Taxation

in the
Philippine
HISTORY
OF
TAXATION
ANCIENT FILIPINOS
• Where they pay their taxes to their datu or Chiefs for the protection given to them.
• Tax was termed buwis.
• Everyone is required to pay their taxes, except for the Datu/Chieftain’s household.

INVASION OF SPANIARDS
• Spanish people from 1521 to 1898 gave the Filipinos modern concepts of taxation.
• Wherein 16 years to 60 years old where forced to pay tributes or tribute to the king of the
Spain through the Colonial Government worth 8 reales or 1 peso per year, but there are also other
forms of payment like gold ,chickens, textile. Rice and forced labor or Polo y Servicio.
SEDULA
• In 1884,the tribute was abolished and was replaced by the cedula or sedula.

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”
• National taxes refer to national internal revenue taxes imposed and collected by the national
government through BIR(Bureau of Internal Revenue).
• Local taxes is those imposed and collected by the local government

TRAIN LAW
• Signed last January 01, 2018, which seeks to correct a number of deficiencies in the tax
system to make it simpler, fairer, and more efficient.
• Wherein the rich will have a bigger contribution and the poor will benefit more from the
government’s program and services.
 What is tax?
Taxation is defined in many ways.
Commonly heard definitions include:
• It is the process by which the sovereign, through its law
making body, races revenues use to defray expenses of
government.
• It is a means of government in increasing its revenue
under the authority of the law, purposely used to promote
welfare and protection of its citizenry.
• It is the collection of the share of individual and
organizational income by the government under the
authority of the law.
 Theory of taxation

“LIFEBLOOD THEORY”

Like blood which acts as a support to every

human organ so it could perform every duty
inside the body, tax acts as the blood which
supports government and state.
 Basis of Taxation

“BENEFITS-RECEIVED PRINCIPLE”

Reciprocal duties of protection and support

between the state and its inhabitants.
 Commissioner vs. Algue, Inc.

It is said that taxes are what we pay for civilized

society. Without taxes, the government would be
paralyzed for the lack of motive power to activate and
operate it. Hence, despite the natural reluctance to
surrender part of one’s hard earned income to the
taxing authorities, every person who is able must
contribute his share in the running of the government.
The government for its part, is expected to respond
In the form of benefits intended to improve the lives of the people.
This symbiotic relationship is the rationale of taxation
And should dispel the erroneous notion that it is an arbitrary
method of exaction by those in the seat of power.
But even we concede the inevitability and indispensability of
taxation, it is a requirement in all democratic regimes that it be
exercised reasonably and in accordance with the prescribed
procedure. If it is not, then the taxpayer has a right to complain and
will come to his succor.
 Concept of Tax

Taxation is the inherent power of the state to impose and demand contributions
upon persons, properties, or rights for the purpose of generating revenues for
the public purposes.

The power of taxation upon necessity and is inherent in every government or

sovereignty.
 Distinction of Tax
Tax distinguished from Toll
• A tax is demand of sovereignty, while toll is demand for proprietorship.
• A tax is paid for the use of the government’s property, while toll is paid for the use of
another’s property.
• A tax may be imposed by the government only, while a toll is enforced by the
government or a private individual or entity.
Tax distinguished from penalty
• A taxis intended to raise revenue, while penalty is designed to regulate conduct.
• A tax may be imposed by the government only while a penaly may be imposed by the
government or a private individual.
 Tax distinguished from Debt

A tax is base on law, while debt is based on contract.

A tax may not be assignable, while a debt is assignable.
A tax is generally playable in cash, while debt is payable in cash or
in kind.
A person may be imprisoned for a non-payment of taxes, but any
person may not be imprisoned for non-payment of debt.
 Purposed and Significance of Tax

Primary purpose:
generates funds or revenues use to defray expenses incurred by the government
in promoting the general welfare of its citizenry. Public expenditure

Other purposes:
To equitably contribute to the wealth of the nation.
 Characteristics of Tax

It is enforced contribution. Its payment is not voluntary nature, and the imposition is not
dependent upon the will of the person taxed.
It is generally payable in cash. This means that payment by checks, promissory notes, or in
kind is not accepted.
It is proportionate in character. Payment of taxes should be base on the ability to pay
principle; the higher income of the tax payer the bigger amount of the tax paid.
It is levied(to impose; collect) on person or property. There are taxes that are imposed or
levied on acts, rights or privileges.
It is levied by the state which has jurisdiction over the person or property. As a general
rule, only persons, properties, acts, right or transaction with in the jurisdiction of the taxing
state are subject for taxation
It is levied by the law making body of the state. This means that a prior law must be
enacted first by the congress before assessment and collection may be implemented of the
1987 constitution.
It is levied for the public purposes. Taxes or imposed to support the government for the
implementation of projects and programs.
 Classification of taxes
1. As to subject matter
• Personal, Poll or Capitation Tax (ex. Residence Tax)
• Property Tax. (ex. Real State Tax)
2. As to who bears the burden
• Direct Tax (ex. Income Tax)
• Indirect Tax (ex. Buying of goods and services(RVAT))
3. As to purpose
General Tax(ex. Almost all taxes)
Special Tax
4. As to scope
National Tax(ex. National Revenue Taxes)
Local Tax
 Principles of Taxation
Fiscal adequacy. Means that the sources of the revenue taken as a whole should be
sufficient to meet the expanding expenditures of the government regardless of business,
export taxes, trade balances, and problems of economic adjustment. Revenues should be
capable expanding or contracting annually in response to variations of public expenditures.
Equality or Theoretical Justice. Means the taxes levied must be base upon the ability of
the citizen to pay.
Administrative Feasibility. This principle connotes that in a successful tax system, such
tax should be clear and plain to taxpayers, capable of enforcement by an adequate and well-
trained staff of public office, convenient as to the time and manner payment, and not unduly
burdensome upon on discouraging to business activity.
Consistency or Compatibility with Economic Goals. This refer to the tax laws that should
be consistent with economic goals or programs of the government. This are the basic
services intended for masses.
 Tax Exemption
• Religious Institutions
• Charitable Institutions
• Non-profit, Non-Stock Educational
Institutions
• Non-profit Cemeteries
• Government Institutions
• Foreign Diplomats
 How to pay tax?
How to Compute Income Tax in the Philippines
Computing income tax expense and payable is different for individuals and
corporations. Taxable corporations may be taxed using a fixed income tax
rate.

On the other hand, if you are a self-employed professional or an owner of an

single proprietorship business, your income tax expense is computed using
graduated tax rate. it is a progressive tax which tax the tax rate increases as
the taxable base amount increases. This means that the higher taxable income
you have, the higher you income tax expense is.
 Government Budget and Expenditures

In National Income Accounting, government

spending, government expenditure, or
government spending goods and services
includes all government consumption and
investment by a state.
 Government acquisition of goods and services for current use to directly
satisfy individual or collective needs of the members of the community is
called government final consumption expenditure(GFCE)

Government acquisition of goods and services intended to create future

benefits, such as infrastructure investment of research spending, is called
gross fixed capital formation, or government investment, which usually is the
largest part of the government
 SOURCES:
https://www.slideshare.net/krista3633/01-general-pri
nciples-of-taxation?next_slideshow=1

https://www.slideshare.net/cheryldemafiles2731/my-
presentation-taxation

https://whatistrainlaw.wordpress.com/2018/03/11/his
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