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INCOME TAXATION > CHAPTER 1 PPT BASED > Flashcards

CHAPTER 1 PPT BASED Flashcards

1
Q

Those not explicitly stated in the Constitution that allows the government to take actions, which are needed to efficiently perform essential duties.

A

Inherent Powers

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2
Q

It exist as essential force in order that a government can command, maintain peace and order, and survive, irrespective of any Constitutional provision.

A

Inherent Powers

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3
Q

The power to protect citizens and provide for safety and welfare society

A

Police Power

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4
Q

The power to take private property (with just compensation) for public use.

A

The Power of Eminent Domain

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5
Q

The power to enforce contributions to support the government, and other inherent powers of the state.

A

Power of Taxation

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6
Q

The power of promoting the public welfare by restraining and regulating the use of both liberty and property of all the people.

A

Police Power

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7
Q

It is considered to be the most all-encompassing of the three powers.

A

Police Power

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8
Q

Police power may be exercised only by the ______

A

Government

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9
Q

Requisites of a valid police measure

A
  • Lawful Subject
  • Lawful Means
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10
Q
  • It affects only property RIGHTS.
  • It may be exercised by some private entities.
  • The property forcibly taken under this power, upon payment of just compensation, is needed for conversion to public use or purpose.
A

Power of Eminent Domain

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11
Q

It is the imposition of compulsory levies on individuals or entities by governments in almost every country of the world.

A

Taxation

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12
Q

It is used primarily to raise revenue for government expenditures, though it can serve other purposes as well.

A

Taxation

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13
Q

The Nature of tax power includes the following:

A
  • Inherent power of sovereignty
  • Essentially a legislative function
  • For public purposes
  • Territorial in operations
  • Tax exemption of government
  • The strongest among the inherent powers of the government
  • Subject to Constitutional and inherent limitation
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14
Q

BASIS OF TAXATION
Taxation is basically established based on the following principles:

A
  • Principle of Necessity
  • Principle of Benefit-Received of Benefit-Protection Theory
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15
Q

Taxation is the “_____” or the “_______” of the government and every citizen must pay his taxes.

A

lifeblood or the bread and butter

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16
Q

2 Purposes of Taxation

A
  1. Revenue or fiscal
  2. Non-revenue or regulatory
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17
Q

Purposes of Taxes

A
  • Rising Revenue
  • Economic Stability
  • Fair distribution of Income
  • Optimum Allocation of resources
  • Protection Policy
  • Social Welfare
  • Higher Employee Level
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18
Q

The Four R’s of Taxation

A

Revenue
Redistribution - transferring of wealth from rich to poor
Repricing - taxes are levied to address externalities (tobacco)
Representation - citizens demand accountability from their rulers

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19
Q

Scope of Taxation

A
  1. Complete (plenary)
  2. Comprehensive
  3. Supreme
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20
Q

Objects of Taxation

A

1. Person
- Natural
- Juridical

2. Properties
- Real
- Personal
- Tangible
- Intangible

3. Excise object
- Transaction
- Rights
- Privilege
- Interest

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21
Q

Taxation has unlimited area of application and only restricted by the inherent and constitutional limitation

A

Plenary or Complete

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22
Q

It has a wide scope of coverage

A

Comprehensive

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23
Q

It has the highest degree of application and strongest among the inherent power of the state

A

Supreme

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24
Q

Inherent Limitations to Taxation

A
  • Taxes may be levied only for public purpose
  • Taxation cannot be delegated
  • Taxation is limited to territorial jurisdiction.
  • Taxation is subject to international comity.
  • The government is generally tax exempt.
25
Q

Constitution Limitation

A
  • Due process of law
  • Equal protection of law
  • Rule of uniformity and equity
  • Non-impairment of contracts
  • Congress granting tax exemption
26
Q

4 stages of taxation

A
  1. Levy or Imposition
  2. Assessment and Collection
  3. Payment
  4. Refund
27
Q

Principles of a sound tax system

A
  1. Fiscal adequacy
  2. Administrative feasibility
  3. Theoretical justice or equality
28
Q

This states that a tax bill must only be applicable and operative after becoming a law. Thus, the effectivity of the law commences upon its approval and its scope would only cover the present and future transactions.

A

Prospective application of tax laws

29
Q

It states that unless otherwise provided by the tax law itself, taxes in general are not cancelable. The court held that there is no time limit on the right of the BIR Commissioner to assess taxes on unreasonable accumulated earnings of the corporation. The law on prescription being a remedial measure should be interpreted liberally in order to protect the taxpayer.

A

Imprescriptibility of Taxes

30
Q

It refers to the imposition of taxes on the same income, assets or financial transaction at two different points of time. It can be economic, which refers to the taxing of shareholder dividends after taxation as corporate earnings.

A

Double Taxation

31
Q

Permits the taxpayer to minimize (if not to escape) payment of tax by lawful means.

A

Escape From Taxation

32
Q

It occurs when illegal efforts are made to escape the payment of a tax

A

Tax Evasion

33
Q

Examples of tax evasion

A
  • non-inclusion of sales
  • deliberate fabrication of expenses
  • forming an artificial person to evade taxation
  • deliberately reduce of taxable income
  • malicious failure to report income to defeat tax liability
34
Q

It occurs when legally permissible attempts are made to minimize or reduce the tax to be paid

A

Tax Avoidance

35
Q

Taxpayers may choose to pay lower tax rate in some transactions as permitted by Tax Laws.

A

Tax Option

36
Q

It is the transfer of tax burden to another; the imposition of tax is transferred from the statutory taxpayer to another without violating the Law. As a rule, only indirect taxes may be shifted; direct taxes cannot be shifted.

A

Shifting

37
Q

The tax burden is transferred from the ultimate consumer through factors of distribution to the factors of production

A

Backward Shifting

37
Q

The burden of tax is transferred from the manufacturer, then to the distributor and finally to the ultimate consumer of the product.

A

Forward Shifting

38
Q

The tax burden is shifted two or more times either forward or backward.

A

Onward Shifting

39
Q
  • It refers to the reduction in the price of the taxed object equal to the capitalized value of the future taxes which the purchaser expects to be called upon to pay.
  • It is made when the price of the property is lowered to accommodate the exclusion of the tax which is expected to be paid by the seller as a result of sale transaction.
A

Capitalization

40
Q

The producer absorbs the payment of tax to reduce prices and to maintain market share. The tax, therefore, is transformed into a gain through the medium of production.

A

Transformation

41
Q

It is a privilege that is personal and in any ways cannot be transferred or assigned by the person to whom it is given without the consent of the state.

A

Exemption

42
Q

Tax exemptions are generally granted on the basis of:

A

a) Reciprocity
b) Public Policy
c) Contracts

43
Q

A general pardon of the state by intentionally overlooking its authority to imposed penalties on persons guilty of tax evasion or violation of a particular revenue or tax law.

It is used to give tax evaders a chance to start a new, properly comply with the tax laws, and pay the correct taxes.

A

Tax Amnesty

44
Q

When the state desists or refrains from exacting, inflicting or enforcing something as well as to restore what has already been taken.

It is equivalent to and is in the nature of a tax exemption. Thus, it should be sustained only when expressed in the law.

A

Tax Condonation or Tax Remission

45
Q

It denotes a grant of immunity, expressed or implied, to a particular person, corporation, or to persons or corporations of a particular class, from a tax upon property or on excise which persons and corporation generally within the same taxing district are obliged to pay.

A

Exemption From Taxation

46
Q

Classification of Tax Exemption

A
  • Expressed Exemption
  • Implied Exemption or by Omission
  • Contractual Exemption
47
Q

This doctrine of law states that a tax claim for refund, which is prevented by prescription, may be allowed to be used as payments for unsettled tax liabilities if both taxes arise from the same transaction in which overpayment is made and underpayment is due.

A

Equitable Recoupment

48
Q

This doctrine states that taxes are not subject to set-off or legal compensation because the government and the taxpayer are not mutual creditor and debtor of each other.

A person cannot refuse to pay tax on the basis that the government owes him an amount equal to or greater than the tax being collected.

A

Set-off Taxes

49
Q

A ____________ effected through court proceedings could only be allowed if the act involves a direct and illegal disbursement of public funds derived from taxation.

A

Taxpayer Suit

50
Q

This doctrine provides that _________ are generally allowed and enforceable when the subject matter thereof is not prohibited from being compromised and the person entering such compromise is duly authorized to do so.

A

Compromises

51
Q

The government can compel payment of tax and forfeiture of property through the exercise of police power.

This tax doctrine is based on the Marshall Dictum which states that the power to tax includes the _________ because the taxpayer has no option but to pay the tax imposed to him.

A

Power to Destroy

52
Q

It means place of taxation. The general rule is that the taxing power cannot go beyond the territorial limits of the taxing authority. Basically, the state where the subject to be taxed has a situs may rightfully charge and collect the tax.

A

SITUS OF TAXATION

53
Q

Why is it important to know the situs of taxation?
- The benefit of learning about the situs of your income includes:

A
  1. Knowing the available tax exemptions;
  2. Knowing your obligations to avoid incurring unnecessary penalties;
  3. Determining the proper tax rates of certain transactions.
54
Q

The determination of the situs of taxation depends on various factors including the:

A
  • Nature, kind or classification of the tax being imposed;
  • Subject matter of the tax (i.e. person, property, act or activity)
  • Possible protection and benefit that may accrue both to the government and the taxpayer;
  • Residence of the taxpayer
  • Citizenship of the taxpayer; and
  • Source of the income.
55
Q

Nature of Taxes

A

Taxes are:
- Obligations created by law
- Generally personal to the taxpayer

56
Q

ESSENTIAL CHARACTERISTICS OF TAXES

A
  • Enforced Contribution
  • Imposed by the legislative body
  • Proportionate in character
  • Payable in the form of money
  • Imposed for the purpose of raising revenue
  • Used for a public purpose
  • Enforced on some persons
  • Commonly required to be paid at regular intervals
  • Imposed by the sovereign state within its jurisdiction
57
Q

Sources of Philippine Tax Laws

A
  • Constitution of the Philippines
  • Judicial Decisions
  • Executive Orders
  • Special Laws
  • Tax Treaties and Conventions with Foreign Countries
  • Revenue Regulated promulgated by the Department of Finance
  • BIR Revenue Memorandum Circulars and Bureau of Customs Memorandum Orders
  • BIR Rulings
  • Local Government Code

INCOME TAXATION (8 decks)

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