Taxation 101 Flashcards
An enforced proportional contribution, imposed by the state in its sovereign capacity, to support the government
Taxation
What are the elements of taxation
Imposed proportional contribution from people and property
Enforced by the state in virtue of its sovereignty
For the support of the government
Through which the government and its agencies continue to operate and with which the state effects its functions for the welfare of its constituents
Lifeblood theory
Sometimes called the power to destroy
Power of taxation
What are the attributes of sound taxation system
Fiscal adequacy
Administrative feasibility
Theoretical justice
The sources of revenue should be adequate to meet government expenditures and their variations
Fiscal adaquacy
The tax system should be capable of being effectively administered and enforced with the least inconvenience to the taxpayer
Administrative feasibility
The tax system should be fair to the average taxpayer and based upon the ability to pay
Theoretical justice
What are the inherent limits of the power to tax
1 Taxes must be exacted for Public purpose
2 The power to tax is Inherently legislative in nature
3 government entities, agencies, and instrumentalities are generally exempt from taxation
4 international comity
5 taxes are limited to the state’s territorial jurisdiction
Money raised by taxation can be spent only on public purposes and not for the advantage of private individuals
Taxes must be exacted for a public purpose
What are the exemptions of power to tax
Delegation to local government
Delegation to the president
Delegation to administrative agencies
Exemption of the government taxation
Government owned or controlled corporations are not exempt from real property taxes
It refers to te respect accorded by nations to each other because they are sovereign equals. Thus, the property or income of a foreign state may not be the subject of taxation by another state.
International comity
What is the exemption to the territorial jurisdiction
Relationship exists between the state and the taxpayer
What are the 2 types of due process
Substantive due process
Procedural due process
The law must be reasonable and it must be for a public purpose
Substantive due process
There must be no arbitrariness in the assessment and collection
Procedural due process
It means that all persons subjected to such legislation shall be treated alike, under like circumstances and conditions, both in the privileges conferred and, in the liabilities, imposed.
Equal protection of laws
Exemption of tax under the religious freedom
Income of religious organizations from activities conducted for profit or from any of their property is subject to impncome tax
What is poll tax
Cedilla or residence tax
Are levied on individuals or organizations and must be paid directly to the government
Direct and indirect taxes
They include income tax, wealth tax, corporate tax, etc.
Direct and indirect tax
Are levied on goods and services and are collected by an intermediary from the person who bears the ultimate economic burden of the tax
Indirect tax
Increases as the taxable amount increases, meaning those with higher income pay a higher percentage of their income in tax
Progressive
Takes a larger percentage of income from low- income earners than from high income
Regressive tax
Also known as flat tax, levies the same percentage rate of taxation on everyone, regardless of income
Proportional tax
Levied based on the value of the goods or property
Ad valorem
Are levied based on quantity, such as excise taxes and fuel or cigarettes
Specific taxes
Are levied on the consumption of goods and services and include sales taxes and vat
Consumption taxes
Levied on the income of individuals and businesses
Income taxes
Are levied on the profits of business
Corporate taxes
Levied on individuals income
Personal taxes
What are the Classification of taxes
Direct and indirect taxes
Progressive, regressive, and proportional taxes
An valorem and specific taxes
Consumption and income taxes
Corporate and personal taxes
A tax on all yearly profits arising from property, professional, trade, or business, or a tax on persons income, emoluments, profits and the like
Income tax
Is in the nature of an exercise taxation system, or taxation on the exercise of privileges, the privilege to earn yearly profits from various sources. It is a soupy stem that does not provide for the taxation of property
Income taxation
Refers to all wealth which flows into the taxpayer other than as mere return of capital. It includes the forms of income specifically described as gains and profits, including gains derived from the sale or other disposition of capital assets
Income
Is a flow of service rendered by capital by payment of money from it or any benefit rendered by a fund of capital in relation to such fund through a period of time
Income
A primary consideration in income taxation is that there must be income before there could be income taxation
Existence of income
The earning process is complete or virtually complete
An exchange has taken place
Realization of income
If actually or physically received by taxpayer
If constructively received by taxpayer
Recognition income
It is the place or authority that has the right to impose and collect taxes
Situs of taxation
What are the factors to determine the situs of taxation
Residence of the taxpayers
Citizenship of the taxpayer
Nature of the tax
Subject matter of the tax
Source of income
Is a tax imposed by your local government unit that property owners must pay annually
Real estate property tax
The transmission of properties from a descendent to his heirs
Estate tax
Levied on the transmission of properties from a living person to another living person
Donors tax
What are the elements of a donation
Reduction of the patrimony of the donor
Increase of the patrimony of donee
Intent to do an act of liberality or animus donandi
What are the essential requisites of a taxable donation
1 Capacity of the donor or the legal ability of the donor to enter into a valid contract
2 donative intent
3 delivery, whether actual or constructive, of the subject matter
4 acceptance of the gift by the donee
Is a business tax imposed and collected on every sale, barter, or exchange of goods or properties (real or personal), lease of goods or properties, renditions of services, all in the course of trade or business, importation of goods
Vat or value added tax
It is an indirect tax that may be shifted or passed on to the buys, transferee or lessee of goods, properties or services.
Value added tax
This usually refers to redistribution of land from the rich to the poor
Agrarian reforms
It includes regulation of ownership, operation, leasing, sales, and inheritance of land
Agrarian reform
Decreeing the emancipation of tenants from the bondage of the soil, transferring to them the ownership of the land they till and providing the instruments and mechanism therefore
Presidential decree no. 27
This shall apply to tenant farmers of private agricultural lands primarily devoted to rice and corn under a system or sharecrop or lease tenancy
Presidential decree no. 27
An act instituting a comprehensive agrarian reform program to promote social justice and industrialization, providing the mechanism for its implementation, and for other purposes
Republic act no. 6657
Is founded on the right of farmers and regular farm workers, who are landless, to own directly or collectively the lands they till or, in the case of other farm workers, to receive a just share of the fruits thereof.
Agrarian reform
The redistribution of lands, regardless of crops or fruits produced to farmers and regular farm workers who are landless
Agrarian reforms
The cultivation of the soil, plating of crops, growing of fruit trees, rosining of livestock, poultry or fish, including the harvesting of such farm products, and other farm activities and practices performed by a farmer
Agriculture, agricultural enterprise, agricultural activity
Refers to land devoted to agricultural activity as defined in this act and not classified as mineral, forest, residential, commercial, or industrial land
Agricultural land
Refers to a natural person whose primary livelihood is cultivation of land
Farmer
Refers to any agricultural land not cultivated, tilled or developed to produce any crop nor devoted to any specific economic purpose continuously for a period of three years
Idle abandoned land
A natural person who renders services for value as an employee or laborer in an agricultural enterprise or farm
Farm workers
Is a natural person who is employed on a permanent basis by an agricultural enterprise or farm
Regular farm worker
Is a natural person who is employed on a recurrent, periodic, or intermittent basis by an agricultural entreprise or farm
Seasonal farm worker
Shall refer to organizations composed primarily of small agricultural producers, farmers, farm workers, or other agrarian producers
Cooperatives
