 The Government should NOT tax Itself  The power to tax includes the Power to

 The LIFEBLOOD doctrine Do NOT required the License

Government to override its obligations and
contracts when necessary
Nature of Taxation
 Lifeblood doctrine not application: “Taxation
is the Rule; Exemption is the Exception”  Inappropriately describes: Generally for
 International comity connotes courtesy public purpose
between nations
 The President of PH can change tarrif or
imposts Without necessity of calling Congress
Legislatie Act (SAKTOMP)
to pass a law for that purpose
 “The power to tax includes the Power to  Situs (BSSPP)
EXEMPT” • Business
 Impact of taxation – the point at which tax is • Service
levied • Sale of Goods
 Constitutional Exemption of Religious or • Property
charitable institutions: Real property tax • Personal
 Constitutional Limitation: No tax law  Apportionment
Exemption shall be passed without the  Kind
concurrence of a majority of members of  Tax rate or amount
Congress  Object
 Tax exemption Bills approved by Majority of  Method
all members of Congress  Purpose
 Implementing Police power: mandatory
observed for Public Interest INHERENT Limitations (PENTID)
 Police power: principally limited by the  Public Purpose
requirement of due process  Exemption of the Government
 Just Compensation: Not consider of the  Non-delegation of taxing power
government in exercising Taxation  Territoriality
 Congress CAN exercise the Power of taxation  International comity
even without Constitutional delegation of the  Double Taxation
power to tax
 Philippine TAX laws by nature of Civil
 Theoretical Justice- principle demands that tax Minimized\Mitigated: Double taxation (CRET)
should be just, reasonable, and fair
 Tax Credit
 Theory of Taxation- Necessity
 Reciprocal tax treatment
False  Tax Exemption
 Treaties or bilateral agreements
 No one shall be imprisoned for non-payment
of tax- (non payment of debt)
 CHAPTER 3 -Alien
A. Resident Alien
-residing in PH and not a Citizen
-Ex. An alien who come to PH with
immigration visa is a resident alien upon
his arrival
TYPES OF INCOME TAXPAYERS Aliens who stayed in PH for more than
1 year as of the end of the taxable
year are considered resident
INDIVIDUALS

-Citizen 1. Lives in PH without Definite

Constitution: intention as to his stay
 Those who are citizens of the Philippines at the 2. Who comes to PH for his purpose
time of adoption of the Constitution on Feb. 2, 1987 would require an extended stay
and makes PH temporarily his
A. Resident Citizen home although it may be his
a) A Filipino citizen intention at all times to return to
Ex. A citizen who would go abroad under a his country
tourist visa

B. Non Resident Alien

B. Non- Resident Citizen -not residing in PH and not a citizen
Ex. An alien who come to PH with a tourist
a) -who leaves PH during taxable year to reside
Visa
abroad (either as an immigrant or as an
1. Non-resident aliens engaged in
employment)
business (NRA-ETB)
b) -who works and derives income, from
-who stayed more than 180 days
abroad and whose employment thereat
during the year
requires him to be physically abroad most of
-ex. Aliens who are staying in PH
the time during taxable year
for not more than 1 year but
-who arrives in PH at any time during the
more than 180 days
taxable year to reside permanently in PH

- Ex. A citizen who would go abroad with a 2 2. Non-resident citizens aliens not
year working visa is a non-resident citizen engaged in business (NRA-NETB)
upon his departure a) Who come with definite
purpose which in nature may
Citizen staying abroad for a period of at promptly accomplished
least 183 days are considered non- b) Who shall come and stayed less
resident than 180 days during the year
-ex. Aliens who stayed in PH for
not more than 180 days
 CORPORATION

1. Domestic corporation
 Corporation that is organized in accordance
in PH laws
Notes: Intentions 2. Foreign corporation
-organized under foreign law
-The taxpayers shall submit to the CIR of BIR
a) Resident Foreign corporation (RFC)
documentary proofs such as visas, work contracts
-a foreign corporation that
and other documents indicating such intention
operates/ conduct business in PH
-Tourist Visa – short term stay through a permanent establishment
( a Branch)
-shall not result in the reclassification -transacts business with residents
of the taxpayers normal residency through a resident branch

- Immigrant Visa or working Visa b) Non-Resident Foreign Corporation

-does not operate or conduct
-automatic reclassification of the
business in the PH
taxpayers residency
-transacts directly to residents
outside its branch

TAXABLE ESTATES AND TRUST Special Corporation

-domestic or foreign corporation which are
1. Estate- refers to properties, rights and
subject to special tax rules or preferential tax
obligations of a deceased not extinguished by
rates
his death
I. Partnership
II. Joint venture
2. Trusts- an arrangement whereby one person
III. Co-ownership
(grantor or trustor) transfer (i.e donates)
property to another person (beneficiary), which
will be held under the management of a third
party (trustee or fiduciary)

a) A trust that is irrevocably

designated by the grantor- treated
in taxation as if it is an individual
taxpayer.

b) A trust that are designated as

revocable by the grantor- are not
taxable entities and not considered
as individual taxpayer
*Trust agreement if silent
considered as or presumed to
be revocable
 CHAPTER 4

 Final Income Taxation

 Capital Gains Taxation
 Regular Income Taxation
Incurred:
Gross income
Expenses
Less: Allowed Deductions
INDIVIDUALS
Year 2018 Net Income
Considerations: Allowed by Law:
already
DELETED Less: Allowances and Exemptions
a) Tax rates Personal
b) Situs (sourcing)- WW or IN TAXABLE NET INCOME Exemptions:
c) Exemptions- Intentions
(x) Tax rates  BAPE
 AAPE
Income Tax Due/ Payable  HHIP
TP Physical Intention Sourc Tax Tax
Less: Tax Credits
presence es base rates
RC Less than Income Tax still DUE/ Payable
183 days WW TNI R/B
OUT in 0-35%
PH
NRC More Immigrant,
than 183 OFW IN PH TNI R/B  BAPE
days OUT 0-35%
(Basic Allowed Personal Exemption)
in PH
-granted of law to any STATUS of
RA 2yrs or More on
more IN Physical IN PH TNI R/B individual taxpayer
PH presence 0-35%
o Single Married
NRA- Less than Only o Annulled Widow
EBT 180 days INTENTION IN PH TNI R/B o Legal separated
IN PH 0-35%
NRA- More XX Personal Exemptions:
NETB than 180 INTENTION IN PH GI FT
days IN 25%
PH

Classification:

a) Physical Presence
b) Intentions
c) Exemptions of Physical presence