SPECIAL RATES AND OTHER QUESTIONS

Question 1

Explain the exemption of educational institutions from taxes.

Answer 1

Non-profit, non-stock educational institutions are exempt from tax on its revenues that are actually, directly and exclusively devoted for educational purposes.

Government educational institutions are exempt from income tax.

Private education institutions are subject to a minimal 10% income tax.

Question 2

What is required for the passage of a law granting tax exemption? For the withdrawal of a tax exemption?

Answer 2

Concurrence of ABSOLUTE MAJORITY OF ALL MEMBERS OF CONGRESS is needed for the PASSAGE of a law granting tax exemption.

Concurrence of RELATIVE MAJORITY OF ALL MEMBERS OF CONGRESS is needed for the WITHDRAWAL of a law granting tax exemption.

Question 3

Can tax bills originate from the Senate?

Answer 3

No. Appropriations, revenue, or tariff bills shall ORIGINATE EXCLUSIVELY in the House of Representatives.

Question 4

T or F
All inherent powers presuppose an equivalent form of compensation.

Answer 4

F.

Question 5

The constitutional limitation of taxation that states that exemption of religious/charitable entities, non-profit cemeteries, churches, mosques, pertains to what kind of tax?

Answer 5

PROPERTY TAX ONLY.

Question 6

T or F
The power to tax includes the power to exempt.

Answer 6

T.

Question 7

A. Taxation is the rule, EXEMPTION IS THE EXCEPTION.
B. Taxation is the rule, EXCEPTION IS THE EXEMPTION.
Which is correct?

Answer 7

A.

Question 8

What is tax administration? Who administers tax administration in the Philippines?

Answer 8

Tax administration refers to the management of the tax system. Tax administration in the PH is entrusted to the BIR, which is under the Department of Finance.

Question 9

What are revenue regulations? Who issues revenue regulations?

Answer 9

Revenue regulations are formal pronouncements intended to clarify or explain the law. The Secretary of Finance issues revenue regulations, upon recommendation of the CIR.

Question 10

What is the composition of the BIR?

Answer 10

BIR is composed of 1 commissioner and 4 deputy commissioners, each designated to:

a. Operations
b. Legal Enforcement
c. Information Systems
d. Resource Management

Question 11

What are the powers of the BIR?

Answer 11

1. Assessment and collection of taxes
2. Enforcement of all forfeitures, penalties/fines decided in its favor by the courts
3. Giving effect to and administering the supervisory and police power conferred to it by the NIRC and other laws
4. Assignment of internal revenue officers and other employees
5. Provision and distribution of forms/receipts
6. Issuance of receipts and clearances
7. Submission of annual report.

Question 12

What are the powers of the Commissioner of Internal Revenue?

Answer 12

1. To interpret the provisions of NIRC, subject to review by the Secretary of Finance
2. To decide on tax cases, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals
3. To obtain information and to summon persons to effect tax collection.
4. To make assessment and prescribe additional requirement for tax administration and enforcement
5. To examine tax returns and determine tax due thereon
6. To conduct inventory taking or surveillance
7. To prescribe presumptive gross sales and receipts
8. To terminate tax period
9. To prescribe real property values
10. To compromise tax liabilities of tax payers
11. To inquire into bank deposits when:
    a. Determining the gross estate of a decedent
    b. To substantiate the taxpayers claim of financial
    incapacity to pay tax in the application of a tax
    compromise
12. To accredit and register tax agents
13. To refund or credit internal revenue taxes

Question 13

The taxing power of the provinces, municipalities and cities emanate from?

Answer 13

Constitutional grant.

Question 14

What are the tax-exempt GOCCs?

Answer 14

1. Philippine Health Insurance Commission (PHIC)
2. Social Security Services (SSS)
3. Government Service Insurance System (GSIS)
4. Philippine Charity Sweepstakes Office (PCSO)

Question 15

Which of the inherent powers of the State are inferior and superior to the Non-impairment clause of the Constitution?

Answer 15

Inferior - taxation power

Superior - police power and eminent domain

Question 16

What is the non-impairment clause of the Constitution?

Answer 16

The non-impairment clause safeguards the integrity of contracts AGAINST UNWARRANTED INTERFERENCE BY THE STATE. Contracts should not be tampered with by subsequent laws that would change/modify the rights and obligations of the parties.

Question 17

Abdul stipulated in his last will and testament that his land in Davao be transferred to a GOCC upon his death. Is the value of the land deductible from his gross estate?

Answer 17

It depends upon the nature of the GOCC. Keep in mind that to be deductible, transfers for public use must be for EXCLUSIVE PUBLIC PURPOSE.

Question 18

Abdul and Abdullah, are married under CPOG. Mohammed donated to them a piece of land which they intended to build their residence. Abdul sold his Bajaj motorcycle, which he owned prior the marriage, and used the proceeds to build their home. The motorcycle was bought by Abdul for 100,000, and he sold it for the same amount. Thereafter, Abdul died. At the time of death, the land is worth 500,000 and the home at 200,000. How shall this be reflected in Abdul’s estate tax return?

Answer 18

The land is common property.
The home is the separate property of Abdul since the money with which it was built is Abdul’s separate property.

The home is part of special deduction as follows:

Land (Common) - 500,000/2 = 250,000
Building (Separate) = 200,000

Question 19

What does TRAIN mean? What RA is it?

Answer 19

Tax Reform Acceleration and Inclusion. It is RA 10963.