jan 1, 2013-chapter 1-valencia & roxas
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CHAPTER 1GENERAL PRINCIPLESAND CONCEPTS OFTAXATION
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INHERENT POWERS OF THESTATE
ESSENTIAL POWER NECESSARY FOR
THE SOVEREIGN STATES SURVIVAL.
EXIST AS THE CENTRAL FORCE IN
ORDER THAT A GOVERNMENT CAN:
COMMAND
MAINTAIN PEACE AND ORDER,
SURVIVE IRRESPECTIVE OF ANYCONSTITUTIONAL PROVISION.
CHAPTER 1 General Principles and Concepts of Taxation
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THREE INHERENT POWERS OFTHE SOVEREIGN STATE
POLICE POWER
THE POWER TO PROTECT CITIZENS ANDPROVIDE SAFETY AND WELFARE OF SOCIETY.
EMINENT DOMAIN POWER
THE POWER TO TAKE PRIVATE PROPERTY(WITH JUST COMPENSATION) FOR PULIC USE.
TAXATION POWER
THE POWER TO ENFORCE CONTRIUTIONS TO
SUPPORT THE GOVERNMENT, AND OTHERINHERENT POWERS OF THE STATE.CHAPTER 1 General Principles and Concepts of Taxation
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TAXATION DEFINED
!. A POWER Y WHICH AN INDEPENDENTSTATE, THROUGH ITS LAW MAKINGBODY, RAISES AND ACCUMULATES
REVENUE FROM ITS INHAITANTS TO PAYTHE NECESSARY EXPENSES OF THEGOVERNMENT.
". A PROCESS OR ACT OF IMPOSING ACHARGE Y GOVERNMENTAL AUTHORITYON PROPERTY, INDIVIDUALS ORTRANSACTIONS TO RAISE MONEY FOR
PUBLIC PURPOSES.CHAPTER 1 General Principles and Concepts of Taxation
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TAXATION DEFINED (CONTD)
#. A MEANS Y WHICH THE SOVEREIGNSTATE THROUGH ITS LAW$MAKINGODY DEMANDS FOR REVENUE IN
ORDER TO SUPPORT ITS EXISTENCEAND CARRY OUT ITS LEGITIMATEOJECTIVES.
CHAPTER 1 General Principles and Concepts of Taxation
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NATURE OF TAXATIONPOWER
% INHERENT POWER OF SOVEREIGNTY&
% ESSENTIALLY A LEGISLATIVE FUNCTION;
% FOR PUBLIC PURPOSES&% TERRITORIAL IN OPERATION&
CHAPTER 1 General Principles and Concepts of Taxation
TAX EXEMPTION OF GOVERNMENT;
THE STRONGESTAMONG THEINHERENT POWERSOF THEGOVERNMENT& AND
SUJECT TO CONSTITUTIONALAND
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SCOPE OF TAXATION POWER
IT REACHES EVERY TRADE OROCCUPATION
EVERY OBJECTOF INDUSTRY, AND
EVERY SPECIES OF POSSESSION.
IT IMPOSES A URDEN WHICH, IN CASE OF FAILURETO DISCHARGE, MAY E FOLLOWED Y SEIZUREOR CONFISCATION OF PROPERTY.
CHAPTER 1 General Principles and Concepts of Taxation
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SUBJECT TO INHERENT ANDCONSTITUTIONAL LIMITATIONS
INHERENT POWER ITS VERY PURPOSE AND NATURE
RESTRICT TAXATION.
TAX POWER SHOULD EEXERCISED FOR ITS VERYNATURE, PURPOSE ANDJURISDICTION.
A VIOLATION OF THESE INHERENT LIMITATIONS ISTANTAMOUNT TO TAKING A PROPERTY WITHOUTDUE PROCESS OF LAW.
CHAPTER 1 General Principles and Concepts of Taxation
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CONSTITUTION TO PROTECT THE OJECT OF
TAXATION AGAINST ITS ABUSIVEIMPLEMENTATION.
IF A TAX LAW VIOLATES THE CONSTITUTION, SUCHLAW SHALL E DECLARED NULL AND VOID.
SUBJECT TO INHERENT ANDCONSTITUTIONAL
LIMITATIONS (CONTD!
CHAPTER 1 General Principles and Concepts of Taxation
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SIMILARITIES AMONGTAXATION, EMINENT DOMAIN
AND POLICE POWERS!. THEY ARE INHERENT POWERS OF THE STATE&
". THEY CONSTITUTE THE THREE WAYS Y WHICH THESTATE INTERFERES WITH THE PRIVATE RIGHTSAND PROPERTY&
#. THEY ARE LEGISLATIVE IN NATURE AND CHARACTER&
'. THEY PRESUPPOSE AN E"UIVALENTCOMPENSATION&
. THEY ALL UNDERLIE AND EXIST INDEPENDENTLY OFTHE CONSTITUTION&
. THEY ARE ALL NECESSARY ATTRIBUTES OFSOVEREIGNTY& AND
*. THE PROVISIONS IN THE CONSTITUTION ARE JUSTCHAPTER 1 General Principles and Concepts of Taxation
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DISTINCTION OF TAXATION,POLICE POWER, AND
EMINENT DOMAINTAXATION POLICE
POWEREMINENTDOMAIN
1. AS TO
CONCEPT
POWER TO
ENFORCECONTRIUTIONTO RAISEGOVERNMENTFUNDS.
POWER TO
MAKE ANDIMPLEMENTLAWS FOR THEGENERALWELFARE.
POWER TO TAKE
PRIVATEPROPERTY FORPULIC USE WITHJUSTCOMPENSATION.
2. AS TOSCOPE
PLENARY,COMPREHENSIVEAND SUPREME
ROADER INAPPLICATION,GENERALPOWER TOMAKE ANDIMPLEMENTLAWS.
MERELY APOWER TO TAKEPRIVATEPROPERTY FORPULIC USE.
CHAPTER 1 General Principles and Concepts of Taxation
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DISTINCTION OF TAXATION,POLICE POWER, AND EMINENT
DOMAIN (CONTD)
TAXATION POLICEPOWER
EMINENTDOMAIN
3. AS TOAUTHORITY
EXERCISEDONLY YGOVERNMENTOR ITSPOLITICAL
SUDIVISIONS.
EXERCISEDONLY YGOVERNMENTOR ITSPOLITICAL
SUDIVISIONS.
MAY EGRANTED TOPULIC SERVICEOR PULICUTILITY
COMPANIES.
4. AS TOPURPOSE
MONEY ISTAKEN TOSUPPORT THEGOVERNMENT.
PROPERTY ISTAKEN ORDESTROYED TOPROMOTE
GENERALWELFARE.
PRIVATEPROPERTY ISTAKEN FORPULIC USE.
CHAPTER 1 General Principles and Concepts of Taxation
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DISTINCTION OF TAXATION,POLICE POWER, AND
EMINENT DOMAIN (CONTD!TAXATION POLICEPOWER
EMINENTDOMAIN
#. AS TONECESSITYOFDELEGATION
THE POWERTO MAKE TAX
LAWS CANNOTEDELEGATED.
CAN EEXPRESSLY
DELEGATED TOTHE LOCALGOVERNMENTUNITS Y THELAW MAKING
ODY.
CAN EEXPRESSLY
DELEGATED TOTHE LOCALGOVERNMENTUNITS Y THELAW MAKING
ODY.
$. AS TOPERSONAFFECTED
OPERATES ONA COMMUNITYOR A CLASSOF
INDIVIDUAL.
OPERATES ON ACOMMUNITY ORA CLASS OFINDIVIDUAL.
OPERATES ONPARTICULARPRIVATEPROPERTY OF AN
INDIVIDUAL.CHAPTER 1 General Principles and Concepts of Taxation
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TAXATION POLICEPOWER
EMINENTDOMAIN
7. AS TOBENEFITS
CONTINUOUSPROTECTIONANDORGANIZEDSOCIETY.
HEALTHYECONOMICSTANDARD OFSOCIETY.
MARKET VALUEOF THEPROPERTYEXPROPRIATED.
8. AS TOAMOUNTOFIMPOSITION
GENERALLY,NO LIMIT.
COST OFREGULATION,LICENSE ANDOTHERNECESSARY
EXPENSES.
NO IMPOSITION.
DISTINCTION OF TAXATION,POLICE POWER, AND
EMINENT DOMAIN (CONTD!
CHAPTER 1 General Principles and Concepts of Taxation
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TAXATION POLICE POWER EMINENTDOMAIN
9. AS TOIMPORTANCE
INSEPERALEFOR THEEXISTENCE OFA NATION + IT
SUPPORTSPOLICE POWERAND EMINENTDOMAIN.
PROTECTION,SAFETY ANDWELFARE OFSOCIETY.
COMMONNECESSITIES ANDINTERESTS OF THECOMMUNITY
TRANSCENDINDIVIDUALRIGHTS INPROPERTY.
10. AS TORELATIONSHIP TOCONSTITUTION
SUJECT TOCONSTITUTIONAL ANDINHERENTLIMITATIONS.
INFERIOR TONONIMPAIRMENT
RELATIVELY FREEFROMCONSTITUTIONALLIMITATIONS.
SUPERIOR TONON IMPAIRMENT
CLAUSE.
SUPERIOR TO ANDMAY OVER RIDE
CONSTITUTIONALIMPAIRMENTPROVISION ECAUSE
THE WELFARE OF THESTATE IS SUPERIOR
TO ANY PRIVATECONTRACT.
DISTINCTION OF TAXATION, POLICEPOWER, AND EMINENT DOMAIN
(CONTD!
CHAPTER 1 General Princi les and Conce ts of Taxation
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TAXATION POLICE
POWER
EMINENT
DOMAIN11. AS TOLIMITATION
CONSTRAINTSY CONSTITU$
TIONAL ANDINHERENT
LIMITATIONS.
LIMITED Y THEDEMAND FORPULICINTEREST AND
DUE PROCESS.
OUNDED YPULIC PURPOSEAND JUSTCOMPENSATION.
DISTINCTION OF TAXATION,POLICE POWER, AND
EMINENT DOMAIN (CONTD!
CHAPTER 1 General Principles and Concepts of Taxation
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INHERENT LIMITATIONS
THE NATURAL RESTRICTIONS TO SAFEGUARDAND ENSURE THAT THE POWER OF TAXATIONSHALL E EXERCISED Y THE GOVERNMENT ONLYFOR THE BETTERMENT OF THE PEOPLE WHOSEINTEREST SHOULD E SERVED, ENHANCED AND
PROTECTED.!. TAXES MAY E LEVIED ONLY FOR PUBLIC PURPOSES&
". EING INHERENTLY LEGISLATIVE, TAXATION MAY NOT EDELEGATED&
#. TAX POWER IS LIMITEDTO TERRITORIAL JURISDICTIONOF THE STATE&
'. TAXATION IS SUJECT TO INTERNATIONAL COMITY& AND
#. GOVERNMENT ENTITIES ARE GENERALLY TAX%EXEMPT.
CHAPTER 1 General Principles and Concepts of Taxation
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CONSTITUTIONALLIMITATIONS
PROVISIONS OF THE FUNDAMENTAL LAW OF THELAND THAT RESTRICT THE SUPREME, PLENARY,UNLIMITED AND COMPREHENSIVE EXERCISE Y THESTATE OF ITS INHERENT POWER TO TAX.
THE CONSITUTIONAL PROVISIONS THAT LIMIT THE EXERCISEOF THE POWER TO TAX ARE AS FOLLOWS:
!. DUE PROCESS OF LAW;
". E"UAL PROTECTION OF LAW;
&. RULE OF UNIFORMITY AND E"UITY;
'. PRESIDENTS POWER TO VETO SEPARATE ITEMS INREVENUE OR TARIFF BILLS.
CHAPTER 1 General Principles and Concepts of Taxation
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. EXEMPTION FROM PROPERTY TAXATION OF RELIGIOUS,CHARITALE OR EDUCTAIONAL ENTITIES, NONPROFITCEMETERIES, CHURCHES, AND CONVENTS APPURTENANTTHERETO&
. NO PULIC MONEY SHALL E APPROPRIATED FORRELIGIOUS PURPOSES.
*. MAJORITYOF ALL THE MEMERS OF THE CONGRESSGRANTING TAX EXEMPTIONS&
. THE CONGRESS MAY NOT DEPRIVE THE SUPREME COURTOF ITSJURISDICTION IN ALL CASES INVOLVING THELEGALITY OF ANY TAX, IMPOST OR ASSESSMENT OR TOLLOR ANY PENALTY IMPOSED IN RELATION TO TAX&
CONSTITUTIONALLIMITATIONS (CONTD!
CHAPTER 1 General Principles and Concepts of Taxation
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-. NO IMPRISONMENT FOR NONPAYMENTOFPOLL TAX;AND
!. TAX COLLECTION SHALL GENERALLY ETREATED AS GENERAL FUNDS OF THEGOVERNMENT.
CONSTITUTIONALLIMITATIONS (CONTD!
CHAPTER 1 General Principles and Concepts of Taxation
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DUE PROCESS OF LAW
IT MANDATES A FUNDAMENTAL RIGHT OFPROTECTION THAT LIFE, LIBERTY OR PROPERTYSHALL ONLY E TAKEN AWAY FROM ANY PERSON(NATURAL OR JURIDICAL) IF ITS EXERCISE IS NOTCONTRARY TO THE FUNDAMENTAL LAW OF THE LAND
AND IT IS DONE AFTER COMPLIANCE WITH THEESTALISHED PROCEDURE PRESCRIED Y LAW.
RE/UIRES THAT THE LAW SHOULD BE
REASONABLE AND NOT OPPRESSIVE(SUBSTANTIVE), AND IT RE/UIRES OPPORTUNITYTO BE HEARD IN PROPER COURT OF LITIGATIONEFORE JUDGEMENT IS RENDERED AFFECTING ONESPERSON OR PROPERTY (PROCEDURAL).
CHAPTER 1 General Principles and Concepts of Taxation
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PURPOSE OF DUE PROCESS
TO SECURE THE INDIVIDUAL FROM THEABUSIVE EXERCISE OF THE TAXINGPOWER OF THE GOVERNMENT.
E"UAL PROTECTION OF THE LAWS)
ALL PERSONS SUJECT TO LEGISLATIONSHALL E TREATED ALIKE UNDER SIMILAR
CIRCUMSTANCESAND CONDITIONSOTHIN THE PRIVILEGES CONFERRED ANDLIABILITIESIMPOSED.
DUE PROCESS OF LAW (CONTD!
CHAPTER 1 General Principles and Concepts of Taxation
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PURPOSE THE CONSTITUTIONAL MANDATE
ON E/UAL PROTECTION IS TO PROTECT
PERSONS ELONGING TO THE SAME CLASSAGAINST INTENTIONALAND ARBITRARYDISCRIMINATION.
DUE PROCESS OF LAW (CONTD!
CHAPTER 1 General Principles and Concepts of Taxation
O O
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RULE ON UNIFORMITY ANDE"UITY IN TAXATION
E"UALITY IN TAXATION)
SIMILAR TO PROGRESSIVE SYSTEM OFTAXATION.
TAX LAWS AND THEIR IMPLEMENTATION MUST EFAIR, JUST, REASONALE AND PROPORTIONATE TOONES ABILITY TO PAY.
PRIMARY RE"UISITE OF E"UITY PRINCIPLE*
A PROGRESSIVE TAX RATE SHALL E APPLIEDE/UALLY TO ALL PERSONS, FIRMS, ANDCORPORATION, AND TRANSACTIONS PLACED INSIMILAR CLASSIFICATION AND SITUATION.
CHAPTER 1 General Principles and Concepts of Taxation
RULE ON UNIFORMITY AND
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RULE ON UNIFORMITY ANDE"UITY IN TAXATION (CONTD!
PROGRESSIVE SYSTEM OF TAXATION
TAX LAWS SHALL GIVE EMPHASIS ON DIRECT
RATHER THAN INDIRECT TAXES OR ON THEABILITY%TO%PAY PRINCIPLE OF TAXATION.
CHAPTER 1 General Principles and Concepts of Taxation
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PRESIDENTS VETO POWER
VETO POWER) REFERS TO THE EXECUTIVES POWER TO REFUSE
TO SIGN INTO LAWA ILL THAT HAS EEN PASSED YA LEGISLATURE.
IT CAN BE DEFINED INTO*
A. ITEM VETO
THE POWER TO VETO ITEMS IN APPROPRIATIONBILLS WITHOUT AFFECTING ANY OTHER PROVISIONSOF SUCH ILLS, AND
. POCKET VETO
THE POWER TO DISAPPROVE LEGISLATIVE ACT YTHE PRESIDENT WITH THE RESULT THAT ILLS SHALL
FAIL TO ECOME LAWS.CHAPTER 1 General Principles and Concepts of Taxation
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EXEMPTION FROMPROPERTY TAXATION
THE EXEMPTION IS GRANTED IN RETURN FORTHE ENEFITS THEY HAVE AFFORDED FOR THEPULIC WELFARE.
TO E EXEMPTED FROM TAXATION, THE REALPROPERTYMUST E EXCLUSIVELY USED FORRELIGIOUS, EDUCATIONAL AND CHARITABLE
PURPOSES.
CHAPTER 1 General Principles and Concepts of Taxation
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PUBLIC MONEY NOTRELIGIOUS PURPOSES
ART. VI, SECTION + OF THECONSTITUTION
PROVIDES THAT NO PUBLIC MONEY OR PROPERTYSHALL EVER BE APPROPRIATED, APPLIED, PAID OR USED
IRECLY OR INIRECTLYFOR THE USE, BENEFIT, ORSUPPORT OFANY SECT! CHURCH! ENOMINATION!SECTARIAN! INSTITUTION, OR SYSTEM OF RELIGION,OR FOR THE USE, BENEFIT OR SUPPORT OFANY PRIEST!PREACHER! MINISTER! OR RELIGIOUS TEACHER ORIGNITARYAS SUCH, EXCEPT WHEN SUCH PRIEST,PREACHER, MINISTER, OR DIGNITARY IS ASSIGNED TOARMED FORCES, OR TO ANY PENAL INSTITUTION, ORGOVERNMENT ORPHANAGE OR LEPROSARIUM.
LIKEWISE, THE CHURCH SHOULD NOT INTERFERE IN PURELY
POLITICAL MATTERS OR AFFAIRS EXCLUSIVELY FOR THESTATE. CONSE UENTLY THE CONSTITUTION PROHIITSCHAPTER 1 General Principles and Concepts of Taxation
CONGRESS GRANTING TAX
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CONGRESS GRANTING TAXEXEMPTION
ART. VI, SECTION +-, PAR. ' OF THECONSTITUTION
PROVIDES THAT NO LAW GRANTING ANY TAXEXEMPTION SHALL BE PASSED WITHOUT THECONCURENCE OF A MA"ORITY OF ALL THEMEMBERS OF THE CONGRESS.#
PROVISION RE/UIRES THE CONCURENCE OF THEMAJORITY NOT OF THE ATTENDEES CONSTITUTING A/UORUM UT OF ALL THE MEMERS OF THECONGRESS.
CHAPTER 1 General Principles and Concepts of Taxation
SUPREME COURTS FINAL
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SUPREME COURTS FINALJUDGEMENT IN ALL TAX CASES
THE POWER OF JUDICIAL REVIEW INTAXATION IS LIMITE ONLY TO THEINTERPRETATION AN APPLICATION OF
TAX LAWS.THE JUDICIAL TRIUNALS HAVENO CONCERN ON THE WISDOM OFTAXING ACT. ITS POWER DOES NOTINCLUDE IN/UIRY IN THE POLICY OF
LEGISLATION. NEITHER CAN IT LEGITIMATELY/UESTION OR REFUSE TO SANCTION THEPROVISIONS OF ANY LAW CONSISTENT WITH
THE CONSTITUTION.
CHAPTER 1 General Principles and Concepts of Taxation
NO IMPRISONMENT FOR NON
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NO IMPRISONMENT FOR NON%PAYMENT OF POLL TAX
POLL TAX)
A TAX IMPOSED ON A PERSON AS A
RESIDENT WITHIN A TERRITORY OF THETAXING AUTHORITY WITHOUT REGARD TO HISPROPERTY, USINESS OR OCCUPATION.
IT IS TO E NOTED THAT THE PROHIBITION OF
IMPRISONMENT APPLIES ONLY TO THE NON%PAYMENTOF POLL TAX.
CHAPTER 1 General Principles and Concepts of Taxation
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CHAPTER 1 General Principles and Concepts of Taxation
TAXES AS GENERAL FUNDS OFTHE GOVERNMENT
ART. VI, SECTION +, PAR. & OF THEPHILIPPINE CONSTITUTION
STATES THAT ALL MONEY COLLECTED ON ANY TAX LEVIED
FOR A SPECIAL PURPOSE SHALL BE TREATE AS ASPECIAL FUNAND PAID OUT FOR SUCH PURPOSE ONLY.IF THE PURPOSE FOR WHICH A SPECIAL FUND WAS CREATEDHAS BEEN FULFILLED OR ABANDONED, THE BALANCE IF ANY,
SHALL BE TRANSFERRED TO THE GENERAL FUNDS OF THEGOVERNMENT.
THUS, COLLECTION OF FEE WITH THE NATURE OF TAXES INTENDEDFOR THE PROMOTION OF SUGAR INDUCTRY SHALL E TREATED AS A
SPECIAL FUND.
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CHAPTER 1 General Principles and Concepts of Taxation
IMPORTANCE OF TAXATION
IT IS THE PRIMARY SOURCE OF GOVERNMENTREVENUE THAT IS USED TO EFFECTIVELY ANDPERMANENTLY PERFORM GOVERNMENT
FUNCTIONS.
WITHOUT TAXATION, THE OTHER INHERENTPOWERS (POLICE AND EMINENT DOMAIN POWERS!WOULD BE PARALYZED.
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CHAPTER 1 General Principles and Concepts of Taxation
BASIS OF TAXATION
ESTABLISHED BASED ON THEPRINCIPLES OF*
A. NECESSITY
THE GOVERNMENT HAS A RIGHT TO COMPEL ALL
ITS CITIZENS, RESIDENTS AND PROPERTY WITHINITS TERRITORY TO CONTRIUTE MONEY.
TAXATION IS THE 0LIFELOOD1 OR THE 0READAND UTTER1 OF THE GOVERNMENT AND EVERY
CITIZEN MUST PAY HIS TAXES.B. RECIPROCAL UTIES OF PROTECTION ANDSUPPORT BETWEEN THE STATE AND INHABITANTS.
THE GOVERNMENT COLLECTS TAXES FROM THESUJECT OF TAXATION IN ORDER THAT IT MAY E
ALE TO PERFORM ITS FUNCTIONS.
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CHAPTER 1 General Principles and Concepts of Taxation
PURPOSES OF TAXATION
OBJECTIVES IN THE EXERCISE OF TAXINGPOWER
1. REVENUE PURPOSES
THE PRIMARY PURPOSE OF TAXATION IS TO RAISEREVENUE Y COLLECTING FUNDS OR PROPERTY FOR THESUPPORT OF THE GOVERNMENT IN PROMOTING THE GENERALWELFARE AND PROTECTING ITS INHAITANTS.
+. REGULATORY PURPOSE
THIS OJECTIVE ISACCOMPLISHED TO
A. REGULATE INFLATION,
. ACHIEVE ECONOMIC AND SOCIAL STABILITY,AND
C. SERVE AS KEY INSTRUMENT FOR SOCIAL
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CHAPTER 1 General Principles and Concepts of Taxation
PURPOSES OF TAXATION (CONTD!
REGULATORY PURPOSES CONTD/
TAXES MAYE USED AS A TOOL AND WEAPON IN INTERNATIONAL RELATIONS
AS A TOOL TO PROTECT TRADE RELATION, SPECIAL DUTIESMAYE CREATED TO PROTECT NEW CONDITIONS, SUCH AS:
$1% ISCRIMINATORY UTY
THIS SPECIAL DUTY IS DESIGNED TO OFFSET ANYFOREIGN DISCRIMINATION AGAINST OUR LOCAL COMMERCE.
$2% COUNTERVAILING UTY
IT MAYE IMPOSED TO OFFSET ANY FOREIGN SUSIDYGRANTED TO IMPORTED GOODS TO THE PREJUDICE OF OURLOCAL INDUSTRIES.
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CHAPTER 1 General Principles and Concepts of Taxation
REGULATORY PURPOSE 2CONTD3
(&! MAR&ING UTY
IT IS GENERALLY IMPOSED AS ADDITIONAL DUTYTAX ON IMPORTED ARTICLES AND4OR CONTAINERS WITHIMPROPER CLASSIFICATION.
('! UMPING UTIES
IT REFERS TO THE ADDITIONAL DUTY TAXESIMPOSED ON IMPORTED GOODS WITH PRICES LESSER THANTHEIR FAIR MARKET VALUES TO PROTECT LOCAL INDUSTRIES.
&. COMPENSATORY PURPOSE
TAXATION IS A WAY OF GIVING ACK THE EXPECTEDECONOMIC AND SOCIAL ENEFIT DUE TO THE INHAITANTS.
PURPOSES OF TAXATION (CONTD!
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES INTAXATION
!. PROSPECTIVITY OFTAX LAWS
". IMPRESCRIPTIILITYOF TAXES
#. DOULE TAXATION
'. ESCAPE FROMTAXATION
. EXEMPTION FROMTAXATION
. E/UITALERECOUPMENT
*. SET$OFF TAXES
. TAXPAYER SUIT
-. COMPROMISES
!. POWER TO
DESTROY
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
1. PROSPECTIVITY OF TAX LAWS
THE PRINCIPLE OF PROPECTIVITY OF TAX LAWSSTATES THAT A TAX ILL MUST ONLY E
APPLICALE AND OPERATIVE AFTER BECOMINGA LAW.
+. IMPRESCRIPTIBILITY OF TAXES
THIS PRINCIPLE STATES THAT UNLESSOTHERWISE PROVIDED Y THE TAX LAW ITSELF,TAXES IN GENERAL ARE NON CANCELLABLE.
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CHAPTER 1 General Principles and Concepts of Taxation
&. DOUBLE TAXATION
MEANS AN ACT OF THE SOVEREIGN Y TAXINGTWICE FOR THE SAME PURPOSE IN THE SAMEYEAR UPON THE SAME PROPERTY OR ACTIVITYOF THE SAME PERSON, WHEN IT SHOULD E TAXEDONCE, FOR THE SAME PURPOSE AND WITH THE SAMEKIND OF CHARACTER OF TAX.
TO AVOID INJUSTICE AND UNFAIRNESS, DOUBTS AS TO WHETHER DOULE
TAXATION HAS EEN IMPOSED SHOULD E RESOLVED IN FAVOR OF THETAXPAYER
CERTAIN DOCTRINES IN TAXATION(CONTD!
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD)
INDIRECT DUPLICATE TAXATION.
THIS IS DOULE TAXATION IN ITS BROAD SENSE.
IT EXTENDS TO ALL CASES IN WHICH THERE IS ABURDEN OF TWO OR MORE PECUNIARY IMPOSITIONS.
DIRECT DUPLICATE TAXATION.
THIS IS DOULE TAXATION IN ITS STRICT SENSE.
IT IS PROHIITED ECAUSE IT COMPRISES IMPOSITIONOF THE SAME TAX ON THE SAME PROPERTYFOR THE
SAME PURPOSE Y THE SAME STATE DURING THE SAMETAXING PERIOD.
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD)
HOW TO COUNTER ACT INDIRECT DOUBLE TAXATION0
!. TAX EXEMPTIONS&
". RECIPROCITYCLAUSE4 TAX TREATY&
#. TAX CREDIT&
'. TAX EXEMPTIONS& AND
. ALLOWANCE FOR DEDUCTIONS SUCH AS VANISHING DEDUCTION IN ESTATETAX.
THERE IS NO DOUBLE TAXATION IN THE FOLLOWING CASES*
!. Y TAXING CORPORATE INCOME AND STOCKHOLDERS DIVIDENDS FROM
THE SAME CORPORATION.". A TAX IMPOSED Y THE STATE AND THE LOCAL GOVERNMENT UPON THE SAME
OCCUPATION , CALLING OR ACTIVITY.
&. REAL ESTATE TAX AND INCOME TAX COLLECTED ON THE SAM REAL ESTATEPROPERTY LEASED FOR EARNING PURPOSES.
'. TAXES ARE IMPOSED ON THE TAXPAYERS FINAL PRODUCT AND THE STORAGE
OF RAW MATERIALSUSED IN THE PRODUCTION OF THE FINAL PRODUCT.
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
'. ESCAPE FROM TAXATION
THE WAYS Y WHICH A TAX PAYER COULD ESCAPE TAXURDENS MAY E THROUGH TAX EVASIONAND TAXAVOIDANCE.
TAX EVASION)
UNDER THIS METHOD, THE TAX PAYER USES UNLAWFULMEANSTO EVADE OR LESSEN THE PAYMENT OF TAX.
THIS FORM OF TAX DODGING IS PROHIITED ANDTHEREFORE SUJECT TO CIVIL AND OR CRIMINAL
PENALTIES.
TAX AVOIDANCE)
THIS IS THE REDUCING OR TOTALLY ESCAPING PAYMENT OFTAXES THROUGH LEGALLY PERMISSIBLE MEANS.
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
FORMS OF TAX AVOIDANCE
(1.! TAX OPTION
TAXPAYERS MAY CHOOSE TO PAY LOWER TAX RATE INSOME TRANSACTIONS AS PERMITTED BY TAX LAWS.
(+.! SHIFTING
IS THE TRANSFER OF TAX BURDEN TO ANOTHER&THE IMPOSITION OF TAX IS TRANSFERRED FROM THE
STATUTORY TAXPAYER TO ANOTHER WITHOUTVIOLATING THE LAW.
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
FORMS OF TAX AVOIDANCE CONTD/
(&.! TRANSFORMATION
THE PRODUCER ABSORBS THE PAYMENT OF TAXTOREDUCE PRICES AND TO MAINTAIN MARKET SHARE, THEN HERECOVERS HIS ADDITIONAL TAX EXPENSES Y IMPROVING
THE PROCESS OF PRODUCTION.
('.! EXEMPTION FROM TAXATION
DENOTES A GRANT OF IMMUNITY,EXPRESSED ORIMPLIED, TO A PARTICULAR PERSON, CORPORATION, OR TO
PERSONS OR CORPORATIONS OF A PARTICULAR CLASS ,FROM A TAX UPON PROPERTY OR AN EXCISE WHICHPERSONS AND CORPORATION GENERALLY WITHIN THE SAMETAXING DISTRICT ARE OLIGED TO PAY.
TAX EXEMPTIONS ARE GENERALLY GRANTED IN THE
ASIS OF (5) RECIPROCITY,(6) PUBLIC POLICY, AND (C)CONTRACTS.
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
CLASSIFICATIONS OF TAX EXEMPTION TAX EXEMPTION MAYBE CLASSIFIED AS*
(1.! EXPRESSED EXEMPTION
THESE TAX EXEMPTIONS ARE STATUTORY LAWS IN
NATURE AS PROVIDED Y CONSTITUTION, STATUTE,TREATIES, ORDINANCES, FRANCHISES OR SIMILARLEGISLATIVE ACTS.
(+.! IMPLIED EXEMPTION OR BY OMISSION
THESE EXEMPTIONS ARE EITHER INTENTIONALORACCIDENTAL.
THESE OCCUR WHEN TAX IS IMPOSED ON A CERTAINCLASS OF PERSONS, PROPERTIES OR TRANSACTIONSWITHOUT MENTIONING OTHER CLASSES& THOSE NOTMENTIONED ARE DEEMED EXEMPTED BY OMISSION.(PRINCIPLE OF LAW!.
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
CLASSIFICATIONS OF TAX EXEMPTION CONTD/
(&.! EXPRESSED EXEMPTIONARE EXEMPTIONS THAT ARE LAWFULLY ENTERED INTO YTHE GOVERNMENT IN CONTRACT UNDER EXISTING LAWS.
THESE EXEMPTIONS MUST NOT E CONFUSED WITH THETAX EXEMPTIONS GRANTED UNDER FRANCHISES, WHICH
ARE NOT CONTRACTS WITHIN THE CONTEXT OF NON%IMPAIRMENT CLAUSE OF THE CONSTITUTION.
CERTAIN DOCTRINES IN TAXATION
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
$. E"UITABLE RECOUPMENT
THIS DOCTRINE OF LAW STATES THAT A TAX CLAIMFOR REFUND, WHICH IS PREVENTED Y PRESCRIPTION, MAY EALLOWEDTO E USED AS PAYMENT FOR UNSETTLED TAX
LIABILITIES IF OTH TAXES ARISE FROM THE SAMETRANSACTION IN WHICH OVERPAYMENTIS MADE ANDUNDERPAYMENT IS DUE.
2. SET%OFF TAXES
THIS DOCTRINE STATES THAT TAXES ARE NOTSUBJECT TO SET%OFF OR LEGAL COMPENSATION ECAUSETHE GOVERNMENT AND THE TAXPAYER ARE NOT MUTUALCREDITOR AND DEBTOROF EACH OTHER.
CERTAIN DOCTRINES IN TAXATION
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CERTAIN DOCTRINES IN TAXATION(CONTD!
CHAPTER 1 General Principles and Concepts of Taxation
-.! SET%OFF TAXES CONTD/
33 A PERSON CANNOT REFUSE TO PAY TAX ON THE BASIS THAT THEGOVERNMENT OWES HIM AN AMOUNT E"UAL TO OR GREATER THAN THETAX BEING COLLECTED.
EXEMPTION TO THIS RULE:
!.) WHERE OTH THE CLAIMS OF THE GOVERNMENT AND THETAXPAYER AGAINST EACH OTHER HAVE ALREADY ECOME DUE,DEMANDABLE AND FULLY LI"UIDATED&
".) WHERE THERE IS AN ACTUAL COMPROMISE ETWEEN THETAXPAYER AND THE TAX OFFICER.
CERTAIN DOCTRINES IN TAXATION
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
.! TAXPAYER SUIT
IS EFFECTED THROUGHCOURT PROCEEDINGS ANDCOULD ONLY E ALLOWED IF THE ACT INVOLVES A DIRECTANDILLEGAL DISBURSEMENT OF PUBLIC FUNDS DERIVED FROM
TAXATION.
14.! COMPROMISES
THIS DOCTRINE PROVIDES THAT COMPROMISES ARE
GENERALLYALLOWEDAND ENFORCEABLE WHEN THESUBJECT MATTERTHEREOF IS NOT PROHIBITED FROM NOTBEING COMPROMISED AND THE PERSON ENTERING SUCHCOMPROMISE IS DULY AUTHORIZEDTO DO SO.
CERTAIN DOCTRINES IN TAXATION
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
11.! POWER TO DESTROY
THIS PRINCIPLE IMPLIES THAT AN IMPOSITION OF LAWFULREGULATORY TAXES WOULD E DESTRUCTIVE TO THETAXPAYERS AND USINESS ESTALISHMENTS ECAUSE THEGOVERNMENT CAN COMPEL PAYMENT OF TAX ANDFORFEITURE OF PROPERTYTHROUGH THE EXERCISE OFPOLICE POWER.
CERTAIN DOCTRINES IN TAXATION
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CHAPTER 1 General Principles and Concepts of Taxation
CERTAIN DOCTRINES IN TAXATION(CONTD!
THIS REFERS TO THE PLACE OF TAXATION, OR THESTATE OR POLITICAL UNIT WHICH HAS JURISDICTION TOIMPOSE TAX OVER ITS INHBITANTS.
SITUS OF TAXATION
POWER TO BUILD
TAX POWER IS PRIMARILY A TOOL THAT CREATES, BUILDSAND SUSTAINS THE UPLIFTMENT OF SOCIAL CONDITION OFTHE PEOPLE IN GENERAL AS IT CONTINOUSLY SUPPORTS THE
OTHER INHERENT POWERS OF THE STATE THAT PRESERVE THEFUNDAMENTAL RIGHTS OF THE PEOPLE.
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CHAPTER 1 General Principles and Concepts of Taxation
SITUS OF TAXATION (CONTD!
GENERAL RULE: THE STATEHAS THE POWER TO IMPOSE TAXONLY WITHIN ITS TERRITORIAL JURISDICTION.
THE FOLLOWING FACTORS ARE DETERMINANTS TO THE
SITUS OF TAXATION*
1. N56789, 789 ;< :5? =5@ 6?89 8B;?&
+. S79:6 56698 ;< =>? =5@ (?;9, ;?=, 8>= ;5=88=)&
&. S?78:9 ;< =>? 89;B? 6?89 =5@?&
'. P5:9 ;< =>? ?@8?, 88??, 689? ; ;5=8;9 6?89=5@?&
#. C=6=9@? =5@5?&
$. R9? =5@5?.
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CHAPTER 1 General Principles and Concepts of Taxation
NATURE OF TAXES
TAXES)
5? 5?, ?@5=8;9, 8B;8=8;9 ;;9=86=8;9 5?? 89 5;59? 8=> ;B? ?5;956?? ;< 5;89=B?9=, 6 5=>;8= ;< 5 ;??89 =5=?, ;9
=>? ?;9, ;?=, ; 8>= ?@?8?, 8=>89 8= 88=8;9,=; ;8? 68 ??9? ? ;= ;< =>? ;?9B?9=,=>? 5B898=5=8;9 ;< =>? 5, ; =>? 5B?9= ;< 68?@?9?.
T5@? 5? ;685=8;9 '()*+), - /*.
T5@? 5? ?9?5)(*/ + +5) +*6*)(.
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CHAPTER 1 General Principles and Concepts of Taxation
NATURE OF TAXES (CONTD!
ESSENTIAL CHARACTERISTICS OF TAXES
1. E@?8:9;9=86=8;9.
". IB;? 6 9=55=?.
'. P556? 89 ?8 ? ?@9.
. IB;? ? ;? ;< 85=
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CHAPTER 1 General Principles and Concepts of Taxation
NATURE OF TAXES (CONTD!
CLASSIFICATION OF TAXES
1. AS TO PURPOSE
5. R))) ( F'*/
T>?? =5@? 5? 8B;? ;? ? ;? ?85=
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CHAPTER 1 General Principles and Concepts of Taxation
NATURE OF TAXES (CONTD!
+. AS TO OBJECT OR SUBJECT MATTER
5. P)(*/! P// ( C*+*+
T>?? =5@? 5? >9 =@ 5?7@6 59 8B;? ;998
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CHAPTER 1 General Principles and Concepts of Taxation
NATURE OF TAXES (CONTD!
&. AS TO DETERMINATION OF AMOUNT
5.A, V*/();
$ T>?? =5@? 5? >9 5?7@6< =@ 8??86=?@ 6?69 579 ? 69 8?986 8=> ??= =; >8> =>? =5@ 85??.
$ I= ?8? =>? 89=??9=8;9 ;< A?; =; ?=8B5=?=>? 5? ;< > ;?= 6?? 5B;9= ? =; =>?=5@5? 6? ?=?B89?.
6. S)'
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CHAPTER 1 General Principles and Concepts of Taxation
'. AS TO WHO BEARS THE BURDEN
5. ()'+
$ T>?? =5@? 5? @?@%685@? 85688= ? 5B?9= ;< =5@ 5 ? 5 =>? =5@? 5B? ?;9.
6. I,()'+
-T>?? =5@? 5? 685@? 85688= ? 5B?9= ;< =5@ ? 6?9 =>??;< 59 6? >8?.
NATURE OF TAXES (CONTD!
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CHAPTER 1 General Principles and Concepts of Taxation
NATURE OF TAXES (CONTD!
#. AS TO SCOPE OR AUTHORITY COLLECTING THE TAX
5. N*+*/
$ T5@? ;?=? 6 =>? @56=?@5 ?98@9@6 (E..E=5=? 59 ;9; =5@?).
6. L'*/ ( M'*/
-T5@? ;?=? 6 =>? M7@=:=5 ?98@9@6 (E..C;BB98= =5@).
O S
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CHAPTER 1 General Principles and Concepts of Taxation
$. AS TO RATE OR GRADUATION5. P((+*/ ( F/*+ R*+)
$ T>? 5=? ;< =>? =5@ 8 65? ;9 5 >9 98:9@659 ? 695?7@6 ? 69 8?986, 89:9=6 ?8 ?698 5? 8569 ? 69 65 89?5? 5 =>? 65 5
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OTHER CHARGES FEES
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CHAPTER 1 General Principles and Concepts of Taxation
OTHER CHARGES FEES (CONTD!
$. CUSTOMS DUTIES$ 5? =?= 89=; =>? ;9= 6? 8?69:6 ?:5=@7:=5 6?69 7=:.
-. TARIFF+ 8 5 >?? ; 8= ;< 8569
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CHAPTER 1 General Principles and Concepts of Taxation
TAX LAW DEFINED
TAX LAW)8 =>5= 6; ;< 5 8989 89;B?, ?=5=?, 8? =5@?.
T>? TAX CODE 8 59 ?@5B? ;< 5 ?85 5 >8> ?58 ;? 5 ?9?5 5 >5 =>? C88 C;? ; =>? R? ;< C;=.
INTERNAL REVENUE LAW
$ I= 89? 5 5 ?85=? ?=58989 =; =>? 95=8;95;?9B?9= =5@? >8> 8 ?B6;8? 89 =>? NIRC.$ T>? B589 ;? ;< ;B5=89 89=?95 ??9? 58 =; 8? B;9? =; B??= =>? ?985 9?? 6 =>?
;?9B?9=.
INTERNAL REVENUE TAXES
$ =5@? 8B;? 6 =>? ?85=8? 6; ?698 65@:7
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CHAPTER 1 General Principles and Concepts of Taxation
NATURE OF TAX LAW
THE PHILIPPINES INTERNAL REVENUE
LAWS ARE GENERALLY CIVIL INNATURE& THEY ARE NEITHERPOLITICAL NOR PENAL IN NATURE.
INTERPRETATION APPLICATION
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CHAPTER 1 General Principles and Concepts of Taxation
OF TAX LAW
THE FOLLOWING RULES ARE GENERALLY FOLLOWEDFOR THE INTERPRETATION AND APPLICATION OF TAXLAWS*
!. TAX STATUTE MUST E ENFORCED AS WRITTEN.
". IMPOSITION OF TAX URDENS IS NOT PRESUMED.
#. DOUBTS SHOULD E RESOLVED LIERALLY IN FAVOR OFTHE TAXPAYER.
'. TAX EXEMPTIONS ARE STRICTLY CONSTRUED AGAINST
THE TAXPAYER.
. TAX LAWS ARE APPLIED PROSPECTIVELY.
. TAX LAWS PREVAIL OVER CIVIL LAWS.
SOURCES OF PHILIPPINE TAX
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CHAPTER 1 General Principles and Concepts of Taxation
SOURCES OF PHILIPPINE TAXLAWS
THE PHILIPPINES REPUBLIC MAKES LAWS WHICHMAYBE COMPRISED OF THE FOLLOWING*
1. CONSTITUTION OF THE PHILIPPINES&
$ THIS REFERS TO THAT ODY OF RULES ANDMAXIMS IN ACCORDANCE WITH WHICH THE POWER OFSOVEREIGNITY ARE HAITUALLY EXERCISED.
+. STATUTES;
$ THESE ARE LAWS ENACTED AND ESTALISHED YTHE CIVIL WILL OF THE LEGISLATIVE DEPARTMENT OF THEGOVERNMENT.
SOURCES OF PHILIPPINE TAX
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CHAPTER 1 General Principles and Concepts of Taxation
SOURCES OF PHILIPPINE TAXLAWS (CONTD!
#. EXECUTIVE ORDERS;
$ THESE ARE REGULATIONS ISSUED BY THEPRESIDENT OR SOME ADMINISTRATIVE UNDER HISDIRECTION FOR THE PURPOSE OF INTERPRETING,IMPLEMENTING, OR GIVING ADMINISTRATIVE EFFECT TO APROVISION OF THE CONSTITUTION OR SOME LAW ORTREATY.
'. TAX TREATIES AND CONVENTION WITH FOREIGNCOUNTRIES;
$ THESE REFER TO THE TREATIES OR
INTERNATIONAL AGREEMENTS WITH FOREIGNCOUNTRIES REGARDING TAX ENFORCEMENT ANDEXEMPTIONS.
SOURCES OF PHILIPPINE TAX
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CHAPTER 1 General Principles and Concepts of Taxation
#. REVENUE REGULATIONS BY THE DEPARTMENT OFFINANCE;
$ THESE ARE RULES OR ORDERS HAVING FORCE OFLAW ISSUED Y EXECUTIVE AUTHORITYOF THE
GOVERNEMENT TO ENSURE UNIFORM APPLICATION OF TAXLAWS.
IN ORDER THAT ADMINISTRATIVE REGULATIONS MAYBECONSIDERED VALID, ALL OF THE FOLLOWING RE*UISITES MUST BE
COMPLIED WITH:
!. THE REGULATIONS MUST E USEFUL IN PRACTICAL ANDNECESSARY FOR THE ENFORCEMENT OF THE LAW&
". THEY MUST E REASONABLEIN THEIR PROVISIONS&
#. THEY MUST NOT BE CONTRARY TO LAW; AND
'. THEY MUST E DULY PUBLISHEDIN THE OFFICIAL
SOURCES OF PHILIPPINE TAXLAWS (CONTD!
SOURCES OF PHILIPPINE TAX
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CHAPTER 1 General Principles and Concepts of Taxation
SOURCES OF PHILIPPINE TAXLAWS (CONTD!
. BIR REVENUE MEMORANDUM CIRCULARS UREAU OFCUSTOMS MEMORANDUM ORDERS&
$ THESE ARE ADMINISTRATIVE RULINGS OROPINIONS WHICH ARE LESS GENERAL INTERPRETATION OFTAX LAWSEING ISSUED Y TIME TO TIME Y THE
COMMISSIONEROF THE INTERNAL REVENUE AND UREAU OFCUSTOMS, AS THE CASE MAYE.
*. BIR RULINGS;
$ THESE ARE EXPRESSED OFFICIAL INTERPRETATION
OF THE TAX LAWS AS APPLIED TO SPECIFICTRANSACTIONS.
-. JUDICIAL DECISIONS;
$ THESE REFER TO THE DECISIONS FOR APPLICATIONMADE CONCERNING TAX ISSUES Y THE PROPER COURTEXERCISING JUDICIAL AUTHORITY OF COMPETENT
SOURCES OF PHILIPPINE TAX
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CHAPTER 1 General Principles and Concepts of Taxation
SOURCES OF PHILIPPINE TAXLAWS (CONTD!
. LOCAL TAX ORDINANCES
$ THESE ARE TAX ORDINANCES ISSUED Y THEPROVINCE, CITY, MUNICIPALITY ANDARANGAYS4ARRIOS SUJECT TO SUCH LIMITATIONSAS PROVIDED Y THE LOCAL GOVERNMENT CODEAND THE REAL PROPERTY TAX CODE.
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