a - general principles

7/29/2019 A - General Principles

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PLEASESHUT-

OFF YOUR

CELL -

PHONES



PRE-BAR REVIEW

IN

TAXATION



COVERAGE OF

TAXATION

1) General Principles of Taxation

2) NIRC Include: CTR

Act of 1997 (R.A. 8424)



Continuation …….

Provisions already in effect

Exclude: EVAT Exclude: Percentage

Taxes, Excise Taxes andDocumentary Stamp

Taxes




(3) Tariff and Customs

CodeExclude: Arrastre

and Classification of Commodities




(4) Republic Act No. 1125

Creating the Court of Tax Appeals

(5) The Local Govt. Code

on Taxation



GENERAL

PRINCIPLES

• Importance

– Foundations

– Validity



CONCEPT

•Inherent power

•Exercised through

the legislature•Impose burdens




– Upon subjects andobjects

– W/in its jurisdiction

•To meet recognizedobjects of govt.



NATURE

• INHERENT POWER

– Basis, manifestation• LEGISLATIVE

– Basis, manifestation



THEORY OF

TAXATION

• Lifeblood

• The power to

destro



BASIS OR

RATIONALE

• Symbiotic

relationship•

Jurisdiction



PURPOSES OR

OBJECTIVES

• Revenue

• Sumptuary

• Compensatory



PRINCIPLES,

CHARACTERISTICS,CANONS OF A SOUND

TAX SYSTEM • Fiscal adequacy

• Administrative feasibility

• Theoretical ustice



TAXATION

DISTINGUISHED

• Police power

• Eminent domain



BASIS FOR

DISTINCTIONS

• Purpose

• Amount

• Property taken

• Disposition of property




• Compensation

• Relation to the non-impairment clause

• Imposing authority



LIMITATIONS

• Purpose

• Kinds

– Inherent –

Constitutional



INHERENT

• Public purpose

• No improper

delegation

• Territoriality




• Govt. exemption

respected • Comity recognized

• No double taxation



PUBLIC PURPOSE

•

Meaning• When should it

exist ?



TAXPAYER’s SUIT

• Injury aspect

• Zone of protection

• Transcendental

importance



LOCUS STANDI

TRANSCEN-DENTAL

IMPORTANCE

*INJURY

ASPECT

*ZONE OF

PROTEC-TION



NO IMPROPER

DELEGATION

• Completeness

• Sufficiently deter-

minate standards



CONSTITUTIONAL

DELEGATION

• Flexible tariff clause

• Delegation to localgovernments



TERRITORIALITY

• Meaning



BASIS

• Jurisdiction

• Symbiotic relation



EXCEPTIONS



OUTSIDE TAXED

OUTSIDE TAXED



OUTSIDE - TAXED

• Resident citizens

taxed on incomesfrom without

• Mobilia sequuntur

personam



OUTSIDE TAXED

INSIDE

NOT TAXED



INSIDE - NOT

TAXED

• Comity - In par parem

non habet imperium• Reciprocity



OUTSIDE TAXED

INSIDE

NOT TAXED

* COMITY

* RECIPROCITY

SITUS



SITUS

• Meaning• Basis

• Situs of property taxes

– Real. Lex situsLex rei sitae

C ti ti




– Personal

• Tangible. Mobilia

sequuntur personam

• Intangible. Business

situs

• Situs of excise taxes

• Situs of transfer taxes



BASIS OF SITUS OF

INCOME TAXATION

• Domicillary theory

• Nationality theory •

Doctrine of source



GENERAL

PRINCIPLES OFINCOME TAXATION

• Individuals, incldg

estates and trusts

• Cor orations

INDIVIDUALS



INDIVIDUALS

• Citizens – Residents w/in w/o

– Non-residents,

OCWs, seamen w/in

•Aliens w/in



CORPORATIONS

• Domestic w/in w/o

• Foreign w/in

FROM WITHIN



FROM WITHIN

• Interest•

Dividends – Domestic

– Foreign 50% 3 years

• Services




• Rentals & royalties

• Sale of – Real property

– Personal property

FROM WITHOUT



FROM WITHOUT

• Interest•

Dividends – Domestic

– Foreign 50% 3 years

• Compensation




• Rentals & royalties

• Gains from sale of – Real property



CONSTITUTIONAL

LIMITATIONS

• General or indirect

• Specific or direct



GENERAL OR

INDIRECT

• Due process

• Equal protection• Freedom of the press

C ti ti




•

Religious freedom• Non-impairment

clause

•Law making

• Executive clemency



DUE PROCESS

• Substantive

• Procedural

– Notice –

Hearing



EQUAL

PROTECTION

• No discrimination

• vs. Uniformity •

Valid classification



VALID

CLASSIFICATION

• Substantial

distinctions• Germane to the issue





• Applicable not only to

existing conditions

• Applicable to allmembers of the same

class



DOUBLE TAXATION

• No specific

prohibition

• Violates equalprotection

DIRECT DUPLICATE



DIRECT DUPLICATE

TAXATION

• Same:

– Taxing authority

– Subject or object

– Purpose

– Taxing period




•Taxing all for first

time w/o taxing allfor the second time



EASING DOUBLE

TAXATION

• Tax treaties - exemption

• Tax deduction• Tax credit



FREEDOM OF THE

PRESS



RELIGIOUS

FREEDOM



NON-IMPAIRMENT

CLAUSE

• Obligations of contract

• Overrides taxing power • Police power superior



LAW MAKING

• One subject one title

• Three readings

• Printed copies



EXECUTIVE

CLEMENCY

• Penal provisions

• No tax amnesty



SPECIFIC OR

DIRECT

• No imprisonment for poll tax

• Uniform & equitable




• Progressive system

• Delegation

• Supreme Court

review




• Law making• Utilization

• Tax exemptions



TAX SYSTEMS

• Regressive system

• Proportional system

• Progressive system

SUPREME COURT



SUPREME COURT

REVIEW

• Tax, impose,

assessment or toll• Penalty

LAW MAKING



LAW MAKING

• Origination

• Presidential veto

• Title

UTILIZATION



UTILIZATION

• No use for religious

• Special purpose tax

• Automatic release of LGUs’ share



TAX EXEMPTIONS

• Majority vote

• Real property tax

exemption




• Revenues and assets

– Non-profit, n/s

– Proprietary, coops

• Grants, endowments

REAL PROPERTY



REAL PROPERTY

TAX EXEMPTIONS

Charitable institutions,

churches, parsonages and

convents appurtenant thereto,

mosques, non-profit cemeteries All lands, buildings and




improvements of all kinds,• Actually, directly and

exclusively used for • Religious, charitable and

educational purposes

REVENUES AND



REVENUES AND

ASSETS

• Non-profit, non-stock• Educational institutions

• Actually, directly and

exclusively used




• Educational purposes

REVENUES AND



REVENUES AND

ASSETS

• Proprietary educationalinstitutions, incldg those

cooperatively owned




• Exempt subject to limit-ations provided by law

– Dividends

– Provisions for reinvestment

EXEMPT



EXEMPT

DONATIONS

• Subject to conditions setby law

• All grants, endowments,

donations, contributions




• Used, actually, directlyand exclusively

• For educational purposes



TAXES

• Enforced contributions

• To raise revenues

• To fulfill objectives of government

SOURCES OF



SOURCES OF

TAX LAWS

• Constitution

• Tax legislation

TAX



TAX

LEGISLATION

• National tax laws

– NIRC – TCCP




• Local tax laws

– Tax ordinances

• Misc. tax laws

– Land transport taxes – VRB taxes

CLASSIFICATION



CLASSIFICATION

• Subject or object

– Personal, poll, capitation

– Property – Excise




• Who bears burden

– Direct

– Indirect




• Amount

– Specific –

Ad valorem – Compound




•Purpose

– General, fiscal, or

revenue – Special or regulatory




• Authority imposing

– National –

Local




• Gradation or rate

– Proportional

– Progressive or

graduated – Regressive




• Source

– Constitutional

– Statutory

– Treaty

– Contractual

Licensin ordinance

TAX VS DEBT



TAX VS. DEBT

• Basis

• Failure to pay

• Mode of payment• Assignability

Continuation




• Interest

• Authority• Prescription

SET OFF



SET-OFF

NATIONAL

LOCAL

NO

SET-OFF

SOLUTIO

INDEBETI

NO

SET-OFF

LEGAL

COMP.

LEGAL



LEGAL

COMPENSATION

• Mutuality of parties – Debtors/creditors

• Both debts due and

demandable



TAX VS. TOLL

• Purpose

• Amount

• Authority

TAX VS. SPECIAL



TAX VS. SPECIAL

ASSESSMENTS

• Subject

• Liability

• Basis

• A lication

TAX VS LICENSE



TAX VS. LICENSE

FEE

• Purpose• Basis

• Amount





• Time of payment

• Effect of non-payment

• Surrender

TAX



TAX

EXEMPTIONS

• Tax exemptions – Broad

– Narrow

PRINCIPLES



PRINCIPLES•

Strictissimi juris• No exemption by

implication • Power to tax, exempt

• Restrictions• Vs. tax amnesty

KINDS



KINDS

• Clarity

– Express

– Implied




• Extent

– Total –

Partial




• Intent

– Intentional –

Accidental or byomission

TAX



TAX

AVOIDANCE VS.TAX EVASION

• Means and methods

• Amount

•Validity

END OF



END OF

GENERALPRINCIPLES !!!

The next topic is Tax

Remedies includingR.A. No. 1125

a - general principles

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