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Tax by Dimaampao Legalground.com

Tax by Dimaampao Legalground.com

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Published by: amun din on Jul 20, 2012
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TAX NOTES (LEGAL GROUND)
Lectures of Atty. Japar B. Dimampao
Supplement Bar Material
STATE POLICY Declared Policy of the State
:
(Code:RDB-N)
1)to promote sustainable economic growth through the rationalization of the Philippine internal revenue tax system, including tax administration;2)to provide, as much as possible, an equitable relief to a greater numberof taxpayers in order to improve levels of disposable income andincrease economic activity;3)to create a robust environment for business to enable firms to competebetter in the regional as well as the global market;4)the State ensures that the Government is able to provide for the needsof those under its jurisdiction and care.
THE B.I.R.
1)
Powers and duties of the BIR.
 The BIR shall be under the supervision and control of the DOF and itspowers and duties shall comprehend:
(CODE: ACE-JP)
1)the assessment;2)collection of all national internal revenue taxes, fees, and charges;3)the enforcement of all forfeitures, penalties, and fines;4)execution of judgments in all cases decided in favor by the CTA andordinary courts5)give effect and to administer the supervisory and police powersconferred to it by the Code and other laws.2)
POWERS of the Commissioner of the Internal Revenue.
1)to interpret tax laws and to decide tax cases (Sec. 4);2)to obtain information and to summon, examine, and take testimony of persons (Sec. 5);3)to make assessments and prescribe additional requirements for taxadministration and enforcement (Sec. 6);4)to delegate powers (Sec. 7);5)to administer oaths and take testimony (Sec. 14);6)to make arrests and seizures (Sec. 15);7)to assign or re-assign internal revenue officers (Sec. 16 & 17).
REQUISITES OF A VALID TAX REGULATION
(LIMITATION OF THE POWER TOINTERPRET TAX LAWS)1)It must be consistent with the provision of the Tax Code2)Reasonable3)Useful and necessary4)It must be published in the official gazette or in the newspapers of general circulation.
SOURCES OF REVENUES
The following taxes, fees and charges are deemed to be national internal revenue taxes
:
(Code:IEVPEDO or EVE-PIDO)
1)Income tax;2)Estate and donor’s taxes;3)Value-added tax;4)Other percentage taxes;5)Excise taxes;6)Documentary stamp taxes; and
 
7)Such other taxes as are or hereafter may be imposed and collected bythe Bureau of Internal Revenue
INCOME TAX
FEATURES OF OUR PRESENT INCOME TAXATIONQ
. What are the features of our present income taxation in the light of R.A8424?
A.
We adopted the so-called
COMPREHENSIVE TAX SITUS
Comprehensive in the sense that we practically apply all possible rules of taxsitus.
Criteria used:
 
(Code: R. P. N.)
a)
Residency of taxpayer 
;Situations where we utilized residency as basis:1)We tax the income of a resident alien derived from sources withinthe Philippines.2)We also tax the income from sources within of resident foreigncorporation in the Philippines.b)
Place/Source
Used as a basis in taxing the income of a non-resident alien individual. Wecan only tax his income derived from sources within and in taxing the same,we consider the place where the income is derived.c)
Nationality or Citizenship in the case of individual taxpayer 
We used that as a basis in imposing tax on the income of a resident citizen.
Resident citizen
may be taxed from his sources within and without. The sourceof income here is immaterial what we consider is the nationality or citizenshipof the taxpayer. 
Domestic corporation
– we can tax its income derived from sources withinand without.On
Non-resident citizen
, they can only be taxed on their income derivedfrom the sources within – tax situs is the place /source of income.
TaxpayerSources
1. RCI/O (Sec. 23 [A])2. NRCI (Sec. 23 [B])3. OCWI (Sec. 23 [C])4. ALIEN4.1 NRA-ETB4.2 NRA-NETB4.3 ALIEN ERA-MNC4.4 ALIEN OBUs4.5 ALIEN PSCSI (Sec. 23 [D])5. Domestic Corp.I (Sec. 23 [E])6. Foreign Corp-RFC/NRFCI (Sec. 23 [F])
1)
A
resident citizen
is taxable on all income derived from sources withinand without the Philippines.
2)
A
non-resident citizen
is taxable only on income derived fromsources within the Philippines.
3)
An
overseas contract worker 
is taxable only on income from sourceswithin the Philippines; a
seaman
who is a citizen of the Philippines andwho receives compensation for services rendered abroad as a member
2
 
of the complement of a vessel engaged exclusively in the internationaltrade shall be treated as an overseas contract worker.
4)
An
alien individual 
, whether a resident or not of the Philippines, istaxable only on income derived from sources within the Philippines.
5)
A
domestic corporation
is taxable on all income derived from sourceswithin and without the Philippines; and6] A
foreign corporation
, whether engaged or not in trade or business inthe Philippines, is taxable only on income derived from sources within thePhilippines.
Income Taxation may be grouped into:
1)individual income taxation2)corporate income taxation
Q
.
What are the
basic features of individual taxation
?
(S.P. F. E. M.)
A
.
1)
Individual income taxation adopted the
Schedular system of taxation
Schedular System of Taxation
– is a system employed where the income taxtreatment varies and made to depend on the kind or category of the taxpayer’staxable income
(Tan vs. Del Rosario).
Characteristics of schedular system of taxation
:a)It gives or accords different tax treatment on the income of individual taxpayer.b)It classifies income.
Manifestations:
(that under the individual taxation we adopted theschedular system of taxation)
[C, B, P, Dp, I, R, R, D, A, Pw, P, P]
Under Sec. 32(a), income may be categorized as follows:1)compensation income,2)business income,3)professional income,4)income derived from dealings in property,5)interest income,6)rent income,7)royalties,8)dividends,9)annuities,10)prizes,11)winnings,12)pensions, and13)partner’s distributive share from the net income of the generalprofessional partnership.
 This is the manifestation that as far as individual income taxation,the income is categorized.
2]
The
tax rates are progressive in character
. This is clear under Sec. 24(a). You will notice there that the tax base increases as the tax rate increases.
3]
 
Modified gross income as regards compensation earner
. Modifiedbecause in determining the taxable compensation income, the only allowabledeductions are personal and additional exemption. You cannot deduct theallowable deductions under Sec. 34 from gross compensation income.But as regards those individual taxpayers that derived business, trade orprofessional income, we adopted the
net income system.
 This is so because
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