scope and limitation of taxation

SCOPE AND LIMITATION OF TAXATIONI. INHERENT LIMITATIONS1. The levy must be for a public purpose.2. It is inherently legislative.GR: Taxation is leislati!e in nat"#e an$ t%"s& t%e 'o(e# to tax )a* NOT +e $eleate$.XPNS:i.Deleation to lo,al o!e#n)ents-ii. Deleation to t%e P#esi$ent-iii.Deleation to a$)inist#ati!e aen,ies-..Taxation is territorial. Taxation )a* e+ exe#,ise$ onl* (it%in t%e te##ito#ial /"#is$i,tion o0 t%e taxin a"t%o#it*.Situs of taxation 'la,e o0 taxationIn 1xin t%e tax sit"s& t%e 0ollo(in ,#ite#ia a#e ene#all* o+se#!e$:i. Sit"s o0 in,o)e tax 2 ,#",ial 0a,to#s in!ol!in t%is ,ateo#* a#e a3 nationalit* o# ,iti4ens%i' o0 tax'a*e# +3%is #esi$en,e o# $o)i,ile ,3so"#,e o0 in,o)e F#o) so"#,es (it%in t%e P%ili''ines F#o) so"#,es (it%o"t t%e P%ili''ines In,o)e 'a#tl* (it%in an$ 'a#tl* (it%o"t t%e P%ili'''inesSe, 2. o0 Tax Co$# o0 1556 : Gene#al P#in,i'les o0 In,o)e Taxation in t%e P%ili''ines.7 Ex,e't (%en ot%e#(ise '#o!i$e$ in t%is Co$e:89A3 A ,iti4en o0 t%e P%ili''ines #esi$in t%e#ein is taxa+le on all in,o)e $e#i!e$ 0#o) so"#,es (it%in an$ (it%o"t t%e P%ili''ines-89:3 A non#esi$ent ,iti4en is taxa+le onl* on in,o)e $e#i!e$ 0#o) so"#,es (it%in t%e P%ili''ines-89C3 An in$i!i$"al ,iti4en o0 t%e P%ili''ines (%o is (o#;in an$ $e#i!in in,o)e 0#o)a+#oa$ as an o!e#seas ,ont#a,t (o#;e# is taxa+le onl* on in,o)e 0#o) so"#,es (it%in t%e P%ili''ines: P#o!i$e$& T%at a sea)an (%o is a ,iti4en o0 t%e P%ili''ines an$ (%o #e,ei!es ,o)'ensation 0o# se#!i,es #en$e#e$ a+#oa$ as a )e)+e# o0 t%e ,o)'le)ent o0 a !essel enae$ ex,l"si!el* in inte#national t#a$e s%all +e t#eate$ as an o!e#seas ,ont#a,t (o#;e#-89D3 An alien in$i!i$"al& (%et%e# a #esi$ent o# not o0 t%e P%ili''ines& is taxa+le onl* on in,o)e $e#i!e$ 0#o) so"#,es (it%in t%e P%ili''ines-89E3 A $o)esti, ,o#'o#ation is taxa+le on all in,o)e $e#i!e$ 0#o) so"#,es (it%in an$(it%o"t t%e P%ili''ines- an$89F3 A 0o#ein ,o#'o#ation& (%et%e# enae$ o# not in t#a$e o# +"siness in t%e P%ili''ines& is taxa+le onl* on in,o)e $e#i!e$ 0#o) so"#,es (it%in t%e P%ili''ines.The taxable situs will depend upon the nature of income as follows; 1)Interests- Interest income is treated as income from within the Philippines if the debtor or lender whether an individual or corporation is a resident of the Philippines. 2)Dividends- Dividends received from a domestic corporation are treated as income from sources within the Philippines.Dividends received from a forein corporation are treated as income from sources within the Philippines! unless"#$ of the ross income of the forein corporation for the three-%ear period precedin the declaration of such dividends wasderived from sources within the Philippines; but onl% in an amount which bears the same ratio to such dividends as the rossincome of the corporation for such period derived from sources within the Philippines bears to its ross income from all sources. &)'ervices- 'ervices performed in the Philippines shall be treated as income from sources within the Philippines. ())entals and )o%alties- *ain or income from propert% or interest located or used in the Philippines is treated as income from sources within the Philippines. ")'ale of )eal Propert%- *ain from sale of real propert% located within the Philipines is considered as income within thePhilippines. +)'ale of Personal Propert%- *ain! profit or income from sale of shares of stoc,s of a domestic corporation is treated as derived entirel% from sources within the Philippines! reardless of where the said shares are sold *ains from sale of other personal propert% can be considered income from within or without or partl% within or partl% without dependin on the rules provided in 'ection (2 - of the Tax .ode.ii. Sit"s o0 P#o'e#t* Taxes7 t%e tax sit"s ,an onl* +e (%e#e t%e '#o'e#t* is sit"ate$. T%"s& t%e #eal '#o'e#t* tax ,annot +e i)'ose$ on #eal n'#o'e#tl* lo,ate$ a+#oa$& alt%o"% o(ne$ +* Fli'ino ,iti4ens.REAL TAX !s PERSONAL PROPERT