SAINT VINCENT’S COLLEGE INCORPORATED

COLLEGE OF ACCOUNTING EDUCATION

MAIN CAMPUS, PADRE RAMON STREET, BARANGAY ESTAKA
DIPOLOG CITY, 7100, ZAMBOANGA DEL NORTE, PHILIPPINES
TELEPHONE NO. (065)212-6292, TELEFAX (065)908-1133
www.svc.edu.ph

GENERAL PRINCIPLES OF TAXATION

Inherent powers of the State: PET c. Power of taxation- the power of the state by which the
a. Police power- the power of the state to enact laws in sovereign raises revenue to defray necessary expenses of
relation to persons and property so as to promote public the government.
health, public moral, public safety, and general welfare of
the people. Similarities among the three inherent powers of the
STATE: I-CLIC
b. Power of eminent domain- the power of the state or those a. They are inherent in the state.
to whom the power has been delegated to take private b. They exist independently of the constitution.
property for public use upon paying thee owner a just c. They are legislative in nature and character.
compensation to be ascertained according to law. d. They constitute the three methods by which the State
interferes with private rights and property.
e. Each presupposes an equivalent compensation.

Comparison of the three powers of the state.

POINT OF DIFFERENCE TAXATION POLICE POWER EMINENT DOMAIN
Exercising Authority Government Government Government and Private
Utilities
Purpose For the support of the To protect the general welfare For public use
Government of the people
Persons affected Community or Class of Community or Class of Owner of Property
individuals individuals
Amount of Imposition Unlimited Limited No amount imposed.
(Tax is based on government (Imposition is limited to cover (The government pays a just
needs) cost of regulation) compensation)
Importance Most important Most Superior Important
Relationship with the Inferior to the “Non- Superior to the “Non- Superior to the “Non-
Constitution impairment Clause” of the impairment Clause” of the impairment Clause” of the
Constitution Constitution Constitution
Limitation Constitutional and inherent Public interest and due process Public purpose and just
limitations compensation

WHAT IS TAXATION? The Basis of Taxation

The government provides benefits to the people in the
TAXATION - is the act of laying tax, the process or means form of public services and the people provide funds that
by which sovereign, through its lawmaking body, raises finance the government. This mutuality of support between the
revenue to defray the necessary expenses of the government. people and the government is referred to as basis of taxation.
-may be defined as a state power, a legislative
process, and a mode of government cost distribution. Theories of Cost Allocation a. Benefit Received Theory
1. As a state power b. Ability to pay theory
Taxation is an inherent power of the state to enforce a
proportional contribution from its subjects for public Aspects of Ability to Pay Theory a. Vertical Equity (Gross
purpose. Concept) b. Horizontal Equity (Net Concept)

2. As a process The Lifeblood Doctrine

Taxes are essential and indispensable to the continued
Taxation is a process of levying taxes by the
subsistence of the government. Without taxes, the government
legislature of the State to enforce proportional would be paralyzed for lack of motive power to activate or
contributions from its subjects for public purpose. operate it.

3. As mode of cost distribution Implication of Lifeblood Doctrine in taxation:

Taxation is a mode by which the state allocates its 1. Tax is imposed even in the absence of Constitutional
costs or burden to its subjects who are benefited by its grant.
spending 2. Claims for tax exemption are construed against
taxpayers.
The Theory of Taxation 3. The government reserves the right to choose the
Every government provides a vast array of public objects of taxation.
services including defense, public order and safety, education 4. The courts are not allowed to interfere with collection
and social protection among others. Without it, people will not of taxes.
relish the benefits of a civilized and orderly society. However, 5. In income taxation:
government cannot exist without a system funding. The a. Income received in advance is taxable
government’s necessity for funding is the theory of taxation. upon receipt.

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b. Deduction for capital expenditure and
prepayments is not allowed as it Inherent limitations: PENTI
effectively defers the collection of a. Public purpose – this is the purpose affecting the
inhabitants of the state as a community and not merely
income tax.
as individuals. It cannot be exercised to further any
c. A lower amount of deduction is private interest.
preferred when a claimable expense is  The best test of rightful taxation is that
subject to limit. the proceeds of the tax must be used:
d. A higher tax base is preferred when the a. For the support of government
tax object has a multiple tax bases. b. For any of the recognized objects of
government
Purpose of taxation: c. To promote welfare of the
a. The principal (primary) purpose is to raise revenue for community.
governmental needs. This is also called revenue or
fiscal purpose. b. Exemption of the Government- government
b. The secondary purpose of taxation are: agencies performing essential governmental functions
1. Compensatory purpose are exempt from tax unless expressly taxed, while
a. To reduce excessive inequalities of wealth. those performing proprietary functions are subject to
b. To maintain high level of employment. tax unless expressly exempted. However, the
c. To control inflation. government normally does not tax itself as this will not
2. Sumptuary or regulatory purpose raise additional funds but will only impute additional
a. To implement the police power of the state to costs.
promote general welfare.  Government agencies operated for profit
shall be taxed in the same manner as
Basic principles of a sound tax system (Canons of Taxation): private business enterprise.
FAT
a. Fiscal adequacy- this means that the sources of c. Non-delegation of the power to tax – the power to
revenue should be sufficient to meet the demands for tax is purely legislative, and cannot be delegated by
public expenditures. the legislature to executive or judicial department of
b. Administrative feasibility- this means that the laws the government. The power of the lawmaking,
should be capable of convenient, just and effective including taxation, is delegated by the people to the
administration. legislature. So as not topsoil the purpose of delegation,
c. Theoretical justice- this means that the tax burden it is held that what has been delegated cannot be
should be proportionate to the taxpayer’s ability to further delegated.
pay.  The limitation arises from the doctrine of
separation of powers among the three
Characteristics or nature of the State’s power to tax: branches of the government.
a. It is inherent in sovereignty, hence it may be exercised  The following are exceptions to the rules
although not, expressly granted by the constitution. against the delegation of taxing power:
b. It is legislative in character, hence, only the legislature a. Delegation of the President to
can impose taxes ( high prerogative of sovereignty) fix, within specified limits,
c. It is subject to constitutional and inherent limitations, tariff rates, import or export
hence, it is not an absolute power that can be exercised quotas, tonnage and wharfage
by the legislature anyway it pleases. dues and other duties or
imports.
Scope of the Power of Taxes: CPUS b. Delegation to local
The power of taxation is comprehensive, plenary, unlimited and governments the power to
supreme. This power is, however, subject to inherent and create its own sources of
constitutional limitations revenues and to levy taxes,
subject to such limitations as
Matters within the competence of the legislature to may be provided by law.
determine: c. Delegation to administrative
a. The subject matter or object to be taxed. agencies certain aspects of
b. The purpose of the tax so long as it is a public purpose. taxing process that are not
c. The amount or rate of the tax. legislative, such as:
d. Kind of tax to be imposed 1. The power to fix value
e. The manner, means and agencies of collection of the of property for
tax. purposes of taxation
f. The exemptions from the imposition. pursuant to fixed
g. Methods of collection rules.
2. The power to assess
Process included or embodied in the term taxation: and collect taxes.
a. Levying or imposition of tax which is a legislative act. 3. The power to perform
b. Collection of tax levied which is essentially any of the
administrative in character. innumerable details of
computation
LIMITATIONS ON POWER OF TAXATION appraisement, and
Distinction between inherent and constitutional limitations: adjustments, and the
a. Inherent limitations are those which caused by the delegation of such
very nature of the power itself. duties.
b. Constitutional limitations are those which are
expressly found in the Constitution or implied from its d. Territoriality – Public services are normally provided
provisions. within the boundaries of the state. Thus, tax can be

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imposed only within the territories of the state. There  The tax laws (and this is true to all laws)
is no basis in taxing foreign subjects abroad since they do not operate beyond a country’s
do not derive benefits from our government. territorial limits.
Furthermore, extraterritorial taxation will amount to
encroachment of foreign sovereignty. Meaning of situs of taxation –situs of taxation
EXCEPTION: Resident Citizen and literally means place of taxation.
Domestic Corporation are taxable on income Basic rule on situs- situs is the State which has
derived within and outside the Philippines. jurisdiction or which exercise dominion over the
Residents or citizens such subject in question. Situs rules serve as frames of
as resident citizens, non-resident citizens and reference in gauging whether the tax object is within
resident aliens or outside the tax jurisdiction of the taxing authority.
are taxable on transfers of properties located
within and outside the Philippines.

Situs of Taxation
SUBJECT SITUS
Poll tax on persons Residence of the Person
Real property tax State where the property is located, whether the owner is
resident or not
Tax on tangible personal properties State where it is physically located, although the owner
resides in another jurisdiction
Tax on intangible personal property Domicile of the owner
Business, occupation and transaction tax Place where the business is done, or the occupation is
engaged in, or the transaction took place.
Gratuitous transfer of property State where the transferor is/was a citizen or resident, or
where the property is located.

Multiplicity of situs – income or intangible personal properties may be subject to taxation in several taxing jurisdiction.

Remedies against multiplicity of situs:

a. Provision of exemption
b. Allowance of deduction or tax credit for foreign taxes.
c. Treaties with other States.
e. International comity- pertains to mutual courtesy or reciprocity between states. It is a basic principle of international law that
all states are equally sovereign. Each state observes co-equal sovereignty by not taxing the properties, income, or effects of
fellow states.
 When states enter into treaties with other states it is bound to honor the agreements as a matter of mutual
courtesy, and in case of its treaty agreements with other states conflict with its local tax law, its treaty
agreements are given privacy.

CONSTITUTUINAL LIMITATIONS:
1. Due Process of Law. No person shall be deprived of life, liberty, or property without due process of law nor shall any person be
denied the equal protection of law.
a. Any deprivation of life, liberty, or property is with due process if it is done:
a. Under authority of law that is valid or of the Constitution itself; and
b. After compliance with fair and reasonable methods of procedure prescribed by law.
b. Procedural due process in judicial proceedings requires “opportunity to be heard before judgment is rendered affecting
one’s person or property.
c. Due process in taxation requires:
a. Tax must be for public purpose
b. Imposed within the territorial jurisdiction.
c. No arbitrariness or oppression in assessment and collection.
d. All persons subject to legislation shall be treated alike under circumstances and conditions both in privileges conferred
and liabilities imposed.
e. The constitution does not require things which are different in fact to be treated in law as though they were the same.
f. Classification is allowed. It is valid when:
a. There is substantial distinction.
b. The classification is germane (relevant) to issue.
c. The Classification applies not only to existing conditions but further conditions as well.
d. The classification is applicable to all members of the same class.
g. There is denial of equal protection in the following cases:
a. Where an ordinance imposes a property tax on motor vehicles using the streets of Manila, such being payable
only by owners of vehicles registered in the City of Manila but those residing outside Manila who also use the
streets are not made to share the corresponding burden.
b. Where tax provision is enforced against manufacturers of filled milk only, but not against persons similarly
situated such as manufacturers of condensed skimmed milk.
2. Power of the President to veto any particular item or items in a Revenue of Tariff Bill
a. As a general rule, under the Constitution, the President may not veto a bill in part and approve it in part. The exception is with
respect to revenue or tariff bill.
3. Non-impairment of the obligation of contracts. “No law impairing the obligations of contracts shall be passed”.
a. The obligation of contract is impaired when items or conditions are changed by law or by a party without consent of the other,
thereby weakening the position of the latter.
4. Non-imprisonment for non-payment of poll tax. No person shall be imprisoned for debt or non-payment of poll tax”.

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a. The prohibition is against “imprisonment” for “non-payment”. Hence, an imposition of a fine (but not subsidiary
imprisonment), or even imprisonment for any other violation than non-payment would not be unconstitutional.
b. Only non-payment of poll tax (or community tax) is covered by the limitation. Non-payment of other (additional) taxes can be
validly be subjected by law to imprisonment.
5. The congress may authorize the President to fix tariff rates, import and export quotas, tonnage and wharfage dues and
other duties or imposts.
6. Rule of uniformity and equity in taxation. “The rule of taxation shall be uniform and equitable”
a. All taxable articles or properties of the same class shall be taxed at the same rate.
b. A tax is considered uniform when it operates with the same force and effect in every place where the subject may be found.
c. The concept of equity in taxation requires that apportionment of the tax burden be, more or less, just in light of the taxpayer’s
ability to shoulder the tax burden and, warranted, on the basis of the benefits he receives from the government.
d. To ensure enhance the equity objective, the constitution enjoins Congress to evolve a progressive system of taxation.
e. Progressive system of taxation means that the tax shall be place emphasis on direct rather than indirect taxation, with ability
to pay as the principal criterion. A system that places emphasis on indirect taxes said to be regressive tax system.
f. Equal protection refers more to like treatment of persons like circumstances, uniformity and equity refer ti the proper relative
treatment for tax purposes of persons in unlike circumstances.
7. No appropriation for religious purposes. “Exemption of religious, charitable or educational entities, non-profit cemeteries,
and churches from property taxation”
a. The tax exemption covers property taxes only and not other taxes.
b. Conveyance (transfer) of exempt property would be subject to transfer taxes.
c. The test of the exemption of the property is the use and not the ownership.
8. Non-appropriation of public funds or property for the benefit of any church sect, or system of religion.
9. Free Worship Rule
10. Exemption from the taxes of the revenues and assets of non-profit, non-stock educational institution including grants,
endowments, donations or contributions for educational purposes.
11. Non-diversification of tax collections
12. Non-delegation of the power of taxation
13. The requirement that appropriations, revenue, or tariff bills shall originate exclusively in the House of Representatives
14. The delegation of taxing power too local government units.
15. Non-impairment of the jurisdiction of the Supreme Court in tax cases.
16. Concurrence by a majority of all members of the Congress for the passage of a law granting tax exemptions.
1. What is exemption from taxation?
a. Tax Holiday
b. Privilege of immunity from a tax burden of which others are subjected to.
c. The power of taxation carries with it the power no to tax or the power to exempt.
d. The general rule, however, is the taxation and exemption is the exception.
e. Strictly construed against the taxpayer claiming the exemption and in favor of the state.
f. The exemption must be based on reasonable grounds.
g. It requires a majority vote of congress on tax exemption grant.
h. It is personal and cannot be assigned or transferred by the person to whom it is given without the consent of
the state given in clear and unmistakable terms.
2. Kinds of Tax Exemption
a. Express or affirmative –clearly provided for in the constitution, statutes, or tax treaty with other countries. Examples
are:
a. Exemption from real property tax on real properties used for religious and charitable purposes by religious and
charitable institutions per the Constitution.
b. Exemption from income taxation of non-profit organizations and exemption from the gift tax of certain donations
per the NIRC.
c. Reciprocity agreements with other nations intended to minimize tax burdens of their respective subjects.
d. Grounds for statutory or express exemptions:
 Contracts – franchise grant exemption from tax entered into between the State and the grantee.
 Public policy – those enjoyed by religious and charitable institutions and non-profit organizations.
 Reciprocity
b. Exemption by omission or implied exemption. Occurs when a tax is imposed on certain class of taxpayers without
mentioning the other class. Those mentioned are therefore exemptions by omission, either intentional or accidental.
3. Tax Exemption and tax amnesty distinguished:
a. Tax exemption is an immunity from civil liability only. It is immunity or privilege, a freedom from a charge or burden
of which others are subjected to. It is prospective in application.
b. Tax amnesty is a immunity from all criminal and civil obligations arising from non-payment of taxes. It is a general
pardon given to all taxpayers. It applies only to past tax periods, hence of retroactive application.

What is double taxation?

In general sense, means taxing a person, property or right, twice during the same taxable period. It does not violate the equal protection
and uniformity clauses of the constitution.
a. Direct double taxation or direct duplicate taxation (which violates the equal protection and uniformity clauses of the
constitution) means:
1. Taxing twice
2. By the same taxing authority
3. Within the same jurisdiction or taxing district
4. For the same purpose
5. In the same year (or taxing period)
6. Some of the property in the territory
b. There is no direct double taxation (indirect duplicate taxation) in the following cases:

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a. A tax on mortgage of property when the mortgaged property is also taxed at its full value as real estate.
b. A tax upon the same property imposed by two deferring States.

How can double taxation be minimized?

The impact of double taxation can be minimized by any one or a combination of the following:
a. Provision for tax exemption
b. Allowing tax credit (deduction for taxes paid abroad)
c. Allowing reciprocal tax treatment between the home country and a foreign country
d. Entering into treaties or bilateral agreements

Escapes from Taxation

Escapes from taxation are means available to taxpayer to limit or even avoid the impact of taxation.

Categories of Escapes from Taxation

A. Those that results to loss of the government revenue
1. Tax Evasion- also known as tax dodging, refers to any act or trick that tends to illegally reduce or avoid the payment of
tax. In income taxation this can be perpetrated by undue understatement of income and overstatement of expenses.
2. Tax Avoidance- also known as tax minimization, refers to any act or trick that reduces or totally escape taxes by any legally
permissible means. This may be done by selecting tax option allowed by the law which minimizes tax liability or by careful
tax planning to reduce tax exposure.
3. Tax Exemption- also known as tax holiday, refers to the immunity, privilege or freedom from being subject to tax which
others are subject to. Tax exemptions may be granted by the Constitution, law, or contract. All forms of tax exemption can
be revoked by the congress except those granted by the Constitution and those granted under contracts.
B. Those that do not result to loss of government revenue
1. Shifting- this is the process of transferring tax burden to other taxpayers. Shifting is common with business taxes where
taxes imposed on business revenue can be shifted or passed-on to customers.
a. Forward Shifting – this takes place when the burden of tax is transferred from a factor of production through the factors of
distribution until it finally settles to the ultimate purchaser or consumer.
b. Backward shifting- this is effected when the burden of the tax is transferred from the customer or purchaser through the
factors of distribution to the factor of production.
c. Onward Shifting- this occurs when tax is shifted two or more times either forward or backward.

2. Capitalization- this pertains to adjustment of the value of an asset caused by changes in tax rates.
3. Transformation- this pertains to elimination of wastes or losses by the taxpayer to form savings to compensate for tax
imposition or increase in taxes.

TAX AND OTHER CHARGES

1. TAX- is an enforced contribution levied by the State by virtue of the sovereignty on persons and property within its jurisdiction
for the support of the government and all public needs.

2. ESSENTIAL CHARACTERISTICS OF TAX: MR JELPP

a. It is payable in money
b. It is commonly required to be paid at a regular intervals (but not all taxes)
c. It is levied on persons and property within the jurisdiction of the State.
d. It is an enforced contribution
e. It is levied pursuant to legislative authority.
f. It is levied and collected for the purpose of raising revenue to be used for public purpose.

3. Classification of taxes: APROBS

a. As to determination of amount:
1. Specific- tax of fixed amount imposed by the head or number, or by some standard of weight or measurement. It
requires no assessment other than listing or classification of the subject to be taxed (e.g. excise tax on cigar, cigarettes
and liquors)
2. Ad valorem- tax of fixed proportion of the value of the property with respect to which the tax is assessed. It requires
the intervention of assessors or appraisers to estimate the value of the property before the amount due to each taxpayer
can be determined (e.g. VAT, income tax, donor’s tax and estate tax).
b. As to purpose:
1. General/Fiscal/Revenue- tax imposed solely for general purpose of the government, i.e, to raise revenue for the
government expenditures (e.g. income tax, donor’s tax and estate tax).
2. Special/ Regulatory- tax imposed for specific purpose, i.e., to achieve some social or economic ends irrespective of
whether revenue is actually raised or not (e.g. tariff and certain duties and imports).
c. As to rates or graduation:
1. Proportional – tax based on a fixed percentage or amount of the property, receipts, or other basis to be taxed (e.g. VAT
other percentage taxes)
2. Progressive – tax the rate of which increases as the tax base or bracket increases (e.g. income tax).
3. Regressive – tax the rate of which decreases as the tax base or bracket increases.
d. As to object or subject matter:
1. Personal/Poll/Capitation – tax of a fixed amount imposed on individuals, whether citizens or not, residing within a
specified territory without regard to their property of the occupation in which he may be engaged (e.g. community
tax).
2. Property – tax imposed on property, whether real or personal, proportion either to its value,or in accordance with some
other reasonable method of apportionment (e.g. real estate tax).

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3. Excise –any tax which does not fall within the classification of a poll tax or a property tax. This is a tax on the excise
of certain rights or privileges (e.g. income tax, estate tax, donor’s tax, VAT, other percentage taxes)
Note: This is different from the excise tax which is a business tax imposed on items such as cigars, cigarettes, wines,
liquors, automobiles, mineral products.
e. As to who bears the burden:
1. Direct – tax which is demanded form the person who also shoulders the burden of the tax or tax which the taxpayer
cannot shift to another (e.g. income tax, estate tax, donor’s tax).
2. Indirect – tax which is demanded from one person in the expectation and intention that he shall indemnify himself at
the expense of another or tax which the taxpayer can shift to another.
f. As to scope:
1. National – imposed by the National Government (e.eg. income tax, estate tax, donor’s tax, value added tax, other
percentage taxes, documentary stamp tax).
2. Local or Municipal – imposed by municipal corporations (e.g. real estate tax, community tax).

4. REGRESSIVE SYSTEM OF TAXATION:

a. A regressive tax must not be confused with regressive system of taxation. In a society where the majority of the people
have low income, it exists when there are more indirect taxes imposed than direct taxes.
b. The low-income sector of the population as a whole buys more consumption goods on which direct taxes are collected.
The burden of indirect taxes rests more on them than on the more affluent groups.
c. Studies reveal that the progressive elements of the income and other direct taxes have not sufficiently offset the regressive
effects of the indirect taxes as a whole.

5. Distinction of tax from other charges: PD SALT

Penalty Vs. Tax
PENALTY TAX
Designed to regulate conduct Aimed at raising revenue
Imposed by government or private Imposed by government only

Debt Vs. Tax

DEBT TAX
Based on Contract Based on law
Assignable Generally not assignable
May be paid in kind Generally payable in money
May be subject to set-off or compensation Generally not subject to set-off or compensation
No imprisonment for non-payment Imprisonment for non-payment, except poll tax
Governed by ordinary prescriptive period Governed by special prescriptive period
Draws interest when stipulated or when there is default Does not draw interest except when delinquent

Special Assessment Vs. Tax

Special assessment is an enforced proportional
contribution from owners of lands for special benefits
resulting from public improvements
SPECIAL ASSESSMENT TAX
Levied on land Levied on persons, property or the exercise of privilege.
Not a personal liability of the person assessed Personal liability of the person taxed
Based on wholly on the special benefits to the property Based on the necessities of the government without any
special benefit directly accruing to the taxpayer
Exception both as to time and place Has general application.

License Vs. Tax

License fee or permit is a charge imposed under the police
power of the State for the purpose of regulations.
LICENSE TAX
Imposed for regulation Imposed for revenue
Involves an exercise of police power Involves exercise of taxing power
Amount is limited to the necessary expenses of regulations Amount is generally not limited.
Imposed on the right to exercise a privilege Imposed on persons, property and the right to exercise a
privilege
Legal compensation or reward of an officer for specific Enforced contribution assessed by sovereign authority to
services defray public expenses.
Failure to pay makes the actor business illegal Failure to pay does not necessarily make the business
illegal.

Toll Vs. Tax

Toll is a sum of money collected for the use of something,
generally, applied to the consideration which is paid for the
use of road, bridge, or the like, of a public nature.
TOLL TAX
Demand of proprietorship Demand of sovereignty
Paid for use of another person’s property Paid for the support of government

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Amount is based on the cost of construction or Amount is based on the necessities of the State
maintenance of public improvements used
May be imposed by the government or by private entities Imposed by government only

6. Other Charges/Related terms: 2. Provision granting tax exemptions are construed

a. A subsidy is pecuniary aid directly granted by the strictly against the taxpayer claiming tax
government to an individual or private exemption.
commercial enterprises deemed beneficial to the
public. APPLICATION OF TAX LAWS
b. Revenue refers to all the funds or income derived General Rule:
by the government, whether from tax or any other Tax laws are prospective in operation because the nature and
sources. amount of the tax could not be foreseen and understood
c. Internal revenue refers to taxes to taxes imposed taxpayer at the time the transaction which the law seeks to tax
by the legislature other than duties on imports and was completed.
exports.
d. Customs duties (or simply duties) are taxes Exception:
imposed on goods exported to or imported from a While it favored, a statute may be nevertheless operate
country. Customs duties are really taxes but the retroactively provided it is expressly declared or is clearly
latter is broader. tlegislative intent. But a tax law should not be given retroactive
e. Tariff may be used in one of the following three application when it would be harsh and oppressive.
senses:
1. A book rates drawn usually in alphabetical 11. SYSTEMS OF INCOME TAXATION
order containing the names of several kinds 1. Global System – All items of gross income and
of merchandise with corresponding duties to deductions are reported in one income tax return
be paid for the same. and the applicable tax rate is applied on the tax
2. The duties payable on goods imported or base.
exported.
3. The system or principles of imposing duties 2. Schedular System - different types of income are
on the importation or exportation of goods. subject to different sets of graduated or flat
income tax rates.
7. National taxes imposed under special laws:
a. Custom duties 12. OTHER DOCTRINES/RULES IN TAXATION
b. Sugar adjustment taxes 1. Equitable Recoupment – claim for refund which
c. Taxes on narcotic drugs is prevented by the prescription may be allowed
d. Specific educational Fund Tax to be used as payment for unsettled tax liabilities
e. Science fund taxes if both taxes arise from the same transaction in
f. Energy taxes on aircraft, motorized watercraft and which overpayment is made and underpayment is
electrical power consumption. due.
g. Travel Tax
h. Private motor vehicle tax 2. Set-off taxes – taxes are not subject to set-off or
legal compensation because the government and
8. Sources of tax laws: the taxpayer are not mutual creditors and debtors
a. Constitution of each other.
b. Statutes or laws
c. Presidential Decrees 3. Taxpayer Suit – This provides that a taxpayer suit
d. Revenue regulations can only be allowed if the act involves a direct and
e. Administrative rulings and opinions illegal disbursement of public funds derived from
f. Judicial decisions taxation.
g. Provincial, city, municipal and barangay
ordinances
h. Treaties and international agreements
END
9. Basic Tax laws of the Philippines:
a. National internal revenue code
b. Tariff and customs code “DO NOT SETTLE FOR JUST BEING GOOD, BE
c. The local tax code THE BEST YOU CAN BE.”- Tamethewise
d. The real property tax code

10. Tax Laws

NATURE OF INTERNAK REVENUE LAWS – tax
laws are civil and not penal in nature, although there
are penalties provided for their violation. The purpose
of tax laws in imposing penalties for delinquencies is
to compel the timely payment of taxes or to punish
evasion or neglect of duty in respect thereof.

CONSTRUCTION OR INTERPRETATION OF
TAX LAWS IN CASE OF DOUBT OR
AMBIGUITY
1. Tax statutes are constructed strictly against the
government. Taxes, being burdens, are not to be
presumed beyond what the statute expressly and
clearly declares.

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