General Principles of Taxation

Part I - Definitions, Distinctions and Classifications

Part II – Limitations on the Power to Tax
Part III – Interpretation of Tax Laws

Part I Definitions and Classifications

Define Taxation

“Taxation” is the necessary power of the sovereign to raise revenue, through the enactment of laws that
impose charges upon persons, property and activity under its jurisdiction, to defray the expenses of the
government.

What are essential elements of taxation?

Taxation is:
1. a necessary power of the state;
2. inherent in, or is an attribute of sovereignty;
3. essentially legislative

The Income Tax

Introductory Concepts

How are the systems of taxing income of various countries classified?

1. Global (Unitary System): All types of income derived from whatever and wherever sources are
treated exactly in the same way.
2. Schedular: Income is divided into different groups (called “schedules”) and each schedule is
given separate treatment, usually in terms of tax rate.