Section 21 - Sources of Revenue: The following taxes, fees and charges are deemed

to be national internal revenue taxes.

1. Income tax - is a direct tax imposed on actual or presumed income – gross or net
realized by a taxpayer during a given taxable year.
2. Estate and donor’s taxes –
a. Donor’s tax - An excise tax imposed on the privilege to transfer property
by way of gift inter vivos based on a pure act of liberality without any or less
than adequate consideration and without any legal compulsion to give.
b. Estate Tax - – Tax on the right to transmit property at death and on certain
transfers by the decedent during his lifetime which are made by the law the
equivalent of testamentary dispositions. An excise tax on the right of
transmitting property at the time of death and of the privilege that a person
is given in controlling to a certain extent the disposition of his property to
take effect upon his death.
3. Value-added tax – is a consumption tax placed on a product whenever value is
added at each stage of the supply chain, from production to the point of sale. The
amount of VAT that the user pays is on the cost of the product, less any of the
costs of materials used in the product that have already been taxed.
4. Other percentage taxes - is a business tax imposed on persons or entities who
sell or lease goods, properties or services in the course of trade or business whose
gross annual sales or receipts do not exceed P1,919,500 (effective 2012)
5. Excise taxes - taxes that are imposed on various goods, services and activities.
Such taxes may be imposed on the manufacturer, retailer or consumer, depending
on the specific tax.
6. Documentary Stamp taxes - is a tax on documents, instruments, loan
agreements and papers evidencing the acceptance, assignment, sale or transfer
of an obligation, right or property incident thereto.
7. Such other taxes as are or hereafter may be imposed and collected by the
BIR.
Realization/Severance Test - There is no taxable income until there is a separation from
capital of something of exchangeable value, thereby supplying the realization or
transmutation which would result in the receipt of income.

Economic Benefits Test - Any economic benefit to the employee that increases his net
worth, whatever may have been the mode by which it is effect, is taxable.

Claim of Right Doctrine - A taxable gain is conditioned upon the presence of a claim of
right to the alleged gain and the absence of a definite and unconditional obligation to
return or repay.

Chapter 3 Section 24-26 (see NIRC Code)

De Minimis Benefits - Which is exempt from the fringe benefit tax shall, in general, be
limited to facilities or privileges, furnished or offered by an employer to his employees,
provided such facilities or privileges are of relatively small value and are offered or
furnished by the employer merely as a means of promoting the health, goodwill,
contentment, or efficiency of his employees.

Fringe Benefits - Any good, service or other benefit furnished or granted in cash or in
kind by an employer to an individual employee (except rank and file employees) such as,
but not limited to, the following:

1. Housing;

2. Expense account;

3. Vehicle of any kind;

4. Household personnel, such as maid, driver and others;

5. Interest on loan at less than market rate to the extent of the difference between
the market rate and actual rate granted;

6. Membership fees, dues and other expenses borne by the employer for the
employee in social and athletic clubs or other similar organizations;

7. Expenses for foreign travel;

8. Holiday and vacation expenses;

9. Educational assistance to the employee or his dependents; and

10. Life or health insurance and other non-life insurance premiums or similar
amounts in excess of what the law allows.

Rules on Situs of Taxation - Literally means place of taxation. The general rule is
that the taxing power cannot go beyond the territorial limits of the taxing authority.
Basically, the state where the subject to be taxed has a situs may rightfully levy and collect
the tax.