TAXATION 1

PART 1: GENERAL PRINCIPLES

I. CONCEPT A. Taxation and Tax defined. B. Tax as distinguished from other forms of exactions 1. Tax vs. Tariff 2. Tax vs. License fee 3. Tax vs. Toll 4. Tax vs. Special Assessment 5. Tax vs. Ordinary Debt II. THEORY AND BASIS OF TAXATION A. Lifeblood Theory B. Necessity Theory C. Benefits-Protection Theory D. Jurisdiction over Subjects and Objects III. PURPOSES/ OBJECTIVE S OF TAXTION A. Revenue-raising B. Non-revenue/ special or regulatory IV. GENERAL PRINCIPLES OF A SOUND TAX SYSTEM A. Fiscal adequacy B. Theoretical justice C. Administrative feasibility V. SCOPE AND LIMITATIONS OF TAXATION A. Inherent Limitations 1. Public Purpose 2. Inherently Legislative GR: power to tax may not be delegated EXCEPTIONS from prohibition against delegation of power to tax a) Delegation to Local Governments b) Delegation to the President c) Delegation to Administrative Agencies 3. Territorial 4. International Comity 5. Exemption of Government Entities, Agencies, and Instrumentality B. Constitutional Limitations 1. Provisions directly affecting Taxation a. Prohibition against imprisonment for non-payment of poll tax b. Uniformity and Equity in Taxation c. Grant by Congress of authority to President to Impose Tariff Rates: d. Prohibition against Taxation of Religious, Charitable Entities and Educational Entities: e. Prohibition against Taxation of non-stock, non-profit institutions f. Majority Vote of Congress for Grant of Tax Exemption g. Prohibition on use of Tax levied for special purpose h. Presidents Veto power on Appropriation, Revenue, and Tariff Bills i. Non-impairment of Jurisdiction of the Supreme Court j. Grant of Power to LGUs to create its own sources of revenue 2. Provisions indirectly affecting Taxation a. Due process b. Religious freedom c. Non-impairment of obligations of contracts VI. STAGES OF TAXATION
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A. B. C. D.

Levy Assessment and Collection Payment Refund

VII. KINDS OF TAXES A. As to Object 1. Personal, capitation or poll tax 2. Property tax 3. Privilege tax B. As to Burden of Incidence 1. Direct 2. Indirect As to Tax Rates 1. Specifc Tax 2. Ad Valorem 3. Mixed As to Purposes 1. General or Fiscal 2. Special, Regulatory or Sumptuary As to Scope or Authority to Impose 1. National 2. Local As to Graduation 1. Progressive 2. Regressive 3. Proportionate

C.

D.

E.

F.

VIII. DOCTRINES OF TAXATION A. B. C. D. Prosepectivity Impresciptibility Situs of Taxation Double Taxation 1. Strict Sense 2. Broad Sense 3. Constitutionality of Double Taxation 4. Tax Treaties Escape from Taxation 1. Shifting of tax burden 2. Tax Avoidance 3. Tax Evasion 4. Tax Exemption a. Meaning of Tax Exemption b. Nature of Tax Exemption c. Kinds of Tax Exemption d. Nature of the power to grant tax exemption e. Rationale/grounds for tax exemption f. Revocation of tax exemption Compensation and Set-Off Taxpayers Suit Compromises Tax Amnesty

E.

F. G. H. I.

IX. CONSTRUCTION AND INTERPRETATION OF TAX LAWS

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A. B. C. D.

Tax Laws Tax Exemption and Exclusion BIR Rules and Regulations Penal Provisions of Tax Laws

PART 1: GENERAL PRINCIPLES

I. INTRODUCTION A. Income Tax Systems 1. Global Tax System 2. Schedular Tax System 3. Semi-schedular or semi-global tax system B. Features of the Philippine Income Tax Law 1. Direct Tax 2. Progressive Tax 3. Comprehensive 4. Semi-schedular or semi-global tax system C. Criteria in Imposing Philippine Income Tax Law 1. Citizenship principle 2. Residence principle 3. Source principle D. Types of Philippine Income Tax E. Taxable Period 1. Calendar year 2. Fiscal year 3. Short period CONCEPT OF INCOME A. Income tax defined B. When is income taxable 1. Existence of income 2. Realization of income a. Tests of Realization b. Actual vs. Constuctive recept 3. Recognition of income 4. Methods of accounting for taxable income and deductible expenses a. Cash vs. accrual method of accounting b. installment vs. deferred payment vs. percentage of completion (in long term contracts) c. distinction between tax accounting and financial accounting C. Test in determining income 1. Realization Test Claim of Right Doctrine or Doctrine of ownership, command, or control Economic benefit test / Doctrine of proprietary interest Severance Test KINDS OF TAXPAYERS A. Individual taxpayers 1. Citizens a. Resident citizens b. non-resident citizens 2. Aliens Special Class of Individual Employees a. resident aliens b. non-resident aliens i. 180-day rule ii. NRA engaged in trade or business in the Philippines iii. NRA not engaged in trade or business in the Philippines
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II.

2. 3. 4. III.

3. 4. 5. B.

Estates and Trusts Co-ownerships General Professional Partnerships

Corporations 1. Domestic corporation 2. Partneship 3. Joint Venture (JV) and Consortium a. Exempt JV and consortium b. Taxable JV and consortium 4. Foreign Corporations a. Resident foreign corporation b. Non-resident foreign corporation c. Subsidiary vs. Branch of a foreign corporation

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