Taxes, Tax Laws, and Tax Administration – Vocabulary Flashcards (Video)

A comprehensive set of vocabulary flashcards covering the key concepts, terms, and definitions from the lecture notes on taxes, tax laws, administration, and related agencies.

Tax laws

Laws that provide for the assessment and collection of taxes (e.g., NIRC, Tariff and Customs Code, Local Tax Code, Real Property Tax Code).

Tax exemption laws

Laws that grant immunity or relief from taxation (e.g., Minimum wage law, Omnibus Investment Code, Barangay Micro-Business Enterprise, Cooperative Development Act).

National Internal Revenue Code (NIRC)

Main statute governing internal revenue taxes in the Philippines.

Tariff and Customs Code

Law governing tariffs and customs duties.

Local Tax Code

Code governing taxes imposed by local government units.

Real Property Tax Code

Code governing taxation on real property.

Minimum wage law

Exemption law providing tax relief or special treatment related to wages.

Omnibus Investment Code

Law that provides tax incentives for investments.

Barangay Micro-Business Enterprise

Law offering tax incentives for small barangay businesses.

Cooperative Development Act

Law providing tax incentives for cooperative enterprises.

Constitution as a source of tax power

Constitution grants the power to tax to the State.

Statutes and Presidential Decree

Statutes and presidential decrees are sources of tax law.

Judicial decisions or case laws

Court rulings that interpret and apply tax laws.

Executive orders

Executive directives that can affect tax administration.

Batas Pambansa

Legislative enactments of the interim Philippine legislature with tax implications.

Revenue regulations

Formal pronouncements clarifying tax laws and administration, signed by the Secretary of Finance on CIR’s recommendation.

Revenue memorandum orders (RMOs)

Directives that prescribe guidelines and processes in BIR operations (except auditing).

Revenue memorandum rulings (RMRs)

CIR interpretations of tax laws applied to specific facts; generally superior to BIR rulings.

Revenue memorandum circulars (RMCs)

Publications amplifying laws, rules, regulations, and precedents by the BIR and other agencies.

Revenue bulletins

Periodic notices/guidance on specific tax issues.

BIR rulings

Official advisory positions of the BIR on tax questions; may be reversed by the BIR.

Local ordinances

Local government tax laws and regulations.

Tax treaties and conventions

International agreements governing taxation between the Philippines and other countries.

Nature of tax

Civil in nature and not political or penal; payments remain valid even during enemy occupation.

Elements of a valid tax

Levy by the proper taxing power; consistency with the Constitution; uniform and equitable; for public purpose; proportional; payable in money.

Fiscal or revenue tax

Tax imposed for general government revenue purposes.

Regulatory tax

Tax imposed to regulate business or activities.

Sumptuary tax

Tax imposed to achieve social or economic objectives.

Poll tax

Tax imposed on residents of a specific territory.

Property tax

Tax on real or personal property.

Excise or privilege tax

Tax on the performance of an act, or enjoyment of a privilege, or occupation.

Direct tax

Statutory taxpayer is the economic taxpayer (the one who pays).

Indirect tax

Statutory taxpayer is not the economic taxpayer (tax can be shifted).

Specific tax

Fixed amount per unit of the tax object.

Ad valorem tax

Tax based on the value of the tax object.

Proportional tax

Flat tax rate across the base.

Progressive tax

Increasing rates as the tax base increases.

Regressive tax

Decreasing rates as the tax base increases (not typically used in PH).

Mixed tax

Combination of tax types in a system.

National tax vs Local tax

National taxes are imposed by the national government; local taxes by local governments.

Tax revenues

Total income collected by the government from taxes, tariffs, licenses, tolls, penalties, etc.

Tax license fee

Charge related to licensing, either pre-activity (to regulate starting a business) or post-activity (upon object).

Toll

Charge for the use of government facilities or services; reflects sovereignty needs.

Charge for use of property

Fee based on the value of the property leased or used.

Tax debt (legal debt)

Debt arising from a law; non-payment may lead to imprisonment.

Civil debt (private debt)

Debt arising from private contracts; non-payment typically does not lead to imprisonment (except estafa).

Tax Special Assessment

Imposed levy (often land-related) used to fund specific improvements.

Tariff

Tax imposed on imported and exported goods.

Penalty (tax)

Charge to fund government operations or discourage an act.

TAX SYSTEM

Methods and schemes for imposing, assessing, and collecting taxes.

Imposing authority in tax system

National tax system vs Local tax system.

Tax system by imposition

Progressive, proportional, and (in PH) not typically regressive.

Tax system by impact

Progressive (emphasizes direct taxes) vs Regressive (emphasizes indirect taxes).

Withholding system

Tax collection system where the payor withholds tax before paying the recipient.

Creditable withholding tax (CWT)

Withholding tax that can be credited against other tax due; income payor handles CWT.

Expanded withholding tax (EWT)

Additional withholding on certain income payments by taxpayers in business.

Final withholding tax (FWT)

Full tax withheld on certain income payments; generally no filing of returns for that portion.

Withholding tax on income vs business tax

Income tax withholding (individuals) vs withholding of VAT/percentage tax on government purchases.

Voluntary compliance system

Taxpayers self-assess, file returns, and pay taxes voluntarily.

Assessment or enforcement system

Government identifies non-compliant taxpayers and enforces collections through audits, penalties, or proceedings.

Principles of a sound tax system: Fiscal adequacy

Public funds sufficient to cover government costs.

Principles of a sound tax system: Theoretical justice

Taxation should consider ability to pay and avoid oppression.

Principles of a sound tax system: Administrative feasibility

Laws should be administrable (e.g., e-filing/e-payment, substituted filing, authorized banks).

Tax administration (BIR/DOF)

BIR manages tax system under the supervision of the Department of Finance.

BIR Chief Officials

Commissioner (CIR) and four Deputy Commissioners (Operations, Legal Enforcement, Information System, Resource Management).

Powers of the CIR (general)

Interpret NIRC; decide tax cases; obtain information; assess and enforce; examine returns; prescribe requirements; locate and prosecute non-compliance; delegate powers.

Powers of the CIR that cannot be delegated

Cannot delegate: promulgation of rules/regulations; rulings of first impression or reversal of existing rulings; compromise or abate tax liability (except under certain boards/conditions).

Other agencies tasked with tax collection/incentives

BOC (tariffs/VAT on imports), BOI (tax incentives), PEZA (tax holidays and incentives), Local government tax collecting units.

Classification of taxpayers: Large taxpayers

Taxpayers under the Large Taxpayers Service with thresholds for VAT, excise, income, withholding, percentage tax; financial criteria (gross receipts, net worth, gross purchases); top corporate taxpayers; multinational and major industry criteria.

Classification of taxpayers: Non-large taxpayers

Taxpayers supervised by the Revenue District Office (RDO) where their business/trade/profession is located.