Professional Documents
Culture Documents
COLLEGE OF LAW
Legazpi City
Taxation
A. Theory and basis of taxation
1. Necessity Theory
2. Lifeblood Theory
3. Benefits-Received Principle
CASES:
1. Commissioner of Internal revenue v. Algue., et.al. L28896, Feb 17, 1988
2. Commissioner of Internal Revenue v. Tokyo Shipping
Co., Ltd., et.al. G.R. No. 68252, May 26, 1995)
3. BPI-Family Savings Bank Inc., v. Court of Appeals, et.al.
G.R. Mo. 122480, April 12, 2000
4. Philippine Bank of Communications v. CIR, et.al. G.R.
No. 119024, Jan. 28, 1999
B. Purposes of taxation
1. Revenue or fiscal
2. Regulation
3. Promotion of General Welfare
4. Reduction of Social Inequality
5. Encourage Economic Growth
6. Protectionism
C. Principles of a Sound Tax System
1. Fiscal Adequacy
Chavez v. Ongpin., et.al. G.R. No. 76778, June 6, 1990
2. Equality or Theoretical Justice
3. Administrative Feasibility
D. Taxation Distinguished from Police Power and Eminent Domain
E. Taxes distinguished from other impositions
a. Toll
b. Penalty
c. Compromise Penalty
d. Special Assessment
e. License Fee
f. Margin Fee
g. Debt
Philex Mining Corporation v. CIR G.R. No. 125704,
August 28, 1998
Gerochi,et,al. vs. Department of Energy, et.al., G.R No.
159796, July 17, 2007
II.
III.
Situs of Taxation
IV.
Double taxation
1. Definition
2. Constitutionality of Double taxation
3. Means of avoiding pr minimizing the Burden of taxation
a. Shifting
b. Evasion
c. Avoidance
CASES:
1. CIR vs. BPI G.R. No 147375, June 26, 2006
2. The City of Manila et.al. vs. Coca-Cola Bottlers
Philippines, Inc., G.R. No. 181845, August 4, 2009
3. Victorias Milling Co. v. Municipality of Victorias,
Negros Occidental, L-21183, Sept 27, 1968
4. CIR v. S.C. Johnson and Son, Inc. G.R.No. 127105,
June 25, 1999
5. Villanueva v. City of Iloilo, L-26521, Dec 28, 1968
6. Pepsi Cola Bottling Co., of the Philippines Inc., v. City
of Butuan, et.al., L-22814, Aug. 28, 1968
7. Serafica v. Treasurer of Ormoc City, et.al. L-24813,
April 28, 1969
8. CIR v. Procter & Gamble Philippine manufacturing
Corp., et.al. G.R. No. 66838, Dec. 2, 1991
9. CIR vs. Citytrust Investment Phils., Inc. G.R. No.
139786, September 27, 2006
10. Ericsson Telecoomunications, Inc. vs. City of Pasig,
et.al. G.R. No. 176667, November 22, 2007
11. CIR vs. Philippine Long Distance Company, G.R.
No. 140230, Dec 12, 2005
V.
Tax pyramiding
CASE: People vs. Sandiganbayan, G.R. No. 152532, August 16,
2005
Exemption
1. Nature of the Power to Grant tax Exemptions
2. Tax Remission/Condonation
3. Tax Amnesty
CASES:
1. The City of Iloilo, et.al vs. Smart Communications, Inc. G.R.
No. 167260,February 17, 2009
2. Surigao Consolidated Mining Co., Inc. v. Collector of Internal
Revenue, et.al. L-14878, Dec 26, 1963
3. Republic vs. Caguioa, G.R. No. 168584, October 15, 2007
4. Visayan Cebu Terminal co., Inc. v. CIR, L-19530 &L-19444,
Feb. 27, 1965
VI.
5.
6.
7.
8.
Maceda vs. Macaraig, Jr. et.al. G.R. No. 88291, May 31, 1991
CIR v. Court of Appeals G.R. No. 102967, Feb. 10, 2000
Republic v. Heirs of Cesar Jalandoni, L-18384, Sept 20, 1965
San Pablo Manufacturing Corporation vs. CIR G.R. No.
147749, June 22, 2006
9. PhilippineBanking Corporation vs. CIR, G.R. No. 170574,
January 30, 2009
VII. Source s of tax Laws
VIII. Construction of Tax laws
A. Nature of internal revenue laws
B. General rules of construction of tax laws
1. Rule when legislative intent is clear
2. Rule when there is doubt
3. Provisions granting exemptions
IX. Tax Administration and Enforcement
A. Agencies Involved in Tax Administration
B. Agents and Deputies for Collection of National Internal Revenue
Taxes
C. The Bureau of Internal Revenue
1. Powers and Duties
a. Interpret tax laws and decide cases
b. Examination of books of accounts
c. power to assess and collect
i. Power to examine tax returns
ii. Assessment based on Best Evidence Obtainable
iii. Power to conduct inventory taking,
surveillance, and to
issue presumptive gross sales/receipts
iv. Termination of taxable period
v. Fixing of real property values
vi. Accredit tax agents
vii.Enforcement of police powers
viii. Authority to abate and compromise tax
liabilities
C. The rule on estoppel in relation to tax administration
D. Assessments and its governing principles
a. Definition
b. Governing principles
c. When is an assessment deemed made
d. Kinds of Assessment
e. Statute of Limitation in the assessment of taxes
f. Instances when the running of the prescriptive period is
suspended
g. Procedure in the issuance of an Assessment (Revenue
Regulations No. 12-99)
h. Instances when a pre-assessment notice is not required
i. Is assessment necessary before a taxpayer could be
prosecuted for violation of the NIRC?
TAX REMEDIES
A.Tax remedies
1. importance
2. Classification
B. Remedies Available to taxpayers
a. BEFORE PAYMENT
1. Protest
* Requirements of a valid protest
*Failure of the BIR to act within the 180-day period
*Administrative actions taken during the 180-day period
* Effect of a protest filed out of time
* Remedies from a denial of a protest
2. Compromise
b. AFTER PAYMENT
1. Refund
* Requirements for Claims for refund
* Period within which to file a claim for refund
* Doctrine of Equitable Recoupment
*Effect of existing tax liability on a pending claim for
refund
* tax Credit vs. Tax refund
* Period of validity of a tax refund/tax credit
* Is the taxpayer entitled to claim interest on the tax
refunded?
C. REMEDIES AVAILABLE TO THE GOVERNMENT
1. No injunction to restrain tax collection
2. Statute of Limitation in the Collection of taxes
3. Remedies available
a. Tax Lien
b. Compromise
c. Distraint/Levy
d. Civil action
e. Criminal action
f. Forfeiture
g. Suspension of business operation
h. Enforcement of Administrative fines
INCOME TAXATION
I.
A.
B.
C.
II.
A.
B.
C.
D.
E.
F.
III.
GROSS INCOME
A.
General Statutory Definition
B.
Gross Income taxation vs. Net Income Taxation; its Advantages and
Disadvantages
C.
Exclusions from Gross Income
a.
Reasons for exclusion
b.
Exclusions
i.
Proceeds of Life Insurance
ii.
Amount received as return of
premium
iii.
Gifts, bequests, and devises
iv.
Compensation for injuries or
sickness
v.
Income Exempt under Treaty
vi.
Retirement benefits, pensions,
gratuities, etc.
vii.
Miscellaneous Items
1.
Income derived by foreign
government
2.
Income derived by the government
or its
political subdivisions
3.
Prizes and awards
4.
Prizes and Awards in sports
competition
5.
13th month pay and other benefits
6.
GSIS, SSS medicare and other
contribution
7.
Gains from the sale of Bonds,
Debentures or
other Certificate of indebtedness
8.
Gains from redemption of shares in
mutual
fund
IV.
INDIVIDUAL INCOME TAXATION
A.
Classification of Individual Taxpayers
1.Resident Citizen (RC)
2.Non-Resident Citizen (NRC)
3.Resident Alien (RA)
4. Non-Resident Alien (NRA)
5. Non-Resident alien not Engaged in Trade or Business
B.
General Principles of Income Taxation
C.
Categories of Income
D.
Compensation Income
1.Definition
2. Basis/test
3.Requisites for taxability
4.Forms of Compensation
E.
G.
V.
FRINGE BENEFIT
1. What is a Fringe Benefit?
2 .Benefits not subject to FBT
3 .Benefits which are considered necessary to the business of the
employer or
are granted for the convenience of the employer
4. Nature of Fringe Benefits tax
5. Purpose of FBT
6. Who Should pay the FBT?
7. Why is FBT collected from the employer?
8. FBT is not an additional tax on the employer.
9. Benefits subject to FBT
10. Who are considered as Managers?Supervisors? Rank and File?
F.
Allowable Deduction from Gross Income
1.Personal Exemption
2. Premium Payments on Health and/or Hospitalization Insurance
BUSINESS/TRADE/PROFESSIONAL INCOME
1.Income Covered
2. Income derived by professionals from the practice of profession
3.Interest Income
4. Rental Income
5. Dividend Income
6. Taxability /non-taxability of a Stock Dividend
7. Passive Investment Income
CORPORATE INCOME TAXATION
A.
Definition under the NIRC
B.
Major groups of Corporation for Income tax Purposes
1. Domestic Corporation
* Special Domestic Corporation
a. Private Educational Institution
b. Non-profit Hospital
2. Resident Foreign Corporation
* Special Resident Foreign Corporation
a. International Carriers
b. Offshore Banking Unit (OBU)
c. Foreign Currency Deposit Unit (FCDU)
3. Non-Resident Foreign Corporation
*Special Non-resident Foreign Corporation
a. NR lessor of Cinematographic Film
b. NR-lessor of vessels chartered by Philippine Nationals
c. NR- lessor of aircraft, machinery and equipment
C.
Minimum Corporate Income Tax (MCIT)
a.
Rationale of MCIT
b.
Nature of Minimum Corporate Income Tax
c.
MCIT is not an additional tax to the regular or normal income
tax
d.
Coverage of the MCIT
e.
When does a corporation start to be covered by the MCIT?
f.
Suspension of the payment of MCIT
g.
h.
i.
j.
income?
What is the carry forward provision under the MCIT?
gross
D.
VII.
a.
b.
3.
Losses from wash sales of stocks or
securities
4.
Certain capital losses but only from capital
gains
5.
Deductions allowed to private educational
institution
ITEMIZED DEDUCTIONS
BUSINESS EXPENSE
i.
Requisites for Deductibility
ii.
Kinds of Business Expense
1.
Compensation for Personal Services
2.
Travelling Expenses
3.
Representation & Entertainment Expenses
4.
Advertising & promotional Expenses
5.
Rent Expense
6.
Cost of Material & Supplies
7.
Repairs
INTEREST
i.
ii.
iii.
iv.
c.
d.
Definition
Requisites for deductibility
Deductible Interest Expense
Non-deductible Interest Expense
TAXES
i.
ii.
iii.
i.
ii.
iii.
iv.
v.
vi.
Definition
Kinds of Losses
Special Kinds of Losses
Requisites for Deductibility
Non-deductible Losses
Net Operating Loss Carry Over
LOSSES
(NOLCO)
e.
BAD DEBTS
i.
ii.
iii.
f.
g.
Definition
Requisites for deductibility
Measure of Bad debts Deductible
DEPRECIATION
i.
ii.
Definition
Requisites for Deductibility
i.
ii.
Definition
Theory and Purpose of Depletion
DEPLETION
Allowance
h.
iii.
Who are entitled?
iv.
Requisites for deductibility
CHARITABLE & other CONTRIBUTIONS
i.
Kinds
ii.
Entitled
iii.
Requisites for Deductibility
iv.
Contributions deductible in Full
v.
Contribution subject to Limitation
vi.
FULL)
i.
j.
Plan
iv.
v.
Insurance Companies
k.
ITEMS NOT DEDUCTIBLE
VIII.
ESTATES AND TRUST
a.
Estate
b.
Trust
i.
Taxable Trusts
ii.
Rules on taxability
c.
Computation of Tax on estate and trust
IX.
CAPITAL TRANSACTION
a.
Definition of Capital Asset
b.
Construction and Interpretation of Capital Assets
c.
Factors/tests determinative of capital or ordinary asset
d.
Guidelines in determining whether a particular property is a
capital asset or
ordinary asset (Revenue Regulations No. 7-2003)
e.
Rules on Disposition of Principal Residence
f.
Special Rules on capital Transactions
g.
Special Capital Transactions
X.
INCOME TAX RULES ON DEALINGS IN PROPERTY
a.
Capital Gains from Sale or other Disposition of Real property
b.
Gains and Losses from Dealings in property
i. Rules on real property classified as capital assets
ii. Rules on gains and losses from sale of shares of
stocks not listed in
the stock exchange
iii. Rules regarding other capital assets
Loss limitation rule
Holding Period Rule
Net Capital Loss Carry Over (NCLCO) Rule
c.Special capital transactions
d. Wash Sales
e. Installment Sales v. Deferred Sales
XI.
a.
b.
vi.
partnership
c.
d.
e.
General
f.
vii.
Fiduciary Returns
viii.
Information returns
ix.
Electronically filed returns
Individuals required to file a return
Substituted Filing of Income tax Returns
Corporations No matter How created or Organized including
professional partnerships
Estate and Trusts engaged in Trade of Business
CASES:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
TRANSFER TAXES
I.
II.
III.
C. Kinds of Donation
1. Donation Mortis Causa
2. Donation Inter-Vivos
D. Donors Tax
1. Definition
2. Nature
3.Purposes
F. Classification of Donor
1. Citizen or Resident Alien
2. Non-resident Alien
G. Gross Gift
1. Valuation
2. Of Citizen and resident alien donors
3. Of non-resident alien donors
4. Exemptions from Gift Tax/Deductions from Gross Gift
H. net Gift and Donors Tax
I. tax Credit for Donors taxes paid to a Foreign Country
J. Filing and payment of Donors Tax
CASES:
1. CIR vs. CA et.alGR No. 123206, March 22, 2000
2. Rafael Arsenio s. Dizon vs. CTA, et.al.GR No. 140944, April
30, 2008
3. Sps. Alvaro Pastor Jr. and Ma. Elena De Pastor vs. CA
et.al.GR No. L-56340,
June 24, 1983
4. Ferdinand Marcos II vs. CA et.alGR No. 120880, June 5, 1997
5. Estate of the late Juliana Diaz Vda de Gabriel GR No.
155541,
January 27, 2004
6. CIR vs. Azucena T. Reyes; GR No. 159694 January 27, 2006
7. Lydia Sumipat et.al. vs. Brigido Banga;GR No. 155810,
August 13, 2004
8. Manuel Abello et.al vs. CIR et.al.;GR No. 120721, February
23, 2005
9. Sps. Agripino Gestopa vs. CA et.al.;GR No. 111904 October
5, 2000
10.The Estate of Hilario M. Ruiz vs. CA et.al;GR No. 118671,
January 29, 1996
IV.
V.
BUSINESS TAX
A.Nature and Concept
B. Classifications under the Tax Code
1. Value-Added tax
2. Percentage tax
3. Excise Tax
VALUE ADDED TAX (Revenue Regulation No. 16-2005)
A.Definition/nature/characteristics
B. Evolution of Present VAT System
C. How the VAT System Works
PERCENTAGE TAXES
A. Concept and nature
B. Businesses Subject to percentage tax
1. Carriers and Keepers of garages
2. Franchise
3. Overseas dispatch or message from the Phil.
4. Bank and non-bank financial intermediaries
5.
6.
7.
8.
VII.
LOCAL TAXATION
I.Local taxation
a. Nature of the Local taxing power
b. Fundamental principles governing local taxation
CASES:
1. City Government of Quezon City v. Bayantel GR No.
162015, March 6, 2006
2. Mactan Cebu International Airport Authority v. Marcos
September 11, 1996
3. City of San Pablo Laguna v. reyes March 25, 1999
II. Common limitation in the exercise of local taxing power and the principle of
preemption/exclusionary rule
CASES:
1. Batangas Power Corporation v. Batangas City;GR No.
152675 April 28, 2004
2. First Philippine Industrial Corporation vs. CA G.R. No.
125948 December 29, 1998
3. Petron Corporation v. Tiangco G.R. No. 158881, April 16,
2008
III. Specific taxing powers of Local Government Units
1. Provinces
2. Municipalities
3. Cities
4. Barangays
5. Common revenue raising powers
6. Community Tax
IV. Remedies in Local Taxation
A.Remedies available to the Government
1. Administrative
* tax lien
*assessment by local treasurer
* Distraint/levy
2. Judicial
3. Others
* Accrual of the tax
* time of payment