Tax Laws and Administration

Question 1

Elements of Valid Tax

Answer 1

• uniform, equitable, proportionate
• for public purpose
• generally payable in money

Question 2

Classification of Taxes

Sumptuary

Answer 2

for a specific objective

Question 3

Classification of Taxes

Specific vs Ad Valorem

Answer 3

Specific - per kilo / liter
Ad Valorem - fixed proportion of a value

Question 4

Classification of Taxes

Proportional vs Progressive

Answer 4

Proportional - fixed rate (business and corporation)
Progressive - increases as tax base increases

Question 5

Classification of Taxes

National Taxes (PDIVES)

Answer 5

Other Percentage Tax
Estate and Donor’s Tax
Income Tax
VAT
Excise Tax
Documentary Stamp Tax

Question 6

Classification of Taxes

Local Taxes (RPCB)

Answer 6

Real Property Tax
Professional Tax
Community Tax
Business Tax

Question 7

Distinction of Tax with Other Items

Tax vs Revenue

Answer 7

Tax - amount imposed
Revenue - amount collected (tax + other)

Question 8

Distinction of Tax with Other Items

Tax vs Toll

Answer 8

Tax - demand of sovereignty
Toll - demand of ownership (government or private)

Question 9

Distinction of Tax with Other Items

Tax vs License

Answer 9

Tax - for revenue, imposed post-activity
License - for regulation, imposed pre-activity

Question 10

Distinction of Tax with Other Items

Tax vs Debt

Answer 10

Tax - no set-off, not assignable, no interest
Debt - YES TO ALL

Question 11

Distinction of Tax with Other Items

Tax vs Special Assessment

Answer 11

Special Assessment - land adjacent to public improvement, imposed on land only (person is not damay)

Question 12

Tax vs Revenue Regulation vs Rulings

Answer 12

Tax - Congress, 1st
Revenue Regulation - Department of Finance, 2nd
Rulings - BIR, 3rd

All are broad and prospective

Question 13

Withholding System for Tax Collection

Creditable vs Final

Answer 13

Final - fully withheld, certain passive income, ITR is not necessary
Creditable - only a portion, certain passive and active income, company for CWT and employee for balance thus, there’s ITR

Question 14

Composition of BIR

5 (1C + LORI)

Answer 14

Chief Officer
Legal Group
Operations Group
Resource Management Group
Information Management

Question 15

Powers of CIR that cannot be delegated

Answer 15

1. Recommend the promulgation of rules and regulations
2. Issue rulings of first impressions
3. Compromise or abate tax liability (except if minor violations and basic deficiency tax of 500k)
4. Assign / reassign internal revenue officers to establishment where articles subjects to excise tax

Question 16

Fundamental Doctrines in Taxation

Marshall vs Holmes

Answer 16

Marshall - power to destroy
Holmes - encourage certain acts

Question 17

Fundamental Doctrines in Taxation

Imprescriptibility and Prospectivity of Taxation

Answer 17

Taxes are imprescriptible unless the law itself provides such prescription

Taxes are prospective unless retroactive application is the intent of the congress

Question 18

Fundamental Doctrines in Taxation

Principle of “Strictissimi Juris”

Answer 18

“Taxation is the rule of and exemption is the exception.”

Question 19

Fundamental Doctrines in Taxation

Judicial Interference

Answer 19

Courts cannot inquire into the wisdom of a taxing act

Question 20

Types of Administrative Issuances

Revenue Regulations

Answer 20

• signed by the Secretary of Finance
• define rules and regulations of NIRC

Question 21

Types of Administrative Issuances

Revenue Memorandum Circulars (RMC)

Answer 21

• publish pertinent and applicable portions

Question 22

Types of Administrative Issuances

Revenue Memorandum Orders (RMO)

Answer 22

• provide directives or instructions

Question 23

Types of Administrative Issuances

BIR Rulings

Answer 23

• official position of BIR to queries raised by taxpayers about clarification and interpretation of tax laws.