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Income Taxation study notes (Philippines), Study notes of Business Taxation and Tax Management

De La Salle University (DLSU)Business Taxation and Tax Management

Study notes in income taxation (Philippines) ©

Typology: Study notes

2017/2018

Uploaded on 10/07/2021

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THE AWESOME NOTES
TAXATION
!
Page of 114
A. DEFINITION AND CONCEPT
!
TAXATION; defined
is the power by which
the sovereign raises revenue
to defray the expenses of the
govt.
!
ALSO:
•is a way of app ort ion ing th e cost of
government among those who in some
measure are privileged to enjoy its benefits
and must bear its burden.
•as a destructive power which interferes with
the personal and property rights of the
people and takes from them a portion of
their property for the support of the govt
(PRDC vs CA)
!
B. NATURE OF TAXATION
1. attribute of sovereignty
2. a legislative in character
3. generally not delegated to executive or
judicial department
4. subject to constitutional and inherent
limitations
!
AS ATTRIBUTE OF SOVEREIGNTY
being an essential and inherent attribute of
sovereignty, belonging as a matter right to
every independent government, without being
expressly conferred by the people.
!
LIFEBLOOD THEORY
no sovereign stat can continue to
exist without the means to pay its
expenses, and for those means,it
has the right to compel all citizens
and property within the limits to
contribute.
!
AS A LEGISLATIVE CHARACTER
as only the legislative has the power to
1. determine the
•nature (kind)
•object (purpose)
•extent (amount or rate)
•coverage (subjects and objects)
•apportionment of tax (general or limited
application)
•situs of imposition; and
•method of collection
2. grant tax exemptions or condonations; and
3. specify or provide for he administrative as
well as judicial remedies that either the
go ve rn ment or the ta xp ay er ma y av ai l
themselves in the proper implementation of the
tax measure.
GENERALLY NOT DELEGATED TO
EXECUTIVE OR JUDICIAL DEPARTMENT
as the power to tax is purely legislative, and its
delegation may result in the infringement of the
theory of separation of power.
!
H O W E V E R : I N S T A N C E S W H E N
DELEGATION IS ALLOWED
1. to local governments, in respect of matters
of local concerns (but cannot exceed than
what was delegated to them)
2. wh en a llo wed b y th e co nst itu ti on.
(ie. President may fix, within the limits and
subject to such limitations and restrictions
as it may impose, tariff rates, import and
export quotas, tonnage and wharfage
dues, and other duties or imposts within
the framework of the national development
program of he Govt.)
3. when the delegation relates merely to
administrative implementation that may
call for some degree of discretionary
power, under a set of sufficient standards
expressed by law.
!
NOTE: the Congress has no power to revoke
the power of LGU to impose tax ---
•as Congress cannot abolish what is
expressly granted by the fundamental law
•furthermore, their only authority is to provide
the guidelines and limitations on the local
government's exercise of the power to tax.
!
SUBJECT TO CONSTITUTIONAL AND
INHERENT LIMITATIONS
while taxation is considered to be the strongest
of all the power of the government, being
unlimited, plenary, and comprehensive and
supreme, but it is subject to limitations
!
NOTE: LEVY; defined
- is an exercise of the to tax, which is
exclusively legislative in nature and character.
!
HENCE; it cannot be said that the
executive may levy taxes.
!
!
AAA - BASTE / ATB
prepared by: ronie ablan
I. GENERAL PRINCIPLES
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TAXATION Page^ ^1 of^ ^14

A. DEFINITION AND CONCEPT

TAXATION; defined is the power by which the sovereign raises revenue to defray the expenses of the govt. ALSO:

  • is^ a^ way^ of^ apportioning^ the^ cost^ of government among those who in some measure are privileged to enjoy its benefits and must bear its burden.
  • as a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the govt (PRDC vs CA)

B. NATURE OF TAXATION

  1. attribute of sovereignty
  2. a legislative in character
  3. generally not delegated to executive or judicial department
  4. subject to constitutional and inherent limitations AS ATTRIBUTE OF SOVEREIGNTY being an essential and inherent attribute of sovereignty, belonging as a matter right to every independent government, without being expressly conferred by the people. LIFEBLOOD THEORY no sovereign stat can continue to exist without the means to pay its expenses, and for those means,it has the right to compel all citizens and property within the limits to contribute. AS A LEGISLATIVE CHARACTER as only the legislative has the power to
  5. determine the
    • nature (kind)
    • object (purpose)
    • extent (amount or rate)
    • coverage (subjects and objects)
    • apportionment of tax (general or limited application)
    • situs of imposition; and
    • method of collection
  6. grant tax exemptions or condonations; and
  7. specify or provide for he administrative as well as judicial remedies that either the government or the taxpayer may avail themselves in the proper implementation of the tax measure.

G E N E R A L LY N O T D E L E G AT E D T O

EXECUTIVE OR JUDICIAL DEPARTMENT

as the power to tax is purely legislative, and its delegation may result in the infringement of the theory of separation of power. H O W E V E R : I N S T A N C E S W H E N DELEGATION IS ALLOWED

  1. to local governments, in respect of matters of local concerns (but cannot exceed than what was delegated to them)
  2. when allowed by the constitution. (ie. President may fix, within the limits and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of he Govt.)
  3. when the delegation relates merely to administrative implementation that may call for some degree of discretionary power, under a set of sufficient standards expressed by law. NOTE: the Congress has no power to revoke the power of LGU to impose tax ---
  • as^ Congress^ cannot^ abolish^ what^ is expressly granted by the fundamental law
  • furthermore, their only authority is to provide the guidelines and limitations on the local government's exercise of the power to tax. SUBJECT TO CONSTITUTIONAL AND INHERENT LIMITATIONS while taxation is considered to be the strongest of all the power of the government, being unlimited, plenary, and comprehensive and supreme, but it is subject to limitations NOTE: LEVY; defined
  • is an exercise of the to tax, which is exclusively legislative in nature and character. HENCE; it cannot be said that the executive may levy taxes. AAA - BASTE / ATB

I. GENERAL PRINCIPLES

TAXATION Page^ ^2 of^ ^14

C. C H A R A C T E R I S T I C S O F

TAXATION

CHARACTERISTICS

  1. pecuniary in nature
  2. enforced charges and contribution
  3. imposed on persons and property within the territorial jurisdiction of a state
  4. assessed according to a reasonable rule of apportionment

D. POWER OF TAXATION AS

D I S T I N G U I S H E D F R O M

EMINENT DOMAIN AND POLICE

POWER

see: Mamalateo's Book Reviewer on Taxation pg. 11-

E. PURPOSE OF TAXATION

REVENUE RAISING

to promote the general welfare and protection of its citizens. see also; Lifeblood Theory NON-REVENUE / REGULATORY

  • REGULATORY ie. requiring licenses for which license fees may have to be paid, congruent with the exercise of police power, which is n e c e s s a r y f o r t h e r e g u l a t i o n a n d surveillance of useful occupations, or discourage non-useful occupation
  • REDUCTION OF SOCIAL INEQUALITY ff the progressive system of taxation, which prevents the undue concentration of wealth in the hands of a few individuals.
  • ENCOURAGE^ ECONOMIC^ GROWTH^ BY GRANTING TAX EXEMPTIONS AND INCENTIVES
  • PROTECTIONISM to protect local industries from foreign competition

F. PRINCIPLE OF SOUND TAX

SYSTEM

FISCAL ADEQUACY; means that government revenues from taxation must suffice to meet fiscal requirements. This implies that a good tax system of a State will not results to budget deficit. ADMINISTRATIVE FEASIBILITY; means that tax laws, rules and regulations must be capable of being administered and complied with. Citizenry must easily understand its application for its compliance. AS: No matter how willing and able a taxpayer in complying the mandates of a tax law if he could not comprehend, he could not fully comply the same without lapses.

  • Notably, each error in compliance is penalized and good faith is not always a good defense. THEORETICAL JUSTICE; means Taxes imposed should be capable of being paid by the taxpayers; otherwise, its imposition would not serve the purpose because no matter how willing they are to pay, they are not capable of doing so. AAA - BASTE / ATB

TAXATION Page^ ^4 of^ ^14

DOUBLE TAXATION

IN STRICT SENSE

DIRECT DUPLICATION TAXATION

PROHIBITED

the ff elements must be present:

  1. the same property must be taxed twice when it should be taxed only once
  2. both taxes imposed on the same property or subject matter
  3. for the same purpose
  4. by the same taxing authority
  5. within the same jurisdiction or taxing district
  6. during the same taxing period; and
  7. m u s t b e t h e s a m e k i n d o r character of tax. IN BROAD SENSE INDIRECT DUPLICATE TAXATION double taxation here means as an indirect duplication of taxation.
  • not prohibited INSTANCES
  • one^ is^ in^ the^ exercise^ of^ police power (regulatory) and the other is imposed as tax (revenue raising). [ie. the former is exacted as license fee and the other as tax n the proceeds of the sale]
  • state merely imposes tax on every separate and distinct business in which a party is engaged in.
  • an article is taxed by two distinct states. NOTE: double taxation is not a valid defense against the legality of a tax measure AS: double taxation is not entirely prohibited, only when it results to direct duplication of the tax. CONSTITUTIONALITY OF DOUBLE TAXATION
  • see: Villanueva vs. City of Iloilo, Dec. 28, 1968 T H E U S U A L M E T H O D S O F AVOIDING THE OCCURRENCE OF DOUBLE TAXATION
  1. allowing reciprocal exemption either by law or by treaty
  2. allowance of tax credit for foreign taxes paid
  3. allowance of deduction for foreign taxes paid
  4. reduction of the Philippine tax rule

ESCAPE FROM TAXATION

SHIFTING OF TAX BURDEN

WAYS OF SHIFTING TAX BURDEN

by shifting the burden to someone else, not as a tax, but as part of the purchase price BUT: this only applies to INDIRECT TAX FOR DIRECT TAX; it cannot be shifted to person, other than the very person who, as intended, should paY the tax. TA X E S T H AT C A N B E S H I F T E D (INDIRECT TAX)

  1. value added tax
  2. excise tax
  3. other percentage tax; and
  4. documentary stamp tax MEANING OF IMPACT AND INCIDENCE OF TAXATION IMPACT OF TAXATION
  • point in which tax is originally imposed or the one on whom the tax is formally assessed INCIDENCE OF TAXATION
  • point on which tax is originally imposed or the one on whom tax is formally assessed. PLUS: TRANSFORMATION
  • for manufacturers or producers, upon whom tax are imposed, fearing the loss of his market if he should add to the price, pays the tax and endeavor to recoup himself by improving his process of production, thereby producing his units at a lower cost. CAPITALIZATION the reduction in the price of the taxed object equal to the capitalized value of future taxes which the purchaser expects to be called upon to pay. KINDS OF SHIFTING TAX BURDER - FORWARD SHIFTING; when the burden of the tax is transferred from a factor if production through the factors of distribution until it finally settles on the ultimate purchaser or consumer - BACKWARD SHIFTING; when the burden is transferred from the consumer through the factors of distribution to the factors of production - ONWARD^ SHIFTING;^ when^ the^ tax^ is shifted 2 or more times wither forward or backward AAA - BASTE / ATB

TAXATION Page^ ^5 of^ ^14

TAX EVASION vs. TAX AVOIDANCE 3 FACTORS OF TAX EVASION

  1. the end to be achieved (payment of tax less than what is legally due from him)
  2. an accompanying state of mind which is described as being evil, in bf, willful, or deliberate, not merely accidental; and
  3. the course of action or failure of action which is unlawful. IE OF VALID TAX AVOIDANCE
  • donation of property to a non-stock, non-profit educational institution (Art. XIV, Sec. 4(3) of the Consti and Sec. 3(b) of the NIRC)
  • deductions PROOF OF TAX EVASION
  • failure^ to^ declare^ for^ taxation purposes true and actual income derived from business
  • substantial^ under-declaration^ of income in the tax returns of the taxpayer for 4 consecutive years c o u p l e d w i t h i n t e n t i o n a l understatement.

EXEMPTION FROM TAXATION

MEANING

is a grant of immunity, express or implied, to a particular persons or corporations or to persons or corporations of a particular class,

  • from a tax upon property or an exercise which persons and corporations generally within the same district are obliged to pay NATURE
  • STRICTLY CONSTRUED AGAINST THE TAXPAYER
  • AS: the law does not look with favor on tax exemptions, they being contrary to the lifeblood theory which is the underlying basis for taxes.
  • furthermore: being a derogation of the s o v e r e i g n t y o f t h e s t a t e , i t s relinquishment is never presumed
  • see also: lifeblood theory
  • strictissimi juris
  • EXEMPTION GRANTED IS PERSONAL IN NATURE AND COVERS ONLY TAXES FOR WHICH THE TAXPAYER-GRANTEE IS DIRECTLY LIABLE
  • hence; a sale to a tax exempt corp by another corp who is not tax exempt, cannot avail of such exemption. KINDS OF TAX EXEMPTION
  • EXPRESS expressly granted by organic or statute law
  • IMPLIED whenever particular persons, properties or excises are deemed exempt as they fall outside the scope of the taxing provision itself.
  • CONTRACTUAL tax exemption in consideration of a c o n t r a c t u a l a g r e e m e n t w i t h t h e government RATION/GROUND
  1. statue granting exemption provides for liberal interpretation
  2. by clear legislative intent
  3. special taxes relating to special cases and affecting only special classes of person
  4. exemptions refer to public property, or to government,its political subdivisions or instrumentalities AAA - BASTE / ATB

TAX EVASION TAX AVOIDANCE

tax minimization is a scheme used outside of those lawful means to escape tax liability and, when availed o f , i t u s u a l l y s u b j e c t s t h e taxpayer to further or additional civil a n d c r i m i n a l liabilities a t a x s a v i n g device within the means sanctioned by law PROVIDED t h i s s h o u l d b e u s e d b y t h e taxpayer in GF and in arms lenght r e s u l t s i n t h e a b s e n c e o f payment of tax minimization of tax

TAXATION Page^ ^7 of^ ^14

COMPROMISE

the commissioner may compromise the payment of any IR tax under 2 instances:

  1. when a reasonable doubt as to the validity of the claim against the taxpayer exists; or
  2. when financial position of the taxpayer demonstrates a clear inability to pay the assessed tax TAX AMNESTY DEFINED general or intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of evasion or violation of the revenue or tax laws.
    • partake absolute forgiveness or waiver of the government of its right to collect. D I S T I N G U I S H E D F R O M T A X EXEMPTION FIRST; SIMILARITIES - never favored nor presumed - construed strictly against the taxpayer DISTINCTION; in tax amnesty
    • the government is not estopped from questioning the tax liability even if amnesty tax payments were already received. note: actually, para syang hindi distinction, hanap hanap nlng later. CONSTRUCTION AND INTERPRETATION OF TAX LAWS GEN RULE: in case of doubt, construed most strongly against the government and in favor of the subjects or citizens. RATION: burdens are not to be imposed, nor presumed to be imposed beyond what the statutes expressly and clearly import. EXE: when no doubt TAX EXEMPTION AND EXCLUSION GEN RULE: strongly against taxpayer, as it is a form of derogation of sovereignty of the state and inconsistent with the lifeblood theory. EXE: see discussions made on tax exemptions

TAX RULES AND REGULATIONS

GEN RULE

  • cannot be extended by implication
  • prevail over general laws
  • to receive a reasonable construction with a view to carrying out their purpose and intent note: the construction of statute by a predecessors is not binding on the successors
  • dito, yung previous construction ng ie. Dept. of Finance, is not binding to the successor of the office, as such is merely an act of administration.... PENAL PROVISION OF TAX LAWS NON-RETROACTIVE APPLICATION TO TAXPAYER tax laws are prospective in application EXE
  1. expressly declared; or
  2. clearly the legislative intent NOTE: in tax rulings, it shall not be given retroactive effect if the modification or reversal is prejudicial to the taxpayer. E X E T O E X E : W H E N R E T R O A C T I V I T Y O F TA X RULING BE GIVEN EFFECT EVEN IF PREJUDICIAL TO THE TAXPAYER 1. when taxpayer deliberately misstates or omits material facts from his return or any document required of him by the BIR 2. where the facts subsequently gathered by the BIR are materially different from the facts in which the ruling is based; or 3. where the tax payer acted in bf AAA - BASTE / ATB

TAXATION Page^ ^8 of^ ^14

I. SCOPE AND LIMITATIONS OF

TAXATION

INHERENT LIMITATIONS

  1. the levy must be for public purpose
  2. inherently legislative
  3. territoriality
  4. international comity
  5. exemption of Govt entities, agencies and instrumentalities PUBLIC PURPOSE the right of taxation can only be used in aid of a public object, an object which is within the purpose for which government is established. IT CANNOT BE EXERCISED in aid of enterprises strictly private, for the benefit of individual, though in a remote or collateral way, the public may be benefited thereby. NOTE: INCIDENTAL ADVANTAGE
    • kasi naalala ko kay Ortega, kung di ako nag kakamali, justifies the requirement of public purpose requirement. TESTS TO DETERMINE PUBLIC PURPOSE
    • DUTY TEST; whether the thing to be furthered by the appropriation of public revenue is something which is the duty of the State as a government to provide
    • P R O M O T I O N^ O F^ G E N E R A L W E L FA R E T E S T; w h e t h e r t h e proceeds of the tax will directly promote the welfare of ye community in equal measure. NON-DELIGABILITY OF THE LEGISLATIVE POWER TO TAX ~ see discussion on the Legislative Character of Taxation. pg. 1 DELEGATA POTESTAS NON POTEST DELEGARI GEN RULE: a delegated power cannot be further delegated - since the power of taxation is a power that is exercised by congress as delegates of the people, then as a general rule, the Congress cannot re-delegate this delegated power. EXE: see discussion already made in pg. 1

INTERNATIONAL COMITY

BASIS: ART. II SEC 2 CONSTI

the Philippines adopts the generally accepted principles of international law as part of the law of the land. COMITY; defined the respect accorded by nations to each other because they are sovereign equals in par paren non habet imperium

- as between equals, there is no sovereign FF INTERNATIONAL COMITY, NO LAW MAY BE PASSED IMPOSING TAX ON

  1. income of foreign ambassadors
  2. real property tax on foreign embassies EXEMPTION FROM TAXATION OF GOVT ENTITIES WOULD DEPEND AS TO WHO EXERCISES THE TAXING POWER
  • IF EXERCISE BY A LGU;
  • cannot tax the national government, its agencies and instrumentalities
  • expressly prohibited by RA 7160 EXE: may fix for the operation of public utilities owned, operated and maintained by the LGU within their jurisdiction
  • IF EXERCISE BY THE NATIONAL GOVT
  • pursuant to NIRC; may levy taxes upon GOCC, agencies and instrumentalities. EXE: cannot tax
  • i n c o m e^ d e r i v e d^ b y^ t h e government from the exercise of public utility and those in exercise of essential govt functions . cannot tax the municipality of pateros for donor's tax on the value of the land it subsequently donated. WOULD ALSO DEPEND ON THE NATURE OR FUNCTION OF THE GOVT BODY BEING TAXED
  • GOVERNMENTAL FUNCTIONS; exempt from tax, unless expressly taxed
  • PROPRIETARY FUNCTIONS; subject to tax unless expressly exempted. ff are expressly exempted: GSIS, SSS, PHIC, PCSO, and for property tax; MIAA & PFDA (Phil Fishiries Dev Authority) AAA - BASTE / ATB

TAXATION Page^ ^10 of^ ^14

CONSTITUTIONAL LIMITATIONS

PROVISIONS INDIRECTLY AFFECTING

TAXATION

1. DUE PROCESS CLAUSE

No person shall be deprived of life, liberty, or property without due process of law, xxx ART. III SEC. 1

  • enforced contribution from the people cannot be made without a law authorizing the same, enacted by a legitimate government
  • SUBSTANTIAL DUE PROCESS; tax statute must be within the constitutional authority of Congress and that it must be fair, just and reasonable (ie. concurrence of majority of all of the members of the Congress in granting tax exemption)
  • PROCEDURAL^ DUE^ PROCESS;^ requires that notice and hearing, or at least an opportunity to to be hear, [a.] before a d e l i n q u e n t t a x p a y e r c a n b e v a l i d l y prosecuted, [b.] during the assessment until a compromise in extra-judicial settlement of the taxpayer's criminal violation is reached, [c.] notified as to the process of distraint and granishment, even when compromise is not allowed as when the case is already filed in court or involves fraud, [d.] during public auction, which the delinquent taxpayer must be allowed to bid, [e] for Sanggunians, to conduct public hearing prior to the enactment of tax ordinance and revenue measures (unlike Natl Govt., which is only discretionary upon them) 2. EQUAL PROTECTION CLAUSE No person xxx be denied the equal protection of the laws. ART. III SEC. 1 CONSTI ESSENCE taxpayers of the same footing should be treated alike, both as to privileges conferred as well as on obligations imposed EXE: when there are substantial distinctions among the taxpayers, difference in treatment is allowed. W AY S I N V I O L AT I N G T H E E Q U A L PROTECTION CLAUSE
  1. when the classification was made when there is none (not based on substantial distinction that makes real difference)
  2. when no classification is called for. ie. made in such a way that the tax exemption only applies to a specified person.

REQUISITES FOR VALID CLASSIFICATION

  1. there must be a substantial distinction
  2. these must be germane to the purpose of the law
  3. the distinction or classification must not only be applicable to present but also to future conditions; and
  4. the distinction must apply to any persons, things, and transactions belonging in the same class. 3. FREEDOM OF RELIGION No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights. ART. III SEC. 5 CONSTI 2 ASPECTS OF SEC. 5
  5. non-establishment clause
  6. the free-exercise clause (this is the basis for granting tax exemption to religious institutions) Hence: by virtue of this, no tax imposable on sale of Bibles
  • as in doing so, would result in the impairment of religious freedom as well as right of dissemination of faith. 4. NON-IMPAIRMENT OF CONTRACTS No law impairing the obligation of contracts shall be passed. ART. III SEC. 10 CONSTI No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. xxx ART. XII SEC. 11 NOTE: the constitutional guarantee on non- impairment of contract only applies to taxation power of the state, and not to eminent domain and police power. NOTE: the law only prohibits impairment of obligations arising from contract. hence, AAA - BASTE / ATB

TAXATION Page^ ^11 of^ ^14

pwede if against quasi-contract, delict, quasi- delict or law. NOTE: non-impairment of contract does not apply to franchise

  • as it is always burdened with condition that it may be altered, amended or repealed at any time if public interest so requires. NOTE: contract is deemed impaired only when
  • the statute/tax alters the relative rights of the parties to each other NOTE: if unilateral tax exemption is granted, it may be revoked at will by the legislature
  • exe of course that the tax exemption granted by the congress is in exchange of valuable consideration, the period stipulated from which the exemption from tax is to run must be respected, as it takes the form of a contract. **CONSTITUTIONAL PROVISIONS DIRECTLY AFFECTING TAXATION
  1. N O N - I M P R I S O N M E N T F O R N O N - PAYMENT OF TAX** No person shall be imprisoned for debt or non- payment of a poll tax. ART. III SEC. 20 POLL TAX; defined is a tax imposed in person without any qualifications. all persons are allowed to pay even if they are not qualified to pay tax.
    • hence, if based on age, property or income, not a poll tax. ie. Community Tax Certificate NOTE: Congress cannot pass a law penalizing non-payment of poll tax. 2. UNIFORMITY AND EQUALITY OF TAXATION The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. ART. VI SEC. 28(1) CONSTI UNIFORMITY; defined all taxable articles or kind of property of the same class shall be taxed at the same rate. FOR VALID CLASSIFICATION; see discussion in equal protection clause C O N G R E S S S H A L L E V O L V E A PROGRESSIVE SYSTEM OF TAXATION
  • as a moral incentive to the Congress, and not as a judicially enforceable rights.

3. GRANT BY CONGRESS OF AUTHORITY

TO THE PRESIDENT TO IMPOSE TARIFF

RATES

ART. VI SEC. 28 PAR. 2

The Congress may, by law, AUTHORIZED THE PRESIDENT

  1. to fix within specified limits, and subject to such limitations and restrictions as it may impose,
  2. tariff rates,
  3. import and export quotas,
  4. tonnage and
  5. wharfage dues, and
  6. other duties or imposts within the f r a m e w o r k o f t h e n a t i o n a l development program of the Government. 4. MAJORITY VOTE OF CONGRESS FOR GRANT OF TAX EXEMPTION REQ NUMBER OF VOTE OF CONGRESS FOR GRANT OF TAX EXEMPTION MAJORITY VOTE (ABSOLUTE) at least 1/2 plus 1 of all the members voting separately RATION: to prevent indiscriminate grant of tax exemption RELATIVE MAJORITY
  • for withdrawal of tax exemption RATION: taxation is the rule and exemption is the exception. thus, the law makes it easier, by requiring a smaller number o f v o t e s t o w i t h d r a w exemption compared to its grant. 5. P R E S I D E N T ' S V E TO P O W E R O N APPROPRIATION, REVENUES AND TARIFF BILLS ART. VI SEC. 27 PAR 2 VETO POWER OF THE PRESIDENT The President shall have the power to veto any particular item or items in an
  1. appropriation,
  2. revenue, or
  3. tariff bill, but the veto shall not affect the item or items to which he does not object. FF AKIN TO GRANT OF TAX EXEMPTION: tax amnesties, condonations and refunds AAA - BASTE / ATB

TAXATION Page^ ^13 of^ ^14

12. PROHIBITION AGAINST TAXATION OF

R E L I G I O U S , C H A R I T A B L E , A N D

EDUCATIONAL ENTITIES

13. PROHIBITION AGAINST TAXATION OF

NON-STOCK, NON-PROFIT INSTITUTIONS

J. STAGES OF TAXATION

1. LEVY

the enactment of law by the congress, imposing tax

2. ASSESSMENT AND COLLECTION t h e a c t o f a d m i n i s t r a t i o n a n d implementation of the tax law by the executive department through the administrative agencies 3. PAYMENT the act if compliance by the taxpayer, including such option, schemes, or remedies as may be legally availed by him. 4. REFUND a claim for the payment of cash for taxes erroneously or illegally paid by the taxpayer to the government.

K, DEFINITION, NATURE AND

CHARACTERISTICS OF TAXES

TAXES; defined enforced proportional contribution from persons and property levied by the lawmaking body of the state by virtue of its sovereignty for the support of government and for all public needs. CHARACTERISTICS

  1. a forced charge, imposition or contribution. (cannot be said as a contractual obligation, express or implied; not in any way dependent upon will or contractual assent, express or implied )
  2. assessment in accordance with some r e a s o n a b l e r u l e o f a p p o r t i o n m e n t (progressive tax system, taxes based on the taxpayer capacity to pay )
  3. a pecuniary burden payable in money. (but backpay certificates may be used in payment of tax, while transfer or property, real or personal, cannot be used as payment of taxes)
  4. imposed by the state on persons, property, or exercises within its jurisdiction (following principle of territoriality)
  5. levied by the legislative body of the government
  6. levied for public purpose
  7. personal to the taxpayer (NOTE: the only way SHs may be held liable for the unpaid taxes of a corp., is when after the dissolution of the corp. it is shown that. [a.] corporate assets have passed into their hands without the payment of taxes AAA - BASTE / ATB

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or [b.] SHs have unpaid subscription to the capital of the corporation, liable to the extent of the unpaid subscription)

L. REQUISITES OF A VALID TAX

REQUISITES OF A VALID TAX

1. that either the person or the property taxed be within the jurisdiction of the taxing authority 2. that the assessment and collection of certain kinds of taxes guarantee against injustice to individuals, especially by providing notice and opportunity for hearing 3. that it should be for public purpose 4. the rule of taxation shall be uniform 5. the tax must not impinge on the inherent and constitutional limitations on the power of taxation

M. TAX AS DISTINGUISHED

F R O M O T H E R F O R M S O F

EXACTION

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