Principles and Frameworks of Philippine Taxation

What is the principal attribute of sovereignty related to government?

Taxation

What is the definition of a state?

A community of persons, more or less numerous, permanently occupying a fixed territory, and possessed of an independent government, organized for political ends.

What are the four elements of a state?

People, Territory, Government, Sovereignty

What is sovereignty?

Supreme and uncontrollable power inherent in a State by which it is governed; it is permanent, exclusive, comprehensive, absolute, indivisible, inalienable, and imprescriptible.

What are the inherent powers of the state?

Police Power, Power of Eminent Domain, Power of Taxation

What is the purpose of taxation?

To provide funds for promoting the general welfare of citizens and financing development projects.

What is the difference between tax evasion and tax avoidance?

Tax evasion is illegal non-payment of taxes, while tax avoidance is legally minimizing tax liabilities.

What is the Marshall Doctrine in taxation?

The power to tax involves the power to destroy if used as an instrument of police power, potentially discouraging undesirable activities.

What is the primary purpose of taxation?

To provide funds or property to promote the general welfare and finance development projects.

What is the secondary purpose of taxation?

To protect local industries against foreign competition through high custom duties on imported goods.

What does the benefit received theory of taxation state?

The more benefits one receives, the more taxes they should pay.

What does the ability to pay theory of taxation suggest?

Taxpayers should pay taxes based on their relative capacity to sacrifice for government support.

What is Holmes' Doctrine in taxation?

Taxation power is not the power to destroy while the court sits; it may be used to build or encourage beneficial industries.

What is the Omnibus Investment Code (EO 226)?

A law that encourages investments in desirable areas by providing a cohesive and consolidated investment incentives framework.

What is the Barangay Micro-Business Enterprise Law (RA 9178)?

A law that encourages the formation and growth of barangay micro-businesses by granting them incentives and benefits.

What is the principle of prospectivity of tax laws?

Retroactive laws are prohibited, but under justifiable conditions, laws may be prospective.

What is the principle of non-compensation in taxation?

Taxes cannot be automatically set-off against pending claims against the government; payment cannot be delayed for this reason.

What is the principle of non-assignment of taxes?

Tax obligations cannot be assigned or transferred to another entity by contract.

What is the situs/place of taxation?

The location where taxes are imposed, which can affect the jurisdiction and authority of tax laws.

What are the principles of a sound tax system?

Equity, efficiency, simplicity, certainty, and convenience.

What are the classifications of taxes?

Direct vs. indirect taxes, progressive vs. regressive taxes, and proportional taxes.

What is the role of the Bureau of Internal Revenue?

To administer and enforce tax laws, collect taxes, and provide tax remedies for taxpayers.

What is the difference between double taxation and taxation?

Double taxation refers to the same income being taxed in two different jurisdictions, while taxation is the general process of levying taxes.

What is the essential characteristic of taxes?

A compulsory contribution imposed by the government on individuals or entities to fund public services.

What is the significance of the principle of equity in taxation?

It ensures that taxpayers contribute to the government based on their ability to pay, promoting fairness in the tax system.

What is the presumption regarding receipt of benefits in taxation?

Receipt of benefits is conclusively presumed; taxpayers cannot avoid payment of tax by claiming unreceived benefits.

What does the Benefit Received Theory in taxation imply?

It implies that the more benefits one receives from the government, the more taxes they should pay.

What is the Ability to Pay Theory in taxation?

Taxpayers should pay taxes based on their relative capacity to sacrifice for government support.

What is Holme's Doctrine in taxation?

It states that taxation power is not the power to destroy, and can be used to build or encourage beneficial industries through incentives.

What is the purpose of the Omnibus Investment Code (EO 226)?

To encourage investments in desirable areas and provide a cohesive investment incentives law.

What are the objectives of the BMBE Law?

To integrate micro enterprises into the mainstream economy, create jobs, and improve the quality of life for Filipinos.

What does the principle of Prospectivity of tax laws entail?

Retroactive laws are prohibited, but under justifiable conditions, tax laws may be prospective.

What is the Non-compensation or set-off doctrine in taxation?

Taxes cannot be delayed for resolution of lawsuits; they are not debts and cannot be set off, except in cases of overpayment.

What does the Non-assignment of taxes doctrine state?

Tax obligations cannot be assigned or transferred to another entity by contract.

What is the Imprescriptibility in taxation?

The government's right to collect taxes does not prescribe unless the law provides for such prescription.

What is the Doctrine of Estoppel in taxation?

Misrepresentation by one party that another relies on in good faith will be binding; the government is not subject to estoppel.

What does Judicial Non-interference mean in taxation?

Courts generally cannot issue injunctions against the government's tax collection efforts.

What is the principle of Strict Construction of tax laws?

Taxation is the rule unless there is a clear exemption; vague laws are construed against the government.

What are the inherent limitations on taxation?

Include territoriality, international comity, public purpose, exemption of government entities, and non-delegation of taxing power.

What are the constitutional limitations on taxation?

Include due process, equal protection, uniformity and equity, progressive taxation, non-imprisonment for non-payment, and non-impairment of contracts.

What is the rule regarding tax exemption for religious entities?

Religious or charitable entities are exempt from property taxes, and public funds cannot be appropriated for religious benefit.

What is required for the passage of a law granting tax exemption?

A concurrence of a majority of all members of Congress is required.

What is the significance of the Lifeblood Doctrine in taxation?

It emphasizes the necessity of tax collection for government functions and public services.

What is the non-delegation of the power of taxation?

It refers to the principle that the power to impose taxes cannot be delegated to another entity.

What power does the President have regarding revenue or tariff bills?

The President has the power to veto any particular item in a revenue or tariff bill.

What are the stages of the exercise of taxation power?

1. Levy or imposition: Legislative act in taxation; enactment of a tax law by Congress. 2. Assessment and collection: Administrative act involving tax implementation.

What does 'situs of taxation' refer to?

It refers to the place of taxation where the tax jurisdiction has the power to levy taxes on the tax object.

Where are business taxes subject to taxation?

Businesses are subject to tax in the place where the business is conducted.

How is income tax on services determined?

Service fees are subject to tax where they are rendered.

What is double taxation?

It occurs when the same taxpayer is taxed twice by the same tax jurisdiction for the same thing.

What are the elements of double taxation?

1. Same type of tax 2. Same purpose of tax 3. Same taxing jurisdiction 4. Same tax period.

What is direct double taxation?

It exists when all elements of double taxation are present for both impositions.

What is indirect double taxation?

It occurs when at least one of the secondary elements of double taxation is not common for both impositions.

How can double taxation be minimized?

1. Provision of tax exemption 2. Allowing foreign tax credit 3. Allowing reciprocal tax treatment 4. Entering into treaties or bilateral agreements.

What is tax evasion?

It is any act or trick that tends to illegally reduce or avoid the payment of tax.

What is tax avoidance?

It refers to legally permissible means to reduce or totally escape taxes.

What is tax amnesty?

A general pardon granted by the government for erring taxpayers to give them a chance to reform.

What is tax condonation?

The forgiveness of the tax obligation of a certain taxpayer under justifiable grounds.

What are the basic principles of a sound tax system?

1. Fiscal adequacy 2. Theoretical justice 3. Administrative feasibility.

What does fiscal adequacy mean?

The source of government revenue must provide enough revenue to meet the basic needs of society.

What is theoretical justice in taxation?

Taxation should consider the taxpayer's ability to pay and should not be oppressive or unjust.

What is administrative feasibility in taxation?

Tax laws should be capable of convenient, just, effective, and efficient administration to encourage compliance.

What is the nature of tax laws in the Philippines?

Philippine tax laws are civil, effective even during enemy occupation, and not penal in nature.

What is the definition of tax?

An enforced proportional contribution levied by the lawmaking body of the State to raise revenues for public purposes.

What are the classifications of taxes based on purpose?

1. Fiscal or revenue tax 2. Regulatory tax 3. Sumptuary tax.

What is a direct tax?

A tax where both the impact and incidence of taxation rest upon the same taxpayer.

What is an indirect tax?

A tax paid by a person other than the one who is intended to pay it, such as business taxes like VAT.

What is a specific tax?

A fixed amount imposed on a per unit basis, such as per kilo, liter, or meter.

What does ad valorem mean?

A tax imposed as a fixed proportion of the value of the tax object.

What are excise taxes?

Taxes levied on specific goods and services, often to discourage consumption or cover social costs.

Who is liable to pay excise tax?

The manufacturer or producer, the owner or possessor of domestic products removed without payment, and the owner or importer of imported exciseable articles.

What is a proportional tax?

A flat or fixed rate tax that imposes the same rate regardless of the taxpayer's ability to pay.

What defines a progressive tax?

A tax that imposes increasing rates as the tax base increases, promoting equitable taxation.

What is a regressive tax?

A tax that imposes decreasing rates as the tax base increases, violating the principle of progressive taxation.

What is a mixed tax?

A tax that combines elements of different tax types.

What is a national tax?

A tax imposed and collected by the National Government.

What is income tax?

A tax on annual income, gains, or profits.

What is an estate tax?

A tax on the gratuitous transfer of properties by a decedent upon death.

What is a donor's tax?

A tax on the gratuitous transfer of properties by a living donor.

What is value-added tax (VAT)?

A consumption tax collected by VAT business taxpayers.

What is an excise tax on sin products?

A tax levied on non-essential commodities such as alcohol and cigarettes.

What distinguishes tax from revenue?

Tax is imposed for public purposes, while revenue includes all income collected by the government, such as licenses and tolls.

What is the difference between tax and license fee?

Tax emanates from taxation for public purposes, while a license fee is imposed to regulate privileges like starting a business.

How does a toll differ from a tax?

A toll is a charge for the use of property, while a tax is a levy imposed by the government.

What is the relationship between tax and debt?

Tax arises from law and non-payment can lead to imprisonment, while debt arises from private contracts and does not lead to imprisonment.

What is a special assessment?

A charge levied by the government on properties adjacent to public improvements, based on the benefit received.

What is a tariff?

A tax imposed on imported or exported commodities, broader than a tax.

What is the tax system?

The methods of imposing, assessing, and collecting taxes, including laws, enforcement means, and government offices.

What are the types of tax systems according to imposition and impact?

Progressive, proportional, and regressive taxes.

What is the withholding system on income tax?

A system where the payor withholds tax on income before releasing it to the payee.

What is the voluntary compliance system?

A system where taxpayers determine their income, report it, and pay taxes to the government.

What is the assessment or enforcement system?

A system where the government identifies non-compliant taxpayers and enforces tax collection.

What is the voluntary compliance system in taxation?

A system where the taxpayer determines their income, reports it through income tax returns, and pays the tax to the government.

What is the assessment or enforcement system in taxation?

A system where the government identifies non-compliant taxpayers, assesses their tax dues, and enforces collections through coercive means if necessary.

What are direct taxes?

Taxes that are directly paid to the government, such as income tax, corporate income tax, and estate and donor's taxes.

What are indirect taxes?

Taxes that are not directly paid by the taxpayer but are included in the price of goods and services, such as VAT and excise taxes.

What is a key characteristic of taxation?

Taxation is an enforced contribution, meaning it is not voluntary and is imposed by law.

How is the share of a taxpayer's burden determined?

It is proportionate to the taxpayer's ability to pay.

What are the four main types of national internal revenue taxes?

1. Direct Taxes (Income, Donor's Tax, Estate Tax), 2. Indirect Taxes (Percentage Tax, Value Added Tax), 3. Excise Tax, 4. Documentary Stamp Tax.

How do taxes affect the economy?

Taxes can alter demand for goods and services, change incentives to work, save, and invest, and raise or lower budget deficits.