Taxation Principles and Regulations

This set of flashcards covers fundamental terms and principles related to taxation, including powers and types of taxes, exemptions, and different tax structures in governmental regulations.

Taxation

The process by which a government collects monetary contributions from individuals and corporations to fund public services and obligations.

Police Power

The inherent authority of a government to impose restrictions on private rights for the purpose of protecting the welfare of the public.

Eminent Domain

The power of the government to take private property for public use, with the obligation to provide just compensation to the owner.

Plenary Power

A full and complete power that is not limited in scope or extent in the governance of a particular area.

General Welfare

The overall well-being of the public, which serves as a guiding principle for governance and law-making.

Direct Tax

A tax that is levied directly on individuals or organizations and is paid by them, such as income tax.

Indirect Tax

A tax that is imposed on goods and services which is then passed on to consumers, such as sales tax.

Tax Exemption

A monetary exemption that reduces taxable income; certain individuals or groups may not be liable for specific taxes.

Progressive Taxation

A tax system in which the tax rate increases as the taxable amount increases, targeting higher income earners with higher rates.

Regressive Taxation

A tax that takes a larger percentage of income from low-income earners than from high-income earners.

Tax Base

The total amount of assets or income that a government can tax, such as real estate, personal income, or corporate earnings.

Value-Added Tax (VAT)

A type of indirect tax that is imposed on the increase in value of a product or service at each stage of production or distribution.

Capital Gains Tax

A tax on the profit realized from the sale of non-inventory assets, such as stocks or real estate.

Documentary Stamp Tax (DST)

A tax imposed on certain documents, instruments, and papers; typically used on transactions like property sales.

Withholding Tax

A government-required deduction from an employee's salary or other income, which is remitted directly to the government.

Fringe Benefit Tax

A tax imposed on the value of non-cash benefits provided to employees, such as allowances and perks.

Compromise Agreement

An agreement between a taxpayer and the BIR to settle a dispute regarding tax liabilities for less than the full amount owed.

Net Taxable Gifts

The total value of gifts made by a donor less any allowable exclusions or deductions.

Estate Tax

A tax on the transfer of the estate of a deceased person, usually based on the value of the property at the time of death.

Donor's Tax

A tax imposed on the transfer of property by one person (the donor) to another person (the donee) without receiving payment.

Income Tax Holiday

A limited period during which a business is exempt from certain taxes to encourage investment or stimulate economic activity.

Real Property Tax (RPT)

A tax imposed on real estate properties based on their assessed value determined by local government.

Grant of Exemption

Official permission released by the government allowing certain individuals or organizations to pay less or no taxes.