Professional Documents
Culture Documents
Ateneo Tax Reviewer
Ateneo Tax Reviewer
BAR REVIEWER
FACULTY ADVISERS
ACADEMICS HEAD
SUBJECT HEADS
TAXATION LAW
Table of Contents
I. GENERAL PRINCIPLES OF TAXATION......................... 5
A. Definition and concept of Taxation ...................5
B. Nature and Characteristics of Taxation ..............5
D. Purpose of Taxation ...........................................6
E. Principles of Sound Tax System (FAT) ................6
F. Theory and Basis of Taxation (JBL) .....................7
G. Doctrines in Taxation .........................................7
1. Prospectivity of tax laws ................................. 7
2. Imprescriptibility ............................................ 7
3. Double Taxation (DT)...................................... 7
4. Escape from Taxation ..................................... 8
5. Exemption from taxation ............................... 8
6. Compensation and Set-off.............................. 9
7. Compromise ................................................... 9
8. Tax Amnesty ................................................... 9
9. Construction and Interpretation of: ............. 10
H. Scope and Limitation of Taxation ....................11
1. Inherent Limitations ..................................... 11
2. Constitutional Limitations ............................. 12
I. Stages of Taxation (LAPR) .................................14
K. Requisites of a valid tax ....................................14
a. Must be for a public purpose........................14
b. It should be uniform and equitable ..............14
c. That either the person or property taxed is
within the jurisdiction of the taxing authority ...14
d. That it complies with the requirements of due
process ...............................................................14
e. That it does not infringe any constitutional
limitations ..........................................................14
L. Tax as distinguished from other forms of
exactions ...............................................................14
M. Kinds of Taxes .................................................15
II. NATIONAL INTERNAL REVENUE CODE ................... 17
A. Income Taxation ...............................................17
1. Income Tax Systems .................................... 17
2. Features of the Philippine Income Tax Law .. 17
3. Criteria in Imposing Philippine Tax Law .........18
4. Types of Philippine Income Tax .................... 18
5. Taxable Period ............................................. 18
6. Kinds of Taxpayers........................................ 18
7. Income Taxation .......................................... 21
8. Income.......................................................... 21
9. Gross Income ................................................. 23
10. Taxation of Resident Citizens, Non-resident
Citizens and Resident Aliens ...............................51
11. Taxation of Non-resident Aliens Engaged in
Trade or Business ...............................................54
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Page 4 of 165
TAXATION LAW
I. GENERAL PRINCIPLES OF TAXATION
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TAX
Power to enforce
contribution to
raise government
funds
Plenary,
comprehensive
and supreme
Government or
political
subdivisions
POLICE POWER
(in the form of a
FEE)
Concept
Power to make
and implement
laws for the
general welfare
Scope
Broader in
application
General power to
make and
implement laws
Exercising Authority
Government or
political
subdivisions
EMINENT
DOMAIN
Power to take
private property
for public use
with just
compensation
Merely a power
to take private
property for
public use
Maybe granted to
public service
companies or
public utilities
Purpose
Raise revenue
Exercise to
The taking of
promote public
property for
welfare through
public use
regulation
Amount of Imposition
No limit
Limited to the
No limit imposed,
cost of
but the amount
regulation,
should be based
issuance of
on the market
license, or
value of the
surveillance
property
Effect
Becomes part of
Restraint on the
Transfer of right
public funds
injurious use of
to the property
property
Persons Affected
Applies to all
Applies to all
Only particular
persons, property
persons, property property is
and excises that
and excises that
comprehended
may be subject
may be subject
thereto
thereto
Superiority of Contracts
Contracts may be
Contracts may be
impaired unless (a) impaired
government is
party to contract
TAX
POLICE POWER
(in the form of a
FEE)
EMINENT
DOMAIN
granting
exemption; or (b)
involves franchise
Benefits Received
No direct or
Market Value of
immediate
the property
benefit but only
such as may arise
from the
maintenance of a
healthy economic
standard of
society
Relationship to Constitution
Subject to certain
Relatively free
Subject to certain
constitutional
from
constitutional
limitations
constitutional
limitations
limitations
Protection and
general benefits
from the
government
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2.
Revenue-raising
Taxation is the power by which the sovereign raises
revenue to defray the necessary expenses of
government.
It is to provide funds or property with which to
promote the general welfare and protection of the
whole citizenry.
It is raised to serve as a means to provide public
improvements designed for the enjoyment of the
citizenry within the States territory.
Non-revenue/special or regulatory
Taxation is also used for regulatory purposes; it is used
to attain non-revenue objectives and pursue policy
decisions.
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Page 6 of 165
2.
3.
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1.
2.
3.
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2.
Imprescriptibility
3.
i.
ii.
iii.
iv.
v.
vi.
Page 7 of 165
d. Modes of eliminating DT
(1) Provide for exemptions or allowance of deduction
or tax credit for foreign taxes
(2) Enter into treaties with other states [like the
former Phil-Am Military Bases Agreements as to
income tax]
(3) Application of the Principle of Reciprocity
4.
Other
Name
Means
Penalty
Object
a.
b.
Nature
Exemption from taxes is personal in nature and
covers only taxes for which the taxpayer-grantee is
directly liable. In any case, it cannot be transferred or
assigned by the person to whom it is given without
the consent of the State.
Tax exemptions are strictly construed against the
taxpayer because such provisions are highly
disfavored and may almost be said to be odious to
the law Manila Electric Company v. Vera, [67 SCRA
351].
Exemptions are not presumed, but when public
property is involved, exemption is the rule, and
taxation, the exception.
There can be no simultaneous exemptions under 2
laws, one partial and the other total.
c.
Kinds (ICE)
(1) Express (or affirmative) when certain persons,
property or transactions are, by express provision,
exempted from all or certain taxes, either entirely
or in part.
TAX AVOIDANCE
Tax Minimization
5.
TAX EVASION
Tax Dodging
Page 8 of 165
e.
6.
7.
Compromise
8.
Tax Amnesty
a.
Page 9 of 165
Scope of
immunity
To whom
granted
Application
Presence of
Actual
Revenue
Loss
AMNESTY
Immunity from all
criminal, civil and
administrative
liabilities from nonpayment of taxes
General pardon given
to all taxpayers
EXEMPTION
Immunity from civil
liability only
b.
A freedom from a
charge or burden to
which others are
subjected
Generally,
prospective in
application
None, because
there was no actual
taxes due as the
person or
transaction is
protected by tax
exemption
9.
a.
Tax Laws
(1) General rule:
No person or property is subject to taxation unless
within the terms or plain import of a taxing
statute.
In case of doubt, tax statutes are construed strictly
against the government and liberally in favor of the
taxpayer.
Taxes being burdens, they are not to be presumed
beyond what the statute expressly and clearly
declares.
Tax statutes offering rewards are liberally
construed in favor of informers.
(2) Exception:
The rule of strict construction as against the
government is not applicable where the language
of the tax statute is plain and there is no doubt as
to the legislative intent. In such case, the words
employed are to be given their ordinary meaning.
Tax statutes are to receive a reasonable
construction with a view to carrying out their
purpose and intent. They should not be construed
as to permit the taxpayer to easily evade the
payment of tax. Thus, good faith of the taxpayer is
(2) Exception:
When the law itself expressly provides for a liberal
construction, that is, in case of doubt, it shall be
resolved in favor of exemption
When the exemption is in favor of the government
itself or its agencies because the gen. rule is that
they are exempt from tax.
When the exemption refers to religious, charitable
and educational institutions.
If there is an express mention or if the taxpayer
falls within the purview of the exemption by clear
legislative intent, the rule on strict construction
does not apply.
c.
Page 10 of 165
d.
e.
======================================
b.
Inherently Legislative
(1) General rule power of taxation cannot be
delegated.
Contemplates the power to determine kind,
object, extent, amount, coverage, and situs of tax;
Distinguish from power to assess and collect
(2) Exceptions:
(a) Delegation to local governments It is in line
with the principle that the power to create
municipal corporations for purposes of local selfgovernment carries with it the power to confer
the power to tax on such local governments.
(b) Delegation to the President Certain aspects of
the taxing process that are not legislative in
character may be vested to him.
(c) Delegation to administrative agencies They are
authorized to fix within specified limits, Tariff
rates, import or export quotas, tonnage and
wharfage dues and other duties or imposts.
c. Territorial
(1) Situs of Taxation
(a) Meaning place of taxation; power to tax is
limited to the territorial jurisdiction of the taxing
state.
EXCEPT where privity of relationship exists, the
State can exercise its taxing powers over its
citizen outside its territory.
(b) Situs of Income Tax
(1) From sources within the Philippines
Interests derived from sources within the
Philippines
Dividends from domestic and foreign
corporations
Compensation for services performed within
the Philippines
Rentals and royalties from properties located
in the Philippines or any interest in such
property including rentals or royalties for the
use of or for the privilege of using within the
Philippines, patents, copyrights and other like
Page 11 of 165
properties.
Sale of Real property located in the Philippines
Sale of Personal property Gains, profit, and
income derived from the purchase within and
its sale without the Phil, or from the purchase
without and its sale within shall be treated as
derived entirely from sources within the
country in which the personal property is sold.
Except: the gain from the sale of shares of
stock in a domestic corporation shall be
treated as derived entirely from sources
within the Phils. regardless where the said
shares are sold.
SUMMARY:
OBJECT
Person
Real Property
Tangible
Personal
Property
Intangible
Personal
Property
Income
Transfer of
property
Business or
Occupation
SITUS RULE
Residence,
Domicile,
Citizenship
Location of the property
Physical location although the owner
resides in another jurisdiction
Domicile of the owner (mobilia
sequntur personam)
Citizenship
Residence
Source of Income
Citizenship
Residence
Location of Property
Where the act/business/occupation is
performed/exercised
d.
International Comity
Property of a foreign State of government may not
be taxed by another.
e.
2. Constitutional Limitations
a. Provisions Directly Affecting Taxation
(1) Prohibition against imprisonment of non-payment
of poll tax [Sec. 20, Art. III]
Can still be made to pay fines and penalties for
non-payment.
Taxpayer may be imprisoned for non-payment of
other kinds of taxes where the law so expressly
provides.
(2) Uniformity and equality of taxation [Sec. 28 (1),
Art VI]
Uniform: all articles or properties of the same class
taxed at the same rate
Equity: apportionment must be more or less just in
the light of taxpayers ability to shoulder tax
burden
The equal protection clause refers more to like
Page 12 of 165
SUBSTANTIVE
Should not be harsh,
oppressive, or confiscatory
(reasonableness)
By authority of valid law
Must be for a public purpose
Imposed within territorial
jurisdiction
PROCEDURAL
No arbitrariness in
assessment and collection
Right to notice and hearing
Page 13 of 165
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Customs Duty/Tariff
TAX
Coverage More comprehensive than
customs duty
Object
Persons, prop, etc
CUSTOMS DUTY
Kind of tax
Goods imported
or exported
Page 14 of 165
2.
off
Toll
TAX
Demand of
sovereignty
support of
government
No limit depends
on need of the
government
Kind of
demand
Purpose
Amount
3.
TOLL
Demand of ownership
Collection for the use
of property
Fair return of the cost
of the property or
improvement
License Fee
TAX
Exercise of
Taxing power
Raise revenue
Persons,
property and
privilege
no limit
Source
Purpose
Object
Amount
LICENSE FEE
Emanate from the police
power of the State
Regulation
Right to exercise a privilege
Effect
Special Assessment
TAX
Imposed
Persons, properties,
on
etc.
Why
Regardless of public
imposed
improvement
Purpose
Support of
government
When
Regular exaction
imposed
Basis
Necessity
5.
SPECIAL ASSESSMENT
Only on land
Debt
Source
TAX
Law; legal obligation
DEBT
Based on contract
Nature
Personal
Assignable
Right to
set-off
Property tax
Imposed on property, real or personal
In proportion to its value or other reasonable
method of apportionment
Ex. Real estate tax
c.
2.
Public improvement
that benefits the land
Contribution to cost of
public improvement
Exceptional as to time
and locality
Benefits obtained
No imprisonment for
non-payment
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4.
Imprisonment is
sanction for nonpayment
3.
Page 15 of 165
4.
As to purposes
a. General, fiscal or revenue - imposed for the
general purpose of supporting the government
Ex. Income tax, percentage tax
b.
5.
6.
Mixed
c.
Page 16 of 165
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c.
It serves as a supplementary
devise to accomplish nonfiscal goals of the
government
Administration is not quite
as easy as schedular
because one has to consider
all income from whatever
sources
SCHEDULAR SYSTEM
A system which imposes
various types of tax on
income producing activities
Emphasizes on revenue and
administrative aspects
Because of its multiple rates,
the tax burden of a person
does not respond to his
income but rather fall
fortuitously on the type of
his income
This function is alien to
schedular system where in
times of plenty or in times of
need, people pay the same
fixed tax on their income
Schedular system cannot
perform these functions
Administration is simple
being confined to each
transaction or activity
2.
a.
b.
c.
d.
Page 17 of 165
b.
c.
4.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
5. Taxable Period
GENERAL RULE: The accounting period of a taxpayer is a
period of twelve (12) months.
a.
b.
c.
6.
Kinds of Taxpayers
TAXPAYER
TAX BASE
Resident Citizen
Taxable
Income
Nonresident
Taxable
Citizen
Income
Taxable
Resident Alien
Income
Nonresident Alien
engaged in trade
Taxable
or business (more Income
than 180 days)
Nonresident Alien
not engaged in
Gross
trade or business
Income
(180 days or less)
General
Professional
Partnership
Taxable
Income
Taxable
Income
Domestic
Corporation
Resident Foreign
Corporation
Non-resident
Foreign
corporation
a.
Taxable
Income
Taxable
Income
Gross
Income
TAXABLE ON INCOME
Within and without the
Philippines
Within the Philippines
Within the Philippines
Individual Taxpayers
(1) Citizens
(a) Resident Citizen citizen of the Philippines
residing therein is taxable on all income derived
from sources within and without the Philippines.
(b) Nonresident Citizen citizen of the Philippines
who are taxable only on his income from sources
within the Philippines if he:
i.
Establishes the fact of his physical presence
abroad with a definite intention to reside
therein.
Page 18 of 165
ii.
iii.
iv.
v.
Page 19 of 165
b.
Corporations
A corporation shall include partnerships, no matter
how created or organized. Joint stock companies,
joint accounts, associations, and insurance
companies
e.
Taxable/Business/Ordinary/General Partnership
i. All other partnerships no matter how created or
organized.
ii. Includes unregistered joint ventures and
business partnerships.
iii. Taxable as an entity ordinary corporate
income tax.
iv. Joint ventures are not taxable as corporations
when its purpose is: a) undertaking construction
projects; b) engaged in petroleum, coal and
other energy operation under a service contract
with the government.
v. Partners are considered stockholders; therefore,
their distributive share is taxed as dividends,
thus subject to final income tax on their gross
distributive share.
Page 20 of 165
f.
Co-ownerships
Exists whenever the ownership of an undivided
thing or right belongs to different persons. For
income tax purposes, the individual co-owners are
liable for the taxes due on their respective shares
and the co-ownership itself is not considered as a
separate taxable entity.
7.
a.
b.
c.
General Principles
TAXPAYER
TAX BASE
Resident Citizen
Taxable
Income
Nonresident Citizen
Taxable
Income
Taxable
Resident Alien
Income
Nonresident Alien
engaged in trade or
Taxable
business (more than
Income
180 days)
Nonresident Alien
not engaged in trade Gross
or business (180 days Income
or less)
General Professional
Partnership
Taxable
Income
Taxable
Income
Domestic
Corporation
Resident Foreign
Corporation
Non-resident Foreign
corporation
Taxable
Income
Taxable
Income
Gross
Income
Income Taxation
Definition A tax on all yearly profits arising from
property, professions, trades, or offices, or as a tax on a
persons income, emoluments, profits and the life.
Income tax is a direct tax
Nature (same as Features of Philippine Income Tax Law)
(1) Direct Tax tax burden us borne by the income tax
recipient upon whom the tax is imposed.
(2) Progressive Tax tax rate increases as the tax base
increases; direct taxes are to be preferred and as
much as possible, indirect taxes should be
minimized. Tolentino v. Secretary of Finance, [G.R.
No. 115455, October 30, 1995]
(3) Comprehensive System adopts the citizenship
principle, residence principle and the source
principle
(4) Semi-Schedular or Semi-Global Tax System
certain passive incomes and capital gains are
subject to final taxes at preferential rates while all
other income are added together to arrive at the
gross income and after deducting the sum of
allowable deductions, the taxable income is
subjected to one set of graduated tax rates for an
individual or normal corporate income tax rate for
corporations.
TAXABLE ON INCOME
Within and without
the Philippines
Within the Philippines
Within the Philippines
8.
a.
Income
Definition and Nature
Income, in the broad sense, means all wealth
which flows into the taxpayer other than as a mere
return of capital. It includes the forms of income
specifically described as gains and profits, including
gains derived from the sale or other disposition of
capital assets. Income cannot be determined
merely by reckoning cash receipts, for the statute
recognizes as income determining factor other
items, among which are inventories, accounts
receivable, property exhaustion, and accounts
payable for expenses incurred. [Sec. 36, RR No. 0240 dated 10 February 1940]
b.
Page 21 of 165
c.
Page 22 of 165
Reportable
Income
Installment
collection
received
Gross
profit
Contract
Price
9. Gross Income
a. Definition
All income derived from whatever source, including
(but not limited to the following items) (GRIP CARD
GPP)
Gross income derived from the conduct of trade or
business or the exercise of a profession
Rent Income
Interest Income
Prizes & winnings
Compensation for services in whatever form paid,
including, but not limited to fees, salaries, wages,
commissions & similar items
Annuities
Royalties
Dividend Income
Gains derived from dealings in property
Pensions
Partners distributive share from the net income of
the GPP (distributive share from ordinary
partnerships is taxable as dividends; in this case,
the ordinary partnership has already been subject
to ordinary corporate income tax) Sec. 32.
Page 23 of 165
Not
taxable
Taxable
Taxable
EXAMPLES OF INCOME
FROM LEGAL SOURCES
Employees salary, bonus;
and commissions/rebates
Not
Taxable
c.
Taxable
Taxable
Taxable
b.
Taxable
d.
EXAMPLES OF INCOME
FROM ILLEGAL SOURCES
Gambling, kidnapping,
extortion, smuggling,
embezzlement
INCOME
Interests
Dividends
Page 24 of 165
INCOME
Services
(Compensation for
labor/personal
services)
Rentals
Royalties
NOTE:
ROYALTIES (from property or use of property located in
Philippines), includes:
(a) Use of/the right/privilege to use in the Philippines
any copyright, patent, design or model, plan,
secret formula or process, goodwill, trademark,
trade brand or other like property or right
(b) Use of/the right to use in the Philippines any
industrial, commercial or scientific equipment
(c) Supply of scientific, technical, industrial or
commercial knowledge or information
Page 25 of 165
Deductions:
Expenses, losses & other deductions properly
allocated thereto and a ratable part of expenses,
interests, losses and other deductions effectively
connected with the business conducted exclusively
within the Philippines which cannot definitely be
allocated to some items or class of gross income
a.
b.
c.
d.
e.
Exceptions:
No deduction for interest paid/incurred abroad
shall be allowed unless:
Indebtedness was actually incurred
Indebtedness must be that of the taxpayer
Interest must be legally due and stipulated in
writing
Interest must be paid or incurred during the
taxable year
Indebtedness must be in connection w/ the
conduct or operation of trade/business in the
Philippines
from
sources
without
the
Deductions:
Expenses, losses & other deductions properly
apportioned/ allocated thereto and a ratable part
of expenses, interests, losses and other deductions
which cannot definitely be allocated to some items
or class of gross income
INCOME
Income partly within,
partly without
Income within
Income partly within,
partly without
Income within
Income without
Income within
Income partly within,
partly without
Page 26 of 165
Income within
Worldwide
Income
e.
Unallocated
Expense
Unallocated
Expense
Deductions
from Income
Without
Deductions
from Income
Within
Page 27 of 165
(j)
(3)
Page 28 of 165
ordinary gain.
v. Computation of the amount of gain or loss
GAIN = excess of the amount realized over
the basis/adjusted basis (selling price > cost)
LOSS = excess of the basis/adjusted basis
Page 29 of 165
income;
applicable
to
corporations and individuals.
both
Page 30 of 165
NOTE:
The capital losses realized from the sale
or disposition of stocks not listed and
traded during the taxable year are
deductible only to the extent of capital
gains from the same type of transaction
during the same period.
If the transferor of the shares is an
individual, the rule on holding period and
capital loss carry-over will not apply.
Non-deductibility of losses on wash sales
and short sales
Gains from sale of shares of stock in a
foreign corporation are not subject to
capital gains tax but to graduated rates
either as capital gain or ordinary income
depending on the nature of the trade or
business of the taxpayer.
Tax Rate
5%
Requisites:
i. Sale or disposition of the old actual
principal residence
ii. By a citizen or resident alien
iii. Proceeds of which is utilized in acquiring
or constructing a new principal residence
within 18 calendar months from date of
sale or disposition
10%
Page 31 of 165
FINAL TAX
7.5%
[Exempt for
nonresident
aliens engaged
in trade or
business]
Exempt
i.
10%
20%
20%
20%
25%
20%
20%
10%
[20% for nonresident aliens
engaged in
trade or
business]
ii.
Exempt
5%
12%
20%
Page 32 of 165
Types of Dividends:
Cash Dividend valued and taxable to the
extent of amount of money received by the
stockholder.
ii. Stock Dividend generally, pure stock
dividends are tax-exempt except if a
corporation cancels or redeems stock issued
as a dividend at such time and in such
manner as to make the distribution and
cancellation or redemption, in whole or in
part, essentially equivalent to the
distribution of a taxable dividend, the
amount so distributed in redemption or
cancellation of the stock shall be considered
as taxable income to the extent that it
represents a distribution of earnings or
profits.
iii. Property Dividend property of an issuing
corporation distributed as a dividend;
valued and taxable to the extent of fair
market value of the property received at
the time of declaration.
iv. Liquidating
Dividend return of
stockholders investment in the form of
asset
distribution
upon
corporate
dissolution; generally, the gain realized or
loss sustained by the stockholder, whether
individual or corporate, is a taxable income
or a deductible loss, as the case may be.
v. Script Dividend in the form of promissory
notes; taxable to the extent of its fair
market value and in the year when the
warrant was issued.
i.
Tax Rules:
i. Tax Exempt:
Received from a Domestic Corporation
by:
Another domestic corporation
Resident Foreign Corporation
Pure Stock Dividend
Pure Liquidating Dividend
Corporation
10%
25%
Other royalties
20%
25%
Page 33 of 165
ii.
iii.
Types of Insurance
Annuity installment payments for life, or for a
Taxpayer
RC, NRC, RA,
NRA-ETB
NRA-NETB
Corporation
P10,000 or
less
More than
P10,000
PCSO and
Lotto
Winnings
5-32%
20%
Exempt
25%
30%
25%
30%
Exempt
Exempt
Page 34 of 165
ii.
iii.
iv.
v.
vi.
Not
Taxable
Taxable
Taxable
f.
Page 35 of 165
INCOME
Services
(Compensation for
labor/personal
services)
Rentals
Royalties
Place of Sale
h.
Page 36 of 165
Page 37 of 165
Page 38 of 165
Bad Debts
Expenses
Losses
Taxes
Depreciation
Interest
Depletion of oil & gas wells & mines
Charitable & other contributions
Research & Development
Pension trusts
(a) Expenses
i.
Requisites for deductibility
[1] Must be ordinary AND necessary (both
must be complied with) trade, business or
professional expenses only
[2] Must be paid or incurred during the taxable
year
[3] Must be paid or incurred in carrying on or
which are directly attributable to, the
development, management, operation and
or conduct of the trade, business or
exercise of a profession.
There is yet to be a clear-cut criteria or a fixed
test for determining the reasonableness of an
advertising expense. There being no hard and
Page 39 of 165
iii.
Substantiation
Requirements:
sufficient
evidence (i.e. official receipts, financial
statements or other adequate records) to
substantiate:
o Amount of expense deducted
o Direct connection/relation of the expense
to the development, management
operation &/or conduct of the trade,
business or profession of the taxpayer
Classification of Expenses:
[1] Ordinary expense normal or usual in
relation to the taxpayers business and the
surrounding circumstance.
[2] Necessary expense appropriate and
helpful in the development of taxpayers
business and are intended to minimize
losses or to increase profits. These are the
day to day expenses.
While illegal income will form part of the
income of the taxpayer, expenses which
constitute bribe, kickback, and other similar
payment, being against law and public
policy are not deductible from gross
income.
[3] Business expense expenditure related to
the business that is deductible in the year
incurred, in the same taxable year.
[4] Capital expense expenditure that
improves or adds to the value of your
property or equipment. Not immediately
deductible. It is deductible over time, such
as in the form of depreciation.
NOTE:
Expenses allowable to private
educational institutions: In addition to the
expenses allowable as deductions, a private
educational institution has the option to elect
either:
(a) to deduct as expense those otherwise
considered as capital outlays of
depreciable assets for the expansion of
school facilities
(b) to capitalize asset & deduct allowance for
depreciation
EXPENSES TO BE DEDUCTIBLE:
1. Amount must be reasonable.
2. Amount must be substantiated.
3. It is not contrary to law, public policy or morals.
4. Tax required to be withheld must have been paid to the
BIR
iv. Salaries, wages & other forms of
compensation for personal services actually
rendered (including grossed-up monetary
value of FB); but the final tax should have
been paid
Page 40 of 165
Subject to a limit of
Page 41 of 165
LIMITATION ON DEDUCTION
Interest expense shall be reduced by an amount
equal to the following % of interest income
subjected to final tax:
1/1/00
1/1/06
1/1/09
38%
42%
33%
iii.
iv.
(c) Taxes
The term taxes refers to national and local
taxes, and means TAXES PROPER, hence, no
deductions are allowed for:
Page 42 of 165
[1] Interests*
[2] Surcharges
[3] Penalties or fines incident to delinquency
(Sec. 80, Rev. Reg. 2)
* Interest incurred or paid by a taxpayer
on all unpaid business-related taxes shall be
fully deductible from gross income and shall
not be subject to the limitation on deduction
of 42%/33% of interest income. (sec. 4(c) Rev.
Reg. 13-00)
i.
ii.
Deductible Taxes
All taxes, national, or local, paid or incurred
during the taxable year in connection with the
taxpayers profession, trade or business, are
deductible from gross income.
Requisites for Deductibility
[1] It must be paid or incurred within the
taxable year
[2] It must be paid or incurred in connection
with the taxpayers trade, profession or
business
[3] It must be imposed directly on the taxpayer
[4] It must not be specifically excluded by law
from being deducted from the taxpayers
gross income
iii.
Non-Deductible Taxes:
[a] Philippine income tax (but FBT can be
deducted from gross income as provided for
in RR 8-98)
[b] Income tax imposed by authority of any
foreign country (except when the taxpayer
signifies his desire to avail of the tax credit
for taxes of foreign countries)
[c] Estate & donors taxes
[d] Taxes assessed against local benefits of a
kind tending to increase the value of the
property assessed
[e] Final taxes, being in the nature of income
tax
[f] Special assessments
iv.
Limitations on Deductions
In case of a nonresident alien individual
engaged in trade/business in the Philippines,
taxes to be deducted shall be allowed only if &
to the extent that they are connected with
income from sources w/in the Philippines
v.
Page 43 of 165
Philippine
Income Tax
Philippine
Income Tax
EXAMPLE:
Particulars
Net
Income
Country A
Country B
Phil-source
income
Tot NI all
P50,000
40,000
110,000
P200,000
Actual Foreign
Tax Paid in
Philippine Peso
P18,000
P11,000
P29,000
Phil Income
Tax due at
30%
P60,000
Page 44 of 165
Requirements:
[a] the taxpayer was not exempt from
income tax in the year of such net
operating loss;
[b] the loss was not incurred in a taxable
year during which the taxpayer was
exempt from income tax, and
[c] there has been no substantial change in
the ownership of the business or
enterprise.
Page 45 of 165
Depreciation
Expense
15,000 - 5,000
5 years
2,000
Rate
Depreciation
Expense
Page 46 of 165
Year 1:
15,000 - 0
5
Year 2:
15,000 - 6,000
5
200%
3,600
Depreciation
Expense
200%
6,000
Year 1:
5
15
15,000 - 5,000
3,333.33
Year 2:
4
15
15,000 5,000
2,666.67
Page 47 of 165
ii. Valuation
The amount of any charitable contribution of
property other than money shall be based on
the acquisition cost of said property.
iii. Contributions subject to limitations:
[1] Contributions or gifts actually paid or made
w/in the taxable year
[2] To or for the use of the government or its
agencies or any political subdivision,
exclusively for public purpose, or
[3] To accredited domestic corps./associations
organized and operated exclusively for:
[a] Religious
[b] Charitable
[c] Scientific
[d] Youth & sports development
[e] Cultural or educational purposes
[f] For the rehabilitation of veterans
[g] To social welfare institutions
[4]
To NGOs
No part of NI inures to the benefit of any
private stockholder or individual
iv. Limitation
[1] For individual: not more than 10% of
taxable income before deducting the
charitable contributions
[2] For corporation: not more than 5 % of
taxable income before deducting the
charitable contributions
v. Contributions deductible in full
[1] Donations to the govt. to finance, to
provide for, or to be used in undertaking
priority activities in education, health, youth
& sports development, human settlements,
science & culture & in economic
development according to National Priority
Plan determined by NEDA
If not in accordance w/ annual priority
plan, donation is subject to limitations in
(a) above
Page 48 of 165
(j)
Page 49 of 165
Page 50 of 165
j.
Exempt Corporations
Income received by the following corporations shall
be exempted from tax:
(1) Government educational institutions
(2) Non-stock non-profit educational institutions
(3) Non-profit labor, agricultural or horticultural
organizations
(4) Association of farmers, fruit growers, and the like
whose primary function is to market the product of
their members
(5) Organizations with a purely local operation whose
income is derived only from assessments, dues and
fees collected from their members to meet
operational expenses
(6) Non-stock corporation or association organized
and operated exclusively for religious, charitable,
scientific, athletic or cultural purposes, or for the
rehabilitation of veterans; provided that no
individual person owns its assets or no individual
person receives benefit on its earnings
(7) Non-stock/non-profit mutual savings bank or nonstock/non-profit cooperative bank
(8) Non-profit civic league or organization operating
exclusively for the benefit of its members
(9) Cemetery company owned and operated
exclusively for the benefit of its members
(10) Non-profit business league, chamber of commerce,
or board of trade
(11) Associations,
orders,
beneficiary
societies
operating for the exclusive benefits of their
members
General Rule
(1) Resident Citizen citizen of the Philippines residing
therein is taxable on all income derived from
sources within and without the Philippines.
(2) Nonresident Citizen citizen of the Philippines
who are taxable only on his income from sources
within the Philippines if he qualifies as a nonresident citizen.
(3) Resident Alien an individual whose residence is
within the Philippines and who is not a citizen
thereof is taxable only on income derived from
sources within the Philippines.
b.
Page 51 of 165
ii.
NOTE:
A dependent means a
[1] Legitimate, illegitimate or legally adopted
child,
[2] Chiefly dependent upon,
iv.
v.
vi.
Page 52 of 165
d.
TAX RATE
20%
20%
Exempt
5%
12%
20%
TAX BASE
Interest income earned from
deposit NOT FCDU
Interest income earned from
deposit FCDU
Cash and/or Property Dividends
Taxation of Capital Gains
TAX BASE
Capital Gains from Sale of Shares of
Stock Not Traded in the Stock Exchange
Net Capital Gains:
Not over P100,000
On any amount in excess of
P100,000
Sale of shares of stocks traded in the
Local Stock Exchange (Stock
Transaction Tax)
Selling price
Capital gains on sale of Real Property
situated in the Philippines
Selling Price or FMV whichever is
HIGHER
Income from the sale, exchange or
other disposition of capital assets
TAX RATE
20%
7.5%
10%
e.
TAX RATE
Final tax of
5%
10%
of 1%
Final tax of 6%
Graduated
Income Tax Rate
NOTE:
Capital gains from sale/disposition of principal
residence by natural persons may be EXEMPT provided
that:
i. Proceeds
were
fully
utilized
in
acquiring/constructing a new principal residence
within 18 mos. from date of sale.
ii. Historical cost/adjusted basis of sold prop be
carried to the new principal residence
built/acquired
iii.Commissioner duly notified within 30 days from
sale
iv.Tax exemption can only be availed once every 10
years
v. If no full utilization of proceeds of sale, such
portion shall be subject to CGT
Capital gains from other capital assets are subject to
the holding period. The reportable capital gain would
be:
i. 100% if the asset was held for one year or less.
ii. 50% if the asset was held for more than one year.
There is a net capital loss carryover on the net capital
loss provided that the amount of loss does not exceed
the income before exemptions at the year the loss was
sustained to be recognized immediately succeeding the
year it was sustained.
Page 53 of 165
TAX RATE
20%
5%
10%
Except:
TAXPAYER
Alien Individual Employed by
Offshore Banking Units
Alien Individual Employed by
Petroleum Service
Contractor and
Subcontractor
Alien Individual Employed by
Regional or Area
Headquarters and Regional
Operating Headquarters of
Multinational Companies
TAX RATE
15% of gross income earned
as such employee
15% of gross income earned
as such employee
NOTE:
The same tax treatment shall also apply to Filipinos
employed and occupying the same positions as those
of the alien employees mentioned above.
Only the income earned as an employee of the said
entities is subject to the preferential 15% rate;
income earned from other sources (i.e. rent) shall be
taxable in the same manner as a Resident Alien or
NRA-ETB.
Filipinos employed by ROHQs or RHQs in a
managerial or technical position shall have the option
to be taxed at either 15% of their gross income OR
b.
TAX RATE
30%
35%
32%
Page 54 of 165
Example:
Computation of RCIT
2008
Gross Sales
P 3,000,000
Cost of Goods
1,500,000
Sold
Gross Income
P 1,500,000
Operating
1,450,000
Expenses
Net Taxable
P 50,000
Income
RCIT Rate
35%
RCIT
P 17,500
[2]
2009
P 4,000,000
2,000,000
2010
P 5,000,000
2,500,000
P 2,000,000
1,900,000
P 2,500,000
2,100,000
P 100,000
P 400,000
30%
P 30,000
30%
P 120,000
Computation of MCIT
2009
2010
Gross Income
P 2,000,000
P 2,500,000
MCIT Rate
2%
2%
MCIT
P 40,000
P 50,000
NOTE: The MCIT is not applicable in 2008 since it has
not yet reached the fourth taxable year
requirement.
[3]
b.
Page 55 of 165
TAX RATE
e.
Final Tax
5%
10%
Final Tax
6%
Regular Corp.
Tax (30%)
d.
Exempt
TAX RATE
f.
20%
7.5%
10%
(2) Exceptions:
(a) GSIS
(b) SSS
(c) PHIC
(d) PCSO
Page 56 of 165
15.
Taxation of Resident Foreign Corporations
a. General rules
The rest is the same rules as Domestic Corporation
On taxable income from all
sources within the Philippines.
b.
c.
TAX RATE
20%
7.5%
10%
5%
10%
Exempt
Exclude:
(1) International Carrier
Doing business in the Philippines shall pay a tax of 2
1/2% on its Gross Philippine Billings defined as:
(a) International Air Carrier
Refers to gross revenue derived from carriage
of persons, excess baggage, cargo, and mail
Page 57 of 165
10%
Exempt
BASIS
Any interest income derived from
foreign currency loans granted to
residents other than offshore banking
units or local commercial banks,
including local branches of foreign
banks that may be authorized by the
BSP to transact business with offshore
banking units
Income derived by offshore banking
units authorized by the BSP, from
foreign currency transactions with
nonresidents, other offshore banking
units, local commercial banks,
including branches of foreign banks
that may be authorized by the BSP to
transact business with offshore
banking units.
Income repatriation by
Branch to HO is referred to
as Branch profit remittances
PARENT-SUBSIDIARY
Subsidiary is classified as a
Domestic Corporation
Parent Company is classified
as a Non-Resident Foreign
Corporation
Subsidiary is taxed on
taxable income within and
without the Philippines
while Parent Company is
taxed on gross income
within the Philippines
Income repatriation by a
Subsidiary to Parent
Company is referred to as
dividends
Page 58 of 165
TAXPAYER
TAX RATE
BASIS
Regional/Area
Exempt
Headquarters
Regional Operating 10%
On taxable income
Headquarters
of
Multinational
companies
Operating
Headquarters
of
multinational
companies (RHQ and ROHQ)
Regional or area headquarters A branch
established in the Philippines by multinational
companies and which headquarters do not earn
or derive income from the Philippines
Act as supervisory, communications and
coordinating center for their affiliates,
subsidiaries, or branches in the Asia-Pacific
Region and other foreign markets.
Regional operating headquarters A branch
established in the Philippines by multinational
Reciprocity rule:
The country in which the nonresident foreign
corporation is domiciled, shall allow a credit
against the tax due from the nonresident foreign
corporation taxes deemed to have been paid in
the Philippines equivalent to the regular income
tax on corporations and the 15% tax on dividends.
(3) Capital gains from shares of stock not traded
through the Local Stock Exchange
A final tax on the NET CAPITAL GAINS realized
during the taxable year from the sale of shares of
stock in a domestic corporation NOT through the
stock exchange:
Rates of tax on the net capital gains:
Not over P100,000
On any amount in excess of
P100,000
Page 59 of 165
5%
10%
c.
d.
Composition
The following constitute accumulation of earnings for
the reasonable needs of the business: (ILL ABE)
Allowance for the increase in the accumulation of
earnings up to 100% of the paid-up capital of the
corporation as of Balance Sheet date, inclusive of
accumulations taken from other years;
Earnings reserved for definite corporate expansion
projects or programs requiring considerable capital
expenditure as approved by the Board of Directors
or equivalent body;
Earnings reserved for building, plants or
equipment acquisition as approved by the Board of
Directors or equivalent body;
Earnings reserved for compliance with any loan
covenant or pre-existing obligation established
under a legitimate business agreement;
Earnings required by law or applicable regulations
to be retained by the corporation or in respect of
which there is legal prohibition against its
distribution;
In the case of subsidiaries of foreign corporations
in the Philippines, all undistributed earnings
intended or reserved for investments within the
Philippines as can be proven by corporate records
and/or relevant documentary evidence.
e.
Covered corporations
Only domestic AND closely-held corporations are
liable for IAET.
c.
Rationale
If the earnings and profits were distributed, the
shareholders would then be liable for income tax; if the
distribution were not made to them, they would incur no
tax in respect to the undistributed earnings and profits
of the corporation. It is a tax in the nature of a penalty
to the corporation for the improper accumulation of its
earnings, and a deterrent to the avoidance of tax upon
shareholders who are supposed to pay dividends tax on
the earnings distributed to them.
Exception
The use of undistributed earnings and profits for the
reasonable needs of the business would not generally
make the accumulated or undistributed earnings subject
to the tax. What is meant by reasonable needs of the
business is determined by the Immediacy Test.
Immediacy Test It states that the reasonable needs of
the business are the
Immediate needs of the business; and
Reasonably anticipated needs (Ex. Expansion)
How to prove the reasonable needs of the business:
The corporation should prove that there is
An immediate need for the accumulation of the
earnings and profits; or
A direct correlation of anticipated needs to such
accumulation of profits.
Exempt corporations
The IAET shall not apply to the following corporations:
(BIG-PEN-T)
(1)
Banks and other non-bank financial
intermediaries;
(2)
Insurance companies;
(3)
Publicly-held corporations;
(4)
Taxable partnerships;
(5)
General professional partnerships;
(6)
Non- taxable joint ventures; and
(7)
Enterprises that are registered:
o With the Philippine Economic Zone Authority
(PEZA) under R.A. 7916;
Page 60 of 165
g.
h.
i.
bonds
and
other
long-term
Page 61 of 165
b. How computed?
o For purposes of computing the distributive
share of the partners, the net income of the
partnership shall be computed in the same
manner as a corporation.
o All expenses, which are ordinary and
necessary, incurred or paid for the practice of
profession, are allowed as deductions.
o Since the taxable income is in the hands of the
partner, apart from the expenses claimed by
the GPP in determining its net income, the
individual partner can still claim deductions
incurred or paid by him that contributed to
the earning of the income taxable to him.
o If the GPP availed of the itemized deduction =
the partners may still claim itemized
deductions from said share, however, they
cannot claim the same expenses already
claimed by the GPP.
o If the GPP availed of itemized deductions, the
partners are not allowed to claim the OSD
from their share in the net income.
o If the GPP avails of OSD in computing its net
income, the partners comprising it can NO
longer claim further deduction from their
share in the said net income.
i. The partners' distributive share in the GPP is
treated as his gross income not his gross
sales/receipts and the 40% OSD allowed to
individuals is specifically mandated to be
deducted not from his gross income but
from his gross sales/receipts;
ii. The OSD being in lieu of the itemized
deductions allowed in computing taxable
income, it will answer for both the items of
deduction allowed to the GPP and its
partners.
Compliance requirements
Every GPP shall file in duplicate, a return of its income
(except items excluded from gross income and shall
set forth the following:
o The items of gross income and of deductions
allowed
o The names, TIN, addresses and shares of each of
the partners.
21.
Taxation of Estates and Trusts
a. Application
Applies to income of estates or of any kind of property
held in trust (separate taxable entities), including:
(1) Income accumulated in trust:
(a) For the benefit of unborn/ unascertained
person(s) w/ contingent interests
(b) Held for future distribution under the terms of
Exception
Employees trust which forms part of a pension, stock
bonus or profit-sharing plan of an employer for the
benefit of all or some of his employees:
(1)
If contributions are made to the trust by the
employer/employees, or both for the purpose of
distributing to such employees the earnings plus
principal of the fund accumulated by the trust in
accordance with such plan
(2)
c.
Determination of tax
(1) Consolidation of income of two or more trusts
(a) Requisites: Two or more trusts where:
The creator of each of the trust is the same
person.
The beneficiary of each of the trust is the
same.
(b) Effects:
The taxable income of all the trusts shall be
consolidated.
The tax provided shall be computed on such
consolidated income.
The proportion of said tax shall be assessed
and collected from each trustee based on the
taxable income of the trust administered by
him.
Page 62 of 165
Page 63 of 165
Timing of Withholding
Withholding tax shall be deducted and withheld by the
withholding agent when the income payment is paid or
payable or accrued or the income payment is accrued
or recorded as an expense or asset, whichever is
EARLIER.
b.
Kinds
FINAL WITHHOLDING
CREDITABLE
TAX
WITHHOLDING TAX
Amount of Tax Collected
Intended to equal or at
Full and final payment
least approximate the
of the income due
tax due from the said
from the payee on the
payee on the said
said income
income
Who is Primarily Liable
Liability rests primarily
Liability rests primarily
on the withholding
on the taxpayer
agent
Need to File a Return
Income recipient is still
required to file an
Payee is not required
income tax return
to file an income tax
and/or pay the
return for the
difference between
particular income
the tax withheld and
the tax due on the
income.
Coverage
All income subject Those income
payments covered by
to final taxes (i.e.
EWT [RR 2-98]
passive income,
Examples:
gross income of
NRA-NETB)
Professional fees,
talent fees
Fringe benefit
Informers reward Income payments
to partners of GPP
to persons
instrumental to
the discovery of
violations of the
NIRC and the
discovery and
seizure of
smuggled goods
Page 64 of 165
c.
Withholding on wages
A method of collecting the income tax at source upon
receipt of the income. It applies to all employed
individuals whether citizens or aliens, deriving income
from compensation for services rendered in the
Philippines. The employer is constituted as the
withholding agent.
(1) Requirement for Withholding
Every employer must withhold from compensation
paid to its employees.
No withholding of tax shall be required on
payments to employees who are classified as
Minimum Wage Earners [earning only the
Statutory Minimum Wage (SMW)].
An
employee
who
receives
additional
compensation and benefits in excess of the
allowable statutory amount of P30,000.00 other
than the SMW the entire amount, including the
SMW shall be subject to withholding tax
(2) Tax paid by recipient
Every person who is required to withhold the tax
from the compensation of an employee is liable
for the payment of such tax to the BIR. Such
liability stays even if the employee subsequently
pays the tax.
The payment of the tax by the employee does not
relieve the employer from the liability for
penalties and/or additions to the tax for failure
to deduct and withhold within the time
prescribed by law or regulations.
The employer will not be relieved of his liability for
payment of the tax required to be withheld
unless he can show that the tax has been paid by
the employee.
(3) Refunds or credits
When the total amount withheld exceeds the
annual tax due for the employee, the excess
shall be credited or refunded to the employee
not later than January 25 of the following year.
Page 65 of 165
Page 66 of 165
e.
Withholding Value-Added
Tax (WVAT)
Page 67 of 165
======================================
RESIDENCE
For estate tax purposes, residence refers to the permanent
home, the place to which whenever absent, for business or
pleasure, one intends to return, and depends on facts and
circumstances, in the sense that they disclose intent. Corre
v. Tan Corre, [100 Phil 321]
2. Nature
A tax imposed upon the privilege to transmit property at the
time of death; the tax should not be construed as a direct
tax on the property of the decedent although the tax is
based thereon.
3. Definition
An EXCISE TAX on the rights of transmitting property at the
time of death and on the privilege that a person is given in
controlling to a certain extent the disposition of his property
to take effect upon death.
4. Purpose or Object
5. Time and transfer of properties
The properties and rights are transferred to the successors
at the time of death. [Art. 777 of the Civil Code]
However, the Register of Deeds shall not transfer the title to
the properties without the Certificate of Authority to
Register (CAR) issued by the RDO evidencing the filing and
payment of the estate tax. [RR 24-02 dated November 15,
2002]
Real Property
FMV as determined by the Commissioner OR the FMV
shown in schedule of values fixed by the assessors,
whichever is HIGHER
a. No zonal value: use the FMV in the latest tax
declaration.
Shares of Stock
Listed shares: average of the highest and lowest
quotation at date of death (or the date nearest to
the date of death, if no quotation is available at
the time of death)
Page 68 of 165
c.
d.
Unlisted Shares
Common stocks: use BOOK VALUE
Preferred stocks: use PAR VALUE
e.
f.
g.
Personal Property
Valued at FMV
2.
a.
b.
a.
Decedents Interest
c.
Revocable Transfer
of
RECIPROCITY CLAUSE
Intangible personal property of a decedent who is nonresident alien, with a situs in the Philippines (Section 104)
The intangibles shall not form part of the gross estate if:
1. The decedent at that time of his death was a citizen and
resident of a foreign country which at the time of his
death
a. Did not impose a transfer tax or death tax of any
character
b. In respect of the intangible personal property of
citizens of the Philippines not residing in that
foreign country; or
Revocable Transfer
Property Passing Under General Power
Appointment
Proceeds of Life Insurance
Prior Interests
Transfers for Insufficient Consideration
Page 69 of 165
d.
Property Passing
Appointment (GPA)
Under
General
Power
of
a.
Ordinary Deductions
Funeral expenses
e.
i.
f.
Prior Interests
g.
Page 70 of 165
Substantiation REQUIREMENTS:
The expenses must be duly supported by receipts or invoices
or other evidence to show that they were actually incurred
[RR 2-2003]
ii.
Judicial Expenses
Judicial Expenses are expenses incurred during the
settlement of the estate but not beyond the last
day prescribed by law, or the extension thereof,
for the filing of the estate tax return.
Substantiation REQUIREMENTS:
notarized at the time incurred, except loans from
financial institutions where notarization not part of
business practice or policy
A statement under oath executed by the administrator
or executor of the estate reflecting the disposition of
the proceeds of the loan if said loan was contracted
within three (3) years prior to the death of the
decedent
iv. Claims against Insolvent Persons
Condition for DEDUCTIBILITY:
The claim against the insolvent person should be included as
part of the gross estate of the decedent.
v.
Unpaid Mortgage
Page 71 of 165
vii. Losses
d.
b.
Family Home
Page 72 of 165
e.
Standard Deduction
Medical Expenses
NOTE:
To be allowed deductions for a non-resident alien,
executor/administrator/any heir must include in the return
to be filed, the value of the gross estate not situated in the
Philippines
12. Exclusions from GROSS estate
Acquisitions and transfers expressly declared as exempt:
Merger of the usufruct in the owner of the naked title
Transmission or delivery of the inheritance or legacy by
the fiduciary heirs or legatee to the fiduciary
Transmission from the first heirs, legatees or donees in
b.
Page 73 of 165
Example:
A died leaving a fishpond; naked title to B, his son, and
usufruct to C, another son, for life. C died a year later.
The fishpond will be included in the gross estate of A,
being the owner. Upon the death of C, the usufruct will
be merged into the owner of the naked title B who shall
become the absolute owner thereof. The transfer from C
to B is exempt from estate tax.
c.
Example
A dies and leaves in his will a lot to his brother B who is
entrusted with the obligation to transfer the lot to C, a
son of A when A reaches legal age. B is the fiduciary heir
and C is the fideicommissary. The transfer from A to B is
subject to estate tax. But the transmission or delivery to
C upon reaching legal age shall be exempt from estate
tax.
d.
e.
======================================
KINDS OF DONATIONS:
Donation inter vivos: a donation made between living
persons; perfection is at the moment when the donor
Page 74 of 165
3.Nature
The subject of donors tax is the gift or donation. Article 725
of the Civil Code defines a gift or donation as an act of
liberality whereby a person disposes gratuitously of a thing
or right in favor of another who accepts it.
4. Purpose or object
The purpose of donors tax is to complement estate tax by
preventing tax-free depletion of the transferors estate
during his lifetime
It is also to prevent avoidance of income tax through the
device of splitting income among numerous donees, who
are usually members of a family or into many trusts, with
the donor thereby escaping the effect of the progressive
rates of income tax.
5. Requisites of valid gift or donation (CIDA)
b.
c.
Resident citizen
Non-resident citizen
Resident alien
Non-resident alien
Page 75 of 165
RECIPROCITY CLAUSE
Intangible personal property of a decedent who is nonresident alien, with a situs in the Philippines (Section 104)
The intangibles shall not form part of the gross gift if:
1. The donor at that time of his death was a citizen and
resident of a foreign country which at the time of his
death
a. Did not impose a transfer tax or death tax of any
character
b. In respect of the intangible personal property of
citizens of the Philippines not residing in that
foreign country; or
2.
FORMULA
Limitation A (per country):
Net gifts, foreign country X Phil. donors tax
Net gifts, world
-
Page 76 of 165
administration purposes
14. Person liable
xx
xx
xx
xx
xx
==========
On subsequent donation during the year
Gross Gift
Less: deductions
Net gift
Add: prior net gift
Aggregate net gifts
Multiply by: tax rate
Donors tax on aggregate gift
Less: prior donors tax paid
Donors tax on this date
xx
xx
xx
xx
xx
xx
xx
xx
xx
==========
TAX RATES
1. Donee is a Stranger to the Donor
Rate: 30%
A Stranger is a person who is not a:
1) Brother, sister (whether by whole or half-blood),
spouse, ancestor and lineal descendant
2) Relative by consanguinity in the collateral line
within the 4th degree of relationship
Page 77 of 165
2.
======================================
Page 78 of 165
Page 79 of 165
a.
b.
Export Sales
a. The sale and actual shipment of goods from the
Philippines to a foreign country
i.
Irrespective of any shipping arrangement
ii.
Paid for in acceptable foreign currency or its
equivalent in goods or services
iii.
Accounted for in accordance with the rules
and regulations of the BSP
b. Sale of raw materials or packaging materials by a VATregistered entity to a nonresident buyer
i.
for delivery to a resident local export-oriented
enterprise
ii.
Used in the manufacturing, processing,
packing, repacking in the Philippines of the said
buyers goods
iii.
Paid for in acceptable foreign currency
iv.
Accounted for in accordance with the rules
and regulations of the BSP
c. Sale of raw materials or packaging materials to exportoriented enterprise whose export sales exceed 70% of
total annual production
d. Sale of gold to the BSP
e. Those considered export sales under the Omnibus
Investment Code of 1987 and other special laws
Page 80 of 165
Page 81 of 165
b.
c.
d.
Page 82 of 165
a.
Sale, transfer, or exchange of imported goods by taxexempt persons: In the case of goods imported by VATexempt persons, entities or agencies which are
subsequently sold, transferred or exchange in the
Philippines to non-exempt persons or entities, the
latter shall be considered the importers thereof and
shall be liable for VAT due on such importation. The tax
due on such importation shall constitute a lien on the
goods, superior to all charges/liens, irrespective of the
possessor of said goods.
Page 83 of 165
b.
c.
d.
e.
f.
g.
b.
c.
d.
Page 84 of 165
e.
f.
g.
h.
i.
Page 85 of 165
q.
r.
s.
t.
u.
b.
from
VAT-exempt
Page 86 of 165
c.
v)
b.
c.
d.
e.
f.
h.
TAXPAYER
To the importer
Page 87 of 165
royalty or fee.
To the purchaser of real
property under:
Cash/Deferred Payment
Basis
Installment Basis
b.
Requisites:
A VAT-registered person purchases or imports capital
goods (which are depreciable goods for income tax
purposes)
If aggregate acquisition cost of all capital goods
(exclusive of VAT) in a calendar month exceeds P1
million, the input tax cannot be claimed outright but
should be subject to amortization over a period of 5
years or useful life of the capital goods, whichever is
lower.
If the aggregate acquisition cost of all capital goods in a
calendar month does not exceed P1 million, the input
tax may be claimed outright as credit against output
tax.
Aggregate acquisition cost refers to the total price
agreed upon for one or more assets acquired and not
the payments actually made during the calendar
month.
ii.
Page 88 of 165
ii.
NOTE:
input tax attributable to VAT-exempt sales shall not be
allowed as credit against the output tax but should be
treated as part of cost of goods sold
for persons engaged in both zero-rated sales and nonzero rated sales, the aggregate input taxes shall be
allocated ratably between the zero-rated sale and nonzero-rated sale
d.
On deemed sale
transactions
On payments made to nonresidents
Page 89 of 165
b.
c.
d.
b.
Page 90 of 165
i.
c.
ii.
NOTE:
The party required to withhold is the payor, regardless
of whether or not he is VAT-registered.
The VAT is passed on to the resident withholding agent.
The payor shall claim this as input tax upon filing of his
own VAT return, subject to the rule of allocation of
input tax.
Page 91 of 165
b.
Page 92 of 165
Other Updates
Any person registered shall, whenever applicable,
update his registration information with the RDO where
he is registered under any of the following instances:
a) A person's business has become exempt
b) A change in the nature of the business itself, i.e.
from sale of taxable goods and services to exempt
c) A person whose transactions are exempt from VAT
but voluntarily registered under VAT system
applies for cancellation of his VAT registration after
the lapse of 3 years after his registration
NOTE: optional registration as a VAT taxpayer of a
franchise grantee of radio and/or television
broadcasting whose gross receipts for the
preceding year did not exceed P10,000,000.00
shall be irrevocable;
d) A VAT-registered person whose gross sales or
receipts for three consecutive years did not exceed
P1,500,000.00. Upon updating his registration, the
taxpayer shall become liable to the percentage tax.
e) Any other changes/updates in registration
information
previously supplied, including
cancellation or change in any tax types.
Cancellation of Registration
Either cancellation of business registration and/or TIN.
The cancellation of business registration shall not
automatically cancel the TIN of the person.
TIN is cancelled upon:
a) Death of an individual;
b) Dissolution, merger or consolidation of juridical
person;
c) Discovery of a taxpayer having multiple TINs;
d) Payment of estate tax by the heirs, administrator or
executor or upon full settlement of the tax
liabilities of the estate.
The cancellation of business registration may be
granted on the following instances:
a) Closure/Cessation of business operation;
b) Dissolution of corporation/partnership;
c) Merger/Consolidation;
d) Death of an individual.
Page 93 of 165
Supplying TIN
Any person required to make, render or file a return,
statement or other document shall be supplied with or
assigned a Taxpayer Identification Number (TIN) which
he shall indicated in such return statement or
document filed with the BIR for his proper identification
for tax purposes.
In case a registered taxpayer dies, the administrator or
executor shall register the estate of the decedent a new
TIN.
In case of a nonresident decedent, the executor or
administrator of the estate shall register the estate
with the RDO where he is registered BUT if the
executor or administrator is not registered, registration
shall be made with the RDO having jurisdiction over his
legal residence.
Only one TIN shall be assigned to a taxpayer.
d.
Page 94 of 165
e.
f.
g.
======================================
A.
COMMON
CARRIER
By Land
By Sea
TRANSPORTING
Persons
Goods/cargo
Whether
transporting
person or
goods/cargo
KIND OF
CARRIER
Domestic
Domestic
Domestic
International
By Air
Domestic
Page 95 of 165
TAX
LIABILITY
3%
Percentage
Tax
12% VAT
Domestic
Trip 12%
VAT
International
Trip Zerorated
3%
Percentage
Tax
Domestic
International
B.
flight 12%
VAT
International
flight Zerorated
3%
Percentage
Tax
RECEIPTS
Interest, commission, discounts from
lending activities and financial leasing
bases on remaining maturities of
instruments
Maturity period is 5 years or less
Maturity period is more than 5
years
Dividends and equity shares in net
income of subsidiaries
Royalties, rentals of property
(real/personal), profits from exchange
and all other items treated as gross
income under Section 32
Net trading gains on foreign currency,
debt securities, derivatives, and other
similar financial instruments
TAX ON FRANCHISES
1. Franchises on radio and broadcasting companies
whose annual gross receipts of the preceding year does
not exceed P10 million
3% tax on the gross receipts derived from the
business covered by law granting the franchise
Radio and television broadcasting has an
irrevocable option to be registered as a VAT
taxpayer and pay the corresponding VAT
2 Gas and water utilities
2% tax on the gross receipts derived from the
business covered by the law granting the
franchise
D.
RATE
5%
1%
0%
7%
7%
NOTE:
1. The term banks refer to entities engaged in the
lending of funds obtained in the form of deposits. [RA
337, as amended General Banking Law of 2000]
2.
Quasi-bank refers to a non-bank financial
institution authorized by BSP to engage in quasi-banking
functions and to borrow funds from more than 19
lenders through the issuance, endorsement or
assignment with recourse or acceptance of deposit
substitutes.
3. The 20% final withholding tax on a banks passive
income forms part of the taxable gross receipts for the
purpose of computing the gross receipts tax (GRT).
E.
RATE
5%
1%
Page 96 of 165
F.
SOURCE
Cockpits
Cabarets, night or day clubs
Boxing exhibitions
Professional basketball games (in
lieu of all other percentage taxes)
Jai-alai and racetracks (whether or
not they charge for admissions)
I.
G.
H.
AMUSEMENT TAXES
TAX ON WINNINGS
Winnings or dividends
based on the actual
amount paid to winner
for every winning ticket
after deducting the cost
of the ticket
Winnings from double,
forecast/quinella and
trifecta bets
Prizes of owners of
winning horses
RATE
10%
4%
10%
J.
Owner of
winning race
horses
PERSON
LIABLE
Every person
who wins in
horse races
30%
SOURCE
NOTE:
Cooperative companies or associations are such as
are conducted by the members thereof with the money
collected from among themselves and solely for their
own protection and not for profit
RATE
18%
18%
10%
15%
Page 97 of 165
RATES
4%
2%
1%
======================================
Page 98 of 165
i)
j)
Cancellation of Registration
Either cancellation of business registration and/or TIN.
The cancellation of business registration shall not
automatically cancel the TIN of the person.
TIN is cancelled upon:
e) Death of an individual;
f) Dissolution, merger or consolidation of juridical
person;
g) Discovery of a taxpayer having multiple TINs;
h) Payment of estate tax by the heirs, administrator or
executor or upon full settlement of the tax
liabilities of the estate.
The cancellation of business registration may be
granted on the following instances:
e) Closure/Cessation of business operation;
f) Dissolution of corporation/partnership;
g) Merger/Consolidation;
h) Death of an individual.
Power of Commissioner to suspend the business operations
of any person who fails to register
Suspension of business operations: In addition to other
administrative and penal sanctions provided for in the
Tax Code and implementing regulations, the CIR or his
duly authorized representative may order suspension
or closure of a business establishment for a period of
not less than 5 days for any of the following violations:
e) Failure to issue receipts and invoices
f) Failure to file VAT return as required under the
provisions of Sec. 114 of the Tax Code
g) Understatement of taxable sales or receipts by
30% or more of his correct taxable sales or receipt
for the taxable quarter
h) Failure of any person to register as required under
the provisions of Sec. 236 of the Tax Code
i.
Page 99 of 165
Supplying TIN
Any person required to make, render or file a return,
statement or other document shall be supplied with or
assigned a Taxpayer Identification Number (TIN) which
he shall indicated in such return statement or
k.
2. Tax Returns
a.
Time of filing
Within sixty (60) days following the close of each of the
first three (3) quarters of the taxable year whether
calendar or fiscal year.
ii. Final adjustment return
Place of filing
Any Authorized Agent Bank (AAB) located within
the territorial jurisdiction of the Revenue District
Office where the taxpayer is required to
register/which has jurisdiction over the location of
the principal office of the CORPORATION filing
the return.
In places where there are no AABs with the
Revenue Collection Officer or Duly Authorized City
or Municipal Treasurer of the municipality or city
under the jurisdiction of the Revenue District
Office where the taxpayer is required to
register/which has jurisdiction over the location of
the principal office of the CORPORATION filing
the return.
Time of filing
On or before the 15th day of the fourth month following
the close of the taxpayer's taxable year.
iii. Taxable year of corporations
A corporation may employ either calendar year or
fiscal year as a basis for filing its annual income tax
return.
The corporation shall not change the accounting
period employed without prior approval from the
Commissioner in accordance with the provisions of
Section 47 of this Code.
iv. Extension of time to file return
The Commissioner may, in meritorious cases, grant
a reasonable extension of time for filing returns of
income, subject to the provisions of Section 56 of
this Code.
c.
VAT Return
(1) In General
a. Monthly VAT Declaration (BIR Form No. 2550M) and
Payment of VAT
b.
c.
iii.
Income Taxes
Payment, in general; time of payment
Pay as you file
In the case of tramp vessels, the shipping agents
and/or the husbanding agents, and in their
absence, the captains thereof are required to file
the return herein provided and pay the tax due
thereon before their departure.
Upon failure of the said agents or captains to file
the return and pay the tax, the Bureau of Customs
is hereby authorized to hold the vessel and
prevent its departure until proof of payment of the
tax is presented or a sufficient bond is filed to
answer for the tax due.
b.
Estate Taxes
Definition of deficiency
The amount by which the tax imposed by this Chapter
exceeds the amount shown as the tax by the executor,
administrator or any of the heirs upon his return; but
the amount so shown on the return shall first be
increased by the amounts previously assessed (or
collected without assessment) as a deficiency and
decreased by the amounts previously abated, refunded
or otherwise repaid in respect of such tax; or
If no amount is shown as the tax by the executor,
administrator or any of the heirs upon his return, or if
no return is made by the executor, administrator, or
any heir, then the amount by which the tax exceeds the
amounts previously assessed (or collected without
assessment) as a deficiency; but such amounts
previously assessed or collected without assessment
shall first be decreased by the amounts previously
abated, refunded or otherwise repaid in respect of such
tax.
(3) Payment before delivery by executor or administrator
No judge shall authorize the executor or judicial
administrator to deliver a distributive share to any
party interested in the estate unless a certification
from the Commissioner that the estate tax has
been paid is shown.
Payment of tax antecedent to the transfer of shares,
bonds or rights
There shall not be transferred to any new owner in
the books of any corporation, sociedad anonima,
partnership, business, or industry organized or
established in the Philippines any share, obligation,
bond or right by way of gift inter vivos or mortis
causa, legacy or inheritance, unless a certification
from the Commissioner that the taxes fixed in this
Title and due thereon have been paid is shown.
If a bank has knowledge of the death of a person,
who maintained a bank deposit account alone, or
jointly with another, it shall not allow any
withdrawal from the said deposit account, unless
the Commissioner has certified that the taxes
imposed thereon by this Title have been paid;
Provided, however, That the administrator of the
estate or any one (1) of the heirs of the decedent
may, upon authorization by the Commissioner,
withdraw an amount not exceeding Twenty
thousand pesos (P20,000) without the said
certification.
For this purpose, all withdrawal slips shall contain
a statement to the effect that all of the joint
depositors are still living at the time of withdrawal
by any one of the joint depositors and such
statement shall be under oath by the said
depositors.
(4) Duties of certain officers and debtors
Registers of Deeds shall not register in the Registry
of Property any document transferring real
property or real rights therein or any chattel
mortgage, by way of gifts inter vivos or mortis
causa, legacy or inheritance, unless a certification
from the Commissioner that the tax fixed in this
Title and actually due thereon had been paid is
shown, and they shall immediately notify the
Commissioner, Regional Director, Revenue District
Officer or Revenue Collection Officer or Treasurer
of the city or municipality where their offices are
located, of the nonpayment of the tax discovered
by them.
A debtor of the deceased shall not pay his debts to
the heirs, legatee, executor or administrator of his
creditor, unless the certification of the
Commissioner that the tax fixed in this Chapter
had been paid is shown; but he may pay the
executor or judicial administrator without said
certification if the credit is included in the
inventory of the estate of the deceased.
(5) Restitution of tax upon satisfaction of outstanding
obligations
If, after the payment of the estate tax, new
obligations of the decedent shall appear, and the
persons interested shall have satisfied them by
order of the court, they shall have a right to the
restitution of the proportional part of the tax paid.
c.
d.
Donors Taxes
Within thirty days (30) after the date the gift (donation)
is made.
A separate return will be filed for each gift (donation)
made on the different dates during the year reflecting
therein any previous net gifts made during the same
calendar year.
If
the
gift
(donation)
involves
conjugal/community/property, each spouse will file
separate returns corresponding to his/ her respective
share in the conjugal/community property. This rule
will also apply in the case of co-ownership over the
property.
VAT
(Please see discussion under Tax Returns)
4. Penalties
Suspension of business operations: In addition to other
administrative and penal sanctions provided for in the Tax
Code and implementing regulations, the Commissioner of
======================================
d. Jeopardy assessment
A jeopardy assessment is a tax assessment made by an
authorized Revenue Officer without the benefit of complete
or partial trial in light of the Revenue Officers belief that
assessment and collection of tax will be jeopardized by the
delay caused by the taxpayers failure to 1) comply with
audit and investigation requirements and 2) substantiate
any or all claims, deductions or credits in his return.
e. Tax delinquency and tax deficiency
Delinquency means:
Failure to pay:
1. tax due on any return required to be filed, or
2. tax due for which no return is required, or
3. A deficiency tax, or any surcharge or interest
thereon on the due date appearing in the
notice and demand of the Commissioner.
Deficiency means:
The amount by which the tax imposed
exceeds the amount shown as tax by the
taxpayer on his return. The amount shown on
the return shall be increased by the amounts
previously assessed as a deficiency, and
decreased by the amount previously abated,
credited, return or repaid.
If no amount is shown as tax by the taxpayer
on his return, or if no return is made, then the
amount by which the tax exceeds the amount
previously assessed (or collected without
assessment) as a deficiency, but such
previously assessed or collected without
assessment shall first be decreased by the
amounts previously abated, credited, return
or repaid.
3)
4)
5)
6)
2)
Examination of returns and determination of tax due (a) After a return has been filed the Commissioner or
his representative may authorize
i. Examination of any taxpayer; and
ii. Assessment of the correct amount of tax;
(b) Failure to file a return shall not prevent the
Commissioner from authorizing the examination of
any taxpayer;
Any tax or deficiency tax so assessed shall be paid upon
notice and demand from the Commissioner or his
representative.
Any return, statement or declaration filed in any
authorized office shall not be withdrawn; but within
THREE YEARS from date of filing, the same may be
modified, changed or amended; provided that no
notice for audit or investigation of such return, has in
the meantime, been actually served upon the taxpayer.
Failure to submit required returns and other
documents
(a) If a person:
i. Fails to file a required return or report at the
time prescribed or
ii. Willfully or otherwise files a false or
fraudulent return,
4)
5)
Authority to Register tax agents (a) The Commissioner shall Accredit and Register,
individuals and general professional partnerships
and their representatives who prepare and file tax
returns and other papers or who appear before the
BIR
(b) The Commissioner shall create national and
regional accreditation boards
Those who are denied accreditation may appeal
the same to the Sec. of Finance who shall rule on
the appeal within 60 days from receipt of such
appeal. Failure of the Sec. of Finance to rule on the
appeal within the said period shall be deemed as
approval for accreditation.
8)
Amendment of Return
If the amended return is substantially different from the
original return, the prescriptive period shall be counted from
the filing of the amended return. CIR v. Phoenix Assurance
Co., [L-19727, May 20, 1965]
b. Suspension of running of statute of limitations
1.
2.
3.
4.
5.
b. Interest
A) There shall be assessed and collected an Interest at
20% per annum on any unpaid amount of tax
B) OR higher rate prescribed by rules and regulations
from the date prescribed for payment until the
amount is fully paid.
C) FROM the date prescribed for its payment until the
full payment.
a) Deficiency Interest in the tax due
b) Delinquency Interest In case of failure to
pay:
4. tax due on any return required to be
filed, or
5. tax due for which no return is required, or
6. A deficiency tax, or any surcharge or
interest thereon on the due date
appearing in the notice and demand of
the Commissioner.
D) Interest shall form part of the tax.
NOTE: Pursuant to Section 249 of the Tax Code, the
imposition of interest on delinquency is mandatory.
Jamora v. Meer, [74 Phil. 22] The imposition of interest
is but a just compensation to the state for the delay in
the payment of the tax, and for the concomitant use by
the taxpayer of funds that rightfully should be in the
government's hands.[BIR Ruling No. 019-03]
E)
5. ASSESSMENT PROCESS
a. Tax audit
b. Notice of informal conference
A written notice informing a taxpayer that the
findings of the audit conducted on his accounting
records indicate that additional taxes or
deficiency assessment has to be paid.
If, after the culmination of an audit, a revenue
officer recommends the imposition of deficiency
tax assessment, this recommendation is
communicated by the BIR to the taxpayer during
an informal conference. The taxpayer shall have
15 days from the receipt of the notice of informal
conference to explain his side.
c. Issuance of preliminary assessment notice
Communication issued by the BIR informing a
taxpayer who has been audited of the findings by
the BIR. The assessment shall be in writing, and
should inform the taxpayer of the law and the
facts on which the assessment is made;
otherwise, the assessment is void.
There is a presumption of correctness and good
faith on the part of the CIR, thus, the burden lies
on the taxpayer. Otherwise, the finding of the CIR
will be conclusive and he will assess the taxpayer.
The same is true even if the CIR is wrong, if the
taxpayer does not controvert it. Cagayan Robina
Sugar Milling v. CA, [G.R. No. 122451, October
12, 2000]
Indeed, Section 228 of the Tax Code clearly requires that the
taxpayer must first be informed that he is liable for
deficiency taxes through the sending of a PAN. He must be
informed of the facts and the law upon which the
assessment is made. The law imposes a substantive, not
merely a formal, requirement. To proceed heedlessly with
tax collection without first establishing a valid assessment is
evidently violative of the cardinal principle in administrative
investigations - that taxpayers should be able to present
their case and adduce supporting evidence.
From the provision [of RR 12-99] it is clear that the sending
of a PAN to taxpayer to inform him of the assessment made
is but part of the "due process requirement in the issuance
of a deficiency tax assessment," the absence of which
renders nugatory any assessment made by the tax
authorities. CIR v. METRO STAR SUPERAMA, [G.R. 185371,
December 8, 2010]
6. PROTESTING ASSESSMENT
a. Protest of assessment by taxpayer
- Protested assessment
A protest is a vital document which is a formal
declaration of resistance of the taxpayer. It is a
repository of all arguments. It can be used in court in
case of administrative remedies have been exhausted.
It is also the formal act of the taxpayer questioning the
c.
B. COLLECTION
1. REQUISITES
2. PRESCRIPTIVE PERIODS
1.
2.
ii.
NOTE:
A tax lien is superior to judgment claim of private
person.
Attaches not only from the time the warrant was
served BUT from the time tax was due and demandable
(from the time when the assessment was made [Sec.
219].
8. COMPROMISE
a. Authority of the commissioner to compromise and
abate taxes
BIR Commissioner as expressly authorized by the NIRC
subject to certain conditions [Sec. 204, NIRC];
1.
2.
3.
b)
a)
TAX CREDIT
The government issues a Tax
Credit Certificate covering the
amount determined to be
reimbursable, which is applied
after proper verification against
any sum that may be due to the
taxpayer.
Tax Credit Certificate:
a) may be applied
against any internal
b)
c)
NOTES
There is no
payment until the
whole/entire tax
liability is fully
paid
If the taxpayer
merely made a
deposit
From
conversion of
the deposit to
payment
[Union
Garment v.
Coll]
Merely making a
deposit is not
equivalent to
payment until the
amount is actually
applied to the
purpose for which
it was deposited
From date it
falls due at the
end of the
taxable year
Gibbs v. CIR,
[G.R. No. L17406,
November 29,
1965]
At the earliest,
on the date of
the filing of the
adjusted final
return [ACCPA
v. CA]
From the date
the taxpayer
becomes
entitled to
refund and not
from the date
of payment
CIR v. Don
Pedro Central
Azucarera,
[G.R. No. L28467
February 28,
1973]
A taxpayer who
contributes to the
withholding tax
system performs
and extinguishes
his tax obligation
for the year
concerned.
Corporate
taxpayer
2.
4.
5.
6.
======================================
1. Fundamental Principles
The fundamental principles governing the exercise of the
taxing and other revenue-raising powers of LGUs are [ULIP]:
(a) Taxation shall be Uniform in each local government
unit;
(b) Taxes, fees, charges and other impositions shall
(EPuJuL):
1) be Equitable and based as far as practicable on the
taxpayer's ability to pay;
2) be levied and collected only for Public purposes;
3) not be unJust, excessive, oppressive, or
confiscatory;
4) not be contrary to Law, public policy, national
economic policy, or in the restraint of trade;
(c) The collection of local taxes, fees, charges and other
impositions shall in no case be Let to any private
person;
(d) The revenue collected shall Inure solely to the benefit
of the local government unit levying the tax, fee, charge
or other imposition unless otherwise specifically
provided herein; and,
(e) Each local government unit shall, as far as practicable,
evolve a Progressive system of taxation. [Sec. 130]
2.
3.
1.
1.
2.
3.
3.
2.
2.
Conditions:
a.
b.
Sources of Revenues
1.
2.
a.
b.
3.
4.
4.
1.
5.
2.
necessity of quorum
submission for approval by the local chief
executive
c. the matter of veto and overriding the same
d. the publication and affectivity
Public hearings are required before any local tax
ordinance is enacted [Sec. 187, LGC]
Within 10 days after their approval, publication in full
for 3 consecutive days in a newspaper of general
circulation. In absence of such newspaper in the
province, city or municipality, then the ordinance may
be posted in at least two conspicuous and publicly
accessible places [Sec. 189 LGC]
RATE
EXCEPTIONS
NOTES
It shall be the duty of the seller,
donor, transferor or administrator
to pay the tax imposed within 60
days from the date of the
execution of the deed or from the
date of the decedent's death.
Professionals exclusively
employed in the
government shall be
exempt from the
payment of this tax.
B. CITIES
NOTES:
The city may levy the taxes, fees, and charges which
the province or municipality may impose.
The tax rates that the city may levy may exceed the
maximum rates allowed for the province or
municipality by not more than 50% except the rates of
professional and amusement taxes. [Sec. 151]
C. MUNICIPALITIES
SCOPE: Municipalities may levy taxes, fees and charges not
otherwise levied by provinces. [Sec. 142]
I. Tax on Business
The municipality may impose taxes on the following:
a.
b.
c.
d.
e.
f.
g.
h.
b.
c.
b.
c.
a.
b.
c.
jurisdiction.
Toll Fees or Charges for the use of any public road, pier,
or wharf, waterway, bridge, ferry or telecommunication
system funded and constructed by the LGU concerned.
Except:
1. officers and enlisted men of the AFP and PNP on
mission,
2. post office personnel delivering mail,
3. physically-handicapped, and disabled citizens who
are sixty-five (65) years or older.
1.
2.
F. COMMUNITY TAX
1)
a.
b.
c.
b.
5)
A. Individual
1. When an individual subject to the comm. tax
acknowledges any document before a notary
public;
2. Takes the oath of office upon election or
appointment to any position in the government
service;
3. Receives any license, certificate or permit from any
public authority;
4. Pays any tax or fee;
5. Receives any money from any public fund;
6. Transacts other official business; or
7. Receives any salary or wage from any person or
corporation.
The presentation of the CTC shall not be required in
connection with the registration of a voter.
B. Corporation
1. receives any license, certificate or permit from any
public authority;
2. pays any tax or fee;
3. receives any money from any public fund; or
4. transacts other official business.
4.
1.
2.
3.
8. Taxpayers Remedies
a) Periods of assessment and collection of local taxes, fees
or charges
I. Administrative
1.
Before assessment
After Assessment
a.
b.
i)
By
administrative
actionthrough
distraint of personal property and by levy
upon real property
a. Distraint of personal property
b. Levy of real property, procedure
c. Further distraint or levy
d. Exemption of personal property from
distraint or levy
e. Penalty on local treasurer for failure to
Judicial action
Deficiency
Deficiency
Report on levy within 10 days from levy by the levying officer.
Seizure or confiscation of personal property belonging to the
person subject to tax or subject to lien in sufficient quantity to
satisfy the liability
or levy
The following property shall be exempt from distraint
and the levy, attachment or execution thereof for
delinquency in the payment of any local tax, fee or charge,
including the related surcharge and interest:
(a) Tools and the implements necessarily used by the
delinquent taxpayer in his trade or employment;
(b) One (1) horse, cow, carabao, or other beast of
burden, such as the delinquent taxpayer may select,
and necessarily used by him in his ordinary occupation;
(c) His necessary clothing, and that of all his family;
(d) Household furniture and utensils necessary for
housekeeping and used for that purpose by the
delinquent taxpayer, such as he may select, of a value
not exceeding Ten thousand pesos (P10,000.00);
(e) Provisions, including crops, actually provided for
individual or family use sufficient for four (4) months;
(f) The professional libraries of doctors, engineers,
lawyers and judges;
(g) One fishing boat and net, not exceeding the total
value of Ten thousand pesos (P10,000.00), by the lawful
use of which a fisherman earns his livelihood; and
(h) Any material or article forming part of a house or
improvement of any real property. [Sec. 185, LGC]
(v) Penalty on local treasurer for failure to issue
and execute warrant of distraint or levy
The Local Treasurer who:
1. Fails to issue or execute the warrant of distraint or
levy after the expiration of the time prescribed, or
2. Who is found guilty of abusing the exercise thereof
by competent authority
shall be automatically dismissed from the service after
due notice and hearing without prejudice to criminal
prosecution under the Revised Penal Code and other
applicable laws. [Sec. 177, LGC]
2.
NOTE: Unlike the NIRC, the Local Tax Code does not
contain any specific provision prohibiting courts from
enjoining the collection of local taxes. Such statutory
lapse or intent may have allowed preliminary injunction
where local taxes are involved. But it cannot negate the
procedural rules and requirements under Rule 58 of the
Rules of Court Valley Trading Co. v. CFI of Isabela
[1989]
======================================
Court action
a.
b.
c.
d.
Land
Buildings
Machinery and
Other improvements not otherwise exempted under
said code [Sec 232]
Commercial
Agricultural
Residential
Mineral
Industrial
6. Timberland
7. Special
2.
Under Sec. 238 of the LGC, idle lands may be exempt from
tax by reason of force majeure, civil disturbance, natural
calamity or any cause which physically or legally prevents
the owner of the property or person having legal interest
therein from improving the land
5. Collection of Real Property Tax
Steps in the Assessment and Collection of RPT
STEP 1 - DECLARATION OF REAL PROPERTY
1. Declared by Owner or Administrator (Secs. 202-203,
LGC)
If newly acquired property file with the assessor
within 60 days from date of transfer a sworn
statement containing FMV and description of
property
If improvement on real property file w/in 60 days
upon completion or occupation (whichever is earlier)
a sworn statement of FMV and description of
property
2. Declared by Provincial / City / Municipal Assessor (Sec.
204, LGC)
NOTE (1): If filing for exemption under Sec. 206 of LGC, the
person claiming exemptions must file with assessor
sufficient documentary evidence to support claim within 30
days from the date of declaration of property.
If the required evidence is not submitted within 30 days, the
property will be listed as taxable.
NOTE (2): If property is declared for the first time, Sec. 222
of LGC states that the property shall be assessed for back
taxes for not mare than 10 years prior to the date of initial
assessment. The taxes shall be computed on the basis of
applicable schedule of values in force during the
corresponding periods.
STEP 2: LISTING OF REAL PROPERTY IN THE ASSESSMENT
ROLLS (Secs. 205, 207, LGC)
1.
2.
FOR MACHINERY
1. For brand new machinery: FMV is equivalent to
acquisition cost
2. In all other cases:
FMV = Remaining eco. life X Replacement cost
Estimated eco. life
B. Judicial
7. Taxpayers Remedies
Advertise sale or auction (within 30 days after service of
warrant) by posting and publication
A. Administrative
1.
Protest
Sale
Pay
Pay the
the tax
tax under protest
protest
Denied
Appeal to SC (within 15
days from receipt of
adverse decision of CTA)
b.
B. Judicial
1.
2.
3.
4.
5.
2.
======================================
2.
3.
4.
======================================
2.
3.
4.
5.
6.
7.
3.
4.
5.
Arrastre charge
Wharfage due- counterpart of license, charged not for
the use of any wharf but for a special fund- Port Works
Fund
Berthing fee
Harbor fee
Tonnage due
======================================
EXCEPTIONS:
1. If provided under the TCC (e.g. conditionally-free
importation)
2. Exemptions granted to GOCCs with existing contracts,
commitments, agreements or obligations with foreign
countries
3. Exemptions of international institutions, associations or
4.
2.
3.
1.
2.
3.
======================================
Import duties which are modified by the President upon
investigation by the Tariff Commission and recommendation
======================================
======================================
Importation Terminates:
1. Upon payment of the duties, taxes, and other
charges due upon the articles, or secured to be
paid at the port of entry and legal permit for
withdrawal shall have been granted
2. In case the articles are free of duties, taxes and
other charges until they have legally left the
jurisdiction of customs [Sec. 1202]
Absolutely prohibited
a.
b.
c.
d.
e.
f.
2.
Weapons of war
Immoral/obscene or insidious articles
Articles for treason
Prohibited drugs/narcotics
Gambling paraphernalia/devices
Those prohibited under Special Laws [Sec. 102,
TCC]
Qualifiedly prohibited
======================================
======================================
CONDITIONS
For scientific, experimental, propagation, botanical, breeding,
zoological and national defense purposes
caught or gathered by vessels of Philippine registry
Not have landed in foreign territory, or if landed, solely for
transshipment
Bond= 1 x of ascertained duties, taxes and charges
Must be exported within 6 months
Phil must not have adequate facilities to make repair
Vessel was compelled by weather or casualty to go to a foreign
port of repair
Excludes value of article used for repair
to be re-exported upon completion of the repair, processing or
reconditioning
Bond = 1 x of ascertained duties, taxes and charges
======================================
2.
3.
4.
5.
b)
c)
d)
Imposed on foreign
articles:
a. Being imported
into, sold or is
likely to be sold in
the Phils.
b. At a price less than
its normal value
The importation or
sale of which might
injure an industry
producing like goods
in the Phils.
AMOUNT /RATE
DUMPING
Difference
between the
actual price
and the normal
value of the
article (extent
of the
underpricing)
COUNTERVAILING
Imposed upon foreign Equivalent to
goods enjoying
the bounty,
subsidy thus allowing
subsidy or
them to sell at lower
subvention
prices to the
detriment of local
products similarly
situated
MARKING
Imposed upon those
5% ad valorem
not properly marked
of articles
as to the place of
origin of the goods
DISCRIMINATORY
Imposed upon goods
coming from countries
that discriminate
against Philippine
products
IMPOSING
AUTHORITY
Special
Committee on
Anti-dumping
(Sec. of Financechairman;
members: Sec.
of DTI, Sec. of
Agriculture/ Sec.
of Labor)
Secretary of
Finance
Commissioner of
Customs
President of the
Philippines
======================================
======================================
2.
3.
4.
======================================
DRAWBACK: It is a device resorted to for enabling a
commodity affected by taxes to be exported and sold in
foreign markets upon the same terms as if it had not been
taxed at all. Uy Chiaco Sons v. Collector of Customs, [24
Phil 562]
IMPORT ENTRY: It is a declaration to the BOC showing
particulars of the imported article that will enable the
customs authorities to determine the correct duties. An
importer is required to file an import entry. It must be
accomplished at the moment the last cargo is disembarked
from the vessel.
Conditions for Grant of Drawback
1.
2.
3.
4.
5.
6.
7.
II. Judicial
This remedy is normally availed of when the tax lien is lost
by the release of the goods
1.
2.
2. Taxpayer
I. Administrative
1.
Protest
Any importer or interested party dissatisfied
with published value within 15 days from date
of publication, or within 5 days from the date
the importer is entitled to refund if payment is
2.
3.
Refund
A written claim for refund may be submitted
by the importer in abatement cases on
missing packages, deficiencies in the contents
of packages or shortages before arrival of the
goods in the Philippines, articles lost or
destroyed after such arrival, dead or injured
animals, and for manifest clerical errors and
Drawback cases where the goods are reexported. [Secs. 1701-1708 TCC]
Settlement of any seizure by payment of fine or
redemption
BUT this shall not be allowed in any case
where importation is absolutely prohibited or
the release would be contrary to law or when
there is an actual and intentional fraud [Sec.
2307, TCC]
These are cases which are solely with liability for customs
duties, fees, and other charges.
Before filing a protest there must first be a payment under
protest.
When Customs Protest Applicable
-
4.
Appeal
Within 15 days to Commissioner after
notification by collector of his decision [Sec.
2313, TCC]
II. Judicial
1.
Appeal
Within 30 days from receipt of decision of the
Commissioner or Secretary of Finance to the
division of the CTA [Sec. 2403, TCC, Sec. 7 R.A.
1125, as amended by Sec. 9 R.A. 9282]
Since Sec. 11 of RA 1125, as amended by Sec.
9 RA 9282 empowers the tax court to issue
injunctions, it would appear than an importer
may appeal without first paying the duties,
such as in seizure but not in protest cases.
2.
3.
1.
2.
3.
4.
5.
6.
Must be in writing
Must point out the particular decision or ruling of the
Collector of Customs to which to which exception is
taken or objection made;
Must state the grounds relied upon for relief;
Must be limited to the subject matter of a single
adjustment;
Must be filed when the amount claimed is paid or
within 15 days after the payment;
Protestant must furnish samples of goods under
protest when required.
3.
4.
IF DECISION IS ADVERSE TO
THE PROTESTANT
Appeal with the
Commissioner within 15
days from notice
Appeal with CTA division
within 30 days from notice
Appeal with the CTA en
banc
IF DECISION IS ADVERSE TO
THE GOVERNMENT
Automatic review by
Commissioner
3.
A.
B.
The Philippines is divided into various ports of entry entry other than thru port of entry will be SMUGGLING.
Smuggling
3.
2.
Over Vessels
a. An act is done in Phil. Waters which constitute a
violation of the tariff and custom laws.
b. A pursuit of such vessel began within the
jurisdictional waters which
i. may continue beyond the maritime zone, and
ii. The vessel may be seized on the high seas.
Over Imported Articles
a. There is a violation of the tariff and customs laws.
b. As a consequence, they may be pursued in the
Phils.
c. With jurisdiction over them at any place
therein for the enforcement of the law.
[Sec. 603, 2nd par., TCC]
IF DECISION IS NOT
FAVORABLE TO THE
AGGRIEVED OWNER OR
IMPORTER
Appeal by aggrieved owner
or importer
IF DECISION IS NOT
FAVORABLE TO THE
GOVERNMENT
Automatic review by Comm.
2.
Enclosures
dwelling house (there must be search warrant
issued by a judge)
vessels or aircrafts and persons or articles
conveyed therein
vehicles, beasts or persons
persons arriving from foreign countries
3.
4.
Unlawful importation;
Entry of imported or exported article by means of
any false or fraudulent practices, invoice,
declaration, affidavit or other documents;
Entry of goods at less than their true weights or
measures or upon a classification as to quality or
value;
Payment of less than the amount due.
======================================
======================================
2.
3.
4.
Doctrine discussion
The jurisdiction of the CTA is to review by appeal
decisions of the CIR on disputed assessments. When a
taxpayer does not protest an assessment, and appeals
the assessment itself to the CTA, his appeal is
premature. [CIR v. Villa]
A final demand letter for payment of delinquent taxes
may be considered a decision on a disputed or
======================================
3. REQUISITES
RIPENESS
An aspect of the "case-or-controversy" requirement is the
requisite of "ripeness."
TAX ON INDIVIDUALS
**a nonresident alien engaged in trade or business is an individual who shall come to the Philippines & stay therein for an aggregate period of more than 180 days during any calendar
year
TYPE OF INCOME
Interest from any currency bank deposit & yield or
any other monetary benefit from deposit
substitutes & from trust funds & similar
arrangements
Royalties (except on books & other literary works
& musical compositions)
Prizes > P10,000
Other winnings except PCSO & Lotto
Royalties on books & other literary works &
musical compositions
Prizes < P10,000
Winnings from PCSO & Lotto
Interest Income received by an individual (except a
nonresident individual) from a depositary bank
under the expanded foreign currency deposit
system
Interest income from long term deposit or
investment in the form of savings, common or
individual trust fund, deposit substitutes,
investment management accounts & other
investments evidenced by certification in such
form prescribed by the BSP
Pre-termination of such certificate before the 5th
year (i.e. 4 years to less than 5 years)
3 years to less than 4 years
less than 3 years
Cash and/or Property Dividends from a domestic
corp. or from a joint stock co., insurance or mutual
fund companies & regional operating headquarters
of multinational companies;
Share of an individual in the distributable net
income after tax of a partnership (except GPP);
Share of an individual in the net income after tax
NON-RESIDENT ALIEN
ENGAGED IN TRADE /
BUSINESS
20% Final Tax
NON-RESIDENT ALIEN
NOT ENGAGED IN
TRADE / BUSINESS
25% Final tax
Schedular rate
Schedular rate
Schedular rate
Schedular rate
exempt
7.5% Final Tax
exempt
exempt
Exempt
7.5% Final Tax
Exempt
Exempt
5% Final tax on
the entire income
12%
20%
10% Final Tax
N/A
N/A
N/A
25% Final tax
TYPE OF INCOME
of an assn., a joint account or a joint venture or
consortium taxable as a corp. of w/c he is a
member/co-venturer
Capital gains from sale, barter, exchange or other
disposition of shares of stock (of domestic corp.)
not traded in the stock exchange
For the first P100,000
On any amount in excess of P100,000
Capital gains from sale, exchange or other
disposition of real property located in Philippines,
classified as capital assets, including pacto de retro
sales & other forms of conditional sales
NON-RESIDENT ALIEN
ENGAGED IN TRADE /
BUSINESS
NON-RESIDENT ALIEN
NOT ENGAGED IN
TRADE / BUSINESS
5% Final tax on
net capital gains
realized during
the taxable yr:
10%
10%
10%
10%
10%
6% Final Tax on
the gross selling
price or current
fair market value
or zonal value
whichever
is
higher
Exempt from CG
tax
TAX ON CORPORATIONS
TYPE OF INCOME
Interest on currency bank deposits & yield or any other monetary
benefit from deposit substitutes & from trust funds & similar
arrangement
Royalties (similar within the Philippines)
Interest income from a depositary bank under the expanded foreign
currency deposit system (EFCDS)
CG from sale, barter, exchange or other disposition of shares of stock
(of domestic corp.) not traded in the stock exchange
For the first P100,000
On any amount in excess of P100,000
Income derived by depositary bank under the EFCDS from foreign
currency transactions with non-residents, offshore banking unites in
the Philippines, local commercial banks including branches of foreign
banks that may be authorized by the BSP to transact business with
FCDS units & other depositary banks under the EFCDS
Interest income from foreign currency loans granted by such
depository banks under said EFCDS to RESIDENTS
Inter-corporate dividends (from a domestic corp.)
DOMESTIC CORP
20% Final Tax
NON-RESIDENT FOREIGN
35%/30% Income Tax
N/A
TAX RATE
2 % on Gross Phil Billings
TYPE OF TAXPAYER
Nonresident cinematographic film owner, lessor or distributor (NOTE: Even to individuals)
Nonresident owner or lessor of vessels chartered by the Phil. Nationals
Nonresident owner or lessor of aircraft, machineries & other equipment
TYPE OF INCOME
TAX RATE
25% of gross income
4.5% of gross rentals, lease or charter fees
7.5% of gross rentals or fees
** Multinational company = a foreign firm/entity engaged in international trade with affiliates/subsidiaries/branch offices in the Asia Pacific Region & other foreign markets.
Goods released
Protest Granted
Protest Denied
Protest Affirmed
Protest Denied
Protest Affirmed
Assessment final
Assessment final
Assessment final
Protest Denied
TCC
GOVERNMENT REMEDIES
A. TO EFFECT TAX COLLECTION:
1. Tax Lien (Sec. 1204)
2. Administrative Fines and Forfeitures (Sec.
2530, 2531)
3. Reduction of customs duties/compromise
subject to approval of Sec. of Finance (Sec.
709, 2316)
4. Seizure, Search, Arrest (Sec. 2205, 2210, 2211)
5. Civil Action (Sec. 1204)
6. Criminal Action
B.
B.
C.
LGC
GOVERNMENT REMEDIES
LOCAL TAX
A. TO EFFECT TAX COLLECTION:
1. Tax Lien (Sec. 173)
2. Distraint and Levy (Sec. 174, 175)
3. Civil Action (Sec. 183)
4. Purchase of property by local government
units for want of bidder (Sec. 181)
Property distrained not disposed within 120 days from
date of distraint considered sold to the local
government for the amount of assessment made and to
that extent, the tax delinquency shall be cancelled. (Sec.
175)
B. TO CANCEL TAX LIABILITY:
May grant tax exemptions but may not condone or
remit taxes (Sec. 192)
2.
3.
NIRC
(Sec. 203)
b. 10 yrs when (1) no return is filed, (2) the
return is false or fraudulent with intent to
evade tax (from date of discovery) (Sec.
222)
Collection of tax:
a. 5 yrs from assessment or within the
period for collection agreed upon in
writing before expiration of the 5 yr.
Period (Sec. 222)
Criminal Liability
a. 5 yrs from commission or discovery of
violation, whichever of later (Sec. 281)
TCC
LGC
10 yrs in case of fraud or intent to
evade payment of taxes from discovery of
fraud or intent to evade payment (Sec.
194)
Collection
a. 5 yrs from day of assessment by
administrative or judicial action (Sec. 194)
b.
2.
NIRC
TCC
TAXPAYER REMEDIES
A. ADMINISTRATIVE:
1. Before Payment
a. Protest filing a petition for
reconsideration or reinvestigation within
30 days from receipt of assessment (Sec.
228)
b. Entering into a compromise (Sec. 204)
2. After Payment
a. Filing a claim for refund or tax credit
within 2 years from date of payment
regardless of any supervening cause (Sec.
229)
TAXPAYER REMEDIES
A. ADMINISTRATIVE:
1. Protest
a. Any importer or interested party if
dissatisfied with published value within 15
days from date of publication or within 5
days from the date the importer is entitled
to refund if payment is rendered
erroneous or illegal by events occurring
after the payment
b. Taxpayer within 15 days from
assessment. Payment under protest is
necessary (Sec. 2308, 2210)
2. Refund
a. A written claim for refund may be
submitted by the importer in abatement
cases on missing packages, deficiencies in
the contents of packages or shortages
before arrival of the goods in the
Philippines, articles lost or destroyed after
such arrival, dead or injured animals, and
for manifest clerical errors; and
b. Drawback cases where the goods are reexported. (Sec. 1701-1708)
3. Settlement of any seizure by payment of fine
or redemption BUT this shall not be allowed
in any case where importation is absolutely
prohibited, or the release would be contrary to
law, or when there is an actual and intentional
fraud (Sec. 2307)
4. Appeal within 15 days to Commissioner after
notification by collector of his decision (Sec.
2313)
B.
JUDICIAL:
1. Civil Action
a. Appeal within 30 days from receipt of
decision on the protest or from the lapse
of 180 days inaction of the Commissioner
to the CTA (Sec. 228)
b. Action to contest forfeiture of chattel
(Sec. 231)
c. Action for damages (Sec. 227)
2.
Criminal Action
1. Against erring BIR officials and employees
2. Injunction when the CTA in its opinion
the collection by BIR may jeopardize
taxpayer. Court may require deposit of an
amount or surety bond for not more than
double the amount. (Sec. 1, RA 1125)
B.
Judicial
1. Appeal to the CTA division within 30 days
from receipt of decision of the Commissioner
of Secretary of Finance (Sec. 2403 TCC, Sec. 7
RA 1125)
2. Action to question the legality of seizure
LGC
having legal interest therein is out of the
country or otherwise cannot be located.
TAXPAYER REMEDIES
LOCAL TAX
A. ADMINISTRATIVE:
1. Before Payment
a. Appeal any question on
constitutionality or legality of tax
ordinance within 30 days from effectivity
thereof to Secretary of Justice (Sec. 187)
b. Declaratory relief whenever applicable
2. After assessment
a. Protest within 60 days from receipt of
assessment (Sec. 195). Payment under
protest not necessary.
b. Payment and subsequent refund or tax
credit within 2 yrs from payment of tax
to local treasurer (Sec. 196)
c. Right of redemption 1 yr from the date
of forfeiture (Sec. 181)
Real Property Tax
1. Protest payment under protest is required.
Filed within 30 days (From date of payment) to
provincial, city or municipal treasurer
2. Refund or tax credit within 2 years from the
date the taxpayer is entitled thereto (Sec. 253)
3. Redemption of real property within 1 yr from
date of sale (Sec. 261)
4. Appeal within 60 days from assessment of
provincial, city or municipal assessor to LBAA
(Sec. 226)
Within 30 days from receipt of
decision of LBAA to CBAA
In case of denial of refund or credit,
appeal to BAA as in protest case
LOCAL TAX
B. JUDICIAL:
1. Court action within 30 days after receipt of
decision or lapse of 60 days of Secretary of
Justices inaction (Sec. 187)
Within 30 days from receipt when
NIRC
3.
TCC
Abandonment (Sec. 1801)
LGC
protest of assessment is denied
If no action is taken by the treasurer in
refund cases and the two year period
is about to lapse (Sec. 195)
If remedies available do not provide
plain, speedy and adequate remedy.
2. Action for declaratory relief
3. Injunction if irreparable damage would be
caused to the taxpayer and no adequate
remedy is available.
REAL PROPERTY TAX
1. Court Action appeal of CBAAs decision to
CTA
2. Suit assailing validity of tax; recovery of refund
of taxes paid (Sec. 64 PD 464)
3. Suit to declare invalidity of tax due to
irregularity in assessment and collection (Sec.
64 PD 464)
4. Suit assailing the validity of tax sale