omp, mm ZErAcsST- IO 2017 BAR EXAMINATION Law ON TAXATION PART |. GENERAL PRINCIPLES OF TAXATION Definition, Concept and Purpose of Taxation Nature and Characteristics of Taxation Power of Taxation as distinguished from Police Power and Power of Eminent Domain Theory and Basis of Taxation . Principles of a Sound Tax System . Scope and Limitations of Taxation 1. Inherent limitations 2. Constitutional limitations Stages or Aspects of Taxation Definition, Nature and Characteristics of Taxes Requisites of a Valid Tax Tax as distinguished from other forms of exactions Kinds of Taxes Situs of Taxation Construction and Interpretation of 1. Tax Laws 2. Tax Exemption and Exclusion 3. Tax Rules and Regulations 4. Penal provisions of Tax Laws 5. Non-retroactive application to Taxpayers Sources of Tax Laws Doctrines in Taxation . Prospectivity of Tax Laws Imprescriptibility of Taxes . Double Taxation Power to Tax involves Power to Destroy Escape from Taxation a. Shifting of Tax Burden b. Tax Avoidance c. Tax Evasion Exemption from Taxation . Doctrine of Equitable Recoupment . Compensation and Set-off Compromise and Tax Amnesty ORONS O©DND Page 1 of 162017 Bar Examinations Taxation Law 10. Taxpayer's Suit a. Nature and Concept b. As distinguished from a citizen's suit c. Requisites of a Taxpayer's suit challenging the constitutionality of a tax measure or act of a taxing authority; concept of Jocus standi, doctrine of transcendental importance and ripeness for judicial determination PART Il. NATIONAL TAXATION A. Organization and Functions of the Bureau of Internal Revenue 4. Rule-making authority of the Secretary of Finance a. Authority of the Secretary of Finance to promulgate tules and regulations b. Specific provisions to be contained in rules and regulations 2. Jurisdiction, Power and Functions of the Commissioner of Internal Revenue a. Powers and duties of the Bureau of Internal Revenue b. Power of the Commissioner to interpret tax laws and to decide tax cases. c. Non-retroactivity of rulings B. National Internal Revenue Code (NIRC) of 1997, as amended 1. Income taxation a. Definition, Nature and General Principles a.1 Income Tax systems — Global, Schedular and Semi-schedular or Semi-Global Taxpayer's income a.2 Features of the Philippine Income Tax Law a.3 Criteria in imposing Philippine income tax a.4 Types of Philippine income tax a.5 Taxable period a.6 Kinds of taxpayers b. Income Tax b.1. Definition, Nature and General principles b.2 Income b.2.1 Definition and nature b.2.2 When income is taxable i, Existence of income Page 2 of 162017 Bar Examinations Taxation Law b.3 b.4 li, Realization of income iii. Recognition of income iv. Cash method of accounting versus Accrual method of accounting b.2.3 Tests in determining whether income is earned for tax purposes Realization test H |. Claim of right doctrine or doctrine of ownership, command or control Economic benefit test, doctrine of proprietary interest iv. Severance test v. All events test b.2.4 Classification of income b.2.5 Situs of Income Taxation Gross Income b.3.1 Definition b.3.2 Concept of income from whatever source derived b.3.3 Gross income vis-a-vis net income vis-a-vis taxable income b.3.4 Sources of income subject to tax b.3.5 Classification of income subject to tax i, Compensation income ii. Fringe benefits iii. Professional income iv. Income from business v. Income from dealings in property vi. Passive investment income vii. Annuities, proceeds from life insurance or other types of insurance viii. Prizes and awards ix. Pensions, retirement benefit or separation pay x. Income from any source whatever b.3.6 Exclusions from gross income i. Rationale for the exclusions ii. Taxpayers who may avail of the exclusions iii, | Exclusions distinguished from deductions and tax credit iv. Exclusions under the Constitution v. Exclusions under the Tax Code vi. Exclusions under special laws. Deductions from Gross Income Page 3 of 16