Taxes, Tax Law, and Tax Administration

• Interpretation of Tax Laws


  General Rule: Liberally in FAVOR of the taxpayer and strictly AGAINST the government.

  Exception: In cases of tax exemptions and deductions.
• Sources of Tax Laws

  a. The Constitution.

  b. Statutory enactments.

  c. Administrative rulings and regulations.

  d. Judicial decisions.
• The Constitution

  The provisions of the Constitution dealing on taxation merely regulate the exercise of the power of taxation. They are not actually grants of the power, because taxation can be exercised by the government; the power of taxation is not a mere constitutional grant.
• Statutory Enactment


  This refers to the tax laws passed by the Congress.
• Administrative Rulings and Regulations

  Administrative rulings are less general interpretation of tax laws which are issued from time to time by the Commissioner of Internal Revenue. They are usually rendered on request of taxpayers to clarify certain provisions of a tax law. They are commonly known as "BIR Rulings."
• Judicial Decisions


  This refers to decisions of the Court of Tax Appeals and the Supreme Court applying, or interpreting tax laws. They constitute major part of the jurisprudence on taxation and form part of the legal system of the Philippines. Decisions of the Court of Tax Appeals, however, are still appealable to the Supreme Court.
• Types of Administrative Issuances

  1. Revenue Regulations.

  2. Revenue Memorandum Orders.

  3. Revenue Memorandum Rulings.

  4. Revenue memorandum circulars.

  5. Revenue Bulletins.

  6. BIR Rulings.
• Revenue Regulations


  Issuance signed by the Secretary of Finance upon recommendation of the Commissioner of Internal Revenue that specify, prescribe, or define rules and regulations for the effective enforcement of the provisions of the NIRC and other related statutes.
• Revenue Memorandum Orders


  Issuance that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods, and procedures necessary in the implementation of the stated policies, goals, objectives, plans, and programs of the Bureau.
• Revenue Memorandum Rulings


  Rulings, opinions and interpretations of the CIR with respect to the provisions of the Tax Code and other tax laws.
• Revenue Memorandum Circulars


  issuance that publish pertinent and applicable portions as well as amplification of laws, rules, regulations, and precedents issued by the BIR and other agencies and offices.
• Revenue Bulletins


  Periodic issuances, notices, and official announcements of the CIR.
• BIR Rulings

  Official position of the Bureau.
• GAAP vs Tax Laws

  Tax Laws must prevail over GAAP.
• Nature of Philippine Tax Laws

  Civil and not political nor penal in nature.
• Tax


  Enforced proportional contribution.
• Elements of a valid tax

  1. Tax must be levied by the taxing power having jurisdiction over the object.

  2. Must not violate constitutional and inherent limitations.

  3. Must be uniform and equitable.

  4. Must be for public purpose.

  5. Must be proportional in character.

  6. Must be payable in money.
• As to subject matter

  a. Personal, capitation or poll tax.

  b. Property tax.

  c. Excise tax (privilege).
• Personal, Poll or Capitation Tax


  Imposed on persons residing within a specified territory without regard to their property or occupation.

  
  

  Example: Community Tax
• Property Tax


  Tax on property whether real or personal.

  
  

  Example: Real Estate Tax
• Excise Tax


  Imposed upon the performance of act, enjoyment of privilege, or engaging in an occupation.

  
  

  Example: Income tax, donor's tax, estate tax
• As to Purpose

  a. General, Fiscal or Revenue.

  b. Regulatory.

  c. Sumptuary.
• General, Fiscal, or Revenue


  Imposed to raise revenue for the general purposes of the government.

  Example: Income tax, Vat
• Special or Regulatory


  Imposed to regulate conduct.

  
  

  Example: Custom duties
• Sumptuary


  Levied to achieve some social or economic objectives.
• As to who bears the burden

  a. Direct

  b. Indirect.
• Direct Tax


  Demanded from persons who shoulder also the burden of the tax.

  
  

  Example: Income Tax, Donor's Tax, Estate Tax
• Indirect Tax


  Demanded from person who shall indemnify himself at the expense of another.

  
  

  Example: Vat, other percentage taxes.
• As to determination of amount

  a. Specific.

  b. Ad Valorem.
• Specific Tax


  Fixed amount by the head, number or some standard of weight or measurement.

  
  

  Example: Excise tax on distilled spirits, wines, liquors.
• Ad Valorem


  Fixed proportion of the value of property with respect to which tax is assessed.

  
  

  Example: Real estate tax
• As to Imposing Authority

  a. National Tax

  b. Local Tax
• National Tax


  Imposed by national government.

  
  

  Example: Internal revenue taxes, customs duties
• Local or Municipal Tax


  Imposed by local government units.

  Example: Sand and gravel tax, occupation tax
• As to rate

  a. Proportional

  b. Progressive

  c. Regressive
• Proportional


  Based on fixed percentage of property, receipts or other basis to be taxed.
• Progressive


  Rate increases as the tax base increases.
• Regressive


  The rate decreases as the tax base increases.
• Tax vs Toll

  To - demand of proprietorship.

  Tx - demand of sovereignty.

  
  

  To - paid for the use of another's property.

  Tx - paid for the support of government.
• Tax vs Toll (cont)

  To - amount is based on cost of construction or maintenance of public improvement.

  Tx - based on necessities of the state

  
  

  To - imposed by government, private individuals or entities.

  Tx - imposed only by the government