Classification of Taxes - the tax is demanded from one person who

is intended to pay it
Examples: income tax (taxpayer himself to pay),
estate tax (estate to pay), donor’s tax (donor to
CLASSIFICATION OF TAXES A. As to authority pay)
who imposes the tax 2. Indirect –
- one paid by a person who is not directly
liable therefor, and who may therefore shift
1. National tax – imposed by the National or pass on the tax to another person or
Government. National internal revenue taxes entity, which ultimately assumes the tax
(DIVE-PESO) burden
Examples: - the tax is demanded from one person who
a. income taxes can shift the burden of paying the tax to
b. value-added tax another person
c. other percentage taxes Example: Value-Added Tax
d. estate tax
e. donor’s tax E. As to determination of amount (ASA)
f. excise tax
g. documentary stamp tax 1. Specific tax – a tax of a fixed amount imposed
h. other taxes as may be imposed by the head or number e.g. excise tax on wines
or distilled spirits, cigars
2. Local tax – tax imposed by local 2. Ad valorem – tax is imposed for a fixed
governments proportion of the amount or value of the
(provincial/city/municipal/barangay) property to which the tax is assessed e.g.
Examples: income tax, transfer taxes (estate and donor’s),
a. real property tax VAT
b. professional tax
c. business taxes, fees and charges F. As to rate (MR-PP)
d. community tax
1. Proportional or flat rate – the tax is based on
B. As to purpose (P-FRS) a fixed percentage of the amount of the
property, income or other basis to be taxed.
1. Fiscal – general, fiscal or revenue- tax Examples:
imposed for the general purpose of the a. Preferential Income Tax of 8% for
government or to raise revenue for SelfEmployed individuals or mixed
government needs, e.g. income tax, transfer income earners on their
taxes (estate/donor’s business/professional income
2. Regulatory – for purposes of regulation b. VAT (12%) and percentage taxes.
(exercise of police power), e.g. PRC and c. Regular corporate income tax (30%)
driver’s license d. Under TRAIN: Donor’s tax and Estate tax
3. Special or sumptuary – tax imposed for a (6%)
special purpose or to achieve some social or e. Capital gains tax on sale of real property
economic ends, e.g. Road User’s Tax / Special classified as capital asset or creditable
Education Fund withholding tax on sale of ordinary asset
(6%)
C. As to subject matter or object (SM-PPPE) f. Capital gains tax on sale of shares of
stocks not listed in Stock Exchange
1. Personal, poll or capitation – tax of a fixed (15%)
amount imposed on individuals residing within 2. Progressive or graduated tax – the tax rate
a specified territory e.g. community tax increases as the tax base increases. Example:
certificate/cedula Income tax for individual taxpayers (retained
2. Property tax – tax imposed on property, under TRAIN) (did not avail 8%)
whether real or personal e.g. real property tax 3. Regressive tax – the tax the rate of which
/ factory machinery decreases as the tax base increases. The
3. Excise tax – tax on commodities/excisable Philippines has no regressive tax.
articles e.g. sin products 4. Mixed tax- mixture of proportional, progressive
(alcohol/cigarettes/automobiles/minerals/ or regressive.
jewelri es/non-essential services) Example:
4. Privilege tax – tax imposed upon the a. Income tax for individuals
performance of an act, the enjoyment of a (progressive/graduated) and for
privilege or the engaging in an occupation, corporation (proportional/flat)
e.g. b. Income tax for Mixed Income Earners
Professional tax (issued PTR) who opted 8% on his business income
while the compensation income is
D. As to who bears the burden of paying the subject to graduated tax rate
tax / incidence (I-DI)

1. Direct –

- is one which the taxpayer who pays the

tax is directly liable therefor
- the burden of paying the tax falls directly
on the person paying the tax
 needs (no limit property or
as to the amount improvements
of tax) thereon
DISTINCTION OF TAX WITH SIMILAR ITEMS
TAX VS. REVENUE TAX VS. DEBT

Tax Revenue Tax Debt

Definition Refers to the Refers to the Basis Law Contract or
amount imposed amount collected judgment
Scope Only one of the The product of Effect of Taxpayer may No imprisonment
sources of taxation. It noncompliance be imprisoned
government refers to the for non-
revenues funds derived by payment
the government (except for
whether from poll tax)
tax or from other Assignable? No Yes
sources Mode of Generally Money, property
settlement payable in or service
TAX VS. LICENSE money
Tax License Subject to Generally, not Subject to set-off
Purpose For revenue For regulation Setoff? subject to set-
Amount No limit Limited off
Time of Generally paid Generally paid Interest Does not earn Draws interest
payment after start of before the interest when stipulated
business commencement except when or when in default
of business delinquent
Subject/Object Person, Required for the Authority Imposed by Can be imposed
of Imposition properties, commencement the State by private
business rights, of a business individuals
interests, profession Prescription Provided Provided under
privilege, acts under the the Civil Code
and NIRC
transactions
Effect of Does not Makes the TAX VS. SPECIAL ASSESSMENT
noncompliance necessarily business illegal
make the act,
business or Tax Special
profession Assessment
illegal Definition Enforced Enforced
Revocability Has a nature of Always revocable proportional proportional
contribution from contribution from
permanence
persons or owners of lands
Scope The power to Power to license
properties benefited by public
tax includes the does not include
improvements
power to license the power to tax

When imposed Post-activity Pre-activity

Basis of Current data Preceding year
imposition or quarter date. Subject of business, Land only
If new business, the interests,
based on imposition transactions,
capitalization rights, persons,
Basis/Sources Power of Police power properties or
of Power taxation privileges
TAX VS. TOLL Cannot be made
Effect on Personal liability of
the person the person the personal
Tax Toll
liable or assessed liability of the
Definition Enforced Sum of money paid
the one person assessed,
contribution for use of road or because it is the
bridge owning the
subject land that answers
Basis Demand of Demand of for the liability
sovereignty ownership
Purpose One’s support for Compensation for
the government the use of
Basis of Necessity (with no Entirely on
somebody else’s hope of direct or
Imposition benefits received
property (road or immediate benefit
bridge and the to the taxpayer)
like) Coverage General Exceptional both
Authority Imposed only by May be imposed by of application as to the time and
the government the government or application place
by private
individuals
Amount Based on Determined by the
government cost of the
 TAX VS. PENALTY

Tax Penalty
Definition Enforced Sanction
proportionate imposed as
contribution punishment for TAX VS. TARIFF
violation of a Tariff refers to a book of rates containing names of
law or acts merchandises with corresponding duties to be paid for
deem injurious the same. Tariff refers to the duties payable on goods
to to regulate imported or exported. It is a system or principle of
Purpose raise revenue conduct imposing duties on the importation or exportation of
through goods.
punishment and
suppression of
injurious act

Exercising the government the

authority government or
by private
individuals
Source Law Law or contract
Mode of in money in money or in
settlement kind
Note:
• Payment of tax is compulsory to those who are covered by
imposition
• Taxes are important because they are the lifeblood of the
government.
• Taxes are personal. The burden of taxation cannot be
transferred from one person to the other by private
agreement as this is determined by law
• While the power of taxation includes the power to destroy,
it is not absolute. It is subject to limitation or restrictions.