDENTS POWER TO VETO SEPARATE ITEMS INREVENUE OR TARIFF BILLS.



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. EXEMPTION FROM PROPERTY TAXATION OF RELIGIOUS,CHARITALE OR EDUCTAIONAL ENTITIES, NONPROFITCEMETERIES, CHURCHES, AND CONVENTS APPURTENANTTHERETO&

. NO PULIC MONEY SHALL E APPROPRIATED FORRELIGIOUS PURPOSES.

*. MAJORITYOF ALL THE MEMERS OF THE CONGRESSGRANTING TAX EXEMPTIONS&

. THE CONGRESS MAY NOT DEPRIVE THE SUPREME COURTOF ITSJURISDICTION IN ALL CASES INVOLVING THELEGALITY OF ANY TAX, IMPOST OR ASSESSMENT OR TOLLOR ANY PENALTY IMPOSED IN RELATION TO TAX&

CONSTITUTIONALLIMITATIONS (CONTD!



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-. NO IMPRISONMENT FOR NONPAYMENTOFPOLL TAX;AND

!. TAX COLLECTION SHALL GENERALLY ETREATED AS GENERAL FUNDS OF THEGOVERNMENT.

CONSTITUTIONALLIMITATIONS (CONTD!



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DUE PROCESS OF LAW

IT MANDATES A FUNDAMENTAL RIGHT OFPROTECTION THAT LIFE, LIBERTY OR PROPERTYSHALL ONLY E TAKEN AWAY FROM ANY PERSON(NATURAL OR JURIDICAL) IF ITS EXERCISE IS NOTCONTRARY TO THE FUNDAMENTAL LAW OF THE LAND

AND IT IS DONE AFTER COMPLIANCE WITH THEESTALISHED PROCEDURE PRESCRIED Y LAW.

RE/UIRES THAT THE LAW SHOULD BE

REASONABLE AND NOT OPPRESSIVE(SUBSTANTIVE), AND IT RE/UIRES OPPORTUNITYTO BE HEARD IN PROPER COURT OF LITIGATIONEFORE JUDGEMENT IS RENDERED AFFECTING ONESPERSON OR PROPERTY (PROCEDURAL).



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PURPOSE OF DUE PROCESS

TO SECURE THE INDIVIDUAL FROM THEABUSIVE EXERCISE OF THE TAXINGPOWER OF THE GOVERNMENT.

E"UAL PROTECTION OF THE LAWS)

ALL PERSONS SUJECT TO LEGISLATIONSHALL E TREATED ALIKE UNDER SIMILAR

CIRCUMSTANCESAND CONDITIONSOTHIN THE PRIVILEGES CONFERRED ANDLIABILITIESIMPOSED.

DUE PROCESS OF LAW (CONTD!



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PURPOSE THE CONSTITUTIONAL MANDATE

ON E/UAL PROTECTION IS TO PROTECT

PERSONS ELONGING TO THE SAME CLASSAGAINST INTENTIONALAND ARBITRARYDISCRIMINATION.

DUE PROCESS OF LAW (CONTD!


O O


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RULE ON UNIFORMITY ANDE"UITY IN TAXATION

E"UALITY IN TAXATION)

SIMILAR TO PROGRESSIVE SYSTEM OFTAXATION.

TAX LAWS AND THEIR IMPLEMENTATION MUST EFAIR, JUST, REASONALE AND PROPORTIONATE TOONES ABILITY TO PAY.

PRIMARY RE"UISITE OF E"UITY PRINCIPLE*

A PROGRESSIVE TAX RATE SHALL E APPLIEDE/UALLY TO ALL PERSONS, FIRMS, ANDCORPORATION, AND TRANSACTIONS PLACED INSIMILAR CLASSIFICATION AND SITUATION.


RULE ON UNIFORMITY AND


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RULE ON UNIFORMITY ANDE"UITY IN TAXATION (CONTD!

PROGRESSIVE SYSTEM OF TAXATION

TAX LAWS SHALL GIVE EMPHASIS ON DIRECT

RATHER THAN INDIRECT TAXES OR ON THEABILITY%TO%PAY PRINCIPLE OF TAXATION.



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PRESIDENTS VETO POWER

VETO POWER) REFERS TO THE EXECUTIVES POWER TO REFUSE

TO SIGN INTO LAWA ILL THAT HAS EEN PASSED YA LEGISLATURE.

IT CAN BE DEFINED INTO*

A. ITEM VETO

THE POWER TO VETO ITEMS IN APPROPRIATIONBILLS WITHOUT AFFECTING ANY OTHER PROVISIONSOF SUCH ILLS, AND

. POCKET VETO

THE POWER TO DISAPPROVE LEGISLATIVE ACT YTHE PRESIDENT WITH THE RESULT THAT ILLS SHALL

FAIL TO ECOME LAWS.CHAPTER 1 General Principles and Concepts of Taxation


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EXEMPTION FROMPROPERTY TAXATION

THE EXEMPTION IS GRANTED IN RETURN FORTHE ENEFITS THEY HAVE AFFORDED FOR THEPULIC WELFARE.

TO E EXEMPTED FROM TAXATION, THE REALPROPERTYMUST E EXCLUSIVELY USED FORRELIGIOUS, EDUCATIONAL AND CHARITABLE

PURPOSES.



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PUBLIC MONEY NOTRELIGIOUS PURPOSES

ART. VI, SECTION + OF THECONSTITUTION

PROVIDES THAT NO PUBLIC MONEY OR PROPERTYSHALL EVER BE APPROPRIATED, APPLIED, PAID OR USED

IRECLY OR INIRECTLYFOR THE USE, BENEFIT, ORSUPPORT OFANY SECT! CHURCH! ENOMINATION!SECTARIAN! INSTITUTION, OR SYSTEM OF RELIGION,OR FOR THE USE, BENEFIT OR SUPPORT OFANY PRIEST!PREACHER! MINISTER! OR RELIGIOUS TEACHER ORIGNITARYAS SUCH, EXCEPT WHEN SUCH PRIEST,PREACHER, MINISTER, OR DIGNITARY IS ASSIGNED TOARMED FORCES, OR TO ANY PENAL INSTITUTION, ORGOVERNMENT ORPHANAGE OR LEPROSARIUM.

LIKEWISE, THE CHURCH SHOULD NOT INTERFERE IN PURELY

POLITICAL MATTERS OR AFFAIRS EXCLUSIVELY FOR THESTATE. CONSE UENTLY THE CONSTITUTION PROHIITSCHAPTER 1 General Principles and Concepts of Taxation

CONGRESS GRANTING TAX


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CONGRESS GRANTING TAXEXEMPTION

ART. VI, SECTION +-, PAR. ' OF THECONSTITUTION

PROVIDES THAT NO LAW GRANTING ANY TAXEXEMPTION SHALL BE PASSED WITHOUT THECONCURENCE OF A MA"ORITY OF ALL THEMEMBERS OF THE CONGRESS.#

PROVISION RE/UIRES THE CONCURENCE OF THEMAJORITY NOT OF THE ATTENDEES CONSTITUTING A/UORUM UT OF ALL THE MEMERS OF THECONGRESS.


SUPREME COURTS FINAL


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SUPREME COURTS FINALJUDGEMENT IN ALL TAX CASES

THE POWER OF JUDICIAL REVIEW INTAXATION IS LIMITE ONLY TO THEINTERPRETATION AN APPLICATION OF

TAX LAWS.THE JUDICIAL TRIUNALS HAVENO CONCERN ON THE WISDOM OFTAXING ACT. ITS POWER DOES NOTINCLUDE IN/UIRY IN THE POLICY OF

LEGISLATION. NEITHER CAN IT LEGITIMATELY/UESTION OR REFUSE TO SANCTION THEPROVISIONS OF ANY LAW CONSISTENT WITH

THE CONSTITUTION.


NO IMPRISONMENT FOR NON


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NO IMPRISONMENT FOR NON%PAYMENT OF POLL TAX

POLL TAX)

A TAX IMPOSED ON A PERSON AS A

RESIDENT WITHIN A TERRITORY OF THETAXING AUTHORITY WITHOUT REGARD TO HISPROPERTY, USINESS OR OCCUPATION.

IT IS TO E NOTED THAT THE PROHIBITION OF

IMPRISONMENT APPLIES ONLY TO THE NON%PAYMENTOF POLL TAX.



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TAXES AS GENERAL FUNDS OFTHE GOVERNMENT

ART. VI, SECTION +, PAR. & OF THEPHILIPPINE CONSTITUTION

STATES THAT ALL MONEY COLLECTED ON ANY TAX LEVIED

FOR A SPECIAL PURPOSE SHALL BE TREATE AS ASPECIAL FUNAND PAID OUT FOR SUCH PURPOSE ONLY.IF THE PURPOSE FOR WHICH A SPECIAL FUND WAS CREATEDHAS BEEN FULFILLED OR ABANDONED, THE BALANCE IF ANY,

SHALL BE TRANSFERRED TO THE GENERAL FUNDS OF THEGOVERNMENT.

THUS, COLLECTION OF FEE WITH THE NATURE OF TAXES INTENDEDFOR THE PROMOTION OF SUGAR INDUCTRY SHALL E TREATED AS A

SPECIAL FUND.


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IMPORTANCE OF TAXATION

IT IS THE PRIMARY SOURCE OF GOVERNMENTREVENUE THAT IS USED TO EFFECTIVELY ANDPERMANENTLY PERFORM GOVERNMENT

FUNCTIONS.

WITHOUT TAXATION, THE OTHER INHERENTPOWERS (POLICE AND EMINENT DOMAIN POWERS!WOULD BE PARALYZED.


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BASIS OF TAXATION

ESTABLISHED BASED ON THEPRINCIPLES OF*

A. NECESSITY

THE GOVERNMENT HAS A RIGHT TO COMPEL ALL

ITS CITIZENS, RESIDENTS AND PROPERTY WITHINITS TERRITORY TO CONTRIUTE MONEY.

TAXATION IS THE 0LIFELOOD1 OR THE 0READAND UTTER1 OF THE GOVERNMENT AND EVERY

CITIZEN MUST PAY HIS TAXES.B. RECIPROCAL UTIES OF PROTECTION ANDSUPPORT BETWEEN THE STATE AND INHABITANTS.

THE GOVERNMENT COLLECTS TAXES FROM THESUJECT OF TAXATION IN ORDER THAT IT MAY E

ALE TO PERFORM ITS FUNCTIONS.


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PURPOSES OF TAXATION

OBJECTIVES IN THE EXERCISE OF TAXINGPOWER

1. REVENUE PURPOSES

THE PRIMARY PURPOSE OF TAXATION IS TO RAISEREVENUE Y COLLECTING FUNDS OR PROPERTY FOR THESUPPORT OF THE GOVERNMENT IN PROMOTING THE GENERALWELFARE AND PROTECTING ITS INHAITANTS.

+. REGULATORY PURPOSE

THIS OJECTIVE ISACCOMPLISHED TO

A. REGULATE INFLATION,

. ACHIEVE ECONOMIC AND SOCIAL STABILITY,AND

C. SERVE AS KEY INSTRUMENT FOR SOCIAL


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PURPOSES OF TAXATION (CONTD!

REGULATORY PURPOSES CONTD/

TAXES MAYE USED AS A TOOL AND WEAPON IN INTERNATIONAL RELATIONS

AS A TOOL TO PROTECT TRADE RELATION, SPECIAL DUTIESMAYE CREATED TO PROTECT NEW CONDITIONS, SUCH AS:

$1% ISCRIMINATORY UTY

THIS SPECIAL DUTY IS DESIGNED TO OFFSET ANYFOREIGN DISCRIMINATION AGAINST OUR LOCAL COMMERCE.

$2% COUNTERVAILING UTY

IT MAYE IMPOSED TO OFFSET ANY FOREIGN SUSIDYGRANTED TO IMPORTED GOODS TO THE PREJUDICE OF OURLOCAL INDUSTRIES.


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REGULATORY PURPOSE 2CONTD3

(&! MAR&ING UTY

IT IS GENERALLY IMPOSED AS ADDITIONAL DUTYTAX ON IMPORTED ARTICLES AND4OR CONTAINERS WITHIMPROPER CLASSIFICATION.

('! UMPING UTIES

IT REFERS TO THE ADDITIONAL DUTY TAXESIMPOSED ON IMPORTED GOODS WITH PRICES LESSER THANTHEIR FAIR MARKET VALUES TO PROTECT LOCAL INDUSTRIES.

&. COMPENSATORY PURPOSE

TAXATION IS A WAY OF GIVING ACK THE EXPECTEDECONOMIC AND SOCIAL ENEFIT DUE TO THE INHAITANTS.

PURPOSES OF TAXATION (CONTD!


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CERTAIN DOCTRINES INTAXATION

!. PROSPECTIVITY OFTAX LAWS

". IMPRESCRIPTIILITYOF TAXES

#. DOULE TAXATION

'. ESCAPE FROMTAXATION

. EXEMPTION FROMTAXATION

. E/UITALERECOUPMENT

*. SET$OFF TAXES

. TAXPAYER SUIT

-. COMPROMISES

!. POWER TO

DESTROY


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CERTAIN DOCTRINES IN TAXATION(CONTD!

1. PROSPECTIVITY OF TAX LAWS

THE PRINCIPLE OF PROPECTIVITY OF TAX LAWSSTATES THAT A TAX ILL MUST ONLY E

APPLICALE AND OPERATIVE AFTER BECOMINGA LAW.

+. IMPRESCRIPTIBILITY OF TAXES

THIS PRINCIPLE STATES THAT UNLESSOTHERWISE PROVIDED Y THE TAX LAW ITSELF,TAXES IN GENERAL ARE NON CANCELLABLE.


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&. DOUBLE TAXATION

MEANS AN ACT OF THE SOVEREIGN Y TAXINGTWICE FOR THE SAME PURPOSE IN THE SAMEYEAR UPON THE SAME PROPERTY OR ACTIVITYOF THE SAME PERSON, WHEN IT SHOULD E TAXEDONCE, FOR THE SAME PURPOSE AND WITH THE SAMEKIND OF CHARACTER OF TAX.

TO AVOID INJUSTICE AND UNFAIRNESS, DOUBTS AS TO WHETHER DOULE

TAXATION HAS EEN IMPOSED SHOULD E RESOLVED IN FAVOR OF THETAXPAYER



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CERTAIN DOCTRINES IN TAXATION(CONTD)

INDIRECT DUPLICATE TAXATION.

THIS IS DOULE TAXATION IN ITS BROAD SENSE.

IT EXTENDS TO ALL CASES IN WHICH THERE IS ABURDEN OF TWO OR MORE PECUNIARY IMPOSITIONS.

DIRECT DUPLICATE TAXATION.

THIS IS DOULE TAXATION IN ITS STRICT SENSE.

IT IS PROHIITED ECAUSE IT COMPRISES IMPOSITIONOF THE SAME TAX ON THE SAME PROPERTYFOR THE

SAME PURPOSE Y THE SAME STATE DURING THE SAMETAXING PERIOD.


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CERTAIN DOCTRINES IN TAXATION(CONTD)

HOW TO COUNTER ACT INDIRECT DOUBLE TAXATION0

!. TAX EXEMPTIONS&

". RECIPROCITYCLAUSE4 TAX TREATY&

#. TAX CREDIT&

'. TAX EXEMPTIONS& AND

. ALLOWANCE FOR DEDUCTIONS SUCH AS VANISHING DEDUCTION IN ESTATETAX.

THERE IS NO DOUBLE TAXATION IN THE FOLLOWING CASES*

!. Y TAXING CORPORATE INCOME AND STOCKHOLDERS DIVIDENDS FROM

THE SAME CORPORATION.". A TAX IMPOSED Y THE STATE AND THE LOCAL GOVERNMENT UPON THE SAME

OCCUPATION , CALLING OR ACTIVITY.

&. REAL ESTATE TAX AND INCOME TAX COLLECTED ON THE SAM REAL ESTATEPROPERTY LEASED FOR EARNING PURPOSES.

'. TAXES ARE IMPOSED ON THE TAXPAYERS FINAL PRODUCT AND THE STORAGE

OF RAW MATERIALSUSED IN THE PRODUCTION OF THE FINAL PRODUCT.


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'. ESCAPE FROM TAXATION

THE WAYS Y WHICH A TAX PAYER COULD ESCAPE TAXURDENS MAY E THROUGH TAX EVASIONAND TAXAVOIDANCE.

TAX EVASION)

UNDER THIS METHOD, THE TAX PAYER USES UNLAWFULMEANSTO EVADE OR LESSEN THE PAYMENT OF TAX.

THIS FORM OF TAX DODGING IS PROHIITED ANDTHEREFORE SUJECT TO CIVIL AND OR CRIMINAL

PENALTIES.

TAX AVOIDANCE)

THIS IS THE REDUCING OR TOTALLY ESCAPING PAYMENT OFTAXES THROUGH LEGALLY PERMISSIBLE MEANS.


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FORMS OF TAX AVOIDANCE

(1.! TAX OPTION

TAXPAYERS MAY CHOOSE TO PAY LOWER TAX RATE INSOME TRANSACTIONS AS PERMITTED BY TAX LAWS.

(+.! SHIFTING

IS THE TRANSFER OF TAX BURDEN TO ANOTHER&THE IMPOSITION OF TAX IS TRANSFERRED FROM THE

STATUTORY TAXPAYER TO ANOTHER WITHOUTVIOLATING THE LAW.


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FORMS OF TAX AVOIDANCE CONTD/

(&.! TRANSFORMATION

THE PRODUCER ABSORBS THE PAYMENT OF TAXTOREDUCE PRICES AND TO MAINTAIN MARKET SHARE, THEN HERECOVERS HIS ADDITIONAL TAX EXPENSES Y IMPROVING

THE PROCESS OF PRODUCTION.

('.! EXEMPTION FROM TAXATION

DENOTES A GRANT OF IMMUNITY,EXPRESSED ORIMPLIED, TO A PARTICULAR PERSON, CORPORATION, OR TO

PERSONS OR CORPORATIONS OF A PARTICULAR CLASS ,FROM A TAX UPON PROPERTY OR AN EXCISE WHICHPERSONS AND CORPORATION GENERALLY WITHIN THE SAMETAXING DISTRICT ARE OLIGED TO PAY.

TAX EXEMPTIONS ARE GENERALLY GRANTED IN THE

ASIS OF (5) RECIPROCITY,(6) PUBLIC POLICY, AND (C)CONTRACTS.


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CLASSIFICATIONS OF TAX EXEMPTION TAX EXEMPTION MAYBE CLASSIFIED AS*

(1.! EXPRESSED EXEMPTION

THESE TAX EXEMPTIONS ARE STATUTORY LAWS IN

NATURE AS PROVIDED Y CONSTITUTION, STATUTE,TREATIES, ORDINANCES, FRANCHISES OR SIMILARLEGISLATIVE ACTS.

(+.! IMPLIED EXEMPTION OR BY OMISSION

THESE EXEMPTIONS ARE EITHER INTENTIONALORACCIDENTAL.

THESE OCCUR WHEN TAX IS IMPOSED ON A CERTAINCLASS OF PERSONS, PROPERTIES OR TRANSACTIONSWITHOUT MENTIONING OTHER CLASSES& THOSE NOTMENTIONED ARE DEEMED EXEMPTED BY OMISSION.(PRINCIPLE OF LAW!.


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CLASSIFICATIONS OF TAX EXEMPTION CONTD/

(&.! EXPRESSED EXEMPTIONARE EXEMPTIONS THAT ARE LAWFULLY ENTERED INTO YTHE GOVERNMENT IN CONTRACT UNDER EXISTING LAWS.

THESE EXEMPTIONS MUST NOT E CONFUSED WITH THETAX EXEMPTIONS GRANTED UNDER FRANCHISES, WHICH

ARE NOT CONTRACTS WITHIN THE CONTEXT OF NON%IMPAIRMENT CLAUSE OF THE CONSTITUTION.

CERTAIN DOCTRINES IN TAXATION


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$. E"UITABLE RECOUPMENT

THIS DOCTRINE OF LAW STATES THAT A TAX CLAIMFOR REFUND, WHICH IS PREVENTED Y PRESCRIPTION, MAY EALLOWEDTO E USED AS PAYMENT FOR UNSETTLED TAX

LIABILITIES IF OTH TAXES ARISE FROM THE SAMETRANSACTION IN WHICH OVERPAYMENTIS MADE ANDUNDERPAYMENT IS DUE.

2. SET%OFF TAXES

THIS DOCTRINE STATES THAT TAXES ARE NOTSUBJECT TO SET%OFF OR LEGAL COMPENSATION ECAUSETHE GOVERNMENT AND THE TAXPAYER ARE NOT MUTUALCREDITOR AND DEBTOROF EACH OTHER.



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-.! SET%OFF TAXES CONTD/

33 A PERSON CANNOT REFUSE TO PAY TAX ON THE BASIS THAT THEGOVERNMENT OWES HIM AN AMOUNT E"UAL TO OR GREATER THAN THETAX BEING COLLECTED.

EXEMPTION TO THIS RULE:

!.) WHERE OTH THE CLAIMS OF THE GOVERNMENT AND THETAXPAYER AGAINST EACH OTHER HAVE ALREADY ECOME DUE,DEMANDABLE AND FULLY LI"UIDATED&

".) WHERE THERE IS AN ACTUAL COMPROMISE ETWEEN THETAXPAYER AND THE TAX OFFICER.



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.! TAXPAYER SUIT

IS EFFECTED THROUGHCOURT PROCEEDINGS ANDCOULD ONLY E ALLOWED IF THE ACT INVOLVES A DIRECTANDILLEGAL DISBURSEMENT OF PUBLIC FUNDS DERIVED FROM

TAXATION.

14.! COMPROMISES

THIS DOCTRINE PROVIDES THAT COMPROMISES ARE

GENERALLYALLOWEDAND ENFORCEABLE WHEN THESUBJECT MATTERTHEREOF IS NOT PROHIBITED FROM NOTBEING COMPROMISED AND THE PERSON ENTERING SUCHCOMPROMISE IS DULY AUTHORIZEDTO DO SO.



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11.! POWER TO DESTROY

THIS PRINCIPLE IMPLIES THAT AN IMPOSITION OF LAWFULREGULATORY TAXES WOULD E DESTRUCTIVE TO THETAXPAYERS AND USINESS ESTALISHMENTS ECAUSE THEGOVERNMENT CAN COMPEL PAYMENT OF TAX ANDFORFEITURE OF PROPERTYTHROUGH THE EXERCISE OFPOLICE POWER.



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THIS REFERS TO THE PLACE OF TAXATION, OR THESTATE OR POLITICAL UNIT WHICH HAS JURISDICTION TOIMPOSE TAX OVER ITS INHBITANTS.

SITUS OF TAXATION

POWER TO BUILD

TAX POWER IS PRIMARILY A TOOL THAT CREATES, BUILDSAND SUSTAINS THE UPLIFTMENT OF SOCIAL CONDITION OFTHE PEOPLE IN GENERAL AS IT CONTINOUSLY SUPPORTS THE

OTHER INHERENT POWERS OF THE STATE THAT PRESERVE THEFUNDAMENTAL RIGHTS OF THE PEOPLE.


54/73


SITUS OF TAXATION (CONTD!

GENERAL RULE: THE STATEHAS THE POWER TO IMPOSE TAXONLY WITHIN ITS TERRITORIAL JURISDICTION.

THE FOLLOWING FACTORS ARE DETERMINANTS TO THE

SITUS OF TAXATION*

1. N56789, 789 ;< :5? =5@ 6?89 8B;?&

+. S79:6 56698 ;< =>? =5@ (?;9, ;?=, 8>= ;5=88=)&

&. S?78:9 ;< =>? 89;B? 6?89 =5@?&

'. P5:9 ;< =>? ?@8?, 88??, 689? ; ;5=8;9 6?89=5@?&

#. C=6=9@? =5@5?&

$. R9? =5@5?.


55/73


NATURE OF TAXES

TAXES)

5? 5?, ?@5=8;9, 8B;8=8;9 ;;9=86=8;9 5?? 89 5;59? 8=> ;B? ?5;956?? ;< 5;89=B?9=, 6 5=>;8= ;< 5 ;??89 =5=?, ;9

=>? ?;9, ;?=, ; 8>= ?@?8?, 8=>89 8= 88=8;9,=; ;8? 68 ??9? ? ;= ;< =>? ;?9B?9=,=>? 5B898=5=8;9 ;< =>? 5, ; =>? 5B?9= ;< 68?@?9?.

T5@? 5? ;685=8;9 '()*+), - /*.

T5@? 5? ?9?5)(*/ + +5) +*6*)(.


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NATURE OF TAXES (CONTD!

ESSENTIAL CHARACTERISTICS OF TAXES

1. E@?8:9;9=86=8;9.

". IB;? 6 9=55=?.

'. P556? 89 ?8 ? ?@9.

. IB;? ? ;? ;< 85=


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CLASSIFICATION OF TAXES

1. AS TO PURPOSE

5. R))) ( F'*/

T>?? =5@? 5? 8B;? ;? ? ;? ?85=


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+. AS TO OBJECT OR SUBJECT MATTER

5. P)(*/! P// ( C*+*+

T>?? =5@? 5? >9 =@ 5?7@6 59 8B;? ;998


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&. AS TO DETERMINATION OF AMOUNT

5.A, V*/();

$ T>?? =5@? 5? >9 5?7@6< =@ 8??86=?@ 6?69 579 ? 69 8?986 8=> ??= =; >8> =>? =5@ 85??.

$ I= ?8? =>? 89=??9=8;9 ;< A?; =; ?=8B5=?=>? 5? ;< > ;?= 6?? 5B;9= ? =; =>?=5@5? 6? ?=?B89?.

6. S)'


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'. AS TO WHO BEARS THE BURDEN

5. ()'+

$ T>?? =5@? 5? @?@%685@? 85688= ? 5B?9= ;< =5@ 5 ? 5 =>? =5@? 5B? ?;9.

6. I,()'+

-T>?? =5@? 5? 685@? 85688= ? 5B?9= ;< =5@ ? 6?9 =>??;< 59 6? >8?.



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#. AS TO SCOPE OR AUTHORITY COLLECTING THE TAX

5. N*+*/

$ T5@? ;?=? 6 =>? @56=?@5 ?98@9@6 (E..E=5=? 59 ;9; =5@?).

6. L'*/ ( M'*/

-T5@? ;?=? 6 =>? M7@=:=5 ?98@9@6 (E..C;BB98= =5@).

O S


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$. AS TO RATE OR GRADUATION5. P((+*/ ( F/*+ R*+)

$ T>? 5=? ;< =>? =5@ 8 65? ;9 5 >9 98:9@659 ? 695?7@6 ? 69 8?986, 89:9=6 ?8 ?698 5? 8569 ? 69 65 89?5? 5 =>? 65 5


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OTHER CHARGES FEES


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OTHER CHARGES FEES (CONTD!

$. CUSTOMS DUTIES$ 5? =?= 89=; =>? ;9= 6? 8?69:6 ?:5=@7:=5 6?69 7=:.

-. TARIFF+ 8 5 >?? ; 8= ;< 8569


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TAX LAW DEFINED

TAX LAW)8 =>5= 6; ;< 5 8989 89;B?, ?=5=?, 8? =5@?.

T>? TAX CODE 8 59 ?@5B? ;< 5 ?85 5 >8> ?58 ;? 5 ?9?5 5 >5 =>? C88 C;? ; =>? R? ;< C;=.

INTERNAL REVENUE LAW

$ I= 89? 5 5 ?85=? ?=58989 =; =>? 95=8;95;?9B?9= =5@? >8> 8 ?B6;8? 89 =>? NIRC.$ T>? B589 ;? ;< ;B5=89 89=?95 ??9? 58 =; 8? B;9? =; B??= =>? ?985 9?? 6 =>?

;?9B?9=.

INTERNAL REVENUE TAXES

$ =5@? 8B;? 6 =>? ?85=8? 6; ?698 65@:7


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NATURE OF TAX LAW

THE PHILIPPINES INTERNAL REVENUE

LAWS ARE GENERALLY CIVIL INNATURE& THEY ARE NEITHERPOLITICAL NOR PENAL IN NATURE.

INTERPRETATION APPLICATION


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OF TAX LAW

THE FOLLOWING RULES ARE GENERALLY FOLLOWEDFOR THE INTERPRETATION AND APPLICATION OF TAXLAWS*

!. TAX STATUTE MUST E ENFORCED AS WRITTEN.

". IMPOSITION OF TAX URDENS IS NOT PRESUMED.

#. DOUBTS SHOULD E RESOLVED LIERALLY IN FAVOR OFTHE TAXPAYER.

'. TAX EXEMPTIONS ARE STRICTLY CONSTRUED AGAINST

THE TAXPAYER.

. TAX LAWS ARE APPLIED PROSPECTIVELY.

. TAX LAWS PREVAIL OVER CIVIL LAWS.

SOURCES OF PHILIPPINE TAX


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SOURCES OF PHILIPPINE TAXLAWS

THE PHILIPPINES REPUBLIC MAKES LAWS WHICHMAYBE COMPRISED OF THE FOLLOWING*

1. CONSTITUTION OF THE PHILIPPINES&

$ THIS REFERS TO THAT ODY OF RULES ANDMAXIMS IN ACCORDANCE WITH WHICH THE POWER OFSOVEREIGNITY ARE HAITUALLY EXERCISED.

+. STATUTES;

$ THESE ARE LAWS ENACTED AND ESTALISHED YTHE CIVIL WILL OF THE LEGISLATIVE DEPARTMENT OF THEGOVERNMENT.



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SOURCES OF PHILIPPINE TAXLAWS (CONTD!

#. EXECUTIVE ORDERS;

$ THESE ARE REGULATIONS ISSUED BY THEPRESIDENT OR SOME ADMINISTRATIVE UNDER HISDIRECTION FOR THE PURPOSE OF INTERPRETING,IMPLEMENTING, OR GIVING ADMINISTRATIVE EFFECT TO APROVISION OF THE CONSTITUTION OR SOME LAW ORTREATY.

'. TAX TREATIES AND CONVENTION WITH FOREIGNCOUNTRIES;

$ THESE REFER TO THE TREATIES OR

INTERNATIONAL AGREEMENTS WITH FOREIGNCOUNTRIES REGARDING TAX ENFORCEMENT ANDEXEMPTIONS.



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#. REVENUE REGULATIONS BY THE DEPARTMENT OFFINANCE;

$ THESE ARE RULES OR ORDERS HAVING FORCE OFLAW ISSUED Y EXECUTIVE AUTHORITYOF THE

GOVERNEMENT TO ENSURE UNIFORM APPLICATION OF TAXLAWS.

IN ORDER THAT ADMINISTRATIVE REGULATIONS MAYBECONSIDERED VALID, ALL OF THE FOLLOWING RE*UISITES MUST BE

COMPLIED WITH:

!. THE REGULATIONS MUST E USEFUL IN PRACTICAL ANDNECESSARY FOR THE ENFORCEMENT OF THE LAW&

". THEY MUST E REASONABLEIN THEIR PROVISIONS&

#. THEY MUST NOT BE CONTRARY TO LAW; AND

'. THEY MUST E DULY PUBLISHEDIN THE OFFICIAL




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. BIR REVENUE MEMORANDUM CIRCULARS UREAU OFCUSTOMS MEMORANDUM ORDERS&

$ THESE ARE ADMINISTRATIVE RULINGS OROPINIONS WHICH ARE LESS GENERAL INTERPRETATION OFTAX LAWSEING ISSUED Y TIME TO TIME Y THE

COMMISSIONEROF THE INTERNAL REVENUE AND UREAU OFCUSTOMS, AS THE CASE MAYE.

*. BIR RULINGS;

$ THESE ARE EXPRESSED OFFICIAL INTERPRETATION

OF THE TAX LAWS AS APPLIED TO SPECIFICTRANSACTIONS.

-. JUDICIAL DECISIONS;

$ THESE REFER TO THE DECISIONS FOR APPLICATIONMADE CONCERNING TAX ISSUES Y THE PROPER COURTEXERCISING JUDICIAL AUTHORITY OF COMPETENT



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. LOCAL TAX ORDINANCES

$ THESE ARE TAX ORDINANCES ISSUED Y THEPROVINCE, CITY, MUNICIPALITY ANDARANGAYS4ARRIOS SUJECT TO SUCH LIMITATIONSAS PROVIDED Y THE LOCAL GOVERNMENT CODEAND THE REAL PROPERTY TAX CODE.


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Jan 1, 2013-Chapter 1-Valencia & Roxas

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