Principles of Taxation

Question 1

What are the aspects of taxation?

Answer 1

1) Levy or Imposition - This is the legislation. The function of Congress.
2) Assessment / Enforcement / Administration - This is the collection function of the executive and administrative branches. BIR, LGUs..

Question 2

Discretion of the taxing power extends to:

Answer 2

1) Amount or rate of the tax situes
2) Kinds of tax to be collected, method of collection
3) Apportionment of the tax purposes for its levy
3) The person, property or excises to be taxed provided these are within its jurisdiction

Question 3

What are the inherent limitations of taxation?

Answer 3

TIPEN
Territoriality
International comity
Public purpose
Exemption of government
Non-delegability of the power to rax (exclusively rests with Congress)
*Public Purpose and Non-delegation are ALSO CONSTITUTIONAL LIMITATIONS

Question 4

What is double taxation

Answer 4

Taxing the object or subject within the territorial jurisdiction TWICE, for the SAME PERIOD, involving the SAME KIND OF TAX, by the SAME TAXING AUTHORITY.

Question 5

Tax exemption on real property taxes will be based on the Doctrine of Usage and not Doctrine of Ownership except for real properties owned by the government which is absolutely exempt from taxation.

Answer 5

Yup!

Question 6

Tax exemption on local taxes can be granted by local governments but they cannot condone existing liabilities on local taxes.

Answer 6

Yep.

Question 7

Tax exemption on real property tax cannot be granted by local governments but they can condone real property tax liabilities in SPECIAL CASES.

Answer 7

yes ok.

Question 8

Constitutional Limitations

Answer 8

1. observance of due process of law
2. equal protection of the law
3. uniformity in taxation
4. progressive scheme of taxation
5. non-imprisonment for non-payment debt or poll tax
6. non-impairment of obligation and contract
7. free worship rule
8. non-appropriation of public funds or property for the benefit of any church, sect or system of religion
9. exemption of religious, charitable or educational entities, non-profit cemeteries, churches and mosque from property
   taxes.
10. exemption from taxes of the revenues and assets of non-profit, non-stock educational institutions including grants,
    endowments, donations or contributions for educational purposes
11. concurrence of a majority of all members of Congress for the passage of a law granting tax exemption
12. non-diversification of tax collections
13. non-delegation of the power of taxation
    Exception:
    a. power to tax was delegated to the President under the Flexibility Clause of the Tariff and Customs Code
    b. power to tax was delegated to the local government units under the Local Government Code
    c. matters involving the expedient and effective administration and implementations of assessment and collection
    of taxes or certain aspects of taxing process that are not legislative in character
14. non-impairment of the jurisdiction of the Supreme Court to review tax cases
15. appropriations, revenue or tariff bills shall originate exclusively in the House of Representatives but the Senate may
    propose or concur with amendments
16. each local government unit shall exercise the power to create its own sources of revenue and shall have a just
    share in the national taxes

Question 9

Inherent limitations of taxation that are also constitutional limitations:

Answer 9

1) Non-delegability of the power of taxation

2) Public purpose only

Question 10

Elements of a valid tax

Answer 10

1. must not violate the constitutional, inherent and or contractual limitation of the power of taxation
2. must be uniform and equitable, not unjust, excessive, oppressive, confiscatory or discriminatory
3. must be for a public purpose
4. must be levied by the taxing power (legislature) having jurisdiction over the object of taxation
5. must be proportionate in character
6. generally payable in money, at regular interval (not regular in payment)

Question 11

Sources of tax laws

Answer 11

Constitution
Statues and Presidential Decrees
Executive Orders
Treaties

Administrative issuances or BIR Rulings
Judicial decisions
Ordinances - local ordinances
Revenue regulations - DoF

Question 12

This is a formal pronouncement intended to clarify or explain the tax law and carry into effect its general provisions by providing details of administration and procedure. They have the force and effect of law.

Answer 12

Revenue Regulation

Question 13

These are the less general interpretations of the tax laws at the administrative levels, being issued from time to time by the CIR, to clarify certain provisions of the tax law.

They are merely advisory or sort of an information service to the taxpayer such that, none of them are binding except to the addressee and may be
reversed by the BIR at anytime.

Answer 13

Administrative issuances or BIR Rulings

Question 14

Fundamental Doctrines in Taxation

Answer 14

1. No court may enjoin the collection of taxes
2. Claim for exemptions shall be interpreted strictly against the taxpayer
3. A law that permit deduction from the tax base is strictly construed against the taxpayer
4. Tax assessment are presumed to be correct and done in good faith
5. Tax laws are generally prospective in application
6. Tax are not subject to compensation or set-off
7. Refund of taxes do not earn interest because interest do not run against the government

Question 15

What is the BASIS of taxation?

Answer 15

The government and the people have the reciprocal and mutual duties of support and protection.

Question 16

What is the THEORY of taxation?

Answer 16

The existence of the government is a necessity and it cannot continue without means to support itself.

Question 17

What is the scope of taxation?

Answer 17

Taxation is supreme, comprehensive, unlimited and plenary. It includes the power to destroy

Question 18

What is the situs of taxation?

Answer 18

The place of taxation

Question 19

What factors determine the situs of taxation?

Answer 19

1. Nature, kind, or classification of the tax
2. Subject matter of the tax
3. Citizenship of the taxpayer
4. Residence of the taxpayer
5. Sources of income
6. Place of exercise, business or occupation being taxed
7. Place where income-producing activity was held or done

Question 20

Principles of a sound tax system

Answer 20

a. Fiscal Adequacy – sources of revenue should be sufficient to meet the demand for public expenditure
b. Administrative Feasibility - tax laws must be capable of convenient, just and effective administration
c. Theoretical Justice - tax must be imposed with equity and certainty and must consider the taxpayers ability to pay and
benefits received
- Non-observance of the principles does not necessarily render a tax levy unconstitutional.

Question 21

Nature of Philippine Tax Laws

Answer 21

Philippine tax laws are civil in nature and character. They remain effective even in times of war.
They are not penal in nature, although penalties are provided for their violation.

Question 22

Natures of taxation

Atty. Jack

Answer 22

1. Plenary
2. Comprehensive
3. Awesome power that could destroy

Question 23

What are the characteristics of taxes?

Answer 23

1. Enforced
2. Payable in money
3. Exclusively levied by the legislature
4. Assessed in accordance with some reasonable rule of apportionment
5. Imposed by the State within its jurisdiction.
6. Levied for a public purpose.

Question 24

The theory of taxation is:

Answer 24

Necessity

Question 25

The basis of taxation is:

Answer 25

Benefits-Protection theory
or
Mutual protection & support

Question 26

What are the scopes of legislative taxing power?

Answer 26

KAMPASS
Kind
Amount
Method
Purpose of the levy
Apportionment of the tax -NG/LG

Question 27

Exceptions the the non-delegability rule of taxation:

Answer 27

1. Authority of the President to fix TARIFF RATES, IMPORT and EXPORT QUOTAS, TONNAGE & WHAREFARE DUES, +other IMPOSTS
2. Local Governments’ power to levy taxes, fees and charges
3. Delegation to administrative agencies for implementation and collection.

Question 28

Elements of double taxation

Answer 28

1. Same property or subject is taxed twice when it should only be taxed once
2. Both taxes are levied for the same purpose
3. Imposed by the same taxing authority
4. Within the same jurisdiction
5. During the same taxing period
6. Covering the same kind of character o tax

Question 29

Passage of a tax law

Answer 29

The bill must originate from the House of Representatives.
After passing 3 READINGS by a MAJORITY VOTE in technical committee, deliberation and journals of Congress, it shall be elevated to the Senate, which needs to pass the same 3 readings. Normally, the President signs a bill into law for its implementation.

Question 30

Requisites of tax regulations

Answer 30

Reasonable
Within conferred authority
Lawful
Published
Prospective unless the retroactive application is beneficial to the taxpayer

Question 31

Who has the authority to promulgate tax regulations?

Answer 31

The Secretary of Finance upon the recommendation of the Commissioner of Internal Revenue.

-Carlos Dominguez upon recommendation of Cesar Dulay.

Question 32

These are issuances that provide directives or instructions; prescribe guidelines and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, plans and programs of the BIR in all areas of operations except auditing.

Answer 32

Revenue Memorandum Orders

Question 33

These are issuances that cover subject matters dealing strictly with the permanent administrative set-up of the Bureau, more specifically, the organizational structure, statements of functions and/or responsibilities of BIR offices, definitions and delegations of authority, staffing and personnel requirements and standards of performance.

Answer 33

Revenue Administrative Orders

Question 34

These are issuances that publish pertinent and applicable portions as wells as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Answer 34

Revenue Memorandum Circulars.

Question 35

These are issuances from the BIR of general interpretation of tax laws usually upon the request of a taxpayer to clarify a provision of law.

Answer 35

BIR Rulings

Question 36

These are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the NIRC and related statutes.

Answer 36

Revenue Regulations