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SAN BEDA UNIVERSITY


College of Arts and Sciences
Mendiola , Manila

TAXATION LAW II
2 nd Se m es te r, A .Y. 2 0 18 - 2 0 19

LECTURER : SCHEDULE :
Atty . Sa rah Jean e C. Antolin Wedn esday, Thursday and Friday
sarahjea necardona @ya hoo .com 3 : 00PM - 6 : 00PM

Suggested References :
Tax Less Made Taxing , Atty . Ingles
Basic Approach to Income Taxation , Justice Japar Dimaampao
Taxation Volume III, Transfer Taxes and Value Added Tax by Abelardo
Domondon 2010 Edition

INCOME TAXATION
COURSE OUTLINE

I.
ORGANIZATION AND FUNCTIONS OF THE
BUREAU OF INTERNAL REVENUE
(Secs . 1-22, NIRC as amended by Section 3 and 4,
Republic Act No . 10963, Tax Reform for Acceleration and Inclus ion)

1. Powers and Duties of the Bureau of Internal Revenue


2. Chief Officials of the Bureau of Internal Revenue
3. Power of the Commissioner to Interpret Tax Laws and Decide Tax Cases
a. Rulings of First Impressions
b. Rulings with Established Precedents
c. Revenue Memorandum Rulings
d. Revenue Memorandum Circulars
e. Revenue Memorandum Orders
f. Revenue Audit Memorandum Orders
g. Revenue Delegation of Authority Orders
h. Revenue Administrative Orders
4. Power of the Commissioner to Make Assessments and Prescribe Additional
Requirements for Tax Administration and Enforcement
a. Examination of Returns and Determination of Tax Due
b. Authority to Conduct Inventory -taking , Surveillance and to Prescribe
Presumptive Gross Sales and Receipts
b.1. Net Worth Method
b.2. Best Evidence Rule
b.3. Correlate : Section 43, NIRC
c. Authority to Make Assessments
c. l . When necessary
c.2. When not necessary
c.3 . Correlate : Secs 228 and 254, NIRC
c. Authority to Terminate Taxable Period
d. Authority to Prescribe Real Property Values
e. Authority to I nquire into Bank Deposi t Accou nts
f. Authority to Accredit and Register Tax Agents 1

g. Authority to Prescribe Add it ional Procedural or Documentary j


Requ irements
Cases :

i) Eug e nio Pe r e / v s, (, ()U t t <Jf In/ /\111,<-, ;:il c. (<11' ti,, I 1,, ,,, , / , M.r; / ~' , ,
1 9 5 13)
ii) C o mmiss io n e r o f rntf'r n v l ,_,~::: v1-~n1Jf ~ J t , IMmY M H,'.J f / , r(/ A /) i l 1 , r
,Jrr.<Jr 1
CTA EB No . 1306 ( CT A CiJ Sf! N(J , Fr~(J I ), t ,l<, V' ; rt1t11·, 11 , / t J l ',
iii) Co mmi ss ion e r o f Jn t1-: rn1JI f 1 cv FrnU ' ! v ·, J.1 ,, ~,,hf ~-' 1;~tt / 1; h l)
Developm ent Co rp ., (G.J-< . No , l2B '11'? Jun ,~ '/9 , 1(J(Jf.JJ
iv) Un gab vs. Cusi ( G. R. No . L 41 9 J 9 24 rJJ ;;y -~() , 19~~(J)
v) Splash Co rporati on vs. Co mmlsslont:r of l ntt~rnbl ~'!'lf~riu r_; CTI· ff1r";t
Divi sion ) Case No . B4B 3 promulgated 1rj Augu~t 2(J17
vi) Mod ern Imaging Solution s, I nc,, vs. Comrni ssloru::r rJf 1nt:l.cmol
Revenu e CTA (Second) Divi sion Case B9H7, promulgated 21 Mc,rch 2017

5. Authority of th e Commissioner to Delegate Power


6. Duty of the Commissioner to Ensure the Provision and Distribution of Forms,
Receipts, Certificates, and Applian ces, and th e Acknowl edgment of Payment
of Taxes

6.a. Memorize BIR Form Nos. and Form Titl e (check BIR website
https: //www .bir .gov. ph/index,obp/bir-forms,html)
7 . Internal Revenue Districts
8. Agents and Deputies for Collection of Nationa l Internal Revenue Taxes
8. Duties and Authorities of Revenue District Officer and Revenue Officer
9. Other Function s of th e Bureau of In terna l Pevenur.: and it s Offic1:;rr.,
9.a. Sections 14-20, NIR C
10. National Internal Revenu e Taxes
10.a. Distinguished with Loca l Taxes
11. Definitions (Section 22 , in clu sive)
11.a . Memorize :
i) corporation
ii) nonresident citize n
iii) withholding agent
iv) taxable year
v) fiscal year
vi) ordinary income
vii) regional or area headquarters
viii) regional operating headquarters

II .
GENERAL PRINCIPLES AND INCOME
FROM SOURCES WITHIN THE PHILIPPINES
(Section 23 and 42, NIRC)

12 . Memorize : Section 23 , NIRC


13 . Correlate : Section 22, NIRC definition s of:
i) domestic
ii) foreign
iii) nonresident citizen
iv) resident alien
v) nonresident ali en
vi) resid ent foreign co rporation
vii) nonresi dent foreign co rporati on j
14 . Section 42 , NIRC
14 .a. Classification of Inco me as to Source
J.2 in fu ll f ~9 m sources within the Phili ppin es __J
Ii) In fu ll from so urces o uts id e th e Phi l ippin es
iii) part l y from so urces within and part l y for outs ide th e
Ph il ippin es
L4 . IJ . Ru les a s to s o u r ces of in co m e :
I) I nte r es ts .
ii) Dividends (from dom es ti c co r p orat io n a nd fro m f o r e ig n
corpora tion)
iii) Compensa tio n for services
iv) Re nta ls and Ro yalties
v ) Sa le of Rea l Property
v i) Sa le of Perso nal Property
Cases :
i) National Development Corporation vs . Commissioner of Internal
Revenu e June 30, 1987
ii) Commissioner of Internal Revenue v. Marubeni Corporation, G.R.
No. 137377, December 18, 2001
iii) Philippine Guaranty Co., Inc. v. Commissioner of Internal Revenue,
G.R. No . L-2707, ApriI30, 1965
iv) Alexander Howden & Co . Ltd v. Commissioner of Internal Revenue,
L-19392 , April 14, 1965
v) Philamlife v . Court of Tax Appeals and Commissioner of Internal
Revenue, CA-GR SP No . 31283, April 25, 1995

III.
SALIENT FEATURES OF THE PRESENT INCOME TAX SYSTEM AND
OTHER RELATED CONCEPTS

15. Individual Income Taxation


15.a. Schedular Tax Treatment
15.b. Net Income Taxation
15.c. Gross Income Taxation
15.d. Income Tax Situs
16. Corporate Income Taxation
16.a. Global Tax Treatment
16.b. Net Income Taxation
16.c. Gross Income Taxation
16.d. Income Tax Situs
16.e. Calendar Period
16.f. Fiscal Period
16.g. Short Period
16.h. Instance when a taxpayer may have a short taxable period
17. Common Features
17.a. Pay as you File System
17.b. Creditable Withholding Tax [Section 57(8), NIRC]
17.c. Final Withholding Tax [Section 57(A), NIRC, as amended by
Section 17 of Republic Act No. 10963, Tax Reform for Acceleration and
Inclusion Act]
17.d. Revenue Regulations 2-98

IV.
CLASSIFICATIONS OF TAXPAYERS
18. Individual
19. Corporation
19.a. Distinguished from :
!~ Ge_
neral Professional Partnerships
!!~ Joint Venture (Read : Revenue Regulations No . 10-2012)
111) Co-ownerships
2
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3
'i I , 1:-'·i l.ul:U (Suctlon !J &0 ~66, Inclusive)

Coses:
I) Phll Qx Mlnln~J Corporation vs, Commissioner of Internal Revenue
(G.I~. N<J . 14H:I.H7, Ap ril J6, 2008 )
11) Ta n V(i . Del Rosurlo, Jr ., et al., and companion cases (G .R. No.
l09 2H9 October 3, 1994)
Ill) OIJlllos, Jr. vs. Cornrnl s5ioner of Internal Revenue (G .R. No. L-
6Hl lB October 29, :19BS)
Iv) Pa scunl v5. Comm issioner of Internal Revenue (G .R. No. 78133
October .18, :I. 988)
v) Ona vs. Commissioner of Internal Revenue (G .R. No. L- 19342 May
25, l 972 )
vi) Evang elista vs. Co llector of Internal Revenue (G .R. No . 9996, Oct.
15, 1957)
vii) Afl sco Insurance Corporation vs . Court of Appeals (G .R. No.
1126 75 January 25, 1999)

v.
INCOME, REQUISITES, NATURE AND RELATED CONCEPTS

15 . Definition
16. Income vs . Capital
17 . Income from Whatever Source
18. Income Tax, Basis, Nature and Functions
18.a. Protection Theory
18.b. Theory of Favorable Business Climate
19. Requisites for Income to be Taxable
20 . Constructive Receipt of Income
21. Cash Method of Income Recognition
22 . Accrual Method of Income Recognition
23 . Tests in Determining Whether Income is Earned for Tax Purposes
23 .a. Realization Test
23 .b. All - Events Test
23 .c. Claim of Right Doctrine
24 .d. Severa nce Test Theory
24 .e. Control Test

Cases:
i) Madrigal vs . Rafferty (G.R. No. L- 12287 August 7, 1918)
ii) Fisher vs . Trinidad (G.R. No. L- 17518 October 30, 1922)
iii) Javier vs. Court of Appeals (G.R. No. 78953 July 31, 1991)
iv) North American Oil Consolidated vs. Burnet, (286 U.S. 417, May
23, 1932)
v) Fernandez vs. Commissioner of Internal Revenue (G.R. No. L-
21551, September 30, 1969)
vi) Limpan Investment Corporation vs. Commissioner of Internal
Revenue (G.R. No . L-21570, July 26, 1966)
vii) Commissioner of Internal Revenue vs. Isabela Cultural Corporation
(G.R . No. 172231 , February 12, 2007)
viii) Commissioner of Internal Revenue vs. Tours Specialists, G.R. No.
66416, March 21 , 1990

VI.
GROSS INCOME AND EXCLUSIONS FROM GROSS INCOME
(Sections 31 and 32 , NIRC, as amended by
Sections 8 and 9 of Republic Act No. 10963,
Tax Reform for Acceleration and Inclusion)
24 . Gross Income
19.a. Distinguished from :
i) Net or Taxable Income
ii) Taxable Compensation Income
iii) Income Tax Due
iv) Income Tax Payable
25 . Gross Income Taxation vs . Net Income Taxation
26 . Items of Gross Income
27 . Exclusions from Gross Income
27 .a. Proceeds from life insurance
27 .b. Amount received as return of premium
27 .c. Gifts, bequests and devises
27 .d. Compensation for injuries or sickness
27 .e. Income exempt under treaty
27.f. Retirement benefits, pensions, gratuities, etc .
27 .g. Miscellaneous items

Cases :

i) Gutierrez vs . Collector of Internal Revenue (CTA Case No. 65,


August 31 , 1965)
ii) Commissioner of Internal Revenue vs. Mitsubishi Metal Corporation
(G.R. No. L-54908 January 22, 1990)

VII.
INDIVIDUAL INCOME TAXATION
(Sections 24-26 and 33, NIRC as amended by
Sections 5, 6 and 10 of Republic Act No. 10963,
Tax Reform for Acceleration and Inclusion)

28 . Sources of Income
28.a . Compensation Income
i) Tax - Exempt Compensation Income
-Co nveni ence of the Employer Rule
-De Minimis Benefi ts (Revenue Regulations 5-2011 , as
amended)
ii) Special Rules on Fringe Benefits
iii) Allowable Deductions from Gross Compensation Income
28.b. Business/Trade/Professional Income
28.c. Passive Investment Income
28.d. Gains from Dealings in Property
29. Rates of Income Tax on Individual Citizen and Individual Resident Alien
of the Philippines
30. Rate of Tax on Certain Passive Income
29 .a. Interests, Royalties, Prizes and Other Winnings
29.b. Cash and/or Property Dividends
29 .c. Capital Gains from Sale of Shares of Stock Not Traded in the
Stock Exchange
29 .d. Capital Gains from Sale of Real Property
29 .e. Exception from Capital Gains from Sale of Real Property
31. Tax on Non-Resident Alien Individual
32 . Rate of Tax on Certain Passive Income
31.a . Interests, Royalties, Prizes and Other Winnings
31 .b. Cash and/or Property Dividends
31.c . Capital Gains from Sale of Shares of Stock Not Traded in the
Stock Exchange
31.d . Capital Gains from Sale of Real Property
31.e . Exception from Capital Gains from Sale of Real Property
33 . Tax on Non -Resident Alien Individual Not Engaged in Trade or Business
Within the Philippines
34 . Alien Individual Employed by Regional or Area Headquarters and
Reg ional Operating Headquarters of Multinational Companies
35 . Alien Individual Employed by Offshore Banking Units
36 . Alien Individual Employed by Petroleum Service Contractor and
Subcontractor
37 . Tax Liability of Members of General Professional Partnerships

Cases:
i) Commissioner of Internal Revenue vs . Court of Appeals (G .R. No.
108576, January 20 , 1999)
ii ) Commissioner of Internal Revenue vs . Manning (G .R. No . L- 28398,
August 6, 1975)

VIII.
CORPORATE INCOME TAXATION
(Section 27 -30 , NIRC, as Amended by Section 7 of Republic Act No .
10963, Tax Reform for Acceleration and Inclusion)

38 . Major Categories of Corporation for Income Tax Purposes


38 .a. Domestic Corporation
38 .b. Special Domestic Corporation
i) Private Educational Institution
ii) Non-profit Hospital
38 .c. Resident Foreign Corporation
38 .d . Non -Res ident Foreign Co rporation
39 . Minimum Corporate Income Tax ( Read : Revenue Regu lations 12-2007)
40 . Improperly Accumu lated Earnin gs Tax (Read : Revenue Regulations 2-
2001)
41. Other Corporate Ta xes
41.a . Common Ta x Ra tes
i) Capital ga in from sal e of share of stock not listed and traded
through stock exchange
ii) Capital ga in from sale of share of stock listed and traded
through stock exchange
41.b . Domestic Corporation
i) Tax on Gross Income
ii) Tax on Passive Investment Income
41 .c. Resident Foreign Corporat ion
i) Branch Profit Remittance Tax /
41.d .) Non -Resident Foreign Corporation
i) Interest on foreign loan
ii) Dividend received from domestic corporation
42 . Tax-Exempt Corporations under the NIRC

Cases:
i) Commissioner of Internal Revenue vs. St. Luke's Medica l Center,
Inc. (G.R. No . 2035 14, February 13, 20 17)
ii) CREBA vs. Rom ul o (G.R. No. 160756, March 9, 20 10)
iii) Cyanamid Phili ppines, Inc, vs. Court of Appeals (G.R. No. 108067
January 20, 2000)
iv) Man ila Wine Merchants, Inc. vs . Commissioner of Internal Revenue
(G .R. No . L- 26145, February 20 , 1984)
v) Commissioner of Internal Revenue vs. Procter & Gamble Philippine
Manufacturing Corporation (G .R. No. L-66838 De<:ember 2, 1991 )
IX .
DEDUCTIONS FROM GROSS INCOME
(Section 34, 36, 37 , 38 and 61 , NIRC as amended by Section 11 of
Republic Act No . 10963, Tax Reform for Acceleration and Inclusion)

43 . Deductions in general
44 . Kinds of Deductions
44 .a. Optional Standard Deduction
44 .b. Special Ded uction
44 .c. Itemized Deduction
44 .d. Taxpayers who cannot avail of deductions from gross income
whether OSD or Itemized Deductions
45 . Itemized Deductions
45 .a. Ordinary and Necessary Expenses
45 .b. Interest
45 .c. Taxes
45 .d. Losses
45 .e. Bad Debts
45.f. Depreciation of Property
45 .g. Depletion of Oil and Gas well s and mines
45 .h. Charitable and other contributions
45 .i. Research and Development
45 .j . Pension trust contributions of employees
45 .k. Premium payments on health and/or hospitalization insurance
46 . Special Deductions
46 .a. Private proprietary educational institutions (Section 34 (A) (2) ,
NIRC)
46 .b. Insurance companies (Section 37 , NIRC)
46 .c. Estates and Trusts (Section 61 , NIRC)
47 . Optional Standard Deduction (OSD)
48 . Items Not Deductible
48 .a. Personal , living or family expenses
48 .b. Amount paid for new buildings of for permanent improvements
48 .c. Amount expended in restoring property
48 .d. Premiums paid on life insurance policy covering the life of any
officer financially interested
48 .e. Interest expense, bad debts and losses from sales of property
between related parties
48 .f . Losses from sales or exchange of property
48 .g. Losses from wash sales of stocks or securities .

Cases:
i) Aguinaldo Industries Corp v . Commissioner of Internal Revenue ,
G.R. No . L- 29790, February 25 , 1982
ii) Commissioner of Internal Revenue v. General Foods (Phils.) Inc.
G.R. No . 143672, April 24, 2003
iii) Esso Standard Eastern Inc. V. Commissioner of Internal Revenue ,
G.R. Nos . L- 28508 -9, July 7, 1989
iv) Atlas Conso li dated Mining and Development Corp v. Comm issioner
of Internal Revenue , G.R. No . 26911 , January 27, 1981
v) Republ ic of the Ph ilipp ines v. Man ila Electric Company, G.R. No .
141314, November 15, 2002
vi) Kuenzle & Streiff Inc. v. Comm issioner of Internal Revenue , G.R.
Nos . L12010 and L- 12113, October 20 , 1959
vi i) Comm issioner of Interna l Revenue v. Pa lanca Jr. G.R. No . L- 16626,
October 29, 1966
viii) Commissioner of Internal Revenue v. Vda . De Prieto, G.R. No. L-
13912, September 30 , 1960
ix) Philippine Refining Co . v. Court of Appeals G.R. No . 118794, May
8, 1996
x) Basilan Estates, Inc. v. Commissioner of Internal Revenue, G.R. No .
L- 22492 , September 5, 1967
xi) Roxas v, Court of Tax Appeals, G.R. No . L-25043, April 26, 1968

X.
CAPITAL TRANSACTIONS AND DETERMINATION OF AMOUNT AND
RECOGNITION OF GAIN OR LOSS
(Sections 39 and 40 , NIRC)

49 . Definition of Capital Asset


50 . Definition of Ordina ry Asset
51. Guidelines in Determining Whether a Particular Real Property is a Capital
Asset or Ordinary Asset (Read : Revenue Regulations No . 7- 2003)
52 . Special Rules on Capital Transactions
52 .a. Holding Period
52 .b. Loss Limitation Ru le
52 .c. Net Capita l Loss (Ca rry-Over) /
53 . Special Capital Transactions
53 .a. Short Sale
53 .b. Securities Becoming Worthless
53.c. Failure to Exercise Privileges or Option to Buy or Sell Property
53 .d. Retirement of Bonds /
53 .e. Readj ustment of Interest in a Tax -Exempt Partnership
53 .f. Receipt of Uquidatl ng Dividends
54 . Gains and Losses for Dealings in Property
55 . Measure of Income or Loss
56 . Adj usted Basis or Cost of the Property
56 .a. By purcha se
56 .b. Included in the inve ntory
56 .c. By devise, bequest or inheritan ce
56 .d. By gift
56 .e. Acquired for less than the adequate consideration
56.f. If the property was acquired in a transaction where gain or loss is
not recognized
57 . Tax-Exempt Sales or Exchanges (No Gain, No Loss Recognized)
58 . Gain Recognized , Loss Not Recognized Transactions

XI.
RETURNS AND PAYMENT OF TAX
(Sections 51 - 56, NIRC, as amended by Sections 13, 14 , 15 and 16 of
Republic Act No. 10963, Tax Refor m fo r Accelerati on and Incl usion )

59 . I ndivi dua l Return


59 .a. Requirements
59 .b. Where to File
59 .c. Wh en to File
59 .d. Husband and wife
60 . Corporation Returns
60 .a. Requirements
60 .b. Taxable Year
60 .c. Return of Corporation Contemplating Dissolution or
Reorganizati on
60 .d , Return on Capital Gains Realized from Sale of $hares of Stock
not Traded in the Locill Stock Excha n_ge
61. Extension of Time to File Returns
62 . Returns of Receivers, Trustees in Bankruptcy or Assignees
63 . Returns of General Professional Partnerships
64 . Payment and Assessment of Income Tax for Individuals and Corporations
64 .a. Payment of Tax
64 .b. Installment Payment
64 .c. Payment of Capital Gains Tax
64 .d. Assessment and Payment of Deficiency Tax

XII.
WITHHOLDING TAXES
(Section 57 -58, 78-82 , NIRC, as amended by Sections 17, 18, and 21 of
Republic Act No . 10963, Tax Reform for Acceleration and Inclusion)

65 . Withholding Tax System


66 . Kinds of Withholding Tax
66 .a. Withholding Tax at Source
i. Final Withhold ing Tax
ii. Creditable Withhold ing Tax
66 .b. Withholding Tax on Compensation
i. Withholding Tax on Wages
ii. Withholding Tax on Fringe Benefit
66 .c. Withholding Tax on Creditable Value Added Tax ("VAT")
66 .d. Withholding on Percentage Tax
67. Persons Required to Withhold
68. Persons NOT Required to Withhold
69 . Consequences of Failure to Withhold
70 . Read Revenue Regulations No . 2-98

Cases:
i) Comm issioner of Internal Revenue v. Wander Philippines Inc and
Court of Tax Appeals, G.R. No . L-68375 , April 15, 1988
ii) Banco Filipino Savings and Mortgage Bank v. Court of Appeals, G.R.
No . 155682, March 27 , 2007

XIII .
TRANSFER TAXES

A. INTRODUCTION
1. Transfer tax, defined
2. Nature of transfer taxes
3. Kinds of transfer taxes under the National Internal Revenue Code
("NIRC")
4. Governing law
5. Situs of transfer taxes

B. ESTATE TAX
(Read: Revenue Regulations 2-2003 1
and Sections 84-97 NIRC Inclusive)

1. Succession , basic concepts :


Articles 774- 782 , 796-803 , 886-887 , 915-923 and 960 -969, Civil Code
Order of Intestate Succession
2. Estate tax, definition
3. Nature of estate tax

' Consolidated Revenue Regulations on Estate Tax and Donor's Tax Incorpora ting the Amendments
lntraduced_hv_RP.nuh · , ,, ' ·
4. Purposes of imposing estate tax
5. Law that governs the imposition of estate tax
6. When estate tax accrues
7. Rates
8. Situs of estate taxation
9. Gross estate
a. Real property
b. Personal property
i. Tangible personal property
ii . Intangible personal property
10. Kinds of estates of decedents for the purpose of imposing estate tax
a. Estates of decedent resident citizen, non-resident citizens and
resident aliens
b. Estates of decedent non -resident aliens
11 . Gross estate of decedent resident citizen, non -resident citizens and
resident aliens (within and without the Philippines) and non -resident aliens
(within the Philippines)
a. Decedent's interest
b. Transfer in conternplation of death
c. Revocable transfer
· d. Property passing under general power of appointment
e. Proceeds of life insurance
f. Prior interest
g. Transfers for insufficient consideration
h. Capital of the surviving spouse
12. Deductions allowed to the estate of decedents resident citizen, non-
resident citizen and resident alien.
a. Expenses, losses, indebtedness and taxes
b. Property previously taxed (Vanishing Deductions)
c. Transfers for public use
d. Family home
e. Standard deduction
f. Medical expenses
g. Amount received by heirs under RA 4917
h. Surviving spouse's net share in the conjugal property
13. Deductions allowed to the estate decedents non-resident aliens
a. Expenses, losses, indebtedness and taxes
b. Property previously taxed (Vanishing Deductions)
c. Transfers for public ,use
d. Surviving spouse's net share in the conjugal property
14. Tax credit for estate taxes paid to a foreign country
15. Exemption of certain acquisitions and transmissions (Sec. 87, NIRC)
a. Merger of usufruct in the owner of the naked title.
b. Transmission or delivery of the inheritance or legacy by the fiduciary
heir or legatee to the fideicommissary
c. Transmission from the first heir, legatee, or done in favor of another
beneficiary, in accordance with the desire of the predecessor
d. All bequests, devises, legacies or transfers to social welfare, cultural
and charitable institutions
e. Exempt acquisitions and transmissions of intangible personal
property under the principle of reciprocity
16. Common valuation rules for all gross estates whether of decedent
Filipinos, resident or non-resident aliens
a. Date of death valuation rule
b. Rationale for date of death valuation rule
17. Administrative requirements
a. Notice of death
i. Instances when required to be filed
ii Who should file
iii . Period for filing
b. Estate tax returns
i. Instances when required to be filed
ii. Who should file
iii. Period for filing
iv. Extension of time for filing
18. Payment of estate tax
a. When paid
b. Place of payment
c. Effects of payment, deficiency in payment or failure to pay the
estate tax

C. DONOR'S TAX
(Read : Revenue Regulations 2-2003 2 and Sections 98-104 NIRC
Inclusive)
1. Donation basic concepts (Articles 725-773, Civil Code)
2. Donor's tax, definition
3. Donor's tax vs. Estate tax
4. Purpose of donor's tax
5. Law that governs imposition of donor's tax
6. Donation inter vivas distinguished from donation mortis causa
7. Simple vs . Remuneratory vs. Onerous donations
8. Progressive schedular rates
9. Gifts of a resident citizen, non-resident citizen and resident alien , subject
to donor's tax
10. Gifts of non- resident alien subject to donor's tax
11 . Tax Payable by Donor if Donee is a Stranger
12. Transfer for Less Than Adequate and full Consideration .
13. Exempt donations
a. Total net gifts made during the calendar year not exceeding
P100,000 .00
i. Donation or gift splitting
b. Donation for political campaign purposes
c. Certain gifts made by a resident citizens, non -resident citizens and
resident aliens
i. Dowries
ii . Gifts made to government or any entity created by any of its
agencies which is not conducted for profit, or to any political
subdivision of the said Government
iii. Gifts in favor of an educational and/or charitable, relig ious,
cultural or social welfare corporation, institution, accredited
nongovernment organ ization, trust or philanthrophic
organization or research institution or organization
d. Certain gifts made by non-resident aliens
i. Gifts made to government or any entity created by any of its
agencies which is not conducted for profit, or to any political
subdivision of the said Government
iii. Gifts in favor of an educational and/or charitable, religious,
cultural or social welfare corporation , institution , accredited
nongovernment organization , trust or philanthrophic
organization or research institution or organization
e. Donations of intangibles subject to reciprocity
f . Donations for athlete's prizes and awards under Republic Act 7549
g. Donations under the "adopt-a-school program under Republic Act
8525 I

2
Consolidated Revenue Regulations on Estate Tax and Donor's Tax Incorporating the Amendments
J
1'1 . rc1x ueclll '-> tor forc1yn donor's taxes
t1 H<'4ulremcn1 s
b Llrnlt atlon r,
15 /\c1rnlnistr al Ive Requirements
cJ . r>onor 's tax return
I Requirements
II . Time Jnd place of fili ng
Iii . Liabilities for non-fi ling
l 6. PcJ ymcnt of donor's tax
I. Tim e an d place of paym ent
II. Liabi lities for non-payment

D. VALUE-ADDED TAX
(Read : R4evenue R~gulations No. 16-2005 3 Revenue Regulations No.
16- 2011 and Sections 105-115, NIRC Inclusive)

1. Value added tax defined


2. Characterlstrcs
a, Indirect tax
b. Tax on cons umption
c. Perce ntage tax
3. VAT Principles
a. Destination principle
b. VAT zero -rating
c. Effectively zero-rating
4. Liability for VAT
a. Transactions subject to VAT
b. Meaning of '1in th e course of trade or business "
5 . Kind s of VAT
a. VAT on sa le, barter or exchange of goods or properties
b. VAT on importation of goods
c. VAT on sale of services and use or lease of properties
6. VAT on sale, barter or exchange of goods or properties
a. Rate and tax base
b. Meaning of "goods or properties"
c. Transactions subject to VAT zero-rating
i. Export sales
ii. Foreign currency denominated sale
iii. Transaction covered by reciprocity rule
d. Transactions deemed sale
7. VAT on importation of goods
a. Rate and tax base
b. Importation, defined
c. Transfer of goods by tax-exempt persons
8. VAT on sa le of services and use or lease of properties
a. Rate and base
b. "Sale or exchange" defined
c. "In the ord inary course of business" defined
d. Transactions subject to VAT zero-rating
9. Exempt transactions . .
Take note: Revenue Regu lations No. 16-2011 rncreasrng the amount of
threshold on certa in exempt transactions
10 . Refund or credit of excess input VAT
i. Output tax
ii . Input tax

J
Ill. Transitional Input tax credits
Iv . Presumptive In pu t tax credits
11 . Whom may apply for tax refund or credit .
I. Any VAT-registered person , whose sales are zero rated or effectively
zero-rated
II. A person whose VAT registration has been cancelled
12 . Period within which Refund or Tax Credit of Input Taxes shall be Made
13. Compliance Requirements
14. Invoicing and Accounting Requirements for VAT-Registered Persons.
a. Invoicing Requirements
b. Accounting Requirements
15. Return and Payment of Value -Added Tax
a. Time and place of filing the returns
b. Time and place of payment
c. Withholding of Creditable Value-added Tax
16. Power of the Commissioner to Suspend the Business Operations of a
Taxpayer
a. Failure to issue receipts or invoices
b. Failure to file a value -added tax return as required under Section
114
c. Understatement of taxable sales or receipts by thirty percent (30%)
or more of his correct taxable sales or receipts for the taxable
quarter.
d. Failure of any Person to Register as Required under Section 236