Rationale of Taxation Types of Double Taxation

It allows for the maintenance of the people
Tax is the lifeline of the government. Without it, the
government cannot prosper.
Symbiotic Relationship – the government is obliged to
protect and serve its people, while the people are
obliged to pay taxes
Purpose/s:
Direct double taxation – invalid, done by same body
under same jurisdiction.
Indirect double taxation – valid and done by two
governing bodies. Can be mitigated legally
CONSTITUTIONAL LIMITATIONS(DUP)
1. Due process clause – taxpayers should be informed
with the facts and laws on taxation.

Main 2. Uniformity clause – tax system shall accommodate all

To collect revenue for government functions
Secondary (RAC)
Redistribute wealth to the needy (ayuda)
Attract more employment()
Complement the police power(fund improvements)
Tax Holiday – tax is lowered or eliminated to attract
investors
Inherent Power of the Government(PET)
subjects of taxation, treated alike in privileges and
liabilities.
3. Progressive system – tax system shall be uniform,
equitable and uses a graduate system(level by level)
Taxpayers’ Suit
Requisites:
There must be Illegal disbursement of public funds
Petitioner is directly affected by the alleged act

Police Power Life Blood Doctrine

Power of Eminent Domain
Government’s power of taxation emanates from its
Power of Taxation
necessity to protect and serve its people.
Sintax – tax upon vices to protect the health of its
Principles of Sound Tax System(FAT)
citizens
Fiscal Adequacy – in satisfaction only of government
Branches of the Government
expenditure.
Legislative - Writter of bills Congress and Senate Office Administrative Feasibility – enforced effectively
- the law intends that the bills must come from the Theoretical Justice – payable by taxpayers
congress. Although, bills can also be made by Senators
Situs of Taxation
Executive – Enforce and exercises the law
Tax should be paid per establishment of the same
Judicial – Protects the enforcement of law
company. Although, it can be paid at once in one branch
Limits of Tax(PINGT)
Tax is paid only on the area of transaction where there
Public Purpose is a branch. When there is no branch is located at the
International Comity transaction site, then the tax is paid at the main branch
Non-delegation of Power of the company.
Government exemption
Tax Avoidance – legal reduction or elimination of tax by
Territoriality
taxpayer. This is done through methods that are legal,
Taxpayer’s suit – this suit can be filed when a taxpayer’s but the action is illegal in nature.
funds are misused.
Tax Evasion – reduction or elimination of tax through
Requisites:
illegal means. Not paying tax for no reason, paying less
Illegal or improper use of fund
than what is due, not paying lacking amounts.
Directly affected by the acts
Basic Taxation This will result into an Underpayment or Overpayment
of Income tax due. If underpaid, then pay the lacking
A taxpayer is classified if five categories:
and If overpaid, then there are two options:
1. Resident Citizen
1. Refund the Excess
2. Non-resident Citizen
2. Receive a Tax Credit Certificate(TCC) which can
3. Resident Alien
be used in the next taxable year
4. Non-Resident Alien Engaged in Trade and
Business Missing:
5. Non-Resident Alien Not Engaged in Trade and
Table on the CITR
Business
Lesson in 1701 – income purely from business or
RC NRC RA NRAE NRANE
profession
Days 365 183 365 180 180
Rate table table table table 25%
Profit In & In In In In
Inclusio out
n

Common Forms used:

BIR form 1700 – Individuals w/ purely compensation

income
BIR form 1701 – Individuals w/ mixed income, business
and profession
BIR form 1701A – Individuals w/ purely from business or
profession income
BIR form 2316 – Individual’s income for the year

In filing Income Tax Return, note the following:

 Self Assessment – It will be the taxpayers who

has the obligation to assess his income tax
 Pay as you File – Payment of tax should come
with the submission of the ITR
 Substituted Filing – employer should file for his
employees their ITR(including payment)

FORM 1700

Format of Calculation

Taxable 750,000
income
Base P30,000
Excess of (400,000) 350,000
Rate 25% 87,500
P117,500

When the taxpayer has two employers, he must file a

Consolidated Income Tax Return(CITR)