— TAX.O-1401 & r t 4 SOF TAXATION . CPA REVIEW KNOWLEDGE ENGINEERS/ REVIEWERS “Serving towards your (PA License.” R. By Bangeawan REVIEW NOTES Taxation 1. As a power ~ refers to the inherent power of the state to demand enforced contribution for public purpose to support the government. 2. Asa process ~ the legislative act of laying a tax to raise income for the government to defray its necessary expenses Purpose of Taxation 1. Primary —to raise revenue 2. Secondary a. Regulatory - To regulate the conduct of businesses or professions - Toachieve economic and social stability - To protect local industries b. Compensatory = _ Key instrument of social control ~ Check inflations ~ Reduces inequities in wealth distributions- Tools on international bargains - Strengthens anemic enterprises - Promotes science and inventions - Provides incentives - Uses as implement in the exercise of police power to promote general welfare The Life Blood Doctrine Taxes are indispensable to the existence of the state. Without taxation the state cannot raise revenue to support is operations Nature or Characteristics of the Power of Taxation 1, for public purpose 5, exaction payable in money 2, inherently legislative in nature 6. territorial 3. subject to international comity or treaty 4, not absolute being subject to constitutional and inherent limitations uc cpa review ‘www.certscollege.org wonw.reviewer-online.com‘AX.O-1401.General Principles of Taxation.RN H low exercised: Legislation of laws by Congress and tax ordinances by the Local Sahgguanian Tax collection by the administrative branch of the government Scope of the Power of Taxation Taxation is supreme, comprehiénsive, unlimited and plenary. Itincludes the power to destroy Discretion of the Taxing Power- this extends to: ak 2 3, 4 apportionment of the tax 5. situs of taxation 6, method of collection 7. purposes for its levy, provided for public purpose the person, property and excises to be taxed, provided within it jurisdiction amount or rate of the tax kinds of tax to be collected Underlying principles behind the power of taxation ; 1 Principles of Necessity ~ the existence of the government is a necessity and it cannot continue without means to support itself ~ this is the Theory of Taxation Benefit Received Theory — the government and the people have the reciprocal and mutual duties of support and protectian — this is the Basis of Taxation q Legal Basis of the Power of Taxation “Me Benefit-received theory the sovereign power of the state over is peoplé and property the presumption of receipts or enjoyment of benefits and protection by the people to protect new conditions by imposing special duties to uplift social conditions by imposing regulatory taxes or licenses Objects of Taxation 5. acts 6. persons 7. properties 8. privileges businesses interests transactions rights Phases of Stages of Taxation a b. Assessment of tax i Impact of taxation Incidence of Taxation Levy or Imposition ‘Taxation Payment of the tax 4 these all comprise the taxation system Elements of the tax system a 2 Tax structure b. Tax administration ¢. Public tax consciousness TAX.O-1401.General Principles of Taxation, RN Principles of a sound tax system a. Fiscal Adequacy — sources of revenue should be sufficient to meet the demand for publie expenditure b. Administrative Feasibility- tax laws must be capable of convenient, just and effective administration 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. Principal Approaches in the distribution of tax burden a, Benefit Approach — tax payment should be based on benefits received b. Ability to Pay Approach — tax payments should be based relative to the ability of taxpayers to pay Taxation and Economic Efficiency 1, Income Effect ~ makes people economically efficient (ex: transformation) 2. Substitution Effect — makes people economically inefficient (ex: indirect taxes) The Inherent Powers of the Government . 1. Power of Taxation — the power to take property for the support of the government and for publle purpose 2. Police Power ~ the power to enact laws to promote the general welfare of the people, It is wider in application because it is the general power to make laws. 3. Power of Eminent Domain — the power to take private property for public use upon payment of just compensation | Point of Difference | Exercising Authority Point of Differences of the Inherent Powers of the State. Taxation Police Power Government Government Eminent Domain Government or private entities Necessity of Delegation is not There must be There must be due Delegation necessary since it is delegation before delegation before local inherent local governments, government oF private could exercised it party may exerelse it Purpose Revenue and support | Propertyistaken for, |... Property is taken or publicuse | public use Community or class of | Operates on the owner of individuals the property Persons affected of the government. Community or class of individuals Effect of transfer of Money paid as taxes | There is no transfer of | There | transfer of right property rights becomes part of the. | title, at most there is | to property whether It be public fund restraint on the of ownership oF lesser injurious use of right property www.certscollege.org uc cpa review www.reviewer-online.com uc cpa review www, certicolloge olf WWW. ravieweranline. comTAX.O-1401.General Principles of Taxation, RN Point of Difference Taxation Police Power Eminent Domain 10. exemption from taxes of the revenues and assets of non-profit, non-stock educational Amount of Imposition Unlimited Sufficient to cover the | No imposition, the owner institutions including grants, endowments, donations or contributions for educational costs of regulation is paid the fair market purposes value of his property 11. concurrence of a majority of all members of Congress for the passage of a law granting tax Importance Most important of the Most superior exemption three 2k te 12. non-diversification of tax collections Relationship with the inferior to the “Non- | Superior to the “Non- Superior and may 13. non-delegation of the power of taxation Constitution Impairment Clause” of || Impairment Clause” override the “Non- Exception: the Constitution of the Constitution Impairment Clause” a. power to tax was delegated to the President under\the Flexibility Clause of the Tariff because the welfare of and Customs Code ‘the state is superior to b. power to tax was delegated to the local government units under the Local Government private contracts Code Limitation Constitutionally and jicinterest and | Public purpose and just matters involving the expedient and effective administration and implementations of inherently restricted | the requirement of compensation assessment and collection of taxes or certain aspects of taxing process that are not due process legislative in character 14. .non-impairment of the jurisdiction of the Supreme Court to review tax cases 15. appropriations, revenue of tariff bills shall originate exclusively in the House of Representatives but the Senate may propose or concur with amendments, 16. éach local government unit shall exercise the power to create its own sources of revenue and shall have a just share in the national taxes Similarities of the Three Powers 1, Allthree powers are necessary attributes of sovereignty, resting upon necessity 2, allare inherent powers of the State 3, Allare legislative in nature 4 They are ways in which the State interferes with private rights and property B. They exist independently with the Constitution although the condition for their exercise may be prescribed or limited by the Constitution They all presuppose an equivalent compensation received by the persons affected by the exercise of the power, whether directly, indirectly or remote, The exercise of these powers by the local government units may be limited by national legislature “Police power can be used to raise revenue for the government (ex: license fee) 1, territoriality of taxation 2. subject to international comity or treaty 3. tax exemption of the government” 4, taxis for public purpose 5. _non-delegation of the power of taxation *The last 2 limitations are also Constitutional limitations LIMITATIONS OF TAXATION POWER A. Constitutional Limitation 1. observance of due process of law equal protection of the law uniformity in taxation progressive scheme of taxation SITUS OF TAXATION The place of taxation Factors that determine the situs of taxation 1, nature, kind or classification of the tax 5. sources of income. hon-imprisonment for non-payment debt or poll tax 2. subject matter of the tax 6. place. of exercise, business or occupation non-impairment of obligation and contract being taxed 3. citizenship of the taxpayer 7. place where income-producing activity was free worship rule non-appropriation of public funds or property for the benefit of any church, sect or system of held or done religion | 4. residence of the taxpayer exemption of religious, charitable or educational entities, non-profit cemeteries, churches, Nee and mosque from property taxes. Applications 1. persons ~residence of the taxpayer, 2. community development tax ~ residence or domicile of the taxpayer 3. _business taxes - where the business was conducted or place where the transaction took place y www.reviewer-online,com waww.certscollege.org uc cpa review uc epa review www certscollege.org wwwreviewer onlipiivilege or occupation tax ~ where the privilege is exercised veal property tax—where the property is located personal property toxes — ‘a, tangible = where they are physically located b. _ intangible — domicile of the owner unless the property has acquired a situs elsewhere Income — place where the income is earned or residence or citizenship of the taxpayer Transfer Taxes ~ residence or citizenship of the taxpayer or location of the property Franchise Taxes ~ State that grants the franchise 10. Corporate Taxes - depend on the law of incorporation DOUBLE TAXATION Toxing the object or subject within the territorial jurisdiction twice, for the same period, involving the me kind of tax by the same taxing authority Kinds: Direct Double Taxation — this objectionable and prohibited because it violates the constitutional provision on uniformity and equality Indirect Double Taxation = no constitutional violation. Ex: taxing the same property by two different taxing authority International Double Taxation -2 double taxation caused by two different taxing authorities, one domestic and one foreign Remedies to Double Taxation 1 provision for tax exemption 2, allowance for tax credit 3, allowance for principle of reciprocity 4. enter into treaties with and agreement with foreign government Forms of Escape from Taxation ‘Those that will not result in loss of revenue to the government Shifting -the process of transferring the tax burden from the statutory taxpayer to another without violating the law. Capitalization — the Seller is willing to lower the price of the commodity provided the taxes will be shouldered by the buyers ‘Transformation - the manufacturer absorbs the additional taxes imposed by the government without passing it to the buyers for fear of lost of his market. instead, it increases quantity of production, thereby turning their units of production at a lower cost resulting to the transformation of the tax into gain through the medium of productions. 1, Those that will result to loss of revenue to the government 1, Tax Evasion ~ tax dodging ~ resorting to acts and devices that illegally reduces or totally escape the payment of taxes that are due to the taxpayer. They are prohibited and are therefore are not subject to penalties, TAX.O-1401.General Principles of Taxation, RN. 2. Tax Avoidance -tax minimization scheme ~ the reduction or totally escaping payment of taxes through legally permissible means, that are not prohibited and therefore are not subject to penalties. 3. Tax Exemption- an immunity, privilege or freedom from payment of a charge or burden to which others are obliged to pay. Kinds of Exemptions: 1. _Express- granted by the constitution, statute, treaties, ordinance, contracts or franchise a. constitutional b. statutory c. contractual 2. Implied’ exempted by accidental or intentional omission 3. Total-exemption from all taxes (OFWs) 4. Partial exemption from certain taxes, partially or totally Grounds for Exemption 1. Itmay be based on a contract 2. It may be based on grounds of public policy - ex: granting of exemptions to rural banks, and sweepstakes or lotto winnings 3, It may be based on some grounds to foster charitable and other benevolent institutions: 4. Itmay be created under a treaty on grounds of reciprocity 5. Itmay be created to lessen the rigors of international double or multiple taxation Distinction between tax evasion and tax avoidance : Tax Evasion __ Tax Avoidance itis scheme used outside of those lawful means and when | Its a tax saving device within the moan availed of, it usually subjects the taxpayer to penalties Itis accomplished by breaking the law ‘Accomplished by legal procedures and di Itconnotes fraud, deceit and matice No fraud is involved Tax Exemptions > isnot automatic >» isnon-transferable » is revocable by the government (except when granted under a valid contract or by the Constitution) 6 | Www.reviewer-online.com ‘www.certscollege.org, uc cpa review » tule shall be uniform » does not contravene the LifeBlood Doctrine > is always disfavored » is allowed only under a clear and unequivocal provision of the law » onreal property tax 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 form taxation > — on real property tax cannot be granted by local governments but can condone real property tax liabilities in special cases >» on local taxes can be granted by local governments but they cannot condone existing liabilities on local taxes = uc cpa review www.certscollege.org www.reviewer-online,com401.General Princi ‘TAX.O-1401,General Principles of Taxation, MC Fundamental Doctrine in Taxation ‘MULTIPLE CHOICE QUESTIONS = bt een, L. No court may enjoin the collection of taxes 1, The primary purpose of taxation is: 2. Claim for exemptions shall be interpreted strictly against the taxpayer A. To enforce contribution from its Subject for private purpose 3. Alaw that permit deduction from the tax base is strictly construed against the taxpayer B. To raise revenue for the government 4, Tax assessment are presumed to be correct and done in good faith ©. Toachieve economic and social stability Tax laws are generally prospective in application D. To regulate the conduct of business or profession Tax are not subject to compensation or set-off Refund of taxes do not earn interest because interest do not run against the government 2. This theory underscores that taxes are indispensable to the existence of the state, A. Doctrine of equitable recoupment C. The benefit received theory Distinction between Tax Amnesty and Tax Condonation 8. The lifeblood doctrine D. The Holmes Doctrine Tox Amnesty ~a general pardon or intentional overlooking by the state of its authority to impose ponalties on persons otherwise guilty of tax evasion or violation of tax laws, The purpose is to give the | 3. Select the correct statement. ‘erring taxpayer a chance to reform and become part of the society with a clean slate. A. The benefit received theory explains that the government is obliged to serve the people since it is benefiting from the tax collection from its subjects, Tox Condonation ~ means to remit or to desist or refrain form exacting or imposing a tax. It cannot B. The lifeblood theory underscores that taxation is the most superior power of the stat ‘extend to refund of taxes already paid when obtaining condonation. C. ‘The police power of the state is superior to the non-impairment clause of the Constitutién D. The power of taxation is superior to the non-impairment clause of thé Constitution Tax Exemption Tax Amnesty ‘There is no tax liability at all Connotes condonation from payment of existing tax [| 4. The income effect of taxation is exhibited in liability A. Forward shifting of tax C, Percentage taxes The grantee need not pay anything The grantee pays a portion B. Value added tax D. Transformation Can be availed of by any qualified taxpayer Not always available 5, That tax laws should be certain and consider the taxpayer's ability to pay denotes ” A.» Fiscal adequacy C. Theoretical justice B, Administrative feasibility D. Compatibility with economic objectives 6. What is the theory of taxation? A. Necessity C. reciprocal duties of support and protection, B. Constitutionality D. public purpose 7. Whats the basis of taxation? A. Constitutionality C. necessity B, public purpose D. reciprocal duties of support and protection 8, Which of the following inappropriately describe the nature of taxation? A.” inherent in sovereignty B. essentially a legislative function CC. subject to inherent and constitutional limitation D. generally for public purpose 9.1. Forward Shifting will result in increase prices II. Tax evasion is also known as tax dodging A. lis correct C.land Ilare correct i! B._ His correct D. land Il are not correct www reviewer-online.com www certscollege.org uc cpa review luc cpa review www. certscollege.org, www.reviewer-online cornX,0v1.401..General Principles of Taxation. MC 10, When tax is recovered by the manufacturer or producer by finding out means of improvement in production so as savings would compensate for taxes, this is known as? A, Capitalization C. backward shifting B, onward shifting D. transformation The point in which tax is levied is called? A. Impact of taxation B, Situs of taxation C. Incidence of taxation D. Assessment 12, When the impact and incidence of taxation are merged into the statutory taxpayer, the tax is called? A, personal tax B, direct tax C. indirect tax D, national tax LJ, The following are inherent limitation on the power to tax. Which is the exception? A, Territoriality of taxes C.Public purpose B, Legislative in character D. Non-appropriation for religious purpose Which of the following is an administrative act in taxation? A. Collection of taxes. C. Determination of the subject of the tax B, Fixing the rate of the tax D. Determination of the purpose of the tax Select the correct statement. A. The substitution effect makes people economically efficient since the impact of the tax is spread forward to the consumers. 8, Only taxation and eminent domain presupposes a form compensation when exercised by the government since police power merely involves confiscation. G.Any.tax laws which violate the principles of a sound tax system renders itself unconstitutional. D, Taxation means the apportionment of the costs of the government among those who are benefited from its existence. Select the correct statement. ‘A. Since taxation presupposes an equivalent form of compensation, there should be a direct and proximate advantage received by any taxpayer before he could be required to pay tax. 8, Compensation under police power is the intangible feeling of contribution to the general welfare of the people. C.Both A and B D. Neither. A nor B 17, Public improvement is a requisite to the exercise of which power of the state? A. Police power C. Eminent domain B. Taxation D. Eminent domain and taxation o | www. reviewer-online.com www.certscollege.org uc cpa review ‘of Taxation, ME TAX.0-1401.General Princip “Public utility entities may in some circumstance exercise the power of eminent domain Which of the following is not a public utility? A. Electric cooperatives B. Water cooperatives . Telecommunication business D, Manufacturing business 49. |. Police power and the power of taxation are exercised primarily by the legislature but not eminent domain 11, Taxation and eminent domain interferes with private tight’and property but not with poliee power A. Lis true C.land Ware true B. Wis true D. land Il are not true 20. Select the incorrect statement. A. the power of eminent domain may be exercised by private’entities B. by police power, the property taken is destroyed €. _byeminent domain, the property taken is destroyed D. eminent domain and taxation affects only property rights 24, The inherent powers of the state are similar in the following respect, except? A. inherentto the existence of the state f B. exercisable without the need for an express constitutional grant CC. allaffects property rights D. exercised primarily by the legislature 22. The following statement correctly states the differences among. the inherent powers of the state, except? A. the property taken under eminent domain and taxation are preserved but that of police power is destroyed B. eminent domain do not require constitutional grant but taxation being formidable does WW order to limit its exercise by the legislature C. police power and taxation is exercised only by the government but eminent domaly may Ne exercised by private entities b. Police power regulates both property and liberty; eminent domain and taxation affects only property rights 23, Select the incorrect Statement: ‘A. since just compensation is involved, eminent domain raises money for the government B. once a government is established, taxation is exercisable C. the most important of the power is taxation D. police power is more superior than the non-impairment clause of the Constitution 24. Select the correct statement ‘A. >the provision on taxation in the Philippine Constitution are grant of power B. the power to tax includes the power to destroy www.certscollege.org wnat ae www. reviewer online Gam uc cpa review‘3. 2 401.General Princi C. when taxation is used as a tool for general and economic welfare this is called fiscal purpose D. sumptuary purpose of taxation is to raise funds for the government Which is nota legislative act? ‘A, Assessment of the tax B. _ setting the amount of the tax C. determination of the subject of the tax D. determining the purpose of the tax Which of the following is not an inherent limitation of the power to tax? tax should be levied for public purpose taxation is limited to its territorial jurisdiction tax laws shall be uniform and equitable exemption of government agencies and instrumentalities ich of the following is not a constitutional limitation of the power to tax? non-impairment of obligation or contracts due process and equal protection of the law non-appropriation for religious purposes D, _non-delegation of the taxing power Agreement among nation to lessen tax burden of their respective subject is called: A. Reciprocity C. territoriality 8. international comity D. tax minimization |, No one shall be imprisoned for non-payment of tax. ||, Double taxation is not prohibited by the Constitution. A. lis true C. land Il are true B, Nistrue D. land ll are’not true The constitutional exemption of religious or charitable institution refers only to: A. real property tax C. real property tax and income tax By income tax D, business tax When a legislative body taxes persons and property, rights and privilege under the same taxable category at the same rate, this is referred to as compliance with the constitutional limitation of: A. Equity C. due process B, Uniformity D. equal protection clause When a certain tax imposed base tax burden on the ability of the subject to pay the tax, this is construed as complying with the inherent limitation of taxation which is: A. Equity B. Uniformity C. due process. D. none The constitutional requirement for non-provision of any tax-exempt legislation without the 7 | soncurrence of the majority of all the members of Congress is intended to prevent: www.reviewer-online,com www.certscollege.org uc cpa review 34, 35. 36. 37. uc cpa review TAX.0-1401.General Principles of Taxation. MG legislation of burdensome or oppressive tax laws to ensure that the government will no incur a deficit ensure approval of all tax bills prior to becoming tax laws unethical lobbying in the lawmaking body goeP |. Taxation is the rule; exemption is the exception, Il, Taxation may be used to implement the police power of the state. A, listrue Cl and IWare true B. is true D, land Hare not true Select the incorrect statement. ‘A. the power to taw includes the power to exempt B. exemption are construed against the taxpayer and in favor of the government C._ tax statutes are construed against the government in case of doubt D. taxes should be collected only for public improvement This refer to the privilege or immunity from a tax burden of which others are subjected to! A. Exclusion C.tax holiday B. Deduction D, reciprocity Mr: Sorotski, isa professional practitioner as a management adviser. In addition, he held various properties and currently engaged in diverse business operations.As a result, he has P1,895,000.00 in personal tax aside from his basic tax of P5.00. If Mr. Sorotsktintentionally disregard to pay his total personal tax, which of the following is correct? ‘A. Mr. Sorotski can be imprisoned for non-payment of the P5.00 personal tax, B. Mr. Sorotski cannot be imprisoned for non-payment 'of the personal tax because he is # professional wherein his imprisonment could cause economic loss to the country C. If Mr. Sorotski pays only the P5.00 personal tax, he cannot be imprisoned, D. _Non-payment of the additional tax could cause imprisonment, . DEF Shipping Lines operates a fleet of sheep from Metro Manila to Zambonga. DEF was exempted from payments of the franchise tax but in return it has to transport government mails and other government correspondence to and from Metro Manila and Zamboanga. Subsequently, a new law was passed removing such exemptions and requiring DEF to pay the franchise tax. Which of the following is correct? ‘A. The tax law is valid since the power of taxation is broad. B. The new law is invalid being unconstitutional. C. The new law is invalid since exemption, once given, can’t be revoke If it prejudice the taxpayer. D. The new lawis valid since tax is dictated by the needs of the governments Wolf has many tax evasion cases. For most, he was found guilty by the courts, Which of the following can be his sanctions? ‘A. Capital punishment ‘www.certscollege.org www, reviewer-online,conjeneral Principles of Taxation.MC imprisonment. ©. Confiscation of his properties A, ABC BAC cB pC D.Conly Owl has a P5,000,000.00 tax evasion case with the BIR. BIR rendered him an assessment but his appeal failed to meet the deadline due to his undue hesitation to answer for the notice of ssessment, Asa result, the assessment became final and demandable, Which of the following is correct? A. Owl should be allowed an extension since the amount of the tax is highly material so as his right for equal protection of the law will not be denied B. Due process is not violated so long as the consideration isto be given by the BIR C, Due process is not violated. 1, Owl should demand for compromise so as he will be overburdened. The tax imposed upon the performance of an act, the enjoyment of a privilege or engaging Ina profession is known as? A. Income tax B. License C. Excise tax D. Transfer tax When the determination of the amount of the tax requires an assessment of the value of the subject of tax, this type of tax is known as? A, proportional tax 8, specific tax C. ad valorem tax D. progressive tax Tax as to graduation or rate include the-following, except? A. Progressive C. pro-rata 8, Proportional D. regressive A tax base and tax rate of an imposition is shown as follows: Income Tax Rate 1,000,000.00 20% 800,000.00 30% 600,000.00 40% This taxation scheme makes use of a? A. progressive rate 8. proportional rate ©. digressive rate D. regressive rate Which of the following is a local tax? A. value added tax 8, documentary stamp tax C.other percentage taxes D. real property tax |, Asa rule, taxes are not assignable. | Debt earns interest only when stipulated or when there is legal delay. www.reviewer-online,com www.certscollege org uuc cpa review 47. 48, 49, 50, 51. 52. 53. uc cpa review TAX.0-1401.General Principles of Taxat A. listrue B. Wistrue C. land Iare true D, and Il are not true Select the incorrect statement. A. Tax may be unlimited in amount. B. License make the business illegal when not paid while taxes do not. C. Special assessment is not the liability of the person owning the property. D. Special assessment can be imposed on building’ and other real right attaching’ pertaining to land. 1. One of the essential characteristic of tax is its being unlimited in amount. Ii, The State has complete discretion on the amount of license to be imposed after distinguishing between useful and non-useful activity. A. listrue By istrue C. land Il are true D. land are not true Which of the following is correct regarding the tax table for individual taxable income for residents and citizens? A. the table shows purely progressive tax rates B. the tax table is a combination of proportional and progressive tax rates C. low income earners are subject to proportional rate while high income earners are subject to both proportional and progressive tax rates, D. none of the above Which of the following is not a local tax? A. Community tax B. Documentary stamp tax . Taxon banks and other financial institutions D. Business taxes, fees and charges A license that is imposed for revenue purposes is known as? A. Alicense tax C. Professional tax B Sin tax D. Mixed tax Select the incorrect statement. A. Taxis a demand of sovereignty just as toll is a demand of ownership B. No one shall be imprisoned for non-payment of debt or poll tax AA C) A and B are true BB D. Neither A nor 8 Distinguishing between tax and debt, which is assignable? Which cannot be set-off? A. Tax; debt C. Tax, tax B. Debt; tax D. Debt, debt is www.reviewer-online com www.certscollege.orgjeneral Principles of Taxation. MC Select the correct statement. The doctrine of estoppel operates against the taxpayer, not against the government. Non-compensation or set-off violates the principle of administrative feasibility. ‘Taxes are always imprescriptible. The principle of strictissimi juris simply states that exemption is the rule, taxation is the exemption. Which of the following is a power of the Commissioner of Internal Revenue? A. Assessment and collection of taxes 1), Enforcement of all forfeitures, penalties and fines C. Interpretation of the provisions of the NIRC D. Giving effects to. and administering the supervisory and police powers conferred by the NIRC and other laws Which of the following powers of the Commissioner of Internal Revenue cannot be delegated? 62. (A, The examination of tax return and tax due thereon To refund or credit tax liabilities in certain cases ©. The power to compromise or abate any tax liability involving basic deficiency tax of P500,000 and minor criminal violations D, The power to reverse a ruling of first impression The following are the limitation on the taxing power of the state. Which of the following inherent limitation of taxation is also categorized as a constitutional limitation? Territoriality of taxation 8. Exemption of the government C. Public purpose of taxation 1D. Non-impairment of contracts f. _Non-delegation of the power to tax A AandB B. Bandc C.CandE D. DandE Which of the following forms of escapes to taxation will more likely to result in direct loss of revenue to the government? A, Shifting 1. Capitalization €. transformation D. tax exemption When exemption from a tax imposition is silent or not clearly stated, which statement is true? A, Taxation applies since exemptions are construed against the government. 1. Exemption still applies since this is exemption by omission. ©, Taxation applies since exemptions are to be construed against the taxpayer. D, Exemption applies since obligation arising from law cannot be presumed and hence construed against the government: When the provisions of tax laws are silent as to the taxability ofan item, which is true? www.certscollege.org uc cpa review wwwirevieweronline.com 61. uc cpa review TAX.O-1401.General Principles of Taxation. MC Taxation applies since taxation is the rule, exemption is the exception. Exemption applies since vague tax laws are construed against the government. Taxation applies in accordance with the Lifeblood doctrine. Exemption applies since obligation arising from law is presumed; ignorance of the law is not an excuse. 9OR> Which statement is correct? A. Tax assessment are presumed to be correct and done in good faith B. Tax laws should not operate retrospectively. C. Refund of taxes should earn interest since as a principle, no one shall be enriched at the expense of another; the state should be the model of good faith among its constituents, A. A,BandC C.Aonly B. AandB D.BandC Select the incorrect statement regarding tax amnesty and condonation. A. Intax amnesty, violators are required to pay a portion of the tax assessed. B, When the remaining unpaid portion of the tax is condoned,:the taxpayer cannot ask for refund for the balance already paid. C. Tax amnesty operates as a general pardon and is always not available. D. Tax condonation operates on the whole balance of the assessed tax and not only to the unpaid portion [a7 www, certscollege.org www.reviewer-online com)