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Notes3 Principles of Taxation
SITUS OR PLACE OF TAXATION
The term situs is of Latin origin referring to “site or
location”. In tax parlance, situs refers to the place of
taxation. Determined by legislature, situs is one aspect of
taxation, along with nature, purpose, rate, and coverage.
Knowing the proper situs of local business tax (LBT) is
particularly crucial because payment of the applicable LBT
is required before one can get a business permit.
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.
And the situs is necessarily in the state which has
jurisdiction or which exercises dominion over the subject in
question.
Income tax may properly be exacted from:
1) persons who are residents or citizens in the taxing
jurisdiction;
2) persons who are neither residents nor citizens,
provided the income is derived from sources within the
taxing state;
3) A non-resident citizen is taxable on all income derived
from sources within the Philippines.
4) An alien, whether a resident or not of the Philippines,
and a foreign corporation, whether engaged or not in
trade or business in the Philippines are also taxable
only from sources within the Philippines.
Thus, resident citizens and domestic corporations are
taxable on all income derived from sources within or without
the Philippines.
The taxable situs will depend upon the nature of income, as
follows:
Interest - Interest income is treated as income from within
the Philippines if the debtor or lender, whether an
individual or corporation, is a resident of the
Philippines.
Dividends - Dividends received from a domestic
corporation are treated as income from sources
within the Philippines.
Dividends received from a foreign corporation are treated as
income from sources within the Philippines-
➢ unless only 50% of the gross income of the foreign
corporation for the three-year period preceding the
declaration of such dividends was derived from sources
within the Philippines –
➢ but only in an amount which bears the same ratio to such
dividends as the gross income of the corporation for such
period derived from sources within the Philippines
against its gross income from all sources.
Services - Services performed in the Philippines shall be
treated as income from sources within the
Philippines.
Rentals and royalties - Gain or income from property or
interests located or used in the Philippines is
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treated as income from sources within the
Philippines.
Sale of real property - Gain from the sale of real property
located within the Philippines is considered as
income within the Philippines.
In the Philippines, real property taxes are imposed only by
the LGUs on real property situated within their jurisdiction.
The real estate is subject to taxation in the state in which it
is located whether or not the owner is a resident of the said
jurisdiction.
The Local Government Code and its implementing
regulations provide for a definition of “real property”,
such as lands, buildings, machinery and other
improvements affixed or attached to real property that are
subject to the tax, notwithstanding the definitions under the
Civil Code.
Income from sale or lease of real property is, likewise,
generally taxable in the jurisdiction where the property is
located.
Sale of personal property - Gain, profit or income from
sale of shares of stock of a domestic corporation is
treated as being derived entirely from sources
within the Philippines, regardless of where the said
shares are sold. Gains from sale of other personal
property can be considered income from within or
without - or partly within or partly without -
depending on the rules provided in the Tax Code.
The taxing power of a state does not extend beyond its
territorial limits; but within such limits it may tax persons,
property, income, or business.
Hence, knowledge of the situs of income is crucial to
ensuring that only income taxable in a particular jurisdiction
is declared and assessed. Without such knowledge, a
taxpayer runs the risk of failing to declare income which is
taxable in one jurisdiction, or else declaring income that is
not taxable.
Tangible personal property - The modern rule is that it is
taxable in the state where it is physically located
notwithstanding that the owner resides in another
jurisdiction.
There are no taxes on ownership of tangible personal
property but income from sale or lease of tangible property
is generally taxable in where the property is physically
located.
Intangible personal property - Intangible personalty
such as credits, bills receivable, bank deposits, bonds,
promissory notes, mortgage loans, judgements and
corporate stocks, does not admit of actual location, and as
to such property, taxation is at the domicile of the owner.
The situs of personal property is the domicile of the owner.
Income from intangible personal property, however, is
generally taxable where the obligation arises. Hence,
income of a non-resident foreigner from shares of stock in
a domestic corporation, whether as dividends or as gains
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TAXATION
Notes3 Principles of Taxation
from sale, are taxable in the Philippines. The reason is that
said shares receive the protection and benefit of our laws.
In the same manner, interest income from a loan is taxable
in the state where the loan obligation arises.
Income - Under Philippines rules, resident citizens and
domestic corporation are taxable on all income derived from
sources within or without the Philippines. A non-resident
citizen, an alien whether or not a resident of the Philippines
and a foreign corporation, whether engaged or not in trade
or business in the Philippines, are taxable only from sources
within the Philippines.
Business, occupation and transaction - As far as the
situs of business, occupation, or transaction is concerned,
the general rule is that the power to levy an excise tax
depends upon the place where the business is done, or the
occupation is engaged in, or the transaction took place. In
the Philippines, the taxes on business, occupation and
transaction are the VAT, Percentage Tax and Excise Tax.
The Supreme Court in a 1936 decision has clearly summed
up the situs rules.
1) The taxing power of a state does not extend beyond its
territorial limits, but within such limits it may tax
persons, property, income, or business.
2) If an interest in property is taxed, the situs of either the
property or interest must be found within the state.
3) If an income is taxed, the recipient thereof must have a
domicile within the state or the property or business out
of which the income issues must be situated within the
state so that the income may be said to have a situs
therein.
4) Personal property may be separated from its owner and
he may be taxed on its account at the place where the
property is although it is not a citizen or resident of the
state which imposes the tax.
DOUBLE TAXATION
Double taxation is a tax principle referring to income taxes
paid twice on the same source of income. It can occur when
income is taxed at both the corporate level and personal
level.
Double taxation also occurs in international trade or
investment when the same income is taxed in two different
countries.
How Double Taxation Works
Double taxation often occurs because corporations are
considered separate legal entities from their shareholders.
As such, corporations pay taxes on their annual earnings,
just like individuals. When corporations pay out dividends to
shareholders, those dividend payments incur income-tax
liabilities for the shareholders who receive them, even
though the earnings that provided the cash to pay the
dividends were already taxed at the corporate level.
Double taxation is often an unintended consequence of tax
legislation. It is generally seen as a negative element of a
tax system, and tax authorities attempt to avoid it whenever
possible.
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Most tax systems attempt, through the use of varying tax
rates and tax credits, to have an integrated system where
income earned by a corporation and paid out as dividends
and income earned directly by an individual is, in the end,
taxed at the same rate.
For example, in the U.S. dividends meeting certain criteria
can be classified as "qualified" and as such, subject to
advantaged tax treatment: a tax rate of 0%, 15% or 20%,
depending on the individual's tax bracket. The corporate tax
rate is 21%, as of 2019.
Double taxation also refers to the same income being taxed
by two different countries.
While critics argue that dividend double taxation is unfair,
advocates say that without it, wealthy stockholders could
virtually avoid paying any income tax.
Debate Over Double Taxation
The concept of double taxation on dividends has prompted
significant debate. While some argue that taxing
shareholders on their dividends is unfair, because these
funds were already taxed at the corporate level, others
contend this tax structure is just.
Proponents of double taxation point out that without taxes
on dividends, wealthy individuals could enjoy a good living
off the dividends they receive from owning large amounts of
common stock, yet pay essentially zero taxes on their
personal income.
Stock ownership could become a tax shelter, in other words.
Supporters of dividend taxation also point out that dividend
payments are voluntary actions by companies and, as such,
companies are not required to have their income "double
taxed" unless they choose to pay dividends to shareholders.
Certain investments with a flow-through or pass-through
structure, such as master limited partnerships, are popular
because they avoid the double taxation syndrome.
International Double Taxation
International businesses are often faced with issues of
double taxation. Income may be taxed in the country where
it is earned, and then taxed again when it is repatriated in
the business' home country. In some cases, the total tax
rate is so high, it makes international business too
expensive to pursue.
To avoid these issues, countries around the world have
signed hundreds of treaties for the avoidance of double
taxation, often based on models provided by the
Organization for Economic Cooperation and Development
(OECD). In these treaties, signatory nations agree to limit
their taxation of international business in an effort to
augment trade between the two countries and avoid double
taxation.
Double taxation is the levying of tax by two or more
jurisdictions on the same declared income (in the case of
income taxes), asset (in the case of capital taxes), or
financial transaction (in the case of sales taxes). Double
liability is mitigated in a number of ways, for example:
➢ the main taxing jurisdiction may exempt foreign-source
income from tax,
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Notes3 Principles of Taxation
➢ the main taxing jurisdiction may exempt foreign-source
income from tax if tax had been paid on it in another
jurisdiction, or above some benchmark to not include tax
haven jurisdictions,
➢ the main taxing jurisdiction may tax the foreign-source
income but give a credit for foreign jurisdiction taxes
paid.
Another approach is for the jurisdictions affected to enter
into a tax treaty which sets out rules to avoid double
taxation.
The term "double taxation" can also refer to the double
taxation of some income or activity. For example, in some
jurisdictions, corporate profits are taxed twice, once when
earned by the corporation and again when the profits are
distributed to shareholders as a dividend or other
distribution.
There are two types of double taxation:
1) Economical - double economical taxation which is
related to situations where people or companies pay
two or more taxes from one tax basis. The most
common situation where double economical taxation
arises is when a company pays taxes over the profit the
made, and after that they are paying out dividend to
their stockholders. That amount of dividend is also
taxed, but now it is dividend tax.
2) International double taxation. International double
taxation arises when a person is paying taxes in
different countries for, on object in the same period of
time. Countries can do this type of double taxation
because of the principal of residence or territorial
principal. A country can rely on principal or residence
when they found that the taxpayer is their residence.
Countries can rely on territorial principal when they
found that the profit is made in their country, so their
territory.
For example: Country A has a sales branch in country
B, country A taxes its residents on a worldwide basis.
The company will pay taxes to country B based on its
source and to country A based on the multinational
company's residency.
International double taxation agreements
It is not unusual for a business or individual who is resident
in one country to make a taxable gain (earnings, profits) in
another country. It could happen that a person need to pay
tax on that gain locally and also need to pay tax to the
country in which the gain was made. Since this is
inequitable, many nations make bilateral double taxation
agreements with each other.
1) In some cases, this agreement requires that the tax will
be paid in the country of residence, to avoid double
taxation it will be exempt in the country in which it arises.
2) In the remaining cases, the resident needs to pay tax to
the country where the profit is made ("withholding tax")
and the taxpayer receives a compensating foreign tax
credit in the country of residence to reflect the fact that
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tax has already been paid. To do this, the taxpayer must
declare himself (in the foreign country) to be non-
resident there.
3) So the second aspect of the agreement is that the two
taxation authorities exchange information about such
declarations. Because of the communication between the
countries they also have a better view on individuals and
companies who are trying to avoid the tax.
4) Individuals, or natural persons can only be one residence
in one country at a time. While corporate persons,
owning foreign subsidiaries, can be a residence in one
country and simultaneously another residence in another
country. Because of this the control of unreasonable tax
avoidance of corporations becomes more difficult and it
requires more investigation when goods, rights and
services are transferred.
Double taxation relief methods
1) There are two methods which countries can use to reduce
or relief the double taxation problem. These methods
called the exemption method (EM) and the foreign
tax credit method (FTC). The EM method requires the
home country to pay off the tax on income from foreign
sources. Tax jurisdiction extends only to the national
border. When countries rely on territorial principal as
described above they usually depend on the EM method
to relieve double taxation. But the EM method is only
common for certain income classes or sources, such as
international shipping income for example.
2) On the contrary, the FTC method is a legal provision,
mostly used in laws of countries who rely on taxing
residents on global basis. The FTC method requires the
home country to provide credit against its own tax
liability when companies pay foreign income tax.
These methods are created to encourage foreign direct
investment otherwise double taxation will arise. The
economic implications motivate countries to hold on to
the principles of free trade to assure that their EM of FTC
regimes reduces the double taxation problem.
Another solution that is used are relief provisions. They
help residents head of multinational groups to compete
globally. They create more favorable terms for
multinational companies.
LEGISLATION OF TAX LAWS
Tax laws in the Philippines covers national and local
taxes.
National taxes refer to national internal revenue taxes
imposed and collected by the national government
through the Bureau of Internal Revenue (BIR); and
Local taxes refer to those imposed and collected by the
local government. The Tax Code of 1997, Revenue
Issuances and BIR Rulings pertaining to national taxes
are posted at the BIR website.
National Tax Laws
1) 1987 Constitution
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2) Laws
3) Treaties
4) Administrative Material
5) Case Law
6) Treatises and Other Books
7) Periodicals
8) Local Government Tax Laws
9) National Tax Research Center
I. 1987 Constitution
The 1987 Philippine Constitution sets limitations on the
exercise of the power to tax.
The rule of taxation shall be uniform and equitable. The
Congress shall evolve a progressive system of taxation.
(Article VI, Section 28, paragraph 1)
All money collected on any tax levied for a special
purpose shall be treated as a special fund and paid out
for such purpose only. If the purpose for which a special
fund was created has been fulfilled or abandoned, the
balance, if any, shall be transferred to the general funds
of the Government. (Article VI, Section 29, paragraph
3)
The Congress may, by law, authorize the President to fix
within specified limits, and subject to such limitations
and restriction as it may impose, tariff rates, import and
export quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the national
development program of the Government (Article VI,
Section 28, paragraph 2)
The President shall have the power to veto any particular
item or items in an appropriation, revenue or tariff bill,
but the veto shall not affect the item or items to which
he does not object. (Article VI, Section 27, second
paragraph)
The Supreme Court shall have the power to review,
revise, reverse, modify or affirm on appeal or certiorari,
as the law or the Rules of Court may provide, final
judgments and orders of lower courts in x x x all cases
involving the legality of any tax, impost, assessment, or
toll or any penalty imposed in relation thereto. (Article
VIII, Section 5, paragraph)
Tax exemptions are limited to those granted by law.
However, no law granting any tax exemption shall be
passed without the concurrence of a majority of all the
members of the Congress. (Article VI, Section 28, par.
4).
The Constitution expressly grants tax exemption on
certain entities/institutions such as:
1) Charitable institutions, churches, parsonages or
convents appurtenant thereto, mosques, and non-
profit cemeteries and all lands, buildings and
improvements actually, directly and exclusively used
for religious, charitable or educational purposes;
2) Non-stock non-profit educational institutions used
actually, directly and exclusively for educational
purposes.
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II. Laws
The basic source of Philippine tax law is the National
Internal Revenue Law, which codifies all tax provisions,
the latest of which is embodied in Republic Act No. 8424
(“The Tax Reform Act of 1997”). It amended previous
national internal revenue codes, which was approved on
December 11, 1997. A copy of the Tax Reform Act of
1997, which took effect on January 1, 1998, can be found
here and the most recent is the TRAIN Law.
III. Treaties
The Philippines has entered into several tax treaties for
the avoidance of double taxation and prevention of fiscal
evasion with respect to income taxes. At present, there
are 31 Philippine Tax Treaties in force. Copies are
available at the BIR Library and the International Tax
Affairs Division of the BIR, which is under the Deputy
Commissioner for Legal and Inspection Group.
IV. Administrative Material
The Secretary of Finance, upon the recommendation of
the Commissioner, promulgates needful rules and
regulations for the effective enforcement of the
provisions of the Tax Code (Section 244, Tax Code of
1997). The Commissioner of Internal Revenue, however,
has the exclusive and original power to interpret the
provisions of the Tax Code, but subject to review by the
Secretary of Finance.
Administrative issuances which may be relied upon in
interpreting the provisions of the Tax Code, which are
signed by the Secretary of Finance, or the Commissioner
of Internal Revenue, or his duly authorized
representative, come in the form of Revenue
Regulations, Revenue Memorandum Orders, Revenue
Memorandum Rulings, Revenue Memorandum Circulars,
Revenue Memorandum Rulings, and BIR Rulings.
Revenue Regulations (RRs) are issuances signed by the
Secretary of Finance, upon recommendation of the
Commissioner of Internal Revenue, that specify,
prescribe or define rules and regulations for the effective
enforcement of the provisions of the National Internal
Revenue Code (NIRC) and related statutes.
Revenue Memorandum Orders (RMOs) are issuances
that provide directives or instructions; prescribe
guidelines; and outline processes, operations, activities,
workflows, methods and procedures necessary in the
implementation of stated policies, goals, objectives,
plans and programs of the Bureau in all areas of
operations, except auditing.
Revenue Memorandum Rulings (RMRs) are rulings,
opinions and interpretations of the Commissioner of
Internal Revenue with respect to the provisions of the
Tax Code and other tax laws, as applied to a specific set
of facts, with or without established precedents, and
which the Commissioner may issue from time to time for
the purpose of providing taxpayers guidance on the tax
consequences in specific situations. BIR Rulings,
therefore, cannot contravene duly issued RMRs;
otherwise, the Rulings are null and void ab initio.
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Revenue Memorandum Circular (RMCs) are issuances
that publish pertinent and applicable portions, as well as
amplifications, of laws, rules, regulations and precedents
issued by the BIR and other agencies/offices.
BIR Rulings are the official position of the Bureau to
queries raised by taxpayers and other stakeholders
relative to clarification and interpretation of tax laws.
Revenue Regulations, Revenue Memorandum Orders,
Revenue Memorandum Rulings, Revenue Memorandum
Circulars, Revenue Memorandum Rulings, and BIR
Rulings are found here.
V. Case Law
In the Philippines, Supreme Court decisions form part of
the law of the land. As such, decisions by the Supreme
Court in the exercise of its power to review, revise,
reverse, modify or affirm on appeal or certiorari, as the
law or the Rules of Court may provide, final judgments
and orders of lower courts cases involving the legality of
any tax, impost, assessment, or toll or any penalty
imposed in relation thereto are adhered to and
recognized as binding interpretations of Philippine tax
law. Court of Appeals and Court of Tax Appeals decisions
which have become final and executory are also
recognized interpretations of Philippine tax law.
VI. Treatises and other books
There are no Philippine treatises exclusively devoted to
Philippine Tax law but various Philippine authors have
come up with annotated versions of the Tax Code.
VII. Periodicals
Periodicals on Philippine tax law are the:
(1) Philippine Revenue Service (copies available in the
BIR Library), published by the BIR from 1969-1980;
(2) Philippine Revenue Journal (copies available in the
BIR Library) which was both published by the Bureau of
Internal Revenue from 1969 to 2000; and
(3) the Tax Monthly, published by the National Tax
Research Center (NTRC) (copies available in the BIR
Library and the NTRC).
VIII. Local Government Tax Law
Local government taxation in the Philippines is based on
the constitutional grant of the power to tax to the local
governments.
Local taxes may be imposed, as the Constitution grants,
to each local government unit, the power to create its
own sources of revenues and to levy taxes, fees, and
charges which shall accrue to the local governments
(Article X, Section 5). With respect to national taxes,
local Government units shall have a just share, as
determined by law, in the national taxes which shall be
automatically released to them (Article X, Section 6).
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However, certain taxes, such as the following, may
not be imposed by local government units: (Section
133, Local Government Code and Tax Law and
Jurisprudence by Vitug & Acosta, copyright 2000)
(1) Income tax, except when levied on banks and other
financial institutions;
(2) Documentary stamp tax;
(3) Taxes on estates, inheritance, gifts, legacies and
other acquisitions mortis causa, except as otherwise
provided in the Local Government Code (Code) (except
taxes levied on the transfer of real property ownership
under Section 135, and Section 151 of the Code);
(4) Customs duties, registration fees of vessels (except
license fees imposed under Section 149, and Section 151
of the Code), wharfage on wharves, tonnage dues and
all other kinds of customs fees, charges and dues except
wharfage on wharves constructed and maintained by the
local government unit concerned;
(5) Taxes, fees, charges and other impositions upon
goods carried into or out of, or passing through, the
territorial jurisdictions of local governments in the guise
of charges for wharfage, tolls for bridges or otherwise, or
other taxes in any form whatever upon such goods or
merchandise;
(6) Taxes, fees or charges on agricultural and aquatic
products when sold by marginal farmers or fishermen;
(7) Taxes on business enterprises certified by the Board
of Investments as pioneer or non-pioneer for a period of
six and four years, respectively, from the date of
registration;
(8) Excise taxes on articles enumerated under the
National Internal Revenue Code and taxes, fees, or
charges on petroleum products, but not a tax on the
business of importing, manufacturing or producing said
products (Patron vs. Pililla, 198 SCRA 82);
(9) Percentage tax or value-added tax on sales, barters
or exchanges of goods or services or similar transactions
thereon (but not fixed graduated taxes on gross sales or
on volume of production);
(10) Taxes on the gross receipts of transportation
contractors and persons engaged in the transportation of
passengers or freight by hire and common carriers by air,
land or water except as provided by the Code;
(11) Taxes on premiums paid for reinsurance or
retrocession;
(12) Taxes, fees or charges for the registration of motor
vehicles and for the issuance of all kinds of licenses or
permits for the driving thereof, except tricycles;
(13) Taxes, fees, or other charges on Philippine products
actually exported except as provided by the Code (the
prohibition applies to any local export tax, fee, or levy on
Philippine export products but not to any local tax, fee,
or levy that may be imposed on the business of exporting
said products);
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(14) Taxes, fees or charges on duly organized and
registered Countryside and Barangay Business
Enterprises (R.A. No. 6810) and on cooperatives (R.A.
No. 6938); and
(15) Taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities, and
local government units (Section 133, LGC)
The Local Government Code (www.comelec.gov.ph) or
(www.dilg.gov.ph/) contains provisions on the scope and
limitation on the exercise of local government taxing
power.
IX. National Tax Research Center (NTRC)
Constituted under Presidential Decree 74, the NTRC is
mandated to conduct continuing research in taxation to
restructure the tax system and raise the level of tax
consciousness among the Filipinos, to achieve a faster
rate of economic growth and to bring about a more
equitable distribution of wealth and income. Specifically,
the NTRC performs the following functions:
1. Undertake comprehensive studies on the need for
additional revenue for accelerated national development
and the sources from which this might most equitably be
derived;
2. Re-examine the existing tax system and tax policy
structure;
3. Conduct researches on taxation for the purpose of
improving the tax system and tax policy;
4. Pass upon all tax measures and revenue proposal;
5. Recommend of such reforms and revisions as may be
necessary to improve revenue collection and to
formulate sound tax policy and a more efficient tax
structure.
IMPACT OF TAXES IN NATION BUILDING
The government collects taxes to provide basic services
such as education, health, infrastructure, and other
social services for all. These taxes are used to pay for
our doctors, teachers, soldiers, and other government
personnel and officials. These are also used to build
schools, hospitals, roads, and various infrastructure for
connectivity, and industrial and agricultural facilities.
In other words, governments impose charges on their
citizens and businesses as a means of raising revenue,
which is then used to meet their budgetary demands.
This includes financing government and public projects
as well as making the business environment in the
country conducive for economic growth.
Importance of Taxes in Society
Without taxes, governments would be unable to meet the
demands of their societies. Taxes are crucial because
governments collect this money and use it to finance
social projects.
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Importance of Tax to Businesses
For business to flourish in the country, there has to be
good infrastructure such as roads, telephones,
electricity, etc. This infrastructure is developed by
governments or through close involvement of the
government. When governments collect money from
taxes, it ploughs this money into development of this
infrastructure and in turn promotes economic activity
throughout the country.
The concept of taxation is also important to businesses
because governments can fund this money back into the
economy in the form of loans or other funding forms.
Taxes help raise the standard of living in a country. The
higher the standard of living, the stronger and higher the
level of consumption most likely is. Businesses flourish
when there is a market for their product and services.
With a higher standard of living, businesses would be
assured of a higher domestic consumption as well. Taxes
are essential and every citizen is meant to reap benefits
of these taxes. This is why it is important that citizens
endeavour to pay taxes and understand that it is meant
to be more than just a “money grab” from the
government.
ETHICAL TAX COMPLIANCE AND ADMINISTRATION
Conflict between expectations of administrators and tax
advisers and even of taxpayers in relation to what is done
by these players when they perform their duties.
There can be no doubt that although they owe a duty to
the courts they also have a paramount obligation to their
clients. In taxation they are, it seems, ethically bound to
ensure that their client pays the
minimum amount of tax.
The role of their advisers is critical to the compliance
behaviour of taxpayers.
Taxpayer integrity relies on a complex web of influences
and factors not all of them within the control of a
collection agency. Indeed, some are rooted in the human
condition and fuelled by natural greed, envy, and basic
social relationships.
Yet the revenue collection agency must attempt to
influence, support, guide and coerce taxpayers to comply
and must do so with all sensitivity for the relevant
influential factors. It is said that the French Minister to
Louis XIV, Jean Baptiste Colbert, once said that:
“The art of taxation consists in so plucking the goose
as to obtain the largest possible amount of feathers with
the smallest possible amount of hissing, such is the
unenviable task of the revenue agency.”
It has to be strong and not give in to pressure groups,
but also be flexible and understanding and not treat all
taxpayers as if they are non-compliant. This is a delicate
balance requiring constant reflection and moderation and
attention to detail as well as sensitivity to the legitimate
claims of the community.
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