TAXATION 1

Basic Principles Of Taxation

PROBLEM 1 – Enumeration
1. Essentials characteristics of a tax – 5
2. Classification of taxes
a. As to subject matter – 3
b. As to who bears the burdern – 2
c. As to determination of amount – 2
d. As to purpose – 2
e. As to authority imposing the tax – 2
f. As to graduation or rate – 3
3. Sources of tax laws – 5
4. Examples of national taxes – 5
5. Examples of local taxes – 5
6. Classification of individual taxpayers – 6
7. Requirements by which a child may be considered as dependent of a head of family – 6

PROBLEM 2 – Identify or fill in the blanks

1. The process by which the state, through its lawmaking body, raises income to defray its
necessary expenses.
2. These are enforced proportional contribution from persons and property levied by the
lawmaking body of the state by virtue of its sovereignty for the support of the
government and all public needs.
3. Tax imposed upon the performance of an act, the enjoyment of a privilege or the
engaging in an occupation.
4. Tax which the taxpayer can shift to another.
5. Tax imposed based on a physical unit of measurement.
6. Tax proportionate to the value of the property.
7. Tax imposed by the national government.
8. Tax rate increases as the tax base increases.
9. The place of taxation.
10. Any sanction imposed as a punishment for violation of law or acts deemed injurious..
11. Taxes imposed on goods exported to or imported from a country.
12. This happens when the taxpayer minimizes his tax liability by taking advantage of
legally available tax planning opportunities.
13. This happens when a taxpayer resorts to unlawful means to lessen or to get away with
his tax liability.
14. In its broad sense, means all wealth, which flows into the taxpayer other than a mere
return of capital.
15. A tax on all yearly profits arising from property, profession, trade or business.
16. A Filipino citizen permanently residing in the Philippines.
17. An individual whose residence is not within the Philippines and who is not a citizen
thereof.
18. Income subject to a separate and final tax at fixed rates ranging from 5% to 25%.
19. Arbitrary amounts allowed as deductions from gross income of the individual taxpayer
from compensation , business or practice of profession. They represent the personal,
living or family expenses of the taxpayer.
20. The amount of basic personal exemption for the following taxpayers:
a. Single b. Married c. Head of the family
d. Widow with minor children e. Legally separated wife with no children
PROBLEM 3
Indicate the tax rate if the taxpayer is a resident citizen and non-resident alien engaged in
trade or business in the Philippines for the following passive income:

1. Interest income on time deposit from RCBC

2. Royalty on the musical composition of Mr. C
3. First prize in PCSO draw
4. Cash dividend from Smart Corporation received in 2004
5. Interest income from 5-year individual trust fund
6. Interest income on dollar deposit from Metrobank under FCDS
7. P1,000,000 prize from Philippine Idol
8. P5,000 prize from amateur singing contest
9. Royalty on patent for a machinery
10. Winnings from horse racing