general principles TABAG + AMPONGAN
power to tax
- act of levying tax - raise income to defray gov't expenses
2 classification on tax exemption
- express/ affirmative - implied/ exemption by omission
what to do if accounting principles are not enforceable in accordance with the law?
- not enforceable -taxes prevail over GAAP
nature of tax laws
-CIVIL not penal in nature -penalties provided for violation
Inherent Limitations (PINES)
-Public purpose -International Comity -Non-delegability of taxing power -Exemption of the government -Situs of taxation
Due process of law
-Requires no oppression in assessment and collection of taxes -must be for public purpose -imposed within territorial boundaries
assessment and collection
-act of administration or implementation of tax laws
payment of taxes
-act of compliance by taxpayer in contributing share to pay expenses
debt
-based on contract -assignable -payable in kind/ money -no imprisonment -interest depending on the stipulation of the parties
equitable recoupment (doctrine of tax)
-claim for refund -maybe allowed to use for unsettled tax liabilities if both taxes arises from the same transaction -when refund of tax is due has already barred by prescription
Toll (not tax)
-compensation for someone else's property -maybe done with gov't/ individuals
sources of tax laws
-constitutions -tax treaties -statutes and laws -presidential decrees -executive orders -court decisions -revenue regulations -admin issuances -BIR ruling -Local Tax ordinances
2 types of double taxation
-direct -indirect
classification of taxes (who bears burden)
-direct tax -indirect tax
classification of taxes (purpose)
-fiscal/ general/ revenue tax -regulatory/ special/ sumptuary tax
personal/poll/capitation
-fixed amount -imposed to individual within situs
license fee (not tax)
-from police power of state -regulatory purpose -fee limited to necessary of regulation - imposed on exercise of right - non-payment makes business illegal
2 systems of income taxation
-global system -schedular system
penalty (not tax)
-imposed to regulate conduct through punishment -government/ individuals -from contract/ law -pain in money/ in kind
nature and characteristics of taxation
-inherent power -essentially legislative in function -has inherent and constitutional limitations -public purpose -strongesst of all inherent powers -subject to international treaty and comity -payable in money -territorial in scope
indirect double taxation
-legal -imposed on different authorities
special assessment (not tax)
-levied on land -land answers for liability -based on benefits received -application for recovery of cost/ maintaining improvement
tax capitalization
-make prices of goods lower to pass burden to buyer -reduction of SP of incoming-producing property by an amount equal to the capitalized value of future taxes that may be paid by the purchaser.
classification of taxes (jurisdiction/scope of authority)
-national tax -local tax
theories of taxation
-necessity theory -lifeblood doctrine
manifestation of lifeblood doctrine
-no estoppel against the government -collection of taxes cannot be stopped by law order -taxes not subject to compensation -valid taxes may destroy taxpayers property -right to select objects for taxation
levying/ imposition
-passage of tax laws/ ordinances through LEGISLATURE
classification of taxes (subject matter)
-personal/poll/capitation -property tax -excise tax
inherent powers of state
-power to tax -police power -eminent domain
direct double taxation
-prohibited -must be the same: >authority >jurisdiction >purpose >year >kind/character xamount (NOT)
classification of taxes (rate)
-proportional/ flat rate -progressive/ graduated tax -regressive tax
compensatory purpose of tax
-reduction of social inequality -economic growth -protect local industries from unfair competition
purpose to taxation (secondary)
-regulatory purpose -compensatory purpose
classification of taxes (determination of amount)
-specific tax -ad valorem tax
exemption grants
-strictly construed against person/ entity exclaiming exemption -claim must be justified by clear/ positive grant
scope of taxing power
-tax most absolute of all government powers -broadest powers of all powers
tax laws in case of doubt
-tax statutes/ law - favor taxpayers -tax exemptions - favor government
taxpayer's suit
-taxpayer's right to sue officers, boards, commissions to recover money wrongfully spent - only allowed if act involves direct and ilegal disbursement of public fund from taxation
Escapes from taxation
1. evasion/ dodging 2. avoidance 3.. shifting 4. capitalization 5. transformation 6. exemption
PRINCIPLES OF A SOUND TAX SYSTEM
1. fiscal adequacy 2. administrative feasibility 3. theoretical justice
stages/ aspect of taxation
1. levying/ imposition 2. assessment and collection 3. payment of taxes
what matters should be included in making taxes?
1. subject/ object to tax 2. purpose of tax 3. amount/ rate of tax 4. kind of tax 5. apportionment of tax 6. situs of tax 7. manner/ method collection
who assesses and collects taxes?
BIR / bureau of customs
Does prohibition of delegation by state of power prohibit BIR to modify rules for filing and payment?
No. BIR is allowed to modify such rules
do barrios have power to tax?
No. Barrios do not. Barangay's are the lowest org
Would ordinance taxes be affected if there's only one person within the city with such occupation? (defendant says it is discriminatory because he's the only one affected)
No. The ordinances only tax the occupation itself and not the person. The number of persons exercising the occupation is immaterial. Also, ordinance will also be imposed on other people with the same occupation in the future.
application of tax laws
PROSPECTIVE -exception: when statute expressly declared retroactively
Uniformity of taxation
Same rate shall be imposed on all taxable persons or property of the same tax
Non-delegation of legislative power
Since power of taxation is delegated to congress, congress cannot redelegate the power
Equality of taxation
Those who have more income should pay morr taxes while minimum wage earners should be exempt
Test for exemption of property tax
Use. Not ownership. Even if the real property is not owned by the school, exempt for property is provoded as long as it is used actually, directly, exclusively for educational purposes
lifeblood doctrine
Without taxes, the government would be paralyzed for lack of motive power to activate or operate it.
Can inherent limitation be disregarded with use of constitutional limitation?
Yes. Constitutional > Inherent
Are all revenues of non-stock, non-profit educational institutions EXEMPT from taxes and duties?
Yes. Revenue are exempt from income tax as long as it is used actually, directly and, exusively for educational purposes
subsidy
aid by government to help individual/commercial enterprise deemed beneficial to the public
global system
all gross income and deductions reported in one ITR applicable tax rate applied
indirect tax
allowed to transfer burden
local taxes
authority: delegated power nature: tax ordinances through the local legislative branch process: >levying - the legislative branch of lgu >assess/collect - treasurer
national taxes
authority: inherent power nature: tax laws congress and senate process: >levying - congress >assess/collect - BIR & BOC
theoretical justice
based of taxpayers ability to pay; progressive system -equality
specific tax
based on volume, weight or quantity of goods -based on value of property subject to tax
Basis of taxation
benefits-protection theory
direct tax
burden cannot be passed
local tax
by municipal corporations
administrative feasibility
convenient, just and, effective administration
schedular system
different types of income, different taxes
regulatory purpose of tax
employed as devise for regulation or control
necessity theory
existence of a government is a necessity
express/ affirmative exemption
expressly written in constitutions, statutes, treaties, ordinances, franchises or contracts
budget deficit
gov't revenue < gov't expenditures
budget surplus
gov't revenue > gov't expenses
tax transformation
higher production to lower cost and make taxes gain
tax evasion/ dodging
illegal unlawful means to evade taxes
tax exemption
immunity to pay tax
property tax
imposed to real/ personal property
tariff
imposing duties on importation and exportation of goods
regulatory/ special/ sumptuary tax
intended to achieve social/ economic goals
Who makes tax laws?
legislative department
if loan was given to the Philippines from japan given that the taxes won't be imposed on japanese institutions, which basic characteristic of taxation is being violated?
legislative in character. exemption can only be granted according to legislation
fiscal/ general/ revenue tax
levied without specific purpose
national tax
national gov't
are local taxes needed to be uniform with other local taxes of a political subdivision?
no. local taxes imposed by lgus will depend on the ordinances they have imposed
power to tax is power to destroy. is that always so?
no. supreme court may nullify tax law so that property rights are not affected
Actual, Direct and Exclusive use of property for charitable institutions
only to direct and immediate actual application of its purpose are exempted
tax shifting
passing the tax burden to another party
police power
promote public welfare by resstraining/ regulating use of liberty or property
purpose to taxation (primary)
raise revenue for gov't expenses
benefits-protection theory
reciprocal duties of government nd its inhabitants for duties of its protection and support
fiscal adequacy
sufficient to meet government expenses and public needs -certainty
eminent domain
take private property for public purpose
excise tax
tax for rights and privileges
custom duties (not tax)
tax imposed on imported/ exported goods
implied/ exemption by omission
tax levied on certain classes of persons without mentioning other classes
internal revenue
taxes imposed by legislature (except imports/ exports)
set-off taxes
taxes not subject to legal compensation because the government and taxpayer are not debtor and creditor of each other
locus standi
taxpayer can question validity of tax measures and illegal expenditures of public money
tax avoidance
the use of legitimate methods to reduce one's taxes
proportional/ flat rate tax
uses single rate
progressive/graduated tax
↑base ↑ rate
Regreessive tax
↓base ↑rate