Double Taxation Flashcards
Taxation Law 2018 Ib
KM Corporation, doing business in the City of Kalookan, has been a distributor and retailer of clothing and household materials. It has been paying the City of Kalookan local taxes based on Sections 15 (Tax on Wholesalers, Distributors or Dealers) and 17 (Tax on Retailers) of the Revenue Code of Kalookan City (Code). Subsequently, the Sangguniang Panlungsod enacted an ordinance amending the Code by inserting Section 21 which imposes a tax on “Businesses Subject to Excise, Value-Added and Percentage Taxes under the National Internal Revenue Code (NIRC),” at the rate of 50% of 1 % per annum on the gross sales and receipts on persons “who sell goods and services in the course of trade or business.” KM Corporation paid the taxes due under Section 21 under protest, claiming that (a) local government units could not impose a tax on businesses already taxed under the NIRC and (b) this would amount to double taxation, since its business was already taxed under Sections 15 and 17 of the Code.
(b) Does this amount to double taxation?
Yes. The three taxes are all in the nature of local business taxes on wholesalers, retailers, and service providers which are imposed by the same taxing authority on the same subject matter for the same tax period; hence, the elements of double taxation are present.
Nursery Care Corporation vs. Anthony Acevedo, GR 180651, July 30, 2014
Taxation Law 2018 Ib
KM Corporation, doing business in the City of Kalookan, has been a distributor and retailer of clothing and household materials. It has been paying the City of Kalookan local taxes based on Sections 15 (Tax on Wholesalers, Distributors or Dealers) and 17 (Tax on Retailers) of the Revenue Code of Kalookan City (Code). Subsequently, the Sangguniang Panlungsod enacted an ordinance amending the Code by inserting Section 21 which imposes a tax on “Businesses Subject to Excise, Value-Added and Percentage Taxes under the National Internal Revenue Code (NIRC),” at the rate of 50% of 1 % per annum on the gross sales and receipts on persons “who sell goods and services in the course of trade or business.” KM Corporation paid the taxes due under Section 21 under protest, claiming that (a) local government units could not impose a tax on businesses already taxed under the NIRC and (b) this would amount to double taxation, since its business was already taxed under Sections 15 and 17 of the Code.
(b) Does this amount to double taxation?
Alternative Answer
Yes. Double taxation means taxing the same property twice when it should be taxed only once; that is, “taxing the same person twice by the same jurisdiction for the same thing”.
It is obnoxious when the taxpayer is taxed twice, when it should be only once. In double taxation, which is otherwise described as “direct duplicate taxation”, the two taxes must be imposed on the same subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during the same taxing period, and the taxes must be of the same kind or character.
Using the aforementioned test, there is indeed, double taxation since KM Corporation is subjected to the taxes under Sections 15 (Tax on Wholesalers, Distributors, or Dealers), 17 (Tax on Retailers), and 21 (Tax on Businesses Subject to Excise, Value-Added, and Percentage Taxes under the NIRC). of the Revenue Code of Kalookan City. These taxes are being imposed:
(1) on the same subject matter - the privilege of doing business in Kalookan City;
(2) for the same purpose - to make persons conducting businesses within Kalookan City contribute to city revenues;
(3) by the same taxing authority - Kalookan City;
(4) within the same taxing jurisdiction - within the territorial jurisdiction of Kalookan City;
(5) for the same taxing periods - per calendar year; and
(6) of the same kind or character - a local business tax imposed on gross sales or receipts of the business.
*City of Manila v. Coca-Cola Bottlers Philippines, Inc., GR 181845, August 4, 2009 & GR 167283, February 10, 2010
*Swedish Match Philippines, Inc. v. The Treasurer of the City of Manila, GR 181277, July 3, 2013
*Nursery Care Corporation v. Acevedo, GR 180651, July 30, 2014
